Franchise Agreement

The original documents were scanned as an image. The original file can be downloaded at the link above.

Sample Franchise Agreement

DALE CARNEGIE & ASSOCIATES, INC.

FRANCHISE AGREEMENT

THIS FRANCHISE AGREEMENT (the "Agreement") is made and entered into this____day of _

____________________,_____(the "Effective Date"), between DALE CARNEGIE & ASSOCIATES,

INC., a New York corporation with its principal office at 290 Motor Parkway, Hauppauge, New York

11788 ("DC&A," "we" or "us") and__________________________________________whose principal

address is___________________________________________________("Franchisee" or "you").

1. BACKGROUND

1.1         Carnegie Businesses, Carnegie Programs and the Carnegie System

We have developed a proprietary system (the "Carnegie System" or the "System") for developing, opening and operating businesses ("Carnegie Businesses") specializing in the offer, sale and teaching of certain of DC&A's proprietary instructional programs and related services, including, but not limited to, consulting services, organizational development products and services, needs assessments, evaluations, interviews and executive summary sessions (the "Carnegie Programs"), and other related merchandise from and at training centers (each, a "Carnegie Center"). The Carnegie System and Carnegie Programs continue to evolve.

As used in this Agreement, Carnegie Programs are limited to (and you only receive a franchise and license to offer, sell and teach) the following:

A.          The programs listed in Appendix A and related services, including, but not limited to, consulting services, needs assessments, evaluations, interviews and executive summary sessions.

B.          Any other programs developed by us in the future which we decide to franchise and license to similarly situated franchisees and grant written authorization so to do, provided that we will grant you the first opportunity to offer such programs if we reasonably believe you to be qualified to conduct them.

C.          Any instructional program, system, teaching or management technique, consulting, advising, educational program, survey or program you propose for a client of yours or any similarly situated franchisee and approved in writing by us.

D.          Programs listed in Appendix A under any names under which such programs may be conducted in the future (and we reserve the right to change the name or title of any Carnegie Program).

E.          Your Carnegie Business is authorized to provide only direct in-person training of Carnegie Programs and only at a Carnegie Center, a Training Facility (as defined in Article 7), at a location designated by your client, or another location which we authorize. For the purpose of this Agreement, the term "direct in-person training" means face-to-face training without any form of electronic, magnetic or telephonic intervention.

1.2        The Marks

We own the trademarks, service marks and trade names "DALE CARNEGIE®" and "DALE CARNEGIE TRAINING®" and other trademarks, service marks and trade names, logotypes, emblems, designs, labels, signs, and symbols, copyrighted materials and other intellectual property used in connection with the offer, sale, promotion and presentation of the Carnegie Programs (collectively, the "Marks"). The Marks constitute an integral part of the Carnegie System, and some of the Marks are licensed to you, along with any intellectual property that may in the future be licensed by us to similarly situated franchisees, in accordance with this Agreement.

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2. GRANT OF FRANCHISE AND LICENSE

2.1 Grant of Franchise

You desire to obtain a franchise to operate one Carnegie Business using the Marks and the Carnegie System in the territory described in Section 3.1. We desire to grant to you a franchise and license on the terms and subject to the conditions of this Agreement. We grant to you, and you accept, the Limited Exclusive Right (as defined below) to operate one Carnegie Business (the "Business") in the territory specified in Section 3.1, subject to the terms and conditions of this Agreement. We also grant to you the right to use the Carnegie System, as we may change, improve, modify or further develop it from time to time. "Limited Exclusive Right" means that:

A.   The franchise and license granted by this Agreement is limited to the right to offer, sell and conduct Carnegie Programs as limited by and defined in Section 1.1, which includes amongst other limitations that the Carnegie Programs may only be conducted by you through direct in-person training.

B.   You must be qualified, willing and ready to offer and conduct, or offer and conduct after notice from us or upon a specific request from a customer, all Carnegie Programs. If you do not meet or fulfill these requirements, then we reserve the right to offer such Carnegie Programs as you are incapable of offering or fail to make available as provided herein, or to assign the right to offer such Carnegie Programs to a third party, in each case within the Territory described in Section 3.1.

C.   Your rights in the Territory (as described in Section 3.1) are limited by Section 3.3 and Section 9.15.

2.2 Grant of License to Marks

We grant to you, and you accept, a non-exclusive license to use and display the Marks "DALE CARNEGIE®" and "DALE CARNEGIE TRAINING®" and such other Marks as we may designate, subject to the terms and conditions of this Agreement. You will not use, and will not permit or cause another to use, the Marks except in the manner and to the extent specifically licensed to you under this Agreement. You acknowledge that your use of the Marks in a manner not authorized under this Agreement could result in the termination of this Agreement pursuant to Sections 18.2.13 and/or 18.5. The license granted under this Section 2.2 applies solely to the operation of the Business and the Carnegie Programs and related services and products offered and sold by the Business in strict compliance with the terms and conditions of this Agreement. This license is limited to the Territory specified in Section 3.1 of this Agreement.

3. TERRITORY 3.1 Territorial Grant

A.    Your right to establish and operate the Business is restricted to the geographic area (the "Territory") described in Appendix B by a map or written description. Your rights to offer, sell and conduct each Carnegie Program and to promote, advertise and publicize each Carnegie Program are all restricted solely to the Territory.

B.    You will not, either alone or in conjunction with any other person or entity, advertise or promote the Business in any media not having at least seventy-five percent (75%) of its total circulation or coverage within your Territory, as determined by us in our reasonable discretion, without first obtaining our prior written authorization in each instance. In addition, you will not, either alone or in

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conjunction with any other person or entity, issue or distribute any advertising or promotional material, engage in any on-site promotional visits, and/or otherwise engage in any advertising and/or promotional activity outside your Territory with respect to the Business, without first obtaining our prior written authorization in each instance. Advertising or promotion of your Business through a Web Site (as defined in Section 9.17 hereof) will not be deemed a violation of this Section 3.1, provided that you comply with the provisions of Section 3.1.C hereof.

C. You must not offer or sell any Carnegie Program to any potential client (i) having a residence located outside your Territory, if the potential client is an individual; or (ii) having a business address located outside your Territory, if the potential client is a corporation or other entity. In addition, if you receive, through any advertising or promotional activity of any kind, whether within or outside your Territory, any information concerning a potential client having a residence (if an individual) or a business address (if an entity) located within the territory granted to another DC&A franchisee or licensee, then, within ten (10) days of your receipt of such information, you must provide all such information to such other DC&A franchisee or licensee.

3.2        DC&A Restrictions

Within the Territory, we will not operate or allow another to operate a Carnegie Business, except as provided in Section 2.1, Section 3.3 and Section 9.15. These restrictions will terminate immediately upon the expiration or termination of this Agreement for whatever reason.

