[Item 23: RECEIPTS]

During the term of this Franchise Agreement and thereafter, Franchisee agrees not establish, create, traffic in, or operate an Internet site or website using a domain name or uniform resource locator containing any of the Proprietary Marks, including "My Salon Suite" or any portion or variation thereof.

Franchisee agrees and acknowledges that Franchisor, its Affiliate and any licensor of Franchisor or its Affiliate retain the exclusive right to advertise on the Internet and create websites using the "My Salon Suite" name and any other domain name(s) that Franchisor may specify in the Manual or other writing.

Franchisor is the sole owner of all right, title, and interest in and to such domain names, as Franchisor shall designate in the Manual.

• **H.

Improvements**.

Any improvements or additions to the System, patents, copyrighted materials, the Domain Name, website, or any other documents or information

pertaining to or relating to the System or the Franchised Business, or any new trade names, trade and service marks, logos, or commercial symbols related to the Franchised Business or any advertising and promotional ideas or inventions related to the Franchised Businesses (collectively, "Improvements") conceived or developed by Franchisee shall become Franchisor's property.

Franchisee agrees to assign and does hereby assign to Franchisor, all right, title and interest in and to the Improvements, including the right to grant sublicenses to any such Improvement.

Franchisee shall fully disclose the Improvements to Franchisor, without disclosure of the Improvements to others, and shall obtain Franchisor's written approval prior to using such Improvements.

Any Improvement may be used by Franchisor and all other franchisees without any obligation to Franchisee for royalties or other fees.

Franchisor may apply for and own copyrights, patents, trade names, trademarks and service marks relating to any such Improvement and Franchisee shall cooperate with Franchisor in securing such rights.

Franchisor may also consider such Improvements as the property and trade secrets of Franchisor.

In return, Franchisor shall authorize Franchisee to utilize any Improvement that may be developed by other franchisees and is authorized generally for use by other franchisees.

Telephone Number**.

Franchisee must obtain its own local telephone number for use in connection with the Franchised Business, which must be listed under the Proprietary Mark "My Salon Suite" or other listing designated by Franchisor when displayed in any traditional or electronic directory.

This telephone number must be used exclusively in connection with Franchisee's operation of the Franchised Business.

Any telephone listing Franchisee has in any directory must be approved by Franchisor prior to publication.

Upon the expiration, transfer, or termination of this Franchise Agreement for any reason, Franchisee must cease all such use of such telephone number(s) and listings, at Franchisor's option, listing(s) and assign same to Franchisor or Franchisor's designee.

• **I.

Payment of Debts**.

Franchisee is solely responsible for selecting, retaining, and paying Franchisee's employees; the payment of all invoices for the purchase of goods and services used in connection with operating the Franchised Business; and determining whether, and on what terms, to obtain any financing or credit which Franchisee deems advisable or necessary for the conduct of the Franchised Business.

Franchisee agrees to pay all current obligations and liabilities to vendors, lessors, and creditors on a timely basis.

Franchisee agrees to indemnify Franchisor if Franchisor is held responsible for debts owed by Franchisee if Franchisor elects to pay any of Franchisee's obligations to preserve the relationship between vendors and franchisees.

Franchisee agrees to make prompt payment of all federal, state, and local taxes, including individual and corporate taxes, sales and use taxes, franchise taxes, gross receipts taxes, employee withholding taxes, FICA taxes, personal property and real estate taxes arising from Franchisee's operation of the Franchised Business.

Franchisee agrees to indemnify Franchisor if Franchisor is held responsible for these taxes.

• **J.

Compliance with Applicable Laws**.

• 6.4 Failure by you to adhere to the Development Schedule, including execution of each Addition Franchise Agreement in accordance with the Development Schedule, shall constitute a material breach under this Agreement and Franchisor may terminate this Agreement upon notice.

Upon termination of this Agreement, any (i) remaining option rights you must open Additional Franchised Businesses under this Agreement, or (ii) territorial protection in the Development Area, will be terminated as well without any refund of any portion of the Development Fee.

