FRANCHISE AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Agreement made and entered into by and between:

KURYENTE MULTI-SALES CORPORATION, a domestic

corporation duly organized and existing under the laws of the Philippines, with
principal office at 55 Damar Loop, Damar Village, Quezon City, duly authorized
and represented in this act by its President, Marcelino Jo, hereinafter referred to
as the "FRANCHISOR"

- and -

CRESENCIO VALLEDOR, of legal age, Filipino, with residential and

postal address at Vigan, Ilocos Sur, hereinafter referred to as the
"FRANCHISEE".

WITNESSETH: that

FRANCHISOR is engaged in the business of promoting, marketing, selling and

distributing electrical products, equipment, and appliances under the businessname and
tradename "KURYENTE" and franchises its services and business format to qualified
franchisees.

FRANCHISEE has offered to operate a unit under FRANCHISOR's businessname/

tradename and business format and the latter has accepted and agreed to franchise its services and
business format to the FRANCHISEE.

NOW THEREFORE, for and in consideration of the foregoing premises and the
stipulations hereinafter appearing, the parties have agreed under the following terms and
conditions:

ACKNOWLEDGEMENTS

1.1. FRANCHISOR is the exclusive owner of the following intellectual property: the
businessname and tradename "KURYENTE", the mark "KURYENTE" and device, the slogans:
"Your one-stop electrical shop", "Ang electrical shop ng bayan", the business format/tradedress
of the KURYENTE stores, and all the proprietary and confidential information used and involved
in FRANCHISOR's business.

1.2. The KURYENTE stores and shops operate under FRANCHISOR's confidential
and proprietary information, trade secrets, distinctive image, designs, business format, methods,
procedures, specifications, all of which may be further developed or otherwise modified by
FRANCHISOR from time to time.

1.3. Due to the special and unique nature of FRANCHISOR's confidential

information, businessname, trademarks, tradedress, operations manual, training manuals and
other intellectual property, FRANCHISEE acknowledges that FRANCHISOR shall be entitled to
immediate equitable remedies including, but not, limited to, restraining orders and/or injunctive
relief and damages in the event of any violation by the FRANCHISEE of FRANCHISOR's
intellectual property rights.
 1.4. FRANCHISEE acknowledges that it has received all pertinent information in
order to make an informed decision concerning the business contemplated in this Agreement.
FRANCHISEE further acknowledges that it has read this Agreement and understands and accepts
the provisions of this Agreement as being reasonably necessary to maintain FRANCHISOR's
high standards of quality and service and the uniformity of those standards at the franchise unit.

II

GRANT OF FRANCHISE

2.1. FRANCHISEE has applied for a franchise to own and operate a KURYENTE
store at Vigan, Ilocos Sur and FRANCHISOR grants to FRANCHISEE a license to use, during
the term and on the conditions set forth in this Agreement, the businessname, tradenames,
trademarks, slogans, business format, systems and procedures associated with FRANCHISOR's
name and franchise system, from the said premises.

2.2. The license granted to FRANCHISEE by this Agreement shall include the right
to use FRANCHISOR's tradename and tradedress, operating procudures, business strategies and
complete system for the marketing of electrical equipment and products supplied by
FRANCHISOR and marketed under the KURYENTE businessname/ tradename and business
format as it presently exists and as it may be supplemented and modified during the term of this
Agreement.

2.3. FRANCHISOR's system shall include, but not be limited to FRANCHISOR's

businessname, tradename, trademarks, and service marks: copyrighted marks and materials:
distinctive architecture and design of the unit; interior decoration and layout of the unit;
developed operating procedures as published in FRANCHISOR's standard operating procedures
manual; advertising methods; and accounting systems.

This system is and shall be deemed to be the exclusive property of FRANCHISOR, and
FRANCHISEE acknowledges that his use of such system is a temporary use under license of a
system in which FRANCHISOR maintains and reserves an exclusive proprietary right.

2.4. FRANCHISEE shall clearly identify the franchise unit under the tradename
KURYENTE and FRANCHISOR's own products sold under and pursuant to this Agreement as
KURYENTE products, except those distributed by the FRANCHISOR for third party-suppliers.
FRANCHISEE's name shall not be used in connection with the operation of the franchise unit
except as follows:

a. FRANCHISEE may include in any local advertising placed by him the line:
"______________[name of franchisee], your local KURYENTE franchise operator";

b. A sign placed near the cash register, to be provided by FRANCHISOR, and to bear
the inscription, "This KURYENTE store is owned and operated by ___________
[name of franchisee] under franchise from KURYENTE MULTI-SALES
CORPORATION".

2.5.FRANCHISEE shall be free to incorporate his interest in this Agreement at any time,
provided that the corporation formed executes with FRANCHISOR all agreements then required
by FRANCHISOR of new corporate franchisees. FRANCHISEE understands and agrees that
such required agreements will include the requirements that FRANCHISEE execute a personal
guarantee and covenant to personally supervise the operation of the franchise unit.

