FRANCHISE AGREEMENT

This Franchise Agreement (“Agreement”) made as of this 3 rd day of October 2019 by

and between:

CATHERINE J. YU, Filipino, of legal age, and a resident of Unit 2 corner Kamagong
Street La Paloma Subdivision, Labangon, Cebu City (“FRANCHISOR”);

-and-

MERGEAN R. GALANG, Filipino, of legal age, married and a resident of 3 rd Street

Corner Chiongbian Ave., Seaview Heights Subdivision Lawaan, Talisay Cebu, Philippines
(“FRANCHISEE”);

WITNESSETH:

WHEREAS, the FRANCHISOR is engaged in the food stall business, selling halo-halo,
desserts, and other food products under the name and style of “Sol’s Halo-Halo and Desserts”;

WHEREAS, the FRANCHISOR’s distinct brand and mark is the word “Sol’s” and has
created a system and processes for making a delightful and distinctive taste of Halo-Halo;

WHEREAS, FRANCHISEE desires to use the brand and system of the FRANCHISOR in
the outlet located at Aliwanay, Balamban Cebu, Philippines;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and
premises herein recorded and contained and for other good and valuable consideration and
intending to be legally bound hereby, the parties do hereby agree as follows:

ARTICLE I
LICENSE GRANTED

Section 1.1. FRANCHISOR grants to FRANCHISEE for the period of THREE (3) years
commencing on _____________ until __________ unless sooner terminated in accordance with
the terms and conditions of this Agreement, a license, without the right to further sub-license,
to sell, market and distribute Sol’s halo-halo and other products and to use the system, marks,
menu, and designs in direct connection with the operation of the outlet located at Aliwanay,
Balamban Cebu, Philippines in accordance with and subject to the limitations of this Agreement.

The license granted hereunder shall be limited to one (1) outlet only. The license shall
be non-exclusive. FRANCHISOR reserves the right to operate its own business or to give
license to other persons or entitles within the same area or location of the Outlet.

Section 1.2. The Outlet shall remain in continuous operation from the date such outlet
opens for business to the public until the expiration of the Term.

Section 1.3. FRANCHISEE shall conduct the Business only at the Outlet specified above.
FRANCHISEE shall use only such colors, specifications and layout at the locations previously
approved by FRANCHISOR. The license granted hereunder does not include the right to, directly
or indirectly, sell or deliver the Products or operate at any other location other than the Outlet.

If FRANCHISEE desires or intends to conduct the Business and/or sell or distribute the
Products at locations or areas other than the Outlet specified above, FRANCHISEE must apply
for such privilege with FRANCHISOR, which has the unqualified privilege and right to approve or
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disapprove the same and impose whatever conditions, restrictions and terms that it may deem
proper.

Section 1.4. FRANCHISEE shall not, without the prior written permission of
FRANCHISOR, engage or have an interest in any business entailing operation, management and
licensing of any food outlet or any business similar to and/or competitive with the Business,
except the Business to be operated under this Agreement.

Section 1.5. FRANCHISEE shall open the Outlet within the time frame set by
FRANCHISOR.

Section 1.6. FRANCHISEE does not have any exclusive, protected and/or reserved
territorial or similar rights. FRANCHISOR retains the absolute right to operate by itself and/or
extend to other persons the privilege to conduct the Business and/or sell or distribute the
Products wherever FRANCHISOR desires in its sole and absolute discretion.

Section 1.7. All rights which have not been expressly granted to FRANCHISEE shall be
deemed reserved for the sole benefit of FRANCHISOR. FRANCHJSEE shall not exercise any
privilege or right other than those expressly and specifically granted in its favor under this
Agreement.

ARTICLE II
TRAINING AND DEVELOPMENT

Section 2.1. FRANCHISEE acknowledges that the franchise fees hereunder are due as
compensation for the rights to establish and operate the Outlet under the license granted,
herein and not for the performance of specific services.

