What rights does Sonesta Select Sonesta Essential retain during and after the term of the franchise agreement?

acknowledged by each party, and in accordance with all terms, conditions, covenants, agreements, representations, and warranties contained in this Agreement, you and we agree as follows:

1. GRANT OF FRANCHISE; NO EXCLUSIVITY; RESERVATION OF RIGHTS.

A. Grant of Franchise. Subject to this Agreement's terms, we grant you a limited and nonexclusive franchise (the "Franchise") to establish and operate your Hotel under the Franchise System at the Premises, and to use the Franchise System and the Brand Standards (as defined in Section 2.A) for the applicable Designated Brand Concept in its operation, for a term beginning on the Opening Date (as defined in Section 2.E) and expiring 20 years from the Opening Date, unless sooner terminated under Section 14 of this Agreement (the "Term").

You agree to, at all times, faithfully, honestly, and diligently perform your obligations under this Agreement and to use your best efforts to promote your Hotel. You agree to use the Premises only for your Hotel, and, once it opens for business, to continuously operate your Hotel in accordance with this Agreement for the duration of the Term. You agree not to conduct the business of your Hotel at any location other than the Premises. You may not promote or sell any products or services, whether directly or indirectly, through or on the Internet, the World Wide Web, or any other similar proprietary or common carrier electronic delivery system, except as expressly set forth herein or as set forth in the Brand Manual, as hereinafter defined.

• B. No Exclusivity and Reservation of Rights. We do not grant any, and you have no, exclusive rights or territorial protection around your Hotel. We (and our affiliates) retain the right at all times during and after the Term to engage in any and all activities that we (and they) deem appropriate and that have not been expressly granted to you in this Agreement, wherever and whenever we (and they) desire, and whether or not such activities compete with your Hotel, including the right, anywhere in the world, to do any of the following:
  • (1) establish and operate, and allow others to establish and operate Brand Hotels at any location on such terms and conditions we deem appropriate;
  • (2) establish, operate, and license others to establish and operate, anywhere in the world other than the Premises, Network Hotels and other businesses that offer products and services which are identical or similar to the products and services offered by Brand Hotels under any trade names, trademarks, service marks and commercial symbols;
  • (3) purchase, merge, acquire, be acquired or affiliate with one or more existing franchise networks, chains or any other businesses, including Competitive Businesses (defined below), regardless of the location of such chains' or businesses' facilities, and to operate, franchise or license those businesses under the Marks or any other marks following the purchase, merger, acquisition or affiliation, regardless of the location of those businesses (or the franchisees or licensees of those businesses);
  • (4) sell our ownership interests, our assets, the Marks and/or the Franchise System to a third party; become publicly traded; engage in a private placement of some of or all our securities; merge, acquire other corporations or entities, or be acquired by another corporation or entity; and/or undertake a refinancing, recapitalization, leveraged buyout or other economic or financial restructuring; and
    • (5) engage in all other activities not expressly prohibited by this Agreement.
• C. The Exercise of Our Judgment. We have the right to further develop and change the Brand Standards in any manner at any time either on a temporary or a permanent basis, in our sole discretion. Whenever we have reserved in this Agreement a right to take or to withhold an action, to grant or decline to grant you a right to take or withhold an action, or to provide or withhold approval or consent, we may, except as otherwise specifically provided in this Agreement, make our decision or exercise our

rights based on information readily available to us and on our judgment of what is in our or the Brand Hotels' best interests at the time our decision is made.

D. Representations and Warranties. You warrant, represent, and agree that:

• (1) If you are at any time a corporation, limited liability company, or partnership (each, an "Entity"), you will have the authority to execute, deliver, and perform your obligations under this Agreement and all related agreements and are duly organized or formed and are and will, throughout the Term, remain validly existing and in good standing under the laws of the state of your incorporation or formation and the laws of the state in which your Hotel is located;

Source: Item 22 — CONTRACTS (FDD page 84)