What is the 'Item 16' review process for Eos Worldwide franchisees designed to prevent?

We understand that our franchisees are successful, abundance minded entrepreneurs that may engage in other opportunities during their term as a franchisee. While we do not require our franchisees to be full-time operators and therefore understand they may engage in outside opportunities, those opportunities must not violate the restrictive covenants in the Franchise Agreement or create a conflict of interest with the role as an EOSW franchisee. To prevent potential conflicts of interest, we created guidelines set forth in the Operations Manual defining the kind of outside opportunities that we determine are acceptable, and those that we determine are not. To summarize this process and our guidelines, essentially anytime you have created or pursued, or are even in the planning stages of creating or pursuing, a separate venture alongside your EOS Implementer Franchised Business, then you may be required to clear it with us by submitting for what we refer to as our "Item 16" review. As part of this evaluation process for new franchisees, we may ask you a series of questions designed to determine whether you are engaged in any outside opportunities that could create a conflict of interest. These questions are referred to as our "Item 16" review and is part of our screening process.

Not every opportunity requires an Item 16 review. Generally speaking, if the opportunity could potentially create a conflict of interest with the EOS Worldwide brand or your business or otherwise materially impact your ability to operate your EOS Implementer business, you should go through an Item

16 review.

Unlike many franchise concepts, you are not required to operate your EOS business full-time; in fact, one of the benefits of EOS and what is a core principle to living The EOS Life is that even as an EOS Implementer, you have time for your other passions. But that does not mean you can essentially do whatever you want. As a franchisee/Implementer, you may not engage in activity that is competitive or that would create a conflict of interest with your business.

This does not mean that any income producing venture must go through this process. There are of course various types of opportunities and investments that would have no tangible impact on your Franchised Business. For example, a purely passive investment unrelated to business operating systems should not require an "Item 16" review.

But those that do or might, we expect that you will clear those with us as part of this process.

When considering your next steps, please consider these simple rules:

• 1. Don't damage the EOS brand, use EOS Intellectual Property, or compete with either EOS Worldwide or the EOS Implementer Community
• 1. Don't use the EOS brand or any EOS brand assets without our express written permission, and
  • 1. Ask us for input before investing any time or money.

Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 53–54)