ll be) located within the Development Territory; and (b) any Salon otherwise permitted by this Section. At any time during the Term we reserve the right to engage in Acquisitions that involve, or subsequently result in, conversion of the acquired or acquiring company's outlets to ITAN® Salons, even if those outlets are located in the Development Territory. We reserve the right to sell, and license third parties to sell, competitive or identical goods and services (including under the Marks) within the Development Territory through Alternative Channels of Distribution.

4. DEVELOPMENT OBLIGATIONS

• 4.1. Required Salons. You must develop, open and operate all Required Salons listed in the Development Schedule. You must develop and open each Required Salon in strict compliance with the opening dates set forth in the Development Schedule. The opening date listed in the Development Schedule for a given Required Salon may be earlier than the opening date required under the terms of the associated Franchise Agreement. In order to comply with the Development Schedule you must open each Required Salon by the opening date listed in the Development Schedule even if such date is earlier than the opening date required by the associated Franchise Agreement. If a Force Majeure event occurs that directly prevents you from opening a Required Salon on or prior to the required opening date set forth in the Development Schedule, the opening date may be extended in accordance with §13.5 for such period of time that is reasonable in light of the nature of the Force Majeure event (not to exceed 180 days).
• 4.2. Optional Salons. If (a) you develop and open all Required Salons prior to the expiration of the Term of this Agreement and (b) you and your affiliates have substantially complied with the Development Schedule and all Definitive Agreements, then you shall have the option, but not the obligation, to develop one (1) or more additional Salons within the Development Territory during the remainder of the Term (each, an "Optional Salon").
• 4.3. Reasonableness of Development Schedule. You represent that you: (a) have conducted your own independent investigation and analysis of the prospects for development of the Required Salons in the Development Territory; (b) approve the Development Schedule as being reasonable and viable; and (c) recognize that a breach of the Development Schedule is a material breach of this Agreement.

5. DEVELOPMENT AND OPERATION OF SALONS

• 5.1. Site Selection. You must select a specific site within the Development Territory for each Salon in compliance with our then-current site selection criteria. Each site you select is subject to our prior approval in accordance with the applicable Franchise Agreement.
• 5.2. Franchise Agreements. You must sign a separate Franchise Agreement for each Salon. You must sign the Initial Franchise Agreement for your first (1st) Required Salon at the time you sign this Agreement. We will not review proposed sites for a Salon until you sign the applicable Franchise Agreement for that Salon. Each Franchise Agreement shall be our then-current form of iTAN Franchise Agreement, the terms of which may vary materially and substantially from the terms of the Initial Franchise Agreement; provided, however, that the initial franchise fee imposed under each Franchise Agreement executed pursuant to this Agreement shall be determined in accordance with §5.3. You have no right to construct or operate a Salon until the parties have signed the Franchise Agreement and all ancillary agreements for that Salon. You must develop, open and operate each Salon in compliance with the Franchise Agreement and the Manual.
• **5.3.

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