Franchise Agreement

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Sample Franchise Agreement


THIS FRANCHISE AGREEMENT ("Agreement") is entered into as of the_______day of 200_

by and among LIQUID CAPITAL OF AMERICA CORP., a corporation formed under the laws of the

State of Delaware ("Franchisor"), and ■___________________________, a___________________

formed under the laws of the State of________________(hereinafter referred to as the "Franchisee").


WHEREAS, Franchisor has the right to use and license the use of the Liquid Capital System for the operation of businesses offering factoring and financial services; and

WHEREAS, the distinguishing features of the Liquid Capital System include, without limitation, proprietary methods and procedures, information technology systems, identification schemes, products, management programs, staffing, sales strategies, advertising programs, standards, specifications and trademarks, service marks and confidential and proprietary information; and

WHEREAS, businesses using the Liquid Capital System operate under various Marks, including the trade name and service mark "Liquid Capital"; and

WHEREAS, Franchisee desires to acquire from Franchisor a franchise for the right to operate a Liquid Capital Business upon and subject to the terms and conditions of this Agreement; and

WHEREAS, Franchisor desires to enter into this Agreement in reliance upon the representations, warranties and covenants, and the business skill, financial capacity and character, of Franchisee and its Principals;

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree to be bound as follows:

Article I.                      DEFINITIONS AND CONVENTIONS

Section 1.01 Definitions

"Account" shall mean a right to payment of a monetary obligation, whether or not earned by performance, and shall include any "account" as defined in Article 9 of the UCC in effect on the Effective Date of this Agreement, provided that if any amendment to the definition of "account" contained in such Article 9 shall thereafter become effective and shall amend such definition so as to include any additional property not included in such definition prior to the effective date of such amendment, then, and in each such case, the definition of "Account" as used in this Agreement shall be deemed to be automatically amended, as of the effective date of such amendment, to include, in addition to any property theretofore included, all such additional property.

"Account Debtor" shall mean the obligor on a Factored Account.

"Additional Charges" shall mean the discount fee due for each additional day in excess of the base number of days (as provided in the Purchase and Sale Agreement) that a Receivable is outstanding.


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"Advances" shall mean the principal amount of all advances, and other extensions of credit or other financial accommodations made to or on behalf of a Client pursuant to the Purchase and Sale Agreement, and all other amounts, including, without limitation, attorney's fees (other than interest or other compensation) chargeable to the Client pursuant thereto.

"Affiliate" shall mean any Person, directly or indirectly, controlling, controlled by or under common control with another Person.

"Anniversary Date" shall mean the same month and day of the Effective Date for each succeeding year thereafter, provided that if the Effective Date is February 29 of any year the Anniversary Date is March 1 for any year in which February 29 does not occur.

"Back Office Support Services" shall mean those administrative and other services more fully set forth in the Rules and Regulations as modified from time to time (provided, that no such modification shall alter a Franchisee's fundamental status and rights under this Agreement, any Participation Agreement or any Confirmation of Transaction) which support the relationships of Liquid Capital Franchisees with their respective Clients and the interests of Liquid Capital Franchisees under the Participation Agreements and Confirmations of Transaction. They include the verification, servicing, administration and collection of Client Accounts under the Purchase and Sale Agreements between Clients and the Exchange and the administration of and accounting for Advances, fee receipts, and payments under all Participation Agreements and Confirmations of Transaction.

"Back Office Services Fee" shall mean a processing fee paid by the Participants in a Funding Transaction in an amount equal to the greater of (i) a percentage (not to exceed 0.75%) of the Accounts represented by the invoices listed on a Schedule of Accounts or (ii) Five Dollars ($5.00) multiplied by the number of such invoices. Each Participant shall pay its share of the Back Office Services Fee in proportion to its Participation Percentage.

"Back Offices Services Fee for Spot Factoring" shall mean a processing fee paid by the Participants in a Funding Transaction for Spot Factoring as follows: (i) for invoices which are less than Sixty Thousand Dollars ($60,000), an amount equal to the greater of (a) 0.50% of the invoice amount or (b) One Hundred Dollars ($100) per invoice and (ii) for invoices which are Sixty Thousand Dollars ($60,000) or more, an amount equal to Three Hundred Dollars ($300), plus 0.125% of the invoice amount.

"Basic Operational Training Course" shall have the meaning set forth in Section 7.01.

"Business Day" shall mean each day other than a Saturday, Sunday, U.S. holidays or any other day on which the Federal Reserve is not open for business in the United States.

"Change of Control" shall mean the acquisition of a Controlling Interest in Franchisee.

"Client" shall mean any Person who executes a Purchase and Sale Agreement or other agreement for the provision of factoring or related financial services with Exchange (or any other service provider recognized and approved by Franchisor, including Franchisor, an Affiliate of Franchisor, or any designee thereof) who is acknowledged as a client of Franchisee by Franchisor in writing pursuant to the Rules and Regulations. Reference to "Clients" shall be to the Clients of all Liquid Capital Franchisees.


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"Client Obligations" shall mean the unpaid balance of Advances (referred to as "Net Cash Employed" in the Purchase and Sale Agreement), including accrued but unpaid fees and other charges thereon, together with any and all other obligations of Client under the Purchase and Sale Agreement.

"Collateral" shall mean all collateral and guarantees received by or granted to Exchange pursuant to a Purchase and Sale Agreement or otherwise securing all Client Obligations.

"Computer System" shall mean the computer hardware and software (including all upgrades, modifications and enhancements thereto) that Franchisor requires from time to time for the operation of the Liquid Capital Business.

"Confidential Information" shall mean Franchisor's confidential, proprietary information or trade secrets (including, but not limited to, the Rules and Regulations and other contents of the Manual).

"Confirmation of Transaction" means the form, as published in the Rules and Regulations, which is executed by Franchisees that wish to participate in Spot Factoring Arrangements and which sets out the terms under which Spot Participations are to be acquired.

"Control" (including the correlative meanings, the terms "controlling", "controlled by" and "under common control with") shall mean the possession by any Person, directly or indirectly, of the power to direct or cause the direction of the management and policies of another Person, whether through the ownership of voting securities, by contract, proxy or otherwise.

"Controlling Interest" shall mean an ownership interest in Franchisee of more than forty-nine percent (49%) or such lesser percentage interest as may be determined by Franchisor to constitute "Control".

"Controlling Principal" shall mean any Principal who has been designated by Franchisee and approved by Franchisor as Franchisee's Controlling Principal.

"Controlling Principal's Designee" shall''mean the individual designated by Franchisee and Franchisee's then-current Controlling Principal in writing to Franchisor to succeed to the interest of such then-current Controlling Principal upon his or her death or Permanent Disability, provided that such individual is acceptable to Franchisor and completes to Franchisor's sole satisfaction Franchisor's Basic Operational Training Course not later than ninety (90) days following the date of death or determination of Permanent Disability of the former Controlling Principal.

"CPI" shall mean the Consumer Price Index for all Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84 = 100.

"Default" shall mean an event or condition that constitutes, or with the lapse of any applicable grace or cure period or the giving of notice or both would constitute, an Event of Default and that has not been waived by Franchisor in writing.

"Effective Date" shall mean the date upon which this Agreement is executed by a duly authorized officer of Franchisor.

