10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: August 31, 2010

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 0-18859

SONIC CORP.

(Exact name of registrant as specified in its charter)

Delaware	73-1371046
(State of incorporation)	(I.R.S. Employer Identification No.)

300 Johnny Bench Drive Oklahoma City, Oklahoma	73104
(Address of principal executive offices)	Zip Code

Registrant’s telephone number, including area code: (405) 225-5000

Securities registered pursuant to section 12(b) of the Act:

None

Securities registered pursuant to section 12(g) of the Act:

Common Stock, Par Value $.01 (Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x.    No  ¨.

(Facing Sheet Continued)

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨.    No   x.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file the reports), and (2) has been subject to the filing requirements for the past 90 days.    Yes  x.    No  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨.    No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨.    No  x.

As of February 28, 2010, the aggregate market value of the 61,166,156 shares of common stock of the Company held by non-affiliates of the Company equaled $519,300,664 based on the closing sales price for the common stock as reported for that date.

As of October 15, 2010, the Registrant had 61,641,531 shares of common stock issued and outstanding.

Documents Incorporated by Reference

Part III of this report incorporates by reference certain portions of the definitive proxy statement which the Registrant will file with the Securities and Exchange Commission no later than 120 days after August 31, 2010.

FORM 10-K OF SONIC CORP.

TABLE OF CONTENTS

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	11
Item 2.	Properties	12
Item 3.	Legal Proceedings	12
Item 4.	Submission of Matters to a Vote of Security Holders	12
Item 4A.	Executive Officers of the Company	12
PART II
Item 5.	Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	27
Item 9A.	Controls and Procedures	27
Item 9B.	Other Information	30
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	30
Item 11.	Executive Compensation	30
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
Item 13.	Certain Relationships and Related Transactions, and Director Independence	30
Item 14.	Principal Accounting Fees and Services	30
PART IV
Item 15.	Exhibits and Financial Statement Schedules	30

FORM 10-K

SONIC CORP.

PART I

Item 1. Business

General

Sonic Corp. operates and franchises the largest chain of drive-in restaurants (“Sonic Drive-Ins”) in the United States. References to “Sonic Corp.,” “the Company,” “we,” “us,” and “our” in this Form 10-K are references to Sonic Corp. and its subsidiaries.

The Sonic Drive-In restaurant chain began in the early 1950’s. Sonic Corp. was incorporated in the State of Delaware in 1990 in connection with its 1991 public offering of common stock. Our principal executive offices are located at 300 Johnny Bench Drive, Oklahoma City, Oklahoma 73104. Our telephone number is (405) 225-5000.

The Sonic Brand

At a standard Sonic Drive-In restaurant, a customer drives into one of 20 to 36 covered drive-in spaces, orders through an intercom speaker system, and has the food delivered by a carhop. Most Sonic Drive-Ins also include a drive-thru lane and patio seating.

Sonic Drive-Ins feature Sonic signature items, such as specialty drinks including cherry limeades and slushes, frozen desserts, made-to-order sandwiches and hamburgers, footlong quarter pound chili cheese coneys, hand-battered onion rings, tots, salads, and wraps. Sonic Drive-Ins also offer breakfast items that include sausage or bacon with egg and cheese Breakfast Toaster^®, or CroisSONIC^® breakfast sandwiches, and breakfast burritos. Sonic Drive-Ins serve the full menu all day.

Business Strategy

Our objective is to maintain our position as or to become a leading restaurant operator in all of our markets. We have developed and implemented a strategy designed to build the Sonic brand and to maintain high levels of customer satisfaction and repeat business. The key elements of that strategy are: (1) a unique drive-in concept focusing on a distinctive menu of quality made-to-order food products including several signature items; (2) a commitment to customer service featuring the quick delivery of food by carhops; (3) the expansion of Sonic Drive-Ins within the continental United States; and (4) a commitment to strong franchisee relationships.

1

Restaurant Locations

As of August 31, 2010, the Company had 3,572 Sonic Drive-Ins in operation from coast to coast, consisting of 455 Company-owned Drive-Ins and 3,117 Franchise Drive-Ins. Company-owned Drive-Ins are owned and operated by Sonic Restaurants, Inc. (“SRI”), a wholly owned subsidiary of the Company. The following table sets forth the number of Company-owned Drive-Ins and Franchise Drive-Ins by state as of August 31, 2010:

States	Franchise		Company-owned		Total
Alabama		108		0		108
Arizona		94		0		94
Arkansas		195		0		195
California		54		0		54
Connecticut		1		0		1
Colorado		48		32		80
Delaware		4		0		4
Florida		75		36		111
Georgia		117		1		118
Idaho		18		0		18
Illinois		44		1		45
Indiana		22		0		22
Iowa		11		1		12
Kansas		101		37		138
Kentucky		79		1		80
Louisiana		170		0		170
Massachusetts		2		0		2
Maryland		3		0		3
Michigan		13		0		13
Minnesota		7		0		7
Mississippi		122		0		122
Missouri		189		15		204
Montana		1		0		1
Nebraska		28		0		28
New Jersey		13		0		13
New York		4		0		4
Nevada		24		0		24
New Mexico		72		0		72
North Carolina		97		0		97
Ohio		46		0		46
Oklahoma		178		93		271
Oregon		13		0		13
Pennsylvania		29		0		29
South Carolina		74		0		74
South Dakota		3		0		3
Tennessee		199		30		229
Texas		753		208		961
Utah		22		0		22
Virginia		54		0		54
Washington		10		0		10
West Virginia		6		0		6
Wisconsin		10		0		10
Wyoming		4		0		4
Total		3,117		455		3,572

Expansion

During fiscal year 2010, we opened 85 Sonic Drive-Ins, which consisted of five Company-owned Drive-Ins and 80 Franchise Drive-Ins. Expansion plans for fiscal year 2011 involve the opening of multiple Sonic Drive-Ins under area development agreements, as well as single-store development by long-standing franchisees. We believe that our existing as well as newly opened markets offer significant growth opportunities for both Company-owned Drive-In and Franchise Drive-In expansion over the long term. In the near term, unit growth will be impacted by the recent decline in sales and profits.

2

Restaurant Design and Construction

The typical Sonic Drive-In consists of a kitchen housed in a one-story building flanked by canopy-covered rows of 20 to 36 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. In addition, most Sonic Drive-Ins incorporate a drive-thru service and patio seating area.

Marketing

We have designed our marketing program to differentiate Sonic Drive-Ins from our competitors by emphasizing high quality distinctive made-to-order menu items and personalized service featuring skating carhops. The marketing plan includes promotions for use throughout the Sonic chain. We support those promotions with television, radio, interactive media, point-of-sale materials, and other media as appropriate. Those promotions generally center on products which highlight new product introductions for a limited time and signature menu items.

Each year Sonic develops a marketing plan with the involvement of the Sonic Franchise Advisory Council. (Information concerning the Sonic Franchise Advisory Council is set forth on page 5 under Franchise Program -Franchise Advisory Council.) Funding for our marketing plan is comprised of the System Marketing Fund, the Sonic Brand Fund and local advertising expenditures. The System Marketing Fund focuses on purchasing advertising on national cable and broadcast networks and other national media, sponsorship and brand enhancement opportunities. In addition, a portion of the System Marketing Fund is re-allocated to local markets to optimize impressions in a drive-in trade area. The Sonic Brand Fund is our national media production fund. Franchisees are also required to spend additional amounts on local advertising, typically through participation in the local advertising cooperative. Our franchise agreements require advertising contributions by franchisees of up to 5.9% of gross sales to these marketing funds and local advertising cooperatives.

The total amount spent on media (principally television) was approximately $167 million for fiscal year 2010, and we expect media expenditures to be approximately $170 million for fiscal 2011.

Purchasing

We negotiate with suppliers for our primary food products and packaging supplies to ensure adequate quantities of food and supplies and to obtain competitive prices. We seek competitive bids from suppliers on many of our food products. We approve suppliers of those products and require them to adhere to our established product and food safety specifications. Suppliers manufacture several key products for Sonic under private label and sell them to authorized distributors for resale to Sonic Drive-Ins. We require all Sonic Drive-Ins to purchase from approved distribution centers.

Food Safety and Quality Assurance

To ensure the consistent delivery of safe, high-quality food, we created a food safety and quality assurance program. Sonic’s food safety program promotes the quality and safety of all products and procedures utilized by all Sonic Drive-Ins, and provides certain requirements that must be adhered to by all suppliers, distributors, and Sonic Drive-Ins. We also have a comprehensive, restaurant-based food safety program called Sonic Safe. Sonic Safe is a risk-based system that utilizes Hazard Analysis & Critical Control Points (HACCP) principles for managing food safety and quality. Our food safety program includes employee training, supplier product inspections and testing, unannounced drive-in food safety auditing by independent third-parties, and other detailed components that monitor the safety and quality of Sonic’s products and procedures at every stage of the food preparation and the production cycle. All Sonic Drive-In employees are required to be trained in food safety in their first stage of training, utilizing an internal training program, referred to as the STAR Training Program. This program includes specific training on food safety information and requirements for every station in the drive-in. We also require our drive-in managers and assistant managers to pass and maintain the ServSafe® certification. ServSafe® is the most recognized food safety training certification in the restaurant industry.

3

Company Operations

Restaurant Personnel. A typical Company-owned Drive-In is operated by a manager, two to four assistant managers, and approximately 25 hourly employees, many of whom work part-time. The manager has responsibility for the day-to-day operations of the Company-owned Drive-In.

Ownership Structure. Company-owned Drive-Ins are drive-in operations in which SRI, as the Company’s operating subsidiary, owns a controlling ownership interest. Effective April 1, 2010, the Company introduced a new compensation program as an alternative to the prior form of ownership to improve manager and supervisor retention. While managers and supervisors do not own an interest in the drive-in under the new compensation program, the program provides managers and supervisors a larger portion of guaranteed compensation, but retains a significant incentive component based on drive-in level performance. With this change, 95% of Company-owned Drive-Ins now operate under the new compensation structure. Historically, Company-owned Drive-Ins operated as individual limited liability companies or general partnerships in which the manager and the supervisor for the respective drive-in owned a noncontrolling interest. Under this form of ownership, managers and supervisors shared in the cash flow for their Company-owned Drive-In, but were also responsible for their share of any losses incurred by the drive-in.

Company-owned Drive-In Data. The following table provides certain financial information relating to Company-owned Drive-Ins and the number of Company-owned Drive-Ins opened and closed during the past five fiscal years.

	2010			2009			2008			2007			2006
Average Sales per Company-owned Drive-In
(in thousands)	$	893			$954		$	1,007		$	1,017		$	980
Number of Company-owned Drive-Ins:
Total Open at Beginning of Year		475			684			654			623			574
Newly Opened and Re-Opened		5			11			29			29			35
Purchased from Franchisees		—			—			18			15			15
Sold to Franchisees(1)		(16	)		(205	)		(12	)		(10	)		—
Closed		(9	)		(15	)		(5	)		(3	)		(1	)
Total Open at Year End		455			475			684			654			623

(1) The large number of drive-ins sold by Sonic in fiscal 2009 reflects the refranchising initiative which Sonic implemented in fiscal 2009 and includes 88 drive-ins in which Sonic retained a noncontrolling interest.

Franchise Program

General. As of August 31, 2010, we had 3,117 Franchise Drive-Ins in operation. A large number of successful multi-unit franchisee groups have developed during the Sonic system’s 57 years of operation. Those franchisees continue to develop new Franchise Drive-Ins in their franchise territories either through area development agreements or single-site development. Our franchisees opened 80 Franchise Drive-Ins during fiscal year 2010. We consider our franchisees a vital part of our continued growth and believe our relationship with our franchisees is good.

Franchise Agreements. For traditional drive-ins, the current franchise agreement provides for an initial franchise fee of $45,000 per drive-in, a royalty fee of up to 5% of gross sales on a graduated percentage basis, advertising fees of up to 5.9% of gross sales, and a 20-year term. For fiscal year 2010, Sonic’s average royalty rate was equal to 3.82%.

Area Development Agreements. We use area development agreements to facilitate the planned expansion of the Sonic Drive-In restaurant chain through multiple unit development. While many existing franchisees continue to expand on a single drive-in basis, approximately 83% of the new Franchise Drive-Ins opened during fiscal year 2010 occurred as a result of then-existing area development agreements. Each area development agreement gives a developer the exclusive right to construct, own, and operate Sonic Drive-Ins within a defined area. In exchange, each developer agrees to open a minimum number of Sonic Drive-Ins in the area within a prescribed time period.

We offer development agreements for construction of one or more new Sonic Drive-Ins over a defined period of time and in a defined geographic area. Franchisees who enter into development agreements are required to pay a fee, a portion of which is credited against franchise fees due when Sonic Drive-Ins are opened in the future. Franchisees may forfeit such fees and lose their rights to future development if they do not maintain the required schedule of openings.

4

Franchise Drive-In Development. We assist each franchisee in selecting sites and developing Sonic Drive-Ins. Each franchisee has responsibility for selecting the franchisee’s drive-in location but must obtain our approval of each Sonic Drive-In design and each location based on accessibility and visibility of the site and targeted demographic factors, including population density, income, age, and traffic. We provide our franchisees with the physical specifications for the typical Sonic Drive-In.

From time to time, at our discretion, the Company offers incentives to franchisees to increase the development of Sonic Drive-Ins in certain markets. These incentives typically offer reduced or waived franchise fees and/or royalty fees upon certain conditions.

Franchisee Financing. Other than the agreements described below, we do not generally provide financing to franchisees or guarantee loans to franchisees made by third parties.

We had an agreement with GE Capital Franchise Finance Corporation (“GEC”) pursuant to which GEC made loans to existing Sonic franchisees who met certain underwriting criteria set by GEC. Under the terms of the agreement with GEC, Sonic provided a guaranty of 10% of the outstanding balance of a loan from GEC to the Sonic franchisee. The portions of loans made by GEC to Sonic franchisees that are guaranteed by the Company total approximately $946,000 as of August 31, 2010. We ceased guaranteeing new loans made under the program during fiscal year 2002. In April 2010, we paid approximately $166,000 to GEC pursuant to our guaranty for one franchisee.

We have an agreement with First Franchise Capital Corporation (“FFCC”) pursuant to which FFCC has agreed to make loans to existing Sonic franchisees who meet certain underwriting criteria set by FFCC to finance the equipment and improvements for our retrofit program in which significant trade dress modifications are being made to Sonic Drive-Ins. Under the terms of the agreement with FFCC, we will provide a guaranty to FFCC of the greater of (i) 5% of the outstanding balance of a loan from FFCC to the Sonic franchisee or (ii) $250,000, provided that in no event will our maximum liability to FFCC exceed $3.75 million in the aggregate. As of August 31, 2010, the total amount guaranteed under the FFCC agreement was approximately $563,000.

Franchise Advisory Council. Our Franchise Advisory Council provides advice, counsel, and input to Sonic on important issues impacting the business, such as marketing and promotions, operations, purchasing, building design, human resources, technology, and new products. The Franchise Advisory Council currently consists of 22 members selected by Sonic. We have seven executive committee members who are selected at large, 13 regional members representing four defined regions of the country, and two at large members representing new franchisees and smaller operators. We have four Franchise Advisory Council task groups comprised of approximately 65 members who serve three-year terms and lend support on individual key priorities.

Franchise Drive-In Data. The following table provides certain financial information relating to Franchise Drive-Ins and the number of Franchise Drive-Ins opened, purchased from or sold to Sonic, and closed during Sonic’s last five fiscal years.

	2010			2009			2008			2007			2006
Average Sales Per Franchise Drive-In
(in thousands)	$	1,043		$	1,122		$	1,154		$	1,132		$	1,092
Number of Franchise Drive-Ins:
Total Open at Beginning of Year		3,069			2,791			2,689			2,565			2,465
New Franchise Drive-Ins		80			130			140			146			138
Sold to the Company		—			—			(18	)		(15	)		(15	)
Purchased from the Company(1)		16			205			12			10			—
Closed and Terminated, Net of Re-openings		(48	)		(57	)		(32	)		(17	)		(23	)
Total Open at Year End		3,117			3,069			2,791			2,689			2,565

(1) The large number of drive-ins sold by Sonic in fiscal 2009 reflects the refranchising initiative which Sonic implemented in fiscal 2009 and includes 88 drive-ins in which Sonic retained a noncontrolling interest.

5

Competition

We compete in the restaurant industry, a highly competitive industry in terms of price, service, location, and food quality. The restaurant industry is often affected by changes in consumer trends, economic conditions, demographics, traffic patterns, and concerns about the nutritional content of quick-service foods. We compete on the basis of distinctive food and service with signature food items and skating carhops and the method of food preparation (made-to-order). The quality of service, featuring Sonic carhops, constitutes one of our primary marketable points of difference from the competition. There are many well-established competitors with substantially greater financial and other resources. These competitors include a large number of national, regional, and local food services, including quick-service restaurants and casual dining restaurants. A significant change in pricing or other marketing strategies by one or more of those competitors could have an adverse impact on Sonic’s sales, earnings, and growth. In selling franchises, we also compete with many franchisors of quick-service and other restaurants and other business opportunities.

Seasonality

Our results during Sonic’s second fiscal quarter (the months of December, January and February) generally are lower than other quarters because of the lower temperatures in the locations of a number of Company-owned Drive-Ins and Franchise Drive-Ins, which tends to reduce customer visits to our drive-ins.

Employees

As of August 31, 2010, we had 340 full-time corporate employees and approximately 12,400 full-time and part-time restaurant employees. None of our employees are subject to a collective bargaining agreement. We believe that we have good labor relations with our employees.

Intellectual Property

Sonic owns or is licensed to use valuable intellectual property including trademarks, service marks, patents, copyrights, trade secrets and other proprietary information, including the “Sonic” logo and trademark, which are of material importance to our business. Depending on the jurisdiction, trademarks and service marks generally are valid as long as they are used and/or registered. Patents, copyrights and licenses are of varying durations.

Customers

Our business is not dependent upon either a single customer or small group of customers.

Government Contracts

No portion of our business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the U.S. government.

Environmental Matters

We are not aware of any federal, state or local environmental laws or regulations that will materially affect our earnings or competitive position or result in material capital expenditures. However, we cannot predict the effect on operations of possible future environmental legislation or regulations. During fiscal year 2010, there were no material capital expenditures for environmental control facilities, and no such material expenditures are anticipated.

Available Information

We maintain a website with the address of www.sonicdrivein.com. Copies of the Company’s reports filed with, or furnished to, the Securities and Exchange Commission on Forms 10-K, 10-Q, and 8-K and any amendments to such reports are available for viewing and copying at such website, free of charge, as soon as reasonably practicable after filing such material with, or furnishing it to, the Securities and Exchange Commission. In addition, copies of Sonic’s corporate governance materials, including the Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Code of Ethics for Financial Officers, and Code of Business Conduct and Ethics are available for viewing and copying at the website, free of charge.

6

Item 1A. Risk Factors

This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors including, but not limited to, the risks and uncertainties discussed below. Accordingly, such forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized. For these reasons, you should not place undue reliance on forward-looking statements. We undertake no obligation to publicly update or revise them, except as may be required by law.

Events reported in the media, such as incidents involving food-borne illnesses or food tampering, whether or not accurate, can cause damage to our reputation and rapidly affect sales and profitability.

Reports, whether true or not, of food-borne illnesses, such as e-coli, avian flu, bovine spongiform encephalopathy (commonly known as mad cow disease), hepatitis A or salmonella, and injuries caused by food tampering have in the past severely injured the reputations of participants in the restaurant industry and could in the future affect us. The potential for terrorism of our nation’s food supply also exists and, if such an event occurs, it could have a negative impact on our brand’s reputation and could severely hurt sales, revenues, and profits.

Our brand’s reputation is an important asset to the business; as a result, anything that damages our brand’s reputation could immediately and severely hurt sales, revenues, and profits. If customers become ill from food-borne illnesses or food tampering, we could also be forced to temporarily close some, or all, Sonic Drive-Ins. In addition, instances of food-borne illnesses or food tampering occurring at the restaurants of competitors could, by resulting in negative publicity about the restaurant industry, adversely affect our sales on a local, regional, or national basis. A decrease in customer traffic as a result of these health concerns or negative publicity, or as a result of a temporary closure of any Sonic Drive-Ins, could materially harm our brand, sales, and profitability.

The restaurant industry is highly competitive, and that competition could lower our revenues, margins, and market share.

The restaurant industry is intensely competitive with respect to price, service, location, personnel, dietary trends, including nutritional content of quick-service foods, and quality of food, and is often affected by changes in consumer tastes and preferences, economic conditions, population, and traffic patterns. We compete with international, regional and local restaurants, some of which operate more restaurants and have greater financial resources. We compete primarily through the quality, price, variety and value of food products offered and our distinctive service experience. Other key competitive factors include the number and location of restaurants, speed of service, attractiveness of facilities, effectiveness of advertising and marketing programs, and new product development by us and our competitors. Some of our competitors have substantially larger marketing budgets, which may provide them with a competitive advantage. In addition, our system competes within the quick-service restaurant industry not only for customers but also for management and hourly employees, suitable real estate sites, and qualified franchisees.

Changing dietary preferences may cause consumers to avoid our products in favor of alternative foods.

The restaurant industry is affected by consumer preferences and perceptions. Although we monitor these changing preferences and strive to adapt to meet changing consumer needs, growth of our brand and, ultimately, system-wide sales depend on the sustained demand for our products. If dietary preferences and perceptions cause consumers to avoid certain products offered by Sonic Drive-Ins in favor of different foods, demand for our products may be reduced, and our business could be harmed.

Our earnings and business growth strategy depends in large part on the success of our franchisees, who exercise independent control of their businesses.

We have significantly increased the percentage of restaurants owned and operated by our franchisees. A portion of our earnings comes from royalties, rents and other amounts paid by our franchisees. Franchisees are independent contractors, and their employees are not our employees. We provide training and support to, and monitor the operations of, our franchisees, but the quality of their drive-in operations may be diminished by any number of factors beyond our control. Franchisees may not successfully operate drive-ins in a manner consistent with our high standards and requirements, and franchisees may not hire and train qualified managers and other restaurant personnel. Any operational shortcoming of a Franchise Drive-In is likely to be attributed by consumers to the entire Sonic brand, thus damaging our reputation and potentially affecting revenues and profitability.

7

Changes in economic, market and other conditions could adversely affect Sonic and its franchisees, and thereby Sonic’s operating results.

The quick-service restaurant industry is affected by changes in economic conditions, consumer tastes and preferences and spending patterns, demographic trends, consumer perceptions of food safety, weather, traffic patterns, the type, number and location of competing restaurants, and the effects of war or terrorist activities and any governmental responses thereto. Factors such as interest rates, inflation, gasoline prices, food costs, labor and benefit costs, legal claims, and the availability of management and hourly employees also affect restaurant operations and administrative expenses. Economic conditions, including interest rates and other government policies impacting land and construction costs and the cost and availability of borrowed funds, affect our ability and our franchisees’ ability to finance new restaurant development, improvements and additions to existing restaurants, and the acquisition of restaurants from, and sale of restaurants to, franchisees. Inflation can cause increased food, labor and benefits costs and can increase our operating expenses. As operating expenses increase, we recover increased costs by increasing menu prices, to the extent permitted by competition and the consumer environment, or by implementing alternative products or cost reduction procedures. We cannot ensure, however, that we will be able to recover increases in operating expenses in this manner.

Our financial results may fluctuate depending on various factors, many of which are beyond our control.

Our sales and operating results can vary from quarter to quarter and year to year depending on various factors, many of which are beyond our control. Certain events and factors may directly and immediately decrease demand for our products. If customer demand decreases rapidly, our results of operations would also decline precipitously. These events and factors include:

• variations in the timing and volume of Sonic Drive-Ins’ sales;

• sales promotions by Sonic and its competitors;

• changes in average same-store sales and customer visits;

• the inability to purchase sufficient levels of media;

• variations in the price, availability and shipping costs of supplies such as food products;

• seasonal effects on demand for Sonic’s products;

• unexpected slowdowns in new drive-in development efforts;

• changes in competitive and economic conditions generally including increases in energy costs;

• changes in the cost or availability of ingredients or labor;

• unreliable or inefficient drive-in technology, including point-of-sale and payment systems;

• weather and other acts of God; and

• changes in the number of franchise agreement renewals.

Our profitability may be adversely affected by increases in energy costs.

Our success depends in part on our ability to absorb increases in energy costs. If energy costs increase dramatically, they could have an adverse effect on our profitability.

Shortages or interruptions in the supply or delivery of perishable food products or rapid price increases could adversely affect our operating results.

We are dependent on frequent deliveries of perishable food products that meet certain specifications. Shortages or interruptions in the supply of perishable food products may be caused by unanticipated demand, problems in production or distribution, acts of terrorism, financial or other difficulties of suppliers, disease or food-borne illnesses, inclement weather or other conditions. We purchase large quantities of food and supplies, which can be subject to significant price fluctuations due to seasonal shifts, climate conditions, industry demand, energy costs, changes in international commodity markets and other factors. These shortages or rapid price increases could adversely affect the availability, quality and cost of ingredients, which would likely lower revenues and reduce our profitability.

Failure to successfully implement our growth strategy could reduce, or reduce the growth of, our revenue and net income.

We plan to increase the number of Sonic Drive-Ins, but may not be able to achieve our growth objectives, and any new drive-ins may not be profitable. The opening and success of drive-ins depend on various factors, including:

8

• competition from other restaurants in current and future markets;

• the degree of saturation in existing markets;

• consumer interest in the Sonic brand;

• the identification and availability of suitable and economically viable locations;

• sales and profit levels at existing drive-ins;

• the negotiation of acceptable lease or purchase terms for new locations;

• permitting and regulatory compliance;

• the cost and availability of construction resources;

• the ability to meet construction schedules;

• the availability of qualified franchisees and their financial and other development capabilities;

• the cost and availability of and delays in financing;

• the ability to hire and train qualified management personnel;

• weather; and

• general economic and business conditions.

If we are unable to open as many new drive-ins as planned, if the drive-ins are less profitable than anticipated or if we are otherwise unable to successfully implement our growth strategy, revenue and profitability may grow more slowly or even decrease.

Our outstanding and future leverage could have an effect on our operations.

On December 20, 2006, the Company closed on a securitized financing facility comprised of a $600 million fixed rate term loan and a $200 million variable rate revolving credit facility. As of August 31, 2010, we had $404 million in outstanding debt under the fixed rate notes at an interest rate of 5.7% and $187.3 million outstanding under the variable rate notes at an interest rate of 1.4%.

Our increased leverage could have the following consequences:

• We may be more vulnerable in the event of deterioration in our business, in the restaurant industry or in the economy generally. In addition, we may be limited in our flexibility in planning for or reacting to changes in our business and the industry in which we operate.

• We may be required to dedicate a substantial portion of our cash flow to the payment of principal and interest on our indebtedness, which could reduce the amount of funds available for operations or development of new Company-owned Drive-Ins and thus place us at a competitive disadvantage as compared with competitors that are less leveraged.

• From time to time, we may engage in various capital markets, bank credit and other financing activities to meet our cash requirements. We may have difficulty obtaining additional financing at economically acceptable interest rates.

• Our existing and future debt obligations may contain certain negative covenants including limitations on liens, consolidations and mergers, indebtedness, capital expenditures, asset dispositions, sale-leaseback transactions, stock repurchases and transactions with affiliates, which may reduce our flexibility in responding to changing business and economic conditions.

• Our debt obligations are subject to customary rapid amortization events and events of default. Although management does not anticipate an event of default or any other event of noncompliance with the provisions of the notes, if such an event occurred, the unpaid amounts outstanding could become immediately due and payable.

• On March 24, 2010, the Office of the Commissioner of Insurance of the State of Wisconsin (“OCI”) commenced rehabilitation proceedings with respect to a segregated account of certain insurance policies held by Ambac Assurance Corporation (“Ambac”), the third-party insurance company that provides credit enhancements in the form of financial guaranties of our fixed and variable rate note payments (the “Segregated Account”). Our insurance policy is not included in the Segregated Account and is not affected by the rehabilitation proceedings. Apart from its actions with regard to the Segregated Account, the OCI continues to maintain oversight of Ambac. No delinquency, rehabilitation or similar proceeding involving our insurance policy is currently pending. If the insurance company were to become the subject of insolvency or similar proceedings, our lenders would not be required to fund additional advances on our variable rate notes. In addition, an event of default would occur if: (i) the insurance company were to become the subject of insolvency or similar proceedings and (ii) the insurance policy were not continued or sold to a third party (who would assume the insurance company’s obligations under the policy), but instead were terminated or canceled as a result of those proceedings. In an event of default, all unpaid amounts under the fixed and variable rate notes could become immediately due and payable only at the direction or consent of holders with a majority of the outstanding principal. Such acceleration of our debt could have a material adverse effect on our liquidity if we were unable to negotiate mutually acceptable new terms with our lenders or if alternate funding were not available to us.

9

Sonic Drive-Ins are subject to health, employment, environmental and other government regulations, and failure to comply with existing or future government regulations could expose us to litigation, damage to our reputation and lower profits.

Sonic and its franchisees are subject to various federal, state and local laws affecting their businesses. The successful development and operation of restaurants depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use (including the placement of drive-thru windows), environmental (including litter), traffic and other regulations. More stringent requirements of local and state governmental bodies with respect to zoning, land use and environmental factors could delay, prevent or make cost prohibitive the continuing operations of an existing restaurant or the development of new restaurants in particular locations. Restaurant operations are also subject to licensing and regulation by state and local departments relating to health, food preparation, sanitation and safety standards, federal and state labor and immigration laws (including applicable minimum wage requirements, overtime, working and safety conditions and work authorization requirements), federal and state laws prohibiting discrimination and other laws regulating the design and operation of facilities, such as the Americans with Disabilities Act. If we fail to comply with any of these laws, we may be subject to governmental action or litigation, and our reputation could be accordingly harmed. Injury to our reputation would, in turn, likely reduce revenues and profits.

