SONIC INDUSTRIES LLC NUMBER 7 NON-TRADITIONAL LICENSE AGREEMENT BY AND BETWEEN SONIC INDUSTRIES LLC, Licensor, and , Licensee Non-Traditional Sonic Location
SONIC
INDUSTRIES LLC
NUMBER
7 NON-TRADITIONAL LICENSE AGREEMENT
BY
AND BETWEEN
SONIC
INDUSTRIES LLC, Licensor, and
,
Licensee
Non-Traditional
Sonic Location
,
Effective
as of , .
CIF
No.
NUMBER
7 NON-TRADITIONAL LICENSE AGREEMENT
(CIF
____)
SONIC
INDUSTRIES LLC (“Sonic”) and the
individuals listed below (jointly and severally, the “Licensee”) enter into this
Number 7 Non-Traditional License Agreement (the “Agreement”) as of the _____ day
of _________, 200__.
(“Principal”)
RECITALS
Sonic
is the developer and owner of the
right to license the distinctive and proprietary food service system under
which
food and beverages are sold to the public from drive-in restaurants and other
facilities operated under the trade name and federally registered trademark
and
service ▇▇▇▇ “Sonic.” The Sonic System so developed now includes,
among other things, the following elements, all or some of which may be deleted,
changed, improved, or further developed by Sonic from time to time:
A.
Methods
and procedures for the
preparation and serving of food and beverage products.
B.
Confidential
recipes for food
products and distinctive service accessories (including, but not limited to,
uniforms, menus, packages, containers, and additional paper or plastic
items).
C.
Plans
and specifications for
distinctive standardized premises featuring characteristic exterior style,
colors, and design, interior furnishings, equipment layout, exterior signage,
and marketing techniques and materials.
D.
A
uniform method of operating
which is described in the Sonic Operations Manual.
E.
The
Proprietary Marks as
defined in Section 1.09.
F.
Such
trade secrets as have
been and may from time to time be developed, which are owned by Sonic, and
which
are disclosed to its licensees in confidence in connection with the construction
and operation of a Sonic drive-in restaurant or non-traditional Sonic
restaurant.
G. Such
proprietary payment
and other business methods, including (without limitation) the pay-at-your-stall
payment system (“PAYS”), which have been and may from time to time be developed
for use in the Sonic System.
Licensee
wishes to obtain a license
from Sonic to operate a non-traditional Sonic restaurant pursuant to the Sonic
System and to be afforded the assistance provided by Sonic in connection
therewith, and understands and accepts the terms, conditions, and covenants
set
forth herein as those which are reasonably necessary to maintain Sonic’s high
and uniform standards of quality and service designed to protect the goodwill
and enhance the public image of the Proprietary Marks and the Sonic System,
and
recognizes the necessity of operating the licensed Non-Traditional Sonic in
faithful compliance therewith, and with Sonic’s standards and
specifications.
1. DEFINITIONS.
Unless
the context of their use in this
Agreement requires otherwise, the following words and phrases shall have the
following meanings when used in initially-capitalized form in this
Agreement.
1.01. Affiliate.
The
word “Affiliate” shall mean (a) any
stockholder, director, or officer of a specified Person (if the specified Person
is a corporation), (b) any partner of a specified Person (if the specified
Person is a partnership), (c) any member of a specified Person (if the specified
Person is a limited liability company), (d) any employee of a specified Person,
and (e) any Person which directly or indirectly through one or more
intermediaries Controls the specified Person, the specified Person Controls,
or
shares a common Control with the specified Person.
1.02. Control.
The
word “Control” means the
possession, direct or indirect, of the power to direct or cause the direction
of
the management and policies of a Person or entity, whether through the ownership
of voting securities, by contract, or otherwise.
1.03. DMA.
The
term “DMA” shall mean a Designated
Market Area as defined by ▇.▇. ▇▇▇▇▇▇▇ Company from time to time.
1.04 Facility.
The
word “Facility” shall mean the
building or structure in which a non-traditional Sonic restaurant may operate,
including (without limitation) military bases and other governmental facilities;
universities and schools; airports and other transportation facilities;
stadiums, arenas and other sports and entertainment venues; amusement and theme
parks; cafeterias and food courts in shopping centers, shopping malls, office
buildings, hospitals and industrial facilities; museums, zoos and other public
facilities, and highway travel plazas, convenience stores, and gasoline filling
stations.
1.05. Gross
Sales.
The
phrase “Gross Sales” shall mean all
revenues from all business conducted upon or from the Non-Traditional Sonic,
whether evidenced by check, cash, credit, charge account, debit card,
stored-value card, exchange, or otherwise, and shall include (without
limitation) the amounts received from the sale of goods, wares, and merchandise,
including sales of food, beverages, and tangible property of every kind and
nature, promotional or otherwise
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(excluding
restaurant equipment), and for services performed from or at the Non-Traditional
Sonic, whether the Licensee fills the orders from the Non-Traditional Sonic
or
elsewhere. Each charge or sale via credit, debit card, stored-value
card, or other payment means shall constitute a sale for the full price in
the
month during which the charge or sale occurs, regardless of the time when the
Licensee receives payment (in whole or in part) for the charge or
sale. The phrase “Gross Sales” shall not include (a) sales of
merchandise for which the Licensee makes a cash refund, if previously included
in Gross Sales; (b) the price of merchandise returned by customers for exchange,
if the Licensee previously included the sales price of the merchandise returned
by the customer in Gross Sales and includes the sales price of merchandise
delivered to the customer in exchange in Gross Sales; (c) the amount of any
sales tax imposed by any governmental authority directly on sales and collected
from customers, if the Licensee adds the amount of the tax to the sales price
or
absorbs the amount of the sales tax in the sales price and the Licensee actually
pays the tax to the governmental authority; (d) amounts not received for menu
items because of discounts or coupons, if properly documented; and (e) amounts
received from the sale of Sonic-approved stored-value cards. The
phrase “Gross Sales” also shall not include any proceeds received by the
Licensee pursuant to an assignment made in accordance with the provisions of
Section 13.
1.06. License.
The
word “License” shall mean the
rights granted the Licensee pursuant to Section 2 of this
Agreement.
1.07. Non-Traditional
Sonic.
The
phrase “non-traditional Sonic
restaurant” shall mean any location licensed to use the Sonic System other than
a free-standing building with canopies devoted, in whole or in part, to the
operation of a Sonic drive-in restaurant and accessible to the general public
by
automobile from public thoroughfares. The phrase “Non-Traditional
Sonic” shall mean the non-traditional Sonic restaurant licensed by this
Agreement.
1.08. Person.
The
word “Person” shall mean any
individual or business entity, including (without limitation) a corporation,
joint venture, general partnership, limited partnership, limited liability
company, or trust.
1.09. Proprietary
Marks.
The
phrase “Proprietary Marks” shall
mean the distinctive and characteristic trade names, trademarks, service marks,
logotypes and trade dress which Sonic designates in the Sonic Operations
Manual or otherwise in writing or through usage from time to time as
prescribed for use with the Sonic System and as may from time to time be
developed, including (without limitation) the terms “Sonic,” “America’s
Drive-In,” “Route 44,” “Wacky Pack,” “Fountain Favorites,” “Frozen Favorites,”
“It’s Sonic Good,” “SuperSonic,” “Your Morning Drink Stop!,” “Ultimate Drink
Stop,” and “My Sonic;” signs; emblems; menu housings and/or table ordering
stations; designs; color schemes; standardized premises featuring characteristic
exterior style, canopies, colors, and design (including angled parking stalls
equipped with menu housings, speakers, and tray supports); interior furnishings;
and equipment layout.
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1.10. Sonic
System.
The
phrase “Sonic System” shall mean
the Proprietary Marks, proprietary and confidential information, methods,
specifications, and trade secrets of Sonic, including (without limitation)
the
Sonic Operations Manual and consisting of (a) methods and procedures
for the preparation of food and beverage products; (b) confidential recipes
for
food products; (c) distinctive service and accessories; (d) plans and
specifications for interior and exterior signs, designs, layouts, and color
schemes (whether copyrighted or not); (e) methods, techniques, formats, systems,
specifications, procedures, information, trade secrets, and sales and marketing
programs; (f) methods of business operations and management; (g) knowledge
and
experience regarding the operation and franchising of Sonic drive-in restaurants
and non-traditional Sonic restaurants; (h) payment methods, including (without
limitation) PAYS; and (i) such further elements as set forth in the
Recitals.
2. LICENSE
GRANT.
Sonic
grants to Licensee for the
following stated term the right, license, and privilege:
2.01. (a) To
adopt and use the Sonic System at the Non-Traditional Sonic located within
the
located at (the “Facility”).
(b) To
have the exclusive rights to adopt and use the Sonic System for a
non-traditional Sonic restaurant to be constructed within a Facility within
the
current boundaries of the town or city of , , for a period of six months from
the date hereof, with the obligation of selecting and having such site approved
within such six-month period and completing Section 2.01(a), above, within
such
six-month period.
2.02. Sonic
shall not own or operate a non-traditional Sonic restaurant and shall not
franchise any other Person to own or operate a non-traditional Sonic restaurant
within the Facility identified in Section 2.01.
2.03. To
advertise to the public as a licensee of Sonic.
2.04. To
adopt and use, but only in connection with the sale from the Non-Traditional
Sonic of those food and beverage products which have been designated in the
Sonic menu as specified in an attachment to this Agreement or in any future
operations manual designed for non-traditional Sonic restaurants, the
Proprietary Marks which Sonic shall designate from time to time to be part
of
the Sonic System.
2.05. Site
Selection.
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In
the event the Licensee receives this
License pursuant to Section 2.01(b), above, the selection of a site by Licensee
shall be subject to the approval of Sonic in accordance with the standard site
approval procedures required by this Agreement and the standard practices of
Sonic. In the event a site for the Non-Traditional Sonic has not been
approved by Sonic before the expiration of the six-month period provided for
by
Section 2.01(b), above, then this Agreement shall expire and be of no further
force or effect. In such case, Sonic will immediately refund to
Licensee the license fee less one-third of the license fee, which shall be
fully
earned by Sonic upon execution and delivery of this Agreement.
2.06. Relocation.
If
the Licensee relocates the
Non-Traditional Sonic during the term of this Agreement with the written consent
of Sonic (which consent Sonic shall not withhold unreasonably), this Agreement
shall continue to apply to the Non-Traditional Sonic in accordance with the
terms contained in this Agreement, except that Sonic and the Licensee shall
enter into an amendment to this Agreement to change the address of the
Non-Traditional Sonic accordingly.
2.07. Rights
Reserved to Sonic.
Except
as expressly limited by this
Agreement, Sonic retains all rights with respect to the Sonic System, the
Proprietary Marks, the sale of similar or dissimilar products and services,
and
any other activities Sonic deems appropriate whenever and wherever it
desires. Specifically, but without limitation, Sonic reserves the
following rights:
(a) The
right
to establish and operate, and to grant to others the right to establish and
operate, similar businesses or any other businesses offering similar or
dissimilar products and services through similar or dissimilar channels of
distribution, at any locations inside or outside the Facility identified in
Section 2.01 under trademarks or service marks other than the Proprietary Marks
and on any terms and conditions Sonic deems appropriate;
(b) The
right
to provide, offer, and sell, and to grant others the right to provide, offer,
and sell, goods and services that are identical or similar to and/or competitive
with those provided at the Non-Traditional Sonic, whether identified by the
Proprietary Marks or other trademarks or service marks, through dissimilar
distribution channels (including, without limitation, the Internet or similar
electronic media) both inside and outside the Facility identified in Section
2.01 and on any terms and conditions Sonic deems appropriate;
(c) The
right
to establish and operate, and to grant to others the right to establish and
operate, businesses offering dissimilar products and services, both inside
and
outside the Facility identified in Section 2.01, under the Proprietary Marks
and
on any terms and conditions Sonic deems appropriate;
(d) The
right
to operate, and to grant others the right to operate, Sonic drive-in restaurants
or non-traditional Sonic restaurants anywhere outside the Facility identified
in
Section 2.01 under any terms and conditions Sonic deems appropriate regardless
of the proximity to the Non-Traditional Sonic;
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(e) The
right
to be acquired (whether through acquisition of assets, ownership interests,
or
otherwise, regardless of the form of transaction) by a business providing
products and services similar to those provided at the Non-Traditional Sonic,
or
by another business, even if such business operates, franchises, and/or licenses
competitive businesses in the Facility identified in Section 2.01.
3. TERM.
3.01. Initial
Term.
Unless
sooner terminated as hereafter
provided, the term of this Agreement, including the License, shall end ___
years
from the effective date of this Agreement as set forth on the cover page to
this
Agreement.
3.02. Opening
of Restaurant.
Licensee
expressly acknowledges and
agrees that a pre-condition to opening the Non-Traditional Sonic shall be
Sonic’s written authorization to open, which authorization shall be given only
upon Licensee’s completing, to Sonic’s satisfaction, (i) construction of the
Non-Traditional Sonic, (ii) preparation of the Non-Traditional Sonic for
commencement of operations, and (iii) training as required by Section 6.04
of
this Agreement.
3.03. Option.
At
the end of the initial term, if
Licensee desires, Licensee may renew the rights granted under this Agreement,
including the License to adopt and use the Sonic System at the Non-Traditional
Sonic, for one additional ______-year term, provided that prior to the
expiration of the initial term:
(a) Licensee
gives Sonic written notice of Licensee’s election to renew not less than six
months nor more than 12 months prior to the end of the initial
term.
(b) 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 Licensee and Sonic or Sonic’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 Licensee to Sonic or Sonic’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 _____ years and shall contain the then-current royalty rate and the
then-current advertising and brand expenditure requirements for non-traditional
Sonic restaurants; provided, however, that in lieu of an initial license fee,
a
renewal fee shall be paid to Sonic in the amount of 20% of the then-current
initial license fee for a non-traditional license agreement.
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(e) Licensee
performs such remodeling, repairs, replacements, and redecorations as Sonic
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
Sonic restaurants on the renewal date.
(f) Licensee
executes a general release, in a form satisfactory to Sonic, of any and all
claims the Licensee may have against Sonic and its Affiliates, including
(without limitation) all claims arising under any federal, state, or local
law,
rule, or ordinance.
(g) The
Principal and/or manager at Licensee’s expense attend and satisfactorily
complete such retraining program as Sonic may require at its sole
discretion.
(h) Licensee
meets the remodeling requirements set forth in Section 6.02(d)
herein.
4. DUTIES
OF SONIC.
Sonic
agrees to regularly advise and
consult with Licensee in connection with the operation of the Non-Traditional
Sonic and to provide the following to Licensee:
4.01. Site
Selection Services.
Sonic
shall provide the Licensee with
Sonic’s experience in the selection of Sonic restaurant sites through the use of
the forms, criteria, and materials that Sonic makes available to new licensees
from time to time, as well as the benefit of its review and evaluation of any
proposed sites selected by the Licensee.
4.02. Plans
and Specifications.
If
and when developed, Sonic shall
provide the Licensee with its standard construction plans, specifications,
and
layouts for the structure, equipment, décor, and signs for a non-traditional
Sonic restaurant which Sonic makes available to new licensees from time to
time.
Sonic shall review the Licensee’s site plan and final construction plans and
specifications for conformity to Sonic’s then-current construction standards and
specifications, if any.
4.03. Operations
Manual.
The
Sonic
Operations Manual
containing the standards, specifications, procedures, and methods for operating
a traditional Sonic drive-in restaurant, one copy to which Licensee will be
given access for the term of this Agreement. If and when Sonic
develops a separate operations manual for non-traditional Sonic restaurants,
Sonic will give Licensee access to the manual for the term of this
Agreement.
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4.04. Training.
Sonic
shall provide the Licensee with
initial training in the standards, methods, procedures, and techniques of
operating a non-traditional Sonic restaurant. Sonic shall provide
that training to the Licensee (if the Licensee is an individual) or to one
principal of the Licensee selected by Sonic (if the Licensee is a corporation,
partnership, limited liability company, other entity, or group of
individuals). Sonic shall provide that training at the times and
places designated by Sonic from time to time for its training
program.
4.05. Marketing
Assistance.
