What is the 'Approved Location' in the Hyper Kidz franchise agreement?

d diligently perform your obligations hereunder and that you will continuously exert your best efforts to promote and enhance the business of the Hyper Kidz Business and the goodwill of the Marks. You shall not conduct the business of the Hyper Kidz Business from any location other than the Site.

3.2 Territorial Rights

This Agreement grants Franchisee the right to operate the Franchised Business at a single location and from within the Territory. Subject to Section 3.2 below, Franchisor agrees that during the Term of this Agreement, Franchisor will not operate, and will not authorize any other franchisees to operate, a Hyper Kidz outlet in the Territory using the same Marks as licensed to Franchisee in this Agreement so long as Franchisee is not in default under this Agreement or this Agreement has not been terminated. Except as otherwise specified in this Agreement, Franchisor reserves the right to open, operate or franchise Hyper Kidz franchises bordering and adjacent to the Territory. Except as set forth in this Agreement, Franchisee is prohibited from serving and soliciting customers outside of the Territory and from alternative methods of distribution as more fully specified herein. You expressly acknowledge that this Franchise is nonexclusive, but that this Agreement does grant you a protected area or territory for your Hyper Kidz Business referred to herein as your "Designated Territory". Your Designated Territory is described in Attachment 3 hereof.

3.3 Rights Retained by Us

We retain all rights with respect to Hyper Kidz Businesses, the Marks and the sale of Approved Products and Services and any other products and services anywhere in the world including, without limitation:

• (a) to produce, offer and sell and to grant others the right to produce, offer and sell the Products offered at Hyper Kidz Outlets and any other goods through similar or dissimilar channels of distribution, both within and outside the Designated Territory, under trade and service marks other than the Marks and under any terms and conditions we deem appropriate;
• (b) to operate and to grant others the right to operate Hyper Kidz Outlets located outside the Designated Territory under any terms and conditions we deem appropriate and regardless of proximity to your Hyper Kidz Outlet;
• (c) the right to acquire and operate a business operating one or more child development Outlets located or operating in your Designated Territory; provided, however, that if we do acquire this business any facilities located or operating within your Designated Territory will not operate using the Marks.

You expressly acknowledge and agree that we shall have the unbridled right to exercise all of the rights reserved to us in this Section 3.3 at any location, regardless of the proximity of such location to your Hyper Kidz Outlet.

3.4 Limitations on Sale of Approved Products and Services

This license does not include any right to provide any product or service at or from any location except from the Site. Your use, directly or indirectly, of the System, the Marks licensed hereunder, or the sale of any Approved Product or Service at any location other than from the Site, except as we may specifically approve, shall be a material breach of this Agreement and shall give us, in addition to all other rights and remedies hereunder, the right to terminate this Agreement. You shall not engage in any promotional activities or sell the Approved Products and Services, or similar products and services, whether

directly or indirectly, through the internet, the world wide web, or any other similar proprietary or common carrier electronic delivery system, except for party bookings made through our Website; or by telecopy or other telephonic or electronic communications, including toll-free numbers, directed to or received from clients or prospective clients located outside of the Designated Territory. You may place advertisements in printed media and on television and radio that are targeted to customers and prospective customers located within the Designated Territory, and you will not be deemed to be in violation of this Agreement if those advertisements, because of the natural circulation of the printed media or reach of television and radio, are viewed by prospective customers outside of the Designated Territory. You shall not directly solicit customers outside of your Designated Territory. You shall not sell any products at wholesale.

3.5 Right of First Refusal

During the term of this Agreement, if we have a prospective franchisee who is interested in establishing a Hyper Kidz Business in an area that is contiguous to your Designated Territory, we may offer you a right of first refusal to purchase the Franchised Business and establish it in the proposed area. We may offer you this right of first refusal if you are in full compliance with this Agreement, including that all fees owed to us have been paid in full and have not been late during the immediately preceding twelve (12) month period, and if we believe you are financially capable of constructing and operating another Hyper Kidz Business. You will have thirty (30) days after receiving the right of first refusal to notify us whether you will purchase the additional Hyper Kidz Business. If you decline the right of first refusal, or if you fail to notify us within the thirty (30) day period, we will be free to sell the Hyper Kidz Business to the prospective franchisee and you will have no further interest in the proposed area.

ARTICLE 4: DEVELOPMENT AND OPENING OF THE HYPER KIDZ BUSINESS

4.1 Approval of Site

• 4.1.1 Within one hundred eighty (180) days from the date hereof, you will submit to us such demographic, commercial and other information, and photographs as we may require in order to evaluate the site you propose to use for your Hyper Kidz Business. You acknowledge that in reviewing a proposed site we may consider such matters as we deem material including, without limitation, demographic characteristics of the proposed site, traffic patterns, parking, the predominant character of the neighborhood, competition from other businesses providing similar services within the area (including other Hyper Kidz Businesses), the number of households, income levels, population, the purchase price or lease terms for the proposed site and other commercial characteristics, the size of the premises, appearance, and other physical characteristics of the proposed site.
• 4.1.2 We will approve or disapprove the site you propose for the operation of the Hyper Kidz Business by giving written notice to you. We agree to use reasonable efforts to deliver such notice to you within thirty (30) days after we receive the complete site documentation and any other materials we request regarding you and the proposed site. We will not unreasonably withhold our approval of a proposed site that meets our standards and specifications for Hyper Kidz Businesses. Upon our approval of a proposed site for the Hyper Kidz Business, the address of the Hyper Kidz Business will be inserted on Attachment 3 to this Agreement. If you are unable to find a suitable location for your Hyper Kidz Business within one hundred eighty (180) days after you sign this Agreement, we will provide you with an additional thirty (30) days to locate a suitable site. If you do not locate a suitable site within this additional thirty (30) day period, we may provide you with an additional extension, in our discretion, or we may terminate this Agreement.

Source: Item 22 — CONTRACTS (FDD page 52)