"Event of Default" shall mean an event or condition that constitutes an event of default as defined in Article XIII of this Agreement.


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"Exchange" shall mean Liquid Capital Exchange Inc., a corporation formed under the laws of the State of Delaware and any successor thereto with which Franchisor has a relationship.

"Exchange Agreement" shall mean the exchange services agreement between Franchisor and Exchange for provision of an Exchange System and Back Office Support Services, as from time to time amended.

"Exchange Fee" shall mean a fee which is paid to Exchange in an amount equal to the percentage set out in the Rule and Regulations (currently, 0.4%) of the Accounts represented by the invoices subject to a Funding Transaction and processed through the Exchange. In Funding Transactions involving more than one Participant, Participants pay the Exchange Fee in proportion to their Participation Percentages.

"Exchange Services" shall mean the identification of Funding Participants and the processing of Advances funded by such Funding Participants.

"Exchange System" shall mean the exchange mechanism operated by Exchange under which Franchisees, as Participants, are permitted to participate in Factoring Arrangements and Spot Factoring Arrangements.

"Extraordinary Expenses" means (i) Advances made subsequent to Exchange's declaring the Factoring Arrangement to be in liquidation, so long as the making of such Advances is consistent with the exercise of such reasonable care and skill as a person would use in managing the affairs of its own clients; and (ii) attorneys' fees and disbursements, court costs and fees of any outside agency incurred subsequent to Exchange's declaring the Factoring Arrangement to be in liquidation, in connection with the enforcement of any of Exchange's rights and remedies under the Purchase and Sale Agreement. Extraordinary Expenses shall not include expenses of ordinary overhead or ordinary payments made to clerical personnel or executives of Exchange.

"Factoring Arrangement" shall mean the entire contractual relationship pursuant to which a Client's Accounts are factored and shall include, without limitation, the Purchase and Sale Agreement or Confirmation of Transaction (as applicable), the Client Obligations, the Collateral, and all other sources of repayment.

"Factored Account" shall mean an Account of a Client specifically assigned by Client to Exchange pursuant to a Purchase and Sale Agreement, the existence of which has been relied upon by Exchange in extending financial accommodations to that Client.

"Financing Estoppel Agreement" shall mean the agreement executed by lenders or investors in Franchisee pursuant to which they acknowledge that Franchisee is a franchise of Franchisor and agree to hold Franchisor, the Exchange, and the Service Provider harmless from detrimental reliance claims and similar claims.

"Fiscal Year" shall mean the period beginning at 12:00 Midnight January 1 of each year and ending at 11:59 p.m. December 31 of the immediately following year for the time zone in which Franchisee maintains its principal place of business.

"Franchised Business" shall mean the business to be operated by Franchisee under the "Liquid Capital" Mark and Liquid Capital System pursuant to the provisions of this Agreement.


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"Funding Participant" - A Participant who elects to fund a Factoring Arrangement. Franchisees that are in Good Standing, Exchange, Franchisor, and other parties designated by Franchisor from time to time in the Rules and Regulations will have the opportunity to become Funding Participants.

"Funding Transaction" - The delivery of funds by the Participants pursuant to a Participation Agreement or Confirmation of Transaction, as applicable, for the purchase by Exchange of those Accounts that are the subject of the Funding Transaction. For Factoring Arrangements other than Spot Factoring Arrangements, the invoices underlying the Accounts shall be those listed on each Schedule of Accounts issued by the Client under the Purchase and Sale Agreement. In each Funding Transaction, Participants will provide funds for the purchase of the Accounts in an amount equal to their proportionate share of the total Advance, as determined by their Participation Percentages.

"GAAP" shall mean U.S. generally accepted accounting principals as then in effect, which shall include official interpretations thereof by the Financial Accounting Standards Board.

"Good Standing" shall mean that Franchisee (i) is current on all payments due to Franchisor, Franchisor's Affiliates, Exchange, other Franchisees and Clients; (ii) has passed Franchisor's most recent inspection or audit and is otherwise in compliance with Franchisor's standards and procedures set forth in the Rules and Regulations; and (iii) is not in default of this Agreement (including, without limitation, the performance standards set forth herein), any Participation Agreement, or any other agreement between Franchisee and Franchisor or Franchisor's Affiliates.

"Gross Revenue" shall mean the entire amount of all revenue earned (whether or not received) by Franchisee from any source (including, without limitation, each Funding Transaction, referral fees, and recharges) in connection with the Franchised Business in any form. There shall be no deductions allowed for uncollected or uncollectible Accounts and no allowances shall be made for bad debts; provided, that if on the termination of a Client Account, any Advance is uncollectible, then Franchisor will refund to Franchisee the royalties paid on such Advance in accordance with the procedures set forth in the Rules and Regulations.

"Guarantor" shall mean those Principals (including any Controlling Principal) designated by Franchisor to guaranty Franchisee's performance and payment Obligations under this Franchise Agreement.

"Initial Franchise Fee" shall mean the sum of Forty-Two Thousand Five Hundred Dollars ($42,500.00) for a single franchise. If this Agreement is executed pursuant to our multi-territory program, the initial franchise fee is One Hundred Twelve Thousand Five Hundred Dollars ($112,500) for the first 3 franchises ($37,500 per franchise) and Thirty-five Thousand Dollars ($35,000) for each additional franchise. The initial franchise fee will be entered on Schedule 1 to this Agreement before it is signed.

"LCRA" - A Liquid Capital Remittance Account established by Exchange in the name of Franchisee, the operation of which is further described in Section 6.01 E. of this Agreement.

1 "Liquid Capital Franchise" shall mean a business using the Liquid Capital System and operating pursuant to a currently effective franchise agreement with Franchisor.

"Liquid Capital Franchisee" shall mean any Person operating a Liquid Capital Franchise.


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"Liquid Capital Business" shall mean any business operating under the Marks and the Liquid Capital System, whether or not franchised.

"Liquid Capital Network" shall mean the network of Liquid Capital Businesses.

"Liquid Capital System" shall mean a system for the establishment and operation of businesses for the operation of factoring and financial services using the Marks and operated under the name "Liquid Capital" in accordance with the Rules and Regulations and other standards, policies and procedures set forth in the Manual or otherwise in writing.

"Management Fee" shall mean the fee paid to the Managing Participant by the other Participants in an amount equal to the percentage set out in the Rules and Regulations (currently, 0.50%) of the Accounts represented by the invoices subject to a Funding Transaction.

"Managing Participant" shall mean any Participant (i) who is a Qualified Franchisee, the Exchange, the Franchisor, or any other party designated by Franchisor from time to time and approved by Exchange and (ii) who is designated in the Participation Agreement as responsible for managing the ongoing relationship with the Client whose Purchase and Sale Agreement is the subject of the Participation Agreement. A "Qualified Franchisee" is a Franchisee who has been certified by Franchisor in accordance with the Rules and Regulations as qualified to act as a Managing Participant and who is in Good Standing under the Franchise Agreement.

"Manual" shall mean, collectively, all books, pamphlets, discs, software, bulletins, memoranda, letters, notices or other publications or documents prepared by or on behalf of Franchisor, whether in printed or electronic format, for use by Liquid Capital Franchisees, setting forth information, advice, standards, requirements, operating procedures, instructions or policies, including the Rules and Regulations, relating to the operations of the Liquid Capital System, as same may be amended, modified or enhanced from time to time by Franchisor. The Manual may be provided electronically, including via CD-ROM or on a secure Internet webpage, or by any other method reasonably adopted by Franchisor.

