Franchise Agreement ? Management Agreement

Exhibit 10.2

Franchise Agreement – Management Agreement

1. THIS AGREEMENT is made this 30th day of August 2007, by and between Clearpoint Business Resources, Inc and or its assigns located at 1600 Manor Drive, Suite 110, Chalfont, PA 18914 (hereinafter referred to as “Franchisor” or “ClearPoint”) and KOR Capital, LLC, located at 442 Genius Drive, Winter Park, FL 32789 (hereinafter referred to as “Franchisee” or “You”).

The Parties shall seek to enforce this Agreement as a Franchise Agreement and shall cooperate with each other and exercise their best efforts to secure any such required approvals, file any such registrations, or satisfy any such conditions expeditiously. In the event that the parties mutually determine that the formal relationship of Franchisor/Franchisee is not practical, the parties shall follow the specific terms and intent of the Agreement with ClearPoint as the Company and KOR Capital, LLC as the Service Manager for the Company.

2. CLEARPOINT BUSINESS RESOURCES OVERVIEW

ClearPoint Business Resources, Inc. is a leading Workforce Management Solutions provider to clients ranging from small businesses to Fortune 500 companies. Franchisor’s of franchisees and affiliates provide customized temporary staffing solutions with performance based deliverables, creating increased productivity. The Company’s services can streamline and optimize the complex processes involved in the procurement and management of a contingent workforce. ClearPoint’s proprietary suite of technology provides a cutting human capital portal that allows companies to manage their workforce in one click. This unique approach involving their specialized consultant teams puts the Franchisor at the forefront of the rapidly evolving Human Capital industry. For more information about ClearPoint, visit http://www.clear-point.com .

3. THE CLEARPOINT PROGRAM AND NETWORK

3(a) Clearpoint Business Resources has developed a unique and distinctive “Program” which includes the Client Files, Prospect Lists, Materials, Proprietary Marks, Domain Names, Copyrighted Works, Confidential Information, as well as certain tools, methods, operational procedures and techniques, proprietary and other third-party software applications, advertising materials, promotional programs, recordkeeping and reporting procedures, training, and knowledge. All components of the Program, existing today or developed by Franchisee or Franchisor during the term of this Agreement, constitute valuable trade secrets that are proprietary to Franchisor.

3(b) All components of the Program are provided to Franchisee for the establishment, development, operation and management of each franchise licensed under this Agreement.

3(c) The Program is the undisputed property of Franchisor, any component of the Program may be changed, improved, developed or discontinued by Franchisor from time to time, Franchisee must adhere to any changes to the Program.

3(d) Ownership of the Confidential Information by Franchisor is derived from the fact that all business generated during the operation of Franchisee is done under the Proprietary Marks, the Program, and the training designed and provided by Franchisor.

3(e) The value of the Program is enhanced by the “Network” which consists of all of the ClearPoint licensed franchisees and affiliates or offices owned directly by Franchisor. Franchisee may compete directly with any other franchisee, and any other Clearpoint Resources franchisee, affiliate or Franchisor owned office may compete directly with Franchisee, including the solicitation of Clients, Job-seekers, and Field Employees.

3(f) For the purposes of this Agreement, the Clearpoint Franchisee (the “Business”) is licensed for the purpose of providing full staffing employment services. Without limitation, those services include,

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career placements, contract staffing, temp-to-hire placements, and temporary assignments, as well as all other similar or related staffing products, services, or activities. The Franchisor is specifically precluded from providing employee leasing services and technology solutions. The parties hereby agree that such services are exclusively provided to Clients by Franchisor.

3(g) Any use of the Program, including the Confidential Information and the Proprietary Marks, other than for the operation of the Business, is a material breach of this Agreement.

4. AUTHORIZATION FOR PAY/BILL SERVICES BY CLEARPOINT

4(a) Authorization: The Franchisee relationship is primarily with Franchisor; however, certain duties and obligations contained in this Agreement will be performed by Franchisee. Franchisee must receive written approval of your plan to perform Payroll and Billings Operations under this Agreement. Franchisor authorizes ClearPoint’s Payroll and Billings Operations to perform these duties and obligations in accordance with the terms of this Agreement. Any changes to this plan must be pre approved by Franchisor. Generally, the role of Franchisor will be to fund, process, administer and maintain the accounting of the monies on behalf of the Franchisee (as detailed in Section 9), and employ Field Employees to be utilized by Franchisee.

4(b) Employment of Field Employees: Franchisee, Franchisor, and each “Client” (commonly identified as any individual or entity that uses, or desires to use, the services of Clearpoint) may under certain federal and state laws, contemporaneously incur certain employer responsibilities through their respective day-to-day activities and interaction with the Field Employee. These activities may result in the Co-employment of a Field Employee. “Co-employment” means the act of having direct contact with, or control of, a Field Employee. Therefore, as the facts and circumstances of each action performed by Franchisee, Franchisor, and/or the Client may warrant, each party may be required to undertake an employer’s legal duty to the Field Employee. Unless otherwise required by law, as a result of the affiliation with Franchisor, the Field Employee services provided through the Business shall be provided by individuals who are generally employees of Franchisee. In all circumstances, Franchisee shall be solely responsible for all taxes, wages, and benefits due Field Employees. Franchisee shall also be solely responsible to ensure compliance with all laws regarding employment and hiring of Field Employees. Franchisee agrees to indemnify and hold harmless Franchisor for any and all claims related to the employment of Field Employees. All Clients who receive services through the Business shall be Clients of Franchisor. Franchisor shall retain all right, title and interest in and to all Clients.