3.3        Rights Reserved By DC&A

3.4

We reserve all rights not specifically granted to you in this Agreement. These include but are not necessarily limited to the following:

A.   We may own and operate, and authorize others to own and operate, Carnegie Centers and/or Carnegie Businesses at any location outside the Territory, including those which may be situated immediately proximate to, adjacent to or abutting the boundary of the Territory.

B.   Except as limited by this Agreement, to use or license the Marks within or outside the Territory for the purposes of offering or selling any service or product whatsoever, whether or not such services or products are competitive with the Business or the Carnegie System, including without limitation, to offer, sell, organize and conduct (either ourselves or through franchises, licenses, joint ventures or any other business combination): any proprietary instructional programs, systems, teaching and management techniques, educational programs, consulting, surveys and/or programs developed by us or third parties, whether through direct in-person modes of training or through "channels and methods of distribution and presentation other than a direct in-person mode of training" (as defined below), to any person wherever situated, including situated within the Territory and including proximate to your Center(s) and/or Training Facilities and without regard to the impact therefrom on the revenues, profitability and/or viability of the Business; provided, however, that we will not offer, sell and/or conduct Carnegie Programs (as defined in Section 1.1) in your Territory; and provided further, that you acknowledge and we specifically reserve the right to offer, sell and/or conduct any proprietary instructional program, system, teaching and management technique, educational program, consulting, survey and/or program developed by us or third parties, which include less than all of the modules of a Carnegie Program or is based on less than all of the content of a Carnegie Program. We will share our gross revenues received from the activities set forth in this Subsection with you and with our other franchisees, but only to the extent provided in Section 4.

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Other "channels and methods of distribution and presentation other than a direct in-person mode of training" may include, without limitation, electronic presentations via computer networks (including, without limitation, the World Wide Web, other areas of the Internet and/or other on-line networks); satellite broadcasts; private cable hookups; audio tapes, videotapes; CD-ROMs; computer programs; conference calls; catalogues; direct mail; and other communications methods now or hereafter devised of any nature whatsoever, other than a direct in-person mode of training.

C.   To purchase, merge, acquire, be acquired by or affiliate with any other business organization, including one that provides training or instruction that is competitive with Carnegie Programs, whether or not the other business organization provides training services in the Territory; provided, however, that any facility of such business organization situated within the Territory will not be permitted to operate under the Marks until the termination or expiration of this Agreement, but will be permitted to continue operation under any other name or mark.

D.   Upon the termination or expiration of this Agreement, within the Territory, to establish Carnegie Businesses (either ourselves or through franchises, licenses, joint ventures or any other business combination) which will establish Carnegie Centers and offer and sell those products and services which this Agreement contemplates you will offer and sell.

The essence of this Section 3.3 is that the specific terms and limitations of this Agreement and the Business and the boundaries of the Territory conferred under this Agreement are to be deemed for all purposes strict terms, limitations and boundaries not subject to further judicial or other construction, implication or attempts to expand same, directly or indirectly, and outside of which (or within which, to the extent provided above) we may engage in any business activity whatsoever.

4. REVENUE SHARING

4.1 On-Line Programs

In the event we, either directly or through third parties, offer and/or sell via the World Wide Web, other areas of the Internet and/or other on-line networks, any proprietary training program, system, teaching and management technique, educational program, survey and/or program developed by us or third parties (an "On-Line Program"), then we shall share gross revenues received therefrom with you and our other franchisees but only to the extent and in the manner set forth in this Article 4. We will perform all invoicing, revenue collecting and disbursements concerning the sale of On-Line Programs, and all contracts with clients concerning On-Line Programs will be entered into by us. You have no right to sell any On-Line Programs, except as provided in this Section. "Persons in the Territory" for purposes of this Article 4 are persons located in the Territory who purchase an On-Line Program, the location of any such person to be conclusively established by reference to the business address provided by such person in connection with his/her/its purchase of an On-Line Program.

A.   We shall remit to you twelve percent (12%) of gross revenues we receive from our sale of each On-Line Program purely over the Internet (a "Pure Internet Program" or "PIP") to Persons in the Territory.

B.   With respect to our sale of On-Line Programs over the Internet which are sold in conjunction with direct in-person training (a "Blended Internet Program" or "BIP"), we shall remit to you:

1.         Thirteen percent (13%) of gross revenues we receive therefrom if you provide the

live training component of the Blended Internet Program.

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2.         Twelve percent (12%) of gross revenues we receive therefrom if the Internet

component of the Blended Internet Program was taken by a Person in the Territory.

C.   With respect to the sale of an On-Line Program by a third party provider (such as portals or aggregators) who has contracted with us to offer and sell On-Line Programs over the Internet, we shall remit to you:

1.          Twelve percent (12%) of gross revenues we receive from the sale of a PIP to Persons in the Territory.

2.          Thirteen percent (13%) of gross revenues we receive from the sale of a BIP if you provide the live training component of the BIP.

3.          Twelve percent (12%) of gross revenues we receive from the sale of a BIP if the Internet component of the BIP was taken by a Person in the Territory.

D.   With respect to the sale by us of a PIP or BIP as a closed, intranet system application (an "Intranet Program"), we shall remit to you:

1.          One hundred percent (100%) of gross revenues from the sale of an Intranet Program arranged by you and delivered in your Territory only, less (a) twenty five percent (25%) of those gross revenues during the first year of sales of such program and (b) twelve percent (12%) of those gross revenues during every year after the first year of sales of such program, provided, that the gross revenues from the sale of an Intranet Program shall be reduced by any out-of-pocket development costs incurred by us in creating, or assisting in or contracting for the creation of, an Intranet Program that is tailored or customized for a particular client.

2.          Twenty percent (20%) of gross revenues from the sale of an Intranet Program arranged by you and delivered in the territory of another of our franchisees or a company-owned Carnegie Business (including a DC&A Center of Excellence), less (a) twenty five percent (25%) of those gross revenues during the first year of sales of such program and (b) twelve percent (12%) of those gross revenues during every year after the first year of sales of such program, provided, that the gross revenues from the sale of an Intranet Program shall be reduced by any out-of-pocket development costs incurred by us in creating, or assisting in or contracting for the creation of, an Intranet Program that is tailored or customized for a particular client.

3.          Eighty percent (80%) of gross revenues from the sale of an Intranet Program arranged by another of our franchisees or a company-owned Carnegie Business (including a DC&A Center of Excellence) and delivered in your Territory, less (a) twenty five percent (25%) of those gross revenues during the first year of sales of such program and (b) twelve percent (12%) of those gross revenues during every year after the first year of sales of such program.

