What is the scope of the 'System' that is licensed to a Basecamp Fitness franchisee?

6 | | | `S | | RIDER 40

BASECAMP FITNESS FRANCHISE AGREEMENT

THIS FRANCHISE AGREEMENT ("Agreement") is made as of the Effective Date set forth in the Rider attached to this Agreement (the "Rider") between BASECAMP FITNESS FRANCHISOR LLC, a Delaware limited liability company ("we" or "us") and the person or persons named in the Rider as "Franchisee" ("you").

RECITALS:

• A. We along with our predecessors have developed a system of operating boutique interval training fitness studios under the "Basecamp" and "Basecamp Fitness" service marks that offer short, high intensity guided workouts that combine strength, cardio and core training in a fast-paced, high-energy environment. We grant franchises to qualified candidates for the establishment and operation of these studios. We license our trademark rights in "Basecamp" and "Basecamp Fitness" and may in the future adopt, use and license additional or substitute trademarks, service marks, logos and commercial symbols in connection with the operation of Basecamp Fitness studios (collectively, the "Marks"). These studios use our methods, procedures, standards, specifications and the Marks, all of which we may improve, further develop or otherwise modify from time to time (all of which are collectively referred to as the "System").
• B. You acknowledge that the Basecamp Fitness concept is a relatively new concept. As such, the methods of operation for a Basecamp Fitness studio continue to evolve. These businesses and the System will evolve over time, and such evolution will likely result in numerous changes to the System, some of which may require additional investment by you.
• C. You acknowledge that you have had an adequate opportunity to be thoroughly advised of the provisions of this Agreement and our Franchise Disclosure Document and have had sufficient time and opportunity to evaluate and investigate the System and the procedures and financial requirements associated with the System, as well as the competitive market in which it operates.
• D. You desire to operate a Basecamp Fitness franchise that will conform to our uniform requirements and quality standards as established from time to time by us.

AGREEMENTS:

1. GRANT OF FRANCHISE; FRANCHISED LOCATION

• A. Grant of Franchise. Subject to the provisions stated below, we license to you a personal franchise to operate a Basecamp Fitness studio (your "Basecamp Studio") in conformity with our System at the location described on the Rider (the "Franchised Location"). You accept the license and undertake the obligation to operate your Basecamp Studio using the System and in compliance with our standards. Your Basecamp Studio may only be operated at the Franchised Location. If you would like to open a second or subsequent location, you must sign a new franchise agreement on our then-current form for each location, and pay the applicable franchise fees for each location.
• B. Protected Territory. Included in the Rider is a map or description of an area surrounding the Franchised Location (the "Protected Territory"). Except as specified in this Section, in Section 2.B, or in the Rider, during the term of this Agreement, we will not operate or license to anyone else the right to operate a Basecamp Fitness studio physically located in the Protected Territory. You acknowledge and agree that: (i) we and our affiliates have the right to grant other franchises or licenses and to operate

company or affiliate owned fitness studios/businesses (including Basecamp Fitness studios) at locations outside the Protected Territory even if they compete with your Basecamp Studio for customers or members; (ii) we and our affiliates have the right to grant other franchises or licenses and to operate company or affiliate-owned fitness studios/businesses (including Basecamp Studios) within private establishments located within the Protected Territory, provided that access to those centers is limited to employees of the business, or transient guests of the business who, in either case, would not have any reciprocity with any other Basecamp Studio as a result of their use or membership in this private studio, and (iii) we and our affiliates have the right to operate, and to grant franchises or licenses to others to operate, any fitness studios/business and any other business from locations within and outside the Protected Territory under trademarks other than the Marks, without compensation to you. In addition, the boundaries of your Protected Territory may overlap with a territory we grant to another franchisee or to a Basecamp Fitness studio we or our affiliates operate, so long as no other Basecamp Fitness studio is located within your Protected Territory.

• C. Additional Reservation of Rights.

Source: Item 22 — CONTRACTS (FDD pages 61–62)