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4(c) Reasons to Refuse Services: Franchisor reserves the right, in our sole discretion, to refuse to:

(1) Allow Franchisee to employ any individual referred by Franchisee as a Field Employee who does meet the qualifications and standards specified by Franchisor in the Materials or who does not meet Federal, state, or local minimum hiring requirements,

(2) allow Franchisee to dispatch a Field Employee to any job assignment due to any adverse economic or safety reasons, or any reason that would violate a Field Employee’s rights under federal law,

(3) provide Field Employees to a Client who has not made timely payments to Franchisor;

(4) enter into an agreement with a Client if the anticipated Gross Margin with respect to that agreement would not fairly compensate Franchisor for providing Franchisor related services; or

(5) at the sole discretion of the Franchisor, allow Franchisee to provide Field Employees to a Client if Franchisee fail to perform credit checks or if we deem a Client to be a high credit risk.

5. THE CLEARPOINT LICENSE RELATIONSHIP

5(a) Grant: In reliance on the representations, warrants, acknowledgements, promises and covenants Franchisee makes in this Agreement, Franchisor grants Franchisee a nonexclusive license to use the Clearpoint Property solely for the purpose of operating each Business identified in Attachment 2: Granted Territory. Franchisee has an exclusive license to all ClearPoint Property under the trademark “Advantage Services Group” or “ASG” in the granted territory. In turn, Franchisee accepts the rights and obligations contained in this Agreement and Franchisee agrees to comply with all terms and provisions contained in this Agreement.

5(b) Term: The initial term of this Agreement begins on the Effective Date and will not exceed 99 years. In addition, every ten years the Parties shall engage in the 10 Year Renewal Process set forth in Section 13.

5(c) Granted Territory and Minimum Performance Requirements:

(1) If the parties agreed to designate a “Granted Territory” (as detailed on Attachment 2), then Franchisee must establish Franchisee first Location within that Granted Territory. If the parties agree not to identify a Granted Territory, then Franchisee must establish Franchisee first Location at a site approved by Franchisor in accordance with subsection 6(b) below.

(2) The terms of this Agreement provide for operating multiple Business locations. During the term of this Agreement, if Franchisee desires to expand Franchisee existing operations, and Franchisee meets Franchisors then-current criteria to expand, Franchisor will determine whether or not the new location must be established within the Granted Territory or elsewhere.

(3) It is agreed by the parties that the grant of the Granted Territory rights is specifically conditional on Franchisee successful market penetration of the Granted Territory. It is understood that if during any given annual period during the term of this Agreement Franchisee fails to achieve the “Minimum Performance Requirements” set forth on Attachment 2, Franchisor will provide Franchisee with Franchisors written notice that Franchisor elect to either:

(i) give Franchisee the opportunity to pay Franchisor the amount equal to the shortfall between the Royalty payments actually paid by Franchisee and the then-required Minimum Performance Requirement figure thus enabling Franchisee to retain Franchisee rights to the Granted Territory, or

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(ii) rescind your Granted Territory rights, at which time Franchisor is no longer restricted from establishing other ClearPoint businesses (whether franchised or company-owned) within the Granted Territory, regardless of proximity to any Business already established within the Granted Territory.

(3a) Further, except under the other specific circumstances described below, as long as You retain those rights, ClearPoint will not establish, or authorize any other party to establish a ASG or Advantage Services Group office within the Granted Territory. The parties acknowledge that physical ClearPoint offices exist in the Granted Territory and such offices primarily focus on transportation staffing and technical staffing. Franchisor will continue to develop business in the Granted Territory on behalf of Franchisee including:

(i) Clearpoint Acquisition: In the event Franchisor (whether directly or through Franchisor’s subsidiaries or affiliates) acquire a multi-location staffing business from an unrelated third-party that happens to have one or more locations within the Granted Territory, Franchisor shall seek to provide Franchisee the opportunity to purchase and operate one or more of the acquired businesses located within the Granted Territory.

(iii) Major Account Client: If during the term of this Agreement Franchisor initiates a major account program that requires servicing Clients located in the Granted Territory Franchisor shall offer Franchisee the opportunity to perform the services as required by the related Major Account agreement.

(4) Franchisor is not restricted from developing business within the Granted Territory if Franchisee does not retain Franchisee rights (or in those instances that apply to the exceptions above). Further, Franchisor is not restricted from establishing ClearPoint businesses (or other similar staffing businesses) outside the Granted Territory. Franchisor may establish such businesses under the Proprietary Marks or any other marks Franchisor designates. The established businesses may be operated or franchised by Franchisor from sites anywhere in the world, and regardless of proximity to a specific ClearPoint office.