At its sole option or discretion, FRANCHISOR may require FRANCHISEE and/or any of its officers
and/or employees to attend and successfully complete all training programs that may be
devised and required by FRANCHISOR in connection with the Business (“Training”).
FRANCHISEE shall bear the entire cost of the Training including but not limited to the cost of
travel, meals and all other related and incidental expenses.

Section 2.2. The Training may include but not limited to, any of the following:

Section 2.3. FRANCHISOR shall have the right to immediately bar and/or disallow
FRANCHISEE from (i) conducting the Business; (ii) utilizing the system and processes and/or
(iii) selling or distributing the Products in the event that FRANCHISEE shall fail to comply with
any of the Training requirements or guidelines issued by FRANCHISOR.

ARTICLE III
PRODUCTS AND STANDARDS

Section 3.1. FRANCHISEE shall engage only in the Business at the Outlet and shall only
sell, advertise for sale, market or give away all or any of the Products and such food products
and beverages as are approved in writing by FRANCHISOR and which meet FRANCHISOR’s
quality standards and menu requirements through the use of FRANCHISOR‘s specifications and
processes. FRANCHISEE may not discontinue the sale or otherwise fail to offer any of the
Products at any time during the term of this Agreement unless prior written approval is given by
FRANCHISOR to FRANCHISEE. Furthermore, FRANCHISEE covenants and undertakes that it

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shall immediately discontinue serving, selling or offering for sale or distribution any and/or all of
the Products as FRANCHISOR may, in its discretion, withdraw from sale at any time.

Section 3.2. The FRANCHISOR permits and allows the FRANCHISEE to sell in the Outlet
other food products like French fries, siomai, ngohiong, other pica-pica and desserts.

ARTICLE IV
OUTLET’S AND BUSINESS’ COMPLIANCE AND SUPERVISION OF STANDARDS

Section 4.1. FRANCHISEE represents, undertakes and warrants that the Outlet will in all
respects be constructed, established and prepared to conduct the Business in strict compliance
with the requirements prescribed by FRANCHISOR and that any deviation from the
requirements prescribed by FRANCHISOR will require prior approval in writing by FRANCHISOR.
At FRANCHISOR’s request, FRANCHISEE will promptly correct any unapproved deviation upon
demand and within the time frame set by FRANCHISOR. Furthermore, FRANCHISEE shall hold
FRANCHISOR free and harmless from and/or indemnify it for any damage that may result from
the aforementioned unapproved deviation from the requirements prescribed by FRANCHISOR.

Section 4.2. FRANCHISEE shall, consistent with the terms of this Agreement, diligently
develop the Business of the Outlet and exert best efforts to market and promote the Products.

Section 4.3. FRANCHISEE will strictly comply with the requirements, rules, regulations
and instructions of FRANCHISOR, which now exist or which may be established from time to
time. FRANCHISEE represents, undertakes and warrants that it will take such actions and
precautions as necessary to ensure compliance with the following minimum requirements:

a. FRANCHISEE’s fully trained and qualified managers/owner/s shall devote their full
time to the supervision, management and operation of the Outlet;

c. No sale of any other products except with the prior written authorization of
FRANCHISOR;

d. Only sign and menu boards, advertising and promotional materials, equipment, a
supplies, uniforms, paper goods, packaging, furnishings, fixtures, recipes and food ingredients,
which meet the Standards and Directives, are used at the Outlet or in connection with the
Business;

f. The Outlet and everything located at the Outlet are maintained in good condition/and
repair and are kept clean, neat and sanitary; the Outlet is adequately lighted and are operated
in a clean, wholesome and sanitary manner consistent with the Directives; all maintenance,
repairs and replacements required by FRANCHISOR or needed in connection with the Outlet are
promptly made; and all employees are clean and neat in appearance;

g. No alterations of the Outlet are made except at FRANCHISOR's request or with

FRANCHISOR’s prior written approval.

h. The Outlet and the Business comply with applicable laws, ordinances and
governmental rules, regulations and other requirements, including but not limited to health,
safety, labor, and sanitation requirements.

j. Each Outlet is continuously open and is in continuous operation for business everyday
during the hours specified or previously approved in writing by FRANCHISOR, except any day
expressly prohibited or regulated by the appropriate government authority;

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 k. The employees, supplies and other items on hand at each Outlet are, at all times,
sufficient to meet the reasonably anticipated volume of the Business, unless FRANCHISOR
instructs FRANCHISEE to maintain a lower number and/or quantities;

m. The Products shall be sold only within their shelf life as prescribed by FRANCHISOR;

n. All debts and taxes in connection with the Outlet and FRANCHlSEE’s business are paid
when due, including but not limited to debts payable to FRANCHISOR.

