(a)        The Licensee gives the Licensor written notice of the Licensee’s election to renew not less than six months nor more than 12 months prior to the end of the initial term.

        (b)        The Licensee is not, when notice is given, in material default of any provision of this Agreement or any amendment hereof or successor agreement hereto or in material default of any other agreement between the Licensee and the Licensor or the Licensor’s Affiliates involving any other license agreement and has substantially complied with the terms and conditions of this Agreement and all other such agreements, during the term thereof.

        (c)        All monetary obligations owed by the Licensee to the Licensor or the Licensor’s Affiliates from any source whatsoever (whether under this Agreement or otherwise) have been satisfied prior to renewal.

        (d)        The Licensee executes a license agreement containing the same terms and conditions as this Agreement, except that the license agreement shall provide for a term of up to five years and shall contain the then current royalty rate and the then current national and local advertising expenditure requirements for Non-Traditional License Agreements; provided, however, that in lieu of an initial license fee, the Licensee shall pay a renewal fee to the Licensor in the amount of 20% of the then current initial license fee for a Non-Traditional License Agreement.

        (e)        The Licensee performs such remodeling, repairs, replacements and redecorations as the Licensor may reasonably require to cause the restaurant equipment and

fixtures to conform to the plans and specifications being used for new or remodeled Non-Traditional Sonics on the renewal date, provided the Licensor notifies the Licensee of such requirements within 30 days after receipt of the Licensee’s notice of renewal.

        (f)        The Licensor and the Licensee execute a general release of each other, in a form satisfactory to the Licensor, of any and all claims the Licensee may have against the Licensor and its Affiliates, including (without limitation) all claims arising under any federal, state or local law, rule or ordinance, but excluding (as to the Licensor) any claims against the Licensee for (a) unpaid moneys due the Licensor or its Affiliates, (b) a material breach of the provisions of this Agreement regarding the Proprietary Marks, or (c) the violation of the Licensor’s legal rights regarding the Proprietary Marks. The Licensor may waive the requirements of this paragraph (f) at the Licensor’s election.

        (g)        The Principal Licensee and/or the manager at the Licensee’s expense attend and satisfactorily complete such retraining program as the Licensor may require at its sole discretion. 

        (h)        The Licensee meets the remodeling requirements set forth in Section 6.02(d), below.

        The calculation of gross sales and the corresponding royalty fees shall take place on a cumulative basis. For example, the following formula results in the calculation of the royalty fee on $65,000 of gross sales: Royalty Fee = ($5,000 x .01) + ($5,000 x .02) + ($5,000 x .03) + ($15,000 x .04) + ($10,000 x .0425) + ($10,000 x .045) + ($10,000 x .0475) + ($5,000 x .05).

        (a)        The Licensee shall submit for evaluation by the Licensor the information the Licensor reasonably may require from time to time to evaluate a proposed site for a Non-Traditional Sonic. The Licensor shall review the submitted information, shall conduct any investigation of the proposed site the Licensor deems necessary or appropriate to evaluate the site, and shall accept or reject the site. The Licensor shall have the right to request any supplemental information it reasonably deems necessary or appropriate to evaluate the proposed site.

        (b)        Within 30 days after the Licensee’s submission of all initial and supplemental information requested by the Licensor regarding the proposed site, the Licensor shall give the Licensee written notice of its acceptance or rejection of the site. If the Licensor accepts the site, the written notice shall set forth any remaining conditions to that acceptance. If the Licensor rejects the site, the written notice shall set forth the primary reasons for the rejection. If the Licensor does not give the Licensee written notice of its rejection of the site within 30 days after the Licensee’s submission of all initial and supplemental information requested by the Licensor regarding the site, the Licensee may deem the Licensor as having approved the site. The Licensee acknowledges that no officer, employee or agent of the Licensor has any authority to approve any proposed site except in writing and in accordance with the provisions of this Section 6. Any other representations, written or oral, shall have no effect.

