What happens if a Clear Pest Pros franchisee fails to comply with the covenants in the agreement?

nual;

• 1. You conduct yourself in a manner that, although not criminal, reflects adversely on the System, the Marks, or the products offered through the System; or
• 1. You fail to procure or maintain any licenses, certifications, or permits necessary for the operation of your Clear Pest Pros Business.

We also have the right to terminate this Agreement after providing notice and a 30 day cure period if you fail to perform or comply with any one or more of the terms or conditions of this

Agreement or the Operations Manual not specifically contained in Section 12.A above; including, without limitation, any warranty, or certification of this Agreement, and any System Standard or other provision in the Clear Pest Pros owners' intranet website or the Operations Manual.

In addition to our right to terminate this Agreement, and not in lieu of such right, or any other rights we may have against you, upon a failure to cure any default within the applicable time period (if any), we have the right, but not the obligation, to: (1) charge the Non-Compliance Fee; (2) reduce the size of your Territory or permit other franchisees or Company Stores to provide the Services and Products with your Territory; and/or (3) enter upon the Clear Pest Pros Business premises and exercise complete authority with respect to the operation of the Clear Pest Pros Business until such time as we determine, in our sole discretion that the default has been cured, and you are otherwise in compliance with this Agreement. In the event we exercise the rights described in this Section, you must pay us a reasonable management fee of 10% of Gross Sales and reimburse us for all reasonable costs and overhead, if any, incurred in connection with our operation of your Clear Pest Pros Business including, without limitations, costs of personnel for supervising and staffing the Clear Pest Pros Business and their travel and lodging accommodations, plus a 20% service charge.. This fee is in addition to the payment of the Royalty and all other fees due under this Agreement during the time we exercise our rights under this Agreement. If we undertake to operate the Clear Pest Pros Business pursuant to this Section, you agree to indemnify and hold us (and our representative(s) and employees) harmless from and against any fines, claims, suits or proceedings that may arise out of our operation of the Clear Pest Pros Business.

Our delay in exercising or failing to exercise any right or remedy under this Agreement or our acceptance of any late or partial payment due hereunder will not constitute a waiver of any of our rights or remedies against you.

D. NON-COMPLIANCE FEE.

We have the right to assess then-current fine amount for conduct that violates the terms of this Agreement, including, but not limited to, advertising, marketing, soliciting or servicing in any way, any Customers or Customer Service Locations outside the Territory, without our prior written consent, or servicing residential Customers without our express written consent ("Out-of-Territory Conduct"), use of unapproved equipment in operating the Franchised Business, selling or using unapproved Products or Services through the Franchises Business, misuse of the Marks, use of unapproved marketing materials, and other violations of franchisee's duties under the Franchise Agreement. The Non-Compliance Fee is currently up to $5,000 or the cost of the job (in our discretion) per violation, or in the case of Out-of-Territory Conduct, $500 or the total invoice for the job (in our discretion), per instance. This fee may be in lieu or in connection with default and/or terminate your Franchise Agreement, and other available remedies set forth in this Agreement for your default.

13. POST TERMINATION OBLIGATIONS.

A. PAYMENT OF AMOUNTS OWED TO US.

You promise to pay to us, on the effective date of termination or expiration of this Agreement, or at any later date that the amounts due to us are determined:

• 1. all Royalties, Referral Fees, promissory note balance(s), Late Report Fees, Late Payment Fees, NSF Fees, Interest Fees, or any other fees, amounts or interest owed to us; and
• 1. upon termination for any default, the actual and consequential damages, costs, and expenses (including reasonable attorneys' and experts' fees) incurred by us as a result of your default.

The obligation to pay said sums will create a lien in favor of us against any and all of the personal property, furnishings, equipment, signs, fixtures, and inventory of the Clear Pest Pros Business and/or against any moneys we hold or otherwise come to our possession.

Any transferee (or purchaser of all or substantially all of the assets of the Clear Pest Pros Business) shall be liable for payment of these items if you do not timely pay them.

Source: Item 22 — CONTRACTS (FDD pages 67–68)