In recent years, there has been an increased legislative, regulatory and consumer focus on nutrition and advertising practices in the food industry, particularly among restaurants. As a result, we will become subject to regulatory initiatives in the area of nutritional content, disclosure or advertising, such as requirements to provide information about the nutritional content of our food products, which could increase expenses. The operation of our franchise system is also subject to franchise laws and regulations enacted by a number of states and rules promulgated by the U.S. Federal Trade Commission. Any future legislation regulating franchise relationships may negatively affect our operations, particularly our relationship with our franchisees. Failure to comply with new or existing franchise laws and regulations in any jurisdiction or to obtain required government approvals could result in a ban or temporary suspension on future franchise sales. Changes in applicable accounting rules imposed by governmental regulators or private governing bodies could also affect our reported results of operations.

We are subject to the Fair Labor Standards Act, which governs such matters as minimum wage, overtime and other working conditions, along with the Americans with Disabilities Act, various family leave mandates and a variety of other laws enacted, or rules and regulations promulgated, by federal, state and local governmental authorities that govern these and other employment matters. We have experienced and expect further increases in payroll expenses as a result of government-mandated increases in the minimum wage, and although such increases are not expected to be material, there may be material increases in the future. Enactment and enforcement of various federal, state and local laws, rules and regulations on immigration and labor organizations may adversely impact the availability and costs of labor for our restaurants in a particular area or across the United States. In addition, our vendors may be affected by higher minimum wage standards or availability of labor, which may increase the price of goods and services they supply to us.

We are reviewing the health care reform law enacted by Congress in March of 2010. As part of that review, we will evaluate the potential impacts of this new law on our business, and accommodate various parts of the law as they take effect. There are no assurances that a combination of cost management and price increases can accommodate all of the costs associated with compliance.

Litigation from customers, franchisees, employees and others could harm our reputation and impact operating results.

Claims of illness or injury relating to food content, food quality or food handling are common in the quick-service restaurant industry. In addition, class action lawsuits have been filed, and may continue to be filed, against various quick-service restaurants alleging, among other things, that quick-service restaurants have failed to disclose the health risks associated with foods we serve and that quick-service restaurants’ marketing practices have encouraged obesity and other health issues. In addition to decreasing our sales and profitability and diverting management resources, adverse publicity or a substantial judgment against us could negatively impact our reputation, hindering the ability to attract and retain qualified franchisees and grow the business.

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Further, we may be subject to employee, franchisee and other claims in the future based on, among other things, discrimination, harassment, wrongful termination and wage, rest break and meal break issues, including those relating to overtime compensation.

We may not be able to adequately protect our intellectual property, which could decrease the value of our brand and products.

The success of our business depends on the continued ability to use existing trademarks, service marks and other components of our brand in order to increase brand awareness and further develop branded products. All of the steps we have taken to protect our intellectual property may not be adequate.

Our reputation and business could be materially harmed as a result of data breaches.

Unauthorized intrusion into portions of our computer systems or those of our franchisees that process and store information related to customer transactions may result in the theft of customer data. We rely on proprietary and commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information, such as payment card and personal information. Further, the systems currently used for transmission and approval of payment card transactions, and the technology utilized in payment cards themselves, all of which can put payment card data at risk, are determined and legally mandated by payment card industry standards, not by us. Improper activities by third-parties, advances in computer and software capabilities and encryption technology, new tools and discoveries and other events or developments may facilitate or result in a compromise or breach of our or our franchisees’ computer systems. Any such compromises or breaches could cause interruptions in our operations and damage to our reputation, subject us to costs and liabilities and hurt sales, revenues and profits.

Disruptions in the financial markets may adversely impact the availability and cost of credit and consumer spending patterns.

The disruptions to the financial markets and continuing economic downturn have adversely impacted the availability of credit already arranged and the availability and cost of credit in the future. The disruptions in the financial markets also had an adverse effect on the economy, which has negatively impacted consumer spending patterns. There can be no assurance that various governmental responses to the disruptions in the financial markets will restore consumer confidence, stabilize the markets or increase liquidity or the availability of credit.

Ownership and leasing of significant amounts of real estate exposes us to possible liabilities and losses.

We own or lease the land and building for all Company-owned Drive-Ins. Accordingly, we are subject to all of the risks associated with owning and leasing real estate. In particular, the value of our assets could decrease and our costs could increase because of changes in the investment climate for real estate, demographic trends and supply or demand for the use of our drive-ins, which may result from competition from similar restaurants in the area, as well as liability for environmental conditions. We generally cannot cancel the leases, so if an existing or future Sonic Drive-In is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. In addition, as each of the leases expires, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close drive-ins in desirable locations.

Catastrophic events may disrupt our business.

Unforeseen events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, and natural disasters such as hurricanes, earthquakes, or other adverse weather and climate conditions, whether occurring in the United States or abroad, could disrupt our operations, disrupt the operations of franchisees, suppliers or customers, or result in political or economic instability. These events could reduce demand for our products or make it difficult or impossible to receive products from suppliers.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

Of the 455 Company-owned Drive-Ins operating as of August 31, 2010, we operated 204 of them on property leased from third-parties and 251 of them on property we own. The leases expire on dates ranging from 2011 to 2027, with the majority of the leases providing for renewal options. All leases provide for specified monthly rental payments, and some of the leases call for additional rentals based on sales volume. All leases require Sonic to maintain the property and pay the cost of insurance and taxes. We also own the real property on which 176 Franchise Drive-Ins are operated. These leases for Franchise Drive-Ins expire on dates ranging from 2012 to 2029, with the majority of the leases providing for renewal options. The majority of the leases for Franchise Drive-Ins provide for percentage rent based on sales volume, with a minimum base rent. These leases generally require the franchisee to maintain the property and pay the costs of insurance and taxes.

Our corporate headquarters are located in the Bricktown district of downtown Oklahoma City. We have a 15-year lease to occupy approximately 83,000 square feet. The lease expires in November 2018 and has two five-year renewal options. Sonic believes its properties are suitable for the purposes for which they are being used.

Item 3. Legal Proceedings

The Company is involved in various legal proceedings and has certain unresolved claims pending. Based on the information currently available, management believes that all claims currently pending are either covered by insurance or would not have a material adverse effect on the Company’s business or financial condition.

Item 4. Submission of Matters to a Vote of Security Holders

Sonic did not submit any matter during the fourth quarter of the Company’s last fiscal year to a vote of Sonic’s stockholders through the solicitation of proxies or otherwise.

Item 4A. Executive Officers of the Company

Identification of Executive Officers

The following table identifies the executive officers of the Company:

Name	Age	Position	Executive Officer Since
J. Clifford Hudson	55	Chairman of the Board of Directors and Chief Executive Officer	June 1985
W. Scott McLain	48	President of Sonic Corp. and President of Sonic Industries Services Inc.	April 1996
Stephen C. Vaughan	44	Executive Vice President and Chief Financial Officer	January 1996
Omar Janjua	52	President of Sonic Restaurants, Inc. and Executive Vice President of Operations of Sonic Industries Services Inc.	October 2009
Danielle M. Vona	42	Vice President and Chief Marketing Officer	August 2010
Paige S. Bass	41	Vice President, General Counsel and Assistant Corporate Secretary	January 2007
Carolyn C. Cummins	52	Vice President of Compliance and Corporate Secretary	April 2004
Terry D. Harryman	45	Vice President and Controller	January 1999
Claudia San Pedro	41	Vice President of Investor Relations and Treasurer	January 2007
Sharon T. Strickland	57	Vice President of People	January 2008

Business Experience

The following sets forth the business experience of the executive officers of the Company for at least the past five years:

J. Clifford Hudson has served as the Company’s Chairman of the Board since January 2000 and Chief Executive Officer since April 1995. Mr. Hudson served as President of the Company from April 1995 to January 2000 and reassumed that position from November 2004 until May 2008. He has served in various other offices with the Company since 1984. Mr. Hudson has served as a Director of the Company since 1993. Mr. Hudson has served on the Board of Trustees of the Ford Foundation since January 2006 and on the Board of Trustees of the National Trust for Historic Preservation since January 2001, where he now serves as Chairman of the Board.

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W. Scott McLain has served as President of the Company since May 2008. He also has served as President of Sonic Industries Services Inc. since September 2004. He served as Executive Vice President of the Company from November 2004 until May 2008. He served as the Company’s Executive Vice President and Chief Financial Officer from January 2004 until November 2004 and as the Company’s Senior Vice President and Chief Financial Officer from January 2000 until January 2004. Mr. McLain joined the Company in 1996.

Stephen C. Vaughan has served as Executive Vice President of the Company and Chief Financial Officer since August 2008 and was the Company’s Vice President and Chief Financial Officer from November 2004 until August 2008. Mr. Vaughan also served as Treasurer of the Company from November 2001 until April 2005. He joined the Company in 1992.

Omar Janjua has served as President of Sonic Restaurants, Inc. since September 2009 and Executive Vice President of Operations of Sonic Industries Services Inc. since September 2010. He served as Executive Vice President and Chief Operating Officer for The Steak n Shake Company from June 2007 to September 2009. Prior to joining Steak n Shake, Mr. Janjua worked for 18 years with Yum Brands, Inc. in its Pizza Hut operations in various positions of increasing responsibility, the most recent of which was Vice President of Company Operations.

Danielle M. Vona has served as Vice President and Chief Marketing Officer of Sonic Industries Services Inc. since July 2010. From May of 1999 until joining Sonic in 2010, she held various management positions with PepsiCo/Pepsi-Cola North America, the most recent of which was Vice President of Propel Brand Marketing from June 2008 until July 2010.

Paige S. Bass has served as Vice President and General Counsel of the Company since January 2007 and has also served as Assistant Corporate Secretary since October 2008. Ms. Bass joined the Company as Associate General Counsel in April 2004. Prior to joining the Company, Ms. Bass was employed seven years as an associate with the law firm of Crowe & Dunlevy in Oklahoma City, Oklahoma.

Carolyn C. Cummins has served as the Company’s Corporate Secretary since January 2007 and as the Company’s Vice President of Compliance since April 2004. Ms. Cummins joined the Company as Assistant General Counsel in January 1999.

Terry D. Harryman has served as Vice President of the Company since January 2008 and as the Company’s Controller since January 1999. Mr. Harryman has also served as the Controller of Sonic Restaurants, Inc. and Sonic Industries Services Inc. since January 2002. Mr. Harryman joined the Company in 1996.

Claudia San Pedro has served as Vice President of Investor Relations of the Company since July 2010. She served as Vice President of Investor Relations and Brand Strategies from October 2009 until July 2010. Ms. San Pedro has also served as Treasurer of the Company since January 2007 and as Treasurer of Sonic Industries Services Inc. and Sonic Restaurants, Inc. since November 2006. She served as the Director of the Oklahoma Office of State Finance from June 2005 through November 2006. From July 2003 to May 2005, Ms. San Pedro served as the Budget Division Director for the Office of State Finance.

Sharon T. Strickland has served as Vice President of People of the Company since January 2008. She served as Senior Director of Potential from August 2005 until January 2008. Ms. Strickland was a Human Resources Advisor for Kerr-McGee Corporation from April 2004 until August 2005.

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PART II

Item 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

The Company’s common stock trades on the Nasdaq National Market (“Nasdaq”) under the symbol “SONC.” The following table sets forth the high and low sales price for the Company’s common stock during each fiscal quarter within the two most recent fiscal years as reported on Nasdaq.

Fiscal Year Ended August 31, 2010	High	Low	Fiscal Year Ended August 31, 2009	High	Low
First Quarter	$12.63	$9.05	First Quarter	$18.19	$5.78
Second Quarter	$10.68	$8.07	Second Quarter	$12.86	$7.35
Third Quarter	$13.11	$8.29	Third Quarter	$12.09	$6.05
Fourth Quarter	$10.52	$7.28	Fourth Quarter	$11.75	$8.34

Stockholders

As of October 15, 2010, the Company had 676 record holders of its common stock.

Dividends

The Company did not pay any cash dividends on its common stock during its two most recent fiscal years and does not intend to pay any dividends in the foreseeable future as profits are reinvested in the Company to fund expansion of its business, payments under the Company’s financing arrangements and other stockholder-value enhancing initiatives. As in the past, future payment of dividends will be considered after reviewing, among other factors, returns to stockholders, profitability expectations and financing needs.

Issuer Purchases of Equity Securities

None.

Item 6. Selected Financial Data

The following table sets forth selected financial data regarding the Company’s financial condition and operating results. One should read the following information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” below, and the Company’s Consolidated Financial Statements included elsewhere in this report.

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Selected Financial Data

(In thousands, except per share data)

	Year ended August 31,
	2010			2009(3)			2008(3)			2007(1) (3)			2006(1) (3)
Income Statement Data:
Company-owned Drive-In sales	$	414,369		$	567,436		$	671,151		$	646,915		$	585,832
Franchise Drive-Ins:
Franchise royalties		122,385			126,706			121,944			111,052			98,163
Franchise fees		2,752			5,006			5,167			4,574			4,747
Lease revenue		6,879			3,985			1,519			1,851			2,226
Other		4,541			3,148			1,978			2,810			1,872
Total revenues		550,926			706,281			801,759			767,202			692,840
Cost of Company-owned Drive-In sales		354,659			464,876			526,180			493,520			443,393
Selling, general and administrative		66,847			63,358			61,179			58,736			52,048
Depreciation and amortization		42,615			48,064			50,653			45,103			40,696
Provision for impairment of long-lived assets		15,161			11,163			571			1,165			264
Total expenses		479,282			587,461			638,583			598,524			536,401
Other operating income (expense), net		(763	)		12,508			2,954			3,267			422
Income from operations		70,881			131,328			166,130			171,945			156,861
Interest expense, net		36,073			35,657			47,927			44,406			7,578
Income before income taxes	$	34,808		$	95,671		$	118,203		$	127,539		$	149,283
Net income-including noncontrolling interests		25,839			64,793			82,241			90,848			103,939
Net income-noncontrolling interests		4,630			15,351			21,922			26,656			25,234
Net income-attributable to Sonic Corp.	$	21,209		$	49,442		$	60,319		$	64,192		$	78,705
Income per share (2):
Basic	$	0.35		$	0.81		$	1.00		$	0.94		$	0.91
Diluted	$	0.34		$	0.81		$	0.97		$	0.91		$	0.88
Weighted average shares used in calculation (2):
Basic		61,319			60,761			60,403			68,019			86,260
Diluted		61,576			61,238			62,270			70,592			89,239
Balance Sheet Data:
Working capital (deficit)	$	17,875		$	84,813		$	(13,115	)	$	(40,784	)	$	(35,585	)
Property, equipment and capital leases, net		489,264			523,938			586,245			529,993			477,054
Total assets		735,624			849,041			836,312			758,520			638,018
Obligations under capital leases (including current portion)		36,256			39,461			37,385			39,318			36,625
Long-term debt (including current portion)		591,621			699,550			759,422			710,743			122,399
Stockholders’ equity (deficit)		22,566			(2,352	)		(61,020	)		(103,013	)		396,259
Cash dividends declared per common share		—			—			—			—			—

(1) Previously reported prior-year results have been adjusted to implement changes to stock based compensation on a modified retrospective basis.

(2) Adjusted for a three-for-two stock split in 2006.

(3) Previously reported prior-year results have been adjusted to reflect changes in the presentation of noncontrolling interests, as well as the reclassification of gains (losses) from other revenues to other operating income (expense), net.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Description of the Business. Sonic operates and franchises the largest chain of drive-in restaurants in the United States. As of August 31, 2010, the Sonic system was comprised of 3,572 drive-ins, of which 13% were Company-owned Drive-Ins and 87% were Franchise Drive-Ins. Sonic Drive-Ins feature signature menu items such as specialty drinks and frozen desserts, made-to-order sandwiches and a unique breakfast menu. The Company derives revenues primarily from Company-owned Drive-In sales and royalties from franchisees. The Company also receives revenues from leasing real estate to franchisees, initial franchise fees, earnings from minority investments in franchise operations and other miscellaneous revenues.

Costs of Company-owned Drive-In sales relate directly to Company-owned Drive-In sales. Other expenses, such as depreciation, amortization, and general and administrative expenses, relate to the Company’s franchising operations, as well as Company-owned Drive-In operations. Our revenues and expenses are directly affected by the number and sales volumes of Company-owned Drive-Ins. Our revenues and, to a lesser extent, expenses also are affected by the number and sales volumes of Franchise Drive-Ins. Initial franchise fees and franchise royalties are directly affected by the number of Franchise Drive-In openings. Lease revenues are generated by leasing of land and buildings for Company-owned Drive-Ins that have been sold to franchisees.

Overview of Business Performance. Persistent unemployment and declines in consumer spending were the primary contributors to a challenging year. In the second quarter of fiscal year 2010, sales were adversely affected by severe winter weather. While the second quarter is typically the Company’s most volatile quarter, harsh weather, particularly in our core markets, contributed to a significant decline in same-store sales during the quarter.

Throughout fiscal years 2010 and 2009, we implemented a number of initiatives to improve the customer experience and emphasize Sonic’s core brand strengths such as high-quality food, new product news and service differentiation with skating carhops. In addition, a new targeted media allocation strategy and new messaging were implemented this past year to communicate our brand effectively to the customer.

While the number of new store openings in fiscal year 2010 was down compared to fiscal year 2009, investments by franchisees in new and existing locations continued throughout the year. Franchisees opened 80 new drive-ins and relocated or rebuilt 23 existing drive-ins during the fiscal year. We also opened the first Sonic Drive-Ins in several new markets, including Connecticut.

The growth and success of our business is built around implementation of our brand strategy, which features the following components:

• Improved performance of Company-owned Drive-Ins, including consistent and improved operations execution, improved speed of service, cleanliness of drive-ins, and focus on the customer experience; and

• Same-store sales growth fueled by re-emphasizing the Company’s core brand strengths, including consistent drive-in execution, high-quality products, new products and service differentiation with skating carhops.

The following table provides information regarding the number of Company-owned Drive-Ins and Franchise Drive-Ins in operation as of the end of the years indicated as well as the system-wide growth in sales and average unit volume. System-wide information includes both Company-owned Drive-In and Franchise Drive-In information, which we believe is useful in analyzing the growth of the brand as well as the Company’s revenues, since franchisees pay royalties based on a percentage of sales.

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System-Wide Performance

($ in thousands)

	Year Ended August 31,
	2010			2009			2008
Changes in sales		(5.7	%)		0.7	%		5.6	%
System-wide drive-ins in operation (1):
Total at beginning of period		3,544			3,475			3,343
Opened		85			141			169
Closed (net of re-openings)		(57	)		(72	)		(37	)
Total at end of period		3,572			3,544			3,475
Average sales per drive-in:	$	1,023		$	1,093		$	1,125
Change in same-store sales (2):		(7.8	%)		(4.3	%)		0.9	%

(1) Drive-ins that are temporarily closed for various reasons (repairs, remodeling, relocations, etc.) are not considered closed unless the Company determines that they are unlikely to reopen within a reasonable time.

(2) Represents percentage change for drive-ins open for a minimum of 15 months.

System-wide same-store sales decreased 7.8% during fiscal year 2010 primarily as a result of a reduction in traffic (number of transactions per drive-in). The second fiscal quarter was adversely affected by the severe weather in our core markets and accounted for an estimated two-thirds of the decline in same store sales during that time period. In the second half of the year, the Company implemented initiatives designed to provide a unique and high quality customer service experience with the goal of improving same-store sales by driving both traffic and average check. These initiatives include focusing on customer service, offering differentiated high quality food and drink products, a new value strategy, new commercials and implementation of a new media strategy.

During fiscal year 2010, our system-wide media expenditures were approximately $167 million as compared to $184 million in fiscal year 2009. During the fiscal year, we modified our media strategy by shifting a larger portion of our marketing expenditures from national to local markets. We use varying forms of advertising mediums, such as outdoor billboard, local radio and television and local store advertising to optimize media impressions in drive-in trade areas. We also continue to invest in system-wide marketing fund efforts, which are largely used for network cable television advertising. Expenditures for national cable advertising decreased from approximately $96 million in fiscal year 2009 to approximately $72 million in fiscal year 2010, which was a result of the focus on local markets and the decline in system-wide sales. Looking forward, we expect system-wide media expenditures to be approximately $170 million in fiscal 2011.

The following table provides information regarding drive-in development across the system.

	Year ended August 31,
	2010		2009		2008
New drive-ins:
Company-owned		5		11		29
Franchise		80		130		140
System-wide		85		141		169
Rebuilds/relocations:
Company-owned		—		4		5
Franchise		23		46		64
System-wide		23		50		69

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Results of Operations

Revenues. The following table sets forth the components of revenue for the reported periods and the relative change between the comparable periods.

Revenues

($ in thousands)

Year Ended August 31,	2010		2009		Increase/ (Decrease)			Percent Increase/ (Decrease)
Revenues:
Company-owned Drive-In sales	$	414,369	$	567,436	$	(153,067	)		(27.0	%)
Franchise revenues:
Franchise royalties		122,385		126,706		(4,321	)		(3.4	)
Franchise fees		2,752		5,006		(2,254	)		(45.0	)
Lease revenue		6,879		3,985		2,894			72.6
Other		4,541		3,148		1,393			44.3
Total revenues	$	550,926	$	706,281	$	(155,355	)		(22.0	%)

Year Ended August 31,	2009		2008		Increase/ (Decrease)			Percent Increase/ (Decrease)
Revenues:
Company-owned Drive-In sales	$	567,436	$	671,151	$	(103,715	)		(15.5	%)
Franchise revenues:
Franchise royalties		126,706		121,944		4,762			3.9
Franchise fees		5,006		5,167		(161	)		(3.1	)
Lease revenue		3,985		1,519		2,466			162.3
Other		3,148		1,978		1,170			59.2
Total revenues	$	706,281	$	801,759	$	(95,478	)		(11.9	%)

The following table reflects the changes in Company-owned Drive-In sales and comparable drive-in sales. It also presents information about average unit volumes and the number of Company-owned Drive-Ins, which is useful in analyzing the growth of Company-owned Drive-In sales.

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Company-owned Drive-In Sales

($ in thousands)

	Year Ended August 31,
	2010			2009			2008
Company-owned Drive-In sales	$	414,369		$	567,436		$	671,151
Percentage change		(27.0	%)		(15.5	%)		3.8	%
Company-owned Drive-Ins in operation (1):
Total at beginning of period		475			684			654
Opened		5			11			29
Acquired from (sold to) franchisees, net		(16	)		(205	)		6
Closed		(9	)		(15	)		(5	)
Total at end of period		455			475			684
Average sales per Company-owned Drive-In	$	893		$	954		$	1,007
Percentage change		(6.4	%)		(5.3	%)		(1.0	%)
Change in same-store sales (2)		(8.8	%)		(6.4	%)		(1.6	%)

(1) Drive-ins that are temporarily closed for various reasons (repairs, remodeling, relocations, etc.) are not considered closed unless the Company determines that they are unlikely to reopen within a reasonable time.

(2) Represents percentage change for drive-ins open for a minimum of 15 months.

For fiscal year 2010, the decrease in Company-owned Drive-In sales was largely driven by 245 drive-ins that were refranchised or closed since the beginning of fiscal year 2009 and the decline in same-store sales for existing drive-ins. Drive-ins that were refranchised or closed resulted in $121.3 million of the decrease in fiscal year 2010, partially offset by sales of $4.9 million from drive-ins opened during the period. Same-store sales decreases for existing drive-ins of $36.7 million were driven by the impact of weather previously discussed as well as a reduction of consumer spending at restaurants.

During fiscal year 2010, same-store sales at Company-owned Drive-Ins declined 8.8%, as compared to the 7.8% decrease for the system. In addition to implementation of system-wide initiatives, we restructured management of our Company-owned Drive-In operations to reduce excess management layers, revised the compensation program at the drive-in level, and implemented a customer service initiative to improve sales and profits. During the second half of the year, Company-owned Drive-Ins showed improvement in closing the gap in same-store sales growth with the Franchise Drive-Ins. These efforts are expected to have a continued positive impact on Company-owned Drive-In sales going forward.

Sales at Company-owned Drive-Ins decreased 15.5% in fiscal year 2009, primarily due to 219 drive-ins that were refranchised or closed during the year, which resulted in $100.9 million of the decrease, partially offset by sales of $11.8 million from drive-ins opened during the period. Same-store sales decreases of 6.4% for existing stores accounted for the balance of the decrease in fiscal year 2009.

The following table reflects the growth in franchise income (franchise royalties and franchise fees) as well as franchise sales, average unit volumes and the number of Franchise Drive-Ins. While we do not record Franchise Drive-In sales as revenues, we believe this information is important in understanding our financial performance since these sales are the basis on which we calculate and record franchise royalties. This information is also indicative of the financial health of our franchisees.

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Franchise Information

($ in thousands)

	Year Ended August 31,
	2010			2009			2008
Franchise fees and royalties (1)	$	125,137		$	131,712		$	127,111
Percentage change		(5.0	%)		3.6	%		9.9	%
Franchise Drive-Ins in operation (2):
Total at beginning of period		3,069			2,791			2,689
Opened		80			130			140
Acquired from (sold to) Company, net		16			205			(6	)
Closed		(48	)		(57	)		(32	)
Total at end of period		3,117			3,069			2,791
Franchise Drive-In sales	$	3,205,507		$	3,269,930		$	3,139,996
Percentage change		(2.0	%)		4.1	%		6.0	%
Effective royalty rate		3.82	%		3.87	%		3.88	%
Average sales per Franchise Drive-In	$	1,043		$	1,122		$	1,154
Change in same-store sales (3)		(7.6	%)		(3.9	%)		1.4	%

(1) See Revenue Recognition Related to Franchise Fees and Royalties in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(2) Drive-ins that are temporarily closed for various reasons (repairs, remodeling, relocations, etc.) are not considered closed unless the Company determines that they are unlikely to reopen within a reasonable time.

(3) Represents percentage change for drive-ins open for a minimum of 15 months.

Franchise royalties declined $4.3 million or 3.4% in fiscal year 2010 as compared to fiscal year 2009. Same-store sales decreases combined with a lower effective royalty rate resulted in a decrease in royalties of $11.5 million, which was partially offset by $7.2 million in incremental royalties from newly constructed and refranchised drive-ins. The lower effective royalty rate resulted from the Company’s variable royalty rate structure which increases as same-store sales increase and decreases as same-store sales decrease. Franchise royalties increased 4.1% or $4.8 million in fiscal year 2009 as compared to fiscal year 2008 as a result of an $8.1 million increase from newly constructed or refranchised stores, which was partially offset by the impact of declining same-store sales.

Franchise fees declined $2.3 million to $2.8 million in fiscal year 2010 as franchisees opened 80 new drive-ins, down from 130 new drive-ins in fiscal year 2009. The decrease is primarily comprised of $1.8 million attributable to fewer new drive-in openings in fiscal 2010 compared with fiscal year 2009, as well as $0.7 million in reduced fees associated with incentives for the development of new Sonic Drive-Ins. Franchisee investment in existing drive-ins continued during fiscal year 2010, and included the relocation or rebuild of 23 drive-ins (versus 46 in the prior year). Franchise fees decreased 3.1% to $5.0 million during fiscal year 2009 as a result of fewer Franchise Drive-In openings, in addition to a decline in fees associated with the termination of area development agreements.

Lease revenue increased 72.6% to $6.9 million in fiscal year 2010 from $4.0 million in fiscal year 2009. The increase relates primarily to lease revenue from refranchised drive-ins in which the Company retained ownership of the real estate. Lease revenue increased $2.5 million to $4.0 million in fiscal year 2009 as compared to $1.5 million in fiscal year 2008 also primarily due to lease revenue from refranchised drive-ins in which the Company retained ownership of the real estate during the latter half of fiscal year 2009.

Other income increased 44.3% to $4.5 million in fiscal year 2010 from $3.1 million in fiscal year 2009 primarily due to a minority ownership interest that we retained in the operations of 88 drive-ins that were refranchised in fiscal year 2009.

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Operating Expenses. The following table presents the overall costs of drive-in operations as a percentage of Company-owned Drive-In sales. Other operating expenses include direct operating costs such as marketing, telephone and utilities, repair and maintenance, rent, property tax and other controllable expenses. Noncontrolling interests of Company-owned Drive-Ins are no longer included as a part of cost of sales in the consolidated income statement due to recent accounting guidance changes. We have included noncontrolling interests for comparative purposes in the table below.

Restaurant-Level Margins

	Year ended August 31,						Percentage points Increase/ (Decrease)
	2010			2009
Costs and expenses:
Company-owned Drive-Ins:
Food and packaging		27.6	%		27.6	%		0.0
Payroll and other employee benefits		35.2			32.9			2.3
Other operating expenses		22.8			21.4			1.4
		85.6	%		81.9	%
Noncontrolling interests		1.1			2.7			(1.6)
		86.7	%		84.6	%		2.1
	Year ended August 31,						Percentage points Increase/ (Decrease)
	2009			2008
Costs and expenses:
Company-owned Drive-Ins:
Food and packaging		27.6	%		26.5	%		1.1
Payroll and other employee benefits		32.9			31.5			1.4
Other operating expenses		21.4			20.5			0.9
		81.9	%		78.5	%
Noncontrolling interests		2.7			3.3			(0.6)
		84.6	%		81.8	%		2.8

Restaurant-level margins decreased overall in fiscal year 2010 as a result of higher labor costs driven by minimum wage increases and the de-leveraging impact of lower same-store sales. In the third quarter of fiscal 2010, the Company implemented a new compensation program for Company-owned Drive-Ins as an alternative to the ownership program to attract and retain quality talent. The new compensation program provides managers and supervisors a larger portion of guaranteed compensation but retains a significant incentive component based on drive-in level performance. As of April 2010, most Company-owned Drive-Ins operate under this new compensation structure. These efforts are expected to have a positive impact for Company-owned Drive-In sales and profits in the long run but are expected to add 50 to 75 basis points to payroll and other employee benefits on an annualized basis. In addition, the annual amounts of manager and supervisor bonuses have been reclassified from other operating expenses to payroll and other employee benefits. Manager and supervisor bonuses are paid monthly and generally follow the seasonality in our business. Historically, under our previous compensation structure, these bonuses were classified as other operating expenses because they related to the profitability of individual stores for equity partners.

