What is the purpose of protecting FSI's proprietary rights in the confidential information of Fat Shack?

taurants and/or the Licensed Methods.

• E. FSI and Company require that Associate enter into this Agreement with them before Associate shall be allowed to have access to any confidential information of FSI (i) as a material term of the Franchise Agreement; (ii) in order to protect FSI's confidential know-how and distinctive systems, designs, décor, trade dress, specifications, standards, procedures and other trade secrets authorized or required by FSI for use in the operation of Company's FAT SHACK Restaurant; (iii) in order to protect FSI's proprietary rights in, and Company's right to use, the confidential information of FSI; and (iv) in consideration of Associate's Affiliation with Company.
• F. Associate, Company, and FSI have reached an understanding and agreement with regard to nondisclosure by Associate of confidential information and with respect to noncompetition by Associate with FSI and Company.
• NOW THEREFORE, in consideration of the foregoing, the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Associate, Company and FSI, intending legally to be bound, agree as follows:
• 1. Confidential Information. Associate recognizes and agrees that certain proprietary information relating to FSI and its operations ("Confidential Information") is owned by and treated as

confidential by FSI and Company, including without limitation, (1) the Licensed Methods; (2) all proprietary information concerning FSI's business, the FAT SHACK Restaurants, and the FAT SHACK Restaurant business format and operating procedures; (3) sales methods; (4) formulas, recipes, or processes related to any products sold at FAT SHACK Restaurants; (5) all financial information of FSI and Company other than financial information filed with any government regulatory agency; (6) information regarding the design, décor and layout of FAT SHACK Restaurants; (7) franchise sales processes and promotional methods and materials; (8) all nonpublic statistical information; (9) the strategic plan, budgets and projections for FSI; (10) all information concerning negotiations of any kind conducted by FSI whether pending or completed; (11) all marketing research data and marketing plans; (12) all lead generation or prospecting methods; (13) all information contained in FSI's operations manual, and any other manual, written instructional guides, or other nonpublic written information; (14) internal lists of FSI's current and former franchisees, area developers, and customers of FSI and its franchisees and area developers, including contact information such as physical addresses and e-mail addresses thereof; and (15) all other information which gives FSI and its affiliates an opportunity to obtain an advantage over their competitors or that may be considered a trade secret or proprietary and such Confidential Information that may be further developed from time to time by FSI. Such Confidential Information is unique, exclusive property and a trade secret of FSI.

• 1. Use and Disclosure of Confidential Information. Associate acknowledges that, in connection with Associate's Affiliation with Company, FSI or Company will disclose in strict confidence certain Confidential Information necessary for the operation of a FAT SHACK Restaurant. Associate specifically acknowledges that the Confidential Information is valuable, unique and comprises a key portion of the assets of FSI; and Associate agrees that he or she will not utilize all or any portion of the same for Associate's personal benefit during the term of Associate's Affiliation with Company, nor in any manner use the same subsequent to the termination of Associate's Affiliation with Company or the termination or expiration of the Franchise Agreement, nor disclose any of the same to any person, firm, corporation or other entity whatsoever, including but not limited to a Competitive Business, as defined below, at any time for any reason or purpose, without the prior written consent of FSI. Associate shall not copy, publish or otherwise duplicate the Confidential Information or permit others to do so and shall return all Confidential Information to FSI or Company upon termination of Associate's Affiliation with Company. Associate may disclose to other employees, agents, or representatives of FSI or Company the Confidential Information only to the extent necessary for such employees, agents or representatives to carry out their intended function. Associate acknowledges that any unauthorized disclosure or use of the Confidential Information would be wrongful and would cause irreparable injury and harm to Company. Associate further acknowledges that Company has expended a great amount of effort and money in obtaining and developing the Confidential Information, that Company has taken numerous precautions to guard the secrecy of the Confidential Information and that it would be very costly for competitors to acquire or duplicate the Confidential Information.
• 1. Noncompetition Covenant. Associate covenants and agrees that, during the term of his or her Affiliation, except while conducting Company's business in a manner authorized by FSI and Company, Associate shall not, either directly or indirectly through any member of Associate's immediate family, separate business entity or otherwise:
• a. have any direct or indirect interest as a disclosed or beneficial owner in a "Competitive Business," as defined below;
• b. perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business;

• c. divert or attempt to divert any business related to, or any customer or account of Company's FAT SHACK Restaurant, FSI's business, or any other FSI franchisee's business; or
• d. divert or attempt to divert the employment of any employee of Company, FSI, FSI's affiliates, or another FSI franchisee, to any Competitive Business.

The term "Competitive Business" as used in this Agreement means any business operating, or granting franchises or licenses to others to operate a restaurant or other business deriving more than 10 percent of its gross receipts, excluding gross receipts relating to the sale of alcoholic beverages, from the sale of sandwiches, burgers and wings (other than another FAT SHACK Restaurant operated by Company);

Source: Item 23 — Receipts (FDD pages 53–223)