Document:

exv10w3

Exhibit 10.3

PLANET BEACH INTERNATIONAL, L.L.C.

MASTER FRANCHISE AGREEMENT FOR

TERRITORY

	 	 	 	 	 
	 
	 

	 	 

Master Franchisee
	 	 
	 
	 	 	 	 
	 

	 	                                                             , 2008	 	 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	1. CERTAIN DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2. DEVELOPMENT RIGHTS AND OBLIGATIONS
	 	 	6	 
	A. GRANT OF DEVELOPMENT RIGHTS
	 	 	6	 
	B. TERRITORIAL RIGHTS OF MASTER FRANCHISEE
	 	 	6	 
	C. DEVELOPMENT OBLIGATIONS
	 	 	7	 
	D. EXTENSION OF DEVELOPMENT TERM
	 	 	8	 
	E. GUARANTEE INDEMNITY
	 	 	9	 
	3. GUIDANCE AND ASSISTANCE
	 	 	9	 
	A. INITIAL TRAINING
	 	 	9	 
	B. CONTINUING TRAINING
	 	 	10	 
	C. CONTINUING GUIDANCE AND SUPPORT BY FRANCHISOR
	 	 	10	 
	D. OPERATIONS MANUALS
	 	 	11	 
	E. FRANCHISOR’S ON-SITE ASSISTANCE
	 	 	11	 
	F. PRODUCT AND OPERATIONS DEVELOPMENT
	 	 	12	 
	G. COMPUTER SOFTWARE, HARDWARE AND TECHNOLOGY
	 	 	12	 
	4. GRANT, SUPPORT AND SUPERVISION OF FRANCHISES
	 	 	13	 
	A. UNIT FRANCHISE AGREEMENTS
	 	 	13	 
	B. AREA REPRESENTATIVE RIGHTS
	 	 	14	 
	C. CORPORATE LOCATIONS
	 	 	15	 
	D. SYSTEM STANDARDS
	 	 	15	 
	E. PRODUCTS AND SUPPLIES; INTERNATIONAL VENDOR PROGRAM
	 	 	15	 
	F. OBLIGATIONS TO FRANCHISEE TO ENSURE AND ENFORCE FRANCHISEE COMPLIANCE WITH SYSTEM STANDARDS
	 	 	16	 
	G. FAILURE TO MEET OBLIGATIONS
	 	 	18	 
	5. OTHER OBLIGATIONS OF MASTER FRANCHISEE
	 	 	19	 
	A. SENIOR EXECUTIVE
	 	 	19	 
	B. SITE SELECTION, FRANCHISEE SELECTION/RECRUITMENT
	 	 	19	 
	C. INSURANCE
	 	 	20	 
	D. RECORDS AND REPORTS
	 	 	20	 
	E. GOVERNMENTAL APPROVALS
	 	 	22	 
	F. COMPLIANCE WITH LEGAL REQUIREMENTS AND GOOD BUSINESS PRACTICES
	 	 	22	 
	G. COMPLIANCE WITH U.S. AND OTHER ANTI-TERRORIST AND RELATED LAWS, REGULATIONS, ETC
	 	 	23	 
	6. INITIAL AND CONTINUING FEES
	 	 	24	 
	A. DEVELOPMENT FEE
	 	 	24	 
	B. INITIAL FRANCHISE FEES, NOTIFICATION OF RECEIPT BY FRANCHISOR AS A CONDITION PRECEDENT TO
OPENING OF FRANCHISE
	 	 	25	 
	C. ROYALTIES
	 	 	25	 
	D. ADVERTISING FUND CONTRIBUTIONS
	 	 	26	 
	E. DESIGN FEE
	 	 	26	 

i 

 

	 	 	 	 	 
	F. TECHNOLOGY FEES
	 	 	26	 
	G. WITHHOLDING TAXES
	 	 	26	 
	H. CURRENCY OF PAYMENT
	 	 	27	 
	I. INTEREST ON LATE PAYMENTS
	 	 	28	 
	J. STAMP DUTIES
	 	 	28	 
	K. PROOF OF AMOUNTS DUE
	 	 	28	 
	7. MARKETING
	 	 	28	 
	8. EXCLUSIVE RELATIONSHIP
	 	 	29	 
	9. INDEPENDENT CONTRACTORS/INDEMNIFICATION
	 	 	30	 
	A. INDEPENDENT CONTRACTORS
	 	 	30	 
	B. TAXES
	 	 	30	 
	C. INDEMNIFICATION
	 	 	30	 
	10. MARKS
	 	 	31	 
	A. GOODWILL AND OWNERSHIP OF THE MARKS
	 	 	31	 
	B. LIMITATIONS ON MASTER FRANCHISEE’S USE OF THE MARKS
	 	 	31	 
	C. NOTIFICATION OF INFRINGEMENT AND CLAIMS
	 	 	32	 
	D. MODIFY/DISCONTINUANCE OF USE OF MARKS
	 	 	32	 
	E. REGISTRATIONS; LICENSE AGREEMENTS
	 	 	32	 
	11. TRANSFER
	 	 	33	 
	A. BY FRANCHISOR
	 	 	33	 
	B. BY MASTER FRANCHISEE
	 	 	33	 
	C. DEATH OR DISABILITY OF MASTER FRANCHISEE
	 	 	34	 
	D. NO RIGHT TO ENGAGE IN SECURITIES OFFERING
	 	 	35	 
	E. FRANCHISOR’S RIGHT OF FIRST REFUSAL
	 	 	35	 
	12. TERMINATION OF AGREEMENT
	 	 	36	 
	A. BY MASTER FRANCHISEE
	 	 	36	 
	B. BY FRANCHISOR
	 	 	36	 
	13. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION
	 	 	38	 
	A. MARKS AND DE-IDENTIFICATION
	 	 	38	 
	B. FRANCHISE AGREEMENTS
	 	 	39	 
	C. CONTINUING OBLIGATIONS
	 	 	40	 
	14. NON-COMPETITION AND CONFIDENTIALITY
	 	 	40	 
	A. CONFIDENTIALITY AND NON-DISCLOSURE
	 	 	40	 
	B. NON-COMPETITION
	 	 	41	 
	C. AREA DEVELOPMENT FRANCHISEES/UNIT FRANCHISEES
	 	 	42	 
	15. ENFORCEMENT
	 	 	42	 
	A. INFORMAL DISPUTE RESOLUTION
	 	 	42	 
	B. ARBITRATION
	 	 	43	 
	C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS
	 	 	43	 
	D. WAIVER OF OBLIGATIONS
	 	 	44	 
	E. RIGHTS OF PARTIES ARE CUMULATIVE
	 	 	45	 
	F. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL
	 	 	45	 
	G. LIMITATION OF CLAIMS
	 	 	45	 
	H. COSTS AND LEGAL FEES
	 	 	45	 
	I. GOVERNING LAW/CONSENT TO JURISDICTION
	 	 	46	 
	J. BINDING EFFECT
	 	 	46	 

ii 

 

	 	 	 	 	 
	K. CONSTRUCTION
	 	 	46	 
	L. GOVERNING LANGUAGE
	 	 	46	 
	M. FORCE MAJEURE
	 	 	47	 
	16. NOTICES, REPORTS, PAYMENTS AND ADDRESS FOR SERVICE
	 	 	47	 
	17. INDEPENDENT ADVICE
	 	 	48	 
	18. THIRD PARTY RIGHTS
	 	 	48	 

	 
	EXHIBIT A —  DEVELOPMENT AREA

	EXHIBIT B —  DEVELOPMENT SCHEDULE

	EXHIBIT C —  OWNERSHIP INTERESTS

	EXHIBIT D — FEE PAYMENTS

	EXHIBIT E —  MARKS

	EXHIBIT F —  NON-DISCLOSURE AGREEMENTS

	EXHIBIT G —  GUARANTEE

	EXHIBIT H —  INTERNATIONAL VENDOR PROGRAM

	EXHIBIT I —  FORM OF AFFILIATE ADDENDUM

iii 

 

PLANET BEACH INTERNATIONAL, L.L.C.

MASTER FRANCHISE AGREEMENT

FOR

TERRITORY

     THIS AGREEMENT (“Agreement”) is made and entered into this       day of                      2008, by and
between Planet Beach International, L.L.C. a limited liability company organized under the laws of
the State of Louisiana, U.S.A. with its principal place of business at 5161 Taravella Road Marrero,
LA 70072, U.S.A. (“Franchisor”), and                                                             , a corporation organized under the laws
of                                                              and with its principal place of business at
                     
                                                
                                (“Master Franchisee”).

PREAMBLES

     Franchisor has expended considerable time, effort and money in developing and in obtaining and
acquiring knowledge about the conduct of a business for the operation of the PLANET BEACH®
business. Franchisor’s business operates under distinctive trademarks, business formats, systems,
methods, procedures, designs, layouts, standards and specifications for the maintenance of a common
identity and reputation of the PLANET BEACH® business, all of which Franchisor may improve, further
develop or otherwise modify from time to time (the “System” as further defined below). Franchisor
grants to qualified persons rights to license, develop and operate the System and to franchise
other Persons to use the System in defined geographic areas (“master franchises”). Master
Franchisee has applied to Franchisor for a master franchise for the Development Area (defined
below). Master Franchisee’s application has been approved by Franchisor in reliance upon all
representations made by Master Franchisee. Master Franchisee agrees that during the term of this
Agreement, it will at all times faithfully, honestly and diligently perform its obligations
hereunder and will continuously exert its best efforts to promote and enhance the development and
operation of PLANET BEACH® businesses within the Development Area.

     In this Agreement, Planet Beach International, L.L.C. is referred to as “Franchisor,” “PBI,”
“us,” “we” or the possessive “our” and the Master Franchisee is referred to as “you”, the “Master
Franchisee” or the possessive “your”.

1. CERTAIN DEFINITIONS

     For purposes of this Agreement, the terms listed below have the meanings indicated. Other
terms used in this Agreement are defined and construed in the context in which they occur.

     “Affiliate” - any Person that directly or indirectly owns or controls, that is directly
or indirectly owned or controlled by, or that is under common ownership or control with another
Person.

     “Area Representative Franchise” - business operations licensed by Persons subject to an
Area Representative Agreement for the right to develop and operate, as well as recruit Unit

 

 

Franchisees to develop and operate Unit Franchises within a specific geographic area within the
Development Area.

     “Area Representative Franchisee” - One or more Person(s) that is/are a party to an Area
Representative Agreement with Master Franchisee for the right to develop and operate an Area
Representative Franchise.

     “Competitive Business” - an enterprise, Person or business that: (a) operates a Similar
Business or offers products or services similar to those offered by PLANET BEACH® businesses; or
(b) grants or has granted franchises or licenses, or establishes or has established partnerships or
joint ventures, for the development and/or operation of an enterprise or business described in the
foregoing clause (a).

     “Confidential Information” - any know-how and trade secrets (whether or not judicially
recognized as a trade secret), and all other information not generally known, that is or was
developed and/or is owned by Franchisor or any of it Affiliates, or their officers, directors,
employees, agents, representatives, master franchisees, franchisees and Unit Franchisees, including
but not limited to all operating manuals, customer information and other documentation, including
those on the subjects of management and administration, field operation, purchasing, marketing and
all other information Franchisor or its Affiliates provides to or makes available to Master
Franchisee and its Owners, in any form or by any method, for the use in the operation of an PLANET
BEACH® business under this Agreement or any Unit Franchise Agreement.

     “Control” – possession (through one or more intermediaries) of the power to direct or cause
the direction of, the management or policies of another entity, whether through ownership of voting
interest, by contract or otherwise.

     “Controlled Franchisee” - a legal entity that Master Franchisee Controls, or in which
Master Franchisee has a Controlling Interest.

     “Controlling Interest” - if a Person is a partnership, corporation or other form of
limited liability company, the ownership of twenty percent (20%) or more of the voting interests of
such Person will constitute a controlling interest. A trustee of a trust shall be deemed to hold
one hundred percent (100%) of the voting interests of the trust and each beneficiary of a trust
shall be deemed to hold his proportionate share of the voting interest of the trust or, if such
interest is indeterminate, one hundred percent (100%) of the voting interests of the trust.

     “Corporate Location” – a PLANET BEACH® business operated by a Franchisee in which Master
Franchisee has Control and at least a 51% equity interest.

     “Country” - the country constituting the Development Area or each country or portion of
a country in which a part of the Development Area is situated.

 

 

     “Data Protection Laws” - the laws protecting the fundamental rights and freedoms of
natural persons and, in particular, their right to privacy with respect to the processing of
Personal Data.

     “Development Area” - the geographic area or areas described on Exhibit A to this
Agreement.

     “Development Period” - each period of time defined as a Development Period on
Exhibit B to this Agreement.

     “Development Rights” - the right and license of the System to operate and grant
Franchises for the development and operation of PLANET BEACH® businesses.

     “Development Schedule” - the minimum number of the PLANET BEACH® businesses that must be
open and in operation at the end of each Development Period in each of the geographic areas which
comprise the Development Area, as set forth on Exhibit B to this Agreement.

     “Development Term” - the term of this Agreement and, once approved, the period during
which Master Franchisee is authorized to grant Franchises, which will commence on the Effective
Date and will expire, unless terminated sooner in accordance with the terms of this Agreement, on
the fifteenth (15th) anniversary of the Effective Date. The Development Term includes any
extension or renewal of the Development Term which is exercised in accordance with Section 3.D.

     “Dollars” and “$”- the legal currency of the United States of America.

     “Effective Date” - the date an authorized officer of Franchisor executes this
Agreement.

     “Franchise” - the right to develop and operate a PLANET BEACH® business within the
Development Area and to use the Marks and the System in the operation thereof.

     “Franchise Agreement” - the revised form of Franchisor’s Unit Franchise Agreement and/or
Area Representative Agreement (including all exhibits, ancillary documents and guarantees attached
thereto) which has been drafted and amended by counsel in the Country as necessary to comply with
legal requirements for the commercial operation of the PLANET BEACH® business in the Development
Area and approved by Franchisor pursuant to provisions detailed in Section 5.A and 5.B of this
Agreement.

     “Franchisee” – any or all Unit Franchisees and Area Representative Franchisees.

     “Gross Sales” - the total of all sales and revenue derived from the operation of any and
all Unit Franchises within the Development Area including, but not limited to, the sale of all
goods and services sold at or from the site of a Unit Franchise or elsewhere, or through or by
means of the business conducted by a Unit Franchise and the sale of products or services in
connection with the placement or servicing by a Unit Franchise, whether in cash or credit

 

 

transactions, but excluding sales, value added or service taxes actually collected from customers
and paid to the appropriate taxing authority and all customer refunds and credits.

     “Legal Requirements” - any and all applicable laws, ordinances, regulations, rules,
administrative orders, decrees and policies of any government, governmental agency or department
pertaining to the formation and performance of this Agreement, including, but not limited to, the
governments of the Country and the United States.

     “Marks” - the trademarks, service marks, logos and other commercial symbols set forth on
Exhibit E to this Agreement which Franchisor authorizes Master Franchisee to use and
sublicense to Unit Franchisees to identify the Franchise and Products offered by such, including
the marks, and associated logos and slogans. Such trademarks, service marks, logos and other
commercial symbols are subject to modification and discontinuance and may include additional or
substitute trademarks, service marks, logos and commercial symbols as provided in this Agreement.

     “Master Franchise Business” - means all of Master Franchisee’s activities related to
soliciting and recruiting new franchisees and facilitating the license, development and operation
of PLANET BEACH® businesses in the Development Area pursuant to this Agreement.

     “Master Franchisee Affiliated Unit” - a Unit Franchise owned and operated by an
Affiliate of Master Franchisee.

     “Offering Fee” - Franchisor’s reasonable costs and expenses associated with reviewing a
proposed offering, including, without limitation, legal and accounting fees and salaries of
Franchisor’s personnel and its professional advisors.

     “Operations Manual” - means any confidential operating manuals and other written
materials (including materials provided online or through other electronic media) covering the
proper operating and marketing techniques of the Master Franchise Business, Unit Franchises and any
other PLANET BEACH® business.

     “Owners” - all Persons or entities holding Ownership Interests (defined below) in Master
Franchisee and all Persons or entities who have other direct or indirect property rights in Master
Franchisee or this Agreement (the Persons or entities who are Owners as of the date of this
Agreement are listed on Exhibit C to this Agreement).

     “Ownership Interest” - a direct or indirect, disclosed or undisclosed, legal or
beneficial ownership or property right, including, without limitation: (a) in relation to a
company, the ownership of shares in the company; (b) in relation to a partnership, the ownership of
a general or limited partnership interest; or (c) in relation to a trust, the ownership of the
beneficial interest of such trust.

 

 

     “Permanent Disability” - any physical, emotional or mental injury, illness or incapacity
which would prevent a Person from performing the obligations set forth in this Agreement or in the
Guaranty attached hereto as Exhibit G for at least 90 consecutive days and from which
condition recovery within 90 days from date of determination is unlikely. Permanent Disability will
be determined by a licensed practicing physician selected by Franchisor upon examination of the
individual; or if the individual refuses to submit to an examination, then such individual will be
automatically deemed permanently disabled as of the date of the refusal for the purposes of this
Agreement. The costs of the examination required to determine Permanent Disability will be paid by
Franchisor.

     “Person” - an individual (and the heirs, executors, administrators or other legal
representatives of an individual), corporation, general or limited liability partnership, limited
liability company, trust, association or other business or legal entity.

     “Personal Data” – any information relating to an identified or identifiable natural person; an
identifiable person is one who can be identified, directly or indirectly, in particular by
reference to an identification number or to one or more factors specific to his or her physical,
physiological, mental, economic, cultural or social identity.

     “PLANET BEACH® business” - a business, identified by the Marks and operated in
accordance with the System pursuant to a valid Franchise Agreement with Franchisor or Master
Franchisee.

     “Products” - all products and services which Franchisor authorizes for sale by Unit
Franchises.

     “Proprietary Products” – include all Products identified by the Marks, any private label
Products developed by Franchisor or its affiliates and any Products prepared according to
Franchisor’s confidential or trade secret formulas.

     “Prospectus” - statutory prospectus (preliminary or final), a private placement
memorandum or any similar document that a company may use to convey information about a public
offering or private placement of equity or debt securities.

     “Restricted Persons” - (1) Owners who have a direct or indirect Controlling Interest in
Master Franchisee; (2) Affiliates of Master Franchisee; and (3) the officers, directors and
management personnel of Master Franchisee and its Affiliates.

     “Royalty” or “Royalty Fees” - means the monthly fees payable by you to us based on a
percentage of the revenues payable by Unit Franchisees to you under Unit Franchise Agreements, or
payable by Corporate Locations or Master Franchise Affiliated Units as provided in Exhibit
D, Section 4.2.

     “Securities Offering” - public offering or private placement of any equity or debt
securities or any securities convertible into or exchangeable for equity securities by Master
Franchisee or, if any of the proceeds of the offering are to be invested in or loaned to Master

 

 

Franchisee, or if the Prospectus, and Affiliate or any other person uses in connection with
offering mentions Franchisor or describes the relationship between Franchisor and Master
Franchisee.

     “Similar Business” - means any enterprise or entity that offers, is otherwise involved
in, or deals with any tanning or spa services.

     “System” - means the then-current PLANET BEACH® System, which includes the Marks, System
Standards, Operations Manual and other Confidential Information developed and embodying
Franchisor’s commercial experience and business processes for the licensing, development and
operation of PLANET BEACH® businesses, including the goodwill associated with the System.

     “System Standards” - means the then-current standards, requirements and specifications
for the development, construction and operation of PLANET BEACH® businesses, which may include
standards relating to design, construction, signage, furniture, fixtures, equipment, use of the
Marks, business techniques, methods of operation, procedures, supplies, Confidential Information,
quality, service, marketing, advertising, sales promotion programs, training, and insurance, which
are contained in the Operations Manual.

     “Unit Franchise” - business operations licensed by Persons subject to a Unit Franchise
Agreement with Master Franchisee for the development and operation of an PLANET BEACH® business
within the Development Area, including all Franchises operated by Affiliates of Master Franchisee.

     “Unit Franchisee” - one or more Person(s) that is/are party to a Unit Franchise
Agreement with Master Franchisee for the development and operation of a Unit Franchise.

     “United States” and “U.S.” - the United States of America.

     “VAT” - Value Added Tax and any similar tax replacing it or adding to it.

2. DEVELOPMENT RIGHTS AND OBLIGATIONS

     A. GRANT OF DEVELOPMENT RIGHTS

          Subject to the terms and conditions of this Agreement, Franchisor hereby grants to Master
Franchisee the Development Rights within the Development Area during the Development Term. Master
Franchisee may not directly operate Unit Franchises, but may operate PLANET BEACH® businesses
through Affiliates. All Unit Franchisees and Area Representative Franchisees, including Master
Franchisee’s Affiliates, must execute a Franchise Agreement for each Franchise. The rights granted
to Master Franchisee by this Agreement are limited to the Development Area and Master Franchisee
agrees that it is not hereby granted any rights to franchise, and that it will not, operate or
grant Franchises for PLANET BEACH® businesses outside of the Development Area.

 

 

     B. TERRITORIAL RIGHTS OF MASTER FRANCHISEE

          Except as hereinafter provided, and provided that Master Franchisee is in full compliance with
this Agreement, Franchisor and its Affiliates will not operate or grant Franchises or Development
Rights for PLANET BEACH® businesses within the Development Area during the Development Term. After
the termination of this Agreement or expiration of the Development Term, Franchisor and its
Affiliates shall have the right to operate and grant Franchises and Development Rights for PLANET
BEACH® businesses within the Development Area, subject only to the territorial rights granted to
Area Representative Franchisees and/or Unit Franchisees prior to the termination of this Agreement
or expiration of the Development Term.

          Franchisor expressly reserves the right: (1) to establish or operate, and license others to
establish or operate, PLANET BEACH® businesses, at any location outside the Development Area,
notwithstanding the proximity of said business to your Development Area; (2) outside the
Development Area, to market, sell, or distribute, or to license or contract with others to market,
sell or distribute, any products or services of any kind, including products or services similar to
those offered by the PLANET BEACH® businesses, to any person, organization, or public or private
entity, using the Marks or other trade-marks, through alternative channels of distribution,
including through Franchisor’s website, catalogues and direct mail solicitations; (3) within the
Development Area, to develop and operate, directly or indirectly, other businesses offering
products of services, similar to the products or services offered by the PLANET BEACH® business,
but under different marks; (4) within and outside the Development Area, to advertise and promote
the PLANET BEACH® business, System and Marks wherever Franchisor deems appropriate; and (5) outside
the Development Area, to offer, sell, and provide and to grant other Persons the right to offer,
sell and provide any products and service of any kind under the Marks or other trademarks; and (6)
within or outside the Development Area to develop and establish other businesses and systems using
the trademarks and service marks other than the Marks for any products and services.

     C. DEVELOPMENT OBLIGATIONS

          1. Immediately following the Effective Date of this Agreement, Master Franchisee shall
(a) engage counsel in the country to prepare the Franchise Agreement in accordance with Section
5.A; (b) cause an Affiliate to enter into a Unit Franchise Agreement and open a Corporate Location
within one year of the Effective Date of this Agreement; (c) commence a franchise sales, marketing
and development program for the Development Area; and (d) cause Franchisees to have open and in
operation within the Development Area the number of Unit Franchises agreed upon in the manner and
within each of the “Development Periods” specified in the Development Schedule. Master Franchisee
acknowledges and recognizes that the Development Periods and Development Schedule within the
Development Area are fair and reasonable for the development of Unit Franchises in the Development
Area and are an accurate reflection of market demand without over saturation of Franchisor
proprietary services offered under the System.

          2. Master Franchisee shall not enter into a Franchise Agreement with any third-party
Franchisee until (i) a proper form of the Unit Franchise Agreement and/or Area Representative
Agreement has been drafted by counsel of the Country pursuant to the terms of

 

 

Section 5.A and 5.B of this Agreement; and (ii) at least one Corporate Location is open and
operating pursuant to a Unit Franchise Agreement and System Standards. At all times throughout the
Development Term, Master Franchisee shall have open and in operation at least one Corporate
Location.

          3. The sale of any Unit Franchises in excess of the minimum number required in any time period
shall be credited to the subsequent time period.

          4. Master Franchisee may request an extension of any Development Period in which Master
Franchisee is required to have PLANET BEACH® businesses open and in operation. If granted, each
extension will be for an additional sixty (60) days beginning on the expiration of the applicable
Development Period, including any previous extensions. No more than three (3) extensions of any
Development Period will be permitted during the Development Term. No extension of any Development
Period shall, however, affect the duration of the Development Term, the development obligations and
time of any subsequent Development Period or any of Master Franchisee’s other obligations under
this Agreement. To obtain the extension, Master Franchisee must notify Franchisor in writing at
least thirty (30) days prior to the expiration of the applicable Development Period, provide a
detailed explanation for the delay and request Franchisor to consider granting Master Franchisee an
extension. Franchisor has no obligation to grant any extension. If Franchisor elects to grant the
extension, Franchisor may require Master Franchisee to pay an extension fee of $7,500.

          5. If Master Franchisee is unable to meet the Development Schedule solely as the result of
Force Majeure (as defined in Section 16.M), the Development Periods shall be extended by the amount
of time during which Force Majeure shall exist, provided that if any such Force Majeure shall
continue for a period in excess of six (6) months, Franchisor may terminate or rescind this
Agreement in accordance with Section 16.M.

     D. EXTENSION OF DEVELOPMENT TERM

          1. Upon expiration of the initial Development Term, if Master Franchisee has substantially
complied with all of the terms of this Agreement during the Development Term, and any subsequent
terms, including, without limitation, the Development Schedule, subject to the terms of this
Section 3.D, Master Franchisee shall have the option to extend this Agreement for two (2)
additional terms of ten (10) years each provided that:

               (a) Master Franchisee shall give Franchisor written notice of its request for an extension of
the Development Term not less than six (6) months and not more than eighteen (18) months prior to
the expiration of the Development Term.

               (b) Master Franchisee agrees to further develop PLANET BEACH® businesses in the Development
Area in accordance with a development schedule to be mutually established by the parties;

               (c) Master Franchisee is not in default of this Agreement and any other agreement between
Master Franchisee and Franchisor;

 

 

               (d) Master Franchisee is current with respect to all monetary obligations, including amounts
owing to Franchisor and its Affiliates;

               (e) Master Franchisee must enter into a new master franchise agreement which may contain terms
and conditions materially different from this Agreement, but consistent with Franchisor’s
then-current commercial policies; provided, however, that Master Franchisee will pay a renewal fee
of Fifty Thousand Dollars (US$50,000.00) to Franchisor upon execution of the new master franchise
agreement for the renewal rights in place of the Development Fee.

               (f) Master Franchisee and each Owner must, execute and deliver to Franchisor a general release
(in a form prescribed by Franchisor) of all claims against Franchisor and its Affiliates, and each
of their respective officers, directors, shareholders, partners, agents, representatives,
independent contractors, servants and employees in their corporate and individual capacities,
including claims arising under this Agreement and under any applicable law, rules or regulations;
and

               (g) Master Franchisee and any of its managers must be in compliance with Franchisor’s
then-current qualification and training requirements.

          2. If Master Franchisee fails to satisfy the conditions set forth in this Section 3.D, Master
Franchisee’s Development Rights and all other rights granted under this Agreement shall be deemed
to have expired and Franchisor shall have the right to operate and grant Franchises and Development
Rights for the PLANET BEACH® business in the Development Area, subject only to territorial rights
previously granted to Area Representative Franchisees and/or Unit Franchisees. In such a case NO
compensation of any kind shall be due to Master Franchisee, and Master Franchisee agrees to
transfer to Franchisor all records and files relevant to the operations of the PLANET BEACH®
business and all Area Representative Franchisees and/or Unit Franchises in the Development Area,
and all files, in paper, disc and electronic form as requested by Franchisor, within 10 days of the
expiration of this Agreement and Master Franchisee shall ensure that all such records and files can
be transferred to Franchisor in accordance with applicable Data Protection Laws.

     E. GUARANTEE INDEMNITY

          It is a condition precedent of this Agreement that each Owner specified by Franchisor (each a
“Guarantor”) enters into the Guarantee and Indemnity at Exhibit G to guarantee the
performance of Master Franchisee obligations under this Agreement.

3. GUIDANCE AND ASSISTANCE

     A. INITIAL TRAINING

          Within six (6) months of the Effective Date of this Agreement, and at least thirty (30) days
prior to the opening of Master Franchisee’s first Corporate Store, Franchisor will

 

 

provide initial training and Senior Executive (defined in Section 6.A) and all of its appropriate
personnel, as designated by Franchisor, must, at Master Franchisee’s expense, comply with all of
the initial training requirements prescribed by Franchisor which may include the training programs
defined below.

          1. Master Franchisee/Senior Executive Training.

               (a) Master Franchising Initial Training. Master Franchisee must successfully attend
and participate in the Master Franchising Initial Training program which is currently a five (5)
day program. This program will be conducted at the Franchisor’s corporate headquarters in Marrero,
Louisiana.

               (b) Planet Beach University Online Certification Program. Master Franchisee must
successfully complete the Planet Beach University Online, an online training program, prior to
attending Franchisee School and/or any other training programs.

               (c) Franchisee School. Master Franchisee must attend Franchisee School which is
currently a six (6) day program. In its sole discretion Franchisor may lengthen the duration of
Franchisee School by one or more consecutive days.

               (d) Onsite Grand Opening Training. Master Franchisee must successfully attend and
participate in the Grant Opening Training Program. This consecutive five (10) day program will be
conducted at the Master Franchisee’s first corporate store.

          2. Master Franchisee agrees to be responsible for all travel, living expenses and compensation
for its employees/managers who attend all such initial training programs. Franchisor will not
charge Master Franchisee any additional tuition-based training fee for any training required,
unless otherwise provided in this Agreement. Additional representatives of Master Franchisee may
also attend such initial training program if desired by Master Franchisee, without tuition,
however, Master Franchisee will be responsible to assume all other expenses as set forth in the
preceding sentence.

     B. CONTINUING TRAINING

          Franchisor has the right to require Master Franchisee to attend, but is not obligated to
provide, additional training at Franchisor’s corporate headquarters, or at such other location
specified by Franchisor, consisting of (i) two (2) additional training programs during the first
year of this Agreement and (ii) one (1) program for each year of the Development Term thereafter.
The additional training programs shall not exceed five (5) days of training for approximately eight
(8) hours each day. Master Franchisee will not be required to pay any tuition fees for the
additional training programs; provided that Master Franchisee shall be responsible for all travel
and living expenses incurred by its representatives in connection with their attendance at such
training programs. Master Franchisee will be assigned a direct point of contact. Master
Franchisee will have weekly scheduled calls with key executives of Franchisor from the date of the
Signature Date until the Master Franchisee’s flagship Planet Beach location

 

 

opens. Upon opening of the flagship location there will be monthly scheduled calls with Planet
Beach International, LLC staff.

     C. CONTINUING GUIDANCE AND SUPPORT BY FRANCHISOR

          Franchisor may provide, if it deems necessary in its sole discretion, ongoing advice and
guidance to Master Franchisee concerning the development, operation and franchising of the PLANET
BEACH® business. In connection with such assistance, Franchisor may furnish written and other
materials and various of its personnel to communicate the System to Master Franchisee. Franchisor
personnel shall be available for periodic consultation with personnel of Master Franchisee by
telephone, email, facsimile transmission and correspondence. Upon Master Franchisee’s reasonable
request, Franchisor, if it deems it necessary in its sole discretion, may send personnel to the
Development Area for further consultation and advice at Master Franchisee’s sole cost and expense.

     D. OPERATIONS MANUALS

          Franchisor shall loan to Master Franchisee or provide access to a copy of its Operations
Manual for the development and operation of the PLANET BEACH® business used in the United States
(or, at the option of Franchisor, a country with a language or culture that is the same as or
similar to the language or culture of the Development Area). Master Franchisee may from time to
time submit for review and approval by Franchisor any modifications to the System and System
Standards that Master Franchisee believes to be necessary to comply with the legal requirements of
the Development Area or for the commercial success of the PLANET BEACH® business operated in the
Development Area. Franchisor agrees to consider such proposed modifications in good faith and to
notify Master Franchisee in writing of Franchisor’s acceptance or rejection of such modifications,
specifying the reasons for any rejections. Modifications to the System and System Standards shall
be reflected in the Operations Manuals for the Development Area. If necessary, Master Franchisee
shall cause the Operations Manual to be translated into the principal commercial language of the
Development Area at a time to be determined or approved by Franchisor. The cost of such translation
shall be borne by the Master Franchisee. Master Franchisee acknowledges that the Operations Manual,
the copyright therein, and any translations thereof, shall be the property of Franchisor and agrees
to assign any copyright interest it may otherwise have to Franchisor. Prior to having any persons
(whether employees or independent parties) translate any materials, Master Licensee must enter into
a binding written agreement with such persons sufficient to transfer to Franchisor (either directly
or through Master Franchisee) all intellectual property rights in or to such translations, to waive
any moral rights that such person may have in or to such translations, and to maintain the
confidentiality of the Operations Manual and its translation. Any translation of the Operations
Manual shall be subject to the confidentiality and other provisions of this Agreement applicable to
the Operations Manual. Except for providing access to one (1) copy of the Operations Manual to
each Unit Franchisee and Area Representative Franchisee, Master Franchisee agrees that it will not
copy or disclose any part of the Operations Manual to any Person other than its employees who have
a need to know the contents of the Operations Manual.

 

 

     E. FRANCHISOR’S ON-SITE ASSISTANCE

          Assistance in Opening Prototype Facility. Franchisor may, if it deems it necessary,
at its own reasonable costs and sole discretion of time and timeframe, provide on-site advice,
guidance and support in connection with the opening and initial operations of Master Franchisee’s
first Corporate Location referred to in Section 3.A of this Agreement.

     F. PRODUCT AND OPERATIONS DEVELOPMENT

          1. New Products. Master Franchisee will authorize Unit Franchisees to sell new
Products and advise Area Representative Franchisees and Unit Franchisees of modifications or
additions to operating procedures for the development and operation of the PLANET BEACH® business
that Franchisor develops and designates for use by the PLANET BEACH® business franchisees. If
Franchisor in its sole discretion deems it necessary, Franchisor will provide training to Master
Franchisee concerning such new Products and operating procedures at times and places designated by
Franchisor.

          2. Innovations. Master Franchisee agrees to disclose to Franchisor all ideas,
concepts, methods, techniques, products and services relating to the development and operation of
the PLANET BEACH® business conceived or developed by Master Franchisee and its Affiliates, Area
Representative Franchisees and Unit Franchisees. In order that Master Franchisee, Franchisor and
all of its other franchisees may all benefit from the free interchange of ideas Master Franchisee
agrees to grant, and to ensure that its Affiliates, Area Representative Franchisees, and Unit
Franchisees grant to the Franchisor, its Affiliates and other network members: (a) a royalty free
license to use any non-patentable improvements in the System; and (b) a non-exclusive license at an
agreed fair price of all rights in any improvement in the System which is capable of being patented
and that are created by Master Franchisee, its Affiliates, Area Representative Franchisees or Unit
Franchisees.

     G. COMPUTER SOFTWARE, HARDWARE AND TECHNOLOGY

          1. Computer System. Master Franchisee must purchase and use any computer system that
Franchisor or its Affiliates develops or selects for the Business, including all future updates,
supplements and modifications (the “Computer System”). In the future, the computer software
package developed for use in PLANET BEACH® businesses may include proprietary software. Master
Franchisee may be required to license the proprietary software from Franchisor, an Affiliate or a
third party and also may be required to pay a software licensing or user fee in connection with
their use of the proprietary software. All right, title and interest in the software will remain
with the licensor of the software. The computer hardware component (including the security system)
of the Computer System must conform to specifications Franchisor develops. Franchisor reserves the
right to designate a single source from whom the Computer System must be purchased. Master
Franchisee acknowledges and agrees that Franchisor will have full and complete access to
information and data entered and produced by the Computer System.

 

 

          2. Participation in Internet Web Sites or Other Online Communications. Master
Franchisee must, at its expense, participate in Franchisor’s PLANET BEACH® web site, any
intranet or extranet system Franchisor may develop or other online communications as Franchisor may
require. Franchisor has the right to determine the content and use of the PLANET BEACH®
web site and any intranet or extranet system Franchisor may develop and will itself and may
not allow its Franchisees to establish the rules under which licensees may or must participate.
Master Franchisee may not separately register any domain name or operate a separate web site
containing any of the Marks without Franchisor’s prior written consent. Franchisor retains all
rights relating to its web site and any intranet or extranet system it may develop and may alter or
terminate the web site, intranet or extranet system. Master Franchisee’s general conduct on the
web site, intranet and extranet system or other online communications and, specifically, Master
Franchisee’s use of the Marks or any advertising is subject to the provisions of this Agreement.
Master Franchisee acknowledges that certain information related to its participation in the web
site, intranet or extranet system may be considered Confidential Information, including access
codes and identification codes. Master Franchisee’s right to participate in the web site, intranet
and extranet system, or otherwise use the Marks or System on the internet or other online
communications, will terminate when this Agreement expires or terminates.

          3. Franchisee Use of Technology. Master Franchisee must ensure that each Unit
Franchisee and Area Representative Franchisee uses the Computer System and participates in the
internet websites or other online communications and is bound by obligations equivalent to those
that apply to Master Franchisee in Section 4.G.1 and 4.G.2.

4. GRANT, SUPPORT AND SUPERVISION OF FRANCHISES

     A. UNIT FRANCHISE AGREEMENTS

          Within (30) days after execution of this Agreement, Franchisor shall furnish to Master
Franchisee its then-current version of its unit franchise agreement or form of subfranchise
agreement. Within thirty (30) days of Master Franchisee’s receipt of Franchisor’s unit franchise
agreement or subfranchise agreement, Master Franchisee shall engage, in writing, counsel from the
Country for the purpose of updating and revising Franchisor’s unit franchise agreement (including
all exhibits, ancillary documents and guarantees attached thereto) to be in total compliance with
the laws and other legal requirements of the Development Area. Master Franchisee must obtain
Franchisor’s written approval of the Unit Franchise Agreement and may not at any time grant any
franchise except pursuant to a Franchise Agreement in a form approved by Franchisor. The Unit
Franchise Agreement shall include a provision for the novation of the obligations and rights of the
Master Franchisee to the Franchisor in the event of the termination of this Agreement or expiration
of the Development Term, such novation to be exercised at Franchisor’s sole discretion and such
other provisions as Franchisor determines necessary or desirable to protect its interests and the
interest of the PLANET BEACH® System. Similarly, Franchisor shall have the option, exercisable in
its sole discretion, to be a named a party to the Unit Franchise Agreement or a third-party
beneficiary to the Unit Franchise Agreement.

 

 

          Master Franchisee shall submit, in English, for Franchisor’s review, both a black-lined and a
clean copy of the Unit Franchise Agreement which complies with the laws of Development Area at
least fifteen (15) days before the opening of its first Corporate Location as described in Section
2.C of this Agreement. Franchisor shall not be liable to any party under any provision of the
revised Unit Franchise Agreement (including all exhibits, ancillary documents and guarantees
attached thereto) that is used by Master Franchisee in the Development Area, except as otherwise
provided in this Agreement. Master Franchisee assumes all costs and responsibility for engaging
counsel in the Country in the time and manner expressed in this Section, and agrees to indemnify
Franchisor for any default under this Section.

          From time to time, Master Franchisee shall also submit, in English, for Franchisor’s review
and approval any modifications to such Franchise Agreement that Master Franchisee believes to be
necessary to comply with legal requirements or for the commercial operations of the PLANET BEACH®
business in the Development Area. Master Franchisee does hereby assign to Franchisor any copyright
ownership interest Master Franchisee may acquire in the future to the Unit Franchise Agreement or
any modifications thereto, as well as any copyright ownership interest Master Franchisee may
acquire in the future in any translation(s) of the Unit Franchise Agreement. Franchisor does hereby
grant to Master Franchisee a non-exclusive license to use the Unit Franchise Agreement developed
pursuant to this Section 5.A during the term of this Agreement.

     B. AREA REPRESENTATIVE RIGHTS

          In the event that Master Franchisee decides to grant area representative rights within the
Development Area, Franchisor will supply Master Franchisee with a copy of its then-current area
representative agreement upon Master Franchisee’s written request. Within thirty (30) days of
Master Franchisee’s receipt of Franchisor’s area representative agreement for the United States,
Master Franchisee shall engage, in writing, counsel from the Country for the purpose of updating
and revising Franchisor’s area representative agreement (including all exhibits, ancillary
documents and guarantees attached thereto) to be in total compliance with the laws and other legal
requirements of the Development Area. Master Franchisee must obtain Franchisor’s written approval
of the revised Area Representative Agreement and may not at any time grant any area representative
rights except pursuant to an Area Representative Agreement in a form approved by Franchisor. The
Area Representative Agreement shall include provision for the novation of the obligations and
rights of Master Franchisee to the Franchisor in the event of the termination of this Agreement or
expiration of the Development Term, such novation to exercised in Franchisor’s sole discretion, and
such other provisions as Franchisor determines necessary or desirable to protect its interests and
the interests of the PLANET BEACH® System. Similarly, Franchisor shall have the option, exercisable
in its sole discretion, to be a party to the Area Representative Agreement or named third-party
beneficiary to the Area Representative Agreement.

          Master Franchisee shall submit, in English, for Franchisor’s review, both a black-lined and a
clean copy of the Area Representative Agreement which complies with the laws of Development Area at
least fifteen (15) days before granting Area Representative rights. Franchisor shall not be liable
to any party under any provision of the revised Area Representative

 

 

Agreement (including all exhibits, ancillary documents and guarantees attached thereto) that is
used by Master Franchisee in the Development Area, except as otherwise provided in this Agreement.
Master Franchisee assumes all costs and responsibility for engaging counsel in the Country in the
time and manner expressed in this Section, and agrees to indemnify Franchisor for any default under
this Section.

          From time to time, Master Franchisee shall also submit, in English, for Franchisor’s review
and approval any modifications to such franchise agreement that Master Franchisee believes to be
necessary to comply with legal requirements or for the commercial operations of the PLANET BEACH®
business in the Development Area. Master Franchisee does hereby assign to Franchisor any copyright
ownership interest Master Franchisee may acquire in the future to the Area Representative Agreement
or any modifications thereto, as well as any copyright ownership interest Master Franchisee may
acquire in the future in any translation(s) of the Area Representative Agreement. Franchisor does
hereby grant to Master Franchisee a non-exclusive license to use the Area Representative Agreement
developed pursuant to this Section 5.B during the term of this Agreement.

     C. CORPORATE LOCATIONS

          Any PLANET BEACH® business Master Franchisee develops for its own account must be developed
and operated through an Affiliate, joint venture (in corporate or other form) or partnership with
one or more individuals or entities (a “Master Franchise Affiliated Unit”). In addition, the
rights of such affiliates, joint ventures and partnerships to use the System and the Marks in the
development and operation of PLANET BEACH® businesses must be: (1) granted pursuant to Franchise
Agreements which must include the Corporate Location Addendum attached hereto as Exhibit I;
and (2) subject to all terms and conditions of this Agreement.

     D. SYSTEM STANDARDS

          Master Franchisee acknowledges and agrees that the development and operation of the Master
Franchise Business PLANET BEACH® businesses in accordance with System Standards is the essence of
this Agreement and is essential to preserve the goodwill of the Marks related to the PLANET BEACH®
business. Therefore, Master Franchisee agrees that in order to maintain the identity and
reputation of the PLANET BEACH® System and to maintain the uniformly high standards amongst
franchisees carrying on business under the Marks in accordance with System Standards and to protect
Franchisor, Master Franchisee and the network of franchisees carrying on the PLANET BEACH® business
the goodwill and the demand for the Products sold, supplied or provided in the PLANET BEACH®
business under the Marks, the Master Franchisee will, at all times during the term of this
Agreement comply with, and cause Area Representative Franchisees and Unit Franchisees to develop,
maintain and operate in compliance with, each and every System Standard, as periodically modified
and supplemented by Franchisor in its discretion during the term of this Agreement. Master
Franchisee hereby agrees that System Standards prescribed from time to time in the Operations
Manual, or otherwise communicated to Master Franchisee, Area Representative Franchisees and Unit
Franchisees in writing, constitute provisions of this Agreement and Franchise Agreements. All

 

 

references to this Agreement and Franchise Agreements shall include all System Standards as
periodically modified.

     E. PRODUCTS AND SUPPLIES; INTERNATIONAL VENDOR PROGRAM

          1. Authorized Products and Services. Master Franchisee must require its
subfranchisees to offer from their respective PLANET BEACH® businesses, only those services and
products that Franchisor has approved in writing. Franchisor has the right to revise the list of
approved products and services from time to time based upon Franchisor’s evaluation of various
factors, which may include customer demand, geographic location, technological developments, and
other market or economic factors.

          2. Approved Supplies and Suppliers. Franchisor will furnish Master Franchisee with
lists of approved supplies or approved suppliers from time to time. Master Franchisee must ensure
that its subfranchisees use only approved equipment, products, fixtures, signs, marketing
materials, trademarks items and other items (collectively “approved supplies”) in the PLANET BEACH®
businesses. Approved supplies will include Proprietary Products and non-proprietary products.
Franchisor has the right to approve the manufacturer of approved supplies. Master Franchisee
acknowledges and agrees that certain approved supplies may only be available from one source, and
Franchisor or its affiliates may be that source. ALTHOUGH APPROVED BY FRANCHISOR, FRANCHISOR AND
ITS AFFILIATES MAKE NO WARRANTY AND EXPRESSLY DISCLAIM ALL WARRANTIES, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO PRODUCTS, EQUIPMENT
(INCLUDING WITHOUT LIMITATION ANY REQUIRED COMPUTER SYSTEMS), SUPPLIES, FIXTURES, FURNISHINGS OR
OTHER APPROVED ITEMS.

          3. International Vendor Program. Master Franchisee and Franchisor agree to split
rebates provided by vendors of approved supplies and any product or service used in the operation
of the PLANET BEACH® business in the Development Area in accordance with the terms of Franchisor’s
International Vendor Program which is attached hereto as Exhibit H and may be modified by
Franchisor from time to time.

          4. Distribution by Master Franchisee. Master Franchisee understands and acknowledges
that nothing in this Agreement or in the International Vendor Program grants Master Franchisee any
rights to manufacture or distribute any approved supplies. Master Franchisee or its Affiliates may
distribute non-proprietary products to its subfranchisees provided Master Franchisee and its
Affiliates comply with all applicable legal requirements. Master Franchisee may only manufacture
or distribute Proprietary Products if manufacturing or distribution rights are granted by
Franchisor or its Affiliates pursuant to a separate agreement negotiated between the parties and
provided that provided that Master Franchisee can comply with all legal requirements and can meet
Franchisor’s quality and other requirements.

 

 

     F. OBLIGATIONS TO FRANCHISEE TO ENSURE AND ENFORCE FRANCHISEE COMPLIANCE WITH SYSTEM STANDARDS

          To ensure that the System Standards as set forth more fully in the preceding paragraph are
met, Master Franchisee agrees to undertake the following obligations:

          1. Training. Master Franchisee is responsible for training its employees and all Unit
Franchisees and Area Representative Franchisees. Master Franchisee shall designate a Person who is
fluent in English to serve as Master Franchisee’s certified trainer/manager in the Development
Area. Such Person shall be obligated to have successfully completed all phases of training
provided by Franchisor in order to become certified to train others in the Development Area. Prior
to the effectiveness of any Franchise Agreement, Master Franchisee shall ensure that at least one
representative of that PLANET BEACH® business has successfully completed all phases of training
provided by Master Franchisee. Master Franchisee must also provide new Unit Franchisees with five
(5) days of on-site training within the first two (2) weeks that that Unit Franchisee’s PLANET
BEACH® business is opened. Master Franchisee must also perform a three (3) day on-site follow-up
training session within the third month of a PLANET BEACH® business’s operation.

          2. Enforcing Franchisee Compliance. Franchisor has created and developed special
procedures, standards and methods for operating and maintaining the PLANET BEACH® businesses, which
System Standards are incorporated in Franchisor’s confidential Operations Manual, as it may be
amended from time to time or otherwise in writing. Master Franchisee shall ensure that each PLANET
BEACH® business within the Development Area is developed and operated solely in accordance with
Franchisor’s requirements and specifications as set forth in the Operations Manual including
through inspections and secret shoppers as required by Franchisor policies and procedures, which
may be changed from time to time. In each instance, Master Franchisee shall ensure that each PLANET
BEACH® business does not engage in deceptive, misleading or unethical practices or conduct that may
have a negative impact on the reputation and goodwill of Franchisor, Franchisees or the System.

