What is the relationship between Aerus and the franchisee according to the agreement?

The right granted under this Agreement is only for the operation of the Franchised Business in accordance with this Agreement.

Franchisee is granted no rights of any kind in and to any other business or system that may now or hereafter be owned, operated or licensed by Company or any of its Affiliates.

Company and Company's Affiliates retain all rights not expressly granted herein.

Company reserves the right to provide new products and services under the System, and to require or permit new products and services to be provided, marketed, promoted, distributed or sold hereunder by Franchisee through the Franchised Business, and may, in connection therewith, without limitation (1) require Franchisee to execute an additional or supplemental agreement and (2) require the payment of a royalty.

• G.

Notwithstanding anything herein to the contrary, without Company's prior written approval, Franchisee shall not (1) conduct the Franchised Business under any actual or assumed name other than the Approved Name, (2) sell to any person or entity that is not an Approved Customer, (3) advertise, market or solicit sales outside of the Area of Responsibility, (4) sell to any person not residing within the Area of Responsibility, (5) conduct any aspect of the Franchised Business by, through, over or on the internet or world wide web, including without limitation, advertising, marketing and solicitation, unless or until Company establishes a Company sponsored program for such conduct by Franchisees and, then, only as part of and in accordance with such program, (6) use any trade name, trademark or service mark in connection with the Franchised Business other than the Marks (and then only in strict accordance with the terms and conditions of this Agreement, the Policies and Procedures, the Manuals and any specific guidelines imposed by Company), (7) advertise or sell any product or service from the Approved Location or through the Franchised Business bearing any trade name, trademark or service mark other than the Marks, (8) sell any product or service that is not a Product, or (9) permit any Product to be sold from any

physical location other than the Approved Location, by any Person other than an authorized representative of Franchisee or in a manner otherwise inconsistent with the System.

• H.

Notwithstanding the foregoing and without limiting the generality of the provisions contained in this Section, Franchisee acknowledges that Company and its Affiliates and existing franchisees, distributors and licensees operate existing businesses and systems, and may in the future establish and operate new businesses and systems, including Aerus Businesses, under the same and other assumed names, trade names and trademarks as the Marks, which businesses and systems may offer or sell products and services similar or identical to the Products, and may do so (or grant licenses or franchises for third-parties to do so) within any part of the Area of Responsibility (except as limited by the rights granted hereunder).

Provide prompt and workmanlike care and service, including service under any warranty offered by Company, to all Approved Customers who have purchased Products from Franchisee or through Franchisee's Sales Representatives or Outlet Licensees, to all other owners of Products residing within the Area of Responsibility or who may appear personally (or otherwise contact the Franchised Business) at the Approved Location, and to all owners of products (other than the Products) which may be designated from time to time by Company, whether or not the Products to be serviced were purchased from or through Franchisee, and in order to fully discharge and perform this obligation, Franchisee shall establish and maintain a service and repair center (in accordance with the Manuals) at the Approved Location, provided that, in limited circumstances, with the Company's prior approval, Franchisee may satisfy this obligation by entering into a contractual arrangement (approved by Company in all respects) with an existing owner of an Aerus Business to discharge and perform all the Franchisee's repair, maintenance, service and warranty obligations.

• I.

Fulfill or cause to be fulfilled any and all promises and commitments made to Approved Customers by Franchisee, and any of its Outlet Licensees, Sales Representatives, employees or agents.

• J.

Develop in the Area of Responsibility an organization of qualified Sales Representatives operating from or through the Approved Location who will and do follow the Policies and Procedures and guidelines of the Manuals and comply with the terms and conditions of this Agreement.

• K.

Recruit and train Sales Representatives to properly and effectively demonstrate, use, care for, install and sell the Products and to understand and follow the Policies and Procedures and other guidelines set forth in the Manuals.

• L.

Actively and diligently use the Customer Data and any information, data or relationship management software provided by Company to service and support existing customers, develop leads to potential customers and potential sales representative recruits and to promptly and accurately record information about all past and future sales, leads and customers in the Customer Data.

• M.

Fully comply with all of the provisions of the Manuals, including the Policies and Procedures, with all bulletins and other communications issued by Company from time to time and with all applicable federal, state and local laws, ordinances and regulations.

Assignment.

Franchisee shall not directly or indirectly Transfer or assign, nor attempt to Transfer or assign, this Agreement, or any right or obligation hereunder, without the prior written consent of Company; provided, that a principal or equity holder in Franchisee may be permitted to transfer an interest in Franchisee pursuant to the provisions set forth in Addendum C attached hereto.

Company shall be permitted to assign this Agreement at any time and from time to time; provided, however, no such assignment will be made by Company except to an assignee who, in Company's good faith judgment, is willing and able to assume Company's obligations under this Agreement.

14. Representations and Warranties.

A. Franchisee shall use its best efforts to operate the Franchised Business so as to achieve optimum sales in accordance with this Agreement.

B. If a business entity:

• (1) Franchisee is duly organized and validly existing under the law of the jurisdiction of its formation and is duly qualified and authorized to do business in each jurisdiction in which the Franchised Business will operate;
• (2) Franchisee's charter documents currently provide and will at all future times provide that Franchisee's activities shall be confined exclusively to the ownership and operation of an Aerus Business, unless Company otherwise consents in writing;
• (3) Franchisee has provided to Company for review certified copies of its articles of organization or other charter documents, any amendments thereto, resolutions of its Board of Directors or Board of Managers, or consent of its limited partners, authorizing and consenting to entry into and performance of this Agreement, and any certificates, buy-sell agreements or other documents restricting the sale or transfer of equity of the entity, and any other documents as Company may reasonably require prior to the execution of this Agreement;
• (4) The individual executing this Agreement is duly authorized to so execute, has appropriate authority to bind Franchisee as provided hereunder, and is an active, full-time participant in the daily operations of the Franchised Business; and
• (5) Franchisee's execution of this Agreement, and entry into the business arrangement contemplated hereby, do not violate any prior existing obligation, any law or any of the contractual or business relationship of Franchisee or any of Franchisee's principals.

A. This Agreement shall automatically terminate upon the expiration of its Term.

Source: Item 23 — Receipts (FDD pages 74–305)