For purposes of this Section 4.1.D, an Intranet Program will be conclusively established to be delivered in your Territory if the site to which the Intranet Program is licensed is in your Territory.

E.    We will remit to you twelve percent (12%) of gross revenues received from the sale by us via the Internet of an On-Line Program (as defined herein and/or in the Operations Manual and Business Model) in the form of videotapes, audiotapes, cassettes, compact discs or other product form, including a product which can be retrieved and downloaded via computer access, to Persons in the Territory.

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4.2         Seminars

We will, from time to time, test the appeal of new programs by offering, selling and conducting shorter versions of such programs in territories we deem appropriate, including your Territory. If we do, we will remit to you (a) such amounts as we set forth in the Operations Manual and Business Model if the seminars are conducted in your Territory; and (b) twelve percent (12%) of the gross training fees receipts received from any participants of a seminar who reside in your Territory and traveled to the territory of another of our franchisees or a company-owned Carnegie Business (including a DC&A Center of Excellence) to take the seminar.

4.3        Payments

We will make any payments due to you pursuant to this Section 4 via electronic transfer of funds quarterly on April 15th, July 15th, October 15th and January 15th of each calendar year, or credit any such payments to any outstanding balance you owe us. The revenues you receive pursuant to this Section 4 are not included in Gross Revenues as defined in Section 6.4 and upon which you must pay to us a Monthly Royalty, Minimum Royalty and Marketing Contributions as defined in Sections 6.2 and 6.3 hereof. We will have a certified accountant issue a letter annually stating that the mechanism for revenue sharing set forth in this Article 4 has been complied with generally.

5. TERM AND RENEWAL

5.1        Initial Term

The initial term ("Initial Term") of this Agreement will be fifteen (15) years, commencing on the Effective Date, unless this Agreement is sooner terminated in accordance with its provisions.

5.2        Renewal Term

You will have the right to enter into a renewal franchise agreement ("Renewal Franchise Agreement") for a single additional term often (10) years (the "Renewal Term"), if you have complied with the conditions and procedures for renewal set forth in this Agreement and if we are franchising in this State (as defined below in this Section 5.2) at the time of renewal. The Renewal Term will begin on the day after the date of the expiration of this Agreement. You acknowledge and agree that upon the expiration of the Renewal Term (if any), we will be under no obligation to renew your franchise or enter into any form of franchise agreement with you, except that the post-expiration provisions of the then-applicable Renewal Agreement (as defined in Section 5.3 hereof) will remain in effect.

We will be deemed to be "franchising in this State" at the time of renewal unless we have published a public notice or a notice to the Carnegie System within twelve (12) months of the expiration of the Term stating that we will no longer license any third party to offer and conduct Carnegie Programs in the state or states where your Territory is located.

5.3        Form and Manner of Renewal

If we are franchising in this State (as defined in Section 5.2), and if you wish to exercise your right to enter into a Renewal Franchise Agreement as provided for in Section 5.2, you will need to execute a renewal franchise agreement (the "Renewal Agreement"). The Renewal Agreement will take the form of our then-current Franchise Agreement, modified as provided below. The Renewal Agreement will supersede this Agreement in all respects. The terms of the Renewal Agreement may differ entirely from the terms of this Agreement, including, without limitation, such material terms as the boundaries of

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the Territory; the Guaranteed Minimum Production; the Minimum Royalty; the Monthly Royalty; the Marketing Contribution; other fees; the Minimum Territory Development Expenditure (each as hereinafter defined); and the rights, duties, limitations and responsibilities afforded or imposed under said Renewal Agreement.

You must exercise your renewal right under this Agreement in strict accordance with the procedures set forth in the Operations Manual and Business Model (as defined in Section 8.1) as of the date of this Agreement. If you do not perform any of the acts or deliver any of the notices required by those procedures in a timely fashion, this will be deemed your election not to exercise your right to enter into a Renewal Agreement, and this right will automatically lapse and expire without further notice or action by us. If this occurs, this Agreement will terminate at the end of the Initial Term, subject to the provisions of this Agreement which by their nature survive expiration, including, without limitation, the post-termination, post-expiration and indemnification provisions hereof.

If: (i) you have exercised your renewal right as described above; (ii) you have complied with all of the conditions set forth in Section 5.4 below as of the date of expiration of the Initial Term; and, (iii) we are franchising in this State, then we will execute the Renewal Agreement executed by you and will, promptly after expiration of the Initial Term of this Agreement, deliver one fully-executed copy of the Renewal Agreement to you.

5.4 Conditions to Renewal

Your right to enter into a Renewal Agreement will be conditioned on your fulfillment of all of the following conditions:

1.          You have not failed to cure an outstanding notice of default under the Agreement.

2.          Before the commencement of the Renewal Term, your Centers and Training Facilities will be in a condition consistent with then-current system facility standards.

3.          You must be current in all monetary obligations to us or our affiliates, subsidiaries and designees (together, our "Affiliates").

4.          We have not sent you two (2) or more valid Notices of Default (as defined in Section 18.3) under this Agreement within any continuous six (6) month period occurring within two years of the expiration date of the Initial Term.

5.          You must be able to continue the operation of your Business without interruption.

6.          You must have executed a General Release in the form of Exhibit A ("General Release -Renewal"). This document will not purport to release us from any future claims arising out of or related to the Renewal Agreement.

7.          You must comply with our then-current qualification and training requirements as set forth in our Operations Manual and Business Model, including, without limitation, the successful completion of our then-current Refresher Training Program for experienced franchisees.

8.          You must pay to us a "Renewal Fee" of $ 10,000.

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5.5 Notice of Expiration

If applicable law requires us to give notice of expiration to you at a specified time before the expiration of the Initial Term, and we have not done so, then the term of this Agreement will be extended on a month-to-month basis until we have given you the required notice of expiration, and the required period before the expiration of the Agreement becomes effective has expired.

6. PAYMENTS TO DC&A AND, IF APPLICABLE, FORMER SPONSOR

6.1 Initial Franchise Fee

In consideration of the execution of this Agreement by us, you will pay us an "Initial Franchise Fee" of $35,000.00. The Initial Franchise Fee is payable in full upon the execution of this Agreement by you, will be deemed fully earned when paid, and will not be refundable (in whole or in part) except in accordance with Section 8.3 hereof.

6.2        Monthly Royalty and Minimum Royalty

In consideration of our grant to you of the franchise and license granted under this Agreement, you will pay the following to us on the dates specified in Sections 6.5 and 6.6:

A.   A "Monthly Royalty" equal to twelve percent (12%) of your prior month's Gross Revenues (as defined in Section 6.4).

B.   A "Minimum Royalty" equal to the excess of (i) twelve percent (12%) of the then-applicable annual Guaranteed Minimum Production (as defined in Section 9.10) over (ii) the aggregate Monthly Royalty that was due for the applicable Fiscal Year (as defined in Section 9.10).