          3. Supervision. Master Franchisee, or its duly authorized representative, must
provide supervision to all Franchisees within the Development Area. Such supervision shall
include, but not be limited to, on-site supervision during the period of time prior to the opening
of each Franchise; general assistance, advice and consultation to Franchisees with regard to
entering into negotiations and agreements within the Development Area for Franchisee services;
review of proposed leases and contracts; consultation and assistance with regard to grand opening
of each Franchise; providing supplemental training and assistance of all material aspects of the
operation of a PLANET BEACH® business, as needed, in accordance with Franchisor’s requirements;
periodic and regular telephone calls or visits to monitor operations of the Franchisees, continuous
advisory services to Franchisees, ongoing training and updates for all Franchisees within the
Development Area. Master Franchisee agrees to perform such duties pursuant to Franchisor’s
requirements herein described and in accordance with the System, the Operations Manual or otherwise
in writing, all of which may be changed from time to time by Franchisor.

 

 

          4. Advisement. Master Franchisee must advise all Franchisees within the Development
Area of problems arising out of the operation of any PLANET BEACH® business as disclosed by
periodic reports submitted to Master Franchisee or Franchisor by a Franchisee, or by inspections
conducted by Master Franchisee or Franchisor of the Franchisees within the Development Area.
Master Franchisee must provide each PLANET BEACH® business within the Development Area with such
assistance in connection with the operation of such PLANET BEACH® business as is reasonably
determined to be necessary by Franchisor. Operational assistance may consist of advice and
guidance with respect to: (i) proper utilization of procedures developed for a PLANET BEACH®
business with respect to operations and management, recruitment of personnel, advertising and
promotion, compliance with regulations and related activities as approved by Franchisor; (ii)
additional services authorized for Franchisees within the Development Area; (iii) purchase of
equipment, furniture, fixtures, products, inventory, materials, and supplies; (iv) the institution
of proper administrative bookkeeping, accounting, inventory control, supervisory and general
operating procedures for the effective operation of a PLANET BEACH® business; (v) advertising and
promotional programs; (vi) marketing and negotiating technique to be employed when dealing with
prospective customers, clients and vendors; and (vii) maintenance of the PLANET BEACH® business
premises.

          5. Regional Seminars. Not less than once every 12 months, Master Franchisee will
arrange for and conduct regional seminars within the Development Area for all Franchisees within
the Development Area. Such seminars shall include training and general advisory assistance for the
PLANET BEACH® business within the Development Area and Master Franchisee shall notify Franchisor in
writing at least four (4) weeks prior to conducting such regional seminars.

          6. Franchisee Reports. Master Franchisee must make contact with all Franchisees
within the Development Area for the purpose of consultation, assistance and guidance of Franchisees
and managers of each PLANET BEACH® business, and Master Franchisee or its representatives will
prepare, for benefit of both Master Franchisee and Franchisor, written reports regarding these
regular contacts outlining any suggested changes or improvement in the operations of the PLANET
BEACH® business and detailing any defaults in such operations which become evident as a result of
any such contact, and a copy of each such written report must be provided to both the Franchisee or
its manager and Franchisor.

          7. Franchisee Reviews. Not less than once every three (3) months, Master Franchisee
must conduct management and financial reviews with each PLANET BEACH® business in the Development
Area. As a part of these reviews an evaluation form, which form will be mutually approved by
Franchisor and Master Franchisee, will be completed by each Franchisee to determine if Master
Franchisee is satisfactorily performing its duties and obligations under the Development Terms of
this Agreement. Master Franchisee will remit the management and financial review form, together
with the Master Franchisee evaluation forms to Franchisor within 10 days after its receipt of such
reviews.

          8. Franchisee Advertising Standards. Master Franchisee shall establish and revise, as
necessary, standards, specifications and programs for local advertising, marketing and promotion to
be conducted by Franchisees in their respective trading areas, including: (i) required level of
local marketing expenditures; (ii) type of promotional and advertising activity; and (iii) a

 

 

schedule for such activities. Master Franchisee agrees that each franchised location must produce
a local Ms. Planet Beach promotion annually and send a representative to compete for the applicable
regional Ms. Planet Beach competition. At the Master Franchisee’s cost, the winners of the
regional Ms. Planet Beach competitions will be sent to the Ms. Planet Beach International
competition held annually at the Planet Beach convention to compete for the Ms. Planet Beach
International Title.

     G. FAILURE TO MEET OBLIGATIONS

          In the event Master Franchisee fails to perform any of these duties or any other obligations
pursuant to this Agreement, Franchisor has the right, but not the obligation, to perform said
duties or obligations. Master Franchisee hereby agrees to pay Franchisor the sum of $100.00US per
day for each representative of Franchisor for its services in connection therewith together with
any expenses incurred by Franchisor in so performing, including travel, meals and lodging expenses.
In the event Franchisor performs duties for the Master Franchisee, the Master Franchisee shall
also remit a higher portion of any royalty payments or other payments owed to Franchisor in an
amount 20% greater than the amount agreed upon in Section 7.C.

5. OTHER OBLIGATIONS OF MASTER FRANCHISEE

     A. SENIOR EXECUTIVE

          Concurrently with the execution of this Agreement, Master Franchisee agrees to designate an
individual, who shall be a managing partner, shareholder or senior manager of Master Franchisee, to
act as the “Senior Executive” of Master Franchisee. Master Franchisee agrees to notify Franchisor
fifteen (15) days in advance of the desired appointment and qualifications of the proposed Senior
Executive. Franchisor reserves the right to disapprove of any such appointment; in which case,
Master Franchisee shall not appoint that particular individual. The Senior Executive shall exert
his full-time efforts to the franchising, development and operation of the Master Franchise
Business and shall not engage in any other business or other activity, directly or indirectly, that
requires any significant management responsibility or time commitments or that may otherwise
conflict with Master Franchisee’s obligations hereunder. The Senior Executive shall attend and
complete to Franchisor’s satisfaction such training programs as Franchisor shall prescribe (which
may be conducted in whole or in part at one or more of the offices of Franchisor in the United
States). If the relationship of the Senior Executive with Master Franchisee terminates, or if the
proposed Senior Executive fails to satisfactorily complete such training programs, Master
Franchisee agrees to promptly designate a replacement Senior Executive, who shall satisfactorily
complete such training programs. The Senior Executive must speak, read and write the English
language fluently. Master Franchisee acknowledges that its success is not dependent on the
approval or disapproval of any particular Senior Executive.

     B. SITE SELECTION, FRANCHISEE SELECTION/RECRUITMENT

          Master Franchisee shall be solely responsible for identifying and selecting any prospective
Franchisee for the timely execution of the Franchise Agreement. Master Franchisee will cause all
sales efforts made by it or under its direction to be courteous and dignified, and in a

 

 

professional, ethical and responsible manner and in accordance with all applicable Legal
Requirements. Master Franchisee shall deliver an original executed copy of each Franchise
Agreement to Franchisor within 14 calendar days of its execution. At its own expense, Master
Franchisee shall cause the Franchise Agreement to be prepared and effectively signed by each
Franchisee in English, unless otherwise permitted by Franchisor, and shall take all steps necessary
to cause each Franchisee to comply with the in-term and post-term provisions of the Franchise
Agreement. A Franchisee shall have 180 days to submit a proposed territory within the Development
Area to Master Franchisee. Master Franchisee shall ensure that the business site conforms to local
ordinances and building codes, guide Franchisee in obtaining permits, constructing and decorating
the premises and purchasing or leasing equipment, signs, fixtures and supplies. Franchisor does
not provide assistance with the business site nor approve such site.

          As set forth more fully in Section 8, Master Franchisee agrees to create and develop local
advertising and promotional programs for the purpose of recruiting prospective franchisees within
the Development Area and agrees to implement the use of such advertising and promotional programs
immediately. The advertising and promotional programs shall be submitted to Franchisor approval
prior to the beginning of such program. For the first three (3) years of this Agreement, Master
Franchisee agrees to expend not less than Twenty Thousand Dollars ($20,000.00US) per year on
advertising and promotional programs for the purpose of recruiting new franchises. If, at the end
of the three (3) year period, Master Franchisee is in compliance with its Development Schedule,
this requirement will be waived for each Development Period during which Master Franchisee is in
compliance with the Development Schedule provided that Master Franchisee shall continue use its
best efforts to recruit prospective franchisees during any period such minimum expenditure is
waived.

     C. INSURANCE

          Master Franchisee must maintain all insurance be required by law in connection with its
business as the Master Franchisee, and must further maintain comprehensive general liability
coverage. In the event that Master Franchisee owns and operates any PLANET BEACH® business , Master
Franchisee must maintain all insurance required under the applicable Franchise Agreements.

          In connection with all areas of liability coverage, Master Franchisee must submit as proof of
such insurance a fully paid insurance policy naming Franchisor and any other parties designated by
Franchisor as additional insured parties, to Franchisor for Franchisor’s prior approval before
commencing the business contemplated hereunder. Any proposed changes in the insurance policies must
be submitted to Franchisor for its prior approval. Master Franchisee must furnish to Franchisor a
copy of the then prevailing insurance policies with assurances that the specified insurance is in
full force and effect; that the insurance covers Master Franchisee, Franchisor and other designated
parties as their respective interest may appear, and that said insurance policies will not be
cancelled or modified by the insurer without written notice to Franchisor at least thirty (30) days
prior to the proposed cancellation or modification including, but not limited to, products
liability, property damage, personal injury, owned and non-owned automobile and contractual
liability, with a combined single limit of at least $3,000,000US or such larger amount as
Franchisor may reasonably require. It is acknowledged by the parties that Master Franchisee will
obtain

 

 

insurance denominated in United States Dollars. The Master Franchisee must review the insurance
policy on an annual basis and ensure that it adjusted as necessary to maintain a cover valued at
the aforementioned $3,000,000US (or such larger amount as the Franchisor reasonably required).

     D. RECORDS AND REPORTS

          Master Franchisee agrees to maintain and preserve at its Owner office, full, complete and
accurate records and reports pertaining to the development and operation of Area Representative
Franchisees, Unit Franchises and the performance by Master Franchisee of its obligations under this
Agreement, including, but not limited to, records and information relating to: franchisee
applications, site reports, inspection and supervisory reports relating to the operation of Area
Representative Franchises, Unit Franchisees, copies of Franchise Agreements for each PLANET BEACH®
business, records reflecting the financial condition and performance of Master Franchisee, Area
Representative Franchisees and Unit Franchisees, records of the receipts and expenditures of the
National Marketing Fund (defined below) and such other records and reports as periodically may be
prescribed by Franchisor. Franchisor and/or its agents shall have the right to inspect, audit and
make copies or extracts of such records and reports and Master Franchisee agrees to fully cooperate
with any such inspection or audit during regular business hours. Franchisor will give Master
Franchisee ten (10) days prior written notice of any such inspection or audit. Franchisor shall
have the right, at any time, during normal business hours, to inspect the premises of any Area
Representative Franchisee or Unit Franchise for the purpose of monitoring an Area Representative
Franchisee’s and/or Unit Franchisee’s compliance with its Area Representative Agreement, Unit
Franchise Agreement and Master Franchisee’s compliance with the terms of this Agreement.

          In addition to the reports required in connection with the operation and franchising of the
PLANET BEACH® business, Master Franchisee shall deliver to Franchisor in the form periodically
prescribed by Franchisor and in a true, accurate and timely manner: (i) by the twentieth (20th) day
of each month, a report of the number of Unit Franchises operating during the immediately preceding
month; (ii) within thirty (30) days of the end of each quarter of Master Franchisee‘s financial
year, a profit and loss account for such quarter and a report disclosing Master Franchisee’s net
worth as of the end of such quarter; (iii) within ninety (90) days after the end of Master
Franchisee’s financial year, a financial year-end balance sheet for Master Franchisee and a profit
and loss account for such financial year reflecting all year-end adjustments, and a statement of
changes in financial condition on a basis consistent with generally accepted accounting principles
of the Country (until such time as the accounting principles and standards of the International
Accounting Standards Committee are adopted by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, and thereafter on a basis consistent with
the principles and standards adopted by the International Accounting Standards Committee); and upon
request by Franchisor, Master Franchisee’s most recent audited annual financial statements; (iv)
not less than sixty (60) days prior to the end of each Development Period, a business and
development plan for the succeeding Development Period, including plans for sales of Franchises,
development of Franchises and capital and operating budgets; (v) within sixty (60) days following
the end of each Development Period, an analysis of Master Franchisee’s compliance with the
development plans for the previous Development Period; (vi) not less than sixty (60) days prior to
the end of

 

 

each financial year of Master Franchisee, a marketing plan and budget describing the proposed
marketing activities and expenditures for the National Marketing Fund (as defined hereinafter) for
the succeeding financial year; (vii) within sixty (60) days following the end of each financial
year of Master Franchisee, a report of the receipts and disbursements of, and advertising,
promotion, public relations, market research and other marketing programs and activities undertaken
by, the National Marketing Fund (as defined hereinafter) during the preceding year; such other
data, reports, information, financial statements and supporting records relating to Area
Representative Franchisee and/or Unit Franchisees and Gross Sales of the PLANET BEACH® business as
Franchisor periodically prescribes. Each such report and financial statement furnished by Master
Franchisee shall be verified as correct and signed by Master Franchisee in the manner prescribed by
Franchisor. Master Franchisee shall immediately report to Franchisor any events or developments
which may have a significant or material adverse impact on the performance of Master Franchisee
under this Agreement or the goodwill associated with the Marks. Master Franchisee shall ensure
that all information to be provided to Franchisor pursuant to this Section can be provided to
Franchisor in compliance with the Data Protection Laws and/or where such use is not permitted under
the Data Protection Laws, to notify Franchisor of such.

          Furthermore, Master Franchisee shall, at its own cost, visit Franchisor offices in Marrero,
Louisiana located in the United States or at such other location as shall be mutually determined by
Franchisor and Master Franchisee, at least once a year, to inform Franchisor’s officers of Master
Franchisee’s progress toward complying with the terms of this Agreement. During this visit, Master
Franchisee shall establish a level of Marketing Fund expenditures to be made by Franchisees in the
Territory that is acceptable to Franchisor, and will discuss any other yearly business plans
regarding the development of the Development Area detailed in the preceding paragraph.

     E. GOVERNMENTAL APPROVALS

          Master Franchisee agrees to execute any and all instruments and documents, render such
assistance, and otherwise cooperate with Franchisor, in order to obtain all governmental approvals
necessary, in the opinion of Franchisor’s counsel, to comply with the Legal Requirements,
including, without limitation, obtaining visas for Franchisor personnel. At its option, Franchisor
shall have the right to submit, or to require Master Franchisee to submit, this Agreement and/or
any Franchise Agreement to any governmental entity or agency (the “Agency”) for registration or
approval of any clause thereof in the event Franchisor determines such registrations or approvals
are necessary in order to comply with the Legal Requirements. Master Franchisee shall not submit
any application or registration concerning this Agreement without the express prior written
approval of Franchisor. If the Agency requires that any amendments be made to this Agreement
and/or the Franchise Agreement as a condition to such approval or registration and such amendments
are acceptable to Franchisor, Franchisor will deliver to Master Franchisee for execution an
addendum to this Agreement and/or the Franchise Agreement, or other appropriate documents, to
reflect such amendments.

 

 

     F. COMPLIANCE WITH LEGAL REQUIREMENTS AND GOOD BUSINESS PRACTICES.

          1. Master Franchisee shall secure and maintain in force in its name all required licenses,
permits, and certificates relating to the conduct of its business pursuant to this Agreement.
Master Franchisee shall at all times comply with Legal Requirements including any Legal
Requirements applicable to franchise sales and privacy. All advertising by Master Franchisee shall
be completely factual and conform to high standards of ethical advertising. Master Franchisee shall
in all dealings with Franchisor, public officials and other third parties adhere to high standards
of honesty, integrity, fair dealing and ethical conduct. Master Franchisee agrees to refrain from
any business or advertising practice which may be injurious to the business of Franchisor or Master
Franchisee and the goodwill associated with the Marks and the PLANET BEACH® business. Master
Franchisee shall notify Franchisor in written form within five (5) days of being served with any
proceedings, court action or suit, or being served with any order, injunction, award, decree or
complaint of any court, agency, or other governmental instrumentality, which may adversely affect
the operation or financial condition of Master Franchisee or a Unit Franchisee.

          2. Master Franchisee shall at all times comply with and shall ensure that its Affiliates, Area
Representative Franchisees, Unit Franchisees, officers and employees shall comply with the Data
Protection Laws and with other applicable Legal Requirements including without limitation:

               (a) ensuring all electronic and hard copy materials containing Personal Data can be sent to
Franchisor in the United States in compliance with the Data Protection Laws;

               (b) obtaining appropriate consents from customers and prospective customers of Master
Franchisee, Area Representative Franchisees and Unit Franchisees so that Franchisor may if it
wishes use such information for marketing, market research or any other purpose notified in writing
to Master Franchisee and/or where such use is not permitted under the Data Protection Laws to
notify Franchisor of such; and

               (c) Master Franchisee agrees not during the term of this Agreement to enter in to any
transaction or arrangement which would bring the network of PLANET BEACH® businesses in the
Development Area within the meaning of a pyramid promotional scheme or similar concept as provided
in any applicable consumer protection laws; and

               (d) Master Franchisee further agrees that it will at the date of this Agreement be registered
for VAT with any and all applicable government agencies in the Development Area and shall not
during the term of this Agreement cease for any reason to be registered for VAT, and it will timely
and properly file all required tax returns and pay all required taxes. In addition the Master
Franchisee will ensure that at all times whilst they are parties to a Franchise Agreement or Area
Representative Agreement (as applicable) Unit Franchisees, Affiliates of Master Franchisee and Area
Representative Franchisees will timely and properly file all required tax returns and pay all
required taxes, and will register and remain registered for VAT with the applicable government
agency. Failure by Master Franchisee to

 

 

comply with any aspect of this sub-paragraph will be a material breach that allows Franchisor
the right to terminate this Agreement immediately.

     G. COMPLIANCE WITH U.S. AND OTHER ANTI-TERRORIST AND RELATED LAWS, REGULATIONS, ETC.

          1. Anti Terrorism. Master Franchisee acknowledges that Franchisor is an American
franchisor and certifies that neither Master Franchisee nor its Owners, employees or anyone
associated with Master Franchisee is listed in the Annex to Executive Order 13224
http://www.treasury.gov/offices/enforcement/ofac/sanctions/terrorism.html).

          Master Franchisee agrees not to hire or have any dealings with a person listed in the Annex.
Master Franchisee certifies that it has no knowledge of information that, if generally known, would
result in Master Franchisee, its Owners, employees, or anyone associated with Master Franchisee
being listed in the Annex to Executive Order 132234. Master Franchisee agrees to comply with
and/or assist Franchisor to the fullest extent possible in Franchisor’s efforts to comply with the
Anti-Terrorism Laws (as defined below). In connection with such compliance, Master Franchisee
certifies, represents, and warrants that none of its property or interests are subject to being
“blocked” under any of the Anti-Terrorism Laws and that Master Franchisee and its Owners are not
otherwise in violation of any of the Anti-Terrorism Laws. Master Franchisee is solely responsible
for ascertaining what actions must be taken by Master Franchisee to comply with all such
Anti-Terrorism Laws, and Master Franchisee specifically acknowledges and agrees that Master
Franchisee’s indemnification responsibilities as provided in Section 10.D of this Agreement pertain
to Master Franchisee’s obligations under this Section 6.G. Any misrepresentation by Master
Franchisee under this Section or any violation of the Anti-Terrorism Laws by Master Franchisee, its
Owners, or employees shall constitute grounds for immediate termination of this Agreement and any
other agreement Master Franchisee has entered into with Franchisor or one of Franchisor’s
affiliates in accordance with the terms of Section 13.B of this Agreement. As used herein,
“Anti-Terrorism Laws” means Executive Order 13224 issued by the President of the United States, the
Terrorism Sanctions Regulations (Title 31, Part 595 of the U.S. Code of Federal Regulations), the
Foreign Terrorist Organizations Sanctions Regulations (Title 31, Part 597 of the U.S. Code of
Federal Regulations), the Cuban Assets Control Regulations (Title 31, Part 515 of the U.S. Code of
Federal Regulations), the USA PATRIOT Act, and all other present and future federal, state and
local laws, ordinances, regulations, policies, lists and any other requirements of any Governmental
Authority (including, without limitation, the United States Department of Treasury Office of
Foreign Assets Control) addressing or in any way relating to terrorist acts and acts of war.

          2. Foreign Corrupt Business Practices. Franchisor has entered into this Agreement
with Master Franchisee on the basis of its and its Owners and any Affiliate’s experience,
reputation and qualifications, including their reputation for ethical business conduct and
compliance with applicable laws. Master Franchisee agrees that it, its Owners and Affiliates will
each maintain this ethical conduct and avoid any activity that might result in a violation of the
U.S. Foreign Corrupt Practices Act or any other applicable anti-competition law. Master Franchisee
and each of its Owners and Affiliates affirm that it has not and agrees that it will not, in
connection with the Business, or in connection with any business transactions involving Franchisor,
make or promise to make any payment or transfer anything of value, directly or

 

 

indirectly, to (i) any governmental official or employee (including employees of government
corporations); (ii) any political party, official of a political party or candidate (or to an
intermediary for payment to any of the foregoing); or (iii) to any other person or entity if such
payment or transfer would violate the laws of the country in which made or the laws or the United
States of America. It is the intent of the parties that no payments or transfers of value shall be
made which have the purpose or effect of public or commercial bribery, or acceptance of or
acquiescence in extortion, kickbacks, money laundering or other unlawful or improper means of
obtaining or retaining business.

6. INITIAL AND CONTINUING FEES

     The fees shall consist of five (5) types of payments as described in subsections lettered A
through E below.

     A. DEVELOPMENT FEE

          Concurrently with the execution of this Agreement, Master Franchisee shall pay to Franchisor
the sum set forth in Section 1 of Exhibit D hereof as a nonrefundable development and System
license fee (“Development Fee”), which shall be fully earned by the Franchisor upon the execution
of this Agreement.

     B. INITIAL FRANCHISE FEES, NOTIFICATION OF RECEIPT BY FRANCHISOR AS A CONDITION PRECEDENT TO
OPENING OF FRANCHISE

          1. Unit Franchise Fee. Master Franchisee agrees to pay to Franchisor the sum set
forth in Section 2 of Exhibit D hereof as a Unit Franchise Fee for the license of the System in
connection with a Franchise Agreement for the operation of PLANET BEACH® business in the
Development Area. The Unit Franchise Fee varies depending on the number of Franchises granted to a
Franchisee, with Franchises being sold in the following “packs”: (i) one Franchise; (ii) three
Franchises; (iii) five Franchises; and (iv) ten Franchises. If the license is not exercised and the
PLANET BEACH® location is not open then Master Franchisee agrees to pay to Franchisor the Unit
Franchise Fee set forth in Section 2 of Exhibit D. There is no Initial Franchisee Fee payable to
Franchisor for the resale or transfer of an existing, opened PLANET BEACH® business.

          2. Initial Area Rights Fee. Similarly, Master Franchisee agrees to pay to Franchisor
the sum set forth in Section 3 of Exhibit D for the sale of Area Representative Rights to an Area
Representative Franchisee.

          3. Payment. The Unit Franchise Fee shall be fully earned by Franchisor upon execution
of a Unit Franchise Agreement. Master Franchisee shall wire the Unit Franchise Fee to Franchisor
within ten (10) days of Master Franchisee receiving said funds. Likewise, in the event that Master
Franchisee sells development rights within the Development Area, Master Franchisee agrees to pay to
Franchisor the sum set forth in Section 2 of Exhibit D hereof as a fee, which shall be fully earned
by Franchisor upon execution of an Area Representative Agreement.

 

 

These fees shall also be wired to Franchisor within ten (10) days after the execution of an
Area Representative Agreement,

          4. Notification of Receipt by Franchisor as a Condition Precedent to Opening
Franchise. Upon the later to occur of (i) receipt of the Unit Franchise Fee and (ii)
satisfaction of all other conditions for opening the PLANET BEACH® business set forth in this
Agreement and the applicable Franchise Agreement to be sent via registered mail or it equivalent to
Franchisor’s corporate headquarters, Franchisor will issue, in writing, a notice to Master
Franchisee indicating that it has received the Unit Franchise Fee, that all other conditions for
opening a PLANET BEACH® business have been satisfied and that the applicable Franchise may be
opened for business.

     C. ROYALTIES

          You must pay us the percentage of the Gross Sales for each Unit Franchise in the Development
Area immediately preceding month as defined in Section 3 of Exhibit D hereof by the 15th
day of each month for the preceding calendar month. You must pay us the Royalty on the total Gross
Sales regardless of whether you actually collect such amount from your Unit Franchisees.

     D. ADVERTISING FUND CONTRIBUTIONS

          Master Franchisee is responsible for setting up its own National Marketing Fund as set forth
more fully below in Section 8 as the “NMF”. As such, Master Franchisee does not have an obligation
to remit the payments set forth in Section 8 to Franchisor, but all marketing and promotional
expenditures are subject to the discretion and approval of Franchisor as set forth therein.

     E. DESIGN FEE

          Franchisor reserves the right to require that Master Franchisee obtain the design work for
each Planet Beach location from Franchisor. Master Franchisee will pay Franchisor’s then-current
Design Fee (“Design Fee”) (currently $2,500US) for the design work Franchisor provides for each
location. Master Franchisee acknowledges and agrees that the amount of the Design Fee may increase
over the Term of the Agreement. Franchisor agrees that changes to the Design Fee will be on a
basis that, in its sole opinion, is consistent with modifications to the Design Fee charged to
similarly situated franchisees, provided that the Design Fee may vary by region to account for any
regional, legal, market or vendor differences.

     F. TECHNOLOGY FEES

          Master Franchisee agrees to pay Franchisor’s then-current Technology Fee (currently $199.95US
per month) to Franchisor or its designee in accordance with Franchisor’s then current policy
regarding such Technology Fees. Master Franchisee agrees and acknowledges that it will also pay
the then current Technology Fee for each Unit Franchise (including Corporate Locations) in the
Territory in accordance with Franchisor’s Technology

 

 

Fee policy. Franchisor agrees that changes to the Technology Fee will be on a basis that, in its
sole opinion, is consistent with modifications to the Technology Fee charged to similarly situated
franchisees, provided that the Technology Fee may vary by region to account for any regional,
legal, market or vendor differences. Master Franchisee acknowledges and agrees that Franchisor may
increase the monthly Technology Fee by up to 5% each year to take into account any increased costs
associated with new or improved technology used in the System.

     G. WITHHOLDING TAXES

          In the event that any amounts payable by Master Franchisee to Franchisor hereunder are subject
to withholding or other taxes that Master Franchisee is required to deduct from such payments,
Master Franchisee shall make payment to Franchisor in the amount required by this Agreement without
the reduction or deduction for such withholding or other taxes. Consequently, all payments to
Franchisor hereunder shall be increased to the extent necessary to provide Franchisor with the same
net amount it would have received had no such taxes been applicable to such payment. For example,
if a payment of one thousand US dollars ($1,000.00US) is due to Franchisor, and if a withholding
tax of ten percent (10%) is applicable under the laws of the Country, then the amount due to
Franchisor shall be increased to one thousand one hundred and eleven US dollars ($1,111.00US), the
applicable tax rate of ten percent (10%) shall be applied to that amount, the resulting tax of one
hundred and eleven US dollars ($111.00US) shall be deducted by Master Franchisee and remitted to
the appropriate tax authority in the Country, and one thousand US dollars ($1,000.00US) shall be
remitted by Master Franchisee to Franchisor. Master Franchisee agrees to promptly deliver to
Franchisor receipts of applicable governmental authorities for all such taxes withheld or paid.
Master Franchisee shall be responsible for and shall indemnify and hold Franchisor and its
Affiliates harmless against any penalties, interest and expenses incurred by or assessed against
Franchisor or its Affiliates as a result of Master Franchisee’s failure to withhold such taxes or
to timely remit them to the appropriate taxing authority. Master Franchisee agrees to fully and
promptly cooperate with Franchisor to provide Franchisor timely a tax certificate or government
receipt for any taxes withheld or paid in respect of payments hereunder (for example, the $111.00US
in the foregoing example) and to provide such information and records and complete and file with
the tax authority such forms or declarations as Franchisor may request in connection with any
application by Franchisor to any taxing authority with respect to tax credits, exemptions or
refunds available for any withholding or other taxes paid or payable by Master Franchisee and with
respect to any information request from or tax audit by a taxing authority with respect to Master
Franchisee or the Master Franchise Business. The parties agree to use their mutual commercially
reasonable efforts to secure any exemption from or reduced rate of withholding tax with respect to
any payments under this agreement, and to provide the other party or applicable Government
Authority such information or tax forms as required to secure any such exemption or reduced rate of
withholding tax.

     H. CURRENCY OF PAYMENT

          Payments by Master Franchisee to Franchisor hereunder shall be made in United States Dollars
unless otherwise specified by Franchisor. All payments hereunder to be calculated

 

 

in the currency of the Country and converted into Dollars for payment to Franchisor shall be
converted at the spot currency rate announced by CITIBANK as of 10:00 a.m. Eastern USA time on the
date payment is transmitted; provided, however, that, in the event a payment is transmitted after
the date payment is due, the currency exchange rate used shall be the rate as of the date payment
was due or the rate as of the date the payment is transmitted, whichever rate produces the larger
amount in the currency of payment. All payments shall be submitted electronically (e.g. bank
transfer) or as otherwise directed by Franchisor to a bank of Franchisor’s choosing located in the
United States or elsewhere. Master Franchisee shall execute all agreements and consents reasonably
necessary to effectuate electronic payment. Master Franchisee shall pay for all costs related to
the transfer of funds to Franchisor. Master Franchisee shall use its best endeavors to obtain any
consents or authorizations which may be necessary in order to permit timely payments in U.S.
Dollars of all amounts payable hereunder. If at any time, any legal restriction is imposed upon
the purchase of U.S. Dollars or the transfer to or credit of a non-resident company with payments
in U.S. Dollars, Master Franchisee shall notify Franchisor immediately. While such restrictions
are in effect, Franchisor may require payment in any currency designated by Franchisor that is
available to Master Franchisee or, at Franchisor’s option, may require Master Franchisee to deposit
all amounts due but unpaid as a result of such a restriction in any type of account, in any bank or
institution in the Country designated by Franchisor, or in the form of products or services
available to Master Franchisee or its Affiliate at the actual cost of such products or services to
Master Franchisee or its Affiliate. Franchisor shall be entitled to all interest earned on such
deposits. If payment is made in products or services, Master Franchisee agrees to deliver such
products or services to Franchisor or its designated agent or shipper within the Development Area.
All costs incurred by Master Franchisee in complying with this Subsection H shall be the
responsibility of Master Franchisee.

     I. INTEREST ON LATE PAYMENTS

          Failure by Master Franchisee to timely remit the monthly payments and any related monthly
reports will result in a late fee such amount being a genuine pre-estimation of the loss suffered
by Franchisor as a result of such a failure by Master Franchisee) in the amount of $100.00US plus
interest. All amounts which Master Franchisee owes to Franchisor or its Affiliates under this
Agreement or any related agreement shall bear interest after the due date at the rate of one and
one-half percent (1.5%) above the prime interest rate as charged by the Bank of Territory
capitalized monthly in arrear on the balance due and calculated on and with effect from the due
date for payment up to and including the date of actual payment, unless such rate is higher than
the highest legal rate permitted by applicable law, in which case, the rate payable shall be the
highest legal rate permitted by law. Such interest shall be payable in the same currency as the
debt on which interest accrues. Master Franchisee acknowledges that this Subsection I shall not
constitute Franchisor’s agreement to accept such payments in place of such debts or a commitment by
Franchisor to extend credit to, or otherwise finance Master Franchisee’s business operated pursuant
to this Agreement. Master Franchisee acknowledges that its failure to pay all such amounts when due
shall constitute grounds for termination of this Agreement notwithstanding the provisions of this
Subsection I.

 

 

     J. STAMP DUTIES

          If required by law of the Development Area, Master Franchisee shall within the time prescribed
by applicable law, submit an executed copy of this Agreement to each governmental agency within the
Country responsible for the assessment of stamp duty or comparable duties or taxes for the purposes
of assessing or obtaining an opinion as to the stamp duty payable on or in respect of this
Agreement and Master Franchisee agrees to pay all stamp duties and comparable duties and taxes
(including any penalties for late payment) assessed to be payable on or in respect of this
Agreement.

     K. PROOF OF AMOUNTS DUE

          If required by law of the Development Area, a certificate issued under the hand of the current
President or Vice President of the Franchisor, stating the amount due at the date of the
certificate as well as any interest due calculated in accordance with the terms of Subsection 7.I
shall be conclusive proof of the amount and interest calculated thereon due at the time of the
certificate. It shall not be necessary for the Franchisor to prove the appointment of the person
signing, his/her signature, his/her authority so to sign or the amount(s) and interest rate stated
in the certificate.

7. MARKETING

     As previously set forth in Subsections 5.E and 6.B, Master Franchisee shall establish and
revise, as necessary, standards, specifications and programs for both national and local
advertising, marketing and promotion to be conducted by Franchisees in their respective trading
areas, including: (i) required level of local marketing expenditures; (ii) type of promotional and
advertising activity; and (iii) a schedule for such activities.

     Master Franchisee shall establish a National Marketing Fund (the “NMF”), and collect monthly
marketing fees from all Franchisee’s in the Development Area to maintain the NMF. The NMF shall
fund, among other things, the regional competitions. Master Franchisee agrees that (i) it will hold
annual regional Ms. Planet Beach competitions for the Country, (ii) it will cause each franchised
location must produce a local Ms. Planet Beach promotion annually and send a representative to
compete for the applicable regional Ms. Planet Beach competition, and (iii) it will produce a
contestant from each of the regional competitions to participate at the annual Ms. Planet Beach
International competition in the United States.

     For both NMF expenditures and those expenditures dealing with franchisee recruitment, Master
Franchisee shall submit to Franchisor for prior approval all sales, promotional, and advertising
and other materials, which relate to recruiting new Franchisees or for proposed use by a Franchisee
to attract patrons. Franchisor shall use reasonable endeavors to respond within said ten (10) days
period and shall not unreasonably withhold or delay approval. If Franchisor does not approve such
material and programs within such period, such material shall be deemed disapproved and Master
Franchisee shall not use such materials in any manner. Franchisor will have the sole right to
formulate and make policy decisions concerning every aspect of sales, promotions, advertising and
other programs.

 

 

8. EXCLUSIVE RELATIONSHIP

     Master Franchisee acknowledges and agrees that Franchisor would be unable to protect the
Confidential Information against unauthorized use or disclosure and would be unable to encourage a
free exchange of ideas and information among owners of the PLANET BEACH® business if master
franchisees, franchisees and their management personnel were permitted to engage in, have Ownership
Interests in or perform services for Competitive Businesses. Master Franchisee further
acknowledges that the restrictions contained in this Section will not hinder its activities or
those of the Restricted Persons under this Agreement or otherwise. Franchisor has entered into
this Agreement with Master Franchisee on the express condition that with respect to the development
and operation of PLANET BEACH® businesses and other businesses engaged in the production and sale
of the Products, Master Franchisee and the Restricted Persons will deal exclusively with
Franchisor. Master Franchisee therefore agrees that during the term of this Agreement, Master
Franchisee and Restricted Persons shall not directly or indirectly engage in any Competitive
Business in a territory where it would compete with one or more of the PLANET BEACH® business
activities or with Franchisor and Master Franchisee shall procure that all such Restricted Persons
as specified by Franchisor enter into a Non Disclosure Agreement in the appropriate form as set out
in Exhibit F and Master Franchisee shall take such steps at its own expense as Franchisor may
require in order to enforce the said Non Disclosure Agreement and/or restrain any breach of its
terms. Notwithstanding the above, Master Franchisee will be allowed to obtain Products from other
PLANET BEACH® businesses where such Products conform with the Franchisor’s then current standards
for such Products. For the purposes of this Section, the phrase “directly or indirectly engage in
any Competitive Business” shall include, without limitation: (a) the ownership of a direct or
indirect interest in a Competitive Business, if such Ownership Interest confers upon Master
Franchisee or a Restricted Person the power to influence the economic conduct of such Competitive
Business; and (b) the performance of services as a director, officer, manager, employee,
consultant, representative, agent or otherwise for any Competitive Business.

9. INDEPENDENT CONTRACTORS/INDEMNIFICATION

     A. INDEPENDENT CONTRACTORS

          The parties are independent contractors. In executing and implementing this Agreement and
performing their respective obligations hereunder, the parties intend and agree that nothing in
this Agreement is intended to or shall create a partnership, joint venture, agency or any other
legal entity or employment relationship between them. Neither party is or is intended to be the
agent, legal representative, partner, subsidiary, joint venturer or employee of the other. Neither
party has the authority to bind or commit the other party to any contract or obligation whatsoever,
and neither party shall represent or hold itself out as having any right or authority to do so.
This Agreement does not reflect or create a fiduciary relationship or a relationship of special
trust or confidence. Neither party has, is entitled to or shall hold itself out as having, the
authority to use the offices, facilities or any fixed place of business of the other as its office,
facility or fixed place of business, and neither party shall constitute any such office, facility
or fixed place of business of the other as its permanent establishment.

 

 

          Master Franchisee shall conspicuously identify itself in all dealings with others as a master
franchisee or sub-franchisor of the PLANET BEACH® business and shall conspicuously and prominently
place such other notices of independent ownership and operation on such forms, business cards,
stationery, and other materials as Franchisor may require from time to time.

B. TAXES

          Franchisor shall have no liability for and shall not bear any sales, value added, use,
service, stamp duty, occupation, excise, gross receipts, income, withholding, property, payroll,
custom duties, or other taxes, whether levied or imposed on any amounts payable under this
Agreement, or upon Master Franchisee, one or more of Master Franchisee’s properties, or upon
Franchisor, in connection with the business conducted by Master Franchisee (except any taxes that
Franchisor is required by law to collect from Master Franchisee with respect to purchases from
Franchisor). Payment of all taxes (except for said taxes levied on purchases from Franchisor)
shall be the responsibility of Master Franchisee.

     C. INDEMNIFICATION

          Master Franchisee agrees to indemnify, defend and hold Franchisor, its Affiliates, and their
respective shareholders, directors, officers, employees, agents, and their respective successors
and assignees, harmless against and to reimburse them for all claims causes of action, costs,
expenses, loss, liability, damages, interest, penalties or obligations arising from or relating to
Master Franchisee’s obligations pursuant to this Section 10, any and all taxes described in
Subsection 7.F, the operation of Master Franchisee’s business pursuant to this Agreement, the
breach by any of the Restricted Persons of any provisions of this Agreement applicable to such
Restricted Persons, the direction and administration of the Marketing Fund, the operation or
termination of any Area Representative Franchise or Unit Franchise, or the transfer of any interest
in this Agreement, an Area Representative Agreement, Franchise Agreement, or an Ownership Interest
in Master Franchisee, to the extent that such claims, causes of action, costs, expenses, loss,
liability, damages or obligations do not arise from the negligence or wrongful conduct of
Franchisor. For purposes of this indemnification, “claims” shall mean and include all obligations,
actual and consequential damages, and costs incurred in the defense of any claim against
Franchisor, including without limitation reasonable accountants’, attorneys’, attorney assistants’,
arbitrators’ and expert witness fees, costs of investigation and proof of facts, court costs, other
litigation expenses, and travel and living expenses. Franchisor shall have the right to defend any
such claim against it in such manner as Franchisor deems appropriate. This indemnity shall
continue in full force and effect subsequent to and notwithstanding the expiration or termination
of this Agreement.

 

 

10. MARKS

     A. GOODWILL AND OWNERSHIP OF THE MARKS

          Master Franchisee acknowledges that Master Franchisee’s right to use the Marks is derived
solely from this Agreement and is limited to granting Franchises in the Development Area in
accordance with the terms hereof. Any unauthorized use of the Marks by Master Franchisee shall
constitute a breach of this Agreement and an infringement of the rights of Franchisor in and to the
Marks. Master Franchisee acknowledges and agrees that all usage of the Marks by Master Franchisee,
Area Representative Franchisees and Unit Franchisees and any goodwill established by such use by
Master Franchisee, Area Representative Franchisees and/or Unit Franchisees shall inure to the
exclusive benefit of Franchisor and that this Agreement does not confer any goodwill or other
interests in the Marks upon Master Franchisee (other than the right to grant Franchises in
compliance with this Agreement). All provisions of this Agreement applicable to the Marks shall
apply to any other trademarks and commercial symbols hereafter authorized for use by and licensed
to Master Franchisee by Franchisor. Master Franchisee agrees that neither Master Franchisee agrees
to not, and to ensure that its Affiliates do not, use or attempt to register, any other trademarks,
service marks or other commercial symbol for use in connection with the development, operation or
franchising of Similar Businesses or Competitive Businesses.

          Master Franchisee will not (i) infringe or harm Franchisor’s exclusive ownership and rights to
each and every aspect of the System or (ii) represent that it has acquired any ownership interest
in an of the Marks. In the event that Master Franchisee takes any action challenging Franchisor’s
and its Affiliates’ use or rights to the Marks, Franchisor shall be entitled to terminate this
Agreement immediately by serving notice on Master Franchisee. Master Franchisee’s rights to use
the Marks will terminate upon the expiration or termination of the Agreement for any reason
whatsoever.

     B. LIMITATIONS ON MASTER FRANCHISEE’S USE OF THE MARKS

          Master Franchisee shall not use the Marks as part of any corporate or trade name or with any
prefix, suffix, or other modifying words, terms, designs, or symbols, or in any modified form, nor
may Master Franchisee use any Mark in connection with the performance or sale of any unauthorized
services or products or in any other manner not expressly authorized in writing by Franchisor. All
Marks shall be displayed in the manner prescribed by Franchisor.

     C. NOTIFICATION OF INFRINGEMENT AND CLAIMS

          Master Franchisee shall immediately notify Franchisor by telephone, and thereafter, in written
form, of any apparent infringement of or challenge (actual or threatened) to Master Franchisee’s or
a Unit Franchisee’s use of any Mark, or claim by any Person of any rights in any Mark or a
confusingly or deceptively similar trademark or service mark. Master Franchisee shall not
communicate with any Person other than its counsel, Franchisor and Franchisor’s counsel with
respect to any such infringement, challenge or claim. Franchisor shall have sole discretion to
take such action as it deems appropriate in connection with any such

 

 

infringement, challenge or claim, and shall have the right to control any settlement, litigation,
arbitration or administrative proceeding arising therefrom. Master Franchisee agrees to execute
any and all instruments and documents, render such assistance, and do such acts and things as may,
in the opinion of Franchisor’s counsel, be necessary or advisable to protect and maintain the
interests of Franchisor in the Marks. Franchisor will reimburse Master Franchisee for reasonable
expenses incurred and paid by Master Franchisee in complying with requirements imposed by this
Subsection C.

     D. MODIFY/DISCONTINUANCE OF USE OF MARKS

          If it becomes advisable at any time in Franchisor’s sole judgment for Master Franchisee and
one or more Area Representative Franchisees and/or Unit Franchisees to modify or discontinue use of
any Mark and/or for Master Franchisee or any Area Representative Franchisee and/or Unit Franchisee
to use one or more additional or substitute trademarks or service marks, Master Franchisee agrees
to immediately comply with and require such Area Representative Franchisees and/or Unit Franchisees
to immediately comply with Franchisor’s directions to modify or otherwise discontinue the use of
such Mark, and/or use one or more additional or substitute trademarks, logos or commercial symbols.
In such an event such modified, additional or substitute trademarks, logos or commercial symbols
will be governed by the terms of this Agreement. Franchisor will have no obligation to compensate
or reimburse Master Franchisee, Area Representative Franchisee or Unit Franchisees for any
expenditures made by them to modify or discontinue the use of a Mark or to adopt substitutes for
discontinued Marks, including, without limitation, any expenditures relating to advertising or
promotional materials, and no obligation to reimburse Master Franchisee, Area Representative
Franchisees or Unit Franchisees for any loss of goodwill of their businesses related to a
discontinued Mark. If such Marks must be modified, Franchisor will provide a phase in period
of not less than six (6) months to incorporate the modification.

     E. REGISTRATIONS; LICENSE AGREEMENTS

          Only Franchisor has the right to register the Marks with any and all trademark registration
authorities. Master Franchisee may not register the Marks or any similar Marks with any trademark
authority anywhere in the world. Master Franchisee shall at the request and expense of Franchisor
do all acts and execute all documents necessary or desirable in Franchisor’s sole discretion for
establishing Master Franchisee as a user of the Marks hereunder and, where required, for the
registration of Master Franchisee’s permitted use with governmental agencies. Following such
request, Master Franchisee shall not be entitled to exercise any of the rights granted by this
Agreement until Master Franchisee has executed and delivered such documents to Franchisor. Any
license agreement shall be in form and substance acceptable to Franchisor.

11. TRANSFER

     A. BY FRANCHISOR

          This Agreement is fully assignable or novateable by Franchisor and shall inure to the benefit
and/or burden of any assignee or novatee or other legal successor to the interests of

 

 

Franchisor herein. Master Franchisee acknowledges and agrees that Franchisor may assign or novate
any or all of its rights and/or obligations under this Agreement to an Affiliate or an unaffiliated
third party. Franchisor agrees that it will only assign or novate any obligations under this
Agreement, to a Person that is capable of performing this Agreement or discharging such obligations
and whom Franchisor in good faith believes intends to perform this Agreement or discharge such
obligations. In the event Franchisor novates or assigns any rights and/or obligations as
aforesaid, Franchisor may direct Master Franchisee to make payments due to Franchisor hereunder
directly to the novatee or assignee.

          Specifically, and without limitation to the foregoing, Master Franchisee expressly affirms and
agrees that Franchisor may sell its assets, its Marks, or its System outright to a third party; may
go public; may engage in a private placement of some or all of its securities; may merge, acquire
other corporations, or be acquired by another corporation; may undertake a refinancing,
recapitalization, leveraged buy out or other economic or financial restructuring; and, with regard
to any or all of the above sales, assignments and dispositions, Master Franchisee expressly and
specifically waives any claims, demands or damages arising from or related to the loss of said
Marks (or any variation thereof). Nothing contained in this Agreement requires Franchisor to remain
in the business or to offer the same products and services, whether or not bearing the Marks, in
the event that Franchisor exercises its rights hereunder to assign or novate its rights and/or
obligations under this Agreement.

     B. BY MASTER FRANCHISEE

          Master Franchisee understands and acknowledges that the rights and duties created by this
Agreement are personal to Master Franchisee and Owners and that Franchisor has entered into this
Agreement in reliance upon the individual or collective character, skill, aptitude, attitude,
business ability and financial capacity of Master Franchisee and Owners. Therefore, neither this
Agreement, a Controlling Interest in Master Franchisee, nor any Franchise Agreement may be
transferred, in a single transfer or a series of transfers, without the prior written approval of
Franchisor. Any such transfer without such approval shall constitute a breach hereof and shall
convey no rights to or interests in this Agreement or any Franchise Agreement. Master Franchisee
agrees to reimburse Franchisor for all reasonable expenses incurred by Franchisor in evaluating and
approving a proposed transfer. As used in this Agreement, the term “transfer” shall include,
without limitation, whether voluntary or involuntary, direct or indirect; an assignment, novation,
sale, gift or pledge; the grant of a mortgage, charge, lien or security interest including, without
limitation, the grant of a collateral assignment; a merger or consolidation, or issuance of
additional Ownership Interests or redemption of Ownership Interests; a sale of voting interests of
securities convertible to voting interests, or an agreement granting the right to exercise, or
control the exercise, of voting rights of any holder of an Ownership Interest; and a transfer that
occurs as a result of divorce, insolvency, corporate or partnership dissolution, or upon death, by
will, intestate succession or by declaration of, or transfer to, a trust.

          Franchisor will not unreasonably withhold or delay its consent to the transfer of any interest
in the Master Franchisee; provided, however, that prior to the time of the transfer, Franchisor
may, in its sole discretion require that: (i) the transferee demonstrate to Franchisor’s

 

 

satisfaction that it meets Franchisor’s requirements that existed under the original Agreement and
have the adequate financial resources and capital to manage the Development Area; (ii) transferee
must submit to Franchisor an application in the form prescribed by Franchisor; (iii) transferee or
transferee’s manager must complete any training course then in effect for Master Franchisee, at
transferee’s expense and upon such other terms and conditions as Franchisor may reasonably require;
(iv) except in the case of a transfer to a corporation formed solely for the convenience of
ownership, a transfer fee of 10% of Franchisor’s then-current Master Franchise Fee shall be paid to
Franchisor by Master Franchisee; (v) Master Franchisee and its Owners execute a general release,
in a form prescribed by Franchisor, of all claims against Franchisor, it Affiliates and its
officers, developers, agents, and employees; and (vi) at Franchisor’s sole option, the transferee
must either (A) execute Franchisor’s then-current Master Franchise Agreement (which may contain
different royalty rates, fees and marketing contributions) and all other agreements and legal
instruments and documents (including guarantees) then customarily used by Franchisor in the grant
of master franchises or (B) undertake in writing, in a form acceptable to Franchisor, to assume all
of Master Franchisee’s rights and obligations under this Agreement.

