ermination of this Agreement; and

We have approved your request to purchase a HydroDog Business in reliance on all of your representations.

• 1.3 Business Organization. If you are at any time a business organization ("Business Entity") (like a corporation, limited liability company or partnership) you agree and represent that:
  • (a) you have the authority to execute, deliver and perform your obligations under this Agreement and are duly organized or formed and validly existing in good standing under the laws of the state of your incorporation or formation, and you have provided us with sufficient evidence of the same;
  • (b) your organizational or governing documents will recite that the issuance and transfer of any ownership interests in you are restricted by the terms of this Agreement, and all certificates and other documents representing ownership interests in you will bear a legend referring to the restrictions of this Agreement; and you will provide us with copies of these documents for our review.
  • (c) the Principal Owners Statement will completely and accurately describe all of your owners and their interests in you. A copy of our current form of Principal Owners Statement is attached to the Franchise Disclosure Document you were furnished;
  • (d) you and your owners agree to revise the Principal Owners Statement as may be necessary to reflect any ownership changes and to furnish such other information about your organization or formation as we may request (no ownership changes may be made without our approval);
  • (e) each of your owners during the Term will sign and deliver to us our standard form of Principal Owner's Guaranty undertaking to be bound jointly and severally by all provisions of this Agreement and any other agreements between you and us, and any

amendments or modifications thereto. A copy of our current form of Principal Owners Guaranty is attached to the Franchise Disclosure Document; and

• (f) at our request, you will furnish true and correct copies of all documents and contracts governing the rights, obligations and powers of your owners and agents (like articles of incorporation or organization and partnership, operating or shareholder agreements).
• (g) a Principal Owner of your HydroDog Business Entity (defined as a person with at least a twenty percent (20%) ownership interest in you) must: (i) have management responsibility and authority over the "Business" (defined as your HydroDog Business) on a day-to-day basis; (ii) be actively employed on a full-time basis to manage your HydroDog Business's operations; (iii) be present at your HydroDog Business for at least fifty percent (50%) of the hours your HydroDog Business is open to the public for business; (iv) be bound by our then-current form of Confidentiality Agreement (or other form satisfactory to us); and (v) satisfactorily complete our initial training program and any other training programs we request during the Term; and
• (h) each of your Principal Owners, during the term of this Agreement, will sign and deliver to us our standard form of Principal Owner's Guaranty ("Owner's Guaranty") undertaking to be bound jointly and severally by all provisions of this Agreement and any other agreements between you and us. A copy of our current form of Principal Owner's Guaranty is attached as an Exhibit B to the Franchise Disclosure Document.

2. GRANT AND TERM.

• 2.1 Grant. We grant you the non-exclusive right, and you undertake the obligation, on the terms and conditions set forth in this Agreement and any amendments or modifications thereto, to establish and operate a HydroDog Business operating only from and through your HydroDog Vehicle, and marketing to customers within the geographic area we designate or approve (the "Territory"). Subject to the terms of, and upon the conditions contained in this Agreement, we grant you a franchise (the "Franchise") to: (a) operate a HydroDog Business from and through the HydroDog Vehicle only within the Territory; and (b) use the Marks, Copyrights and System solely in connection with operating the HydroDog Business.
• 2.2 Initial Term. Unless terminated sooner as provided in this Agreement, the initial term of this Agreement (the "Initial Term") expires ten (10) years from the Effective Date. Your rights to seek a renewal franchise agreement for an additional term are set forth in Section 3. This Agreement may be terminated before it expires only in accordance with this Agreement.
• 2.3 HydroDog Vehicle Purchase or Lease. You must purchase or lease your first HydroDog Vehicle (and/or any replacement or additional HydroDog Vehicles, if approved by us) from us, our designee or an Approved Supplier before attending training and, if necessary, purchase the Initial Tools Package for your HydroDog Business. Failure to do so may result in delay or cancellation of your training and/or termination of this Agreement. You recognize that the HydroDog Vehicle embodies our Marks and may be used or possessed for no purpose other than operating a HydroDog Business. You must maintain one (1) HydroDog Vehicle for every 100,000 population (or fraction thereof) in your Territory. You must add each required additional HydroDog Vehicle within six (6) months after commencing operations or within six (6) months of any population increase that triggers the requirement for an additional vehicle based on the above ratio. Your failure to add required HydroDog Vehicles within these

timeframes will constitute a default under this Agreement, and we reserve the right to terminate this Agreement or otherwise alter the terms of your territorial rights in our sole discretion.

Source: Item 23 — RECEIPTS (FDD pages 43–166)