        (c)        The Licensee shall have sole responsibility for determining the location of the Non-Traditional Sonic and all aspects of the site selection, negotiation and development process, including (without limitation) the investigation and compliance with all applicable zoning, licensing, leasing and other requirements. Neither the Licensor nor any of its Affiliates shall have any responsibility, obligation or liability in connection with the Licensor’s efforts, assistance and/or advice in the selection and securing of a location for the License’s use, nor shall the Licensor have any liability for any consequences of the Licensee’s choice of a site or any aspect of the site selection, negotiation and development process. The Licensee acknowledges that the Licensor’s approval of a site does not constitute any representation, warranty or guaranty by the Licensor that the site will constitute a successful location for a Non-Traditional Sonic, and the Licensee waives and releases the Licensor and its Affiliates from any claims in that regard. The Licensee confirms that, in the absence of its agreement as set forth above, the Licensor would not become involved in any way in the site selection, negotiation or development process.

        (d)        In the event the Non-Traditional Sonic premises suffers some physical casualty, the minimum acceptable quality and appearance for the restored location will be that which existed just prior to the casualty, unless the Non-Traditional Sonic was below minimum acceptable standards for the Licensor at the time of casualty, in which event the Non-Traditional Sonic will be restored to a condition which meets the minimum acceptable standard according to the Licensor.  However, the Licensee agrees to make all reasonable effort to have the restored Non-Traditional Sonic reflect the then current image, design and specifications of Non-Traditional Sonics.  If the Non-Traditional Sonic is substantially destroyed by fire or other casualty, the Licensee may, with the written consent of the Licensor elect to terminate this agreement in lieu of the Licensee reconstructing the restaurant, provided that for a period of 18 months after said election, the Licensee shall not enter into, become landlord of or loan money to any restaurant business within a three-mile radius of the Non-Traditional Sonic which is similar in nature to or competitive with a Sonic drive-in restaurant, Non-Traditional Sonic, or considered a fast food establishment.

        (a)        The Licensee agrees to complete the construction of the Non-Traditional Sonic within a minimum of 365 days after the effective date of this Agreement. Unless the Licensee is remodeling an existing location, the Licensee shall construct the Non-Traditional Sonic in accordance with the site plan approved by the Licensor for such site and with the Licensor’s standard construction plans and specifications, if any (the “Sonic Plans and Specifications”), subject, however, to any alterations thereto that may be required by any applicable law, regulation or ordinance.  If alterations of any kind are required to be made to the site plan, as approved by the Licensor, or to the Sonic Plans and Specifications, if any, for any reason, such alterations must be approved by the Licensor in writing before any work is begun on the Non-Traditional Sonic. The Licensee shall submit the final site layout and construction plans for the Non-Traditional Sonic to the Licensor for its written approval.  Any costs including engineering and architectural fees incurred in obtaining approvals by the appropriate governmental authorities of the construction plans, specifications and layouts shall be paid by the Licensee.

        (b)        If the Licensee is remodeling an existing location, the Licensor shall have the right to inspect and approve all plans and specifications prior to the commencement of any work. The Licensee shall submit the final remodeling plans and specifications for the Non-Traditional Sonic to the Licensor for its written approval.  Nothing in this section shall be construed as an endorsement or guarantee of the conformity of such plans to applicable local, state or federal building or safety codes, or a guarantee that construction will be done in conformity with such approved plans.  In any event, the Licensee shall obtain written approval of such plans or written notice of the Licensor’s waiver of the rights reserved hereunder prior to the commencement of construction.

        (c)        The Licensee shall not deviate from the approved plans and specifications in any manner in the construction or remodeling of the restaurant without the prior written

approval of the Licensor.  If at any time the Licensor determines (prior to opening date) that the Licensee has not constructed or remodeled the Non-Traditional Sonic in accordance with the plans and specifications approved by the Licensor, the Licensor shall, in addition to any other remedies, have the right to obtain an injunction from a court of competent authority against the continued construction and opening of the Non-Traditional Sonic, and the Licensee hereby consents to any such injunction.

