1.2 Site Selection. You must select a site for your Office within 180 days after you sign this Agreement. After you notify us of a proposed site for your Office, we will have 30 days to review the site and to notify you whether or not we consent to your operation of the Business at that site. If we reject the site you propose, you will have an additional 60 days to locate a site that is acceptable to us. If you fail to do so, this Agreement will automatically terminate and we will refund your Initial Franchise Fee, less our expenses associated with reviewing the proposed site(s). After we consent to an Office site you propose (if at all), you must open your Business at that site within six months. If you fail to do so, this Agreement will automatically terminate and your Initial Franchise Fee will not be refunded. We may, in our sole discretion, grant extensions of the deadlines described above. Our consent to a site is not a guarantee or assurance as to the availability, suitability or prospects of an Office or Business.

7.1 Standards of Operation. You must:

bona fide real estate broker's license in good standing under the laws of the state where the Business is located. If Franchisee is a partnership, corporation or other entity, Franchisee must be legally authorized to do business in the state where your Business is located;

• (c) offer and provide all products and services, and continuously operate the Business, in accordance with the Franchise Policy Guidelines and all applicable laws and regulations;
• (d) be managed by you or a designated manager involved in the day-to-day operation of the Business; be staffed with qualified and trained employees and licensed real estate agents, in conformity with local, state and federal laws and regulations, who are employed or contracted solely by you, not by us. You are solely responsible for hiring and discharging employees, and setting their wages and terms of employment. You are solely responsible for entering into and terminating contracts with agents;
• (e) use only advertising programs, materials and media (including print, audio, video, website, and computer-transmitted media) that conform at all times to Counselor's brand standard and image. If Counselor determines, in its sole discretion, that any advertising materials or media do not conform to Counselor's brand standard or image, you will alter or remove such advertising materials or media, as directed in writing by Counselor. You have the option to develop your own website as part of your overall promotion strategy. Your use of our trademarks in any advertising materials, advertising media or on your website must conform at all times to the requirements set forth in the Article 4 of this Agreement. Counselor does not currently require any advertising materials, advertising media or your website to be approved by Counselor prior to you using them, but reserves the right to review and approve such advertising materials, advertising media and your website (and to require you to alter or cease using all or any portion of such advertising materials, advertising media or website it does not approve); and
• (f) comply with changes we may make to the Franchise Policy Guidelines, System and standards even if additional investment or expenditures are required.

7.2 Best Efforts, Confidentiality and No Conflicts of Interest.

• (a) You or your Business manager must furnish your personal full time and attention and best efforts to the management and operation of your Business.
• (b) During and after the term of this Agreement, you shall not disclose to a third party or use, except to operate the Business during the term of this Agreement, any confidential or proprietary information, or trade secret, that we own or disclose to you. You must require your Business manager (if any) and agents to sign a corresponding confidentiality agreement. You must return the entire Franchise Policy Guidelines to us promptly upon termination or expiration of this Agreement or any transfer.
• (c) During the term of this Agreement, you will not own any interest in, or work for, engage in or assist, directly or indirectly, any real estate brokerage service business other than Counselor, or that competes with Counselor, at or within 50 miles of the Office (or any Additional Office or Extension Office) without Counselor's prior written approval.

8. FINANCIAL STANDARDS.

• 8.1 Records and Reports. You must keep and give us the information, reports, books and records concerning the Office (including any Additional Office and Extension Office) and Business we specify, on forms or in media we specify periodically. You will allow us to inspect, copy and audit such records, both at the Office (including any Additional Office and Extension Office) and remotely by electronic means. If Franchisee is a partnership, corporation or other entity, you must provide us with copies of Franchisee's organizational documents (including, without limitation, as applicable, its articles of incorporation, bylaws, operating agreement or partnership agreement) and breakdown of ownership. You must report promptly to us any claim involving the Business and any change in the Franchisee's organizational documents.

• 8.2 Insurance. You must maintain types and levels of insurance coverage required by the state in which you operate your Business. You also must maintain other insurance required by law, and by your Office (including any Additional Office and Extension Office) lease or mortgage, and errors and omissions insurance coverage. You must maintain general liability insurance on an occurrence basis with a minimum limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, and errors and omission insurance with a minimum limit of at least $1,000,000. Insurance shall be with insurers and on forms acceptable to us, shall name Counselor as an additional insured, and waive subrogation. If we buy such insurance because you fail to do so (which we may, but are not required to, do) you will reimburse us immediately upon request.

• 8.3 Indemnification. You will defend, indemnify and hold harmless Counselor, its affiliates and their respective officers, agents, and employees from all suits, claims, demands, liabilities and costs, including attorneys' fees, in tort, contract, or otherwise, arising out of

• (c) If Counselor has consented to any Extension Office locations, you must maintain the mutually agreed-upon minimum number of sales agents operating from such Extension Office.

One of these sales agents must be a supervising broker.

If you fail to satisfy and maintain the minimum required number of sales agents in the Extension Office on an ongoing basis, Counselor may (in its sole discretion) elect to have you close the Extension Office or terminate the Franchise Agreement.

Source: Item 22 — CONTRACTS (FDD page 32)