What standard elements of the C12 Group business model must a franchisee adhere to?

opportunity to participate in any global C12 web functionality (e.g., search for other members, benchmarking, bulletin board/blog functions, etc.).

• 1. Specific Operational Obligations. Franchisee shall adhere to and comply with Franchisor's basic business model and its various standard processes, due dates, and payments, as they may be revised from time to time in Franchisor's sole discretion. Currently, these obligations of Franchisee include the

following:

• a. Franchisee shall submit a monthly Area Chair Activity and Payment Report via the reporting system to Franchisor by the fifth (5th) business day of each month for the preceding month's activity. Franchisee shall pay Franchisor a late fee of $100 each time this report is late. Any unpaid Royalty Fees past-due greater than thirty (30) days will be subject to a monthly compounded interest rate of 1.5% or the maximum interest rate allowed by law. Late fees and interest shall be paid in conjunction with Franchisee's payment of Royalty Fees. In addition, if Franchisee requires a change to a monthly Area Chair Activity and Payment Report (not due to Franchisor's system error) after the fifth (5th) day of the following month, Franchisee must pay Franchisor a $99 fee to correct such error(s).
• b. Franchisee shall pay Franchisor all fees due under this Agreement via ACH or check (or credit card with Franchisee paying the applicable transaction and processing fees), which must be received by Franchisor by the fifth (5th) day of the month.
• c. Franchisor reserves the right to modify the due dates and methods of payment for all payments due under this Agreement. Franchisor also reserves the right to have any of its staff, officers or Board Directors visit Franchisee's scheduled C12 meetings, given advanced notice, to support Franchisee in Franchisee's effortsto develop strong C12 forums, effectively apply C12 methods and processes, and to encourage Franchisee and Franchisee's members.
• d. Franchisee shall conduct member registration for CEO members and Key Players members by using standard C12 forms and registration payment remittance amounts and methods set forth herein (see fee schedule in Section VI). These standard forms and methods are maintained on the C12 App or via another platform determined by Franchisor for Franchisee's use. Franchisee may set its own registration fees and monthly member fees that Franchisee charges members based on local economics. Such pricing changes must be reviewed in advance with Franchisor, and any modifications to member application/covenant forms must be approved by Franchisor and continue to provide Franchisor with the information necessary to sustain community functionality and value for C12 members. Franchisor must receive both registration form and payment before a New Member Kit or binder will be sent to Franchisee to, in turn, provide to any new C12 member(s). While Franchisee's monthly Royalty Fee is established solely based on each month's membership roster and billings, Franchisee is solely responsible for invoicing and collecting registration fees and membership fees from Franchisee's members and setting collections policies and standards. Franchisee will pay Franchisor Royalty Fees based on Franchisee's membership roster and billings regardless of whether Franchisee actually collects the registration and/or membership fees from its members.

8. Performance, Conduct, and Confidentiality

a. Baseline Target Performance. Franchisee shall pursue the business plan developed during Franchisee's New Chair Training and strive to achieve a ten percent (10%) market penetration of the businesses within the Territory that qualify for C12 membership (the "Baseline Target"). Franchise's Baseline Target is set forth in Section V.1. of this Agreement. Within twenty-four (24) months of opening for business, Franchisee must achieve the greater of (i) thirty-three percent (33%) of the Baseline Target or (ii) at least one (1) CEO Forum with at least ten (10) CEO Members. Franchisee must achieve fifty percent (50%) of the Baseline Target and have at least ten (10) CEO Members within three (3) years of opening for business. If Franchisee fails to achieve either of these performance levels, Franchisee shall have ninety (90) days in which to meet such levels or, if permitted by Franchisor, ninety (90) days in which to make substantial progress in good faith, as determined in Franchisor's sole discretion, toward such levels. If Franchisee fails to achieve these performance levels within ninety (90) days of receiving notice from Franchisor, Franchisor may, in its sole discretion, redefine the Territory or terminate the Franchise

Agreement.

• b. Biblical Conduct. Franchisee acknowledges that being a C12 franchisee and Area Chair represents a unique role and Kingdom responsibility and agrees that Franchisee will work in a manner consistent with biblical principles in order to contribute to the unity, peace, mutual trust, hope, love, and respect of those engaged in C12 at all levels. Franchisee agrees to respect the uniqueness of this Agreement, made before God, and adhering to a higher standard than even our society's legal ethics, which is intended for the mutual benefit of brothers and sisters in the Lord and for the extending of the Kingdom of God and the Gospel of Jesus Christ on the earth.

Source: Item 22 — CONTRACTS (FDD page 46)