Selling, General and Administrative (“SG&A”). SG&A expenses increased 5.5% to $66.8 million during fiscal year 2010 and 3.6% to $63.4 million during fiscal year 2009. The increase for fiscal year 2010 is primarily attributable to $2.9 million in provision for bad debt expenses, as well as professional fees associated with financial restructuring services for franchisees. Stock-based compensation is included in SG&A, and, as of August 31, 2010, total remaining unrecognized compensation cost related to unvested stock-based arrangements was $12.3 and is expected to be recognized over a weighted average period of 1.7 years. See Note 1 and Note 13 of the Notes to the Consolidated Financial Statements included in this Form 10-K for additional information regarding our stock-based compensation.

Depreciation and Amortization. Depreciation and amortization expense decreased 11.3% to $42.6 million in fiscal year 2010 and decreased 5.1% to $48.1 million in fiscal year 2009 primarily as a result of refranchising Company-owned Drive-Ins in fiscal year 2009. Capital expenditures during fiscal year 2010 were $24.5 million. For fiscal year 2011, capital expenditures are expected to be approximately $20 to $25 million.

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Provision for Impairment of Long-Lived Assets. The Company identified impairments for certain drive-in assets and surplus property through regular quarterly reviews of long-lived assets. The recoverability of Company-owned Drive-Ins is assessed by estimating the undiscounted net cash flows expected to be generated over the remaining life of the Company-owned Drive-Ins. This involves estimating same-store sales and margins for the cash flows period. The amount of impairment, if any, is measured based on projected discounted future net cash flows. When impairment exists, the carrying value of the asset is written down to fair value.

In fiscal year 2010, we recorded a non-cash impairment of long-lived assets of $15.2 million to reduce the carrying cost of the related operating assets to an estimated fair value. This provision was attributable to lower sales and profits in Company-owned Drive-Ins due to the sustained economic downturn and weaker results than anticipated during the summer months for operating stores. Assets impaired included operating drive-ins, property leased to franchisees, surplus property and other assets. The decision whether to close or continue to operate a drive-in is made independent of the impairment process. We continue to perform quarterly analyses of certain underperforming drive-ins. It is reasonably possible that the estimate of future cash flows associated with these drive-ins could change in the future resulting in the need to write-down to fair value assets associated with one or more of these drive-ins. While it is impossible to predict if future write-downs will occur, we do not believe that future write-downs will impede our ability to grow earnings.

Interest Expense and Other Expense, Net. The net interest expense increase from fiscal year 2009 to fiscal year 2010 is a result of a $6.4 million gain from the early extinguishment of debt that resulted from purchasing a portion of the Company’s fixed rate notes at a discount in fiscal year 2009. Excluding this gain in fiscal year 2009, net interest expense decreased by $6.0 million from fiscal year 2009 to fiscal year 2010, reflecting declining debt from amortization payments and a debt purchase of $58 million in the third quarter of the fiscal year. Net interest expense decreased $12.3 million to $35.7 million in fiscal year 2009. Of this decline, $6.4 million is attributable to the gain from the early extinguishment of debt in fiscal year 2009.

Income Taxes. The provision for income taxes decreased for fiscal year 2010 with an effective federal and state tax rate of 29.7% compared with 38.4% in fiscal year 2009 and 37.4% in fiscal year 2008. The decline in the tax rate for the fiscal year 2010 was primarily related to a $1.8 million tax benefit associated with the stock option exchange program that was implemented in the third quarter of fiscal year 2010. Our tax rate may continue to vary significantly from quarter to quarter depending on the timing of option exercises and dispositions by option holders, changes to uncertain tax positions and as circumstances on various tax matters change.

Noncontrolling Interests. Effective April 1, 2010, the Company introduced a new compensation program for managers and supervisors at Company-owned Drive-Ins as an alternative to the traditional ownership program. As a result, compensation costs that were formerly reflected as noncontrolling interests are now included in payroll and other employee benefits. Primarily due to this change, noncontrolling interests decreased 69.8% to $4.6 million for fiscal year 2010.

Financial Position

During fiscal year 2010, current assets decreased 33.7% to $133.9 million compared to $202.1 million as of the end of fiscal year 2009. Cash balances decreased by $51.6 million primarily as a result of the purchase of $58.0 million in the Company’s debt. During fiscal year 2010, noncurrent assets decreased 6.7% to $603.3 million compared to $646.9 million as of the end of fiscal year 2009. The decrease was primarily the result of a $34.7 million reduction of net property and equipment resulting from depreciation and the refranchising of Company-owned Drive-Ins.

Total liabilities decreased $136.6 million or 16.0% during fiscal year 2010 compared to fiscal year 2009 primarily due to a $107.9 million decrease in long-term debt which resulted from scheduled payments on the Company’s fixed rate notes in addition to the debt purchase mentioned above.

Stockholders’ equity increased $24.9 million during fiscal year 2010. The increase primarily relates to earnings of $21.2 million, along with a $4.7 million net increase in paid-in capital related to stock compensation and the repurchase of noncontrolling interests in Company-owned Drive-Ins resulting from changes in the ownership program.

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Liquidity and Sources of Capital

Operating Cash Flows. Net cash provided by operating activities decreased by $19.9 million from $97.5 million in fiscal year 2009 to $77.6 million in fiscal year 2010. Of the total decrease, approximately $11 million relates to the refranchising of 205 Company-owned Drive-Ins in fiscal 2009 and 16 Company-owned Drive-Ins in fiscal 2010, partially offset by $8 million in cash flow from royalties and lease revenue from the refranchised drive-ins. In addition, $12.5 million of the decrease in net cash provided by operating activities resulted from current-year tax payments in excess of those paid in the previous fiscal year. The balance relates to a decline in cash flow from operations of Company-owned Drive-Ins and lower franchise income due primarily to the difficult economic environment.

Investing Cash Flows. Net cash used in investing activities was $9.4 million in fiscal year 2010 as compared to net cash provided by investing activities of $49.2 million in fiscal year 2009. The $58.6 million decrease primarily relates to a decrease in proceeds from the sale of assets of $70.7 million related to refranchising drive-ins in fiscal years 2009 and 2010, partially offset by a decrease of $11.7 million in purchases of property and equipment. Five Company-owned Drive-Ins were constructed and opened during fiscal year 2010. The following table sets forth the components of our investments in capital additions for fiscal year 2010 (in millions):

New Company-owned Drive-Ins, including drive-ins under construction	$	3.4
Retrofits, drive-thru additions and LED signs in existing drive-ins		1.6
Rebuilds, relocations and remodels of existing drive-ins		2.0
Acquisition of real estate for underlying Company-owned Drive-Ins		5.0
Replacement equipment for existing drive-ins and other		12.5
Total investing cash flows for capital additions	$	24.5

Financing Cash Flows. Net cash used in financing activities was $119.8 million in fiscal year 2010 as compared to $53.4 million in fiscal year 2009. The increase in cash used for financing activities in fiscal year 2010 as compared to fiscal year 2009 primarily relates to the repayment of long-term debt combined with a $12.5 million reduction in proceeds from borrowings in fiscal year 2010.

The Company has a securitized financing facility of variable funding notes that provides for the issuance of up to $200.0 million in borrowings and certain other credit instruments, including letters of credit. As of August 31, 2010, our outstanding balance under the variable funding notes totaled $187.3 million at an effective borrowing rate of 1.4%, as well as $0.3 million in outstanding letters of credit. During fiscal year 2009, upon request of the Company to draw down the remaining $12.3 million in variable funding notes from one of the lenders, the lender, which had previously filed for Chapter 11 bankruptcy, notified the Company that it could not meet its obligation. At this time, the Company does not consider the $12.3 million to be available. Subsequent to August 31, 2010, the credit rating for the Company’s variable and fixed rate notes was downgraded by Standard & Poor’s. As a result of the downgrade, the Company will be required to pay an additional 0.5% premium to the company that guarantees payment of the debt.

Despite recent challenges with Company-owned Drive-In operations, operating cash flows remain healthy, and we believe that cash flows from operations, along with existing cash balances, will be adequate for mandatory repayment of any long-term debt and funding of planned capital expenditures in fiscal year 2011. See Note 10 of the Notes to Consolidated Financial Statements for additional information regarding our long-term debt.

Our variable and fixed rate notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) required actions to better secure collateral upon the occurrence of certain performance-related events, (ii) application of certain disposition proceeds as note prepayments after a set time is allowed for reinvestment, (iii) maintenance of specified reserve accounts, (iv) maintenance of certain debt service coverage ratios, (v) optional and mandatory prepayments upon change in control, (vi) indemnification payments for defective or ineffective collateral, and (vii) covenants relating to recordkeeping, access to information and similar matters. If certain covenants or restrictions are not met, the notes are subject to customary rapid amortization events and events of default. Although management does not anticipate an event of default or any other event of noncompliance with the provisions of the debt, if such an event occurred, the unpaid amounts outstanding could become immediately due and payable. See Note 1 – Restricted Cash of the Notes to Consolidated Financial Statements for additional information regarding restrictions on cash.

We plan capital expenditures of approximately $20 to $25 million in fiscal year 2011. These capital expenditures primarily relate to the development of additional Company-owned Drive-Ins, retrofit of existing Company-owned Drive-Ins and other drive-in level expenditures, as well as technology infrastructure expenditures. We expect to fund these capital expenditures through cash flow from operations as well as cash on hand.

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As of August 31, 2010, our unrestricted cash balance of $86.0 million reflected the impact of the cash generated from operating activities, borrowing activity, refranchising, and capital expenditures mentioned above. We believe that existing cash and funds generated from operations, as well as borrowings under the variable funding notes, will meet our needs for the foreseeable future.

Off-Balance Sheet Arrangements

The Company has obligations for guarantees on certain franchisee loans and lease agreements. See Note 17 of the Notes to Consolidated Financial Statements for additional information about these guarantees. Other than such guarantees and various operating leases, which are disclosed more fully in “Contractual Obligations and Commitments” below and Note 7 to our Consolidated Financial Statements, the Company has no other material off-balance sheet arrangements.

Contractual Obligations and Commitments

In the normal course of business, Sonic enters into purchase contracts, lease agreements and borrowing arrangements. Our commitments and obligations as of August 31, 2010 are summarized in the following table:

Payments Due by Period

(In Thousands)

	Total		Less than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years
Contractual Obligations
Long-term debt(1)	$	636,493	$	83,742	$	552,668	$	83	$	—
Capital leases		49,510		5,800		11,070		10,519		22,121
Operating leases		181,643		11,738		23,020		22,168		124,717
Purchase obligations		8,491		8,491		—		—		—
Total	$	876,137	$	109,771	$	586,758	$	32,770	$	146,838

(1) The fixed-rate interest payments included in the table above assume that the senior notes will be outstanding for the expected six-year term ending December 2012, and all other fixed-rate notes will be held to maturity. Interest payments associated with variable-rate debt have not been included in the table. Assuming the amounts outstanding under the variable-rate notes as of August 31, 2010 are held to maturity, and utilizing interest rates in effect at August 31, 2010, the interest payments will be approximately $3 million on an annual basis through December 2012.

Impact of Inflation

We have experienced impact from inflation. Inflation has caused increased food, labor and benefits costs and has increased our operating expenses. To the extent permitted by competition, increased costs are recovered through a combination of menu price increases and reviewing, then implementing, alternative products or processes, or by implementing other cost reduction procedures.

Critical Accounting Policies and Estimates

The Consolidated Financial Statements and Notes to Consolidated Financial Statements included in this document contain information that is pertinent to management’s discussion and analysis. The preparation of financial statements in conformity with generally accepted accounting principles requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. These assumptions and estimates could have a material effect on our financial statements. We evaluate our assumptions and estimates on an ongoing basis using historical experience and various other factors that are believed to be relevant under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We annually review our financial reporting and disclosure practices and accounting policies to ensure that our financial reporting and disclosures provide accurate and transparent information relative to the current economic and business environment. We believe that of our significant accounting policies (see Note 1 of Notes to Consolidated Financial Statements) the following policies involve a higher degree of risk, judgment and/or complexity.

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Impairment of Long-Lived Assets. We review Company-owned Drive-In assets for impairment when events or circumstances indicate they might be impaired. We test for impairment using historical cash flows and other relevant facts and circumstances as the primary basis for our estimates of future cash flows. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. These impairment tests require us to estimate fair values of our drive-ins by making assumptions regarding future cash flows and other factors. During fiscal year 2010, we reviewed Company-owned Drive-Ins and other long-lived assets with combined carrying amounts of $57 million in property, equipment and capital leases for possible impairment, and our cash flow assumptions resulted in impairment charges totaling $15.2 million to write down certain assets to their estimated fair value.

We assess the recoverability of goodwill and other intangible assets related to our brand and drive-ins at least annually and more frequently if events or changes in circumstances occur indicating that the carrying amount of the asset may not be recoverable. Goodwill impairment testing first requires a comparison of the fair value of each reporting unit to the carrying value. We estimate fair value based on a comparison of two approaches: discounted cash flow analyses and a market multiple approach. The discounted estimates of future cash flows include significant management assumptions such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. In addition, the market multiple approach includes significant assumptions such as the use of recent historical market multiples to estimate future market pricing. These assumptions are significant factors in calculating the value of the reporting units and can be affected by changes in consumer demand, commodity pricing, labor and other operating costs, our cost of capital and our ability to identify buyers in the market. If the carrying value of the reporting unit exceeds fair value, goodwill is considered impaired. The amount of the impairment is the difference between the carrying value of the goodwill and the “implied” fair value, which is calculated as if the reporting unit had just been acquired and accounted for as a business combination.

During the fourth quarter of fiscal year 2010, we performed our annual assessment of recoverability of goodwill and other intangible assets and determined that no impairment was indicated. As of the impairment testing date, the fair value of the Company-owned Drive-In reporting unit exceeded the carrying value by approximately 21.4%. The carrying value of goodwill as of August 31, 2010, was $82.1 million, all of which was allocated to the Company-owned Drive-In reporting unit. If cash flows generated by our Company-owned Drive-Ins were to decline significantly in the future or there were negative revisions to key assumptions, we may be required to record impairment charges to reduce the carrying amount of goodwill.

Ownership Program. Effective April 1, 2010, the Company introduced a new compensation program as an alternative to the prior form of ownership to improve manager and supervisor retention. While managers and supervisors do not own an interest in their drive-ins under the new compensation program, the compensation program provides managers and supervisors a larger portion of guaranteed compensation, but retains a significant incentive component based on drive-in level performance. Prior to April 1, 2010, the drive-in management compensation program was structured as an ownership program. As part of the ownership program, either a limited liability company or a general partnership was formed to own and operate each individual Company-owned Drive-In. SRI owned a controlling ownership interest, typically at least 60%, in each of these limited liability companies and partnerships. Generally, the supervisors and managers owned a noncontrolling interest in the limited liability company or partnership. As owners, they shared in the cash flow and were responsible for their share of any losses incurred by their Company-owned Drive-Ins.

The Company records the earnings related to noncontrolling interests of supervisors and managers as “net income attributable to non-controlling interests” below net income. As a result of the change to our compensation program for Company-owned Drive-Ins, compensation costs that were formerly reflected in noncontrolling interests and other operating expenses are now included in payroll and other employee benefits.

Revenue Recognition Related to Franchise Fees and Royalties. Initial franchise fees are recognized in income when we have substantially performed or satisfied all material services or conditions relating to the sale of the franchise and the fees are nonrefundable. Area development fees are nonrefundable and are recognized in income on a pro-rata basis when the conditions for revenue recognition under the individual area development agreements are met. Both initial franchise fees and area development fees are generally recognized upon the opening of a Franchise Drive-In or upon termination of the agreement between Sonic and the franchisee.

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Our franchisees are required under the provisions of the license agreements to pay royalties to Sonic each month based on a percentage of actual net sales. However, the royalty payments and supporting financial statements are not due until the following month under the terms of our license agreements. As a result, we accrue royalty revenue in the month earned based on polled sales of Franchise Drive-Ins and sales estimates for nonpolling drive-ins.

Accounting for Stock-Based Compensation. We account for stock-based compensation in accordance with Accounting Standards Codification (ASC) Topic 718, Stock Compensation. We estimate the fair value of options granted using the Black-Scholes option pricing model along with the assumptions shown in Note 13 of Notes to the Consolidated Financial Statements in this Form 10-K. The assumptions used in computing the fair value of stock-based payments reflect our best estimates, but involve uncertainties relating to market and other conditions, many of which are outside of our control. We estimate expected volatility based on historical daily price changes of the Company’s stock for a period equal to the current expected term of the options. The expected option term is the number of years the Company estimates that options will be outstanding prior to exercise considering vesting schedules and our historical exercise patterns. If other assumptions or estimates had been used, the stock-based compensation expense that was recorded during fiscal year 2010 could have been materially different. Furthermore, if different assumptions are used in future periods, stock-based compensation expense could be materially impacted.

Income Taxes. We estimate certain components of our provision for income taxes. These estimates include, among other items, depreciation and amortization expense allowable for tax purposes, allowable tax credits for items such as wages paid to certain employees, effective rates for state and local income taxes and the tax deductibility of certain other items.

We account for uncertain tax positions under ASC Topic 740, Income Taxes, which sets out criteria for the use of judgment in assessing the timing and amounts of deductible and taxable items. Although we believe we have adequately accounted for our uncertain tax positions, from time to time, audits result in proposed assessments where the ultimate resolution may give rise to us owing additional taxes. We adjust our uncertain tax positions in light of changing facts and circumstances, such as the completion of a tax audit, expiration of a statute of limitations, the refinement of an estimate, and penalty and interest accruals associated with uncertain tax positions until they are resolved. We believe that our tax positions comply with applicable tax law and that we have adequately provided for these matters. However, to the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.

Our estimates are based on the best available information at the time that we prepare the provision, including legislative and judicial developments. We generally file our annual income tax returns several months after our fiscal year end. Income tax returns are subject to audit by federal, state and local governments, typically several years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws. Adjustments to these estimates or returns can result in significant variability in the tax rate from period to period.

Leases. We lease the land and buildings for certain Company-owned Drive-Ins from third parties. Rent expense for operating leases is recognized on a straight-line basis over the expected lease term, including cancelable option periods when it is deemed to be reasonably assured that we would incur an economic penalty for not exercising the options. Judgment is required to determine options expected to be exercised. Certain of our leases have provisions for rent holidays and/or escalations in payments over the base lease term, as well as renewal periods. The effects of the rent holidays and escalations are reflected in rent expense on a straight-line basis over the expected lease term, including cancelable option periods when appropriate. The lease term commences on the date when we have the right to control the use of lease property, which can occur before rent payments are due under the terms of the lease. Contingent rent is generally based on sales levels and is accrued at the point in time we determine that it is probable that such sales levels will be achieved.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Sonic’s use of debt directly exposes the Company to interest rate risk. Floating rate debt, where the interest rate fluctuates periodically, exposes the Company to short-term changes in market interest rates. Fixed rate debt, where the interest rate is fixed over the life of the instrument, exposes the Company to changes in market interest rates reflected in the fair value of the debt and to the risk that the Company may need to refinance maturing debt with new debt at a higher rate. Sonic is also exposed to market risk from changes in commodity prices. Sonic does not utilize financial instruments for trading purposes. Sonic manages its debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps as a tool to achieve that goal in the future.

26

Interest Rate Risk. Our exposure to interest rate risk at August 31, 2010 is primarily based on the fixed rate notes with an effective rate of 5.7%, before amortization of debt-related costs. At August 31, 2010, the fair value of the fixed rate notes was estimated at $388 million versus carrying value of $404.0 million (including accrued interest). The difference between fair value and carrying value is attributable to interest rate decreases subsequent to when the debt was originally issued, more than offset by the increase in credit spreads required by issuers of similar debt instruments in the current market. Should interest rates and/or credit spreads increase or decrease by one percentage point, the estimated fair value of the fixed rate notes would decrease by approximately $7.0 million or increase by approximately $7.2 million, respectively. The fair value estimate required significant assumptions by management as there are few, if any, securitized loan transactions occurring in the current market. Management used market information available for public debt transactions for companies with ratings that are close to or lower than ratings for the Company (without consideration for the third-party credit enhancement). Management believes this fair value is a reasonable estimate with the information that is available.

The variable funding notes outstanding at August 31, 2010 totaled $187.3 million, with a variable rate of 1.4%. The annual impact on our results of operations of a one-point interest rate change for the balance outstanding at year-end would be approximately $1.9 million before tax. At August 31, 2010, the fair value of the variable funding notes was estimated at $164 million versus carrying value of $187.3 million (including accrued interest). Should credit spreads increase or decrease by one percentage point, the estimated fair value of the variable funding notes would decrease by approximately $3.7 million or increase by approximately $3.8 million, respectively. The Company used similar assumptions to value the variable funding notes as were used for the fixed rate notes. The difference between fair value and carrying value is attributable to the increase in credit spreads required by issuers of similar debt instruments in the current market.

We have made certain loans to our franchisees totaling $8.7 million as of August 31, 2010. The interest rates on these notes are generally between 3.3% and 10.5%. We believe the carrying amount of these notes approximates their fair value.

Commodity Price Risk. The Company and its franchisees purchase certain commodities such as beef, potatoes, chicken and dairy products. These commodities are generally purchased based upon market prices established with vendors. These purchase arrangements may contain contractual features that limit the price paid by establishing price floors or caps; however, we have not made any long-term commitments to purchase any minimum quantities under these arrangements. We do not use financial instruments to hedge commodity prices because these purchase agreements help control the ultimate cost.

This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in financial markets.

Item 8. Financial Statements and Supplementary Data

The Company has included the financial statements and supplementary financial information required by this item immediately following Part IV of this report and hereby incorporates by reference the relevant portions of those statements and information into this Item 8.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-14 under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

27

Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of August 31, 2010. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on our assessment, we believe that, as of August 31, 2010, the Company’s internal control over financial reporting is effective based on those criteria.

The Company’s independent registered public accounting firm that audited the financial statements included in the annual report has issued an attestation report on the Company’s internal control over financial reporting. This report appears on the following page.

28

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Sonic Corp.

We have audited Sonic Corp.’s internal control over financial reporting as of August 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Sonic Corp.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Sonic Corp. maintained, in all material respects, effective internal control over financial reporting as of August 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Sonic Corp. as of August 31, 2010 and 2009, and the related consolidated statements of income, stockholders’ equity (deficit), and cash flows for each of the three years in the period ended August 31, 2010 of Sonic Corp. and our report dated October 29, 2010 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP

Oklahoma City, Oklahoma

October 29, 2010

29

Item 9B. Other Information

No information was required to be disclosed in a Form 8-K during the Company’s fourth quarter of its 2010 fiscal year which was not reported.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Sonic has adopted a Code of Ethics for Financial Officers and a Code of Business Conduct and Ethics that applies to all directors, officers and employees. Sonic has posted copies of these codes on the investor section of its internet website at the internet address: http://www.sonicdrivein.com.

Information regarding Sonic’s executive officers is set forth under Item 4A of Part I of this report. The other information required by this item is incorporated by reference from the definitive proxy statement which Sonic will file with the Securities and Exchange Commission no later than 120 days after August 31, 2010 (the “Proxy Statement”), under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

Item 11. Executive Compensation

The information required by this item is incorporated by reference from the Proxy Statement under the caption “Executive Compensation – Compensation Discussion and Analysis.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference from the Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference from the Proxy Statement under the captions “Certain Relationships and Related Transactions,” “Director Independence,” “Committees of the Board of Directors,” and “Compensation Committee Interlocks and Insider Participation.”

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated by reference from the Proxy Statement under the caption “Independent Registered Public Accounting Firm.”

PART IV

Item 15. Exhibits and Financial Statement Schedules

Financial Statements

The following consolidated financial statements of the Company appear immediately following this Item 15:

	Pages
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets at August 31, 2010 and 2009		F-2
Consolidated Statements of Income for each of the three years in the period ended August 31, 2010		F-4
Consolidated Statements of Stockholders’ Equity (Deficit) for each of the three years in the period ended August 31, 2010		F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended August 31, 2010		F-7
Notes to Consolidated Financial Statements		F-9

30

Financial Statement Schedules

The Company has included the following schedule immediately following this Item 15:

	Page
Schedule II - Valuation and Qualifying Accounts		F-32

The Company has omitted all other schedules because the conditions requiring their filing do not exist or because the required information appears in Sonic’s Consolidated Financial Statements, including the notes to those statements.

Exhibits

The Company has filed the exhibits listed below with this report. The Company has marked all management contracts and compensatory plans or arrangements with an asterisk (*).

3.01. Certificate of Incorporation of the Company, which the Company hereby incorporates by reference from Exhibit 3.1 to the Company’s Form S-1 Registration Statement No. 33-37158 filed on October 3, 1990.

3.02. Certificate of Amendment of Certificate of Incorporation of the Company, March 4, 1996, which the Company hereby incorporates by reference from Exhibit 3.05 to the Company’s Form 10-K for the fiscal year ended August 31, 2000.

3.03. Certificate of Amendment of Certificate of Incorporation of the Company, January 22, 2002, which the Company hereby incorporates by reference from Exhibit 3.06 to the Company’s Form 10-K for the fiscal year ended August 31, 2002.

3.04. Certificate of Amendment of Certificate of Incorporation of the Company, January 31, 2006, which the Company hereby incorporates by reference from Exhibit 3.04 to the Company’s Form 10-K for the fiscal year ended August 31, 2006.

3.05. Bylaws of the Company, as amended and restated January 14, 2010.

3.06. Certificate of Designations of Series A Junior Preferred Stock, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K filed on June 17, 1997.

4.01. Specimen Certificate for Common Stock, which the Company hereby incorporates by reference from Exhibit 4.01 to the Company’s Form 10-K for the fiscal year ended August 31, 1999.

10.01. Form of Sonic Industries LLC, successor to Sonic Industries Inc., License Agreement (the Number 4.2 License Agreement and Number 5.1 License Agreement), which the Company hereby incorporates by reference from Exhibit 10.03 to the Company’s Form 10-K for the fiscal year ended August 31, 1994.

10.02. Form of Sonic Industries LLC License Agreement (the Number 4.4/5.4 License Agreement), which the Company hereby incorporates by reference from Exhibit No. 10.08 to the Company’s Form 10-K for the fiscal year ended August 31, 2007.

10.03. Form of Sonic Industries LLC License Agreement (the Number 5.5 License Agreement), which the Company hereby incorporates by reference from Exhibit No. 10.09 to the Company’s Form 10-K for the fiscal year ended August 31, 2007.

10.04. Form of Sonic Industries LLC, successor to Sonic Industries Inc., License Agreement (the Number 6 License Agreement), which the Company hereby incorporates by reference from Exhibit 10.04 to the Company’s Form 10-K for the fiscal year ended August 31, 1994.

10.05. Form of Sonic Industries LLC, successor to Sonic Industries Inc., License Agreement (the Number 6A License Agreement), which the Company hereby incorporates by reference from Exhibit 10.05 to the Company’s Form 10-K for the fiscal year ended August 31, 1998.

31

10.06. Form of Sonic Industries LLC License Agreement (the Number 7 License Agreement), which the Company hereby incorporates by reference from Exhibit No. 10.10 to the Company’s Form 10-K for the fiscal year ended August 31, 2007.

10.07. Form of Sonic Industries LLC Area Development Agreement (the Number 7 Area Development Agreement), which the Company hereby incorporates by reference from Exhibit No. 10.13 to the Company’s Form 10-K for the fiscal year ended August 31, 2007.

10. 08. Form of Sonic Industries Services Inc. Sign Lease Agreement, which the Company hereby incorporates by reference from Exhibit 10.4 to the Company’s Form S-1 Registration Statement No. 33-37158.

10.09. 1991 Sonic Corp. Stock Purchase Plan, amended and restated effective April 2, 2008, which the Company hereby incorporates by reference from Exhibit 10.17 to the Company’s Form 10-K for fiscal year ended August 31, 2008.*

10.10. Sonic Corp. Savings and Profit Sharing Plan, as amended and restated effective October 1, 2010.*

10.11. Net Revenue Incentive Plan, which the Company hereby incorporates by reference from Exhibit 10.19 to the Company’s Form S-1 Registration Statement No. 33-37158.*

10.12. Form of Indemnification Agreement for Directors, which the Company hereby incorporates by reference from Exhibit 10.7 to the Company’s Form S-1 Registration Statement No. 33-37158.*

10.13. Form of Indemnification Agreement for Officers, which the Company hereby incorporates by reference from Exhibit 10.14 to the Company’s Form 10-K for the fiscal year ended August 31, 1995.*

10.14. Employment Agreement with J. Clifford Hudson dated December 15, 2008, which the Company hereby incorporates by reference from Exhibit 10.01 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

10.15. Employment Agreement with W. Scott McLain dated December 15, 2008, which the Company hereby incorporates by reference from Exhibit 10.05 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

10.16. Employment Agreement with Omar Janjua dated October 15, 2009 which the Company hereby incorporates by reference from Exhibit 10.21 to the Company’s Form 10-K for the fiscal year ended August 31, 2009.*

10.17. Employment Agreement with Stephen C. Vaughan dated December 15, 2008, which the Company hereby incorporates by reference from Exhibit 10.09 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

10.18. Employment Agreement with Paige S. Bass dated December 15, 2008, which the Company hereby incorporates by reference from Exhibit 10.02 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

10.19. Employment Agreement with Carolyn C. Cummins, which the Company hereby incorporates by reference from Exhibit 10.03 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

10.20. Employment Agreement with Terry D. Harryman dated December 15, 2008, which the Company hereby incorporates by reference from Exhibit 10.04 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

10.21. Employment Agreement with Claudia San Pedro dated December 15, 2008, which the Company hereby incorporates by reference from Exhibit 10.06 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

32

10.22. Employment Agreement with Sharon T. Strickland dated December 15, 2008, which the Company hereby incorporates by reference from Exhibit 10.08 to the Company’s Form 10-Q for the second fiscal quarter ended February 28, 2009.*

10.23. Employment Agreement with Danielle M. Vona dated August 5, 2010.*

10.24. 1991 Sonic Corp. Stock Option Plan, as amended and restated effective January 14, 2010, which the Company hereby incorporates by reference from Exhibit (d)(4) to the Company’s Schedule TO filed March 31, 2010.*

10.25. 1991 Sonic Corp. Directors’ Stock Option Plan, as amended and restated October 14, 2009.*

10.26. 2001 Sonic Corp. Stock Option Plan, as amended and restated effective January 14, 2010, which the Company hereby incorporates by reference from Exhibit (d)(3) to the Company’s Schedule TO filed March 31, 2010.*

10.27. 2001 Sonic Corp. Directors’ Stock Option Plan, as amended and restated October 14, 2009.*

10. 28. Sonic Corp. 2006 Long-Term Incentive Plan, as amended and restated effective October 13, 2010.*

10. 29. Form of Award Agreement under Sonic Corp. 2006 Long-Term Incentive Plan, which the Company hereby incorporates by reference from Exhibit (d)(2) to the Company’s Schedule TO filed March 31, 2010.*

10.30 Base Indenture dated December 20, 2006 among Sonic Capital LLC and certain other indirect subsidiaries of the Company, and Citibank, N.A. as Trustee and Securities Intermediary, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K filed on December 27, 2006.

