COIT SERVICES, INC.COIT

Computer Requirements. You will need a computer system to operate the franchised business. The estimated cost of the computer system will range from $800 to $1,200 for a one- or two-user configuration. For multi-user configurations, the estimated cost will range from $1,700 to $5,700 for a dedicated server plus $700 to 1,200 per workstation. Under Article 7.20 of the Franchise Agreement, you are required to use the computer hardware and software that we designate. You must use an approved accounting program, and our proprietary COES software (described in more detail below). Currently if you offer Disaster Restoration Services under a Disaster Restoration Addendum, you must also use Xactimate®1 or any mandated software from TPA or insurance companies, a project estimating program. Xactimate runs on Microsoft Windows-compatible personal computers, workstations, data servers, online and in the cloud. Multi-user systems can operate the required software over the Microsoft networking products. You must have high-speed Internet access to access COES and for online support for the required software. You must also have a dot-matrix printer capable of printing through a four-part invoice. COIT reserves the right to become a master seller of Xactimate. In such event Franchisees would be required to purchase the licenses through COIT. Disaster Restoration Franchises must obtain and use restoration job management software of their choosing. Additional software and hardware may be required if the disaster restoration franchisee joins and works on Third Party Administrator (“TPA”) programs. Many TPA’s use their proprietary application requiring the use of an Android or iOS mobile device for document signing, photo documentation, moisture mapping and uploads. You are required (by Article 7.20 of the Franchise Agreement) to use the COIT Order Entry System, or “COES,” a computer program that, with your compatible computer hardware, records customer orders, captures customer names, addresses and other information, and assists in dispatching and routing customer service calls. It also provides accounts receivable functions. COES is the only component in the required system that is proprietary to COIT. You will be required (by Article 5.5 of the Franchise Agreement and Section 3 of the COIT Software License & Support Agreement) to pay us a monthly fee for COES. The current monthly fee is $200 plus $60 for each user. We have the right to increase the fees from time to time in our discretion. As noted above in this Item, we will provide a software user service through which you will receive, without additional charge, all errors corrections, operational support and assistance reasonably necessary for COES to operate according to our standards. We have no contractual obligation to update or upgrade COES, but if we do, you are obligated to purchase and use the updates or upgrades. You agree to upgrade to the most recent version of COES by the end-of-life date provide by us. There are no specific contractual obligations limiting the frequency or cost of your obligation to acquire 35 these upgrades and updates or to modify your computer system or replace obsolete or worn out equipment. There is no available annual cost estimates for COES or computer system upgrades and updates, as all COES upgrades to date have been provided without charge. We cannot currently estimate the annual cost of any future updates or upgrades to COES or your computer system. Current computer system requirements and recommendations are listed in our Operating Manuals. For most of the components of your computer system, there are many brands of products on the market. In most cases, all components are readily available from a variety of sources. You will decide which brands of these components are best for your needs and budget but are urged to review your proposed equipment purchases with us before signing contracts. If you request assistance, we will review your proposal for purchasing the computer system and help you make an informed decision (Franchise Agreement Articles 7.20 and 9.3). You will (by Article 7.20 of the Franchise Agreement) use your computer system to maintain information about your customers, prepare proposals and invoices, maintain the financial records of the franchised business, access Internet sites, and communicate with prospective and current customers, suppliers, us, and others via e-mail. You must provide us with independent access to all of the information that will be generated and stored on your computer system if we request it, including the delivery of a backup of your database. There are no contractual limitations on our right to access the information. Neither we nor any of our software suppliers has any contractual obligation to update or upgrade any of the required or recommended software. Each vendor may change and update their software as new technology becomes available. You may have to modify or replace your computer system to accommodate any such changes. You are contractually required to upgrade or update your computer system as we require during the term of the franchise. There is no specific contractual obligation limiting the frequency or cost of your obligation to acquire these software upgrades and/or updates or to modify your computer system or to replace obsolete equipment. We currently do not require you to purchase a maintenance, repair, update, or upgrade service contract for your computer system, but we have the right to do so. We cannot currently estimate the annual cost of any optional maintenance, repair, or support contracts or of any optional or required future updates or upgrades to any required or recommended software or your computer system. We have established, and you are required to use, the COIT Intranet. You must pay us an Intranet Use Fee by the first of each month for access to and use of the COIT Intranet (Franchise Agreement Article 5.7). The current Intranet Use Fee is $19.95 for a single user and $15.95 for each additional user for each franchise. We have the right to change the Intranet Use Fee, in our discretion, effective upon 2 months written notice to you. We may in our discretion use the COIT Intranet to provide various forms of training and other assistance to franchisees, to provide access to our Operating Manuals and updates to it, for franchisees to file financial and other reports required by us, for general communications between us and franchisees, and for such other purposes as we may authorize or require from time to time. You must use the COIT Intranet for those purposes designated by us and enter into the agreement, as we may modify from time to time, that establishes the terms relating to the use of the COIT Intranet (“Terms of Use”). You may be denied access to the COIT Intranet if you do not pay the Intranet Use Fee, abide by any required Terms of Use, maintain the required computer system, or maintain connection to the COIT Intranet through an ISP (Internet Service Provider). We reserve the right to change the computer requirements above including the addition of new or different software and hardware and you, at your own cost and expense, must comply with any new or different computer, software, hardware requirements establish by us. Site Selection and Service Opening. You are solely responsible for selecting any facilities or offices for the operation of the franchised business. We are not obligated to do so, but will consult with you about site selection, if you request. We do not maintain any criteria for site selection other than the requirement that any office or plant facilities located in your Territory. We do not approve your site; however, your site must be within your Territory. If you will not operate a Plant, you may operate the Franchised Business from your residence, if you residence in the Territory and it is permitted by applicable building, zoning and licensing laws, ordinances, and you obtain authorization from us for use of an approved drapery cleaning provider. Article 3 of the Franchise Agreement.