5(d) Use of Franchisor Property: Franchisee is hereby licensed to use the Clearpoint Property solely in accordance with this Agreement and in the manner prescribed by Franchisor either in the Materials or by Franchisors written instructions to Franchisee. Franchisor may change, modify, develop, or discontinue components of the Clearpoint Property from time to time. The “Clearpoint Property” includes the following:

(1) The Program.

(2) The “ Proprietary Marks” including the service marks CLEARPOINT , CLEARPOINTSEARCH, the descriptive phrases CLEARPOINT RESOURCES, CLEARPOINT Technical Services and CLEARPOINT Information Services, and such other trade names, trademarks, and service marks as Franchisor may designate (or substitute) for Franchisee use in connection with the operation of the Business.

(3) The “Domain Names ” including the Internet domain name www.clear-point.com (and all other Domain Names registered by Franchisor or Franchisor’s affiliates) and any other domain names that may be utilized by Franchisor. Franchisee must use the Domain Names in conjunction with the identifier Franchisor assign to Franchisee.

(4) The “Materials” , (whether written or electronic) include without limitation manuals, written directives and policy statements, Copyrighted Works, forms, reports, audio or video tapes, all virtual classroom programs, forms of electronic storage media, software applications and Internet web pages (whether owned or licensed by Franchisor). Franchisor may, at Franchisors sole option, modify the Materials from time to time, and Franchisee must adhere to such changes.

(5) The “Copyrighted Works” , includes all Materials containing the copyright identification CLEARPOINT , as well as all other Materials entitled to the protection of the copyright laws.

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(6) All Confidential Information owned, licensed or sublicensed by Franchisor or delivered to Franchisee in confidence, including information developed by the parties during the term of this Agreement.

(7) All “Service Files” which consist of any and all the information concerning any Client or potential Client, any job opening from a Client or potential Client, and resumes, applications, and any other related information concerning the following individuals:

(i) any “Job-seeker” who is generally identified as an applicant who seeks out Clearpoint Resources, with respect to self-employment, or temporary employment by others; and

(ii) any “Field Employee” who is generally identified as a Job-seeker who becomes a Field Employee at the time Franchisee sells his/her services to one or more Clients; and

(8) The goodwill associated with and symbolized by each component described in this subsection 5(d), and all improvements, enhancements, additions and modifications to any of them.

(9) All “accounts” resulting from the processing of Billings in accordance with Section 9 of this Agreement.

5(e) Ownership of the Clearpoint Property:

(1) Franchisor’s ownership of the Clearpoint Property is undisputed. Franchisee shall not contest the validity of Franchisors rights in the Clearpoint Property or take any action that would prejudice or interfere with the validity of Franchisors rights with respect to the Clearpoint Property.

(2) Except with regard to Franchisee right to use the Clearpoint Property in accordance with the terms and conditions of this Agreement nothing in this Agreement shall give Franchisee (or any related party to Franchisee) any rights, title, or interest in or to the Clearpoint Property.

(3) Any unauthorized use of the Clearpoint Property by Franchisee shall constitute an infringement of Franchisors rights in the Clearpoint Property and is a material default of this Agreement.

(4) Franchisee shall execute and provide to Franchisor all documents and information Franchisor reasonably request to fully vest and protect Franchisor’s right, title and interest in the Clearpoint Property.

5(f) Identifying the Program:

(1) Clearpoint reserves the right to issue specifications and guidelines as are reasonably necessary to preserve Franchisors rights in and to the Proprietary Marks and Domain Names. Franchisee must adhere to these specifications and guidelines.

(2) If the current Proprietary Marks or Domain Names can no longer be used Franchisor may discontinue, modify, substitute or add to the Proprietary Marks or Domain Names for the benefit of the Program. Upon Franchisee’s receipt of Franchisor’s written notice, Franchisee must, at Franchisee’s expense, comply with such change. Franchisee agrees to consistently adhere to Franchisor’s instructions concerning the use of the Proprietary Marks and Domain Names.

(3) Franchisor may inspect Franchisee operations from time to time and will advise Franchisee of any deficiencies concerning Franchisee non-compliance with the Program identification at the Business. Upon notification of such deficiencies, Franchisee must conform Franchisee operations accordingly. Franchisee’s failure to comply with Franchisors instructions is a material breach of this Agreement.

5(g) Identification for Advertising and Marketing Purposes: Franchisee must identify itself as a Clearpoint franchisee as Franchisor prescribed or approved by Franchisor. Franchisee may not use the Proprietary Marks with any prefix, suffix, or additional words, symbols, marks, or punctuation that have

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not been approved by Franchisor. If the law requires different or additional identification, Franchisee may use the Proprietary Marks only with modifications that Franchisor designates in writing to Franchisee. Franchisee may not use any corporate, partnership, fictitious, trade, domain or other name without Franchisors prior written approval.