Sonic
shall provide the Licensee with
marketing materials and merchandising, marketing and advertising research data,
and advice as may be developed from time to time by Sonic and deemed to be
helpful in the operation of a non-traditional Sonic restaurant.
4.06. Communication.
Sonic
shall provide the Licensee with
management development and motivational seminars and periodic newsletters which
communicate to Licensee available advertising materials and new developments,
techniques, and improvements in areas of restaurant equipment, management,
food
preparation, and service which are pertinent to the operation of a restaurant
using the Sonic System.
4.07. Evaluation
Program.
Sonic
will conduct periodic field
evaluations of the Non-Traditional Sonic for the mutual benefit of both Sonic
and Licensee to promote uniform standards of operation and quality
control.
4.08. Advice.
Sonic
shall provide the Licensee with
periodic individual or group advice, consultation, and assistance by personal
visit, by telephone, or by newsletters or bulletins that Sonic makes available
to new licensees from time to time.
4.09. Written
Materials.
Sonic
shall provide the Licensee with
bulletins, brochures, and reports that Sonic publishes from time to time
regarding its plans, policies, research, developments, and
activities.
4.10. Other.
Sonic
shall provide the Licensee with
other resources and assistance that Sonic may develop and make available to
its
new licensees from time to time.
5. FEES.
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5.01. License
Fee.
The
Licensee acknowledges
that: (a) the initial grant of the License constitutes the sole
consideration for the payment of a license fee of $________ paid by the Licensee
to Sonic concurrently with the execution hereof; and (b) the fee has been earned
by Sonic (except where the construction of the Non-Traditional Sonic has not
been completed within one year from the date of this Agreement as discussed
in
Section 6.02(a) and except as provided hereafter in this Section
5.01). Sonic reserves the right, in case construction of the
Non-Traditional Sonic should be abandoned, the lease assigned for a purpose
other than the operation of the Non-Traditional Sonic, or other interest in
the
premises be relinquished for a purpose other than the operation of the
Non-Traditional Sonic, to terminate this Agreement, including the License,
upon
written notice, after which Sonic will immediately refund to Licensee the
license fee less one-third of the license fee, which shall be fully earned
by
Sonic upon execution and delivery of this Agreement. Licensee shall
have the right, if Licensee does not consummate a lease or purchase a site
for
the Non-Traditional Sonic within one year from the date of this Agreement,
to
terminate this Agreement, including the License, upon written notice, after
which Sonic will immediately refund to Licensee the license fee less one-third
of the license fee, which shall be fully earned by Sonic upon execution and
delivery of this Agreement.
5.02. Royalty
Fees.
On
or before the 10th day of each
calendar month, the Licensee shall pay a royalty fee determined by the following
scale based on Gross Sales for the calendar month preceding the date of such
payment:
|
Monthly
Gross Sales
|
But
Not
|
Royalty
|
|
Greater
Than
|
More
Than
|
Rate
|
|
$ 0.00
|
$ 5,000.00
|
2.00%
|
|
$ 5,000.00
|
$10,000.00
|
3.00%
|
|
$10,000.00
|
$15,000.00
|
3.50%
|
|
$15,000.00
|
$20,000.00
|
4.00%
|
|
$20,000.00
|
$25,000.00
|
4.50%
|
|
$25,000.00
|
N/A
|
5.00%
|
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 $50,000 of Gross Sales: Royalty
Fee = ($5,000 x .02) + ($5,000 x .03) + ($5,000 x .035) + ($5,000 x .04) +
($5,000 x .045) + ($25,000 x .05).
The
payment of royalty fees, as well as the payment of any other obligations
incurred under the terms of this Agreement, shall be made via automated clearing
house (ACH) or other electronic means approved by Sonic.
5.03. Brand
Fee.
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(a) On
or before the 10th day of each calendar month throughout the term of this
Agreement, Licensee shall pay to the Sonic Brand Fund, which is administered
by
Sonic, a brand contribution fee in an amount equal to .90% of the
Gross Sales of the Non-Traditional Sonic during the calendar month next
preceding the date of such payment.
(b) The
amount due to Sonic by Licensee pursuant to Section 5.03(a), above, shall be
in
addition to and separate from that which Licensee is obligated to contribute
pursuant to Sections 11.01(a) and 11.01(c) of this Agreement.
5.04. Transfer
Fee.
(a) A
transfer fee in the amount of $1,000 shall be paid by Licensee in the event
of a
transfer or assignment of this Agreement (resulting in a change in Control
of
the Agreement) to a licensee then-currently qualified as a licensee, excluding
assignments under Sections 13.02 and 13.03.
(b) A
transfer fee in the amount of $3,000 shall be paid by Licensee in the event
of a
transfer or assignment of this Agreement (resulting in a change in Control
of
this License) to a new licensee not then-currently qualified as a licensee,
excluding assignments under Sections 13.02 and 13.03.
5.05. Late
Payments.
In
the event any payments required by
Sections 5.02, 5.03, or 5.04, above, are not paid on or before the date on
which
they are due, a late charge in an amount equal to 1.75% per month shall be
levied against such amounts due and shall be owing to Sonic by the Licensee
from
the date on which such obligations were due until any such obligations are
paid
in full. In the event any payments required by Sections 5.02, 5.03,
or 5.04, above, are not paid on or before the date on which they are due three
or more times during any 12-month period, in addition to all other rights of
Sonic contained in this Agreement or otherwise, (a) Sonic may require the
Licensee to submit a statement of Gross Sales in the form prescribed by Sonic
and at a frequency prescribed by Sonic, such as weekly; and (b) Sonic may
require the Licensee to pay obligations incurred under the terms of this
Agreement more frequently than once a month, such as weekly. In the
event the interest rate set out in this Section 5.05 exceeds that amount
permitted by Oklahoma law, then the maximum interest rate permitted by Oklahoma
law shall be charged. Sonic’s acceptance of any partial or late
payment does not affect Sonic’s right to terminate this Agreement pursuant to
the terms of this Agreement. Further, Licensee acknowledges that this
Section 5.05 is not an agreement to accept any partial payments or payments
after they are due or Sonic’s commitment to extend credit to, or otherwise
finance the operation of, the Non-Traditional Sonic.
5.06. Taxes.
(a) Licensee
shall pay when due all taxes levied or assessed on Licensee and the
Non-Traditional Sonic including, without limitation, unemployment, sales, or
gross receipts taxes, and all accounts or other indebtedness of any kind
incurred by Licensee in conducting the business of the Non-Traditional
Sonic.
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(b) In
the time and manner prescribed by Sonic, Licensee shall also pay an amount
equal
to any sales tax or gross receipts tax, but not including any net income tax
upon Sonic, imposed on Sonic or its Affiliates with respect to any payments
from
Licensee to Sonic required under this Agreement, unless the tax is credited
against a net income tax otherwise payable by Sonic.
(c)
(i) In
the event of a dispute with a taxing authority as to (a) Licensee’s liability
for taxes or (b) Sonic’s or its Affiliate’s liability for any taxes upon which
Licensee is required under this Section 5.06 to make payment to Sonic, Licensee
may contest the validity or the amount of the tax or indebtedness in accordance
with the law and regulations of the taxing authority. Sonic shall
provide Licensee with all information, cooperation, and assistance that Licensee
may reasonably request in connection with any dispute as to Licensee’s, Sonic’s,
or Sonic’s Affiliate’s liability for taxes. Licensee shall not permit
a tax sale, seizure, levy, or similar writ or warrant by a creditor to occur
against the Non-Traditional Sonic or any of its assets.
(ii) In
the event a state taxing authority makes a refund to Sonic or its Affiliate
of
taxes paid for which Sonic previously received payment from Licensee under
this
Section 5.06, Sonic shall pay to Licensee the amount of the taxes refunded
by
the state taxing authority to Sonic or its Affiliate which equals the amount
Licensee previously paid to Sonic under this Section 5.06.
(d) All
notices received by Licensee from a state taxing authority regarding the
alleged, potential, or actual tax liability of Sonic or its Affiliates shall
be
given to Sonic within 15 calendar days of receipt by Licensee. Sonic
and Licensee agree to consult in good faith to determine the nature of any
action to be taken in connection with the notice or any demands contained
therein.
6. DUTIES
OF LICENSEE.
6.01. Non-Traditional
Sonic Site.
(a) The
Licensee shall submit for evaluation by Sonic the information Sonic reasonably
may require from time to time to evaluate a proposed site for the
Non-Traditional Sonic. Sonic shall review the submitted information,
shall conduct any investigation of the proposed site Sonic deems necessary
or
appropriate to evaluate the site, and shall accept or reject the
site. Sonic 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 Sonic regarding the proposed site, Sonic shall give
the
Licensee written notice of its acceptance or rejection of the
site. If Sonic accepts the site, the written notice shall set forth
any remaining conditions to that acceptance. If Sonic rejects the
site, the written notice shall set forth the primary reasons for the
rejection. If Sonic does not give the
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(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 Sonic nor any of its Affiliates shall have any
responsibility, obligation, or liability in connection with Sonic’s efforts,
assistance, and/or advice in the selection and securing of a location for the
Licensee’s use, nor shall Sonic 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 SONIC’S APPROVAL OF A SITE DOES NOT CONSTITUTE ANY REPRESENTATION,
WARRANTY, OR GUARANTY BY SONIC THAT THE SITE WILL CONSTITUTE A SUCCESSFUL
LOCATION FOR THE NON-TRADITIONAL SONIC, AND THE LICENSEE WAIVES AND RELEASES
SONIC AND ITS AFFILIATES FROM ANY CLAIMS IN THAT REGARD. The
Licensee confirms that, in the absence of its agreement as set forth above,
Sonic 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 Sonic 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 Sonic. However, 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 Sonic
restaurants. If the Non-Traditional Sonic is substantially destroyed by
fire or other casualty, Licensee may, with the written consent of Sonic, elect
to terminate this Agreement in lieu of Licensee reconstructing the restaurant,
provided that for a period of 18 months after said election, 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 premises which is similar
in
nature to or competitive with a Sonic drive-in restaurant or non-traditional
Sonic restaurant or which is considered a quick-service restaurant
establishment.
6.02. Construction
and Opening.
(a) Licensee
agrees to complete the construction of the Non-Traditional Sonic and open the
Non-Traditional Sonic to the public within one year from the effective date
of
this Agreement. If the Non-Traditional Sonic is not constructed and opened
to the public before the expiration of the one-year period, then
Sonic may terminate this Agreement, making it of no further force or effect.
In
such case, Sonic will immediately refund to Licensee the license fee less
one-third of the license fee, which shall be fully earned by Sonic upon
execution and delivery of this Agreement. Unless Licensee is
remodeling an existing location, Licensee shall construct the Non-Traditional
Sonic
12
in
accordance with the site plan approved by Sonic for such site and with Sonic’s
standard construction plans and specifications (“Sonic Plans and
Specifications”), if any, 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
Sonic, or to the Sonic Plans and Specifications, if any, for any reason, such
alterations must be approved by Sonic 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 Sonic 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
Licensee. Prior to opening, Licensee shall submit to Sonic, at no
cost to Sonic, a record set of drawings showing all approved changes to the
plans and specifications.
(b) If
Licensee is remodeling an existing location, Sonic 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 Sonic 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, Licensee shall obtain
written approval of such plans or written notice of Sonic’s waiver of the rights
reserved hereunder prior to the commencement of construction.
(c) 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 Sonic. If at any time Sonic determines (prior to opening date)
that Licensee has not constructed or remodeled the Non-Traditional Sonic in
accordance with the plans and specifications approved by Sonic, Sonic 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 Licensee hereby consents to any such
injunction.
(d) Sonic
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 Sonic’s then-existing system
image. Sonic 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
the 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 Sonic). If Sonic 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 of
the
then-current term of this Agreement.
6.03. Equipment
and Signage.
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(a) Licensee
shall install in and about the Non-Traditional Sonic such equipment, fixtures,
furnishings, and other personal property, and shall upgrade or purchase
additional equipment, fixtures, furnishings, and other personal property, as
are
required and which strictly conform to the appearance, uniform standards, and
specifications of Sonic existing from time to time, which shall be communicated
to Licensee in writing. Equipment not required by Sonic shall not be
installed without Sonic’s prior written consent, except that Licensee may,
without Sonic’s prior written consent, install security-related equipment that
does not interfere with the operation or trade dress of the Non-Traditional
Sonic.
(b) In
order to provide maximum exposure of the Sonic name and marks, Licensee shall
prominently display and maintain at Licensee’s own expense signage which
complies with the specifications required by Sonic from time to time and in
such
location as Sonic may approve. Licensee shall not display any other sign
or advertising at the Non-Traditional Sonic without Sonic’s prior written
approval.
(c) Licensee
may lease the required signage from Sonic or may acquire or lease the signage
from any other source approved by Sonic. Licensee agrees to require in any
lease agreement with Sonic or other suppliers a clause giving Sonic the right
to
remove the signage from the Non-Traditional Sonic upon termination of this
Agreement.
(d) Licensee
hereby agrees that it shall obtain from the landlord of the property at which
the Non-Traditional Sonic is located a landlord’s waiver releasing all claims
against any equipment or sign which belongs to Sonic and all claims to fixtures
and furnishings that constitute Proprietary Marks of Sonic.
(e) If
Licensee is or becomes a lessee of the Non-Traditional Sonic premises, Licensee
shall provide Sonic with a true and correct, complete copy of any such lease
and
obtain Sonic’s written approval of the lease terms prior to executing the
lease. Licensee shall have included in the lease provisions, in form
satisfactory to Sonic, expressly permitting both the Licensee and Sonic to
take
all actions and make all alterations referred to under Section
15.01. Any such lease shall also require the lessor thereunder to
give Sonic 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
Sonic.
6.04. Training.
(a) 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 or other Sonic-designated training
program. If the trained individual ceases to work full time at the
Non-Traditional Sonic for whatever reason, the Licensee shall promptly replace
the individual with a person who has completed the Stage Career Development
Program or other Sonic-designated training program. Licensee agrees
that each individual who participates in the Stage Career Development Program
or
other Sonic-designated training program for the Non-Traditional Sonic will,
at
the request of Sonic, sign a confidentiality agreement in a form prescribed
by
Sonic agreeing to maintain as confidential certain information learned and
received during the program.
14
(b) Licensee
shall pay all traveling expenses, living expenses, and any other personal
expenses for themselves and managers while enrolled in the training
program. As part of the initial license fee paid pursuant to Section
5.01 herein, Licensee shall have the right to have one principal and one manager
of the Non-Traditional Sonic attend the Stage Career Development Program or
other Sonic-designated training program for no cost other than those set out
in
the preceding sentence. Any additional parties attending the Stage
Career Development Program or other Sonic-designated training program shall
bear
the cost, including any fees and tuition due for such training
program.
(c) Upon
opening the Non-Traditional Sonic, all management personnel shall be certified
in ServSafe or in another comparable, nationally recognized food safety training
and certification program approved by Sonic, the cost of which shall be borne
by
Licensee. Management personnel subsequently employed by Licensee at
the Non-Traditional Sonic shall have 120 days from the beginning date of such
employment to successfully complete such training. Licensee shall pay
all traveling expenses, living expenses, and any other personal expenses for
such persons while participating in the training. Management
personnel includes any person who has shift responsibility or employee oversight
at the Non-Traditional Sonic and also includes the operating principal of the
Non-Traditional Sonic.
6.05. Compliance
with Entire System.
(a) Licensee
acknowledges that every component of the Sonic System is important to Sonic
and
to the operation of the Non-Traditional Sonic as a non-traditional Sonic
restaurant, 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) Sonic
shall have the right to inspect the Non-Traditional Sonic at all reasonable
times to ensure that Licensee’s operation thereof is in compliance with the
standards and policies of the Sonic System. This right to inspect
includes the right of Sonic or a third party on behalf of Sonic to conduct
food
safety audits and operational assessments. In the event that any
inspection, including a food safety audit or an operational assessment, reveals
any deficiency or unsatisfactory condition with respect to any aspect of the
Non-Traditional Sonic operation, Licensee shall, within 72 hours of Licensee’s
receipt of notice of such condition or such other time as Sonic 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 Licensee fails to comply with the foregoing
obligations to correct and repair, Sonic, upon 24 hours’ notice to Licensee,
shall have the right (but no obligation), 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 Sonic
personnel, if utilized, shall be paid by Licensee upon billing by Sonic.