C.   Letter of Credit/Royalty Deposit

1.    In consideration of the fact that royalties are due within a month of you collecting fees for training, we will estimate an amount of royalty that may become due within a six (6) month period based on the first year TRP in your agreement, and require a Letter of Credit be issued to us by a reputable banking institution in the country of your Center. We will only draw down on this Letter of Credit when your past due balance (over 30 days) approaches the amount of the Letter of Credit.

2.    Should a Letter of Credit not be available to you, we will require a cash deposit be paid to us in a similar amount as above. We will hold this deposit in an account bearing interest of 3%. The deposit will be refunded at the termination of the franchise agreement, less any amounts that may be outstanding at that time.

6.3        Marketing Contribution

To contribute to our cost of advertising and promotions for the Carnegie System, you will pay to us on the dates specified in Sections 6.5. and 6.6, a monthly "Marketing Contribution," to be expended as provided for in Section 11.5, in an amount equal to three percent (3%) of your prior month's Gross Revenues.

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6.4 Definition of Gross Revenues

"Gross Revenues" means all revenues and income from whatever source derived or received by you from, through, by or on account of the operation of the Business, or based upon Confidential Information (as defined in Article 13), whether received in cash, in services, in kind, from barter and/or exchange, or otherwise, but excluding passive investment income, revenues from the rental of your Center and/or Training Facility and revenues from speeches you may give or similar activities you may engage in which are not done for the purpose of offering or selling Carnegie Programs. There will be deducted from Gross Revenues, to the extent that they have been included in your calculation of Gross Revenues: documented refunds, chargebacks, credits and allowances given in good faith to clients by you, and all sales taxes, value added taxes or similar taxes which, by law, are chargeable to clients, customers and attendees of your Carnegie Programs and you in fact pay. For the purpose of determining Gross Revenues, all barter and/or exchange transactions where you furnish services or products in exchange for goods or services to be provided to you by a vendor, supplier or client will be valued at the full retail value of the goods and/or services provided to you.

6.5        Reporting and Payment

A.   Within five (5) business days after the end of every calendar month, you will send us, in the form and manner (including electronic) set forth in the Operations Manual and Business Model, reports concerning the operation of your Business, which will include, but not be limited to, the Gross Revenues, program activity, class rosters, services rendered and products sold for the preceding month and such other information as we may require in the Operations Manual and Business Model (the "Monthly Report"). On the applicable dates set forth in the Operations Manual and Business Model, you will send us any other periodic reports regarding the activity of your Business that we may prescribe in the Operations Manual and Business Model.

B.   We require the electronic filing of all of your reports, but if for any reason the necessary electronic communications cannot take place - whether because our computer system is unable to receive your report or because your computer system is unable to transmit a report, or for any other reason - then you will ensure that we receive the report in the manner we otherwise direct by the date due.

C.   On the fifteenth (15th) day of every month, you will pay to us the Monthly Royalty and the Marketing Contribution for the preceding month based on the Gross Revenues for such month.

D.   You will pay to us, if due, the Minimum Royalty on the fifteenth (15th) day following the end of each Fiscal Year (as defined in Section 9.10 hereof).

E.   You will pay us the software support fees specified in the Software License Agreement (as defined in Section 9.16) at the times specified in such agreement.

F.    You will pay us for the texts, books, booklets, awards, supplies and incidental items you purchase from us (collectively, the "Materials") at the times specified in Section 9.7.B.

6.6        Commencement of Payments

Except as otherwise provided in this Section 6.6 or elsewhere in this Agreement, the Monthly Royalty, Marketing Contribution and all other payments and fees due under this Agreement will accrue on the date of Commencement of Operation of the Business (as defined in Section 9.1). All payments due us will accrue on those dates specified either in this Agreement, the Operations Manual and Business Model or the Software License Agreement, or, with regard to the Materials and any other products and/or

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services sold or furnished by us (or any of our Affiliates) to you, on the terms specified by us (or our Affiliate) at the time of offer or sale, as applicable.

6.7        Other Payments to DC&A

1.          You will pay to us the amount of all sales taxes, value added taxes, trademark license taxes and any other similar tax (except income taxes) or levy whatsoever - however denominated - imposed on, required to be collected, or paid by us on account of Materials, services or goods we have furnished to you through sale, lease or otherwise, or on account of collection by us of the Initial Franchise Fee, Monthly Royalty, Minimum Royalty, Marketing Contribution and/or the other fees called for by this Agreement.

2.          All amounts advanced by us, or which we have paid, or for which we have become obligated to pay, on your behalf.

6.8        Late Charges

A.  You will pay to us (or our Affiliates) interest on any amounts overdue to us (or our Affiliates) under this Agreement, from the date due until paid, at the rate which is the lesser of eighteen percent (18%) per annum or the highest contract rate of interest allowed by the law of the state where your Center is located.

B.   In the event that we receive your monthly report the month after the end of the month in which it was due, you will pay to us (or our Affiliate) a 10% penalty on the royalty that was generated from that report.

You acknowledge that this Section 6.8 will not constitute agreement by us or our Affiliates to accept any payments after they are due, or a commitment by us or our Affiliates to extend credit to you or otherwise finance the Business.

6.9        Form of Currency; Electronic Transfers of Funds.

Each and every payment due to us hereunder will be made in freely transferable United States Dollars and will be tendered by electronic funds transfer or other wire transfer.

6.10      Application of Funds

If you are delinquent in the payment of any obligation to us under this Agreement, or under any other agreement with us or any of our Affiliates, then we or our Affiliate may apply any payment from you to the oldest obligation due, whether under this Agreement or otherwise, whether or not there is any contrary designation by you.

6.11      Franchisee May Not Withhold

You agree not to withhold payment of any Monthly Royalty, Minimum Royalty, Marketing Contribution, payment for Materials or any other amount due to us or our Affiliates on the grounds of the alleged non-performance or breach of any of our (or our Affiliates') obligations under this Agreement or any related agreement (including agreements for the sale of Materials or other products or services by us or our Affiliates to you).

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6.12 Payment of Continuing License Fee to Former Sponsor of Territory

If the Territory was formerly operated by a former DC&A sponsor who has a right to receive a "continuing license fee" pursuant to a "Sponsor's License Agreement" with us covering the Territory, then you will pay to said former sponsor the Continuing License Fee for the Territory, as set forth in Appendix C. The liability for payment of the Continuing License Fee will be your obligation and not ours (nor that of the Intermediary as that term is defined in any Sponsor's License Agreement), and neither we nor said Intermediary will be deemed to be a guarantor of payment of the Continuing License Fee.

