PRELIMINARY AGREEMENT FOR A LICENSE TO DEVELOP
A SUBURBAN LODGE UNIT
THIS AGREEMENT is made and entered into on December 20,
1996, by and between SUBURBAN FRANCHISE SYSTEMS, INC., a Georgia
corporation ("SFS") and E.E.B. Lodging Systems, LLC whose
principal address is P.O. Box 420528, Atlanta, Georgia 30342
("APPLICANT").
W I T N E S S E T H:
SFS, through the expenditure of time, effort and money, has
developed an extended stay lodging facility featuring efficiency
guest rooms rented primarily for periods in excess of one day.
Such establishments are operated with uniform formats, signs,
equipment, layout, systems, methods, procedures and designs and
are known as "SUBURBAN LODGE UNITS." SFS owns, uses, promotes
and licenses the trade name and trademark and service mark
"SUBURBAN LODGE" (the "Mark"), which has gained and continues to
gain public acceptance and goodwill. SFS has experience and
know-how in and the ability to provide assistance and guidance in
connection with the operation of a SUBURBAN LODGE UNIT.
WHEREAS, APPLICANT has applied to SFS for a license to
operate a SUBURBAN LODGE UNIT and such application has been
approved by SFS.
NOW, THEREFORE, the parties agree as follows:
1. The preambles are incorporated herein by this
reference.
2. It shall be the obligation of APPLICANT to locate
within 30 days a site suitable for the operation of a SUBURBAN
LODGE UNIT acceptable to SFS within the following area: Cooper
Street., Arlington, TX. SFS shall not unreasonably withhold
approval of sites that meet its standards for general location
and neighborhood, traffic pattern, parking, size, layout,
competition and other physical characteristics for a SUBURBAN
LODGE UNIT. If APPLICANT shall be unable to locate an acceptable
site within the time above specified, SFS may, subject to
Paragraph 6 below, at any time thereafter terminate this
Preliminary Agreement, provided that SFS shall refund the deposit
to the extent required by Paragraphs 5 and 6 below.
3. Unless APPLICANT withdraws his application for a
license to operate a SUBURBAN LODGE UNIT as hereinafter provided,
APPLICANT agrees upon approval by SFS of a site for APPLICANT's
SUBURBAN LODGE UNIT, to execute SFS's standard Franchise
Agreement in the form delivered to APPLICANT. Such agreement
shall be executed no later than the earlier of: (a) thirty (30)
days after the execution by APPLICANT of a purchase contract for
the site; (b) prior to the submission of any loan application for
construction and/or permanent financing for the development of
the SUBURBAN LODGE UNIT; (c) prior to engagement of the services
of an engineer and/or architect for the design of the SUBURBAN
LODGE UNIT; (d) forty-five (45) days after site approval by SFS.
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4. APPLICANT has, contemporaneously with the execution of
this Preliminary Agreement, paid to SFS the sum of Three Thousand
Dollars ($3,000) to be applied against the initial franchise fee
payable to SFS in accordance with SFS's standard Franchise
Agreement.
5. SFS agrees to expend such time and effort and to incur
such expense as it may deem necessary to inspect sites proposed
by APPLICANT for a SUBURBAN LODGE UNIT. APPLICANT may withdraw
its application for a license to operate a SUBURBAN LODGE UNIT
and terminate this Preliminary Agreement at any time prior to the
execution by APPLICANT of SFS's standard Franchise Agreement by a
written notice of termination delivered to SFS. Upon such
termination, SFS shall refund APPLICANT's deposit less the
expenses incurred by SFS in connection with APPLICANT's
development of a SUBURBAN LODGE UNIT including, without
limitation, those expenses related to site selection, inspecting
and negotiating the lease or purchase contract for proposed sites
for APPLICANT's SUBURBAN LODGE UNIT, assistance in supplying
APPLICANT with information concerning the operation of a SUBURBAN
LODGE UNIT, travel and living expenses, compensation of employees
and agents of SFS, and legal fees and expenses.
6. If APPLICANT has not located a site acceptable to SFS
within the period specified in Paragraph 2 above, APPLICANT may
notify SFS in writing (for receipt by SFS not later than the last
day of the period) that APPLICANT desires to extend this
Agreement for an additional period of thirty (30) days (an
"Extension Period"). If APPLICANT elects so to extend this
Agreement, APPLICANT's payment made to SFS pursuant to Paragraph
4 above shall become nonrefundable. If by the expiration of the
first Extension Period APPLICANT has not located a site
acceptable to SFS, APPLICANT may notify SFS in writing (for
receipt by SFS not later than the last day of the Extension
Period) that APPLICANT desires to extend this Agreement for a
second Extension Period. To obtain a second Extension Period,
APPLICANT shall, together with such notice, include a
nonrefundable payment to SFS of Three Thousand Dollars ($3,000).