10.31 Supplemental Indenture dated December 20, 2006 among Sonic Capital LLC and certain other indirect subsidiaries of the Company, and Citibank, N.A. as Trustee and the Series 2006-1 Securities Intermediary, which the Company hereby incorporates by reference from Exhibit 99.2 to the Company’s Form 8-K filed on December 27, 2006.

10.32 Class A-1 Note Purchase Agreement dated December 20, 2006 among Sonic Capital LLC and certain other indirect subsidiaries of the Company, certain private conduit investors, financial institutions and funding agents, Bank of America, N.A. as provider of letters of credit, and Lehman Commercial Paper Inc., as a swing line lender and as Administrative Agent, which the Company hereby incorporates by reference from Exhibit 99.3 to the Company’s Form 8-K filed on December 27, 2006.

10.33 Guarantee and Collateral Support Agreement dated December 20, 2006 made by Sonic Industries LLC, as Guarantor in favor of Citibank N.A. as Trustee, which the Company hereby incorporates by reference from Exhibit 99.4 to the Company’s Form 8-K filed on December 27, 2006.

10.34 Parent Company Support Agreement dated December 20, 2006 made by Sonic Corp. in favor of Citibank N.A., as Trustee, which the Company hereby incorporates by reference from Exhibit 99.5 to the Company’s Form 8-K filed on December 27, 2006.

21.01. Subsidiaries of the Company.

23.01. Consent of Independent Registered Public Accounting Firm.

31.01. Certification of Chief Executive Officer pursuant to S.E.C. Rule 13a-14.

31.02. Certification of Chief Financial Officer pursuant to S.E.C. Rule 13a-14.

32.01. Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.02. Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

33

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

Sonic Corp.

We have audited the accompanying consolidated balance sheets of Sonic Corp. as of August 31, 2010 and 2009, and the related consolidated statements of income, stockholders’ equity (deficit), and cash flows for each of the three years in the period ended August 31, 2010. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sonic Corp. at August 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for each of the three years in the period ended August 31, 2010, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Sonic Corp.’s internal control over financial reporting as of August 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 29, 2010, expressed an unqualified opinion thereon.

As discussed in Note 1 to the consolidated financial statements, in fiscal year 2010 the Company adopted Accounting Standards Certification Topic 810 “Consolidation.”

ERNST & YOUNG LLP

Oklahoma City, Oklahoma

October 29, 2010

F-1

Sonic Corp.

Consolidated Balance Sheets

	August 31,
	2010		2009
	(In Thousands)
Assets
Current assets:
Cash and cash equivalents	$	86,036	$	137,597
Restricted cash		12,546		24,900
Accounts and notes receivable, net		25,463		27,585
Inventories		3,674		3,365
Prepaid expenses and other		6,209		8,685
Total current assets		133,928		202,132
Noncurrent restricted cash		9,685		10,468
Notes receivable, net		8,824		7,679
Property, equipment and capital leases, net		489,264		523,938
Goodwill		82,089		82,343
Other intangibles, net		4,710		5,967
Debt origination costs, net		6,176		11,071
Other assets, net		2,644		5,443
Total assets	$	737,320	$	849,041

F-2

Sonic Corp.

Consolidated Balance Sheets (continued)

	August 31,
	2010			2009
	(In Thousands)
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	11,772		$	17,174
Deposits from franchisees		3,299			1,833
Accrued liabilities		33,332			34,512
Income taxes payable		5,072			8,156
Obligations under capital leases and long-term debt due within one year		65,133			55,644
Total current liabilities		118,608			117,319
Obligations under capital leases due after one year		32,872			36,516
Long-term debt due after one year		529,872			646,851
Other noncurrent liabilities		18,421			24,200
Deferred income taxes		14,981			26,507
Commitments and contingencies (Notes 7, 8, 15, 16 and 17)
Stockholders’ equity (deficit):
Preferred stock, par value $.01; 1,000,000 shares authorized; none outstanding		—			—
Common stock, par value $.01; 245,000,000 shares authorized; shares issued 118,313,450 in 2010 and 117,781,040 in 2009		1,183			1,178
Paid-in capital		224,453			219,736
Retained earnings		670,488			649,398
Accumulated other comprehensive loss		(843	)		(1,500	)
		895,281			868,812
Treasury stock, at cost; 56,676,425 shares in 2010 and 56,683,932 shares in 2009		(872,937	)		(873,080	)
Total Sonic Corp. stockholders’ equity (deficit)		22,344			(4,268	)
Noncontrolling interests		222			1,916
Total stockholders’ equity (deficit)		22,566			(2,352	)
Total liabilities and stockholders’ equity (deficit)	$	737,320		$	849,041

See accompanying notes.

F-3

Sonic Corp.

Consolidated Statements of Income

	Year ended August 31,
	2010			2009			2008
	(In Thousands, Except Per Share Data)
Revenues:
Company-owned Drive-In sales	$	414,369		$	567,436		$	671,151
Franchise Drive-Ins:
Franchise royalties		122,385			126,706			121,944
Franchise fees		2,752			5,006			5,167
Lease revenue		6,879			3,985			1,519
Other		4,541			3,148			1,978
		550,926			706,281			801,759
Costs and expenses:
Company-owned Drive-Ins:
Food and packaging		114,281			156,521			177,533
Payroll and other employee benefits		145,688			186,545			211,537
Other operating expenses, exclusive of depreciation and amortization included below		94,690			121,810			137,110
		354,659			464,876			526,180
Selling, general and administrative		66,847			63,358			61,179
Depreciation and amortization		42,615			48,064			50,653
Provision for impairment of long-lived assets		15,161			11,163			571
		479,282			587,461			638,583
Other operating income (expense), net		(763	)		12,508			2,954
Income from operations		70,881			131,328			166,130
Interest expense		36,707			43,457			49,946
Debt extinguishment and other costs		314			(6,382	)		—
Interest income		(948	)		(1,418	)		(2,019	)
Net interest expense		36,073			35,657			47,927
Income before income taxes		34,808			95,671			118,203
Provision for income taxes		8,969			30,878			35,962
Net income - including noncontrolling interests		25,839			64,793			82,241
Net income - noncontrolling interests		4,630			15,351			21,922
Net income - attributable to Sonic Corp.	$	21,209		$	49,442		$	60,319
Basic income per share	$	0.35		$	0.81		$	1.00
Diluted income per share	$	0.34		$	0.81		$	0.97

See accompanying notes.

F-4

Sonic Corp.

Consolidated Statements of Stockholders’ Equity (Deficit)

	Common Stock				Paid-in			Retained			Accumulated Other Comprehensive			Treasury Stock					Noncontrolling
	Shares		Amount		Capital			Earnings			Loss			Shares		Amount			Interests
	(In Thousands)
Balance at August 31, 2007		116,223	$	1,162	$	193,682		$	540,886		$	(2,848	)		55,078	$	(839,684	)	$	3,789
Exercise of common stock options		822		8		6,285			—			—			—		—			—
Stock-based compensation expense, including capitalized compensation of $232		—		—		7,428			—			—			—		—			—
Excess tax benefit from stock-based compensation		—		—		1,921			—			—			—		—			—
Purchase of treasury stock		—		—		—			—			—			1,522		(32,683	)		—
Net change in deferred hedging losses, net of tax of $407		—		—		—			—			657			—		—			—
Retained earnings adjustment for adoption of ASC Topic 740		—		—		—			(1,249	)		—			—		—			—
Purchases of noncontrolling interests in Company-owned Drive-Ins		—		—		—			—			—			—		—			(4,369	)
Proceeds from sale of noncontrolling interests in Company-owned Drive-Ins		—		—		—			—			—			—		—			3,701
Changes to noncontrolling interests		—		—		—			—			—			—		—			(21,946	)
Net income		—		—		—			60,319			—			—		—			21,922
Balance at August 31, 2008		117,045	$	1,170	$	209,316		$	599,956		$	(2,191	)		56,600	$	(872,367	)	$	3,097
Exercise of common stock options		736		8		4,503			—			—			—		—			—
Stock-based compensation expense		—		—		6,910			—			—			—		—			—
Deferred tax shortfall from stock-based compensation		—		—		(993	)		—			—			—		—			—
Purchase of treasury stock		—		—		—			—			—			84		(713	)		—
Net change in deferred hedging losses, net of tax of $428		—		—		—			—			691			—		—			—
Purchases of noncontrolling interests in Company-owned Drive-Ins		—		—		—			—			—			—		—			(11,753	)
Proceeds from sale of noncontrolling interests in Company-owned Drive-Ins		—		—		—			—			—			—		—			5,190
Changes to noncontrolling interests		—		—		—			—			—			—		—			(9,969	)
Net income		—		—		—			49,442			—			—		—			15,351
Balance at August 31, 2009		117,781	$	1,178	$	219,736		$	649,398		$	(1,500	)		56,684	$	(873,080	)	$	1,916

F-5

Sonic Corp.

Consolidated Statements of Stockholders’ Equity (Deficit) (cont.)

	Common Stock				Paid-in			Retained			Accumulated Other Comprehensive			Treasury Stock						Noncontrolling
	Shares		Amount		Capital			Earnings			Loss			Shares			Amount			Interests
	(In Thousands)
Balance at August 31, 2009		117,781	$	1,178	$	219,736		$	649,398		$	(1,500	)		56,684		$	(873,080	)	$	1,916
Exercise of common stock options		532		5		3,374			(119	)		—			(14	)		221			—
Stock-based compensation expense		—		—		7,666			—			—			—			—			—
Deferred tax shortfall from stock-based compensation		—		—		(100	)		—			—			—			—			—
Purchase of treasury stock		—		—		—			—			—			6			(78	)		—
Net change in deferred hedging losses, net of tax of $462		—		—		—			—			657			—			—			—
Purchases of noncontrolling interests in Company-owned Drive-Ins		—		—		(6,725	)		—			—			—			—			(9,277	)
Proceeds from sale of noncontrolling interests in Company-owned Drive-Ins		—		—		502			—			—			—			—			613
Changes to noncontrolling interests		—		—		—			—			—			—			—			2,340
Net income									21,209												4,630
Balance at August 31, 2010		118,313	$	1,183	$	224,453		$	670,488		$	(843	)		56,676		$	(872,937	)	$	222

See accompanying notes.

F-6

Sonic Corp.

Consolidated Statements of Cash Flows

	Year ended August 31,
	2010			2009			2008
	(In Thousands)
Cash flows from operating activities
Net income - including noncontrolling interests	$	25,839		$	64,793		$	82,241
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		42,615			48,064			50,653
Gain on dispositions of assets, net		763			(12,506	)		(2,954	)
Stock-based compensation expense		7,666			6,910			7,428
Noncontrolling interests		(4,630	)		(15,351	)		(21,922	)
Provision for impairment of long-lived assets		15,161			11,163			571
Debt extinguishment and other costs		314			(6,382	)		—
Other		328			4,730			1,614
Decrease (increase) in operating assets:
Restricted cash		4,465			126			212
Accounts receivable and other assets		292			(2,149	)		(2,889	)
Increase (decrease) in operating liabilities:
Accounts payable		(522	)		(5,001	)		2,454
Deposits from franchisees		(1,839	)		(459	)		1,196
Accrued and other liabilities		399			(3,544	)		15,386
Income taxes		(13,247	)		7,141			(6,847	)
Total adjustments		51,765			32,742			44,902
Net cash provided by operating activities		77,604			97,535			127,143
Cash flows from investing activities
Purchases of property and equipment		(24,468	)		(36,145	)		(105,426	)
Acquisition of businesses, net of cash received		—			—			(20,895	)
Proceeds from sale of assets		14,271			84,986			17,339
Other		814			385			2,807
Net cash provided by (used in) investing activities		(9,383	)		49,226			(106,175	)

(Continued on following page)

F-7

Sonic Corp.

Consolidated Statements of Cash Flows (continued)

	Year ended August 31,
	2010			2009			2008
	(In Thousands)
Cash flows from financing activities
Payments on long-term debt	$	(106,296	)	$	(64,838	)	$	(123,321	)
Proceeds from borrowings		—			12,495			165,250
Purchases of treasury stock		—			—			(46,628	)
Restricted cash for debt obligations		(209	)		(487	)		(1,463	)
Exercises of stock options		3,404			3,794			5,796
Proceeds from sale of noncontrolling interests in Company-owned Drive-Ins		613			5,190			5,120
Purchases of noncontrolling interests in Company-owned Drive-Ins		(9,277	)		(11,753	)		(6,048	)
Other		(8,017	)		2,169			(833	)
Net cash used in financing activities		(119,782	)		(53,430	)		(2,127	)
Net (decrease) increase in cash and cash equivalents		(51,561	)		93,331			18,841
Cash and cash equivalents at beginning of the year		137,597			44,266			25,425
Cash and cash equivalents at end of the year	$	86,036		$	137,597		$	44,266
Supplemental cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized of $25, $212 and $734, respectively)	$	32,184		$	38,446		$	44,727
Income taxes (net of refunds)		25,534			12,961			35,316
Additions to capital lease obligations		446			5,299			1,055
Accounts and notes receivable and decrease in capital lease obligations from property and equipment sales		391			4,412			348
Stock options exercised by stock swap		78			713			488
Change in obligation for purchase of property and equipment		3,208			(1,162	)		(222	)

See accompanying notes.

F-8

Sonic Corp.

Notes to Consolidated Financial Statements

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

1. Summary of Significant Accounting Policies

Operations

Sonic Corp. (the “Company”) operates and franchises a chain of quick-service drive-ins in the United States. It derives its revenues primarily from Company-owned Drive-In sales and royalty fees from franchisees. The Company also leases signs and real estate, and receives equity earnings in noncontrolling ownership in a number of Franchise Drive-Ins.

Principles of Consolidation

The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and its Company-owned Drive-Ins. All significant intercompany accounts and transactions have been eliminated.

Certain amounts have been reclassified in the Consolidated Financial Statements to conform to the fiscal year 2010 presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported and contingent assets and liabilities disclosed in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements.

Cash Equivalents

Cash equivalents consist of highly liquid investments, primarily money market accounts that mature in three months or less from date of purchase, and depository accounts.

Restricted Cash

As of August 31, 2010, the Company had restricted cash balances totaling $22,231 for funds required to be held in trust for the benefit of senior note holders under the Company’s debt arrangements. The current portion of restricted cash of $12,546 represents amounts to be returned to Sonic or paid to service current debt obligations. The noncurrent portion of $9,685 represents interest reserves required to be set aside for the duration of the debt.

Accounts and Notes Receivable

The Company charges interest on past due accounts receivable at a rate of 18% per annum. Interest accrues on notes receivable based on contractual terms. The Company monitors all accounts for delinquency and provides for estimated losses for specific receivables that are not likely to be collected. In addition, a general provision for bad debt is estimated based on historical trends.

Inventories

Inventories consist principally of food and supplies that are carried at the lower of cost (first-in, first-out basis) or market.

Property, Equipment and Capital Leases

Property and equipment are recorded at cost, and leased assets under capital leases are recorded at the present value of future minimum lease payments. Depreciation of property and equipment and amortization of capital leases are computed by the straight-line method over the estimated useful lives or the lease term, including cancelable option periods when appropriate, and are combined for presentation in the financial statements.

F-9

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

1. Summary of Significant Accounting Policies (continued)

Accounting for Long-Lived Assets

In accordance with Accounting Standards Codification (ASC) Topic 360, the Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which generally represents the individual drive-in. The Company’s primary test for an indicator of potential impairment is operating losses. If an indication of impairment is determined to be present, the Company estimates the future cash flows expected to be generated from the use of the asset and its eventual disposal. If the sum of undiscounted future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. Fair value is typically determined to be the value of the land, since drive-in buildings and improvements are single-purpose assets and have little value to market participants. The equipment associated with a store can be easily relocated to another store, and therefore is not adjusted.

Surplus property assets are carried at the lower of depreciated cost or fair value less cost to sell. The majority of the value in surplus property is land. Fair values are estimated based upon appraisals or independent assessments of the assets’ estimated sales values.

Goodwill and Other Intangible Assets

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350. Goodwill is determined based on acquisition purchase price in excess of the fair value of identified assets. Intangible assets with lives restricted by contractual, legal, or other means are amortized over their useful lives. The Company tests all goodwill and other intangible assets not subject to amortization at least annually for impairment using the fair value approach on a reporting unit basis. The Company’s reporting units are defined as Company-owned Drive-Ins and Franchise Operations (see additional information regarding the Company’s reporting units in Note 14, Segment Information). The accounting guidance requires a two-step process for testing impairment. We test for impairment using historical cash flows and other relevant facts and circumstances as the primary basis for our estimates of future cash flows. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. These impairment tests require us to estimate fair values of our drive-ins by making assumptions regarding future cash flows and other factors.

We assess the recoverability of goodwill and other intangible assets related to our brand and drive-ins at least annually and more frequently if events or changes in circumstances occur indicating that the carrying amount of the asset may not be recoverable. Goodwill impairment testing first requires a comparison of the fair value of each reporting unit to the carrying value. We estimate fair value based on a comparison of two approaches: discounted cash flow analyses and a market multiple approach. The discounted estimates of future cash flows include significant management assumptions such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. In addition, the market multiple approach includes significant assumptions such as the use of recent historical market multiples to estimate future market pricing. These assumptions are significant factors in calculating the value of the reporting units and can be affected by changes in consumer demand, commodity pricing, labor and other operating costs, our cost of capital and our ability to identify buyers in the market. If the carrying value of the reporting unit exceeds fair value, goodwill is considered impaired. The amount of the impairment is the difference between the carrying value of the goodwill and the “implied” fair value, which is calculated as if the reporting unit had just been acquired and accounted for as a business combination.

The Company’s intangible assets subject to amortization consist primarily of acquired franchise agreements, franchise fees, and other intangibles. Amortization expense is calculated using the straight-line method over the expected period of benefit, not exceeding 20 years. See Note 5 for additional disclosures related to goodwill and other intangibles.

F-10

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

1. Summary of Significant Accounting Policies (continued)

Ownership Structure

Company-owned Drive-Ins are drive-in operations in which the Company’s operating subsidiary, Sonic Restaurants, Inc. (“SRI”), owns a controlling ownership interest. Historically, Company-owned Drive-Ins have operated as individual limited liability companies or general partnerships in which the manager and the supervisor for the respective drive-in own a noncontrolling interest (generally, the “ownership program”). Under the ownership program, managers and supervisors shared in the cash flow for their Company-owned Drive-In but were also responsible for their share of any losses incurred by the drive-in. Effective April 1, 2010, the Company introduced a new compensation program as an alternative to the ownership program to improve retention. While partners and supervisors do not have an ownership interest in their drive-in(s) under the new compensation program, the program provides managers and supervisors a larger portion of guaranteed compensation but retains a significant incentive component based on drive-in level performance. With this change, 95% of Company-owned Drive-Ins now operate under the new compensation structure.

For those Company-owned Drive-Ins still in the Company’s ownership program, noncontrolling interests are recorded as a component of equity on the Consolidated Balance Sheets, and our partners’ share of the drive-in earnings are reflected as net income—noncontrolling interests on the Consolidated Statements of Income. The ownership agreements contain provisions that give the Company the right, but not the obligation, to purchase the noncontrolling interest of the supervisor or manager in a drive-in. The amount of the investment made by a partner and the amount of the buy-out are based on a number of factors, including primarily the drive-in’s financial performance for the preceding 12 months, and are intended to approximate the fair value of a noncontrolling interest in the drive-in.

Under the ownership program, the Company acquires noncontrolling interests in Company-owned Drive-Ins as managers and supervisors sell their ownership interests. If the purchase price of a noncontrolling interest that we acquire exceeds the net book value of the assets underlying the partnership interest, the excess is recorded as paid-in capital. The acquisition of a noncontrolling interest for less than book value is recorded as a reduction in paid-in capital.

Revenue Recognition, Franchise Fees and Royalties

Revenue from Company-owned Drive-In sales is recognized when food and beverage products are sold. Company-owned Drive-In sales are presented net of sales tax and other sales-related taxes.

Initial franchise fees are recognized in income when all material services or conditions relating to the sale of the franchise have been substantially performed or satisfied by the Company and the fees are nonrefundable. Area development agreement fees are generally nonrefundable and are recognized in income on a pro rata basis when the conditions for revenue recognition under the individual area development agreements are met. Both initial franchise fees and area development fees are generally recognized upon the opening of a Franchise Drive-In or upon termination of the agreement between the Company and the franchisee.

The Company’s franchisees are required under the provisions of the license agreements to pay the Company royalties each month based on a percentage of actual sales. However, the royalty payments and supporting financial statements are not due until the following month. As a result, the Company accrues royalty revenue in the month earned based on polled sales from Franchise Drive-Ins and sales estimates for nonpolling drive-ins.

Operating Leases

Rent expense is recognized on a straight-line basis over the expected lease term, including cancelable option periods when it is deemed to be reasonably assured that the Company would incur an economic penalty for not exercising the options. Within the provisions of certain of our leases, there are rent holidays and/or escalations in payments over the base lease term, as well as renewal periods. The effects of the holidays and escalations have been reflected in rent expense on a straight-line basis over the expected lease term, which includes cancelable option periods when appropriate. The lease term commences on the date when the Company has the right to control the use of the leased property, which can occur before rent payments are due under the terms of the lease. Percentage rent expense is generally based on sales levels and is accrued at the point in time it is probable that such sales levels will be achieved.

F-11

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

1. Summary of Significant Accounting Policies (continued)

Advertising Costs

Costs incurred in connection with the advertising and promoting of the Company’s products are included in other operating expenses and are expensed as incurred. Such costs amounted to $22,537, $32,997, and $36,801 for fiscal years 2010, 2009 and 2008, respectively.

Under the Company’s license agreements, both Company-owned Drive-Ins and Franchise Drive-Ins must contribute a minimum percentage of revenues to a national media production fund (Sonic Brand Fund) and spend an additional minimum percentage of gross revenues on local advertising, either directly or through Company-required participation in advertising cooperatives. A portion of the local advertising contributions is redistributed to a System Marketing Fund, which purchases advertising on national cable and broadcast networks and funds other national media and sponsorship opportunities. As stated in the terms of existing license agreements, these funds do not constitute assets of the Company, and the Company acts with limited agency in the administration of these funds. Accordingly, neither the revenues and expenses nor the assets and liabilities of the advertising cooperatives, the Sonic Brand Fund, or the System Marketing Fund are included in the Company’s consolidated financial statements. However, all advertising contributions by Company-owned Drive-Ins are recorded as expense on the Company’s financial statements.

Stock-Based Compensation

In accordance with ASC Topic 718, stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant).

The following table shows total stock-based compensation expense and the tax benefit included in the Consolidated Statements of Income and the effect on basic and diluted earnings per share for the years ended August 31:

	2010			2009			2008
Stock-based compensation	$	7,666		$	6,910		$	7,428
Income tax benefit		(4,260	)		(2,452	)		(2,820	)
Net stock-based compensation expense		3,406		$	4,458		$	4,608
Impact on net income per share:
Basic	$	0.05		$	0.07		$	0.08
Diluted	$	0.05		$	0.07		$	0.07

The Company grants both incentive and non-qualified stock options. For grants of non-qualified stock options, the Company expects to recognize a tax benefit on exercise of the option, so the full tax benefit is recognized on the related stock-based compensation expense. For grants of incentive stock options, a tax benefit only results if the option holder has a disqualifying disposition. As a result of the limitation on the tax benefit for incentive stock options, the tax benefit for stock-based compensation will generally be less than the Company’s overall tax rate, and will vary depending on the timing of employees’ exercises and sales of stock. However, in fiscal year 2010, the Company executed a stock option exchange which resulted in an additional tax benefit of $1.8 million for the conversion of eligible incentive stock options to nonqualified stock options. Additional information regarding the stock option exchange program is provided in Note 13.

F-12

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

1. Summary of Significant Accounting Policies (continued)

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Income tax benefits credited to equity relate to tax benefits associated with amounts that are deductible for income tax purposes but do not affect earnings. These benefits are principally generated from employee exercises of non-qualified stock options and disqualifying dispositions of incentive stock options.

The threshold for recognizing the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority. Liabilities for unrecognized tax benefits related to such tax positions are included in other long-term liabilities unless the tax position is expected to be settled within the upcoming year, in which case the liabilities are included in accrued expenses and other current liabilities. Interest and penalties related to unrecognized tax benefits are included in income tax expense.

Additional information regarding the Company’s unrecognized tax benefits is provided in Note 12.

Disclosures About Fair Value of Financial Instruments

ASC Topic 820 defines fair value, establishes a framework for its measurement and requires disclosures about fair value measurements. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). The three levels of the fair value hierarchy are described below:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment, credit risk, etc.).

Level 3—Significant unobservable inputs.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

F-13

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

1. Summary of Significant Accounting Policies (continued)

The following table presents financial assets and liabilities measured at fair value on a recurring basis as of August 31, 2010:

	Level 1		Level 2		Level 3		Carrying Value
Cash equivalents	$	86,036	$	—	$	—	$	86,036
Restricted cash (current)		12,546		—		—		12,546
Restricted cash (noncurrent)		9,685		—		—		9,685
Total assets at fair value	$	108,267	$	—	$	—	$	108,267

Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis, which means these assets and liabilities are not measured at fair value on an ongoing basis but are subject to periodic impairment tests. For the Company, these items primarily include long-lived assets, goodwill and other intangible assets. Refer to Accounting for Long-Lived Assets and Goodwill and Other Intangible Assets in Note 1 for inputs and valuation techniques used to measure the fair value of these nonfinancial assets. The fair value was based upon management assessment as well as appraisals or independent assessments which involved Level 3 inputs. There was a $15.2 million charge recorded for fiscal year 2010 for the impairment of long-lived assets. See Note 3 for a description of the impairment.

Noncontrolling Interests

Effective September 1, 2009, the Company implemented ASC Topic 810, “Consolidation.” Topic 810 requires noncontrolling interests, previously called minority interests, to be presented as a separate item in the equity section of the consolidated balance sheet. It also requires the amount of consolidated net income attributable to noncontrolling interests to be clearly presented on the face of the consolidated income statement.

Additionally, Topic 810 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions, and that deconsolidation of a subsidiary requires gain or loss recognition in net income based on the fair value on the deconsolidation date. Topic 810 was applied prospectively with the exception of presentation and disclosure requirements, which were applied retrospectively for all periods presented, and did not significantly change the presentation of our consolidated financial statements.

Reclassifications

The Company buys and sells Company-owned Drive-Ins as a part of its ongoing business operations. Gains and losses derived from these transactions have historically been reported net in other revenues on the Consolidated Statements of Income. The Company reported these net gains and losses in other operating income beginning in the third quarter of fiscal year 2010 and has reclassified amounts previously reported in the current and prior fiscal years to conform to this new presentation.

On the Statements of Cash Flows for fiscal year 2009, $8,881 was reclassified from a reduction of cash for the change in operating assets in cash flows from operations to a reduction of proceeds from disposition of assets, net of cash paid in cash flows from investing activities. This reclassification relates to cash from the sale of real estate that was held in restricted cash for a period of time as required by the Company’s debt agreement. In addition, the cash paid and received related to noncontrolling interests in Company-owned Drive-Ins was reclassified from cash flows from investing activities to cash flows from financing activities in accordance with ASC Topic 810. The amount of cash paid for noncontrolling interests for fiscal year 2010 was $9,277 as compared to $11,753 for the same period in fiscal year 2009. The amount of cash received for noncontrolling interests was $613 and $5,190 for fiscal years 2010 and 2009, respectively.

F-14

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

1. Summary of Significant Accounting Policies (continued)

The Company has historically classified bonuses related to management at Company-owned Drive-Ins as a component of other operating expenses within costs and expenses for Company-owned Drive-Ins on the Consolidated Statements of Income. These amounts were reported in payroll and other employee benefits beginning in the fourth quarter of fiscal year 2010 and amounts previously reported in the current and prior fiscal years have been reclassified to conform to this new presentation.

The Company has historically classified trademarks and trade names and other goodwill as a component of trademarks, trade names and other intangibles, net on the Consolidated Balance Sheet. These amounts have been reclassified to goodwill on the Consolidated Balance Sheet in the current and prior fiscal years.

