What are the consequences of failing to comply with Cicis's System Standards described in Item 8, as they relate to the franchisee's obligations outlined in Item 9?

OURCES OF PRODUCTS AND SERVICES**

Standards and Specifications: In order to maintain the quality and uniformity of all food products, menu items, ingredients, services, products, materials, forms, items, supplies, fixtures, furnishings and equipment utilized in or by Cicis Restaurants, we may, at our discretion, issue certain mandatory standards, specifications, operating procedures and rules (the "System Standards"). You must strictly comply with all System Standards. In constructing and operating the Restaurant, you must use only those types of food and beverage items, condiments, construction and decorative materials, fixtures, equipment, furniture and signs and other products and services ("Operating Assets") that we have approved according to our System Standards for appearance, function and performance. We will not issue to you or to our approved suppliers (except as we deem necessary for purposes of production) the System Standards for proprietary Operating Assets. We will otherwise communicate our System Standards and the approved Operating Assets to you in the

prototype architectural plans for a Cicis Restaurant, in the Operations Manual and otherwise in writing.

Approved or Designated Suppliers; Restricted Purchases: To further facilitate consistency and quality among Cicis Restaurants and our ability to leverage volume purchasing power, we may approve or designate vendors and suppliers for some or all the Operating Assets. We are not approved suppliers of any Operating Asset but as noted in Item 5 above, our affiliate, JMC, is the sole approved supplier of certain items that you will use in the development and operation of your Cicis Restaurant. You will be required to participate in our gift and loyalty card programs that are currently conducted by and through our affiliate, CiCi Services. We will provide a list of approved and designated suppliers in the Operations Manuals or otherwise in writing.

We have designated third-party suppliers for the following Operating Assets and you must purchase such goods and services from those suppliers: food and beverage products; the initial restaurant equipment, furniture, fixture, supplies & décor package; smallwares; branded merchandise; the point-of-sale system; digital menu boards; game room card readers; computer system and other technology infrastructure requirements; vehicles for delivery; third-party delivery service providers; construction contractor; marketing materials; and insurance.

The total amount of required purchases of goods and services by franchisees constitute 90% to 95% of the total cost incurred by you in establishing your Cicis Restaurant and 90% to 95% of the total cost incurred by you in operating your Cicis Restaurant.

Insurance: Before your Cicis Restaurant opens for business and throughout its operation, you must secure and maintain the insurance coverage required by us, which includes the following:

• (1) Commercial General Liability Insurance, personal injury, advertising injury, completed operations, products liability, and fire damage coverage, in the amount of $1,000,000 per occurrence limit with a $2,000,000 general aggregate and a $2,000,000 product aggregate limit; fire legal liability of $50,000, and a premises medical limit of $2,500.
• (2) "All Risks" coverage for the full cost of replacement of your Cicis Restaurant premises and all other property in which we may have an interest and business income insurance in an amount sufficient to cover continuing obligations to us in the event of a covered loss.
• (3) Automobile liability coverage, including coverage of owned, non-owned, and hired vehicles, with coverage in amounts not less than $1,000,000 combined single limit.