What is the nature of the sublicense granted to the Sublicensee for Epcon Communities?

e each desire to acknowledge that Franchisor is intended to be a third | | | | party beneficiary of this Sublicense Agreement. | | | | Agreement | | | | | | | | | | | NOW, THEREFORE, in consideration of the foregoing, of the agreements, terms and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Franchisee and Sublicensee hereby agree as follows, each intending to be legally bound hereby:

• 1. Grant of Sublicense. Franchisee hereby expressly grants to Sublicensee a limited, nontransferable and royalty free sublicense to use the Development System, Epcon Communities Works and the Marks solely in connection with the development and marketing of an Epcon Communities project pursuant to a Market Area Agreement to be executed by and between Sublicensee and Franchisor and subject to the terms and conditions set forth in the Franchise Agreement and this Sublicense Agreement. Compliance with all terms and conditions of this Sublicense Agreement, is a strict condition precedent to this sublicense. This sublicense shall not include the grant of rights to, or the imposition of obligations upon, Franchisee provided under Sections 3.4 or 4.1 of the Franchise Agreement. Article 21 of the Franchise Agreement shall not be included in the sublicense hereunder. The Franchise Agreement shall remain in full force and effect subsequent to execution of this Sublicense Agreement. Notwithstanding the foregoing, this Section 1 shall not prevent the Sublicensee from using those materials provided by Franchisor to Franchisee pursuant to Section 4.1 of the Franchise Agreement.
• 1. Acceptance of Sublicense and Assumption of the Obligations. Sublicensee hereby accepts the sublicense described in Section 1 hereof and, as of the date hereof, assumes, and agrees to be bound by, all of Franchisee's obligations under the Franchise Agreement and any related agreements as such obligations relate to the Epcon Communities project developed by Sublicensee.
• 1. Term. Except as provided in Section 5 of this Sublicense Agreement, the sublicense granted pursuant to Section 1 of this Sublicense Agreement shall remain in full force and effect until the earlier of (a) the date of the sale of the last unit of Sublicensee's Epcon Communities project (b) the date that is one year after the completion of construction (as defined by Section 11.1 of the Franchise Agreement) of the last unit of Sublicensee's Epcon Communities project or (c) the date of the termination of the Franchise Agreement (the "Term").

• 1. Ownership of Development System, Epcon Communities Works and Marks. Sublicensee acknowledges Franchisor's sole and exclusive rights in and to the Development System, Epcon Communities Works and the Marks, and Sublicensee agrees that it will do nothing inconsistent with such rights and interests and that all use of the Development System, Epcon Communities Works and the Marks by Sublicensee shall inure to the benefit of and be on behalf of Franchisor. If requested by Franchisor or Franchisee, Sublicensee agrees to assist Franchisor in recording this Sublicense Agreement with the appropriate governmental authorities. Sublicensee agrees that nothing in this Sublicense Agreement shall give Sublicensee any right, title or interest in any of the Development System, Epcon Communities Works or the Marks other than the right to use the Development System, Epcon Communities Works and the Marks in accordance with this Sublicense Agreement, and Sublicensee agrees that it will not attack the title of Franchisor to the Development System, Epcon Communities Works or the Marks or attack the validity of the Franchise Agreement or validity of the sublicense granted pursuant to this Sublicense Agreement.

Source: Item 23 — RECEIPTS (FDD pages 86–280)