The foregoing shall be in addition to any other right or remedies Sonic may
have.
15
(c) Licensee
shall comply with the entire Sonic System as described herein and in the
Sonic Operations Manual for a traditional Sonic drive-in restaurant,
except to the extent that Licensee cannot comply as a practical matter because
of the physical layout or 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
standards of quality, food safety, service, cleanliness, and appearance as
prescribed by governmental authorities and by Sonic; comply with all business
policies, practices, and procedures imposed by Sonic; 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 Sonic.
(ii) Purchase
and install kitchen fixtures, lighting, payment systems, and equipment, and
office equipment and signs in accordance with the equipment specifications
and
layout designated by Sonic.
(iii) Without
the prior written consent of Sonic, make no (a) building design conversion
or (b) 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 15 hours per day or such other hours, including
specific opening and closing times, as may from time to time be reasonably
prescribed by Sonic (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 Licensee, while working in the Non-Traditional Sonic, to:
(a) wear uniforms of such color, design, and other specifications as Sonic
may
designate from time to time, (b) present a neat and clean appearance, and (c)
render competent and courteous service to Non-Traditional Sonic
customers.
(vii) Serve
all menu items which Sonic may deem appropriate and which are included in the
menu approved by Sonic at the time to take full advantage of the potential
market and achieve standardization in the Sonic System; serve no items which
are
not set forth in the Sonic Operations Manual and which are not
otherwise authorized and approved in writing by Sonic; and display and offer
only the menu approved by Sonic at the time.
16
(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,
manufacturers, and brands which meet the Sonic System specifications and quality
standards, which Sonic may designate from time to time, and (c) employ only
those methods of food handling, preparation, and serving which Sonic may
designate from time to time.
(ix) Make
prompt payment in accordance with the terms of invoices rendered to Licensee
including, but not limited to, invoices for the purchase of fixtures, equipment,
and food and paper supplies.
(x) At
Licensee’s expense, comply with all federal, state, and local laws, ordinances,
and regulations affecting the operation of the Non-Traditional Sonic, including
all laws, ordinances, or regulations relating to terrorist
activities.
(xi) Install
no electronic games or other games of chance at the Non-Traditional Sonic
without the express prior written consent of Sonic.
(xii) Furnish
Sonic with current home addresses and phone numbers of Licensee and Licensee’s
owners and manager; furnish Sonic with current information regarding the legal
and equity ownership and Control of the operation of the Non-Traditional Sonic;
and, upon Sonic’s reasonable request, provide updates of financial information,
personal financial statements, and credit information.
(xiii) Notify
Sonic’s Communications Department or, if not available, the most senior
executive officer of Sonic 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.
(xiv) Only
provide a Sonic-approved toy premium that is appropriate for the age of the
child; make a Sonic-approved all-age toy premium available upon customer
request; and, except in the case of an all-age toy premium provided as
appropriate, only offer the Sonic-approved toy premium corresponding to the
Sonic-designated promotion.
(xv) Accept
Sonic-designated debit and credit cards, Sonic-approved stored-value cards,
and
any other Sonic-designated payment means.
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(xvi) Participate
in system-wide initiatives, including technology initiatives such as the
PartnerNet technology initiative and other initiatives as may be designated
by
Sonic from time to time.
(xvii) Deal
with Persons supplying goods and services to the Non-Traditional Sonic in a
respectful and responsive manner such that the reputation and goodwill of Sonic,
its licensees, and the Sonic System are not tarnished in the business community
or with consumers; ensure that all Persons that provide goods or services to
the
Non-Traditional Sonic during construction and operation are timely and fully
paid for such goods and services, except only to the extent that any of the
goods and services are non-conforming, damaged, defective, or missing; and,
in
the event that a dispute arises as to quality or quantity of goods or services
furnished to the Non-Traditional Sonic, timely communicate with and respond
to
the supplier in a good faith effort to resolve the dispute. Licensee
cannot avoid the obligations contained in this Section 6.05(c)(xvii) by
contracting for or obtaining the goods or services indirectly, such as through
an intermediary.
(xviii)
Except as to
bottled water and paper products and except as allowed by any policy contained
in the Sonic Operations Manual, do not sell or serve food and beverage
products outside of the Non-Traditional Sonic premises and do not donate food
and beverage products to a third party except upon the prior written consent
of
Sonic.
(xix) Do
not sell Sonic
coupons, and only sell Sonic-related merchandise on the Internet or by other
means upon the prior written consent of Sonic.
(xx) Participate
in Sonic-approved marketing, advertising, promotional, and brand enhancement
programs.
(xxi) In
the event Sonic
sets a maximum price for any product, do not charge a price in excess of such
maximum price for the product; however, Licensee may charge a price lower than
the maximum price.
(xxii) Sell
the
Sonic-approved stored-value card or other Sonic-designated pre-paid payment
means.
(xxiii) Utilize
at the Non-Traditional Sonic a Sonic-approved point-of-sale system that at
all
times has a non-alterable grand total function so that each item entered in
such
register and each day’s totals may not be altered once entered.
(d) Sonic
shall have the right to establish new or to modify existing operating
procedures, policies, practices, requirements, and guidelines, which shall
be
effective upon notice from Sonic unless Sonic specifies
otherwise. Such new or modified operating procedures, policies,
practices, requirements, and guidelines may require Licensee to incur additional
expense.
6.06. Approved
Suppliers and Advertising Agencies.
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(a) Sonic
may require the Licensee (i) to purchase food, beverages, signs, and equipment
which meet the specifications established by Sonic; (ii) to purchase such items
only from Sonic-designated suppliers (which designated suppliers may include
Sonic or its Affiliates); and (iii) to retain and utilize exclusively the
marketing and advertising services of the Sonic-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) Sonic may require the Licensee to support the use of and to use the products and programs of the beverage syrup supplier approved by Sonic and used by a majority of all Sonic drive-in restaurants and non-traditional Sonic restaurants, to the exclusion of any other supplier of beverage syrup.
(c) Sonic 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 Sonic restaurants
for which the Licensee serves as a licensee.
(d) Sonic
hereby explicitly retains the exclusive right to consider, review, and approve
any and all suppliers that may hold, sell, or distribute Sonic-labeled goods
or
products.
(e) Licensee
agrees that its suppliers may provide to Sonic information regarding Licensee’s
past due amounts.
(f) 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
restaurant and shall survive the expiration or termination of this
Agreement.
(g) If
at least 95% of all Sonic drive-in restaurants and non-traditional Sonic
restaurants are in compliance with Sections 6.06(a) and 6.06(b), Sonic
periodically shall submit the approved advertising agency or beverage syrup
supplier to competitive bid or review, but shall not be obligated to do so
more
often than once every three years.
6.07. Best
Efforts.
Licensee
shall diligently and fully
exploit his rights in this Agreement by personally devoting his best efforts
and, in case more than one individual has executed this Agreement as the
Licensee, at least one individual Licensee shall devote his full time and best
efforts to the operation of the Non-Traditional Sonic. Licensee shall
avoid any activities which, in Sonic’s sole judgment, would be detrimental to or
interfere with the business of the Non-Traditional Sonic, the Sonic System,
or
Sonic.
6.08. Interference
with Employment Relations of Others.
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During
the term of this Agreement,
except upon the prior written consent of Sonic, Licensee shall not employ or
seek to employ any person who is at the time or was at any time during the
prior
six months employed by Sonic or any of its subsidiaries. In addition,
during the term of this Agreement, except upon the prior written consent of
Licensee, Sonic agrees not to employ or seek to employ any person who is at
the
time or was at any time during the prior six months employed by Licensee in
a
management level position.
6.09. Sonic’s
Standards.
Licensee
shall operate the
Non-Traditional Sonic specified in this Agreement in conformity with the Sonic
System and the obligations set forth in this Agreement and shall strictly adhere
to Sonic’s standards and policies as they exist now and as they may be from time
to time modified.
6.10. Majority
Interest Owner.
Licensee
represents, warrants, and
agrees that Licensee actually owns the majority interest in the legal and equity
ownership and Control of the operation of the Non-Traditional Sonic, and that
Licensee shall maintain such interest during the term of this Agreement except
only as otherwise permitted pursuant to the terms and conditions of this
Agreement. Licensee shall furnish Sonic with such evidence as Sonic
may request from time to time for the purpose of assuring Sonic that Licensee’s
interest remains as represented herein.
6.11. Electronic
Communication and Use of Internet.
(a) At
Sonic’s option, Sonic may post the Sonic Operations Manual (pursuant to
Sonic’s obligation to provide Licensee with access to the Sonic Operations
Manual, as set forth in Section 8) and other communications on a restricted
Intranet or other website to which Licensee will have access. If
Sonic does so, Licensee must periodically monitor the site for any updates
to
the Sonic Operations Manual or other standards, specifications, and
procedures. Any passwords or other digital identification necessary
to access the Sonic Operations Manual and other information on such a
site will be deemed to be part of the Confidential Information (defined in
Section 9.01). Further, Licensee agrees that Licensee will establish
the channels of communication with Sonic and Licensee’s customers as required by
Sonic from time to time, including e-mail, Internet, and other electronic forms
of communication, and that Licensee will acquire and maintain any computer
or
other components necessary for the transmission of such
communications.
(b) Licensee
will not establish or operate a website for the Non-Traditional Sonic or for
Licensee’s organization that owns and operates the Non-Traditional Sonic or
other Sonic restaurants under license agreements with Sonic.
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7. PROPRIETARY
MARKS.
7.01. Sonic’s
Representations.
Sonic
represents with respect to the
Proprietary Marks that Sonic will use and permit Licensee and other licensees
to
use the Proprietary Marks only in accordance with the Sonic System and the
standards and specifications attendant thereto which underlie the goodwill
associated with and symbolized by the Proprietary Marks.
7.02. Use
of Marks.
With
respect to Licensee’s licensed use
of the Proprietary Marks pursuant to this Agreement, Licensee agrees
that:
(a) Licensee
shall use only the Proprietary Marks designated by Sonic and shall use them
only
in the manner authorized and permitted by Sonic.
(b) 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, 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 conspicuous locations on the premises
of
the Non-Traditional Sonic. The identification shall be in the form which
specifies Licensee’s name, followed by the term “Licensed Proprietor”, or such
other identification as shall be approved by Sonic.
(d) Licensee’s
rights to use the Proprietary Marks are limited to such uses as are authorized
under this Agreement, and any unauthorized use thereof shall constitute an
infringement of Sonic’s rights.
(e) Licensee
shall not use the Proprietary Marks to incur any obligation or indebtedness
on
behalf of Sonic.
(f) Licensee
shall not use the Proprietary Marks as part of its corporate or other legal
name.
(g) Licensee
shall comply with Sonic’s instructions in filing and maintaining the requisite
trade name or fictitious name registrations, and shall execute any documents
deemed necessary by Sonic 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 Licensee, Licensee shall promptly notify Sonic and shall
cooperate fully in defending or settling such litigation.
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7.03. Licensee’s
Understanding.
Licensee
expressly understands and
acknowledges that:
(a) As
between the parties hereto, Sonic owns the 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 Licensee inures to the benefit of Sonic.
(b) The
Proprietary Marks are valid and serve to identify the Sonic System and those
who
are licensed under the Sonic System.
(c) Licensee
shall not directly or indirectly contest the validity or the ownership of the
Proprietary Marks.
(d) Licensee’s
use of the Proprietary Marks pursuant to this Agreement does not give 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 Licensee’s use of the Proprietary Marks in its
licensed operations under the Sonic System shall inure solely and exclusively
to
Sonic’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 Licensee’s use of the Sonic System or the
Proprietary Marks.
(f) The
right and license of the Proprietary Marks granted hereunder to Licensee is
nonexclusive except as provided in Section 2.01 of this Agreement, and Sonic
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 Licensee.
(g) Sonic
reserves the right to substitute different Proprietary Marks for use in
identifying the Sonic System and the businesses operating thereunder if Sonic’s
currently owned Proprietary Marks no longer can be used.
7.04. Other
Intellectual Property.
If
Licensee develops any trademark,
service ▇▇▇▇, trade dress, copyright, patent, or other intellectual property
for
use in promoting or operating the Non-Traditional Sonic or promoting the Sonic
System, such intellectual
22
property
will be deemed the property of Sonic or its Affiliate, at Sonic’s election,
without charge or the payment of any royalty, and Licensee shall take action
as
necessary to convey such rights to Sonic.
8. MANUAL.
Sonic
shall provide Licensee access to,
for use at the Non-Traditional Sonic, the Sonic Operations Manual
prepared by Sonic for use by licensees of traditional Sonic drive-in
restaurants. Licensee recognizes that the Sonic Operations Manual
contains detailed information relating to operation of Sonic restaurants
including: (a) food formulas and specifications for designated food and beverage
products; (b) methods of inventory control; (c) bookkeeping and accounting
procedures; (d) business practices and policies; (e) required equipment; and
(f)
other management and advertising policies. Licensee agrees to promptly
adopt and use exclusively the formulas, methods, and policies contained in
the
Sonic Operations Manual, now and as they may be modified by Sonic from
time to time, except to the extent Licensee cannot comply as a practical matter
because of the physical layout or structure of the Non-Traditional
Sonic. Licensee shall return the manual to Sonic at the expiration or
earlier termination of this Agreement.
9. CONFIDENTIAL
INFORMATION.
9.01. Sonic
Proprietary and Confidential Information.
Sonic
possesses certain unique,
proprietary, and confidential information, consisting of methods and procedures
for preparation of food and beverage products, confidential recipes for food
products, distinctive service and accessories, plans and specifications for
interior and exterior signs, designs, layouts, and color schemes, and methods,
techniques, formats, systems, specifications, procedures, business information,
trade secrets, sales and marketing programs and information, methods of business
operations and management, and knowledge of and experience in the operation
and
franchising of Sonic restaurants and the Sonic System (collectively, the
“Confidential Information”). Sonic will disclose the Confidential
Information to Licensee in furnishing Licensee the Sonic Plans and
Specifications for a non-traditional Sonic restaurant, the training program,
and
the Sonic Operations Manual, and in providing guidance and assistance
to Licensee during the term of this Agreement. The Sonic
Operations Manual, as modified by Sonic from time to time, and the policies
contained therein, are incorporated in this Agreement by reference. Licensee
acknowledges that Confidential Information will be disclosed by Sonic through
various means, including orally, in writing, and electronically, such as on
a
restricted Intranet or other website.
9.02. Licensee’s
Use of Proprietary and Confidential Information.
Licensee
acknowledges and agrees that
Licensee shall not acquire any interest in the Confidential Information, other
than the right to utilize it in the development and operation of the
Non-Traditional Sonic (and other Sonic drive-in restaurants and non-traditional
Sonic restaurants under license agreements with Sonic) during the term of this
Agreement, and that the use or duplication of the Confidential Information
in
any other business would constitute an unfair method of
competition. Licensee acknowledges and agrees that the Confidential
Information is proprietary to Sonic, may constitute trade secrets of Sonic,
and
is disclosed to Licensee solely on the condition that Licensee agrees, and
Licensee does hereby agree, that Licensee:
23
(i) shall
not use the
Confidential Information in any other business or capacity, or for the benefit
of any other Person or entity;
(ii)
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 the Agreement;
(iii)
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
(iv)
shall adopt and implement all
procedures prescribed from time to time by Sonic 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, members, officers, and
partners of Licensee) who have access to the Confidential
Information.
9.03. Licensee’s
Use of Sonic Operations Manual.