     C. DEATH OR DISABILITY OF MASTER FRANCHISEE

          In the event of the death or Permanent Disability of the Master Franchisee, the spouse or
personal representative of Master Franchisee may, on request in writing to Franchisor made within
90 days of such death or Permanent Disability, continue to act as Master Franchisee under this
Agreement for a period of 1 year from the date such request is received by Franchisor to the
expiration of the aforesaid 1 year period, provided that the spouse or personal representative of a
deceased or incapacitated Master Franchisee, as the case may be, must file with Franchisor an
application for a master franchise agreement.

          If application is made to Franchisor for a master franchise agreement, Franchisor agrees to
authorize the person designated in such application to become a Master Franchisee under this
Agreement for the balance of the term hereof provided that such person substantially meets
Franchisor’s qualifications to become an Master Franchisee under the terms of this Agreement and
this Agreement is not in default. No transfer fee will be required upon transfer of this Agreement
to the surviving spouse, heirs, beneficiaries or devisee of Master Franchisee. Except as provided
in this Agreement, if the representative fails to take the steps stated above, Franchisor will
automatically assume the rights of the Master Franchisee one year after the death or permanent
disability of the Master Franchisee. During any transition period to an heir or
successor-in-interest, the Master Franchise Business still must be operated in accordance with the
terms and conditions of this Agreement and Franchisor reserves all rights related to default and
termination.

     D. NO RIGHT TO ENGAGE IN SECURITIES OFFERING

          The Master Franchisee must not, and must ensure that its Affiliates or Owners do not engage in
a Securities Offering without the prior written consent of Franchisor (whether or not Franchisor’s
consent is otherwise required). Franchisor’s consent will be conditioned upon (i) its verification
that the Prospectus does not state or imply (by use of the Marks or otherwise) that Franchisor is
sponsoring or otherwise participating in the Securities Offering or that Franchisor will receive
any part of the proceeds from the Securities Offering, and (ii) its receipt

 

 

of a legal opinion from Franchisor’s counsel satisfactory to Franchisor stating (a) that the
Prospectus and the conduct of the Securities Offering comply in all material respects with the laws
of each country from which an offer of securities originates or into which an offer of securities
is directed, and (b) that neither the conduct nor the consummation of the Securities Offering will
result in a violation of any of the laws, rules or regulations referenced Section 6 of this
Agreement. To obtain Franchisor’s consent, Master Franchisee must submit the required legal
opinion and a complete copy of the Prospectus to Franchisor prior to the time the Prospectus is
filed with a government agency or official or, if an exempt Securities Offering is contemplated,
prior to the delivery of the Prospectus to any prospective investor. Franchisor will have thirty
(30) days after its receipt of the Prospectus and the required legal opinion either to provide its
consent or to advise Master Franchisee of the deficiencies that must be corrected prior to
Franchisor providing its consent. Franchisor will have no obligation to provide its consent until
all deficiencies it notes have been corrected. Master Franchisee, the Owners and the other
participants in a Securities Offering will fully indemnify Franchisor in connection with the
offering. For each proposed Securities Offering, Master Franchisee will pay Franchisor an offering
fee equal to Franchisor’s reasonable cost and expenses associated with reviewing a proposed
offering, including, without limitation, legal and accounting fees and salaries of Franchisor’s
personnel and its professional advisors.

     E. FRANCHISOR’S RIGHT OF FIRST REFUSAL

          If Master Franchisee or an Owner shall at any time determine to sell or transfer a Controlling
Interest in this Agreement, substantially all the assets of Master Franchisee, the Franchise
Agreements or a Controlling Interest in the Master Franchisee or one of its Owners, Master
Franchisee will, and will ensure that its Owners will, obtain a bona fide, executed written offer
and earnest money deposit (in the amount of five percent (5%) or more of the offering price) from a
qualified, responsible and fully disclosed purchaser and a true and complete copy of the offer (and
any proposed ancillary agreements) shall immediately be submitted to Franchisor. The offer must
apply only to this Agreement, the assets of Master Franchisee, the Franchise Agreements or a
Controlling Interest in Master Franchisee or such Owner and may not include the purchase of any
other property or rights. Franchisor shall have the right, exercisable by written notice delivered
to Master Franchisee or Owners within thirty (30) days from the date of delivery of an exact copy
of such offer to Franchisor, to purchase such interests for the price and on the terms and
conditions contained in such offer, provided that Franchisor may substitute cash or marketable
securities of equal value for any form of payment proposed in such offer. Franchisor’s credit
shall be deemed equal to the credit of any proposed purchaser. Franchisor shall have not less than
ninety (90) days to prepare for closing. If Franchisor does not exercise its right of first
refusal, Master Franchisee or Owners may complete the sale to such purchaser pursuant to and on the
exact terms of such offer, subject to Franchisor’s approval of the transfer as otherwise provided
in Section 12, provided that if the sale to such purchaser is not completed within one hundred
twenty (120) days after delivery of such offer to Franchisor, or there is a material change in the
terms of the sale, Franchisor shall have an additional right of first refusal for thirty (30) days
on the terms and conditions applicable to the initial right of first refusal, except that
Franchisor shall have the option, exercisable in its sole discretion, to substitute any of the
modified terms of purchase for those contained in the original offer.

 

 

12. TERMINATION OF AGREEMENT

     A. BY MASTER FRANCHISEE

          If Master Franchisee is in full compliance with this Agreement and Franchisor materially
breaches this Agreement, Master Franchisee may terminate this Agreement effective sixty (60) days
after delivery of written notice of termination if Master Franchisee gives written notice of such
breach to Franchisor and Franchisor does not cure such breach within sixty (60) days after delivery
of notice of such breach; or, if such breach cannot reasonably be cured within sixty (60) days
after delivery of notice of such breach, Franchisor does not undertake within sixty (60) days after
delivery of such notice, and continue until completion, reasonable endeavors to cure such breach.
Any termination of this Agreement by Master Franchisee other than as provided in this Subsection A
shall be deemed a termination by Master Franchisee without cause.

     B. BY FRANCHISOR

          The rights, licenses and territorial exclusivity granted to the Master Franchisee under this
Agreement have been granted in reliance on Master Franchisee’s representations and assurances,
among others, that the conditions and obligations set forth in this Agreement will be met and
performed in a timely manner.

          The rights, licenses and territorial exclusivity may be terminated or rescinded without the
need of obtaining any judicial or administrative judgment, ruling, arbitration award or resolution
of any kind, immediately upon written notice to Master Franchisee, which shall be deemed an
incurable default of this Agreement (in the understanding that the termination or rescission of
this Agreement shall become effective immediately upon delivery of the written notice of
termination to Master Franchisee), and Master Franchisee will no longer have any of the rights
created by this Agreement, upon the happening of any of the following events:

          1. In the event that Master Franchisee is adjudicated bankrupt, becomes insolvent (as revealed
by its records or otherwise), or if Master Franchisee files a voluntary petition for commercial
insolvency or suffers a permanent or temporary court-appointed receivership or examinership of
substantially all of Master Franchisee’s property, makes a general assignment for the benefit of
creditors or suffers the filing of a voluntary or involuntary bankruptcy petition which is not
dismissed within one year after filing;

          2. If Master Franchisee is dissolved;

          3. If the Master Franchisee fails to comply with the Development Schedule set forth in this
Agreement and such default is not cured within 30 days after Master Franchisee receives notice of
such default;

          4. If Master Franchisee fails to cause each Franchise Agreement to be executed in accordance
with Sections 5 and 6;

 

 

          5. If Master Franchisee or any Owner has made a material misrepresentation or omission in its
application for master license rights or with respect to its representations and agreements
contained in Section 6;

          6. If Master Franchisee or any of its Owners is convicted by a trial court of or pleads guilty
or not guilty to an indictable offence, or to any other crime or offence, or engages in any
misconduct that may adversely affect the reputation of Master Franchisee, its Owners or PLANETS
BEACH® businesses or the goodwill or reputation associated with the Marks or the System;

          7. If Master Franchisee, any of its Owners, Affiliates or a Guarantor is listed by the United
States or United Nations as being a terrorist, financier or terrorism, or otherwise restricted from
doing business in or with the United States;

          8. If the System, Master Franchisee or its Owners make any unauthorized use, disclosure of, or
duplication of any Confidential Information or copyrighted works, or makes any unauthorized use of
the Marks or the trade dress (decoration or image) of any PLANET BEACH® business;

          9. Master Franchisee or its Owners violate the restrictions of Section 15 of this Agreement
relating to the non-competition and confidentiality covenants;

          10. Master Franchisee makes a transfer in violation of Section 12 of this Agreement;

          11. Master Franchisee fails to make any monetary payments to Franchisor in accordance with the
terms of this Agreement within ten (10) days of notice of such failure provided to Master
Franchisee;

          12. Master Franchisee fails, on three (3) or more separate occasions within any period of
twelve (12) consecutive months to comply with the terms of this Agreement, whether or not such
failures to comply are corrected after notice thereof is delivered to Master Franchisee;

          13. Master Franchisee or any of its Owners commit a material default under the terms of any
other agreement with Franchisor, or its Affiliates and such default continues beyond any cure
period after receipt of notice of such as provided in such other agreement;

          14. Master Franchisee or any of its Owners commit an event of default under the terms of any
loan or financing documents that results in the loss of any rights with respect to any material
assets of Master Franchisee or in any PLANETS BEACH® business;

          15. Master Franchisee fails to comply with any other provision of this Agreement, and does not
correct such failure within thirty (30) days after written notice of such failure is delivered to
Master Franchisee; provided that, in relation to any default that cannot be reasonably corrected
within such thirty (30) days period, Franchisor shall not exercise its right to terminate or
rescind this Agreement if Master Franchisee has continuously and diligently

 

 

undertaken, and continues to utilize all best endeavors to bring itself into full compliance with
this Agreement within such thirty (30) day period and furnishes proof acceptable to Franchisor upon
its request of such endeavors and the date on which full compliance was or will be achieved; or

          16. If there is not substantial compliance with Section 5.F and 75% of the Franchisees provide
a written petition to Franchisor that the Master Franchisee is not substantially providing the
franchise support as outlined in their individual Franchise Agreement of which the Master
Franchisee has direct control, Franchisor will immediately give written notice of such substantial
non-compliance. Upon receipt of such notice of non-compliance and Franchisee petition the Master
Franchisee will have ninety (90) days or such time as is reasonable to cure such defaults.

          The events of default and grounds for termination described in this Section will be
independent and in addition to any other grounds for termination and remedies contained elsewhere
in this Agreement or in any individual Franchise Agreement executed between Franchisor and the
Master Franchisee. Upon termination or expiration of this Agreement, the Master Franchisee will not
have further rights to receive any portion of any fees paid by Franchisees pursuant to any
Franchise Agreement, and Franchisor will have complete and exclusive rights to the franchise and
royalty fees collected from each PLANET BEACH® business within the Development Area should it
obtain an assignment or novation of all of Master Franchisee’s rights under this Agreement in
accordance with Section 14 of this Agreement. No right or remedy herein conferred upon or reserved
to Franchisor is exclusive of any other right or remedy provided or permitted by law or equity.

13. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION

     A. MARKS AND DE-IDENTIFICATION

          Master Franchisee agrees, and will ensure that its Owners agree, that after the termination or
expiration of this Agreement (including transfer, novation or assignment of this Agreement), for
any reason, it or they shall:

          1. Not directly or indirectly at any time or in any manner identify itself or any business as
a current or former franchisee, licensee or dealer of, or as otherwise associated with, Franchisor,
or directly or indirectly use any of the Marks, any colourable imitation thereof or confusingly
similar marks or other indicia of a PLANET BEACH® business, or the System, including Confidential
Information, in any manner or for any purpose, or utilize for any purpose any trade name,
trade-mark or other commercial symbol that suggests or indicates a connection or association with
Franchisor or its Affiliates or franchisees;

          2. Within a period of ten (10) days return to Franchisor all signs, Operations Manuals,
brochures, advertising materials, forms, invoices and other materials containing any Marks or
otherwise identifying or relating to the System or the operation of a PLANET BEACH® business and
allow Franchisor, without liability, to remove all such items from the Master Franchisee’s offices;

 

 

          3. Within ten (10) days take such action as may be required to cancel all trade name or
equivalent registrations relating to its use of any Marks;

          4. Within ten (10) days notify the appropriate telephone company, all telephone directory
listing agencies of the termination or expiration of Master Franchisee’s right to use any telephone
numbers and any regular, classified or other telephone directory listings associated with any Marks
and domain name registry with respect to any domain name associated with the Marks and authorize
transfer of the same to or at the direction of Franchisor. Master Franchisee agrees to execute
updated letters of direction to telephone companies, telephone directory listing agencies, and
domain name registries directing termination and/or transfer of Master Franchisee’s right to use
telephone numbers or domain names associated with the Marks, which Franchisor may hold until
termination or expiration hereof. Master Franchisee acknowledges that as between Franchisor and
Master Franchisee, Franchisor has the sole right to and interest in all telephone numbers,
directory listing and domain names associated with any Marks. Master Franchisee authorizes
Franchisor, and hereby appoints Franchisor and any officer of Franchisor as its attorney in fact,
to direct the appropriate telephone company and all listing agencies or domain name registries to
transfer the same to Franchisor or at is direction, should Master Franchisee fail or refuse to do
so, and the appropriate telephone company and all listing agencies and domain name registry may
accept such direction of this Agreement or Master Franchisee’s letter of direction held by
Franchisor as conclusive of the exclusive rights of Franchisor in such telephone number and
directory listings and domain names and its authority to direct their transfer;

          5. Comply with the confidentiality and non-competition obligations set forth in Section 15 of
this Agreement; and

          6. Furnish to Franchisor, within thirty (30) days after the effective date of termination or
expiration, evidence satisfactory to Franchisor of Master Franchisee’s compliance with the
foregoing obligations.

B. FRANCHISE AGREEMENTS

          In addition to, and not in lieu of the rights of Franchisor and the obligations of Master
Franchisee under this Section, if Master Franchisee terminates this Agreement without cause or
Franchisor terminates this Agreement in accordance with its terms, Master Franchisee agrees to
novate to Franchisor or its designee, at the option of Franchisor, all of its rights and
obligations under those Area Representative Agreements or Unit Franchise Agreements designated by
Franchisor. Franchisor shall give Master Franchisee written notice of its exercise of this option
within sixty (60) days of the effective date of termination of this Agreement. If Franchisor
exercises the option provided for in this Subsection B, it shall have ninety (90) days from the
date of the notice exercising such option to designate the Franchise Agreements to be novated and
prepare for closing of this termination. The Franchise Agreements transferred, as designated by
Franchisor, shall be novated to Franchisor without cost or charge and free and clear of any liens,
charges and encumbrances. Neither Franchisor nor its designee shall under any circumstances assume
or be liable for any obligation for performance or obligation or liability for default or
non-performance of Master Franchisee under the particular Franchise Agreement or this Agreement (or
on any other basis) that arose prior to the effective date of the novation. Therefore,

 

 

Master Franchisee and its Owner(s) shall be liable for any obligation for performance or obligation
or liability for default or non-performance under any Franchise Agreement of Franchisor or its
designee that arises before and after the effective date of novation.

          If Franchisor does not exercise its novation option with respect to one or more Franchise
Agreements, Master Franchisee shall cause Area Representative Franchisee and/or Unit Franchisees
whose Area Representative Agreement or Unit Franchise Agreement are not novated to Franchisor to
cease all use of the Marks and the System as provided in Subsection A of this Section.

C. CONTINUING OBLIGATIONS

          All obligations of Franchisor and Master Franchisee which expressly or by their nature survive
the termination of this Agreement or the expiration of the Development Term shall continue in full
force and effect subsequent to and notwithstanding its expiration or termination and until they are
satisfied in full or by their nature expire.

14. NON-COMPETITION AND CONFIDENTIALITY

     A. CONFIDENTIALITY AND NON-DISCLOSURE

          Master Franchisee acknowledges that it will receive valuable training regarding the operation
of a PLANET BEACH® business, and Confidential Information which is beyond the present skills,
experience and knowledge of Master Franchisee and its Owners and Master Franchisee’s employees.
The Confidential Information provide by Franchisor in connection with this Agreement constitutes
valuable, essential, necessary and indispensable information that Master Franchisee requires and
needs in order to perform under this Agreement. Master Franchisee and Restricted Persons shall, at
all times during the term hereof and thereafter, use their best endeavors to preserve the
confidentiality of all Confidential Information. Master Franchisee shall use Confidential
Information only in connection with the rights granted to it under this Agreement. Disclosure and
access to Confidential Information shall be limited to Master Franchisee and to other Persons,
including Area Representative Franchisees and/or Unit Franchisees, who need the Confidential
Information to perform their obligations pursuant to this Agreement, an Area Representative
Agreement or a Unit Franchise Agreement and who have signed a confidentiality agreement in the form
attached as Exhibit F hereof. Each party undertakes to the other to take all steps that
are necessary from time to time to ensure compliance with the provisions of this Section 15.A by
its employees, agents and subcontractors. In addition, Master Franchisee shall not disclose the
financial terms of this Agreement to any person or persons except to its professional advisors for
legitimate business purposes.

          The obligations of confidentiality under this Section 15.A shall not apply where:

	 	(a)	 	the receiving party is subject to an obligation to disclose the
information under law, or the information is required to be disclosed by any
competent regulatory authority, by notice or otherwise; or

 

 

	 	(b)	 	the information is already in the receiving party’s possession
other than as a result of a breach of this Section 15.A; or

	 	(c)	 	the information is in the public domain other than as a result
of a breach of this Section 15.A.

     B. NON-COMPETITION

          Master Franchisee acknowledges and will ensure that its Owners acknowledge, that it and they
will receive valuable training regarding the operation and maintenance of PLANET BEACH® businesses,
and Confidential Information which is beyond the present skills, experience and knowledge of Master
Franchisee, any Owner and Master Franchisee’s employees. The Confidential Information provided by
Franchisor in connection with this Agreement constitutes valuable, essential, necessary and
indispensable information that Master Franchisee requires and needs in order to perform under and
offer the goods and services described in this Agreement, each and every restriction imposed on
Master Franchisee and its Owners in this Section constitutes measures necessary to maintain the
identity, integrity and reputation of the System.

          Consequently, Master Franchisee and each Owner shall not, during the Development Term have any
interest as an owner, partner, director, officer, employee, consultant, investor, shareholder,
licensor, licensee, lender, representative or agent, or in any other capacity, in any Competitive
Business: (i) in the Development Area, or (ii) within 5 kilometers of the perimeter of any Assigned
Area (Assigned Areas meaning any assigned territory in which Master Franchisee or its Affiliate
previously operated a Franchise, or in which any Unit Franchisee operates a Franchise).

          Further, Master Franchisee and each Owner shall not for a period of two (2) years following
the expiration or early termination of this Agreement, or with respect to an Owner, commencing when
such Owner ceases to meet the definition of Owner under this Agreement, have any interest as an
owner, partner, director, officer, employee, consultant, investor, shareholder, licensor, licensee,
lender, representative or agent, or in any other capacity, in any Competitive Business:

	 	(i)	 	which operates or is part of a chain or franchise of a
Competitive Business in the Development Area or any part of the Development
Area; or

	 	(ii)	 	without prejudice to the generality of the foregoing, within
0.3 kilometers of the perimeter of any Planet Beach Unit Franchise premises in
the Development Area;

          Master Franchisee further covenants that for the period of two (2) years after the expiration
or termination for any reason of this Agreement (howsoever arising) the Master Franchisee and each
Owner shall not whether itself or together with any other person, firm or company in any capacity
whatsoever save as authorized hereunder directly or indirectly solicit customers or former
customers of the Business (former customers being persons who have been customers of the Business
in the Development Area within the year prior to expiration or termination.

 

 

          Nothing contained in this Section, however, shall restrict Master Franchisee and the Owners
from (i) holding a 5% Ownership Interest in a Similar Business where neither Master Franchisee nor
any Owners have the power to influence the economic conduct of such Similar Business, or (ii)
participating in any trade associations or organizations involving Similar Businesses.

          The parties acknowledge and agree that the covenant contained in Section is a reasonable
limitation as to time, space, geographic area and scope of activity and does not impose a greater
restraint than is necessary to protect the goodwill (reputation) or other business interests of
Franchisor. Subject to the terms of this Agreement, if all or any portion of the covenant
contained in this Section is held unreasonable or unenforceable by a court or agency having valid
jurisdiction in an unappealed decision to which Franchisor is a party, Master Franchisee expressly
agreed, and will ensure that the Owners expressly agree to be bound by the lesser covenant subsumed
within the terms of the covenant that imposes the maximum duty permitted by law, as if the
resulting covenant were separately stated in and made part of this Section.

     C. AREA DEVELOPMENT FRANCHISEES/UNIT FRANCHISEES

          Master Franchisee shall use reasonable commercial and legal endeavors to cause its Area
Representative Franchisees and Unit Franchisees to comply with the non-competition and
confidentiality restrictions in the Area Representative Agreements and Unit Franchise Agreements.

15. ENFORCEMENT

     A. INFORMAL DISPUTE RESOLUTION

          Prior to filing any judicial or arbitration proceeding, except as provided in Subsection 16.B,
the party intending to file such a proceeding shall be required to notify the other party in
writing of the existence and the nature of the dispute. Franchisor and Master Franchisee each
agree that within fifteen (15) business days of the other party’s receipt of such notice, the Chief
Executive, Chief Operating Officer or other senior executive officer of both Franchisor and Master
Franchisee shall meet at Franchisor’s corporate offices in Marrero, Louisiana for a minimum of two
(2) eight (8) hour days in order to attempt to resolve the dispute amicably. If such informal
dispute resolution attempts prove to be unsuccessful, the notifying party may initiate a judicial
or arbitration proceeding as described in Subsection B of this Section 16.

     B. ARBITRATION

          Subject to Subsection A of this Section 16, all controversies, disputes or claims arising
between the Franchisor, its Affiliates, and their respective officers, directors, shareholders,
partners, agents, employees and attorneys (in their representative capacity) and Master Franchisee
(and its Owners and the guarantors of this Agreement) arising out of or related to the relationship
of the parties hereto, this Agreement or any provision hereof, any

 

 

Franchise Agreement or any related agreement, the validity of this Agreement or any provision
hereof or any System Standard relating to the establishment or operation of PLANET BEACH® shall be
submitted for arbitration to be administered in accordance with the rules and procedures of
arbitration of the International Chamber of Commerce (ICC) in Marrero, Louisiana on demand of
either party. Such arbitration proceedings shall be conducted before a panel of three (3) neutral
arbitrators and, except as otherwise provided in this Agreement, shall be conducted in accordance
with the then-current commercial arbitration rules of the ICC for international arbitration. All
arbitration proceedings shall be conducted in Marrero, Louisiana. All matters within the scope of
the Federal Arbitration Act of the United States (9 U.S.C. §§1 et seq.) shall be governed by it.
The arbitrators shall have the right to award or include in their award any relief which they deem
proper in the circumstances, including without limitation, money damages (with interest on unpaid
amounts from date due), specific performance, injunctive relief, legal fees and costs in accordance
with Subsection H of this Section 16, provided that the arbitrators shall not have the authority to
award exemplary, punitive or special damages. The award and decision of the arbitrators shall be
conclusive and binding upon all parties hereto and judgment upon the award may be entered in any
court of competent jurisdiction. The parties further agree to be bound by the provisions of any
applicable limitation on the period of time in which claims must be brought under applicable law or
this Agreement, whichever is less. The parties further agree that in connection with any such
arbitration proceeding, each shall submit or file any claim which would constitute a compulsory
counterclaim (as defined by Rule 13 of the United States Federal Rules of Civil Procedure) within
the same proceeding as the claim to which it relates. Any such claim which is not submitted or
filed as described above shall be barred. Master Franchisee and Franchisor agree that arbitration
shall be conducted on an individual, not a class-wide basis and that no arbitration proceeding
conducted pursuant to this Agreement shall be consolidated with any other arbitration proceeding
involving Franchisor and any other Person, corporation, partnership or entity.

          Notwithstanding anything to the contrary contained in this Subsection B or Subsection A Master
Franchisee and Franchisor each have the right in a proper case to obtain temporary restraining
orders and temporary or preliminary injunctive relief from a court of competent jurisdiction,
provided, however, that the parties agree to contemporaneously submit their dispute for arbitration
on the merits as provided herein. The provisions of this Subsection B are intended to benefit and
bind certain third party non-signatories and will continue in full force and effect subsequent to,
and notwithstanding the expiration of, the Development Term or the termination of this Agreement.

     C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS

          All provisions of this Agreement are severable and this Agreement shall be interpreted and
enforced as if all completely invalid or unenforceable provisions were not contained herein and
partially valid and enforceable provisions shall be enforced to the extent valid and enforceable.
To the extent that the post-termination restrictive covenant set forth in Subsection 15.B is deemed
unenforceable by virtue of its scope in terms of geographic area, activity prohibited or length of
time, but may be made enforceable by reductions of any of them, Master Franchisee and the
Franchisor agree that same shall be enforced to the fullest extent permissible under the laws and
public policies applied in the jurisdiction in which enforcement is

 

 

sought. If any applicable and binding law or rule of any jurisdiction requires a greater prior
notice of the termination of this Agreement than is required hereunder or the taking of some other
action not required hereunder, or if under any applicable and binding law or rule of any
jurisdiction, any provision of this Agreement or any specification, standard or operating procedure
prescribed by the Franchisor is invalid or unenforceable, the prior notice and/or other action
required by such law or rule shall be substituted for the comparable requirements hereof, and
Franchisor shall have the right, in its sole discretion, to modify such invalid or unenforceable
provision, specification, standard or operating procedure to the extent required to be valid and
enforceable. Such modifications to this Agreement shall be effective only in such jurisdiction and
shall be enforced as originally made and entered into in all other jurisdictions.

     D. WAIVER OF OBLIGATIONS

          The Franchisor and Master Franchisee may by written instrument unilaterally waive any
obligation of or restriction upon the other under this Agreement. No acceptance by the Franchisor
of any payment by Master Franchisee or any other Person or entity and no failure, refusal or
neglect of the Franchisor or Master Franchisee to exercise any right under this Agreement or to
insist upon full compliance by the other with its obligations hereunder shall constitute a waiver
of any provision of this Agreement. Franchisor makes no warranties or guarantees upon which Master
Franchisee may rely, and assumes no liability or obligation to Master Franchisee, by granting any
waiver, approval, or consent to Master Franchisee, or by reason of any neglect, delay, or denial of
any request therefore. Any waiver granted by Franchisor shall be without prejudice to any other
rights Franchisor may have, will be subject to continuing review by Franchisor, and may be revoked,
in Franchisor’s sole discretion, at any time and for any reason, effective upon delivery to Master
Franchisee of ten (10) days’ prior written notice. Franchisor and Master Franchisee shall not be
deemed to have waived or impaired any right, power or option reserved by this Agreement (including,
without limitation, the right to demand exact compliance with every term, condition and covenant
herein, or to declare any breach thereof to be a default and to terminate this Agreement prior to
the expiration of its term), by virtue of any custom or practice of the parties at variance with
the terms hereof; any failure, refusal, or neglect of Franchisor or Master Franchisee to exercise
any right under this Agreement or to insist upon exact compliance by the other with its obligations
hereunder, including, without limitation, any System Standard; any waiver, forbearance, delay,
failure, or omission by Franchisor to exercise any right, power, or option, whether of the same,
similar or different nature, with respect to any PLANET BEACH® business or any franchise agreement;
or the acceptance by Franchisor of any payment from Master Franchisee after any breach of this
Agreement.

          Neither Franchisor nor Master Franchisee shall be liable for loss or damage or deemed to be in
breach of this Agreement if its failure to perform its obligations results from any of the
following and is not caused or exacerbated by the non-performing party: compliance with any law,
ruling, order, regulation, requirement, or instruction of any government or any department or
agency thereof; acts of God; or acts of war or insurrection. Any delay resulting from any of said
causes or occurrences shall extend performance accordingly or excuse performance, in whole or in
part, as may be reasonable, except that said causes shall not excuse payment of amounts owed at the
time of such occurrence or payment of Royalty Fees thereafter.

 

 

     E. RIGHTS OF PARTIES ARE CUMULATIVE

          The rights of Franchisor and Master Franchisee hereunder are cumulative and no exercise or
enforcement by Franchisor or Master Franchisee of any right or remedy hereunder shall preclude the
exercise or enforcement by Franchisor or Master Franchisee of any other right or remedy hereunder
or which Franchisor or Master Franchisee is entitled by law to enforce.

     F. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL

          Master Franchisee hereby waives to the fullest extent permitted by law, any right to or claim
for any punitive, exemplary or special damages against Franchisor and agrees that in the event of a
dispute between them, except as otherwise provided herein, Master Franchisee shall be limited to
the recovery of any actual damages sustained by it. Franchisor and Master Franchisee irrevocably
waive trial by jury in any action, proceeding or counterclaim, whether at law or in equity, brought
by either of them.

     G. LIMITATION OF CLAIMS

          Except with regard to Master Franchisee’s obligations to pay to Franchisor Unit Franchise
related Initial Franchisee Fees, Royalty Fees and other payments due to Franchisor and/or its
Affiliates pursuant to this Agreement, any and all claims arising out of or relating to this
Agreement or the relationship of Master Franchisee and Franchisor shall be barred unless an
arbitration proceeding is commenced within one (1) year from the date Franchisor or Master
Franchisee knew or, exercising reasonable diligence should have known, of the facts giving rise to
such claims.

     H. COSTS AND LEGAL FEES

          If Franchisor or Master Franchisee is required to enforce this Agreement in a judicial or
arbitration proceeding, the party prevailing in such proceeding shall be reimbursed by the other
party for its costs and expenses, including without limitation reasonable attorneys’ fees (for
attorneys and legal assistants), accountants’ fees, and expert witness fees, costs of investigation
and proof of facts, court costs, other litigation expenses and travel and living expenses, whether
incurred prior to, in preparation for or in contemplation of the filing of any such proceeding. If
the Franchisor is required to engage legal counsel in connection with any failure by Master
Franchisee to comply with this Agreement, Master Franchisee shall reimburse Franchisor for any of
the above-listed costs and expenses incurred by it. If and when Franchisor takes any action in a
competent court on any matter related in any way to this Agreement, any cost order granted in favor
of Franchisor will be deemed to be between attorney and own client.

     I. GOVERNING LAW/CONSENT TO JURISDICTION

          Master Franchisee and Franchisor agree that, except to the extent governed by the United
States Federal Arbitration Act (9 U.S.C. §§1 et seq.), the United States Trademark Act of 1946
(Lanham Act, 15 U.S.C. Section 1051 et seq.) or other federal law, this Agreement and the

 

 

relationship of the parties hereto shall be governed by the internal laws of the State of
Louisiana, United States, except that the internal laws of the State of Louisiana’s choice of law
and conflict of law rules shall not apply. Master Franchisee and Franchisor agree that any action
against Master Franchisee arising out of or relating to this Agreement seeking an order pursuant to
Subsection 16.B or the enforcement of an arbitration award may be brought in a state or federal
court of general jurisdiction in the State of Louisiana. Franchisor may file an action seeking an
order pursuant to Subsection 16.B or to enforce any arbitration award, judgment or order in any
such court or in any court located in the Country. Master Franchisee irrevocably submits to the
jurisdiction of such courts and waives any objection it may have to either the jurisdiction or
venue of such courts.

     J. BINDING EFFECT

          This Agreement is binding upon the parties hereto and their respective executors,
administrators, heirs, assigns, novatees and successors in interest, and shall not be modified
except by written agreement signed by both Master Franchisee and Franchisor.

     K. CONSTRUCTION

          The preambles and exhibits are a part of this Agreement, which constitutes the entire
agreement of the parties, and, except for Franchise Agreements, there are no other oral or written
understandings or agreements between Franchisor and Master Franchisee relating to the subject
matter of this Agreement. The headings of the several sections and subsections hereof are for
convenience only and do not define, limit or construe the contents of such sections or subsections.
The term “Master Franchisee” as used herein is applicable to one or more Persons, a corporation or
a partnership, as the case may be, and the singular usage includes the plural and the masculine and
neuter usages include the other and the feminine. If two or more Persons are at any time Master
Franchisee hereunder, whether or not as partners or joint venturers, their obligations and
liabilities to Franchisor shall be joint and several. This Agreement may be executed in multiple
copies, each of which shall be deemed an original. In this Agreement reference to Irish or English
statutes or statutory provisions include those statutes or statutory provisions as amended extended
consolidated re-enacted or replaced from time to time and to any order regulations instruments or
other subordinate legislation and to any former statute or statutory provision replaced (with or
without modification) by the statute or statutory provision referred to except to the extent that
any amendment or modification enacted after the date of this Agreement would increase or extend the
liability of any party to this Agreement.

     L. GOVERNING LANGUAGE

          This Agreement and the Operations Manual originally will be written in the English language,
and all questions of interpretation of this Agreement or the Operations Manual shall be resolved by
reference to the same as written in English.

 

 

     M. FORCE MAJEURE

          If a party’s default under this Agreement (other than Master Franchisee’s obligations with
respect to insurance and indemnification, and to pay all fees and other amounts due to Franchisor
and its affiliates under this Agreement or any other agreement between either of them and Master
Franchisee), is caused in whole or in part by a force majeure, such default and any right of the
other party to terminate this Agreement for such default is suspended for as long as the default is
reasonably caused by such force majeure. Any suspension is effective only from the delivery of a
notice of the force majeure to the other party stating the party’s intention to invoke the force
majeure. However, if such suspension continues for longer than six months and such default still
exists, either party has the right to terminate this Agreement upon 30 days notice to the other
party. Neither party shall consider the termination as being due to the default of the other
party. Events of force majeure are those that cannot be prevented, avoided or removed by the party
invoking the force majeure despite the exercise of reasonable diligence, including acts of God,
actions of the elements, lockouts, strikes, wars, riots, civil commotion, and acts of governmental
authorities, (not including a governmental authority’s delaying or refusing to grant building
permits, licenses and other permissions and approvals), and except as specifically provided for
elsewhere in this Agreement.

     16. NOTICES, REPORTS, PAYMENTS AND ADDRESS FOR SERVICE

          All written notices, reports, payments and address for service permitted or required to be
delivered by the provisions of this Agreement or of the Operations Manual shall be deemed so
delivered at the time delivered by hand, one (1) business day after transmission by facsimile,
telecopy or other electronic system (evidenced by a machine generated receipt), five (5) business
days after being placed in the hands of a commercial courier service for express delivery or ten
(10) business days after placement with a government mail service by Registered or Certified Mail
(or the equivalent), Return Receipt Requested, postage prepaid. All such notices, reports and
payments shall be addressed to the parties as follows:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	If to Franchisor:	 	 	 	PLANET BEACH INTERNATIONAL, L.L.C.  
	 	 	 	 	 	 	5161 Taravella Road	 	 
	 	 	 	 	 	 	Marrero, LA 70072	 	 
	 	 	 	 	 	 	Attention: Nina Rabito	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	If to Master Franchisee:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	  
	 	 
	 

	 	 	 	 	 	  
	 	 
	 

	 	 	 	 	 	  
	 	 
	 

	 	 	 	 	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

     A change by any party with respect to the address for delivery of all such notices and reports
must be delivered in writing to the other party within ten (10) business days of any such change in
address. Any required payment or report not actually received by Franchisor during regular
business hours on the date due (or postmarked by government postal authorities at least two (2)
days prior thereto) will be deemed delinquent. For purposes of this Agreement, the terms “Business
Day” shall exclude Saturdays, Sundays and official holidays.

 

 

17. INDEPENDENT ADVICE

     You acknowledge that in giving you advice, assisting you to establish this master franchise
business, recommending equipment and materials and assessing your suitability for the business, we
have based our recommendations on experience actually obtained in practice but that we do not give
any guarantee or warranty with regard to such matters or generally in connection with the sales
volume, profitability or any other aspect of the Business. You acknowledge that your decision to
enter into this Agreement has been taken solely on the basis of your personal judgment and
experience having taken independent advice. Accordingly, you acknowledge that no representation,
warranty, inducement or promise express or implied had been made by us or relied upon by you in
entering into this Agreement. Nothing in this Section or any other Section in this Agreement
excludes or limits either parties’ liability for fraud or fraudulent misrepresentation.

18. THIRD PARTY RIGHTS.

     Except where expressly provided to the contrary, this Agreement is not intended to be for the
benefit of, and shall not be enforceable by, any person who is not named at the date of this
Agreement as a party to it, or any person who claims rights under applicable law or otherwise and
neither party can declare itself a trustee of the rights under it for the benefit of any third
party. The parties to this Agreement reserve the right to rescind or vary this Agreement without
the consent of any third party who is expressly entitled to enforce this Agreement. The Master
Franchisee acknowledges that its breach of this Agreement may cause loss or damage to Franchisor’s
Affiliates. Master Franchisee agrees that notwithstanding this Section, such loss or damage shall
be deemed to be the loss of Franchisor and may be recovered by Franchisor.

THE NEXT PAGE IS THE SIGNATURE PAGE

 

 

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement in multiple
counterparts on the day and year first above written.

	 	 	 	 	 
	SIGNED in the presence of.	 	PLANET BEACH INTERNATIONAL L.L.C.
	 
	 	 	 	 
	 
	 
	 	 	 	 
	WITNESS

	 	By:	 	 
	 

	 	 	 	 
	Printed Name:

	 	Its:	 	 
	 

	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 
	 	 	Location: United States
	 
	 	 	 	 
	WITNESS
	 	 	 	 
	Printed Name:
	 	 	 	 
	 
	SIGNED in the presence of.	 	MASTER FRANCHISEE:
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	WITNESS

	 	By:	 	 
	 

	 	 
	 	 
	Printed Name:

	 	Its:	 	 
	 

	 	 
	 	 
	 

	 	Date:	 	 
	 

	 	 
	 	 
	 	 	Location:	 
	 
	 	 	 	 
	WITNESS
	 	 	 	 
	Printed Name:
	 	 	 	 

 

 

EXHIBIT A

TO THE MASTER FRANCHISE AGREEMENT

BY AND BETWEEN

PLANET BEACH INTERNATIONAL, L.L.C.

AND

 

DATED                      2008

DEVELOPMENT AREA

     The Development Area referred to in Section 2 of the captioned agreement shall be the
geographic area described as follows:

Territory

	 	 	 	 	 	 	 
	PLANET BEACH INTERNATIONAL, L.L.C.	 	Master Franchisee	 
	 
	By:
	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	 	Its:	 	 
	 
	 	 	 	 	 	 	 	 

 

 

EXHIBIT B

TO THE MASTER FRANCHISE AGREEMENT

BY AND BETWEEN

PLANET BEACH INTERNATIONAL, L.L.C.

AND

 

DATED                      2008

DEVELOPMENT SCHEDULE

	 	 	 	 	 	 	 	 	 
	 	 	Minimum Number of	 	 
	 	 	Unit Franchises to	 	Cumulative Number of Unit
	 	 	be developed during	 	Franchises in Operation
	Development Period	 	the Development	 	at the end of the
	Conclusion Date	 	Period	 	Development Period
	Effective Date

	 	 	0	 	 	 	0	 
	Year 1

	 	 	1	 	 	 	1	 
	Year 2

	 	 	2	 	 	 	3	 
	Year 3

	 	 	4	 	 	 	7	 
	Year 4 and every
year thereafter

	 	 	4	 	 	11 (4 additional per year)

     One (1) is the minimum number of Unit Franchises to be developed during the development
period in year one, and two (2) is the minimum number of Unit Franchises to be developed during the
development period in year 2. Four (4) units will be required for the third and every year
thereafter until market saturation. The parties shall meet on an annual basis to assess market
saturation after 25 Unit Franchises are developed and to review this Development Schedule, and to
determine whether any amendments to this Schedule are necessary or desirable.

     Each Development Period begins on the anniversary of the Effective Date of this Agreement and
ends on the day prior to the following anniversary of the Effective Date. For purposes of
determining compliance with the Development Schedule, only the Franchised Units actually open or in
active stages of development, including site selection as of the last day of the Development Period
will be counted toward the number of Franchised Units required to be open and continuously
operating for the applicable period. PLANET BEACH INTERNATIONAL, L.L.C. MASTER FRANCHISEE

	 	 	 	 	 	 	 
	PLANET BEACH INTERNATIONAL, L.L.C.	 	MASTER FRANCHISEE	 
	 
	By:
	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	 	Its:	 	 
	 
	 	 	 	 	 	 	 	 

 

 

EXHIBIT C

TO THE MASTER FRANCHISE AGREEMENT

BY AND BETWEEN

PLANET BEACH INTERNATIONAL, L.L.C.

AND

 

DATED                      2008

OWNERSHIP INTERESTS

     Master Franchisee represents and warrants that it is duly organized and validly existing in
good standing under the laws of the jurisdiction of its incorporation or organization, is qualified
to do business in all jurisdictions in which its business activities or the nature of properties
owned by Master Franchisee requires such qualification, and has the corporate or other authority to
execute, deliver and carry out all of the terms of this Agreement.

     Master Franchisee further represents and warrants that all Owners and their interests in
Master Franchisee are completely and accurately listed on this Exhibit C and that Master
Franchisee will execute such revised Exhibits C as may be necessary during the term of this
Agreement to reflect any changes in the information contained in the original Exhibit C
such that this Exhibit C at all times accurate reflects the ownership of Master Franchisee.

     1. Ownership Structure. Master Franchisee is a corporation, limited liability
company, partnership or other entity, Master Franchisee and its Owners represent and warrant that
the Ownership structure of Master Franchisee is as follows:

	 	 	 	 	 
	Name of Owner, Shareholder
Member or Partner

	 	 
	 	Percentage Of Total

Ownership Interest
	 
	 	 	 	 
	 

	 	 	 	___%
	 
 
	 	 	 	 
	 
	 	 	 	 
	 
 

	 	 	 	___%
	 
	 	 	 	 
	 
 

	 	 	 	___%
	 
	 	 	 	 
	 
 

	 	 	 	___%

Master Franchisee, its Owners, shareholders, members or partners listed above (the “Named Persons”)
are not named and will not be named as “Specially Designated Nationals” or “Blocked Persons” as
designated by the United States Department of the Treasury’s Office of Foreign Asset Control. The
Named Persons are not and will not become controlled by, or act

 

 

directly or indirectly on behalf of, the governmental authorities of any country that is subject to
a United States embargo. No governmental entity, official of an international organization,
political party or official of any political party, or candidate for public office has any direct
or indirect ownership interest in the Named Persons or in the respective revenues or profits.

DATED:                     

	 	 	 	 	 
	 

	 	MASTER FRANCHISEE:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:  	 	 
	 

	 	 	 	 
 
	 

	 	Its:	 	 
	 
	 

	 	 	 	 
 
	 

	 	 
 OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 
	 

	 	 
 OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 
	 

	 	 	 
	 

	 	OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 
	 

	 	 
 OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 

 

 

EXHIBIT D

TO THE MASTER FRANCHISE AGREEMENT

BY AND BETWEEN

PLANET BEACH INTERNATIONAL, L.L.C.

AND

 

DATED                      2008

FEE PAYMENTS

1. The Development Fee referred to in Subsection 7.A of this Agreement shall be $80,000US
Franchisor acknowledges receipt of Master Franchisee’s deposit of $30,000US. Accordingly, the
remaining amount of the Development Fee payable on the Execution Date is $50,000US.

2. The Unit Franchise Fee referred to in Subsection 7.B of this Agreement shall be Nine Thousand
Dollars ($9,000US) upon the sale of each individual Unit Franchise within the Development Area and
are due at the earlier of once the funds are cleared or on signing of the Unit Franchise Agreement.
For each “Three-Unit” pack, which refers to the sale of three units to one Unit Franchisee at the
same time, the Unit Franchise Fee referred to in Subsection 7.B of this Agreement shall be Thirteen
Thousand Dollars ($13,000US) in the aggregate. For each “Five-Unit” pack, which refers to the sale
of five units to one Unit Franchisee at the same time, the Unit Franchise Fee referred to in
Subsection 7.B of this Agreement shall be Fifteen Thousand Dollars ($15,000US) in the aggregate.
Finally, for each “Ten-Unit” pack, which refers to the sale of ten units to one Unit Franchisee,
the Unit Franchise Fee referred to in Subsection 7.B of this Agreement shall be Twenty Five
Thousand Dollars ($25,000US) in the aggregate.

3. In the event Area Representative Rights are given, the Unit Franchise Fee referred to Section
7.B of this Agreement shall be Nine Thousand Dollars ($9,000US).

4. The Royalty Fees referred to in Subsection 7.C of this Agreement shall be 1.8% of the Gross
Sales of the Franchises within the Development Area.

	 	 	 	 	 	 	 
	PLANET BEACH INTERNATIONAL, L.L.C.	 	MASTER FRANCHISEE	 
	 
	By:
	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	 	Its:	 	 
	 
	 	 	 	 	 	 	 	 

 

 

EXHIBIT E

TO THE MASTER FRANCHISE AGREEMENT

BY AND BETWEEN

PLANET BEACH INTERNATIONAL, L.L.C.

AND

 

DATED                      2008

TRADEMARKS

     As of the date of this Agreement, Master Franchisee shall be authorized to use the following
Marks in connection with the franchising of the PLANET BEACH® business pursuant to this Agreement:

	 	 	 	 	 
	MARK

	 	COUNTRY
	 	APPLICATION NO.
	 

	 	 
	 	 

 

 

EXHIBIT F

PART A

NON-DISCLOSURE AGREEMENT TO BE USED BY MASTER FRANCHISEE

(DIRECTORS, OFFICERS, AGENTS, PRINCIPAL OR AFFILIATE)

Date:

     I am a director, officer, agent, principal or affiliate of                                          (the
“Master Franchisee”), who is the                      master franchisee of the PLANET BEACH® franchise
system (the “System”).

     I acknowledge that in the course of my exposure to the System, I will have access to certain
Confidential Information (defined below) about the System’s methods of establishing, developing,
operating and maintaining PLANET BEACH® businesses, which is confidential and not available to the
public in general.

     I understand that a great amount of time and money has been spent to develop the Confidential
Information and I acknowledge that competitive business interests of the Master Franchisee and
other franchisees, master franchisees and the franchisor of the System (“Franchisor”) could be
severely and irreparably damaged if the Confidential Information revealed to me were to be
disclosed to any third person, become available to the public in general, or be used by me to
compete with the Master Franchisee or other franchisees, master franchisees or the Franchisor.

In consideration of obtaining access to the Confidential Information, I agree as follows:

	1.	 	“Confidential Information” means information or material relating to the System that is not
generally available, known or used by others, or the utility or value of which is not
generally known or recognized as standard practice, including operations manuals, technical
manuals, financial data, software, training programs, techniques, processes, ideas, concepts,
customer and supplier information.

	2.	 	I will not directly or indirectly disclose to any third party or use for myself any
Confidential Information which I have learned or may learn in the future, except as necessary
to perform my duties in relation to the Master Franchisee. I agree that these restrictions
will apply indefinitely in the future and will only cease with respect to particular
Confidential Information when that Confidential Information becomes publicly available through
no fault of mine.

	3.	 	While I am a director, officer, agent, principal or affiliate of the Master Franchisee, and
for a period of one (1) year from the date I cease to be a director, officer, agent, principal
or affiliate of the Master Franchisee, I will not:

	 	(a)	 	use, advise on the use of, or in any manner knowingly enter
into or be employed in any business which uses any of the Confidential
Information; or

 

 

	 	(b)	 	directly or indirectly hire or solicit for hire any current or
former employee of the Master Franchisee or of any other franchisee, master
franchisee or the Franchisor or encourage any such employee to leave his or her
employment.

	4.	 	My obligations under this Agreement bind me and my heirs and assigns or novatees and are for
the benefit of the System, the Master Franchisee, other franchisees, master franchisees and
the franchisor of the System and their successors and assigns or novatees. My obligations
under this Agreement are in addition to all other obligations I have under the law. Master
Franchisee and Franchisor shall each have the right to enforce the terms of this Agreement.

	5.	 	I acknowledge that the System, Master Franchisee, other franchisees, master franchisees and
the franchisor of the System will suffer irreparable harm if I violate or breach the promises
I have made in this Agreement. I also acknowledge that the restrictions set out in this
Agreement are reasonable in order to protect the legitimate business interests of Master
Franchisee and Franchisor. I agree that my failure to adhere to the restrictions contained in
those clauses will constitute unfair competition to Master Franchisee and Franchisor and I
acknowledge the difficulty of accurately determining the tangible and intangible damages which
Master Franchisee and Franchisor will suffer if I breach any of those restrictions.
Accordingly, I agree to the granting without prior notice (to the extent that applicable
notice requirements may be waived) of temporary and permanent injunctions against any such
breach, and to indemnify Master Franchisee and Franchisor for all costs and expenses
(including all legal fees and other expenses on a full indemnity basis in accordance with
accounts actually rendered) incurred by Master Franchisee and Franchisor in seeking to obtain
such injunctions or maintaining the same, or obtaining any other relief.