        (d)        The Licensor may require the Licensee to undertake extensive remodeling and renovation and substantial modifications to its existing improvements necessary for the Licensee’s restaurant to conform with Licensor’s then existing system image. The Licensor may exercise the foregoing right at any time during the term of this Agreement, but may not require (1) the remodeling of the Non-Traditional Sonic more than once every five years or (2) the remodeling of a Non-Traditional Sonic built within the preceding three years, unless the required remodeling will not exceed 15% of the original cost of the improvements and equipment (as adjusted for increases in the consumer price index after the construction date of the Non-Traditional Location). If the Licensor exercises its right to require the Licensee to undertake extensive remodeling or renovation or substantial modification within two years of the end of the term of this Agreement, the Licensee may exercise any right to renew the term of this Agreement at that point in time in accordance with the applicable provisions of this Agreement, which renewal then shall take effect as of the expiration the then current term of this Agreement.

        (a)        The Licensee shall only install in and about the Non-Traditional Sonic such equipment, fixtures, furnishings and other personal property as are required and which strictly conform to the appearance, uniform standards and specifications of the Licensor existing from time to time, which shall be communicated to the Licensee in writing.  The Licensee may purchase the equipment from the Licensor if the Licensor at that time is offering such equipment for sale on a regular basis, but is not required by this or any other agreement to do so.

        (b)        In order to provide maximum exposure of the Sonic name and marks, Licensee shall prominently display and maintain at the Licensee’s own expense signage which complies with the specifications required by the Licensor from time to time and in such location as the Licensor may approve.  The Licensee shall not display any other sign or advertising at the Non-Traditional Sonic without the Licensor’s prior written approval.

        (c)        The Licensee may lease the required signage from the Licensor or may acquire or lease the signage from any other source approved by the Licensor.  The Licensee agrees to require in any lease agreement with the Licensor or other suppliers a clause giving

the Licensor the right to remove the signage from the Non-Traditional Sonic upon termination of this Agreement.

        (d)        The Licensee hereby agrees that it shall, upon the Licensor’s request, obtain from the landlord of the property at which the Non-Traditional Sonic is located, a landlord’s lien and waiver releasing all claims against any equipment or sign which belongs to the Licensor.

        (e)        If the Licensee is or becomes a lessee of the Non-Traditional Sonic premises, he shall provide the Licensor with a true and correct, complete copy of any such lease, and shall have included therein provisions, in form satisfactory to the Licensor, expressly permitting both the Licensee and the Licensor to take all actions and make all alterations referred to under Section 15.01(c) of this Agreement. Any such lease shall also require the lessor thereunder to give the Licensor reasonable notice of any contemplated termination and a reasonable time in which to take and make the above actions and alterations and provide that the Licensee has the unrestricted right to assign such lease to the Licensor.

        (a)        The Licensee acknowledges the importance of the quality of business operations among all restaurants in the Sonic System and, agrees that it will not allow any of its licensed establishments to be opened or operated without having at least one individual working full time at the Non-Traditional Sonic who has completed the Stage Career Development Program. If the trained individual ceases to work full time at the Non-Traditional Sonic for whatever reason, the Licensee shall have 120 days in which to replace the individual with a person who has completed the Stage Career Development Program.

        (b)        The Licensee shall pay all traveling expenses, living expenses, and any other personal expenses for themselves and their managers while enrolled in the training program. As part of the initial franchise fee paid pursuant to Section 5.01 of this Agreement, the Licensee shall have the right to have one principal and one manager of the Non-Traditional Sonic attend the Stage Career Development Program for no cost other than those set out in the preceding sentence. Any additional parties attending the Stage Career Development Program shall bear the cost, including any fees and tuition due for such training program.

