Under what conditions can Costa Vida Fresh Mexican Grill withhold approval of a transfer?

Transfer. "Controlling Interest," for purposes of this Section 13 and provisions, addenda and exhibits which refer to this Section 13, means an interest, the ownership of which empowers the holder to exercise a controlling influence over the management, policies or personnel of an entity. Ownership of 10% or more of the equity or voting securities of a corporation, limited liability company or limited liability partnership or ownership of any general partnership interest in a general or limited partnership will be deemed conclusively to constitute a Controlling Interest in the corporation, limited liability company, or partnership, as the case may be.

B. CONDITIONS FOR APPROVAL.

If we have not exercised our right of first refusal pursuant to Section 8.F below, we will not unreasonably withhold our approval of a Transfer that meets all of the reasonable restrictions, requirements and conditions we impose on the transfer, the transferor and the transferee, including the following:

• (i) you are operating your opened Restaurants in accordance with this Agreement, the Franchise Agreements, and all other associated agreements;
• (ii) you and your Owners and Affiliates are in compliance with the provisions of this Agreement, all Franchise Agreements signed pursuant hereto and all other agreements with us or any of our Affiliates;
• (iii) the proposed transferee, or its Owners (if the proposed transferee is a corporation, partnership, limited liability company or other legal entity), must: (a) provide us on a timely basis all information we request, (b) be individuals acting in their individual capacities who are of good character and reputation, (c) have sufficient business experience, aptitude and financial resources to develop, open and operate Costa Vida Restaurants within the Development Area pursuant to this Agreement, and (d) otherwise meet our approval;

• (iv) 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;
• (v) the transferee (and its owners) must agree to be bound by all of the provisions of this Agreement for the remainder of its Term;
• (vi) at our discretion, we may require that the transferee must acquire, in a concurrent transaction, all of your rights, and the rights of your Owners and Affiliates, under all agreements between you or your Affiliates and us or our Affiliates, including all Franchise Agreements for Costa Vida Restaurants signed by you or your Owners or Affiliates pursuant to this Agreement or pursuant to any other development or similar agreement with us;
• (vii) you or the transferee must pay us a Transfer fee equal to Ten Thousand Dollars ($10,000), plus Ten Thousand Dollars ($10,000) for each Costa Vida Restaurant for which a Franchise Agreement has been signed pursuant hereto (as required under the terms of such Franchise Agreements), plus any transfer fee required by any other agreement between you or your Affiliates and us or our Affiliates;
• (viii) you and your Owners and Affiliates must, unless limited or prohibited by applicable law, sign a general release, in form and substance satisfactory to us, of any and all claims against us, our Affiliates, shareholders, members, officers, directors, employees, agents, successors and assigns;
• (ix) we must not have disapproved the material terms and conditions of the Transfer (including the price and terms of payment and the amount to be financed by the transferee in connection with the Transfer, which shall not in any event exceed seventy-five percent (75%) of the purchase price for the assets or stock to be transferred) on the basis that they are so burdensome as to be likely, in our reasonable judgment, to adversely affect the transferee's operation of Costa Vida Restaurants or its compliance with its Franchise Agreements, this Agreement, and any other agreements being transferred;
• (x) if you (or any of your Owners or Affiliates) finance any part of the sale price of the Transferred interest, you and your Owners or Affiliates must agree that all obligations of the transferee, and security interests reserved by any of them in the assets transferred, will be subordinate to the transferee's obligations to pay all amounts due us and our Affiliates and to otherwise comply with this Agreement, any Franchise Agreement being transferred or any Franchise Agreement signed by the transferee;
• (xi) you and your Owners and Investors must sign a non-competition covenant, in form and substance satisfactory to us, in favor of us and the transferee agreeing that, for a period of two years, starting on the effective date of the Transfer, you and your Owners will not directly or indirectly (such as through immediate family members): (a) own any legal or beneficial interest in, or render services or give advice to (1) any Competitive Business that is operating within the Development Area; (2) any Competitive Business that is located within five mile radius of any other Costa Vida Restaurant in operation or under construction as of the effective date of the Transfer; or (3) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business; and (b) recruit or hire any person who is an employee of ours or of any Costa Vida Restaurant operated by us, our Affiliates or any franchisee of ours without obtaining the employer's consent, which consent may be withheld for any reason;

Source: Item 23 — RECEIPTS (FDD pages 67–282)