What rights does a Hyper Kidz franchisee acquire under the Franchise Agreement?

nesses as they may be revised and further developed by us from time to time and as further described in the Operations Manual.

• 2.1.12 "Website" An interactive electronic document contained in a network of computers linked by communications software.

ARTICLE 3: GRANT OF FRANCHISE

3.1 Grant of Franchise; Term

Subject to the provisions of this Agreement, we hereby grant to you a "Franchise" to operate the Hyper Kidz Business at the Site and to use the Marks and the System in the operation thereof for a term of ten (10) years commencing on the date of this Agreement. Termination or expiration of this Agreement shall constitute a termination or expiration of the Franchise and any and all licenses granted herein. You

agree that you will at all times faithfully, honestly and 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;

Source: Item 22 — CONTRACTS (FDD page 52)