7. CENTER AND TRAINING FACILITY LOCATIONS

You will operate the Business from one or more Carnegie Centers (as operated by you, each a "Center") at Center locations (each a "Center Location") situated within the Territory. Each Center must contain an office from which you will manage and administer the Business and may, but is not required to, contain a Training Facility. A "Training Facility" or "Training Facilities" means a location or locations selected by you situated within the Territory at which you will conduct Carnegie Programs (each a "Training Facility Location").

You will comply with all of our Center Location and Training Facility Location specifications, requirements and restrictions contained in the Operations Manual and Business Model in both the selection and operation of such locations. You may not relocate your Center to another location without first obtaining our written approval.

You acknowledge that any advice by us regarding site selection (whether as part of the Carnegie System or Operations Manual and Business Model , in response to your proposals or inquiries, or otherwise); our proposal or suggestion of any Center Location or Training Facility Location; and/or our exercise of our rights of inspection or approval, are not meant to be relied on or construed in any way as a representation, express or implied warranty, or any other indicia of the prospective profitability, viability or merit of any location.

8. DUTIES OF DC&A

8.1 DC&A Operations Manual and Business Model

A. At the Initial Training Program described in Section 8.3, we will lend you one copy of our confidential Franchise Operations Manual (the "Operations Manual"). You will operate your Business in strict compliance with the operational systems, procedures, policies, methods and requirements prescribed from time to time in the Operations Manual. If you lose or destroy the Operations Manual, you will be required to pay us the sum of $1,000 upon demand. Upon such payment, we will lend you another copy of the Operations Manual.

We retain the right to prescribe additions to, deletions from, or modifications or revisions of the Operations Manual (the "Supplements to the Operations Manual"), all of which will be deemed a part of the Operations Manual, such that all references to the "Operations Manual" in this Agreement (except in Section 5.3) will include all Supplements to the Operations Manual. Supplements to the Operations Manual will become binding on you as if originally set forth in the Operations Manual, upon being delivered to you. You will immediately adopt and use the services, products, programs, materials, standards, specifications, policies, methods, procedures and techniques set forth in Supplements to the Operations Manual. The Operations Manual and Supplements to the Operations Manual are material in that they have an effect on the operation of the Business; however, they will not conflict with or materially alter the terms of this Agreement.

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B.          In addition to the Operations Manual, you will receive a Business Model that will help you launch, grow and sustain your franchise.

C.          We represent that we own all proprietary rights in the Carnegie System and the Operations Manual and Business Model. You acknowledge that you are acquiring no property or other right to them other than a license to use them during the term of this Agreement and in strict compliance with the terms of this Agreement and of the Operations Manual and Business Model. The Operations Manual and Business Model will at all times remain our property. You agree that you, your agents, independent contractors and employees will treat the Operations Manual and Business Model and the information contained in it as confidential; use all reasonable efforts to maintain this information as secret and confidential; at no time copy, duplicate, record or otherwise reproduce the Operations Manual and Business Model, in whole or in part; and, not otherwise make the Operations Manual and Business Model or information in it available to any unauthorized person. Upon the expiration or termination of this Agreement, you will return the Operations Manual and Business Model to us or, upon our request, destroy and certify such destruction to us.

D.          You will ensure at all times that your copy of the Operations Manual and Business Model is current and up-to-date. If there is any dispute as to your compliance with the provisions of the Operations Manual and Business Model, the master copy of the Operations Manual and Business Model maintained at our principal office will control.

8.2        Method of Operation

In addition to any other training and assistance provided for in this Agreement, we will furnish to you from time to time all information, training, techniques, data, instructional materials, forms and other operational developments pertaining to the operation of the Business which we may from time to time develop and incorporate in the Carnegie System.

8.3        Initial Training Program; On-Site Training; Apprenticeship Program

A.   Before Commencement of Operation of the Business, you (and those persons set forth in the Operations Manual and Business Model) must attend and successfully complete our initial training program as described in the Operations Manual and Business Model (the "Initial Training Program"). The Initial Training Program will consist of up to fourteen (14) days of training at our headquarters. In addition to the Initial Training Program, before Commencement of Operation of the Business, you (and those persons set forth in the Operations Manual and Business Model) must attend and successfully complete our "On-Site Training Program," consisting of no less than ten (10) days of on-site training at your Center and/or Training Facility. The cost for your Initial Training Program and On-Site Training Program is included in the Initial Franchise Fee.

B.   Before Commencement of Operation of the Business, you or a designee approved by us (and those persons set forth in the Operations Manual and Business Model) must attend and successfully complete an apprenticeship program as described in the Operations Manual and Business Model (the "Apprenticeship Program"). The Apprenticeship Program will consist of up to fourteen (14) consecutive days of training at the Carnegie Center and/or Training Facility of an existing DC&A franchisee. The location, starting date, and duration of the Apprenticeship Program will be determined by DC&A, in its sole discretion, prior to completion of your Initial Training Program. The cost for your Apprenticeship Program is included in the Initial Franchise Fee.

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C. If we determine that you have failed to attend or successfully complete the Initial Training Program and terminate this Agreement, then we will return to you twenty-five percent (25%) of the Initial Franchise Fee.

Any of your personnel who are required to attend the Initial Training Program but whom you hire or appoint after the Commencement of Operation of the Business must attend and successfully complete our next scheduled Initial Training Program, On-Site Training Program, and Apprenticeship Program. You will pay an additional charge to us for training such persons (as set forth in the Operations Manual and Business Model, but which will be no greater than $1,000 per person as of the Effective Date, adjusted for any increases in the Consumer Price Index subsequent to the Effective Date) and all expenses associated with such training.

We reserve the right to determine the duration and subject matter of all our training programs and the right to train any number of individuals from any number of franchised or non-franchised Carnegie Businesses at the same time. You will pay all expenses incurred by you and your personnel in connection with any training, including, but not limited to, transportation costs, meals, lodging and other living expenses.

8.4 Trainer Training Services

A.    Only those persons who have successfully completed our training program for a specific Carnegie Program (a "Trainer Training Program") and are then-current ly certified by us to be trainers (each, a "Trainer") in a specific Carnegie Program may act as Trainers for such Carnegie Program. We reserve the right, in our sole judgment, for any reason or no reason: (i) to accept or reject any individual as a trainer candidate for training (each, a "Trainer Candidate") and (ii) to grant or withhold authorization of any Trainer Candidate as a Trainer. You, at your sole expense, will provide each Trainer Candidate with preliminary training, as prescribed in the Operations Manual and Business Model, prior to entry in a Trainer Training Program. We will notify you if, in our sole judgment, any of your Trainer Candidates has failed to successfully complete a Trainer Training Program, and inform you of the basis for our conclusion.