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 III

FRANCHISE STRUCTURE

3.1.FRANCHISEE shall construct a structure conforming to FRANCHISOR's standard

retail outlet plan and shall take possession, equip, and furnish the structure in accordance with
FRANCHISOR's standard specifications and open the unit for business within sixty (60) days
after execution of this Agreement at Vigan, Ilocos Sur.

3.2.Any modifications or revisions of the franchise unit/structure shall require the prior
written approval of FRANCHISOR.

3.3. FRANCHISEE shall operate the franchise unit only at the location specified in
paragraph 3.1 hereof. FRANCHISOR shall grant permission for relocation of the franchise unit
in the event that the lease thereon expires or is terminated for reasons not attributable to the
FRANCHISEE, or the franchise unit is destroyed by fire/calamity or otherwise rendered
unusable. Relocation of the franchise unit to another site may also be agreed upon in writing by
the parties. All expenses arising from such relocation shall be for FRANCHISEE's account.

3.4.FRANCHISOR shall assist the FRANCHISEE in analyzing the feasibility and

appropriateness of FRANCHISEE's proposed area for relocation. However, any assistance
rendered by the FRANCHISOR in this regard shall not be construed as a guarantee by the
FRANCHISOR of the franchise unit's success in the proposed area.

3.5. A legal description of the franchised premises, together with a statement of the
holder of record title to the premises, and of the interest of FRANCHISEE in such property,
whether as lessee or otherwise, is set forth in a separate schedule attached to this Agreement. If
FRANCHISEE is not the owner of and occupies the premises under a lease or similar
arrangement, FRANCHISEE shall furnish a copy of any lease contract covering the premises to
FRANCHISOR. Any act of the FRANCHISEE constituting default in its lease arrangement over
the franchise unit shall constitute default on the part of the FRANCHISEE under this Agreement.
3.6.FRANCHISOR shall supply a qualified training supervisor. The training supervisor
shall be assigned 30 days prior to opening of FRANCHISEE's unit and shall continue to
personally instruct and supervise FRANCHISEE for 30 days after opening of unit.

3.7.FRANCHISEE's employees shall at all times wear uniforms prescribed by

FRANCHISOR in its Manual.

3.8.FRANCHISEE shall be fully responsible for the operation of the franchise unit. The
franchise unit shall at all times be under the direct, hands-on supervision of FRANCHISEE or a
full-time manager specially trained for this purpose. Even, if the FRANCHISEE employs a full-
time manager, FRANCHISEE agrees to remain actively involved in supervising the operations of
the franchise unit based on the procedure and instructions in FRANCHISOR's Manual. If
FRANCHISEE operates more than one (1) franchise unit, the FRANCHISEE shall employ at
least one (1) full-time manager. FRANCHISEE shall keep FRANCHISOR informed at all times
of the identity of the manager(s) of the franchise unit. All additional or new employees shall be
required to undergo training from and as scheduled by FRANCHISOR. All expenses incurred
for the training of FRANCHISEE's employees shall be for FRANCHISEE's account.

3.9.FRANCHISEE shall not install, add or maintain on the premises of the franchised
unit any other business/machines/devices without the written approval of the FRANCHISOR.

3.10. FRANCHISOR may enter the franchise unit during reasonable business hours of
the day. For this purpose, the parties shall have their respective keys to the franchise unit.
However, FRANCHISOR and its agents/representiatives may enter the franchise unit only when
accompanied by FRANCHISEE or FRANCHISEE's agent/representative.

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 IV

MUTUAL OBLIGATIONS ON THE FRANCHISE STRUCTURE

4.1.As soon as practicable after the effective date of this Agreement, and prior to the
beginning of construction of the franchise structure, it is agreed as follows:

(a) FRANCHISOR shall assist FRANCHISEE in obtaining a satisfactory site for

construction of the franchise structure. Such assistance shall not obligate
FRANCHISOR to actually obtain the site.

(b) FRANCHISOR shall, at no additional expense to the FRANCHISEE, perform or

cause to be performed by a qualified expert, a detailed feasibility study of the site.
If FRANCHISEE has already obtained a feasibility study from an independent and
qualified expert, FRANCHISOR shall perform a detailed analysis of such study,
and if such study is deemed to be inadequate in whole or in part, FRANCHISOR
shall perform, or cause to be performed, such additional feasibility studies as
FRANCHISOR shall determine to be necessary and appropriate subject to the
payment of a reasonable fee.

4.2. FRANCHISOR agrees to review the final plans and specifications pertaining to the
construction of the franchise structure prior to the beginning of such construction.