0. All necessary and appropriate measures are taken to avoid an unsatisfactory or

equivalent safety, sanitation or health rating at any time from any governmental authority and
conditions or practices disapproved by any such authority are promptly corrected; and

p. FRANCHISEE shall provide FRANCHISOR such information on the operations of the

Outlet and Business as may be required by FRANCHISOR.

Section 4.4. FRANCHlSOR’s authorized employees and representatives shall have the
right, during business hours and at all other reasonable times, to enter and inspect each Outlet.
In the event such inspection indicates any deficiency in the conduct of the Business,
FRANCHISEE shall, within two (2) days notice by the FRANCHlSEE, or such other period of time
as FRANCHISOR may impose or provide, correct or repair any deficiency or unsatisfactory
condition. If FRANCHISEE fails to comply with the foregoing obligation to correct and/or repair,
FRANCHISOR may (i) make or cause to be made such corrections or repairs, and the
reasonable expenses thereof, shall be paid by FRANCHISEE upon billing by FRANCHISOR;
and/or (ii) terminate this Agreement and hold FRANCHISEE liable for damages.

ARTICLE V
TRADEMARKS AND TRADE CENTER

Section 5.1. FRANCHISEE is not granted and shall not acquire any right, title or interest
of any kind or nature whatsoever in or over the use of the marks and designs and future
trademarks or the associated goodwill of FRANCHISOR. FRANCHISEE acknowledges
FRANCHISOR‘s exclusive rights to future Trademarks and to the future developments and
variations thereto and all of FRANCHISOR’s other future commercial, industrial and intellectual
property rights, whether or not protected by registration, including the right to use all of the
foregoing and other ancillary rights such as the right to defend against infringement.

FRANCHISEE shall not form any company or corporation, the name of which includes
the word “Sol’s” or any of the Trademarks or words or marks similar thereto.

ARTICLE VI
SUPPLIES, MATERIALS AND PRODUCTS

Section 6.1. THE FRANCHISEE shall purchase exclusively the ice, ice cream, pizza and
cups from the FRANCHISOR. The FRANCHISEE may however purchase the spoons, mango,
nangka, coconut and corn flakes from other suppliers.

Section 6.2. Upon FRANCHlSEE’s acceptance of the supplies, materials, FRANCHISEE

shall pay cash upon delivery or pick up of the supplies, materials and products or shall be billed
upon at a later date.

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 Section 6.3. To ensure adequate supplies of ice, the FRANCHISEE shall obtain, purchase,
maintain, and use an Ice Maker from the first day of operation and for as long as this
agreement shall remain in force and effect. The Ice Maker shall be for the account of the
FRANCHISEE.

ARTICLE VII
FEES

Section 7.1 A. FRANCHISEE shall pay a non-refundable Franchise Package fee of THREE
HUNDRED FIFTY THOUSAND PESOS (P350,000.00) upon the signing of this Franchise
Agreement. The Franchise Fee shall be inclusive of the following:

1. Site approval
2. Ice Smasher (3 pcs.)
3. Chest Freezer (11 cubic, Fujidenzo)
4. Complete set of utensils
5. Halo-Halo Ice (500 pcs.)
6. Complete ingredients good for 500 pieces
7. Opening assistance

Repair or replacement of the ice masher and chest freezer shall be for the account of
the FRANCHISEE.

B. The Franchisee who decides to discontinue the Franchise Agreement will not be
entitled to any refund of the Franchise Fee.