	6.	 	If any item or provision contained in this Agreement or any part thereof (in this clause
called the “offending provision”) shall be declared or become unenforceable invalid or illegal
for any reason whatsoever, the other terms and provisions of this Agreement shall remain in
full force and effect as if this Agreement had been executed without the offending provision
appearing herein.

	7.	 	While the restrictions above are considered by both me and Master Franchisee and Franchisor
to be reasonable in all the circumstances it is agreed that if such restrictions shall taken
together be judged to go beyond what is reasonable in all the circumstances for the protection
of Master Franchisee and Franchisor but would be judged reasonable if part or parts of the
wording thereof were deleted the said restrictions shall apply with words deleted.

	8.	 	This Agreement and all rights and obligations of the parties hereunder will be governed by,
and construed and interpreted in accordance with the laws of the State of Louisiana and the
parties submit to the non exclusive jurisdiction of the state or federal courts of
Louisiana.

 

 

	9.	 	All written notices and address for service permitted or required to be delivered by the
provisions of this Agreement shall be deemed so delivered at the time delivered by hand, one
(1) business day after transmission by facsimile, telecopy or other electronic system
(evidenced by a machine generated receipt), five (5) business days after being placed in the
hands of a commercial courier service for express delivery or ten (10) business days after
placement with a government mail service by Registered or Certified Mail (or the equivalent),
Return Receipt Requested, postage prepaid. All such notices shall be addressed to the parties
as follows:

	 	 	 
	If the Franchisor:

	 	Planet Beach International, L.L.C.
	 

	 	5161 Taravella Rd.
	 

	 	Marrero, Louisiana 70072
	 

	 	Attention: Nina Rabito

	 	 	 	 	 
	If to Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	If to director, officer, agent, principal or
	 	 	 	 
	 	 	 
	affiliate of Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 

	10.	 	A change by any party with respect to the address for delivery of all such notices must
be delivered in writing to the other parties within ten (10) business days of any such
change in address. For purposes of this Agreement, the term “business day” shall exclude
Saturdays, Sundays and public holidays.

IN WITNESS WHEREOF, the undersigned has entered into this Agreement as of the date shown above the
undersigned’s signature.

	 	 	 	 	 
	DATED:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	 
	 	 	 
	Print Name	 	 

 

 

PART B

NON-DISCLOSURE AGREEMENT TO BE USED BY MASTER FRANCHISEE

(EMPLOYEES)

Date:

     I am an employee of                                                       
                   
                            (the “Master Franchisee”), who is
the                      master franchisee of the PLANET BEACH® franchise system (the “System”).

     I acknowledge that in the course of my exposure to the System, I will have access to certain
Confidential Information (defined below) about the System’s methods of establishing, developing,
operating and maintaining PLANET BEACH® businesses, which is confidential and not available to the
public in general.

     I understand that a great amount of time and money has been spent to develop the Confidential
Information and I acknowledge that competitive business interests of the Master Franchisee and
other franchisees, master franchisees and the franchisor of the System (“Franchisor”) could be
severely and irreparably damaged if the Confidential Information revealed to me were to be
disclosed to any third person, become available to the public in general, or be used by me to
compete with the Master Franchisee or other franchisees, master franchisees or the Franchisor.

In consideration of obtaining access to the Confidential Information, I agree as follows:

	1.	 	“Confidential Information” means information or material relating to the System that is not
generally available, known or used by others, or the utility or value of which is not
generally known or recognized as standard practice, including operations manuals, technical
manuals, financial data, software, training programs, techniques, processes, ideas, concepts,
customer and supplier information.
	 
	2.	 	I will not directly or indirectly disclose to any third party or use for myself any
Confidential Information which I have learned or may learn in the future, except as necessary
to perform my duties in relation to the Master Franchisee. I agree that these restrictions
will apply indefinitely in the future and will only cease with respect to particular
Confidential Information when that Confidential Information becomes publicly available through
no fault of mine.
	 
	3.	 	While I am an employee of the Master Franchisee, and for a period of six (6) months from the
date I cease to be an employee of the Master Franchisee, I will not:

	 	(a)	 	use, advise on the use of, or in any manner knowingly enter
into or be employed in any business which uses any of the Confidential
Information; or
	 
	 	(b)	 	directly or indirectly hire or solicit for hire any current or
former employee of the Master Franchisee or of any other franchisee, master
franchisee or the

 

 

	 	 	 	franchisor of the System or encourage any such employee to leave his or her
employment.

	4.	 	My obligations under this Agreement bind me and my heirs and assigns and are for the benefit
of the System, the Master Franchisee, other franchisees, master franchisees and the Franchisor
and their successors and assigns. My obligations under this Agreement are in addition to all
other obligations I have under the law. Master Franchisee and Franchisor shall each have the
right to enforce the terms of this Agreement.
	 
	5.	 	I acknowledge that the System, Master Franchisee, other franchisees, master franchisees and
the Franchisor will suffer irreparable harm if I violate or breach the promises I have made in
this Agreement. I also acknowledge that the restrictions set out in this Agreement are
reasonable in order to protect the legitimate business interests of Master Franchisee and
Franchisor. I agree that my failure to adhere to the restrictions contained in those clauses
will constitute unfair competition to Master Franchisee and Franchisor and I acknowledge the
difficulty of accurately determining the tangible and intangible damages which Master
Franchisee and Franchisor will suffer if I breach any of those restrictions. Accordingly, I
agree to the granting without prior notice (to the extent that applicable notice requirements
may be waived) of temporary and permanent injunctions against any such breach, and to
indemnify Master Franchisee and Franchisor for all costs and expenses (including all legal
fees and other expenses on a full indemnity basis in accordance with accounts actually
rendered) incurred by Master Franchisee and Franchisor in seeking to obtain such injunctions
or maintaining the same, or obtaining any other relief.
	 
	6.	 	If any item or provision contained in this Agreement or any part thereof (in this clause
called the “offending provision”) shall be declared or become unenforceable invalid or illegal
for any reason whatsoever, the other terms and provisions of this Agreement shall remain in
full force and effect as if this Agreement had been executed without the offending provision
appearing herein.
	 
	7.	 	While the restrictions above are considered by both me and Master Franchisee and Franchisor
to be reasonable in all the circumstances it is agreed that if such restrictions shall taken
together be judged to go beyond what is reasonable in all the circumstances for the protection
of Master Franchisee and Franchisor but would be judged reasonable if part or parts of the
wording thereof were deleted the said restrictions shall apply with words deleted.
	 
	8.	 	This Agreement and all rights and obligations of the parties hereunder will be governed by,
and construed and interpreted in accordance with the laws of Territory and the parties submit
to the non exclusive jurisdiction of the Territory courts.
	 
	9.	 	All written notices and address for service permitted or required to be delivered by the
provisions of this Agreement shall be deemed so delivered at the time delivered by hand, one
(1) business day after transmission by facsimile, telecopy or other electronic system
(evidenced by a machine generated receipt), five (5) business days after being placed in

 

 

	 	 	the hands of a commercial courier service for express delivery or ten (10) business days
after placement with a government mail service by Registered or Certified Mail (or the
equivalent), Return Receipt Requested, postage prepaid. All such notices shall be addressed
to the parties as follows:

	 	 	 
	If the Franchisor:

	 	Planet Beach International, L.L.C.
	 

	 	5161 Taravella Rd.
	 

	 	Marrero, Louisiana 70072
	 

	 	Attention: Nina Rabito

	 	 	 	 	 
	If to Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	If to employee of Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 

A change by any party with respect to the address for delivery of all such notices must be
delivered in writing to the other parties within ten (10) business days of any such change
in address. For purposes of this Agreement, the term “business day” shall exclude
Saturdays, Sundays and public holidays.

IN WITNESS WHEREOF, the undersigned has entered into this Agreement as of the date shown above the
undersigned’s signature.

	 	 	 	 	 
	DATED:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	 
	 	 	 
	Print Name	 	 

 

 

EXHIBIT G

GUARANTEE AND INDEMNITY

FOR OBLIGATIONS UNDER

THE MASTER FRANCHISE AGREEMENT

     In consideration of Planet Beach International, L.L.C., a corporation organized under the laws
of the State of Louisiana, U.S.A. with its principal place of business at 5161 Taravella Rd.,
Marrero, Louisiana, U.S.A. (the “Franchisor”) entering into a Franchise Agreement dated the [          ] day
of [               ] 200 [ ] (the “Franchise Agreement”) with [   
       ] of [             
  ] (the “Franchisee”) at the request of [      
              ]
(the “Guarantor”), being the [shareholder/director] of the Franchisee, the Guarantor enters into
this guarantee and indemnity (the “Guarantee”) on the following terms:

Scope Of Guarantee

	1.	 	The Guarantor hereby irrevocably and unconditionally (and where there is more than one
Guarantor, jointly and severally):

	 	(i)	 	guarantees to the Franchisor the due and prompt payment by the Franchisee of
all monies which are now or shall at any time be due owing or incurred by the
Franchisee under or in connection with the Franchise Agreement together with all
commission, fees, charges, legal costs and other costs and expenses, including any tax
liability incurred by the Franchisor under or in connection with the Franchise
Agreement; and
	 
	 	(ii)	 	undertakes to perform or to procure the performance and observance by the
Franchisee of any and all obligations contained in any document evidencing, securing,
renewing, extending or pertaining to the Franchise Agreement.

	2.	 	As a separate and primary obligation, the Guarantor irrevocably and unconditionally (and
where there is more than one Guarantor jointly and severally) agrees to indemnify, keep
indemnified and hold harmless the Franchisor from and against all costs (including the costs
of enforcement), expenses, liabilities (including any tax liability), losses, damages, claims,
demands, proceedings or legal costs (on a full indemnity basis) and judgments awarded against
the Franchisor or which the Franchisor incurs or suffers as a result of the breach, error,
fault, negligence, act or omission of the Franchisee under or in connection with the Franchise
Agreement or as a result of the Franchisee not having the legal capacity to enter into any of
the obligations or liabilities under the Franchise Agreement.
	 
	3.	 	If any sum payable by the Guarantor under this Guarantee is not paid when due then, without
prejudice to the Franchisor’s other rights under this Guarantee, that sum shall bear interest
from the due date until payment is made in full, both before and after judgment, at the rate
provided in the Franchise Agreement.

 

 

Liability Of Several Guarantors

	4.	 	Where there is more than one guarantor under this Guarantee:

	 	(i)	 	the term “Guarantor” in this Guarantee refers to each of the Guarantors and
to all of them;
	 
	 	(ii)	 	their obligations as Guarantor are joint and several;
	 
	 	(iii)	 	the Franchisor may enforce this Guarantee against all or any of them;
	 
	 	(iv)	 	any notice or demand may be served on all of them by serving on any one of
them;
	 
	 	(v)	 	this Guarantee remains binding on the other Guarantors, even if:

	 	(a)	 	any Guarantor failed to enter into this Guarantee;
	 
	 	(b)	 	this Guarantee is not binding on any Guarantor; or
	 
	 	(c)	 	the Franchisor shall release any Guarantor from liability
under this Guarantee.

Performance on demand

	5.	 	The Guarantor must fulfil its obligations under this Guarantee as soon as the Franchisor
demands that it does so. There is no limit to the number of times the Franchisor can make a
demand.

Guarantor Not Discharged

	6.	 	This Guarantee is a continuing obligation and shall remain in full force and effect until all
(but not partial) sums payable by and the obligations of the Franchisee referred to in
paragraph 1 above have been irrevocably paid and discharged in full. If the Guarantor is an
individual, this Guarantee remains security against the Guarantor and his curator or legal
guardian and his estate shall remain liable in respect of this Guarantee following the
Guarantor’s death or mental incapacity until the Franchisor releases him in writing.
	 
	7.	 	The obligations of the Guarantor under this Guarantee shall not be terminated, reduced,
discharged or otherwise affected by anything which as a matter of law would otherwise
terminate, reduce, discharge or otherwise affect them, including:

	 	(i)	 	the granting of any indulgence or extension of time by
the Franchisor to the Franchisee, the Guarantor or any other person;
	 
	 	(ii)	 	the Franchisor’s neglect or failure to enforce any
covenants in the Franchise Agreement against the Franchisee or waiver of any
breaches or defaults under the Franchise Agreement;

 

 

	 	(iii)	 	the total or partial release of liability of the
Franchisee or of a Guarantor by the Franchisor;
	 
	 	(iv)	 	the entry into any arrangement, composition or compromise
relating to the Franchise Agreement between the Franchisor and the
Franchisee and/or any other person;
	 
	 	(v)	 	the variation of any provision of the Franchise Agreement
between the Franchisor and the Franchisee;
	 
	 	(vi)	 	the Franchisee’s liability under the Franchise Agreement
being or becoming invalid, illegal or unenforceable, including through any
act, omission or legislation;
	 
	 	(vii)	 	any security held or taken at any time by the Franchisor
being void, voidable, defective or unenforceable;
	 
	 	(viii)	 	the disclaimer of the Franchise Agreement following the Franchisee’s
insolvency;
	 
	 	(ix)	 	any change in the constitution, name or style or death or
bankruptcy, liquidation, insolvency, administration or winding up of the
Franchisee, the Franchisor, the Guarantor or any other person; or
	 
	 	(x)	 	the Franchisee granting any security or other rights to
the Franchisor (or any other person);
	 
	 	(xi)	 	any amendment of the terms on which any security or other
rights are granted to the Franchisor, any step being taken in connection
with any security or other rights (to enforce them, to release them or to do
anything else) or any omission to take any step by the Franchisor in
connection with any security or other rights which could or should have been
taken;
	 
	 	(xii)	 	any act, omission, matter or thing which although could
affect the liability of a surety, would not affect liability of a principal
debtor, or which, but for this provision, might operate to exonerate,
discharge, reduce or extinguish the Guarantor’s liability under this
Guarantee.

Additional security

	8.	 	This Guarantee is in addition to and is not prejudiced by and does not prejudice any other
security, right or remedy held by or available to the Franchisor at any time whether against
the Guarantor, the Franchisee or any other person. If the Franchisor holds any other security
for or right in respect of all or any of the monies hereby guaranteed, the Franchisor need not
resort to that other security or right before enforcing its rights against the Guarantor under
this Guarantee.

 

 

No interference with Franchisor’s rights

	8.1	 	The Guarantor agrees that, until all debts and liabilities due or incurred by the Franchisee
to the Franchisor under the Franchise Agreement have been paid in full (the “Debts”), it will
not:

	 	(i)	 	hold the benefit of any security (including any guarantee or indemnity) in
respect of any liability it might incur under this Guarantee;
	 
	 	(ii)	 	take any step against the Franchisee (or any co-surety) in respect of any
liability the Guarantor might incur under this Guarantee (for example, the Guarantor
will not attempt, whether on the basis of subrogation or otherwise, to claim
reimbursement of any payment, to exercise a right of set-off, indemnity or
contribution in respect of any payment or to enforce any security);
	 
	 	(iii)	 	exercise any right it might have, whether on the basis of subrogation or
otherwise, to share in any security held by the Franchisor in respect of any Debts;
or
	 
	 	(iv)	 	in any insolvency proceedings (or analogous proceedings) affecting the
Franchisee (or any co-surety), submit any proof or other claim or rank as a creditor
in competition with the Franchisor (or with any trustee or agent acting on its
behalf).

	8.2	 	Clause 8.1 applies whatever the amount of the Debts at the relevant time and regardless of
whether the Guarantor has been notified before then of any change in the amount of the Debts.
	 
	8.3	 	Despite the prohibition in clause 8.1 where the Franchisor instructs the Guarantor in writing
to take any of the steps referred to in that clause, the Guarantor must take such steps , in
accordance with the Franchisor’s written instructions. The Franchisor will not be liable for
any costs incurred by the Guarantor in doing so.
	 
	8.4	 	Clause 8.5 applies where:

	 	(a)	 	at any time, the Guarantor holds the benefit of any security or receives
any money or other property or rights:

	 	(i)	 	in breach of clause 8.1; or
	 
	 	(ii)	 	as a result of taking any action under clause 8.3; and

	 	(b)	 	at any time after the Franchisor makes a demand under clause 5, the
Guarantor receives any money or other property or rights from the Franchisee.

	8.5	 	Until the Debts have been paid in full, the Guarantor must hold the relevant property for the
benefit of the Franchisor, to be applied in or towards paying the Guarantor’s liabilities
under this Guarantee. If, at any time, the aggregate amount of the property required to be
held for the benefit of the Franchisor under this clause 8.5 would

 

 

	 	 	otherwise exceed the amount of the Guarantor’s liabilities under this Guarantor at that
time, this clause 8.5 will not apply with regard to the excess amount.

Miscellaneous

	9.	 	All payments to be made by the Guarantor to the Franchisor under this Guarantee shall be made
on the due date and in same day funds and to such account as the Franchisor shall specify and
shall be made (a) without set-off, counterclaim or condition; (b) in the currency such payment
was due as provided in the Franchise Agreement and (c) free and clear of, and without
deduction for or on account of, any present or future taxes, levies, duties, charges, fees or
deductions of any nature unless the Guarantor is required by law or regulation to make any
such deduction or withholding, in which event such payment shall be increased by such amount
as may be necessary to ensure that the Franchisor receives a net amount, which, after such
deduction or withholding, is equal to the full amount which the Franchisor would have received
had such payment not been subject to such deduction or withholding. The Guarantor shall
indemnify the Franchisor against any liability of the Franchisor in respect of such deduction
and withholding and shall promptly supply the Franchisor with copies of applicable tax
receipts.

	10.	 	Any release, settlement, discharge or arrangement between the Guarantor and the Franchisor is
conditional upon no assurance, security or payment by any person to the Franchisor being void,
set aside or ordered to be refunded for any reason whatever including under any enactment,
decree or regulation relating to bankruptcy, liquidation or insolvency. If the aforesaid
condition is not fulfilled, the Franchisor may enforce this Guarantee subsequently as if such
release, settlement, discharge or arrangement had not occurred and any such assurance,
security or payment had not been made or given.

Partial invalidity

	11.	 	If any provision of this Guarantee is illegal, invalid or unenforceable in any respect under
the law of any jurisdiction, this does not affect:
	 
	11.1	 	the legality, validity or enforceability of the other provisions of this Guarantee; or
	 
	11.2	 	the legality, validity or enforceability of the affected provision under the law of any other
jurisdiction.

12. All payments due under this Guarantee shall be made in US Dollars. If any amounts payable under
this Guarantee are paid in any currency other than that in which they are due, they shall be
converted into the due currency at the rate of exchange in Territory quoted by the Bank of
Territory at the close of business on the day in which the Franchisor is in receipt of the cleared
funds. If following conversion, the amount of such payment actually received by the Franchisor
falls short of the amount due, the Guarantor shall fully indemnify hte Franchisor against the
amount of such shortfall. 13. For the purpose of this Guarantee, a certificate or statement signed
by or on behalf of the Franchisor or the Franchisor’s legal representatives relating to any sum of
money claimed by the Franchisor to be due from the Franchisee under the Franchise Agreement, or
relating to the performance of any obligation of the Franchisee under the Franchise

 

 

Agreement, is prima facie evidence of the amount or obligation claimed and the facts stated
therein.

14. This Guarantee is binding and enforceable on the Guarantor and his or her executors and
administrators.

15. This Guarantee is in favour of the Franchisor and its successors, assigns and novatees.

Suspense account

16. The Franchisor may, at any time, credit to a suspense account any money received by it under
this Guarantee pending its application towards paying the liabilities of the Guarantor.

Exercise of powers as directors and/or shareholders of Franchisee

17. The Guarantor agrees and undertakes to exercise his or her powers as director or shareholder of
the Franchisee as the case may be to ensure the Franchisee’s compliance with the terms and
conditions of the Franchise Agreement.

Notice18. Any notice, demand or communication in connection with this Guarantee shall be in writing
and may be delivered by hand, first class pre-paid post or facsimile addressed to the recipient at
its registered office or its address or facsimile number as the case may be stated above (or such
other address or facsimile number as may be notified in writing from time to time). The notice,
demand or communication shall be deemed to have been duly served, if delivered by hand, when left
at the proper address for service, if given or made by first class prepaid post, 48 hours being
posted or in the case of airmail, 14 days after being posted, if given by facsimile, at the time of
transmission, provided that a confirming copy is sent by pre-paid post to the other party within 24
hours after transmission. Where in the case of delivery by hand or transmission by facsimile, such
delivery or transmission occurs either after 4:00pm on a business day or on a day other than a
business day, service shall be deemed to occur at 9:00am on the next following business day (such
times being local time at the address of the recipient). For the purposes of this clause,
business day means a day when banks are open for business in Territory and the State of Louisiana.

Entire Contract

19. This Guarantee contains all the express provisions agreed on by the Parties with regard to the
subject matter of the Guarantee, and supersedes and novates in its entirety any previous
understanding or agreements among the Parties in respect thereof and the Parties waive the right to
rely on any alleged provision not expressly contained in this Guarantee.

Governing Law and Jurisdiction

20. This Guarantee shall be governed by and construed in accordance with the laws of Territory and
each of the parties hereto irrevocably submits to the non-exclusive jurisdiction of the Territory
courts.

 

 

	 	 	 
	EXECUTED as a deed this day of

	 	200[   ]
	 
	 	 
	 

	 	 
	 

	 	 
	in the presence of:
	 	 
	 
	 	 
	Witness signature:
	 	 
	 
	 	 
	 

	 	 
	 

	 	Spouse of Guarantor, who hereby consents to
the granting of this Guarantee by the
Guarantor
	Witnesses:
	 	 
	1.
	 	 
	 
	 	 
	2.
	 	 
	 

	 	 
	 

	 	 

	 	 	 	 
	Signature of Franchisor
	 
	 	 
	SIGNED as a deed on behalf of PLANET BEACH
INTERNATIONAL L.L.C. a company incorporated in
Louisiana, by [full names of persons signing,
being persons who, in accordance with the laws of
that territory, are acting under the authority of
the company:
	 
	 	 
	 

	 	Authorised signatory
	 	 	 
	 
	 	 
	 

	 	Authorised signatory
	 	 	 

 

 

EXHIBIT H

INTERNATIONAL VENDOR PROGRAM

     Franchisor and Master Franchise agree that any rebates from suppliers attributable to
subfranchisees in the Development Area will be shared between Franchisor (or its affiliates) and
Franchisee as set forth on the attached spreadsheet. Franchisor has the right to update the
International Vendor Program from time to time provided that: (1) any rebates for local suppliers
determined by Master Franchisee may be retained in full by Master Franchisee and (2) any rebates
provided by Franchisor’s suppliers attributable to subfranchisees in the Development Area will be
will be split in accordance with the following percentages: 40% to Franchisor (or its affiliates)
and 60% to Master Franchisee.

     All vendors, suppliers and products are subject to approval by Franchisor pursuant to Section
5.E.

PBFC Acknowledgement

Planet Beach Franchising Corporation (“PBFC”) agrees and acknowledges that any rebates attributable
to subfranchisees in the Development Area that it receives from suppliers will be shared with
Franchisee as set forth in this Exhibit H.

PLANET BEACH FRANCHISING CORPORATION

	 	 	 	 	 
	By:
	 	 

	 	 
	 	 	 
	 	 
	Name:	 	 
	 	 	 
	 	 
	Title:
	 	 

	 	 
	 	 	 
	 	 
	Date:
	 	 

	 	 
	 	 	 
	 	 

 

 

EXHIBIT I

AFFILIATE ADDENDUM

TO

FRANCHISE AGREEMENT

This Affiliate Addendum (“Addendum”) is by and between [insert Master Licensee’s entity name], a
[jurisdiction & entity type] (“Subfranchisor”) and [insert affiliate’s entity name], a
[jurisdiction & entity type] (“Franchisee”) and is effective as of the date of the Franchise
Agreement. All terms not defined herein have the meaning ascribed to them in the Franchise
Agreement.

Recitals

     WHEREAS, Franchisor has the exclusive right within the territory of Territory to use and to
license others the right to establish and operate PLANET BEACH® businesses pursuant to a
Master Franchise Agreement between Subfranchisor and Planet Beach International, LLC, a Louisiana
limited liability company (“Licensor”) dated                                          (“Master License”);

     WHEREAS, Subfranchisor and Franchisee have entered into a Franchise Agreement for the
establishment of a PLANET BEACH® business dated                                          (“Franchise
Agreement”).

     WHEREAS, Franchisee is an affiliate of Franchisor.

NOW THEREFORE, in consideration of the foregoing and of the covenants and considerations stated in
this Addendum, the parties agree as follows:

	1.	 	Franchisee acknowledges and agrees that its default under the Franchise Agreement may
constitute a default of Subfranchisor under the terms of the Master License and result in
termination of the Master License.
	 
	2.	 	Franchisee acknowledges and agrees that if the Master License is terminated, Licensor has the
right to (a) terminate the Franchise Agreement or (b) terminate the Franchise Agreement and
require Franchisee to execute Licensor’s then-current form of Franchise Agreement; provided
that Licensor has the right to reduce the term of the Franchise Agreement to the remainder of
the term of the Franchise Agreement.
	 
	3.	 	Licensor is a third party beneficiary of this Addendum.
	 
	4.	 	Except as amended herein, the Franchise Agreement will be construed and enforced in
accordance with its terms.

[Signature Page Follows]

 

 

Each of the undersigned hereby acknowledges having read and understood this Addendum and consents
to be bound by all of its terms.

	 	 	 	 	 	 	 
	 	 	 	 	SUBFRANCHISOR:
	 
	 	 	 	 	 	 
	SIGNED in the presence of.
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	By	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:
	 

	 	 	 	 	 	 
	WITNESS
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	FRANCHISEE:
	 
	 	 	 	 	 	 
	SIGNED in the presence of.	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	By	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:
	 

	 	 	 	 	 	 
	WITNESSexv10w4

Exhibit 10.4

PLANET BEACH FRANCHISING CORPORATION

AREA REPRESENTATIVE AGREEMENT DATA SHEET

	 	 	 	 	 
	1.

	 	Name of Area Representative:	 	 
	 

	 	 	 	 
	 
	 

	 	Partner or Spouse:	 	 
	 

	 	 	 	 
	 
	2.

	 	Area Representative’s Address:	 	 
	 

	 	 	 	 
	 
	3.

	 	Licensing Agent:	 	 
	 

	 	 	 	 
	 
	4.

	 	Area Representative’s Territory:	 	 
	 

	 	 	 	 
	 
	5.

	 	Area Representative’s Telephone Number:	 	 
	 

	 	 	 	 
	 
	6.

	 	Area Representative’s Cell Number:	 	 
	 

	 	 	 	 
	 
	7.

	 	Area Representative’s Facsimile Number:	 	 
	 

	 	 	 	 
	 
	8.

	 	Area Representative’s E-Mail Address:	 	 
	 

	 	 	 	 
	 
	9.

	 	Area Representative Fee:	 	 
	 

	 	 	 	 
	 
	10.

	 	Amount Paid:	 	 
	 

	 	 	 	 
	 
	11.

	 	Amount Due:	 	 
	 

	 	 	 	 
	 
	12.

	 	Effective Date:	 	 
	 

	 	 	 	 

Agreement Exceptions:

 

 

 

 

 

 

 

The information contained in this Data Sheet is incorporated by reference into the Planet Beach
Franchising Corporation Area Representative Agreement.

 

 

PLANET BEACH FRANCHISING CORPORATION

AREA REPRESENTATIVE AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 
	Background
	 	 	3	 
	1. GRANT AND TERRITORY
	 	 	4	 
	2. TERM AND RENEWAL
	 	 	4	 
	3. AREA REPRESENTATIVE FEES
	 	 	5	 
	4. MANDATORY DEVELOPMENT SCHEDULE
	 	 	5	 
	5. TRAINING
	 	 	6	 
	6. CONFIDENTIAL OPERATIONS MANUAL
	 	 	7	 
	7. DUTIES OF PLANET BEACH
	 	 	7	 
	8. DUTIES OF AREA REPRESENTATIVE
	 	 	8	 
	9. USE OF SYSTEM AND PROPRIETARY MARKS
	 	 	12	 
	10. REMUNERATION OF AREA REPRESENTATIVE
	 	 	13	 
	11. COVENANTS
	 	 	15	 
	12. RELATIONSHIP OF THE PARTIES
	 	 	15	 
	13. INDEMNIFICATION
	 	 	16	 
	14. INSURANCE
	 	 	16	 
	15. DEFAULT AND TERMINATION
	 	 	16	 
	16. TRANSFERABILITY
	 	 	17	 
	17. RIGHTS AND OBLIGATIONS OF THE PARTIES UPON TERMINATION
	 	 	19	 
	18. CHANGES AND MODIFICATIONS
	 	 	20	 
	19. NOTICES
	 	 	21	 
	20. CHOICE OF LAW; DISPUTE RESOLUTION
	 	 	21	 
	21. CONSTRUCTION
	 	 	23	 
	22. PERSONAL GUARANTY OF SHAREHOLDERS, PARTNERS, MEMBERS
AND MANAGERS
	 	 	24	 
	23. REPRESENTATIONS AND ACKNOWLEDGMENTS
	 	 	25	 
	 
	 	 	 	 
	Exhibits
to Planet Beach Franchising Corporation’s Area Representative
Agreement
	 	 	 	 
	 
	 	 	 	 
	Exhibit 1 – Planet Beach Franchising Corporation’s Single Unit Franchise Agreement
	 	 	 	 
	Exhibit 2 – Planet Beach Franchising Corporation’s Multi-Unit Option Agreement
	 	 	 	 
	Exhibit 3 – Guaranty Agreement and Acknowledgment by Guarantor
	 	 	 	 
	Exhibit 4 – Confidentiality and Non-Compete Agreement
	 	 	 	 
	Exhibit 5 – Statement of Prospective Area Representative
	 	 	 	 

 

 

AREA REPRESENTATIVE AGREEMENT

     THIS AREA REPRESENTATIVE AGREEMENT (the “Agreement”) is made as of this                      day of
                    , 20                     between Planet Beach Franchising Corporation, a Delaware corporation with an
address at 5145 Taravella Road, Marrero, Louisiana 70072 (“Planet Beach”) and
                                         (“Area Representative”).

BACKGROUND

A. Contemporaneous with the execution of this Agreement, you and Planet Beach have entered
into a Single Unit Franchise Agreement (the “Franchise Agreement”) for the right to establish and
operate a single Planet Beach Spa (the “Your Spa”) and paid the Initial Franchise Fee.

B. Through the expenditure of money, time and effort, Planet Beach has developed a distinct and
proprietary method business format for the operation of spas (the “System”), the distinguishing
characteristics of which include proprietary operating procedures and standards and specifications
for products and services, as amended from time to time in Planet Beach’s sole discretion.

C. The System is identified by proprietary trademarks, service marks, trade dress, logos and other
indicia of origin including, without limitation, the trade name and service mark “Planet Beach”
(the “Proprietary Marks”).

D. Planet Beach offers franchises to qualified individuals for the right to use the System and
Proprietary Marks at a single approved location (the “Spa”).

E. Planet Beach continues to develop, expand, use, control and add to the Proprietary Marks and
System for the benefit and exclusive use of itself and its franchisees in order to identify for the
public the source of products and services marketed thereunder and to represent the System’s high
standards of quality and service;

F. You have applied to Planet Beach for the non-exclusive right to serve as an independent
representative of Planet Beach and to coordinate the development of the territory defined in the
Data Sheet (“Territory”) granted hereunder, including recruiting franchisees to operate Spas under
Planet Beach’s System and Proprietary Marks, as well as to provide continuing operational and
supervisory assistance and otherwise administer the System within the Territory as specified
herein; and

G. You acknowledge that you have read this Agreement and Planet Beach’s Franchise Disclosure
Document, and that you have been given an opportunity to obtain clarification of any provision that
you did not understand. You also understand and agree that the terms and conditions in this
Agreement are necessary to maintain Planet Beach’s high standards of quality and service, and the
uniformity of those standards at all Planet Beach Spas.

 

 

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, mutually agree as follows:

1. GRANT AND TERRITORY

1.1. Grant. Planet Beach hereby grants you for a term of 10 years (“Term”) the
non-exclusive right and license to serve as an independent representative of Planet Beach in order
to recruit prospective franchisees in the Territory described in the Data Sheet (the “Territory”)
and provide certain services to franchisees (as provided below) in the Territory in strict
accordance with the System and under the Proprietary Marks. Each Spa sold in the Territory shall
operate according to the terms of an individual Single Unit Franchise Agreement (“Franchise
Agreement”), a copy of which is attached hereto as Exhibit 1, which may be modified from time to
time by Planet Beach

1.2. Reservation of Rights. Planet Beach retains the right, among others, to: (i) establish
and grant others the right to develop and establish Planet Beach Spas outside the Territory; and
(ii) use the Proprietary Marks within your Territory in alternative forms of distribution for
selling its products including, but not limited to, tanning beds, spa equipment, lotions and other
products. Such forms of distribution include, without limitation, offering Planet Beach products
within health clubs, beauty salons, spas, stores, boutiques and other locations, as well as through
fixed stores, the internet and mail order sales.

1.3. Additional Territory. You may purchase an additional Territory under the following
conditions:

1.3.1. Your Spa is open and operating in your current Territory and you are
compliant with your Franchise Agreement;

1.3.2. There are a minimum of 3 other Spas open and operating in your Territory that
are compliant with their Franchise Agreements;

1.3.3. The additional Territory you wish to purchase is contiguous with your current
Territory; and

1.3.4. You execute the then-current Area Representative Agreement contemporaneous
with the then-current Single Unit Franchise Agreement for a Spa located within the
additional Territory.

1.3.5. You have no outstanding balances owed to Planet Beach.

1.4. Sale of Your Spa. You may sell your Spa to a buyer who we approve and who will sign a
then-current Single Unit Franchise Agreement after your Spa has been in operation for 36 months.

2. TERM AND RENEWAL

2.1. Term. The initial term of this license shall begin on the Effective Date set forth on
the Data Sheet by Planet Beach and shall expire at midnight on the tenth anniversary of the
Effective Date.

2.2. Renewal. You have the right to renew this Agreement for additional 5-year terms, if
you meet the following conditions on the date of expiration of the Initial Term or any Renewal
Term:

     2.2.1. You are in compliance with all the terms and conditions of this Agreement at the time
of renewal and have substantially complied with the terms of this Agreement and with the operating

 

 

standards established by Planet Beach throughout the initial term and any renewal term of this
Agreement;

     2.2.2. You have satisfied all monetary obligations owed to Planet Beach and its affiliates;

     2.2.3. You are in compliance with all other agreements with Planet Beach and/or its
affiliates;

     2.2.4. You have provided Planet Beach with written notice of your intention to renew the Area
Representative Agreement at least 90 days but not more than 180 days prior to expiration of the
then current term;

     2.2.5. You execute Planet Beach’s then-current form of area representative agreement, which
may vary materially from the terms of this Agreement, which when executed, will supersede this
Agreement in all respects; and

     2.2.6. You sign a general release in the form prescribed by Planet Beach, in favor of Planet
Beach and its affiliates and their respective officers, directors, agents, and employees, for all
claims arising out of or related to this Agreement or any related agreements with Planet Beach and
its affiliates.

3. AREA REPRESENTATIVE FEES

3.1. In consideration of the rights granted under this Agreement, you must remit to Planet Beach an
Area Representative Fee in the amount set forth in the Data Sheet (the “Area Representative Fee”),
which is deemed fully earned upon payment and non-refundable.

3.2. This Agreement is not a Franchise Agreement and does not authorize you to operate Spas under
the System, and you have no right to use the System and Proprietary Marks in any manner by virtue
of this Agreement, other than as necessary to recruit individual franchisees and to manage and
supervise Planet Beach franchisees within the Territory.

3.3. You may own and operate additional Spas under the System within the Territory upon the
execution of our then-current franchise agreement, and payment of the initial franchise fee which
will be discounted by 1/2 for each Spa to be opened within the Territory. You are subject to the
same procedures for site approval and subject to the same standards of quality control for each Spa
as other Planet Beach franchisees of the System within the Territory.

4. MANDATORY DEVELOPMENT SCHEDULE

4.1. Immediately following the execution of this Agreement, you must immediately commence
procedures to open Your Spa in the Territory and comply with the terms and conditions of the
Franchise Agreement. You will remit to Planet Beach a royalty fee as set forth in your Franchise
Agreement.

4.2. Immediately following the execution of this Agreement, you must immediately commence a
franchise sale(s), marketing and development program for the Territory using Planet Beach’s
previously approved or prepared sales materials, and will establish and operate yourself or recruit
third parties to establish and operate at least 4 Spas per year in the Territory until your
Territory is saturated in accordance with paragraph 4.3 hereof. Once your Territory is saturated,
you will continue to provide support and training to the franchisees in your Territory as further
discussed below in Paragraph 8.

4.3. You shall ensure that there is a minimum of 1 Spa per market population of 40,000 people (the
“Saturation Point”). Your Territory will consist of a population as designated by PBFC. At 1,
000,000 the

 

 

Saturation Point is 25 Spas. After you reach the Saturation Point, you must award an additional
Spa in your Territory per 40,000 population increase in order to reach the Saturation Point again.
Your development obligation hererin shall be referred to as the “Mandatory Development Schedule.”

4.4. The sale of any Spas in excess of the minimum number required under your Mandatory Development
Schedule in any time period shall be credited to the subsequent time period. If you fail to meet
your Mandatory Development Schedule, in your first calendar year as an Area Representative, you
will have a 9 month period to cure the default.

4.5. Planet Beach and Area Representative hereby acknowledge and agree that the Mandatory
Development Schedule contained herein is a fair and reasonable time frame for the development of
Spas within the Territory and is an accurate reflection of market demand without over saturation of
Planet Beach’s proprietary services offered under the System.

5. TRAINING

5.1. Area Representative Program. You must successfully complete each of Planet Beach’s 3
training programs as described below in Paragraphs 5.1.1, 5.1.2 and 5.1.4 prior to beginning
operations. You must attend the program immediately following your execution of the Agreement.
Planet Beach will provide these training programs tuition-free to you. You shall be solely
responsible for all other training-related expenses including, without limitation, travel expenses
to and from the training site, lodging accommodations for additional persons, and dining expenses.
These training programs will be in addition to the training required under the Single Unit
Franchise Agreement.

     5.1.1. Area Representative Planet Beach University Training. You must complete all
Area Representative required courses or certifications of Planet Beach University, a web-based
training and certification program prior to attending further Area Representative, Grand Opening
Specialist or Mentor training.

     5.1.2. Area Representative Training. You must attend Special Training, a 5-day
program conducted at Planet Beach’s headquarters.

     5.1.3. Mentor Training. You must attend Area Representative Mentor Training, a 3-day
program in which you will work in the field with an Area Representative designated by Planet Beach.

     5.1.4.
Grand Opening Specialist (G.O.S.) Certification. You are required to
provide G.O.S. services to the spas awarded within your Territory, as further explained in
Paragraph 8.10 below. You and an approved G.O.S., if you so chose to hire one, must obtain G.O.S.
Certification. G.O.S. Certification consists of, without limitation, courses on Planet Beach
University Online, Classroom training at Planet Beach headquarters or at a location
designated by Planet Beach, Grand Opening Shadow Training as further described in Paragraph 6 of
the Franchise Agreement, and any other additional training and seminars as designated by Planet
Beach. G.O.S. Certification must be maintained annually through refresher courses.

     5.1.5. IFA Compliance Course. You must successfully complete this online compliance
course offered through the International Franchise Association prior to attending Area
Representative and Mentor Training. You are solely responsible for tuition and all related
expenses.

5.2. Additional Training Programs and Seminars. Planet Beach has the right to require you
to attend additional training and/or to complete compliance courses. Planet Beach will not require
your participation more than 2 times per year. You are solely responsible for tuition and all
training-related expenses including, without limitation, travel expenses and living and dining
accommodations.

 

 

5.3. Discovery Day. You must attend Discovery Day at Planet Beach’s headquarters with the
first qualified prospective franchisee(s) you submit to Planet Beach.

5.4. Two Annual Conferences. You must attend both conferences, one of which will coincide
or immediately precede Planet Beach’s Annual Convention, unless exigent circumstances exist and you
receive Planet Beach’s prior approval not to attend, or in the event that the nature of the exigent
circumstances renders obtaining prior approval impracticable, you must notify Planet Beach of the
reasons for your non-attendance as soon as it becomes practicable. All costs related to the Annual
Conferences, including but not limited to, travel expenses, lodging and entertainment shall be your
sole responsibility.

6. CONFIDENTIAL OPERATIONS MANUAL

Planet Beach will loan you one copy of its confidential Area Representative operations manual(s)
(the “Operations Manual”), containing policies, procedures, standards, specifications and methods
of operating as a Planet Beach Area Representative. Planet Beach has the right to amend and
supplement the Operations Manual from time to time in its discretion. The contents of the
Operations Manual are protected by the Copyright law of the United States and may not be disclosed
to any person or entity not affiliated with Planet Beach and may not be duplicated, copied,
reproduced or altered in any way. Planet Beach will post its Operations Manual on its website,
accessible only to Planet Beach and its franchisees, it shall be in “read only” format and may not
be downloaded, saved, copied, duplicated, distributed or altered in any way. A violation of Planet
Beach’s copyright will be punishable to the maximum extent permitted by law. Area Representative
acknowledges and agrees that the Confidential Operations Manual is proprietary and a confidential
trade secret owned by Planet Beach, and will at all times treat these documents and materials as
such. Area Representative must take all reasonable steps to maintain such information as
confidential, restrict and prohibit unauthorized access to the Operations Manual and prohibit any
copying, duplication or recording of any information contained therein. Planet Beach may from time
to time update and revise the contents of the Operations Manual and distribute supplements thereto,
and Area Representative expressly agrees to comply with each new or changed standard.

7. DUTIES OF PLANET BEACH

Planet Beach will furnish the following services, information and personnel to the Area
Representative.

7.1. Marketing. Planet Beach will make available to you, at your own expense, all
materials, layouts, business cards, stationary, Franchise Disclosure Documents and other
promotional items necessary to attract new franchisees and promote the business and goodwill of the
System.

7.2. On-Going Support. Upon your request, Planet Beach will review your operation and
techniques in franchise sales and support services, and may suggest methods of improvement.

7.3. Franchise Disclosure Document (“FDD”). Planet Beach will prepare and keep current the
necessary Franchise Disclosure Document relative to the offer and sale of Spas in the Territory.
If your territory is in a registration state, Planet Beach shall also register Planet Beach’s
Franchise Disclosure Document. You are responsible for timely providing and updating true and
accurate information required to be disclosed in the Franchise Disclosure Document by applicable
law.

PLANET BEACH RESERVES THE RIGHT TO WITHHOLD FROM YOU ANY PRODUCTS, SERVICES, MAINTENANCE,
INFORMATION, ADVICE, CONSULTATION AND TRAINING, TO DIRECT SUPPLIERS NOT TO OFFER SYSTEM DISCOUNTS,
TO DELETE YOUR SPA

 

 

FROM THE PLANET BEACH WEBSITE, AND TO DENY YOU ACCESS TO PLANET BEACH’S COMPUTER SYSTEM IF YOU ARE
NOT IN COMPLIANCE WITH THE TERMS OF THIS AGREEMENT OR THE OPERATIONS MANUAL.

8. DUTIES OF THE AREA REPRESENTATIVE

In addition to your obligation to meet the Mandatory Development Schedule described in paragraph 4
above, you agree to perform the following obligations in a diligent and timely manner:

8.1. Generally. You must submit to Planet Beach for prior approval all sales, promotional,
and advertising and other materials, which you intend to use to recruit new franchisees. Planet
Beach will notify you of its approval of the proposed materials and programs within 10 days after
receipt thereof. If Planet Beach does not approve such material and programs within such period,
such material shall be deemed disapproved and Area Representative shall not use such materials in
any manner. Planet Beach shall use reasonable efforts to respond within said 10 day period and
shall not unreasonably withhold or delay approval.

8.2. Compliance with Planet Beach’s Policies and Procedures. You agree to follow and
enforce in your Designated Market Area (DMA), Planet Beach’s standards, specifications, policies
and procedures as set forth in the Area Representative Operations Manual and/or Training Manual, as
it may be amended from time to time, or otherwise in writing. Planet Beach will have the sole
right and distinction to make policy decisions concerning every aspect of your sales, promotions,
advertising and other programs.

8.3. Compliance with Standards and Specifications. Planet Beach has created and developed
special procedures, standards and methods for operating and maintaining Spas, which standards are
incorporated in Planet Beach’s Confidential Operating Manual. You shall ensure that each Spa within
the Territory is developed and operated solely in accordance with Planet Beach’s requirements and
specifications as set forth in the Confidential Operating Manual, and periodically inspect and
secret shop or use other techniques as required by Planet Beach, which may be changed from time to
time.

8.4. Compliance with Franchise Agreement. Area Representative will ensure that all signs,
equipment, fixtures, supplies, design, layout and maintenance of each Spa conforms to the plans and
specifications set forth in the Operations Manual. Area Representative will take all necessary
steps to enforce the terms of each individual Franchise Agreement executed for a Spa within its
Territory and the provisions of the Operations Manual, as amended.

8.5. Representations and Earnings Claims. You will make no earnings claims, promises,
representations or commitments to any prospective franchisee other than as stated in the
then-current Franchise Disclosure Document and/or Franchise Agreement, and will only make offers
and presentations pertaining directly or indirectly to the Spa in strict compliance with the laws
of the United States, and any other applicable laws and regulations.

8.6. Applicable Laws. You will act (and require your employees to act) in a professional,
ethical and responsible manner. You must not violate any federal, state or local law in connection
with the offer or sale of franchises, and you must specifically abide by all valid and enforceable
laws, rules and regulations by appropriate regulatory bodies regarding franchising. You are
responsible for registering yourself as a franchise broker directly with all state franchise
authorities where applicable.

8.7. Compliance with Disclosure Laws. All sales of Spas by Area Representative and any
acts incident thereto shall be in strict accordance with the FTC Disclosure Document or Franchise
Disclosure Document prepared by Planet Beach relative to the sale of Planet Beach franchises. You
will furnish the appropriate and

 

 

currently-approved version of the disclosure document and any other required documents to
prospective franchisees, comply with the requirements for timing of disclosure, and obtain and
deliver to Planet Beach an original signed receipt for each disclosure document. At the first
personal meeting, as defined by the FTC, with a prospective franchisee, you must reveal the fact
that you are an Area Representative and franchise broker for Planet Beach, and not an employee,
agent or salesperson. You will further acknowledge that you have no power to bind Planet Beach or
enter into any agreements with the prospective franchisee other than as specifically authorized in
writing by Planet Beach.

8.8. Supervision.

     8.8.1. Personal Supervision. You, or your duly authorized representative, must provide
supervision to all Spas within the Territory. Such supervision shall include, but not be limited
to, on-site supervision during the period of time prior to the opening of the Spa; review of
proposed leases and contracts; consultation and assistance with regard to grand opening of the Spa;
provide supplemental training and assistance of all material aspects of the operation of a Spa, as
needed, in accordance with Planet Beach’s requirements; periodic and regular telephone calls and
weekly visits to monitor operations of the Spas, continuous advisory services to franchisees,
ongoing training and updates for all Spas within the Territory. You agree to perform such duties
pursuant to Planet Beach’s requirements set forth in this Agreement, the Confidential Operations
Manual or otherwise in writing, all of which may be changed from time to time by Planet Beach. If
at any time it is determined that you are not fulfilling these requirements, Planet Beach may
mandate that you hire additional support staff or management team as described below in section
8.8.2.

     8.8.2. Management Team. At your request, Planet Beach may permit you to operate your
duties through a management team. Your management team must successfully complete Planet Beach’s
required training programs as described in Paragraph 6 of the Franchise Agreement, as well as the
training described in Paragraph 5 above prior to communicating with franchisees. You are solely
responsible for tuition and all training-related expenses including, without limitation, travel
expenses, living and dining accommodations, and employee salaries. Your management team must sign
a Confidentiality and Non-Compete Agreement in the form attached as Exhibit 4 to this Agreement
prior to assuming its responsibilities. However, the appointment of a management team shall not
relieve you of any duties or obligations under this Agreement.

8.9. Recruiting and Discovery Day. In recruiting prospective franchisees, Area
Representative shall make every effort to locate persons of good standing, professional competence,
experience, reputation, ability and financial responsibility. You must submit to Planet Beach
written and completed applications of all qualified prospective franchisees together with such
additional information and comments, including credit and background information, as specified by
Planet Beach on terms specified by Planet Beach. Within 10 days of receipt Planet Beach will
notify Area Representative and the prospective franchisee of acceptance or rejection of such
application. All qualified prospective franchisees must also attend Discovery Day at Planet
Beach’s headquarters. The cost for travel will be the responsibility of the prospective
franchisee, and the cost for the hotel will be either the responsibility of you or the prospective
franchisee. Any other Discovery Day expenses, such as meals and entertainment, will be your
responsibility. Planet Beach’s determination, for which it will have complete discretion, will be
conclusive, final and binding. Planet Beach will not unreasonably withhold or delay its acceptance
of a prospective franchisee or its manager.

