nterests or to control the operations or affairs of Franchisee; and/or (e) the legal and/or equitable transfer and/or sale of an Owner's interests and/or voting rights in Franchisee.

"Transfer Fee" shall have the meaning defined in Article 14.C.(11) of this Agreement. The Transfer Fee is a fixed sum of $15,000.

ARTICLE 2 GRANT OF FRANCHISE

2.A. GRANT OF FRANCHISE

Franchisee has requested that Franchisor grant to Franchisee the non-exclusive license and right to develop, own and operate a Beard Papa's Shop from a fixed Shop Location located within a specified territory. Relying on the representations made by Franchisee and/or Franchisee's Owners in any submitted application and during the application process, and subject to the terms and conditions of this Agreement, Franchisee's request has been approved by Franchisor, subject to the following terms and conditions:

• (1) During the Term of this Agreement and subject to the rights of Franchisor including, but not limited to, the Reserved Rights, Franchisor grants to Franchisee and Franchisee accepts, the nonexclusive license, right and obligation to develop and operate, one Beard Papa's Shop in conformity with the System and this Agreement from a single fixed shop location, selected by Franchisee but requiring the approval of Franchisor ("Franchisee's Shop Location") and, as designated by Franchisor in Franchisor's discretion and Reasonable Business Judgment, within a Designated Territory;
• (2) If, as of the Effective Date, Franchisee has selected a proposed Shop Location that Franchisor approves as Franchisee's Shop Location, then Franchisee's Shop Location and Designated Territory, if any, shall be identified in Schedule 1 of this Agreement. To be effective, Schedule 1 must be completed and signed by Franchisor. Franchisee's execution of Schedule 1 with a specific location for Franchisee's Shop Location shall constitute Franchisee's obligation to develop and operate the Franchised Business at the designated Franchisee Shop Location;
• (3) If, as of the Effective Date, Franchisee has not selected a proposed Shop Location, and/or has not obtained Franchisor's approval of the proposed Shop Location, and/or Schedule 1 to this Agreement is left incomplete or is not signed by Franchisor, Franchisee must locate, identify and secure a Shop Location for the Franchised Business in accordance with the terms of this Agreement, including the requirement that Franchisee must obtain Franchisor's approval of Franchisee's Shop Location. If, after the Effective Date, Franchisee proposes and Franchisor approves of Franchisee's proposed Shop Location, such approval must be in writing and must be evidenced by Franchisor's execution of Schedule 1 with a specific Shop Location designated and identified in Schedule 1. At the time of executing a completed Schedule 1 and, thereby, approving Franchisee's proposed Shop Location, Franchisor, in Franchisor's discretion and Reasonable Business Judgment, shall designate and determine Franchisee's Designated Territory;
• (4) If, as of the Effective Date or other appropriate periods after the Effective Date, Franchisee has not selected a proposed Shop Location that is approved by Franchisor but, Franchisee has identified an area in which Franchisee may look to secure a shop location for the Franchised Business, Franchisor, in Franchisor's discretion and Reasonable Business Judgment, may enter into the Site Selection Acknowledgment attached to this Agreement as Exhibit 3. If executed by Franchisor, within the Exhibit 3 Site Selection Acknowledgment, Franchisor shall designate a geographic area (the "Site Selection Area") within which Franchisor, during the Site Selection Period, shall not, on

behalf of any third party, approve any new Shop Location. Franchisee agrees that the Site Selection Acknowledgment does not constitute Franchisor's approval of a proposed Shop Location, does not constitute Franchisor's designation of Franchisee's Designated Territory, does not afford Franchisee any territorial rights in or to the Site Selection Area, and does not extend and/or modify any obligation on the part of Franchisee to timely secure an approved Shop Location in accordance with the terms of this Agreement;

• (5) At all times, Franchisee's rights in and to the real property and the business premises of Franchisee's Shop Location shall be subordinate and subject to Franchisee's and Franchisee's landlord's agreement to and execution of the Shop Location Lease Agreement Rider attached to this Agreement as Exhibit 4, and Franchisee's agreement and execution of the Collateral Assignment of Lease attached to this Agreement as Exhibit 5;
• (6) Franchisee may only offer and sell the Approved Services and Products from Franchisee's Shop Location in accordance with the requirements set forth in the Operations Manual and only to: (a) retail customers for consumption on the premises of Franchisee's Shop Facility; (b) personal carryout from Franchisee's Shop Facility; (c) delivery to customers located within the Designated Territory; and (d) catering to customers located within the Designated Territory;
• (7) Franchisee may not directly or, indirectly such as through third party vendors or delivery services, deliver Approved Services and Products to customers located outside Franchisee's Designated Territory;
• (8) Franchisor, in Franchisor's Reasonable Business Judgment and for any reason or no reason at all, may prohibit Franchisee from soliciting customers located outside Franchisee's Designated Territory;
• (9) Except as otherwise provided in this Agreement including, but not limited to, the Reserved Rights, provided that, at all times Franchisee is and remains in compliance with all of the terms of this Agreement, during the Term of this Agreement, neither Franchisor nor any affiliate of Franchisor will establish or operate, or grant a franchise to any third party to establish or operate, a Shop using the Licensed Marks and System at a Shop Location that is located within Franchisee's Designated Territory (provided that a Designated Territory has been designated and approved by Franchisor in accordance with the terms of this Agreement) but excluding Closed Markets. Franchisee may face competition from other Beard Papa's Shops and other System franchisees with shop locations and/or designated territories, including Shops that are located within Closed Markets and/or located adjacent to and/or within a close proximity to Franchisee's Shop Location and/or Designated Territory.

Source: Item 23 — RECEIPTS (FDD pages 58–275)