Under what circumstances can Budget operate a Rental Business inside a franchisee's exclusive territory?

sively as the business of renting and leasing Vehicles and such other vehicles, without drivers, as may be approved by Budget in writing, for a period not to exceed one hundred and eighty (180) days under the Marks and the System, and does not include or refer to the rental, lease or sharing of any other vehicle or product or to any other business or commercial activity, including any business engaged in the sale of new or used vehicles or the rental, lease or sharing of any type of vehicle not authorized by Budget.

Budget reserves all rights not expressly granted to Licensee in this Agreement, including rights of Budget and its affiliates and parent companies and subsidiaries (collectively, the "Related Entities") to: (a) operate, and grant others the right to operate, one or more Rental Businesses outside the Territory and, under certain circumstances as agreed to in Paragraphs 6.1, 11.7, 11.10, 11.11 and 11.12, inside the Territory, on such terms and conditions as Budget deems appropriate; (b) hire and/or appoint sales persons and general sales agents and negotiate and enter into local, regional, national and international sales and marketing agreements with persons or entities located within the Territory; (c) use the Marks for any purpose within the Territory, other than for the operation of a Rental Business at a location within the Territory (subject to Budget's rights under Paragraphs 6.1, 11.7, 11.10, 11.11 and 11.12); (d) operate, and grant others the right to operate, businesses (including businesses that offer for rent, lease, share or sale Vehicles and other motorized and non-motorized equipment) outside and within the Territory under trademarks different than the Marks; and (e) offer and sell products and services to customers located anywhere, whether inside or outside of the Territory, under the Marks or any other trademarks or service marks through alternative channels of distribution, like the Internet, e-mail, digital cellular networks, smartphone applications and similar e-commerce channels, as well as tour operators, wholesalers, telemarketing or other direct marketing. In addition, Budget and its Related Entities may advertise its services to any person anywhere including in the Territory. Licensee may

advertise for customers outside the Territory, but not in yellow pages advertising circulated wholly outside the Territory.

Nothing in this Agreement will prohibit Budget or its Related Entities from: (i) operating, and granting others the right to operate, a Rental Business in the Territory where such Rental Business offers for rental, lease, share or sale vehicles other than the Vehicles; (ii) operating the System alongside or in conjunction with any of the Related Entities; or (iii) selling their assets, engaging in a public offering or private placement of ownership interests, merging with or acquiring other corporations or entities, or being acquired by another corporation or entity (including a corporation or entity which may own or operate systems or chains which may be competitive with or similar to the Network).

• 1.3 Prohibition Against Sublicensing. Licensee no right or authority to grant a sublicense to any person to perform any part of Licensee's rights or obligations.
• 1.4 Territory. This license will be exclusive, for the Rental Business and nonexclusive for Rental Business, subject to the terms of this Agreement, only throughout the Territory as it exists on the Effective Date (as defined in the Summary Pages (Section 7)). If the Territory description, as understood in the future, defines a territory larger than the Territory as it exists as of the Effective Date (the "Expanded Territory"), the Territory will include such Expanded Territory provided that such territory is not being served by corporate locations or has not already been licensed by Budget to another person or entity.
• 1.5 Exclusive Relationship. Budget would be unable to protect its confidential information against unauthorized use or disclosure and would be unable to encourage a free exchange of ideas and information among the Network and between Licensee and Budget if Licensee, its beneficial owners or persons related to Licensee or its beneficial owners were permitted to engage in other businesses competing with Rental Businesses or Budget. Accordingly, neither Licensee, its beneficial owners, any immediate family member of Licensee or its beneficial owners, nor any of Licensee's principal officers or directors will, during the term of this Agreement, directly or indirectly, participate or engage in as an owner, partner, director, officer, employee, consultant or agent, or in any other capacity, in any other vehicle rental business, car sales or sharing business or system located or operating anywhere in the United States (or its territories or possessions), except other vehicle rental or vehicle sharing businesses operated under license agreements with Budget or, with Budget's consent, any of the Related Entities.

MARKS AND SYSTEM

2.1 Budget's Exclusive Ownership. Budget represents that it has applied for or is applying for registration in the Territory of the Marks. Licensee acknowledges and agrees that Budget, or one of its Related Entities, owns all rights to and interest in the Marks, and has exclusive ownership of the System, and that Licensee's use of the Marks, or any variation thereof, and any goodwill established thereby inures to the exclusive benefit of Budget. Licensee agrees not to contest, or assist anyone else in contesting, at any time during or after the term of this Agreement, in any manner, the validity of Budget's exclusive ownership of and rights to the Marks, the

limitations on Licensee usage (as defined below and in the then-current Standards) or any element of the System, whether now existing or hereafter created or obtained.

• 2.2 Notification of Infringement/Claim. Licensee shall notify Budget immediately in writing of any apparent infringement of or challenge to Licensee's use of any Mark or claim by any person other than Budget of any rights in any Mark or any similar trade name, trademark or service mark of which Licensee becomes aware. Licensee shall not communicate with any person other than Budget and Budget's counsel in connection with any such infringement, challenge or claim. Budget will have sole discretion to take such action as it deems appropriate and the right to control exclusively any litigation or administrative proceeding arising out of any such infringement, challenge or claim or otherwise relating to any Mark. Licensee shall execute any documents, render such assistance and do such acts and things as may, in the opinion of counsel for Budget, be necessary or advisable to protect the interest of Budget in any such litigation or proceeding or to otherwise protect the interest of Budget in the Marks.

Source: Item 23 — RECEIPTS (FDD pages 80–426)