Will Learningrx establish another franchisee or company-owned outlet within a Learningrx franchisee's territory?

[Item 12: TERRITORY]

We will grant to you a territory ("Territory") defined by population size. A Micro Franchise has a population of less than 100,000; and a Standard Franchise has a population of 100,000 to 200,000 people, as determined by us. Your Territory may be delineated by boundary streets, highways, counties, or zip codes. We will not operate through our current trademarks, any permanent LearningRx Centers or grant franchises for a similar or competitive business within your Territory as long as you meet minimum revenue requirements, but we have the right to do so anywhere outside your Territory at any time. You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. You may also have preexisting PACE Licensees and Clinical Licensees offering educational services under different trademarks and trade names operating in your Territory. You will operate from 1 location approved by us and must receive our permission before relocating. We will grant approval to relocate if you are in compliance with the Franchise Agreement, you have paid all money owed to us and/or our affiliates, and the proposed location meets our site selection criteria as specified in the Operations Manual. Once established and unless otherwise agreed, the boundaries of your Territory will not be adjusted without our prior written consent regardless of whether the population of your Territory increases or decreases over time.

[Item 12: TERRITORY]

Reservation of Rights

Rights We Reserve Under the Franchise Agreement:

As noted above, and as specified in the Franchise Agreement, we will not establish, franchise or license others to establish a LearningRx Center in the Territory during the term of the Franchise Agreement so long as you are in compliance with the Franchise Agreement. However, and despite those promises and obligations, we and our affiliates retain all rights with respect to LearningRx Centers, the System,

the Marks, the sale of similar or dissimilar services, and any other activities we deem appropriate whenever and wherever we desire, including:

• 1. to own, franchise, license or operate LearningRx Centers or remote training services at any location outside of the Territory, regardless of the proximity to your LearningRx Center.

We will not establish within your Territory another franchisee or company-owned outlet which may also use the Marks;

• 1. to use the Marks and the System to sell any products or services, similar to those which you will sell, except products provided "trainer to student," through any alternate channels of distribution within or outside of the Territory.

This includes, but is not limited to, retail locations and other channels of distribution such as stores, shops, kiosks, malls, airports, and college campuses, at special events, and other channels of distribution such as, television, mail order, catalog sales, wholesale to unrelated retail outlets, or over the Internet.

We exclusively reserve alternative channels of distribution such as the Internet, catalog sales, telemarketing or other direct marketing, as channels of distribution for us.

You may not independently use alternative channels of distribution to make sales within or outside your Territory;

[Item 12: TERRITORY]

To maintain your Territory and license you must maintain, starting 6 months after opening, annual minimum Gross Revenues (the "Minimum Revenue Quota") of $50,000.00 for every 100,000 people (or

pro-rated portion of 100,000) in your Territory for the first 12 months, $75,000.00 for every 100,000 people (or pro-rated portion of 100,000) in your Territory for the second 12 months and $100,000.00 for every 100,000 people (or pro-rated portion of 100,000) in your Territory for any 12 month period. If you do not meet the Minimum Revenue Quota as outlined above, you will be subject to lose your territory exclusivity and we may choose to offer a Center location to an additional franchisee with your designated territory. This quota is not, and should not be considered, earnings estimate for your Center or representation regarding your potential earnings as a LearningRx Franchisee. We do not furnish or authorize our sales people to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a Center. Actual results vary from Center to Center and we cannot estimate the results of any particular franchise. If you fail to meet your Minimum Revenue Quota, we have the right to mandate local advertising expenditures and, if the deficiency continues, to reduce your Territory or terminate your Franchise.

Source: Item 12 — TERRITORY (FDD pages 33–35)