"Marks" shall mean the trade-marks, trade names and other commercial symbols and related logos as set forth in Exhibit A hereto, including the trade names and service marks "Liquid Capital" and "Liquid Exchange", together with such other trade names, trade-marks, symbols, logos, distinctive names, service marks, certification marks, logo designs, insignia or otherwise which may be designated by Franchisor in writing from time to time as part of the Liquid Capital System, and not thereafter withdrawn.

"Minimum Business Volume" on an annual basis, the amount designated in Exhibit B to this Franchise Agreement, which amount shall be adjusted annually by the amount of any change in the CPI and shall be derived exclusively from Franchisee's Territory.

"Normal Business Hours" shall mean 8:00 A.M. to 5:00 P.M. (as determined by the time zone in effect in the Territory) of any Business Day.

"Obligations" shall mean all present and future obligations owing by Franchisee to Franchisor whether or not for the payment of money, whether or not evidenced by any note or other instrument, whether direct or indirect, absolute or contingent, due or to become due, joint or several, primary or secondary, liquidated or unliquidated, secured or unsecured, original or renewed or extended, whether arising before or after the commencement of any bankruptcy proceeding in which Franchisee is a debtor,


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including without limitation any obligations arising pursuant to letters of credit or acceptance transactions or any other financial accommodations.

"Originating Franchisee" shall mean the Franchisee who, through the operation of the Franchised Business, identified and initially processed (in accordance with the procedures set forth in the Rules and Regulations) the Client that entered into the Purchase and Sale Agreement with Exchange.

"Originating Franchisee Fee" shall mean the fee in an amount equal to the percentage (currently 12%) set out in the Rules and Regulations of the gross revenue earned by the other Participants in a Funding Transaction and paid to the Originating Franchisee by such other Participants as a referral fee for identifying and initially processing the Client in accordance with the procedures set forth in the Rules and Regulations.

"Participant" shall mean any Franchisee or other person permitted by the Rules and Regulations to participate in a Factoring Arrangement under a Participation Agreement.

"Participation Agreement" shall mean that agreement, in the form provided in the Rules and Regulations, used to document the contractual relationship among the Participants in every Factoring Arrangement, which sets forth the Participants, their roles, and their respective percentage of ownership together the terms and conditions of such ownership.

"Participant's Compensation" means each Participant's pro rata share (determined in accordance with its Participation Percentage as set out in the applicable Participation Agreement) of all fees paid by a Client in a Factoring Arrangement.

"Participation Percentage" means a Participant's applicable percentage of the total Factoring Arrangement to which the Participation Agreement relates, as set out in the Participation Agreement.

"Permanent Disability" shall mean any physical or mental condition that renders a Controlling Principal incapable of performing his or her normal duties, functions and responsibilities with respect to operating and managing the Franchised Business for a period of either (i) ninety (90) consecutive days or (ii) any combination of one hundred twenty (120) days during a span of one hundred eighty (180) consecutive days or earlier if such Controlling Principal is certified as permanently disabled by such Principal's primary physician or by order of a court of competent jurisdiction.

"Person" shall mean any individual, partnership, limited liability company, corporation, trust or other legal entity.

"Portfolio" shall mean all rights, titles and interests of Franchisee's Franchised Business, including, without limitation, Participation Percentages under Participation Agreements to which Franchisee is a party, and all books and records related thereto including, without limitation, all names, addresses, contact information and any other information related to any Franchisee Client and any lead or Prospective Client with whom Franchisee has had contact together with all pending transactions, Accounts, debts owing, outstanding invoices, collateral security and other financial instruments and proceeds therefrom owned or controlled by Franchisee. Notwithstanding the foregoing, Franchisee's Portfolio shall not include any Participation Percentage held by Franchisee which is purchased by the other Participants in the subject Factoring Arrangement pursuant to Section 12.6 of the applicable Participation Agreement.


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"Principal" shall mean all holders of an ownership interest in Franchisee and in any entity directly or indirectly controlling Franchisee; any other person or entity controlling, controlled by, or under common control with Franchisee; all officers and directors of Franchisee (including the officers and directors of any general partner of Franchisee) whom Franchisor designates as Franchisee's Principals; and, if Franchisee is an individual, Franchisee's spouse.

"Prospective Client" shall mean a potential client that has had contact with Franchisee, expressed an interest in services provided by the Franchised Business, and has been registered in accordance with the Rules and Regulations.

"Purchase and Sale Agreement" shall mean the purchase and sale agreement, security agreement and all documents related thereto between Exchange and a Client of a Liquid Capital Franchisee pursuant to which the Client's Accounts are factored.

"Referral System" shall mean the procedures established by Franchisor under the Rules and Regulations for referring leads to Liquid Capital Franchisees. Such procedures shall permit Franchisor to consider a number of factors, including, without limitation, the proximity of the lead to the Liquid Capital Franchisee, the lead's industry, the lead's current and potential needs, the Liquid Capital Franchisee's financial resources, expertise and availability, and the respective personalities of the lead and the Liquid Capital Franchisee.

"Reserve Fund" shall mean the difference between the amount of a Receivable and the amount of the Advance with respect to such Receivable.

"Rules and Regulations" shall mean all rules, regulations, directives, procedures, policies and similar matters prescribed by Franchisor for use by the Franchisee and all other Liquid Capital Franchisees in the operation of the Liquid Capital System, as amended or modified by Franchisor from time to time. The Rules and Regulations are included in the Manual.

"Schedule of Accounts" shall mean each list of invoices representing the Accounts to be purchased under the Purchase and Sale Agreement and that are the subject of a Funding Transaction, including all accompanying documentation required by the Purchase and Sale Agreement.

"Services Agreement" shall mean the agreement between Franchisor, the Exchange and Service Provider whereby Exchange shall provide Back Office Support Services for the benefit of Franchisee, directly or through the Service Provider.

"Service Provider" shall mean that Person with whom Franchisor and/or the Exchange contracts to provide some or all the Back Office Support Services.

"Small Business" shall, with respect to those industries identified in the Rules and Regulations, have the meaning set forth in the Small Business Act (PL 85-536, as amended April 5,2004).

"Spot Factoring Arrangement" means the entire contractual relationship pursuant to which a single or "spot" invoice is factored, including, without limitation, the Confirmation of Transaction, Client Obligations, Collateral, and all other sources of repayment.

"Spot Participation" means a Participant's percentage ownership interest in a Spot Factoring Arrangement, as it appears on the Confirmation of Transaction.


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"Taxes" shall mean any present or future taxes, levies, imposts, duties or other charges of whatsoever nature, including any interest or penalties thereon, imposed by any government or political subdivision of such government on or relating to the operation of the Franchised Business, the payment of monies, or the exercise of rights granted pursuant to this Agreement, except taxes imposed on or measured by Franchisor's net income.

"Territory" shall mean the geographic area described in Exhibit C to this Franchise Agreement.