        (a)        The Licensee acknowledges that every component of the Sonic System is important to the Licensor and to the operation of the Non-Traditional Sonic as a Non-Traditional Sonic, including a designated menu of food and beverage products; uniformity of food specifications, preparation methods; quality and appearance; and uniformity of facilities and service.

        (b)        The Licensor shall have the right to inspect the Non-Traditional Sonic at all reasonable times to ensure that the Licensee’s operation thereof is in compliance with the standards and policies of the Sonic System.  In the event that such inspection reveals any deficiency or unsatisfactory condition with respect to any aspect of the operation of the Non-Traditional Location, the Licensee shall, within 72 hours of the Licensee’s receipt of notice of such condition or such other time as the Licensor in its sole discretion may provide, correct or repair such deficiency or unsatisfactory condition if it is correctable or repairable within such time period, and, if not, shall within such time commence such correction or repair and thereafter diligently pursue same to completion. The preceding sentence notwithstanding, the Licensee shall take immediate action to correct or repair any deficiency or unsatisfactory condition which poses a risk to public health or safety. In the event the Licensee fails to comply with the foregoing obligations to correct and repair, the Licensor, upon 24 hours’ notice to the Licensee, shall have the right, without being guilty of trespass or tort, to forthwith make or cause to be made such corrections or repairs, and the expense thereof, including board, wages, lodging and transportation of the Licensor personnel, if utilized, shall be paid by the Licensee upon billing by the Licensor.  The foregoing shall be in addition to any other right or remedies the Licensor may have.

        (c)        The Licensee shall comply with the entire Sonic System as described in this Agreement and in the Sonic Operations Manual for a traditional Sonic drive-in restaurant, except to the extent that the Licensee cannot comply as a practical manner because of the physical layout and structure of the Non-Traditional Sonic. That compliance shall include (without limitation) the following:

        (i)        Operate the Non-Traditional Sonic in a clean, wholesome manner in compliance with prescribed standards of quality, service and cleanliness; comply with all business policies, practices and procedures imposed by the Licensor; and maintain the building, equipment and parking area in a good, clean, wholesome condition and repair, well lighted and in compliance with designated standards as may be prescribed from time to time by the Licensor.

        (ii)        Purchase and install kitchen fixtures, lighting and other equipment and signs in accordance with the equipment specifications and layout initially designated by the Licensor.

         (iii)        The Licensee shall not, without the prior written consent of the Licensor (a) make any building design conversion or (b) make any alterations, conversions or additions to the location.

         (iv)        Make repairs or replacements required because of damage, wear and tear or in order to maintain the Non-Traditional Sonic in good condition and in conformity with blueprints and plans.

        (v)        Operate the Non-Traditional Sonic everyday of the year (except Easter, Thanksgiving and Christmas), and at least 10 hours per day or such other hours as may from time to time be reasonably prescribed by

the Licensor (except when the Non-Traditional Sonic is untenantable as a result of fire or other casualty), maintain sufficient supplies of food and paper products and employ adequate personnel so as to operate the Non-Traditional Sonic at its maximum capacity and efficiency.

        (vi)        Cause all employees of the Licensee, while working in the Non-Traditional Sonic, to (a) wear uniforms of such color, design and other specifications as the Licensor may designate from time to time, (b) present a neat and clean appearance, and (c) render competent and courteous service to the Licensee’s customers.

        (vii)        All menu items which the Licensor may deem appropriate to take full advantage of the potential market and achieve standardization in the Sonic System will be served, and no items which are not authorized and approved in writing by the Licensor will be served.

        (viii)        In the dispensing and sale of food products (a) use only containers, cartons, bags, napkins and other paper goods and packaging bearing the approved trademarks and which meet the Sonic System specifications and quality standards; (b) use only those flavorings, garnishments and food and beverage ingredients which meet the Sonic System specifications and quality standards, which Licensor may designate from time to time; and (c) employ only those methods of food handling, preparation and serving which the Licensor may designate from time to time.