B.   Within sixty (60) days after the Effective Date, you must provide us with a list of Trainer Candidates approved by us. We will determine, in our sole discretion: (1) the number of approved Trainer Candidates you must provide and (2) the date of commencement, location and duration of a Trainer Training Program for each Carnegie Program. If you fail to provide us with a list of approved Trainer Candidates as required under this Section 8.4, we will have the right (but not the obligation) to send our own Trainees) to act as Trainees) for all Carnegie Programs conducted by your Business until such time as you have satisfied all the requirements of this Section 8.4 and Section 9.6 hereof. You will reimburse us, upon demand, for all costs and expenses (including, but not limited to, transportation costs, meals, lodging, salary, and other expenses) incurred by us and our Trainer(s) in connection with providing such Trainees) to you and your Business.

C.   The cost for the Trainer Training Programs for the number of approved Trainer Candidates and designated programs you must provide under Section 8.4.B. hereof is included in the Initial Franchise Fee. For any additional Trainer Candidate(s) who attend a Trainer Training Program during the Initial Term of this Agreement, you will pay the cost for such Trainer Training Program(s), which will be as set forth in the Operations Manual and Business Model. You will pay all expenses incurred by you and your Trainer Candidates in connection with any and all Trainer Training Programs, including, but not limited to, transportation costs, meals, lodging and other living expenses (although you are free to pass these costs and expenses on to your Training Candidates).

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D.   Certification to instruct specific Carnegie Programs is for a period of duration as described in the Operations Manual and Business Model. During this period a Trainer will be required to attend refresher events annually and certification renewal events every three (3) years. We will determine and notify you of the date of commencement, location and duration of certification renewal events, and will conduct such events at no charge to you. We will provide refresher materials and facilitator notes, and you have the option of conducting the refresher utilizing a local Trainer or a Master Trainer (as defined in the Operations Manual and Business Model) from outside your Territory as the facilitator. If you use a Master Trainer from outside your Territory as the facilitator, then you will pay Master Trainer fees plus expenses, as outlined in the Operations Manual and Business Model. You will pay all of your expenses and the expenses of your Trainers associated with certification renewals and refreshers, including, but not limited to, transportation costs, meals, lodging and other living expenses.

E.   From time to time, usually when one or more Carnegie Programs are changed or updated, we will require the recertification of all Trainers in the Carnegie Program(s) in question (a "Recertification"), and if we do so, your Trainer(s) for the Carnegie Program(s) in question will attend. We will determine and notify you of the date of commencement, location and duration of each Recertification training program to be attended by your Trainees). We will not charge you any training fees for the Recertification training program, but you must pay all expenses incurred by your Trainees) in connection with the Recertification training program, including, but not limited to, transportation costs, meals, lodging and other living expenses.

8.5        Conventions

We may from time to time conduct conventions and seminars. We strongly recommend, but do not require, that you attend our international conventions. You must pay all expenses associated with your participation or attendance at conventions and seminars.

8.6        Field Support Services

Upon your reasonable request and at no cost to you, we will furnish you with field support services, which may include, by way of example only, advice regarding proper display of the Marks, procurement of equipment, fixtures and supplies, establishing your Training Facilities and staffing, financial and operational management, advertising and promotional techniques, employee training, certification and development procedures, cost control techniques, and other general guidance and advice regarding programs, procedures, specifications, and/or techniques pertaining to the operation of the Business. We will determine, in our sole discretion, the nature and extent of any such field support services and the manner in which they are provided to you. Your receipt of any such services will be subject to the availability of our personnel.

In addition, our Global Support Services group will provide support to you in the areas of trainer recruitment and development, product tailoring, proposal services, credentials, and organizational development, as outlined in the Operations Manual and Business Model.

8.7        Optional Materials and Services Which DC&A May Offer

If we determine to offer to sell you any optional materials and services (directly, or through an Affiliate), and you determine to purchase any of them, then you must pay us (or our Affiliate) such prices as we determine and set forth at the time of offer or sale, or otherwise generally set forth in the Operations Manual and Business Model. All such prices will be subject to change at any time. Examples of such materials and services may include, at our sole option:

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1.          Local advertising and promotional materials.

2.          Media buying services - purchasing local media time and/or print space and placing commercials or advertisements.

3.          Direct Mail marketing materials and/or the services of mailing these materials to individuals, groups, entities and other addressees.

4.          Camera-ready advertising to be utilized by you for placement in classified telephone directories.

8.8        Accounting and Information Systems

We will specify in the Operations Manual and Business Model the electronic and/or written accounting and information systems, procedures, formats and reporting requirements which you must utilize to account for your Business; maintain your financial records and merchandising data; and, generate reports for both you and us.

8.9        Test Marketing

We may, from time to time, conduct market research and testing to determine consumer trends and the desirability of new or modified Carnegie Programs. You agree to cooperate with us in any such market research programs or test marketing of new or modified Carnegie Programs.

8.10      Pricing

A.   Except for your sale of Carnegie Programs to corporate clients, you will charge a single, lump-sum registration fee per participant per Carnegie Program. This registration fee will include the cost of training and all texts, books, booklets, miscellaneous fees, awards, supplies and all incidental items for the Carnegie Program in question. You will also charge sales, use or similar taxes as may be required by applicable law.

If any approved third-party provider is used to deliver to individual participants or clients any services related to the programs listed in Appendix A (including, but not limited to, consulting services, needs assessments, evaluations, interviews and executive summary sessions), you will set the price of those services and invoice the individual participant or client. All monies paid to you by participants or clients in exchange for such services will be considered part of your Gross Revenues, and be subject to the fees set forth in this Agreement.

You will inform us of all lump-sum prices charged for Carnegie Programs and all prices for any other services and/or products sold by you, and promptly inform us of any new or changed prices you may establish from time to time.

B.   To enhance the interbrand competitiveness of the Carnegie System; to enable competitive, multi-territorial and system-wide "price point" advertising; and, to benefit clients of the Carnegie System, we may from time to time establish maximum prices above which the Business may not offer and sell Carnegie Programs or other services and/or products under this Agreement. We will likewise have the right from time to time to revise or eliminate any such maximum prices. Except as set forth above, and in Section 9.15, you will otherwise have the sole right to determine the prices which you will charge your clients.

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You will adhere to any such maximum price requirement imposed by us. We may, at our sole option, advertise specific Carnegie Programs throughout the Carnegie System at such maximum prices "or less." Under no circumstances, however, will we establish or advertise any minimum prices below which you may not offer or sell Carnegie Programs or other services or products.