You will receive an exclusive territory (the “Territory”) in which to operate your franchised business. The Territory is typically a geographical area containing at least 100,000 households but may be smaller depending on the market area. We generally do not grant Territories larger than 500,000 households, but we reserve the right to do so. The franchise is not granted for a specific location, but your office or facility must be located within the Territory. We do not maintain any condition for relocation other than the requirement that any office or plant facilities be located in your Territory. You may only solicit customers and accept orders within your Territory, you may not solicit customers or accept orders outside your Territory, and you may not and do not have the right to use other channels of distribution such as the Internet, catalog sales, telemarketing, or other direct marketing, to make sales outside your Territory, unless we give you written consent to serve another specified area where no other COIT franchise or company-owned unit is located. If you are granted consent to service another specified area. You shall be obligated to pay royalty fee to us for the services performed. We reserve various rights in your Territory as explained in greater detail below. Subject to these limitations, if you comply with the Franchise Agreement, we will not operate a business using the COIT System and the Marks within the Territory or authorize anyone else to operate a business using the COIT System and the Marks within the Territory during the term of the Franchise Agreement. We are not obligated to ensure that no other franchisee will conduct operations in your Territory. Although such activities are discouraged, we reserve the right to determine how to respond to any such situation. Except as described in the following paragraphs, neither we nor any affiliate of ours has the right to use other channels of distribution to make sales within your Territory under our current Marks or different trademarks. Our reserved rights, which limit your exclusivity in the Territory, are as follows: 1. We reserve the right to redefine the Territory’s geographic area to exclude counties and terminate the franchise agreement in any counties in which Franchisee fails to report Gross Revenues of at least $5,000 annually and to exclude counties and terminate the franchise agreement in any counties which 42 the Franchisee fails to continuously advertise such as online paid search advertisements such as Google Adwords. 2. We reserve the right to develop other businesses that offer products or services other than those you will be initially authorized to offer. We anticipate that we may grant some of our franchisees rights to offer new services as we develop them, and in some cases these products or services may be identified by different trademarks. We may impose additional contractual requirements and fees for these opportunities. We do not promise, and you should not assume that you will receive rights to offer any of these new services, either under your COIT Franchise Agreement or another agreement or trademark. 3. We reserve the right to establish and license others to establish businesses that use the COIT System and Marks within your Territory, if you fail to remain in compliance with the Franchise Agreement (including the requirement to offer all services and products that we require). 4. We reserve the right to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing sales, to make sales within the franchisee’s territory using the franchisor’s principal trademarks. 5. We reserve the right to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing, to make sales within the franchisee’s territory of products or services under trademarks different from the ones the franchisee will use under the franchise agreement. 6. We reserve right to establish, acquire and franchise businesses that offer any products or services— including products or services similar to those that you will offer in the franchised business—identified by different trademarks, even within your Territory. Except as described in Item 1 of this disclosure document relating to the WELDON BROS., VACCO, MERLE WEST, and SUPERIOR trademarks, we do not currently operate or franchise, or plan to operate or franchise, under a different trade name or trademark in your Territory, any business that offers products or services similar to those you will be initially authorized to offer. 7. Special Accounts. We have the exclusive right to control all business with Special Accounts, subject to your right to participate in Special Account business in your Territory as described in this paragraph. A “Special Account” is a business or other organization whose offices, stores, plants, buildings or other physical facilities are not confined to the territory of a single COIT franchisee or company-owned or affiliated business. We will offer you first option of providing the services to Special Account facilities in your Territory at the prices minus any applicable account sales commission and Administrative Fee and subject to the contract requirements we negotiate with the Special Account. If you accept the project, we will collect amounts due from the Special Account and remit to you the amount due for services you provided to the Special Account, less the amount of any applicable account sales commission and Administrative Fee. All amounts you receive from Special Account work are included in Gross Revenues for purposes of calculating your royalty payments. If you decline to service a Special Account, we have the unfettered right to fulfill the contract requirements to the Special Account in the Territory in any manner whatsoever, including through another COIT franchisee, a company-owned or affiliated business, or a third party contractor. If a Special Account requests that someone other than you provide services in the Territory, we may revoke your right to provide the services and may fulfill the contract requirements to the Special Account in the Territory in any manner we select. 