"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of South Carolina; provided however that if by reason of any mandatory provisions of law any or all of the attachment, perfection or priority of a security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of South Carolina, then, and in each such case, the term "UCC" shall mean the Uniform Commercial Code as in effect from time to time in such other jurisdiction for the purposes of the attachment, perfection or priority of a security interest in such Collateral.

. Section 1.02 Conventions

A.          Unless otherwise stated, references to the First Paragraph, Recitals, Articles, Sections, Schedules and Exhibits are to the First Paragraph, Recitals, Articles, Sections, Schedules, and Exhibits of this Agreement and all such Recitals, Schedules and Exhibits are hereby incorporated herein by reference.

B.          Words importing the singular include the plural and vice versa as the context may require. Words importing a gender include every gender as the context may require.

C.          The headings to the Articles and Sections and the Article and Section numbers are for convenience only and have no legal effect.

D.         The words "include," "included" and "including" shall be terms of enlargement and shall not imply any restriction or limitation unless the context clearly requires otherwise. The words "hereof, "herein", "hereunder" and similar expressions used in any Article or Section of this Agreement relate to the whole of this Agreement (including any Schedules or Exhibits attached hereto) and not to that Article or Section only, unless otherwise expressly provided for or the context clearly indicates to the contrary,

E.          When this Agreement requires or permits Franchisor to take or refrain from taking an action, or to exercise discretion, or to change or modify anything, Franchisor may do so from time to time.

F.          The words "Franchisee", "Principal", "Controlling Principal", and "Guarantor" whenever used in this Agreement shall be deemed and taken to mean each and every person or party mentioned as a Franchisee, Principal, Controlling Principal, or Guarantor herein, be the same one or more; and if there shall be more than one Franchisee, Principal, Controlling Principal, or Guarantor, any notice, consent, approval, statement, authorization, document or other communication required or permitted to be given by the terms or conditions of this Agreement may be given by or to any one thereof, and shall have the same force and effect as if given by or to all thereof.

G.         The use of the neuter or male or female pronoun to refer to any Person may be an individual (male or female), a partnership, a corporation or another entity or a group of two or more


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individuals, partnerships, corporations or other entities. The necessary grammatical changes required to make the provisions of this Agreement apply in the plural sense, where there is more than one Person and to either individuals (male or female) partnerships, corporations or other entities, shall in all instances be assumed in each case.

Article II.                      GRANT OF FRANCHISE RIGHTS

Section 2.01 Grant

Subject to the provisions, and for the term, of this Agreement, Franchisor hereby grants to Franchisee the right and license, and Franchisee accepts the obligation, to establish and operate a Liquid Capital Business in the Territory in accordance with the Liquid Capital System and the terms and conditions set forth in this Agreement, Franchisee shall not solicit any business from any Person whose place of business is outside of the Territory or any Person not having a bona fide business office within the Territory. Notwithstanding the foregoing, Franchisee shall be permitted to transact business with any Person whose place of business is located outside of the Territory so long as such business transaction is the result of a bona fide referral, whether through the Referral System or otherwise. Should Franchisee receive an inquiry related to a proposed Factoring Arrangement from any Person located outside the Territory, other than a Bona Fide Referral (as further described in the Rules and Regulations), Franchisee shall promptly refer such Person to any other Liquid Capital Franchisee located in such other territory, or in the event that there is no other Liquid Capital Franchisee for such other territory, to Franchisor. No violation of this provision shall be deemed to have occurred where Franchisee's bona fide advertising and promotional materials are found to be present outside the Territory, provided that the presence of such material outside the Territory is an indirect consequence of Franchisee's advertising and promotion within the Territory. In the event of a dispute regarding the allocation of leads among Liquid Capital Franchisees, Franchisee agrees that a final and binding determination will be made by Franchisor or a committee constituted by Franchisor.

Section 2.02 Territorial Protection

A.          During the term of this Agreement and provided that Franchisee is in Good Standing, neither Franchisor nor its Affiliates shall establish, or license any other Person to establish, a Liquid Capital Business within the Territory.

B.          Annually at any time following any December 31 which is at least five (5) years after December 31 of the year in which the Effective Date of this Agreement occurs Franchisor may elect to adjust Franchisee's Minimum Business Volume (the "Revised Minimum Business Volume") if the number of Small Businesses in the Territory have increased by twenty percent (20%) (an "Increased Demographic"). If Franchisor and Franchisee fail to mutually agree on the Revised Minimum Business Volume, then Franchisor may modify Franchisee's Territory, in Franchisor's reasonable discretion, to accommodate the Increased Demographic.

Section 2.03 Reserved Rights

Franchisee understands and agrees that, except for the establishment of a Liquid Capital Business in the Territory in accordance with Section 2.02, Franchisor, directly and indirectly, has the right to establish and operate, and grant franchises for the establishment and operation of, Liquid Capital Businesses throughout the world. Franchisee further acknowledges that these other Liquid Capital Businesses may compete with Franchisee's Liquid Capital Business.


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Section 2.04 Referral System

Franchisee agrees that it is Franchisee's primary responsibility to develop its own leads. However, Franchisor may refer leads to Franchisee in accordance with Franchisor's Referral System. Franchisor shall have absolute discretion in the operation of its Referral System to act in the best interests of the Liquid Capital Network as a whole. Franchisor shall keep records of the disposition of all leads it receives and shall make such records available to any Liquid Capital Franchisee.

Article HI.                   TERM

Section 3.01 Initial Term

The term of this Agreement shall commence on the Effective Date and, unless sooner terminated as provided herein, shall continue until 11:59 p.m. (eastern time zone) on the tenth (10th) anniversary of the Effective Date.

Section 3.02 Renewal

A.          Subject to satisfaction of the conditions set forth in Section 3.02.B., Franchisee may renew the rights granted under this Agreement for additional successive periods of ten (10) years each following the expiration of the initial term set forth in Section 3.01.

B.          Renewals of the rights granted under this Agreement are subject to the following conditions:

1.          No Default by Franchisee under this Agreement or any other agreement with Franchisor or any Affiliate of Franchisor, or the Exchange shall exist as of the last day of the initial term set forth in Section 3.01 and Franchisee shall have substantially complied with such agreements throughout their respective terms.

2.          Franchisee shall have given Franchisor written notice of its desire to renew this Agreement at least one hundred and eighty (180) days prior to the end of the initial term.

3.          Franchisee shall do or cause to be done all such things as Franchisor may reasonably require to ensure that the Liquid Capital Business satisfies the then current image, standards, and specifications established by the Franchisor for new Liquid Capital Franchises whether or not such image, standards or specifications reflect a material change in the Liquid Capital System in effect during the initial term of this Agreement.

4.          Franchisee shall reimburse Franchisor for all reasonable legal fees and other costs and expenses incurred by Franchisor incident to Franchisee's exercise of any renewal option.

5.          Franchisee shall execute a general release in a form acceptable to Franchisor of all claims, if any, it has or believes it has against Franchisor, all Affiliates of Franchisor, the Exchange, the Service Provider and any of their respective owners, directors, officers, agents and employees; provided, however, that if any such claim arises after delivery of the notice required under Section 3.02.B.2. of this Agreement, Franchisee shall promptly notify Franchisor of the claim and the parties shall enter into good faith negotiations to attempt to resolve the claim for a period not to exceed thirty (30) days following Franchisee's notification of the claim. If Franchisor and Franchisee shall fail to resolve


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the claim within the thirty (30) day negotiation period, then unless otherwise agreed by the parties, Franchisee may elect to forego its claim and execute the general release or to pursue its claim and, if Franchisee elects to pursue its claim, Franchisor shall have the right not to renew the rights granted under this Agreement.

