Exhibit 10.2

ESIO Franchising, LLC

FRANCHISE AGREEMENT

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FRANCHISE AGREEMENT

TABLE OF CONTENTS

ARTICLE

PAGE

 

 

 

1.

INTRODUCTION

1

 

 

 

2.

GRANT OF FRANCHISE

1

 

 

 

 

2.1

Grant of Franchise

1

 

 

 

 

 

2.2

Term

1

 

 

 

 

 

2.3

Full Term Performance; Minimum Requirements

2

 

 

 

 

 

2.4

Grant of Franchise

2

 

 

 

 

 

2.5

Term

2

 

 

 

 

 

2.6

Full Term Performance; Minimum Requirements

2

 

 

 

 

 

2.7

Protected Territory.

2

 

 

 

 

 

2.8

Franchisor’s Reservation of Rights.

3

 

 

 

 

 

2.9

Renewal of Franchise.

3

 

 

 

3.

DEVELOPMENT AND OPERATION OF THE FRANCHISE

4

 

 

 

 

3.1

Site Selection..

4

 

 

 

 

 

3.2

Development Obligations and Deadlines.

4

 

 

 

 

 

3.3

Training.

4

 

 

 

 

 

3.4

Required Hardware and Software..

5

 

 

 

 

 

3.5

Equipment, Furniture, Fixtures, Furnishings and Signs.

5

 

 

 

 

 

3.6

Franchise Opening.

6

 

 

 

 

 

3.7

Grand Opening Program..

6

 

 

 

 

 

3.8

Standards of Operation and Marketing.

6

 

 

 

 

 

3.9

No Disparagement.

.6

 

 

 

 

 

3.10

Approved Suppliers and Vendors.

6

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3.11

Process for Approval of New Suppliers and Vendors.  .

7

 

 

 

 

 

3.12

Consistency of Franchise Assets.  .

7

 

 

 

 

 

3.13

Consent to Sharing of Information; Appointment as Attorney in Fact..

7

 

 

 

 

 

3.14

Pricing.  .

7

 

 

 

 

 

3.15

Specifications, Standards and Procedures.

7

 

 

 

 

 

3.16

Compliance with Laws and Good Business Practices.

8

 

 

 

 

 

3.17

Management and Personnel of the Franchise.

8

 

 

 

 

 

3.18

Insurance.

8

 

 

 

 

 

3.19

Credit Cards and Other Methods of Payment.

9

 

 

 

4.

FRANCHISE; OPERATING PRINCIPAL; GUARANTY

9

 

 

 

 

4.1

Operating Principal..

9

 

 

 

 

 

4.2

Supervision of Franchise Business..

9

 

 

 

 

 

4.3

Interests in Franchisee.

10

 

 

 

 

 

4.4

Guaranty of Franchisee’s Obligations.  .

10

 

 

 

5.

GUIDANCE; OPERATIONS MANUAL

10

 

 

 

 

5.1

Guidance and Assistance.

10

 

 

 

 

 

5.2

Operations Manual.

11

 

 

 

 

 

5.3

Modifications to System.

11

 

 

 

 

 

5.4

Advisory Councils.

11

 

 

 

6.

FEES

11

 

 

 

 

6.1

Initial Franchise Fee.

11

 

 

 

 

 

6.2

Royalty Fee.

11

 

 

 

 

 

6.3

Advertising Fee.

12

 

 

 

 

 

6.4

Interest on Late Payments.

12

 

 

 

 

 

6.5

Late Fees.

12

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6.6

Electronic Funds Transfer.

12

 

 

 

 

 

6.7

Application of Payments.

13

 

 

 

7.

MARKS

13

 

 

 

 

7.1

Ownership and Goodwill of Marks.

13

 

 

 

 

 

7.2

Limitations on Franchisee’s Use of Marks.

13

 

 

 

 

 

7.3

Notification of Infringements and Claims.

13

 

 

 

 

 

7.4

Discontinuance of Use of Marks.

13

 

 

 

 

 

7.5

Indemnification of Franchisee.

14

 

 

 

8.

RELATIONSHIP OF THE PARTIES; INDEMNIFICATION

14

 

 

 

 

8.1

Independent Contractor; No Fiduciary Relationship.

14

 

 

 

 

 

8.2

No Liability, No Warranties.

14

 

 

 

 

 

8.3

Indemnification by You.

14

 

 

 

9.

CONFIDENTIAL INFORMATION

15

 

 

 

 

9.1.

Types of Confidential Information

15

 

 

 

 

 

9.2.

Non-Disclosure Agreement.

15

 

 

 

 

 

9.3.

Agreement to Not Compete.

15

 

 

 

10.

ADVERTISING

15

 

 

 

 

10.1

By Company

15

 

 

 

 

 

10.2

By Franchisee.

17

 

 

 

 

 

10.3.

Local and Regional Advertising Cooperatives.

17

 

 

 

 

 

10.4.

Websites.

17

 

 

 

11.

ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS

17

 

 

 

12.

INSPECTIONS AND AUDITS

18

 

 

 

 

12.1

Company’s Right to Inspect the Franchise.

18

 

 

 

 

 

12.2

Company’s Right to Audit.

18

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13.

TRANSFERS

18

 

 

 

 

13.1

Transfer by Us.

18

 

 

 

 

 

13.2

Transfer by You.

19

 

 

 

14.

TERMINATION OF THE FRANCHISE

22

 

 

 

 

14.1

Termination Without Cure Period.

22

 

 

 

 

 

14.2

Termination Following Expiration of Cure Period.

23

 

 

 

 

 

14.3

Illegality.

23

 

 

 

15.

RIGHTS AND OBLIGATIONS OF COMPANY AND FRANCHISE OWNER UPON TERMINATION OR
EXPIRATION OF THE FRANCHISE

24

 

 

 

 

15.1

Payment of Amounts Owed to Company.

24

 

 

 

 

 

15.2

Marks.

24

 

 

 

 

 

15.3

De-Identification.

24

 

 

 

 

 

15.4

Confidential Information.

24

 

 

 

 

 

15.5

Covenant Not to Compete.

24

 

 

 

 

 

15.6

Return of Financed Equipment..

24

 

 

 

 

 

15.7

Company’s Option to Acquire the Business Assets.

24

 

 

 

 

 

15.8

Continuing Obligations.

25

 

 

 

16.

ENFORCEMENT

25

 

 

 

 

16.1

Invalid Provisions; Substitution of Valid Provisions.

25

 

 

 

 

 

16.2

Unilateral Waiver of Obligations.

25

 

 

 

 

 

16.3

Written Consents from Franchisor.

25

 

 

 

 

 

16.4

Lien and Security Interest.

25

 

 

 

 

 

16.5

No Guarantees.

26

 

 

 

 

 

16.6

No Waiver.

26

 

 

 

 

 

16.7

Cumulative Remedies.

26

 

 

 

 

 

16.8

Specific Performance; Injunctive Relief.

26

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16.9

Mediation and Arbitration.

26

 

 

 

 

 

16.10

Waiver of Punitive Damages and Jury Trial; Limitations of Actions.

28

 

 

 

 

 

16.11

Governing Law/Consent To Jurisdiction.

28

 

 

 

 

 

16.12

Binding Effect.

28

 

 

 

 

 

16.13

No Liability to Others; No Other Beneficiaries.

28

 

 

 

 

 

16.14

Construction.

28

 

 

 

 

 

16.15

Joint and Several Liability.

28

 

 

 

 

 

16.16

Multiple Originals.

29

 

 

 

 

 

16.17

Timing Is Important.

29

 

 

 

 

 

16.18

Independent Provisions.

29

 

 

 

17.

NOTICES AND PAYMENTS

29

 

 

 

18.

INDEPENDENT PROFESSIONAL JUDGMENT OF YOU AND YOUR GENERAL MANAGER

29

 

 

 

19.

ENTIRE AGREEMENT

29

 

 

 

20.

AMENDMENTS OR MODIFICATIONS

29

 

 

 

21.

FRANCHISEE’S ACKNOWLEDGEMENT OF BUSINESS RISK AND ABSENCE OF GUARANTEE

29

EXHIBITS

 

 

EXHIBIT 1

EXPIRATION DATE, PROTECTED TERRITORY, GRAND OPENING ADVERTISING, AND FRANCHISING
OPENING SCHEDULE

 

EXHIBIT 2

OWNERSHIP STRUCTURE

 

EXHIBIT 3

[INTENTIONALLY DELETED]

 

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ESIO FRANCHISING, LLC

FRANCHISE AGREEMENT

This Franchise Agreement (this or the “Agreement”) is being entered as of August
14, 2012 (“Effective Date”). The parties to this Agreement are ESIO Franchising,
LLC, a Delaware limited liability company (“Franchisor” “the Company” “we,”
“us,” or “ESIO”); and Tempco, Inc., a Delaware corporation (“you,” or
“Franchisee”), and, if you are a partnership, corporation, or limited liability
company, your “Principals” (defined below).

1.          INTRODUCTION.

This Agreement is written in an informal style to make it more easily readable
and so you become familiar with all of the important rights and obligations
covered in the Agreement before you sign it.  This Agreement includes several
exhibits, all of which are legally binding and are an integral part of the
complete Agreement.

In this Agreement, we refer to ESIO Franchising, LLC as “we,” “us,” or the
“Company.”  We refer to you as “you,” or “Franchisee.”  If you are a
corporation, partnership or limited liability company, you will notice certain
provisions that are applicable to those principal shareholders, partners or
members on whose business skill, financial capability and personal character we
are relying in entering into this Agreement.  Those individuals will be referred
to in this Agreement as “Principals.”

Through the expenditure of considerable time, effort and money, we and our
affiliates have devised a system for the establishment and operation of an ESIO
business model that specializes in providing ESIO Beverage Systems for in-home
and in-office use along with offering a wide variety of ESIO hot and cold drink
products for use with ESIO Beverage Systems, and other related services and
products (all of which we refer to in this Agreement as the “System”).  We
identify the System by the use of certain trademarks, service marks and other
commercial symbols, including the mark “ESIO” and certain associated designs,
artwork and logos, which we may change or add to from time to time (the
“Marks”).

This Agreement is being presented to you because you have expressed a desire to
develop and own, and operate an ESIO Franchise (we refer to your ESIO franchise
hereinafter as the “Franchise” or the “Franchised Business”).  We expressly
disclaim making, and you acknowledge that you have not received or relied on,
any guarantee, express or implied, as to the revenues, profits, or likelihood of
success of the ESIO Franchise venture contemplated by this Agreement.  You
acknowledge that there have been no representations by us or our officers,
directors, members, employees, or agents that are inconsistent with the
statements made in our current Franchise Disclosure Document concerning the
Franchised Business, or the provisions of this Agreement. (See Section 21 of
this Agreement).  You further represent to us, as an inducement to our entering
into this Agreement with you, that there have been no misrepresentations to us
in your application for the rights granted by this Agreement, or in the
financial information provided by you and your Principals.

2.          GRANT OF FRANCHISE.

2.1        Grant of Franchise.  Subject to the provisions of this Agreement, we
grant to you the right to operate one (1) ESIO Franchise offering all products,
services, and proprietary programs of ours, in accordance with all elements of
the System, that we may require for ESIO Franchises.

2.2        Term.  The Term of this Agreement is ten (10) years from the
Effective Date of this Agreement. You must operate the Franchise from a site
(“the Site”) within the territory you select and we approve (“the Protected
Territory”), and use the System and the Marks in the operation of that Franchise
during the Term of this Agreement.  The Initial Term will begin on the Agreement
Date.  (For convenience, the expiration date of the Initial Term is listed on
Exhibit 1.)  Termination or expiration of this Agreement will constitute a
termination or expiration of your Franchise.  (All references to the “term” of
this Agreement refer to the period from the Agreement Date to the date on which
this Agreement actually terminates or expires.)

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2.3        Full Term Performance; Minimum Requirements. You specifically agree
to operate the Franchise, perform the obligations of this Agreement, and
continuously exert your best efforts to promote and enhance the business of the
Franchise for the Term and any Renewal Terms (as defined in Section 2.6 of this
Agreement).  The continuation of your exclusive rights to the Protected
Territory, and your rights to continue your Franchised Business, generally
depends upon your compliance with your obligations under your Franchise
Agreement.  However, you must also satisfy beverage system development
expectations on a monthly basis during the Term and Renewal Terms of this
Agreement in order to maintain your rights as a Franchised Business in the
Protected Territory.  The development expectations requirements for ESIO
Beverage Systems during the Term and Renewal Terms of this Agreement are as
follows:

Minimum Sales Requirement

Time Frame

20 ESIO Beverage Systems per month

For the first twelve (12) months after opening for business

30 ESIO Beverage Systems per month

For each and every month thereafter including Renewal Terms

If your Franchised Business includes more than one ESIO Franchise, the Minimum
Sales Requirements must be met for each ESIO Franchise separately and is not
cumulative.

2.4        Protected Territory; Reference to Exhibit 1; Reservation of Rights.
You acknowledge that the Franchise granted by this Agreement gives you the right
to operate your Franchise within the Protected Territory described in Exhibit 1.
 Your Protected Territory shall encompass at least 30,000 Qualified Residential
Households, as determined by us, a Developer, or other sources approved by us.
 A “Qualified Residential Household” means a residential household earning a
median annual income of $50,000 or higher.  You and we will mutually designate
your Protected Territory prior to or after you sign this Agreement.

(a)        You will have the rights to solicit, sell, market and/or distribute
ESIO products and services to residential households and businesses within your
Protected Territory.

(b)        No Exclusive Rights.  You will not receive an exclusive territory and
ESIO products and services may be available from us or third party retail
outlets, online distributors, and other third parties within the Protected
Territory.  Therefore, you may face competition from franchisor-owned outlets,
or from other channels of distribution or competitive brands that we control.
 You also may face competition from distributors and/or retail outlets including
department stores, grocery stores, and convenience stores distributing or
selling ESIO products in your Protected Territory. However, as long as you
remain in compliance with your Franchise Agreement, we will not establish
additional ESIO Franchises owned by us, our affiliates, or other ESIO
franchisees in your Protected Territory that market, solicit, or service
residential households.  We may enter into other lines of business offering
similar or dissimilar products or services under other trademarks and services
marks, or under the Marks, that market to business customers both within and
outside of your Protected Territory.  Such non-franchised businesses may offer
ESIO products and services to residential households in your Protected Territory
as an incidental part of their business operations without having to pay you
special compensation.

(c)        Limited Territorial Rights.  You may not offer ESIO products and
services outside your Protected Territory without obtaining our prior written
consent.  Likewise, ESIO Franchises outside of your Protected Territory, owned
by us, our affiliates, or other franchisees may not solicit and sell authorized
ESIO services and products to residential customers residing in your Protected
Territory without having to pay you special compensation.  You may not discount
your pricing to attract residential customers who live in the Protected
Territory of another ESIO Franchise.  You have no options or rights of first
refusal to purchase additional franchises, but may apply to us for the right to
operate additional ESIO Franchises and/or Developer Franchises under separate
agreements.  Your Protected Territory may not be modified under any
circumstances unless you and we both agree to the change.  

(d)        No Rights to Customers Outside Your Protected Territory.  You may
accept customers only from persons or companies located within your Protected
Territory.  You may not solicit customers from

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outside your Protected Territory without our prior written approval.  If you
accept such solicited customers from outside your Protected Territory (“Outside
Protected Territory Customer”), then the Company has the right to require you to
deliver such customers to us or other franchises in whose Protected Territory
that customer resides. However, you may accept business in your Protected
Territory resulting from referrals or unsolicited inquiries from customers
outside your Protected Territory.   We may, in our sole discretion, but shall
not be obligated to, implement a program awarding special compensation to
franchisees for referring Outside Protected Territory Customers to the
franchisee who should service such customer.