8.10. Grand Opening Specialist. For Your Spa, Planet Beach will provide you with one Grand
Opening Specialist (“G.O.S.”) at no cost to you and Paragraph 8.10 will not apply to Your Spa. For
all other Spas in your Territory, whether awarded by you or not, you solely will hire and provide 1
G.O.S. per single unit franchise and 1 G.O.S. per multi-unit franchise. You or a designated
Representative may perform the duties of a G.O.S. after completing G.O.S. Certification Training as
explained in Paragraph 5.1.4 above or you may

 

 

hire someone who has successfully completed G.O.S. Certification Training and has been approved by
Planet Beach. All G.O.S. Training costs are your sole responsibility.

8.11. Training. You must provide new franchisees within the Territory 5-days of on-site
opening training during the first 2 weeks the new Spa is opened in accordance with Planet Beach’s
policies and specifications. Area Representative must also perform a 3-day on-site follow-up
training session in the third month after the date designated for grand opening of a franchisee’s
Spa. This training is in addition to the training offered the new franchisees in the franchise
agreement.

8.12. On-Going Assistance and Support. Area Representative must advise all Spas within the
Territory of problems arising out of the operation of any Spa as disclosed by periodic reports
submitted to Area Representative or Planet Beach by a franchisee, or by inspections conducted by
Area Representative or Planet Beach of the Spas within the Territory. Area Representative must
provide each Spa within the Territory with such assistance in connection with the operation of such
Spa as is reasonably determined to be necessary by Planet Beach. Operational assistance may consist
of advice and guidance with respect to:

     8.12.1. Proper utilization of procedures developed for a Spa with respect to operations and
management, recruitment of personnel, advertising and promotion, managing spa expenses, customer
service, membership and retail sales, compliance with training and certification, standards and
related activities as approved by Planet Beach and as required in the Single Unit Franchise
Agreement and Operations Manual;

     8.12.2. Additional services authorized for Spas within the Territory;

     8.12.3. Purchase of equipment, products, inventory, materials, and supplies;

     8.12.4. The institution of proper administrative bookkeeping, accounting, inventory control,
supervisory and general operating procedures for the effective operation of a Spa;

     8.12.5. Advertising, catalog and promotional programs;

     8.12.6. Marketing and negotiating techniques to be employed when dealing with prospective
customers, clients and vendors; and

     8.12.7. Maintenance of the Spa’s premises.

8.13. Communication and Consultation. Area Representative must make contact with all Spas
within the Territory for the purposes of clear communication and consultation, assistance and
guidance of franchisees and directors of each Spa, and Area Representative or its representatives
will prepare, for benefit of both Area Representative and Planet Beach, written reports regarding
these regular contacts outlining any suggested changes or improvement in the operations of the Spa
and detailing any defaults in such operations which become evident as a result of any such contact,
and a copy of each such written report must be provided to both the franchisee or its manager and
Planet Beach at the end of each quarter, March 31, June 30, September 30 and December 31,
respectively.

8.14. Seminars by Area Representative. Area Representative shall notify Planet Beach in
writing and provide an agenda at least 4 weeks prior to conducting any such regional seminars. At
your request, Planet Beach may provide one person as an instructor and/or speaker at each regional
seminar. The cost of travel, lodging and meals for the Planet Beach representative will be your
responsibility.

     8.14.1. Seminars for Spa. Not less than once every 3 months, Area Representative will
arrange for and conduct regional seminars within the Territory for all Spas within the Territory.
Such seminars for Spa

 

 

shall include, without limitation, training and general advisory assistance for the Spa within the
Territory. Area Representative Spa Performance Consultants may elect to assist Area Representative
in creating content and training materials for spa seminars.

     8.14.2. Seminars for Prospective Franchisees. Not less than once every 3 months, Area
Representative will arrange for and conduct regional seminars within the Territory for all
prospective franchisees within the Territory. Such seminars for prospective franchisees shall
include, without limitation, marketing, promotion, and general education of the Planet Beach
franchise.

8.15. Seminars by Planet Beach. Area Representative, or an appointed representative, must
attend any Area Representative seminars or training sessions held by Planet Beach. Area
Representative shall be responsible for travel, meals and lodging and other related expenses
relating to such training sessions.

8.16. Daily Production Reports. You must ensure that the franchisees in your Territory
e-mail to or fax to you or Planet Beach on the last day of each month their monthly Daily
Production Reports (“DPR”). E-mail will be through Planet Beach’s website. You must review DPR’s
and consult franchisees in an effort to achieve monthly spa goals.

8.17. Management and Financial Reviews. Not less than once every 3 months, Area
Representative must conduct management and financial reviews with each Spa. As a part of these
reviews, an evaluation form, which will be mutually approved by Planet Beach and Area
Representative, will be included to determine if Area Representative is satisfactorily performing
its duties and obligations under the terms of this Agreement. Area Representative will remit the
management and financial review form, together with the Area Representative evaluations to Planet
Beach within 10 days after its receipt of such reviews.

8.18. Books and Records. Area Representative must keep accurate records concerning all
transactions and communications between Planet Beach, Area Representative and franchisees relating
to the operation of any Spa in the Territory, and Planet Beach’s duly authorized representative
shall have the right at all reasonable hours to examine all such records, and shall have full and
free access to these records for said purpose and for the purpose of making extracts from these
records. All such records shall be available for at least 3 years after the termination or
expiration of this Agreement for any reason whatsoever.

8.19. Local Advertising. Subject to terms of paragraph 7.1 above, Area Representative
agrees to create and develop local advertising and promotional programs for the purpose of
recruiting prospective franchisees within the Territory and agrees to implement the use of such
advertising and promotional programs once approved by Planet Beach. Area Representative agrees to
expend not less than $1,000 per calendar month, for the purpose of recruiting new franchises. The
advertising and promotional program will include only local and regional advertising media specific
to the Territory and will not include national media advertising or franchise trade shows. An
advertising and promotional program budget will be submitted by Area Representative each quarter
and will be mutually agreed upon 30 days prior to the beginning of each calendar quarter. Area
Representative must submit copies of all advertising and receipts for advertising expenditures no
later than the 5th of every month for the previous month.

8.20. Marketing Cooperatives. Area Representative, upon consultation with and approval of
Planet Beach’s marketing director, will have the right to establish a Cooperative Marketing and
Promotional Association (“CMPA”) of the purpose to solicit contributions to CMPA from franchisees
within the Territory. Area Representative hereby agrees to assist Planet Beach in ensuring that
individual franchisees comply with the provisions hereof regarding the contribution to CMPA and the
use of marketing, promotional and other materials.

 

 

8.21. Trade Shows. In the event Area Representative participates in a franchise trade show
which participation will be at the Area Representative’s discretion, Area Representative will be
responsible for all expense associated with staffing of the booth at the trade show. You will be
solely responsible for the display booth, including shipping the booth to and from the trade show,
sales and promotional material, and costs to exhibit in the trade show. Planet Beach will only be
responsible for the travel and lodging expenses of any Planet Beach personnel who may attend the
trade show.

8.22. Default by Area Representative. In the event Area Representative fails to perform
any of these duties or any other obligations imposed on it by the terms of this Agreement, after
being given a 30 day period of time to resolve, correct, or otherwise bring into compliance any
terms of this Agreement, Planet Beach has the right but not the obligation to perform said duties
or obligations and Area Representative hereby agrees to remit Planet Beach the sum of $300.00 per
day via Planet Beach’s Autodraft system for each representative of Planet Beach for its services in
connection therewith together with any expenses incurred by Planet Beach in so performing,
including travel, meals and lodging expenses. Any portion of any royalty payments or other
payments owed by Planet Beach to Area Representative hereunder may be offset by any amounts owed by
Area Representative to Planet Beach if Planet Beach is required to so perform any of Area
Representative’s duties or obligations under the terms of this Agreement. In the event Planet
Beach performs duties for the Area Representative, without waiving any of Planet Beach’s rights
including, without limitation, those described in Paragraph 15 below, the Area Representative’s
share of the royalty payments, set forth in Paragraph 10, will cease until the default is cured.

8.23. Termination or Expiration of Franchisees. In the event of a termination or
expiration of a franchise agreement with a franchisee in your Territory, you will assist in
ensuring that the de-identification process and other post-termination/expiration obligations of
the franchisee, as stated in the franchise agreement, are complied with. This assistance will
include, without limitation, removing all proprietary materials and/or information from the spa, in
particular the customer list/data, contacting and/or notifying the members of the spa via phone,
e-mail and/or notice in the local paper regarding termination and/or change of ownership of the
spa, notifying other spas within your Territory of membership reciprocation if applicable, ensuring
that the Planet Beach sign is removed from the spa, remarketing the spa and/or the area surrounding
the spa, and/or all other necessary actions as directed by Planet Beach. Any expenses incurred
will be the responsibility of the Area Representative.

9. USE OF SYSTEM AND PROPRIETARY MARKS

9.1. Ownership. Area Representative acknowledges that the name Planet Beach and all other
Proprietary Marks licensed hereunder or subsequently developed are owned by Planet Beach
Franchising Corporation, and that only Planet Beach, Area Representative and Planet Beach’s
designated franchisees have the right to use such Proprietary Marks and such other trade names,
trademarks, service marks and copyrights as may presently exist or be acquired and licensed for use
by Planet Beach, along with ancillary signs, symbols or indicia used in connection or conjunction
with said Proprietary Marks. Area Representative further acknowledges, and will not contest,
infringe or harm Planet Beach’s exclusive ownership and rights to each and every aspect of the
System

9.2. Goodwill. Area Representative acknowledges that valuable goodwill is attached to such
trade names, trademarks and service marks and that it will use such Proprietary Marks only in the
manner and to the extent specifically licensed by this Agreement.

9.3. Territorial Limits. Area Representative’s right to market the System and establish
and sell Spas is specifically limited to the Territory, and is subject to the supervision and
control of Planet Beach as provided herein. Area Representative’s rights will terminate upon the
expiration or termination of the Agreement for any reason whatsoever.

 

 

9.4. Other Covenants. Area Representative acknowledges that the Proprietary Marks
constitute a significant aspect of the System and Area Representative agrees that such Proprietary
Marks will not be used as the name, or part of any name, of any corporation, partnership or any
entity under which Area Representative or any franchisee within the Territory transacts any
business. Area Representative’s use of the marks is subject to the control and approval of Planet
Beach in every respect.

9.5. Notification of Actions. If a claim is asserted by others of a prior use of the
Proprietary Marks with respect to a similar business within the Territory, Planet Beach will defend
such claims, and/or modify or cause to be modified, the Proprietary Marks in any manner as
necessary. Area Representative must give written notice to Planet Beach within 5 days of acquiring
such knowledge concerning use by others within the Territory of the same or confusingly similar
marks or the Proprietary Marks.

9.6. Modification. If Planet Beach at any time in its sole discretion determines that it is
advisable for Area Representative and/or individual franchisees to modify or discontinue use of any
Proprietary Marks, and/or use one or more additional trade names, trademarks, service marks or
other commercial symbols, Area Representative agrees to comply therewith within a reasonable time
after notice thereof by Planet Beach. Area Representative also agrees to utilize its best efforts
to cause franchisees within the Territory to comply likewise, at the sole cost and expense of the
franchisees.

9.7. Internet Usage. If you maintain an internet site, you may not register or use the
words “Planet Beach” in your domain name. An individual website may only be operated and
maintained through Planet Beach’s website.

10. REMUNERATION OF THE AREA REPRESENTATIVE

The Area Representative’s principal source of income under this agreement will be derived from its
share of the revenues generated by the sale and operation of Spas within the Territory. The Area
Representative will be entitled to its share of the initial franchise fees and ongoing royalties
due under the individual Franchise Agreements for the Territory, provided that, Area Representative
fully and diligently performs its obligations throughout the term of this Agreement.

10.1. Escrow and/or Deferral of Initial Franchise Fees. In the event that applicable
state and/or federal law requires Planet Beach to defer receipt of the initial franchise fees
and/or place said fees into an escrow account until the Spas open for business, you will be paid
your percentage of said fees (as described in Paragraphs 10.2 and 10.3 below) once said fees are
received by Planet Beach or removed from escrow.

10.2. Spas Generated and Awarded by Area Representative.

     10.2.1. Initial Franchise Fees and Any Multi-Unit Option Fees.

          10.2.1.1. Fees for Spas Sold Within Your Territory. Planet Beach shall remit to you
50% of the initial franchise fee and any multi-unit option fees collected upon the sale of the
franchise and due to Planet Beach for each Spa sold within your Territory by you through a lead
generated and awarded by you. Planet Beach shall remit said sum within 30 days of cleared funds.

          10.2.1.2. Fees for Spas Sold Outside of Your Territory. Planet Beach shall remit to
you 20% of the initial franchise fee and any multi-unit option fees collected upon the sale of the
franchise and due to Planet Beach for each Spa sold outside of your Territory by you through a lead
generated and awarded by you. Planet Beach shall remit said sum within 30 days of cleared funds.

     10.2.2. Assignment or Renewal Fees. Area Representative shall be entitled to 50% of
any monies received by Planet Beach for assignment or renewal fees of Spas awarded by you within
your Territory.

     10.2.3. Royalty Fees. All Spas awarded by you within your Territory shall remit to
you royalty and service payments due under the individual Franchise Agreement to Planet Beach,
based on the percentage of gross sales for each Spa. In consideration of the ongoing supervisory
and support services provided by the Area Representative, Planet Beach shall remit 40% of all
royalty fees received by Planet Beach to Area Representative.

10.3. Spas not Generated or Awarded by You.

     10.3.1. Initial Franchise Fees and Any Multi-Unit Option Fees. In the event that a
franchise broker generates a lead and subsequently awards a Spa within your Territory, Planet Beach
shall remit to you 50% of the Net Franchise Fee collected upon the sale of the franchise. “Net
Franchise Fee” is defined as the remaining sum after: (i) broker fees/commissions as agreed by and
between Planet Beach and broker, if any, plus (ii) Planet Beach fees/commissions plus (iii) 1%
administrative expenses are subtracted. Planet Beach shall remit said sum within 30 days of
cleared funds.

     10.3.2. Assignment or Renewal Fees. Area Representative shall be entitled to 50% of
any Net Monies received by Planet Beach for assignment or renewal fees of Spas within your
Territory. “Net Monies” is defined as the remaining sum after: (i) broker fees/commissions as
agreed by and between Planet Beach and broker, if any, plus (ii) Planet Beach fees/commissions plus
(iii) 1%

 

 

administrative expenses are subtracted. Planet Beach shall remit said sum within 30 days of
cleared funds.

     10.3.3. Royalty Fees. All Spas within your Territory shall remit royalty and service
payments due under the individual Franchise Agreement to Planet Beach, based on the percentage of
gross sales for each Spa. In consideration of the ongoing supervisory and support services
provided by the Area Representative, Planet Beach shall remit 40% of all royalty fees received by
Planet Beach to Area Representative.

10.4 Spas Generated by You and Awarded by Planet Beach.

     10.4.1. Initial Franchise Fees and Any Multi-Unit Option Fees. Upon your generation
of a lead, you can choose to engage the efforts of Planet Beach to obtain and award a Spa by
written agreement between you and Planet Beach. Planet Beach shall remit to you 20% of the initial
franchise fee and any multi-unit option fees collected upon the sale of the franchise due to Planet
Beach for each Spa sold within your Territory through a lead generated by you and awarded by Planet
Beach. Planet Beach shall remit said sum within 30 days of cleared funds.

     10.4.2. Assignment or Renewal Fees. Area Representative shall be entitled to 20% of
any monies received by Planet Beach for assignment or renewal fees of Spas awarded by Planet Beach
within your Territory.

     10.4.3. Royalty Fees. All Spas awarded by Planet Beach within your Territory shall
remit to you royalty and service payments due under the individual Franchise Agreement to Planet
Beach, based on the percentage of gross sales for each Spa. In consideration of the ongoing
supervisory and support services provided by the Area Representative, Planet Beach shall remit 40%
of all royalty fees received by Planet Beach to Area Representative.

10.5. Acknowledgments. Area Representative expressly acknowledges and agrees that its
rights to receive the amounts contemplated by this Paragraph 10 are conditioned on Area
Representative’s full, prompt and complete performance of its duties and obligations under the
terms of this Agreement. The responsibility for collection of all payments due under the
individual Franchise Agreements from franchisees rests solely with Planet Beach. The Area
Representative shall use its best efforts to ensure that all payments and reports are submitted to
Planet Beach on a timely basis.

10.6. Audits. Planet Beach has the right to inspect the books, records and tax statements
of the Area Representative. Such inspection will be at Planet Beach’s expense and a 5-business day
written notice shall be given to the Area Representative at his office prior to any inspection.

10.7. Referral. You will be entitled to a referral fee of up to $2,500 per referral for
any referral by you who subsequently becomes a franchisee outside of your Territory, but not in
another Area Representative’s Territory. This referral fee will be paid by Planet Beach once the
referred franchisee first opens its spa for business. In the event that a franchisee refers a
prospect who subsequently becomes a franchisee within your Territory, the referral fee will be paid
by you to that referring franchisee in an amount up to $2,500.

10.8. Payment of Fees. All fees, including but not limited to the franchise and royalty
fees, shall be paid to Planet Beach. Area Representative shall not accept any payment from any
existing or prospective franchisees. Planet Beach will not be required to maintain a separate
account or a separate set of books and records, and may commingle the fees in a general operating
account.

10.9. Royalty Fees for Your Spa. Planet Beach will receive 100% of royalty fees from your
Spa. If you own more than 1 Spa, Planet Beach will receive 100% of royalty fees from your
1st Spa and 60% of your royalty fees from each of your subsequent Spas.

 

 

11. COVENANTS

11.1. During the Term of this Agreement. During the term of this Agreement, neither
you nor any of your principals shall, directly or indirectly, through corporations, partnerships,
limited liability companies, trusts, associations, joint ventures, or other unincorporated
businesses, perform any services for, engage in or acquire, participate or have any financial or
other interest in any other business offering tanning and/or spa services or other services or
products offered by Planet Beach, or which engages in any business competing in whole or in part
with Planet Beach or which grants franchises or licenses for any business competing in whole or in
part with Planet Beach; provided, however, that this provision shall not apply to the operation of
any other Planet Beach franchised business pursuant to a valid franchise agreement with Planet
Beach.

11.2. After the Term of this Agreement. For a period of 2 years following termination or
expiration of this Agreement, or the termination of any principal’s interest in the area
representative opportunity, neither you nor any of your principals shall, directly or indirectly,
through corporations, partnerships, limited liability companies, trusts, associations, joint
ventures, or other unincorporated businesses, perform any services for, engage in or acquire,
participate or have any financial or other interest in any other business offering tanning and/or
spa services or other services or products offered by Planet Beach or which engages in any business
competing in whole or in part with Planet Beach or which grants franchises or licenses for any
business competing in whole or in part with Planet Beach: (1) within the Territory; (2) within a 10
mile area surrounding the perimeter of the Territory; or (3) within a 10 mile radius of any
Planet Beach location in existence on the date of expiration or termination of this Agreement;
provided, however, that this provision shall not apply to the operation of any other Planet Beach
area representative business pursuant to a valid area representative agreement with Planet Beach.
The aforesaid 2-year period shall be tolled during any period of noncompliance.

11.3. Spouses and Immediate Family Members. It shall be deemed a breach of this Agreement
if your spouse or children engage in any of the prohibited conduct.

11.4. Reformation. It is the intention of the parties that this section be enforced to the
fullest extent possible. If a court shall determine that it is not enforceable as drawn, then it
shall be reformed and enforced to the fullest extent lawful in the jurisdiction.

12. RELATIONSHIP OF THE PARTIES

12.1. Independent Contractor. The appointment of Area Representative pursuant to this
Agreement does not make Area Representative an agent, partner, legal representative or employee of
Planet Beach and the parties expressly agree that Area Representative is an independent contractor.
Area Representative does not have the right to bind Planet Beach, to transact any business or make
any promises or representations on behalf of Planet Beach, except as herein expressly provided.
Area Representative will at all times represent himself only as an independent contractor who has
been appointed and licensed as an Area Representative. Neither this Agreement nor the relationship
between the parties hereto constitutes a partnership or a joint venture between Area Representative
and Planet Beach. It is understood, acknowledged and agreed by the parties hereto that they do not
intend to create by this Area Representative Agreement any type of franchise relationship. The
relationship that exists between the parties is one of contracting for the services of Area
Representative as an independent representative for franchise sales and support and this Area
Representative Agreement is strictly a method to develop a program to sell and coordinate services
for Planet Beach and is not a master franchise, subfranchise, area development agreement, or any
other type of franchise relationship of any kind or nature. If any state regulatory agency deems
Area Representative to be a subfranchisee, Planet Beach shall assume responsibility for all
necessary franchise registration filings on

 

 

behalf of Area Representative and shall assume all costs for such necessary filing with appropriate
state agencies.

12.2. Area Representative as a Franchisee. Subject to any provisions contained in this
Agreement to the contrary, the relationship of Planet Beach and Area Representative with respect to
the ownership and operation by Area Representative of Spas within the Territory, if applicable,
will be governed by the individual Franchise Agreement(s) executed in connection therewith.

13. INDEMNIFICATION

13.1. The parties covenant and agree to indemnify and hold the other party harmless against and
from any and all claims, demands, judgments, damages, suits, losses penalties, expenses, costs,
settlements and liabilities of any kind or nature (including reasonable attorneys’ fees) arising or
resulting from any default in the observance, performance, or breach of any representation,
warranty, covenant or agreement made by the indemnifying party required to be performed, observed
or kept by that party, under this Agreement.

13.2. Each party will be responsible for all loss or damage originating from or in connection with
the operation of its respective headquarters, and for all claims or demands for damages to property
or for injury, illness or death of persons, directly or indirectly, resulting from said operation,
and agrees to indemnify and hold harmless the other party against and from any such claims, loss or
damage.

14. INSURANCE

14.1. Area Representative must maintain insurance that may be required by law in connection with
its business as the Area Representative, and must further maintain comprehensive general liability
coverage. In the event that Area Representative owns and operates any Spa, Area Representative must
maintain all insurance required under the individual franchise agreements pertaining thereto.

14.2. In connection with all areas of liability coverage, Area Representative must submit as proof
of such insurance a fully paid insurance policy naming Planet Beach and any other parties
designated by Planet Beach as additional insured parties, to Planet Beach for Planet Beach’s prior
approval before commencing the business contemplated hereunder. Any proposed changes in the
insurance policies must be submitted to Planet Beach for its prior approval. Area Representative
must furnish to Planet Beach a copy of the then prevailing insurance policies with assurances that
the specified insurance is in full force and effect; that the insurance covers Area Representative,
Planet Beach and other designated parties as their respective interest may appear, and that said
insurance policies will not be canceled or modified by the insurer without written notice to Planet
Beach at least 30 days prior to the proposed cancellation or modification including, but not
limited to, products liability, property damage, personal injury, owned and non-owned automobile
and contractual liability, with a combined single limit of at least $1,000,000.00 or such larger
amount as Planet Beach may reasonably require.

15. DEFAULT AND TERMINATION

The rights, licenses and territorial exclusivity granted to the Area Representative under this
Agreement have been granted in reliance on Area Representative’s representations and assurances,
among others, that the conditions and obligations set forth in Paragraphs 8 and 9 of this Area
Representative Agreement will be met and performed in a timely manner.

15.1. The rights, licenses and territorial exclusivity may be terminated upon the happening of any
of the following events:

 

 

     15.1.1. In the event the Area Representative is adjudicated bankrupt, becomes insolvent,
suffers a permanent or temporary court-appointed receivership of substantially all of Area
Representative’s property, makes a general assignment for the benefit of creditors or suffers the
filing of a voluntary or involuntary bankruptcy petition which is not dismissed within one year
after filing;

     15.1.2. If the Area Representative fails to comply with the Mandatory Development Schedule set
forth in Paragraph 4 herein within the 1st calendar year as an Area Representative,
Planet Beach, in Planet Beach’s sole discretion, may remarket and resell your territory. If the
Area Representative fails to also comply with the Mandatory Development Schedule set forth in
Paragraph 3 herein within any calendar year following their first year as an Area Representative
and default is not cured with in 6 months, Area Representative may be terminated;

     15.1.3. If there is not substantial compliance with Paragraph 8 herein, Planet Beach will
immediately give written notice of such substantial noncompliance. Upon receipt of notice of
non-compliance the Area Representative will have 30 days to respond in writing to Planet Beach with
its action plan to cure the non-compliance and an additional 30 days to establish compliancy. If
Area Representative is unable to establish compliancy after 60 days, the Area Representative may be
terminated.

     15.1.4. If there is not substantial compliance with Paragraph 8 herein and 75% of the
franchisees provide a written petition to Planet Beach that the Area Representative is not
substantially providing the franchise support as outlined in their individual Franchise Agreement
of which the Area Representative has direct control, Planet Beach will immediately give written
notice of such substantial noncompliance. Upon receipt of notice of non-compliance and franchisee
petition the Area Representative will have 60 days or such time as is reasonable to cure such
defaults; failure to cure said defaults may result in Area Representative’s termination.

15.2. The events of default and grounds for termination described in this Paragraph 15 will be in
addition to any other grounds for termination and remedies contained elsewhere in this Agreement or
in any individual Franchise Agreement executed between Planet Beach and the Area Representative.

15.3. Upon termination of this Agreement, the Area Representative will not have further rights to
receive any portion of any remuneration described in Paragraph 10 above, and Planet Beach will have
complete and exclusive rights to the franchise and royalty fees collected from each Spa within the
Territory.

15.4. In the event that Planet Beach must expend legal fees in order to get a Spa within your
Territory compliant, you will reimburse Planet Beach for 50% of said legal fees directly out of
your share of royalty fees from said non-compliant Spa.

15.5. No right or remedy herein conferred upon or reserved to Planet Beach is exclusive of any
other right or remedy provided or permitted by law or equity.

16. TRANSFERABILITY

16.1. Planet Beach has the right to assign this Agreement, and all of its rights and privileges
hereunder, to any person, firm, corporation or other entity provided that, with respect to any
assignment resulting in the subsequent performance by the assignee of the functions of Planet
Beach: (i) the assignee shall, at the time of such assignment, be financially responsible and
economically capable of performing the obligations of Planet Beach hereunder, and (ii) the assignee
shall expressly assume and agree to perform such obligations.

Specifically, and without limitation to the foregoing, Area Representative expressly affirms and
agrees that Planet Beach may sell its assets, its Proprietary Marks, or its System outright to a
third party; may go public;

 

 

may engage in a private placement of some or all of its securities; may merge, acquire other
corporations, or be acquired by another corporation; may undertake a refinancing, recapitalization,
leveraged buy out or other economic or financial restructuring; and, with regard to any or all of
the above sales, assignments and dispositions, Area Representative expressly and specifically
waives any claims, demands or damages arising from or related to the loss of said Proprietary Marks
(or any variation thereof) and/or the loss of association with or identification of “Planet Beach
Franchising Corp.” as Planet Beach hereunder.

Nothing contained in this Agreement requires Planet Beach to remain in the Tanning and/or Spa
business or to offer the same products and services, whether or not bearing Planet Beach’s
Proprietary Marks, in the event that Planet Beach exercises its rights hereunder to assign its
rights in this Agreement.

16.2. Area Representative understands and acknowledges that the rights and duties set forth in this
Area Representative Agreement are personal to the Area Representative and are granted in reliance
upon the individual or collective character, skill, aptitude and business and financial capacity of
Area Representative or its principals. Area Representative has represented to Planet Beach that
Area Representative is entering into this Area Representative Agreement with the intention of
complying with its terms and conditions and not for the purpose of resale of its rights and
obligations hereunder.

16.3. In the event that the Area Representative desires to sell its interest, right or license
under this Agreement, it must submit to Planet Beach, in writing, the terms and conditions of any
proposed sale or transfer, including the name or names of person or entity desiring to purchase
such interest, rights or license of the Area Representative. Planet Beach will have 30 days from
the date of the receipt of any notice of a bona fide offer to sell, to purchase the interest of the
Area Representative upon the same terms and conditions as set forth in the offer to sell to the
bona fide offeree. The right of first refusal granted hereunder to Planet Beach may be exercised
in connection with any offer to sell which may be made by the Area Representative during the entire
term of this Agreement and any renewal thereof. In the event that Planet Beach elects not to
purchase the interest, rights and licenses granted to the Area Representative, then the remaining
provisions of this Paragraph 16 shall apply.

16.4. Neither Area Representative nor any partner or shareholder thereof may, without Planet
Beach’s prior written consent, directly or indirectly sell, assign, transfer, convey, give away,
pledge, mortgage or otherwise encumber any interest in this Agreement without the prior written
consent of Planet Beach.

16.5. Planet Beach will not unreasonably withhold or delay its consent to the transfer of any
interest in the Area Representative; provided, however, that prior to the time of the transfer,
Planet Beach may, in its sole discretion require that:

     16.5.1. The transferee demonstrate to Planet Beach’s satisfaction that it meets Planet Beach’s
requirements that existed under the original Agreement and have the adequate financial resources
and capital to manage the Territory; and transferee must submit to Planet Beach an application in
the form prescribed by Planet Beach;

     16.5.2. At transferee’s expense and upon such other terms and conditions as Planet Beach may
reasonably require, transferee or transferee’s manager must complete any training course then in
effect for Area Representatives;

     16.5.3. Except in the case of a transfer to a corporation formed solely for the convenience of
ownership, a transfer fee of 10% of Planet Beach’s then-current Area Representative fee shall be
paid to Planet Beach from Area Representative;

 

 

     16.5.4. Area Representative’s execution of a general release, in a form prescribed by Planet
Beach, of all claims against Planet Beach, its affiliates and its officers, directors, agents, and
employees. Notwithstanding such release, Area Representative shall remain obligated under those
provisions of this Agreement that expressly extend beyond the term hereof; and

     16.5.5. Transferee’s execution of Planet Beach’s then-current area representative agreement.

16.6. Planet Beach shall have the irrevocable first right and option to purchase your business on
the same terms and conditions as any bona fide purchaser. If you receive an acceptable bona fide
offer from a third party to purchase the Territory or any or all of your assets, you shall provide
Planet Beach with a copy of the written purchase offer, which offer shall contain all of the terms
of the proposed sale and the identity of the proposed purchaser. At Planet Beach’s request, the
proposed purchaser shall promptly complete and submit to Planet Beach a franchise application and
any other information Planet Beach deems necessary, in its discretion, to evaluate the proposed
transferee. Planet Beach may exercise this right of first refusal by notifying you of Planet
Beach’s decision to do so in writing within thirty (30) days after receipt of all items required
above. Silence on Planet Beach’s part shall constitute rejection. If Planet Beach fails to
exercise this option, all provisions relating to assignment of this Agreement remain in full force
and effect. The election by Planet Beach not to exercise Planet Beach’s option as to any offer
shall not affect Planet Beach’s right of first refusal as to any subsequent offer. Any sale or
attempted sale without first giving Planet Beach the right of first refusal shall be void and of no
force or effect.

16.7. In the event of the death or permanent incapacity of the Area Representative, the spouse or
personal representative of Area Representative may, on request in writing to Planet Beach made
within 90 days of such death or permanent incapacity, continue to act as Area Representative under
this Agreement for a period of 1 year from the date such request is received by Planet Beach to the
expiration of the aforesaid 1 year period. Said spouse or personal representative must file with
Planet Beach an application for an Area Representative Agreement. Said spouse or personal
representative may, in the alternative, offer for sale the Agreement pursuant to the terms and
conditions of this section, including Planet Beach’s right of first refusal contained in paragraph
16.6.

If application is made to Planet Beach for an Area Representative Agreement, Planet Beach agrees to
authorize the person designated in such application to become an Area Representative under this
Agreement for the balance of the term hereof provided that such person substantially meets Planet
Beach’s qualifications to become an Area Representative under the terms of this Agreement,
successfully completes all training required under this Agreement, and this Agreement is not in
default. No transfer fee will be required upon transfer of this Agreement to the surviving spouse,
heirs, beneficiaries or devisee of Area Representative. Except as provided in this Agreement, if
the area representative fails to take the above stated steps, it shall constitute a breach of this
Agreement.

17. RIGHTS AND OBLIGATIONS OF THE PARTIES UPON TERMINATION

17.1. Area Representative agrees that after the termination of this agreement, for any reason, it
shall:

     17.1.1. Promptly turn over to Planet Beach the identities of all prospective franchisees that
have been provided with our FDD and/or with whom Area Representative has communicated.

     17.1.2. Not directly or indirectly at any time or in any manner identify itself or any
business as a current or former franchisee, licensee or dealer of, or as otherwise associated with,
Planet Beach, or directly or indirectly use any of Planet Beach’s Proprietary Marks, any colorable
imitation thereof or other indicia of a Spa in any manner or for any purpose, or utilize for any
purpose any trade name, trademark, service mark or

 

 

other commercial symbol that suggests or indicates a connection or association with Planet Beach or
its affiliates and franchisees;

     17.1.3. Promptly return to Planet Beach all sign, Manuals, brochures, advertising materials,
forms, invoices and other materials containing any Proprietary Marks or otherwise identifying or
relating to the System or the operation of a Spa and allow Planet Beach, without liability, to
remove all such items from the Area Representative’s offices;

     17.1.4. Promptly take such action as may be required to cancel all fictitious or assumed name
or equivalent registrations relating to its use of any Proprietary Marks;

     17.1.5. Promptly notify the appropriate telephone company and all telephone directory listing
agencies of the termination or expiration of Area Representative’s right to use any telephone
numbers and any regular, classified or other telephone directory listings associated with any
Proprietary Marks and authorize transfer of same to or at the direction of Planet Beach. Area
Representative agrees to execute updated letters of direction to telephone companies and telephone
directory listing agencies directing termination and/or transfer of Area Representative’s right to
use telephone numbers associated with the Proprietary Marks, which Planet Beach may hold until
termination or expiration hereof. Area Representative acknowledges that as between Planet Beach
and Area Representative, Planet Beach has the sole right to and interest in all telephone numbers
and directory listings associated with any Proprietary Marks. Area Representative authorizes
Planet Beach, and hereby appoints Planet Beach and any officer of Planet Beach as its attorney in
fact, to direct the appropriate telephone company and all listing agencies to transfer same to
Planet Beach or at is direction, should Area Representative fail or refuse to do so, and the
appropriate telephone company and all listing agencies may accept such direction of this Agreement
or Area Representative’s letter of direction held by Planet Beach as conclusive of the exclusive
rights of Planet Beach in such telephone number and directory listings and its authority to direct
their transfer; and

     17.1.6. Furnish to Planet Beach, within 30 days after the effective date of termination or
expiration, evidence satisfactory to Planet Beach of Area Representative’s compliance with the
foregoing obligations.

17.2. Comply with the restrictive covenants contained in paragraph 11 of this Agreement.

17.3. If Area Representative at the time of expiration or termination of this Agreement is
operating one or more franchises pursuant to the terms of individual franchise agreements entered
into with Planet Beach, then all of the rights and obligations under such individual franchise
agreements will be applicable; however, to the extent of any conflict or inconsistency between any
individual franchise agreement and this Agreement, the provisions of the individual Franchise
Agreement will govern.

17.4. All obligations of Area Representative which expressly or by their nature service the
expiration or termination of this Agreement will continue in full force and effect subsequent to
and notwithstanding its expiration or termination and until they are satisfied in full or by their
nature expire.

18. CHANGES AND MODIFICATIONS

Planet Beach may modify this Agreement only upon the execution of a written agreement by Planet
Beach and Area Representative. Planet Beach reserves and will have the sole right to make changes
in the Manual, the System and the Proprietary Marks at any time and without prior notice to Area
Representative. Area Representative must promptly alter any signs, products, business materials or
related items, at its sole cost and expense, upon written receipt of notice of such change or
modification in order to conform to Planet Beach’s revised specifications. In the event that any
improvement or addition to the Manual, the System, or the Proprietary Marks is developed by Area
Representative, then Area Representative agrees to grant to

 

 

Planet Beach an irrevocable, world-wide, exclusive, royalty-free license, with the right to
sublicense such improvement or addition.

Area Representative understands and agrees that due to changes in competitive circumstances,
presently unforeseen changes in the needs of customers, and/or presently unforeseen technological
innovations, Planet Beach’s System must not remain static, in order that it best serve the
interests of Planet Beach, Area Representative, and the System. Accordingly, Area Representative
expressly understands and agrees that Planet Beach may from time to time change the components of
the System, including but not limited to, altering the programs, services, methods, standards,
forms, policies, procedures, and software of that System; adding to, deleting from or modifying
those programs, products and services which the Spa is authorized to offer; and changing, improving
or modifying the Proprietary Marks. Subject to the other provisions of this Agreement, Area
Representative expressly agrees to abide by any such modifications, changes, additions, deletions
and alterations.

19. NOTICES

All notices, requests and reports to be given under this Agreement shall be in writing, and
delivered by either hand; e-mail with a confirming receipt; overnight mail; certified mail, return
receipt requested, prepaid; or by facsimile transmission (except that regular monthly and other
reports from you may be sent by regular mail), to the address or fax number set forth in the Data
Sheet (which may be changed by written notice).

20. CHOICE OF LAW; DISPUTE RESOLUTION

20.1. Governing Law. This Agreement shall be deemed to have been made in the State of
Louisiana and shall be construed according to the laws of Louisiana without regard to its conflict
of laws, LCC Arts. 3515 et seq., and any amendments and/or revisions thereto.

20.2. Internal Dispute Resolution. Before commencing any legal action against Planet Beach
or its affiliates with respect to any such claim or dispute, you must submit a notice of dispute
which specifies, in detail, the precise nature and grounds of such claim or dispute to the Planet
Beach Legal Department. Resolution of your dispute may involve an external, neutral Ombudsman at
Planet Beach’s discretion. If your claim or dispute cannot be resolved, you must agree to a face
to face meeting between you, your attorney if you have retained one, a corporate representative
from Planet Beach and the General Counsel prior to engaging in mediation. This meeting may occur
at a neutral meeting place. You must exhaust these internal dispute resolution procedures before
proceeding to mediation.

20.3. Mediation. At Planet Beach’s option, all claims or disputes between you and Planet
Beach or its affiliates arising out of, or in any way relating to, this Agreement, or any of the
parties’ respective rights and obligations arising out of this agreement, shall be submitted first
to mediation, in Jefferson Parish, Louisiana under the auspices of the National Franchise Mediation
Program (“NFMP”), in accordance with the NFMP’s Commercial Mediation Rules then in effect. Before
commencing any legal action against Planet Beach or its affiliates with respect to any such claim
or dispute, you must submit a notice to Planet Beach, which specifies, in detail, the precise
nature and grounds of such claim or dispute. Planet Beach will have a period of 30 days following
receipt of such notice within which to notify you as to whether Planet Beach or its affiliates
elects to exercise its option to submit such claim or dispute to mediation. You may not commence
any action against Planet Beach or its affiliates with respect to any such claim or dispute in any
court unless Planet Beach fails to exercise its option to submit such claim or dispute to
mediation, or such mediation proceedings have been terminated either: (i) as the result of a
written declaration of the mediator(s) that further mediation efforts are not worthwhile; or (ii)
as a result of a

 

 

written declaration by Planet Beach. The parties shall each bear their own costs of mediation and
shall share equally the filing fee imposed by NFMP and the mediator’s fees. Planet Beach’s rights
to mediation, as set forth herein, may be specifically enforced by Planet Beach.

20.4. Arbitration. At Planet Beach’s option, all disputes and claims relating to this
Agreement or any other agreement entered into between the parties, the rights and obligations of
the parties, or any other claims or causes of action relating to the making, interpretation, or
performance of either party under this Agreement, shall be settled by arbitration in Jefferson
Parish, Louisiana in accordance with the Federal Arbitration Act and the Commercial Arbitration
Rules of the American Arbitration Association (“AAA”). Any arbitration proceeding, or any claim in
arbitration (including any defense and any claim of setoff or recoupment), must be brought or
asserted before the expiration of the earlier of (1) the time period for bringing an action under
any applicable state or federal statute of limitation; (2) 1 year after the date upon which a
party discovered or should have discovered, the facts giving rise to an alleged claim; or (3) 2
years after the first act or omission giving rise to an alleged claim. Claims of Planet Beach
attributable to the underreporting of sales and claims of the parties for indemnification shall be
subject only to the applicable state or federal statute of limitation.

The right and duty of the parties to this Agreement to resolve any disputes by arbitration shall be
governed by the Federal Arbitration Act, as amended. The following shall supplement and, in the
event of a conflict, shall govern any arbitration: If the claim is for less than $35,000 than the
matter shall be heard before a single arbitrator. If the claim, or a counterclaim, is for $35,000
or more, the matter may be heard before a panel of three (3) arbitrators if both parties agree and
each party shall appoint its own arbitrator, and the appointed arbitrators shall appoint a
“neutral” arbitrator from the AAA’s list of arbitrators. If the parties do not agree the matter
shall be heard before a single arbitrator. Arbitrability will be decided by the arbitrator.
Neither party shall pursue class claims and/or consolidate the arbitration with any other
proceeding to which the franchisor is a party. Each party must bear its own costs of arbitration
including the fee for their respective arbitrator; provided, however, that the neutral or the
single arbitrator’s fee shall be shared equally by Planet Beach and you.

The arbitrator’s award shall include all fees, costs and attorneys’ fees for the prevailing party.
The arbitrators shall have no authority to amend or modify the terms of the Agreement. To the
extent permitted by applicable law, no issue of fact or law shall be given preclusive or collateral
estoppel effect in any arbitration, except to the extent such issue may have been determined in
another proceeding between the parties. Judgment upon the award of the arbitrator shall be
submitted for confirmation to the United States District for the Eastern District of Louisiana and,
if confirmed, may be subsequently entered in any court having competent jurisdiction. This
agreement to arbitrate shall survive any termination or expiration of this Agreement.

20.5. Third Party Beneficiaries. Planet Beach’s officers, directors, shareholders, agents,
employees and/or affiliates are express third party beneficiaries of this Agreement and the
mediation and arbitration provisions contained herein, each having authority to specifically
enforce the right to mediate and arbitrate claims asserted against such person(s) by you.

20.6. Injunctive Relief. Nothing contained in this Agreement herein shall prevent the
parties from applying to or obtaining from any court having jurisdiction, without bond, a writ of
attachment, temporary injunction, preliminary injunction and/or other emergency relief available to
safeguard and protect the parties’ interest prior to the filing of any legal proceeding or pending
the trial or handing down of a decision or award pursuant to any legal proceeding conducted
hereunder.

20.7. Jurisdiction and Venue. With respect to any proceeding, the parties agree that any
action at law or in equity instituted against either party to this Agreement shall be commenced
only in the 24th Judicial

 

 

District Court for the Parish of Jefferson, Louisiana or the United States District Court for the
Eastern District of Louisiana at Planet Beach’s discretion.

20.8. Jury Trial Waiver. With respect to any proceeding, the parties hereby agree to waive
trial by jury in any action, proceeding or counterclaim, whether at law or equity, regardless of
which party brings suit. This waiver shall apply to any matter whatsoever between the parties
hereto which arises out of or is related in any way to this Agreement, the performance of either
party, and/or your purchase from Planet Beach of the franchise and/or any goods or services.

20.9. Waiver of Punitive Damages. You waive to the fullest extent permitted by law, any
right to or claim for any punitive, exemplary, incidental, indirect, special or consequential
damages (including, without limitation, lost profits) which you may have against Planet Beach, its
affiliates, successors or assigns, arising out of any cause whatsoever (whether such cause be based
in contract, negligence, strict liability, other tort or otherwise) and agree that in the event of
a dispute, recovery shall be limited to actual damages. If any other term of this Agreement is
found or determined to be unconscionable or unenforceable for any reason, the foregoing provisions
shall continue in full force and effect, including, without limitation, the waiver of any right to
claim any consequential damages.

20.10. Attorneys’ Fees. If either party institutes any judicial or arbitration proceeding
to enforce any monetary or non-monetary obligations or interpret the terms of this Agreement and
Planet Beach prevails in the action or proceeding, you shall be liable to Planet Beach for all
costs, including reasonable attorneys’ fees, incurred in connection with such proceeding.

20.11. Nonwaiver. Planet Beach’s failure to insist upon strict compliance with any
provision of this Agreement shall not be a waiver of Planet Beach’s right to do so, any law,
custom, usage or rule to the contrary notwithstanding. Delay or omission by Planet Beach
respecting any breach or default shall not affect Planet Beach’s rights respecting any subsequent
breaches or defaults. All rights and remedies granted in this Agreement shall be cumulative.
Planet Beach’s election to exercise any remedy available by law or contract shall not be deemed a
waiver or preclude exercise of any other remedy.

20.12. Class Action Waiver. You hereby agree to waive any class action proceeding or
counterclaim against Planet Beach, its affiliates, successors or assigns, whether at law or equity,
regardless of which party brings suit. This waiver shall apply to any matter whatsoever between
the parties hereto which arises out of or is related in any way to this Agreement, the performance
of either party, and/or your purchase from Planet Beach, its affiliates, successors or assigns of
the franchise and/or any goods or services.

21. CONSTRUCTION

21.1. Entire Agreement. This Agreement contains the entire agreement between the parties
concerning the area representative’s opportunity; no promises, inducements or representations not
contained in this Agreement have been made, nor shall any be of any force or effect, nor binding on
the parties. Modifications of this Agreement must be in writing and signed by both parties. Planet
Beach reserves the right to change Planet Beach’s policies, procedures, standards, specifications
or manuals at Planet Beach’s discretion. Nothing in the Agreement or in any related agreement is
intended to disclaim the representation we made in the franchise disclosure document.

21.2. Survival. Any provisions of this Agreement which may be reasonably interpreted to
impose any obligation after termination or expiration hereof shall survive such termination or
expiration and be binding upon the parties.

 

 

21.3. Severability. The parties agree that if any provisions of this Agreement may be
construed in two ways, one of which would render the provision illegal or otherwise voidable or
unenforceable and the other which would render it valid and enforceable, such provision shall have
the meaning, which renders it valid and enforceable. The language of all provisions of this
Agreement shall be construed according to fair meaning and not strictly construed against either
party. The provisions of this Agreement are severable, and this Agreement shall be interpreted and
enforced as if all completely invalid or unenforceable provisions were not contained herein, and
partially valid and enforceable provisions shall be enforced to the extent that they are valid and
enforceable. If any material provision of this Agreement shall be stricken or declared invalid,
the parties agree to negotiate mutually acceptable substitute provisions. In the event that the
parties are unable to agree upon such provisions, Planet Beach reserves the right to terminate this
Agreement.

21.4. Construction. The terms “Area Representative” and “you” shall be construed to refer
to the male or female gender in all cases where the Area Representative is an individual, masculine
or feminine modifiers and pronouns notwithstanding. The term “Area Representative” and “you”
include all persons or entities identified as “area representative” in the Data Sheet. The term
“principals” shall include your general and limited partners if you are a partnership; your
officers, directors and shareholders if you are a corporation; and your members and managers if you
are a limited liability company. The paragraph captions are inserted only for convenience and
reference, and are not intended to define, limit or describe the scope, intent or language of this
Agreement or any provisions hereof.

21.5. Binding Agreement. This Agreement shall be binding upon the parties and their heirs,
executors, personal representatives, successors and assigns. All area representative signatories
to this Agreement and all partners of a partnership area representative, all officers, directors
and shareholders of a corporate area representative, and all members and managers of a limited
liability company area representative, shall be jointly and severally liable for the performance of
all terms, covenants and conditions hereof.

22. PERSONAL GUARANTY OF SHAREHOLDERS, PARTNERS, MEMBERS AND MANAGERS

You acknowledge that all partners in a limited partnership, shareholders in a corporate Area
Representative, or members and managers in a limited liability company Area Representative are
obligated to execute a Guaranty Agreement whereunder each agrees to personally abide by all of the
terms and conditions of this Agreement, and guarantees to Planet Beach your performance of this
Agreement and your financial obligations. Unless all such partners, shareholders, or members and
managers execute such Guaranty Agreement concurrently herewith, this Agreement shall, at Planet
Beach’s option, become null and void and confer no rights upon you nor any partner, shareholder,
member or manager. All guarantors shall be jointly and severally liable for the performance of all
of the terms, covenants and conditions hereof. If you are an individual(s), or subsequent to
execution hereof, you assign this Agreement to an individual(s), such individual’s spouse hereby
personally and unconditionally guarantees without notice, demand or presentment the payment of all
of your monetary obligations under this Agreement as if each were an original party to this
Agreement in his or her individual capacity. All such spouses further agree to be bound by the
restrictions upon your activities upon transfer, termination or expiration of this Agreement as if
each were an original party to this Agreement in his or her individual capacity. All such spouses
shall execute the Guaranty Agreement in the form attached as Exhibit 3 to this Agreement.

