What happens if a Beehive Homes franchisee elects not to renew?

• 5.4. Non-Renewal. If Franchisee makes an Election Not to Renew as provided in 5.2 above, this Agreement shall not expire but shall continue in full force and effect on a month-tomonth basis until terminated by Franchisor by delivery to Franchisee of a written notice of termination at least thirty (30) days prior to the date of such termination.

• 14.4. Obligations of Franchisee Upon the Occurrence of an Event of Default, Termination or Expiration.

Upon occurrence of an Event of Default, termination, Election Not to Renew or expiration of this Agreement for any reason, the Franchisee shall cease to be a licensed franchisee of Franchisor and Franchisee hereby covenants:

• (a) To pay to Franchisor all fees and other charges owed or accrued to Franchisor on or before the first day of the month following the date of termination or expiration;

• (b) To pay to Franchisor a cancellation fee in the amount of Ten Thousand Dollars ($10,000.00);

• (c) Not to hold itself out as a franchisee of Franchisor and to cease all use of the Names and Marks, Trade Secrets and Copyrighted Materials;

• (d) To deliver and surrender up to Franchisor each and all of the Names and Marks, and any physical objects bearing or containing any of the Names and Marks, or, at

Franchisor's election, to obliterate or destroy any Names and Marks in Franchisee's possession;

• 14.6. Franchisor's Alternative Right Upon Event of Default or Expiration. As additional consideration for this Agreement, Franchisee hereby covenants and agrees to pay to Franchisor and its designees, exercisable upon the occurrence of an Event of Default described in Section 14.1 above, and subject to the notice requirements of Section 14.2 above, or upon the occurrence of an Election Not to Renew as defined in Section 5.2 of this Agreement, or upon expiration of this Agreement, in addition to all other costs and expenses provided for in this Agreement and in lieu of Section 14.5 above, an additional transfer fee in an amount equal to ten (10) times [5% times [12 times [the greater of (i) the average published monthly rate per resident of the Home during the 12 months preceding the Event of Default, times the number of beds in the Home, or (ii) the average published monthly rate per resident of the home which has been in operation for the preceding 18 months and is in nearest geographic proximity to the Home, times the number of beds in the Home]]]. The parties hereto agree that this additional transfer fee is not a penalty, but the parties' best estimate of the anticipated damage to Franchisor resulting from the Event of Default or Election Not to Renew or expiration.
• 14.7. Franchisee's Obligation to Sell. Notwithstanding any other provision of this Agreement, upon the occurrence of an Event of Default described in Section 14.1 above, and subject to the notice requirements of Section 14.2 above, or upon the occurrence of an Election Not to Renew as defined in Section 5.2 of this Agreement, or upon expiration of this Agreement, Franchisee will sell, subject to the terms of this Agreement, the Home and its contents within four months after the date of Franchisor's written notice to sell.

Source: Item 23 — RECEIPTS (FDD pages 34–123)