5(h) Identification as an Independent Contractor.

(1) This Agreement does not create a fiduciary relationship between Franchisee and Franchisor. Nothing in this Agreement is intended to make either party an agent, legal representative, subsidiary, joint venturer, partner, employee, or servant of the other for any purpose whatsoever.

(2) Franchisee must hold itself out to the public as an independent contractor operating according to a franchise license from Franchisor. Franchisee must exhibit a notice in a conspicuous place at each Business to inform the public that Franchisee is operating independently as a franchisee of ClearPoint. Franchisor reserves the right to specify in the Materials the content and form of Franchisee notice.

(3) nothing in this Agreement authorizes Franchisee to enter into any contract, agreement, lease, warranty or representation by using Franchisors name, except as a doing business as (d/b/a) identifier (for example, John Doe Corporation, dba Clearpoint Resources). Franchisee can not legally bind Franchisor to incur any debt or obligations, and Franchisor shall not assume any liability, or be deemed liable under this Agreement as a result of any action by Franchisee to attempt to do so. Franchisee may not execute any written agreement with a Client that imposes an indemnification of any nature by Franchisor. Should Franchisee enter into any such agreement, the agreement shall be void against Franchisor and will constitute an event of default under this Agreement,

(4) Franchisor shall not be liable for any act or omission by Franchisee in operating the Business or for any claim or judgment arising from such acts or omissions.

5(i) Associated Goodwill: Any and all goodwill associated with, and identified by, the Proprietary Marks and Domain Names (including goodwill arising from Franchisee use of them) inures directly and exclusively to Franchisors benefit and is Franchisors property. Upon expiration (without renewal) or termination of this Agreement, no monetary amount shall be attributable to the goodwill associated with Franchisee use of the Clearpoint Property, or Franchisee activities under the Program.

5(j) Future Development of the Clearpoint Property: Any improvements, enhancements, advertising or public relations programs, marks, domain names, inventions, or modifications of the Clearpoint Property developed or adopted by Franchisee during the term of this Agreement (even if not authorized by Franchisor) which relates in any way to the operation of the Business, shall be Franchisors exclusive property. Franchisee hereby disclaims any right, title or interest therein. Franchisee must immediately disclose to Franchisor any such future development designed by Franchisee. If Franchisor, at Franchisors expense, elects to file for patent, copyright, domain name registration or similar protection concerning the future development, Franchisee must execute the documents and provide Franchisor with any information Franchisor may reasonably request in order to perfect the filing.

5(k) Services Rendered: Any services Franchisee renders using the ClearPoint Property must conform to the standards of quality specified or approved by Franchisor.

5(l) Internet Services: As long as Franchisor provides an Internet presence for Franchisee, Franchisee may not independently establish an Internet presence in any manner. However, should Franchisor cease to provide Franchisee with Internet service, upon obtaining Franchisor’s prior written consent, Franchisee may do so.

5(m) notice of Legal Action and Indemnification:

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(1) YOU AGREE, AT ALL TIMES AND AT YOUR EXPENSE, TO DEFEND, INDEMNIFY AND HOLD HARMLESS US, OUR AFFILIATES, SUBSIDIARIES, SUCCESSORS, ASSIGNS, AND DESIGNEES, AND THEIR RESPECTIVE MANAGERS, MEMBERS, OFFICERS, AGENTS, AND REPRESENTATIVES (COLLECTIVELY REFERRED TO AS THE “INDEMNITEES” ) FROM ALL LOSSES AND EXPENSES INCURRED IN CONNECTION WITH ANY ACTION, SUIT, ALTERNATIVE DISPUTE RESOLUTION, ARBITRATION, PROCEEDING, CLAIM, DEMAND, INVESTIGATION, FORMAL OR INFORMAL INQUIRY, OR ANY SETTLEMENT THEREOF (COLLECTIVELY REFERRED TO AS “ACTION”) WHICH ARISES OUT OF OR IS BASED UPON YOUR OWNERSHIP OR OPERATION OF THE BUSINESS, INCLUDING CLAIMS RELATED TO THE EMPLOYMENT OF YOUR STAFF EMPLOYEES. THIS OBLIGATION TO INDEMNIFY AND DEFEND US SHALL APPLY EVEN IN THE EVENT OF THE NEGLIGENCE OF OR CLAIM OF NEGLIGENCE AGAINST INDEMNITEES.

(2) SPECIFICALLY EXCLUDED FROM THE INDEMNITY GIVEN ABOVE IS ANY LIABILITY ARISING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF INDEMNITEES (EXCEPT TO THE EXTENT THAT SUCH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IS ATTRIBUTED OR IMPUTED BY REASON OF ANY ACT OR OMISSION BY YOU).

(3) For the purpose of this Agreement the term “losses and expenses” shall, without limitation include, all losses, compensatory, exemplary or punitive damages, fines, charges, costs, expenses, lost profits, attorneys’ fees, experts’ fees, court costs, settlement amounts, judgments, arbitration awards, compensation for damages to Franchisors reputation and goodwill, costs of or resulting from delays, financing, costs of advertising material and media time or space, including costs of changing, substituting or replacing same, and all expenses for recall, refunds, compensation, public notices and other such amounts incurred in connection with the matters described.