2.5        Franchisor’s Reservation of Rights.  Except as otherwise provided in
Section 2.4, we retain all rights with respect to ESIO Franchises, the Marks and
the System, including the right to (by way of example only and not as a
limitation):

(a)        operate, or grant to others the right to operate, ESIO Franchises and
Developer Franchises located outside of your Protected Territory on terms and
conditions we deem appropriate;

(b)        provide or grant other persons the right to provide goods and
services that are similar to and/or competitive with those provided by ESIO
Franchises within your Protected Territory, through any distribution channel
other than an ESIO Franchise (including, but not limited to retail outlets,
department stores, grocery stores and convenience stores) under the Marks;

(c)        provide and grant rights to other persons to provide, goods and
services dissimilar to and/or not competitive with those provided by ESIO
Franchises to customers located within your Protected Area;

(d)        acquire the assets or ownership interest of businesses providing
products and services similar to those provided at ESIO Franchises, and
franchising, licensing, or creating similar arrangements with respect to those
acquired businesses, wherever those businesses or their franchisees or licensees
are located (including in your Protected Territory);

(e)        be acquired (regardless of the form of transaction) by any business
or person, including a business providing products and services similar to those
provided at ESIO Franchises or Regional Developer Franchises or another
business, even if the acquiring business operates, franchises, or licenses
competitive businesses within the Protected Territory or Development Area; and

(f)        provide or offer ESIO products and services to business customers
within or outside of your Protected Territory through ESIO’s affiliates or
dealers of ESIO products and services.

2.6        Renewal of Franchise.

(a)        Franchisee’s Right to Renew.  Subject to the provisions of
subparagraph (b) below, and if you have substantially complied with all
provisions of this Agreement and all other agreements between us, on expiration
of the Initial Term, and you modify the Franchise in compliance with
specifications and standards then applicable under new or renewal franchises for
ESIO Franchises, you will have the right to renew the Franchise for up to two
(2) additional ten (10) year terms.

(b)        Notice of Intent to Renew; Notice of Deficiencies and Other
Requirements.  At least six (6) months before the expiration of the Term (or any
renewal terms if additional renewal terms are available), you shall provide us
with written notice of your intent to renew the Franchise Agreement.  We agree
to give you written notice of any deficiencies in your operation or in the
historical performance of the Franchise within thirty (30) days of receiving
your notice of intent to renew that could cause us not to renew the Franchise.
 If we will permit renewal, our notice will state what actions, if any, you must
take to correct the deficiencies in your operation of the Franchise or of the
Site, and will specify the time period in which those deficiencies must be
corrected or other requirements satisfied.  Renewal of the Franchise will be
conditioned on your continued

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compliance with all the terms and conditions of this Agreement up to the date of
expiration.  If we send a notice of non-renewal, it will state the reasons for
our refusal to renew.

(c)        Renewal Agreement; Releases.  To renew the Franchise Agreement, the
Company, you and your Principals must execute the form of Franchise Agreement
and any ancillary agreements we are then customarily using in the grant or
renewal of franchises for the operation of ESIO Franchises (with appropriate
modifications to reflect the fact that the agreement relates to the grant of a
renewal franchise), except that no initial franchise fee will be payable upon
renewal of the Franchise.  However, you must pay to us a renewal fee equal to
fifty percent (50%) of our then-current Initial Franchise Fee for an ESIO
Franchise.  You and your Principals, and your and their spouses, must also
execute general releases, in a form satisfactory to us, of any and all claims
against us and any affiliates we may have, and our and their respective owners,
officers, directors, employees, and agents.

3.          DEVELOPMENT AND OPERATION OF THE FRANCHISE.

3.1        Site Selection. You will use your best efforts to seek and select a
Site within your Protected Territory for operating your Franchise that is
suitable for the operation of your Franchise.  We will not approve or disapprove
the Site.  You may operate your Franchise out of a personal residence, assuming
that all state and local requirements are met for a home-based business.  You
may also operate your Franchise out of an office or a warehouse.

3.2        Development Obligations and Deadlines. You agree at your own expense
to do the following (a) within ninety (90) days of the date of this Agreement,
or within 45 days of receiving your Initial Training, whichever occurs first, or
(b) if you sign this Agreement pursuant to the purchase of multiple ESIO
franchises, by the Opening Deadline defined in Exhibit 1: (1) secure all
financing required to fully develop the Franchise; (2) obtain all required
building, utility, sign, health, sanitation and business permits and licenses
and any other required permits and licenses; (3)  construct the Franchise
according to the construction plans and specifications we have approved;
(4) purchase and install all required equipment, furniture, furnishings and
signs; (5) cause the training requirements of Section 3.3 to be completed;
(6) purchase an opening inventory of products and other supplies and materials,
including all marketing materials for your grand opening advertising campaign;
(7)  provide proof, in a form satisfactory to us, that your operation of the
Franchise at the Franchise location does not violate any applicable state or
local zoning or land use laws, ordinances, or regulations, or any restrictive
covenants that apply to such location; (8) provide proof, in a form satisfactory
to us, that you (and/or your General Manager, as defined in Section 4.1, if any)
are legally authorized and have all licenses necessary to perform all of the
services to be offered by your Franchise, and that your organizational structure
is consistent with all legal requirements; (9) do any other acts necessary to
open the Franchise for business; (10) obtain our approval to open the Franchise
for business; and (11) open the Franchise for business.

3.3        Training. You acknowledge the importance of the training program that
we provide you for the exceptional operation of your Franchise.  To that end,
you agree as follows:

(a)        At least forty-five (45) days before the Franchise opens for
business, you and at least one, but no more than two (2), other members of your
management team (a total of three (3) persons) will attend our initial training
program (the “Initial Training”) at the time and place we designate.  You (if
you are an individual) or at least one of your Principals (if you are a legal
entity), your General Manager (if any) and other employees that we designate
must complete this initial training program to our satisfaction.  The Initial
Training may include classroom instruction and Franchise operation training, and
will be furnished at our training facility, an ESIO franchise location we
designate, your Franchise location, and/or at another location we designate.
 Our Initial Training programs may be different for each employee depending on
their responsibilities at the Franchise.  There will be no tuition charge for
the persons whom we require to attend any Initial Training program; however,
additional personnel of yours may attend the Initial Training only if you pay to
us, for each additional attendee, a daily attendance fee in an amount to be
determined by us.  All persons who attend our Initial Training must attend and
complete the program to our satisfaction.  If we, in our sole discretion,
determine that any General Manager

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or employee whom we require to attend any Initial Training program is unable to
satisfactorily complete such program, then you must not hire that person, and
must hire a substitute General Manager or employee (as the case may be), who
must enroll in the Initial Training program within fifteen (15) days thereafter,
and complete the Initial Training to our satisfaction.

(b)        You agree to complete additional training programs at places and
times as we may request from time to time during the term of this Agreement.

(c)        You agree to have your General Manager (if any) and/or other
employees who attend our Initial Training complete additional training programs
at places and times as we may request from time to time during the term of this
Agreement.

(d)        In addition to providing the Initial Training described above, we
reserve the right to offer and hold such additional ongoing training programs
and franchise owners meetings regarding such topics and at such times and
locations as we may deem necessary or appropriate.  We also reserve the right to
make any of these training programs mandatory for you and/or designated owners,
employees, and/or representatives of yours.  We may charge you a daily
attendance fee in an amount to be set by us for each attendee of yours who
attends any mandatory or optional training program or owners meeting.  If we
offer any such mandatory training programs, then you or your designated
personnel must attend each of the programs offered on an annual basis.

(e)        You agree to pay all wages and compensation owed to, and travel,
lodging, meal, transportation, and personal expenses incurred by, all of your
personnel who attend our Initial Training and/or any mandatory or optional
training we provide.

(f)        The Franchise’s General Manager (if any) and other employees shall
obtain all certifications and licenses required by law in order to perform their
responsibilities and duties for the Franchise.

3.4        Required Hardware and Software. You agree to use in the development
and operation of the Franchise the computer systems and operating software
(“Computer System”) that we specify from time to time.  You acknowledge that we
may modify such specifications and the components of the Computer System from
time to time.  As part of the Computer System, we may require you to obtain
specified computer hardware and/or software, including without limitation a
license to use proprietary software developed by us or others.  Our modification
of such specifications for the components of the Computer System may require you
to incur costs to purchase, lease and/or obtain by license new or modified
computer hardware and/or software, and to obtain service and support for the
Computer System during the term of this Agreement.  You acknowledge that we
cannot estimate the future costs of the Computer System (or additions or
modifications thereto), and that the cost to you of obtaining the Computer
System (or additions or modifications thereto), including software, may not be
fully amortizable over the remaining term of this Agreement.  Nonetheless, you
agree to incur such costs in connection with obtaining the computer hardware and
software comprising the Computer System (or additions or modifications thereto).
 Within sixty (60) days after you receive notice from us, you agree to obtain
the components of the Computer System that we designate and require.  You
further acknowledge and agree that we and our affiliates have the right to
charge a reasonable systems fee for software or systems installation services;
modifications and enhancements specifically made for us or our affiliates that
are licensed to you; and other maintenance and support Computer System-related
services that we or our affiliates furnish to you.  You will have sole
responsibility for: (1) the acquisition, operation, maintenance, and upgrading
of your Computer System; (2) the manner in which your Computer System interfaces
with our computer system and those of third parties; and (3) any and all
consequences that may arise if your Computer System is not properly operated,
maintained, and upgraded.

3.5        Equipment, Furniture, Fixtures, Furnishings and Signs. You agree to
use in the development and operation of the Franchise only those brands, types,
and/or models of equipment, furniture, fixtures, furnishings, and signs we have
approved.

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3.6        Franchise Opening. You agree not to open the Franchise for business
until: (1) all of your obligations under Sections 3.1 through 3.5 have been
satisfied; (2) we determine that the Franchise has been constructed, furnished,
equipped, and stocked with materials and supplies in accordance with plans and
specifications we have provided or approved; (3) you and any of your  employees
whom we require complete our pre-opening Initial Training (as defined herein) to
our satisfaction; (4) the Initial Franchise Fee (as defined herein) and all
other amounts due to us have been paid; (5) you have furnished us with copies of
all insurance policies required by Section 3.18 of this Agreement, or have
provided us with appropriate alternative evidence of insurance coverage and
payment of premiums as we have requested; and (6) we have approved any
marketing, advertising, and promotional materials you desire to use in
connection with your grand opening, as provided in Section 3.7 of this
Agreement.

3.7        Grand Opening Program. You agree to spend the amount set forth in
Exhibit 1 on a grand opening advertising and promotional program for the
Franchise, and use any particular media and advertising agencies we may
designate in connection with such program.  We agree to furnish you such advice
and guidance we deem appropriate with respect to your grand opening advertising
and promotional program, and reserve the right to require that you allow us to
conduct grand opening marketing and advertising on your behalf.  In such event,
you agree to reimburse us for all costs incurred by us in preparing and
implementing the grand opening advertising and promotional program.  

3.8        Standards of Operation and Marketing. Franchisee must operate the
Franchised Business with the highest integrity and good business standards, and
must use his best efforts to enhance, to the satisfaction of Franchisor, the
goodwill associated with the Marks.   All advertising you employ must be
completely factual, in good taste (in our judgment), and conform to the highest
standards of ethical advertising and all legal requirements.  You agree that in
all dealings with us, your customers, your suppliers, and public officials, you
will adhere to the highest standards of honesty, integrity, fair dealing and
ethical conduct.  You further agree to refrain from any business or advertising
practice that may be harmful to the business of the Company, the Franchise, the
Franchise System and/or the goodwill associated with the Marks and other ESIO
franchises.

3.9        No Disparagement.  Franchisee must not disparage to any person,
Franchisor, its employees, representatives or agents, its products or the Marks.

3.10      Approved Suppliers and Vendors.

(a)        We have developed or may develop various unique products or services
that may be prepared according to our formulations.  We have approved, and will
continue to periodically approve, specifications for suppliers and distributors
(which may include us and/or our affiliates) for products or services required
to be purchased by, or offered and sold by ESIO Franchises, that meet our
standards and requirements, including without limitation standards and
requirements relating to product quality, prices, consistency, reliability, and
customer relations.  You agree that the Franchise will: (1) purchase any
required products or services in such quantities as we designate; (2) utilize
such formats, formulae, and packaging for products as we prescribe; and
(3) purchase all designated products and services only from distributors and
other suppliers we have approved.

(b)        We may approve a single distributor or other supplier (collectively
“Supplier”) for any product, and may approve a supplier only as to certain
products.  We may concentrate purchases with one or more suppliers to obtain
lower prices or the best advertising support or services for any group of ESIO
Franchises franchised or operated by us.  Approval of a supplier may be
conditioned on requirements relating to the frequency of delivery, concentration
of purchases, standards of service (including prompt attention to complaints),
or other criteria, and may be temporary, pending our continued evaluation of the
supplier from time to time.

(c)        We or any of our affiliates may be an approved supplier or the only
approved supplier of certain products or services to be purchased by you for use
and/or sale in conjunction with your operation of the Franchised Business.  We
reserve the right to charge any licensed manufacturer engaged by us a royalty to
manufacture products for us, or to receive commissions or rebates from vendors
that supply goods or services to

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you.  We or any affiliates we may have may also derive income from our sale of
products or services to you, and may sell these items at prices exceeding our or
their costs in order to make a profit on the sale.

3.11      Process for Approval of New Suppliers and Vendors.  If you would like
to purchase any items from any unapproved supplier, then you must submit to us a
written request for approval of the proposed supplier.  We have the right to
inspect the proposed supplier’s facilities, and require that product samples
from the proposed supplier be delivered, at our option, either directly to us,
or to any independent, certified laboratory that we may designate, for testing.
 We may charge you a supplier evaluation fee (not to exceed the reasonable cost
of the inspection and the actual cost of the test) to make the evaluation.  We
reserve the right to periodically re-inspect the facilities and products of any
approved supplier, and revoke our approval if the supplier does not continue to
meet any of our criteria.  Franchisee must contract with Franchisor’s approved
vendors to provide credit card and gift card processors and services,
maintenance and service for Franchisee’s equipment and computers (hardware and
software), Internet service, e-mail services and other services designated by
Franchisor.  Franchisee may request that Franchisor add certain vendors or
suppliers to Franchisor’s list of approved vendors and suppliers by notifying
Franchisor in writing.  Franchisor may require Franchisee to submit samples or
specifications for examination or testing, at Franchisee’s expense, to determine
if the supplies or products meet Franchisor’s specifications in such areas as
weight, size, shape, delivery, performance, consistency, warranties, design,
appearance, atmosphere and price.  Franchisor will advise Franchisee of its
approval or denial of approval within 45 days after receipt of all applicable
information.

3.12      Consistency of Franchise Assets.  Franchisee must cause the Franchised
Business and Franchise vehicles, beverage equipment, operating equipment and
goods to be consistent in color, design and style with the standards adopted and
approved by Franchisor from time to time.  Franchisee must maintain the
appearance and atmosphere of the Franchise, vehicles and beverage equipment, and
operating equipment used in connection with the Franchise, in accordance with
the standards that Franchisor may adopt from time to time.  If Franchisor so
requests, Franchisee, at his expense, must remodel and update Franchisee’s
vehicle, inventory, office, and other Franchise assets to Franchisor’s then
current standards.  Any variations in color, design, style, appearance or
atmosphere must be approved in writing by Franchisor.

3.13      Consent to Sharing of Information; Appointment as Attorney in Fact.
Franchisee hereby consents to Franchisor’s (and its representatives’ and
agents’) meetings, communications and solicitations and authorizes his
employees, suppliers, vendors, lenders, equipment lessors and customers to
provide Franchisor any information and/or documents that Franchisor may request,
in its sole discretion, and Franchisee expressly waives any and all rights that
Franchisee may have in connection with the disclosure of that information and
those documents to Franchisor and its representatives and agents, and the use of
that information by Franchisor or its representatives or agents.  Franchisee
will promptly execute such documents, and take such other and further actions,
as Franchisor may request to confirm or effectuate Franchisor’s rights pursuant
to this Section 3.13.  Franchisee irrevocably appoints and constitutes
Franchisor and its designated representatives and agents, with full power of
substitution, as Franchisee’s agent and attorney-in-fact for and on behalf of,
and in Franchisee’s name, and at Franchisee’s expense, to execute such documents
and to take such other and further actions.  This special power of attorney will
be deemed to be coupled with an interest and will be irrevocable.  The
provisions of this Section 3.13 will survive the expiration or termination of
this Agreement.

3.14      Pricing.  As a service to Franchisee and other franchisees of
Franchisor, Franchisor may, but is not obligated to, utilize its experience and
the data obtained from all of its franchisees to establish and maintain a
suggested schedule of prices for products and services of the Franchised
Business.  In addition, Franchisor may establish required maximum prices for
products and services of the Franchised Business and Franchisee will be required
to comply with that maximum pricing schedule.