C. The Franchisee shall pay the FRANCHISOR a fixed quarterly royalty of NINE
THOUSAND PESOS (P9,000.00) to be paid every end of the quarter. First payment will start on
December 31, 2019.

D. Any delay in the payment of supplies and remittance of royalty fee is subject to a late
payment fee of 3% monthly for the outstanding balance.

E. ln the event that the franchisee decides to transfer the location of business, the term
for the transferred location is only for the remaining period of this Agreement. All transfer of
location of the business must have the prior approval of the FRANCHISOR.

F. lnitial training of FRANCHISEE and crew will be for free. Subsequent training for
upgrading and updating of both FRANCHISEE and crew which is compulsory will be for a
minimal fee.

ARTICLE VIII
COVENANTS REGARDING OTHER ACTIVITIES

The FRANCHISEE shall not, in any capacity whatsoever, directly or indirectly, at any
location engage in the production, sale or distribution, whether at retail or wholesale, of food
products similar to or competitive with the products of the FRANCHISOR, except as disclosed in
writing by the FRANCHISEE to the FRANCHISOR prior to the signing of this Agreement. In case
of breach thereof, the FRANCHISEE shall pay a liquidated damages of ONE HUNDRED
THOUSAND PESOS (P100,000.00), without prejudice to any other rights provided in this
agreement.

ARTICLE IX

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 COVENANTS REGARDING TRANSFER OR ASSIGNMENT

FRANCHISOR may assign its rights and privileges under this Agreement at any time without
need of the consent of FRANCHISEE. However, the privileges and rights granted in favor of
FRANCHISEE under this Agreement may not be transferred or transmitted unless FRANCHISOR
shall give its consent thereto in a written instrument and subject to the conditions, guidelines,
restrictions and terms that FRANCHISOR may impose.

ARTICLE X
DEFAULT AND TERMINATION

Section 10.1. FRANCHISOR shall have the absolute right and privilege to immediately
terminate the present Agreement if:

a. FRANCHISEE fails to faithfully comply with any of the terms and conditions of this
Agreement;

b. FRANCHISEE shall be charged or summoned for violation of any law, regulation or

guideline issued by any governmental authority involving health, safety, sanitation,
consumer and environmental issues;

c. There is animosity and hostility between the parties as evidenced by, among others, the
filing of cases between them;

d. Failure and/or refusal of FRANCHISEE to accept and/or obtain any and/or all of the
products and supplies from the FRANCHISOR except those supplies or products as are
allowed under this agreement or with the consent of the FRANCHISOR; and/or

e. FRANCHISEE fails to remit to FRANCHISOR any and all amounts, bills, payments,
interests and penalties that FRANCHISEE is liable to pay FRANCHISOR under or
pursuant to this Agreement or any other contract within the time frame set or fixed by
FRANCHISOR.

In the event of termination of this Agreement based on any and/or all of the above
mentioned grounds, FRANCHISEE shall become liable to pay FRANCHISOR the amount of One
Hundred Thousand Pesos (PHP 100,000.00) upon demand as a form of penalty in addition to
other reliefs and remedies to which FRANCHISOR may be entitled to under the law or this
Agreement, including but not limited to the right to be compensated for all the damages that
may be suffered by FRANCHISOR. FRANCHISEE shall pay FRANCHISOR all the damages, costs
and expenses, including reasonable attorney’s fees, incurred by FRANCHISOR as a result of any
default in the performance or compliance with any of the provisions of this Agreement. Without
waiving the right to terminate this Agreement, FRANCHISOR may give a grace period to
FRANCHISEE for the latter to remedy or correct the breaches or defaults of this Agreement
subject to the conditions and terms including penalties that may be imposed by FRANCHISOR.
The exercise of such privilege shall not in any way be construed as a waiver of FRANCHISOR‘s
other rights and privileges under this Agreement nor shall it be deemed a violation of this
Agreement.

Section 10.2. In the event of termination of this Agreement howsoever caused,

FRANCHISEE shall not be entitled to any compensation on account of such termination.