2. Net Income Per Share

The following table sets forth the computation of basic and diluted earnings per share for the years ended August 31:

	2010		2009		2008
Numerator:
Net income (loss) – attributable to Sonic Corp.	$	21,209	$	49,442	$	60,319
Denominator:
Weighted average shares outstanding – basic		61,319		60,761		60,403
Effect of dilutive employee stock options		257		477		1,867
Weighted average shares – diluted		61,576		61,238		62,270
Net income per share – basic	$	0.35	$	0.81	$	1.00
Net income per share – diluted	$	0.34	$	0.81	$	0.97
Anti-dilutive employee stock options excluded		6,834		6,493		3,255

3. Assets Held for Sale and Impairment of Long-Lived Assets

Assets held for sale consist of Company-owned Drive-Ins that we expect to sell within one year. Such assets are classified as assets held for sale upon meeting the requirements of ASC Topic 360. These assets are recorded at the lower of the carrying amount or fair value less costs to sell. Assets are no longer depreciated once classified as held for sale. These assets are included in the prepaid expenses and other account and classified as current assets on the consolidated balance sheet. As of August 31, 2010, there were no assets classified as held for sale. The following table sets forth the components of assets held for sale:

	August 31, 2009
Assets:
Property, equipment and capital leases, net	$	1,531
Allocated goodwill		1,274
Other		134
Total assets held for sale	$	2,939

During the fiscal years ended August 31, 2010, 2009 and 2008, the Company identified impairments for certain drive-in assets and surplus property through regular quarterly reviews of long-lived assets. The recoverability of Company-owned Drive-Ins is assessed by estimating the undiscounted net cash flows expected to be generated over the remaining life of the Company-owned Drive-Ins. This involves estimating same-store sales and margins for the cash flows period. When impairment exists, the carrying value of the asset is written down to fair value.

F-15

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

3. Assets Held for Sale and Impairment of Long-Lived Assets (continued)

During fiscal year 2010, the Company experienced lower sales and profits in Company-owned Drive-Ins due to the sustained economic downturn and weaker results than anticipated during the summer months for operating stores. Accordingly, the Company revised its future sales growth assumptions and estimated cash flows in assessing the recoverability of its investments in Company-owned Drive-Ins. These analyses resulted in provisions for impairment totaling $15,162, including $11,341 to write down the carrying amount of building and leasehold improvements on underperforming drive-ins and $2,316 to write down the carrying amount of property leased to franchisees and $616 to reduce to fair value the carrying amount of 12 surplus properties.

During fiscal year 2009, the Company’s assessment of long-lived assets resulted in provisions for impairment totaling $11,163, including $7,462 to write down the carrying amount of building and leasehold improvements on underperforming drive-ins, $3,276 to write down the carrying amount of equipment on underperforming drive-ins and $425 to reduce to fair value the carrying amount of six surplus properties.

During fiscal year 2008, these analyses resulted in provisions for impairment totaling $571, including $99 to write down the carrying amount of building and leasehold improvements on an underperforming drive-in, and $472 to reduce to fair value the carrying amount of five surplus properties.

4. Accounts and Notes Receivable

Accounts and notes receivable consist of the following at August 31:

	2010		2009
Current Accounts and Notes Receivable:
Royalties and other trade receivables	$	18,021	$	16,775
Notes receivable from franchisees		4,432		1,740
Notes receivable from advertising funds		2,440		3,881
Other		3,769		5,994
		28,662		28,390
Less allowance for doubtful accounts and notes receivable		3,199		805
	$	25,463	$	27,585
Noncurrent Notes Receivable:
Notes receivable from franchisees	$	4,244	$	7,753
Notes receivable from advertising funds		4,591		—
Less allowance for doubtful notes receivable		11		74
	$	8,824	$	7,679

The Company’s receivables are primarily due from franchisees, all of whom are in the restaurant business. The notes receivable from advertising funds represent transactions in the normal course of business. Substantially all of the notes receivable from franchisees are collateralized by real estate or equipment.

5. Goodwill and Other Intangibles

The entire balance of the Company’s goodwill relates to Company-owned Drive-Ins. The changes in the carrying amount of goodwill for fiscal years ending August 31 were as follows:

	2010			2009
Balance as of September 1	$	82,343		$	111,806
Goodwill acquired during the year		21			1,354
Goodwill disposed of for noncontrolling interests in Company-owned Drive-Ins		(5	)		(2	)
Goodwill disposed of related to the sale of Company-owned Drive-Ins		(270	)		(30,815	)
Balance as of August 31	$	82,089		$	82,343

F-16

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

5. Goodwill and Other Intangibles (continued)

The gross carrying amount of franchise agreements, franchise fees and other intangibles subject to amortization was $6,957 and $7,823 at August 31, 2010 and 2009, respectively. The estimated amortization expense for each of the five years after August 31, 2010 is approximately $325. Accumulated amortization related to these intangible assets was $2,248 and $1,856 at August 31, 2010 and 2009, respectively.

6. Refranchising of Company-owned Drive-Ins

During fiscal year 2009, the Company refranchised the operations of 205 Company-owned Drive-Ins and recorded a $13.2 million gain. We retained a noncontrolling operating interest in 88 of these refranchised drive-ins. In fiscal year 2010, the Company refranchised the operations of 16 Company-owned Drive-Ins. Gains and losses are recorded as other operating income (expenses), net on the Consolidated Income Statement. The Company has concluded its refranchising plan but may periodically refranchise other operations when conditions warrant.

7. Leases

Description of Leasing Arrangements

The Company’s leasing operations consist principally of leasing certain land, buildings and equipment (including signs) and subleasing certain buildings to franchise operators. The land and building portions of these leases are classified as operating leases and expire over the next 18 years. The equipment portions of these leases are classified principally as direct financing leases and expire principally over the next 10 years. These leases include provisions for contingent rentals that may be received on the basis of a percentage of sales in excess of stipulated amounts. Income is not recognized on contingent rentals until sales exceed the stipulated amounts. Some leases contain escalation clauses over the lives of the leases. Most of the leases contain one to four renewal options at the end of the initial term for periods of five years.

In fiscal year 2009, as a component of the refranchising of Company-owned Drive-Ins, the Company executed two significant master lease agreements with franchisees. These leases consist of leasing land, building and signs for a period of 15 years and are classified as operating leases. There are four renewal options at the end of the primary term for periods of five years for property that is owned by the Company. For property owned by third parties, the lease term runs concurrent with the term of the third party lease arrangements. These leases include provisions for contingent rentals that may be received on the basis of a percentage of sales in excess of stipulated amounts. Both leases contain escalation clauses based on sales over the life of the lease.

Certain Company-owned Drive-Ins lease land and buildings from third parties. These leases, which expire over the next 17 years, include provisions for contingent rents that may be paid on the basis of a percentage of sales in excess of stipulated amounts. For the majority of leases, the land portions are classified as operating leases and the building portions are classified as capital leases.

Direct Financing Leases

Components of net investment in direct financing leases are as follows at August 31:

	2010		2009
Minimum lease payments receivable	$	1,982	$	2,807
Less unearned income		496		747
Net investment in direct financing leases		1,486		2,060
Less amount due within one year		375		537
Amount due after one year	$	1,111	$	1,523

Initial direct costs incurred in the negotiations and consummations of direct financing lease transactions have not been material. Accordingly, no portion of unearned income has been recognized to offset those costs.

F-17

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

7. Leases (continued)

Future minimum rental payments receivable as of August 31, 2010 are as follows:

	Operating		Direct Financing
Years ending August 31:
2011	$	9,112	$	495
2012		9,893		362
2013		10,282		273
2014		10,247		190
2015		10,911		137
Thereafter		89,362		525
		139,807		1,982
Less unearned income		—		496
	$	139,807	$	1,486

Capital Leases

Components of obligations under capital leases are as follows at August 31:

	2010		2009
Total minimum lease payments	$	49,510	$	55,375
Less amount representing interest averaging 6.4% in 2010 and 6.5% in 2009		13,254		15,914
Present value of net minimum lease payments		36,256		39,461
Less amount due within one year		3,384		2,945
Amount due after one year	$	32,872	$	36,516

Maturities of these obligations under capital leases and future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of August 31, 2010 are as follows:

	Operating		Capital
Years ending August 31:
2011	$	11,738	$	5,800
2012		11,634		5,565
2013		11,386		5,505
2014		11,163		5,334
2015		11,005		5,185
Thereafter		124,717		22,121
		181,643		49,510
Less amount representing interest		—		13,254
	$	181,643	$	36,256

F-18

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

7. Leases (continued)

Total rent expense for all operating leases and capital leases consists of the following for the years ended August 31:

	2010			2009			2008
Operating leases:
Minimum rentals	$	14,330		$	14,690		$	14,438
Contingent rentals		176			199			163
Sublease rentals		(2,993	)		(1,330	)		(527	)
Capital leases:
Contingent rentals		740			945			1,326
	$	12,253		$	14,504		$	15,400

The aggregate future minimum rentals receivable under noncancelable subleases of operating leases as of August 31, 2010 was $38,147.

8. Property, Equipment and Capital Leases

Property, equipment and capital leases consist of the following at August 31:

	Estimated Useful Life		2010		2009
Property and equipment:
Home office:
Leasehold improvements		Life of lease	$	4,541	$	4,491
Computer and other equipment		2 – 5 yrs		45,459		42,612
Drive-ins, including those leased to others:
Land				172,506		170,679
Buildings		8 – 25 yrs		357,173		372,224
Equipment		5 – 7 yrs		126,014		126,432
Property and equipment, at cost				705,693		716,438
Less accumulated depreciation				244,727		225,388
Property and equipment, net				460,966		491,050
Capital Leases:
Leased home office building		Life of lease		9,990		9,990
Leased drive-in buildings, equipment and other assets under capital leases, including those held for sublease		Life of lease		40,795		43,288
Less accumulated amortization				22,487		20,390
Capital leases, net				28,298		32,888
Property, equipment and capital leases, net			$	489,264	$	523,938

F-19

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

8. Property, Equipment and Capital Leases (continued)

Land, buildings and equipment with a carrying amount of $190,617 at August 31, 2010 were leased under operating leases to franchisees or other parties. The accumulated depreciation related to these buildings and equipment was $44,915 at August 31, 2010. As of August 31, 2010, the Company had drive-ins under construction with costs to complete which aggregated $1,591.

9. Accrued Liabilities

Accrued liabilities consist of the following at August 31:

	2010		2009
Wages and other employee benefits	$	5,120	$	5,224
Taxes, other than income taxes		9,631		11,374
Accrued interest		222		887
Noncontrolling interest in consolidated drive-ins		110		1,501
Unredeemed gift cards and gift certificates		8,586		7,109
Other		9,663		8,417
	$	33,332	$	34,512

The Company sells gift cards that do not have expiration dates. The gift card balances are recorded as a liability on the balance sheet. Breakage is the amount on a gift card that is not expected to be redeemed and that the Company is not required to remit to a state under unclaimed property laws. The Company estimates breakage based upon the trend in redemption patterns from previously sold gift cards utilizing our history with the program. The Company’s policy is to recognize quarterly the breakage on the delayed recognition method when it is apparent that there is a remote likelihood the gift card balance will be redeemed based on our historical trends. The Company reduces the gift card liability for the estimated breakage and uses that amount to help defray the costs of operating the gift card program.

10. Long-Term Debt

Long-term debt consists of the following at August 31:

	2010		2009
5.7% Class A-2 senior notes, due December 2031	$	403,400	$	511,107
Class A-1 senior variable funding notes		187,250		187,250
Other		971		1,193
		591,621		699,550
Less long-term debt due within one year		61,749		52,699
Long-term debt due after one year	$	529,872	$	646,851

Maturities of long-term debt as of August 31, 2010 are $61,749 in 2011, $78,585 in 2012, $450,949 in 2013 and $226 in 2014.

In December 2006, various subsidiaries of the Company issued $600,000 of Class A-2 senior notes in a private transaction. The Class A-2 senior notes are the first issuance under a facility that will allow Sonic to issue additional series of notes in the future subject to certain conditions. These notes have a fixed interest rate of 5.7%, subject to upward adjustment after the expected six-year repayment term. Loan origination costs associated with this debt totaled $20,564, and the unamortized balance is categorized as debt origination costs, net, on the Consolidated Balance Sheet as of August 31, 2010. Amortization of these loan costs and the hedge loss discussed below produces an overall weighted average interest cost of 6.7%.

F-20

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

10. Long-Term Debt (continued)

In connection with issuance of the Class A-2 notes, various subsidiaries of the Company also completed a securitized financing facility of Class A-1 senior variable funding notes. This facility allows for the issuance of up to $200,000 of notes and certain other credit instruments, including letters of credit. Considering the $187,250 outstanding at August 31, 2010 and $325 in outstanding letters of credit, $12,425 was unused and available under the Class A-1 notes. The effective interest rate on the outstanding balance for the Class A-1 notes at August 31, 2010 and 2009 was 1.41% and 1.42%, respectively. There is a commitment fee on the unused portion of the Class A-1 notes of 0.5%. During fiscal year 2009, upon request of the Company to draw down the remaining $12,250 in Class A-1 senior variable funding notes from the lender that committed to advance one-half of the funds for the variable funding notes, the lender, which had previously filed for Chapter 11 bankruptcy, notified the Company that it could not meet its obligation. At this time, the Company no longer considers the $12,250, to be available.

The Class A-1 and Class A-2 notes were issued by special purpose, bankruptcy remote, indirect subsidiaries of the Company that hold substantially all of Sonic’s franchising assets and Company-owned Drive-In real estate used in operation of the Company’s existing business. As of August 31, 2010, total assets for these combined indirect subsidiaries were approximately $420,000, including receivables for royalties, Company-owned Drive-In real estate, intangible assets, loan origination costs and restricted cash balances of $22,231. The Notes are secured by Sonic’s franchise royalty payments, certain lease and other payments and fees and, as a result, the repayment of these notes is expected to be made solely from the income derived from these indirect subsidiaries’ assets. Sonic Industries LLC, which is the subsidiary that acts as franchisor, has guaranteed the obligations of the co-issuers and pledged substantially all of its assets to secure such obligations.

While the Class A-1 and A-2 notes have a legal final maturity date of December 2031, the notes are structured to provide for a six-year life with full repayment expected to occur by December 20, 2012. The Company expects to refinance the notes on or before December 20, 2012. However, if the debt extends beyond December 20, 2012, the terms of the notes provide for a 1% increase in the interest rate for the Class A-1 notes and an increase in the interest rate for the A-2 notes based on current market conditions. In addition, principal payments will accelerate by applying all of the residual from the royalties, lease revenues and other fees securing the debt, after the required debt service payments, until the debt is paid in full.

On March 24, 2010, the Office of the Commissioner of Insurance of the State of Wisconsin (“OCI”) commenced rehabilitation proceedings with respect to a segregated account of certain insurance policies held by Ambac Assurance Corporation (“Ambac”), the third-party insurance company that provides credit enhancements in the form of financial guaranties of our fixed and variable rate note payments (the “Segregated Account”). Our insurance policy is not included in the Segregated Account and is not affected by the rehabilitation proceedings. Apart from its actions with regard to the Segregated Account, the OCI continues to maintain oversight of Ambac. No delinquency, rehabilitation or similar proceeding involving our insurance policy is currently pending. If the insurance company were to become the subject of insolvency or similar proceedings, our lenders would not be required to fund additional advances on our variable rate notes. In addition, an event of default would occur if: (i) the insurance company were to become the subject of insolvency or similar proceedings and (ii) the insurance policy were not continued or sold to a third party (who would assume the insurance company’s obligations under the policy), but instead were terminated or canceled as a result of those proceedings. In an event of default, all unpaid amounts under the fixed and variable rate notes could become immediately due and payable only at the direction or consent of holders with a majority of the outstanding principal. Such acceleration of our debt repayment could have a material adverse effect on our liquidity if we were unable to negotiate mutually acceptable new terms with our lenders or if alternate funding were not available to us. While no assurance can be provided, if acceleration of our debt repayment were to occur, we believe that we could negotiate mutually acceptable terms with our lenders or obtain alternate funding.

We pay Ambac for the financial guarantees of our Class A-1 and Class A-2 note payments in the form of a fixed percentage applied to the outstanding principal balance of the guaranteed debt. The financial guarantees are unconditional and irrevocable guarantees that note holders will receive timely payment of principal and interest. The insurance fee, which is included in the interest rate on the debt, is accrued monthly and included in interest expense in the Consolidated Statements of Income.

F-21

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

10. Long-Term Debt (continued)

Although Sonic Corp. does not guarantee the Class A-1 and Class A-2 notes, Sonic Corp. has agreed to cause the performance of certain obligations of its subsidiaries, principally related to the servicing of the assets included as collateral for the notes and certain indemnity obligations.

In August 2006, the Company entered into a forward starting swap agreement with a financial institution to hedge part of the exposure to changing interest rates until the new financing was closed in December 2006. The forward starting swap was designated as a cash flow hedge, and was subsequently settled in conjunction with the closing of the Class A-2 notes, as planned. The loss resulting from settlement of $5,640 ($3,483, net of tax) was recorded in accumulated other comprehensive income and is being amortized to interest expense over the expected term of the Class A-2 notes. Amortization of this loss during fiscal years 2010 and 2009 totaled $1,064 ($657, net of tax) and $1,050 ($691, net of tax) in interest expense, respectively. Over the next 12 months, the Company expects to amortize $676 ($418, net of tax) to interest expense for this loss. The cash flows resulting from these hedge transactions are included in cash flows from operating activities on the Consolidated Statement of Cash Flows.

During the third quarter of fiscal 2010, the Company purchased $57,993 of its 5.7% fixed rate notes at a discount. The net loss, after the write-off of associated debt costs, was $314 and is included as a loss from early extinguishment of debt in net interest expense. During the second quarter of fiscal 2009, the Company purchased $24,985 of its 5.7% fixed rate notes at a discount. The net gain, after the write-off of associated debt costs, was $6,382 and is included as a gain from early extinguishment of debt, offsetting net interest expense.

The following table presents the components of comprehensive income for the years ended August 31:

	2010		2009		2008
Net income - attributable to Sonic Corp.	$	21,209	$	49,442	$	60,319
Net income - noncontrolling interests		4,630		15,351		21,922
Decrease in deferred hedging loss, net of tax		657		691		657
Total comprehensive income	$	26,496	$	65,484	$	82,898

11. Other Noncurrent Liabilities

Other noncurrent liabilities consist of the following at August 31:

	2010		2009
Deferred area development fees	$	4,709	$	8,014
Escalating land leases payable		7,565		6,545
Deferred income real estate installment sales		869		4,348
Deferred income - sale/leaseback		4,057		4,134
Other		1,221		1,159
	$	18,421	$	24,200

F-22

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

12. Income Taxes

The Company’s income before the provision for income taxes is classified by source as domestic income.

The components of the provision for income taxes consist of the following for the years ended August 31:

	2010			2009		2008
Current:
Federal	$	12,165		$	17,512	$	21,881
State		2,904			2,487		5,730
		15,069			19,999		27,611
Deferred:
Federal		(5,303	)		9,456		7,259
State		(797	)		1,423		1,092
		(6,100	)		10,879		8,351
Provision for income taxes	$	8,969		$	30,878	$	35,962

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate due to the following for the years ended August 31:

	2010			2009			2008
Amount computed by applying a tax rate of 35%	$	10,562		$	28,112		$	33,698
State income taxes (net of federal income tax benefit)		1,370			2,542			4,434
Employment related and other tax credits, net		(1,504	)		(1,401	)		(1,732	)
Benefit from stock option exchange program		(1,471	)		—			—
Other		12			1,625			(438	)
Provision for income taxes	$	8,969		$	30,878		$	35,962

Prior to the adoption of Topic 810, noncontrolling interests were reported as a component of operating income. Due to the adoption, noncontrolling interests are now presented pre-tax as net income-noncontrolling interests and no longer as a component of operating income. This presentation gives an appearance of a lower effective tax rate than the Company’s actual effective tax rate. The following table reconciles the difference in the effective tax rate as a result of adoption of this topic:

	2010			2009			2008
Effective income tax rate reconciliation (post-adoption of Topic 810):
Effective tax rate per consolidated income statement		25.8	%		32.3	%		30.4	%
Book income attributable to noncontrolling interests		3.9			6.1			7.0
Effective tax rate for the fiscal year		29.7	%		38.4	%		37.4	%

F-23

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

12. Income Taxes (continued)

Deferred tax assets and liabilities consist of the following at August 31:

	2010			2009
Current deferred tax assets (liabilities):
Allowance for doubtful accounts and notes receivable	$	1,229		$	315
Property, equipment and capital leases		37			107
Accrued litigation costs		408			272
Prepaid expenses		(585	)		(570	)
Deferred income from franchisees		972			27
Deferred income from affiliated technology fund		(143	)		220
Current deferred tax assets, net	$	1,918		$	371
Noncurrent deferred tax assets (liabilities):
Net investment in direct financing leases, including differences related to capitalization and amortization	$	(2,729	)	$	(2,841	)
Investment in partnerships, including differences in capitalization, depreciation and direct financing leases		(2,631	)		(11,158	)
State net operating losses		5,550			5,231
Property, equipment and capital leases		(20,737	)		(24,232	)
Deferred income from affiliated franchise fees		1,271			1,327
Accrued liabilities		445			331
Intangibles and other assets		(2,589	)		158
Deferred income from franchisees		1,801			3,104
Stock compensation		11,989			8,349
Loss on cash flow hedge		522			928
Debt extinguishment		(2,323	)		(2,473	)
		(9,431	)		(21,276	)
Valuation allowance		(5,550	)		(5,231	)
Noncurrent deferred tax liabilities, net	$	(14,981	)	$	(26,507	)
Deferred tax assets and (liabilities):
Deferred tax assets (net of valuation allowance)	$	18,674		$	15,138
Deferred tax liabilities		(31,737	)		(41,274	)
Net deferred tax liabilities	$	(13,063	)	$	(26,136	)

State net operating loss carryforwards expire generally beginning in 2011. Management does not believe the Company will be able to realize the state net operating loss carryforwards and therefore has provided a valuation allowance of $5.5 million and $5.2 million as of August 31, 2010 and August 31, 2009, respectively.

F-24

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

12. Income Taxes (continued)

As of August 31, 2010, the Company had approximately $5,628 of unrecognized tax benefits, including approximately $1,368 of interest and penalty. The liability for unrecognized tax benefits increased by $2,209 in fiscal year 2010. The majority of the change resulted from an increase to tax positions of prior years due to an uncertain tax position that was challenged under audit. Reductions included positions for prior years in which cash settlements of audits were less than the liability recorded and positions in which the statute of limitations has expired. The Company recognizes estimated interest and penalties as a component of its income tax expense, net of federal benefit. If recognized, $3,891 of unrecognized tax benefits would favorably impact the effective tax rate. A reconciliation of the beginning and ending amount of the unrecognized tax benefits follows:

	2010			2009
Opening balance at September 1	$	3,419		$	5,383
Additions for tax positions of prior years		2,724			494
Reductions for tax positions of prior years		(5	)		(713	)
Reductions for settlements		(163	)		(206	)
Reductions due to statute expiration		(347	)		(1,539	)
Ending balance at August 31	$	5,628		$	3,419

The Company or one of its subsidiaries is subject to U.S. federal income tax and income tax in multiple U.S. state jurisdictions. The Company is currently undergoing examinations or appeals by various state and federal authorities. The Company anticipates that the finalization of these examinations or appeals, combined with the expiration of applicable statutes of limitations and the additional accrual of interest related to unrecognized benefits on various return positions taken in years still open for examination could result in a change to the liability for unrecognized tax benefits during the next 12 months ranging from a decrease of $233 to a decrease of $3,810, depending on the timing and terms of the examination resolutions.

13. Stockholders’ Equity

Stock Purchase Plan

The Company has an employee stock purchase plan for all full-time regular employees. Employees are eligible to purchase shares of common stock each year through a payroll deduction not in excess of the lesser of 10% of compensation or $25 in the stock’s fair market value. The aggregate amount of stock that employees may purchase under this plan is limited to 1,139 shares. The purchase price will be between 85% and 100% of the stock’s fair market value and will be determined by the Company’s Board of Directors.

Stock-Based Compensation

The Sonic Corp. 2006 Long-Term Incentive Plan (the “2006 Plan”) provides flexibility to award various forms of equity compensation, such as stock options, stock appreciation rights, performance shares, restricted stock and other stock-based awards. At August 31, 2010, 2,327 shares were available for grant under the 2006 Plan. The Company has historically granted only stock options with an exercise price equal to the market price of the Company’s stock at the date of grant, a contractual term of seven to ten years, and a vesting period of three years. The Company’s policy is to recognize compensation cost for these options on a straight-line basis over the requisite service period for the entire award. Additionally, the Company’s policy is to issue new shares of common stock to satisfy stock option exercises.

In November 2009, the Company’s Board of Directors authorized a stock option exchange program that allowed eligible employees the opportunity to exchange certain options granted under the 2006 Plan, the 2001 Stock Option Plan, and the 1991 Stock Option Plan for a lesser number of replacement options with a lower exercise price. The Company’s stockholders approved the stock option exchange program on January 14, 2010, and the Company executed the program in the third quarter of fiscal year 2010. The exchange, which was accounted for as a modification of existing stock options, was on an estimated fair value neutral basis and resulted in no incremental compensation expense. The exchange resulted in a tax benefit of $1.8 million for the conversion of eligible incentive stock options to nonqualified stock options. This tax benefit was recognized during the third quarter of fiscal 2010.

F-25

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

13. Stockholders’ Equity (continued)

In January 2009, the Company began to award restricted stock units (“RSUs”) to its directors under the 2006 Plan. In addition, in fiscal 2010, the Company awarded RSUs to certain officers under the 2006 Plan. The RSUs have a vesting period of three years, their fair value is based on our closing stock price on the date of grant, and they are payable in the Company’s common stock.

In 2009, the Company awarded 426 performance share units (“PSUs”) to certain executives under the 2006 Plan. These PSUs, which vested at the end of a three-year period if certain Company performance criteria were met, were payable in the Company’s common stock. As of August 31, 2009, there were 413 PSUs outstanding which had a weighted-average grant date fair value of $10.15 and a total fair value of $4,192. All outstanding PSUs were canceled in August 2010 due to the performance criteria for the first two years not being met and having no probability of performance in the future. No expense had been recorded for these PSUs.

The Company measures the compensation cost associated with stock-based payments by estimating the fair value of stock options as of the grant date using the Black-Scholes option pricing model. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options granted during 2010, 2009 and 2008. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the employees who receive equity awards.

The per share weighted average fair value of stock options granted during 2010, 2009 and 2008 was $3.40, $3.50 and $6.10, respectively. In addition to the exercise and grant date prices of the awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants in the respective periods are listed in the table below:

	2010			2009			2008
Expected term (years)		4.5			4.6			4.5
Expected volatility		45	%		38	%		28	%
Risk-free interest rate		2.2	%		1.4	%		3.1	%
Expected dividend yield		0	%		0	%		0	%

The Company estimates expected volatility based on historical daily price changes of the Company’s common stock for a period equal to the current expected term of the options. The risk-free interest rate is based on the United States treasury yields in effect at the time of grant corresponding with the expected term of the options. The expected option term is the number of years the Company estimates that options will be outstanding prior to exercise considering vesting schedules and our historical exercise patterns.

Cash flows resulting from the tax benefits for tax deductions in excess of the compensation expense recorded for those options (excess tax benefits) are required to be classified as financing cash flows. These excess tax benefits were $146, $776 and $2,033 for the years ended August 31, 2010, 2009 and 2008, respectively, and are classified as a financing cash inflow in the Company’s Consolidated Statements of Cash Flows. The proceeds from exercises of stock options are also classified as cash flows from financing activities and totaled $3,404, $3,794 and $5,796 for each of the years ended August 31, 2010, 2009 and 2008, respectively.

F-26

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

13. Stockholders’ Equity (continued)

Stock Options

A summary of stock option activity under the Company’s stock-based compensation plans for the year ended August 31, 2010 is presented in the following table:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Yrs.)		Aggregate Intrinsic Value
Outstanding-beginning of year		7,752		$	15.76
Granted		1,758			8.87
Exercised		(550	)		9.87
Forfeited or expired		(465	)		13.69
Exchange program - replacement options		1,108			13.20
Exchange program - options tendered		(2,129	)		21.86
Outstanding August 31, 2010		7,474		$	12.12		4.75	$	5,295
Exercisable August 31, 2010		3,555		$	14.47		3.40	$	3,106

The total intrinsic value of options exercised during the years ended August 31, 2010, 2009 and 2008 was $2,482, $2,597 and $10,992, respectively. At August 31, 2010, total remaining unrecognized compensation cost related to unvested stock-based arrangements was $12.3 and is expected to be recognized over a weighted average period of 1.7 years.

Restricted Stock Units

The fair value of each RSU granted is equal to the market price of the Company’s stock at the date of the grant. A summary of the Company’s RSU activity during the year ended August 31, 2010 is presented in the following table:

	Restricted Stock Units			Weighted-Average Grant Date Fair Value		Total Fair Value ($)
Outstanding-beginning of year		42		$	10.45	$	439
Granted		220			8.68		1,910
Issued		(14	)		8.75		123
Forfeited and canceled		(51	)		8.82		450
Outstanding August 31, 2010		197		$	8.96	$	1,765
Vested August 31, 2010		—		$	—	$	—
Not Vested at August 31, 2010		197		$	8.96	$	1,765

Accumulated Other Comprehensive Income

In August 2006, the Company entered into a forward starting swap agreement with a financial institution to hedge part of the interest rate risk associated with the pending securitized debt transaction. The forward starting swap was designated as a cash flow hedge, and was subsequently settled in conjunction with the closing of the Class A-2 notes, as planned. The loss resulting from settlement was recorded net of tax in accumulated other comprehensive income and is being amortized to interest expense over the expected term of the debt. See Note 10 for additional information.

F-27

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

14. Segment Information

ASC Topic 280 establishes annual and interim reporting standards for an enterprise’s operating segments. Operating segments are generally defined as components of an enterprise about which separate discrete financial information is available as the basis for management to allocate resources and assess performance.

Based on internal reporting and management structure, the Company has determined that it has two reportable segments: Company-owned Drive-Ins and Franchise Operations. The Company-owned Drive-Ins segment consists of the drive-in operations in which the Company owns a controlling ownership interest and derives its revenues from operating drive-in restaurants. The Franchise Operations segment consists of franchising activities and derives its revenues from royalties and initial franchise fees received from franchisees. The accounting policies of the segments are described in the Summary of Significant Accounting Policies. Segment information for total assets and capital expenditures is not presented as such information is not used in measuring segment performance or allocating resources between segments.

