Under what circumstances can Bonchon use the monies from the Bonchon System Brand Fund?

uired insurance on your behalf, your failure will be a material and incurable breach of this Agreement which, unless we waive the breach, will entitle us to terminate this Agreement immediately upon notice to you, with no opportunity to cure.

10. ADVERTISING

10.01 Administration of the System Brand Fund

We or our designee will administer the Bonchon System Brand Fund as follows:

• A. As provided in Section 5.03, you agree to pay us a Bonchon System Brand Fund Contribution which, combined with the contributions made by all other Bonchon franchisees, will constitute the Bonchon System Brand Fund (or the "Fund").
• B. We will direct all advertising programs, with sole control over the creative concepts, materials and media used in such programs, and the placement and allocation of Fund advertising. You acknowledge that the Fund is intended to further general public recognition and acceptance of the Proprietary Marks for the benefit of the Bonchon System. You further acknowledge that we and our designees undertake no obligation in administering the Fund to make expenditures for you which are equivalent or proportionate to your contributions, to ensure that any particular franchisee benefits directly or pro rata from the placement of advertising or to ensure that any advertising impacts or penetrates your Restaurant Location. The Fund is not a trust and we are not a fiduciary with respect to the Fund.
• C. The Fund may be used to meet any and all costs of administering, directing, preparing, placing and paying for national, regional or local advertising, including (without limitation): production and media; television, radio, cable, video, audio, magazine, newspaper, written materials, graphics, electronic media, and worldwide web/internet advertising campaigns; other advertising, marketing and public relations and promotional materials; point-of-purchase materials; consumer research, menu and promotion analytics tracking, interviews and related activities; the creation, maintenance and periodic modification of the Bonchon website; advertising at sports events; sports team sponsorships; mailers, door hangers, freestanding inserts/coupons, brochures and sponsorships; mystery shoppers (both for the Bonchon System and for competitive networks or units); celebrity endorsements; influencer marketing; reviewing any advertising material you propose to use (as provided below); search engine optimization; establishing a third party facility for customizing local advertising materials; accounting for Bonchon System Brand Fund receipts and expenditures; attendance at industry related conventions, shows or seminars; related retainers; association dues (including the International Franchise Association); social media programs on the

internet; cellular telephone and smartphone media programs, other activities that we in our business judgment believe are appropriate to enhance, promote and/or protect the Bonchon System or any component thereof; and, engaging advertising agencies to assist in any or all of the foregoing activities, including fees to have print, broadcast and/or internet advertising placed by an agency, and all other advertising agency fees.

• D. We need not maintain the sums paid by franchisees to the Bonchon System Brand Fund, or income earned from the Fund, in a separate account from our other funds, but we may not use these amounts under any circumstance for any purposes other than those provided for in this Agreement. We may, however, expend monies from the Bonchon System Brand Fund for any reasonable administrative costs and overhead that we may incur in activities reasonably related to the administration or direction of the Fund and advertising programs for franchisees including, without limitation, preparing marketing and advertising materials; working with advertising agencies, advertising placement services and creative talent; collecting Fund contributions and preparing an accounting of contributions to the Bonchon System Brand Fund and the annual statement of Fund contributions and expenditures provided for below; the Fund's administrative costs; travel expenses of personnel while they are on Fund business; meeting costs, including franchisee conferences; overhead relating to Fund business; a management fee for us (or an affiliate); and other expenses we incur in activities reasonably related to administering or directing the Fund and its programs, including taxes we must pay on Fund contributions we receive; conducting market research, public relations, and creating, preparing, and producing advertising, promotions, and marketing materials; and, otherwise devoting our personnel, resources and/or funds for the benefit of the Bonchon System Brand Fund. Our right to expend monies from the System Advertising Fund to reimburse us for such activities is exclusive of any advertising agency fees which the Fund must expend to secure the services of an advertising agency or to have print, broadcast or internet advertising placed by an agency.
• E. Within 60 days following the close of our fiscal year, we will prepare (but not audit) a statement detailing Bonchon System Brand Fund income and expenses for the fiscal year just ended, a copy of which statement will be sent to you upon request.
• F. We expect to expend most contributions to the Fund for advertising during the fiscal year when the contributions are made. If not all advertising funds are spent in the fiscal year in which they accrue, we will use the remaining amount in the future for the benefit of the franchisees and the System. If franchisees request, we will provide them with an annual accounting of how advertising funds are spent, as stated in paragraph "E" immediately above.
• G. We reserve the right to use any media, create any programs and allocate brand funds to any regions or localities in any manner we consider appropriate in our business judgment. The allocation may include rebates to individual franchisees of some or all of their System Brand Fund contributions for local advertising expenditures if, in our judgment, our national or regional advertising program or campaign cannot effectively advertise or promote in certain regions or communities. If we determine that the total Bonchon System Brand Fund Contributions collected from all Bonchon franchisees is insufficient to sustain a meaningful regional or national advertising campaign, we may rebate all or a portion of the Fund contributions to franchisees on a pro rata basis. Franchisees must expend any rebate on the types of local advertising and media that we determine. All rebate advertising expenditures must be documented to us in a monthly rebate advertising expenditure report form which we will furnish in our Manuals or otherwise.
• H. The Fund will not be used for any activity whose sole purpose is the sale of franchises. However the design and maintenance of our Web site (for which Fund monies may be used) may, without violating the provisions of this Agreement, include information and solicitations for prospective franchisees and public relations and community involvement activities which may result in greater awareness of the Bonchon brand and the franchise opportunity.

I. Although the Bonchon System Brand Fund is intended to be a perpetual duration, we maintain the right to terminate the Fund, but will not do so until all of the monies in the Fund have been expended for advertising and promotional purposes.

10.02 Advertising Standards You Must Comply With

You may only use advertising which we have either furnished (through sale to you or otherwise) or approved in writing in advance. We may require you to purchase advertising materials we develop at a reasonable cost. All net profits from the sale of such materials to you will be contributed to the System Brand Fund.

Source: Item 23 — RECEIPTS (FDD pages 92–536)