(4) As soon as Franchisee are aware of any Action Franchisee must immediately give Franchisor notice of such Action. At Franchisee expense and risk, Indemnitees may elect to assume the defense of any Action; however, under no circumstance are Indemnitees obligated to undertake the defense of any Action. Such an undertaking by Indemnitees shall in no manner diminish Franchisee obligation to indemnify Indemnitees and to hold them harmless. Franchisee acknowledge that Franchisee have no authority to accept any service of process on behalf of any of the lndemnitees.

(5) Franchisor may, at any time and with such notice as Franchisor deems appropriate, offer, order, consent or agree to settlements or take such other remedial or corrective actions Franchisor deems expedient with respect to any Action if, in Franchisors sole judgment, there are reasonable grounds to believe that any of the acts or circumstances enumerated in this subsection 5(m) have occurred, or that any act, error, or omission of Yours may result directly or indirectly in damage, injury or harm to any person or any property. All losses and expenses incurred under this subsection 5(m) shall be chargeable to and paid by Franchisee regardless of any action, activity or defense undertaken by any Indemnitees or the subsequent success or failure of such actions, activity or defense.

(6) Indemnitees do not assume any liability whatsoever for acts, errors, or omissions of those with whom Franchisee may contract, regardless of the purpose. Franchisee shall hold harmless and indemnify Indemnitees for all losses and expenses that may arise out of any acts, errors or omissions regarding such third parties.

(7) Under no circumstances shall Indemnitees be required or obligated to seek recovery from third parties or otherwise mitigate their losses in order to maintain a claim against Franchisee. The failure to pursue such recovery or mitigate loss will in no way reduce the amounts recoverable by Indemnitees from Franchisee.

(8) Provisions of this subsection 5(m) shall continue in effect after the expiration or

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termination of this Agreement for any and all Actions that accrued during the term of this Agreement.

5(n) Infringement and Franchisor’s Related indemnification:

(1) Should Franchisee become aware that a suspected unauthorized third party is using the Proprietary Marks (or any variant thereof), Franchisee must immediately notify Franchisor of the facts relating to the alleged infringement. Upon receipt of Franchisee notice, Franchisor shall, in Franchisor’s sole discretion, determine whether or not Franchisor will take any action concerning the alleged infringement. Franchisee shall have no right to make any demand or prosecute any claim related to such infringement.

(2) Franchisee must notify Franchisor immediately of any claim against Franchisee alleging that Franchisee use of the Proprietary Marks constitutes an infringement of someone else’s rights. So long as Franchisee have complied with the Program, Franchisor agrees to indemnify and hold Franchisee harmless against any liability assessed against Franchisee in favor of the claimant, including Franchisee reasonable costs of defending the claim. Franchisor will not be liable for any other damages, costs, expenses or for any loss of profits or business opportunities or incidental or consequential damages of any kind relating to any such claim. Franchisor reserve the right to defend, compromise and settle any such action and if Franchisor do undertake Franchisee defense, Franchisor will not be responsible for the cost of any independent counsel Franchisee retain. Franchisor shall have no obligation to defend or indemnify Franchisee pursuant to this subsection 5(n) if the claim, suit or demand against Franchisee arises out of or relates to Franchisee use of the Proprietary Marks in violation of the terms of this Agreement.

7. TRADE SECRET/CONFIDENTIAL INFORMATION

7(a) Trade Secret: The Confidential Information is not a matter of common knowledge in the trade, is generally not available except through time consuming and costly processes, and gives Franchisee and Franchisor an advantage over other staffing businesses. Therefore, Franchisee acknowledges and agrees that the Confidential Information, whether currently in existence or hereafter acquired, constitutes a trade secret of ClearPoint.

7(b) Confidential Information: The following information, without limitation, constitutes the “Confidential Information” :

(1) the Clearpoint Property, the Materials; the Program, Service Files content, Field Employee and/or Staff Employee information obtained through the operation of the Business (whether past, present or prospective);

(2) any information regarding any individual who has a reasonable expectation of privacy and/or which was disclosed to Franchisee, the Client, the Business and/or Franchisor in confidence;

(3) any additional information regarding any Client, including, but not limited to, personal information on the various contact persons, contact telephone numbers, personnel needs, fringe benefits, hiring practices, time lines and budgets, policies, goals and plans, usage of Field Employees, Client pricing for various services and types of Field Employees, fees, profit margins, credit history, existing or prospective Job-orders and Client agreements and all other dealings with Franchisee, the Business and/or Franchisor,

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(4) any information regarding Franchisee business operations and practices under the Program, including pricing and cost codes, marketing techniques, strategic business plans and market research studies, promotional ideas, operating reports, placement registers, and accounts receivable;

(5) any information, including a formula, pattern, compilation, program, device, method, technique, or process that derives independent economic value, actual or potential, for which reasonable efforts are used to maintain its secrecy, and which is not generally known to the public or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and

(6) any other information known by Franchisee or used in the Business that could give Franchisee an advantage over competitors that is not disclosed to the public by Franchisor or that is not generally known to the public.