The following table presents the revenues and income from operations for each reportable segment, along with reconciliation to reported revenue and income from operations:

	2010			2009			2008
Revenues:
Company-owned Drive-Ins	$	414,369		$	567,436		$	671,151
Franchise Operations		132,016			135,697			128,630
Unallocated revenues		4,541			3,148			1,978
	$	550,926		$	706,281		$	801,759
Income from Operations:
Company-owned Drive-Ins	$	59,710		$	102,560		$	144,971
Franchise Operations		132,016			135,698			128,630
Unallocated income		3,778			15,656			4,932
Unallocated expenses:
Selling, general and administrative		(66,847	)		(63,358	)		(61,179	)
Depreciation and amortization		(42,615	)		(48,064	)		(50,653	)
Provision for impairment of long-lived assets		(15,161	)		(11,163	)		(571	)
	$	70,881		$	131,329		$	166,130

15. Net Revenue Incentive Plan

The Company has a Net Revenue Incentive Plan (the “Incentive Plan”), as amended, which applies to certain members of management and is at all times discretionary with the Company’s Board of Directors. If certain predetermined earnings goals are met, the Incentive Plan provides that a predetermined percentage of the employee’s salary may be paid in the form of a bonus. The Company recognized as expense incentive bonuses of $828, $1,187, and $1,324 during fiscal years 2010, 2009 and 2008, respectively.

16. Employment Agreements

The Company has employment contracts with its Chairman and Chief Executive Officer and certain of its officers. These contracts provide for use of Company automobiles or related allowances, medical, life and disability insurance, annual base salaries, as well as incentive bonuses. These contracts also contain provisions for payments in the event of the termination of employment and provide for payments aggregating $10,249 at August 31, 2010 due to loss of employment in the event of a change in control (as defined in the contracts).

F-28

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

17. Contingencies

The Company is involved in various legal proceedings and has certain unresolved claims pending. Based on the information currently available, management believes that all claims currently pending are either covered by insurance or would not have a material adverse effect on the Company’s business or financial condition.

The Company initiated an agreement with First Franchise Capital Corporation (“FFCC”) in September 2006, pursuant to which existing Sonic franchisees may qualify with FFCC to finance drive-in retrofit projects. The agreement provides that Sonic will guarantee at least $250 of such financing, limited to 5% of the aggregate amount of loans, not to exceed $3,750. As of August 31, 2010, the total amount guaranteed under the FFCC agreement was $563. The agreement provides for release of Sonic’s guarantee on individual loans under the program that meet certain payment history criteria at the mid-point of each loan’s term. Existing loans under the program have terms through 2016. In the event of default by a franchisee, the Company is obligated to pay FFCC the outstanding balances, plus limited interest and charges up to Sonic’s guarantee limitation. FFCC is obligated to pursue collections as if Sonic’s guarantee were not in place, therefore, providing recourse with the franchisee under the notes. The Company is not aware of any defaults under this program. The Company’s liability for this guarantee, which is based on fair value, is $215 as of August 31, 2010.

The Company has an agreement with GE Capital Franchise Finance Corporation (“GEC”), pursuant to which GEC made loans to existing Sonic franchisees who met certain underwriting criteria set by GEC. Under the terms of the agreement with GEC, the Company provided a guarantee of 10% of the outstanding balance of loans from GEC to the Sonic franchisees, limited to a maximum amount of $5,000. As of August 31, 2010, the total amount guaranteed under the GEC agreement was $946. The Company ceased guaranteeing new loans under the program during fiscal year 2002 and has not recorded a liability for the guarantees under the program. Existing loans under guarantee will expire through 2013. In the event of default by a franchisee, the Company has the option to fulfill the franchisee’s obligations under the note or to become the note holder, which would provide an avenue of recourse with the franchisee under the notes. One franchisee participating in the GEC financing program entered into bankruptcy, and the Company fulfilled its obligation under the program by paying the guaranteed amount of $166 during the third quarter of fiscal 2010.

The Company has obligations under various lease agreements with third-party lessors related to the real estate for Company-owned Drive-Ins that were sold to franchisees. Under these agreements, the Company remains secondarily liable for the lease payments for which it was responsible as the original lessee. As of August 31, 2010, the amount remaining under guaranteed lease obligations for which no liability has been provided totaled $10,489. In addition, capital lease obligations totaling $1,070 are still reflected as liabilities as of August 31, 2010 for properties sold to franchisees. At this time, the Company has no reason to anticipate any default under the foregoing leases.

F-29

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

18. Selected Quarterly Financial Data (Unaudited)

	First Quarter				Second Quarter						Third Quarter					Fourth Quarter					Full Year
	2010		2009		2010			2009			2010			2009		2010			2009		2010			2009
Income statement data:
Company-owned Drive-In sales	$	103,584	$	153,047	$	86,627		$	141,708		$	108,752		$	144,279	$	115,406		$	128,402	$	414,369		$	567,436
Franchise operations		31,717		30,617		26,000			27,453			35,925			35,900		38,374			41,727		132,016			135,697
Other		1,180		372		702			47			1,367			1,027		1,292			1,702		4,541			3,148
Total revenues		136,481		184,036		113,329			169,208			146,044			181,206		155,072			171,831		550,926			706,281
Company-owned Drive-In operating expenses		87,962		126,810		75,834			118,720			93,278			115,026		97,585			104,320		354,659			464,876
Selling, general and administrative		16,132		16,162		17,324			16,300			17,096			16,420		16,295			14,476		66,847			63,358
Depreciation and amortization		10,666		13,019		10,647			12,529			10,645			11,454		10,657			11,062		42,615			48,064
Impairment of long-lived assets		—		414		—			—			188			7,489		14,973			3,260		15,161			11,163
Total expenses		114,760		156,405		103,805			147,549			121,207			150,389		139,510			133,118		479,282			587,461
Other operating income (expense), net		18		30		(540	)		(211	)		(183	)		10,697		(58	)		1,992		(763	)		12,508
Income from operations		21,739		27,661		8,984			21,448			24,654			41,514		15,504			40,705		70,881			131,328
Debt extinguishment and other costs		—		—		—			(6,382	)		314			—		—			—		314			(6,382	)
Interest expense, net		9,520		11,666		9,377			10,778			8,785			9,911		8,077			9,684		35,759			42,039
Income before income taxes		12,219		15,995		(393	)		17,052			15,555			31,603		7,427			31,021		34,808			95,671
Provision for income taxes		3,877		5,039		(789	)		5,337			3,450			10,049		2,431			10,453		8,969			30,878
Net income- including noncontrolling interests		8,342		10,956		396			11,715			12,105			21,554	$	4,996			20,568	$	25,839			64,793
Net income- noncontrolling interests		2,112		3,825		1,038			3,064			1,139			4,781		341			3,681		4,630			15,351
Net income-attributable to Sonic Corp.	$	6,230	$	7,131	$	(642	)	$	8,651		$	10,966		$	16,773	$	4,655		$	16,887	$	21,209		$	49,442
Net income per share:
Basic	$	0.10	$	0.12	$	(0.01	)	$	0.14		$	0.18		$	0.28	$	0.08		$	0.28	$	0.35		$	0.81
Diluted	$	0.10	$	0.12	$	(0.01	)	$	0.14		$	0.18		$	0.27	$	0.08		$	0.28	$	0.34		$	0.81
Weighted average shares outstanding:
Basic		61,086		60,459		61,146			60,464			61,434			60,886		61,627			61,052		61,319			60,761
Diluted		61,415		61,210		61,385			61,148			61,697			61,215		61,706			61,377		61,576			61,238

F-30

Sonic Corp.

Notes to Consolidated Financial Statements (continued)

August 31, 2010, 2009 and 2008

(In Thousands, Except Per Share Data)

19. Fair Values of Financial Instruments

The following discussion of fair values is not indicative of the overall fair value of the Company’s consolidated balance sheet since ASC Topic 825 does not apply to all assets, including intangibles.

The following methods and assumptions were used by the Company in estimating its fair values of financial instruments:

Cash and cash equivalents—Carrying value approximates fair value due to the short duration to maturity.

Notes receivable—For variable rate loans with no significant change in credit risk since the loan origination, fair values approximate carrying amounts. Fair values for fixed-rate loans are estimated using discounted cash flow analysis, using interest rates that would currently be offered for loans with similar terms to borrowers of similar credit quality and/or the same remaining maturities.

As of August 31, 2010 and 2009, carrying values approximate their estimated fair values.

Borrowed funds—Fair values for fixed rate borrowings are estimated using a discounted cash flow analysis that applies interest rates currently being offered on borrowings as similar as available in terms of amounts and terms to those currently outstanding. There are few leveraged loan transactions occurring in the current market. Market information available for public debt transactions for companies with ratings that are close to or lower than ratings for the Company (without consideration for the third-party credit enhancement) was used in estimating fair value. Management believes this fair value is a reasonable estimate with the information that is available.

The carrying amounts, including accrued interest, and estimated fair values of the Company’s fixed-rate borrowings at August 31, 2010 were $404,028 and $388,095, respectively, and at August 31, 2009 were $511,903 and $473,266, respectively. Carrying values, including accrued interest, and estimated fair values for variable-rate borrowings at August 31, 2010 were $187,327 and $163,552, respectively, and at August 31, 2009 were $187,333 and $159,303, respectively.

F-31

Sonic Corp.

Schedule II – Valuation and Qualifying Accounts

Description	Balance at Beginning of Year		Additions Charged to Costs and Expenses		Amounts Written Off Against the Allowance		(Transfer) Recoveries		Balance at End of Year
	(In Thousands)
Allowance for doubtful accounts and notes receivable
Years ended:
August 31, 2010		879		2,460		139		10		3,210
August 31, 2009		717		454		296		4		879
August 31, 2008		711		337		335		4		717
Accrued carrying costs for drive-in closings and disposals
Years ended:
August 31, 2010		46		—		—		1		47
August 31, 2009		44		—		—		2		46
August 31, 2008		91		—		47		—		44

F-32

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has caused the undersigned, duly authorized, to sign this report on its behalf on this 29th day of October, 2010.

Sonic Corp.
By:	/s/ J. Clifford Hudson
	J. Clifford Hudson
	Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the undersigned have signed this report on behalf of the registrant, in the capacities and as of the dates indicated.

Signature	Title	Date
/s/ J. Clifford Hudson J. Clifford Hudson, Principal Executive Officer	Chairman of the Board of Directors and Chief Executive Officer	October 29, 2010
/s/ Stephen C. Vaughan Stephen C. Vaughan, Principal Financial Officer	Executive Vice President and Chief Financial Officer	October 29, 2010
/s/ Terry D. Harryman Terry D. Harryman, Principal Accounting Officer	Vice President and Controller	October 29, 2010
/s/ Douglas N. Benham Douglas N. Benham	Director	October 29, 2010
/s/ Michael J. Maples Michael J. Maples	Director	October 29, 2010
/s/ Federico F. Peña Federico F. Peña	Director	October 29, 2010
/s/ J. Larry Nichols J. Larry Nichols	Director	October 29, 2010
/s/ H. E. Rainbolt H.E. Rainbolt	Director	October 29, 2010
/s/ Frank E. Richardson Frank E. Richardson	Director	October 29, 2010
/s/ Robert M. Rosenberg Robert M. Rosenberg	Director	October 29, 2010
/s/ Jeffrey H. Schutz Jeffrey H. Schutz	Director	October 29, 2010
/s/ Kathryn L. Taylor Kathryn L. Taylor	Director	October 29, 2010

EXHIBIT INDEX

Exhibit Number and Description
3.05.	Bylaws of the Company, as amended and restated January 14, 2010
10.10.	Sonic Corp. Savings and Profit Sharing Plan, as amended and restated effective October 1, 2010
10.23.	Employment Agreement with Danielle M. Vona dated August 5, 2010
10.25.	1991 Sonic Corp. Directors’ Stock Option Plan, as amended and restated October 14, 2009
10.27.	2001 Sonic Corp. Directors’ Stock Option Plan, as amended and restated October 14, 2009
10.28.	Sonic Corp. 2006 Long-Term Incentive Plan, as amended and restated effective October 13, 2010
21.01.	Subsidiaries of the Company
23.01.	Consent of Independent Registered Public Accounting Firm
31.01.	Certification of Chief Executive Officer pursuant to S.E.C. Rule 13a-14
31.02.	Certification of Chief Financial Officer pursuant to S.E.C. Rule 13a-14
32.01.	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
32.02.	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

EX-3.05

Exhibit 3.05

BYLAWS

OF

SONIC CORP.

(a Delaware Corporation)

(as amended and restated January 14, 2010)

ARTICLE I

OFFICES

Section 1. The registered office of the Corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle, and the name of the resident agent in charge thereof is The Corporation Trust Company.

Section 2. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. All meetings of Stockholders for the election of directors shall be held at such place within or without the State of Delaware as may be fixed from time to time by the Board of Directors and stated in the notice of meeting or in a duly executed waiver of notice hereof.

Section 2. Annual meetings of Stockholders shall be held at such place in or out of the State of Delaware, and at such time and day, not a legal holiday, as shall be designated by the Chief Executive Officer and stated in the notice of meeting or in a duly executed waiver of notice thereof. At such meeting the Stockholders shall elect, by a plurality vote, a Board of Directors, who need not be Stockholders, which Board shall consist of at least the minimum number of directors for the ensuing year. The Stockholders may transact such other business as shall properly come before them.

Section 3. Special meetings of Stockholders may be held at such place within or without the State of Delaware, and at such time and day, not a legal holiday, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 4. Special meetings of the Stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the Board of Directors, and the Chief Executive Officer and Secretary shall cause proper notice thereof to be given.

Section 5. Written notice of every meeting of Stockholders, stating the date, time and place where it is to be held, and such other information as may be required by law shall be given, not less than ten (10) nor more than sixty (60) days before the meeting, either personally or by mail, courier, facsimile or by telegram, upon each Stockholder entitled to vote at such meeting and upon each Stockholder of record who, by reason of any action proposed at such meeting, would be entitled to have such Stockholder’s stock appraised if such action were taken. If mailed, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the Stockholder at such Stockholder’s address as it appears on the books of the Corporation. The attendance of any Stockholder at a meeting, in person or by proxy, shall constitute a waiver of notice by such Stockholder, except when such Stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the grounds that such meeting is not lawfully called or convened.

ARTICLE III

QUORUM, VOTING OF STOCK AND MEETINGS

Section 1. The holders of a majority of the shares of stock issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at all meetings of the Stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the Stockholders, the Stockholders present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Notice of the adjourned meeting shall be given when required by law.

Section 2. If a quorum is present, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the Stockholders, unless the vote of a greater or lesser number of shares of stock is required by law or the certificate of incorporation or pursuant to Article II, Section 2, above. Cumulative voting shall not be allowed.

Section 3. Each outstanding share of stock having voting power shall be entitled to one vote on each matter submitted to a vote at a meeting of Stockholders. A Stockholder may vote either in person or by proxy executed in writing by the Stockholder or by such Stockholder’s duly authorized attorney-in-fact.

Section 4. At an annual or special meeting of the Stockholders, only such business shall be conducted as shall have been properly brought before the meeting. Except as otherwise provided by law, the business which may be transacted at any special meeting of Stockholders shall consist of and be limited to the purpose or purposes so stated in the notice of such special meeting.

Section 5. Advance Notice Provisions for Business to be Transacted at Annual Meeting.

(a) No business may be transacted at an annual meeting of Stockholders, other than business that is (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any Stockholder of the Corporation who (A) is a Stockholder of record on both (x) the date of the giving of the notice provided for in this Section 5 and (y) the record date for the determination of Stockholders entitled to vote at such annual meeting, (B) is entitled to vote at the annual meeting and (C) has given timely notice thereof in proper written form to the Secretary of the Corporation in accordance with this Section 5.

(b) To be timely, a Stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, notice by the Stockholder to be timely must be delivered not earlier than the one hundred and twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made.

(c) To be in proper written form, a Stockholder’s notice to the Secretary must set forth (1) as to each matter such Stockholder proposes to bring before the annual meeting, a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and the language of any proposed amendment to these bylaws) and the reasons for conducting such business at the annual meeting and (2) as to such Stockholder, and if the Stockholder holds shares of stock of the Corporation for the benefit of another, the beneficial owner, the Stockholder Information (as defined herein). The foregoing notice requirements shall be deemed satisfied by a Stockholder if the Stockholder has notified the Corporation of such Stockholder’s intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such Stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.

2

(d) No business shall be conducted at the annual meeting of Stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 5; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 5 shall be deemed to preclude discussion by any Stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted notwithstanding that proxies in respect of such matters may have been received. With respect to any Stockholder proposal of business to be brought before an annual meeting, if the proposing Stockholder (or a qualified representative of such Stockholder) is not present at the meeting of Stockholders to propose such business, such proposed business shall not be transacted, notwithstanding that proxies in respect of a vote thereon have been received by the Corporation. To be considered a “qualified representative” of a Stockholder, a person must be a duly authorized officer, manager or partner of such Stockholder or authorized by a writing executed by such Stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation prior to the making of such proposal at such meeting, stating that such person is authorized to act for such Stockholder as proxy at the meeting of Stockholders.

(e) For purposes of this Section 5 and Section 6, “Stockholder Information” means, with respect to a Stockholder giving notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made: (1) the name and record address of such Stockholder, as they appear on the Corporation’s books, and the name and address of the beneficial owner, (2) the class or series and number of shares of stock of the Corporation that are owned beneficially or of record by such Stockholder and beneficial owner, (3) a description of any agreement, arrangement or understanding (whether or not in writing) between such Stockholder or beneficial owner and any other person or persons (including their names) in connection with such nomination or the proposal of such business by such Stockholder and any material interest of such Stockholder, or beneficial owner, if any, in such nomination or business, (4) a description of any agreement, arrangement or understanding (including derivative positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into by, or on behalf of, such Stockholder or beneficial owner, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such Stockholder or such beneficial owner, with respect to such shares of stock of the Corporation, without regard to whether (A) such agreement, arrangement or understanding conveys to such Stockholder or beneficial owner any voting rights in such shares of stock of the Corporation, (B) the agreement, arrangement or understanding is required to be, or capable of being, settled through delivery of such shares of stock of the Corporation, or (C) such Stockholder or beneficial owner may have entered into other transactions that hedge the economic effect of such agreement, arrangement or understanding and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of stock of the Corporation (a “Derivative Instrument”), (5) any proxy, contract, arrangement, understanding, or relationship pursuant to which the Stockholder or beneficial owner has a right to vote or has granted a right to vote any shares of stock of the Corporation, (6) any short interest in any shares of stock of the Corporation (for purposes of these bylaws a person shall be deemed to have a short interest in a share of stock of the Corporation if the Stockholder or beneficial owner directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of such share of stock), (7) any rights to dividends on the shares of stock of the Corporation owned beneficially by the Stockholder or beneficial owner that are separated or separable from the underlying shares of stock of the Corporation, (8) any performance-related fees (other than an asset-based fee) that the Stockholder or beneficial owner is entitled to based on any increase or decrease in the value of shares of stock of the Corporation or Derivative Instruments, if any, (9) any arrangements, rights, or other interests described in Section 5(c)(4)-(7) held by members of such Stockholder's or beneficial owner’s immediate family sharing the same household, (10) any other information relating to the Stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder, (11) any other information as reasonably requested by the Corporation, and (12) a representation that such Stockholder intends to appear in person or by proxy at the annual meeting to bring such nomination or business before the meeting. As used in these bylaws, “beneficially owned” means all shares which such person is deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Exchange Act (or any successor thereof).

3

Section 6. Advance Notice Provisions for Election of Directors.

(a) No nomination of a person for election as a director may be brought before an annual meeting of Stockholders, other than a nomination that is (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any Stockholder of the Corporation who (i) is a Stockholder of record on both (A) the date of the giving of the notice provided for in this Section 6 and (B) the record date for the determination of Stockholders entitled to vote at such annual meeting, (ii) is entitled to vote at the annual meeting and (iii) has given timely notice thereof in proper written form to the Secretary of the Corporation in accordance with this Section 6. If a Stockholder is entitled to vote only for a specific class or category of directors at a meeting of the Stockholders, such Stockholder’s right to nominate one or more persons for election as a director at the meeting shall be limited to such class or category of directors.

(b) To be timely in connection with the annual meeting of the Stockholders, a Stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, notice by the Stockholder to be timely must be delivered not earlier than the one hundred and twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In the event the Corporation calls a special meeting of Stockholders for the purpose of electing one or more directors to the Board, any Stockholder entitled to vote for the election of such director(s) at such meeting and satisfying the requirements specified in this Section 6 may nominate a person or persons (as the case may be) for election to such position(s) as are specified in the Corporation’s notice of such meeting, but only if the Stockholder notice required by this Section 6 hereof shall be delivered to the Secretary at the principal executive office of the Corporation not later than the close of business on the tenth (10th) day following the first day on which the date of the special meeting and either the names of all nominees proposed by the Board to be elected at such meeting or the number of directors to be elected shall have been publicly announced.

(c) To be in proper written form, a Stockholder’s notice to the Secretary must set forth (A) as to each person whom the Stockholder proposes to nominate for election as a director (1) the name, age, business address and residence address of the person, (2) the principal occupation or employment of the person, (3) the class or series and number of shares of stock of the Corporation, if any, which are owned beneficially or of record by the person, (4) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act (or any successor thereof) and the rules and regulations promulgated thereunder and (5) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such Stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K of the Securities Act of 1933, as amended (or any successor thereof), if the Stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (B) as to the Stockholder giving notice and beneficial owner, the Stockholder Information. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

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(d) No nomination shall be brought before an annual meeting of Stockholders except nominations brought before the annual meeting in accordance with the procedures set forth in this Section 6; provided, however, that, once a nomination has been properly brought before an annual meeting in accordance with such procedures, nothing in this Section 6 shall be deemed to preclude discussion by any Stockholder of any such nomination. If the chairman of an annual meeting determines that a nomination was not properly brought before the annual meeting in accordance with the procedures in this Section 6, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted notwithstanding that proxies to vote with respect thereto have been received by the Corporation. With respect to any Stockholder nomination to be brought before an annual meeting, if the proposing Stockholder (or a qualified representative of such Stockholder) is not present at the meeting of Stockholders to make the nomination, such nomination shall be disregarded, notwithstanding that proxies to vote with respect thereto have been received by the Corporation. For purposes of this Section 6, to be considered a qualified representative of the Stockholder, a person must be a duly authorized officer, manager or partner of such Stockholder or authorized by a writing executed by such Stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation prior to the making of such nomination or proposal at such meeting, stating that such person is authorized to act for such Stockholder as proxy at the meeting of Stockholders.

Section 7. The Board of Directors in advance of any Stockholders’ meeting may appoint one or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at a Stockholders’ meeting may, and on the request of any Stockholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed as inspector fails to appear or act, the vacancy may be filled by the Board in advance of the meeting or at the meeting by the person present thereat. Each inspector, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of such inspector’s ability.

ARTICLE IV

DIRECTORS

Section 1. The number of directors constituting the entire Board may be changed from time to time by resolution adopted by the Board of Directors or the Stockholders, provided no decrease made in such number shall shorten the term of any incumbent director.

Section 2. Directors shall be at least eighteen years of age and need not be residents of the State of Delaware nor Stockholders of the Corporation. The Directors shall be divided into three classes, as nearly equal in number as reasonably possible, with the terms of office of the first class to expire at the 1991 annual meeting of Stockholders, the term of office of the second class to expire at the 1992 annual meeting of Stockholders and the term of office of the third class to expire at the 1993 annual meeting of Stockholders. At each annual meeting of Stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of Stockholders after their election.

Section 3. Any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

Section 4. Vacancies and newly created directorships resulting from an increase in the authorized number of directors may be filled by a majority vote of the directors in office, although less than a quorum, or by election by the Stockholders at any meeting thereof. A director elected to fill a vacancy shall be elected for the unexpired portion of the term of the director’s predecessor in office. A director elected to fill a newly created directorship shall serve until the next succeeding annual meeting of Stockholders and until the director’s successor shall have been elected and qualified.

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Section 5. The business affairs of the Corporation shall be managed by its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised by the Stockholders.

Section 6. The directors may keep the books of the Corporation, except such as are required by law to be kept within the State, outside the State of Delaware, at such place or places as they may from time to time determine.

Section 7. The Board of Directors, by the affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the Corporation as directors, officers or otherwise.

Section 8. At least once in each year, the directors shall make a complete and detailed report of the financial condition of the Corporation to its Stockholders, which report shall be filed with the Treasurer and shall be subject to inspection by the Stockholders.

Section 9. The directors may close the stock transfer books for a period not exceeding twenty (20) days prior to Stockholders’ meetings or payment of dividends or for such other reasons as they may see fit.

ARTICLE V

MEETINGS OF THE BOARD OF DIRECTORS

Section 1. Meetings of the Board of Directors, regular or special, may be held either within or without the State of Delaware, at such places as the Board may from time to time determine.

Section 2. The Board of Directors shall hold its annual meeting as soon after the Stockholders’ annual meeting as may be practical. Annual meetings of the Board of Directors may be held without notice. Special meetings of the Board of Directors may be called by the Chief Executive Officer or any two or more directors. Notice of special meetings, specifying the time and day thereof, shall be given by the Chief Executive Officer or the Secretary to each director not less than two (2) days before such meeting, either personally or by mail, courier, facsimile, electronic mail or by telegram.

Section 3. Notice of a meeting need not be given to any director who submits a signed waiver of notice, whether before or after the meeting, or who attends the meeting without protesting prior thereto or at its commencement, the lack of notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

Section 4. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business unless a greater or lesser number is required by law or by the certificate of incorporation. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, unless the vote of a greater number is required by law or by the certificate of incorporation. If a quorum shall not be present at any meeting of directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 5. Any action required or permitted to be taken by the Board of Directors, or any committee thereof, may be taken without a meeting if all members of the Board of Directors, or the committee, consent in writing to the adoption of a resolution authorizing the action. Any such resolution and the written consents thereto by the members of the Board of Directors or the committee shall be filed with the minutes of the proceedings of the Board of Directors or the committee.

Section 6. Any one or more members of the Board of Directors, or any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

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ARTICLE VI

COMMITTEES OF THE BOARD OF DIRECTORS

Section 1. The Board of Directors, by resolution adopted by a majority of the entire Board, may designate, from among its members, an Executive Committee and other committees, each consisting of one or more directors, and each of which, to the extent provided in the resolution, shall have all the authority of the Board, except as otherwise required by law; provided, however, that no committee shall have the power or authority of the Board in reference to amending the certificate of incorporation of the Corporation, adopting an agreement of merger or consolidation of the Corporation (except as hereinafter expressly provided), recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the Stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the bylaws of the Corporation. The Executive Committee is expressly authorized and empowered to declare dividends, authorize the issuance of stock and adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of the State of Delaware, or successor provisions of applicable law. The Executive Committee shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. The Board of Directors shall appoint the Chairman of the Executive Committee. The members of the Executive Committee shall receive such compensation and fees as from time to time may be fixed by the Board of Directors. Vacancies in the membership of a committee shall be filled by the Board of Directors at a regular or special meeting of the Board of Directors. All committees created by the Board shall keep regular minutes of their proceedings and report the same to the Board at the regular meeting of the Board immediately subsequent to any such committee proceeding.

ARTICLE VII

NOTICES

Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or Stockholder, such notice may be given in writing, either personally or by courier, facsimile or telegram or by mail, addressed to such director or Stockholder, at such Stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid, in which case such notice shall be deemed given at the time when the same shall be received at such Stockholder’s address as it appears on the records of the Corporation.

Section 2. Whenever any notice of a meeting is required to be given under the provisions of the statutes or under the provisions of the certificate of incorporation or these bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE VIII

OFFICERS

Section 1. The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a President, one or more Vice Presidents, a Treasurer and a Secretary. The Board of Directors may also appoint a Chairman of the Board, one or more Assistant Secretaries and Assistant Treasurers and such other officers and agents as the Board of Directors may determine.

Section 2. The Board of Directors, at its first meeting after each annual meeting of Stockholders, shall appoint a Chief Executive Officer, a President, one or more Vice Presidents, a Treasurer and a Secretary and such other officers as the Board shall determine, none of whom need to be a member of the Board. Any two or more offices may be held by the same person, except that there shall always be two persons who hold offices which entitle them to sign instruments and stock certificates. Officers shall be elected by a majority vote of the whole Board of Directors at its annual meeting.

Section 3. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.

Section 4. The officers of the Corporation, unless removed by the Board of Directors as herein provided, shall hold office until their successors are elected and qualify or until their earlier resignation or removal. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by a majority vote of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.

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Section 5. In the event of the absence of any officer of the Corporation or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may at any time or from time to time delegate all or any part of the powers or duties of any officer to any other officer or officers or to any director or directors by a majority vote of the Board of Directors.

CHIEF EXECUTIVE OFFICER

Section 6. The Chief Executive Officer, in the absence or vacancy in the office of the Chairman of the Board, shall preside at all meetings; shall have general supervision of the affairs of the Corporation or other obligations of the Corporation as authorized by the Board of Directors, and shall perform any other duties incident to the Chief Executive Officer’s office which are properly required by the Board of Directors.

PRESIDENT

Section 7. The President shall perform such duties as are assigned by the Board of Directors or the Chief Executive Officer, under whose supervision the President shall be. In the absence or vacancy in the office of the Chief Executive Officer, the President shall perform the duties and exercise the powers of the Chief Executive Officer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

THE VICE PRESIDENTS

Section 8. The Vice President or Vice Presidents shall perform such duties as are assigned by the Board of Directors, the Chief Executive Officer or the President. Such Vice President or Vice Presidents shall be supervised by the Chief Executive Officer or the President. If there are two or more Vice Presidents, one shall be designated by the directors as the Executive Vice President. The Vice President, or, if there shall be more than one Vice President, the Executive Vice President, shall perform the duties of the President hereinabove set forth in the absence, refusal, or incapacity of the President.

THE SECRETARY AND ASSISTANT SECRETARIES

Section 9. The Secretary shall attend all meetings of the Board of Directors and all meetings of the Stockholders and record all the proceedings of the meetings of the Stockholders and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for any committee appointed by the Board when required. The Secretary shall give, or cause to be given, notice of all meetings of the Stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chief Executive Officer or the President. The Secretary shall be supervised by the Chief Executive Officer or the President. The Secretary shall have custody and charge of the corporate books and the corporate seal of the Corporation and the Secretary, or an Assistant Secretary, shall have authority to affix the corporate seal to any instrument requiring it and, when so affixed, it may be attested by the Secretary’s signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by such officer’s signature.

