iginally due until the date of payment. Further, if such inspection or audit is made necessary by your failure to furnish reports, records or information on a timely basis, or if we determine an understatement of Net Sales for the period of any audit to be greater

than 2%, you must reimburse us for the cost of such audit or inspection, including the charges of any attorneys and independent accountants and the travel expenses, room and board and compensation of our employees.

13. FRANCHISEE'S RIGHT TO TRANSFER.

• 13.01 Franchisor's Approval.The rights and duties created by this Agreement are personal to you or, if you are a business corporation, partnership, limited liability company or other legal entity, your Owners. Accordingly, neither you nor any of your Owners may transfer the Franchise without our approval and without complying with all of the provisions of Section 13. Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
• 13.02 Conditions for Approval.If we have not exercised our right of first refusal under Section 13.06, we will not unreasonably withhold our approval of a transfer of the Franchise that meets all of the reasonable restrictions, requirements and conditions we impose on the transfer, the transferor(s) and/or the transferee(s), including the following:
• (a) you have completed development of the Franchised Restaurant and are operating the Franchised Restaurant in accordance with this Agreement;
• (b) you and your Owners and Affiliates are in compliance with the provisions of this Agreement and all other agreements with us or any of our Affiliates;
• (c) the proposed transferee, or its Owners (if the proposed transferee is a legal entity), must provide us on a timely basis all information we request, must be individuals acting in their individual capacities who are of good character and reputation, who must have sufficient business experience, aptitude and financial resources to operate the Franchised Restaurant, and who must otherwise meet our approval;
• (d) the proposed transferee may not be an entity, or be affiliated with an entity, that is required to comply with reporting and information requirements of the Securities Exchange Act of 1934, as amended;
• (e) the transferee (or its operating partner) and its operators must have completed our initial training program to our satisfaction;
• (f) the transferee (and its owners) must agree to be bound by all of the provisions of this Agreement for the remainder of its term or, at our option, execute our then current standard form of franchise agreement and related documents used in the state in which the Franchised Restaurant is located (which

may provide for different royalties, advertising contributions and expenditures, duration and other rights and obligations than those provided in this Agreement and which we may require to be guaranteed by you and your Owners);

• (g) if you executed this Agreement pursuant to a development agreement, then the transferee must acquire, in a concurrent transaction, all of your rights, and the rights of your Owners and Affiliates, under such development agreement (or any successor development agreement) and all franchise agreements for Restaurants that you or your Owners or Affiliates executed pursuant to such development agreement (or any predecessor or successor development agreement);
• (h) the transferee agrees (if the transfer is of this Agreement) to upgrade, remodel, expand and/or remodel the Franchised Restaurant in accordance with our current prescribed plans, specifications and design model for Restaurants (including, without limitation, any modifications or adjustments we authorize and timely introduce for similarly-situated Restaurants, or otherwise incorporate into the System for all franchisees) and to add or replace fixtures, furniture, equipment, signs and supplies in accordance with our then current requirements and specifications for Restaurants within the time period we specify following the effective date of the transfer (we will advise the transferee before the effective date of the transfer of the specific actions that it must take and the time period within which such actions must be taken);
• (i) you must ensure that we receive, before we will approve any proposed transferee to begin conducting business activities at the Franchised Restaurant as its authorized operator, a transfer fee equal to Twenty Thousand Dollars ($20,000) (or, if the proposed transferee is a then-current franchisee of a Restaurant, a transfer fee equal to Ten Thousand Dollars ($10,000)), provided, however, if this Agreement is being transferred as part of a transaction involving franchise agreements for multiple Restaurants and the franchise agreement for each Restaurant will be transferred on the same day, notwithstanding anything to the contrary in any other franchise agreement governing another Restaurant that is included as part of the transfer, the transfer fee will be Twenty Thousand Dollars ($20,000) or Ten Thousand Dollars ($10,000) for the first Restaurant, depending on whether the transfer is to a new franchisee or a then-current franchisee, plus Five Thousand Dollars ($5,000) for each additional Restaurant to be transferred;
• (i) you and your Owners and Affiliates must, except to the extent limited or prohibited by applicable law, execute a general release, in form and substance satisfactory to us, of any and all claims against us and our Affiliates, stockholders, officers, directors, employees, agents, successors and assigns;
• (j) we must not have disapproved the material terms and conditions of such transfer (including the price and terms of payment) on the basis that they are

so burdensome as to be likely, in our judgment, to adversely affect the transferee's operation of the Franchised Restaurant or its compliance with its franchise agreements and any development agreements;

Source: Item 22 — CONTRACTS (FDD pages 91–92)