270 Legal [Sample Agreements]

DEVELOPMENT AGREEMENT

Sonic Industries LLC (“Sonic”), a Delaware limited liability company, and __________________ (the “Developer”), a ____________ ___________________, enter into this Development Agreement (this “Agreement”) as of the ____ day of __________, 2007.

W I T N E S S E T H :

Whereas, Sonic is developing a food service system (“Sonic System”) under which food is sold to the public from drive-in restaurants operated under the name “Sonic Drive-In”; and

Whereas, Developer desires to obtain the right to select proposed sites on which to construct Sonic drive-ins, to submit the same to Sonic for its acceptance and, upon the acceptance of each proposed site by Sonic, to enter into a License Agreement with Sonic to construct, own and operate a Sonic drive-in upon such site (hereinafter “Developmental Rights”) upon the terms and conditions set forth herein.

Now, therefore, in consideration of the foregoing and of the covenants herein contained, the parties, intending to be legally bound, hereby agree as follows:

1. AREA EXCLUSIVITY AND CONSTRUCTION SCHEDULE

(a) Subject to the terms and conditions of this Agreement, Sonic hereby grants to the Developer through ___________________, 20__, the exclusive Developmental Rights for the cities of ___________, __________ (in accordance with their boundaries as of the date of this Agreement), all as generally shown on Exhibit A to this Agreement, less and except any protected radius previously granted by Sonic or its Affiliates and currently in effect within that area as it now exists or later increases or decreases through the operation or renewal of the terms of the applicable license agreement (the “Franchised Area”). Sonic has and shall have the absolute right to approve the location of a Sonic drive-in restaurant in an area contiguous to the Franchised Area even though the protected radius of that drive-in restaurant would extend into the Franchised Area.

(b) Developer agrees to develop and to put In Operation at least ________ Sonic drive-in restaurants within the Franchised Area in accordance with the following development and performance schedule (the “Performance Schedule”):

Number of In Operation
Restaurants On or Before
__ ____________, 200_
__ ____________, 200_
__ ____________, 200_

(c) For purposes of this Agreement, a restaurant shall be deemed to be “In Operation” once a License Agreement (as hereinafter set forth) has been executed by Developer and Sonic, and the restaurant has opened to the public. At the Developer’s written election, a Sonic drive-in restaurant or Non-traditional Location (as defined in Section 8(d)(iii) below) placed In Operation by someone other than the Developer pursuant to the provisions of Section 8(d) may count or not count as a restaurant placed In Operation for the purpose of the Performance Schedule. If the Developer elects to have an acquired restaurant or Non-traditional Location count towards the Performance Schedule, it may result in the earlier expiration of the Developer’s exclusive Developmental Rights under this Agreement.

2. TERM. The term of this Agreement and all Developmental Rights granted hereunder shall expire on the date the last of the Sonic drive-in restaurants to be constructed pursuant to the Performance Schedule set forth in Section 1 hereof is opened for business, unless sooner terminated in accordance with the terms of this Agreement.

3. RENEWAL. This Agreement shall not be subject to renewal.

4. TIMELY PERFORMANCE. Developer hereby acknowledges that its timely development of the Sonic drive-in restaurants in the Franchised Area in accordance with the Performance Schedule is of material importance to Sonic and Developer, and agrees, as a condition of the continuance of the rights granted hereunder, to develop and construct Sonic drive-in restaurants within the Franchised Area in accordance with the Performance Schedule, to operate such restaurants pursuant to the terms of the License Agreements and to maintain all such restaurants in operation continuously.

5. CONSIDERATION FOR EXCLUSIVE RIGHTS. As consideration for this Agreement, Developer has paid, and Sonic has accepted the sum of $__________ concurrently with the execution of this Development Agreement. This consideration for exclusive rights shall be credited to the required fee for each License Agreement signed per restaurant to be placed In Operation in accordance with the Performance Schedule. Such credit shall be:

(i) in the amount of $10,000 for each License Agreement signed;

(ii) credited against the total franchise fee to be paid to Sonic; and

(iii) credited at the time the License Agreement for each restaurant is signed by Developer and Sonic.

If the Developer elects to have a Sonic drive-in restaurant or Non-traditional Location opened by someone other than the Developer pursuant to Section 8(d) count towards the Performance Schedule, Sonic shall refund $10,000 to the Developer for each restaurant or Non-traditional Location placed In Operation.

Except as set forth above, the fee required by this Section 5 is nonrefundable.

6. SITE SELECTION

(a) Developer agrees to submit for evaluation by Sonic pursuant to Sonic’s site selection criteria, the information ordinarily required for each proposed site for a Sonic drive-in restaurant. Sonic may review the site, conduct such other investigation of the proposed site it determines is necessary to properly evaluate the site, and, in Sonic’s sole discretion, either accept or reject the site by written notice to Developer. Site acceptance shall be contingent upon, among other things, execution by Developer and Sonic of the License Agreement for said site as provided in Section 7 hereof. In the event Sonic does not accept or reject a site submitted in writing by Developer within 30 days of receipt of such written notice, such site shall be deemed to be approved by Sonic.

(b) Developer acknowledges that no officer, employee or agent of Sonic has any authority to approve or accept any proposed site except in writing and in accordance with Section 6(a) above, and any other representations, whether oral or written, shall be of no effect; Developer further acknowledges that Sonic’s acceptance of said site does not constitute any representation, warranty or guarantee by Sonic that said site will be a successful location for a Sonic drive-in restaurant.

(c) Sonic reserves the right to revoke any site approval after the Completion Date (as defined in Section 7(b) below) if a restaurant is not under construction at the site in accordance with a fully executed License Agreement for said site.

7. CONSTRUCTION AND ISSUANCE OF LICENSE AGREEMENT

(a) Upon receipt of Sonic’s written acceptance of a proposed site as set forth in Section 6 hereof, Developer shall promptly take the necessary steps to acquire the site (by purchase, option to purchase, lease or sublease) and to otherwise obtain the rights to construct, maintain and operate a Sonic drive-in restaurant on the site.

(b) Within 10 days of Sonic’s receipt of notice by Developer that Developer is ready to begin construction at the accepted site, Sonic shall execute and forward to Developer the License Agreement for said site if one has not been previously executed. It is specifically agreed by Developer and Sonic that no License Agreement shall be effective until the same is executed by Sonic and Developer and a license fee is paid by Developer, and that Developer shall not begin construction work at the accepted site until Sonic has received the License Agreement executed by Developer and the license fee paid by Developer. Developer shall, however, execute a License Agreement for an approved site on the earlier of (i) six months following approval of the site by Sonic, or (ii) the date construction is to begin (with the earlier of such dates referred to above as the “Completion Date”).

(c) Within 30 days after the receipt of a License Agreement from Sonic for the accepted site, Developer shall execute said License Agreement in accordance with Sonic’s instructions and return the same along with the applicable license fee to Sonic. The License Agreements for all drive-ins under the Performance Schedule shall be in the form attached hereto as Exhibit B. In the event that Sonic does not receive the properly executed License Agreement, with the appropriate number of copies, within said 30-day period, Sonic’s acceptance of the site as provided in Section 6 hereof shall be void and Developer shall have no rights with respect to said site.

(d) Upon receipt by Sonic of the executed License Agreement for said site, Developer shall commence construction of the Sonic drive-in restaurant at the site in accordance with the plans and specifications provided by Sonic and the terms of the License Agreement and this Agreement.
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