6.          Franchisee shall, at the option of Franchisor, execute a new Franchise Agreement for the renewal term in the form then being used by Franchisor (excluding any further renewal rights), which new Franchise Agreement may contain changes to the description of the Territory to account for an Increased Demographic and may provide for different royalty rates and marketing contributions than those contained in this Agreement, it being understood that the royalty rates and marketing contributions charged shall be no greater than the highest of such rates charged to any other Liquid Capital Franchisee at the time of renewal. The Franchisee also shall execute such other documents and agreements as are then customarily used by the Franchisor in the granting of Liquid Capital Franchise rights. If Franchisor shall elect not to require a new Franchise Agreement, all of the provisions contained in this Agreement in effect immediately prior to the commencement of such renewal term shall remain in force during such renewal term (except for any further rights of renewal and for changes to the description of the Territory to account for an Increased Demographic and other changes that have occurred during the initial term).

7.          Franchisee shall pay Franchisor a fee equal to fifty percent (50%) of Franchisor's then-current Initial Franchise Fee provided, that such fee shall be waived if, during the initial term, Franchisee's Clients sell Accounts to the Exchange with an aggregate face value that equals or exceeds 10 times the minimum volume, which figure shall be adjusted annually in conformance with the CPI using 2004 as the base year.


Section 4.01 Initial Franchise Fee

Franchisee shall pay to Franchisor upon the execution of this Agreement an initial, non-recurring, non-refundable Initial Franchise Fee. The Initial Franchise Fee shall be deemed to be fully earned by the Franchisor upon the execution of this Agreement in consideration of the grant by it to Franchisee of the opportunity to establish the Franchised Business as herein provided. Franchisee shall not be entitled to a refiind of any part of the Initial Franchise Fee regardless of the date of or reason for the termination of this Agreement, except as specifically provided in Section 13.02.A. of this Agreement.

Section 4.02 Continuing Royalty

Franchisee shall pay to Franchisor, throughout the initial term of this Agreement, a royalty of eight percent (8%) of Gross Revenues. Such royalties shall be paid by the Franchisee to the Franchisor upon each Funding Transaction from the Participants' respective LCRAs. The royalty percentage during the renewal term may be adjusted as provided in Section 3.02.B.6. of this Agreement.

Section 4.03 Other Fees and Expenses

In addition to the fees described in Sections 4.01 and 4.02 above, Franchisee agrees to pay to Franchisor, its Affiliates, the Exchange, the Service Provider and any other third party suppliers or referral sources promptly when due all other fees, charges and reimbursable amounts payable under this Agreement or other agreements between them, including, without limitation, the Back Office Services Fee, Exchange Fee, Originating Franchisee Fee and Management Fee required by each Participation


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Agreement as to which Franchisee is a party. Such payments shall be made at such times and in such manner as may be specified in this Agreement or such other agreements, as applicable.

Section 4.04 Collection of Fees and Expenses; No Deductions

A.         Franchisee hereby authorizes Franchisor and any Affiliate of Franchisor to pay to Franchisor, its Affiliates, the Exchange, or Service Provider from any funds held by them for the account of Franchisee in the LCRA or otherwise any amounts owed to them (or any one of them) by Franchisee pursuant to this Agreement or any other agreement between them upon receipt of written notice setting forth the amount of the payment that is due and the date the payment is due. Franchisee expressly releases and holds harmless Franchisor and any Affiliate of Franchisor for payments made by them pursuant to the authorization set forth herein.

B.          Each payment to be made to Franchisor or its Affiliates shall be made free and clear and without deduction for any Taxes.

Section 4.05 EFT Authorization

Franchisee hereby authorizes Franchisor to initiate electronic debit or credit entries against Franchisee's LCRA account and agrees to execute an authorization in the form of Exhibit D to this Agreement and all other documents necessary to effect the authorization given herein. Should any electronic debit not be honored for any reason. Franchisee agrees that it shall be responsible for that payment and any service charge. If any payments are not received when due, interest may be charged in accordance with Section 4.06. Upon written notice to Franchisee, Franchisor may designate another method of payment.

Section 4.06 Overdue Amounts

All amounts owing by Franchisee to Franchisor or Franchisor's Affiliates which are not paid when due shall bear interest after the due date until paid at a rate equal to the lesser of (i) eighteen percent (18%) per annum or (ii) the highest rate allowed by applicable law. The acceptance of any interest payment shall not be construed as a waiver by the party to whom payment is due of its rights in respect of the Default giving rise to such payment and, as to Franchisor, shall be without prejudice to Franchisor's right to terminate this Agreement in respect of such Default.

Section 4.07 Application of Payments; No Offset

Notwithstanding anything contained in this Agreement, upon Franchisee's failure to pay to Franchisor as and when due any amounts provided for herein, Franchisor shall have the right at its sole option, to deduct any and all such amounts remaining unpaid from any monies or credits held by Franchisor for the account of Franchisee. Franchisor shall have the right to apply any payment it receives from Franchisee to any amounts Franchisee owes Franchisor or its Affiliates under this Agreement or any other agreement between them, even if Franchisee has designated the payment for another purpose or account. Franchisor may accept any payment in any amount from Franchisee without prejudice to Franchisor's right to recover the balance of the amount due or to pursue any other right or remedy. No endorsement or statement on any payment or in any letter accompanying any payment or elsewhere shall constitute or be considered as an accord or satisfaction. Franchisee shall have no right to withhold any payments due Franchisor or its Affiliates, on account of a breach or alleged breach of this Agreement or

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any other agreement between them, and no right to offset any amount due against any obligation that Franchisor, its Affiliates, the Exchange, or Service Provider may owe to Franchisee.

Section 4.08 Transfer of Funds

Franchisee covenants and agrees to utilize only one bank account for each currency used in the operation of the Franchised Business and to co-operate fully and comply with any system implemented by Franchisor for the transfer of funds directly from any such bank account to the bank account of Franchisor, including the execution of any pre-authorized payment forms required by Franchisee's bankers.

Article V.                     MARKETING

Section 5.01 Marketing Fund

A.          Recognizing the value of uniform advertising, marketing and promotion to the goodwill and public image of the Liquid Capital System, Franchisee agrees that Franchisor may maintain and administer a general marketing fund (the "Fund") as the Franchisor may deem necessary or appropriate in its sole discretion. Franchisor shall direct all marketing and advertising programs in its sole discretion with respect to the creative concepts, materials, endorsements, and media used therein, and the placement and allocation thereof. Franchisee agrees that the Fund may be used to pay the costs of preparing, producing and placing video, audio and written advertising, marketing and promotional materials and employing advertising, promotion and marketing agencies to assist therewith; the cost of developing and maintaining an internet website; and the cost of supporting public relations and market research. Franchisee further agrees that Franchisor shall have the right to allocate up to fifteen percent (15%) of the Fund for the payment of administrative costs.