3.15      Specifications, Standards and Procedures. You agree to comply with all
mandatory specifications, standards, and operating procedures relating to the
appearance, function, and operation of the Franchise.  Any mandatory
specifications, standards, and operating procedures that we prescribe from time
to time in the Operations Manual, or otherwise communicate to you in writing,
will constitute provisions of this Agreement as if

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fully set forth in this Agreement.  All references to “this Agreement” include
all such mandatory specifications, standards, and operating procedures.

3.16      Compliance with Laws and Good Business Practices. You agree to secure
and maintain in force in your name all required licenses, permits and
certificates relating to the operation of the Franchised Business.  You also
agree to operate the Franchised Business in full compliance with all applicable
laws, ordinances, and regulations, including without limitation all government
regulations relating to worker’s compensation insurance, unemployment insurance,
and withholding and payment of federal and state income taxes, social security
taxes, and sales taxes.

3.17      Management and Personnel of the Franchise. Unless we approve your
employment of a General Manager to operate the Franchised Business as provided
in Section 4.2, you or your Operating Principal must actively participate in the
actual, on-site, day-to-day operation of the Franchised Business, and devote
your full-time and best efforts for the efficient operation of the Franchised
Business.  If we agree that you may employ a General Manager, then the General
Manager must fulfill this requirement.  Any General Manager shall each obtain
all licenses and certifications required by law before assuming his or her
responsibilities at the Franchised Business.  You will ensure that your
employees and independent contractors of the Franchised Business have any
licenses as may be required by law, and hold or are pursuing any licenses,
certifications, and/or degrees required by law or by us in the Operations
Manual, as updated from time to time.  You will be exclusively responsible for
the terms of your employees’ and independent contractors’ employment and
compensation, and for the proper training of your employees and independent
contractors in the operation of the Franchise.  You must establish any training
programs for your employees and/or independent contractors that we may prescribe
in writing from time to time.  You must require all employees and independent
contractors to maintain a neat and clean appearance, and conform to the
standards of dress that we specify in the Operations Manual, as updated from
time to time.  Each of your employees and independent contractors must sign a
written agreement, in a form approved by us, to maintain confidential our
Confidential Information, proprietary information, and trade secrets as
described in Section 9.1, and to abide by the covenants not to compete described
in Section 15.5.  You must forward to us a copy of each such signed agreement.
 All of your employees and independent contractors must render prompt, efficient
and courteous service to all customers of the Franchise.  You agree not to
recruit or hire, either directly or indirectly, any employee (or a former
employee, for six (6) months after his or her employment has ended) of any ESIO
Franchisee or Developer franchise operated by us, any affiliates we may have, or
another ESIO Franchise owner without first obtaining the written consent of us,
our affiliate, or the Franchise owner that currently employs (or previously
employed) such employee.  (If you violate this provision, in addition to any
other right or remedy we may have, you agree to pay the employee’s current or
former employer twice the employee’s annual salary, plus all costs and
attorneys’ fees incurred as a result of the violation.  This amount is set at
twice the employee’s annual salary because it is a reasonable estimation of the
damages that would occur from such a breach, and it will almost certainly be
impossible to calculate precisely the actual damages from such a breach.)

3.18      Insurance. Before you open the Franchised Business and during any Term
of this Agreement, you must maintain in force, under policies of insurance
written on an occurrence basis issued by carriers with an A.M. Best rating of
A-VIII or better approved by us, and in such amounts as we may determine from
time to time: (1) comprehensive public, professional, product and motor vehicle
liability insurance against claims for bodily and personal injury, death and
property damage caused by or occurring in conjunction with the operation of the
Franchise or otherwise in conjunction with your conduct of the Franchised
Business pursuant to this Agreement, under one or more policies of insurance
containing minimum liability coverage amounts as set forth in the Operations
Manual; (2) general casualty insurance, including theft, cash theft, fire and
extended coverage, vandalism and malicious mischief insurance, for the
replacement value of the Franchised Business and its contents, and any other
assets related to the operation of the Franchised Business; (3) worker’s
compensation and employer’s liability insurance as required by law, with limits
equal to or in excess of those required by statute; (4) business interruption
insurance for a period adequate to reestablish normal business operations, but
in any event not less than six (6) months; (5) any other insurance required by
applicable law, rule, regulation, ordinance or licensing requirements; and (6)
umbrella liability coverage with limits of not less than $1,000,000/$3,000,000
or

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such other amounts that we may establish in the Operations Manual.  We may
periodically increase or decrease the amounts of coverage required under these
insurance policies, and/or require different or additional kinds of insurance,
including excess liability insurance, to reflect inflation, identification of
new risks, changes in law or standards of liability, higher damage awards, or
other relevant changes in circumstances.  

(a)        Each insurance policy must name us (and, if we so request, our
members, directors, employees, agents, and affiliates) as additional insureds,
and must provide us with 30 days’ advance written notice of any material
modification, cancellation, or expiration of the policy.  Deductibles must be in
reasonable amounts, and are subject to review and written approval by us.  You
must provide us with copies of policies evidencing the existence of such
insurance concurrently with execution of this Agreement and prior to each
subsequent renewal date of each insurance policy, along with certificates
evidencing such insurance.

(b)        Prior to the expiration of the term of each insurance policy, you
must furnish us with a copy of a renewal or replacement insurance policy and
appropriate certificates of insurance.  If you at any time fail or refuse to
maintain any insurance coverage required by us or to furnish satisfactory
evidence thereof, then we, at our option and in addition to our other rights and
remedies under this Agreement, may, but need not, obtain such insurance coverage
on your behalf, and you shall reimburse us on demand for any costs or premiums
paid or incurred by us.

(c)        Notwithstanding the existence of such insurance, you are and will be
responsible for all loss or damage and contractual liability to third persons
originating from or in connection with the operation of the Franchise, and for
all claims or demands for damages to property or for injury, illness or death of
persons directly or indirectly resulting therefrom; and you agree to defend,
indemnify and hold us harmless of, from, and with respect to any such claims,
loss or damage, which indemnity shall survive the termination or expiration and
non-renewal of this Agreement.  In addition to the requirements of the foregoing
paragraphs of this Section 10.8, you must maintain any and all insurance
coverage in such amounts and under such terms and conditions as may be required
in connection with your lease or purchase of the Site.

(d)        Your obligation to maintain insurance coverage as described in this
Agreement will not be reduced in any manner by reason of any separate insurance
we maintain on our own behalf, nor will our maintenance of that insurance
relieve you of any obligations under Section 7 of this Agreement.

3.19      Credit Cards and Other Methods of Payment. You must at all times have
arrangements in existence with Visa, Master Card, American Express and any other
credit and debit card issuers or sponsors, check verification services, and
electronic fund transfer systems that we designate from time to time, in order
that the Franchise may accept customers’ credit and debit cards, checks, and
other methods of payment.  We may require you to obtain such services only
through us or our affiliates or approved third party vendors.

4.          FRANCHISE; OPERATING PRINCIPAL; GUARANTY.

4.1        Operating Principal.  The Franchised Business must be (a) personally
supervised by Franchisee or by a principal of Franchisee selected by Franchisee
who has been approved by Franchisor and who has satisfactorily completed
Franchisor’s Training Program (“Operating Principal”) or (b) directly supervised
“on-site” by a manager who has been approved by Franchisor and who has
satisfactorily completed Franchisor’s Training Program (“General Manager”),
unless Franchisor has waived that requirement. The term “Operating Principal”
means an individual with primary day-to-day responsibility for the Franchise’s
operations, and may or may not be you (if you are an individual) or a Principal,
officer, director, or employee of yours (if you are other than an individual).
 We may or may not require that the General Manager have an equity interest in
the Franchise.

4.2        Supervision of Franchise Business. The Operating Principal or General
Manager will be obligated to devote his or her full time, best efforts, and
constant personal attention to the Franchise’s operations, and must have full
authority from you to implement the System at the Franchise.  You must not hire
any General

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Manager or successor General Manager without first receiving our written
approval of such General Manager’s qualifications.  Each General Manager and
successor General Manager must attend and complete our Initial Training (as
defined herein).  Each General Manager must sign a written agreement, in a form
approved by us, to maintain confidential our Confidential Information described
in Section 9.1, and to abide by the covenants not to compete described in
Section 15.5.  You must forward to us a copy of each such signed agreement.  If
we determine, in our sole discretion, during or following completion of the
Initial Training program, that your General Manager (if any) is not qualified to
act as General Manager of the Franchise, then we have the right to require you
to choose (and obtain our approval of) a new individual for that position.  The
Operating Principal or General Manager must spend at least 40 hours per week
overseeing the operation of the Franchised Business.  The name of the Operating
Principal or General Manager who will supervise the Franchised Business is set
forth on the signature page of this Agreement.  Any changes must be approved by
Franchisor.

4.3        Interests in Franchisee. You and each Principal represent, warrant
and agree that all “Interests” in Franchisee are owned in the amount and manner
described in Exhibit 2.  No Interests in Franchisee will, during the term of
this Agreement, be “public” securities (i.e., securities that require, for their
issuance, registration with any state or federal authority).  (An “Interest” is
defined to mean any shares, membership interests, or partnership interests of
Franchisee and any other equitable or legal right in any of Franchisee’s stock,
revenues, profits, rights or assets.  When referring to Franchisee’s rights or
assets, an “Interest” means this Agreement, Franchisee’s rights under and
interest in this Agreement, any ESIO Franchise, or the revenues, profits or
assets of any ESIO Franchise.)  You and each Principal also represent, warrant,
and agree that no Principal’s Interest has been given as security for any
obligation (i.e., no one has a lien on or security interest in a Principal’s
Interest), and that no change will be made in the ownership of an Interest other
than as expressly permitted by this Agreement or as we may otherwise approve in
writing.  You and each Principal agree to furnish us with such evidence as we
may request from time to time to assure ourselves that the Interests of
Franchisee and each of your Principals remain as permitted by this Agreement,
including a list of all persons or entities owning any Interest, as defined
above.

4.4        Guaranty of Franchisee’s Obligations.  In consideration of, and as an
inducement to, the execution of this Agreement, each Principal of the Franchisee
and their respective spouses shall personally and unconditionally sign our form
of Guaranty and Acceptance of Obligations attached as Exhibit 3, guarantying to
us and our successors and assigns that the Franchisee will punctually pay and
perform each and every undertaking, agreement and covenant set forth in this
Agreement; and agreeing to be personally bound by, and personally liable for the
breach of, each and every provision in this Agreement.  Franchisee shall not
change its ownership structure without complying with all of the terms and
conditions of this Section.  Within ten (10) days of any change in Franchisee’s
ownership structure, Franchisee shall submit a revised Exhibit 2 to us and any
new Principals shall sign our then current form Guaranty and Acceptance of
Obligations.

5.          GUIDANCE; OPERATIONS MANUAL.

5.1        Guidance and Assistance. During the term of this Agreement, we may
from time to time furnish you guidance and assistance with respect to:
(1) specifications, standards, and operating procedures used by ESIO  Franchise
franchises; (2) purchasing approved equipment, furniture, furnishings, signs,
materials and supplies; (3) development and implementation of local advertising
and promotional programs; (4) general operating and management procedures;
(5) establishing and conducting employee training programs for your Franchise;
and (6) changes in any of the above that occur from time to time.  This guidance
and assistance may, in our discretion, be furnished in the form of bulletins,
written reports and recommendations, operations manuals and other written
materials (the “Operations Manual”), and/or telephone consultations and/or
personal consultations at our offices or your Franchise.  If you request—and if
we agree to provide—any additional, special on-site training of your personnel
or other assistance in operating your Franchise, then you agree to pay a daily
training fee in an amount to be set by us, and all expenses we incur in
providing such training or assistance, including any wages or compensation owed
to, and travel, lodging, transportation, and living expenses incurred by, our
Company personnel.

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5.2        Operations Manual. We will provide you with electronic access to our
confidential Operations Manual. It will contain mandatory and suggested
specifications, standards, and operating procedures that we prescribe from time
to time for your Franchise, as well as information relative to other obligations
you have in the operation of the Franchise.  The Operations Manual may be
composed of or include audiotapes, videotapes, computer disks, compact disks,
and/or other written or intangible materials.  We may make all or part of the
Manual available to you through various means, including the Internet or other
reasonable means.  A previously delivered Operations Manual may be superseded
from time to time with replacement materials to reflect changes in the
specifications, standards, operating procedures and other obligations in
operating the Franchise.  You must routinely access and review the Operations
Manual, and if you and we have a dispute over the contents of the Operations
Manual, then our master copy of the Operations Manual will control.  You agree
that you will not at any time copy any part of the Operations Manual, permit it
to be copied, disclose it to anyone not having a need to know its contents for
purposes of operating your Franchise, or share it with anyone without our
permission.  If your access to the Operations Manual is lost or you do not have
internet access that will permit you to access the Operations Manual, then you
must request a written copy from us at our then-applicable charge.

5.3        Modifications to System. We will continually be reviewing and
analyzing developments on the sale and repair of the latest technology products,
and based upon our evaluation of this information, may make changes in the
System, including but not limited to adding new components to services offered
and equipment used and sold by ESIO Franchises.  Moreover, changes in laws
regulating the services offered by ESIO Franchises may (a) require us to
restructure our franchise program, (b) require your General Manager (if any) and
employees to obtain additional licenses or certifications, (c) require you to
retain or establish relationships with additional professionals and specialists,
and/or (d) require you to modify your ownership or organizational structure.
 You agree, at our request, to modify the operation of the Franchise to comply
with all such changes, and to be solely responsible for all related costs.

5.4        Advisory Councils. You agree to participate in, and, if required,
become a member of any advisory councils or similar organizations we form or
organize for ESIO Franchise franchises.

6.         FEES.

6.1        Initial Franchise Fee. In consideration of the rights and franchise
granted Franchisee by this Agreement, assistance, materials and services to be
received by Franchisee from Franchisor, Franchisee agrees to pay Franchisor an
initial fee (“Initial Franchise Fee”) of $29,000 upon the execution of this
Agreement.  Franchisee must pay the Initial Franchise Fee in a lump sum and sign
the Franchise Agreements for all Franchises being purchased upon signing the
first Franchise Agreement to which the purchase corresponds.  Franchisee agrees
the Initial Franchise Fee shall be fully earned by Franchisor upon execution of
this Agreement and cannot, and shall not, be refunded to Franchisee under any
circumstances.

6.2        Royalty Fee. You agree to pay us a Royalty Fee (“Royalty Fee”) on a
monthly basis based upon the chart below.

Year 1

Year 2

Year 3

Year 4

Years 5-10 and

Renewal terms

$400 per month

$800 per month

$1200 per month

$1,600 per month

$2,000 per month

The Royalty Fee will be payable monthly via automatic debit on the day of the
month we specify.  You and we acknowledge and agree that the Royalty Fee
represents compensation paid by you to us for the guidance and assistance we
provide and for the use of our Marks, Confidential Information (as defined
herein), know-how, and other intellectual property we allow you to use under the
terms of this Agreement.  The Royalty Fee does not represent payment for the
referral of customers to you, and you acknowledge and agree that the services we
offer to you and our other ESIO franchisees do not include the referral of
customers.

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6.3        Advertising Fee. Recognizing the value of advertising to the goodwill
and public image of ESIO Franchise franchises, we may, in our sole discretion,
establish, maintain and administer an advertising fund (the “Ad Fund”) for such
advertising as we may deem necessary or appropriate in our sole discretion.
 Once we establish an Ad Fund, you agree to contribute to the Ad Fund an amount
equal to:

Year 1

Year 2

Year 3

Year 4

Years 5-10 and Renewal terms

$100 per month

$200 per month

$300 per month

$400 per month

$500 per month

We will provide you with thirty (30) days’ advance notice of the establishment
of an Ad Fund.  These advertising fees (the “Advertising Fees”) will be payable
monthly via automatic debit at the same time as your Royalty Fees payable under
Section 6.2 above.  A further description of the Ad Fund and your obligations
with respect to advertising and promoting the Franchise is found in Section 11
of this Agreement.

6.4        Grace Period.  The parties agree that for a period ending six months
from the date that Franchisee begins operation of the ESIO Franchised Business
no Royalties or Advertising Fees shall be owed to Franchisor.  For purposes of
this Agreement, Year 1 shall begin on the date six months and one day from the
date the Franchised Business opens for business.  Each subsequent calendar year
shall run from the date one year (365 days) from the beginning of Year 1. If
Year 1 begins in the middle of a calendar month, your first month’s Royalty Fees
and Advertising Fees shall be prorated.

