Under what circumstances does Chicken Guy have the option to purchase assets from the franchisee?

ubstantially similar to a Chicken Guy! Restaurant.

• D. Early Termination Damages. If Franchisee default on its obligations and Franchisor terminates this Agreement prior to the expiration of the Initial Term of this Agreement, it is hereby agreed by the parties that the amount of damages which Franchisor would incur for any such termination of this Agreement would be difficult, if not impossible, to accurately ascertain. Accordingly, within 30 days following such termination, Franchisee and its owners shall pay to Franchisor an amount equal to the average weekly Royalty Fees that Franchisee owed during the one year period prior to termination (or, if the Franchised Restaurant was open for less than one year, the average Royalty Fees owed by Franchisee for the number of weeks that the Franchised Restaurant was in operation) multiplied by the lesser of 104 weeks or the number of weeks (including any partial week) remaining in the Initial Term of this Agreement. These early termination damages shall constitute liquidated damages, are not to be construed as a penalty, and shall be the joint and several liability of Franchisee and its owners. The parties acknowledge and agree that: (1) the early termination damages are a reasonable estimation of the damages that would be incurred by Franchisor resulting from or arising out of the premature termination of this Agreement; and (2) Franchisee's payment of such early termination damages is intended to fully compensate Franchisor only for any and all damages related to or arising out of the premature termination of this Agreement, and shall not constitute an election of remedies, waiver of any default under this Agreement, nor waiver of Franchisor's claim for other damages and/or equitable relief arising out of Franchisee's breach of this Agreement.

24. OPTION TO PURCHASE

A. Scope. Upon the expiration or termination of this Agreement for any reason, Chicken Guy shall give written notice to Franchisee, within 30 days after the effective date of termination or expiration, if Chicken Guy intends to exercise its option to purchase from Franchisee some or all of the assets used in the Franchised Restaurant ("Assets"). As used in this Section 24, "Assets" shall mean and include, without limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures, signs and inventory (nonperishable products, materials and supplies) used in the Franchised Restaurant, the real estate fee simple or the lease or sublease for the Franchised Location, and any liquor licenses and any other licenses necessary to operate the Franchised Restaurant. Chicken Guy shall have the unrestricted right to assign this option to purchase the Assets. Chicken Guy or its assignee shall be entitled to all customary representations and warranties that the Assets are free and clear (or, if not, accurate and complete disclosure) as to: (1) ownership, condition and title; (2) liens and encumbrances; (3) environmental and hazardous substances; and (4) validity of contracts and liabilities inuring to Chicken Guy or affecting the Assets, whether contingent or otherwise.

• B. Purchase Price. The purchase price for the Assets ("Purchase Price") shall be their fair market value, (or, for leased assets, the fair market value of Franchisee's lease) determined as of the effective date of purchase in a manner that accounts for reasonable depreciation and condition of the Assets; provided, however, that the Purchase Price shall take into account the termination of this Agreement. Further, the Purchase Price for the Assets shall not contain any factor or increment for any trademark, service mark or other commercial symbol used in connection with the operation of the Franchised Restaurant nor any goodwill or "going concern" value for the Franchised Restaurant. Chicken Guy may exclude from the Assets purchased in accordance with this Section any equipment, vehicles, furnishings, fixtures, signs, and inventory that are not approved as meeting then-current standards for a Chicken Guy! Restaurant or for which Franchisee cannot deliver a Bill of Sale in a form satisfactory to Chicken Guy.

• C. Certified Appraisers. If Chicken Guy and Franchisee are unable to agree on the fair market value of the Assets within 30 days after Franchisee's receipt of Chicken Guy's notice of its intent to exercise its option to purchase the Assets, the fair market value shall be determined by two professionally certified appraisers, Franchisee selecting one and Chicken Guy selecting one. If the valuations set by the two appraisers differ by more than 10%, the two appraisers shall select a third professionally certified appraiser who also shall appraise the fair market value of the Assets. The average value set by the appraisers (whether two or three appraisers as the case may be) shall be conclusive and shall be the Purchase Price.

• D. Access to Franchised Restaurant. The appraisers shall be given full access to the Franchised Restaurant, the Franchised Location and Franchisee's books and records during customary business hours to conduct the appraisal and shall value the leasehold improvements, equipment, furnishings, fixtures, signs and inventory in accordance with the standards of this Section 24. The appraisers' fees and costs shall be borne equally by Chicken Guy and Franchisee.

• E. Exercise of Option. Within 10 days after the Purchase Price has been determined, Chicken Guy may exercise its option to purchase the Assets by so notifying Franchisee in writing ("Chicken Guy's Purchase Notice"). The Purchase Price shall be paid in cash or cash equivalents at the closing of the purchase ("Closing"), which shall take place no later than 60 days after the date of Chicken Guy's Purchase Notice. From the date of Chicken Guy's Purchase Notice until Closing:

• (1) Franchisee shall operate the Franchised Restaurant and maintain the Assets in the usual and ordinary course of business and maintain in full force all insurance policies required under this Agreement; and

• (2) Chicken Guy shall have the right to appoint a manager, at Chicken Guy's expense, to control the day-to-day operations of the Franchised Restaurant, and Franchisee shall cooperate, and instruct its employees to cooperate, with the manager appointed by Chicken Guy. Alternatively, Chicken Guy may require Franchisee to close the Franchised Restaurant during such time period without removing any Assets from the Franchised Restaurant.

• F. Due Diligence Period. For a period of 30 days after the date of Chicken Guy's Purchase Notice ("Due Diligence Period"), Chicken Guy shall have the right to conduct such investigations as it deems necessary and appropriate to determine: (1) the ownership, condition and title of the Assets; (2) liens and encumbrances on the Assets; (3) environmental and hazardous substances at or upon the Franchised Location; and (4) the validity of contracts and liabilities inuring to Chicken Guy or affecting the Assets, whether contingent or otherwise. Franchisee will afford Chicken Guy and its representatives access to the Franchised Restaurant and the Franchised Location at all reasonable times for the purpose of conducting inspections of the Assets; provided that such access does not unreasonably interfere with Franchisee's operations of the Franchised Restaurant.

• **G.

Source: Item 22 — CONTRACTS (FDD page 50)