B.          Franchisee shall contribute to the Fund each month during the first year of this Agreement the amount of Five Hundred Dollars ($500.00) which amount may be increased on or after the first Anniversary Date and each succeeding Anniversary Date of this Agreement by no more than ten percent (10%) of the amount charged during the year immediately preceding such Anniversary Date, as determined by Franchisor in its sole discretion. Any such increase shall be consistently applied to all similarly situated Liquid Capital Franchisees. Any amount payable to the Fund shall be paid on the first (1st) day of each month. Franchisee agrees that upon renewal of this Agreement, the Fund contribution may be increased to the amount charged the then most recent Liquid Capital Franchisee. Company-owned Liquid Capital Businesses will contribute to the Fund on the same basis as Liquid Capital Franchisees.

C          Franchisee acknowledges that the Fund is intended to maximize recognition of the Marks

and Liquid Capital System. Although Franchisor will endeavor to utilize the Fund to develop advertising, marketing and promotional materials that will benefit all Liquid Capital Businesses, Franchisor undertakes no obligation to ensure that expenditures by the Fund in or affecting any geographic area are proportionate or equivalent to the contributions to the Fund by Liquid Capital Businesses operating in that geographic area or that any Liquid Capital Business will benefit directly or in proportion to its contribution to the Fund from the development of advertising, marketing and promotional materials.

D. The Fund will be accounted for separately from Franchisor's other funds and will not be used to defray any of Franchisor's general operating expenses, except for such reasonable salaries, administrative costs, travel expenses and overhead as Franchisor may incur in activities related to the administration of the Fund, including, without limitation, conducting market research; preparing,


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producing and placing advertising, promotion and marketing materials (including, without limitation, engaging in telemarketing and direct marketing activities); and collecting and accounting for contributions to the Fund. Franchisor may spend, on behalf of the Fund, in any fiscal year an amount greater or less than the aggregate contributions of all Liquid Capital Businesses to the Fund in that year, and the Fund may borrow from Franchisor or others to cover deficits or invest any surplus for future use. All interest earned on monies contributed to the Fund will be used to pay advertising costs before other assets of the Fund are expended. Franchisor will prepare an annual statement of monies collected and costs incurred by the Fund and furnish the statement to Franchisee upon written request. Franchisor has the right to cause the Fund to be incorporated or operated through a separate entity at such time as Franchisor deems appropriate, and such successor entity will have all of the rights and duties specified herein.

E.         Franchisor reserves the right to defer or reduce contributions and, upon thirty (30) days'

prior written notice to Franchisee, to reduce or suspend contributions to and operations of the Fund for one or more periods of any length and to terminate (and, if terminated, to reinstate) the Fund (and, if suspended, deferred or reduced, to reinstate such contributions). If the Fund is terminated, all unspent monies on the date of termination will be distributed to Liquid Capital Businesses in proportion to their respective contributions to the Fund during the preceding twelve (12) month period.

Section 5.02 Advertising by Franchisee

A.         Franchisee shall not engage in any deceptive, misleading or unethical advertising which, in the sole opinion of Franchisor, might be injurious or detrimental to Franchisor, Franchisor's Affiliates, the Liquid Capital System, the Marks, other Liquid Capital Franchisees, the Exchange, the Service Provider, or the public. Franchisee shall submit all marketing and promotional materials developed by Franchisee to Franchisor for Franchisor's approval prior to use and shall not use any advertising or promotional material unless prior written approval from Franchisor has first been obtained. Notwithstanding the above, if Franchisee receives written notice from Franchisor that any advertising or promotional materials Franchisee is misusing the Marks or otherwise violate Franchisor's standards and specifications, then Franchisee agrees to promptly discontinue the use of such materials.

B.          Franchisor has the right to designate any geographic area in which two (2) or more Liquid Capital Businesses are located as a region for purposes of conducting cooperative local or regional promotions required by Franchisor. Each Liquid Capital Business located in the region shall participate in such local or regional promotions on terms applicable to all Liquid Capital Business located in the region.

Section 5.03 Internet, World Wide Web

A. Without Franchisor's prior written approval, which approval may be given or withheld in Franchisor's sole discretion, Franchisee shall not develop, create, generate, own, franchise, lease or otherwise utilize any computer media and/or electronic media (including but not limited to the Internet, World Wide Web, bulletin boards and news groups) which is used in any manner in connection with the operation of the Franchised Business or which uses, displays or utilizes the Marks. If Franchisor grants its approval,

1.         Franchisee acknowledges that the form, content and appearance of any Internet

website used by Franchisee must comply with the standards set forth in the Manual and must be approved by Franchisor in writing before being used. Accordingly, Franchisee agrees that it has no authority to, and will not, establish any website that creates any association with the Marks or the Liquid Capital


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System, or post any advertisements or material on the Internet that depict or display the Marks or suggest an association with the Liquid Capital System, without the express prior written consent of Franchisor. Without limitation of the foregoing, any Internet website created by or for Franchisee must contain a hypertext link to Franchisor's Internet website in the form Franchisor requires, and no other hypertext links to third party Internet websites unless previously approved in writing by Franchisor.

2.         Franchisor and/or Franchisor's Affiliates shall be the owners of and/or control

the materials posted by Franchisee, including any computerized or electronic media.

Notwithstanding Franchisor's approval of a website, Franchisor reserves the right to revoke such approval at any time that the website fails to continue to meet Franchisor's standards, and Franchisee agrees that upon such revocation, Franchisee will immediately discontinue use of such website.

B.          Franchisee agrees that it has no authority to, and will not, register any domain name in any class or category that uses or creates any association with the Marks (including any abbreviation, acronym, phonetic variation or visual variation of the Marks) or the Liquid Capital System without Franchisor's express prior written consent. Franchisee shall obtain Franchisor's prior written approval for Franchisee's domain name prior to use. Franchisee's domain name shall be registered in Franchisor's name and licensed to Franchisee by Franchisor. On termination or expiration of this Agreement, the license of the domain name to Franchisee will automatically terminate and Franchisee shall undertake all such actions as Franchisor requires to disassociate itself with the domain name.

C.          Franchisor has the sole right (but no obligation) to develop an Intranet through which Franchisor and Liquid Capital Franchisees can communicate by e-mail or similar electronic means. Franchisee agrees to participate in and use the facilities of the Intranet in strict compliance with the standards, protocols and restrictions that are included in the Manual (including, without limitation, standards, protocols and restrictions relating to the encryption of confidential information and prohibitions against the transmission of libelous, derogatory or defamatory statements).



Section 6.01 Relationship with Exchange

A.         So long as Franchisee is in Good Standing, Franchisee shall be eligible to participate in

the Exchange System. If Franchisee is not in Good Standing, then Exchange shall suspend the provision of any new Exchange Services (but not the Back Office Support Services).

B.         Unless otherwise permitted by the Rules and Regulations, all Purchase and Sale Agreements

originated by Liquid Capital Franchisees shall be between the Clients of the Liquid Capital Franchisees and the Exchange. Franchisee's right, title and interest in any Purchase and Sale Agreement shall be evidenced by a Participation Agreement (or, for Spot Factoring Arrangements, a Confirmation of Transaction) in the form then-currently in use in the Liquid Capital System and included in the Rules and Regulations and Franchisor shall file the Blanket UCC Financing Form attached hereto as Exhibit F on Franchisee's behalf in order to protect Franchisee's right to compensation as a Participant pursuant to any Participation Agreement or Confirmation of Transaction to which Franchisee is a party. If Franchisee has not signed a Participation Agreement, Franchisee agrees as follows:


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1.          Exchange may declare the Factoring Arrangement to be in liquidation at any time that a default has occurred under the Purchase and Sale Agreement. After declaring the Factoring Arrangement to be in liquidation, Exchange shall assume responsibility for managing the ongoing relationship with the Client in accordance with the Rules and Regulations and shall be entitled to be compensated for its services as set forth in the Rules and Regulations.