6.5        Interest on Late Payments. All Royalty Fees, Advertising Fees,
amounts due from you for purchases from us or our affiliates, and other amounts
which you owe us or our affiliates (unless otherwise provided for in a separate
agreement between us or our affiliates) will begin to accrue interest after
their respective due dates at the greater of (i) the highest commercial contract
interest rate permitted by state law, or (ii) the rate of fifteen percent (15%)
per annum.  You acknowledge that the inclusion of this Section in this Agreement
does not mean we agree to accept or condone late payments, nor does it indicate
that we have any intention to extend credit to, or otherwise finance your
operation of the Franchise.  We have the right to require that any payments due
to us or any affiliates we may have be made by certified or cashier’s check in
the event that any automatic payment is not honored by the bank upon which the
check is drawn.  We also receive the right to charge you a fee of $100 for any
payment that is not honored by the bank upon which it is drawn.  Payments due us
or our affiliates will not be deemed received until such time as funds from the
deposit of any amount, whether check or automatic debit, is collected from your
account.

6.6        Late Fees.  If Franchisee fails to provide Franchisor or Franchisor’s
Regional Developer any necessary statement, reports, information or
documentation by the applicable deadline, Franchisee must pay Franchisor a fee
in the amount of $100 per delinquent statement, report, information or
documentation per week as long as that that failure continues.

6.7        Electronic Funds Transfer. Franchisee authorizes Franchisor to draw
drafts against Franchisee’s bank accounts for the full amount of the Royalties,
Advertising Fees, and for any other amounts that Franchisee owes to Franchisor
or its Affiliates or Franchisee’s cooperative advertising association (for
example, for promotional materials) pursuant to the Franchise Agreement or any
other agreement between the parties.  Simultaneously with signing this
Agreement, Franchisee must sign a pre-authorization form, in the form attached
as Exhibit J to the Disclosure Document, to enable Franchisor to do so.  In
addition, from time to time at Franchisor’s reasonable request, Franchisee must
sign those other and further documents as Franchisor may require enabling
Franchisor to draw drafts against Franchisee’s bank accounts for such purposes.
 Our use of electronic funds transfers as a method of collecting Royalty Fees
and Advertising Fees due us does not constitute a waiver of any of your
obligations to provide us with reports as provided in Section 12, nor shall it
be deemed a waiver of any of the rights and remedies available to us under this
Agreement.

6.8        Application of Payments. When we receive a payment from you, we have
the right in our sole discretion to apply it as we see fit to any past due
indebtedness of yours due to us or our affiliates, whether for

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Royalty Fees, Advertising Fees, purchases, interest, or for any other reason,
regardless of how you may designate a particular payment should be applied.

6.9        Right of Offset.  Franchisee shall have no rights of offset and may
not withhold any monies due to Franchisor or its affiliates under this Agreement
or any other agreement between Franchisee and Franchisor and/or its affiliates.
Further, Franchisor may offset any amounts payable to Franchisee pursuant to
this Agreement against any unpaid amounts payable to Franchisor or its
Affiliates pursuant to this Agreement or any agreement: (i) executed in
connection with this Agreement; (ii) executed between Franchisor and/or its
Affiliates on one hand and Franchisee, its Principals, Affiliates, or Guarantors
on the other hand.

7.          MARKS

7.1        Ownership and Goodwill of Marks. You acknowledge that your right to
use the Marks is derived solely from this Agreement, and is limited to your
operation of the Franchise pursuant to and in compliance with this Agreement and
all applicable standards, specifications, and operating procedures we prescribe
from time to time during the term of the Franchise.  You understand and
acknowledge that our right to regulate the use of the Marks includes, without
limitation, any use of the Marks in any form of electronic media, such as
Websites (as defined herein) or web pages, or as a domain name or electronic
media identifier.  If you make any unauthorized use of the Marks, it will
constitute a breach of this Agreement and an infringement of our rights in and
to the Marks.  You acknowledge and agree that all your usage of the Marks and
any goodwill established by your use will inure exclusively to our benefit and
the benefit of our affiliates, and that this Agreement does not confer any
goodwill or other interests in the Marks on you (other than the right to operate
the Franchise in compliance with this Agreement).  All provisions of this
Agreement applicable to the Marks will apply to any additional trademarks,
service marks, commercial symbols, designs, artwork, or logos we may authorize
and/or license you to use during the term of this Agreement.

7.2        Limitations on Franchisee’s Use of Marks. You agree to use the Marks
as the sole trade identification of the Franchise, except that you will display
at the Franchise location a notice, in the form we prescribe, stating that you
are the independent owner of the Franchise pursuant to a Franchise Agreement
with us.  You agree not to use any Mark as part of any corporate or trade name
or with any prefix, suffix, or other modifying words, terms, designs, or symbols
(other than logos and additional trade and service marks licensed to you under
this Agreement), or in any modified form.  You also shall not use any Mark or
any commercial symbol similar to the Marks in connection with the performance or
sale of any unauthorized services or products, or in any other manner we have
not expressly authorized in writing.  You agree to display the Marks in the
manner we prescribe at the Franchise and in connection with advertising and
marketing materials, and to use, along with the Marks, any notices of trade and
service mark registrations we specify.  You further agree to obtain any
fictitious or assumed name registrations as may be required under applicable
law.

7.3        Notification of Infringements and Claims. You agree to immediately
notify us in writing of any apparent infringement of or challenge to your use of
any Mark, or claim by any person of any rights in any Mark or similar trade
name, trademark, or service mark of which you become aware.  You agree not to
communicate with anyone except us and our counsel in connection with any such
infringement, challenge, or claim.  We have the right to exclusively control any
litigation or other proceeding arising out of any actual or alleged
infringement, challenge, or claim relating to any Mark.  You agree to sign any
documents, render any assistance, and do any acts that our attorneys say is
necessary or advisable in order to protect and maintain our interests in any
litigation or proceeding related to the Marks, or to otherwise protect and
maintain our interests in the Marks.

7.4        Discontinuance of Use of Marks. If it becomes advisable at any time
in our sole judgment for the Franchise to modify or discontinue the use of any
Mark, or use one or more additional or substitute trade or service marks,
including the Marks used as the name of the Franchise, then you agree, at your
sole expense, to comply with our directions to modify or otherwise discontinue
the use of the Mark, or use one or more additional or substitute trade or
service marks, within a reasonable time after our notice to you.

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7.5        Indemnification of Franchisee. We agree to indemnify you against, and
reimburse you for, all damages for which you are held liable in any trademark
infringement proceeding arising out of your use of any Mark pursuant to and in
compliance with this Agreement, and for all costs you reasonably incur in the
defense of any such claim in which you are named as a party, so long as you have
timely notified us of the claim, and have otherwise complied with this
Agreement.  At our option, we may defend and control the defense of any
proceeding relating to any Mark.

8.          RELATIONSHIP OF THE PARTIES; INDEMNIFICATION.

8.1        Independent Contractor; No Fiduciary Relationship. Both you and we
understand and agree that this Agreement does not create a fiduciary
relationship between you and us, that you and we are independent contractors,
and that nothing in this Agreement is intended to make either party a general or
special agent, joint venturer, partner, or employee of the other for any purpose
whatsoever.  You agree to conspicuously identify yourself in all your dealings
with customers, suppliers, public officials, Franchise personnel, and others as
the owner of the Franchise pursuant to a Franchise Agreement with us, and to
place any other notices of independent ownership on your forms, business cards,
stationery, advertising, and other materials as we may require from time to
time.

8.2        No Liability, No Warranties.  We have not authorized or empowered you
to use the Marks except as provided by this Agreement, and you agree not to
employ any of the Marks in signing any contract, check, purchase agreement,
negotiable instrument or legal obligation, application for any license or
permit, or in a manner that may result in liability to us for any indebtedness
or obligation of yours.  Except as expressly authorized by this Agreement,
neither you nor we will make any express or implied agreements, warranties,
guarantees or representations, or incur any debt, in the name of or on behalf of
the other, or represent that your and our relationship is other than that of
franchisor and franchisee.

8.3        Indemnification by You.  You agree to indemnify, defend, and hold us,
any affiliates, subsidiaries, and parents, we may have, and our and their
respective owners, directors, officers, shareholders, employees, insurers,
agents, successors, and assigns (individually, an “Indemnified Party,” and
collectively, the “Indemnified Parties”), harmless against, and to reimburse
such Indemnified Parties for, all such liabilities, obligations, damages, and
taxes for which any Indemnified Party may be held liable, and for all costs the
Indemnified Party reasonably may incur in the defense of any such claim brought
against the Indemnified Party, or in any such action in which the Indemnified
Party may be named as a party, including without limitation actual and
consequential damages; reasonable attorneys’, accountants’, and/or expert
witness fees; cost of investigation and proof of facts; court costs; other
litigation expenses; and travel and living expenses.  Each Indemnified Party
may, at its sole option, either: (a) permit you to conduct the defense or
prosecution of the matter at your sole cost; or (2) assume control of the
defense or prosecution, in which case all expenses will be paid or reimbursed by
you.

(b)        You further agree to hold us harmless and indemnify and defend us for
all costs, expenses, and/or losses we incur in enforcing the provisions of this
Agreement, defending our actions taken relating to this Agreement, or resulting
from your breach of this Agreement, including without limitation reasonable
arbitrator’s and attorneys’ fees (including those for appeal), unless, after
legal proceedings are completed, you are found to have fulfilled and complied
with all of the terms of this Agreement.  Your indemnification obligations
described above will continue in full force and effect after, and
notwithstanding, the expiration or termination of this Agreement.

(c)        We assume no liability related to any agreements, representations, or
warranties you make that are not expressly authorized under this Agreement, nor
will we be obligated for any damages to any person or property directly or
indirectly arising out of the operation of the business you conduct pursuant to
this Agreement, whether or not caused by your negligent or willful action or
failure to act.  We will have no liability for any sales, use, excise, income,
gross receipts, property, or other taxes levied against you or your assets, or
on us, in connection with the business you conduct, or any payments you make to
us pursuant to this Agreement.

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9.          CONFIDENTIAL INFORMATION

9.1.       Types of Confidential Information. We possess certain unique
confidential and proprietary information and trade secrets consisting of the
following categories of information, methods, techniques, products, and
knowledge developed by us, including but not limited to: (1) services and
products offered and sold at ESIO franchises; (2) knowledge of sales and profit
performance of any one or more ESIO franchises; (3) knowledge of sources of
products sold at ESIO franchises, advertising and promotional programs;
(4) methods, techniques, formats, specifications, procedures, information,
systems, and knowledge of, and experience in, the development, operation, and
franchising of ESIO franchises; (5) the selection and methods of training
employees; and (6) patents, copyrights, trademarks, service marks, patentable
materials, copyrightable materials, and other trade secrets and proprietary
information.  We will disclose much of the above-described information to you in
advising you about Site selection, providing our Initial Training, the
Operations Manual, and providing guidance and assistance to you under this
Agreement.  In addition, in the course of the operation of your Franchise, you
or your employees may develop ideas, concepts, methods, or techniques of
improvement relating to the Franchise that you agree to disclose to us, and that
we may then authorize you to use in the operation of your Franchise, and may use
or authorize others to use in other ESIO franchises owned or franchised by us or
our affiliates.  (Any such information disclosed to or developed by you will be
referred to in this Agreement as “Confidential Information”.)

9.2.       Non-Disclosure Agreement. You agree that your relationship with us
does not vest in you any interest in the Confidential Information, other than
the right to use it in the development and operation of the Franchise, and that
the use or duplication of the Confidential Information in any other business
would constitute an unfair method of competition.  You acknowledge and agree
that the Confidential Information belongs to us, may contain trade secrets
belonging to us, and is disclosed to you or authorized for your use solely on
the condition that you agree, and you therefore do agree, that you (1) will not
use the Confidential Information in any other business or capacity; (2) will
maintain the absolute confidentiality of the Confidential Information during and
after the term of this Agreement; (3) will not make unauthorized copies of any
portion of the Confidential Information disclosed in written form, or any other
form that may be copies or duplicated; and (4) will adopt and implement all
reasonable procedures we may prescribe from time to time to prevent unauthorized
use or disclosure of the Confidential Information, including without limitation
restrictions on disclosure to your employees, and the use of non-disclosure and
non-competition agreements we may prescribe or approve for your shareholders,
partners, members, officers, directors, employees, independent contractors, or
agents who may have access to the Confidential Information.

9.3.       Agreement to Not Compete.  During the term of this Agreement, neither
you, any of your Principals, nor any member of your Principal’s immediate family
will have any direct or indirect interest (e.g., through a spouse) as a
disclosed or beneficial owner, investor, partner, director, officer, controlling
shareholder, employee, consultant, representative or agent, or in any other
capacity, in a Competitive Business (defined below), whether located within or
outside the Protected Territory, without our prior written consent.

10.        ADVERTISING.

10.1      By Company.

(a)        We may, at any time upon thirty (30) days written notice to you,
establish, maintain, and administer an Ad Fund to support and pay for national,
regional, or local marketing programs that we deem necessary, desirable, or
appropriate to promote the good will and image of all ESIO Franchise franchises.
 If an Ad Fund is created, you will contribute a monthly Advertising Fee as set
forth in Section 6.3.  Any Franchises owned by us or any affiliates will
contribute to the Ad Fund on at least the same basis as you do.

(b)        We have the exclusive right to direct all advertising programs
financed by the Ad Fund, with sole and absolute discretion over the creative
concepts, materials, and endorsements used in them, and the

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geographic, market, and media placement and allocation of the programs.  Among
the programs, concepts, and expenditures for which we may utilize the Ad Fund
monies are:  (i) creative development and production of print ads, commercials,
radio spots, point of purchase materials, direct mail pieces, door hangers, and
other advertising and promotional materials; (ii) creative development,
preparation, production and placement of video, audio, and written materials and
electronic media; (iii) media placement and buying, including all associated
expenses and fees; (iv) administering regional and multi-regional marketing and
advertising programs; (v) market research and customer satisfaction surveys,
including the use of secret shoppers; (vi) the creative development of, and
actual production associated with, premium items, giveaways, promotions,
contests, public relation events, and charitable or nonprofit events;
(vii) creative development of new program offerings; (h) recognition and awards
events and programs; (viii) system recognition events, including periodic
national and regional conventions and meetings; (ix) Website, extranet and/or
intranet development and maintenance; (x) development, implementation, and
maintenance of an electronic commerce Website and reservation system and/or
related strategies; (xi) retention and payment of advertising and promotional
agencies and other outside advisors including retainer and management fees; and
(xii) public relations and community involvement activities and programs.

(c)        The Ad Fund will be accounted for separately from other funds of the
Company, and will not be used to defray any of our general operating expenses,
except for any reasonable salaries, administrative costs, and overhead we may
incur in activities reasonably related to the administration, development, and
operations of the Ad Fund and its advertising programs (including without
limitation conducting market research, preparing advertising and marketing
materials, and collecting and accounting for contributions to the Ad Fund).  We
may spend in any fiscal year an amount greater or less than the total
contributions to the Ad Fund in that year.  We and our affiliates may be
reimbursed by the Ad Fund for administrative expenses directly related to the Ad
Fund’s marketing programs, including without limitation, conducting market
research, preparing advertising and marketing materials, and collecting and
accounting for contributions to the Ad Fund.  We may use the Ad Fund to pay the
administrative costs of the Ad Fund including managing the advertising,
marketing, and promotional programs and payment of outside suppliers utilized by
the Ad Fund, and we may use the Ad Fund to pay the reasonable salaries and
benefits of personnel (including our personnel and our affiliates’ personnel)
who manage and administer the Ad Fund.  We may use the Ad Fund to pay for other
administrative costs, travel expenses of personnel while they are on Ad Fund
business, meeting costs, overhead relating to Ad Fund business, and other
expenses that we incur in activities reasonably related to administering or
directing the Ad Fund and its programs.  We will prepare an annual statement of
monies collected and costs incurred by the Ad Fund and will make it available to
you on written request.  

(d)        You understand and acknowledge that the Ad Fund will be intended to
maximize recognition of the Marks and patronage of ESIO Franchises.  Although we
will endeavor to use the Ad Fund to develop advertising and marketing materials,
and to place advertising in a manner that will benefit all ESIO Franchises, we
undertake no obligation to ensure or make any representations that expenditures
by the Ad Fund in or affecting any geographic area will be proportionate or
equivalent to contributions to the Ad Fund by ESIO Franchise franchises
operating in that geographic area, or that any ESIO Franchises will benefit
directly or in proportion to its contribution to the Ad Fund from the
development of advertising and marketing materials or the placement of
advertising.  Except as expressly provided in this Section, we assume no direct
or indirect liability or obligation to you with respect to the maintenance,
direction, or administration of the Ad Fund.  

