What rights and obligations does the franchisee obtain by entering into an agreement with Canopy Lawn Care?

WHEREAS, Franchisee recognizes that in order to enhance the value of the System and goodwill associated with it, this Agreement places detailed obligations on Franchisee, including strict adherence to Franchisor's reasonable present and future requirements regarding the types of products sold, services offered, advertising used, operational techniques, marketing and sales strategies and related matters.

WHEREAS, Franchisee is aware of the foregoing and is desirous of obtaining the right and obligation to use the System and in association therewith, the right and obligation to use the Marks, and wishes to be assisted, trained, and franchised to operate a Lawn Care Business pursuant to the provisions and within the Territory specified in this Agreement, subject to the terms and conditions contained in this Agreement.

The parties therefore agree as follows:

DEFINITIONS

For the purposes of this Agreement, the following are hereby defined:

• (a) "Agreement" means this agreement, attachments, addenda and all instruments in amendment hereof.

• (b) "Affiliate" means any person or entity that controls, is controlled by, or is in common control with, Franchisor.

• (c) "Business" or "Lawn Care Business" means the business operations conducted or to be conducted by Franchisee consisting of a business which provides lawn care services, including lawn application such as turf fertilization, and weed control and prevention, and related products and services prescribed by Franchisor.

3. TERM OF THE AGREEMENT AND LICENSE

• 3.1 This Agreement and the License granted shall continue for a period of ten years ("Initial Term"). This Initial Term shall begin on the date this Agreement is executed by Franchisor, subject, however, to termination in accordance with the provisions of this Agreement. When the Initial Term expires Franchisee shall have the option to extend its rights to operate the Lawn Care Business for two additional terms for a period of five years each ("Successor Term"), provided Franchisor determines in its sole and absolute discretion that Franchisee has met all of the following requirements:

• (a) Franchisee has not failed to remedy any breach of this Agreement specified by Franchisor in a written notice to Franchisee as per Sections 17.1 or 17.2;

• (b) Franchisee has not committed and received notice of three or more breaches of this Agreement in the 12 months prior to the end of the current Initial Term, even if such breaches were timely remedied;

• (c) Franchisee has given Franchisor a written notice of intent to extend its rights to operate the Lawn Care Business no less than two months or more than six months prior to expiration of the Initial Term;

• (d) Franchisee is current in its payment obligations to Franchisor, Franchisor's Affiliates, and Franchisee's trade creditors;

• (e) Franchisee has met Franchisor's then-current qualifications for new or renewing Canopy® franchisees;

• (f) Franchisee executes a successor franchise agreement ("Successor Franchise Agreement") and all other agreements in the form then being used by Franchisor in granting new franchises, which may contain materially different terms and conditions than this Agreement, provided that Franchisee will pay Franchisor the Successor Franchise Fee (defined below) instead of the Initial Franchise Fee and the Successor Term will be no less than five years, as described above.

4. TERRITORY

• 4.1 During the Initial Term and any Interim Period and for so long as Franchisee is in compliance with all of its obligations hereunder, except as otherwise provided in this Agreement, including Franchisor's reservation of rights as set forth in Sections 4.2, 4.4 and 4.7, neither Franchisor nor any Affiliate will establish or license another person or entity to establish a Lawn Care Business using the Marks licensed to Franchisee within the Territory encompassed by the boundaries and with the population base set forth in Attachment A, attached hereto and incorporated herein by reference. Except as otherwise specifically provided in this Agreement, this Agreement does not restrict Franchisor or its Affiliates and does not grant rights to Franchisee to pursue any of Franchisor's or its Affiliates other business concepts other than the Lawn Care Business.
• 4.2 Franchisee acknowledges that the Franchise granted hereunder is non-exclusive and that Franchisor and its Affiliates retain the exclusive right, among others:
• (a) to use, and to license others to use, the Marks and System for the operation of Lawn Care Businesses at any location other than in the Territory, regardless of proximity to the Territory;
• (b) to use, license or franchise the use of trademarks or service marks other than the Marks, whether in alternative channels of distribution or at any location including the Territory, in association with operations that are the same as, similar to or different than a Lawn Care Business;
• (c) to use the Marks and the System in connection with the provision of other services and products or in alternative channels of distribution such as those described in 4.2(d), at any location including the Territory;
• (d) to offer the Services or Products, or grant others the right to offer the Services or Products, whether using the Marks or other trademarks or service marks, through alternative channels of distribution, including without limitation, wholesalers, retail outlets or other distribution outlets (other than Lawn Care Businesses), or by Internet commerce (e-commerce), mail order or otherwise, whether inside or outside the Territory;
• (e) to use any websites utilizing a domain name incorporating one or more of the words "Canopy Lawn Care" or similar derivatives thereof.