Licensee
may not at any time, in any
manner, directly or indirectly, and whether or not intentionally, copy any
part
of the Sonic Operations Manual, permit any part of it to be copied,
disclose any part of it except to employees or others having a need to know
its
contents for purposes of operating the Non-Traditional Sonic, or permit its
removal from the Non-Traditional Sonic without prior written consent from
Sonic. Notwithstanding anything to the contrary contained in this
Agreement and provided Licensee shall have obtained Sonic’s prior written
consent, the restrictions on Licensee’s disclosure and use of the Confidential
Information shall not apply to the following:
(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
Licensee; and
(b) disclosure
of the Confidential Information in judicial or administrative proceedings to
the
extent that Licensee is legally compelled to disclose such information, provided
Licensee shall have used its best efforts, and shall have afforded Sonic the
opportunity, to obtain an appropriate protective order or other assurance
satisfactory to Sonic of confidential treatment for the information required
to
be so disclosed.
9.04. No
Information to the Public.
Licensee
acknowledges that Sonic’s
parent company, Sonic Corp., is a public company, and that Sonic Corp. makes
certain information regarding the performance of the Sonic System available
to
the public, including investors and financial analysts, in the normal course
of
business. Licensee further acknowledges that Licensee’s own disclosure of
certain information to the public could interfere with the business of
Sonic. Licensee agrees that it will not provide to the public, or to
any investor, financial analyst, or person that influences investments, any
information that might indicate the performance of the Sonic System, the Sonic
restaurant chain, or any aspect thereof, including sales information, except
that Licensee may provide information to attorneys, accountants, financial
planners, and other professionals as required in the course of Licensee’s
personal business or the operation of the Non-Traditional Sonic.
24
10. ACCOUNTING
AND RECORDS.
10.01. Due
Date.
On
or before the 10th day of each
month, Licensee shall submit to Sonic a complete profit and loss statement
in a form prescribed by Sonic and such statistical reports in such form as
Sonic
shall reasonably require from time to time, for the previous month immediately
ended, or for such other time period as may be designated by
Sonic. Such profit and loss statements and other statistical and
financial reports required by this Agreement shall be submitted by electronic
means as specified by Sonic.
10.02. Record
Retention.
Licensee
shall keep and preserve full
and complete records of the Non-Traditional Sonic business for at least three
years in a manner and form satisfactory to Sonic and shall also deliver such
additional financial, operating, and other information and reports as Sonic
may
reasonably request on the forms and in the manner prescribed by Sonic; provided,
however, that Licensee shall maintain, at a minimum, those books and records
required to be kept by the Internal Revenue Service under the Internal Revenue
Code for purposes of its regulation of Licensee’s business and make the same
books available to Sonic.
10.03. Charitable
Contributions and Discounts.
In
meeting the requirements set forth
in Sections 10.01 and 10.02 above, Licensee shall keep records substantiating
and enter as a line item on its financial statements amounts representing the
valuation for goods (whether food, paper, or otherwise) which constitute
charitable contributions to third parties from the same goods out of the
Non-Traditional Sonic. Likewise, the Licensee shall maintain records
and enter on its financial statements (particularly a line item on its profit
and loss statement) information representing the value or amount of sales
represented by coupons traded with and discounts granted by the Licensee at
the
Non-Traditional Sonic.
10.04. Annual
Reports.
25
Licensee
further agrees to submit,
within 90 days following the close of each fiscal year of the Non-Traditional
Sonic’s operation, a profit and loss statement covering operations during such
fiscal year and the balance sheet taken as of the close of such fiscal
year.
10.05. Audit
by Sonic.
Sonic
shall have the right to inspect
and audit Licensee’s accounts, books, records, and tax returns at all times
during and after the term of this Agreement. If such inspection
discloses that Gross Sales actually exceeded or, pursuant to generally accepted
audit methodologies, should have exceeded the amount reported by Licensee,
Licensee shall immediately pay Sonic: (i) the additional royalty fee,
brand fee, and advertising expenditures; (ii) interest on all unpaid amounts
(from the original due date) at a rate equal to that provided by Section 5.05
herein; and (iii) a 10% surcharge on all unpaid amounts. If such
inspection discloses that Gross Sales actually exceeded or, pursuant to
generally accepted audit methodologies, should have exceeded the amount reported
by Licensee as Licensee’s Gross Sales by an amount equal to 3% or more of the
Gross Sales originally reported to Sonic, Licensee shall bear the cost of such
inspection and audit at rates and fees customarily charged by Sonic for such
auditing and inspecting services and duties. Unpaid brand fees,
including interest and surcharges collected by Sonic pursuant to this section,
shall be used in accordance with the expenditures authorized by Section 5.03;
nevertheless, Sonic may, on a case by case basis, at Sonic’s sole discretion,
use such collected amounts in accordance with the expenditures authorized by
Section 11.01. Sonic shall have the right to bring an action in its
own name to collect unpaid brand and advertising expenditures required by
Section 11 herein.
10.06. Third
–Party Audit.
If
Sonic has reason to believe that the
Licensee may not have reported all of its Gross Sales, Sonic may require the
Licensee to have its profit and loss statement and balance sheet certified
by an
independent public accountant. Licensee shall at his expense cause a
Certified Public Accountant to consult with Sonic concerning such statement
and
balance sheet. The original of each such reports required by this Section
10.06 shall be mailed to Sonic’s business office at the address designated in
Section 19 below.
10.07. Licensee’s
Failure to Timely Deliver Financial Records.
If
Licensee fails to timely provide
Sonic with complete profit and loss statements, accounts, books, records, and
tax returns pertaining to the Non-Traditional Sonic business, or fails to fully
cooperate with Sonic’s audit of the Non-Traditional Sonic business, Sonic shall
have the right to estimate Licensee’s Gross Sales for the Non-Traditional Sonic
using information available on the Non-Traditional Sonic or other Sonic drive-in
restaurants and non-traditional Sonic restaurants. Licensee agrees to
accept Sonic’s estimates as conclusively correct until Licensee fully complies
with Sonic’s accounting and disclosure requirements under this
Agreement. However, if the Licensee’s subsequent accounting and
disclosures reveal that Licensee under-reported Gross Sales or underpaid fees
due under this Agreement, Sonic may recover all deficiencies and may litigate
claims of fraud even though Sonic may have already obtained a judgment using
Sonic’s estimates. Furthermore, nothing in this Agreement or any
judgment using estimates shall prevent or hinder Sonic’s further efforts and
rights to obtain the accounting and disclosures which
26
Licensee
is required to give to Sonic under this Agreement. Without regard to
whether Licensee fails to timely provide records to Sonic or fails to fully
cooperate with Sonic in the audit of the Non-Traditional Sonic, Sonic may make
estimates during the audit process or for other purposes as allowed by generally
accepted accounting principles or audit methodologies.
10.08. Financial
Disclosure.
Sonic
shall have the right to assemble
and disseminate to third parties financial and other information regarding
the
Licensee and other licensees of Sonic to the extent required by law or to the
extent necessary or appropriate to further the interests of the Sonic System
as
a whole. Sonic shall have the right to disclose the business name,
address, and telephone number of the Licensee as they appear in Sonic’s records
to any Person making inquiry as to the ownership of the Non-Traditional
Sonic. Sonic shall not disclose specific financial information
regarding the Licensee or the Non-Traditional Sonic to any Person without (a)
the Licensee’s prior, written consent or (b) being directed to disclose the
information pursuant to the order of a court or other governmental
agency.
10.09. Accounting
Services.
In
the event that Licensee is
late three or more times during any 12-month period in paying any fee or
obligation required by this Agreement, including the royalty fees set forth
in
Section 5.02 and the brand and advertising expenditures set forth in Sections
5.03 and 11, Sonic shall have the right to require Licensee to use Sonic’s
accounting services for the term of this Agreement and any renewal, for which
cost Licensee shall reimburse Sonic. This requirement is in addition
to all other rights Sonic may have under the terms of this Agreement and
otherwise.
10.10. Application
of
Payments.
Despite
any payment designation by
Licensee, Sonic may apply any payments received from Licensee pursuant to this
Agreement to the oldest debt or in accordance with any payment application
process prescribed by Sonic.
11. ADVERTISING
AND BRAND EXPENDITURES.
11.01. Standard
Programs.
Recognizing
the value of advertising
and the importance of the standardization of advertising and brand programs
to
the furtherance of the goodwill and public image of the System, the parties
agree as follows:
(a) In
the event the Non-Traditional Sonic lies within a DMA for which a Sonic-approved
advertising cooperative has been formed, Licensee (i) shall join such
advertising cooperative or such other advertising cooperative as may be
designated by Sonic; (ii) shall abide by, follow, support, and promote the
financial accounting requirements established by Sonic from time to time for
advertising cooperatives, including complying with the format of financial
reporting required by Sonic, acknowledging Sonic’s right to audit the
advertising cooperative, cooperating fully with Sonic in the event of any such
audit, and using either the cooperative accounting services of
27
Sonic
or another Sonic-approved accounting service; (iii) shall support the adoption
of only those bylaws approved by Sonic for the advertising cooperative; and
(iv)
shall not purchase media outside of the advertising
cooperative. Licensee shall contribute to such advertising
cooperative an amount required by such advertising cooperative on a schedule
required by such advertising cooperative, provided that such contributions
shall
occur no less often than each calendar month and shall be of an amount not
less
than 3.25% of Licensee’s Gross Sales from the Non-Traditional Sonic during each
partial or full calendar month. If the DMA has, in Sonic’s sole
discretion, been designated a “developing market,” Licensee shall instead
contribute to the advertising cooperative not less than 5% of Licensee’s Gross
Sales from the Non-Traditional Sonic during each partial or full calendar month;
however, at any time Sonic may alternatively designate other uses for any
portion of such developing market contribution if Sonic determines, in its
sole
discretion, that there is less need for advertising and a greater need for
another use.
(b) In
the event there exists no Sonic-approved advertising cooperative in the DMA
in
which the Non-Traditional Sonic is located, Licensee shall promptly form an
advertising cooperative for the DMA and further comply with the requirements
set
forth in Sections 11.01(a) and 11.01(c) and other provisions of this Agreement
applicable to and related to advertising cooperatives.
(c) Sonic
or its designee shall maintain and administer a marketing fund for the Sonic
System titled the System Marketing Fund (the “SMF”) as follows:
(i) The
SMF shall be administered by Sonic, and funds paid to the SMF shall be deposited
in a separate bank account denoted as the System Marketing
Fund.
(ii) The
advertising cooperative of which Licensee is a member shall pay to the SMF
a sum
equal to 2% of Licensee’s Gross Sales (or higher as may be prescribed by Sonic)
from the contribution paid by Licensee to the advertising
cooperative.
(iii) Sonic
shall direct all marketing programs with sole discretion over the creative
concepts, materials, and media used in such programs. The Licensee
acknowledges that Sonic and its designees undertake no obligation in
administering the SMF to make expenditures for Licensee which are equivalent
or
proportionate to Licensee’s contribution.
(iv) The
SMF is intended to complement local marketing efforts by promoting the message
of the Sonic brand to an expanded audience. The SMF and all earnings
thereof shall be used primarily to purchase national broadcast, print,
interactive, and other media, sponsorships, and brand enhancement
opportunities. The SMF and its earnings shall not inure to the
benefit of Sonic.
(v) The
SMF is not an asset of Sonic, and an independent certified public accountant
designated by Sonic shall review the operation of the SMF annually, and the
report shall be made available to Licensee
28
upon
request. Notwithstanding the foregoing, the body approved and
designated by the Sonic as the body to consult with regarding the Sonic’s
maintenance and administration of the SMF (such as the Franchise Advisory
Council Executive Committee or its successor) may designate the independent
public accountant to conduct the required review of the operation of the SMF
if
requested in writing at least 30 but not more than 60 days prior to the end
of
each fiscal year.
(vi) Although
Sonic intends the SMF to be of perpetual duration, Sonic maintains the right
to
terminate the SMF. The SMF shall not be terminated, however, until all
monies in the SMF have been expended for marketing and promotional purposes
as
aforesaid.
(vii) On
at least a quarterly basis, Sonic shall consult with the body approved and
designated by Sonic (such as the Franchise Advisory Council Executive Committee
or its successor) regarding Sonic’s maintenance and administration of the SMF
and shall report to that body on the SMF’s operation.
(d) For
purposes of determining the amount which the Licensee is required to contribute
pursuant to Sections 11.01(a) and 5.03, above, for each calendar month which
is
the subject of review, the parties hereto agree that the preceding calendar
month shall be used in determining the Gross Sales of the Non-Traditional Sonic
to determine the contributions or expenditures required
hereunder. For example, to determine the contributions or
expenditures required for February, the parties hereto agree that they will
look
to the preceding January’s sales in order to determine the Gross Sales to
determine the amount which must be contributed or expended by the Licensee
under
these Sections 11.01(a) and 5.03. In the event the amounts required
by Sections 11.01(a) and 5.03 are not paid in a timely fashion, Licensee shall
pay Sonic in accordance with Section 10.05.
(e) All
advertising by Licensee in any medium which utilizes the Proprietary Marks
or
refers in any way to the Non-Traditional Sonic shall be conducted in a dignified
manner and shall conform to such standards and requirements as Sonic may specify
from time to time in writing. Licensee shall submit to Sonic (in
accordance with the notice provisions contained herein), for Sonic’s prior
approval (except with respect to prices to be charged unless the terms of
Section 6.05(c)(xxi) apply), samples of all advertising and promotional plans
and materials that Licensee desires to use that use the Proprietary Marks or
refer to the Non-Traditional Sonic and that have not been prepared or previously
approved by Sonic. If written disapproval thereof is not received by
Licensee within 15 days from the date of receipt by Sonic of such materials,
Sonic shall be deemed to have given the required approval. Upon notice
from Sonic, Licensee shall discontinue and/or remove any objectionable
advertising material, whether or not same was previously approved by
Sonic. If said materials are not discontinued and/or removed within five
days after notice, Sonic or its authorized agents, may, at any time, enter
upon
Licensee’s premises, or elsewhere, and remove any objectionable signs or
advertising media and may keep or destroy such signs or other media without
paying therefore, and without being guilty of trespass or other
tort.
29
(f) Sonic
may offer from time to time to provide, upon terms subject to the discretion
of
Sonic, approved local advertising and promotional plans and materials,
including, without limitation, newspaper display space and distributed
promotional materials.
(g) Sonic
or its designee shall maintain and administer a fund for the Sonic System titled
the Sonic Brand Fund (the “SBF”) (formerly known as the Sonic Advertising Fund)
as follows:
(i) As
provided in Section 5.03 hereof, Licensee shall pay a brand contribution fee
to
the SBF, which shall be deposited in a separate bank account denoted as the
Sonic Brand Fund.
(ii) Sonic
shall direct all brand programs with sole discretion over the concepts,
materials, guidelines, and media used in such programs. The SBF is
intended to enhance the Sonic System and maximize general public recognition
and
acceptance of the Proprietary Marks for the benefit of the Sonic System, and
the
Licensee acknowledges that Sonic and its designees undertake no obligation
in
administering the SBF to make expenditures for Licensee which are equivalent
or
proportionate to Licensee’s contribution, and nothing in this Section 11.01
shall contravene the intent in Section 11.01(g)(iv).
(iii) The
SBF and all earnings thereof shall be used exclusively to meet any and all
costs
of maintaining, administering, directing, and preparing advertising and other
promotional programs (including, without limitation, the cost of preparing
and
conducting television, radio, magazine, and newspaper advertising campaigns
and
other public relations activities; employing advertising agencies to assist
therein; and providing promotional brochures and other marketing materials
to
licensees in the Sonic System) as well as any other purpose that promotes,
enhances, or protects the Sonic System including, but not limited to, food
safety programs, customer feedback programs, and Sonic Games. All sums
paid by licensees to the SBF shall be maintained in a separate account from
the
other funds of Sonic. The SBF shall pay Sonic monthly an amount equal
to 15% of the SBF’s receipts during the preceding month, but not to exceed
Sonic’s actual administrative costs and overhead, if any, as Sonic may incur in
activities reasonably related to the administration or direction of the SBF
for
the licensees and the Sonic System, including without limitation, conducting
market research, preparing marketing, advertising, and other materials, and
collecting and accounting for assessments for the SBF. The SBF and
its earnings shall not inure to the benefit of Sonic.
(iv) All
materials produced by the SBF shall be made available to all licensees on a
regular basis at less than full production cost but including the cost of
distribution. This Section 11.01(g)(iv) shall not preclude Sonic from
offering other materials not produced by the SBF upon terms subject to the
discretion of Sonic. (See Section 11.01(f).)