This Agreement will automatically terminate upon Franchisee's opening of the last Additional Franchised Business granted pursuant to this Agreement.

• 1. Conditions for Exercising Franchisee's Option. To exercise Franchisee's option for Franchised Businesses after Franchisee's Initial Franchised Business, you must satisfy the following conditions as Franchisor may determine in its sole discretion:

• 7.1.

You must not be in default of this Agreement, Franchisee's Initial Franchise Agreement, any Additional Franchise Agreement, or other any other agreement between you and Franchisor, and must have fully performed all Franchisee's material obligations under these agreements throughout their respective terms;

• 7.2 You must have opened Franchisee's Initial Franchised Business and, if appropriate, all subsequent Franchised Businesses, within the time periods prescribed in the Development Schedule;

• 7.3 Neither this Agreement, nor any of the franchise agreements you previously entered into with Franchisor may have expired or been terminated for any reason;

• 7.4 You have timely paid any fees or other monies due Franchisor as and when due under the terms of the Initial Franchise Agreement or any other agreement with Franchisor; and

• 7.5 There must be no change in the effective control of you (by way of change in share ownership, membership, or partnership interest, or otherwise) without Franchisor's written consent.

• 7.6 You and Franchisee's owners must satisfy Franchisor's then-current requirements for My Salon Suite franchisees, including Franchisor's candidate review processes, standards and financial requirements, as well as Franchisor's franchisee approval process.

WHEREAS, Franchisee is a licensed franchisee of Suite Management Franchising, LLC, a Florida limited liability company ("SMF"), operating a My Salon Suite business (the "Franchised Business") using the SMF proprietary operating system and certain confidential information for the establishment and operation of facilities at an approved location that provides turnkey salon suite studios and ancillary services to salon professionals; and

WHEREAS, SMF owns, and has provided access to Franchisee to certain non-public information of or about SMF's operating system, SMF, and My Salon Suite businesses, including the Manual, SMF's proprietary training, marketing and other instructional materials, Trade Secrets, information related to any proprietary methodology or aspects of the SMF's operating System or the establishments and continued operation of the Franchised Business, financial information, and vendor prices and matrices, and any and all clientele lists and data obtained through the operation of the Franchised Business (collectively, the "Confidential Information"). "Trade Secrets" means technical or non-technical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, passwords, lists of actual or potential clients or vendors which are not commonly known by or available to the public and which information: (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertained by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; and

WHEREAS, Covenantor will have access to the Confidential Information; and

WHEREAS, Covenantor acknowledges that receipt of and the right to use the Confidential Information constitutes independent valuable consideration for the representations, promises, and covenants made by Covenantor herein.

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the parties agree as follows:

Confidentiality Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the parties agree as follows:

Confidentiality Agreement.

Covenantor shall maintain all Confidential Information. Covenantor shall not at any time make copies of any documents or compilations containing any Confidential Information for any purpose without the express written permission of Franchisee and SMF. Covenantor shall not disclose or permit the disclosure of any Confidential Information to any party except other employees or persons associated with Franchisee and only to the extent necessary to train or assist other employees of Franchisee in the operation of the Franchised Business. This covenant shall always continue in full force and effect during and after the Covenantor's employment with Franchisee.

This is also to provide Covenantor with notice that, pursuant to 18 U.S.C. §1833(b), an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret: (i) made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law; and/or (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, please note that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, provided that such individual (i) files any document containing the trade secret under seal, and (ii) the individual does not disclose the trade secret, except pursuant to a court order.

In-Term Covenant Not to Compete.

To protect the goodwill and unique qualities of the My Salon Suite franchise system and the confidentiality and value of the Confidential Information, and in consideration for the disclosure to Covenantor of the Confidential Information, Covenantor covenants that, during the time Covenantor is associated with Franchisee, Covenantor will not:

Source: Item 9 — **FRANCHISEE'S OBLIGATIONS (FDD pages 39–40)