What is the Caring Transitions definition of an 'exclusive protected territory' as described in Item 12?

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ITEM 12. TERRITORY

We will grant you an exclusive protected territory delineated by postal codes. The exclusive territory you will receive for the base initial franchise fee will contain a population between 175,000 and 200,000. If the population of your territory exceeds 200,000, you must pay an additional $500 for all or part of every 1,000 people over 200,000. There is no maximum limit on the population of your territory. The population will be determined using extrapolated census figures and a designated mapping system. You may operate from more than one location subject to our written approval.

There are no minimum sales quotas. You maintain the rights to your territory even if the population increases. If the Postal Service alters the boundary or number of the postal code(s) comprising your territory, we have the right to re-define the boundaries of your territory to correspond as nearly as possible to the original territorial border. Our decision on this matter will be final. There are no other circumstances that would permit us to modify your territorial rights.

You may not operate your franchise in another franchisee's territory, except as disclosed in this Item 12. "Operate your franchise in another franchisee's territory" means advertising, soliciting, offering, providing, or selling products or services in another franchisee's territory. The exclusivity of your territory begins once you complete our initial training program and become fully operational.

Although we are not obligated to do so under the franchise agreement, we may permit you to operate your franchise in areas outside your territory that are not part of another Caring Transitions franchisee's territory. We may, in our discretion, allow you to continue serving existing clients located in areas outside your territory after such area later becomes part of another franchisee's territory, but you must stop soliciting and serving new clients in any such area. Similarly, earlier Caring Transitions franchisees may have operated their franchises in areas that later became part of your territory; if so, they will be permitted to continue to provide services in your territory to clients they already had in your territory before you opened your franchise, but they will be prohibited from soliciting and serving any new clients in your territory once you open your franchise. In addition, we may permit you to operate in the territory of a franchisee that has been provided written notification of a default under

the franchise agreement and who has not cured the default within 30 days. In this event, the exclusivity of the defaulting franchisee's territory could, in our discretion, be suspended until the default is cured. You do not acquire any rights to any areas outside your territory and you must immediately stop operating your franchise in areas outside your territory upon notification from us.

You may not relocate the franchised business without our approval. Whether or not we would allow relocation depends on the circumstances at the time and what is in the systems' best interests, based on our business judgment. Any relocation, if approved, would be at your sole cost.

The exclusivity of your territory does not extend to customers that we identify as National Accounts. A "National Account" is business, association, or other organization with members, affiliates, policyholders, offices, stores, plants, buildings or other facilities that are not confined to the territory of a single Caring Transitions franchisee. With our prior written consent, you may service National Accounts at or from locations in another franchisee's territory. We have the exclusive right to identify customers or potential customers as National Accounts, to service National Accounts, and to award the right to service National Accounts to any Caring Transitions franchisee, in our sole and absolute discretion.

The exclusivity of your territory does not extend to "shared referral sources" (such as attorneys, bank trust departments, real estate agents and brokers, funeral homes, senior care facilities, and similar organizations) that will be shared by all franchisees in a market. Other Caring Transitions franchisees may solicit referrals from and promote their services to shared referral sources located in your territory, and you may solicit referrals from and promote your services to shared referral sources located in another franchisee's territory. We have the exclusive right to identify the shared referral sources in each market on a case-by-case basis and resolve all disputes between franchisees relating to shared referral sources. It is possible that some part or all of your territory may have previously been owned by a former franchisee. If you submit a written request to us by certified mail, return receipt requested, then we will notify you whether or not a former franchisee previously owned the exact boundaries of your territory.

We may not operate or grant another Caring Transitions franchise within your franchise territory, but nothing prohibits us from operating or granting other franchises under different trademarks or trade names within your territory. These franchises may offer some of the same services offered by Caring Transitions franchises so long as they are not "substantially similar" to a Caring Transitions franchise.

Except as provided in this Item 12, we do not reserve the right, under our principal trademarks or different trademarks, to provide competing services or to use any alternative distribution, including the Internet, within your territory. We will not solicit or accept orders inside your territory.

There are no restrictions on soliciting or accepting clients outside your territory and you may use any commercially reasonable channel of distribution, such as the Internet, telemarketing, or other direct marketing method to obtain and service clients outside your territory, other than as disclosed in this Item 12.

Your franchise agreement does not give you any option, right of first refusal, or similar right to acquire additional franchises, but you may purchase a right of first refusal to purchase an additional franchise territory. The price for a right of first refusal is $3,000, which would be credited toward the initial franchise fee if you exercise the right of first refusal. A right of first refusal will give you the right to purchase a specific territory first if another prospective purchaser shows an interest in purchasing the territory within 1 year after you purchase the right of first refusal. You would have 7 calendar days after receipt of notice to exercise the right. Caring Transitions must receive the entire balance of the then current initial franchise fee for the right of first refusal territory by the seventh day after you receive

the notice. A right of first refusal lasts for 1 year. The right of first refusal agreement is attached to this disclosure document as Exhibit K.

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