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 ARTICLE XI
OBLIGATIONS ON TERMINATION OR EXPIRATION

Section 11.1. Upon the termination or expiration of the present Agreement or closure
cessation of business or operations of the Outlet, FRANCHISEE, at its expense, shall be obliged
to immediately:

a. Pay FRANCHISOR all sums and penalties owing or accruing under this Agreement and
accounts payable;

b. Cease to use, by advertising or in any manner whatsoever, any methods or materials

associated with the business of the FRANCHISOR;

d. Cease to sell or distribute the products of the FRANCHISOR;

e. Remove from the Outlet the signs, menu boards, and the like and change the exterior
and interior appearance so that the Outlet is no longer confusingly similar, in FRANCHISOR’s
reasonable judgment, to a Sol’s Outlet and no longer bears any marks, future trademarks, or
tradenames that in FRANCHlSOR‘s reasonable judgment are similar thereto. All rights or
licenses granted herein shall revert to FRANCHISOR.

Section 11.2. Upon termination or expiration of this Agreement, FRANCHISEE shall not
thereafter use any trademark, trade name, service mark, logo, insignia, slogan, emblem,
symbol, design, package design, distinctive building design or other architectural feature or
other identifying characteristic that is in any way associated with FRANCHISOR, or operate or
do business under any name or in any manner that might tend to give the public the impression
that FRANCHISEE is or was a licensee or franchisee or otherwise is or was associated with
FRANCHISOR.

Section 11.3. If this Agreement is terminated, cancelled or expires for any reason
whatsoever, or if the Outlet is closed for business without FRANCHlSOR’s consent, FRANCHISEE
acknowledges that grave and irreparable injury will be caused to FRANCHISOR not only by way
of loss of revenues but also due injury to FRANCHlSOR‘s goodwill and reputation, the precise
amount of FRANCHISOR’s actual damages would be difficult to ascertain. The parties agree that
upon the occurrence of any such event, FRANCHISEE shall pay FRANCHISOR a penalty in the
amount of One Hundred Thousand Pesos (PHP 100,000.00) in addition to all the damages that
may be suffered by or incurred by FRANCHISOR.

ARTICLE XII
NOTICES

Section 12.1. Any and all notices required or permitted under this Agreement shall be in
writing and shall be personally delivered, sent by registered mail, or by any other means, which
will provide evidence of the date received to the respective parties at the following address
unless and until a different address has been designated by written notice to the other party:

a. Notice to FRANCHISOR

(address of FRANCHISOR)

Attention: (name of Franchisor)

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 b. Notices to FRANCHISEE

(address of FRANCHISEE)

Attention: (FRANCHISEE’s name)

All written notices and reports permitted or required to be delivered by the provisions of this
Agreement shall be addressed to the party to be notified at its most current principal business
address of which the notifying party has been notified and shall be deemed so delivered (i) at
the time delivered by hand; (ii) one (1) business day after sending by telegraph, facsimile or
comparable electronic system; or (iii) if sent by registered or certified mail or by other means,
which affords the sender evidence of delivery, on the date and time of receipt or attempted
delivery if delivery has been refused or rendered impossible by flie party being notified.

Section 12.2. This Agreement shall be governed by and construed in accordance with
the laws of the Philippines. ln the event of litigation, the venue shall be the proper courts of
Cebu City, Cebu, Philippines, to the exclusion of all other courts elsewhere.

ARTICLE XIII
FORCE MAJEURE

lt is specifically understood and agreed that FRANCHISOR negotiated this Agreement in

