What is the Itan franchisee's obligation regarding the operation of their Salon?

• "Manual" means our confidential brand standards manual for the operation of a Salon.

• "Marks" means and includes all service marks, trademarks, trade names and logos that we designate from time to time and authorize Salons to use, including iTAN®, iTAN SUN SPRAY SPA® and the associated logos.

The Marks also include any distinctive trade dress used to identify a Salon or the products it sells.

• "Salon" means any salon we authorize to operate under the Marks and use our System.

• "System" means our system developed for the operation of a Salon, the distinctive characteristics of which include: distinctive interior and exterior design, décor, signage, color scheme and other trade dress elements; proprietary retail products and equipment; high quality tanning services, technology and

techniques; comprehensive training programs; advertising and marketing strategies; merchandising strategies; and operating system.

• **2.

Conversion Date**.

You may not utilize any of our Marks, including, without limitation, by advertising or promoting the upcoming conversion of your Current Business to an iTAN Salon at any time prior to our issuance of a written "Certificate of Conversion Completion" confirming: (a) you have complied with all conversion requirements set forth in this Addendum and all other pre-opening obligations set forth in the Franchise Agreement; and (b) your Premises is ready to commence operations as an iTAN Salon (your "Conversion Date").

You must complete the construction and conversion of your Premises to an iTAN Salon no later than the conversion completion deadline set forth in Attachment B to this Addendum.

• **3.

Lease**.

If you lease the Premises, you must negotiate with your landlord, if necessary, to modify your lease in order to provide you with a term of at least 10 years from the Conversion Date.

You must also cause your landlord to execute our required Lease Addendum.

We may require that you complete these steps prior to execution of the Franchise Agreement and this Addendum.

At a minimum, we may require execution of the Lease Addendum as a condition to us issuing our Certificate of Conversion Completion pursuant to §5 of this Addendum.

• **4.

Construction and Conversion of Premises**.

You must, at your sole expense, re-image, remodel, renovate, refurbish, and modernize the Premises to comply with all standards and specifications in the Manual, including, without limitation, our required design and layout, construction materials, furniture, fixtures and equipment, interior and exterior signage and trade dress.

We may, at our discretion, limit the required remodeling to painting and lightweight items to limit the required conversion costs.

You must hire a licensed and bonded architect to prepare your construction plans to convert your Premises to an iTAN Salon.

Your architect must ensure the construction plans: (a) incorporate the required minimum modifications and improvements set forth in Attachment C to this Addendum; (b) satisfy all required standards and specifications in the Manual; and (c) comply with all Laws (including the Americans with

Source: Item 23 — RECEIPT (FDD pages 44–190)