30
(v) The
SBF is not an asset of Sonic, and an independent certified public accountant
designated by Sonic shall review the operation of the SBF annually, and the
report shall be made available to Licensee upon
request. Notwithstanding the foregoing, the body approved and
designated by Sonic as the body to consult with regarding Sonic’s maintenance
and administration of the SBF (such as the Franchise Advisory Council Executive
Committee or its successor) may designate the independent public accountant
to
conduct the required review of the operation of the SBF, if requested in writing
at least 30 but not more than 60 days prior to the end of each fiscal
year.
(vi) Although
Sonic intends the SBF to be of perpetual duration, Sonic maintains the right
to
terminate the SBF. Such SBF shall not be terminated, however, until all
monies in the SBF have been expended for purposes as aforesaid.
(vii) On
at least a quarterly basis, Sonic shall consult with the body approved and
designated by Sonic (such as the Franchise Advisory Council Executive Committee
or its successor) regarding Sonic’s maintenance and administration of the SBF
and shall report to that body on the SBF’s operation.
(h) Coupons
created or developed by or for Licensee for use in promoting the Non-Traditional
Sonic are subject to the provisions of Section
11.01(e). Additionally, such coupons shall conspicuously state (i)
the location(s) where the coupons will be accepted and (ii) an expiration
date. Licensee shall use its best efforts to ensure that coupons
created or developed for the Non-Traditional Sonic or its market are not
distributed outside the area of the Non-Traditional Sonic or its
market.
11.02. Publicity.
Sonic
shall have the right to
photograph the Non-Traditional Sonic’s exterior and/or interior, and the various
foods served, and to use any such photographs in any of its publicity or
advertising, and Licensee shall cooperate in securing such photographs and
consent of Persons pictured.
12.
INSURANCE.
12.01. Insurance
Amounts.
Prior
to opening or taking possession
of the Non-Traditional Sonic, the Licensee shall acquire and thereafter maintain
insurance from insurance companies acceptable to Sonic. The Licensee
shall determine the appropriate limits of liability insurance and shall also
have the right to specify other forms of insurance, but Sonic shall require
the
following minimum amounts and policy forms of insurance:
(a) The
Licensee shall maintain statutory worker’s compensation insurance and employer’s
liability insurance having a minimum limit of liability of the greater of
$500,000 or the minimum amount otherwise required by applicable state
law. Sonic shall accept participation in the Texas Sonic Employers
Trade Association (“TSETA”) or in the non-subscriber program for Sonic drive-in
restaurants and non-traditional Sonic restaurants located in Texas
31
as
long as Texas law does not require statutory worker’s compensation
insurance.
(b) The
Licensee shall maintain commercial general liability insurance, including bodily
injury, property damage, products, personal, and advertising injury coverage,
on
an occurrence policy form having a minimum per occurrence and general aggregate
limits of at least $1,000,000 per location.
(c) The
Licensee shall maintain non-owned automobile liability insurance having a
minimum limit of $1,000,000. The automobile policy also shall provide
coverage for owned automobiles if owned or leased in the name of the
Licensee.
(d) The
Licensee shall maintain excess (umbrella) liability insurance having a minimum
limit of $1,000,000 per occurrence / general aggregate per
location.
(e) The
Licensee shall maintain business income interruption insurance with an
endorsement providing for reimbursement for a minimum of 12 months to Sonic,
any
Sonic-administered fund, and the advertising cooperative of which the Licensee
is a member, as applicable, for payments due under Sections 5.02, 5.03, and
11.01 stemming from an event causing closure of the Non-Traditional Sonic for
48
hours or more.
(f) Sonic
shall have the right to require the Licensee to increase the insurance specified
above by giving the Licensee 60 days’ written notice in accordance with the
notice provisions of this Agreement, and the Licensee shall comply no later
than
the first policy renewal date after that 60-day period.
12.02. Sonic
as Additional Insured.
The
Licensee shall name Sonic and
Sonic’s subsidiaries and Affiliates as additional insureds and loss payees under
the insurance policies specified in Sections 12.01(b), 12.01(c), 12.01(d),
and
12.01(e), above, and under any insurance policy (including any employment
practices liability insurance policy) that provides coverage for an event that
could result in a lawsuit in which Sonic is named a defendant. The
Licensee’s policies shall constitute primary policies of insurance with regard
to other insurance, shall contain a waiver of subrogation provision in favor
of
Sonic as it relates to the operation of the Non-Traditional Sonic, and shall
provide for at least 30 days’ written notice to Sonic prior to their
cancellation or amendment.
12.03. General
Conditions.
Prior
to opening or taking possession
of the Non-Traditional Sonic and within 10 days of any request by Sonic, the
Licensee shall furnish Sonic with certificates of insurance evidencing that
the
Licensee has obtained the required insurance in the form and amounts as
specified above. In addition, the Licensee shall deliver evidence of
the continuation of the required insurance policies at least 30 days prior
to
the expiration dates of each existing insurance policy. If the
Licensee at any time fails to acquire and maintain the required insurance
coverage, Sonic shall have the right, at the Licensee’s expense, to acquire and
administer the required minimum insurance coverage on
32
behalf
of
the Licensee. However, Sonic shall not have any obligation to assume
the premium expense, and nothing in this Agreement shall constitute a guaranty
by Sonic against any losses sustained by the Licensee. Sonic may
relieve itself of all duties with respect to the administration of any required
insurance policies by giving 10 days’ written notice to the
Licensee.
13.
TRANSFER OF INTEREST.
13.01. Assignment.
The
rights and duties created by this
Agreement are personal to Licensee, and Sonic has granted the License in
reliance on the collective character, skill, aptitude, and business and
financial capacity of Licensee and Licensee’s principals. Accordingly,
except as may be otherwise permitted by this Section 13, neither Licensee nor
any Person or entity with an interest in Licensee shall directly or indirectly,
through one or more intermediaries, without Sonic’s prior written consent, sell,
assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber
any
direct or indirect interest in the Agreement; any interest in Licensee, if
Licensee is a partnership, joint venture, closely held corporation, limited
liability company, or other business entity; or any interest which, together
with other related previous simultaneous or proposed transfers, constitutes
a
transfer of Control of Licensee where Licensee is registered under the
Securities Exchange Act of 1934 or which is a trust. Any such purported
assignment occurring by operation of law or without Sonic’s prior written
consent and pursuant to the terms of this Section 13, shall constitute a default
of this Agreement by Licensee, and such purported assignment shall be null
and
void.
13.02. Death
or Permanent Incapacity of Licensee.
Upon
the death or permanent incapacity
of Licensee, the interest of Licensee in the Agreement may be assigned either
pursuant to the terms of Section 13.04 herein or to one or more of the following
Persons: Licensee’s spouse, heirs, or nearest relatives by blood or
marriage, subject to the following conditions: (1) If, in the sole
discretion of Sonic, such persons shall be capable of conducting the
Non-Traditional Sonic business in accordance with the terms and conditions
of
the Agreement, and (2) if such persons shall also execute an agreement by which
they personally assume full and unconditional liability for and agree to perform
all the terms and conditions of the Agreement to the same extent as the original
Licensee. In the event that Licensee’s heirs do not obtain the consent of
Sonic as assignees of the Agreement, the personal representative of Licensee
shall have the greater of 120 days or the completion of the probate of the
Licensee’s estate to dispose of Licensee’s interest hereunder, which disposition
shall be subject to all the terms and conditions for assignments under Section
13.04. Licensee’s personal representative shall cooperate with Sonic
to provide, in a timely manner, such documents as may be requested by Sonic,
including without limitation Licensee’s death certificate and estate documents,
to assist Sonic to determine or confirm Licensee’s assignees.
13.03. Assignment
to Licensee’s Corporation or Other Business Entity.
Sonic
may, upon Licensee’s compliance
with the following requirements, consent to an assignment of the Agreement
to a
corporation whose shares are owned and Controlled by Licensee or to another
business entity, such as a limited liability company, whose interests are owned
and Controlled by Licensee. Such written materials shall be supplied
to Sonic within 15 days after the request by Sonic.
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(a) Licensee’s
corporation or other business entity shall be newly organized, and its charter
or equivalent organizational document shall provide that its activities are
confined exclusively to operating Sonic drive-in restaurants and/or
non-traditional Sonic restaurants.
(b) Licensee
and Licensee’s corporation or other business entity shall maintain stop transfer
instructions against the transfer on Licensee’s corporation’s or other business
entity’s records of any securities or interests with any voting rights subject
to the restrictions of Section 13 hereof, and shall issue no securities upon
the
face of which the following printed legend does not legibly and conspicuously
appear.
The
transfer of this stock is subject to terms and conditions of one or more license
agreements with Sonic Industries LLC. Reference is made to said license
agreement(s) and the restrictive provisions of the Articles and By-Laws of
this
corporation. By agreeing to receive these securities, the transferee
hereby agrees to be bound by the terms of such agreements, articles, and
by-laws.
(c) At
any time upon Sonic’s request, Licensee and Licensee’s corporation or other
business entity shall furnish Sonic with a list of all shareholders, partners,
or members, as applicable, having an interest in Licensee’s corporation or other
business entity, the percentage interest of such shareholder, partner, or
member, and a list of all officers and directors or managers in such
form as Sonic may require.
(d) The
name of Licensee’s corporation or other business entity shall not include any of
the Proprietary Marks granted by the Agreement. Licensee and Licensee’s
corporation or other business entity shall not use any ▇▇▇▇ nor any name
deceptively similar thereto in a public or private offering of its securities
or
other interest, except to reflect Licensee’s corporation’s or other business
entity’s license relationship with Sonic. Any prospectus or registration
Licensee or Licensee’s corporation would propose to use in such a public or
private offering shall be submitted to Sonic within a reasonable time prior
to
the effective date thereof for the purpose of permitting Sonic to verify
compliance with this requirement by Licensee and Licensee’s
corporation.
(e) Articles
of Incorporation, By-Laws, and all other documents governing Licensee’s
corporation or other business entity shall be forwarded to Sonic for
approval. Such documents shall recite that the issuance and transfer of
any interest in Licensee’s corporation or other business entity are restricted
by the terms of Section 13 of this Agreement.
(f) Each
shareholder, partner, or member, as applicable, of the Licensee’s corporation or
other business entity shall personally guarantee performance under this
Agreement and shall be personally bound by the terms thereof.
(g) Any
breach of this Agreement by Licensee’s corporation or other business entity
shall be deemed a breach of this Agreement by each shareholder, partner, or
member, as applicable, of Licensee’s corporation or other business entity and
each shareholder, partner, or member, as applicable, shall be personally and
fully liable and obligated by any and all such breaches.
34
(h) Licensee
and Licensee’s corporation or other business entity shall submit to Sonic, prior
to any assignment hereunder, a shareholders, partners, or members agreement,
as
applicable, executed by the Board of Directors or managers, as applicable,
and
ratified by all shareholders, partners, or members, which states that, except
as
may be permitted by Section 13 of this Agreement, no shares of stock or other
interest in Licensee’s corporation or other business entity shall be issued,
transferred, or assigned to any Person or entity without Sonic’s prior written
consent.
(i) Each
and every shareholder, partner, or member of Licensee’s corporation or other
business entity or any party owning a security issued by, or owning any legal
or
equitable interest in Licensee’s corporation or other business entity or in any
security convertible to a legal or equitable interest in Licensee’s corporation
or other business entity shall meet those same standards of approval as an
individual licensee shall be required to meet prior to being included as a
licensee on a standard license agreement with Sonic.
13.04. Other
Assignment.
(a) In
addition to any assignments or contingent assignments contemplated by the terms
of Sections 13.02 and 13.03, Licensee shall not sell, transfer, or assign the
Agreement to any Person or Persons (including to another Licensee under this
Agreement where more than one Person has executed this Agreement) without
Sonic’s prior written consent. Such consent shall not be unreasonably
withheld.
(b) In
determining whether to grant or to withhold such consent, the following
requirements must be met by Licensee:
(i) All
of Licensee’s accrued monetary obligations shall have been satisfied whether due
under this Agreement or otherwise.
(ii) Sonic
and the Licensee execute a general release of each other, in a form satisfactory
to Sonic, of any and all claims the Licensee may have against Sonic and its
Affiliates, including (without limitation) all claims arising under any federal,
state, or local law, rule, or ordinance, but excluding (as to Sonic) any claims
against the Licensee for (a) unpaid moneys due Sonic, its Affiliates, or
Sonic-approved advertising cooperatives, (b) the violation of the legal rights
of Sonic or its Affiliates regarding the Proprietary Marks, (c) the violation
of
any of the covenants contained in Section 16.01 of this Agreement, (d) the
violation of any duty under this Agreement to insure, defend, or indemnify
Sonic
or its Affiliates or to hold Sonic or its Affiliates harmless, and (e) the
violation of any other agreement with Sonic or its Affiliates. Sonic
may waive the requirements of this Section 13.04(b)(ii) at Sonic’s
election.
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(iii) Licensee
shall not be in material breach of this Agreement or any other agreement between
Sonic and Licensee.
(iv) Assignee
(or the assignee’s management, as the case may be) shall at Sonic’s sole
discretion enroll in and successfully complete such training programs as Sonic
shall at that time designate according to Section 6.04 hereof.
(v) Sonic
shall consider of each prospective transferee, by way of illustration, the
following: (a) work experience and aptitude, (b) financial background, (c)
character, (d) ability to personally devote full time and best efforts to
managing the Non-Traditional Sonic, (e) residence in the locality of the
Non-Traditional Sonic, (f) equity interest in the Non-Traditional Sonic, (g)
conflicting interests, and (h) such other criteria and conditions as Sonic
shall
apply in the case of an application for a new license to operate a
non-traditional Sonic restaurant. Sonic’s consent shall also be
conditioned upon such transferee’s execution of an agreement by which transferee
personally assumes full and unconditional liability for and agrees to perform
from the date of such transfer all obligations, covenants, and agreements
contained in this Agreement to the same extent as if transferee had been an
original party to the Agreement. At Sonic’s election, Sonic may
alternatively allow such transferee to sign the then-current form of license
agreement for non-traditional Sonic restaurants subject to all terms,
conditions, obligations, and covenants contained in that form of license
agreement, including the full term of that license agreement.
(c) Following
License’s sale, assignment, or transfer of this Agreement, Licensee shall remain
subject to Section 16.01 of this Agreement.
13.05. Sonic’s
Right of First Refusal.
(a) If
Licensee or any Person or entity with an interest in Licensee has received
and
desires to accept any bona fide offer to purchase all or any part of Licensee’s
interest in this Agreement or in Licensee and the transfer of such interest
would: (1) result in a change of Control of Licensee of this Agreement or (2)
constitute a transfer of interest held by a Controlling Person of Licensee
or of
the Agreement, Licensee or such Person shall notify Sonic in writing of each
such offer, with such notice including the name and address of the proposed
purchaser, the amount and terms of the proposed purchase price, a copy of the
proposed purchase contract (signed by the parties, but expressly subject to
Sonic’s right of first refusal), and all other terms and conditions of such
offer. Sonic shall have the right and option, exercisable within 20
days after Sonic’s receipt of such written notification, to send written notice
to Licensee or such Person or entity that Sonic or its designee intends to
purchase the interest which is proposed to be transferred on the same terms
and
conditions offered by the third party, provided that Sonic has the right to
substitute cash for any consideration offered by the third party. Any
material change in the terms of an offer prior to closing shall cause it to
be
deemed a new offer, subject to the same right of first refusal by Sonic or
its
designee as in the initial offer; provided, however, that such new offer shall
not affect Sonic’s right and option, within 20 days of notice to Sonic of the
initial offer, to provide notice of its intent to purchase the interest on
the
terms and conditions in the initial offer. Sonic’s failure to
exercise its option shall not constitute a waiver of any other provision of
this
Agreement, including any of the requirements of this Section 13 with respect
to
the proposed transfer.