 

 

23. REPRESENTATIONS AND ACKNOWLEDGMENTS

23.1. No Warranties. Planet Beach makes no warranties, express or implied, nor any
representation whatsoever other than as expressly set forth herein.

23.2. Acknowledgements. The success of the business venture contemplated to be undertaken
by Area Representative by virtue of this Agreement is speculative and depends, to a large extent,
upon the ability of the Area Representative as an independent businessperson, and its active
participation in the daily affairs of the business as well as other factors. Planet Beach does not
make any representations or warranty, express or implied, as to the potential success of the
business venture contemplated hereby.

Area Representative acknowledges that it has entered into this Agreement after making an
independent investigation of Planet Beach’s operations and not upon any representation as to gross
revenues, volume, potential earnings or profits which Area Representative in particular might be
expected to realize, nor has anyone made any other representation which is not expressly set forth
herein, to induce Area Representative to accept this license and execute this agreement.

Area Representative represents that it has read this Agreement in its entirety and that it has been
given the opportunity to clarify any provisions that it did not understand and to consult with an
attorney or other professional advisor. Area Representative further represents that it understands
the terms, conditions and obligations of this Agreement and agrees to be bound thereby.

23.3. No Authority. NO SALESPERSON, REPRESENTATIVE OR OTHER PERSON HAS THE AUTHORITY TO
BIND OR OBLIGATE PLANET BEACH EXCEPT AN AUTHORIZED OFFICER OF PLANET BEACH BY WRITTEN DOCUMENT.
YOU ACKNOWLEDGE THAT NO REPRESENTATIONS, PROMISES, INDUCEMENTS, GUARANTEES OR WARRANTIES OF ANY
KIND WERE MADE BY OR ON BEHALF OF PLANET BEACH, WHICH HAVE CAUSED YOU TO ENTER INTO THIS AGREEMENT.
YOU UNDERSTAND THAT WHETHER YOU SUCCEED AS AN AREA REPRESENTATIVE IS DEPENDENT UPON YOUR EFFORTS,
BUSINESS JUDGMENTS, THE PERFORMANCE OF YOUR EMPLOYEES, MARKET CONDITIONS AND VARIABLE FACTORS
BEYOND THE CONTROL OR INFLUENCE OF PLANET BEACH. YOU FURTHER UNDERSTAND THAT SOME AREA
REPRESENTATIVES ARE MORE, OR LESS, SUCCESSFUL THAN OTHER AREA REPRESENTATIVES AND THAT PLANET BEACH
HAS MADE NO REPRESENTATIONS THAT YOU WILL DO AS WELL AS ANY OTHER AREA REPRESENTATIVES.

23.4. Receipt. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF PLANET BEACH’S FRANCHISE DISCLOSURE
DOCUMENT, FINANCIAL STATEMENTS AND CONTRACTS FOR THE AREA REPRESENTATIVE AGREEMENT AT LEAST 14
BUSINESS DAYS PRIOR TO EXECUTION OF THIS AGREEMENT OR PAYMENT OF ANY MONIES FOR THE TERRITORY. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THIS AGREEMENT, WITH ALL BLANKS COMPLETED AND WITH ANY
AMENDMENTS AND EXHIBITS, AT LEAST 5 BUSINESS DAYS PRIOR TO EXECUTION OF THIS AGREEMENT.

23.5. Your Business Efforts. YOU, AS AN INDEPENDENT BUSINESS PERSON OR ENTITY, RECOGNIZE
THAT THERE ARE ECONOMIC HAZARDS IN CONNECTION WITH THE OPERATION OF ANY BUSINESS, INCLUDING THE
TYPE CONTEMPLATED BY YOU PURSUANT TO THIS AGREEMENT. YOU ACKNOWLEDGE THAT PLANET BEACH DOES NOT
GUARANTEE YOUR SUCCESS, FINANCIAL OR OTHERWISE, EVEN THOUGH YOU MAY FOLLOW OR RELY ON PLANET
BEACH’S ADVICE, RECOMMENDATIONS, PROGRAMS, POLICIES AND PROCEDURES. YOU ACKNOWLEDGE THAT YOU HAVE
MADE AN

 

 

INDEPENDENT INVESTIGATION OF THE FRANCHISED BUSINESS AND THAT NO REPRESENTATION HAS BEEN MADE BY
PLANET BEACH REGARDING THE POTENTIAL OR FUTURE PROFITABILITY OF THE FRANCHISED BUSINESS, NOR OF THE
FUTURE NUMBER OF PLANET BEACH SPAS AND ANY BENEFITS FLOWING THEREFROM. YOU UNDERSTAND THAT ANY
INCOME OR PROFITS YOU MAY REALIZE WILL BE PRIMARILY THE RESULT OF YOUR EFFORTS AND LABORS, AND NOT
THOSE OF PLANET BEACH OR THIRD PARTIES. THIS AREA REPRESENTATIVE OPPORTUNITY IS NOT A SECURITY
AND YOU AGREE NOT TO RELY ON PLANET BEACH OR ANY THIRD PARTY TO PRODUCE INCOME FOR YOU PURSUANT TO
THIS AGREEMENT.

23.6. Opportunity to Review by Your Advisors. YOU ACKNOWLEDGE THAT PLANET BEACH HAS
RECOMMENDED, AND THAT YOU HAVE HAD THE OPPORTUNITY TO OBTAIN, REVIEW OF THIS AGREEMENT AND PLANET
BEACH’S FRANCHISE DISCLOSURE DOCUMENT BY YOUR LAWYER, ACCOUNTANT OR OTHER BUSINESS ADVISOR PRIOR TO
EXECUTION HEREOF.

23.7. Execution Of Agreement. EACH OF THE UNDERSIGNED PARTIES WARRANTS THAT IT HAS THE
FULL AUTHORITY TO SIGN AND EXECUTE THIS AGREEMENT. IF YOU ARE A PARTNERSHIP, CORPORATION OR
LIMITED LIABILITY COMPANY, THE PERSON EXECUTING THIS AGREEMENT ON BEHALF OF SUCH PARTNERSHIP,
CORPORATION OR LIMITED LIABILITY COMPANY WARRANTS TO PLANET BEACH, BOTH INDIVIDUALLY AND IN HIS
CAPACITY AS PARTNER, OFFICER, MEMBER OR MANAGER, AS APPLICABLE, THAT ALL OF THE PARTNERS OF THE
PARTNERSHIP, ALL OF THE SHAREHOLDERS OF THE CORPORATION, OR ALL OF THE MEMBERS AND MANAGERS OF THE
LIMITED LIABILITY COMPANY, AS APPLICABLE, HAVE READ AND APPROVED THIS AGREEMENT, INCLUDING ANY
RESTRICTIONS WHICH THIS AGREEMENT PLACES UPON RIGHTS TO TRANSFER THEIR INTEREST IN THE PARTNERSHIP,
CORPORATION OR LIMITED LIABILITY COMPANY.

23.8. Execution in Duplicate. THIS AGREEMENT MAY BE EXECUTED IN DUPLICATE, EACH OF WHICH
SHALL BE DEEMED AN ORIGINAL.

     The parties hereto, intending to be legally bound, have hereunto executed this Agreement the
day and year first above written.

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have duly
executed and delivered this Agreement the date and year first written above.

	 	 	 	 	 
	 	PLANET BEACH FRANCHISING CORPORATION  	 
	 
	 	By:  	
 	 

	 	 	 
	 

	 	This Agreement is not fully executed until signed by the
CEO or COO of Planet Beach Franchising Corporation:
	 
	 	 
	 

	 	 

	 	 	 
	 
	 

	 	 
	AREA REPRESENTATIVE

	 	Witness

 

 

EXHIBIT 1

TO

PLANET BEACH FRANCHISING CORPORATION

AREA REPRESENTATIVE AGREEMENT

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

 

 

PLANET BEACH FRANCHISING CORPORATION

FRANCHISE AGREEMENT DATA SHEET

	 	 	 	 	 
	1.

	 	Name of Franchisee:	 	 
	 

	 	 	 	 
	 
	 

	 	Partner or Spouse:	 	 
	 

	 	 	 	 
	 
	2.

	 	Franchisee’s Address:	 	 
	 

	 	 	 	 
	 
	3.

	 	Licensing Agent:	 	 
	 

	 	 	 	 
	 
	4.

	 	Franchisee’s Territory:	 	 
	 

	 	 	 	 
	 
	5.

	 	Franchisee’s Telephone Number:	 	 
	 

	 	 	 	 
	 
	6.

	 	Franchisee’s Cell Number:	 	 
	 

	 	 	 	 
	 
	7.

	 	Franchisee’s Facsimile Number:	 	 
	 

	 	 	 	 
	 
	8.

	 	Franchisee’s E-Mail Address:	 	 
	 

	 	 	 	 
	 
	9.

	 	Initial Franchise Fee:	 	 
	 

	 	 	 	 
	 
	10.

	 	Amount Paid:	 	 
	 

	 	 	 	 
	 
	11.

	 	Amount Due:	 	 
	 

	 	 	 	 
	 
	12.

	 	Effective Date:	 	 

	 	 	 
	Agreement Exceptions:
	 	 
	 

	 	 
	 
	 	 
	 
	 
	 	 
	 
	 
	 	 
	 
	 
	 	 
	 

The information contained in this Data Sheet is incorporated by reference into the Planet Beach
Franchising Corporation Franchise Agreement.

 

 

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

THIS FRANCHISE AGREEMENT (the “Agreement”) is made as of the Effective Date set forth on the Data
Sheet of this Agreement between Planet Beach Franchising Corporation, a Delaware corporation with
an address at 5145 Taravella Road, Marrero, Louisiana 70072 (“Planet Beach”), and the Franchisee
identified in the Data Sheet (“you”). The information contained in the Data Sheet is incorporated
into this Agreement.

BACKGROUND

A. Through the expenditure of money, time and effort, Planet Beach has developed a distinct and
proprietary method business format for the operation of tanning spas (the “System”), the
distinguishing characteristics of which include proprietary operating procedures and standards and
specifications for products and services, as amended from time to time in Planet Beach’s sole
discretion.

B. The System is identified by proprietary trademarks, service marks, trade dress, logos and other
indicia of origin including, without limitation, the trade name and service mark “Planet Beach”
(the “Proprietary Marks”).

C. Planet Beach offers franchises to qualified individuals for the right to use the System and
Proprietary Marks at a single approved location (the “Spa”).

D. You have applied to Planet Beach for the right to operate a Spa pursuant to the terms of this
Agreement, and Planet Beach has approved your application in reliance upon all of the
representations made in your application, including those concerning your financial resources, your
business experience and interests, and the manner in which the franchise will be owned and
operated.

E. You acknowledge that you have read this Agreement and Planet Beach’s Franchise Disclosure
Document, and that you have been given an opportunity to obtain clarification of any provision that
you did not understand. You also understand and agree that the terms and conditions in this
Agreement are necessary to maintain Planet Beach’s high standards of quality and service, and the
uniformity of those standards at all Planet Beach locations.

AGREEMENT

NOW THEREFORE, in consideration of the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, mutually agree as follows:

1. FRANCHISE GRANT

Planet Beach grants to you, and you hereby accept, a nonexclusive franchise to establish and
operate one Spa pursuant to the terms of this Agreement within a geographic area mutually agreed to
by the parties. This Agreement does not give you the right to establish additional Spas.

2. LOCATION

2.1. Approved Location. You shall operate your Spa only from the Approved Location
identified in, or (if the parties have not agreed upon a location at the time this Agreement is

 

 

signed) to be identified, in the Data Sheet. If you have not yet secured a site for the Spa
at the time you sign the Franchise Agreement, you will enter into our Approved Location and
Territory Addendum, attached as Exhibit B to the Franchise Agreement, which will govern the site
selection process.

2.2. Site Selection. You must obtain a site for the Spa within 120 days from the
Effective Date set forth on the Data Sheet (“Site Selection Period”) either by (i) entering into a
lease or sublease with the owner of a site or the prime tenant having possession of a site which is
mutually acceptable to you and Planet Beach; or (ii) purchasing real estate which is mutually
acceptable to you and Planet Beach.

2.3. Lease. If you elect to lease premises for your Spa, you must submit a copy of
your proposed lease for Planet Beach’s approval prior to execution. You must deliver an executed
copy of the lease to Planet Beach within 15 days after the execution of the lease. Planet Beach’s
acceptance of the lease terms does not constitute an expression of Planet Beach’s opinion regarding
the terms of the lease or the viability of the location.

2.4. Relocation. Planet Beach will permit you to relocate your Spa to a new
approved location within the Territory, at your expense, if you lose the right to possess the
premises through no fault of your own, or if the Spa is destroyed by vandalism, fire or act of God.
Planet Beach will approve the new site if it meets Planet Beach’s site selection criteria. You
have no right to relocate the Spa without Planet Beach’s prior written consent.

3. TERRITORY

3.1. Territory. We grant a Franchise based on our expectation that you will continuously
and diligently follow all System requirements. Subject to the exclusions below, Planet Beach
grants to you the right to establish and carry on a business within a protected territory that
consists of a radius or boundary surrounding your Spa (the “Protected Territory”). Your Protected
Territory generally will be a circle, the center of which will be your location as defined by your
signed lease and verified by you. A map plotting the Protected Territory will be provided to you
upon securing a site for your location via a lease execution.

The radius of the circle will be based on where the spa site is located and will be determined as
follows:

	 	 	 	(i.) one-half of a mile (1/2 mile) if your Spa is located in a Downtown area or the
Central Core of a large city;
	 
	 	 	 	(ii.) two miles (2.0 miles) if your Spa is located in any other Area.

Your Protected Territory shall exclude: (i) any area that is across a state line, river,
navigable waterway, or other natural boundary; and (ii) regional shopping malls, train stations,
bus stations and airports. In these cases, the actual size and dimensions of your Territory may be
less than stated above and will depend upon the specific variables of your Site, including
population density, marketing and development trends, traffic flow and natural and man-made
boundaries.

3.2. Modification of Protected Territory. During the term of this Agreement, so long as
you are in substantial compliance with the terms and conditions of this Agreement, Planet Beach
will not establish or locate, or grant any third party the right to establish or locate, another
Planet Beach location using the System and Proprietary Marks within the Territory identified, or to
be identified, in the Data Sheet or Exhibit B to this Agreement except as set forth in paragraph
3.3 and 3.4 below. If you are in breach of this Agreement, or are not otherwise in Good Standing,
we may reduce, eliminate or otherwise modify your rights in the Territory, including any right of
first refusal. We do not make any representation or

 

 

assurance that you can or will achieve any performance minimums. This Agreement does not grant you
any other territorial rights.

3.3. Reservation of Rights. Planet Beach will not establish (and will not authorize any
other party to establish) a Spa within your Protected Territory subject to the following
Exclusions:

	 	a.	 	Own and operate Spas at any location(s) outside your Protected
Territory under the same or different marks, and to license others the right to
own and operate Spas at any location(s) outside your Protected Territory under
the same or different marks. In some instances, Territories may overlap;
	 
	 	b.	 	Conduct any business in a regional shopping mall, train
station, bus station or airport in which your Spa is not located;
	 
	 	c.	 	Use the Proprietary Marks in connection with offering ancillary
or dissimilar products and services at any location inside or outside your
Protected Territory;
	 
	 	d.	 	Acquire other businesses within your Protected Area that
compete with the Spa;
	 
	 	e.	 	Convert any existing tanning and/or spa establishment to a
business which uses the Planet Beach System whether that business be a
Franchised Business or owned and/or operated by Planet Beach or a Planet Beach
affiliate;
	 
	 	f.	 	Conduct and transact business with customers and/or companies
operating in your Protected Territory by means of the internet as well as other
electronic media that are known now or developed in the future, toll-free
telephone numbers, and any other manner we determine; however, we will not do
so from a Spa that is physically located in your Protected Territory subject to
the provisions set forth above;
	 
	 	g.	 	If the franchisor or the franchisee identifies the opportunity
to establish a second or further franchise within the Protected Territory then
the franchisee shall be considered prior to any third party as to the proposed
operator of the proposed franchise. The existing franchisee, subject to meeting
all new franchisee criteria, shall be offered a 21 day first right of refusal.
If the franchisee declines to accept the proposed franchise, then the
franchisor shall be free to either itself open a new store within the territory
or allow a new franchisee to open a new store within the territory; and
	 
	 	h.	 	Engage in any other activities not expressly prohibited by this
Agreement.

3.4. Additional Exclusions. Your grant of a franchise does not include (i)
exclusive marketing rights; (ii) any right to offer any product or service via e-commerce; (iii)
any right to establish an independent website or to establish a URL incorporating the Proprietary
Marks or any variation thereof; or (iv) any right to distribute, market, or implement Planet
Beach’s products and services in any channel of distribution not specifically identified in this
Agreement.

4. TERM AND RENEWAL

4.1. Term. The initial term of this franchise shall begin on the Effective Date set forth
on the Data Sheet by Planet Beach and shall expire at midnight on the twentieth anniversary of the
Effective Date.

4.2. Renewal. You have the right to renew this Agreement for perpetual consecutive
additional 5-year terms, if you meet the following conditions:

	 	4.2.1.	 	You are in compliance with all the terms and conditions of this Agreement at the time
of renewal and have substantially complied with the terms of this Agreement and with
the operating standards and criteria established by Planet Beach throughout the initial
term and any renewal term of this Agreement;

 

 

	 	4.2.2.	 	You have satisfied all monetary obligations owed to Planet Beach and its affiliates;
	 
	 	4.2.3.	 	You are in compliance with all other agreements between you and Planet Beach and/or
its affiliates;
	 
	 	4.2.4.	 	You have provided Planet Beach with written notice of your intention to renew the
Franchise Agreement at least 90 days but not more than 180 days prior to expiration of
the then-current term;
	 
	 	4.2.5.	 	You have the right to remain in possession of the Spa premises, or you have secured
other premises acceptable to Planet Beach for the renewal term;
	 
	 	4.2.6.	 	At Planet Beach’s request, you effectuate, at your expense, any changes in services,
facility, items offered or business system so as to reflect Planet Beach’s then-current
image including interior and exterior design or offerings of Planet Beach Tanning Spas;
	 
	 	4.2.7.	 	You execute Planet Beach’s then-current form of franchise agreement, which may vary
materially from the terms of this Agreement and may include, without limitation, higher
royalty and marketing fees. The renewal franchise agreement, when executed, will
supersede this Agreement in all respects; and
	 
	 	4.2.8.	 	You sign a general release in the form prescribed by Planet Beach, in favor of Planet
Beach and its affiliates and their respective officers, directors, agents, and
employees, for all claims arising out of or related to this Agreement or any related
agreements with Planet Beach or its affiliates.

5. CONFIDENTIAL OPERATIONS MANUAL

You must operate your Spa in accordance with Planet Beach’s confidential operations manual (the
“Operations Manual”), which contains policies, procedures, standards, specifications and methods of
operating a Planet Beach Spa. Planet Beach has the right to amend and supplement the Operations
Manual from time to time in its discretion. You will make, at your sole expense, changes necessary
to conform to the Operations Manual, including, but not limited to, upgrading and remodeling the
Spa, including leasehold improvements, furniture, fixtures, equipment, signs, and software. You
acknowledge these requirements are necessary and reasonable to preserve the identity, reputation
and goodwill Planet Beach has developed and the value of the franchise. You agree to make repairs
and updates and to pay all reasonable required costs within reasonable time periods that may be
established. You will adhere to quality control standards prescribed in the Operations Manual or
elsewhere with respect to the character or quality of the products sold and services performed in
association with the Marks. The Operations Manual, as amended from time to time, is intended to
further the purposes of this Agreement and is specifically incorporated into this Agreement. The
contents of the Operations Manual are protected by the Copyright law of the United States and may
not be disclosed to any person or entity not affiliated with Planet Beach and may not be
duplicated, copied, reproduced or altered in any way.

6. CONSTRUCTION OF SPA

After you identify a site for the Spa and are approaching lease execution, you will construct and
equip your Spa to the specifications contained in the Operations Manual and open for business. You
will remain responsible for all costs of and connected with design and construction, including, but
not limited to construction drawings, architectural and/or engineering drawings, including stamps
and seals, fees

 

 

associated with obtaining building permits, leasehold improvements, equipment, furniture, fixtures
and signs, and you must bear the cost and responsibility for compliance with state or local
ordinances, rules and regulations, including those related to zoning.

7. TRAINING

7.1. Initial Training Program. Within 6-months of the Effective Date of this Agreement and
prior to 30-days of the opening of your Spa (the “initial training period”): Each franchisee and
designated Spa manager (director) shall satisfactorily complete all of Planet Beach’s required
training programs as outlined in paragraphs 7.1.1, 7.1.2, 7.1.3 and 7.1.4 below and as more
specifically defined in the Operations Manual. Each of your additional or replacement directors
are required to successfully complete all required director training programs to Planet Beach’s
satisfaction within 30 days of assuming management responsibilities. You are solely responsible for
full payment of all training-related expenses including, without limitation, travel expenses to and
from the training site, lodging accommodations, dining expenses, and salaries for your employees.

     7.1.1. Planet Beach University Online Certification Program. Each Franchisee and spa
employee must successfully complete all required courses and certifications of Planet Beach
University Online, a web-based training and certification program, according to the training
schedule provided to you at announcement of franchise agreement signing.

     7.1.2. Franchisee and Director School. Each franchisee must attend and complete
Franchisee and Director School. Each spa manager (director) must attend and complete Franchisee
and Director School within ninety (90) days of hire. Each Franchisee and spa manager (director)
must attend and complete such school annually.

     7.1.3. Operator Certification. Each franchisee, spa manager (director), and spa
employee who works with customers as an operator in any franchise location must successfully
complete a nationally recognized indoor tanning operator certification prior to working in a
location, at your expense. Planet Beach accepts those national training certification programs
that are recognized by the Food and Drug Administration or by an individually regulated state, such
as Smart Tan or the National Tanning Training Institute (“NTTI”). New or replacement Directors
and Consultants must obtain Operator’s Certification within 30 days of their employment.

     7.1.4. Onsite Grand Opening Training. You and your initial staff must successfully
attend and participate in your Spa’s Grand Opening Training Program which will be conducted by your
Grand Opening Specialist, at your Spa, within two weeks of the opening date of your first location.

7.2. Additional Training Programs and Seminars. Planet Beach has the right, but is not
obligated, to provide continuing education training programs or seminars for previously-trained
franchisees and directors, assistant directors and consultants and to require you to attend and
successfully complete these programs or seminars. You are solely responsible for tuition and all
training-related expenses including, without limitation, travel expenses, living and dining
accommodations, and employee salaries.

7.3. Attendance at Annual Conventions. You must attend all Planet Beach Annual Conventions
unless exigent circumstances exist and you receive Planet Beach’s prior approval not to attend. All
costs related to the Annual Convention, including but not limited to, travel expenses, lodging and
entertainment shall be your sole responsibility.

8. OPENING

 

 

8.1. Opening for Business. You must open the Spa for business within 275 days of execution
of this Agreement. If you cannot open within 275 days due to vandalism, fire, act of God or other
circumstances beyond your control, you must request an extension from Planet Beach immediately,
which extension will not be unreasonably withheld. It is your sole responsibility to ensure that
your Spa opens within 275 days of execution of this Agreement. You may not open the Spa for
business until a Planet Beach Representative has approved the Spa for opening.

8.2. Opening Marketing. During the development of your Spa and through the initial opening
of your Spa you must expend at least $3,000 to $10,000 on advertising and marketing within your
Territory. You shall make such expenditure in accordance with Planet Beach’s written requirements
and specifications. Within 60 days of the Spa’s opening, you shall supply Planet Beach with
written evidence (by means of cancelled checks, paid invoices, copies of advertisements) of the
purchase and publication of such opening advertising and marketing. You have the right, but are
not required, to spend additional sums with respect to opening marketing.

9. YOUR OBLIGATIONS

9.1. Operations. You must operate your Spa in accordance with the Operations Manual which
contains policies, procedures, standards, specifications and methods of operating a Planet Beach
Spa. Policies include but are not limited to the daily hours of operation, Planet Beach’s
Membership Policy, Reciprocation Policy, etc.

9.2. Compliance with Applicable Laws. You shall operate your Spa in strict compliance with
all applicable laws, regulations and ordinances including, without limitations, laws and
regulations applicable to or affecting health and safety, registering your Spa with the appropriate
authority where and when applicable, taxation issues, membership agreements, and employee
contracts. You must obtain and maintain all permits, licenses, and registrations required for the
lawful operation of your Spa and comply with all health and safety codes. If you are a
corporation, partnership or limited liability company, then the name of your entity shall not
include any portion of any of the Proprietary Marks; provided, however, you shall register for
fictitious name usage in the jurisdiction in which the Spa is located and promptly provide Planet
Beach a copy of the registration. Planet Beach is neither responsible nor liable for researching,
knowing, acting on, and/or advising you and/or anyone on any state, city, county, parish, and/or
local laws that will apply to the Spa’s operations in that specific area. Planet Beach cannot
provide you with any advice, legal or otherwise, on local issues. You must provide Planet Beach
with copies of all permits, licenses and registrations within 30 days of opening your Spa.

9.3. Authorized Products and Services and Approved Suppliers. You shall not conduct any
business or sell any products at the Spa other than the business and products approved by Planet
Beach. Planet Beach has the right to require you to purchase products from designated or
approved suppliers as well as to enter into service agreements with approved vendors. A description
of currently authorized products and services is attached as Exhibit 1 to this Agreement (the
“Authorized Products and Services”). Planet Beach has the right to add, eliminate, modify and
substitute any of the Authorized Products and Services or the designated suppliers in its sole
discretion. If you wish to offer any product or service that Planet Beach has not authorized or to
acquire items or services from an unapproved supplier, you must request Planet Beach’s approval in
writing and provide Planet Beach all information it may reasonably need to evaluate the proposed
product, service or supplier. Planet Beach will make a good faith effort to notify you of its
approval within 15 days of receiving such information. Planet Beach’s failure to approve a
product, service or supplier within this15 day period will constitute disapproval of the proposed
product, service or supplier. If Planet Beach approves your request to offer a new product or
service or to acquire items from a new supplier, such approval will be only for the specific
product, service or supplier for which approval was granted. Notwithstanding the existence of this
approval process, Planet Beach

 

 

reserves the right to be the only approved supplier of a product or service. In that situation,
you will be required to purchase the product or service from Planet Beach and no one else. The
price you will pay for the product or service will be the price then in effect, and Planet Beach
may make a profit on the sale of the product or service.

9.4. Computer Software and Hardware. You shall purchase and use any and all computer
software programs (“Software”) which Planet Beach has developed or may develop and/or designate for
use for the System, and shall purchase such computer hardware as may be necessary for the efficient
operation of the Software within 90 days from the date you receive written notice from Planet
Beach. You must also establish a high-speed internet connection prior to the opening of your Spa.
The Software is and shall remain the sole property of Planet Beach and you agree to execute any
license or sub-license agreement required by Planet Beach. You agree to update or upgrade computer
hardware components and/or Software as Planet Beach deems necessary from time to time but not more
than 3 times per calendar year. In addition, Planet Beach has the right to require you to enter
into a separate maintenance agreement at your sole expense for such computer hardware and/or
Software in the form Planet Beach prescribes. You acknowledge and agree that Planet Beach may deny
you access to the Software if you fail to meet your obligations under this Agreement or the
Operations Manual.

9.5. Collection of Data. You shall collect and maintain such data relating to the business
as Planet Beach may require from time to time, including but not limited to, the names, addresses
and purchase history of all customers. You shall provide such data to Planet Beach in the form
Planet Beach specifies. Any such data shall be Planet Beach’s sole property and shall not be
disclosed or distributed to any person or entity for any reason; provided that you have a license
to use any such data solely for internal marketing and accounting purposes in accordance with all
applicable laws and regulations.

9.6. Debts and Obligations. You shall promptly pay all the debts and obligations relating
to the operation of the Spa and shall not fail to pay any debts to third parties that may result in
claims of liability to Planet Beach.

PLANET BEACH RESERVES THE RIGHT TO WITHHOLD FROM YOU ANY PRODUCTS, SERVICES, MAINTENANCE,
INFORMATION, ADVICE, CONSULTATION AND TRAINING, TO DIRECT SUPPLIERS NOT TO OFFER SYSTEM DISCOUNTS,
TO DELETE YOUR SPA FROM THE PLANET BEACH WEBSITE, AND TO DENY YOU ACCESS TO PLANET BEACH’S COMPUTER
SYSTEM IF YOU ARE NOT IN COMPLIANCE WITH THE TERMS OF THIS AGREEMENT OR THE OPERATIONS MANUAL.

10. INITIAL AND CONTINUING FEES

10.1. Initial Franchise Fee. In consideration of the rights granted under this Agreement,
you have paid to Planet Beach an initial franchise fee (“Initial Franchise Fee”) in the amount
reflected on the Data Sheet. The initial franchise fee is deemed fully earned upon payment and
non-refundable.

10.2. Royalty Fee. During the term of this Agreement, you will pay to Planet Beach a
monthly Royalty Fee (“Royalty Fee”) in an amount equal to 6% of your “Gross Sales” earned during
the preceding month. If you are non-compliant and have been defaulted, you must pay a monthly
Royalty Fee in an amount equal to 9% of your “Gross Sales” earned during the preceding month until
you become compliant. Non-Compliant Franchisees are those who receive a default notice with a 30
day notice to cure letter and fail to cure the default. On the 31st day, Planet Beach
will begin drafting royalties at 9% until the default is cured. Gross Sales shall include all
revenues from sales made by you from all business conducted at or from your Spa, including but not
limited to amounts received from the sale of tanning sessions, prepaid tanning packages,
memberships and any other goods and services and tangible property of any nature

 

 

whatsoever. Planet Beach will sometimes refer to Gross Sales as the sum of Cash, NET EFT and
Retail. Gross Sales shall not include the amount of sales tax imposed by any federal, state,
municipal or other governmental authority and you agree to pay such amounts as and when they become
due. Each charge or sale upon installment or credit shall be treated as having been received in
full by you at the time you receive payment. Sales relating to items for which the full purchase
price has been refunded or the item exchanged shall be excluded from Gross Sales at the time of
refund or exchange, provided that such sales have previously been included in Gross Sales.

10.3. Brand Development Fee. During the term of this Agreement, you will pay to Planet
Beach a monthly Brand Development Fee in an amount equal to 2% of your “Gross Sales” earned during
the preceding month.

10.4. Construction Drawing Fee. You shall pay to Planet Beach $2,500 for the
completion of your site specific construction drawings.

10.5. Credit Card Processing Fee. You shall pay to Planet Beach the amount of the credit
card processing fee charged to PBFC from the credit card processor for any payments made by you to
Planet Beach and/or any purchases made by you from Planet Beach.

10.6. Payment Procedures. You must make all payments to Planet Beach through the AUTODRAFT
system. All payments are due on the 5th of every month for the preceding month. In the event that
any payments are due on a national holiday, payment will be due on the first business day following
such holiday. A late fee of $100 will be assessed for each week that payment is delinquent. An
insufficient funds fee of $100 will be assessed for any AUTODRAFT payment rejected as a result of
insufficient funds. In addition to the late fee and the overdue amount, interest will accrue on
such amount from the date it was due until paid at 18% per annum or the maximum rate permitted by
state law, whichever is less. Interest will be calculated on a daily basis and shall be in
addition to any other remedy Planet Beach may have under this Agreement or applicable law.

10.7. Refunds. All fees are fully earned when they become due and are not refundable.

11. PROPRIETARY MARKS AND COPYRIGHTS

11.1. License. During the term of this Agreement, you are granted a non-exclusive license
to use the Proprietary Marks in connection with the operation of your Spa. You shall display the
Proprietary Marks only in the manner that Planet Beach directs or permits. Your license to use the
Proprietary Marks shall automatically cease upon termination or expiration of this Agreement.

11.2. Ownership. You acknowledge that the Proprietary Marks are valid and are Planet
Beach’s sole property. You will not, either during or after the term of this Agreement, do
anything, or assist any other person to do anything, which would infringe upon, harm or contest
Planet Beach’s rights in any of the Proprietary Marks.

11.3. Goodwill. You acknowledge that all goodwill which may arise from your use of any of
the Proprietary Marks is and shall at all times remain Planet Beach’s sole and exclusive property
and shall inure to Planet Beach’s sole benefit.

11.4. Modification. You acknowledge that Planet Beach has the right to add, modify,
substitute or discontinue use of any of the Proprietary Marks in its sole discretion. You agree to
make any additions,

 

 

deletions and modifications on all interior and exterior signs, packaging materials, printed
materials and advertising as Planet Beach directs at your own expense.

11.5. Internet Usage. If you maintain an internet site, you may not register or use the
words “Planet Beach” in your domain name. You shall not use the Proprietary Marks, or any part
thereof, as part of any web site domain name without Planet Beach’s prior written consent. An
individual website for your Spa may only be operated and maintained through Planet Beach’s website.

11.6. Infringement. You shall promptly notify Planet Beach of any infringement of, or
challenge to, the Proprietary Marks and Planet Beach shall, in its discretion, take such action, as
it deems appropriate. Planet Beach will indemnify and hold you harmless from any suits,
proceedings, demands, obligations, actions or claims, including costs and reasonable attorneys’
fees, for any alleged infringement under federal or state trademark law arising solely from your
use of the Proprietary Marks according to this Agreement and Planet Beach’s other written
directives if you have promptly notified Planet Beach of such claim. If Planet Beach undertakes
the defense or prosecution of any litigation pertaining to any of the Proprietary Marks, you must
execute any and all documents and do such acts and things as may, in the opinion of Planet Beach’s
counsel, are necessary to carry out such defense or prosecution.

11.7. Franchisee Developments. Planet Beach shall own and have the exclusive right to use
and incorporate in the Planet Beach Franchise System, for the benefit of other franchisees and
Planet Beach, any modifications, changes and improvements to the System, in whole or in part,
developed or discovered by you or your employees or agents in connection with the System or the
operation of your Spa, without any liability or obligation to you. This includes, but is not
limited to, discoveries or development of products, systems or techniques, management practices or
procedures, architectural designs and philosophies and names or groups of words relating to the
System or describing the services offered by Planet Beach Spas.

12. CONFIDENTIAL INFORMATION

You acknowledge and agree that the Operations Manual, training material, Planet Beach’s trade
secrets, methods and other techniques and know-how are Planet Beach’s exclusive and confidential
property which Planet Beach provides to you in confidence (“Confidential Information”). You agree
to use the Confidential Information only for the purposes and in the manner Planet Beach authorizes
in writing, which use will inure exclusively to Planet Beach’s benefit. Planet Beach’s trade
secrets consist of, without limitation, sales techniques, merchandising and display techniques, Spa
layout, advertising formats, accounting systems, operations systems, policies, procedures, systems,
compilations of information, records, specifications, manuals and other confidential information
which Planet Beach or its affiliates have developed for use in the operation of Spas. You may not
contest, directly or indirectly, Planet Beach’s ownership of its trade secrets, methods or
procedures or contest Planet Beach’s right to register, use or license others to use any such trade
secrets, methods and procedures. You (including your partners, officers, directors, shareholders,
as applicable), your employees, and their respective heirs, successors and assigns, are prohibited
from using and/or disclosing any Confidential Information in any manner other than as Planet Beach
permits and must execute a Confidentiality and Non-Competition Agreement in the form attached as
Exhibit 6.

13. MARKETING

13.1. Generally. You must participate in all marketing programs required by Planet
Beach in writing or contained in the Operations Manual. You may place or display at your Spa
(interior and exterior) only the signs, emblems, lettering, logos and displays and marketing
materials as Planet Beach approves in writing from time to time. You must submit to Planet Beach, at least 10
days prior to your use, samples

 

 

of all sales promotional and marketing materials you desire to use for approval. Planet
Beach’s failure to approve or disapprove the materials within 10 days of receipt will be deemed a
disapproval. You may not use any marketing or promotional materials for which Planet Beach has not
given its prior written approval.

13.2. Territorial Marketing Restriction. You are not permitted to solicit customers and/or
market outside your Territory, except to the extent that you have received Planet Beach’s prior
written authorization, which Planet Beach will not unreasonably withhold. Planet Beach may
condition its authorization upon your agreement to offer System franchisees who are operating Spas
in contiguous territories the opportunity to participate in, and share the expense of, such
solicitation and/or marketing. You may not market your Spa or any products or services offered by
the Spa via the Internet without Planet Beach’s prior written consent, which may be given or
withheld in Planet Beach’s sole discretion.

13.3. Marketing Fund. Planet Beach may, in its discretion, establish local marketing
cooperatives for the common benefit of Planet Beach’s franchisees.

     13.3.1. Local Cooperatives. Planet Beach has the right, in its discretion, to
designate any geographical area for purposes of establishing a regional marketing and promotional
cooperative (“Cooperative”), and to determine whether you must participate in a Cooperative. If a
Cooperative has been established applicable to the Spa at the time you begin operating under this
Agreement, you must immediately become a member of such Cooperative. If a Cooperative applicable
to the Spa is established at any later time during the term of this Agreement, you must become a
member of such Cooperative no later than 30 days after the date on which the Cooperative begins
operation. Planet Beach has the right to change, combine or dissolve cooperatives. If the Spa is
within the territory of more than one Cooperative, you are required to be a member of only one such
Cooperative. The following provisions will apply to each Cooperative:

	 	a)	 	Each Cooperative will be organized and governed
in a form and manner, and will commence operation on a date, approved
in advance by Planet Beach;
	 
	 	b)	 	Each Cooperative will be organized for the
exclusive purpose of administering regional marketing programs and
developing, subject to our approval, standardized marketing materials
for use by the members in local marketing;
	 
	 	c)	 	All activities and contributions to the
Cooperative shall be determined by a majority vote of the Spas in the
Cooperative; and
	 
	 	d)	 	No promotional or advertising plans or
materials may be used by a Cooperative or furnished to its members
without our prior written approval. All such plans and materials shall
be submitted to Planet Beach in accordance with the procedure set forth
in Paragraph 15.1 hereof.

13.4. Telephone Directory Advertising. At Planet Beach’s request, you must advertise your
Spa in the local telephone directory or directories covering the area from which the Spa is likely
to draw customers. Such advertising must be placed in accordance with size and content formulas
provided by Planet Beach. The amount of payments for such directory advertising may be included to
meet the marketing requirements set forth in paragraph 13.1, above.

14. INSURANCE

 

 

You must obtain and maintain at your sole expense at all times during the term of this Agreement
such insurance coverage, as Planet Beach from time to time shall specify, and/or any other
insurance coverage required by law. This includes but is not limited to, comprehensive general
liability insurance, worker’s compensation insurance and unemployment insurance. Each policy shall
be written by an insurance company acceptable to Planet Beach, and shall name Planet Beach and its
officers, directors, agents, attorneys, employees and affiliates as additional insured parties.
You shall promptly deliver to Planet Beach original certificates evidencing that all insurance
required by Planet Beach is in full force and effect prior to opening the Spa for business. You
shall deliver to Planet Beach each year renewal certificates. All policies must provide that the
policy may not be cancelled, terminated, modified or reduced in terms of coverage, without 30 days
prior written notice to Planet Beach. If you fail to obtain or maintain the required insurance,
Planet Beach has the right, but is not obligated, to obtain and maintain such insurance coverage on
your behalf and to charge you for such coverage, together with a service fee which shall not exceed
25% of the insurance premium. There is no assurance that minimum insurance requirements will be
adequate to satisfy your needs.

15. BOOKS, RECORDS AND REPORTS

15.1. Books and Records. You must maintain at the Approved Location or other approved
location such books, accounts, records and memoranda disclosing all transactions relating to or
involving the operation of the Spa. Planet Beach shall have access to examine, inspect and copy
all such books, accounts, records, memoranda, computer files and systems to review, inspect and
poll such data during regular business hours. Financial records and statements must be kept and
maintained in conformity with generally accepted accounting principles or such other accounting
method that is acceptable for tax reporting purposes. You must keep and maintain such
record-keeping or electronic reporting systems as Planet Beach may require, and make the same
available to Planet Beach as Planet Beach specifies or as a report or statement. You must use those
forms specified by Planet Beach. In addition, you must keep in the manner specified by Planet
Beach, consecutively numbered customer receipt forms for each purchase or service rendered in the
operation of the Spa. You must retain these for Planet Beach’s inspection, and upon Planet Beach’s
request, forward them to Planet Beach.

15.2. Periodic Reports. You must provide to Planet Beach periodic royalty reports and all
other documentation as Planet Beach may reasonably prescribe from time to time. Planet Beach
reserves the right to specify the accounting and/or bookkeeping procedures, formats, systems and
forms you will use in the operation of the Spa. You must deliver to Planet Beach within 20 days
of the end of each fiscal quarter a complete and accurate profit and loss statement for such
quarter, in a format acceptable to Planet Beach.

15.3. Daily Production and Monthly Spa Financial Reports. You must fax or e-mail your
cumulative monthly Daily Production Report (“DPR”) to Planet Beach, following the close of business
on the last business day of every month. Failure to submit your previous month’s DPR by the 3rd
day of each month will result in a maximum late charge of $300.00 per month, per occurrence. You
must submit your monthly Spa financial reports in a manner specified by Planet Beach, including
accurate amounts for all Spa operational expenses. Failure to submit your Spa’s financial reports
by the 3rd day of each month will result in a maximum late charge of $300.00 per month,
per occurrence. E-mail will be through Planet Beach’s web site.

15.4. Annual Financial Statement, Balance Sheet And Tax Return. Within 90 days after
the close of each fiscal year (ending December 31) you must deliver to Planet Beach annual
financial statements, including but not limited to profit and loss statements and balance sheets
for the preceding year prepared in accordance with generally accepted accounting principles or such
other accounting methods that are

 

 

acceptable for tax reporting purposes. You must furnish to Planet Beach copies of federal, state
and local sales, income or other tax returns filed in connection with the Spa by April 1 of the
following year.

16. ACCOUNTING

16.1. Application of Payments. Planet Beach has the right to apply all payments as it
deems appropriate in its discretion, regardless of the purpose for which such payment is
designated; provided, however, Planet Beach shall not apply payment to any indebtedness that you
have identified in writing as a disputed charge.

16.2. Interest. You must pay all bills, fees, charges and other obligations to Planet
Beach in strict accordance with the applicable payment and credit terms. Any amount not paid when
due, will bear interest from the due date at the rate of 18% per annum, or the maximum allowed by
law, whichever rate shall be less. Interest will be compounded monthly. The payment of such
interest or other amounts due shall not be deemed to constitute a waiver of any other rights
available to Planet Beach.

16.3. Audits. Planet Beach or its designee may inspect or conduct an audit of your
accounts, business and financial books and records, local marketing records, tax returns and other
records during regular business hours. If the audit discloses an understatement of Gross Receipts
for any period or periods, you must immediately pay to Planet Beach all Royalty Fees and any other
sums due under this Agreement, plus interest on these monies at the rate set forth in this
Agreement. If any audit reveals that you have underreported any amounts by more than 2% in any
period or periods, or if you fail to timely submit complete, accurate and legible reports, then in
addition to paying all monies due, you shall reimburse Planet Beach for the cost of the audit,
including the charges of any independent certified public accountant, attorneys’ fees, other legal
costs and the travel expenses, room, board and compensation of Planet Beach’s employees.

17. INSPECTIONS

Planet Beach or its designee has the right at any time during regular business hours, and without
prior notice, to conduct a reasonable inspection of the Spa. Any such inspection will be at Planet
Beach’s expense, unless Planet Beach is required to make any additional inspections in connection
with your failure to comply with this Agreement. In such event, Planet Beach has the right to
charge you for the costs of making the additional inspections, including without limitation travel
expenses, room and board and compensation of employees. You must promptly remedy at your sole
expense any deficiency found during any inspection.

18. COVENANTS

18.1. During the Term of this Agreement. During the term of this Agreement, neither you
nor any of your principals shall, directly or indirectly, through corporations, partnerships,
limited liability companies, trusts, associations, joint ventures, or other unincorporated
businesses, perform any services for, engage in or acquire, participate or have any financial or
other interest in any other business or other entities offering tanning services or other services
or products offered by Planet Beach locations, provided, however, that this provision shall not
apply to the operation of any other Planet Beach franchised business pursuant to a valid franchise
agreement with Planet Beach.

18.2. After the Term of this Agreement. For a period of 2 years following termination or
expiration of this Agreement, or the termination of any principal’s interest in the Spa, neither
you nor any of your principals shall, directly or indirectly, through corporations, partnerships,
limited liability companies, trusts, associations, joint ventures, or other unincorporated
businesses, perform any services for, engage in

 

 

or acquire, participate or have any financial or other interest in any other business or other
entities offering tanning services or other services or products offered by Planet Beach locations:
(1) at the Approved Location (or the location of your former Planet Beach Spa); (2) within the
Territory; (3) within a 10 mile area surrounding the perimeter of the Territory; or (4) within a
10 mile radius of any Planet Beach location in existence on the date of expiration or termination
of this Agreement; provided, however, that this provision shall not apply to the operation of any
other Planet Beach franchised business pursuant to a valid franchise agreement with Planet Beach.
The aforesaid 2-year period shall be tolled during any period of noncompliance.

19. INDEPENDENT CONTRACTOR; INDEMNIFICATION

19.1. Independent Contractor. You are an independent contractor responsible for full
control over the internal management and daily operation of your Spa, and neither Planet Beach nor
you are the agent, principal, partner, employee, employer or joint venturer of the other. You must
not act or represent yourself, directly or by implication, as an agent, partner, employee or joint
venture of Planet Beach, nor may you incur any obligation on Planet Beach’s behalf or in its name.

19.2. Indemnification. You must defend, indemnify and hold Planet Beach and/or its
affiliates harmless from all fines, suits, proceedings, claims, demands, obligations or actions of
any kind (including costs and reasonable attorneys’ fees) arising in whole or in part from
training, the construction or operation of your Spa, or the performance of your obligations under
this Agreement that exist upon execution or that may arise in the future, except as otherwise
provided in this Agreement.

20. NOTICES

All notices, requests and reports to be given under this Agreement shall be in writing, and
delivered by either hand; e-mail with a confirming receipt; overnight mail; certified mail, return
receipt requested, prepaid; or by facsimile transmission (except that regular monthly and other
reports from you may be sent by regular mail), to the address or fax number set forth in the Data
Sheet (which may be changed by written notice).

21. SALE OR ASSIGNMENT

21.1. Assignment by Planet Beach. Planet Beach has the right to assign this Agreement and
to delegate its obligations under this Agreement in whole or in part in its sole discretion.
Planet Beach is not obligated to provide you with prior notice of such assignment.

21.2. Assignment by You. Your rights under this Agreement are personal, and you shall not
sell, transfer, assign or encumber your interest in the franchised business without our prior
written consent.

21.3. Conditions for Transfer. Planet Beach shall have the right to condition its consent
to a transfer of the Spa upon:

21.3.1. Planet Beach’s approval of buyer, which approval shall not be unreasonably withheld;

21.3.2. The satisfaction of all monetary and non-monetary obligations under this Agreement
and any other agreement between you and Planet Beach or its affiliates;

21.3.3. Planet Beach is provided with an executed agreement of sale between you and the
buyer;

 

 

21.3.4. Your execution (or your principals’ execution, as applicable) of a general release,
in a form prescribed by Planet Beach, of all claims against Planet Beach and its officers,
directors, agents, employees, and affiliates. Notwithstanding such release, you shall
remain obligated under those provisions of this Agreement that expressly extend beyond the
term hereof; and

21.3.5. The buyer’s execution of Planet Beach’s then-current Single Unit Franchise Agreement
and payment to Planet Beach of a transfer fee equal to 35% of the then-current Initial
Franchise Fee.

21.4. Death or Disability. In the event of your death, disability or incapacitation (or
the death, disability or incapacitation of your principals or personal guarantors if you are a
partnership, corporation or limited liability company), your legal representative (or your
principal’s or guarantor’s respective legal representative, as applicable) shall have the right to
continue the operation of the Spa under this Agreement, without payment of a transfer fee, if: (i)
within 90 days from the date of death, disability or incapacitation (the “90 day period”), such
person has obtained Planet Beach’s prior written approval; and (ii) such person successfully
completes Planet Beach’s required training programs (which Planet Beach will provide at its
then-current tuition rate). Such assignment by operation of law will not be deemed in violation of
this Agreement, provided such heirs or legatees accept the conditions imposed by this Agreement and
are acceptable to Planet Beach.

21.5. Right of First Refusal. Planet Beach shall have the irrevocable first right and
option to purchase your business on the same terms and conditions as any bona fide purchaser who
wishes to become a Planet Beach franchisee. Planet Beach may exercise this right of first refusal
by notifying you of Planet Beach’s decision to do so in writing within 30 days after receipt of any
third party offers that you provide. Any sale or attempted sale without first giving Planet Beach
the right of first refusal shall be void and of no force or effect.

