Under what conditions can Hyper Kidz terminate the exclusivity granted in the Multi-Unit Development Agreement?

using our primary trademarks during the Term of your Franchise Agreement.

Multi-Unit Development Agreement

Under the Multi-Unit Development Agreement, we grant you the right to develop and operate the number of Hyper Kidz Businesses in the Development Area that is specified in the minimum performance schedule, which is Attachment 2 to the Multi-Unit Development Agreement. The Development Area is typically described in terms of municipal or county boundaries but may be defined by zip codes or as a specified trade area in a municipality. The actual size of the Development Area will vary depending upon the availability of contiguous markets, our long-range development plans, your financial and operational resources, population and market conditions. Our designation of a particular Development Area is not an assurance or warranty that there are a sufficient number of suitable sites for Hyper Kidz Businesses in the Development Area for you to meet your minimum performance schedule. We will approve sites for future/additional units under a Multi Unit Agreement using our then current site criteria. The responsibility to locate and prepare a sufficient number of suitable sites is solely yours and we have no obligation to approve sites which do not meet our criteria so you can meet the minimum performance schedule.

Except as described below, during the term of the Multi-Unit Development Agreement, we and our affiliates will not operate or grant a franchise for the operation of Hyper Kidz Businesses to be located within the Development Area. However, we have the right to terminate this exclusivity if you are not in full compliance with all of the terms and conditions of the Multi-Unit Development Agreement and all of the Franchise Agreements signed under it.

Except as expressly limited by the Multi-Unit Development Agreement, we and our affiliates retain all rights with respect to Hyper Kidz Businesses, the Marks, and any products and services anywhere in the world including the right: (a) to offer and sell and to grant others the right to offer and sell the products and services offered at Hyper Kidz Businesses, both within and outside the Development Area, 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 Businesses located outside the Development Area under any terms and conditions we deem appropriate and regardless of proximity to your Hyper Kidz Businesses; and (c) to acquire and operate a business operating one or more similar businesses located or

operating in your Development Area, but if one of these businesses is located within your Development Area, it will not operate using the Proprietary Marks.

After the last Hyper Kidz Business under the minimum performance schedule has opened, your Multi-Unit Development Agreement will expire.

Source: Item 12 — TERRITORY (FDD pages 33–36)