(e)        We will have the right to terminate the Ad Fund by giving you thirty
(30) days’ advance written notice.  All unspent monies on date of termination
will be divided between the Company and the contributing ESIO Franchise
franchisees in proportion to our and their respective contributions.  At any
time thereafter, we will have the right to reinstate the Ad Fund under the same
terms and conditions as described in this Section (including the rights to
terminate and reinstate the Ad Fund) by giving you thirty (30) days’ advance
written notice of reinstatement.  

10.2      By Franchisee. You agree not to use any advertising or promotional
materials that we have not preapproved in writing.  You will be solely
responsible and liable to ensure that all advertising, marketing, and

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promotional materials and activities you prepare comply with applicable,
federal, state, and local law and regulations, and the condition of any
agreements or orders to which you may be subject.

10.3.     Local and Regional Advertising Cooperatives. You agree that we may, in
our sole discretion, designate any geographic area for purposes of establishing
a local or regional advertising cooperative (a “Co-op”).  We may also require
that any Co-op be changed, dissolved or merged.  You and we agree that if we
established a Co-op that includes all or a portion of your Protected Territory,
participation by you in that Advertising Co-op with other ESIO Franchises 1is
mandatory.  In such an event, you will execute any membership agreement that we
may require, which will be consistent for each Co-op member.  You agree that the
following provisions will apply to each Co-op:

(a)        We may, but have no obligation to, require that the Co-op operate
from written governing documents;

(b)        Each Co-op will be administered by ESIO Franchise franchisees who are
members of the Co-op, as duly elected by participating franchisees;

(c)        No promotional or advertising plans may be used by a Co-op without
our prior written approval.  All plans and materials must be submitted to us in
the process described in this Agreement and the Operations Manual;

(d)        Each Co-op will have the right to require its members to make
contributions to the Co-op in an amount the Co-op solely determines; and

(e)        Each Co-op must prepare annual financial statements that are
available for review by us and the members of the Co-op.

10.4.     Websites. You agree to maintain a microsite connected to and in
conformity with our Website.  Your microsite (as defined below) will be deemed
“advertising” under this Agreement, and will be subject to, among other things,
the need to obtain our prior written approval in accordance as to content and
substance as set forth in this Agreement.  As used in this Agreement, the term
“microsite” means an interactive Franchise specific electronic document(s),
contained in a network of computers linked by communications software that you
operate or authorize others to operate, and that refers to the Franchise, the
Marks, us, and/or the System.  In connection with your microsite, you agree to
the following:

(a)        In addition to any other applicable requirements, you will comply
with our standards and specifications for microsites and/or websites as we
prescribe in the Operations Manual or otherwise in writing.

(b)        You will establish your microsite as part of our Website and/or
establish electronic links to our Website

(c)        You will not establish or use any other website without our prior
written approval.

(d)        If you propose any material revision to the microsite or any of the
information contained in the microsite, you will submit each such revision to us
for our prior written approval.

11.        ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS.  YOU AGREE TO ESTABLISH
AND MAINTAIN AT YOUR OWN EXPENSE BOOKKEEPING, ACCOUNTING, AND RECORD KEEPING
SYSTEMS CONFORMING TO THE REQUIREMENTS, DATA PROCESSING, AND REGISTER SYSTEMS
AND FORMATS, IF ANY, WHICH WE PRESCRIBE FROM TIME TO TIME.  THESE SYSTEMS MAY
INCLUDE THE CAPABILITY OF BEING POLLED BY OUR CENTRAL COMPUTER SYSTEM, WHICH YOU
AGREE TO PERMIT.  WITH RESPECT TO THE OPERATION AND FINANCIAL CONDITION OF THE
FRANCHISE, YOU AGREE TO FURNISH US IN THE FORM WE PRESCRIBE FROM TIME TO

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TIME: (1) BY THE DAY OF EACH MONTH THAT WE MAY SPECIFY, A PROFIT AND LOSS
STATEMENT FOR THE PRECEDING CALENDAR MONTH, AND A YEAR-TO-DATE PROFIT AND LOSS
STATEMENT AND BALANCE SHEET; (2) WITHIN NINETY (90) DAYS AFTER THE END OF YOUR
FISCAL YEAR, A FISCAL YEAR-END BALANCE SHEET, AND AN ANNUAL PROFIT AND LOSS
STATEMENT FOR THAT FISCAL YEAR, REFLECTING ALL YEAR-END ADJUSTMENTS; AND
(3) SUCH OTHER REPORTS AS WE PRESCRIBE FROM TIME TO TIME.  YOU MUST SPECIFY AND
SIGN EACH REPORT AND FINANCIAL STATEMENT REQUIRED BY THIS SECTION IN THE MANNER
WE PRESCRIBE.  IF WE DO NOT RECEIVE ANY REPORT BY THE ESTABLISHED DEADLINE, THEN
YOU MUST PAY TO US A NON-REFUNDABLE LATE FEE OF $100.00.  ADDITIONAL LATE FEES
OF $100.00 PER WEEK WILL BE ASSESSED FOR EACH WEEK THEREAFTER THAT THE REPORT IS
NOT SUBMITTED.  YOU AGREE TO MAINTAIN AND FURNISH UPON OUR REQUEST COMPLETE
COPIES OF FEDERAL AND STATE INCOME TAX RETURNS YOU FILE WITH THE INTERNAL
REVENUE SERVICE AND STATE TAX DEPARTMENTS, REFLECTING REVENUES AND INCOME OF THE
FRANCHISE OR THE CORPORATION, PARTNERSHIP, OR LIMITED LIABILITY COMPANY THAT
HOLDS THE FRANCHISE.  WE RESERVE THE RIGHT TO REQUIRE YOU TO HAVE AUDITED OR
REVIEWED FINANCIAL STATEMENTS PREPARED BY A CERTIFIED PUBLIC ACCOUNTANT ON AN
ANNUAL BASIS.

12.        INSPECTIONS AND AUDITS.

12.1      Company’s Right to Inspect the Franchise. To determine whether you and
the Franchise are complying with this Agreement and the specifications,
standards, and operating procedures we prescribe for the operation of the
Franchise, we or our agents have the right, at any reasonable time and without
advance notice to you, to:  (1) inspect the Site or any equipment used by the
Franchisee in operating the Franchise; (2) observe the operations of the
Franchise for such consecutive or intermittent periods as we deem necessary;
(3) interview personnel of the Franchise; (4) interview customers of the
Franchise; (5) inspect and copy any books, records and documents relating to the
operation of the Franchise; and (6) to evaluate the Franchise by performing core
business reviews and operation standards reviews.  You agree to fully cooperate
with us in connection with any of those inspections, observations, reviews, and
interviews.  You agree to present to your customers any evaluation forms we
periodically prescribe, and agree to participate in, and/or request that your
customers participate in, any surveys performed by or on our behalf.  Based on
the results of any such inspections and audits and your other reports, we may
provide to you such guidance and assistance in operating your Franchise as we
deem appropriate.

12.2      Company’s Right to Audit. We have the right at any time during
business hours, and without advance notice to you, to inspect and audit, or
cause to be inspected and audited, the business records, bookkeeping and
accounting records, sales and income tax records and returns and other records
of the Franchise, and the books and records of any corporation, limited
liability company, or partnership that holds the Franchise.  You agree to fully
cooperate with our representatives and any independent accountants we may hire
to conduct any inspection or audit.  If the inspection or audit is necessary
because of your failure to furnish any reports, supporting records, other
information or financial statements as required by this Agreement, or to furnish
such reports, records, information, or financial statements on a timely basis,
then you agree to pay us all monies owed, plus interest, and reimburse us for
the cost of such inspection or audit, including without limitation any
attorneys’ fees and/or accountants’ fees we may incur, and the travel expenses,
room and board, and applicable per diem charges for our employees.  The above
remedies are in addition to all our other remedies and rights under this
Agreement or under applicable law.

13.        TRANSFERS.

13.1      Transfer by Us. You acknowledge and represent: (i) that we maintain a
staff to manage and operate the System and that staff members can change as
employees come and go; (ii) you have not signed this Agreement in reliance on
any particular owner, director, officer, or employee remaining with us in that
capacity; (iii)  we have the absolute, unrestricted right, exercisable at any
time to change our ownership or form and/or transfer and assign all or any part
of our rights and obligations under this Agreement to any person or legal entity

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without your consent; (iv) we may also cause a subsidiary or affiliate of ours
to perform any or all of our obligations and exercise any or all of our rights
under this Agreement and under any Franchise Agreement; (v) we may assign our
rights under this Agreement and any other agreement between you and us to any
third party, without your consent or approval as long as such third party
expressly assumes our obligations under this Agreement; (vi) after our transfer
or assignment of this Agreement to a third party who expressly assumes the
obligations under this Agreement, we shall have no further obligations to
perform under this Agreement.

13.2      Transfer by You.

(a)        Definition of Transfer.  As used in this Agreement the term
“Transfer” means any voluntary, involuntary, direct or indirect assignment,
sale, gift, exchange, grant of a security interest, or occurrence of any other
event which would or might change the ownership of any Interest, and includes,
without limitation:  (1) the Transfer of ownership of capital stock, partnership
interest or other ownership interest; (2) merger or consolidation, or issuance
of additional securities representing an ownership interest in Franchisee;
(3) sale of common  stock of Franchisee sold pursuant to a private placement or
registered public offering; (4) Transfer of an Interest in a divorce proceeding
or otherwise by operation of law; or (5) Transfer of an Interest by will,
declaration of or transfer in trust, or under the laws of intestate succession.

(b)        Organization. If you are a corporation, partnership or limited
liability company (or if this Agreement is assigned to a corporation,
partnership or limited liability company with our approval), you represent and
warrant to us that you are and will continue to be throughout the term of this
Agreement, duly organized and validly existing in good standing under the laws
of the state of your incorporation, registration or organization, that you are
qualified to do business and will continue to be qualified to do business
throughout the term of this Agreement in all states in which you are required to
qualify, that you have the authority to execute, deliver and carry out all of
the terms of this Agreement, and that during the term of this Agreement the only
business you (i.e., the corporate, partnership or limited liability entity) will
conduct will be the development, ownership and operation of the Franchise.

(c)        No Transfer Without Our Approval. You understand and acknowledge that
the rights and duties created by this Agreement are personal to you and that we
have entered into this Agreement in reliance on the individual or collective
character, skill, aptitude, attitude, business ability, and financial capacity
of you and your Principals.  Accordingly, neither this Agreement nor any part of
your interest in it, nor any Interest (as defined in Section 4.3) of Franchisee
or a Principal, may be Transferred (see definition below) without our advance
written approval.  Any Transfer that is made without our approval will
constitute a breach of this Agreement and convey no rights to or interests in
this Agreement, you, the Franchise, or any other ESIO franchise.

(d)        We will not unreasonably withhold consent to a Transfer of an
Interest by a Principal to a member of his or her immediate family or to your
key employees, so long as all Principals together retain a “controlling
Interest” (i.e., the minimum ownership percentage listed in Exhibit 2), although
we reserve the right to impose reasonable conditions on the Transfer as a
requirement for our consent.

13.3      Conditions for Approval of Transfer. If you and your Principals are in
full compliance with this Agreement, we will not unreasonably withhold our
approval of a Transfer that meets all the applicable requirements of this
Section 13.  The person or entity to whom you wish to make the Transfer, or its
principal owners (“Proposed New Owner”), must be individuals of good moral
character and otherwise meet our then applicable standards for ESIO Franchise
franchisees.  If you propose to

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Transfer this Agreement, the Franchise or its assets, or any Interest, or if any
of your Principals proposes to Transfer a controlling Interest in you or make a
Transfer that is one of a series of Transfers which taken together would
constitute the Transfer of a controlling Interest in you, then all of the
following conditions must be met before or at the time of the Transfer:

(a)        the Proposed New Owner must have sufficient business experience,
aptitude, and financial resources to operate the Franchise, as determined by the
sole discretion of the franchisor;

(b)        you must pay any amounts owed to us and our affiliates;

(c)        the Proposed New Owner’s directors and such other personnel as we may
designate must have successfully completed our Initial Training program, and
shall be legally authorized and have all licenses necessary to perform the
services offered by the Franchise.  The Proposed New Owner shall be responsible
for any wages and compensation owed to, and the travel and living expenses
(including all transportation costs, room, board and meals) incurred by, the
attendees who attend the Initial Training program;

(d)        if your lease for the Site requires it, the lessor must have
consented to the assignment of the lease of the Site to the Proposed New Owner;

(e)        you must pay us a Transfer fee equal to $1,500 and must reimburse us
for any reasonable expenses incurred by us in investigating and processing any
Proposed New Owner where the Transfer is not consummated for any reason;

(f)        you and your Principals and your and their spouses must execute a
general release (in a form satisfactory to us) of any and all claims you and/or
they may have against us, our affiliates, and our and our affiliates’ respective
officers, directors, employees, and agents;

(g)        we must approve the material terms and conditions of the proposed
Transfer, including without limitation that the price and terms of payment are
not so burdensome as to adversely affect the operation of the Franchise;

(h)        the Franchise shall have been placed in an attractive, neat and
sanitary condition.

(i)         you and your Principals (or, in the case of Principals making any
such Transfer, those Principals) must execute a non-competition agreement in
favor of both the Company and the Proposed New Owner agreeing that for a period
of twelve (12) months from the date of the Transfer you (or, in the case of
Principals making any such Transfer, those Principals) will not have any direct
or indirect interest as a disclosed or beneficial owner, investor, partner,
director, officer, manager, employee, consultant, representative, or agent, or
in any other capacity, in any business (1) offering or selling products or
services the same as or similar to the services offered or sold by the ESIO
Franchise or by any other ESIO Franchise or affiliate, and (2) located within a
twenty (25) mile radius of the Protected Territory of the ESIO Franchise, or any
other ESIO franchises then in existence, or the Protected Territory for which an
ESIO Franchise has been approved.

(j)         you and your Principals must enter into an agreement with us
providing that all obligations of the Proposed New Owner to make installment
payments of the purchase price (and any interest on it) to you or your
Principals will be subordinate to the obligations of the Proposed New Owner to
pay any amounts payable under this Agreement or any new Franchise Agreement that
we may require the Proposed New Owner to sign in connection with the Transfer.

(k)        the Franchise shall have been determined by us to contain all
equipment and fixtures in good working condition, as were required at the
initial opening of the Franchise.  The Proposed New Owner shall have agreed, in
writing, to make such reasonable capital expenditures to remodel, equip,
modernize and

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redecorate the interior and exterior of the Site in accordance with our then
existing plans and specifications for an ESIO Franchise, and shall have agreed
to pay our expenses for plan preparation or review, and Site inspection.

(l)        Upon receiving our consent for the Transfer or sale of the Franchise,
the Proposed New Owner shall agree to assume all of your obligations under this
Agreement in a form acceptable to us, or, at our option, shall agree to execute
a new Franchise Agreement with us in the form then being used by us.  We may, at
our option, require that you guarantee the performance, and obligations of the
Proposed New Owner.

(m)        You must have properly offered us the opportunity to exercise our
right of first refusal as described below, and we must have then declined to
exercise it.

13.4      Right of First Refusal.

(a)        If you or any of your Principals wishes to Transfer any Interest, we
will have a right of first refusal to purchase that Interest as follows.  The
party proposing the Transfer (the “transferor”) must obtain a bona fide,
executed written offer (accompanied by a “good faith” earnest money deposit of
at least five percent (5%) of the proposed purchase price) from a responsible
and fully disclosed purchaser, and must submit an exact copy of the offer to us.
 You also agree to provide us with any other information we need to evaluate the
offer, if we request it within fifteen (15) days of receipt of the offer.  We
have the right, exercisable by delivering written notice to the transferor
within thirty (30) days from the date of last delivery to us of the offer and
any other documents we have requested, to purchase the Interest for the price
and on the terms and conditions contained in the offer, except that we may
substitute cash for any form of payment proposed in the offer, and will not be
obligated to pay any “finder’s” or broker’s fees that are a part of the proposed
Transfer.  We also will not be required to pay any amount for any claimed value
of intangible benefits, for example, possible tax benefits that may result by
structuring and/or closing the proposed Transfer in a particular manner or for
any consideration payable other than the bona fide purchase price for the
Interest proposed to be transferred.  (In fact, we may in our sole and absolute
discretion withhold consent to any proposed Transfer if the offer directly or
indirectly requires payment of any consideration other than the bona fide
purchase price for the Interest proposed to be transferred.)  Our credit will be
deemed equal to the credit of any other proposed purchaser, and we will have at
least sixty (60) days to prepare for closing.  We will be entitled to all
customary representations and warranties given purchasers in connection with
such sales.  If the proposed Transfer includes assets not related to the
operation of the Franchise, we may purchase only the assets related to the
operation of the Franchise or may also purchase the other assets.  (An equitable
purchase price will be allocated to each asset included in the Transfer.)