Section 10. The Assistant Secretary or, if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

Section 11. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall sign or countersign such instruments as require the Treasurer’s signature and shall perform such other duties as are properly required of the Treasurer.

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Section 12. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer and the Board of Directors at its regular meetings, or when the Board of Directors so requires, an account of all the Treasurer’s transactions as Treasurer and of the financial condition of the Corporation.

Section 13. The Assistant Treasurer, or, if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

ARTICLE IX

CERTIFICATES FOR SHARES

Section 1. Every holder of shares of stock in the Corporation shall be entitled to have a certificate certifying the number of shares owned by such holder in the Corporation. Each such certificate shall be numbered and entered in the books of the Corporation as they are issued. They shall exhibit the holder’s name and the number of shares and shall be signed by the Chief Executive Officer, the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer of the Corporation and may be sealed with the seal of the Corporation or a facsimile thereof.

Section 2. The signatures of the officers of the Corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer at the date of issue.

Section 3. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate has been lost or destroyed. When authorizing such issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems expedient, and may require such indemnities as it deems adequate, to protect the Corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost or destroyed.

Section 4. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a new certificate shall be issued to the person entitled thereto, and the old certificate canceled and the transaction recorded upon the books of the Corporation.

Section 5. For the purpose of determining Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or for the purpose of determining Stockholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors shall fix, in advance, a date as the record date for any such determination of Stockholders. Such date shall not be more than sixty nor less than ten days before the date of any meeting nor more than sixty days prior to any other action. When a determination of Stockholders of record entitled to notice of or to vote at any meeting of Stockholders have been made as provided in this Section 5, such determination shall apply to any adjournment thereof, unless the Board fixes a new record date for the adjourned meeting.

Section 6. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and shall be entitled to hold liable for calls and assessments a person registered on its books as the owner, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

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ARTICLE X

INDEMNIFICATION

Section 1. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against all expenses, liabilities and losses (including attorneys’ fees), judgments, fines or penalties and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

Section 2. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against expenses, liabilities and losses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 3. To the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 or 2 of this Article X, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

Section 4. Any indemnification under Sections 1 or 2 of this Article X (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of the present or former director or officer is proper in the circumstances because the person has met the applicable standard of conduct set forth in said Sections 1 and 2. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (a) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (b) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by the Stockholders of the Corporation.

Section 5. Expenses incurred by any person who may have a right of indemnification under this Article X in defending a civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation pursuant to this Article X. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.

Section 6. The indemnification and advancement of expenses provided by, or granted pursuant to this Article X are in addition to and independent of and shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any certificate of incorporation, articles of incorporation, articles of association, law, bylaw, agreement, vote of Stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors, and administrators of such a person; provided, that any indemnification realized other than under this Article X shall apply as a credit against any indemnification provided by this Article X. Any amendment, repeal or modification of any provision of this Article X shall not adversely affect any right or protection of a director, officer, employee or agent of the Corporation with respect to any acts or omissions of such director, officer, employee or agent occurring prior to such amendment, repeal or modification.

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Section 7. For purposes of this Article X, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article X with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

Section 8. For purposes of this Article X, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves service by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article X.

Section 9. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article X or of applicable law, if and whenever the board of directors of the Corporation deems it to be in the best interests of the Corporation to do so.

Section 10. For the purposes of this Article X and indemnification hereunder, any person who is or was a director or officer of any other corporation of which the Corporation owns or controls or at the time owned or controlled directly or indirectly a majority of the shares of stock entitled to vote for election of directors of such other corporation shall be conclusively presumed to be serving or to have served as such director or officer at the request of the Corporation.

Section 11. The Corporation may provide indemnification under this Article X to any employee or agent of the Corporation or of any other corporation of which the Corporation owns or controls or at the time owned or controlled directly or indirectly a majority of the shares of stock entitled to vote for election of directors or to any director, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise in which the Corporation has or at the time had an interest as an owner, creditor or otherwise, if and whenever the board of directors of the Corporation deems it in the best interests of the Corporation to do so.

Section 12. The Corporation may, to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights then said law permitted the Corporation to provide prior to such amendment) indemnify any and all persons whom the Corporation shall have power to indemnify under said law from and against any and all of the expenses, liabilities or other matters referred to in or covered by said law, if and whenever the board of directors of the Corporation deems it to be in the best interests of the Corporation to do so.

Section 13. If a claim under this Article X is not paid in full by the Corporation within 30 days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action, other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation, that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation, including its board of directors, independent legal counsel or its Stockholders, to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation, including its board of directors, independent legal counsel of its Stockholders, that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

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ARTICLE XI

GENERAL PROVISIONS

Section 1. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 2. Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation, including reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.

Section 3. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 4. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

ARTICLE XII

AMENDMENTS

These bylaws may be amended or repealed or new bylaws may be adopted by the Board of Directors. In addition, these bylaws may be amended or repealed or new bylaws may be adopted by majority vote at any regular or special meeting of Stockholders at which a quorum is present or represented, provided notice of the proposed alteration, amendment or repeal shall have been contained in the notice of such meeting.

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EX-10.10

Exhibit 10.10

SONIC CORP. SAVINGS AND PROFIT SHARING PLAN

Restatement Effective October 1, 2010

TABLE OF CONTENTS

ARTICLE I	Definitions	1
1.1	Account Balance	1
1.2	Accounting Date	1
1.3	Administrator	2
1.4	Alternate Payee	2
1.5	Annual Additions	2
1.6	Beneficiary or Designated Beneficiary	2
1.7	Break in Service	4
1.8	Code	5
1.9	Committee	5
1.10	Compensation	5
1.11	Disability	6
1.12	Effective Date	6
1.13	Eligible Employee	6
1.14	Employee	7
1.15	Employer	7
1.16	Employment Commencement Date	7
1.17	Entry Date	7
1.18	ERISA	7
1.19	Five Percent Owner	8
1.20	Forfeiture	8
1.21	Former Participant	8
1.22	Highly Compensated Employee	8
1.23	Hour of Service	8
1.24	Individual Accounts	8
1.25	Leased Employee	9
1.26	Limitation Year	9
1.27	Named Fiduciary	9
1.28	Nonforfeitable	10
1.29	Non-Highly Compensated Employee	10
1.30	Normal Retirement Age	10
1.31	Normal Retirement Date	10
1.32	Participant	10
1.33	Period of Severance	10
1.34	Plan	10
1.35	Plan Sponsor	10
1.36	Plan Year	10
1.37	Predecessor Employer	11
1.38	Re-Employment Commencement Date	11
1.39	Related Employer	11
1.40	Required Beginning Date	11
1.41	Service	12
1.42	Severance from Employment Date	12

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1.43	Top-Heavy Plan	12
1.44	Trust Agreement	16
1.45	Trust Fund	16
1.46	Trustee	16
1.47	Valuation Date	16
1.48	Year of Service	17
ARTICLE II	Eligibility and Participation	18
2.1	Eligibility Conditions	18
2.2	Participation Election	18
2.3	Participant Re-Entry	18
ARTICLE III	Contributions	19
3.1	Salary Deferral Contributions	19
3.2	Catch-Up Contributions	21
3.3	Matching Contributions	21
3.4	Profit Sharing Contributions	22
3.5	Rules Governing Deposits of Contributions	23
3.6	Adjustment of Individual Accounts	23
3.7	Gap Period Income on Distributed Excess Contributions and Excess Aggregate Contributions	24
3.8	Participant Voluntary After Tax Contributions	24
ARTICLE IV	Allocation of Employer Contributions to Individual Accounts	24
4.1	Allocation of Contributions	24
4.2	Application of Forfeitures	25
4.3	Limitations on Allocations Under Code Section 415	25
4.4	Top-Heavy Allocations	26
4.5	Post-Allocation Adjustments to Accounts	27
ARTICLE V	In-Service Distributions	28
5.1	Withdrawal of Employer Contributions Before Severance From Employment	28
5.2	Withdrawal of Salary Deferral Contributions Before Severance From Employment	28
5.3	Hardship Distributions	29
5.4	Qualified Reservist Distributions	30
ARTICLE VI	Distributions After Severance from Employment	31
6.1	Eligibility Due to Retirement, Death, or Disability	31
6.2	Eligibility Due To Severance from Employment	31
6.3	Vesting	32
6.4	Forfeiture	32
6.5	Determination of Amount of Vested Undistributed Account	33
6.6	Payment of Benefits	33

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ARTICLE VII	Mandatory Distribution of Benefits	34
ARTICLE VIII	Forms of Distribution	35
8.1	Forms of Payment of Benefits	35
8.2	Direct Rollover Benefit	35
8.3	Election to Receive Benefits	37
8.4	Minority or Disability	38
8.5	Unclaimed Account Procedure	38
ARTICLE IX	Plan Sponsor and Employers	38
9.1	Employer Action	38
9.2	Plan Amendment	38
9.3	Discontinuance, Termination of Plan	40
9.4	Prohibition Against Reversion to Plan Sponsor or an Employer	41
9.5	Adoption by Related Employers	41
9.6	Authority of Administrator over Employers	44
9.7	Deficiency of Earnings or Profits	44
ARTICLE X	The Committee	44
10.1	Committee Appointment	44
10.2	Committee Action and Procedure	45
10.3	Committee Powers and Duties	45
10.4	Committee Reliance	46
10.5	Committee Authority	46
10.6	Conflicts of Interest	46
10.7	Appointment of Agent and Legal Counsel	47
10.8	Annual Accounting	47
10.9	Funding Policy	47
ARTICLE XI	Administration	47
11.1	Administrator Appointment	47
11.2	Summary Plan Description	47
11.3	Summary Annual Report	48
11.4	Individual Benefit Statements	48
11.5	Copies of Additional Documents	48
11.6	Documents Available for Examination	48
11.7	Notice of Participant Rights under ERISA	48
11.8	Notice to Participant on Participant Termination	48
11.9	Notice to Trustee on Participant Termination	49
11.10	Claims for Benefits	49
11.11	Appeals of Decisions of the Committee	50
11.12	Special Rules for Disability Claims	50
ARTICLE XII	Investment of Trust Assets	52
12.1	Appointment of Trustee	52
12.2	Investment of Accounts	52
12.3	Income and Expenses	53

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12.4	Exclusive Benefit	53
12.5	Valuation	53
12.6	Investment Policy	54
12.7	Divestment of Employer Securities	54
ARTICLE XIII	Participant Loans	55
13.1	General	55
13.2	Loan Policy	56
13.3	Special Rules under USERRA for Loan Repayments	56
ARTICLE XIV	Rollovers, Mergers, and Direct Transfers	56
14.1	Participant Rollover Contributions	56
14.2	Mergers and Direct Transfers	57
14.3	Rules Concerning Certain Rollovers, Mergers, and Direct Transfers	58
ARTICLE XV	Exclusive Benefit	58
15.1	Exclusive Benefit	58
15.2	Denial of Request for Approval	59
15.3	Mistake of Fact	59
15.4	Disallowance of Deduction	59
15.5	Spendthrift Clause	59
15.6	Termination	60
ARTICLE XVI	Construction	61
16.1	Headings	61
16.2	Context	61
16.3	Employment Not Guaranteed	61
16.4	Waiver of Notice	62
16.5	State Law	62
16.6	Parties Bound	62
16.7	Severance	62
16.8	Employees in Qualified Military Service	62

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Sonic Corp. Savings and Profit Sharing Plan

Sonic Corp., a Delaware corporation (the “Plan Sponsor”), hereby adopts this restatement of the Sonic Corp. Savings and Profit Sharing Plan (the “Plan”), effective October 1, 2010, or as otherwise specified herein.

R E C I T A L S:

WHEREAS, the Plan Sponsor has previously established the Plan for the exclusive benefit of its eligible Employees and their Beneficiaries and those of the Employers;

WHEREAS, the Plan Sponsor recognizes the lasting contribution made by its Employees to its successful operation and wants to reward their contribution by continuing the Plan;

WHEREAS, the Plan Sponsor wishes to amend and restate the existing Plan;

WHEREAS, the Plan Sponsor has authorized the execution of this Plan to ensure continued compliance with Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended by the Pension Protection Act of 2006, and the regulations promulgated thereunder;

WHEREAS, the provisions of this Plan, as amended and restated, will apply solely to an Employee who terminates employment with an Employer on or after the restated Effective Date of this Plan; and

WHEREAS, if an Employee terminates employment with an Employer prior to the restated Effective Date, that Employee will be entitled to benefits under the Plan as the Plan existed on the Employee’s termination date.

NOW, THEREFORE, considering the premises and their mutual covenants, the Plan Sponsor agrees as follows:

ARTICLE I

Definitions

The following terms used in this Plan will have the meanings set forth in this Article unless a different meaning is clearly indicated by the context:

1.1 Account Balance

The amount standing in a Participant’s Individual Account(s) as of any date derived from both Employer Contributions and Employee Contributions, if any.

1.2 Accounting Date

The date that is the last business day of each Plan Year or such other date as may be designated by the Administrator, but only if the Administrator has specifically requested the Trustee to prepare an accounting on or before such date.

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1.3 Administrator

The Committee, unless the Plan Sponsor designates another person to hold the position of Administrator by written action.

1.4 Alternate Payee

Any spouse, former spouse, child, or other dependent of a Participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to such Participant.

1.5 Annual Additions

The sum of the following additions to a Participant’s Individual Accounts for the Limitation Year: (i) Employer contributions (including Salary Deferral Contributions); (ii) Participant contributions; and (iii) Forfeitures, if any. For purposes of this definition, Annual Additions to other Employer defined contribution plans (also taken into account when applying the limitations in Section 4.3(a)) include any voluntary employee contributions to an account in a qualified defined benefit plan and any Employer contributions to an individual retirement account or annuity under Code Section 408 or to a medical account for a key employee under Code Sections 401(h) or 419A(d), except that the twenty five percent (25%) of pay limit will not apply to employer contributions to a key employee’s medical account after his or her separation from employment.

1.6 Beneficiary or Designated Beneficiary

(a) Beneficiary means any person or fiduciary designated by a Participant or Former Participant who is or may become entitled to receive benefits under the Plan following the death of the Participant or Former Participant. A Beneficiary who becomes entitled to a benefit under the Plan will remain a Beneficiary under the Plan until the Trustee has fully distributed the benefits to the Beneficiary. A Beneficiary’s right to information or data concerning the Plan, and the respective duties of the Administrator and the Trustee to provide to the Beneficiary information or data concerning the Plan, will not arise until the Beneficiary first becomes entitled to receive a benefit under the Plan. For purposes of determining whether the Plan is a Top-Heavy Plan, a Beneficiary of a deceased Participant will be considered a Key Employee or a Non-Key Employee in accordance with the applicable Treasury Regulations.

(b) Each Participant and Former Participant may from time to time designate one or more Beneficiaries to receive benefits under this Plan on the death of the Participant or Former Participant. The selection will be made in writing on a form provided by the Administrator and will be filed with the Administrator. Subject to Subsection (c) below, the last selection filed with the Administrator will control.

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(c) Unless elected in accordance with Subsection (d) below, a Participant’s Beneficiary will be his or her spouse. Notwithstanding the foregoing, the Participant may designate a Beneficiary other than the spouse if:

(i) The Participant has no spouse; or

(ii) The spouse cannot be located.

(d) In the case of a married Participant or Former Participant, the designation of a non-spouse as Beneficiary will be valid only if:

(i) The spouse consents in writing to the designation;

(ii) The designation specifies the Beneficiary and the method of payment of benefits and may not be changed without spousal consent (or the spouse’s consent expressly permits designations by the Participant without any requirement of further spousal consent); and

(iii) The spouse’s consent acknowledges the effect of the election and the written consent is witnessed by a Plan representative or by a notary public.

(e) The spousal consent requirements of Subsection (d) do not apply if:

(i) The Participant and spouse are not married throughout the one year period ending on the date of the Participant’s death;

(ii) The Participant’s spouse is the Participant’s sole primary Beneficiary;

(iii) The Administrator is not able to locate the Participant’s spouse;

(iv) The Participant is legally separated or has been abandoned (within the meaning of State law) and the Participant has a court order to that effect; or

(v) Other circumstances exist under which the Secretary of the Treasury will excuse the consent requirement.

If the Participant’s spouse is legally incompetent to give consent, the spouse’s legal guardian (even if the guardian is the Participant) may give consent.

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(f) If a Participant dies without a spouse or alternative Beneficiary surviving; if the alternative Beneficiary (other than the spouse) does not survive until final distribution of the Participant’s balance; if a Participant who is not married dies without having designated a Beneficiary and/or alternative Beneficiary; or if a Participant who is not married dies after having made and revoked a designation but prior to having made a subsequent designation, then the amount remaining in the deceased Participant’s Individual Account will be payable in the following descending order to:

(i) The Participant’s surviving descendants, including adopted persons and their descendants;

(ii) The Participant’s other living heirs-at-law determined under state laws concerning intestate succession;

(iii) The Participant’s estate, personal representatives, heirs or devisees; and

(iv) the estate, personal representatives, heirs or devisees of the deceased Participant’s prior Beneficiary.

The Administrator will determine the applicable person, class of persons, or legal entity to whom the benefit will be paid beginning with clause (i), in the descending order of clauses (i) to (iv). Each class will be determined to be not in existence and, therefore, inapplicable by the Administrator before proceeding to the next class. In determining if a classification is inapplicable, the Administrator will be required only to make reasonable inquiry into the existence of the person or persons.

(g) Payment made pursuant to the power conferred on the Administrator in this Section will operate as a complete discharge of all obligations under the Plan concerning the share of a deceased Participant and will not be subject to review by anyone but will be final, binding and conclusive on all persons for all purposes.

1.7 Break in Service

(a) A Break in Service, for purposes of vesting, means a Period of Severance of 365 days.

(b) An Employee will receive credit, for purposes of determining whether he has incurred a Break in Service, for the aggregate of all time period(s) commencing with the Employment Commencement Date (or Re-Employment Commencement Date) and ending on the Severance from Employment Date. An Employee will also receive credit for any Period of Severance of less than 365 days. Fractional periods of a year will be expressed in terms of days.

(c) In the case of an Employee who is absent from work for “authorized reasons” or for “maternity or paternity reasons,” the 365-day period beginning on the first anniversary of the first day of such absence will not be a Break in Service.

(i) For purposes of this Section, absence from work for “authorized reasons” means an unpaid temporary cessation from active employment with the Employer pursuant to an established nondiscriminatory policy, whether occasioned by illness, military service, or any other reason.

(ii) For purposes of this Section, absence from work for “maternity or paternity reasons” means an absence from work for any period because of the pregnancy of the individual, the birth of a child of the individual, the placement of a child with the individual relating to the adoption of such child by such individual, or for the purpose of caring for such child for a period beginning immediately following such birth or placement. In the case of absence from work for “maternity or paternity reasons,” the period between the first and second anniversaries of the first date of absence due to said leave will be treated as neither a period of Service nor a Period of Severance.

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1.8 Code

The Internal Revenue Code of 1986, as amended from time to time. A reference to a Code Section in this Plan means the provisions or successor provisions of the particular Code Section, as amended or replaced from time to time.

1.9 Committee

The Plan Committee as from time to time constituted pursuant to Article X.

1.10 Compensation

Compensation will include the total amount of salary, wages, commissions, bonuses, and overtime, paid or otherwise includable in the gross income of a Participant during the Plan Year plus any amounts excluded from a Participant’s income pursuant to Code Sections 125, 132(f)(4), or 401(k), but excluding:

(a) Contributions by the Employer and any Related Employer to any deferred compensation plan (to the extent the contributions are not included in the Participant’s gross income for the taxable year in which contributed) or simplified employee pension under Code Section 408(k), to the extent the contributions are excludable from the Participant’s gross income (other than amounts exlcuded from a Participant’s income pursuant to Code Sections 125, 132(f)(4), or 401(k));

(b) Distributions from any plan of deferred compensation, whether or not such amounts are includable in the gross income of the Employees when distributed;

(c) Amounts realized from the exercise of any nonqualified stock option, or when restricted stock becomes freely transferable or is no longer subject to a substantial risk of forfeiture;

(d) Amounts realized from the sale, exchange, or other disposition of stock acquired under a qualified stock option described in Part II, Subchapter D, Chapter 1 of the Code;

(e) Premiums paid by the Employer and any Related Employer, for group term life insurance (to the extent the premiums are not includable in the Participant’s gross income); contributions by the Employer and any Related Employer, to an annuity under Code Section 403(b) (to the extent not includable in the Participant’s gross income, and any other amounts received under any Employer fringe benefit plan sponsored by the Employer or any Related Employer (to the extent not includable in the Participant’s gross income); and

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(f) Severance pay, unfunded nonqualified deferred compensation, or parachute payments, if paid after termination of employment, even if paid within two and one half (2 ¹/2) months thereafter.

Notwithstanding the foregoing, Compensation will not include amounts that would otherwise satisfy the definition of Compensation but are paid during the determination period while the Employee is not a Participant in the component of the Plan for which the definition is being used.

1.11 Disability

The inability to engage in any substantial, gainful activity because of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months.

1.12 Effective Date

The original Effective Date of this Plan is January 1, 1978. The Effective Date of this Plan, as restated herein, is October 1, 2010, or as otherwise specified herein.

1.13 Eligible Employee

Each Employee other than:

(a) An Employee whose terms and conditions of employment are governed by a collective bargaining agreement, unless such agreement provides for coverage under the Plan;

(b) A nonresident alien who receives no earned income from the Employer that constitutes income from sources within the United States;

(c) A Leased Employee;

(d) An individual who is deemed to be an Employee pursuant to Treasury Regulations issued under Code Section 414(o);

(e) An Employee who has waived participation in the Plan through any means, including, but not limited to, through a written agreement with the Employer (including an offer letter setting forth the terms and conditions of employment) that provides that the Employee is not eligible to participate in the Plan. (A general statement in the agreement, offer letter, or other communication stating that the Employee is not eligible for benefits will be construed to mean that Employee is not an Eligible Employee.); and

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(f) A special project employee, which, as used herein, means an Employee who is hired for the purpose of participating or otherwise assisting in a particular, discrete project which is anticipated to be completed in less than one (1) year.

(g) An Employee who is employed by Sonic Restaurants, Inc. and is classified as an hourly employee and whose primary place of work on a day-to-day basis is a Sonic Drive-In restaurant.

Notwithstanding any provision of the Plan to the contrary, no individual who is designated, compensated, or otherwise classified or treated by the Employer as an independent contractor or other non-common law employee will be eligible to become a Participant even if a court or administrative agency determines that the individual is a common law employee.

1.14 Employee

An individual is an Employee only if he or she is reported on the payroll records of an Employer as a common law employee. This term does not include any other common law employee or any Leased Employee. In particular, it is expressly intended that an individual not treated as a common law employee by the Employers on their payroll records is excluded from Plan participation even if a court or administrative agency determines that the individual is a common law employee.

1.15 Employer

The Plan Sponsor and any entity that is related to the Plan Sponsor, or that is a recipient of the services of a Leased Employee pursuant to a written agreement with the Plan Sponsor, and who elects to adopt this Plan pursuant to Article IX. Effective as of April 1, 2010, the sole Employers are: Sonic Corp., Sonic Industries Services Inc., and Sonic Restaurants, Inc.

1.16 Employment Commencement Date

The date on which an Employee is first entitled to credit for an Hour of Service.

1.17 Entry Date

An Eligible Employee’s Entry Date is the first day of the calendar quarter (January 1^st, April 1^st, July 1^st, October 1^st) next following the date on which the Eligible Employee satisfies the eligibility criteria set forth in Section 2.1.

1.18 ERISA

The Employee Retirement Income Security Act of 1974, as amended.

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1.19 Five Percent Owner

A Participant who owns, or is considered as owning within the meaning of Code Section 318, more than five percent (5%) of the outstanding stock of the Employer or stock possessing more than five percent (5%) of the total combined voting power of all stock of the Employer; or in the case of an unincorporated business, any person who owns more than five percent (5%) of the capital or profits interest in the Employer.

1.20 Forfeiture

The loss, by a Participant or Beneficiary, of that part of the benefit that the Participant or Beneficiary otherwise would have received under the Plan at any time prior to the termination of the Plan or the complete discontinuance of benefits under the Plan, arising from the Participant’s severance of employment.

1.21 Former Participant

Any individual who (i) has been a Participant in the Plan, but who is either no longer employed by the Employer or is otherwise no longer eligible to participate; and (ii) has not yet received the entire benefit to which the individual is entitled under the Plan or incurred a five (5) year Break in Service.

1.22 Highly Compensated Employee

Any Participant or Former Participant who is a Highly Compensated Employee as defined in Code Section 414(q). Generally, any Participant or Former Participant is considered a Highly Compensated Employee if, during the Plan Year (the “Determination Year”) or during the twelve month period immediately preceding the Determination Year, the Participant or Former Participant:

(a) Was at any time during the Plan Year or during the preceding Plan Year a Five Percent Owner; or

(b) For the preceding Plan Year (i) had Compensation from the Employer in excess of $80,000, as adjusted by the Secretary of the Treasury for the relevant year, and (ii) if elected, was part of the top-paid twenty percent (20%) group of Employees (based on Compensation for the preceding Plan Year).

1.23 Hour of Service

An Hour of Service is each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer during the applicable computation period.

1.24 Individual Accounts

Accounts or records maintained by the Administrator or its agent indicating the monetary value of the total interest in the Trust Fund of each Participant, each Former Participant, and each Beneficiary. The types of Individual Accounts under this Plan are:

(a) Employer Contribution Accounts. The types of Employer Contribution Accounts maintained by this Plan are:

(i) Matching Contribution Accounts holding Employer Contributions made to the Plan for the benefit of an Employee because of a Matching Contribution made with respect to the Employee.

(ii) Profit Sharing Contribution Accounts holding Profit Sharing Contributions made to the Plan for the benefit of an Employee that the Employee could not have elected to receive in the form of cash or other taxable benefit, if any.

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(b) Participant Contribution Accounts. The types of Participant Contribution Accounts maintained by this Plan are:

(i) Rollover Accounts holding the Participant’s qualified rollover to the Plan pursuant to Article XIV.

(ii) Salary Deferral Contribution Accounts holding the amounts contributed by the Employer on behalf of a Participant as the result of an election by the Participant to have that amount contributed to the Plan rather than paid as cash or other taxable benefit pursuant to Sections 3.1 and 3.2.

1.25 Leased Employee

An individual who otherwise is not an Employee of the Employer, and who, pursuant to a leasing agreement between the Employer and a leasing organization, has performed services for the Employer (or for the Employer and any persons related to the Employer within the meaning of Code Section 414(n)(6)) on a substantially full time basis for at least one (1) year (unless such individual is otherwise earlier considered a Leased Employee treated as an Employee of the Employer pursuant to the eligibility conditions elected by an Employer) and such services are performed under the primary direction or control of the Employer.

1.26 Limitation Year

The Plan Year, as such term is defined in this Article I.

1.27 Named Fiduciary

One or more fiduciaries named in this Plan who jointly and severally will have authority to control or manage the operation and administration of the Plan. The Administrator will be the Named Fiduciary unless the Plan Sponsor designates another person by written action.

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1.28 Nonforfeitable

A vested interest attained by a Participant or Beneficiary in that part of the Participant’s benefit under the Plan arising from the Participant’s Service, which claim is unconditional and legally enforceable against the Plan.

1.29 Non-Highly Compensated Employee

An Employee, former Employee, or Beneficiary who is not a Highly Compensated Employee.

1.30 Normal Retirement Age

The date the Participant attains age sixty-five (65) years.

1.31 Normal Retirement Date

The first day of the month coincident with or next following the date the Participant attains Normal Retirement Age.

1.32 Participant

An Eligible Employee of the Employer who has met the eligibility requirements of this Plan and who has been enrolled as a Participant in this Plan.

1.33 Period of Severance

The period of time commencing on the Severance from Employment Date and ending on the date on which the Employee again performs an Hour of Service for the Employer.

1.34 Plan

The qualified retirement plan embodied in this Plan, as amended from time to time, designated as the Sonic Corp. Savings and Profit Sharing Plan.

1.35 Plan Sponsor

Sonic Corp., and any successor corporation or business organization that may be substituted for the Plan Sponsor under this Plan.

1.36 Plan Year

The twelve (12) consecutive month period from January 1 of each year to the next following December 31.

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1.37 Predecessor Employer

A business organization, all or a portion of whose assets and business has been acquired by the Employer, whether by merger, stock purchase, or acquisition of the assets and business of the business organization.

1.38 Re-Employment Commencement Date

The first date, following a Period of Severance that is not required to be considered under the Service rules, on which the Employee performs an Hour of Service for the Employer.

1.39 Related Employer

A related group of employers is a controlled group of corporations (defined in Code Section 414(b)), trades or businesses (whether or not incorporated) that are under common control (defined in Code Section 414(c)) or an affiliated service group (defined in Code Section 414(m) or in Code Section 414(o)). If the employer is a member of a related group, the term “Employer” includes the related group members for purposes of determining Service and Breaks in Service under Articles II and VI, applying the coverage test of Code Section 410(b), applying the limitations on allocations in Article IV, applying the top-heavy rules and the minimum allocation requirements of Article IV, the definitions of Employee, Highly Compensated Employee, Compensation, and Leased Employee, and for any other purpose required by the applicable Code Section or by a Plan provision. However, a Related Employer may contribute to the Plan only by being an Employer under the Plan. If one or more of the Plan Sponsor’s related group members become Employers, the term “Employer” includes the participating related group members for all purposes of the Plan. For Plan allocation purposes, Compensation does not include Compensation received from a Related Employer that is not participating in this Plan.

1.40 Required Beginning Date

(a) For a Participant who is a Five Percent Owner, the Required Beginning Date will commence on the first day of April following the later of:

(i) The calendar year in which the Participant attains age seventy and one-half (70 ¹/2) years; or

(ii) The earlier of the calendar year with or within which ends during the Plan Year in which the Participant becomes a Five Percent Owner, or the calendar year in which the Participant retires.