21.6. Transfer to a Corporation or Limited Liability Company. You have the right to assign
your rights under this Agreement to a corporation or limited liability company provided:

	 	21.6.1.	 	The entity is newly organized and its activities are exclusively confined to
operating the Planet Beach franchise;
	 
	 	21.6.2.	 	You are, and at all times remain, the owner of 51% of the outstanding shares of the
corporation or a controlling interest in the limited liability company;
	 
	 	21.6.3.	 	The new entity delivers to Planet Beach a written assumption of your obligations
under this Agreement;
	 
	 	21.6.4.	 	All shareholders, members and/or managers of the new entity sign Planet Beach’s
Guaranty Agreement; and
	 
	 	21.6.5.	 	The entity must adhere to the requirements set forth in this Agreement relating to
management of the Spa.

22. CHANGES AND MODIFICATIONS

Franchisor reserves and shall have the sole right to make changes in the Manual, the System, and
the Proprietary Marks at any time and without prior notice to Franchisee. Franchisee understands
and agrees that due to changes in competitive circumstances, presently unforeseen changes in the
needs of customers, and/or presently unforeseen technological innovations, the System must not
remain static in order that it

 

 

best serve the interest of Franchisor, franchisees, and the System. Accordingly, Franchisee
expressly understands and agrees that Franchisor may from time to time change the components of the
System, including but not limited to, altering the programs, services, methods, standards, forms,
policies and procedures of the System; adding to, deleting from or modifying those programs,
products and services which the Franchised Business is authorized to offer; and changing, improving
or modifying the Proprietary Marks. Subject to other provisions of this Agreement, Franchisee
expressly agrees to abide by any such modifications, changes, additions, deletions and alterations
at its sole expense.

23. TERMINATION

23.1. Automatic Termination. This Agreement will automatically terminate, without notice
and without an opportunity to cure, if:

     23.1.1. You make an assignment for the benefit of creditors, file a voluntary petition in
bankruptcy, are adjudicated a bankrupt or insolvent, file or acquiesce in the filing of a petition
seeking reorganization or arrangement under any federal or state bankruptcy or insolvency law, or
consent to or acquiesce in the appointment of a trustee or receiver for you or for the Spa; or

     23.1.2. You purport to sell, transfer or assign your rights under this Agreement.

23.2. Termination With Notice and Without Opportunity to Cure. Planet Beach has the right
to terminate this Agreement, which termination shall become effective upon delivery of notice of
termination, without providing you an opportunity to cure, if:

     23.2.1. Proceedings are commenced to have you adjudicated as bankrupt or to seek your
reorganization under any state or federal bankruptcy or insolvency law, and such proceedings are
not dismissed within 60 days, or a trustee or receiver is appointed for you or for the Spa without
your consent, and the appointment is not vacated within 60 days;

     23.2.2. A levy or writ of attachment or execution or any other lien is placed against you or
any of your principals, as applicable, or any of your assets or your principal’s assets which is
not released or bonded against within 30 days;

     23.2.3. In the sole and absolute discretion of Planet Beach, you fail to successfully complete
all required Planet Beach training programs at least 60 days following the opening of your Spa;

     23.2.4. You or any of your principals are insolvent.

     23.2.5. You or any of your principals are convicted of or plead no contest to a felony or
criminal misconduct relevant to the performance of your duties under this Agreement;

     23.2.6. You have misrepresented any material information to Planet Beach given in connection
with this Agreement including, but not limited to information in your franchise application, or you
falsify any material information provided to Planet Beach;

     23.2.7. You or your principals commit any fraud or engage in any illegal conduct in
connection with the Spa; or intentionally underreport or misstate any information you are required
to report to Planet Beach;

     23.2.8. You misuse any of the Proprietary Marks, Copyrights or Confidential Information and
fail to immediately cease or correct such use after receiving written or oral notification from
Planet Beach;

 

 

     23.2.9. You fail to find a site for your Spa and submit it to Planet Beach for approval within
60 days of the execution of this Agreement, and you fail to request in writing, and Planet Beach
does not elect to grant you, an extension of this Site Selection Period;

     23.2.10. You fail to open your Spa within 275 days of Planet Beach’s execution of this
Agreement;

     23.2.11. You abandon your Spa (for purposes of this provision, the term “abandon” shall mean
your failure to operate the Spa for 3 or more consecutive days);

     23.2.12. You fail to cure any default of your lease or sublease for your Spa’s location
within the relevant cure period, if any, or to remedy any default under any note,
lease, or sublease for the Spa’s location, or for the equipment or inventory therein, or lose the
right to possession of the Spa’s location, provided however, that if any such loss of possession
results through no fault of your own, and the premises are damaged or destroyed by fire, flood or
other natural disaster such that they cannot, in Planet Beach’s sole judgment, reasonably be
restored, or you are not permitted under the lease or sublease to restore, then this Agreement
shall not be terminated for that reason for a period of 60 days thereafter, provided that Planet
Beach has approved (i) a site within that time to which you will relocate for the remainder of the
term of this Agreement; and (ii) your schedule for reopening the Spa, which approval shall not be
unreasonably withheld;

     23.2.13. You purport to transfer any rights or obligations arising under this Agreement to any
third party without Planet Beach’s prior written consent, including the sale of the assets to a
non-Planet Beach franchisee;

     23.2.14. You violate the confidentiality/non-disclosure obligations of this Agreement;

     23.2.15. The provisions contained in this Agreement for transfer by you upon death,
disability or incompetence are not strictly followed;

     23.2.16. You violate the covenant not to compete;

     23.2.17. You fail to obtain Planet Beach’s approval or consent as required by this
Agreement;

     23.2.18. You violate any of the provisions of this Agreement and/or any other agreement with
Planet Beach on 2 or more occasions within any 12-month period (notwithstanding the cure of any
individual violation) and you have failed, on each occasion, to cure your violations within the
allotted cure period; or

     23.2.19. You violate the terms of the Construction Loan Agreement and/or any of its ancillary
documents. See Item 10.

23.3. Termination by Planet Beach After a Thirty (30) Day Cure Period. Planet Beach has
the right to terminate this Agreement, after providing you a 30-day cure period, if you fail to
comply with any term of this Agreement not listed in Paragraph 22.2.

23.4. Cross-Default. If you are the owner of more than 25% of another Planet Beach
franchise or corporate or limited liability company franchisee, then any breach of the franchise
agreement for such additional franchise will constitute a breach of this Agreement, and be grounds
for Planet Beach to

 

 

terminate this Agreement. Moreover, a breach of this Agreement is grounds for termination of any
other agreement you have with Planet Beach or its affiliates.

24. YOUR OBLIGATIONS UPON TERMINATION

24.1. Upon termination or expiration of this Agreement, you shall:

     24.1.1. Promptly pay to Planet Beach and/or its affiliates any sums due and owing, and to
other persons or entities sums which may result in a claim of liability to Planet Beach. You must
also promptly pay Planet Beach the royalty fees otherwise due for the remaining term of this
Agreement discounted to present value using an interest rate of 8%. This paragraph shall not apply
in the event the termination is due to your bankruptcy;

     24.1.2. Immediately cease using the Proprietary Marks, Copyrights and Confidential Information
and refrain from referencing any past association with Planet Beach;

     24.1.3. Immediately discontinue all marketing under the name “Planet Beach,” or any similar
name;

     24.1.4. Promptly cancel or transfer to Planet Beach, its affiliates or Planet Beach’s designee
any and all registrations and/or telephone listings under the name “Planet Beach”, or any similar
designation and execute such instruments and take such steps as Planet Beach may require to
accomplish the transfer or cancellation of any such registration or listing. You hereby grant to
Planet Beach power of attorney to cancel any fictitious name registration under the name referenced
above, or any similar name;

     24.1.5. If directed by Planet Beach, promptly make such changes and modifications in your
business methods, Spa facility, and otherwise as Planet Beach directs so as to effectively
distinguish the franchise location from any appearance as a Planet Beach Spa;

     24.1.6. Promptly destroy or surrender to Planet Beach all signs, stationery, letterhead, forms
and other printed materials containing any of the Proprietary Marks or any other similar name or
mark;

     24.1.7. Promptly return to Planet Beach the Operations Manual and other materials provided by
Planet Beach or containing Confidential Information or Trade Secrets, or other information which
relates to the System or the operation of the Spa, including but not limited to computer files,
customer data, programs and other materials provided to you by Planet Beach;

     24.1.8. Maintain all books, records and reports Planet Beach requires for a period of not less
than 1 year, and permit Planet Beach to inspect such documents;

 

 

     24.1.9. Deliver to Planet Beach a complete list of all persons employed by you during the 3
years immediately preceding termination, together with all employment files for each person on the
list;

     24.1.10. Provide Planet Beach, within 30 days after the effective date of termination or
expiration, evidence satisfactory to Planet Beach of your compliance with the
foregoing obligations; and

     24.1.11. Comply with all provisions of this Agreement that by their nature survive the
termination or expiration of this Agreement.

24.2. Security Interest in Personal Property. Planet Beach shall have a security
interest in any equipment, supplies and other personal property on the site if Planet Beach has not
received all funds due and owing from you and if Planet Beach is entitled by law to possession and
a lien against such property.

24.3. Option to Purchase Personal Property. Planet Beach, its affiliate or its assignee
also has the option, but is not obligated, to purchase any personal property used in connection
with the operation of your Spa by providing you written notice of its election within 30 days after
termination or expiration of this Agreement and paying you the book value for such personal
property within 30 days of such notice. For purposes of this paragraph, “book value” means the
amount you actually paid for the personal property less depreciation (calculated by using the
straight-line depreciation method on a 10 year depreciation schedule irrespective of the
depreciation method or schedule you use for accounting purposes). Notwithstanding the foregoing,
to the extent that Planet Beach exercises its right to purchase any personal property that is
subject to a lease or finance agreement, the purchase price of such personal property shall equal
the amount of your remaining obligations under the lease or finance agreement, as applicable. In
the event that the amounts due are in excess of book value, then the purchase price shall be equal
to the lesser of the amount due under the lease or finance agreement or book value. Planet Beach
shall be entitled to offset the purchase price by the amount of money owed by you to Planet Beach
for any payments necessary to acquire clear title to property or for any other debt. If Planet
Beach exercises its option to purchase, pending the closing of such purchase, Planet Beach has the
right to appoint a manager to maintain operation of the Spa, or Planet Beach may require that you
close the Spa during such period without removing any assets. You are required to maintain in
force all insurance policies required under this Agreement until the date of such closing.

25. CHOICE OF LAW; DISPUTE RESOLUTION

25.1. Governing Law. This Agreement shall be deemed to have been made in the State of
Louisiana and shall be construed according to the laws of Louisiana without regard to its conflict
of laws, LCC Arts. 3515 et seq., and any amendments and/or revisions thereto.

25.2. Internal Dispute Resolution. Before commencing any legal action against Planet Beach
or its affiliates with respect to any such claim or dispute, you must submit a notice of dispute
which specifies, in detail, the precise nature and grounds of such claim or dispute to the Planet
Beach Legal Department. If you are in a territory with an Area Representative, you must first
submit the claim directly to your Area Representative prior to engaging PBFC’s Legal Department.
Resolution of your dispute may involve an external, neutral Ombudsman at Planet Beach’s discretion.
If your claim or dispute cannot be resolved you must agree to a face to face meeting between you,
your attorney if you have retained one, a corporate representative from Planet Beach and the
General Counsel prior to engaging in mediation. This meeting

 

 

may occur at a neutral meeting place. You must exhaust these internal dispute resolution
procedures before proceeding to mediation.

25.3. Mediation. At Planet Beach’s option, all claims or disputes between you and Planet
Beach or its affiliates arising out of, or in any way relating to, this Agreement, or any of the
parties’ respective rights and obligations arising out of this agreement, shall be submitted first
to mediation, in Jefferson Parish, Louisiana under the auspices of the National Franchise Mediation
Program (“NFMP”), in accordance with the NFMP’s Commercial Mediation Rules then in effect. The
parties shall each bear their own costs of mediation and shall share equally the filing fee imposed
by NFMP and the mediator’s fees. Planet Beach’s rights to mediation, as set forth herein, may be
specifically enforced by Planet Beach.

25.4. Arbitration. At Planet Beach’s option, all disputes and claims relating to this
Agreement or any other agreement entered into between the parties, the rights and obligations of
the parties, or any other claims or causes of action relating to the making, interpretation, or
performance of either party under this Agreement, shall be settled by arbitration in Jefferson
Parish, Louisiana in accordance with the Federal Arbitration Act and the Commercial Arbitration
Rules of the American Arbitration Association (“AAA”). Any arbitration proceeding, or any claim in
arbitration (including any defense and any claim of setoff or recoupment), must be brought or
asserted before the expiration of the earlier of (1) the time period for bringing an action under
any applicable state or federal statute of limitation; (2) 1 year after the date upon which a
party discovered or should have discovered, the facts giving rise to an alleged claim; or (3) 2
years after the first act or omission giving rise to an alleged claim. Claims of Planet Beach
attributable to the underreporting of sales and claims of the parties for indemnification shall be
subject only to the applicable state or federal statute of limitation.

The right and duty of the parties to this Agreement to resolve any disputes by arbitration shall be
governed by the Federal Arbitration Act, as amended. Neither party shall pursue class claims
and/or consolidate the arbitration with any other proceeding to which the franchisor is a party.
Each party must bear its own costs of arbitration including the fee for their respective
arbitrator; provided, however, that the neutral or the single arbitrator’s fee shall be shared
equally by Planet Beach and you.

The arbitrator’s award shall include all fees, costs and attorneys’ fees for the prevailing party.
The arbitrators shall have no authority to amend or modify the terms of the Agreement. To the
extent permitted by applicable law, no issue of fact or law shall be given preclusive or collateral
estoppel effect in any arbitration, except to the extent such issue may have been determined in
another proceeding between the parties. Judgment upon the award of the arbitrator shall be
submitted for confirmation to the United States District for the Eastern District of Louisiana and,
if confirmed, may be subsequently entered in any court having competent jurisdiction. This
agreement to arbitrate shall survive any termination or expiration of this Agreement.

25.5. Third Party Beneficiaries. Planet Beach’s officers, directors, shareholders, agents,
employees and/or affiliates are express third party beneficiaries of this Agreement and the
mediation and arbitration provisions contained herein, each having authority to specifically
enforce the right to mediate and arbitrate claims asserted against such person(s) by you.

25.6. Injunctive Relief. Nothing contained in this Agreement herein shall prevent the
parties from applying to or obtaining from any court having jurisdiction, without bond, a writ of
attachment, temporary injunction, preliminary injunction and/or other emergency relief available to
safeguard and protect the parties’ interest prior to the filing of any legal proceeding or pending
the trial or handing down of a decision or award pursuant to any legal proceeding conducted
hereunder.

 

 

25.7. Jurisdiction and Venue. With respect to any proceeding, the parties agree that any
action at law or in equity instituted against either party to this Agreement shall be commenced
only in the 24th Judicial District Court for the Parish of Jefferson, Louisiana or the United
States District Court for the Eastern District of Louisiana at Planet Beach’s discretion.

25.8. Jury Trial Waiver. With respect to any proceeding, the parties hereby agree to
waive trial by jury in any action, proceeding or counterclaim, whether at law or equity, regardless
of which party brings suit. This waiver shall apply to any matter whatsoever between the parties
hereto which arises out of or is related in any way to this Agreement, the performance of either
party, and/or your purchase from Planet Beach of the franchise and/or any goods or services.

25.9. Waiver of Punitive Damages. You waive to the fullest extent permitted by law, any
right to or claim for any punitive, exemplary, incidental, indirect, special or consequential
damages (including, without limitation, lost profits) which you the parties may have against Planet
Beach, its affiliates, successors or assigns, arising out of any cause whatsoever (whether such
cause be based in contract, negligence, strict liability, other tort or otherwise) and agree that
in the event of a dispute, recovery shall be limited to actual damages. If any other term of this
Agreement is found or determined to be unconscionable or unenforceable for any reason, the
foregoing provisions shall continue in full force and effect, including, without limitation, the
waiver of any right to claim any consequential damages.

25.10. Class Action Waiver. You hereby agree to waive any class action proceeding or
counterclaim against Planet Beach, its affiliates, successors or assigns, whether at law or equity,
regardless of which party brings suit. This waiver shall apply to any matter whatsoever between
the parties hereto which arises out of or is related in any way to this Agreement, the performance
of either party, and/or your purchase from Planet Beach, its affiliates, successors or assigns of
the franchise and/or any goods or services.

25.11. Attorneys’ Fees. If either party institutes any judicial or arbitration proceeding
to enforce any obligations under or to interpret the terms of this Agreement and Planet Beach
prevails in the action or proceeding, you shall be liable to Planet Beach for all costs, including
reasonable attorneys’ fees, incurred in connection with such proceeding.

25.12. Nonwaiver. Planet Beach’s failure to insist upon strict compliance with any
provision of this Agreement shall not be a waiver of Planet Beach’s right to do so, any law,
custom, usage or rule to the contrary notwithstanding. Delay or omission by Planet Beach
respecting any breach or default shall not affect Planet Beach’s rights respecting any subsequent
breaches or defaults. All rights and remedies granted in this Agreement shall be cumulative.
Planet Beach’s election to exercise any remedy available by law or contract shall not be deemed a
waiver or preclude exercise of any other remedy.

26. CONSTRUCTION

26.1. Entire Agreement. This Agreement contains the entire agreement between the parties
concerning the franchisee’s franchise; no promises, inducements or representations not contained in
this Agreement have been made, nor shall any be of any force or effect, nor binding on the parties.
Modifications of this Agreement must be in writing and signed by both parties. Planet Beach
reserves the right to change Planet Beach’s policies, procedures, standards, specifications or
manuals at Planet Beach’s discretion. Nothing in the Agreement or in any related agreement is
intended to disclaim the representation we made in the franchise disclosure document.

 

 

26.2. Survival. Any provisions of this Agreement which may be reasonably interpreted to
impose any obligation after termination or expiration hereof shall survive such termination or
expiration and be binding upon the parties.

26.3. Severability. The parties agree that if any provisions of this Agreement may be
construed in two ways, one of which would render the provision illegal or otherwise voidable or
unenforceable and the other which would render it valid and enforceable, such provision shall have
the meaning, which renders it valid and enforceable. The language of all provisions of this
Agreement shall be construed according to fair meaning and not strictly construed against either
party. The provisions of this Agreement are severable, and this Agreement shall be interpreted and
enforced as if all completely invalid or unenforceable provisions were not contained herein, and
partially valid and enforceable provisions shall be enforced to the extent that they are valid and
enforceable. If any material provision of this Agreement shall be stricken or declared invalid,
the parties agree to negotiate mutually acceptable substitute provisions. In the event that the
parties are unable to agree upon such provisions, Planet Beach reserves the right to terminate this
Agreement.

26.4. Construction. The terms “franchisee” and “you” shall be construed to refer to the
male or female gender in all cases where the franchisee is an individual, masculine or feminine
modifiers and pronouns notwithstanding. The term “Franchisee” and “you” include all persons or
entities identified as “franchisee” in the Data Sheet. The term “principals” shall include your
general and limited partners if you are a partnership; your officers, directors and shareholders if
you are a corporation; and your members and managers if you are a limited liability company. The
paragraph captions are inserted only for convenience and reference, and are not intended to define,
limit or describe the scope, intent or language of this Agreement or any provisions hereof.

26.5. Binding Agreement. This Agreement shall be binding upon the parties and their heirs,
executors, personal representatives, successors and assigns. All franchisee signatories to this
Agreement and all partners of a partnership franchisee, all officers, directors and shareholders of
a corporate franchisee, and all members and managers of a limited liability company franchisee,
shall be jointly and severally liable for the performance of all terms, covenants and conditions
hereof.

27. PERSONAL GUARANTY OF SHAREHOLDERS, PARTNERS, MEMBERS AND MANAGERS

You acknowledge that all partners in a limited partnership, shareholders in a corporate franchisee,
or members and managers in a limited liability company franchisee are obligated to execute a
Guaranty Agreement in which each agrees to personally abide by all of the terms and conditions of
this Agreement, and guarantees to Planet Beach your performance of this Agreement and your
financial obligations. Unless all such partners, shareholders, or members and managers execute
such Guaranty Agreement concurrently herewith, this Agreement shall, at Planet Beach’s option,
become null and void and confer no rights upon you nor any partner, shareholder, member or manager.
All guarantors shall be jointly and severally liable for the performance of all of the terms,
covenants and conditions hereof. If you are an individual(s), or subsequent to execution hereof,
you assign this Agreement to an individual(s), such individual’s spouse hereby personally and
unconditionally guarantees without notice, demand or presentment the payment of all of your
monetary obligations under this Agreement as if each were an original party to this Agreement in
his or her individual capacity. All such spouses further agree to be bound by the restrictions
upon your activities upon transfer, termination or expiration of this Agreement as if each were an
original party to this Agreement in his or her individual capacity. All such spouses shall execute
the Guaranty Agreement in the form attached as Exhibit 3 to this Agreement.

 

 

28. REPRESENTATIONS AND ACKNOWLEDGMENTS

28.1. No Warranties. Planet Beach makes no warranties, express or implied, nor any
representation whatsoever other than as expressly set forth herein.

28.2. No Authority. NO SALESPERSON, REPRESENTATIVE OR OTHER PERSON HAS THE AUTHORITY TO
BIND OR OBLIGATE PLANET BEACH EXCEPT AN AUTHORIZED OFFICER OF PLANET BEACH BY WRITTEN DOCUMENT.
YOU ACKNOWLEDGE THAT NO REPRESENTATIONS, PROMISES, INDUCEMENTS, GUARANTEES OR WARRANTIES OF ANY
KIND WERE MADE BY OR ON BEHALF OF PLANET BEACH, WHICH HAVE CAUSED YOU TO ENTER INTO THIS AGREEMENT.
YOU UNDERSTAND THAT WHETHER YOU SUCCEED AS A FRANCHISEE IS DEPENDENT UPON YOUR EFFORTS, BUSINESS
JUDGMENTS, THE PERFORMANCE OF YOUR EMPLOYEES, MARKET CONDITIONS AND VARIABLE FACTORS BEYOND THE
CONTROL OR INFLUENCE OF PLANET BEACH. YOU FURTHER UNDERSTAND THAT SOME FRANCHISEES ARE MORE, OR
LESS, SUCCESSFUL THAN OTHER FRANCHISEES AND THAT PLANET BEACH HAS MADE NO REPRESENTATIONS THAT YOU
WILL DO AS WELL AS ANY OTHER FRANCHISEE.

28.3. Receipt. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF PLANET BEACH’S FRANCHISE DISCLOSURE
DOCUMENT, FINANCIAL STATEMENTS AND CONTRACTS FOR THE PLANET BEACH SPA FRANCHISE AT LEAST 14
CALENDAR DAYS PRIOR TO EXECUTION OF THIS AGREEMENT OR PAYMENT OF ANY MONIES FOR THE FRANCHISE. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THIS AGREEMENT, WITH ALL BLANKS COMPLETED AND WITH ANY
AMENDMENTS AND EXHIBITS, AT LEAST 7 CALENDAR DAYS PRIOR TO EXECUTION OF THIS AGREEMENT.

28.4. Your Business Efforts. YOU, AS AN INDEPENDENT BUSINESS PERSON OR ENTITY, RECOGNIZE
THAT THERE ARE ECONOMIC HAZARDS IN CONNECTION WITH THE OPERATION OF ANY BUSINESS, INCLUDING THE
TYPE CONTEMPLATED BY YOU PURSUANT TO THIS AGREEMENT. YOU ACKNOWLEDGE THAT PLANET BEACH DOES NOT
GUARANTEE YOUR SUCCESS, FINANCIAL OR OTHERWISE, EVEN THOUGH YOU MAY FOLLOW OR RELY ON PLANET
BEACH’S ADVICE, RECOMMENDATIONS, PROGRAMS, POLICIES AND PROCEDURES. YOU ACKNOWLEDGE THAT YOU HAVE
MADE AN INDEPENDENT INVESTIGATION OF THE FRANCHISED BUSINESS AND THAT NO REPRESENTATION HAS BEEN
MADE BY PLANET BEACH REGARDING THE POTENTIAL OR FUTURE PROFITABILITY OF THE FRANCHISED BUSINESS,
NOR OF THE FUTURE NUMBER OF PLANET BEACH SPAS AND ANY BENEFITS FLOWING THEREFROM. YOU UNDERSTAND
THAT ANY INCOME OR PROFITS YOU MAY REALIZE WILL BE PRIMARILY THE RESULT OF YOUR EFFORTS AND LABORS,
AND NOT THOSE OF PLANET BEACH OR THIRD PARTIES. THIS FRANCHISE IS NOT A SECURITY AND YOU AGREE
NOT TO RELY ON PLANET BEACH OR ANY THIRD PARTY TO PRODUCE INCOME FOR YOU PURSUANT TO THIS
AGREEMENT.

28.5. Opportunity to Review by Your Advisors. YOU ACKNOWLEDGE THAT PLANET BEACH HAS
RECOMMENDED, AND THAT YOU HAVE HAD THE OPPORTUNITY TO OBTAIN, REVIEW OF THIS AGREEMENT AND PLANET
BEACH’S FRANCHISE DISCLOSURE DOCUMENT BY YOUR LAWYER, ACCOUNTANT OR OTHER BUSINESS ADVISOR PRIOR TO
EXECUTION HEREOF.

28.6. Execution Of Agreement. EACH OF THE UNDERSIGNED PARTIES WARRANTS THAT IT HAS THE
FULL AUTHORITY TO SIGN AND EXECUTE THIS AGREEMENT. IF YOU ARE A
PARTNERSHIP, CORPORATION OR LIMITED LIABILITY COMPANY, THE PERSON

 

 

EXECUTING THIS AGREEMENT ON
BEHALF OF SUCH PARTNERSHIP, CORPORATION OR LIMITED LIABILITY COMPANY WARRANTS TO PLANET BEACH, BOTH
INDIVIDUALLY AND IN HIS CAPACITY AS PARTNER, OFFICER, MEMBER OR MANAGER, AS APPLICABLE, THAT ALL OF
THE PARTNERS OF THE PARTNERSHIP, ALL OF THE SHAREHOLDERS OF THE CORPORATION, OR ALL OF THE MEMBERS
AND MANAGERS OF THE LIMITED LIABILITY COMPANY, AS APPLICABLE, HAVE READ AND APPROVED THIS
AGREEMENT, INCLUDING ANY RESTRICTIONS WHICH THIS AGREEMENT PLACES UPON RIGHTS TO TRANSFER THEIR
INTEREST IN THE PARTNERSHIP, CORPORATION OR LIMITED LIABILITY COMPANY.

28.7. Execution in Duplicate. THIS AGREEMENT MAY BE EXECUTED IN DUPLICATE, EACH OF WHICH
SHALL BE DEEMED AN ORIGINAL.

     The parties hereto, intending to be legally bound, have hereunto executed this Agreement the
day and year first above written.

	 	 	 	 	 
	 	PLANET BEACH FRANCHISING CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	This Agreement is not fully executed until signed by the

CEO or COO of Planet Beach Franchising Corporation:	 
	 	 	 	 

	 	 	 	 	 
	 

	 	 	 	FRANCHISEE
	 

	 	 	 	 
	 

	 	 	 	 
	Witness
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness
	 	 	 	 

 

 

EXHIBIT 1

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

SCHEDULE OF AUTHORIZED AND APPROVED PRODUCTS AND SERVICES

For purposes of the Franchise Agreement, the following products and services are currently
“Authorized and Approved Products and Services” as described in Section 9.3.

PBFC: for private label products and UMO related products and accessories.

Australian Gold: for Australian Gold, Swedish Beauty, Designer Skin private label and co-branded
products.

Whiter Image: for teeth whitening products.

Legacy: for private label candles.

Dream Time: for authorized retail products.

Matworks: for all Spa flooring covering needs including vinyl base, adhesives and transition
materials.

Meletio: for all Spa light fixtures.

Spa furniture vendors as approved by PBFC: for all Spa furniture including lobby and service room
furniture.

Architectural/Engineering Firms as approved by PBFC: for all Spa Mechanical, Electrical, Plumbing
(MEP) Engineering and Architectural Drawings.

General Contractors are approved by PBFC on a per store basis.

ACIGI Relaxation – Cyber Relax Massage Chair

AMI – Aqua Massage: Massage and Hydrotherapy equipment and authorized accessories.

JTL Enterprises – HydroMassage (Dry Hydrotherapy Massage)

Ergoline – UV Equipment (International only)

ETS – UV Equipment (Domestic only)

MTI – Mystic Tan Booths: UV Free/Spray Tanning equipment and authorized retail products.

Photo Medex: Lumiere` (Facial Unit) and authorized retail products.

Sybaritic, Inc. – Hydration Station and SlimCapsule equipment and authorized products.

UMO – UMO Facial & Hand Spa

 

 

Oxygen Inc. – 4-person Oxygen Station equipment and authorized retail product accessories.

Therasage – Far Infrared Massage Bed, Sauna and Chairs

Millennium
– Software

Workflow One – Printed Materials

Pel Hughes – Printed Materials/Direct Mail

Professa Grafix – Printed Materials

Valpak – Marriage Mail

Spa Boom – Online Gift Certificates

Lionfish – Contempo Spa Catalog Orders

	 	 	 	 	 
	 	PLANET BEACH FRANCHISING CORPORATION

 	 
	 	By:  	 	 

	 	 	 	 	 
	 

	 	 	 	FRANCHISEE
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness
	 	 	 	 

 

 

EXHIBIT 2

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

APPROVED LOCATION AND TERRITORY ADDENDUM

The undersigned franchisee has the right to establish one Planet Beach Spa at the following
Approved Location (as defined in Section 2.1 of the Franchise Agreement):

      

      

Franchisee’s Territory (as defined in Section 3 of the Franchise Agreement) shall encompass the
following area:

The radius of the circle will be based on where the spa site is located and will be determined as
follows:

	 	 	 	(i.) one-half of a mile (1/2 mile) if your Spa is located in a Downtown area or the
Central Core of a large city;
	 
	 
	 	 	 	(ii.) two miles (2.0 miles) if your Spa is located in any other Area.     

	 	 	 	 	 
	 	PLANET BEACH FRANCHISING CORPORATION

 	 
	 	By:  	 	 

	 	 	 	 	 
	 

	 	 	 	FRANCHISEE
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness
	 	 	 	 

 

 

EXHIBIT 3

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

GUARANTY AGREEMENT

     WHEREAS, a Franchise Agreement dated                                         ,                 
    , has been entered into between Planet Beach
Franchising Corporation and                                                             

(referred to as “Franchisee”) for the operation by Franchisee of a Planet Beach location; and

     WHEREAS, the undersigned guarantor desires to guarantee the obligations of Franchisee to
Planet Beach Franchising Corporation;

     NOW, THEREFORE, the parties hereto, intending to be legally bound, do hereby agree as follows:

     The undersigned, as a person with an interest in a Planet Beach franchise, agrees to
personally and unconditionally guarantee the obligations of Franchisee to Planet Beach and shall
personally be subject to and bound by all terms, conditions, restrictions and prohibitions
contained in the Planet Beach Franchising Corporation’s Single Unit Franchise Agreement including,
without limitation, the confidentiality provisions, covenants, and indemnification provisions
contained in Sections 12, 18 and 19.2, respectively. Further, the undersigned agrees to personally
act as surety for the full and faithful performance of all of the financial obligations,
commitments and payments required of the Franchisee in any such subject Franchise Agreement. The
undersigned agrees that Planet Beach Franchising Corporation does not have to pursue any remedies
it may have against the Franchisee or any other individual guarantor; but, rather, it may proceed
directly and primarily against the undersigned with or without joining the Franchisee or other
guarantors as principals or as named parties in any such proceeding. The undersigned is jointly
and severally liable for such obligations, commitments and payments required of the Franchisee.

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness

	 	 	 	Guarantor, Individually
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness

	 	 	 	Guarantor, Individually

 

 

ACKNOWLEDGMENT BY GUARANTOR

     WHEREAS, a Guaranty Agreement dated                                                         
    , is being
entered into between Planet Beach Franchising Corporation and                                                             
(“Guarantor”), whereunder Guarantor has guaranteed the obligations of a corporate, limited
partnership or limited liability company franchisee to Planet Beach Franchising Corporation, or is
the spouse of an individual franchisee of Planet Beach Franchising Corporation, and

     WHEREAS, Planet Beach Franchising Corporation and Guarantor desire to clarify the relationship
between them.

     NOW, THEREFORE, Guarantor acknowledges that Guarantor has conducted an independent
investigation of the Planet Beach Franchising Corporation franchise program and recognizes that the
business venture contemplated by the franchisee involves business risk and success will be largely
dependent upon the ability of the franchisee, Guarantor and other persons with an interest in the
franchise as independent business persons. Planet Beach Franchising Corporation expressly
disclaims the making of, and Guarantor acknowledges not receiving, any guaranty or warranty,
express or implied, nor any representation as to the potential volume, profits or success of the
business venture contemplated by the Franchise Agreement. Guarantor further represents that
Guarantor is not a party to any agreement which might interfere with the performance required of
persons with an interest in the franchise under the Planet Beach Franchising Corporation’s Single
Unit Franchise Agreement, and that entering into such agreement shall not in any way interfere with
or constitute a breach of any prior existing contract to which Guarantor is a party.

	 	 	 	 	 
	 

	 	 	 	 
	Witness

	 	 	 	Guarantor, Individually
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Witness

	 	 	 	Guarantor, Individually

 

 

EXHIBIT 4

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

RIDER TO LEASE

     THIS RIDER TO LEASE made this                      day of                     20     ,
by and between
                                        , with principle offices
at                                         (hereinafter “Landlord”): and
                                        , with principle offices at
                                         (hereinafter “Tenant”); and Planet Beach
Franchising Corporation, a Louisiana Corporation, with its principal address at 5145 Taravella
Road, Marrero, Louisiana 70072 (hereinafter “Franchisor”).

     This Rider supplements and forms a part of that certain lease between Landlord and Tenant,
dated                     , 20     , (the “Lease”) for leased premises located at
                                         (the “Premises”). This Rider is entered
into in connection with Franchisor’s grant of a franchise to Tenant to operate a franchised
business at the Premises. It is intended to provide Franchisor the opportunity to preserve the
Premises as a tanning Spa operated under Franchisor’s brand in the event of any termination of the
lease or any franchise agreement between Franchisor and Tenant, and to assure Landlord that, if
Franchisor exercises the option to assume the Lease as provided in this Rider to Lease, any
defaults of Tenant under the Lease will be cured by Franchisor before it takes possession of the
Premises. Landlord agrees that Franchisor will have the right, but not the obligation, to assume
the Lease of the Premises attached hereto as Exhibit A, on the terms, covenants and conditions
hereinafter set forth.

I. DEFAULT BY TENANT UNDER THE LEASE

1.0 Landlord will send Franchisor copies of all notices of default it gives to Tenant at the same
time it gives such notices to Tenant. If Tenant fails to cure any default within the period
specified in the Lease, Landlord will promptly give written notice to Franchisor, specifying the
default Tenant has failed to cure. Franchisor will have the right and option to assume the Lease
by giving written notice to Landlord and Tenant within thirty (30) days after the date of receipt
of Landlord’s notice that Tenant has failed to cure a default under the Lease.

1.1 Landlord will deliver possession of the Premises to Franchisor promptly after Landlord receives
Franchisor’s written notice exercising its option to assume the Lease. Franchisor, upon taking
possession of the Premises, will cure the defaults specified by Landlord and will execute and
deliver to Landlord an assumption of the Tenant’s rights and obligations under the Lease.

1.2 Franchisor will not be required to cure defaults and/or begin paying rent until Landlord
delivers possession of the Premises to Franchisor. If it becomes necessary for Landlord to pursue
legal action in order to evict Tenant and deliver possession of the Premises to Franchisor,
Franchisor will, upon written request by Landlord, pay into an escrow account with Landlord’s
attorney, such amounts as are necessary to cure Tenant’s defaults. If Landlord is unable to
deliver possession of the Premises to Franchisor within nine (9) months after the date of
Franchisor’s exercise of its option to assume the Lease, Franchisor will have the right, at any
time until Landlord delivers possession of the Premises, to rescind the option exercise, by written
notice to Landlord, whereupon all amounts in escrow shall be returned to Franchisor.

 

 

     II. TENANT’S FAILURE TO EXTEND THE LEASE TERM.

2.0 If the Lease contains the term renewal or extension right(s) and if Tenant allows the term to
expire without exercising said right(s), Landlord will give Franchisor written notice thereof, and
Franchisor will have the right and option to exercise the Tenant’s renewal or extension right(s) on
the same terms and conditions as are contained in the Lease by giving written notice to Landlord
within thirty (30) days of receipt of Landlord’s notice. If Franchisor exercises such right(s)
Landlord and Franchisor will promptly execute a lease assumption agreement that will provide for
Franchisor’s assumption of the Lease effective at the commencement of the extension or renewal
term.

     III. TERMINATION OF A FRANCHISE AGREEMENT.

3.0 Franchisor will have the right and option to assume the Lease if any franchise agreement
between Franchisor and Tenant is terminated for any reason during the term of the Lease. If any
franchise agreement between Franchisor and Tenant is terminated and Franchisor desires to assume
the Lease it may give written notice to Landlord requesting that Landlord specify any existing
defaults by Tenant under the Lease. Within fifteen (15) days after receipt of such notice,
Landlord will give Franchisor written notice specifying any existing defaults by Tenant under the
Lease.

3.1 If any franchise agreement between Franchisor and Tenant is terminated, Tenant shall, within
ten (10) days after written demand by Franchisor, assign all of its right, title and interest in
the Lease to Franchisor. If Tenant fails to do so, Tenant hereby designates Franchisor as its
agent to execute any and all documents, agreements and to take all action that may be necessary or
desirable to effectuate the assignment of the Lease and the relinquishment of any and all of
Tenant’s right there under. Landlord consents to such assignment, subject to Franchisor executing
as assumption of the Lease in form reasonably satisfactory to Landlord and curing all defaults of
Tenant under the Lease before taking possession of the Premises. Tenant further agrees to promptly
and peaceably vacate the Premises and to remove its personal property at the written request of
Franchisor. Any property not so removed by Tenant within ten (10) days following receipt of such
written request shall be deemed abandoned by Tenant.

3.2 Tenant agrees that termination of any franchise agreement for the Premises shall, at the option
of Landlord, be a default under the Lease.

     IV. ADDITIONAL PROVISIONS

4.0 Tenant shall remain liable to Landlord for all of its obligations under the Lease,
notwithstanding any assignment of the Lease to Franchisor. Franchisor shall be entitled to recover
from Tenant all amounts it pays to Landlord to cure Tenant’s defaults under the Lease, including
interest and reasonable collection costs.

4.1 Prior to taking possession of the Premises pursuant to its rights under this Rider to Lease,
Franchisor will cure the defaults specified by Landlord and execute and deliver to Landlord an
assumption of the Tenants right and obligation under the Lease. Franchisor corporation will pay,
perform and be bound by all of the duties and obligations of the Lease applicable to Tenant, except
that Franchisor may elect not to assume or be bound by the terms of any amendment to the Lease
executed by Tenant without obtaining Franchisor’s prior written approval, which shall not be
unreasonably withheld.

4.2 After Franchisor assumes Tenant’s interest in the Lease, Franchisor will not be subject to any
provision of the Lease that requires the Tenant to continuously operate a business in the Premises
during any period that the business in the Premises is closed for remolding or while the Franchisor
is seeking to obtain and train a new franchisee to operate a franchised business in the Premises.

 

 

4.3 After Franchisor assumes Tenant’s interests in the Lease, Franchisor may, without Landlord’s
consent, sublet the Premises to a franchisee of Franchisor provided the Franchisor remains
primarily liable under the Lease.

4.4 After Franchisor assumes Tenant’s interest in the Lease, Franchisor may assign this Lease so
long as Franchisor remains liable for the payment of rent and the performance of Tenant’s duties
and obligations under the Lease. Franchisor may also, with the prior written consent of Landlord,
assign without recourse its rights under the Lease. Landlord shall not unreasonably withhold its
consent to an assignment to a franchisee of Franchisor who meets Franchisor’s financial
qualification requirements. Upon receipt by Landlord of an assumption agreement in form reasonably
satisfactory to Landlord pursuant to which such franchisee agrees to assume the Lease and to
observe the terms, conditions and agreements on the part of Tenant to be performed under the Lease,
Franchisor shall be released from all liability as tenant under the Lease accruing after the date
of the effective date of the assignment.

4.5 If the Lease or Franchise Agreement for the Premises is terminated and Franchisor does not
exercise its option to assume the Lease, Tenant agrees, upon written demand by Franchisor, to
promptly remove signs, décor and other items which Franchisor reasonably requests be removed as
being distinctive and indicative of Franchisor’s trademarks and trade dress. Franchisor may enter
upon the Premises without being guilty of trespass or tort to effect such de-identification if
Tenant fails to do so within ten (10) days after receipt of written demand from Franchisor. Tenant
shall pay Franchisor for its reasonable cost and expenses in effecting de-identification.
Franchisor shall defend, indemnify and hold Landlord harmless from and against any claims arising
from Franchisor’s de-identification of the Premises.

4.6 BY EXECUTING THIS RIDER TO THE LEASE, FRANCHISOR DOES NOT HEREBY ASSUME ANY LIABILITY WITH
RESPECT TO THE PREMISES OR ANY OBLIGATION AS TENANT UNDER THE LEASE, UNLESS AND UNTIL FRANCHISOR
EXPRESSLY ASSUMES SUCH LIABILITY AND/OR OBLIGATION, AS HEREINABOVE DESCRIBED.

4.7 All notices hereunder shall be delivered by certified mail to the addresses described in the
Lease or to such other address as any party hereto may, by written notice instruct that notices be
given. In the case of Franchisor, notices should be sent to: Director of Location Development,
5145 Taravella Road, Marrero, Louisiana, 70072, until further notice.

THE NEXT PAGE IS THE SIGNATURE PAGE

 

 

     IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS LEASE OPTION RIDER TO BE EXECUTED AS
OF THE DATE FIRST ABOVE WRITTEN.

	 	 	 	 	 	 	 	 	 
	 

	 	Witness/Attest:	 	 	 
	 

	 	 	 	 	 	 	Landlord	 
	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	President	 
	 
	 

	 	 	 	 	 	 	Individually	 
	 
	 	 	 	 	 	 	 	Tenant	 
	 

	 	 	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 	President	 
	 
	 

	 	 	 	 	 	 	Individually	 

	 	 	 	 	 
	 	PLANET BEACH FRANCHISE CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT 5

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

Sublicense Agreement

     THIS SUBLICENSE AGREEMENT (“Sublicense” or “Agreement”) is made this                     day of       
              , 200           
         , (the
“Effective Date”) by and between Planet Beach Franchising Corporation (“Planet Beach”), a Delaware
corporation with an address at 5145 Taravella Road, Marrero, LA 70072 and                                          (“Franchisee” or “You”),
a                                                             having principal offices at    
                
                                         .

     WHEREAS, Planet Beach has entered into a certain License Agreement for Software Distribution
and Use with Harms Software, Inc. (the “Main License”), pursuant to which it has acquired a license
to distribute and use certain software products for employee management, point-of-sale functions,
appointment booking, marketing, inventory control, and the integration and implementation of
various internal business and reporting functions, which software products (the “Licensed
Software”) are proprietary to and owned by Harms Software, Inc. (“Harms”); and

     WHEREAS, Planet Beach requires that each of its franchisees use such Licensed Software in
connection with the operation of its Planet Beach facilities; and

     WHEREAS, each of the parties hereto desires to enter into a sublicense agreement pursuant to
which Franchisee shall be permitted to use the Licensed Software in accordance with the terms and
conditions set forth and established herein.

     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, Harms
and Franchisee hereby agree as follows:

     LICENSE. Planet Beach hereby grants to Franchisee a non-exclusive, limited, non-transferable
license (the “License” or the “Sublicense”) to use the Licensed Software distributed to You by
Planet Beach hereunder, along with associated documentation (the “Documentation”), solely in
connection with the operation by you of your Planet Beach Facility and subject to the terms and
conditions set forth in this Sublicense Agreement.

The Licensed Software shall also include any updates which Planet Beach distributes to Franchisee
during the term of this Sublicense Agreement. Franchisee’s rights to use the Licensed Software are
limited to a single approved location. Planet Beach and Harms specifically retain all right, title
and interest in and to all proprietary and intellectual property rights in and to the Licensed
Software, including without limitation, trade secrets, copyrights, trademarks, patents,
functionality and business methodology embodied therein, and the like. All rights not expressly
granted to Franchisee herein are specifically reserved to Planet Beach and Harms.

     LIMITATIONS ON USE. You may not rent, lease, sell or otherwise transfer or distribute copies
of the Licensed Software or Documentation to any other person or entity for any reason. You may
not modify or translate the Licensed Software or the Documentation for any reason. You may not
reverse assemble, reverse compile or otherwise attempt to create the source code from the Licensed
Software. You may not use the name of Harms Software or its Millennium brand or refer to Harms
Software directly or indirectly in any papers, articles, advertisements, sales presentations, news
releases or releases

 

 

to any third party without the prior written approval of Planet Beach for each such use. You may
not release the results of any performance or functional evaluation of any portion of the Licensed
Software to any third party without prior and express written approval of Planet Beach for each
such release.

     THIRD PARTY BENEFICIARY. You understand, acknowledge, and agree with Planet Beach that Harms
is an intended third party beneficiary of the terms and conditions of this Agreement.

     BACKUP AND TRANSFER. You may obtain a copy of the Licensed Software from Planet Beach for
essential backup purposes, provided the copy is retained at Franchisee’s approved location. You
may not sublicense, assign, delegate, rent, lease, time-share or otherwise transfer this license or
any of the related rights or obligations to any person or entity for any reason. Any attempt to
make any such sublicense, assignment, delegation or other transfer by you shall be void and of no
legal effect and shall automatically be deemed a material breach of this Agreement, which breach
shall trigger an automatic termination of this Agreement.

     If Planet Beach authorizes a sale of your franchise and transfer of your rights under your
Franchise Agreement to a third party (the “Transferee”) you must notify the Transferee that it will
be obligated to enter into a new Sublicense Agreement with Planet Beach, and that a “Re-License
Fee” of $250.00 will be required to be paid to Planet Beach to secure Planet Beach’s authorization
to use the Licensed Software and the Documentation and to receive technical support.

     OWNERSHIP. You own only the magnetic or other physical media on which the Licensed Software
and related Documentation are recorded or fixed. All content accessed through the Licensed
Software is the property of the applicable content owner and may be protected by applicable
copyright law. This Sublicense gives you no rights whatsoever to such content.

     TERM AND TERMINATION. The term of this Sublicense is concurrent with the term of your Planet
Beach Franchise Agreement unless earlier terminated as provided herein, provided, however, that the
term of this Sublicense shall not exceed the term of the Main License, and shall automatically
terminate upon the termination or expiration of the Main License. This Sublicense (and all of your
rights hereunder) automatically terminates if you fail to comply with its terms and conditions.
You agree that, upon such termination, in accordance with Planet Beach’s direction, you will either
destroy (or permanently erase) all copies of the Licensed Software and Documentation, or return the
original Licensed Software and Documentation to Planet Beach, together with any other material you
have received from Planet Beach or HARMS Software in connection with the Licensed Software.

     MAINTENANCE AND SUPPORT. During the term of this Sublicense, you will receive Level 1
technical support services from Planet Beach.

     You will receive Level 2 and above technical support services from Harms during Harms standard
support hours, as follows:

Monday thru Friday – 9:00 AM -8:00 PM EST

(Technical Support Phone Number — 1-973-402-8801)

Saturday — 9:00 AM-5:00 PM EST*

(Technical Support Phone Number — 1-973-402-8801)

 

	*	 	 	Saturday support is available via dispatch to the appropriate technicians working
that day. Once you reach the technical support mailbox, leave your name, business
name,

 

 

           telephone number, and the nature of your call. A Harms technician will return your
call promptly.

Sunday – Emergency Support Only

After Standard Hours Emergency Support**

 

	**	 	 	The telephone message center for the Technical Support Department will ask if this
is an emergency and then prompt the caller to use the paging option in which a Harms
technician will be dispatched to return your call. You will be required to leave
information including business name, contact, phone number, and a credit card
number. You will be charged a fee per 15 minute increment for each emergency call.
	 
	(a)	 	 	Exclusions. Harms’ technical support does not include software
trainings, non-software related issues, provision of software upgrades, data recovery,
after hours emergency support, and data restoration. If Harms determines that you have
a problem with hardware such as a printer or computer, you may be required to contact
the appropriate manufacturer directly. Warranties for hardware are provided by the
hardware manufacturer, and not by Harms.
	 