good faith under and after giving consideration to all applicable laws and regulations. However,
the parties agree and acknowledge that laws and regulations as well as their interpretation may
change and that FRANCHISOR may thereby be deprived of the benefits it is entitled to
hereunder. Hence, in the event of any change in the applicable laws and regulations or in their
interpretation or in the event of any liability of either party to fully perform its obligations
hereunder by reasons of any force majeure whereby FRANCHISOR is not able to obtain the
benefits duly bargained for hereunder, FRANCHISOR shall have the sole right, to terminate this
Agreement upon written notice to FRANCHISEE. The term “force majeure” includes changes in
existing laws or regulations or the interpretation of existing laws, rules or regulations of the
Philippines resulting in the deprivation of benefits duly bargained for hereunder, acts of God,
strikes, lockouts or other industrial disturbance, acts of the public enemy, order of the
government of the Philippines or any subdivision thereof, or any military or civil authority, war,
insurrections, riots, restraining of government and people, rebellion, civil disturbance or any
other causes not reasonably within the control of the parties hereof. Upon termination of this
Agreement on account of this Article, the provisions of this Agreement on the consequences of
termination of this Agreement shall apply.

ARTICLE XIV
TAXES

Section 14.1. All payments by FRANCHISEE in favor of FRANCHISOR under, pursuant to,
in connection with and/or incidental to this Agreement shall be made free and clear of and
without any deduction for withholding for or on account of any and all present and future taxes
(including but not limited to documentary stamp tax and value-added tax), levies, imposts,
duties, filing and other fees or charges, withholdings and all liabilities with respect thereto
imposed, levied, assessed or collected or otherwise required to be paid or remitted to the
Republic of the Philippines or any political subdivision or taxing authority thereof, including
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surcharges, penalties and interest on the said taxes, levies, imposts, duties, filing and other fees
or charges, withholdings and/or liabilities (collectively referred to hereinafter as “Taxes"). The
payment of the Taxes shall be for the sole account of FRANCHISEE and paid by the latter
directly to the relevant taxing or assessing authority when due. FRANCHISOR shall not, in any
way, be held liable for the payment of the Taxes.

In the event that FRANCHISEE is prohibited by law from making payments under this
Agreement free of deductions or withholding for or on account of any and all Taxes, then
FRANCHISEE shall, at the soonest practicable time or upon demand by FRANCHISOR, pay such
additional amount as will result in the receipt by FRANCHISOR, after such deductions or
withholdings, of an amount equal to the amount that FRANCHISOR would have received if such
deductions or withholdings had not been required or imposed.

After the date on which payment of any of the Taxes is due, FRANCHISEE shall promptly
or upon demand, furnish FRANCHISOR the originals or authenticated copies of official receipts
evidencing payment by FRANCHISEE of the Taxes and compliance by the latter of its obligations
hereunder.

In the event that FRANCHISEE fails to pay and FRANCHISOR is required by any
government authority to pay any and all of the Taxes and expenses referred to in this Article,
FRANCHISEE shall upon demand, reimburse FRANCHISOR for the payment of such Taxes and
expenses and the incidental damages caused by FRANCHISEE’s failure to pay the same.

FRANCHISEE shall continue to be liable for the Taxes and expenses contemplated
and/or covered by this Article notwithstanding any subsequent grant of tax and other
exemptions to FRANCHISEE. The obligation of FRANCHISEE to pay the said Taxes and expenses
shall survive and continue until they are fully settled or discharged by FRANCHISEE.

IN WITNESS WHEREOF, the parties have hereby fixed their hands at the date and
place above written.

CATHERINE YU MERGEAN GALANG

FRANCHISOR FRANCHISEE
Competent evidence of identity: Competent evidence of identity:
ID No. CRN-0111-1567544-2 ID No.
Unified Multi-Purpose ID Issued by:
Valid until:

Signed in the presence of:

Grace Daclan and Michael Kay Gaboy

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

CITY OF CEBU ) S.S.

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 BEFORE ME, a Notary Public for the City and Province of Cebu this 3 rd day of Octogber
2019 personally known to me to be the same persons who executed the foregoing Franchise
Agreement between Catherine Yu and Mergean Galang, consisting of ten (10) pages including
the page on which this acknowledgment is written duly signed by the parties and their
instrumental witnesses and they acknowledged to me that the same is their own free and
voluntary act and deed.

WITNESS MY HAND AND NOTARIAL SEAL, on the date, year and place first above
written.

Doc. No. _____;

Page No. ____;
Book No. ____;
Series of 2019.

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