2.          After declaring the Factoring Arrangement to be in liquidation, Exchange shall pay to Franchisee 100% of all funds received by Exchange from the Client, Account Debtors, or from other sources (including Guarantors) on account of the Client Obligations or as proceeds of Collateral, less any costs of collection or reserves required by Exchange in its sole discretion until (a) Franchisee has received full payment of (i) the net outstanding amount of all contributions made by Franchisee to fund Advances to the Client and (ii) all fees paid by the Client after Net Expenses (i.e., gross expenses, net of recoveries) or (b) Collections have been exhausted. Franchisee shall pay to Exchange, on demand, and upon Franchisee's receipt of supporting documentation, all Extraordinary Expenses. Exchange will debit Franchisee's LCRA for such amounts.

C.          Franchisee acknowledges and agrees that it is an essential requirement of the Franchised Business that all agreements and documents that set out the relationship with the Client, including without limitation those agreements and documents pursuant to which a security interest in the Collateral may be obtained, be in approved form and be generated and registered using approved methods, all as more particularly set out in the Manual. Franchisee agrees to use only those forms and methods established by the Manual. Franchisee further agrees to keep all original documents and agreements in Franchisee's possession until any invoice to which such document or agreement relates shall have been paid and to keep copies of all such documents and agreements until the expiration or termination of the related Purchase and Sale Agreement.

D.         The training provided by Franchisor to Franchisee pursuant to Sections 7.01 and 7.02 below will include training as to Franchisee's obligations under the Participation Agreements. Among other things, Franchisor will train Franchisee in the functioning of the Exchange and will train and monitor Franchisee in the qualifications necessary for Franchisee to become a Managing Participant.

E.          Exchange will establish a LCRA at a commercial banking institution selected by Exchange and internally account for each Franchisee, in Franchisee's name, the Franchisee's activity in the account. Funds deposited in Franchisee's LCRA shall be used to fund Franchisee's obligations under those Participation Agreements in which Franchisee has a Participation Percentage, Advances, and fees due to other Participants, Exchange, and Franchisor. The LCRA will be credited with all fee income due to Franchisee, Franchisee's Participant's Compensation, and receipts pursuant to Participation Percentages held by Franchisee. The LCRA will be debited or credited for all amounts due to or from, as the case may be, Franchisee, the Exchange, other Participants, other Franchisees and Franchisor, alt as more particularly set forth in the Rules and Regulations. Exchange will have sole signing authority over the LCRA.

1.         Franchisee shall have the obligation to monitor the LCRA and Franchisee's

ongoing obligations to Clients and other Participants and to fulfill Franchisee's financial obligations pursuant to the Participation Interests Franchisee has acquired by depositing any required funds in the LCRA.


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2.         Exchange will advance funds on behalf of Franchisee to cure any shortfall in the

LCRA as determined by Exchange (a "Short-Term Loan"). The Participation Interests acquired by Franchisee are subordinate to and security for any such Short-Term Loan made by Exchange. Short-Term Loans will bear per diem interest and transaction costs at the rates set out, as modified from time to time, in the Rules and Regulations. Franchisee shall repay Short-Term Loans by depositing the required funds to the LCRA by no later than 10:00 am (Eastern Time) on the next banking day following such Short-Term Loan by Exchange. Exchange may adjust the Participation Interests of any Franchisee, or take such other steps as it deems reasonable, in its sole discretion, to collect unpaid Short-Term Loans and accrued interest and costs.

Section 6.02 Reports and Financial Information

A. Franchisee shall furnish to Franchisor, from time to time, such financial and other reports, with such detail and breakdowns and in such forms as are prescribed by the Rules and Regulations and contained in the Manual, as such forms may be modified or amended from time to time, together with copies of all supporting records. For greater certainty, these reports shall include, without limitation, the following:

1.          On or before the fifteenth (15thJ day of each month during the term of this Agreement, a monthly report of Franchisee's Clients and Prospective Clients including details of Gross Revenues from all sources, calculation of royalty payments, and such other information relating thereto as Franchisor may from time to time require in accordance with the Rules and Regulations.

2.          At Franchisor's request, copies of all returns required to be filed by the Franchisee with all applicable local, state and federal taxing authorities; and

3.          By March 31 immediately following the close of each Fiscal Year of Franchisee during the term of this Agreement, financial statements of Franchisee (income statement, balance sheet, and statement of retained earnings or partnership account), reviewed by a certified public accountant acceptable to Franchisor, for Franchisee's most recent Fiscal Year.

All of Franchisee's accounting records and supporting documents shall be kept in accordance with GAAP and shall be preserved and retained for such period as is required by law, but not less than five (5) years,

Section 6.03 Inspection and Audit of Books and Records

A. Franchisor, or its representatives, shall have the right during Normal Business Hours and without prior notice to the Franchisee to inspect or audit, or cause to be inspected or audited all books, records, documents or other materials relating to the Franchised Business, including the right, without limitation, to have a Person examine and make copies of same and to use, without charge, Franchisee's photocopy machine and supplies and to access Franchisee's computers and any other computer and/or database wherever situated to obtain the financial and any other information about the operation of the Franchised Business. Any Person acting on Franchisor's behalf may remove any records, documents or materials from Franchisee's premises for the purpose of photocopying same provided that the originals or copies thereof shall be returned to Franchisee as soon as practical thereafter. Franchisee shall cooperate and shall cause its employees to cooperate with Franchisor and its representatives in the conduct of any such inspection or audit.


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B.         If an inspection reveals that the Gross Revenues reported by Franchisee to Franchisor are

less than the Gross Revenues generated by Franchisee, then Franchisee shall immediately pay to Franchisor any amounts owing to Franchisor based upon the corrected Gross Revenues. All inspections and audits shall be at the expense of Franchisor, provided however, if an inspection or audit results from the Franchisee's failure to prepare, deliver or preserve statements or records required by this Agreement, or results in the discovery of a discrepancy in the Gross Revenues reported by Franchisee of three percent (3%) or more, Franchisee shall pay or reimburse Franchisor for any and all expenses incurred in connection with the inspection or audit including, without limitation, reasonable accounting and legal fees. Such payments will be without prejudice to any other remedies Franchisor may have under this Agreement or at law, including the right to terminate this Agreement.

Section 6.04 Sharing of Information

Franchisee hereby authorizes Franchisor, Franchisor's Affiliates, the Exchange, and the Service Provider to share between them any information known to them related to the Franchised Business, its Principal(s) and/or Guarantors) without liability to any Person. Franchisee further authorizes (and agrees to execute any other documents deemed necessary to effect such authorization) all banks, financial institutions, businesses, suppliers, manufacturers, contractors, vendors and other persons or entities with whom Franchisee does business to disclose to Franchisor any financial information in their possession relating to Franchisee or the Liquid Capital Business which Franchisor may request. Franchisee authorizes Franchisor to disclose data from Franchisee's reports if Franchisor determines, in its sole discretion, that such disclosure is necessary or advisable, which disclosure may include disclosure to prospective or existing franchisees or other third parties.