Franchisor retains the sole right to market on the Internet and use the Marks on the Internet, including all use of websites, domain names, URL's, directory addresses, metatags, linking, advertising, and co-branding and other arrangements.

Franchisee may not independently market on the Internet, or use any domain name, address, locator, link, metatag, or search technique, with words or symbols similar to the Marks or otherwise establish any presence on the Internet without Franchisor's prior written approval.

Franchisee will provide Franchisor with content for Franchisor's Internet marketing, and will sign Internet and intranet usage agreements, if any.

THIS ASSIGNMENT is entered into this day of 20, in accordance with the terms of the Canopy® Franchise Agreement ("Franchise Agreement") between ("Franchisee") and CANOPY FRANCHISE CORPORATION, ("Franchisor"), executed concurrently with this Assignment, under which Franchisor granted Franchisee the right to own and operate a Lawn Care Business located at FOR VALUE RECEIVED, Franchisee hereby assigns to Franchisor (1) those certain telephone numbers and regular, classified or other telephone directory listings (collectively, the "Telephone Numbers and Listings") and (2) those certain Internet website addresses ("URLs") associated with Franchisor's trade and service marks and used from time to time in connection with the operation of the Lawn Care Business, as defined in the Franchise Agreement, at the address provided above. This Assignment is for collateral purposes only and, except as specified herein, Franchisor shall have no liability or obligation of any kind whatsoever arising from or in connection with this Assignment, unless Franchisor shall notify the telephone company and/or the listing agencies with which Franchisee has placed telephone directory listings (all such entities are collectively referred to herein as "Telephone Company") and/or Franchisee's internet service provider ("ISP") to effectuate the assignment pursuant to the terms hereof.

Upon termination or expiration of the Franchise Agreement (without the extension of Franchisee's rights to operate the Lawn Care Business), Franchisor shall have the right and is hereby empowered to effectuate the assignment of the Telephone Numbers and Listings and the URLs, and, in such event, Franchisee shall have no further right, title or interest in the Telephone Numbers and Listings and URLs, and shall remain liable to the Telephone Company and the ISP for all past due fees owing to the Telephone Company and the ISP on or before the effective date of the assignment hereunder.

• 8.1 Franchisee shall, consistent with the terms of this Agreement, diligently develop the Business and use its best efforts to market and promote the required Services and Products.

• 8.2 Subject to the terms of this Agreement, including Section 7.3, during the Initial Term and any Interim Period, Franchisee shall strictly comply with all mandatory standards, specifications, processes, procedures, requirements, and instructions of Franchisor regarding the operation of the Business and must comply with the following requirements:

• (a) If Franchisee does not have adequate space and storage to operate the Lawn Care Business from a home office, then Franchisee must obtain a flexible warehouse space and/or storage space.

• (a) Reviewing information that Franchisee provides to Franchisor relating to the proposed site of a flexible warehouse if Franchisee operates its Lawn Care Business from a location other than a home office.

Franchisee must obtain Franchisor's prior approval before leasing or operating out of a warehouse.

• (b) Designating Franchisee's Territory as stipulated in Section 4 and Attachment A.

• (c) Furnishing Franchisee with specifications for all initial and replacement equipment, tools, Vehicles, inventory and supplies required for the operation of Franchisee's Business as stipulated in Section 9.

• (d) Within 90 days of the mutual execution of this Agreement, providing Franchisee, or if Franchisee is an entity, a person designated to manage the Business ("Designated Business Manager") with an initial training program.

Franchisor does not represent or warrant that any other guidance, coaching and assistance will be provided to Franchisee, other than as set forth in this Agreement.

To the extent any other guidance, coaching or assistance, or any specific level or quality of guidance, coaching or assistance is expected, Franchisee must obtain a commitment to provide such guidance, coaching or assistance, or level or quality of guidance, coaching or assistance in writing signed by an authorized officer of Franchisor, otherwise Franchisor shall not be obligated to provide any other guidance, coaching or assistance, or specific level or quality of guidance, coaching and assistance.

Source: Item 22 — CONTRACTS (FDD page 55)