What rights does Aktiebolaget Electrolux have regarding the use of trademarks by Aerus franchisees?

i. The trademarks "Electrolux" and "Lux" are owned by Aktiebolaget Electrolux, which is a Swedish company that is not affiliated with us. They licensed the right to use "Electrolux" and "Lux" to Aerus LLC and Aerus Canada, Inc., our affiliates, in the United States and Canada respectively. The licenses allow Aerus LLC and Aerus Canada, Inc. to assign the rights described below to Aerus Concepts, L.P., which they did, effective August 27, 2001. Effective on the same date, Aerus Concepts, L.P. licensed the rights described below to us. Such

rights generally permit you to utilize the "Electrolux" and "Lux" marks on the products noted as long as such products are sold through an Aerus Business. The licenses are generally only cancelable by Aktiebolaget Electrolux if the Aerus business or any of the principal operating Aerus entities is sold to a competitor (as such term is defined in the license agreements with Aktiebolaget Electrolux).

• ii. In connection with the foregoing, there are a series of license instruments granting to us the right to use and license to you for use on a non-exclusive, non-assignable basis (subject to the terms and conditions of the Franchise Agreement and the Manuals), the "Electrolux", "Lux" and derivative trademarks for use in the sale, marketing, distribution and repair of vacuum cleaners and related accessories. The obligations of the licenses have been incorporated into the Manuals, which must be strictly adhered to. Aktiebolaget Electrolux may terminate the Electrolux Sublicense Agreement upon written notice if We, you or any of our other franchisees breach the Electrolux Sublicense Agreement. Material uncured breach of the license terms by you or any other franchisee may result in termination of the license for all franchisees.
• iii. We are a licensee, and not the owner, of the "Electrolux," "Lux," and related marks and have permission to sublicense such Marks to our franchisees. We, our affiliates and Aktiebologet Electrolux have certain inspection rights related to the use of the trademarks, including the ability to inspect your premises for proper use of the Marks. We may also issue trademark usage guidelines from time to time governing your use of the licensed Marks. The Marks may be used only in the United States if your Approved Locations are in the United States and only in Canada if your Approved Locations are in Canada, and only in (i) direct retail sales to residential customers (meaning door-to-door sales and other sales to residential end-users in a manner other than from a fixed store location open to the general public but not including sales over the Internet or other electronic communications media); and (ii) retail sales to consumers from facilities owned or leased by us or our franchisee and identified as "Aerus" and/or "Electrolux" stores, provided such facilities offer for resale to the general public, in substantial part, only those products sold under the "Aerus" and "Electrolux" brands. You may not sell any damaged goods bearing the Marks, and repossessed or demonstration goods may be sold only with our prior approval. you may be required to assist in the protection of the Marks, and are obligated to indemnify us and our affiliates against any claim resulting from your use of the Marks on products or materials.

Source: Item 13 — Trademarks (FDD pages 47–51)