What are the minimum requirements that a Lees Famous Recipe franchisee must ensure during each Development Period?

indirect ownership interest in you shall be deemed an assignment or transfer of this Agreement. Notwithstanding the foregoing, the Principal Owners as of the Effective Date may transfer all or part of their ownership interests in you among themselves without obtaining our prior written consent, provided that you provide us, within thirty (30) days after such transfer, written notice of the transfer and updated ownership information. You acknowledge and agree that no such transfer among Principal Owners will release any Principal Owners from his/her obligations under the Guaranty.

11. CONDITIONS TO FUTURE DEVELOPMENT.

You recognize and acknowledge that this Agreement requires you to open Lee's Famous Recipe Restaurants in the future pursuant to the Development Schedule. You further acknowledge that the estimated expenses and investment requirements set forth in Items 6 and 7 of our Franchise Disclosure Document are subject to increase over time, and that future Lee's Famous Recipe Restaurants likely will involve greater initial investment and operating capital requirements than those stated in the Franchise Disclosure Document provided to you prior to the execution of this Agreement. You must execute all the Franchise Agreements and open all of the Lee's Famous Recipe Restaurants in accordance with the dates set forth on the Development Schedule, regardless of (i) the requirement of a greater investment, (ii) your financial condition or the performance of prior Lee's Famous Recipe Restaurants, or (iii) any other circumstances, financial or otherwise. The foregoing will not be interpreted as imposing any obligation upon us to execute the Franchise Agreements under this Agreement if you have not complied with each and every required condition to obtain such Franchise Agreements including, but not limited to, your satisfaction of our then-current requirements for franchisees. We have entered into this Agreement based, in part, on your current financial condition and our assessment of your ability to meet Franchisor's financial requirements. You further acknowledge that operating Lee's Famous Recipe Restaurants and meeting our re-equipment, remodeling and other obligations will require significant capital. You and your affiliates must at all times maintain reasonably adequate financial resources, taking into account current resources, reasonably projected future cash flows, and reasonable assumptions related to financing, to meet our required capital and operational expenses under this Agreement and the Franchise Agreements. You must promptly provide such financial information related to you and your affiliates as required by the Franchise

Agreements and as we may reasonably request, including, but not limited to, financial statements, debt agreements (and an accounting of your compliance with such agreements), and historical and projected cash flows and expenses.

12. NO RIGHT TO USE THE MARKS.

You acknowledge that this Agreement is not a Franchise Agreement and does not confer upon you any rights to use our Marks or System.

13. COVENANTS.

You acknowledge that, as a participant in the System, you will receive Confidential Information and materials, trade secrets, and the unique methods, procedures and techniques that we have developed. As such, you agree to the covenants in this Section to protect us, the System, the Marks and our franchisees.

• A. In-Term Covenant Not to Compete. You and each Principal Owner will not, during the term of this Agreement, directly or as an employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, partnership or directly competing business: (i) divert or attempt to divert any business or customers of the Restaurant(s) to any Competing Business or perform any act that would damage the goodwill associated with the Marks or the System; or (ii) own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in any Competing Business (including any e-commerce or Internet-based business), except: (1) with our prior written consent;

Source: Item 23 — RECEIPTS (FDD pages 70–287)