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Silence
on the part of Sonic shall constitute rejection. If the proposed sale
includes assets of Licensee not related to the operation of the Non-Traditional
Sonic, Sonic may purchase not only the assets related to the operation of the
Non-Traditional Sonic, but may also purchase the other assets. An
equitable purchase price shall be allocated to each asset included in the
proposed sale. In any purchase by Sonic pursuant to this Section 13(a),
Sonic shall have the right to require the seller to make customary
representations and warranties.
(b) The
election by Sonic not to exercise its right of first refusal as to any offer
shall not affect its right of first refusal as to any subsequent
offer.
(c) Any
sale or attempted sale effected without first giving Sonic the right of first
refusal described above shall be void and of no force and
effect.
(d) If
Sonic does not accept the offer to purchase the Non-Traditional Sonic, Licensee
may conclude the sale to the purchaser who made the offer so long as the terms
and conditions of such sale are identical to those originally offered to Sonic;
provided, however, that Sonic’s approval of the assignee be first obtained,
which consent shall not be unreasonably withheld upon compliance with the
conditions on assignment imposed by this Agreement.
(e) The
provisions of this Section 13.05 shall not apply to any proposed transfers
to
members of the Licensee’s immediate family. For the purposes of this
Section 13.05, a member of the Licensee’s immediate family shall mean the
Licensee’s spouse, children (by birth or adoption), and
stepchildren. In addition, the provisions of this Section 13.05 shall
not apply to any proposed transfers to a Person who already owns an interest
(directly or indirectly) in this Agreement as long as the transfer will not
result in a change in Control of the Licensee or the Agreement.
13.06. Consent
to Assignments.
With
regard to any transfer,
assignment, or pledge of any interest in this Agreement or in the Licensee
pursuant to the foregoing provisions of this Section 13, Sonic shall not
withhold its consent unreasonably as long as the proposed transfer, assignment,
or pledge otherwise complies with the other requirements set forth in this
Section 13.
14.
DEFAULT AND TERMINATION.
14.01. Optional
Termination.
Licensee
shall be deemed to be in
breach of this Agreement and Sonic may, at its option, terminate this Agreement
and all rights granted herein at any time during the term hereof without
affording Licensee any opportunity to cure the breach, effective immediately
upon Licensee’s receipt of a notice of termination, upon the occurrence of any
of the following events:
(a) Licensee
shall become insolvent.
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(b) Licensee,
either personally, through an equity owner, or through Licensee’s attorney,
shall give oral or written notice to Sonic of Licensee’s intent to file a
voluntary petition under any bankruptcy law.
(c) A
final judgment aggregating in excess of $5,000 against the Non-Traditional
Sonic
or property connected with the Non-Traditional Sonic which remains unpaid for
thirty days.
(d) Suit
to foreclose any lien against any assets of the Non-Traditional Sonic is
instituted against Licensee and (i) is not dismissed within 30 days, (ii) such
lien is not contested and challenged through the applicable administrative
agencies or courts, or (iii) a bond is not posted (if such remedy is available)
to delay any such foreclosure and guarantee performance.
(e) The
assets of the Non-Traditional Sonic are sold after being levied thereupon by
sheriff, marshal, or a constable.
(f) Transfer
of this Agreement, in whole or in part, is effected in any manner inconsistent
with Section 13 hereof.
(g) The
assets, property, or interests of Licensee are blocked under any law, ordinance,
or regulation relating to terrorist activities or Licensee is otherwise in
violation of any such law, ordinance, or regulation.
(h) If
Licensee ceases to operate the Non-Traditional Sonic or otherwise abandons
the
Non-Traditional Sonic (other than closure permitted pursuant to Section
6.05(c)(v) herein) or forfeits the legal right to do or transact business at
the
location licensed herein. However, a default under this Agreement
shall not occur and the Licensee shall have the right to terminate this
Agreement upon written notice to Sonic after the Licensee loses its lease or
other legal right to conduct business at the location of the Non-Traditional
Sonic if and only if the loss of the Licensee’s lease or legal right to conduct
business did not result from the Licensee’s breach of its obligations or failure
to exercise any contractual or legal rights available to it.
(i) If
Licensee is convicted of a felony, a crime involving moral turpitude, or
any other crime or offense that is reasonably likely, in the sole
opinion of Sonic, to adversely affect the Sonic System, the Proprietary
Marks, the goodwill associated therewith, or Sonic’s rights
therein.
(j) If
Licensee misuses or makes any unauthorized use of any of the Proprietary Marks
or any other identifying characteristic of the Sonic System or otherwise
materially impairs the goodwill associated therewith or Sonic’s rights therein,
and the Licensee will not or cannot cure the default within 30
days.
(k) If
Licensee improperly discloses trade secrets or confidential information, and
the
Licensee will not or cannot cure the default within 30 days.
(l) If
continued operation of the Non-Traditional Sonic might endanger public health
or
safety. In such case, whether or not Sonic elects to terminate this
Agreement, Sonic may immediately close the Non-Traditional Sonic unless and
until the situation is, in Sonic’s judgment, satisfactorily
resolved.
38
(m) If
Licensee knowingly or through gross negligence maintains false books or records
or knowingly or through gross negligence submits any false report to
Sonic.
(n) If
Licensee is in default of this Agreement three or more times in any given
12-month period, whether or not such default is cured.
14.02. Period
to Cure.
Except
as provided in Section 14.01,
Licensee shall have 30 days after receipt from Sonic of a written notice of
breach of this Agreement or such notice period as is required by the law of
the
state where the Non-Traditional Sonic is located, within which to remedy any
breach hereunder. However, this period to cure will not be available to
Licensee, and Sonic will not be required to delay termination of this Agreement,
where the breach involved is one which Licensee cannot cure within the
prescribed cure period or is one which is impossible to
cure. Licensee shall be in breach hereunder for any failure to comply
with any of the terms of this Agreement or to carry out the terms of this
Agreement. Such breach shall include, but shall not be limited to, the
occurrence of any of the following illustrative events:
(a) If
the Licensee or Persons Controlling, Controlled by, or under common Control
with
Licensee fail to pay any past due amounts owed to Sonic, whether for the
Non-Traditional Sonic or otherwise.
(b) If
Licensee fails to promptly pay, or repeatedly delays the prompt payment of,
undisputed invoices from Licensee’s suppliers or in the remittance of rent and
property tax as required in Licensee’s lease.
(c) If
Licensee fails to maintain and operate the Non-Traditional Sonic in a good,
clean, and wholesome manner or otherwise is not in compliance with the standards
prescribed by the Sonic System. In such case, whether or not Sonic
elects to terminate this Agreement, Sonic may immediately close the
Non-Traditional Sonic unless and until the failure or noncompliance is
cured.
(d) If
Licensee attempts to assign or transfer any interest in this Agreement in
violation of Section 13 herein.
(e) If
Licensee denies Sonic the right to inspect the Non-Traditional Sonic at
reasonable times, which includes the right to photograph the interior and
exterior of the Non-Traditional Sonic in its entirety.
(f) If
Licensee breaches any other requirement set forth in this
Agreement.
(g) If
Licensee, upon the destruction of the Non-Traditional Sonic, fails to rebuild
the licensed premises and resume operation within a reasonable time (cessation
of the business from a licensed premises shall not constitute default of this
Agreement if caused by condemnation, expiration of a location lease pursuant
to
its terms at execution, or when failure to rebuild following destruction of
the
licensed premises is prohibited by law or the location
lease).
39
(h) If
Licensee’s conduct or the operation of the Non-Traditional Sonic by Licensee, in
Sonic’s judgment, damages or threatens to damage the goodwill of the Sonic
System or the Sonic brand. In such case, whether or not Sonic elects
to terminate this Agreement, Sonic may immediately close the Non-Traditional
Sonic unless and until the situation, in Sonic’s judgment, is satisfactorily
resolved.
(i) If
Licensee fails to correct any deficiency or unsatisfactory condition within
the
time period required by Section 6.05(b).
14.03. Resolution
of Disputes.
The
following provisions shall apply to
any controversy between the Licensee and Sonic (including an Affiliate of Sonic)
and relating (a) to this Agreement (including any claim that any part of this
Agreement is invalid, illegal, or otherwise void or voidable and any claim
that
a controversy is not subject to arbitration), (b) to the parties’ business
activities conducted as a result of this Agreement, or (c) the parties’
relationship or business dealings with one another generally, including all
disputes and litigation pending or in existence as of the date of this
Agreement.
(a) Negotiation.
The
parties first shall use their best
efforts to discuss and negotiate a resolution of the controversy.
(b) Mediation.
If
the efforts to negotiate a
resolution do not succeed, the parties shall submit the controversy to mediation
in Oklahoma City, Oklahoma, by a mediation firm agreeable to the parties or
by
the American Arbitration Association, if the parties cannot agree.
(c) Arbitration.
If
the efforts to negotiate and mediate
a resolution do not succeed, the parties shall resolve the controversy by final
and binding arbitration in accordance with the Rules for Commercial Arbitration
(the “Rules”) of the American Arbitration Association in effect at the time of
the execution of this Agreement and pursuant to the following additional
provisions:
(i) Applicable
Law. The Federal Arbitration Act (the “Federal Act”), as
supplemented by the Oklahoma Arbitration Act (to the extent not inconsistent
with the Federal Act), shall apply to the arbitration.
(ii) Selection
of Arbitrator. The parties shall select one arbitrator within 10
days after the filing of a demand and submission in accordance with the
Rules.
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(iii) Location
of Arbitration. The arbitration shall take place in Oklahoma
City, Oklahoma, and the arbitrator shall issue any award at the place of
arbitration. The arbitrator may conduct hearings and meetings at any
other place agreeable to the parties or, upon the motion of a party, determined
by the arbitrator as necessary to obtain significant testimony or
evidence.
(iv) Scope
of Proceeding. The parties shall conduct any arbitration
proceeding and resolve any controversy on an individual basis only and not
on a
class-wide, multiple-party, or similar basis.
(v) Enforcement
of Award. The prevailing party shall have the right to enter the
award of the arbitrator in any court having jurisdiction over one or more of
the
parties or their assets. The parties specifically waive any right
they may have to apply to any court for relief from the provisions of this
Agreement or from any decision of the arbitrator made prior to the
award. The award of the arbitrator shall not have any precedential or
collateral estoppel effect on any other controversy involving Sonic or its
Affiliates.
(d) Excluded
Controversies.
At
the election of Sonic or its
Affiliate, the provisions of this Section 14.03 shall not apply to any
controversies relating to any fee due Sonic or its Affiliate; any promissory
note payments due Sonic or its Affiliate; or any trade payables due Sonic or
its
Affiliate as a result of the purchase of equipment, goods, or
supplies. At the election of Sonic or its Affiliate, the provisions
of this Section 14.03 also shall not apply to any controversies relating to
the
use and protection of the Proprietary Marks or the Sonic System, including
(without limitation) Sonic’s right to apply to any court of competent
jurisdiction for appropriate injunctive relief for the infringement of the
Proprietary Marks or the Sonic System.
(e) Attorneys’
Fees and Costs.
The
prevailing party to the arbitration
shall have the right to an award of its reasonable attorneys’ fees and costs
incurred after the filing of the demand and submission, including a portion
of
the direct costs of any in-house legal staff reasonably allocable to the time
devoted to the arbitration.
15.
OBLIGATIONS UPON TERMINATION.
15.01. Effect
of Termination, Cancellation, or Expiration of this Agreement.
Except
as otherwise authorized pursuant
to the terms of any other license agreement between Sonic and the Licensee,
the
Licensee shall comply with the following provisions after the expiration or
termination of this Agreement and the License:
(a) Licensee,
upon any termination, cancellation, or expiration of this Agreement, shall
promptly pay to Sonic and Sonic’s subsidiaries any and all sums owed to
them. In the event of termination for any breach by Licensee, such sums
shall include all damages, costs, and expenses, including reasonable attorneys’
fees, incurred by Sonic as a result of the breach, which obligation shall give
rise to and remain, until paid in full, a lien in favor of
41
Sonic
against any and all of the assets of the Non-Traditional Sonic owned by Licensee
at the time of default.
(b) Upon
termination, cancellation, or expiration hereof for any reason, the License
and
all Licensee’s rights hereunder shall terminate. Licensee shall not thereafter
use or adopt any trade secrets disclosed to Licensee hereunder or any paper
goods, emblems, signs, displays, menu housings, table ordering stations, or
other property on which Sonic’s name or Proprietary Marks are imprinted or
otherwise form a part thereof or any confusing simulations thereof.
Licensee shall not otherwise use or duplicate the Sonic System or any
portion thereof or assist others to do so. Licensee shall remove
from the premises all signs, emblems, and displays identifying it as
associated with Sonic or the Sonic System or which constitute or display any
Proprietary ▇▇▇▇ and shall also remove from the premises all menu housings
and
PAYS or other Sonic proprietary equipment. Licensee shall cease to
use and shall return to Sonic all copies of the Sonic Operations
Manual, instructions, or materials delivered to Licensee
hereunder.
(c) Upon
termination, cancellation, or expiration of this Agreement, unless otherwise
directed in writing by Sonic, Licensee shall change the exterior and interior
design and the decor of said premises, including, but not limited to, changing
the color scheme, and shall make or cause to be made such changes in signs
and
structures (excluding major structural changes) as Sonic shall reasonably direct
so as to effectively distinguish the same from its former appearance and from
any other non-traditional Sonic restaurant or Sonic drive-in restaurant, and
if
Licensee fails or refuses to comply herewith, then Sonic shall have the right
to
enter upon the premises where said business is being conducted without being
guilty of trespass or any other tort for the purpose of making or causing to
be
made such changes required by Sections 15.01(b) or 15.01(c) at the expense
of
Licensee, which expense Licensee agrees to pay on demand.
(d) Upon
termination, cancellation, or expiration of this Agreement, in the event
Licensee is the owner of any signage containing or incorporating any of the
Proprietary Marks, Sonic shall have an irrevocable option to purchase the
signage for its fair market value. In any event, Licensee shall not
thereafter use any signage displaying Sonic’s name or Proprietary Marks or which
primarily display the colors used in any other such sign at any other
non-traditional Sonic restaurant or Sonic drive-in restaurant (see Section
15.04
for determining fair market value). Any agent, servant, or employee of
Sonic may remove the signage or any objectionable signs or advertising from
the
Non-Traditional Sonic without being guilty of trespass or other tort, and
Licensee shall be liable for Sonic’s costs plus attorneys’ fees for any
interference therewith.
(e) Upon
termination, cancellation, or expiration of this Agreement, Licensee shall
cease
to hold Licensee out in any way as a licensee of Sonic or to do anything which
would indicate any relationship between Licensee and Sonic.
(f) Notwithstanding
the provisions contained in this Section 15.01, Licensee shall be solely
responsible for the cost of any removals or changes required by this Section
15.01. Licensee hereby releases Sonic and its agents, servants, and
employees from and agrees to indemnify, defend, and hold harmless Sonic and
its
agents, servants, and employees against any cost, damage, liability, or expense
(including attorneys’ fees) arising out of or
42
resulting
from Licensee granting Sonic and its agents, servants, and employees access
to
the premises, including without limitation any cost, damage, liability, or
expense arising out of the removal of any sign, equipment, fixture, personal
property, or other property from the premises or modification of the premises
pursuant to this Agreement.
(g) The
covenants set forth in this Section 15.01 shall survive the termination,
cancellation, or expiration of this Agreement.
(h) All
rights, claims, and indebtedness which may accrue to Sonic prior to termination,
cancellation, or expiration of this Agreement shall survive termination,
cancellation, or expiration and be enforceable by Sonic.
(i) Licensee
shall complete all modifications required by this Section 15.01 within 30 days
after this Agreement has been terminated or canceled or has
expired. Licensee and Sonic agree that Sonic’s damages resulting from
a breach of this Section 15.01 are difficult to estimate or determine
accurately. In the event of such breach by Licensee of the provisions of
this Section 15.01, Licensee, in addition to any and all other remedies
available to Sonic herein and elsewhere, will pay Sonic double the royalty,
brand, and advertising fees prescribed in this Agreement until Licensee
satisfactorily de-identifies the restaurant premises in the manner prescribed
by
this Section. This payment shall constitute liquidated damages and
shall not be construed as a penalty since such payment has been agreed to by
Licensee and Sonic as reasonably representative of the actual damage sustained
by Sonic in the event of such a breach. The liquidated damages shall start
on the 31st day after this Agreement has been terminated or canceled or has
expired. These liquidated damages shall not constitute either a
waiver of Licensee’s obligation to de-identify or a license to use the
Proprietary Marks or the Sonic System. These remedies will be in
addition to any other remedies Sonic may have hereunder or under federal or
state law.