(b)        If we do not exercise our right of first refusal, the transferor may
complete the sale to the Proposed New Owner pursuant to and on the terms of the
offer, as long as we have approved the Transfer as provided in this Section 13.
 You must immediately notify us of any changes in the terms of an offer.  Any
material change in the terms of an offer before closing will make it a new
offer, revoking any previous approval or previously made election to purchase
and giving us a new right of first refusal effective as of the day we receive
formal notice of a material change in the terms.  If the sale to the Proposed
New Owner is not completed within one hundred (120) days after we have approved
the Transfer, our approval of the proposed Transfer will expire.  Any later
proposal to complete that proposed Transfer will be deemed a new offer, giving
us a new right of approval and right of first refusal effective as of the day we
receive formal notice of the new (or continuing) proposal.  We will not exercise
a right of first refusal with respect to a proposed Transfer of less than a
controlling interest to a member of a Principal’s immediate family or to your
key employees.

13.5      Death and Disability.  Upon the death or permanent disability of you
or a Principal, the executor, administrator, conservator or other personal
representative of the deceased or disabled person must show due diligence and
Transfer the deceased or disabled person’s Interest within a reasonable time,
not to exceed twelve (12) months from the date of death or permanent disability,
to a person we have approved.  Such Transfers, including without limitation
transfers by a will or inheritance, will be subject to all the terms and
conditions for

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assignments and Transfers contained in this Agreement.  Failure to so dispose of
an Interest within the twelve (12) month period of time will constitute grounds
for termination of this Agreement.

13.6      Effect of Consent to Transfer.  Our consent to a proposed Transfer
pursuant to this Section 13 will not constitute a waiver of any claims we may
have against you or any Principal, nor will it be deemed a waiver of our right
to demand exact compliance with any of the terms or conditions of this Agreement
by the Proposed New Owner.

14.        TERMINATION OF THE FRANCHISE.

14.1      Termination Without Cure Period.  In addition to the grounds for
termination that may be stated elsewhere in this Agreement, we may terminate
this Agreement and the rights granted by this Agreement, upon written notice to
you without an opportunity to cure upon the occurrence of any of the following
events:

(a)        You do not develop or open the Franchise as provided in this
Agreement;

(b)        You abandon, surrender, transfer control of, lose the right to occupy
the Site of, or do not actively operate the Franchisee for three (3) or more
consecutive days (or three (3) or more days in any 30 day period), or your lease
for or purchase of the location of the Franchise is terminated for any reason;

(c)        You or your Principals misrepresent or commit fraud in connection
with, any information contained in an application for a franchise, or in any
other oral or written information communicated to Franchisor;

(d)        You or your Principals assign or Transfer this Agreement, any
Interest, the Franchise, or assets of the Franchise without complying with the
provisions of Section 13;

(e)        You express to us or any third party the intent to file for
bankruptcy protection under any article of the United States Bankruptcy Code,
become insolvent or make a general assignment for the benefit of creditors.
 Termination pursuant to Section 14.1 (e) shall be effective immediately upon
your communication of your intent to take any action described in this Section;

(f)        You use, sell, distribute or give away any unauthorized services or
products;

(g)        You or any of your Principals are convicted of or plead no contest to
a felony or are convicted or plead no contest to any crime or offense that is
likely to adversely affect the reputation of the Company, the Franchise, and/or
the goodwill associated with the Marks;

(h)        You or any of your Principals fail to comply with any other provision
of this Agreement or any mandatory specification, standard, or operating
procedure within twenty (20) days after written notice of such failure to comply
is given to you; or

(i)         You or any of your Principals fail on three (3) or more separate
occasions within any twelve (12) consecutive month period to submit when due any
financial statements, reports or other data, information, or supporting records;
pay when due any amounts due under this Agreement; or otherwise fail to comply
with this Agreement, whether or not such failures to comply are corrected after
notice is given to you or your Principals.

(j)         If Franchisee conducts the Franchised Business in a manner that may
adversely affect the goodwill or reputation of Franchisor, its products and
services or the Marks and, in Franchisor’s sole discretion, that damage is not
curable. Termination will be effective immediately upon notice.

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14.2      Termination Following Expiration of Cure Period. Except for those
items listed in Section 14.1 or those that specify a different specific cure
period, you will have 30 days after written receipt of notice of default from us
within which to remedy any default and provide evidence of that remedy to us.
 If any default is not cured within that time, this Agreement will terminate
without further notice to you effective immediately upon expiration of that
time, unless we notify you otherwise in writing.  You will be in default under
this Section 14.2 for any failure to materially comply with any of the
requirements imposed by this Agreement, the Manual or otherwise in writing, or
to carry out the terms of this Agreement in good faith.

(a)        If Franchisee fails to pay Franchisor any money owed to it pursuant
to this Agreement or any other Agreement between Franchisor (and its Affiliates)
and Franchisee and such failure is not cured within ten (10) days of Franchisor
providing Franchisee with written notice of such monetary default;

(b)        If Franchisee (or its Principals, officers, managers or employees)
fails to perform any obligation under this Agreement (other than a monetary
default described in Section 14.2(a)), or any other agreement with Franchisor or
its Affiliates; provided, however, that the failure is curable (in Franchisor’s
discretion).  Termination will be effective immediately upon notice, unless that
failure is curable, in which event, termination will be effective upon the 30th
day after that notice, unless that failure is cured.

(c)        If Franchisee loses, or fails to obtain or maintain, any permit or
license necessary to operate the Franchised Business.  Termination will be
effective upon either of the following, at Franchisor’s election: (i) the date
that that permit or license is lost or denied or (ii) the date 30 days after
Franchisor has provided notice of termination to Franchisee, unless Franchisee
has obtained or regained that permit or license within 30 days after Franchisor
has provided notice of termination to Franchisee.

(d)        If any involuntary lien exceeding $10,000 is placed on Franchisee’s
business assets and is not promptly (but in any event within 30 days) removed or
bonded against.  Termination will be effective immediately upon notice to
Franchisee by Franchisor.

(e)        If Franchisee conducts the Franchised Business in a manner that may
adversely affect the goodwill or reputation of Franchisor, its products and
services or the Marks and, in Franchisor’s sole discretion, that damage is
curable, Franchisee will have 30 days within which to cure that damage.
Termination will be effective upon the 30th day after that notice, unless that
damage is cured.

(f)        If you or any of your employees violate any health or safety law,
ordinance or regulation, or operate the Franchise in a manner that presents a
health or safety hazard to your customers or the public and fail to begin to
correct such noncompliance or violation immediately or fails to completely
correct such noncompliance or violation within 24 hours after Franchisor has
provided notice of such noncompliance or violation to Franchise;

(g)        If Franchisee refuses or fails to allow Franchisor access to the
Franchise and such refusal or failure has not been cured within 24 hours after
Franchisor has sought access.  Termination will be effective immediately upon
notice to Franchisee, without any opportunity to cure.

14.3      Illegality.  In addition, if, in the opinion of our legal counsel, any
provision of this Agreement is contrary to law, then you and we agree to
negotiate in good faith an amendment that would make this Agreement conform to
the applicable legal requirements.  If you and we are unable to reach such an
agreement, or if fundamental changes to this Agreement are required to make it
conform to the legal requirements, then we reserve the right to terminate this
Agreement upon notice to you, in which case all of post-termination obligations
set forth in Section 15 shall apply.

15.        RIGHTS AND OBLIGATIONS OF FRANCHISOR AND FRANCHISE OWNER UPON
TERMINATION OR EXPIRATION OF THE FRANCHISE.

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15.1      Payment of Amounts Owed to Franchisor. You agree to pay us within five
(5) days after the effective date of termination or expiration of the Franchise,
or any later date that the amounts due to us are determined, all amounts owed to
us or our affiliates which are then unpaid.

15.2      Marks. You agree that after the termination or expiration of the
Franchise you will: (a) not directly or indirectly at any time identify any
business with which you are associated as a current or former ESIO franchise or
franchisee; (b) not use any Mark or any colorable imitation of any Mark in any
manner or for any purpose, or use for any purpose any trademark or other
commercial symbol that suggests or indicates an association with us; (c) return
to us or destroy (whichever we specify) all customer lists, forms and materials
containing any Mark or otherwise relating to an ESIO franchise; (d) remove all
Marks affixed to uniforms or, at our direction, cease to use those uniforms; and
(e) take any action that may be required to cancel all fictitious or assumed
name or equivalent registrations relating to your use of any Mark.

15.3      De-Identification. If you retain possession of the Site, you agree to
completely remove or modify, at your sole expense, any part of the interior and
exterior decor that we deem necessary to disassociate the Site with the image of
an ESIO franchise, including any signage bearing the Marks.  If you do not take
the actions we request within thirty (30) days after notice from us, we have the
right to enter the Site and make the required changes at your expense, and you
agree to reimburse us for those expenses on demand.

15.4      Confidential Information.  You agree that on termination or expiration
of the Franchise you will immediately cease to use any of the Confidential
Information, and agree not to use it in any business or for any other purpose.
 You further agree to immediately return to us all copies of the Operations
Manual and any written Confidential Information or other confidential materials
that we have loaned or provided to you.

15.5      Covenant Not to Compete.  On termination or expiration of this
Agreement, you and your Principals agree that for a period of twelve (12) months
after the effective date of termination or expiration, or the date on which you
stop operating the Franchise, whichever is later, neither you nor your
Principals will be employed by or have any direct or indirect interest (through
a member of your immediate family or that of a Principal, or otherwise) as a
disclosed or beneficial owner, investor, manager, or consultant in a Competitive
Business.  A Competitive Business is defined as any business (1) offering
products or services the same as or similar to those offered or sold at the ESIO
Franchise or any other ESIO Franchise or affiliate; and (2) located within the
Protected Territory or within a twenty (25) mile radius of the Protected
Territory of the ESIO Franchise, or any other ESIO franchises then in existence,
or the Protected Territory for which an ESIO Franchise has been approved. The
ownership of one percent (1%) or less of a publicly traded company will not be
deemed to be prohibited by this Section.

15.6      Return of Financed Equipment.  We have the right to require you to
make the any financed equipment available to us for repossession during
reasonable business hours. You will not make any claims against us or the
equipment for trespass, damage or any other reason. If we take possession of the
equipment we may (a) sell or lease the equipment at public or private sale or
lease, and/or (b) exercise such other rights as may be allowed by applicable
law. Although you agree that we have no obligation to sell the equipment, if we
do sell the equipment, we will reduce your obligations to us by the amounts we
receive. You will immediately pay us the remaining amounts. You agree (a) that
we only need to give you 5 days advance notice of any sale of equipment and no
notice of advertising, (b) to pay all of the costs we incur to enforce our
rights against you, including attorney’s fees, and (c) that we will retain all
of our rights against you even if we do not choose to enforce them at the time
of termination.  Nothing contained in this Section 15.6 should be construed as a
waiver of any rights granted to us pursuant to the Uniform Commercial Code or
otherwise at law or equity.

15.7      Franchisor’s Option to Acquire the Business Assets.

(a)        Upon the termination or expiration of the Franchise, we will have the
option, but not the obligation, exercisable for thirty (30) days upon written
notice of you, to acquire all of the assets of the Franchise, including all
approved equipment, fixtures, furniture and signs and all supplies, materials,
and other items

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imprinted with any Mark, and to take an assignment of the lease for the Site and
any other lease or concession agreement necessary for the operation of the
Franchise at Cost minus Depreciation.  For purposes of this Agreement “Cost”
shall mean the same price that you paid us or a third party for such equipment,
fixtures, furniture, signs, supplies and materials.  “Depreciation” shall mean
fifteen percent (15%) per year.

(b)        The closing shall occur within thirty (30) days after we exercise our
option to purchase the assets or such later date as may be necessary to comply
with applicable bulk sales or similar laws.  At the closing, you and we both
agree to execute and deliver all documents necessary to vest title in the
purchased assets and/or real property in us free and clear of all liens and
encumbrances, except those assumed by us and/or to effectuate the lease of the
Franchise Site.  You also agree to provide us with all information necessary to
close the transaction.

(c)        We reserve the right to assign our option to purchase the assets or
designate a substitute purchaser.  By signing this Agreement, you irrevocably
appoint us as your lawful attorney-in-fact with respect to the matters
contemplated by this Section 15.7, with full power and authority to execute and
deliver in your name all documents required to be provided by you under this
Section in the event you do not provide them in a timely and proper manner.  You
also agree to ratify and confirm all of our acts as your lawful
attorney-in-fact, and indemnify and hold us harmless from all claims,
liabilities, losses or damages suffered by us in so doing.

15.8      Continuing Obligations. All obligations of this Agreement (whether
yours or ours) that expressly or by their nature survive the expiration or
termination of this Agreement will continue in full force and effect after and
notwithstanding its expiration or termination until they are satisfied in full
or by their nature expire.

16.        ENFORCEMENT.

16.1      Invalid Provisions; Substitution of Valid Provisions. To the extent
that the non-competition provision of Section 15.5 is deemed unenforceable
because of the scope in terms of area, business activity prohibited, or length
of time, you agree that the invalid provisions will be deemed modified or
limited to the extent or manner necessary to make that particular provisions
valid and enforceable to the greatest extent possible in light of the intent of
the parties expressed in that such provisions under the laws applied in the
forum in that we are seeking to enforce such provisions.

If any lawful requirement or court order of any jurisdiction (1) requires a
greater advance notice of the termination or non-renewal of this Agreement than
is required under this Agreement, or the taking of some other action which is
not required by this Agreement, or (2) makes any provision of this Agreement or
any specification, standard, or operating procedure we prescribed invalid or
unenforceable, then the advance notice and/or other action required or revision
of the specification, standard, or operating procedure will be substituted for
the comparable provisions of this Agreement in order to make the modified
provisions enforceable to the greatest extent possible.  You agree to be bound
by the modification to the greatest extent lawfully permitted.

16.2      Unilateral Waiver of Obligations. Either you or we may, by written
notice, unilaterally waive or reduce any obligation or restriction of the other
under this Agreement.  The waiver or reduction may be revoked at any time for
any reason on the (10) days’ written notice.

16.3      Written Consents from Franchisor. Whenever this Agreement requires our
advance approval or consent, you agree to make a timely written request for it.
 Our approval or consent will not be valid unless it is in writing.

16.4      Lien and Security Interest. To secure your performance under this
Agreement and indebtedness for all sums due us or our affiliates, we shall have
a lien upon, and you hereby grant us a security interest in, the following
collateral and any and all additions, accessions, and substitutions to or for it
and the proceeds from all of the same: (a) all inventory now owned or
after-acquired by you and the Franchise, including but not limited to all
inventory and supplies transferred to or acquired by you in connection with this
Agreement; (b) all accounts of

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you and/or the Franchise now existing or subsequently arising, together with all
interest in you and/or the Franchise, now existing or subsequently arising,
together with all chattel paper, documents, and instruments relating to such
accounts; (c) all contract rights of you and/or the Franchise, now existing or
subsequently arising; and (d) all general intangibles of you and/or the
Franchise, now owned or existing, or after-acquired or subsequently arising.
 You agree to execute such financing statements, instruments, and other
documents, in a form satisfactory to us, that we deem necessary so that we may
establish and maintain a valid security interest in and to these assets.

16.5      No Guarantees. If in connection with this Agreement we provide to you
any waiver, approval, consent, or suggestion, or if we neglect or delay our
response or deny any request for any of those, then we will not be deemed to
have made any warranties or guarantees upon which you may rely, and will not
assume any liability or obligation to you.