7(c) Non-Disclosure of Confidential Information: Franchisee and Franchisee Principal Owners acknowledge that any use of the Confidential Information other than for the operation of the Business is a material breach of this Agreement and constitutes an unfair business practice. Franchisee agrees that during the term of this Agreement, Franchisee will institute thorough and effective measures to protect and preserve the confidentiality of the Confidential information. Franchisee agrees that Franchisee will not (1) disclose the contents of the Confidential Information to unauthorized persons; (2) allow any written Confidential Information to leave the Location; (3) copy or use the Confidential Information for any purpose other than as permitted by this Agreement; or (4) disclose, use or misappropriate the Confidential Information. Franchisee further agrees to adhere to these terms after the expiration (without renewal) or termination of this Agreement.

7(d) Protection of Confidential Information:

(1) Franchisee will require Franchisee Manager, Staff Employees and/or agents or other third parties who will have access to the Confidential Information to execute a “Confidentiality Agreement” in the same form as Attachment 4 to this Agreement. Franchisee must advise such persons that the Confidentiality Agreement contains covenants against unfair trade practices and that execution of the Confidentiality Agreement is a prior condition of employment and/or association with Franchisee.

(2) All officers, directors, spouses, and other third parties Franchisor designates who are not required by Franchisor to execute this Agreement but whom Franchisor have a reasonable expectation will have access to Confidential Information must execute a Confidentiality Agreement.

(3) Franchisee must forward a copy of each executed Confidentiality Agreement to Franchisor for Franchisors records. Franchisee and Franchisee Principal Owners may not reveal any Confidential Information to any individual in the absence of a written obligation from such person not to misuse or disclose the Confidential Information, Franchisee agrees to consistently and uniformly enforce the Confidentiality Agreement.

8. OPERATION OF THE BUSINESS

8(a) Compliance With Law and Program: Franchisee must strictly follow the Program and comply with all applicable federal, state and local laws, regulations, ordinances, codes, and guidelines.

8(b) Initial Marketing Campaign: Within the first 90 days following the opening of the Business, Franchisee must, at Franchisee cost, conduct an aggressive initial marketing campaign to promote the entrance of the Business into the local market. Franchisor will provide Franchisee with the basic components of advertising and promotional materials to assist Franchisee in this endeavor. If Franchisee desires to use Franchisee own materials Franchisee may do so after obtaining Franchisors written consent.

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8(c) Treatment of Personnel: With respect to the operation of each Business, Franchisee agrees to take all steps necessary to ensure that all Job-seekers, Field Employees, and Staff Employees are treated fairly, equally, and with dignity and respect, as required under the Materials and under applicable laws prohibiting discrimination and harassment, or any other illegal basis concerning the hiring, compensation, supervision, safety, training, discharge, dispatching, or referral for placement of such persons.

8(d) Required insurance:

(1) Except for the insurance Franchisor charges to Franchisee through our processing billing group concerning the Field Employees and the services provided through the Business; Franchisee must procure and maintain the following coverage as required by the Materials: (i) crime/fidelity bond, (Ii) commercial general liability, (ill) worker’s compensation, (iv) errors and omission, (v) employment practices liability, (vi) medical malpractice liability (if Franchisee Intend to provide certain medical services), (vii) professional liability (if Franchisee intend to provide certain professional services) and (viii) any other insurance Franchisor deem necessary (collectively the “Insurance” ) to protect Franchisee and the Indemnitees against any demand or claim with respect to personal injury, death or property damage, as well as any loss, liability or expense arising or occurring in connection with the Business.

(2) The deductible on any Insurance policy may not exceed $2,500 without Franchisors prior written approval, The Insurance shall be underwritten by insurance companies holding a Best’s Rating of not less than B+ ; Class VI, and shall be in forms acceptable to Franchisor, The insurance provider must name Franchisor as an additional insured, and the coverage must conform to the minimum amounts and special provisions described in the Materials. Franchisor may modify these insurance requirements from time to time to meet current industry needs and/or governmental regulations, and Franchisee must comply with such change.

(3) At least 30 days prior to opening the ^. Business, Franchisee shall provide to Franchisor a certificate of insurance or other documents required by the Materials evidencing the required coverage. Franchisee must provide Franchisor with a new certificate of insurance every year at least 30 days prior to the expiration of any required coverage. All Insurance shall expressly provide for no less than 30 days’ advance written notice to Franchisor to inform Franchisor of any event of a material alteration to the Insurance, or cancellation of the insurance.