8. Restoration, COIT Stone Restore, and Wood Floor. If you are not a party to a Disaster Restoration Addendum, COIT Stone Restore Addendum, and/or Wood Floor Addendum we have the right to provide or authorize others to provide such applicable Services to any customers in your Territory. Although we currently have no plans to do so, we have the right to develop and adopt a separate brand for COIT Stone Restore, Restoration, and/or Wood Floor. If we do, you may be required to adopt and use different 43 trademarks, trade names, trade dress, and other commercial symbols to identify your COIT Stone Restore services, Disaster Restoration services, and/or Wood Floor Services and/or to establish and maintain a separate business entity to offer and provide the COIT Stone Restore Services, Disaster Restoration Services, and/or Wood Floor Services. If you are a party to a Disaster Restoration Addendum, COIT Stone Restore Addendum and/or Wood Floor Addendum and you are not certified, trained or approved to provide the service we have the right to perform the service or allow another Franchisee to perform that service in your territory without any compensation to you. This would include Disaster Restoration Services referred from Third Party Administrators (“TPA”) where you have not signed up with or been approved by the TPA. 9. Acquisition of Competing Franchise System or Competitive Business. If we acquire another franchise system of businesses or Competitive Business that are the same as, or substantially similar to, COIT franchises then operating under our franchise system, we will offer you the option to purchase and operate, as a COIT franchise, any unit of the acquired system that is located within your Territory (excluding units to be operated by a licensee of the acquired system). We will notify you of our purchase of the acquired system and the terms and conditions applicable to your option to purchase any acquired units. The purchase price we offer you will reflect our cost to purchase the acquired units, including a per- unit allocation of our costs to purchase the entire acquired system. You must enter into our then-current form of COIT Franchise Agreement for the acquired unit, but you will not be required to pay an initial or successor franchisee fee. If you do not elect to purchase, or fail to complete the purchase of, an acquired unit, we will have the right to operate the acquired unit under any trade name or trademark other than the Marks used for COIT franchises. We are not required to pay you any compensation for soliciting or accepting orders inside your franchise territory. You will have no right to purchase any acquired unit that is operated by a licensee under the system we acquire. We may license those units to be operated under any trade name or trademark other than the Marks used for COIT franchises and may also license additional units of the acquired system to be developed and operated within your Territory. Except as described in the previous paragraphs, as long as you are in good standing under the Franchise Agreement, we will not, within the Territory, operate or establish or authorize another to operate or establish a business using the Marks and offering the same products and services as the franchised business.. If you are in good standing under the Franchise Agreement and otherwise meet our financial qualifications you may request that we sell you another COIT franchise. We reserve the right to determine in our discretion whether to sell you another franchise. If you buy an additional franchise, it will be under the then-current form of Franchise Agreement and other applicable agreements that may be different from those described in this disclosure document. We are currently offering to existing franchisees who acquire another Core Services franchise a discount of $6,000 off of the initial fee then being charged to new franchisees. We reserve the right in the future to discontinue or modify these practices and discount for new franchises. Your Franchise Agreement does not give you any other option, right of first refusal, or similar right to acquire additional franchises. However, we may offer a right of first refusal to purchase an additional franchise to those COIT franchisees who have demonstrated a high level of competence in operating their franchise and who possess adequate financial resources to operate multiple locations. The price for a right of first refusal is 10% of our then-current initial franchise fee for the Territory covered by the right of first refusal. The price would be credited toward the initial franchise fee if you exercise the right of first refusal. A right of first refusal would give you the right to purchase a specific territory first if a prospective franchisee expressed an interest in purchasing the Territory. You would have 30 days to exercise the right by paying the initial franchise fee, which would be non-refundable. A right of first refusal lasts for 2 years.