4.3. FRANCHISEE understands and agrees that regardless of anything provided in this
section, there shall be no liability on the part of FRANCHISOR to FRANCHISEE or any
subsequent franchise approved by the FRANCHISOR or any present or future owner of the
premises or any other person because of FRANCHISOR's approval of the plans and
specifications of the franchise structure.

4.4. FRANCHISEE shall, pursuant to plans and specifications previously approved by

FRANCHISOR, begin construction of the franchise structure within twenty (20) days from the
effective date of this Agreement and shall fully complete the franchise structure within a
reasonable time after construction of such structure has begun, provided that FRANCHISEE is
not prevented from beginning such construction or completing the franchise structure within such
reasonable time by the occurrence of a war, strike, lockout, governmental regulation, fire, Act of
God, or other force majeure directly affecting FRANCHISEE's ability to perform under this
section.

4.5. FRANCHISEE agrees to commence operation of the franchise business no later

than seven (7) days following completion of the franchise structure but, unless FRANCHISOR
otherwise agrees in writing, no sooner than such structure shall have been completed. Prior to
commencing operations, FRANCHISEE shall give FRANCHISOR seven (7) days' written notice
of his intention to so commence operations.

4.6. Actual expenses incurred (e.g. gasoline or bus fare, lodging, meals, etc.) by
FRANCHISOR's staff in over-seeing the site development and construction of a provincial
franchise unit, from the pre-construction stage up to the opening of the unit including the
expenses incurred by FRANCHISOR's training supervisor under Article 3.6 hereof shall be for
the account of FRANCHISEE. The frequency and duration of site visits and supervision to be
conducted by FRANCHISOR's staff shall be agreed upon by the parties in writing.

FRANCHISE FEE

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 5.1. In consideration of the issuance and continuance of this franchise,
FRANCHISEE agrees to make the following payments to FRANCHISOR:

(a) FIVE HUNDRED THOUSAND PESOS (P500,000.00), as franchise fee upon

execution of this Agreement.

(b) Such other required fees and expenses for the optional requirements mentioned in
and in accordance with the payment schedule which is integrally attached hereto as
Annex "A".

5.2. FRANCHISOR shall deliver to the franchise unit initial stocks worth ONE
MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000.00) within forty five (45) days
from the execution of this Agreement and provided that the construction of the franchise unit has
been completed as verified by FRANCHISOR and FRANCHISEE's respective represenatives.
FRANCHISEE shall pay to FRANCHISOR the amount of SEVEN HUNDRED FIFTY
THOUSAND PESOS (P750,000.00) plus five percent (5%) service charge thereon upon delivery
of the initial stocks and the balance of SEVEN HUNDRED FIFTY THOUSAND PESOS
(P750,000.00) within 30 days from the opening of the franchise unit plus five percent (5%)
service charge thereon.

5.3. Thereafter, so long as this Agreement is in effect, FRANCHISEE shall pay the
actual costs of stocks ordered plus a service fee of five percent (5%) on such purchases to
FRANCHISOR within sixty (60) days from receipt of the goods by the FRANCHISEE.

5.4. FRANCHISOR shall advise FRANCHISEE in writing of any changes in the

costs/prices of the goods. In the event of increase in the price of ordered goods, FRANCHISOR
shall be bound to make one (1) delivery of FRANCHISEE's "average order" at existing prices
(prior to price increase) before effecting the price increase on the goods. Accordingly, the parties
hereby agree that FRANCHISEE's "average order" shall be the average quantity of ordered goods
in a three-month period preceding the price increase.

5.5. FRANCHISEE may exchange any unsold goods/stocks delivered by

FRANCHISOR for other products of similar prices within ninety (90) days from date of delivery.
Any goods not returned for exchange with other products within the said period may no longer
be accepted by the FRANCHISOR.

5.6. FRANCHISEE shall source all of its stocks and supplies exclusively from
FRANCHISOR, who shall deliver all of the ordered goods ("specified products") within thirty
(30) days from receipt of written requests therefor. In case there are no sufficient
stocks/inventory or it is not possible for the FRANCHISOR to deliver the specified products
within the said 30-day period, FRANCHISOR shall supply the FRANCHISEE with alternative
brands of the specified products ("alternative products") and FRANCHISEE is bound to accept
the alternative products provided of similar specifications as the specified products. In the event
that FRANCHISOR is not able to deliver the specified products and the alternative products to
the FRANCHISEE within sixty (60) days from the date of the original order, only then may
FRANCHISEE source the specified products from other suppliers.

5.7. All payments to FRANCHISOR shall be made at the address designated in this
Agreement.

VI

FRANCHISEE's OBLIGATIONS

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 6.1. FRANCHISEE shall comply with all applicable government laws, ordinances
and regulations in the maintenance of the franchise unit.