(4) Should Franchisee, for any reason, fail to procure or maintain the Insurance, Franchisor has the right and authority (however not the obligation) to immediately procure the Insurance. Franchisor will charge Franchisors related costs to Franchisee, together with Franchisors reasonable incurred expenses and may deduct them from Franchisee Distribution Account. If Franchisee Distribution Account has a negative balance, upon receipt of Franchisors notice to Franchisee, Franchisee shall immediately reimburse Franchisor for Franchisors costs, These remedies shall be in addition to any other remedies Franchisor may have at law or in equity.

(5) If you elect to enter into an arrangement to lease Franchisee Staff Employees, Franchisee are responsible for obtaining a certificate of insurance from the leasing company evidencing the same level of coverage as would be held by Franchisee if Franchisee did not lease Franchisee Staff Employees. The leasing company must also provide an indemnification of the Indemnitees.

(7) The insurance shall include a waiver of subrogation in favor of Franchisor, and Franchisors affiliates and subsidiaries. All public liability and property damage policies shall contain a provision that Franchisor, Franchisors agents, or Field Employees, are entitled to recover any loss by reason of Franchisee negligence or the negligence of Franchisee agents, Franchisee Staff Employees, or other Field Employees.

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8(e) Insurance Programs: Although not required to do so, Franchisor may establish programs for the Network for any type of insurance coverage required at any time for the Business. If Franchisor does establish such programs, Franchisor may, in Franchisors sole discretion, require Franchisee to enroll and participate in the programs.

8(f) Full Time Management: Franchisee shall at all times have the Business managed by a Manager (whether a Principal Owner or otherwise) who will maintain a presence at the Location and who will devote full time, energy, and best efforts to the management, promotion, and growth of the Business.

8(g) Submission of Reports: Franchisee shall, at Franchisee expense, provide to Franchisor all documents and information Franchisor deem necessary to implement and maintain this Agreement. With respect to each Location developed under this Agreement, Franchisee must submit to Franchisor the marketing, financial and/or other designated reports Franchisor requires. Such information must be submitted in the manner, form, time frame and content prescribed by Franchisor in the Materials. Franchisor has the right to electronically collect this information and/or in turn, require Franchisee to submit this information electronically to Franchisor.

8(h) No Other Business Conducted at Location: Franchisee must ensure that no business other than the Business is conducted at the Location. Franchisee may not allow the impression of a physical or operational connection with any other business.

8(i) Compliance with Materials: Franchisee shall, at Franchisee’s expense, comply with the standards and requirements stated in the Materials (as modified from time to time), including without limitation:

(1) utilization of new technology in the operation of the Business,

(2) office decor, furniture, fixtures, electronic, mechanical and communications equipment, business forms, and advertising materials from the sources Franchisor designate,

(3) use of motivation and recognition programs, annual planning sessions, and format marketing plans, including a grand opening campaign for each Business licensed under this Agreement,

(4) levels and type of Staff Employees necessary to properly penetrate the market and grow market share, and the use of Staff Employee Confidential Agreements, training and improvement programs,

(5) treatment of Job-seekers and the hiring and dispatching of Field Employees, and

(6) compliance with national programs, such as Client satisfaction guarantees, special hours incentive pay, holiday pay, vacation pay, referral payments, and Co-op Splits.

8(j) Modernization: Except for the 12 month period immediately prior to the Scheduled Expiration Date, Franchisor may, during the term of this Agreement, require Franchisee to modernize, at Franchisee expense, all or part of Franchisee Business operations (including the assets at each Location) for the purpose of complying with Franchisors then-current electronic hardware, software, and/or Internet standards and specifications, If any component of the up-dated modernization requires additional training, Franchisor will identify the individual(s) required to attend such training, and Franchisee will, at Franchisee cost, insure that they attend the required training.

9. DISTRIBUTION ACCOUNT AND PROCESSING.

9(a) Distribution Account: Franchisor’s processing billing group will maintain Franchisee “Distribution Account” , which includes without limitation the administration of Credits and Charges related to the Business in accordance with the Materials and the summary provided below. The Franchisee shall have capital availability equal to 85% of the eligible Temporary Help Billings generated by the Franchisee. Eligible Temporary Staffing Billings shall be defined as all Temporary Help Billings less than 60 days old,

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provided that such Billings have the required back up and are not disputed by Client. KOR shall receive weekly funding equal to 50% of all receivables that are between 60 and 90 days old. FRANCHISOR may charge interest for the funding of such past due accounts at the rate of one percent per month. KOR shall not receive any advances for receivables that are greater than 90 days old.

In the event that any of the Accounts Receivable become uncollectible at any time or remains uncollected for more than ninety (90) days after the invoice date, Franchisor has the option at such time to sell such accounts receivable to KOR. The purchase shall be self effectuating without any formal purchase agreement, and FRANCHISOR shall advise the KOR of the Accounts Receivable being assigned and sold and shall be entitled to immediate payment by the KOR of the amount of that assigned receivable. FRANCHISOR shall have the right to offset any funds due and unpaid from the KOR against collections of the Accounts Receivable.