In addition, or alternatively, we may from time to time suggest prices for Carnegie Programs and/or related services or products offered and sold by you. We and you agree that any list or schedule of such prices suggested by us will be recommendations only and not be mandatory on you unless we expressly label any or all of such prices as a maximum price (as provided above). You understand and agree that our suggested or maximum prices, fees, markups or margins may or may not increase or optimize the revenues or profitability of the Business.

8.11      Carnegie System Consultation

We will consult periodically with elected representatives of the Dale Carnegie Franchise Association on matters of concern to our franchisees, and areas of mutual concern such as Strategic/Global Account customer relationships (however denominated), Carnegie System standards and operating procedures, the Operations Manual and Business Model, marketing and market positioning, sourcing, technology, regulatory matters, training and program development, provided that the Dale Carnegie Sponsors' Association represents a majority of our franchisees, is open to membership by any franchisee in good standing, and acts democratically and responsibly. In addition, we will so consult with no more than four separate associations representing franchisees' interests in North America, Europe, Asia and Latin/South America (or any combination thereof), if our franchisees and the Dale Carnegie Franchise Association choose to restructure or divide into such separate associations and such associations represent a majority of our franchisees in the geographical areas being covered, are open to membership by any franchisee in good standing, and act democratically and responsibly.

We will work with the Dale Carnegie Franchise Association (or such other associations) as the franchisees' representative, and encourage franchisees to become members of the Association (or such other associations). We also will review with the Association (or such other associations) our role in sourcing supplies required to conduct Carnegie Programs, with a view towards minimizing franchisees' costs consistent with assuring a consistent source of supply of quality materials that meet applicable System requirements; provided, that you acknowledge and agree that we have the right to receive a profit on the same. You acknowledge and agree that notwithstanding our obligation to consult pursuant to this Section 8.11, we have the sole and absolute right to make any and all decisions regarding any and all matters upon which we are obligated to consult.

8.12      Nature of Obligations

All of our obligations under this Agreement are to you alone. No other party is entitled to rely on, enforce or obtain relief for breach of any of our obligations hereunder, either directly or by subrogation.

9. DUTIES OF FRANCHISEE

9.1 Commencement of Operation

You agree that Commencement of Operation of the Business will take place within one hundred and twenty (120) days after the Effective Date. "Commencement of Operation of the Business" means the first day of the first session of a Carnegie Program provided by you.

Before the Commencement of Operation of the Business, you must fulfill all the pre-opening obligations called for by this Agreement including (but not limited to) your obligations to:

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1.          Attend and satisfactorily complete the Initial Training Program, On-Site Training Program, and Apprenticeship Program;

2.          Make necessary arrangements and obtain our approval for a Center Location and Training Facilities meeting the requirements set forth in the Operations Manual and Business Model;

3.          Investigate the need for, seek and obtain all required business, building, zoning and other permits and licenses required to open and operate the Business;

4.          Employ or retain and train all required staff as set forth in this Agreement and the Operations Manual and Business Model;

5.          Purchase the opening inventory of Materials and any other proprietary products from us (or our designee) that we require pursuant to the Operations Manual and Business Model;

6.          Pay all amounts then due to us;

7.          Furnish us with the evidences of insurance coverage required pursuant to Section 10.1;

8.          Procure and install, at your expense, the computer hardware, software, required dedicated telephone and power lines and other computer-related accessories, peripherals and equipment that we specify in the Operations Manual and Business Model;

9.          Do all other acts necessary to make the Business ready to begin operations; and

10.        Obtain our written approval for the Commencement of Operation of the Business.

11.        Certain personnel will be required to sign a Confidentiality/Non-Competition Agreement pursuant to Section 14.5.

9.2        Manner of Operation

The Business and each Center and Training Facility will at all times comply with each and every provision of this Agreement, the Carnegie System and the Operations Manual and Business Model.

You must devote your best efforts and adequate capital resources to the management and operation of your Business, devote the amount of your time that is necessary for the proper and effective operation of your Business, manage the day-to-day operation of your Business, actively promote and sell Carnegie Programs and use your primary and best efforts to cultivate, develop and expand the market therefor within the Territory.

9.3        Maintenance and Repair; Periodic Renovation

At all times throughout the term of this Agreement, you agree, at your sole reasonable expense, to maintain the interior and exterior of the Centers and Training Facilities, and keep and maintain all equipment, furniture, decorating, signs and appurtenances situated in or at the Centers and Training Facilities, in the highest degree of cleanliness, maintenance, condition and repair. Upon our request, you may also be required to renovate, refurbish and update the Centers and Training Facilities to ensure that they are in substantial conformity with our then-current requirements as set forth in the Operations Manual and Business Model, provided that you will not be required to so renovate, refurbish and update the Centers and Training Facilities during the last three (3) years of the Term of this Agreement (but you may be required to do so as a condition to the renewal or transfer of this Agreement).

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9.4        Modifications to the Carnegie System

From time to time, we may change: the Carnegie System and the Marks; the composition, nature and content of Carnegie Programs; and, add or delete Carnegie Programs; and when we do, you must promptly conform the Business to the revised requirements, at your cost. You will accept, use and effectuate any such modifications to, or substitution of, the Carnegie System as if they were part of the Carnegie System at the time that this Agreement was executed.

9.5        Compliance with Laws, Rules and Regulations; No Discrimination

You will operate the Business in strict compliance with all applicable laws, rules and regulations of all governmental authorities. You will investigate the need for, obtain and maintain in good standing all required licenses, permits and other required forms of governmental approval for you to offer and sell the Carnegie Programs (and any other services, products or programs authorized for sale by us). You will take prompt and effective action to correct any violation set forth in a notice issued by any governmental or municipal authority concerning such licenses and permits. You will strictly comply with our policies against discrimination, as set forth in the Operations Manual and Business Model.

9.6        Trainers and Trainer Candidates

A.   Only those persons who are then-currently authorized by us to be Trainers of specific Carnegie Programs may act as Trainers for such Carnegie Programs as you conduct. Trainers and Trainer Candidates will not be considered our agents, servants, employees or representatives.

B.   You must enter into a written contract with each Trainer you seek to employ or retain (each such contract, a "Trainer Candidate Contract"), which must contain certain provisions as set forth in the Operations Manual and Business Model, and transmit electronically a copy of any such Trainer Candidate Contract to us upon execution. You may supplement any Trainer Candidate Contract; provided, however, that the supplements must not modify the requirements specified in this Agreement or the Operations Manual and Business Model. Each such supplement must be in writing, and you must transmit electronically a copy of such supplement to us upon execution. You must give us prompt written notice of the termination of any Trainer Candidate Contract.

