Under what condition can Sonesta Select Sonesta Essential transfer or assign the Franchise Agreement?

travel expenses, room and board, and compensation of our employees. You will not be required to provide more than two (2) nights' accommodations at your Hotel, free of charge, to our representatives in connection with an audit. These remedies are in addition to our other remedies and rights under this Agreement and applicable law.

12. TRANSFER.

• A. By Us. We have the right to transfer or assign this Agreement or any of our rights, obligations, or assets under this Agreement to any person or legal entity so long as the transferee assumes all our obligations to you under this Agreement.
• B. By You. You acknowledge and agree that the rights and duties this Agreement creates are personal to you (or to your owners if you are an Entity) and that we have granted you the Franchise in reliance upon our perceptions of your (or your owners') individual or collective character, skill, aptitude, attitude, business ability, and financial capacity. Accordingly, neither this Agreement (or any interest in this Agreement), your Hotel or substantially all its assets, any direct or indirect ownership interest in you (regardless of its size), nor any ownership interest in any of your owners (if such owners are legal entities) may be transferred without our prior written approval, which consent will not be unreasonably withheld or

delayed. You further agree that you will not enter into any proposed mortgage, pledge, hypothecation, encumbrance or giving of a security interest in or which affects your Hotel, this Agreement, or your rights under this Agreement without our prior written consent. A transfer of your Hotel ownership, possession, or control, or substantially all its assets, may be made only with a transfer of this Agreement. Any transfer, or attempt to transfer, without our approval is a breach of this Agreement and has no effect. In this Agreement, the term "transfer" includes a voluntary, involuntary, direct, or indirect assignment, sale, gift, or other disposition of any interest in:

• (1) this Agreement;
• (2) you;
• (3) your Hotel or substantially all its assets; or
• (4) your owners (if such owners are legal entities).

An assignment, sale, gift, or other disposition includes the following events:

• (a) transfer of ownership of capital stock, a partnership or membership interest, or another form of ownership interest, including by way of a public offering or pursuant to a private placement;
• (b) merger or consolidation or issuance of additional securities or other forms of ownership interest;
  • (c) any sale of a security convertible to an ownership interest;
• (d) transfer of an interest in you, this Agreement, your Hotel or substantially all its assets, or your owners in a divorce, insolvency, or entity dissolution proceeding or otherwise by operation of law;
• (e) if you, one of your owners, or an owner of one of your owners dies, a transfer of an interest in you, this Agreement, your Hotel or substantially all its assets, or your owner by will, declaration of or transfer in trust, or under the laws of intestate succession; and
• (f) pledge of this Agreement (to someone other than us) or of an ownership interest in you or your owners as security, foreclosure upon your Hotel, or your transfer, surrender, or loss of the possession, control, or management of your Hotel.

If you intend to list your Hotel for sale with any broker or agent, you shall do so only after providing us ten days' prior written notice. You may not use, or authorize any broker or agent or other third party to use, any Mark in advertising the transfer or other disposition of your Hotel or of any ownership in you without our prior written consent. You shall not use or authorize the use of, and no third party shall on your behalf use, any written materials to advertise or promote the transfer of your Hotel or of any ownership interest in you without our prior written approval of such materials.

• C. Conditions for Approval of Transfer. If you (and your owners) are in full compliance with this Agreement, then you may request our consent to a proposed transfer. We will give your request reasonable consideration but may condition our consent on compliance with certain requirements, including the following:
  • (1) you have paid all Royalty and Brand Promotion Fee payments, and other amounts owed to us, our affiliates, and third-party vendors and have submitted all required reports and statements;
  • (2) you have not violated any provision of this Agreement, the Lease, or any other agreement with us during both the 60-day period before you requested our consent to the transfer

and the period between your request and the effective date of the transfer, nor have you received a notice of termination from us;

• (3) neither the transferee nor its owners (if the transferee is an Entity) or affiliates have an ownership interest (direct or indirect) in or perform services for a Competitive Business;
• (4) you provide us all information or documents we request about the proposed transfer, the transferee, and its owners;
• (5) the transferee completes to our satisfaction any training, brand introduction and/or orientation program that we require at the time of the transfer;
• (6) your landlord, if applicable, allows you to transfer the Lease or sublease the Premises to the transferee;

Source: Item 22 — CONTRACTS (FDD page 84)