Is the operation of the Papa Ray's Pizza Restaurant under the Aw franchise dependent on the location specified in the Franchise Agreement?

is being presented to you because of the desire you have expressed to obtain the right to develop, own and be franchised to operate a Papa Ray's Pizza Restaurant.

2. GRANT OF FRANCHISE

2.1 Term. You have applied for a franchise to own and operate a Papa Ray's Pizza Restaurant at one site approved by us in the following general area (when the exact location is determined, the parties will complete Exhibit 1 attached hereto):

_________________________________. We have approved your application in reliance on all of the representations you made in that application. As a result, and subject to the provisions of this Agreement, we grant to you a franchise (the "Franchise") to operate a restaurant using the Marks ("Papa Ray's Pizza Restaurant") and to use the System in the operation of that Papa Ray's Pizza Restaurant, for a term of ten (10) years commencing on the Agreement Date, unless this Agreement terminates before the end of such term as provided in Section 16 of this Agreement. Termination or expiration of this Agreement will constitute a termination or expiration of your Franchise. (All references to the "term" of this Agreement refer to the period from the Agreement Date, to the date on which this Agreement actually terminates or expires.)

• 2.2 Full Term Performance. You specifically agree to be obligated to operate the Papa Ray's Pizza Restaurant, perform the obligations of this Agreement, and continuously exert your best efforts to promote and enhance the Papa Ray's Pizza Restaurant and to affect the widest and best possible distribution of products and services from your Papa Ray's Pizza Restaurant within the Protected Territory, for the full term of this Agreement.
• 2.3 Protected Area. As long as this Agreement is in force and effect and you are not in default under any of the terms of this Agreement, we will not establish another Papa Ray's Pizza Restaurant franchise or operate itself or through an affiliate any other Papa Ray's Pizza Restaurant within the protected area described in Exhibit 1 ("Protected Area"). The Protected Area granted to you will be a certain mile radius from the Premises identified in Exhibit 1. The minimum radius that you will be granted is three (3) miles from the Premises. The criteria for determining the boundaries of the Protected Area include the population density, demographics, the amount of existing competition in the market, major and/or restricting topographical features which clearly define contiguous areas, and/or other factors we deem relevant to the operation of a Papa Ray's Pizza Restaurant. As a result of these considerations, the size of Protected Areas granted to franchisees may vary. Notwithstanding the foregoing, in the event the location of the Premises is within a limited use facility, your Protected Area shall be limited to the limited use facility (as defined below) in which your Papa Ray's Pizza Restaurant is located.
• 2.4 Our Reservation of Rights. We have the right to grant outside of the Protected Area such other Papa Ray's Pizza Restaurant businesses and franchises as we, in our sole and exclusive discretion, deem appropriate. We and any affiliates reserve the right, both within and outside of the Protected Area to:
• (a) grant a Papa Ray's Pizza Restaurant franchise or operate ourselves or through an affiliate a Papa Ray's Pizza Restaurant located within a limited use facility. A limited use facility includes those located within airports, railroad stations or other transportation facilities; stadiums, racetracks or other sport facilities; enclosed shopping centers; casinos; theaters, auditoriums, amusement parks or other entertainment facilities; military bases; and college campuses; and similar types of captive locations;
• (b) distribute products and services which comprise, may in the future comprise or which do not comprise, a part of the System through any alternative distribution channels including,

but not limited to, supermarkets and other retail facilities, mail order systems, the Internet or similar electronic media, using the Marks ("Alternate Distribution Channels");

• (c) establish businesses which are franchised, licensed or owned by us or any affiliate at any locations we deem appropriate or distribute products or services which are similar to the products and services offered under the System under trade names, trademarks, service marks, trade dress or other commercial symbols other than the Marks.
• (d) to acquire or be acquired by a company establishing businesses identical or similar to the Papa Ray's Pizza Restaurants, even if the other business operates, franchises, and/or licenses competitive businesses anywhere, including your Protected Area; and
• (e) to engage in any other business activities not expressly prohibited by this Agreement.
• 2.5 Delivery, Catering and Marketing Restrictions. You are prohibited from providing delivery service to or catering services at any location outside your Protected Area unless you obtain our prior written consent to do so. If you obtain our consent to deliver or provide catering services outside of the Protected Area, and subject to standards, specifications and procedures for delivery and catering as set forth in the Operations Manual, you may deliver and provide catering services outside of the Protected Area only as long as the area does not fall within the Protected Area assigned to another Papa Ray's Pizza franchisee or affiliate-owned Papa Ray's Pizza Restaurant. If the area is later assigned to a Papa Ray's Pizza franchisee, you must immediately cease all deliveries and catering services to customers located in the other franchisee's Protected Area.

Throughout the term of the franchise, you are strictly prohibited from conducting targeted marketing to promote your Papa Ray's Pizza Restaurant within the Protected Area of another Papa Ray's Pizza franchisee. "Targeted Marketing" shall include all forms of advertising and promotion for customers which can reasonably be restricted to an address, including, but not limited to, direct mailings, door leaflets, telephone solicitation, and localized signs. The purpose of this restriction includes, but is not limited to, preventing confusion in the market place among Papa Ray's Pizza franchisees soliciting the same customers.