By the same procedures and by making an additional nonrefundable
payment of Three Thousand Dollars ($3,000), APPLICANT may obtain
a third (but no further) Extension Period. If APPLICANT enters
into a Franchise Agreement within forty-five (45) days of the
expiration of the last Extension Period obtained by APPLICANT,
SFS shall apply the $3,000 payment made by APPLICANT pursuant to
Paragraph 4 above and any $3,000 fee paid to SFS by APPLICANT for
a second or third Extension Period to APPLICANT's initial
franchise fee obligation under the Franchise Agreement.
7. APPLICANT understands that information concerning the
business of SFS which SFS may provide in connection with
APPLICANT's development of a SUBURBAN LODGE UNIT will contain
confidential and proprietary information about the business of
SFS and/or its parent and affiliates (any such materials or
information contained in or developed from such materials by us
or by APPLICANT, in either written or verbal form, shall
hereinafter be collectively referred to as the "Development
Materials").
By execution of this Agreement, APPLICANT acknowledges that
the Development Materials are the valuable confidential property
EXHIBIT B
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of SFS and agrees:
a. To use the Development Materials solely for the purpose
of developing a SUBURBAN LODGE Unit, and to refrain
from copying or otherwise reproducing the Development
Materials or allowing such information to be used in
any way for private use or commercial purpose by
APPLICANT or any other party;
b. To take all appropriate measures to safeguard the
confidentiality of the Development Materials
and to show them to and discuss them with only those
employees and outside advisors to whom disclosure is
required in order for APPLICANT to develop a SUBURBAN
LODGE UNIT;
c. Prior to showing the Development Materials to, or
discussing them with, any of the individuals described
in paragraph 0 above, to advise such individuals of the
confidentiality of the Development Materials and to
require that such individuals agree to and maintain the
confidentiality of the Development Materials;
d. To accept full legal responsibility for any
unauthorized disclosure of the Development Materials by
any of the individuals to whom the Development
Materials are provided pursuant to paragraphs b and c
above;
e. Upon written request from SFS, to return all of the
Development Materials to SFS and to destroy all
materials prepared by or for APPLICANT based upon the
Development Materials, including purging or erasing all
such materials stored by electronic means, and to
confirm to SFS that all such materials have been
returned or destroyed.
8. APPLICANT understands and agrees that SFS might be
irreparably harmed by violation of this Agreement, and that the
unauthorized use of the Development Materials for the business
purpose of any party other than SFS (or its related entities
conducting its business) could enable such a party to compete
unfairly with SFS. In the event that APPLICANT becomes aware of
any breach of the confidentiality of, or the misappropriation of,
any of the Development Materials, APPLICANT agrees to promptly
give notice thereof to SFS. In addition, APPLICANT agrees that
SFS shall be entitled to injunctive relief and to enforcement by
specific performance of this Agreement in addition to any other
relief to which it may be entitled at law or in equity.
9. APPLICANT understands and agrees that neither this
Agreement nor the disclosure of the Development Materials shall
confer upon APPLICANT any license to, or any other right, title
or interest in, or ownership of, any portion of the Development
Materials.
10. APPLICANT understands and agrees that its Agreement to
maintain the confidentiality of the Development Materials shall
survive for a period of five years from the date of this
Agreement.
11. This Agreement shall be binding upon APPLICANT, its
successors and assigns and APPLICANT agrees that it shall be
governed by and construed in accordance with the laws of the
State of Georgia.
12. APPLICANT ACKNOWLEDGES THAT HE HAS READ THIS
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PRELIMINARY AGREEMENT AND THAT HE HAS BEEN GIVEN THE OPPORTUNITY
TO CLARIFY ANY PROVISIONS THAT HE DID NOT UNDERSTAND AND TO
CONSULT WITH AN ATTORNEY OR OTHER PROFESSIONAL ADVISOR.
APPLICANT REPRESENTS THAT HE UNDERSTANDS THE TERMS,
CONDITIONS AND OBLIGATIONS OF THIS PRELIMINARY AGREEMENT AND
AGREES TO BE BOUND THEREBY.
Sincerely,
SUBURBAN FRANCHISE SYSTEMS, INC.
By: /s/ David Krischer
David Krischer
Its: CEO
Date: 12/20/96
CONFIRMED AND AGREED TO BY APPLICANT:
E.E.B. Lodging Systems, LLC
By: /s/ Michael McGovern
Michael McGovern
Its: Manager
Date: 12-20-96
EXHIBIT B
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