        (ix)        Make prompt payment in accordance with the terms of invoices rendered to the Licensee including, but not limited to, the purchase of fixtures, equipment and food and paper supplies.

        (x)        At the Licensee’s expense, comply with all federal, state and local laws, ordinances and regulations affecting the operation of the Non-Traditional Sonic.

        (xi)        The Licensee shall not install any electronic games or other games of chance at the Non-Traditional Sonic without the express prior written consent of the Licensor.

        (xii)        Furnish the Licensor with current changes in home addresses and telephone number of its owners and manager and, upon the Licensor’s

reasonable request, provide updates of personal financial statements or other credit information.

        (xiii)        The Licensee shall notify the Licensor’s Director of Corporate Communications or, if not available, the most senior executive officer of the Licensor as soon as possible and, in any event, within 12 hours after the occurrence at the Non-Traditional Sonic of any event which could have an adverse impact on the Non-Traditional Sonic and/or the Sonic System, including (without limitation) the death or serious bodily injury of any employee or customer for any reason or the risk of infection by a contagious disease.

        (a)        The Licensor may require the Licensee (i) to purchase food, beverages, signs and equipment which meet the specifications established by the Licensor; (ii) to participate in the Licensor’s approved purchasing cooperative for the area in which the Non-Traditional Sonic is located; and (iii) to retain and utilize exclusively the marketing and advertising services of the Licensor approved advertising agency of record. In addition, the Licensee immediately shall use the Licensee’s vote or votes in all advertising cooperatives in which the Licensee participates to support the use of the advertising agency of record for the Sonic restaurant chain.

        (b)        The Licensor may require the Licensee to support the use of and to use the products and programs of the cola syrup supplier approved by the Licensor and used by a majority of all Sonic drive restaurants and Non-Traditional Sonics, to the exclusion of any other supplier of cola syrup.

        (c)        The Licensor may require the Licensee to comply with the foregoing provisions not only for the Non-Traditional Sonic, but also (to the extent the Licensee exercises Control) for all other Sonic drive-in restaurants and Non-Traditional Sonics for which the Licensee serves as a licensee.

        (d)        The Licensor hereby explicitly retains the exclusive right to consider, review or approve any and all distributors which may hold, sell or distribute Sonic-labeled goods or products, except that the Licensor shall not withhold unreasonably its approval of a supplier approved for use by a duly constituted purchasing cooperative.

        (e)        The terms of this Section 6.06 shall continue in effect for as long as the Licensee serves as a licensee for a Sonic drive-in restaurant or Non-Traditional Sonic and shall survive the expiration or termination of this Agreement.

        (f)        If at least 95% of all Sonic drive-in restaurants and Non-Traditional Sonics are in compliance with paragraphs (a) and (b) of Section 6.06, the Licensor periodically

shall submit the approved advertising agency or cola syrup supplier to competitive bid or review, but shall not be obligated to do so more often than once every three years.

        (a)        The Licensee shall use only the Proprietary Marks designated by the Licensor and shall use them only in the manner authorized and permitted by the Licensor.

        (b)        The Licensee shall use the Proprietary Marks only for the operation of the Non-Traditional Sonic.

        (c)        During the term of this agreement and any renewal hereof, the Licensee shall identify itself as the owner of the Non-Traditional Sonic in conjunction with any use of the Proprietary Marks, including, but not limited to, invoices, order forms, receipts, and contracts, as well as at such conspicuous locations on the premises of the Non-Traditional Sonic as the Licensor shall designate in writing.  The identification shall be in the form which specifies the Licensee’s name, followed by the term “Licensed Franchisee of Sonic Industries Inc.” or such other identification as shall be approved by the Licensor.

        (d)        The Licensee’s rights to use the Proprietary Marks is limited to such uses as are authorized under this Agreement, and any unauthorized use thereof shall constitute an infringement of the Licensor’s rights.

        (e)        The Licensee shall not use the Proprietary Marks to incur any obligation or indebtedness on behalf of the Licensor.

        (f)        The Licensee shall not use the Proprietary Marks as part of its corporate or other legal name if not already in existence prior to the effective date of this agreement.

        (g)        The Licensee shall comply with the Licensor’s instructions in filing and maintaining the requisite trade name or fictitious name registrations, and shall execute any documents deemed necessary by the Licensor or its counsel to obtain protection for the Proprietary Marks or to maintain their continued validity and enforceability.

        (h)        In the event that litigation involving the Proprietary Marks is instituted or threatened against the Licensee, the Licensee shall promptly notify the Licensor and shall cooperate fully in defending or settling such litigation.

        (a)        As between the parties hereto, the Licensor has the exclusive right and interest in and to the Proprietary Marks and the goodwill associated with and symbolized by them, and any and all use thereof by the Licensee inures to the benefit of the Licensor.

        (b)        The Proprietary Marks are valid and serve to identify the Sonic System and those who are licensed under the Sonic System.

        (c)        The Licensee shall not directly or indirectly contest the validity or the ownership of the Proprietary Marks.

        (d)        The Licensee’s use of the Proprietary Marks pursuant to this agreement does not give the Licensee any ownership interest or other interest in or to the Proprietary Marks, except the nonexclusive license granted herein.

        (e)        Any and all goodwill arising from the Licensee’s use of the Proprietary Marks in its licensed operations under the Sonic System shall inure solely and exclusively to the Licensor’s benefit, and upon expiration or termination of this agreement and the license herein granted, no monetary amount shall be assigned as attributable to any goodwill associated with the Licensee’s use of the Sonic System or the Proprietary Marks.

        (f)        The right and license of the Proprietary Marks granted hereunder to the Licensee is nonexclusive except as provided in subsection 2.01(a) of this Agreement, and the Licensor thus has and retains the right among others:

        (i)        To grant other licenses for the Proprietary Marks, in addition to those licenses already granted to existing licensees.

        (ii)        To use the Proprietary Marks in connection with selling products and services.

        (iii)        To develop and establish other systems for the same or similar Proprietary Marks, or any other proprietary marks, and grant licenses or franchises thereto without providing any rights therein to the Licensee.

        (g)        The Licensor reserves the right to substitute different Proprietary Marks for use in identifying the Sonic System and the businesses operating thereunder if the Licensor’s currently owned Proprietary Marks no longer can be used.

        (a)        shall not use the Confidential Information in any other business or capacity, or for the benefit of any other Person or entity;

        (b)        shall maintain the absolute confidentiality of the Confidential Information, and shall not disclose or divulge the Confidential Information to any unauthorized Person or entity, during and after the term of this Agreement;

        (c)        shall not make unauthorized copies of any portion of the Confidential Information disclosed in printed, audio or video form (except in connection with instruction of employees in the operation of the Non-Traditional Sonic); and

        (d)        shall adopt and implement all procedures prescribed from time to time by the Licensor to prevent unauthorized use or disclosure of the Confidential Information, including, without limitation, restrictions on disclosure thereof to employees of the Non-Traditional Sonic and the use of nondisclosure and non-competition clauses in employment agreements with employees (including all owners, shareholders and partners of the Licensee) who have access to the Confidential Information.

        (a)        information, processes or techniques which are or become generally known in the food service industry, other than through disclosure (whether deliberate or inadvertent) by the Licensee; and

        (b)        disclosure of the Confidential Information in judicial or administrative proceedings to the extent that the Licensee is legally compelled to disclose such information, provided the Licensee shall have used its best efforts, and shall have afforded the Licensor the opportunity, to obtain an appropriate protective order or other assurance satisfactory to the Licensor of confidential treatment for the information required to be so disclosed.