Franchisee is not entitled to any distribution payments on Billings processed after termination or expiration (without renewal) of this Agreement. Franchisee understands and agrees that Franchisee is financially responsible for all Charges, each of which will be deducted from the Distribution Account. The following summary of typical Credits (denoted with a “+”) and Charges (denoted with a”-”) is provided far demonstrative purposes:

(1) “Credits” include without limitation, Billings charged to Clients for Temporary Help Billings, Conversion Fees, Expense Reimbursements, temp-to-hire Billings, and Career Placement Billings as defined below:

(i) “Billings” individually and collectively refers to all charges to Clients which without limitation include:

(a) “Temporary Help Billings” means fees charged for (1) Field Employees and/or temporary contract workers services (whether on or off site from the Client’s premises), (2) payroll services, and (3) temporary outsourcing,

(b) “Conversion Fees” means the fees charged to the Client for the conversion of the Field Employee to the Client’s payroll or another staffing business;

(c) “Expense Reimbursement” means a Field Employee’s job related costs (I.e., meals, parking, travel allowances, supplies, equipment, mileage, and other similar or related items);

(d) “temp-to-hire Billings” means the fees charged for the placement of a Field Employee with the intent to become an employee of the Client at a later date;

(e) “Career Placement Billings” means the fees charged for (1) helping Job-seekers obtain long term employment or self-employment, (2) Field Employee and Job-seeker

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testing, training,. counseling and/or consulting services, (3) Client counseling and/or consulting services, (4) resume consultation, preparation, processing and distribution, (5) outsourcing, outplacement, or business opportunity services, (6) employment related software sales, (7) Client, Field Employee and/or Job-seeker promotional programs, (8) check cashing services for Clients, Field Employees and/or Job-seekers, (9) co-op activities, (10) employment related publications and/or book sales, and (11) all other similar or related products or services.

(2) “Charges” shall include amounts charged for:

(i) “Payroll” resulting from the Field Employees’ gross wages, including bonuses, commissions and any other form of compensation;

(ii) “Payroll Costs” for (a) federal withholding, FICA, and state withholding, (b) state unemployment and unemployment consulting fees, (c) local taxes of any type or kind, and (d) amounts allocated or charged by Franchisor for the unemployment claims experience of the Field Employees submitted by Franchisee for processing as well as the Program in general;

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(iii) “Insurance Costs” resulting from expenses incurred by Franchisor for (a) obtaining commercial general liability, umbrella, errors and omissions, crime/bond, and employment practices liability insurance coverage or any other coverage Franchisor deem appropriate related to the Field Employees, (b) any retention assumed by Franchisor for worker’s compensation, (c) deductibles or defense costs, in connection with such policies or their administration, (d) obtaining insurance on Field Employees, including residual market loads and any fees or costs related to the number of claims and loss experience of the Field Employees submitted by Franchisee for processing, (e) the cost of administering and implementing the insurance program, including brokerage and consulting expenses, overhead, and travel expenses, (f) claims handling fees and legal fees related to such claims, (g) charges for misclassification of Field Employees for worker’s compensation reporting and charge purposes, and (h) taxes and any other related fees or costs;

(iv) Royalty payments due Franchisor with regard to Temporary Help Billings, temp-to-hire Billings, Career Placement Billings, Conversion Fees, and/or any related Receipts. For the purpose of this Agreement, “Receipts” means all money and other valuable consideration, including barter, received during or after the term of this Agreement by Franchisor, Franchisee, Franchisee Staff Employees, collection agents, or other assignees, as revenue generated by the operation of the Business. The parties further agree that any Receipt represented by consideration other than money shall be given their fair market value as Franchisor may reasonably determine;

(v) Ad Fund contributions due to the promotional fund established by Franchisor to promote the Network;

(vi) “Chargebacks” which include without limitation Billings that (a) are repudiated in whole or in part by a Client; (b) produce a negative Gross Margin; (c) remain unpaid for 67 days after the respective invoice date, (d) are uncollected at the time of termination or expiration (without renewal) of this Agreement, and (e) are the result of the additional amounts due if the Client is classified as a high credit risk or the Clients unpaid Billings exceed Franchisors credit limits;

(vii) “Interest” at the rate of 1% per month.

(viii) “Adjustments” include without limitation amounts charged to the Distribution Account for items such as (a) bank wire transfer fees, (b) overnight courier packages, (c) stop payment check charges, (d) manual check charges, (e) non-sufficient fund charges, (f) Payroll error adjustments, (g) UCC recording fees or other similar filing fees, (h) credit reports and other credit or collection services Franchisor deem appropriate, (i) other collection costs, (j) any adjustments to Payroll Costs, (k) Electronic Data Interchange “EDI”, (l) any special program offered by Franchisor in which Franchisee voluntarily participate, (m) garnishments, and (n) any other charges to the Distribution Account;

(ix) “Client Refunds” amounts related to service guarantees, billing errors, Client dissatisfaction, or items Franchisor may otherwise authorize by the Materials;

(x) “Co-op Splits” amounts related to Franchisee agreement to co-operate with other franchised or company-owned Clearpoint offices or other third-party personnel companies where the partie