16.6      No Waiver. If at any time we do not exercise a right or power
available to us under this Agreement or do not insist on your strict compliance
with the terms of the Agreement, or if there develops a custom or practice that
is at variance with the terms of this Agreement, then we will not be deemed to
have waived our right to demand exact compliance with any of the terms of this
Agreement at a later time.  Similarly, our waiver of any particular breach or
series of breaches under this Agreement or of any similar term in any other
agreement between us and any other ESIO franchisee will not affect our rights
with respect to any later breach.  It will also not be deemed to be a waiver of
any breach of this Agreement for us to accept payments that are due to us under
this Agreement.

16.7      Cumulative Remedies. The rights and remedies specifically granted to
either you or us by this Agreement will not be deemed to prohibit either you or
us from exercising any other right or remedy provided under this Agreement or
permitted by law or equity.

16.8      Specific Performance; Injunctive Relief. Provided we give you the
appropriate notice, we will be entitled, without being required to post a bond,
to the entry of temporary and permanent injunctions and orders of specific
performance to: (1)  enforce the provisions of this Agreement relating to your
use of the Marks and non-disclosure and non-competition obligations under this
Agreement; (2)  prohibit any act or omission by you or your employees that
constitutes a violation of any applicable law, ordinance, or regulation;
constitutes a danger to the public; or may impair the goodwill associated with
the Marks or ESIO franchises; or (3)  prevent any other irreparable harm to our
interests.  If we obtain an injunction or order of specific performance, then
you shall pay us an amount equal to the total of our costs of obtaining it,
including without limitation reasonable attorneys’ and expert witness fees,
costs of investigation and proof of facts, court costs, other litigation
expenses and travel and living expenses, and any damages we incur as a result of
the breach of any such provision.  You further agree to waive any claims for
damage in the event there is a later determination that an injunction or
specific performance order was issued improperly.

16.9      Mediation and Arbitration.  The parties acknowledge it is in their
best interest to resolve any dispute which arises in a consistent and orderly
manner.  Therefore, the parties agree to diligently pursue informal
negotiations, internal appeal procedure, or other informal methods (“Informal
Methods”) to resolve any such dispute.  In the event such Informal Methods are
unsuccessful, the parties agree as follows.

(a)        Non-Binding Mediation.  All claims, controversies or disputes that
arise between the parties which relates in any way to this Agreement, the
purchase or operation of the Franchised Business or the relationship between you
and us, must be submitted to non-binding mediation before an action may be
brought in a court of competent jurisdiction or in arbitration.  At the request
of either party, the mediation will be conducted in secrecy.  The parties to the
mediation will share equally in its cost and expenses, except those costs and
expenses incurred separately by each party.  The mediation process will be
deemed “Completed” when the parties agree that it has been completed, the
mediator declares that any impasse exists or 60 days have elapsed since the date
of the initiating party’s notice to the other party that it is initiating the
mediation process, whichever occurs first.  

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(b)        Arbitration.  Once the mediation has been Completed, the parties must
submit any unresolved dispute to arbitration administered by the American
Arbitration Association (“AAA”) under its Commercial Arbitration Rules.  All
claims, controversies or disputes and controversies arising out of or relating
in any way to this Agreement, the purchase or operation of the Franchised
Business or the relationship between you and us will, to the fullest extent
permitted by Federal Arbitration Act, be resolved by binding arbitration
administered by the American Arbitration Association (“AAA”) under its
Commercial Arbitration Rules in Maricopa County, Arizona.

i.          Arbitration Procedures.  The demand for Arbitration (“Demand”) will
contain a description of the claim, dispute, or controversy and the remedy
requested.  In no event may a Demand be made after the date when the institution
of a legal or equitable proceeding based on the claim, dispute or controversy in
question would be barred by the applicable statute of limitations or laches.
 The appointed arbitrator shall have the authority to dismiss claims for failure
to comply with the applicable statute of limitations or laches. Any claim
requesting relief or an award of less than Twenty thousand and 00/100 Dollars
($20,000.00) will be conducted before a single independent and impartial
arbitrator selected pursuant to the Commercial Arbitration Rules of the AAA.
 For any claim requesting relief or an award of greater than Twenty thousand and
00/100 Dollars ($20,000.00), the arbitration will be conducted before a panel of
three (3) independent and impartial arbitrators selected pursuant to the
Commercial Arbitration Rules of the AAA.  Unless otherwise mutually agreed, all
arbitrators shall be lawyers licensed by the State of Arizona, with five (5) or
more years’ experience in the practice of Commercial Law and approved to be on
an AAA Panel.  The arbitrator will issue a reasoned award, with findings of fact
and conclusions of law.  Actions to enforce an express obligation to pay monies
may be brought under the Expedited Procedures of the AAA’s Commercial
Arbitration Rules.  The Federal Arbitration Act shall govern, excluding all
state arbitration laws.  Arizona law will govern all other issues.  With respect
to discovery, the arbitrator shall require each party to make a good cause
showing before such discovery will be granted.

ii.          Appealability of Award.  Either party may appeal the final award of
the arbitrator(s) to the appropriate U.S. District Court.  The Court’s review of
the arbitrator’s findings of fact will be under the clearly erroneous standard,
and the Court’s review of all legal rulings will be de novo.  If it should be
determined that this provision regarding appealability of the award is not
enforceable, then either party may appeal the arbitrator’s final award to a
panel of three arbitrators chosen under AAA procedures, which will employ the
same standards of review stated immediately above.

(c)        Certain Disputes Exempted.  Notwithstanding anything contained in
this Agreement to the contrary, the provisions of Sections 16.9(a) and (b) do
not apply in cases where (i) Franchisor brings an action for an express
obligation to pay monies, declaratory relief, preliminary or permanent equitable
relief, any action at law for damage to Franchisor’s goodwill, the Confidential
Information, the Marks or other property or for fraudulent conduct by
Franchisee; (ii) the delay resulting from the mediation process may adversely
affect Franchisor’s financial condition or endanger or adversely affect the
public (for example, unhealthy, unsafe or unsanitary conditions would continue
to exist) or (iii) Franchisor in good faith believes that the controversy or
dispute would not be resolved through the mediation process.

(d)        Other Disputes.  Disputes concerning the validity or scope of
arbitration, including whether a dispute is subject to arbitration, are beyond
the authority of the arbitrator(s) and will be determined by a court of
competent jurisdiction pursuant to the Federal Arbitration Act, 9 U.S.C. §1 et
seq., as amended from time to time.

(e)        Survives Termination.  The provisions of this Section 16 will
continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement, however effected.

(f)        Election to Resolve Claims.  This Section 16 is an election to
resolve claims, disputes, and controversies by mediation and arbitration rather
than the judicial process.  The parties agree and understand

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that they are waiving certain rights to seek redress before state and federal
courts. It is understood that this will you and us to waive any right to a jury
trial or a trial in court.  The parties understand that the rules applicable to
arbitrations and the rights of parties in arbitrations differ from the rules and
rights applicable in court.

16.10    Waiver of Punitive Damages and Jury Trial; Limitations of Actions.
Except with respect to your obligations to indemnify us and claims that we may
bring under Sections 7, 9, 15, or 16 of this Agreement, and except for claims
arising from your non-payment or underpayment of any amounts owed to us or our
affiliates, (1) any and all claims arising out of or related to this Agreement
or the relationship between you and us shall be barred, by express agreement of
the parties, unless an action or proceeding is commenced within two (2) years
from the date the cause of action accrues; and (2) you and we hereby waive to
the fullest extent permitted by law, any right to or claim for any punitive or
exemplary damages against the other, and agree that, except to the extent
provided to the contrary in this Agreement, in the event of a dispute between
you and us, each party will be limited to the recovery of any actual damages
sustained by it.  You and we irrevocably waive trial by jury in any action,
proceeding or counterclaim, whether at law or in equity, brought by either you
or us.

16.11    Governing Law/Consent To Jurisdiction. Except to the extent governed by
the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. §§ 1051 et seq.)
and except that all issues relating to arbitrability or the enforcement or
interpretation of the agreement to arbitrate set forth in Section 16.9 which
will be governed by the United States Arbitration Act (9 U.S.C. § 1 et seq.) and
the federal common law relating to arbitration, this Agreement and the Franchise
will be governed by the internal laws of the State of Arizona (without reference
to its choice of law and conflict of law rules), except that the provisions of
any Arizona law relating to the offer and sale of business opportunities or
franchises or governing the relationship of a franchisor and its franchisees
will not apply unless their jurisdictional requirements are met independently
without reference to this Section.  You agree that we may institute any action
against you arising out of or relating to this Agreement (which is not required
to be arbitrated hereunder or as to which arbitration is waived) in any state or
federal court of general jurisdiction in Maricopa County, Arizona, and you
irrevocably submit to the jurisdiction of such courts and waive any objection
you may have to either the jurisdiction or venue of such court.

16.12    Binding Effect. This Agreement is binding on and will inure to the
benefit of our successors and assigns and, subject to the Transfers provisions
contained in this Agreement, will be binding on and inure to the benefit of your
successors and assigns, and if you are an individual, on and to your heirs,
executors, and administrators.

16.13    No Liability to Others; No Other Beneficiaries. We will not, because of
this Agreement or by virtue of any approvals, advice or services provided to
you, be liable to any person or legal entity who is not a party to this
Agreement, and no other party shall have any rights because of this Agreement.

16.14    Construction. All headings of the various Sections of this Agreement
are for convenience only, and do not affect the meaning or construction of any
provision.  All references in this Agreement to masculine, neuter or singular
usage will be construed to include the masculine, feminine, neuter or plural,
wherever applicable.  Except where this Agreement expressly obligates us to
reasonably approve or not unreasonably withhold our approval of any of your
actions or requests, we have the absolute right to refuse any request by you or
to withhold our approval of any action or omission by you.  The term “affiliate”
as used in this Agreement is applicable to any company directly or indirectly
owned or controlled by you or your Principals, or any company directly or
indirectly owned or controlled by us that sells products or otherwise transacts
business with you.

16.15    Joint and Several Liability. If two (2) or more persons are the
Franchisee under this Agreement, their obligation and liability to us shall be
joint and several.

16.16    Multiple Originals. This Agreement will be executed using multiple
copies, each of which will be deemed an original.

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16.17    Timing Is Important. Time is of the essence of this Agreement.  (“Time
is of the essence” is a legal term that emphasizes the strictness of time
limits.  In this case, it means it will be a material breach of this Agreement
to fail to perform any obligation within the time required or permitted by this
Agreement.)

16.18    Independent Provisions. The provisions of this Agreement are deemed to
be severable.  In other words, the parties agree that each provision of this
Agreement will be construed as independent of any other provision of this
Agreement.

17.        NOTICES AND PAYMENTS.  All written notices, reports and payments
permitted or required under this Agreement or by the operations manual will be
deemed delivered: (a) at the time delivered by hand; (b) one (1) business day
after transmission by telecopy, facsimile or other electronic system; (c) one
(1) business day after being placed in the hands of a reputable commercial
courier service for next business day delivery; or (d) three (3) business days
after placed in the U.S. mail by registered or certified mail, return receipt
requested, postage prepaid; and addressed to the party to be notified or paid at
its most current principal business address of which the notifying party has
been advised, or to any other place designated by either party.  Any required
notice, payment or report which we do not actually receive during regular
business hours on the date due (or postmarked by postal authorities at least two
(2) days before it is due) will be deemed delinquent.

18.        INDEPENDENT PROFESSIONAL JUDGMENT OF YOU AND YOUR GENERAL MANAGER.
 YOU AND WE ACKNOWLEDGE AND AGREE THAT THE SPECIFICATIONS, STANDARDS AND
OPERATING PROCEDURES RELATED TO THE SERVICES OFFERED BY THE FRANCHISE ARE NOT
INTENDED TO LIMIT OR REPLACE YOUR OR YOUR GENERAL MANAGER’S (IF ANY)
PROFESSIONAL JUDGMENT IN SUPERVISING AND PERFORMING THE SERVICES OFFERED BY YOUR
FRANCHISE.  THE SPECIFICATIONS, STANDARDS, AND OPERATING PROCEDURES REPRESENT
ONLY THE MINIMUM STANDARDS, AND YOU AND YOUR GENERAL MANAGER (IF ANY) ARE SOLELY
RESPONSIBLE FOR ENSURING THAT THE FRANCHISE PERFORMS SERVICES IN ACCORDANCE WITH
ALL APPLICABLE REQUIREMENTS AND STANDARDS OF CARE.  NOTHING IN THIS AGREEMENT
SHALL OBLIGATE YOU OR YOUR GENERAL MANAGER (IF ANY) TO PERFORM ANY ACT THAT IS
CONTRARY TO YOUR OR YOUR GENERAL MANAGER’S (IF ANY) PROFESSIONAL JUDGMENT;
PROVIDED, HOWEVER, THAT YOU MUST NOTIFY US IMMEDIATELY UPON YOUR DETERMINATION
THAT ANY SPECIFICATION, STANDARD OR OPERATING PROCEDURE IS CONTRARY TO YOUR OR
YOUR GENERAL MANAGER’S (IF ANY) PROFESSIONAL JUDGMENT.

19.        ENTIRE AGREEMENT.  This Agreement, together with the introduction and
exhibits to it, constitutes the entire agreement between us, and there are no
other oral or written understandings or agreements between us concerning the
subject matter of this Agreement.

20.        AMENDMENTS OR MODIFICATIONS.  This Agreement may be amended or
modified only by written agreement signed by both you and us, except that we may
modify the operations manual at any time as provided herein.  Nothing in this
Agreement shall have the effect of disclaiming any of the information in the
franchise disclosure document or its attachments or addenda.

21.        FRANCHISEE’S ACKNOWLEDGEMENT OF BUSINESS RISK AND ABSENCE OF
GUARANTEE.

A.         Franchisee acknowledges and represents that Franchisor, itself or
through any officer, director, employee, or agent, has not made, and Franchisee
has not received or relied upon, any oral or written, visual, express or implied
information, representations, warranties, guarantees, or promises regarding the
amount of sales levels or income Franchisee might expect to earn from the rights
granted hereby, except as set forth in the Franchise Disclosure Document.
_____(Initialed by Franchisee)

B.         The business venture contemplated by the Franchisee Agreement
involves business risks. _____ (Initialed by Franchisee)

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C.          Franchisee’s success will be largely dependent upon Franchisee’s
ability as an independent businessperson.  _____ (Initialed by Franchisee)

D.          The Franchisee has received, read, and understands this Franchisee
Agreement and any attachments.  _____ (Initialed by Franchisee)

E.          Franchisee understands and agrees that beverage distribution is
highly competitive, cyclical, seasonal and volatile industry with constantly
changing market conditions.  _____ (Initialed by Franchisee)

F.          Franchisee acknowledges and agrees that Franchisor has answered any
questions it or its representatives have posed to Franchisor regarding this
Franchisee Agreement to Franchisee’s satisfaction.  _____ (Initialed by
Franchisee)

G.          Franchisee has been advised to consult with Franchisee’s own
advisors with respect to the legal, financial, and other aspects of this
Franchisee Agreement, the business franchised hereby, and the prospects for such
business.  Franchisee either has consulted with such advisors or has
deliberately declined to do so.  _____ (Initialed by Franchisee)

H.          Any written inquiries made to Franchisor by Franchisee pertaining to
the nature of this Franchisee Agreement have been answered in writing to the
satisfaction of Franchisee.  _____ (Initialed by Franchisee)

I.           Franchisee has had the opportunity and adequate time to
independently investigate, analyze, and construe both the business opportunity
being offered hereunder and the terms and provisions of this Franchisee
Agreement, utilizing the services of legal counsel, accountants, and other
advisors (if Franchisee so elects).  _____ (Initialed by Franchisee)

J.           Any and all applications, financial statements, and
representations, whether oral or in writing, submitted to Franchisor by
Franchisee were complete and accurate when submitted and are complete and
accurate as of the date of execution of this Franchisee Agreement, unless the
same have been otherwise amended in writing.  Franchisee states that he/she is
not presently involved in any business activity that could be considered
competitive in nature, unless heretofore disclosed to Franchisor in writing.
 _____ (Initialed by Franchisee)

K.          Franchisee agrees not to contest, directly or indirectly,
Franchisor’s ownership, title, right, or interest in its names or Proprietary
Marks, trade secrets, methods, procedures, know-how, and advertising techniques
which are part of Franchisor’s business or contest Franchisor’s sole right to
register, use, or license others to use such names and Proprietary Marks, trade
secrets, methods, procedures, and techniques.  _____ (Initialed by Franchisee)

L.          Franchisee’s signature to this Franchisee Agreement has not been
induced by any representation inconsistent with the terms of this Franchisee
Agreement or inconsistent with the Franchise Disclosure Document given to
Franchisee by Franchisor. _____ (Initialed by Franchisee)

M.          Franchisee represents and warrants that Franchisee is not a party to
or subject to any order or decree of any court or government agency which would
limit or interfere in any way with the performance by Franchisee of the
obligations under this Franchisee Agreement, and that Franchisee is not a party,
and has not within the last ten (10) years been a party, to any litigation,
bankruptcy, or legal proceedings other than those heretofore disclosed to
Franchisor in writing.  _____ (Initialed by Franchisee)

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SIGNATURE PAGE

The parties to this Agreement now execute and deliver this Agreement in multiple
counterparts as of the Agreement Date.

