What constitutes 'Confidential Information' for a Red Wagon Club franchisee?

We and our affiliates possess (and may continue to develop and acquire) certain information we treat as confidential, some of which may constitute trade secrets under applicable law (the "Confidential Information"), relating to the System, whether or not marked confidential, including: (a) training and operations materials, including the Operations Manual and its contents; (b) the System Standards and other methods, formats, specifications, standards, systems, procedures, sales and marketing techniques, knowledge, and experience used in developing and operating RWC Businesses; (c) information regarding potential marketing, advertising and promotional programs and strategies related thereto, and analyses of the performance and results of such programs once implemented; (d) strategic plans, including expansion strategies and targeted demographics; (e) knowledge of, specifications for and suppliers of, and methods of ordering, Operating Assets and other products and supplies; (f) any computer software or similar technology which is proprietary to us or the System, including digital passwords and identifications and any source code of, and data, reports, and other printed materials generated by, the software or similar technology; (g) knowledge of the operating results and financial performance of RWC Businesses other than your RWC Business; (h) information generated by, or used or developed in, your RWC Business' operation, including information contained from time to time in the Technology System; (i) client and prospective client information; and (j) criteria for approving or rejecting proposed suppliers of any of the System Standards.

You must promptly disclose to us all ideas, concepts, methods, techniques, and products conceived or developed by you and/or any of your affiliates, owners, agents, representatives, contractors or employees relating to the development or operation of your RWC Business or other RWC Businesses ("Innovations"), whether or not protectable intellectual property and whether created by or for you or your owners or employees. All Innovations are our sole and exclusive property and works made-for-hire for us and shall constitute our Confidential Information. To the extent any Innovation does not qualify as a work made-forhire for us, by this Section you assign ownership of that Innovation, and all related rights to that Innovation, to us and will sign (and to cause your owners, employees, and contractors to sign) whatever assignment or other documents we request to evidence our ownership or to help us obtain intellectual property rights in the Innovation. We and our affiliates have no obligation to make any payments to you or any other person with respect to any Innovations. You may not use any Innovation in operating your RWC Business or otherwise without our prior written approval.

You may not use our Confidential Information in an unauthorized manner. You must adopt and implement procedures to prevent unauthorized use or disclosure of Confidential Information, including restricting its disclosure to personnel of your RWC Business and certain other people and using nondisclosure and non-competition agreements with those having access to Confidential Information in a form determined by us. We may regulate the form of agreement that you use, and we will be a third-party beneficiary of that agreement with independent enforcement rights.

All Confidential Information is owned by us or our affiliates and you will use the Confidential Information only for the development, promotion, and operation of your RWC Business. You will not use

or sell Confidential Information to any third parties, and you will comply with all applicable laws governing the use and protection of Confidential Information.

Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 35–37)