9.7        Requirements Concerning Products and Services

A.   Carnegie Programs and Other Services, Products and Programs Sold by Franchisee

Except as otherwise provided in this Agreement, your Business will offer and sell only Carnegie Programs and related Materials. Except as otherwise provided in this Agreement, your Business is prohibited from offering or selling any product, seminar, workshop, assessment,_service, product or program which is not a Carnegie Program or related Materials. You may not use the Dale Carnegie name or the Marks for the benefit of any business other than the Business. You may not conduct any business other than the Business contemplated by this Agreement at or from your Center(s) and/or Training Facilities without our prior written consent, which we may withhold for any reason.

B.   The Materials and Other Proprietary Products and Services

To provide Carnegie Programs of the highest quality and in the most expeditious and cost-conscious manner, guarantee uniformity of concept and quality, and protect our trade secrets - which are of the essence to the Carnegie System and this Agreement -you will be required to purchase or lease certain proprietary products, services and/or equipment from us or our designees. Specifically, you will purchase from us or our designees all Materials and any related products, services and equipment which are associated with the Carnegie Programs conducted by you and which now comprise, or in the future

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may comprise, a part of the Carnegie System and which were developed by or on behalf of, are proprietary to or kept secret by us.

You must pay in full for Materials you buy from us within thirty (30) days from your receipt of an invoice. We may refuse orders, require prepayment, ship C.O.D., include estimated shipping charges or halt shipments in transit if (i) all prior invoices are not paid in full, or (ii) we reasonably believe such steps are necessary to secure payment. We may establish and modify credit limits and payment terms for your Business. Our refusal to place, ship or deliver orders to you does not constitute permission for you to obtain proprietary Materials from unauthorized sources. You have no right to automatic setoff of amounts due you from purchases made from us. We may select the mode of shipment and carrier.

We (or our designees) will sell you all Materials and any other proprietary products or equipment F.O.B. their place of manufacture or any other location we designate from time to time. You waive any possible claim against us (or our designees) arising out of or related to the shipment of the Materials or other proprietary products or equipment or the selection of any carrier.

Your exclusive remedy and our (and our designees') exclusive liability for any and all claims as to any Materials, products or equipment delivered under this Agreement or for delayed delivery or nondelivery of the Materials, products or equipment, will be limited to the purchase price of the Materials, products or equipment in question (plus shipment costs, if any, paid by you for the products or equipment) or, at our (or our designees') option, the replacement of the Materials, products or equipment shipped to the Business at our (or our designee's) expense. Neither we nor any of our designees will be liable for special, incidental, indirect or consequential damages, whether or not caused by or resulting from our negligence or that of our designee (as applicable).

We warrant that Materials and any other proprietary products and equipment purchased by you from us meet our specifications. We and our designees neither make nor intend, nor authorize any agent or representative to make, any other warranties, express or implied, with respect to Materials or other proprietary products and equipment delivered under this Agreement. We and our designees expressly exclude and disclaim all implied warranties of merchantability and fitness for a particular purpose with respect to Materials or any other proprietary products and equipment delivered under this Agreement.

C.          At the conclusion of each Carnegie Program, you must give each participant a program end evaluation designed to measure participant satisfaction. You must pay Dale Carnegie $1.15 per participant for the processing of each program end evaluation. Dale Carnegie will send you a statement on the 5th of every month for the processing of your previous month's evaluations, and you must pay each statement within 30 days.

D.          Sources of Supply and Specifications

As the Operations Manual and Business Model may detail, you may be required to purchase certain non-proprietary supplies, equipment, materials and services required for the operation of the Business from suppliers designated in writing by us, from suppliers selected by you and approved by us, or in accordance with our written specifications.

We will exercise our right of approval of suppliers reasonably and in accordance with the procedures set forth in the Operations Manual and Business Model. We will not arbitrarily interfere with your freedom to obtain non-proprietary items that meet our specifications from sources of your choosing.

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We may from time to time provide you with specifications governing the minimum standards of non-proprietary products, services or equipment procured by you from a third party (that is, from any party other than us or our Affiliates, or the designees of either), in the Operations Manual and Business Model or in other written notices transmitted to you.

We may offer and sell to you and you may elect to purchase any non-proprietary products and services required to be purchased by you at the prices as we determine and set forth at the time of sale or in the Operations Manual and Business Model. You will be under no obligation to purchase any non-proprietary products or services from us. We reserve the right to earn a profit from the sale to you of proprietary and non-proprietary products and services.

9.S Obligations Concerning Trainers and Carnegie Programs

A.   You will purchase from us or our designee, and will make available to your Trainers, the Materials that we specify in the Operations Manual and Business Model for use by Trainers for the Carnegie Programs offered by the Business. These Materials may include, without limitation, teaching aids, texts, books, booklets, awards, supplies and any incidental items. We will provide Trainers with Teaching Manuals. You will require your Trainers to use only such Materials in Carnegie Programs. You acknowledge that these Materials are subject to the restrictions set forth in Article 13 of this Agreement regarding Confidential Information.

B.   You will cause your Trainers to conduct the Carnegie Programs according to the then-current procedures, policies, standards, manuals, supplements, directives and the like prescribed by us in the Operations Manual and Business Model. You may not permit Trainers to conduct Carnegie Programs in any other manner. You will designate each Carnegie Program by the name prescribed by us in the Operations Manual and Business Model and may not designate any Carnegie Program by any name not prescribed by us.

9.9        Translation

You will not conduct any Carnegie Program in a language other than English, or make use of any materials in a language other than English in any Carnegie Program, without our prior written approval. If we approve your request to conduct a Carnegie Program in a language other than English, and/or to make use of foreign-language materials, you will arrange and pay for the translations of the Materials provided by us. Each translation will be subject to our written approval. A Translation Agreement (Exhibit B) must be completed by the Translator and returned to Dale Carnegie & Associates, Inc.

If we have already prepared translations of the Materials in the language in question, then we will sell such Materials to you at no additional cost for such translation. We will own the copyright and all other proprietary rights in any translated Materials, which translated Materials will also be subject to the restrictions set forth in Article 13 of this Agreement regarding Confidential Information.

9.10      Guaranteed Minimum Production

A. During each Fiscal Year (as defined below), you must achieve annual Gross Revenues equal to or in excess of the then-applicable guaranteed minimum production ("Guaranteed Minimum Production") for your Territory. Your Guaranteed Minimum Production in each Fiscal Year will be equal to a percentage of the Territory Revenue Potential for your Territory. The Guaranteed Minimum Production and Territory Revenue Potential for your Territory in each Fiscal Year will be set forth in Appendix D. "Fiscal Year" means the period commencing on September l51 of each calendar year and ending on August 31s' of each following calendar year. Production is defined as the actual collected

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The original documents were scanned as an image. The original file can be downloaded at the link above.