15.02. Sonic’s
Option to Purchase.
(a) Upon
termination, cancellation, or expiration hereof, Sonic shall have the right
and
option to purchase all or any patented, special, or unique non-traditional
Sonic
restaurant equipment, menu housings, table order stations, signs, menus, and
supplies of Licensee at their fair market value (see Section 15.04 for
determining fair market value). Such right or option of Sonic shall be
exercised as provided in Section 15.02(b). If Sonic elects to
exercise any option to purchase herein provided, it shall have the right to
set
off all amounts due from Licensee to Sonic and one-half of the cost of any
appraisals against any payment therefor.
(b) In
the case of termination by expiration, Sonic shall exercise Sonic’s option
contained in this Section 15.02 by giving Licensee written notice at least
30
days prior to expiration. In the case of termination for any other reason,
Sonic shall exercise its option by giving Licensee written notice within 30
days
after termination.
(c) Sonic’s
option hereunder is without prejudice to Sonic’s rights under any security
agreement held by Sonic or with respect to which Sonic may have a guarantor’s or
surety’s subrogation interest. If Sonic exercises this option, Sonic may
pay any debt which Licensee owes to Sonic and shall remit any balance of the
purchase price to Licensee. There shall be no allowance for
goodwill.
43
15.03. Sonic’s
Obligation to Purchase.
(a) Upon
termination, cancellation, or expiration of this Agreement, if Licensee desires
to sell Licensee’s unbroken inventory packages of approved imprinted items and
supplies with Proprietary Marks to Sonic, excluding all food items,
Sonic shall have the obligation to repurchase such items at
Licensee’s cost.
(b) If
Licensee desires to sell such items to Sonic, Licensee shall, not later than
10
days after termination, cancellation, or expiration of this Agreement, give
Sonic 10 days written notice of Licensee’s election and, at the expiration of
the 10 days notice period, deliver such items at Licensee’s expense with an
itemized inventory to the nearest Sonic drive-in restaurant or
non-traditional Sonic restaurant designated by Sonic. Sonic agrees to pay
Licensee or credit Licensee’s account within seven days after said
delivery.
15.04. Fair
Market Value Determination.
If
the parties cannot agree on the fair
market value of any item subject to an option to purchase in this Agreement
within a reasonable time, one appraiser shall be designated by Sonic, one
appraiser shall be designated by Licensee, and the two appraisers shall
designate an independent appraiser, and the valuation of such third appraiser
alone shall be binding. Sonic and the Licensee each shall pay one-half of
the cost of any appraisals required pursuant to this Section 15.04.
16.
COVENANTS.
16.01. Restrictions
on Licensee.
Licensee
agrees and covenants as
follows:
(a) During
the term of this Agreement, Licensee shall not directly or indirectly through
one or more intermediaries (i) engage in, (ii) acquire any financial or
beneficial interest (including interests in corporations, limited liability
companies, partnerships, trusts, unincorporated associations, joint ventures,
or
other business entities) in, (iii) loan money to, or (iv) become landlord of
any
restaurant business which has a menu similar to that of a non-traditional Sonic
restaurant or Sonic drive-in restaurant (such as hamburgers, hot dogs, onion
rings, and similar items customarily sold by non-traditional Sonic restaurants
or Sonic drive-in restaurants) or which has an appearance similar to that of
a
non-traditional Sonic restaurant or Sonic drive-in restaurant (such as the
color
pattern or other items that are customarily used by a non-traditional Sonic
restaurant or Sonic drive-in restaurant).
(b) Licensee
shall not, for a period of 18 months after termination of this Agreement for
any
reason, directly or indirectly through one or more intermediaries (i) engage
in,
(ii) acquire any financial or beneficial interest (including interests in
corporations, limited liability companies, partnerships, trusts, unincorporated
associations, joint ventures, or other business entities) in, (iii) loan money
to, or (iv) become a landlord of any restaurant business
44
which
has
a menu similar to that of a non-traditional Sonic restaurant or Sonic drive-in
restaurant (such as hamburgers, hot dogs, onion rings, and similar items
customarily sold by non-traditional Sonic restaurants or Sonic drive-in
restaurants) or which has an appearance similar to that of a non-traditional
Sonic restaurant or Sonic drive-in restaurant (such as the color pattern or
other items that are customarily used by a non-traditional Sonic restaurant
or
Sonic drive-in restaurant), and which (i) is within a three-mile radius of
the
Non-Traditional Sonic formerly licensed by this Agreement, (ii) is within a
20-mile radius of any non-traditional Sonic restaurant or Sonic drive-in
restaurant in operation or under construction, or (iii) is located within the
MSA of the Non-Traditional Sonic.
(c) Licensee
shall not appropriate, use, or duplicate the Sonic System, or any portion
thereof, for use at any other restaurant business.
(d) During
the term of this Agreement, Licensee shall (i) use Licensee’s best efforts to
promote the business of the Non-Traditional Sonic and (ii) not engage in any
other business or activity that might detract from, interfere with, or be
detrimental to the Sonic System or Licensee’s full and timely performance under
this Agreement.
(h) The
parties agree that each of the foregoing covenants shall be construed as
independent of any covenant or provision of this Agreement. If all or any
portion of a covenant in this Section 16 is held unreasonable or unenforceable
by an arbitrator, court, or agency having valid jurisdiction in an unappealed
final decision to which Sonic is a party, Licensee expressly agrees to be bound
by any lesser covenant subsumed with the terms of such covenant that imposes
the
maximum duty permitted by law, as if the resulting covenant were separately
stated in and made a part of this Section 16.
(j) Licensee
expressly agrees that the existence of any claims Licensee may have against
Sonic, whether or not arising from this Agreement, shall not constitute a
defense to the enforcement by Sonic of the covenants in this Section
16.
(k) Licensee
acknowledges that Licensee’s violation of the terms of this Section 16 would
result in irreparable injury to Sonic for which no adequate remedy at law is
available, and Licensee accordingly consents to the ex parte issuance of
restraining orders, temporary and permanent injunctions, and cease and desist
orders prohibiting any conduct by Licensee in violation of the terms of this
Section 16.
16.02. Covenants
by Others.
At
the time of execution of this
Agreement, Licensee shall obtain covenants similar in substance to those set
forth in this Section 16 (including covenants applicable upon the termination
of
a Person’s relationship with
45
Licensee)
from all officers, directors, and holders of a direct or indirect beneficial
ownership interest in Licensee. With respect to each Person who becomes
associated with Licensee in one of the capacities enumerated above subsequent
to
execution of this Agreement, Licensee shall require and obtain such
covenants. In no event shall any Person enumerated be granted access to
any confidential aspect of the Sonic System or the Non-Traditional Sonic prior
to execution of such a covenant. All covenants required by this Section
16.02 shall include, without limitation, specific identification of Sonic as
a
third-party beneficiary of such covenants with the independent right to enforce
them. Failure by Licensee to obtain execution of a covenant required by
this Section 16.02 shall constitute a breach of this
Agreement. Licensee shall furnish to Sonic executed copies of
such covenants within 10 days of such request by Sonic.
17.
INDEPENDENT CONTRACTOR & INDEMNIFICATION.
17.01. Licensee
not an Agent of Sonic; Employment Matters.
It
is understood and agreed that this
Agreement does not create a fiduciary relationship between Sonic and Licensee,
and that nothing herein contained shall constitute Licensee as the agent, legal
representative, partner, joint venturer, or employee of Sonic. Licensee is,
and
shall remain, an independent contractor responsible for all obligations and
liabilities of, and for all loss or damage to, the Non-Traditional Sonic and
its
business, including any personal property, equipment, fixtures, or real property
connected therewith and for all claims or demands based on damage or destruction
of property or based on injury, illness, or death of any person or persons,
directly or indirectly, resulting from the operation of the Non-Traditional
Sonic. Licensee’s responsibility for the Non-Traditional Sonic and its business
shall include responsibility for all of the employment matters (including
employment decisions) of the Non-Traditional Sonic and for compliance with
federal, state, and local laws and regulations relating to such employment
matters. Sonic will refer all complaints related to employment
matters of the Non-Traditional Sonic to Licensee for resolution, and the
indemnification and hold harmless provisions of Section 17.03 shall apply to
all
employment matters of the Non-Traditional Sonic.
17.02. Cost
of Enforcement.
If
Sonic or Sonic’s Affiliates become
involved in any action at law or in equity or in any proceeding opposing
Licensee to secure, enforce, protect, or defend Sonic’s or Sonic’s Affiliates’
rights and remedies under this Agreement, in addition to any judgment entered
in
their favor, Sonic or Sonic’s Affiliates, as applicable, shall be entitled to
demand of and (in the event Sonic or Sonic’s Affiliates, as applicable, prevail
in such actions or proceedings) recover from Licensee the reasonable costs,
expenses, and attorneys’ fees incurred by Sonic or Sonic's
Affiliates. If, in such applicable final judgment Sonic does not
prevail, Licensee shall be entitled to recover from Sonic in any such action
or
proceeding the reasonable costs, expenses, and attorneys’ fees incurred by
Licensee.
17.03. Indemnification.
If
Sonic or Sonic’s Affiliates shall be
subject to any claim, demand, or penalty or become a party to any suit or other
judicial or administrative proceeding by reason of any claimed act or omission
by Licensee or Licensee’s employees or agents, or by reason of any act occurring
at the Non-Traditional Sonic, or by reason of any act or omission with respect
to the business or operation of the Non-Traditional Sonic, Licensee shall
indemnify and hold Sonic and Sonic’s Affiliates harmless against all judgments,
settlements, penalties, and expenses, including attorneys’ fees, court costs,
and other expenses of litigation or administrative proceeding, incurred by
or
imposed on Sonic or Sonic’s Affiliates in connection with the investigation or
defense relating to such claim or litigation or administrative proceeding and,
at the election of Sonic, Licensee shall also defend Sonic and Sonic’s
Affiliates. The Licensee shall
46
not
have any obligation to indemnify, defend, or hold harmless Sonic or any other
Person pursuant to the provisions of this Section 17.03 to extent the obligation
arises predominantly as a proximate result of Sonic’s act or failure to act when
under a duty to act.
18.
EFFECT OF WAIVERS.
No
waiver by Sonic of any breach or
series of breaches of this Agreement shall constitute a waiver of any subsequent
breach or waiver of the terms of this Agreement.
19.
NOTICES.
19.01. Delivery.
Any
notice required hereunder, if not
specified, shall be in writing and shall be delivered by (i) personal service,
(ii) by overnight, receipted delivery service, (iii) by United States certified
or registered mail, with postage prepaid, addressed to Licensee at the
Non-Traditional Sonic or at such other address of Licensee then appearing on
the
records of Sonic or to Sonic addressed to the attention of Sonic’s General
Counsel at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at the
subsequent address of Sonic’s corporate headquarters. Either party,
by a similar written notice, may change the address to which notices shall
be
sent. Notice shall be deemed effective on the date of delivery, if delivery
is
by personal service or overnight delivery, or three business days after the
party places the notice in the United States mail, if delivery is by certified
or registered mail.
19.02. Failure
to Accept.
If
Sonic is unable to give actual
notice of any breach or termination of this Agreement because Licensee has
failed to provide Sonic with a current address, because Licensee fails to accept
or pick up this mailed notice, or due to any reason which is not the fault
of
Sonic, then such notice shall be deemed as given when Sonic sends such notice
by
overnight receipted delivery service or registered or certified mail, postage
prepaid.
19.03. Licensee’s
Principal.
Licensee
has designated on the first
page of this Agreement a Principal to serve as the party receiving primary
notice on behalf of the Licensee. Each Licensee hereby agrees that
Sonic may send its notices and communications under this Agreement to the
Principal provided for herein, that Sonic may use the Principal as its primary
contact for purposes of communications and notices permitted or required
hereunder, and that all communications and notices given by Sonic to the
Principal will be just as effective on each Licensee as though the same had
been
given to each Licensee.
47
20.
ENTIRE AGREEMENT.
20.01. No
Oral Agreements.
This
Agreement and all addenda,
appendices, and amendments hereto constitute the entire agreement between the
parties and supersede all prior and contemporaneous, oral or written agreements
or understandings of the parties.
20.02. Scope
and Modification of Agreement.
No
interpretation, change, termination,
or waiver of any of the provisions hereof shall be binding upon Sonic unless
in
writing signed by an officer of Sonic. No modification, waiver,
termination, rescission, discharge, or cancellation of this Agreement shall
affect the right of any party hereto to enforce any claim or right hereunder,
whether or not liquidated, which occurred prior to the date of such
modification, waiver, termination, rescission, discharge, or
cancellation.
21.
CONSTRUCTION AND SEVERABILITY.
21.01. Interpretation.
The
recitals shall be considered a part
of this Agreement. Section and subsection captions are used only for
convenience and are in no way to be construed as part of this Agreement or
as a
limitation of the scope of the particular sections, subsections, paragraphs,
and
subparagraphs to which they refer. Words of any gender used in this
Agreement shall include any other gender, and words in the singular shall
include the plural where the context requires.
21.02. Invalidity.
If
any part of this Agreement for any
reason shall be declared invalid, such decision shall not affect the validity
of
any remaining portion, which shall remain in full force and effect. In the
event any material provision of this Agreement shall be stricken or declared
invalid, Sonic reserves the right to terminate this Agreement.
21.03. Binding
Effect.
This
Agreement shall be binding upon
the parties, and their heirs, executors, personal representatives, successors,
and assigns.
21.04. Survival.
Any
provisions of this Agreement which
impose an obligation after termination or expiration of this Agreement shall
survive the termination or expiration of this Agreement and be binding on the
parties.
48
21.05. Liability
of Multiple Licensees.
If
Licensee consists of more than one
Person or entity, each such Person and entity, and each proprietor, partner,
member, and shareholder of each such entity, shall be jointly and severally
liable for any and all of Licensee’s obligations and prohibitions under this
Agreement. Consequently, if and when a Person or entity as Licensee
is in breach of this Agreement and fails or is unable to cure such breach in
a
timely manner, Sonic may terminate the rights of the so-affected Person or
entity under this Agreement whereby this Agreement is terminated as to only
such
Person or entity while remaining fully effective as to all other Persons and
entities remaining as Licensee on this Agreement. This Person or
entity removed as Licensee shall remain jointly and severally obligated with
the
Persons and entities remaining as Licensee for any and all obligations and
liabilities of Licensee which occurred or accrued through the date of removal
of
said Person or entity.
22.
BUSINESS ENTITY LICENSEES
22.01. Corporate,
Partnership, and Limited Liability Company Licensees.
If
the Licensee is a corporation,
partnership, or limited liability company, the Licensee shall comply with the
following provisions:
(a) Purpose. The
certificate of incorporation and bylaws, partnership agreement and certificate
of limited partnership (if applicable), or articles of organization and
operating agreement of the Licensee (collectively, “Organizational Documents”),
as applicable, shall provide that the purpose of the business entity shall
consist only in the development, ownership, operation, and maintenance of Sonic
drive-in restaurants and/or non-traditional Sonic restaurants.
(b) Transfer
Restrictions. The Organizational Documents of the Licensee shall
provide that the Licensee shall not issue any additional capital stock or
interest of the Licensee and that no stockholder, partner, or member, as
applicable, may transfer, assign, or pledge any issued capital stock or interest
of the Licensee without the prior, written consent of Sonic, and each stock
certificate, if applicable, issued to evidence the capital stock of the Licensee
shall contain a legend disclosing the foregoing restriction. Sonic
shall not withhold its consent to the issuance of additional capital stock
or
interest or a transfer, assignment, or pledge without a reasonable
basis. In giving its consent, Sonic shall have the right (but not the
obligation) to impose one or more reasonable conditions, including (without
limitation) the requirement that the recipient of the capital stock or interest
execute an agreement substantially similar to the Guaranty and Restriction
Agreement attached as Schedule I to this Agreement.