	(b)	 	 	Data Backup. Certain locations may be susceptible to power outages
and/or fluctuations that can cause a computer to crash or shut down. You are strongly
recommended to install and maintain battery backups to keep computers from being
shutdown improperly. WARNING: Shutting down your computer while the Licensed Software
is in use may damage the databases and potentially cause a loss of data. Harms is not
responsible for any such losses of data, nor does Harms assume responsibility or
liability for any losses or damages arising, directly, or indirectly, from your
improper use or maintenance of the Software or your hardware. On occasion, data may be
damaged to the extent that intervention by a Harms programmer is necessary to recover
or fix the databases. These types of services are NOT included in this Sublicense and
the fees for such services are subject to the discretion of Harms and Planet Beach.

     LIMITED WARRANTY. Planet Beach warrants the media on which the Licensed Software is furnished
to be free from defects in materials and workmanship under normal use for 30 days from the date
that you obtain the Licensed Software. EXCEPT FOR THIS LIMITED WARRANTY, THE LICENSED SOFTWARE AND
THE DOCUMENTATION IS PROVIDED “AS IS” WITHOUT WARRANTY OF ANY KIND EITHER EXPRESS, IMPLIED OR
STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

     REPRESENTATIONS AND WARRANTIES BY FRANCHISEE. As a condition to the grant of this License to
use the Licensed Software, Franchisee hereby represents, warrants and covenants as follows:

	 	(a)	 	That it will use the Licensed Software only in conformance with the terms and
conditions of this Sublicense Agreement;
	 
	 	(b)	 	That it will not rent, lease, sublicense, distribute, transfer or copy the
Licensed Software or any component(s) thereof except as explicitly authorized herein;

 

 

	 	(c)	 	That it will only use the Licensed Software for its own internal business use
in connection with the operation of its Planet Beach Facility and not for the benefit
of any other person or entity; and
	 
	 	(d)	 	That it will not adapt, modify or reverse engineer the Licensed Software in any
way, or use it or them to create source code or a derivative work.

     LIMITATION OF REMEDIES. Your exclusive remedy in connection with the Licensed Software and
the Documentation is that you are entitled to return any defective media containing the Licensed
Software together with the Documentation to Planet Beach. IN NO EVENT WILL Planet Beach OR HARMS
BE LIABLE FOR ANY INDIRECT DAMAGES OR OTHER RELIEF ARISING OUT OF YOUR USE OR INABILITY TO USE THE
LICENSED SOFTWARE INCLUDING, BY WAY OF ILLUSTRATION AND NOT LIMITATION, LOST PROFITS, LOST BUSINESS
OR LOST OPPORTUNITY, OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING
LEGAL FEES, ARISING OUT OF SUCH USE OR INABILITY TO USE THE LICENSED SOFTWARE, EVEN IF Planet Beach
AND HARMS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM BY ANY OTHER
PARTY.

     DISCLAIMER. EXCEPT AS MAY OTHERWISE BE EXPRESSLY PROVIDED IN THIS AGREEMENT, Planet Beach AND
HARMS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED,
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LICENSED SOFTWARE, OR ANY COMPONENT OF THE
FOREGOING, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, CORRECTNESS,
COMPLETENESS, COMPREHENSIVENESS, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE), OR ANY REPRESENTATION
THAT THE SOFTWARE WILL MEET FRANCHISEE’S REQUIREMENTS OR THAT FRANCHISEE’S USE THEREOF WILL BE
UNINTERRUPTED OR ERROR-FREE, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES.

     REMEDIES FOR THIRD PARTY INFRINGEMENT. In the event the Licensed Software or any portion
thereof is held by any court of competent jurisdiction to infringe the rights of a third party or
to violate a patent, and its use is enjoined, your sole remedy shall be to be provided with (i)
modified Licensed Software, the functionality of which has not been impaired in any material
respect and that is non-infringing or non-violative, or (ii) the right to continue to use the
infringing Licensed Software for any remaining unexpired portion of the License Term, or (iii)
equally suitable non-infringing software to replace the infringing Licensed Software.

     INDEMNIFICATION. Franchisee shall indemnify and hold Planet Beach and Harms harmless from and
against any and all losses, liabilities, obligations, damages, penalties, judgments, suits, costs,
expenses or disbursements of any kind (including, without limitation, attorneys’ fees and expenses)
against, or incurred by, Planet Beach or Harms to the extent such claims, damages, liabilities or
costs relate to, have arisen in connection with, or result directly or indirectly from the breach
by Franchisee of any term or condition of this License.

     CONFIDENTIALITY.

	 	(a)	 	Confidential Information. Franchisee acknowledges that it is the
policy of Planet Beach and Harms to maintain as confidential all information that
should reasonably be understood by Franchisee to be confidential or proprietary,
including, without limitation, information relating to the Licensed Software and the
Documentation, the business methods, marketing strategies, tools, systems, procedures,
products and services,

 

 

	 	 	 	customers, and potential customers of each of Planet Beach and Harms (the
“Confidential Information”), and Franchisee further acknowledges that such
Confidential Information is of great value to the respective party that disclosed
it. Confidential Information shall not include information that (i) is now or
subsequently becomes available to the public through no fault or breach of
Franchisee, (ii) Franchisee rightfully possessed prior to disclosure to it, (iii) is
independently developed or acquired by Franchisee without the use of any
Confidential Information of the party disclosing it, or (iv) is rightfully obtained
by Franchisee from a third party who has the right to disclose the information.
	 
	 	(b)	 	Nondisclosure of Confidential Information. Franchisee acknowledges
that it has acquired and will acquire Confidential Information as a result of and in
connection with the performance of its obligations under this Sublicense Agreement and
that it is reasonably necessary to protect the goodwill of each of Planet Beach and
Harms. Accordingly, it agrees not to directly or indirectly (except where authorized
herein), disclose or divulge any Confidential Information to any third parties, or to
use any Confidential Information for the furtherance of its own business or financial
interests or those of anyone else. Franchisee further agrees that it will not permit,
cause or authorize any third parties to divulge any Confidential Information that
Franchisee lawfully disclosed to such third party.
	 
	 	(c)	 	Compelled Disclosure. In the event any Confidential Information is
required to be disclosed by applicable law, subpoena or similar process or pursuant to
a request by a government or regulatory agency, then, to the extent legally permitted,
Franchisee shall, prior to any such disclosure, promptly notify Planet Beach and Harms,
of such request for disclosure in order to give the appropriate party the opportunity
to object to or seek to limit the scope of such disclosure. Notwithstanding any
provision herein to the contrary, Franchisee may disclose any Confidential Information
to any regulatory agency having jurisdiction over it without the prior written approval
of Planet Beach or Harms to such disclosure.
	 
	 	(d)	 	Remedies for Breach of Confidentiality Obligations. Any breach or
threatened breach by Franchisee of any confidentiality provision of this Sublicense
Agreement may, because of the unique nature of the Confidential Information, cause
irreparable harm to the party disclosing the Confidential Information and shall entitle
that party, in addition to any other legal remedies, to apply to any court of competent
jurisdiction to enjoin such breach or threatened breach.

MISCELLANEOUS PROVISIONS

	 	(a)	 	Assignment. The rights and obligations under this Agreement may not be
assigned by either party and any attempted assignment in violation of this provision
shall be null and void and of no force or effect.
	 
	 	(b)	 	Notices. Any notice or other communication under this Agreement shall
be in writing and shall be deemed given if delivered (i) personally or mailed by
registered mail (return receipt requested) at the addresses set forth on the first page
hereof, or at such other address as shall be specified by notice given pursuant hereto,
(ii) by confirmed facsimile transmission, or (iii) by electronic mail for which a
delivery receipt has been generated.

 

 

	 	(c)	 	Severability. The invalidity or unenforceability of any term or
provision of this Agreement shall not affect the validity or enforceability of the
remaining terms or provisions hereof, which shall remain in full force and effect.
	 
	 	(d)	 	No waiver. No failure or successive failures on the part of either
party to enforce any covenant or agreement contained herein, and no waiver or
successive waivers on its or their part of any condition of this Agreement shall
operate as a discharge of such covenant, agreement, or condition, or render the same
invalid, or impair the right of either party, its respective successors and permitted
assigns, to enforce the same in the event of any subsequent breach or breaches by the
other party, its successors or permitted assigns.
	 
	 	(e)	 	Governing Law. The parties agree that the laws of the United States
and the State of Louisiana (without giving effect to its conflicts of law principles)
govern all matters and actions arising out of or relating to this Agreement, including,
without limitation, its validity, interpretation, construction, performance, and
enforcement. The parties further agree to the personal jurisdiction by and venue in
the state and federal courts with jurisdiction in Jefferson Parish, Louisiana, and
waive any objection to such jurisdiction or venue. The prevailing party in any action
relating to this Agreement shall be entitled to payment of all costs, expenses, losses,
damages and reasonable attorneys’ fees incurred in defending or prosecuting any such
claim, suit or proceeding. The determination of the “prevailing party” for these
purposes shall be made by the court exercising jurisdiction over the matter.
	 
	 	(f)	 	Entire Agreement. This Sublicense Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof and
supersedes all previous agreements and understandings, whether oral or written, express
or implied, with respect to its subject matter. Except as may be expressly authorized
herein, this Agreement may not be altered, amended, or modified except by written
instrument signed by the duly authorized representatives of both parties.
	 
	 	(g)	 	The defined term “Franchisee” as used in this Sublicense includes Franchisee’s
officers, directors, managers, members, employees, agents, and representatives.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date first set forth
above.

	 	 	 	 	 	 
	FRANCHISEE(S): 	 	PLANET BEACH FRANCHISING CORPORATION 
	 

	By:  

	 	 	By:  	 	 
	

	Name:
	 	 	Name: 
	 
	
 	Title: 
	 	 
	Title: CEO or COO of Planet Beach
Franchising Corporation	 

 

 

EXHIBIT 6

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

(for trained employees, shareholders, officers, directors,

general partners, members and managers of Franchisee)

          In
consideration of my being a _____________________________
of ______________________________________(the
“Franchisee”), and other good and valuable consideration, the receipt and sufficiency of which is
acknowledged, I hereby acknowledge and agree that:

     1. ___, doing business as ___(the “Franchisee”), has
acquired the right and franchise from Planet Beach Franchising Corporation (the “Company”) to
establish and operate a Planet Beach Spa (the “Spa” or “Franchised Business”) and the right to use
in the operation of such Spa, the Company’s trade names, service marks, trademarks, logos, emblems,
and indicia of origin (the “Proprietary Marks”) and the Company’s unique and distinctive format and
system relating to the establishment and operation of Planet Beach Spas (the “System’), as they may
be changed, improved and further developed from time to time in the Company’s sole discretion, only
at the following authorized and approved location (the “Approved Location”):
______________________________________________________________________________

______________________________________________________________________________

     2. The Company possesses certain proprietary and confidential information relating to the
operation of the System, which includes certain proprietary methods, techniques, formats,
specifications, systems, procedures, methods of business practices and management, sales and
promotional techniques and knowledge of, and experience in, the operation of the Franchised
Business (the “Confidential Information”).

     3. Any and all information, knowledge, know-how, and techniques that the Company specifically
designates as confidential shall be deemed to be Confidential Information for purposes of this
Agreement.

     4. As
__________________ of the Franchisee, the Company and Franchisee will disclose the
Confidential Information to me in furnishing to me the training program and subsequent ongoing
training, the Company’s Operations Manual (the “Manual”) and other general assistance during the
term of this Agreement.

     5. I will not acquire any interest in the Confidential Information, other than the right to
utilize it in the operation of the Franchised Business during the term hereof, and the use of
duplication of the Confidential Information for any use outside the System would constitute an
unfair method of competition.

     6. The Confidential Information is proprietary, involves trade secrets of the Company, and is
disclosed to me solely on the condition that I agree that I shall hold in strict confidence all
Confidential Information and all other Information designated by the Company as confidential.
Unless the Company otherwise agrees in writing, I will disclose and/or use the Confidential
Information only in connection with my duties as
_______________________ of the Franchisee, and
will continue not to disclose any such information even after I cease to be in that position and
will not use any such information even after

 

 

I cease to be in that position unless I can demonstrate that such information has become
generally known or easily accessible other than by the breach of an obligation of Franchisee under
the Franchise Agreement.

     7. Except as otherwise approved in writing by the Company, I shall not, while in my position
with the Franchise and for a continuous uninterrupted period commencing upon the cessation or
termination of my position with Franchisee, regardless of the cause for termination, and continuing
for 2 years thereafter, either directly or indirectly, for myself, or through, on behalf of, or in
conjunction with any person, persons, partnership, or corporation, own, maintain, operate, engage
in, act as a consultant for, perform services for, or have any interest in any retail business
selling any product or products which are the same as, or substantially similar to, any of the
products or services offered by a Planet Beach location (except at a Planet Beach location), which
is or is intended to be, located within:

	 	7.1.	 	the Franchisee’s Territory as defined in the Franchise Agreement;
	 
	 	7.2.	 	10 miles of Franchisee’s Territory; or
	 
	 	7.3.	 	10 miles of any Planet Beach location operating under the
System and the Proprietary Marks.

This restriction does not apply to my ownership of less than 5% beneficial interest in the
outstanding securities of any publicly-held corporation.

     8. I agree that each of the foregoing covenants shall be constructed as independent of any
other covenant or provision of this Agreement. If all or any portion of a covenant in this
Agreement is held unreasonable or unenforceable by a court or agency having valid jurisdiction in
an unappealed final decision to which the Company is a party, I expressly agree to be bound by any
lesser covenant subsumed within the terms of such covenant that imposes the maximum duty by law, as
if the resulting covenant were separately stated in and made part of this Agreement.

     9. I understand and acknowledge that the Company shall have the right, in its sole discretion
to reduce the scope of any covenant set forth in this Agreement, or any portion thereof, without my
consent, effective immediately upon receipt by me of written notice thereof; and I agree to comply
forthwith with any covenant as so modified.

     10. The Company is an intended beneficiary of this Agreement and may enforce it, solely and/or
jointly with the Franchisee. I am aware that my violation of this Agreement will cause the Company
and the Franchisee irreparable harm; therefore, I acknowledge and agree that the Franchisee and/or
the Company may apply for the issuance of an injunction preventing me from violating this
Agreement, and I agree to pay the Franchisee and the Company all the costs it/they incur(s),
including, without limitation, legal fees and expenses, if this Agreement is enforced against me.
Due to the importance of this Agreement to the Franchisee and the Company, any claim I have against
the Franchisee or the Company is a separate matter and does not entitle me to violate, or justify
any violation of this Agreement.

     11. This Agreement shall be construed under the laws of the State of Louisiana without regard
to its conflict of laws, LCC Arts. 3515 et seq., and any amendments and/or revisions thereto. The
only way this Agreement can be changed is in writing signed by both the Franchisee and me.

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Signature: 
	 	 	 	 	 	Signature: 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 
	 	 
	
	Name:	 	 	 	 		Name: 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	

	Address:	 	 	 	 		Address:	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	

	Title:	 	 	 	 		Title:	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	

	Witness:	 	 	 	 		Witness:	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

ACKNOWLEDGED BY FRANCHISEE

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	
	Name:	 	 	 
	 

	 	 

	 	 
	
	Title:	 	 	 
	 

	 	 

	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	
	Name:	 	 	 
	 

	 	 

	 	 
	
	Title:	 	 	 
	 

	 	 

	 	 

 

 

EXHIBIT 7

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

CONDITIONAL ASSIGNMENT

OF FRANCHISEE’S TELEPHONE NUMBERS

1. __________ , doing business at                 
 (“Assignor”), in exchange for valuable consideration provided by Planet Beach
Franchising Corporation (“Assignee”), receipt of which is hereby acknowledged, hereby conditionally
assigns to Assignee all telephone numbers and listings utilized by Assignor in the operation of its
Spa at Assignor’s above-referenced address. Those numbers are as follows:

2. The conditional agreement shall become effective automatically upon termination of Assignor’s
franchise. Upon the occurrence of that condition, Assignor shall do all things required by the
telephone company to assure the effectiveness of the assignment of telephone numbers as if the
Assignee had been originally issued such telephones, telephone numbers, telephone listings and the
usage thereof.

3. Assignor agrees to pay the telephone company on or before the effective date of assignment all
amounts owed for the use of the telephone number(s) including, without limitation, Yellow Pages
advertising. Assignor further agrees to indemnify Assignee for any sums Assignee must pay the
telephone company to effectuate this agreement, and agrees to fully cooperate with the telephone
company and Assignee in effectuating this assignment.

ASSIGNOR:

	 	 	 	 	 	 	 
	 

	 	Date:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

ASSIGNEE:

PLANET BEACH FRANCHISING CORPORATION

	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	Date:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 

 

 

EXHIBIT 8

TO

PLANET BEACH FRANCHISING CORPORATION

SINGLE UNIT FRANCHISE AGREEMENT

STATEMENT OF PROSPECTIVE FRANCHISEE

(Note: Dates and answers must be completed in the Prospective Franchisee’s own handwriting.)

1. The date of my first face-to-face meeting with a Planet Beach Franchise
Marketing Representative to discuss the possible purchase of a Franchise.

__________________, 20 _.

Date                                    

Franchisee’s Initials ______

2. The date on which I received a Franchise Disclosure Document about
the Planet Beach Spa Franchise.

__________________, 20 _.

Date                                    

Franchisee’s Initials ______

3. The date when I received a fully completed copy (other than signatures) of the
Franchise Agreement I later signed.

__________________, 20 _.

Date                                    

Franchisee’s Initials ______

4. The earliest date on which I signed the Franchise Agreement or any other binding
document (not including the Receipt page).

__________________, 20 _.

Date                                    

Franchisee’s Initials ______

5. The earliest date on which I delivered cash, check or other consideration to
the Franchise Marketing Representative, broker, Planet Beach Franchising
Corporation (“Franchisor”) or any other person or company.

__________________, 20 _.

Date                                    

Franchisee’s Initials ______

 

 

Representations:

     No promises, agreements, contracts, commitments, understandings, “side-deals”, options,
rights-of-first-refusal or otherwise have been made to or with me with respect to any matter
(including but not limited to any representations or promises regarding advertising (television or
otherwise), marketing, site location, operational assistance or otherwise) nor have I relied in any
way on any such except as expressly set forth in the Franchise Agreement, written Option Agreement,
or written addendum signed by me and the President of Franchisor except as
follows:_____________________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________________

_________________.

(If none, the prospective franchisee shall write NONE in his/her own handwriting and initial same.)

Franchisee’s Initials ______

     No oral, written or visual claim or representation, promise, agreement, contract, commitment,
understanding or otherwise which contradicted, expanded upon or was inconsistent with the
Disclosure Document or the Franchise Agreement was made to me by any person or entity, except as
follows:_____________________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________________

_________________.

(If none, the prospective franchisee shall write NONE in his/her own handwriting and initial same.)

Franchisee’s Initials ______

     No oral, written or visual claim or representation (including but not limited to charts,
tables, spreadsheets or mathematical calculations) which stated or suggested any specific level or
range of actual or potential sales, costs, income, expenses, profits, cash flow, tax effects or
otherwise (or from which such items might be ascertained) was made to me by any person or entity,
except as follows:_____________________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________________

_________________.

(If none, the prospective franchisee shall write NONE in his/her own handwriting and initial same.)

Franchisee’s Initials ______

     No contingency, condition, prerequisite, prior requirement, proviso, reservation, impediment,
stipulation, provision or otherwise exists with respect to any matter (including but not limited to
obtaining financing, selection, purchase, lease or otherwise of a site, operational matters or
otherwise) and/or with respect to my fully performing all of my obligations under the Franchise
Agreement and/or any other documents to be executed by me nor have I relied in any way on any such,
except as expressly set forth in a writing signed by me and the CEO and COO of Franchisor, except
as follows:_____________________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________________

_________________.

(If none, the prospective franchisee shall write NONE in his/her own handwriting and initial same.)

Franchisee’s Initials ______

     I hereby understand that there will be no refunds. 

Franchisee’s Initials ______

     Franchisor does not make or endorse nor does it allow any marketing representative, broker or
other individual to make or endorse any oral, written, visual or other claim or representation
(including

 

 

but not limited to charts, tables, spreadsheets or mathematical calculations) which stated or
suggested any specific level or range of actual or potential sales, costs, income, expenses,
profits, cash flow, tax effects or otherwise (or from which such items might be ascertained) with
respect to this or any other Franchise, whether made on behalf of or for Franchisor, any Franchisee
or other individual and expressly disclaims any such information, data or results.

     In addition, Franchisor does not permit any promises, agreements, contracts, commitments,
understandings, “side-deals”, options, rights-of-first-refusal or otherwise or variations of,
changes in or supplements to the Franchise Agreement or the existence of any contingencies or
conditions to Franchisee’s obligations except by means of a written Addendum signed by Franchisee
and Franchisor.

     If any such representations, “side-deals”, contingencies or otherwise have been made by you by
any person or otherwise exist, immediately inform the CEO of Franchisor.

     The prospective franchisee understands and agrees to all of the foregoing and certifies that
all of the above statements are true, correct and complete.

	 	 	 
	

	 	FRANCHISEE
	 
	 	 
	Dated: _____________________________

	 	 
	 
	 	 
	Dated: _____________________________

	 	 

     All of the above is true, correct and complete to the best of my knowledge, information and
belief.

________________________________

Franchise Marketing Representative

	 	 	 	 	 
	 	APPROVED:

PLANET BEACH FRANCHISING CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT 2

TO

PLANET BEACH FRANCHISING CORPORATION

AREA REPRESENTATIVE AGREEMENT

PLANET BEACH FRANCHISING CORPORATION

MULTI-UNIT OPTION AGREEMENT

 

 

MULTI-UNIT OPTION AGREEMENT

     This Multi-Unit Option Agreement (“Agreement”) entered into this ___day of ___, 200___,
between Planet Beach Franchising Corporation, a Delaware corporation, with an
address at 5145 Taravella Road, Marrero, Louisiana 70072 (hereafter “Planet Beach”),
and                                                                                
(hereafter “you”).

Background

A. Contemporaneous with the execution of this Agreement, you and Planet Beach have entered into a
Single Unit Franchise Agreement (the “First Franchise Agreement”) for the right to establish and
operate a single Planet Beach Spa (the “First Spa”) and paid the Initial Franchise Fee.

B. Planet Beach offers qualified franchisees the right and option to open and operate 2, 4 or 9
additional Planet Beach Spas (the “Additional Spas”) during the term of the option period (defined
below) and otherwise upon the terms and conditions of this Agreement.

C. You
wish to purchase an option to establish and operate ___ Additional Spas under the terms and
conditions set forth in this Agreement.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

Agreement

1. Grant of Option. In consideration of your payment to Planet Beach of a $                     option fee (the
“Option Fee”), which is due and payable upon your execution of this Agreement, Planet Beach grants
you the right and option to establish and operate ___ Additional Spas under the terms and conditions
of this Agreement. This Option Fee is deemed fully earned upon payment and is nonrefundable.

2. Eligibility. You must purchase this Option when you execute the First Franchise Agreement.

3. Option Period. You may not execute a lease for any Additional Spa prior to exercising your
option pursuant to paragraph 4 below. Your option to establish 2 additional Spas will expire three
years and one day from the date of the execution of this agreement. Your option to establish 4
additional Spas will expire four years and one day from the date of the execution of this
agreement. Your option to establish 9 additional Spas will expire five years and one day from the
date of execution of this agreement. You must have all of your Spas open and operating before the
expiration of the option period in which you purchased. If you fail to meet the option period
listed above you no longer have an option for those additional Spas for which you do not have
opened and operating, unless you request in writing an extension which will be approved at Planet
Beach’s sole discretion.

4. Exercise of Option. In order to exercise your option for each Additional Spa you must satisfy
all of the following conditions, upon the exercise of each option:

     4.1. Execute a new franchise agreement (“Additional Franchise Agreement(s)”), in the form of
the then current Franchise Agreement, for each of your Additional Spas, each with its own Data
Sheet and Approved Location and Territory Addendum, but without the provision of a Grand Opening
Specialist, the Term of which will coincide with the balance of the remaining Term under the First
Franchise Agreement;

 

 

     4.2. You are not in default under this Agreement, or any other agreement with Planet Beach
and/or its affiliate, including any other franchise agreement or development agreement and have
fully and faithfully performed all of your material obligations under any such agreements
throughout their respective terms;

     4.3. Neither this Agreement, the First Franchise Agreement or any other agreement with you has
expired or been terminated by Planet Beach and/or its affiliate;

     4.4. You have timely paid any fees or other monies due Planet Beach as and when they become
due under the terms of the First Franchise Agreement or any other agreement with Planet Beach,
including interest or principal due under any note payable to Planet Beach;

     4.5. There has been no change in the effective control of you (by way of change in share
ownership, membership or partnership interest, or otherwise) without Planet Beach’s written
consent; and

     4.6. Your Designated Manager has successfully completed Planet Beach University On-line
certifications and has successfully completed Franchisee and Director School.

     4.7. Your Options may be applied only to opening a new Spa and may not be applied to already
existing locations.

5. Sale or Assignment. Your rights under this Agreement are personal and you may not sell,
transfer, or assign any right granted herein. Notwithstanding, if you are an individual or a
partnership, you have the right to assign your rights under this Agreement to a corporation or
limited liability company upon the same terms and conditions as provided in paragraph 21.6 of the
First Franchise Agreement. Planet Beach has the right to assign this Agreement in whole or in part
in its sole discretion.

6. Time is of the Essence. Time is of the essence with respect to any time fixed for performance
of any requirement set forth in this Agreement.

7. Acknowledgment. You acknowledge that this Agreement is not a franchise agreement and does not
confer upon you any rights to use the Planet Beach Proprietary Marks or the System.

8. Notices. All notices, requests and reports to be given under this Agreement are to be in
writing, and delivered by either hand; e-mail with a confirming receipt; overnight mail; or
certified mail, return receipt requested, prepaid, to the addresses set forth above (which may be
changed by written notice).

9. Governing Law. This Agreement shall be deemed to have been made in the State of Louisiana and
shall be construed according to the laws of Louisiana without regard to its conflict of laws, LCC
Arts. 3515 et seq., and any amendments and/or revisions thereto.

10. Mediation. At Planet Beach’s option, all claims or disputes between you and Planet Beach or
its affiliates arising out of, or in any way relating to, this Agreement, or any of the parties’
respective rights and obligations arising out of this agreement, shall be submitted first to
mediation, in the Parish of Jefferson, Louisiana, under the auspices of the National Franchise
Mediation Program (“NFMP”), in accordance with the NFMP’s Commercial Mediation Rules then in
effect. The parties shall each bear their own costs of mediation and shall share equally the
filing fee imposed by NFMP and the mediator’s fees. Planet Beach’s rights to mediation, as set
forth herein, may be specifically enforced by Planet Beach.

 

 

11. Arbitration. At Planet Beach’s option, all disputes and claims relating to this Agreement or
any other agreement entered into between the parties, the rights and obligations of the parties, or
any other claims or causes of action relating to the making, interpretation, or performance of
either party under this Agreement, shall be settled by arbitration in Jefferson Parish, Louisiana
in accordance with the Federal Arbitration Act and the Commercial Arbitration Rules of the American
Arbitration Association (“AAA”). The right and duty of the parties to this Agreement to resolve
any disputes by arbitration shall be governed by the Federal Arbitration Act, as amended. Neither
party shall pursue class claims and/or consolidate the arbitration with any other proceeding to
which the franchisor is a party. Each party must bear its own costs of arbitration including the
fee for their respective arbitrator; provided, however, that the neutral or the single arbitrator’s
fee shall be shared equally by Planet Beach and you.

The arbitrator’s award shall include all fees, costs and attorneys’ fees for the prevailing party.
The arbitrators shall have no authority to amend or modify the terms of the Agreement. To the
extent permitted by applicable law, no issue of fact or law shall be given preclusive or collateral
estoppel effect in any arbitration, except to the extent such issue may have been determined in
another proceeding between the parties. Judgment upon the award of the arbitrator shall be
submitted for confirmation to the United States District for the Eastern District of Louisiana and,
if confirmed, may be subsequently entered in any court having competent jurisdiction. This
agreement to arbitrate shall survive any termination or expiration of this Agreement.

12. Third Party Beneficiaries. Planet Beach’s officers, directors, shareholders, agents, employees
and/or affiliates are express third party beneficiaries of this Agreement and the mediation and
arbitration provisions contained herein, each having authority to specifically enforce the right to
mediate and arbitrate claims asserted against such person(s) by you.

13. Injunctive Relief. Nothing contained in this Agreement herein shall prevent the parties from
applying to or obtaining from any court having jurisdiction, without bond, a writ of attachment,
temporary injunction, preliminary injunction and/or other emergency relief available to safeguard
and protect the parties’ interest prior to the filing of any legal proceeding or pending the trial
or handing down of a decision or award pursuant to any legal proceeding conducted hereunder.

14. Jurisdiction and Venue. With respect to any proceeding, the parties agree that any action at
law or in equity instituted against either party to this Agreement shall be commenced only in the
24th Judicial District for the Parish of Jefferson, Louisiana or the United States District Court
for the Eastern District of Louisiana at Planet Beach’s discretion.

15. Jury Trial Waiver. With respect to any proceeding, the parties hereby agree to waive trial by
jury in any action, proceeding or counterclaim, whether at law or equity, regardless of which party
brings suit. This waiver shall apply to any matter whatsoever between the parties hereto which
arises out of or is related in any way to this Agreement, the performance of either party, and/or
your purchase from Planet Beach of the franchise, option and/or any goods or services.

16. Waiver of Punitive Damages. You waive to the fullest extent permitted by law, any right to or
claim for any punitive, exemplary, incidental, indirect, special or consequential damages
(including, without limitation, lost profits) which you may have against Planet Beach, its
affiliates, successors or assigns, arising out of any cause whatsoever (whether such cause be based
in contract, negligence, strict liability, other tort or otherwise) and agree that in the event of
a dispute, recovery shall be limited to actual damages. If any other term of this Agreement is
found or determined to be unconscionable or unenforceable for any reason, the foregoing provisions
shall continue in full force and effect, including, without limitation, the waiver of any right to
claim any consequential damages.

 

 

17. Class Action Waiver. You hereby agree to waive any class action proceeding or counterclaim
against Planet Beach, its affiliates, successors or assigns, whether at law or equity, regardless
of which party brings suit. This waiver shall apply to any matter whatsoever between the parties
hereto which arises out of or is related in any way to this Agreement, the performance of either
party, and/or your purchase from Planet Beach, its affiliates, successors or assigns of the
franchise and/or any goods or services.

18. Attorneys’ Fees. If either party institutes any judicial or arbitration proceeding to enforce
any monetary or non-monetary obligation or interpret the terms of this Agreement and Planet Beach
prevails in the action or proceeding, you shall be liable to Planet Beach for all costs, including
reasonable attorneys’ fees, incurred in connection with such proceeding.

19. Nonwaiver. Planet Beach’s failure to insist upon strict compliance with any provision of this
Agreement shall not be a waiver of Planet Beach’s right to do so, any law, custom, usage or rule to
the contrary notwithstanding. Delay or omission by Planet Beach respecting any breach or default
shall not affect Planet Beach’s rights respecting any subsequent breaches or defaults. All rights
and remedies granted in this Agreement shall be cumulative. Planet Beach’s election to exercise
any remedy available by law or contract shall not be deemed a waiver or preclude exercise of any
other remedy.

20. Severability. The parties agree that if any provisions of this Agreement may be construed in
two ways, one of which would render the provision illegal or otherwise voidable or unenforceable
and the other which would render it valid and enforceable, such provision shall have the meaning,
which renders it valid and enforceable. The language of all provisions of this Agreement shall be
construed according to fair meaning and not strictly construed against either party. The
provisions of this Agreement are severable, and this Agreement shall be interpreted and enforced as
if all completely invalid or unenforceable provisions were not contained herein, and partially
valid and enforceable provisions shall be enforced to the extent that they are valid and
enforceable. If any material provision of this Agreement shall be stricken or declared invalid,
the parties agree to negotiate mutually acceptable substitute provisions. In the event that the
parties are unable to agree upon such provisions, Planet Beach reserves the right to terminate this
Agreement.

21. Construction of Language. Any term defined in the First Franchise Agreement which is not
defined in this Agreement will be ascribed the meaning given to it in the First Franchise
Agreement. The language of this Agreement will be construed according to its fair meaning, and not
strictly for or against either party. All words in this Agreement refer to whatever number or
gender the context requires. If more than one party or person is referred to as you, their
obligations and liabilities must be joint and several. Headings are for reference purposes and do
not control interpretation.

22. Successors. References to “Planet Beach” or “you” include the respective parties’ successors,
assigns or transferees, subject to the limitations of Paragraph 5 of this Agreement.

23. Additional Documentation. You must from time to time, subsequent to the date first set forth
above, at Planet Beach’s request and without further consideration, execute and deliver such other
documentation or agreement and take such other action as Planet Beach may reasonably require in
order to effectuate the transactions contemplated in this Agreement. In the event that you fail to
comply with the provisions of this Section, you hereby appoint Planet Beach as your
attorney-in-fact to execute any and all documents on your behalf, reasonably necessary to
effectuate the transactions contemplated herein.

24. No Right to Offset. You may not withhold all or any part of any payment to Planet Beach or any
of its affiliates on the grounds of the alleged nonperformance of Planet Beach or any of its
affiliates or as

 

 

an offset against any amount Planet Beach or any of its affiliates may owe or allegedly owe you
under this Agreement or any related agreements.

25. State Law Applies. If any provision of this Agreement, including but not limited to its
provisions for transfer, renewal, termination, notice of termination, or cure rights, is
inconsistent with any valid law or regulation of the state in which your Spa is located, then the
valid law or regulation of that state applicable to the franchised business will supersede any
provision of this Agreement that is less favorable to you.

26. Entire Agreement. This Agreement contains the entire agreement between the parties concerning
the purchase and operation of additional Spas; no promises, inducements or representations (other
than those in the Franchise Disclosure Document) not contained in this Agreement have been made,
nor shall any be of any force or effect, nor binding on the parties. Modifications of this
Agreement must be in writing and signed by both parties. Planet Beach reserves the right to change
Planet Beach’s policies, procedures, standards, specifications or manuals at Planet Beach’s
discretion. In the event of a conflict between this Agreement and any Additional Franchise
Agreement(s), the terms, conditions and intent of this Agreement shall control.

     IN WITNESS WHEREOF, AND INTENDING TO BE LEGALLY BOUND HEREBY, THE PARTIES HERETO HAVE CAUSED
THIS AGREEMENT TO BE EXECUTED EFFECTIVE THE DATE FIRST SET FORTH ABOVE.

	 	 	 	 	 
	 	PLANET BEACH FRANCHISING CORPORATION

 	 
	 	By:  	 	 
	 
	 	This Agreement is not fully executed until signed by the

CEO or COO of Planet Beach Franchising Corporation:	 
	 	 	 
	 	 	 	 

	 	 	 	 
	 

	 	FRANCHISEE:	 
	 
	 	 	 
	 

	 	 	 
	Witness
	 	 	 
	 
	 	 	 
	 

	 	 	 
	Witness
	 	 	 

 

 

EXHIBIT 3

TO

PLANET BEACH FRANCHISING CORPORATION

AREA REPRESENTATIVE AGREEMENT

GUARANTY AGREEMENT

     WHEREAS, an Area Representative Agreement                     , 20___ has been entered into
between Planet Beach Franchising Corporation and                                          referred to as “Area
Representative”) for the right and license to you to serve as an independent representative of
Planet Beach in order to recruit prospective franchisees and provide certain services to
franchisees; and

     WHEREAS, the undersigned guarantor desires to guarantee the obligations of Area Representative
to Planet Beach Franchising Corporation;

     NOW, THEREFORE, the parties hereto, intending to be legally bound, do hereby agree as follows:

     The undersigned, as a person with an interest in serving as an independent representative of
Planet Beach, agrees to personally and unconditionally guarantee the obligations of Area
Representative to Planet Beach Franchising Corporation and shall personally be subject to and bound
by all terms, conditions, restrictions and prohibitions contained in the Planet Beach Franchising
Corporation’s Area Representative Agreement including, without limitation, the confidentiality
provisions, covenants, and indemnification provisions contained in Sections 6, 11 and 13,
respectively. Further, the undersigned agrees to personally act as surety for the full and
faithful performance of all of the financial obligations, commitments and payments required of the
Area Representative in any such subject Area Representative Agreement. The undersigned agrees that
Planet Beach Franchising Corporation does not have to pursue any remedies it may have against the
Area Representative or any other individual guarantor; but, rather, it may proceed directly and
primarily against the undersigned with or without joining the Area Representative or other
guarantors as principals or as named parties in any such proceeding. The undersigned is jointly
and severally liable for such obligations, commitments and payments required of the Area
Representative.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Witness

	 	 
	 	 

Guarantor, Individually
	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Witness

	 	 
	 	 

Guarantor, Individually
	 	 

 

 

ACKNOWLEDGMENT BY GUARANTOR

     WHEREAS, a Guaranty Agreement dated                                         , is being
entered into between Planet Beach Franchising Corporation and                                         
(“Guarantor”), whereunder Guarantor has guaranteed the obligations of a corporate, limited
partnership or limited liability company area representative to Planet Beach Franchising
Corporation, or is the spouse of an individual area representative of Planet Beach Franchising
Corporation, and

     WHEREAS, Planet Beach Franchising Corporation and Guarantor desire to clarify the relationship
between them.

     NOW, THEREFORE, Guarantor acknowledges that Guarantor has conducted an independent
investigation of the Planet Beach Franchising Corporation area representative program and
recognizes that the business venture contemplated by the area representative involves business risk
and success will be largely dependent upon the ability of the area representative, Guarantor and
other persons with an interest in the area representative opportunity as independent business
persons. Planet Beach Franchising Corporation expressly disclaims the making of, and Guarantor
acknowledges not receiving, any guaranty or warranty, express or implied, nor any representation as
to the potential volume, profits or success of the business venture contemplated by the Area
Representative Agreement. Guarantor further represents that Guarantor is not a party to any
agreement which might interfere with the performance required of persons with an interest in the
area representative opportunity under the Planet Beach Franchising Corporation’s Area
Representative Agreement, and that entering into such agreement shall not in any way interfere with
or constitute a breach of any prior existing contract to which Guarantor is a party.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Witness

	 	 
	 	 

Guarantor, Individually
	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Witness

	 	 
	 	 

Guarantor, Individually
	 	 

 

 

EXHIBIT 4

TO

PLANET BEACH FRANCHISING CORPORATION

AREA REPRESENTATIVE AGREEMENT

CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

(for trained employees, shareholders, officers, directors, general partners, members and managers
of Area Representative)

          In consideration of my being a                                          of                
                         
(the “Area Representative”), and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged, I hereby acknowledge and agree that:

     1.                                         , doing business as                                          (the “Area
Representative”), has acquired the right from Planet Beach Franchising Corporation (the “Company”)
to recruit and support prospective franchisees (“Area Representative Opportunity”) and the right to
use in the operation of the Company’s trade names, service marks, trademarks, logos, emblems, and
indicia of origin (the “Proprietary Marks”) and the Company’s unique and distinctive format and
system relating to the establishment and operation of Planet Beach locations (the “System’), as
they may be changed, improved and further developed from time to time in the Company’s sole
discretion, only at the following authorized and approved territory (the “Approved Territory”):

 

 

     2. The Company possesses certain proprietary and confidential information relating to the
operation of the System, which includes certain proprietary methods, techniques, formats,
specifications, systems, procedures, methods of business practices and management, sales and
promotional techniques and knowledge of, and experience in, the operation of the Franchised
Business (the “Confidential Information”).

     3. Any and all information, knowledge, know-how, and techniques that the company specifically
designates as confidential shall be deemed to be Confidential Information for purposes of this
Agreement.

     4. As                                          of the Area Representative, the Company and Area Representative
will disclose the Confidential Information to me in furnishing to me the training program and
subsequent ongoing training, the company’s Operations Manual (the “Manual”) and other general
assistance during the term of this Agreement.

     5. I will not acquire any interest in the Confidential Information, other than the right to
utilize it in the operation of the Area Representative Opportunity during the term hereof, and the
use of duplication of the Confidential Information for any use outside the System would constitute
an unfair method of competition.

     6. The confidential Information is proprietary, involves trade secrets of the Company, and is
disclosed to me solely on the condition that I agree, that I shall hold in strict confidence all
Confidential Information and all other Information designated by the Company as confidential.
Unless the Company otherwise agrees in writing, I will disclose and/or use the Confidential
Information only in connection with my duties as                                          of the Area
Representative, and will continue not to disclose any such information even after I cease to be in
that position and will not use any such

 

 

information even after I cease to be in that position unless I can demonstrate that such
information has become generally known or easily accessible other than by the breach of an
obligation of Area Representative under the Area Representative Agreement.

     7. Except as otherwise approved in writing by the Company, I shall not, while in my position
with the Area Representative and for a continuous uninterrupted period commencing upon the
cessation or termination of my position with Area Representative, regardless of the cause for
termination, and continuing for 2 years thereafter, either directly or indirectly, for myself, or
through, on behalf of, or in conjunction with any person, persons, partnership, or corporation,
own, maintain, operate, engage in, act as a consultant for, perform services for, or have any
interest in any retail business selling any product or products which are the same as, or
substantially similar to, any of the products or services offered by a Planet Beach Tanning Spa,
except at a Planet Beach Tanning Spa, which is or is intended to be, located within:

	 	7.1.	 	the Area Representative ’s Territory as defined in the Area
Representative Agreement;
	 
	 	7.2.	 	10 miles of Area Representative’s Territory; or
	 
	 	7.3.	 	10 miles of any Planet Beach Tanning Spa operating under the
System and the Proprietary Marks.

This restriction does not apply to my ownership of less than 5% beneficial interest in the
outstanding securities of any publicly-held corporation.

     8. I agree that each of the foregoing covenants shall be constructed as independent of any
other covenant or provision of this Agreement. If all or any portion of a covenant in this
Agreement is held unreasonable or unenforceable by a court or agency having valid jurisdiction in
an unappealed final decision to which the Company is a party, I expressly agree to be bound by any
lesser covenant subsumed within the terms of such covenant that imposes the maximum duty by law, as
if the resulting covenant were separately stated in and made part of this Agreement.

     9. I understand and acknowledge that the Company shall have the right, in its sole discretion
to reduce the scope of any covenant set forth in this Agreement, or any portion thereof, without my
consent, effective immediately upon receipt by me of written notice thereof; and I agree to comply
forthwith with any covenant as so modified.

     10. The Company is an intended beneficiary of this Agreement and may enforce it, solely and/or
jointly with the Area Representative. I am aware that my violation of this Agreement will cause
the Company and the Area Representative irreparable harm; therefore, I acknowledge and agree that
the Franchisee and/or the Company may apply for the issuance of an injunction preventing me from
violating this Agreement, and I agree to remit the Area Representative and the Company all the
costs it/they incur(s), including, without limitation, legal fees and expenses, if this Agreement
is enforced against me. Due to the importance of this Agreement to the Area Representative and the
Company, any claim I have against the Area Representative or the Company is separate matter and
does not entitle me to violate, or justify any violation of this Agreement.

     11. This Agreement shall be constructed under the laws of the State of Louisiana without
regard to its conflict of laws, LCC Arts. 3515 et seq., and any amendments and/or revisions
thereto. The only way this Agreement can be changed is in writing signed by both the Franchisee
and me.

 

 

	 	 	 	 	 
	Signature: 

	 	 

	 	 
	

	Name:	 
 

	 	 
	

	Address:	 
 

	 	 
	

	Title:	 
 

	 	 
	

	Witness:	 
 

	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Signature: 
	 	 	 	 
	 

	 	 
	 	 
	
	Name:	 	 	 
	 

	 	 

	 	 
	
	Address:	 	 	 
	 

	 	 

	 	 
	
	Title:	 	 	 
	 

	 	 

	 	 
	
	Witness:	 	 	 
	 

	 	 

	 	 

ACKNOWLEDGED BY AREA REPRESENTATIVE

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	
	Name:	 	 	 
	 

	 	 

	 	 
	
	Title:	 	 	 
	 

	 	 

	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	
	Name:	 	 	 
	 

	 	 

	 	 
	
	Title:	 	 	 
	 

	 	 

	 	 

 

 

EXHIBIT 5

TO

PLANET BEACH FRANCHISING CORPORATION

AREA REPRESENTATIVE AGREEMENT

STATEMENT OF PROSPECTIVE AREA REPRESENTATIVE

(Note: Dates and answers must be completed in the Prospective Area Representative’s own
handwriting.)

The date of my first face-to-face meeting with a Planet Beach Franchise Marketing Representative,
to discuss the possible purchase of an Area Representative Opportunity.                                         , 20___.

Area Representative’s Initials                     

The date on which I received a Franchise Disclosure Document about the Planet Beach Area
Representative Opportunity                                        , 20                    .

Area Representative’s Initials                     

The date when I received a fully completed copy (other than signatures) of the Area Representative
Agreement I later signed.                                         , 20                    .

Area Representative’s Initials                     

The earliest date on which I signed the Area Representative Agreement or any other binding document
(not including the Receipt page).                                         , 20                    .

Area Representative’s Initials                     

The earliest date on which I delivered cash, check or other consideration to the Franchise
Marketing Representative, broker, Planet Beach Franchising Corporation (“Franchisor”) or any other
person or company.                                         , 20                    .

Area Representative’s Initials                     

Representations:

     No promises, agreements, contracts, commitments, understandings, “side-deals”, options,
rights-of-first-refusal or otherwise have been made to or with me with respect to any matter
(including but not limited to any representations or promises regarding advertising (television or
otherwise), marketing, site location, operational assistance or otherwise) nor have I relied in any
way on any such except as expressly set forth in the Area Representative Agreement, or written
addendum signed by me and the President of Franchisor  except  as follows:

      

      

                 
                    
      . (If none, the
prospective Area Representative shall write NONE in his/her own handwriting and initial same.)

Area Representative’s Initials                     

     No oral, written or visual claim or representation, promise, agreement, contract, commitment,
understanding or otherwise which contradicted, expanded upon or was inconsistent with the
Disclosure

 

 

Document or the Area Representative Agreement was made to me by any person or entity, except as
follows:                           
                         

 

 

                     . (If none,
the prospective Area Representative shall write NONE in his/her own handwriting and initial same.)

Area Representative’s Initials                     

     No oral, written or visual claim or representation (including but not limited to charts,
tables, spreadsheets or mathematical calculations) which stated or suggested any specific level or
range of actual or potential sales, costs, income, expenses, profits, cash flow, tax effects or
otherwise (or from which such items might be ascertained) was made to me by any person or entity,
except as
follows:                                                                                                                                                                                                                                     

 

      

                     . (If none,
the prospective Area Representative shall write NONE in his/her own handwriting and initial same.)

Area
Representative ’s Initials                     

     No contingency, condition, prerequisite, prior requirement, proviso, reservation, impediment,
stipulation, provision or otherwise exists with respect to any matter (including but not limited to
obtaining financing, selection, purchase, lease or otherwise of a site, operational matters or
otherwise) and/or with respect to my fully performing all of my obligations under the Area
Representative Agreement and/or any other documents to be executed by me nor have I relied in any
way on any such, except as expressly set forth in a writing signed by me and the CEO and COO of
Franchisor, except as
follows:                                                                                                                                                                                                                                                      

 

      

                     . (If none, the
prospective Area Representative shall write NONE in his/her own handwriting and initial same.)

Area Representative’s Initials                     

I hereby understand that there will be no refunds. 

Area Representative’s Initials                     

     Franchisor does not make or endorse nor does it allow any marketing representative, broker or
other individual to make or endorse any oral, written, visual or other claim or representation
(including but not limited to charts, tables, spreadsheets or mathematical calculations) which
stated or suggested any specific level or range of actual or potential sales, costs, income,
expenses, profits, cash flow, tax effects or otherwise (or from which such items might be
ascertained) with respect to this or any other Franchise, whether made on behalf of or for
Franchisor, any Area Representative or other individual and expressly disclaims any such
information, data or results.

     In addition, Franchisor does not permit any promises, agreements, contracts, commitments,
understandings, “side-deals”, options, rights-of-first-refusal or otherwise or variations of,
changes in or supplements to the Area Representative Agreement or the existence of any
contingencies or conditions to Franchisee’s obligations except by means of a written Addendum
signed by Area Representative and Franchisor.

     If any such representations, “side-deals”, contingencies or otherwise have been made by you by
any person or otherwise exist, immediately inform the CEO of Franchisor.

 

 

     The prospective Area Representative understands and agrees to all of the foregoing and
certifies that all of the above statements are true, correct and complete.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	AREA REPRESENTATIVE
	 
	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 

All of the above is true, correct and complete to the best of my knowledge, information and belief.

	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	Franchise Marketing Representative 	 

	 	 	 	 	 
	 	APPROVED:

PLANET BEACH FRANCHISING CORPORATION

 	 
	 	By:

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