• 2.6 Wholesale Activities Prohibited. You agree to engage only in the retail sale of the products and services which comprise the System, and you agree not to engage in the wholesale sale and/or distribution of any product offered for sale through the Papa Ray's Pizza Restaurant. "Wholesale sale and/or distribution" shall mean any sale and/or distribution of product by you to a third party for resale, retail sale or further distribution by such third party. You shall not sell any products offered for sale through the Papa Ray's Pizza Restaurant through any Alternative Distribution Channels.
• 2.7 Minimum Annual Gross Revenue. Beginning with the second year of operation of the Papa Ray's Pizza Restaurant, you must have annual Gross Revenue for each year of operation of a minimum of Three Hundred Thousand Dollars ($300,000.00) ("Minimum Annual Gross Revenue"). If you do not achieve the Minimum Annual Gross Revenue for any year of operation,

you will be given the next twelve (12) months to increase revenues so that you meet the Minimum Annual Gross Revenue. If you do not meet the Minimum Annual Gross Revenue after having been given a twelve (12) month period to increase sales and achieve the Minimum Annual Gross Revenue, we may either (i) increase the amount that you must expend on local advertising pursuant to Paragraph 12.2 herein to an amount we in our discretion deem necessary in order to increase revenues, (ii) reduce or eliminate your Protected Area upon delivery of written notice to you, and thereafter, we may establish another Papa Ray's Pizza Restaurant in the former Protected Area or (iii) terminate this Agreement upon delivery of written notice to you.

3. RENEWAL OF FRANCHISE

• 3.1 Franchisee's Right to Renew. Subject to the provisions of Paragraph 3.2 below, and if you have substantially complied with all provisions of this Agreement and any other agreement between us, then on expiration of the initial term of the Franchise, you will have the right to renew the Franchise for one (1) additional successive term of ten (10) years if: (1) you maintain possession of the Premises, or (2) you are unable to maintain possession of the Premises or in our judgment the Papa Ray's Pizza Restaurant should be relocated, and you secure an approved substitute premises and agree to expeditiously develop the substitute premises in compliance with specifications and standards then applicable under new or renewal franchises for Papa Ray's Pizza Restaurants. You and your Owners must also comply with our then-current training requirements and attend such training classes as we deem necessary. We will charge you a renewal fee of Two Thousand Five Hundred Dollars ($2,500.00) for services we render to you and expenses we incur in conjunction with the renewal.
• 3.2 Notice of Renewal and Nonrenewal. You must give us written notice of your election to exercise your option to renew at least nine (9) months before the end of the term of this Agreement. Within sixty (60) days of our receipt of your notice, we agree to give you written notice of any deficiencies in your operation or historical performance of the Papa Ray's Pizza Restaurant which could cause us not to renew the Franchise. Our notice will state what actions, if any, you must take to correct the deficiencies in your operation of the Papa Ray's Pizza Restaurant or of the Premises and will specify the time period in which those deficiencies must be corrected. Renewal of the Franchise will be conditioned on your continued compliance with all the terms and conditions of this Agreement up to the date of expiration. If we send a notice of nonrenewal it will state the reasons for our refusal to renew. If we do not give you a deficiency notice within sixty (60) days after receipt of your renewal notice, or if we do not give you notice of our decision not to renew the Franchise six (6) months before the expiration of the term of this Agreement, we may extend the term of this Agreement for any period of time necessary in order to provide you reasonable time to cure the deficiencies or to provide the six (6) month non-renewal notice required under this Agreement.
• 3.3 Renewal Agreement; Releases. To renew the franchise, the Company, you and your Owners must sign the then-current form of standard franchise agreement, which agreement will replace this Agreement in all respects, and which may contain royalty fees, advertising fees and other fees and provisions that differ from those contained in this Agreement; any ancillary agreements we are then customarily using in the grant or renewal of franchises for the operation

of Papa Ray's Pizza Restaurants (with appropriate modifications to reflect the fact that the agreement relates to the grant of a renewal franchise); and a general release, in a form satisfactory to us, of any and all claims against us and our affiliates, and our respective officers, directors, shareholders, employees, and agents. If either you or any of your Owners refuse to sign those agreements and releases within thirty (30) days after their delivery, you will be deemed to have elected not to renew the Franchise.

3.4 Remodeling. As a condition for renewal, you must make reasonable capital expenditures to remodel, upgrade and redecorate the Premises so that your Papa Ray's Pizza Restaurant reflects the then-current image intended to be portrayed by a Papa Ray's Pizza Restaurant, including trade dress, color schemes, lay-out, fixtures, furniture and equipment and presentation of the Marks. All remodeling and all replacements, upgrades or redecoration of the Premises must be done in accordance with standards and specifications as prescribed by us from time to time and with our prior written approval. This obligation is in addition to your ongoing obligations to maintain the condition and appearance of the Premises during the term of this Agreement pursuant to Paragraph 11.2.

4. DEVELOPMENT AND OPENING OF THE RESTAURANT

• 4.1 Franchisee's Responsibilities and Company's Approval. You are responsible for leasing a suitable site for your Papa Ray's Pizza Restaurant. We may in our discretion provide site selection assistance to you. Prior to entering into a lease to acquire a site, you must submit to us a site evaluation form for the proposed, together with a letter of intent, proposed lease or other evidence satisfactory to us which confirms your favorable prospects for obtaining the proposed site. We will provide you written notice of approval or disapproval of the proposed site within thirty (30) days after receiving your written proposal and required documents. While we will use our experience in providing any assistance to you regarding site selection and in granting approval of a site, nothing contained herein shall be interpreted as a guarantee of success for said location. You must have leased a site for the Premises which has been approved by us within one hundred eighty (180) days of the date of this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 39–40)