(c) Stockholder/Partner/Member
Guaranty. Each stockholder, partner, or member of the Licensee,
as applicable, shall execute the Guaranty and Restriction Agreement attached
as
Schedule I to this Agreement.
(d) Documents. Prior
to Sonic’s execution of this Agreement, the Licensee shall deliver to Sonic
copies of its Organizational Documents and issued stock certificates, as
applicable, reflecting compliance with the provisions of this Section
22.01.
49
22.02. Other
Entity Licensee.
If
the Licensee is any other form of
business entity, the Licensee shall deliver to Sonic copies of its
organizational documents containing provisions substantially similar to those
required by Section 22.01.
22.03. Employee
Stock Purchase Plans.
The
Licensee shall have the right to
transfer up to 49% of its outstanding capital stock or other equity interests
to
an employee stock purchase plan as long as one individual who qualifies as
a
licensee of Sonic for the Non-Traditional Sonic continues to own and Control,
directly or indirectly, at least 51% of the Licensee’s outstanding capital stock
or other equity interests.
22.04. Good
Standing.
If
the Licensee is a business entity,
Licensee shall remain an active entity in good standing in its state of
formation.
23. APPLICABLE
LAWS; WAIVER OF JURY TRIAL; LIMITATIONS.
The
terms and provisions of this
Agreement shall be interpreted in accordance with and governed by the laws
of
the State of Oklahoma, provided that if the laws of the State of Oklahoma would
not permit full enforcement of Section 16 of this Agreement, then the laws
of
the state in which the Non-Traditional Sonic is located or Licensee is domiciled
shall apply to the extent that any or all of such laws more fully permit
enforcement of Section 16 of this Agreement. Except as provided in
Section 14.03, Licensee agrees that jurisdiction over Licensee exists and is
proper within the county where the corporate headquarters of Sonic are located
and within any and all other courts, whether federal, state, or local, located
within that county, and venue for any matter, claim, or cause of action relating
to (a) this Agreement or any other agreement between Licensee and Sonic or
Sonic’s Affiliates, (b) the parties’ business activities conducted as a result
of this Agreement, or (c) the parties’ relationship or business dealings with
one another generally, including all disputes and litigation pending or in
existence as of the date of this Agreement, shall only exist and is only proper
within the same county where the corporate headquarters of Sonic are located
and
within any and all other courts, whether federal, state, or local, located
within that county. Licensee waives any and all defenses and
objections, and Licensee agrees not to assert any defense or objection, to
jurisdiction over Licensee and to venue as described hereinabove regarding
any
action, proceeding, or litigation instituted by Sonic against
Licensee. Sonic and Licensee agree that any and all breaches of this
Agreement, including breaches occurring after termination, cancellation, or
expiration of this Agreement, shall be deemed to have occurred where the
corporate headquarters of Sonic are located. SONIC AND LICENSEE
WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY
JURY. SONIC AND LICENSEE ALSO WAIVE, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO OR CLAIM OF PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE
OTHER
AND AGREE THAT, IN THE EVENT OF A DISPUTE BETWEEN THEM, EACH SHALL BE LIMITED
TO
THE
50
RECOVERY
OF ANY
ACTUAL DAMAGES SUSTAINED BY IT. EXCEPT FOR CLAIMS ARISING FROM
LICENSEE’S NON-PAYMENT OR UNDERPAYMENT OF AMOUNTS LICENSEE OWES SONIC, ANY AND
ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR SONIC’S RELATIONSHIP
WITH LICENSEE WILL BE BARRED UNLESS A JUDICIAL OR ARBITRATION PROCEEDING IS
COMMENCED WITHIN ONE YEAR FROM THE DATE ON WHICH THE PARTY ASSERTING THE CLAIM
KNEW OR SHOULD HAVE KNOWN OF THE FACTS GIVING RISE TO THE CLAIMS.
24.
ACKNOWLEDGEMENT.
Licensee
acknowledges
that:
24.01. Consultation
with Counsel.
Licensee
hereby represents that
Licensee has received a copy of this Agreement and has had an opportunity to
consult with Licensee’s attorney with respect thereto at least 10 days prior to
Licensee’s execution hereof. Licensee further represents that
Licensee has had this Agreement in hand for review at least five business days
prior to Licensee’s execution hereof.
24.02. Profitability.
No
representation has been made by
Sonic as to the future profitability of the Non-Traditional Sonic.
24.03. Licensee’s
Investigation.
Prior
to the execution of this
Agreement, Licensee has had ample opportunity to contact existing licensees
of
Sonic and to investigate all representations made by Sonic relating to the
Sonic
System. The Licensee has conducted an independent investigation of
the business contemplated by this Agreement and recognizes that it involves
substantial business risks making the success of the venture largely dependent
on the business abilities of the Licensee. Sonic disclaims and the
Licensee has not received from Sonic or its Affiliates any express or implied
warranty or guaranty regarding the potential volume, profits, or success of
the
business venture contemplated by this Agreement. The Licensee has not
relied on any express or implied warranty or guaranty from Sonic or its
Affiliates regarding the potential volume, profits, or success of the business
venture contemplated by this Agreement.
24.04. Contrary
Representations.
The
Licensee knows of no
representations by Sonic or its Affiliates about the business contemplated
by
this Agreement which contradict the terms of this Agreement. The
Licensee has not relied on any representations from Sonic or its Affiliates
about the business contemplated by this Agreement which contradict the terms
of
this Agreement or the disclosures set forth in the Franchise Offering Circular
delivered to the Licensee in connection with the issuance of this
Agreement.
51
24.05. Variances
to Other Licensees.
The
Licensee understands that other
developers and licensees may operate under different forms of agreements and,
consequently, that Sonic’s rights and obligations with regard to its various
licensees may differ materially in certain circumstances.
24.06. Complete
Agreement.
This
Agreement supersedes any and all
other agreements or representations respecting the Non-Traditional Sonic and
contains all the terms, conditions, and obligations of the parties with respect
to the subject matter of this Agreement.
25. INPUT
AND ADVICE FROM LICENSEES.
In
connection with the implementation
of or significant changes in the programs or policies referred to in Sections
6.04, 6.05(c), 6.06, 8, 11.01(c), and 11.01(g) of this Agreement, Sonic shall
solicit input and advice from a group of licensees gathered together for such
purpose (whether established ongoing for such purpose or gathered on an ad
hoc
basis from time to time). Sonic further shall use its best efforts to
ensure that such groups are balanced in terms of geographic base, size of
operating group, and period of tenure within the Sonic
System. Notwithstanding the foregoing, this Section 25 shall not have
any effect unless the license agreements in effect for at least one-third of
all
Sonic drive-in restaurants and non-traditional Sonic restaurants contain this
provision or a substantially similar provision.
26. INJUNCTIVE
RELIEF.
The
Licensee acknowledges that Sonic’s
remedy at law for any breach of (a) any of the Licensee’s covenants under this
Agreement (other than those involving only the payment of money), including
the
covenants contained in Section 16 of this Agreement; and (b) Sections 14.01(l),
14.02(c), 14.03(h), 15.01(b), 15.01(c), 15.01(d), and 15.01(e) of this
Agreement, would not constitute an adequate remedy at law and, therefore, Sonic
shall have the right to obtain temporary and permanent injunctive relief in
any
proceeding brought to enforce any of those provisions, without the necessity
of
proof of actual damages. Licensee acknowledges and expressly agrees
that Sonic shall not be required to post any bond or other form of security
in
connection with any request for the issuance of injunctive relief, and Licensee
expressly and unconditionally waives any requirement for the provision of
security. Licensee also agrees that injunctive relief sought by Sonic
and ordered by any court of competent jurisdiction shall be given full force
and
effect in any other jurisdiction, including the jurisdiction in which the
Non-Traditional Sonic is located, and that Licensee will not oppose the
enforcement of such relief. Nothing in this Section 26 shall prevent
Sonic from pursuing separately or concurrently one or more of any other remedies
available at law, subject to the provisions of Section 14.03 of this
Agreement.
27. GENERAL
RELEASE AND COVENANT NOT TO ▇▇▇.
THE
LICENSEE HEREBY RELEASES SONIC,
SONIC CORP., AND THEIR SUBSIDIARIES AND AFFILIATES, AND THE OFFICERS, DIRECTORS,
EMPLOYEES, AND AGENTS OF SONIC, SONIC CORP., AND THEIR
52
SUBSIDIARIES
AND AFFILIATES, FROM ANY AND ALL CLAIMS AND CAUSES OF ACTION, KNOWN OR UNKNOWN,
WHICH MAY EXIST IN FAVOR OF THE LICENSEE AS OF THE DATE OF THIS
AGREEMENT. IN ADDITION, THE LICENSEE COVENANTS THAT THE LICENSEE
SHALL NOT FILE OR PURSUE ANY LEGAL ACTION OR COMPLAINT AGAINST ANY OF THE
FOREGOING ENTITIES OR PERSONS WITH REGARD TO ANY OF THE FOREGOING CLAIMS OR
CAUSES OF ACTION RELEASED PURSUANT TO THIS SECTION 27.
Executed
on the dates set forth below,
to have effect as of , 200.
Sonic: Sonic
Industries LLC
By:
_________________________________
(Vice)
President
Date: _______________________, 2007
Licensee:
____________________________________
Date:
__________________________,
2007
____________________________________
Date:___________________________,
2007
53
Schedule
I
Guaranty
and Restriction Agreement
GUARANTY
AND RESTRICTION AGREEMENT
The
undersigned (jointly and severally
or individually, the “Guarantor”), Sonic Industries LLC (“Sonic”),
and (the “Licensee”) enter into this Guaranty and Restriction
Agreement (this “Guaranty”) as of , 200.
WITNESSETH:
Whereas,
Sonic is entering into a
license agreement (the “License Agreement”) dated the same date as this Guaranty
with the Licensee for the non-traditional Sonic restaurant located at ,
, (the “Non-Traditional Sonic”); and
Whereas,
as a condition to entering
into the License Agreement, Sonic has asked the
Guarantor
to provide a personal guaranty of all obligations of the Licensee Agreement;
and
Whereas,
Sonic has also asked the
Guarantor and the Licensee to agree to a restriction on the transfer of
interests in the Licensee; and
Whereas
Sonic, the Guarantor, and the
Licensee are willing to enter into those agreements based upon the terms and
conditions of this Guaranty.
Now,
therefore, in consideration of the
mutual covenants set forth below and other good and valuable consideration,
the
receipt and sufficiency of which the parties hereby acknowledge, the parties
agree as follows:
1. Personal
Guaranty of Payments. The Guarantor hereby guarantees the prompt
and full payment and performance of all obligations under the License Agreement
including:
(a) all
royalties due Sonic pursuant to the License Agreement,
(b) all
brand contribution fees to the Sonic Brand Fund pursuant to the License
Agreement,
(c) all
contributions to approved advertising cooperatives pursuant to the License
Agreement, and
(d) any
other obligations owing to Sonic or its Affiliates (as defined in the License
Agreement) relating to the Non-Traditional Sonic, including any sign lease
agreement.
2. Nature
of Guaranty. This guaranty shall constitute an absolute,
unconditional, irrevocable, and continuing guaranty. Sonic shall not
have any obligation to take any action against any other person or entity for
collection of any payments prior to making any demand for payment or bringing
any action against the Guarantor.
3. Permitted
Actions. From time to time, Sonic shall have the right to take,
permit, or suffer to occur any “Permitted Action,” as defined below, without
modifying, reducing, waiving, releasing, impairing, or otherwise affecting
the
obligations of the Guarantor under this Guaranty, without giving notice to
the
Guarantor or obtaining the Guarantor’s consent, without the necessity of any
reservations of rights against the Guarantor, and without liability on the
part
of Sonic. As used in this Section 3, the phrase “Permitted Action”
shall mean (a) an agreed extension of time for payment of any sum due under
the
License Agreement, (b) an agreed change in the manner or place of payment of
any
sums due under the License Agreement, (c) any waiver by Sonic of any defaults
under the provisions of the License Agreement, (d) any delay or failure by
Sonic
to exercise any right or remedy Sonic may have under the License Agreement,
(e)
the granting by Sonic of any leniencies, waivers, extensions, and indulgences
under the License Agreement, and (f) any agreed amendments to the License
Agreement.
4. Waiver
of Notices. The Guarantor acknowledges and waives notice of
Sonic’s acceptance of the Guarantor’s guaranty pursuant to the terms of this
Agreement. The Guarantor also waives any requirement that Sonic
notify the Guarantor of any demands or enforcement actions by Sonic against
the
Licensee.
5. Restrictions
on Transfer. The Licensee shall not issue any additional shares
of capital stock or other interest without the prior, written consent of
Sonic. The Guarantor shall not transfer, assign, or pledge any of its
shares of capital stock or other interest in the Licensee to any person without
the prior, written consent of Sonic.
6. Disputes. Any
dispute between the parties concerning this Guaranty will be resolved in
accordance with the arbitration provisions contained in the License
Agreement.
7. Attorneys’
Fees, Costs, and Expenses. In any action brought by Sonic to
enforce the obligations of the Guarantor, Sonic shall also have the right to
collect its reasonable attorneys’ fees, court costs, and expenses incurred in
the action.
8. Headings. The
headings used in this Guaranty appear strictly for the parties’ convenience in
identifying the provisions of this Guaranty and shall not affect the
construction or interpretation of the provisions of this Guaranty.
9. Binding
Effect. This Guaranty binds and inures to the benefit of the
parties and their respective successors, legal representatives, heirs, and
permitted assigns.
10. Waiver. The
failure of a party to insist in any one or more instances on the performance
of
any term or condition of this Guaranty shall not operate as a waiver of any
future performance of that term or condition.
11. Governing
Law. Notwithstanding the place where the parties execute this
Guaranty, the internal laws of Oklahoma shall govern the construction of the
terms and the application of the provisions of this Guaranty.
12. Amendments. No
amendments to this Guaranty shall become effective or binding on the parties
unless agreed to in writing by all of the parties to be bound by the
amendment.
13. Time. Time
constitutes an essential part of each and every part of this
Guaranty.
14. Notice. Except
as otherwise provided in this Guaranty, when this Guaranty makes provision
for
notice or concurrence of any kind, the sending party shall deliver or address
the notice to the other party by certified mail, telecopy, or
nationally-recognized overnight delivery service to the addresses shown on
Exhibit “A” to this Guaranty.
All
notices pursuant to the provisions
of this Guaranty shall run from the date that the other party receives the
notice or three business days after the party places the notice in the United
States mail. Each party may change the party’s address by giving
written notice to the other parties.
15. Release
and
Covenant Not To ▇▇▇. THE
GUARANTOR AND THE LICENSEE, AND EACH OF THEM, HEREBY RELEASE ALL CLAIMS AND
CAUSES OF ACTION WHICH THE GUARANTOR OR THE LICENSEE, OR BOTH OF THEM, MAY
HAVE
AGAINST SONIC, SONIC CORP., AND THEIR SUBSIDIARIES AND AFFILIATES, AND THE
STOCKHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS OF SONIC, SONIC CORP.,
AND THEIR SUBSIDIARIES AND AFFILIATES. THE GUARANTOR AND THE
LICENSEE, AND EACH OF THEM, FURTHER COVENANT NOT TO ▇▇▇ ANY OF THE FOREGOING
PERSONS OR ENTITIES ON ACCOUNT OF ANY OF THE FOREGOING CLAIMS OR CAUSES OF
ACTION.
Executed
and delivered as of the day and year first set forth above.
{Signatures
on the following page}
Sonic: Sonic
Industries LLC.
By:
_________________________________
(Vice) President
Guarantor: ____________________________________
____________________________________
____________________________________
Licensee:
By: ________________________________
Its:
This
Guaranty and Restriction Agreement signature page is for the
following:
Non-Traditional
Sonic #
,
EXHIBIT
“A”
Notice
addresses are as follows:
Sonic:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇)
▇▇▇-▇▇▇▇ Fax
Guarantors:
(___)
___-____ Fax
(___)
___-____ Fax
Licensee: