Under what circumstances does Cajun have the option to purchase assets from a Churchs Chicken franchisee?

• A. Upon the expiration or termination of this Agreement, for any reason, Cajun shall have the option to purchase from Franchisee some or all of the assets used in the Franchised Restaurant ("Assets"), including, without limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures, signs and inventory (non-perishable products, materials and supplies) used in the Franchised Restaurant, the real estate fee simple or the lease or sublease for the Franchised Location, as applicable, and any governmental approvals necessary to operate the Franchised Restaurant.

If Cajun intends to exercise its option, Cajun must give notice to Franchisee within 30 days after the effective date of termination or expiration.

Cajun may assign this option to purchase the Assets to another person or entity.

Cajun or its assignee shall be entitled to all customary representations and warranties as to: (1) ownership, condition and title of the Assets; (2) liens and encumbrances on the Assets; (3) compliance with environmental laws at, in or upon the Franchised Location; and (4) validity of contracts and liabilities inuring to Cajun or affecting the Assets, whether contingent or otherwise.

• B. 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 value, 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.

Cajun 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 Church's Restaurant or for which Franchisee cannot deliver a bill of sale in a form satisfactory to Cajun.

Cajun may set off against and reduce the Purchase Price by any and all amounts owed by Franchisee to Cajun, and the amount of any encumbrances or liens against the Assets or any obligations assumed by Cajun.

• C. If Cajun and Franchisee are unable to agree on the fair market value of the Assets within 30 days after Franchisee's receipt of Cajun'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 Cajun 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. 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.

The appraisers' fees and costs shall be borne equally by Cajun and Franchisee.

• E. Within 10 days after the Purchase Price has been determined, Cajun may exercise its option to purchase the Assets by so notifying Franchisee in writing ("Cajun'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 Cajun's Purchase Notice.

Source: Item 23 — RECEIPT (FDD pages 68–406)