What is the dependency between signing the Franchise Agreement and executing the Buona Area Development Agreement?

-------------|--------------------| | FRANCHISOR INITIALS | DEVELOPER INITIALS |

Development Schedule. If you are not in compliance with the Development Schedule at the time of signing any additional franchise agreement, you will pay the then-current initial franchise fee being charged to new franchisees if it is greater than Thirty-Two Thousand Dollars ($32,000.00).

2.2 Upon the execution of this Development Agreement, you shall pay a fee ("Development Fee") in the amount of Sixteen Thousand Dollars ($16,000.00) times the number of additional Buona Restaurants to be developed after the one for which Developer is signing a Franchise Agreement contemporaneously with this Development Agreement. The Development Fee is consideration for this Development Agreement, is fully earned by Franchisor upon execution of this Development Agreement and is non-refundable, notwithstanding any provision to the contrary contained in any Franchise Agreement. However, we will credit Sixteen Thousand Dollars ($16,000.00) of the Development Fee against the Initial Franchise Fee for each additional Franchise Agreement for a Buona Restaurant executed pursuant to, and in accordance with, this Development Agreement.

• 3.1 The terms and conditions of this Agreement are contingent upon you being in full compliance with the Development Schedule. In addition, you must at all times after the opening of each Buona Restaurant continuously maintain in operation pursuant to each Franchise Agreement at least the number of Buona Restaurants set forth in the Development Schedule, and your Owners must at all times own a majority control over the entity that owns each Buona franchise developed hereunder. You may develop and open any Buona Restaurant earlier than the date set forth in the Development Schedule as long as you do so in compliance with this Agreement and the applicable Franchise Agreement.
  • 3.2 You must develop each Buona Restaurant in the following manner:
• (a) By giving us written notice of your intention to begin development of the next Buona Restaurant at least thirty (30) days before the execution of the Franchise Agreement for the applicable restaurant;
• (b) By submitting to us a description of the proposed site, together with a letter of intent in a form approved by us or other evidence satisfactory to us which confirms your favorable prospects for obtaining the proposed site;
• (c) By executing the then-current form of the Franchise Agreement for the applicable restaurant at the approved site and complying with its terms. We acknowledge that the franchisee for each Franchise Agreement may be a separate entity owned by your Owners.
• (d) By executing a lease, in a form approved by us, or purchase agreement for the proposed site; and
  • (e) By meeting all of the requirements for developing and opening the Buona Restaurant

under the terms of the applicable Franchise Agreement.

• 3.3 We will be obligated to execute the Franchise Agreement only if (i) you continue to maintain the requisite knowledge, experience, skills, and financial resources to perform as a franchisee, (ii) you are in compliance with this Agreement, including but not limited to compliance with the Development Schedule and in compliance with the in-term covenants set forth in Paragraph 6.4, (iii) you (and/or an affiliate) are in compliance any and all existing Franchise Agreements between us.
• 3.4 Subject to our prior written approval, you may develop and open more Buona Restaurants in the Development Area than you are required to develop under the Development Schedule.

Source: Item 22 — CONTRACTS (FDD page 78)