What are the specific requirements for handling finances at a Creative World School franchise (implied)?

ediately due and payable, collection costs, material breach of Franchise Agreement. | (See Note 3) |#### Explanatory Notes:

• (1) In its sole discretion, Discount Preschool may elect to finance up to $50,000 of the Opening Package Fee if you meet certain credit requirements. The amount financed is generally negotiated on an individual basis depending on several factors, including, without limitation, your credit history, guarantees of your owners, and financial condition. You must obtain financing related to the purchase of your school building and/or land for your Creative World School® Business, in order to qualify for a loan from Discount Preschool.
• (2) You must execute a Security Agreement which grants Discount Preschool a security interest in all of the furniture, fixtures, equipment, accessories, inventory, licenses, permits, goods, materials, supplies, accounts, general intangibles, and all other assets, including the Opening Package equipment, supplies and materials, under the Uniform Commercial Code, to secure the prompt payment and performance of all of your obligations to Discount Preschool, including the indebtedness on the Promissory Note. If you are a business entity, your principal owners may be required to guaranty your obligations under the Promissory Note and the Security Agreement.
• (3) Upon an event of default or acceleration event, the entire unpaid principal balance and all accrued interest will be accelerated and become immediately due and payable in full, and the interest rate will increase to the lesser of 18% or the maximum rate permitted by law. An "event of default" means: (a) you fail to pay any sums when due to Discount Preschool or us or our affiliates under the Promissory Note, the Franchise Agreement or any other agreement and do not correct such failure within 10 days after written notice of such failure is delivered to you; or (b) you breach any of the provisions of the Franchise Agreement or any other agreement between you and Discount Preschool, us or our affiliates and do not correct such failure within the applicable cure period. You must pay all costs of collecting amounts due under the Promissory Note. In addition, a default under any of the financing documents constitutes an event of default under the Franchise Agreement.

Except as described above, neither we nor any affiliate offers direct or indirect financing to you, guarantees any note, lease or other obligation of yours, has any practice or intent to sell, assign or discount to a third party all or any part of any financing arrangement of yours, or receives any direct or indirect payments or other consideration from any person for the placement of any financing with the lender.

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ITEM 11 FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING

Except as listed below, we are not required to provide you with any assistance.

Pre-Opening Obligations: Before you open the School, we will:

• 1. If you and we have not already agreed upon a location for your School before signing the Franchise Agreement, provide you with our site selection criteria for demographic characteristics, traffic patterns, parking, character and safety of neighborhood, competition from and proximity to other businesses, schools and other Schools, the nature of other businesses in proximity to the site and other commercial or residential characteristics and the size, appearance, other physical characteristics of the proposed site and the proposed site's suitability for children and construction and development of a School. The site must be a minimum of 1.5 useable acres or such space as we deem appropriate for the development and operation of a School. We will approve or disapprove a location you propose for the School within 60 days after we receive the complete site report and other materials we request. We must agree on a site within 120 days of the date of the Franchise Agreement or we may terminate the Franchise Agreement. (Franchise Agreement ‒ Section 4.1)
• 1. Determine the Opening Package and Operating Assets for your School following our acceptance of the Site for your School (Franchise Agreement -- Section 5.5)
• 1. Furnish you with prototype design plans, specifications, decor and layout for a School, including requirements for design, color scheme, image, interior layout and Operating Assets which include fixtures, equipment, signs and furnishing. (Franchise Agreement ‒ Section 5.1)