6.2. FRANCHISEE shall discharge all applicable tax liabilities arising from its
operation and maintenance of the franchise unit including but not limited to payment of any
income, sales, or real property taxes. Likewise FRANCHISEE shall secure and maintain the
insurance policies indicated in Article VII hereof.

6.3. FRANCHISEE covenants and agrees to observe strictly the rules of operation as
now established by FRANCHISOR, or as revised or amended by FRANCHISOR from time to
time after the effective date of this Agreement, the right of revision and amendment being
specifically reserved by FRANCHISOR. FRANCHISOR shall at all times provide
FRANCHISEE written notices of any revisions and amendments to its operating procedures and
policies.

6.4. FRANCHISEE will comply with existing regulations of FRANCHISOR as from

time to time revised and supplemented by FRANCHISOR, with respect to operating procedures
and standards and requirements for furnishing, equipment, and facilities of franchise units
generally. Such regulations may be set forth in an operating manual to be supplied by
FRANCHISOR.

6.5. FRANCHISEE covenants and agrees to permit regular inspection of all

accommodations, facilities, and procedures by accredited inspectors of FRANCHISOR, for
compliance with this Agreement and to guarantee lodging to any such inspector when on official
duty for such time as may be reasonably necessary.

6.6. FRANCHISEE shall, at his expense, attend FRANCHISOR's store management

training at a place to be designated by FRANCHISOR prior to the opening of FRANCHISEE's
business. If, during the term of this Agreement, FRANCHISEE conducts the business with a
manager other than himself/ herself, FRANCHISEE shall, at FRANCHISEE's expense, send
such manager through the same training program.

6.7. FRANCHISEE shall train and instruct each person employed in the operation of
FRANCHISEE's business (other than those instructed by FRANCHISOR) in the methods and
techniques developed by FRANCHISOR. Such training and instruction shall be based upon and
given in accordance with FRANCHISOR's training manuals, and shall be provided prior to
participation by such employee in FRANCHISEE's business. The training and instructions given
by the FRANCHISEE to its employees herein shall not be deemed by the parties as a violation of
the confidentiality clause under this Agreement.

6.8. Subject to applicable municipal ordinances or statutes, FRANCHISEE shall have

erected and maintained at the premises of the franchise unit a standard authorized service sign in
a suitable location and such other signs as are necessary to advertise properly FRANCHISEE's
operations approved by FRANCHISOR

6.9. FRANCHISEE specifically agrees to protect, indemnify, and save

FRANCHISOR harmless from and against any loss, damage, liability or expense, including
attorneys' fees, because of any damage to person or property caused or alleged to have been
caused by FRANCHISEE, his agents, employees, guests, or any other persons in connection
with the operation of the franchise unit.

6.10. FRANCHISEE will keep in utmost confidence and shall not divulge any business
information, whether written or oral, received from FRANCHISOR or from any meetings of
FRANCHISOR's other franchisees, nor use such information in the FRANCHISEE's business, at
any time during or after the term of this Agreement. Such information may include, but is not
limited to, operating and training manuals, accounting system and records, promotional materials

6
or plans, expansion plans, new products, marketing information costs or other financial data, or
development of packaging procedures.

6.11. During the term of this Agreement and unless otherwise authorized by the
FRANCHISOR in writing, FRANCHISEE shall not conduct or operate, directly or indirectly, or
be employed by or associated with any business which is in any way competitive with
FRANCHISOR's business. FRANCHISEE shall not any time, directly of indirectly, furnish any
information as to FRANCHISOR's methods of operation, interviewing, advertising publicity,
promotion ideas, or any other information relative to FRANCHISOR's business, or to any other
business licensed, owned, or managed by FRANCHISOR or any subsidiary of FRANCHISOR to
anyone except FRANCHISOR.

6.12 In the sale of electrical products in the franchise unit, FRANCHISEE shall abide by
FRANCHISOR's price lists as indicated in Article 8.7 hereof.

VII

INSURANCE

7.1. FRANCHISEE shall obtain and maintain at its expense during the term of this
Agreement, the insurance policy/ies indicated in Article 7.2 hereof to protect FRANCHISEE
and FRANCHISOR, and their respective officers, directors, employees, representative and agents
against any loss, liability, personal injury, death or property damage or expenses whatsoever
arising from the operation of the franchise unit. FRANCHISOR shall be named as the primary
beneficiary and the FRANCHISEE as the secondary beneficiary in all such insurance policies.

7.2. Specifically, FRANCHISEE shall secure from a reputable insurance company

duly licensed in the Philippines, taking into consideration the standards and specifications set
forth in the Manual or as otherwise required by the FRANCHISOR in writing, an Extended Fire
on the monthly average of stocks delivered and stored therein in the amount of ONE MILLION
FIVE HUNDRED THOUSAND PESOS (P 1,500,000.00).

7.3. Within ninety (90) days from the signing of this Agreement, but in no event
later than the date of the opening of the franchise unit, the corresponding certificate of insurance
showing compliance with the foregoing requirements and payment of premium shall be furnished
by FRANCHISEE to FRANCHISOR for approval. FRANCHISEE shall not cancel or alter the
insurance policies without at least thirty (30) days prior written notice to FRANCHISOR.

7.4. In the event that FRANCHISEE fails, for any reason, to obtain and maintain any
of the insurance coverages required , FRANCHISOR may obtain such insurance coverage for
the FRANCHISEE's account and charge the FRANCHISEE such reasonable expenses incurred
by FRANCHISOR in connection with such procurement and which charges shall be payable by
FRANCHISEE immediately upon notice.

VIII

FRANCHISOR'S OBLIGATIONS

8.1. FRANCHISOR shall do all acts necessary to protect the tradename and
businessname "KURYENTE" from unauthorized use and infringement of any kind.

8.2. FRANCHISOR shall submit to FRANCHISEE for exclusive use of the

FRANCHISEE and his employees, one copy of FRANCHISOR's Operating Manual (the

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"Manual") and such other training manuals that FRANCHISOR deems sufficient to commence
operations. Additional manuals will be supplied at FRANCHISOR's discretion upon written
request by FRANCHISEE and payment of a printing and/or handling charge. All manuals shall
remain to be the property of FRANCHISOR, and FRANCHISEE shall treat them as confidential
and shall not disclose the contents of such manuals to unauthorized persons.

8.3. FRANCHISEE acknowledges that the Manual is and shall remain to be the
exclusive property of the FRANCHISOR. FRANCHISEE shall return the Manual to the
FRANCHISOR not later than three (3) days from the expiration or termination of this
Agreement. At no time shall FRANCHISEE, its employees, representatives or agents make
copies or reproduction of any part of the Manual.

8.4. FRANCHISOR shall continue to improve and amend the Manual and such
training manuals necessary in FRANCHISOR's business. which is hereby incorporated by
reference in and made a part of this Agreement. FRANCHISOR shall conduct research and
development of new procedures and techniques, products and materials and other activities to
enhance to its systems.

8.5. FRANCHISOR shall furnish to FRANCHISEE, at no additional expense, a

Support Training Group ("STG") for the purpose of assisting in the opening of the franchise unit
for 30 days from the soft opening of the franchised unit. During this period, the STG shall assist
the FRANCHISEE and its employees in performing standard procedures and techniques essential
to the operation of the franchise unit. FRANCHISEE is required to successfully complete the
Support Opening Training to be provided by the STG. FRANCHISEE may request training of
additional or new employees and FRANCHISOR shall provide such training if is deemed
necessary, feasible and appropriate. The STG shall likewise assist in the grand opening of
franchise unit. All expenses incurred for the assistance and training provided by the STG
beyond a 30-day period shall be for the account of the FRANCHISEE.

8.6. FRANCHISOR shall secure and maintain the licenses and permits necessary to
operate the franchise unit, and all expenses incurred in securing and the maintenance thereof
shall be for the FRANCHISEE 's account, subject to the provisions of Article 6.1 and 6.2. hereof.

8.7. At the start of the operations of the franchise unit, FRANCHISOR shall provide
to the FRANCHISEE the following:

(a) A price list for all electrical products offered for sale by the franchise unit which
price list is based on the analysis of the costs of such products and price of
competitive products;

(b) Regulations on maintaining quality standards of products;

(c) Mechanics for the coordination of product distribution;

(d) Hands-on-assistance on Start-up and Merchandise Lay-out Support;

(e) Comprehensive Training Program

(f) Operations assistance and guidance with respect to:

i. Proper utilization of procedures by the franchise unit regarding the service and
sale of all items and materials approved by the FRANCHISOR;

ii. Negotiation of group rates/discounts for wholesale purchases of products and

materials as FRANCHISOR, in its sole discretion, deems necessary and
appropriate;

iii.Additional products and services authorized for sale.

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 IX

ADVERTISING

9.1. FRANCHISOR shall provide to the FRANCHISEE advertising strategies and

promotional programs and materials. All costs for additional promotions not provided by
FRANCHISOR shall be for the account of the FRANCHISEE.

9.2. FRANCHISEE acknowledges the value of standardizing the advertising and

promotional strategies for the enhancement the franchise's image. To this end, FRANCHISEE
shall secure FRANCHISOR's prior approval on all promotional materials and advertising to be
used by FRANCHISEE including, but not limited to, newspapers, radio, television advertising,
specialty and novelty items, leaflets, brochures, and signs.

9.3. FRANCHISEE shall not use FRANCHISOR's intellectual property or other

proprietary materials in its advertisements and promotion of the franchise unit without
FRANCHISOR's prior approval and appropriately indicating therein FRANCHISOR's ownership
thereof.

9.4 Whenever necessary and subject to the agreement of the parties on the amount
involved, FRANCHISEE shall participate and contribute a proportional share in the expenses in
all special nationwide advertising and promotions.

ACCOUNTING SYSTEM AND RECORDS

10.1. FRANCHISEE shall use and keep up to date a satisfactory uniform accounting
system of a type designated by FRANCHISOR and will furnish to FRANCHISOR, by the7 th of
each month, a complete and accurate financial and operating statement, with supporting data,
covering the preceding month's operations and showing the true and actual condition of
FRANCHISEE's business. To this end, FRANCHISEE will maintain such system in accordance
with the administrative, bookkeeping, accounting inventory control, supervisory and general
operating procedures for the effective operation of the franchised unit prescribed by
FRANCHISOR.

10.2. FRANCHISEE shall not furnish to any third party any financial statement
submitted to FRANCHISOR under and pursuant to this agreement, unless authorized by
FRANCHISOR or required to do so by law or unless they are pertinent to judicial proceedings.
10.3. FRANCHISEE shall file with FRANCHISOR within ten (10) days after the
close of each quarter of the calendar year or fiscal year of FRANCHISEE, a financial statement
showing operating results and monthly gross sales and gross revenues for such quarterly period.

10.4. FRANCHISEE shall file with FRANCHISOR within fifteen (15) days after the
close of each such year a similar statement certified by a certified public accountant showing a
balance sheet and the results of operations for the year, including monthly gross sales and
revenues.

10.5. FRANCHISEE shall file with FRANCHISOR any and all such other reports as
FRANCHISOR may, from time to time, require, such reports to be in the form prescribed by
FRANCHISOR.

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 10.6. FRANCHISOR shall have the right to inspect the books and records of the
FRANCHISEE at all reasonable times.

XI

TERM AND RENEWAL

11.1. The term of this franchise shall be five (5) years from the effective date of this
Agreement unless sooner terminated by FRANCHISOR as provided below in this Agreement.
Provided FRANCHISEE is not in default under any provision of this Agreement, FRANCHISEE
may extend such term for an additional period of five (5) years by giving to FRANCHISOR at
least ninety (90) days but not more than 120 days written notice of its election to do so prior to
the expiration of this Agreement, provided:

(a) FRANCHISEE has not committed any act constituting default under this
Agreement;

(b) Renewal fee of P250,000.00 is paid by the FRANCHISEE to the

FRANCHISOR;

(c) FRANCHISEE remains in possession of the franchise unit for the duration of the
renewal term;

(d) FRANCHISEE complies with the Article 3.3 hereof in the event that the
franchise unit is relocated.

11.2. FRANCHISEE shall within 30 days from receipt of written notice of termination
of this Agreement surrender to the FRANCHISOR all the remaining unpaid stocks in the
franchise unit in the event that this Agreement is not renewed by the parties upon expiration of
the term thereof.

11.3. FRANCHISEE acknowledges that the name "KURYENTE", the business

reputation associated with such name, the methods and techniques employed by FRANCHISOR,
the training and instructions to be provided under and pursuant to this Agreement, the knowledge
of the services and methods of FRANCHISOR, and the opportunities, associations, and
experience established and acquired by FRANCHISEE under and pursuant to this Agreement and
as a member of the franchise system, are of considerable value. In consideration thereof, in the
event of expiration or termination of this Agreement for any reason whatsoever, FRANCHISEE,
or any partner if FRANCHISEE is a partnership nor any shareholder if FRANCHISEE is a
corporation, shall not after such termination engage for a period of two (2) years, either directly
or indirectly, as principal or employee, alone or in association with others, in a similar or
competitive business to that licensed and established under and pursuant to this Agreement.

XII

DEFAULT

12.1. The occurrence of any of the following shall be deemed a default, and
FRANCHISOR shall have the right to terminate this Agreement if:

(a) FRANCHISEE fails to comply with any of the terms of this Agreement;

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 (b) FRANCHISEE's business remains in an "inoperative state" for any period of
sixty (60) consecutive days;

(c) FRANCHISEE fails to make any payment within thirty (30) days following the
date when such payment is due in accordance with the terms of this Agreement;
or

(d) FRANCHISEE has made any material misrepresentation or omission in its

application for the franchise.

(f) FRANCHISEE is convicted of a crime that is likely to adversely affect the

reputation of FRANCHISEE or the franchise unit.

(g) FRANCHISEE fails to procure or maintain the Extended Fire insurance coverage
as provided in Article VII of this Agreement.

12.2. In the event of default as defined above, FRANCHISOR may terminate this
Agreement on 30 days' written notice to FRANCHISEE, unless the default is cured within such
30 -day notice period.

12.3. FRANCHISEE shall be deemed to be in default under this Agreement, and all
rights granted to FRANCHISEE under and pursuant to this Agreement shall terminate
immediately, if

(a) FRANCHISEE becomes insolvent;

(b) FRANCHISEE files a petition under any bankruptcy, reorganization, insolvency,

or moratorium law, or any law for the relief of, or relating to, debtors;

(c) Any involuntary petition under any bankruptcy statute is filed against
FRANCHISEE, or any receiver or trustee is appointed to take possession of the
personal and real properties of FRANCHISEE, unless such petition or
appointment is set aside or withdrawn or ceases to be in effect within 30 days of
the date of such filing or appointment; or

(d) The real or personal properties of FRANCHISEE are sold or levied upon by any
sheriff or court appointed personnel.

12.3. FRANCHISEE shall likewise have the right to terminate this Agreement if
FRANCHISOR becomes insolvent or files a petition under any bankruptcy, reorganization,
insolvency, or moratorium law, or any law for the relief of, or relating to, debtors.

XIII

TERMINATION

13.1. Whenever a condition constituting default exists under Article XII hereof, and
FRANCHISOR elects to terminate this Agreement, FRANCHISOR shall have the right,
summarily and without notice, to enter FRANCHISEE's business premises to take custody of all
unpaid stocks/products delivered to FRANCHISEE and to accomplish any acts that
FRANCHISOR has authority or duty to perform pursuant to this Agreement.

13.2. Upon termination of this Agreement, whether by lapse of time, default, or other
cause, FRANCHISEE shall:

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 (a) Within 30 days from receipt of written notice of termination of this Agreement,
discontinue all use of the mark "KURYENTE" and all of FRANCHISOR's other
businessnames, tradenames, trademarks, trade secrets, business format,
procedures and systems and shall remove from his own franchise unit all signs,
decor, and decoration characteristic of FRANCHISOR's operations, and shall not
thereafter operate or do business under any name or in any manner that might
tend to give the general public the impression that he is dispensing, selling or
serving any of FRANCHISOR's products, or that he is operating a business
similar to a KURYENTE outlet/store;

(b) Within 30 days from receipt of written notice of termination of this Agreement,
return to FRANCHISOR all instructions, operations manuals, applications,
books, forms and materials, and other documents bearing FRANCHISOR's
businessname/tradename, trademarks, slogans or any other marks supplied to
FRANCHISEE by FRANCHISOR, and turn over to FRANCHISOR any and all
other books, forms, customer lists, materials, data, and records, including
financial records, pertaining to FRANCHISEE's business under this Agreement.
in this regard, FRANCHISOR is hereby authorized and empowered peaceably to
take possession of the above-stated documents;

(c) Immediately pay to the FRANCHISOR any remaining balance on the franchise
fee; and,

(d) Turn over to FRANCHISOR all unpaid stocks/products.

13.3. In connection with the preceding paragraph, FRANCHISEE shall have the
option of selling back to FRANCHISOR any stocks/products supplied by FRANCHISOR and
already paid for at the time of termination for the price of fifty percent (50%) of the cost thereof.

13.4. The expiration or termination of this Agreement shall not relieve FRANCHISEE
of any of his obligations to FRANCHISOR existing at the time of expiration of termination.

13.5. FRANCHISEE hereby appoints FRANCHISOR or any of FRANCHISOR's

officers as his attorney-in-fact to execute all instruments and to do all things necessary for
accomplishing those acts required of FRANCHISEE under this section in the event that
FRANCHISEE fails to perform such acts immediately on termination of this Agreement.

XIV

DISPUTE RESOLUTION

14.1. This Agreement is based on mutual trust and confidence. Accordingly, the
parties shall in good faith attempt to settle amicably and by mutual agreement any disputes in
connection with or arising out of this Agreement.

14.2. All disputes or differences arising between the parties in respect of this
Agreement, or the breach, termination or inability thereof, which cannot be resolved by the
parties within a period of thirty (30) days, shall be finally settled by arbitration in accordance
with the rules of and under the auspices of the Philippine Dispute Resolution Center, Inc.

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 14.3. The number of arbitrators shall be three (3). Within ten (10) days after the
initiation of arbitration proceedings, the parties shall each select one (1) arbitrator. The decision
in writing of at least two (2) of the three (3) arbitrators shall be final and binding on the parties.

14.4. The arbitration hearing shall be conducted in the English Language and all
documents shall be submitted in English.

14.5. The arbitration hearing shall take place in Quezon City unless the parties agree in
writing to a different location.

14.6. The award rendered by arbitration shall be final and binding upon the parties
hereto, who expressly waive all and any rights of appeal from all and any awards.

14.7. All costs and fees associated with the Arbitration shall be paid by the losing
party, including reasonable and valid legal and witness expenses of the winning party.

14.8. This Agreement shall be governed and interpreted in accordance with Philippine
laws and the exclusive venue of any action to be instituted by any party hereto including
enforcement of any arbitral award shall be the proper courts of Quezon City.

XV

MISCELLANEOUS PROVISIONS

15.1. This Agreement contains the entire agreement between the Parties with respect
to distributorship of FRANCHISOR Products and shall be binding upon and inure to the benefit
of the successors of the Parties. Neither this Agreement, nor its rights or obligations shall be
assignable or transferable by FRANCHISEE, in whole or in part, except with the written consent
of FRANCHISOR.

15.2. No amendments changes, or additions to this Agreement shall be effective or

binding on either party hereto unless reduced to writing and executed by the respective duly
authorized representatives of each of the parties hereto.

15.3. The rights of any of the parties shall not be prejudiced or restricted by any
indulgence or forbearance extended to the other parties and no waiver by any party in respect of
any breach shall operate as a waiver in respect of any subsequent breach.

15.4. The relationship of the parties under and in relation to this Agreement shall be
limited to the matters herein contained. Nothing herein shall constitute a partnership or agency
or employment between or among the parties, nor shall anything herein be considered or
interpreted as constituting any party as the general agent or employee of any other party.

Neither party to this agreement will have authority to act for the other in any manner to
create obligations or debts binding on the other, and either party will be responsible for any
obligations or expenses whatsoever of the other.
Parties in writing.

15.5. A party shall not be liable for any delay in or failure of performance of its
obligations hereunder if such delay or failure arises from or in consequence of force majeure.
The term "Force Majeure" shall mean acts of God, fire, storm, earthquake or seismic
disturbances, acts of war (whether declared or not), acts of public enemies of the Philippines,
sabotage, rebellion, revolution, civil commotion, strikes, lockouts, boycotts or other industrial or

13
labor disputes, acts of Government, or any other cause or causes, whether similar or dissimilar to
the foregoing, beyond the reasonable control of the parties.

Any party claiming the benefit of this provision shall promptly give notice thereof to the
other party including sufficient information as to the cause. The parties shall consult with each
other with a view to suspending or amending this Agreement on account of force majeure.
15.6. If any provision of this Agreement is found to be invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, the other provisions of this Agreement
shall remain in full force and effect in such jurisdiction. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.

15.7. This Agreement shall be binding on the respective successors-in-interest and

permitted nominees and representatives of the parties hereto.

15.8. The rights of FRANCHISEE under this Agreement are personal to

FRANCHISEE and may not be assigned or transferred to any other person, firm corporation, or
other entity without the prior, express, and written consent of FRANCHISOR.

15.9. Except as otherwise provided in this Agreement, all notices, statements,

demands, or other communications and documents (hereafter, the "Communications") required or
permitted to be given, served or delivered hereunder shall be in writing and shall be sent or
delivered by hand, telefax, telex, cable electronic mail or registered mail, with receipt requested.
Any such Communications, acceptance or approval so given shall become effective -

(a) If delivered by hand, upon delivery;

(b) If sent by telex, the correct answer back having been received;

(c) If sent by facsimile machine transmission, at the time of transmission, subject to

its having in fact been received in legible form;

(d) If sent through electronic mail, upon confirmation of receipt from the other
party; and

(e) If by registered mail, upon receipt of return card from the Philippine Bureau of
Post.

Any Communications hereunder shall be addressed as follows:

To KURYENTE: KURYENTE MULTI-SALES CORPORATION

55 Damar Loop, Damar Village, Quezon City
Attention: Mr. Marcelino Jo
Fax No.: 365-07-08
E-Mail:

To Cresencio Valledor:_______________________________________
_______________________________________
Vigan, Ilocos Sur
Attention:
Fax No.:
E-Mail:

XIV

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 EFFECTIVITY

This Agreement shall become effective upon signing hereof by the representatives of
both parties.

IN WITNESS WHEREOF, the parties signed this Agreement on _______________ at

______________________.

KURYENTE MULTI-SALES
CORPORATION CRESENCIO VALLEDOR
(Franchisor) (Franchisee)

By:

MARCELINO JO
President

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

BEFORE ME, a Notary Public for and in the city of ________, on this ______ day of
March 2000 personally appeared the following:

Community Tax
Name Certificate/Passport No. Date/Place Issued

Kuryente Multi-Sales
Corporation
Marcelino Jo
Cresencio Valledor

known to me and to me known to be the same persons who executed the foregoing Franchise
Agreement and acknowledged to me that the same is their free and voluntary act and deed, as
well as the fee and voluntary act and deed of the Corporation which they respectively represent.

WITNESS MY HAND AND NOTARIAL SEAL on this date and place first above
written.

Doc No. ____; NOTARY PUBLIC

Page No. ____;
Book No. ____;
Series of 2000.

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