 

 

 

ESIO FRANCHISING, LLC

 

 

 

 

 

By:

 

 

Lyle Myers

 

President

 

 

 

 

 

FRANCHISEE

 

 

 

 

 

By:

 

 

Anthony Silverman

 

Its:

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EXHIBIT 1 TO THE

FRANCHISE AGREEMENT

1-1        Expiration Date.  Unless sooner terminated in accordance with the
provisions of this Agreement, this Agreement will expire on August 14, 2023.

1-2        Protected Territory.  The Protected Territory referred to in Section
2.4 of this Agreement shall be:

The parties agree that the Protected Territory for the Franchised Business will
be selected by Franchisee within forty five (45) days of the Effective Date of
this Agreement.

1-3        Grand Opening Advertising Expenditure.  The grand opening advertising
expenditure referenced in Section 3.7 of this Agreement shall be:  Minimum
obligation over a 3 month period of time shall be $1,500.

1-4        Franchising Opening Schedule.  In signing the foregoing Agreement to
which this Exhibit 1 is attached, you acknowledge that:

You have purchased the Franchise to which this Agreement corresponds in
conjunction with your acquisition of three (3) Pilot Franchises;

The Franchise to which this Agreement corresponds constitutes ESIO Franchise
number ________.

You must open each Franchise mentioned above within a certain time period
specified by us, the length of which depends upon the number of Franchises you
have purchased and the number of these Franchises that you have developed and
opened for business before developing and opening the Franchise to which the
Agreement corresponds.

You shall open your Pilot Franchises within three hundred and sixty five (365)
days after signing this Franchise Agreement.

Exhibit 1-1

Expiration Date, Protected Territory,

Grand Opening Advertising, and Opening Schedule

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EXHIBIT 2 TO THE ESIO™ FRANCHISE AGREEMENT

2-1       Contact Information of Person to Receive Notice For You.

TEMPCO, INC.

7625 E. Via Del Reposo

Scottsdale, AZ 85258

tonysilverman@hotmail.com

480-272-8745

(fax) 866-545-4875

2-2.       Operating Principal.  Your Operating Principal is Anthony Silverman.

Exhibit 1-2

Expiration Date, Protected Territory,

Grand Opening Advertising, and Opening Schedule

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FIRST AMENDMENT TO FRANCHISE AGREEMENT

This First Amendment to Franchise Agreement (the “1st Amendment”) is being
entered as of August 14, 2012 (“Effective Date”). The parties to this Agreement
are ESIO Franchising, LLC, a Delaware limited liability company (“we,” “us,” or
“ESIO”) and Tempco, Inc., a Nevada corporation (“you,” or “Franchisee”).

ESIO and Tempco desire to amend the Franchise Agreement for ESO Franchise No.
____ as follows:

For purposes of the Agreement, the term “Principal” shall mean all officers and
directors of Developer as well as any shareholder owning more than 5% of the
company’s outstanding capital stock.

Section 2.2 is deleted in its entirety and replaced with the following:

2.2        Term.  The Term of this Agreement is eleven (11) years from the
Effective Date of this Agreement. You must operate the Franchise from a site
(“the Site”) within the territory you select and we approve (“the Protected
Territory”), and use the System and the Marks in the operation of that Franchise
during the Term of this Agreement.  The Initial Term will begin on the Agreement
Date.  (For convenience, the expiration date of the Initial Term is listed on
Exhibit 1.)  Termination or expiration of this Agreement will constitute a
termination or expiration of your Franchise.  (All references to the “term” of
this Agreement refer to the period from the Agreement Date to the date on which
this Agreement actually terminates or expires.)

Section 2.6(c) is deleted in its entirety and replaced with the following.

Renewal Agreement; Releases.  To renew the Franchise Agreement, the Company must
execute the form of Franchise Agreement and any ancillary agreements we are then
customarily using in the grant or renewal of franchises for the operation of
ESIO Franchises (with appropriate modifications to reflect the fact that the
agreement relates to the grant of a renewal franchise), except that no initial
franchise fee will be payable upon renewal of the Franchise.  However, the
Company must pay to us a renewal fee equal to fifty percent (50%) of our
then-current Initial Franchise Fee for an ESIO Franchise.  You and your
Principals, and their spouses, must also execute general releases, in a form
satisfactory to us, of any and all claims against us and any affiliates we may
have, and our and their respective owners, officers, directors, employees, and
agents.

Section 3.2 is deleted in its entirety and replaced with the following.

Development Obligations and Deadlines. You agree at your own expense to do the
following (a) within one year (365 days) of the date of this Agreement,
(1) secure all financing required to fully develop the Franchise; (2) obtain all
required building, utility, sign, health, sanitation and business permits and
licenses and any other required permits and licenses; (3)  construct the
Franchise according to the construction plans and specifications we have
approved; (4) purchase and install all required equipment, furniture,
furnishings and signs; (5) cause the training requirements of Section 3.3 to be
completed; (6) purchase an opening inventory of products and other supplies and
materials, including all marketing materials for your grand opening advertising
campaign; (7)  provide proof, in a form satisfactory to us, that your operation
of the Franchise at the Franchise location does not violate any applicable state
or local zoning or land use laws, ordinances, or regulations, or any restrictive
covenants that apply to such location; (8) provide proof, in a form satisfactory
to us, that you (and/or your General Manager, as defined in Section 4.1, if any)
are legally authorized and have all licenses necessary to perform all of the
services to be offered by your Franchise, and that your organizational structure
is consistent with all legal

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requirements; (9) do any other acts necessary to open the Franchise for
business; (10) obtain our approval to open the Franchise for business; and
(11) open the Franchise for business.

Section 3.13 is deleted in its entirety.

Section 3.17 is deleted in its entirety and replaced with the following.

3.17      Management and Personnel of the Franchise. You must appoint a General
Manager, approved by us, who will devote his/her full-time and best efforts for
the efficient operation of the Franchised Business to run the actual, on-site,
day-to-day operations of the Franchised Business.  Any General Manager shall
each obtain all licenses and certifications required by law before assuming his
or her responsibilities at the Franchised Business.  You will ensure that each
of your employees and independent contractors of the Franchised Business have
any licenses as may be required by law, and hold or are pursuing any licenses,
certifications, and/or degrees required by law or by us in the Operations
Manual, as updated from time to time.  You will be exclusively responsible for
the terms of your employees’ and independent contractors’ employment and
compensation, and for the proper training of your employees and independent
contractors in the operation of the Franchise.  You must establish any training
programs for your employees and/or independent contractors that we may prescribe
in writing from time to time.  You must require all employees and independent
contractors to maintain a neat and clean appearance, and conform to the
standards of dress that we specify in the Operations Manual, as updated from
time to time.  Each of your employees and independent contractors must sign a
written agreement, in a form approved by us, to maintain confidential our
Confidential Information, proprietary information, and trade secrets as
described in Section 9.1, and to abide by the covenants not to compete described
in Section 15.5.  You must forward to us a copy of each such signed agreement.
 Your General Manager and all of your employees and independent contractors must
render prompt, efficient and courteous service to all customers of the
Franchise.  You agree not to recruit or hire, either directly or indirectly, any
employee (or a former employee, for six (6) months after his or her employment
has ended) of any ESIO Franchisee or Developer franchise operated by us, any
affiliates we may have, or another ESIO Franchise owner without first obtaining
the written consent of us, our affiliate, or the Franchise owner that currently
employs (or previously employed) such employee.  (If you violate this provision,
in addition to any other right or remedy we may have, you agree to pay the
employee’s current or former employer twice the employee’s annual salary, plus
all costs and attorneys’ fees incurred as a result of the violation.  This
amount is set at twice the employee’s annual salary because it is a reasonable
estimation of the damages that would occur from such a breach, and it will
almost certainly be impossible to calculate precisely the actual damages from
such a breach.)

Section 4.1 is deleted in its entirety and replaced with the following.

4.1        Operating Principal.  The Franchised Business must be directly
supervised “on-site” by a General Manager who has been approved by Franchisor
and who has satisfactorily completed Franchisor’s Training Program, in
Franchisor’s reasonable discretion  unless Franchisor has waived that
requirement.

Section 4.2 is deleted in its entirety and replaced with the following.

4.2        Supervision of Franchise Business. The General Manager will be
obligated to devote his or her full time, best efforts, and constant personal
attention to the Franchise’s operations, and must have full authority from you
to implement the System at the Franchise.  You must not hire any General Manager
or successor General Manager without first receiving our written approval of
such General Manager’s qualifications.  Each General Manager and successor
General Manager must attend and complete Franchisor’s Training Program.  Each
General Manager must sign a written agreement, in a

First Amendment to Franchise Agreement

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2

 

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form approved by us, to maintain confidential our Confidential Information
described in Section 9.1, and to abide by the covenants not to compete described
in Section 15.5.  You must forward to us a copy of each such signed agreement.
 If we determine, in our sole discretion, during or following completion of the
Franchisor’s Training program, that your General Manager is not qualified to act
as General Manager of the Franchise, then we have the right to require you to
choose (and obtain our approval of) a new individual for that position.  The
name of the Operating Principal or General Manager who will supervise the
Franchised Business is set forth on the signature page of this Agreement.  Any
changes must be approved by Franchisor.

Section 4.3 is deleted in its entirety.

Section 4.4 is deleted in its entirety.

Section 13 is deleted in its entirety and replaced with the following.

13.        We shall have the right, but not the obligation, to cause a
subsidiary or affiliate of ours to perform any or all of our obligations and
exercise any or all of our rights under this Agreement and under any Franchise
Agreement, and to require you to perform any or all of its obligations
hereunder, in favor or such subsidiary or affiliate, by delivery of written
notice thereof to you.

13.1      Transfer By Us.

(a)        We have the right, exercisable at any time, upon notice to you and
your provision of written consent, which shall not be unreasonably withheld, to
change our ownership or form and/or transfer and assign all or any part of our
rights and obligations under this Agreement to any person or legal entity as
long as such person or legal entity expressly assume the obligations under this
Agreement.  

(b)        After our transfer or assignment of this Agreement to a third party,
in a manner consistent with this Agreement, who expressly assumes the
obligations under this Agreement, we no longer will have any performance or
other obligations under this Agreement.

13.2      Transfer By You.  Subject to your compliance with the Conditions for
Approval of Assignment or Transfer set forth in Section 13.3 below, you shall
have the right to transfer this Agreement and/or the rights set forth in this
Agreement in a manner consistent with the Agreement.

13.3      Conditions for Approval of Assignment or Transfer.  Our consent to a
Transfer of your rights under this Agreement shall be conditioned on your
compliance and the proposed assignee’s compliance with the conditions set forth
below.  For purposes of this Agreement, “Transfer” means any voluntary,
involuntary, direct or indirect assignment, sale, gift, exchange, grant of a
security interest, or occurrence of any other event which would or might change
your controlling ownership, and includes, without limitation:  (1) the Transfer
of a controlling interest of capital stock, partnership interest or other
ownership interest of Franchisee; (2) merger or consolidation, or issuance of
additional securities representing an ownership interest in Franchisee; (3) sale
of more than 50% of the common stock of Franchisee sold pursuant to a private
placement or registered public offering; (4) Transfer of an controlling interest
in Franchisee in a divorce proceeding or otherwise by operation of law; or
(5) Transfer of an

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controlling interest by will, declaration of or transfer in trust, or under the
laws of intestate succession.

(a)        that the assignee (or the principal officers, shareholders, directors
or general partners of the assignee in the case of a business entity assignee)
demonstrates that it has the skill, qualifications and economic resources
necessary, in our judgment, reasonably exercised, to own and operate the
Developer Business;

(b)        that Franchisee has paid all amounts owed to us;

(c)        that the assignee shall expressly assume in writing for our benefit
all of the  obligations of Franchisee under this Agreement and any other
agreements proposed to be assigned to such assignee;

(d)        that neither the assignee nor its owners or affiliates operates, has
an ownership interest in or performs services for a Competitive Business
(defined in Section 15.5);

(e)        that the assignee shall have completed (or agreed to complete) our
training program;

(f)        that the assignee signs our then current form of Franchise Agreement,
the provisions of which may differ materially from any and all of those
contained in this Agreement, and the term of which shall be the remaining term
of this Agreement;

(g)        that as of the date of any such assignment, the assignor shall have
strictly complied with all of its obligations to us, whether under this
Agreement or any other agreement, arrangement or understanding with us;

(h)        that the assignee is not then in default of any of the obligation to
us under any agreement between such assignee and us;

(i)         that the assignor shall pay to us a transfer fee, except for
transfers pursuant to Section 13.4 below;

(j)         that the assignor shall sign a general release, in a form
satisfactory to us, of any and all claims against us and our affiliates and our
and their respective shareholders, officers, directors, employees,
representatives, agents, successors and assigns; and

(k)        Any attempted assignment or transfer of your rights under this
Agreement without complying with the conditions set forth in this Section 13.3
is a breach of this Agreement and has no effect.

13.4      Company’s Right of First Refusal.  If Franchisee or Franchisee’s
shareholders (the “Seller”), at any time, determine to sell or transfer a
controlling interest in Franchisee, this Agreement or the Franchised Business,
as applicable, the Seller must obtain from a responsible and fully disclosed
buyer, and send us a true and complete copy of a bona fide, executed written
offer relating exclusively to an interest in Franchisee or this Agreement and
the Franchised Business.  The offer must include details of the

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payment terms of the proposed sale and the sources and terms of any financing
for the proposed purchase price.  To be a valid, bona fide offer, the proposed
purchase price must be in a fixed dollar amount and without any contingent
payments of purchase price (such as earn-out payments).

We may, by delivering written notice to the Seller within fifteen (15) days
after we receive both an exact copy of the offer and all other information
requested, elect to purchase the interest for the price and on the terms and
conditions contained in the offer, provided that: 1) we may substitute cash for
any form or payment proposed in the offer; (2) our credit will be deemed equal
to the credit of any proposed buyer; (3) the closing will be not less than
thirty (30) days after notifying the Seller of our election to purchase or, if
later, the closing date proposed in the offer; and (4) we must receive, and the
Seller agrees to make, all customary representations and warranties, given by
the seller of the assets of a business or ownership interests in a legal entity,
as applicable, including, without limitation, representations and warranties
regarding ownership and condition of, and title to, assets and (if applicable)
ownership interests and validity of contracts and the liabilities, contingent on
otherwise, relating to the assets or ownership interests being purchased. If we
exercise our right of first refusal, the Seller agrees that, for two (2) years
beginning on the closing date, the Seller and members of its immediate family
will be bound by the non-competition covenant contained in Section 15.5 below.

If we do not exercise our right of first refusal, the Seller may complete the
sale to the proposed buyer on the original offeror’s terms.  If the Seller does
not complete the sale to the proposed buyer within: (i) one hundred eighty (180)
days if the buyer is a publicly traded company (for purposes of this Agreement a
publicly traded company is a company issuing stocks, which are traded on the
open market, either on a stock exchange or on the over-the-counter market); or
(ii) sixty (60) days if the buyer is a privately held company; after we notify
the Seller that we do not intend to exercise our right of first refusal, or if
there is a material change in the terms of the sale (which the Seller must let
us know promptly), we will have an additional right of first refusal during the
thirty (30) day period following either the expiration of the applicable period
or receipt of notice of the material change(s) in the sale’s terms, either on
the terms originally offered or the modified terms, at our option.

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SIGNATURE PAGE

The parties to this First Amendment to Franchise Agreement now execute and
deliver this Agreement in multiple counterparts as of the Effective Date.

 

 

 

ESIO FRANCHISING, LLC

 

 

 

 

 

By:

 

 

Lyle Myers

 

President

 

 

 

 

 

TEMPCO, INC.

 

 

 

 

 

By:

 

 

Anthony Silverman

 

Its:

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