Section 6.05 Computer Systems; Electronic Access

A.         Franchisee agrees to acquire, install and use all Computer Systems that Franchisor specifies from time to time for use in the operation of the Liquid Capital Business. Following installation of the Computer Systems, each transaction of the Liquid Capital Business will be processed on the Computer System in the manner prescribed by Franchisor from time to time. At Franchisor's request, Franchisee agrees to transmit to Franchisor or its designee or to permit Franchisor or its designee to collect electronically information from the Computer Systems. Franchisor will have, at all times (including on a daily basis), the right to access and retrieve all information relating to the Liquid Capital Business from the Computer Systems and Franchisee agrees to take such action as may be necessary to provide such access to Franchisor, Franchisee shall co-operate in that regard by ensuring that its computers are left on and available to such polling and that its modem is engaged to receive calls from the Franchisor at all times.

B.          Franchisee acknowledges that Franchisor may modify the specifications and the components of any such Computer System from time to time. As part of the Computer System, Franchisor may require Franchisee to obtain specified computer hardware and/or software, including, without limitation, a franchise to use proprietary software developed by Franchisor or others, and to enter into data processing and service and support arrangements. Modification of the specifications for the Computer System may require Franchisee to incur costs to purchase, lease and/or 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. Franchisee acknowledges that Franchisor cannot estimate the future costs of the Computer System (or additions or modifications thereto) and that the cost to Franchisee of obtaining the Computer System (including any software licenses) or additions or modification thereto may not be fully amortizable over the remaining term of this Agreement. Nonetheless, Franchisee agrees to incur such


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costs. Within sixty (60) days after Franchisee receives notice from Franchisor, Franchisee agrees to obtain the components of the Computer System that Franchisor designates and requires. Franchisee further acknowledges and agrees that Franchisor has the right to charge a reasonable systems fee for software or systems modifications and enhancements specifically made for Franchisor that are franchised to Franchisee and other maintenance and support services that Franchisor or Franchisor's Affiliate furnishes to Franchisee related to the Computer System.

C.         Franchisee shall use the Computer System only for the express purpose of operating the

Franchised Business and for absolutely no other purpose unless approved by Franchisor. Franchisee shall not use any computer hardware or software which is not approved by Franchisor without the previous written consent of Franchisor;


Section 7.01 Basic Operational Training Course

A,          Franchisor shall provide a Basic Operational Training Course for Franchisee's Controlling Principal and such other employees as may be designated by Franchisee and approved by Franchisor to attend training, provided that each trainee executes such confidentiality and noncompetition agreements as required by Franchisor. Attendance and completion of the Basic Operational Training Course by the Controlling Principal to the satisfaction of Franchisor is required as a precondition to the commencement of operation of the Franchised Business. The course shall be conducted in McKinney, Texas or other suitable location selected by Franchisor and shall be of such duration as Franchisor may deem necessary given the experience of Franchisee's Controlling Principal and other relevant considerations. The course will cover the operation of the Liquid Capital Business, in accordance with Franchisor's established methods of operation. The course will be provided by Franchisor for three (3) Persons (or five (5) Persons if this Agreement is signed pursuant to our multi-territory program) (including Franchisee's Controlling Principal) at no additional charge to Franchisee (other than the Initial Franchise Fee) provided that all Persons attend the same session of the course. Franchisor reserves the right to charge a reasonable training fee for any additional Persons attending the course. Franchisee shall be responsible for all travel and living expenses and all wages payable to those of its personnel who attend the Basic Operational Training Course, and without limitation of the foregoing, no wages shall be payable by Franchisor to the Franchisee or any trainee for any service rendered at Franchisor's premises or selected location during the course of such training.

B.          Any original attendee of the Basic Operational Training Course may attend any subsequent sessions of such course which will be offered at Franchisor's sole discretion on a space available only basis without payment of any additional fee to Franchisor, If, after the initial Basic Operational Training Course provided by Franchisor pursuant to.Section 7.01 A. above, Franchisee desires or is required by this Agreement to have Persons other than the original attendees attend such course, Franchisee shall pay Franchisor a fee for each such Person in such amount as is set forth from time to time in the Rules and Regulations. Franchisee also shall be responsible for all travel and living expenses of and compensation payable to all of Franchisee's personnel attending any additional Basic Operational Training Course.

Section 7.02 Additional Training

Franchisor may from time to time develop and offer, directly or indirectly through a designated representative, certain supplemental training and/or certification courses. Franchisor may charge a fee for


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the course and/or may require Franchisee to pay or otherwise reimburse Franchisor for its out-of-pocket costs and expenses related to the course including costs of instruction, textbooks, workbooks, audio and video recordings, and follow up support for a period of at least three (3) months following a course. Franchisee's Controlling Principal (and such other personnel as Franchisor may designate or as Franchisee may designate and Franchisor approves) may be required to attend additional mandatory training courses from time to time during the term of this Agreement. Before Franchisee may qualify as a Managing Participant, Franchisee shall attend an additional training program and pass an exam at the end of such program with a score of at least sixty-five percent (65%). Franchisee shall be responsible for all travel and living expenses of and compensation payable to all of Franchisee's personnel attending any such optional or mandatory training or certification courses.

Section 7.03 Attendance at Annual Conferences

Franchisee's Controlling Principal (or another employee of Franchisee approved by Franchisor) shall be required to attend the Liquid Capital Annual Conference on at least a biannual basis. All expenses related to attending such conferences shall be the sole responsibility of Franchisee.

Section 7.04 Back Office Support Services and Other Services

Franchisor will provide or cause its designee to provide Back Office Support Services to Franchisee in consideration for the payment by Franchisee to Franchisor or to Franchisor's designee of the Back Office Services Fee and the Back Office Services Fee for Spot Factoring, as applicable. In addition, Franchisor will provide or cause its designee to provide the following services to Franchisee:

A.          Training and certification courses in accordance with Sections 7.01 and 7.02.

B.          On loan for the term of this Agreement, access to the Manual (including the Rules and Regulations) and such other operating documentation and guidance as Franchisor may deem necessary.

C.          Such continuing advice and guidance as may from time to time be deemed reasonably necessary by Franchisor, in its sole judgment, with respect to the opening and operation of the Franchised Business, in person or by telephone, mail, e-mail, facsimile or other such form of communication as Franchisor shall determine to be appropriate.

D.          Such marketing and advertising assistance as deemed appropriate by the Franchisor, including, as determined by the Franchisor (i) the development of advertising and promotional programs, and (ii) at Franchisee's request, reasonable marketing and sales support to assist with Prospective Clients; provided, that with respect to marketing and sales support for Prospective Clients requested by Franchisee under this subsection D.(ii), Franchisee shall reimburse Franchisor or its designee for all related expenses and any additional compensation agreed upon in advance of the provision of the services.

E.          Such improvements to the Liquid Capital System as may be developed from time to time.


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The original documents were scanned as an image. The original file can be downloaded at the link above.