(b) For a Participant who is not a Five Percent Owner, the Required Beginning Date is the first day of April of the calendar year immediately following the later of:

(i) The calendar year in which the Participant attains age seventy and one-half (70 ¹/2); or

(ii) The calendar year in which the Participant terminates employment with the Employer.

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1.41 Service

Service includes any period of time commencing on the Employee’s Employment Commencement Date (or Re-Employment Commencement Date) and ending on the Employee’s Severance from Employment Date. Service will be determined using the elapsed time method as defined in Treasury Regulation Section 1.410(a)-7.

(a) Service in all cases includes periods during which the Employee is on a leave of absence for “authorized reasons” or for “maternity or paternity reasons” pursuant to the definition of Break in Service. Leaves of absence also will include periods of absence in connection with military service during which the Employee’s re-employment rights are legally protected. Except for absence by reason of military service, leaves of absence will be for a maximum period of two (2) years. Leaves of absence will be granted on a uniform and nondiscriminatory basis.

(b) If the Employer is a member of a group of Related Employers, then Year of Service will include Service with any Related Employer for the period during which such Employers are related. If the Employer maintains the plan of a Predecessor Employer, Service will include service for the Predecessor Employer. Service will include service of the Employee with any Predecessor Employer, as required under Treasury Regulation Section 1.411(a)-5(b)(3)(iv).

(c) Years of Service will include military service required to be counted for vesting purposes under Section 16.8.

1.42 Severance from Employment Date

The date on which occurs the earlier of: (i) the Employee quits, retires, is discharged, or dies; or (ii) the first anniversary of the first date of a period in which an Employee remains absent from Service, with or without pay, with the Employer for any other reason, such as vacation, holiday, sickness, Disability, leave of absence or layoff.

1.43 Top-Heavy Plan

For purposes of determining Top-Heavy Plan status, each Employer and its Related Employers will be deemed to maintain a separate plan. Related Employers will be considered a single employer for purposes of applying the limitations of this Section. However, Employers who are not Related Employers, but receive services of Employees of the Employer under an employee leasing arrangement will be treated as separate employers for purposes of these top-heavy rules.

A Plan will be a Top-Heavy Plan in any Plan Year in which, as of the Determination Date, (i) the Present Value of Accrued Benefits of Key Employees, or (ii) the sum of the Aggregate Accounts of Key Employees of any plan of an Aggregation Group, exceeds sixty percent (60%) of the Present Value of Accrued Benefits or Aggregate Accounts of all Participants under this Plan and any plan of an Aggregation Group.

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If any Participant is a Non-Key Employee for any Plan Year, but the Participant was a Key Employee for any prior Plan Year, the Participant’s Aggregate Account balance will not be taken into account in determining whether this Plan is a Top-Heavy Plan (or whether any Aggregation Group that includes this Plan is a Top-Heavy Group) as further defined in Code Section 416(g) and the applicable Treasury Regulations.

For purposes of determining Top-Heavy Plan status, the following definitions will apply:

(a) Aggregate Account means, as of the Determination Date, the sum of:

(i) The Participant Contribution Account and Employer Contribution Account balances as of the most recent Valuation Date occurring within a twelve (12) month period ending on the Determination Date;

(ii) The contributions that would be allocated as of a date not later than the Determination Date, even though those amounts are not yet made or required to be made;

(iii) Any plan distributions made during the Determination Period (however, in the case of distributions made after the Valuation Date and prior to the Determination Date, such distributions are not included as distributions for Top-Heavy purposes to the extent that the distributions are already included in the Participant’s Aggregate Account balance as of the Valuation Date);

(iv) Any Employee contributions, whether voluntary or mandatory;

(v) Regarding unrelated rollovers and plan-to-plan transfers (those that are (i) initiated by the Employee and (ii) made from a plan maintained by one employer to a plan maintained by another employer), if this Plan provides for rollovers or plan-to-plan transfers, an unrelated rollover or plan-to-plan transfer will be considered as a distribution for purposes of this Section. If this Plan is the plan accepting an unrelated rollover or plan-to-plan transfer, an unrelated rollover or plan-to-plan will not be considered as part of the Participant’s Aggregate Account balance;

(vi) Regarding related rollovers and plan-to-plan transfers (those either (i) not initiated by the Employee or (ii) made to a plan maintained by the same Employer), if this Plan provides for rollovers or plan-to-plan transfers, a related rollover or plan-to-plan transfer will be considered as a distribution for purposes of this Section. If this Plan is the plan accepting a related rollover or plan-to-plan transfer, a related rollover or plan-to-plan transfer will be considered as part of the Participant’s Aggregate Account balance, irrespective of the date on which the related rollover or plan-to-plan transfer is accepted; and

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(vii) The accounts of Participants who are Leased Employees, for purposes of these top-heavy rules, will be treated as being maintained under a separate plan by each respective Employer.

(b) Aggregation Group means either a Required Aggregation Group or a Permissive Aggregation Group as hereinafter determined.

(i) Required Aggregation Group means the group of plans composed of (i) each plan of the Employer in which a Key Employee is a Participant or participated at any time during the Determination Period, regardless of whether the plan has terminated; and (ii) each other plan of the Employer that enables any plan in which a Key Employee participates to meet the requirements of Code Sections 401(a)(4) or 410, which will be aggregated.

In the case of a Required Aggregation Group, each plan in the group will be considered a Top-Heavy Plan if the Required Aggregation Group is a Top-Heavy Group. No plan in the Required Aggregation Group will be considered a Top-Heavy Plan if the Required Aggregation Group is not a Top-Heavy Group.

(ii) Permissive Aggregation Group means the Required Aggregation Group plus any other plan not required to be included in the Required Aggregation Group, provided the resulting group, taken as a whole, would continue to satisfy Code Sections 401(a)(4) and 410.

In the case of a Permissive Aggregation Group, only a plan that is part of the Required Aggregation Group will be considered a Top-Heavy Plan if the Permissive Aggregation Group is a Top-Heavy Group. No plan in the Permissive Aggregation Group will be considered a Top-Heavy Plan if the Permissive Aggregation Group is not a Top-Heavy Group.

(iii) Only those plans of the Employer in which the Determination Dates fall within the same calendar year will be aggregated to determine whether the plans are Top-Heavy Plans.

(c) Determination Date means for any Plan Year (i) the last day of the preceding Plan Year, or (ii) in the case of the first Plan Year of the Plan, the last day of the first Plan Year.

(d) Determination Period means the five (5) year period ending on the Determination Date.

(e) Excluded Employees means any Employee who has not performed any Service for the Employer during the five (5) year period ending on the Determination Date. Excluded Employees will be excluded for purposes of a Top-Heavy determination.

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(f) Key Employee means any Employee or former Employee, or Beneficiary of the Employee, who, for any Plan Year in the Determination Period is:

(i) An officer of the Employer having Compensation greater than $130,000 (as adjusted under Code Section 416(i)(1));

(ii) A Five Percent Owner; or

(iii) A one percent (1%) owner of the Employer having Compensation of more than $150,000.

Notwithstanding the foregoing, Key Employee will have the meaning set forth in Code Section 416(i), as amended. For purposes of determining whether an Employee or former Employee is an officer under this Subsection (f), an officer of the Employer will have the meaning set forth in the regulations under Code Section 416(i). For purposes of this Section, Compensation means “Compensation” as determined under for the definition of Highly Compensated Employee above. For purposes of determining ownership hereunder, entities that would otherwise be aggregated as Related Employers will be treated as separate entities.

(g) Non-Key Employee means any Employee or former Employee, or Beneficiary of the Employee, who is not a Key Employee.

(h) Present Value of Accrued Benefit. Solely for the purpose of determining if the Plan, or any other plan included in a Required Aggregation Group of which this Plan is a part, is a Top-Heavy Plan, the Accrued Benefit of a Non-Key Employee will be determined under (i) the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Related Employers, or (ii) if there is no uniform method, in accordance with the slowest accrual rate permitted under the fractional accrual method described in Code Section 411(b)(1)(C). To calculate the Present Value of Accrued Benefits from a defined benefit plan, the Administrator will use the actuarial assumptions for interest and mortality only, prescribed by the defined benefit plan(s) to value benefits for top-heavy purposes. If an aggregated plan does not have a valuation date coinciding with the Determination Date, the Administrator must value the Accrued Benefits in the aggregated plan as of the most recent valuation date falling within the twelve (12) month period ending on the Determination Date, except as Code Section 416 and applicable Treasury Regulations require for the first and second plan year of a defined benefit plan. The Administrator will determine whether a plan is top-heavy by referring to Determination Dates that fall within the same calendar year.

For purposes of determining the Present Values of Accrued Benefits and the amounts of Account Balances of Employees as of the Determination Date, the following will apply.

(i) Distributions During Year Ending on the Determination Date. The Present Values of Accrued Benefits and the amounts of Account Balances of an Employee as of the Determination Date will be increased by the distributions made with respect to the Employee under the Plan and any Plan aggregated with the Plan under Code Section 416(g)(2) during the one-year period ending on the Determination Date. The preceding sentence will also apply to distributions under a terminated Plan that, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the case of a distribution made for a reason other than separation from employment, death, or disability, this provision will be applied by substituting “five-year period” for “one-year period.”

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(ii) Employees Not Performing Services During Year Ending on the Determination Date. The Accrued Benefits and accounts of any individual who has not performed services for the Employer during the one-year period ending on the Determination Date will not be taken into account.

(i) Top-Heavy Group means an Aggregation Group in which, as of the Determination Date, the sum of:

(i) The Present Value of Accrued Benefits of Key Employees under all defined benefit plans included in the group; and

(ii) The Aggregate Accounts of Key Employees under all defined contribution plans included in the group.

Exceeds sixty percent (60%) of a similar sum determined for all Participants.

1.44 Trust Agreement

The agreement, entered into with the Trustee, or any successor Trustee, establishing the Trust Fund and specifying the duties of the Trustee.

1.45 Trust Fund

All assets of any kind and nature from time to time held by the Trustee or its agent under the Trust Agreement without distinction between income and principal. This Plan contemplates a single Trust Fund for all Employers under the Plan. However, the Trustee will maintain separate records of account to reflect properly each Participant’s Account Balance from each Employer, if any.

1.46 Trustee

The then acting Trustee or, collectively, if there is more than one, the then acting Trustees of the Trust Fund.

1.47 Valuation Date

Each business day of the Plan Year, or such other dates determined by the Administrator.

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1.48 Year of Service

Year of Service means a three hundred sixty five (365)-day period of Service. For purposes of determining an Employee’s Years of Service, an Employee will receive credit for the aggregate of all time periods commencing on an Employee’s Employment Commencement Date (or Re-Employment Commencement Date) and ending on his or her Severance from Employment Date.

(a) A Year of Service (including a fraction thereof) will be credited for each completed 365 days of elapsed time (as defined in Treasury Regulation Section 1.410(a)-7) that need not be consecutive. An Employee will receive credit towards the completion of a Year of Service for any Period of Severance of less than 365 days.

(b) In computing an Employee’s Years of Service, the following rules will apply:

(i) For an Employee who terminates employment and is subsequently re-employed after incurring a Break in Service, Service prior to the Break in Service will not be taken into account until the Employee has completed a Year of Service after re-employment.

(ii) For a Participant who terminates employment and who subsequently is re-employed after incurring five (5) consecutive one year Breaks in Service, Years of Service after the Break in Service will not be taken into account for purposes of determining the Nonforfeitable percentage of an Employee’s Account Balance derived from Employer Contributions that accrued before the Break in Service.

(iii) For a Participant who terminates employment without any vested right to the Employer Contribution Account and who is re-employed after a one year Break in Service, Service before the Break in Service will not be taken into account if the number of consecutive one year Breaks in Service equals or exceeds the greater of (i) five (5), or (ii) the aggregate number of Years of Service before the Break in Service. A Participant is considered nonvested for this purpose only if:

(A) The Participant has no vested interest in any amounts in his or her Employer Contribution Account; and

(B) The Participant has no Salary Deferral Contributions in the Plan.

(iv) Service with the Employer before a Participant enters the Plan will be considered for purposes of vesting.

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ARTICLE II

Eligibility and Participation

2.1 Eligibility Conditions

Each Eligible Employee who commences employment with an Employer that has adopted the Plan in accordance with Section 9.5 on or after April 1, 2010 will be eligible to participate in this Plan on the Entry Date next following the attainment of age twenty-one (21) and the completion of one (1) Year of Service.

If a Participant is no longer an Eligible Employee and becomes ineligible to participate but has not incurred a Break in Service, such Employee will participate immediately upon resuming status as an Eligible Employee. If a Participant incurs a Break in Service, eligibility will be determined as provided in the definition of Break in Service in Article I.

If an Employee who is not an Eligible Employee becomes an Eligible Employee, the Employee will participate immediately if the Employee has satisfied the minimum age and service requirements and would have otherwise previously become a Participant.

2.2 Participation Election

Whenever a new Eligible Employee is hired by the Employer, the Employer immediately will give notice to the Administrator of the employment and will identify the new Employee. The Administrator will notify in writing each new Eligible Employee of the pending eligibility prior to the date on which the Employee will become eligible under Section 2.1 and will furnish the Employee a copy of this Plan or any other explanation of the Plan that the Administrator will provide for that purpose.

Each Eligible Employee who commences employment with an Employer on or after April 1, 2010 and fails to affirmatively elect to (i) have Salary Deferral Contributions made on his or her behalf at a different rate or (ii) not have Salary Deferral Contributions made on his or her behalf under the Plan, will automatically become a Participant, in accordance with the terms of Section 3.1, effective as of the first day of the first payroll period beginning on or after the Eligible Employee’s applicable Entry Date. In accordance with Code Section 414(w), within ninety (90) days following the date on which the first automatic Salary Deferral Contribution is made on behalf of the Participant under this Section and Section 3.1, the affected Participant may notify the Administrator of his or her election to withdraw all Salary Deferral Contributions (and earnings thereon) made on his or her behalf from the date the first such contribution was made through the date of the Participant’s withdrawal election.

2.3 Participant Re-Entry

If the employment of a Participant is terminated and the Participant subsequently is re-employed as an Eligible Employee, the re-employed Eligible Employee will become a Participant on the Re-Employment Commencement Date. If an Eligible Employee terminates employment prior to satisfying the eligibility requirements of Section 2.1 and subsequently is re-employed as an Eligible Employee, the re-employed Employee will become a Participant after meeting the eligibility requirements of Section 2.1, but will be credited for Service retroactively to the Re-Employment Commencement Date for purposes of eligibility and vesting. If an Eligible Employee becomes eligible in accordance with Section 2.1 but terminates employment prior to the first Entry Date, and the Employee is later re-employed as an Eligible Employee, the Employee will become a Participant on the Re-Employment Commencement Date.

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ARTICLE III

Contributions

3.1 Salary Deferral Contributions

For each Plan Year, the amount of the Salary Deferral Contribution to the Trust Fund will equal the amount determined under this Section. Subject to Subsection (a) below, each Participant may elect to defer any amount of his or her Compensation in whole percentages up to a maximum of fifty percent (50%) of the Participant’s Compensation, but will not elect to defer an amount to cause the Plan to violate the limitations of this Section or Code Section 415, or to exceed the applicable maximum amount allowable as a deduction to the Employer under Code Section 404. A Participant may elect to defer Compensation under this Section only in an amount that the Participant otherwise could elect to receive in cash and that is currently available to the Participant. Compensation is not currently available to the Participant if the Participant is not eligible to receive it at the time of the deferral election. The amounts by which a Participant elects to reduce Compensation under this Plan will be his Salary Deferral Contribution. The Employer will contribute to the Trust Fund the amount of the Salary Deferral Contributions that will be treated as Employer Contributions and credited to the Salary Deferral Contribution Account of each Participant.

(a) Salary Deferral Contribution Elections

(i) The Administrator will adopt a procedure necessary to implement Salary Deferral Contribution elections. The Employer will permit a Participant to make elections, and subsequent changes thereto, in accordance with the rules and procedures that will be established by the Administrator.

(ii) An Eligible Employee that becomes a Participant as a result of the automatic enrollment provision of Section 2.2 will be deemed to have elected to have Salary Deferral Contributions made on his or her behalf each payroll period in an amount equal to one percent (1%) of his or her Compensation until an alternate election is made in accordance with the procedures established under (i) above.

(b) Annual Dollar Limit on Salary Deferral Contributions. A Participant’s Salary Deferral Contributions will not exceed the statutory dollar limitation under Code Section 402(g) for the taxable year of the Participant, except to the extent permitted under Code Section 414(v) and Section 3.2 referring to Catch-Up Contributions. The statutory dollar limitation is the amount of the dollar limitation under Code Section 402(g) in effect on January 1 of each calendar year, as adjusted annually by the Secretary of the Treasury. “Excess Salary Deferrals” are Salary Deferral Contributions that exceed the statutory dollar limitation and are includable in a Participant’s gross income under Code Section 402(g). Excess Salary Deferrals will be treated as Annual Additions under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the Participant’s taxable year.

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(i) Salary Deferral Contributions means, for any taxable year, the sum of:

(A) Any Employer contribution under a qualified cash or deferred arrangement defined in Code Section 401(k), determined without regard to the dollar limitation under Code Section 402(g);

(B) Any Employer contribution under a simplified employee pension as defined in Code Section 408(k)(6), pursuant to a salary reduction agreement; and

(C) Any Employer contribution toward the purchase of a tax sheltered annuity contract as defined in Code Section 403(b), if any, pursuant to a salary reduction agreement.

Salary Deferral Contributions will not include any deferrals properly distributed as excess Annual Additions.

(ii) If the statutory dollar limitation under Code Section 402(g) is exceeded, the Administrator will direct the Trustee to distribute the Excess Salary Deferrals, and any income or loss allocable to the Excess Salary Deferrals (determined in accordance with the requirements of Treasury Regulation Section 1.402(g)-1(e)(5) effective as of January 1, 2007), to the Participant not later than the first April 15 following the close of the Participant’s taxable year.

(iii) If a Participant is also a participant in (i) another qualified cash or deferred arrangement defined in Code Section 401(k); (ii) a simplified employee pension defined in Code Section 408(k); or (iii) a salary reduction arrangement pursuant to which an employer purchases a tax sheltered annuity contract defined in Code Section 403(b), and such Participant’s Salary Deferral Contributions made under the other arrangement(s) and this Plan cumulatively exceed the amount of the applicable statutory dollar limitation under Code Section 402(g), then the Participant may, not later than March 1 following the close of the Participant’s taxable year in which such excess occurred, notify the Administrator in writing of the excess and request that his Salary Deferral Contributions under this Plan be reduced by an amount specified by the Participant. The specified amount then will be distributed in the same manner as provided in clause (ii) above. A Participant is deemed to notify the Administrator of any Excess Salary Deferrals that arise by taking into account only those Salary Deferral Contributions made to this Plan and any other plans of this Employer.

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(iv) If any of the foregoing provisions of this Section do not conform with applicable Treasury Regulations, the nonconforming provisions may be amended retroactively to assure conformity.

(c) Actual Deferral Percentage Test. One of the actual deferral percentage tests set forth in Code Section 401(k)(2) and Treasury Regulations thereunder must be met in each Plan Year. Such testing will utilize the prior year testing method as such term is defined under Treasury Regulation Section 1.401(k)-2(a)(2)(ii). The actual deferral ratio (as such term is defined under Treasury Regulation Section 1.401(k)-6) of any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Salary Deferral Contributions allocated to such Participant’s accounts under two (2) or more cash or deferred arrangements described in Code Section 401(k), that are maintained by an Employer (or a Related Employer), will be determined as if such elective contributions were made under a single arrangement. If a Highly Compensated Employee participates in two (2) or more cash or deferred arrangements of an Employer (or a Related Employer) that have different plan years, then all elective contributions made during the Plan Year being tested under all such cash or deferred arrangements will be aggregated, without regard to the plan years of the other plans.

3.2 Catch-Up Contributions.

All Employees who are eligible to make Salary Deferral Contributions under this Plan and who have attained age fifty (50) before the close of the Plan Year will be eligible to make Catch-Up Contributions in accordance with, and subject to the limitations of, Code Section 414(v). Such Catch-Up Contributions will not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan will not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such Catch-Up Contributions.

3.3 Matching Contributions

(a) Amount of Matching Contributions

(i) Effective on and after April 1, 2010, at the Employer’s sole discretion, a discretionary Matching Contribution may be made to the Trust Fund each Plan Year on behalf of each Participant who is employed on the last day of the Plan Year. For each Plan Year, the amount of the discretionary Matching Contribution will be equal to an amount that the Employer from time to time may deem advisable. Unless an Employer affirmatively elects to make a discretionary Matching Contribution for a Plan Year on behalf of eligible Participants, no such contribution will be made.

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(ii) Effective for payroll periods ending on or before September 30, 2010, a Participant who elects to have Salary Deferral Contributions made on his or her behalf to the Plan will accrue a Matching Contribution each payroll period in an amount equal to one hundred percent (100%) of the Salary Deferral Contributions for the payroll period up to the first three percent (3%) of the Particiapnt’s Compensation that is deferred for the payroll period and fifty percent (50%) of the Salary Deferral Contributions for the payroll period up to the next three percent (3%) of the Participant’s compensation that is deferred for the payroll period. Salary Deferral Contributions that exceed six percent (6%) of a Participant’s Compensation will not be taken into account when calculating Matching Contributions.

(iii) Notwithstanding the foregoing, the Matching Contribution for any Plan Year will not exceed the applicable maximum amount allowable as a deduction to the Employer under Code Section 404. The Matching Contribution for any Plan Year on behalf of a Participant will not exceed the limitations on Annual Additions as described under Section 4.3, even if the contribution formula otherwise would require a larger contribution. The Matching Contribution on behalf of each Participant will be credited to such individual’s Matching Contribution Account.

(b) Actual Contribution Percentage Test. One of the actual contribution percentage tests set forth in Code Section 401(m) and Treasury Regulations thereunder must be met in each Plan Year. Such testing will utilize the prior year testing method as such term is defined under Treasury Regulation Section 1.401(m)-2(a)(2)(ii). The Administrator may elect, in accordance with applicable Treasury Regulations, to treat Salary Deferral Contributions to the Plan as Matching Contributions for purposes of meeting the requirement. The actual contribution ratio (as such term is defined under Treasury Regulation Section 1.401(m)-5) of any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Matching Contributions allocated to such Participant’s accounts under two (2) or more plans described in Code Section 401(a), that are maintained by an Employer (or a Related Employer), will be determined as if the total of contributions was made under a single arrangement. If a Highly Compensated Employee participates in two (2) or more plans or arrangement of an Employer (or a Related Employer) that have different plan years, then all contributions made during the Plan Year being tested under all such arrangements will be aggregated, without regard to the plan years of the other plans.

3.4 Profit Sharing Contributions

At the Employer’s sole discretion, a discretionary Profit Sharing Contribution may be made to the Trust Fund each Plan Year on behalf of each Participant who is employed on the last day of the Plan Year. For each Plan Year, the amount of the discretionary Profit Sharing Contribution to the Trust Fund will be equal to an amount that the Employer from time to time may deem advisable. Unless an Employer affirmatively elects to make a discretionary Profit Sharing Contribution for a Plan Year on behalf of eligible Participants, no such contribution will be made.

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Notwithstanding the foregoing, the aggregate Profit Sharing Contributions for any Plan Year under this Section 3.1 will not exceed the applicable maximum amount allowable as a deduction to the Employer under Code Section 404. The aggregate Profit Sharing Contributions for any Plan Year on behalf of a Participant will not exceed the limitation on Annual Additions as described in Section 4.3, even if the contribution formula otherwise would require a larger contribution. The aggregate Profit Sharing Contributions on behalf of each Participant will be credited to such individual’s Profit Sharing Contribution Account.

3.5 Rules Governing Deposits of Contributions

(a) Salary Deferral Contributions and Catch-Up Contributions accumulated through payroll deductions will be paid to the Trustee with reasonable promptness and not later than the time permitted by the U.S. Department of Labor under Labor Regulations at 29 C.F.R. § 2510.3-102.

(b) The Employer will pay to the Trustee the Employer Contributions (other than Salary Deferral Contributions and Catch-Up Contributions) at any time and from time to time; except that the total Employer Contribution for any Plan Year will be paid in full not later than the time prescribed by Code Section 404(a)(6) to enable the Employer to obtain a deduction on its federal income tax return for the Employer’s taxable year.

(c) Upon payment to the Trustee, all Employer Contributions will be added immediately to and become a part of the Trust Fund.

(d) All Salary Deferral Contributions and Catch-Up Contributions, if any, will be credited to the Participant Contribution Account of each Participant as of the last day of each payroll period. All Matching Contributions and Profit Sharing Contributions, if any, will be credited to the Matching Contribution Account and Profit Sharing Contribution Account, respectively, of each Participant upon deposit with the Trustee in accordance with this Section 3.5.

3.6 Adjustment of Individual Accounts

As of each Valuation Date, before allocating and crediting contributions and Forfeitures, if any, for the Plan Year as provided in Article IV, the Trustee will adjust all Individual Accounts as follows:

(a) The Trustee will determine the fair market value of the Participant’s directed investments.

(b) The Trustee will adjust the value of the Participant’s Individual Accounts by crediting them with any increases in value since the last Valuation Date or, if applicable, since the date of acquisition of the Participant’s directed investments.

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(c) The Trustee will credit the Participant’s Individual Accounts with any income and charge the Participant’s Individual Accounts with any expenditures resulting from the Participant’s directed investments.

A Participant will be responsible for reviewing the information concerning investment directives and earnings allocations on his or her participant statement. If there is any inaccuracy in the information contained on such statement, the Participant will report such inaccuracies to the Administrator or the Trustee within the ninety (90)-day period immediately following the date such statement was received. If a Participant fails to report an inaccuracy within this ninety (90)-day period, the Plan will not be required to make retroactive adjustments to the Participant’s Account but will rectify any errors on a prospective basis.

3.7 Gap Period Income on Distributed Excess Contributions and Excess Aggregate Contributions

This Section applies to excess contributions (as defined in Code Section 401(k)(8)(B)) and excess aggregate contributions (as defined in Code Section 401(m)(6)(B)) made with respect to Plan Years beginning after December 31, 2007. In distributing excess contributions or excess aggregate contributions, the Administrator will not calculate and distribute allocable income for the gap period (i.e., the period after the close of the Plan Year in which the excess contribution or excess aggregate contribution occurred and prior to the distribution).

3.8 Participant Voluntary After Tax Contributions

This Plan does not permit or accept Participant voluntary after tax contributions.

ARTICLE IV

Allocation of Employer Contributions to Individual Accounts

4.1 Allocation of Contributions.

(a) Salary Deferral Contributions and Catch-Up Contributions made by the Employer on a Partcipant’s behalf will be allocated to such Participant’s Salary Deferral Contribution Account in the amount determined in accordance with Sections 3.1 and 3.2, respectively.

(b) Matching Contributions, if any, made by the Employer on a Participant’s behalf will be allocated to such Participant’s Matching Contribution Account in the amount determined in accordance with Section 3.3.

(c) Profit Sharing Contributions, if any, made by the Employer on a Participant’s behalf pursuant to Section 3.4 will be allocated to the Profit Sharing Contribution Accounts of eligible Participants employed by the Employer on the last day of the Plan Year. The allocation to each such eligible Participant’s Profit Sharing Contribution Account will be that portion of Employer Discretionary Profit Sharing Contribution that is in the same proportion that such Particpant’s Compensation for such Plan Year bears to the total of all such Participants’ Compensation for such Plan Year. For this purpose, “Compensation” will include only Compensation earned by a Participant during that portion of the Plan Year during which the Employee actually participates in the Plan.

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4.2 Application of Forfeitures.

Effective April 1, 2010, any amounts that are forfeited under any provision hereof during a Plan Year will be applied in the manner determined by the Administrator to reduce Matching Contributions and Profit Sharing Contributions for the succeeding Plan Year. Any remaining Forfeitures will be used to reduce the Plan’s ordinary and necessary administrative expenses for the succeeding Plan Year. Prior to such application, forfeited amounts will be held in suspense and invested as designated from time to time by the Administrator.

4.3 Limitations on Allocations Under Code Section 415. Contributions hereunder will be subject to the limitations of Code Section 415 and Treasury Regulations published pursuant to such Code Section on April 5, 2007, the provisions of which are specifically incorporated by reference; to the extent any portion of this Section conflicts with such Treasury Regulations, the provisions of the regulations will govern.

(a) The Annual Additions to a Participant’s Individual Accounts hereunder (together with the Annual Additions to the Participant’s account(s) under any other defined contribution plans required to be aggregated with the Plan) for any Limitation Year may not exceed the lesser of:

(i) $40,000, subject to cost-of-living increases as allowed under Code Section 415(d); or

(ii) One hundred percent (100%) of the Participant’s annual compensation for the Limitation Year. For this purpose, “annual compensation” for any Limitation Year will be compensation as defined under Code Section 415(c)(3) and Treasury Regulations issued thereunder.

In the event the preceding limitations apply to an individual who is a Participant in this Plan and was a Participant in any other defined contribution plan maintained by the Employer, the limitations will apply first to this Plan.

(b) In the event the limitations in this Section are not satisfied, correction will be made under the rules provided in Revenue Procedure 2008-50 (and any successor to that Revenue Procedure).

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4.4 Top-Heavy Allocations

(a) Minimum Allocation. Notwithstanding the foregoing, for any Plan Year in which the Plan is determined to be Top-Heavy, the amount of Employer contributions and Forfeitures allocated to the Individual Accounts of each Non-Key Employee will be equal to the lesser of three percent (3%) of each Non-Key Employee’s compensation or the highest contribution rate for the Plan Year made on behalf of any Key Employee. However, if a defined benefit plan maintained by the Employer that benefits a Key Employee depends on this Plan to satisfy the nondiscrimination rules of Code Section 401(a)(4) or the coverage rules of Code Section 410(b) (or another plan benefiting the Key Employee so depends on the defined benefit plan), the top heavy minimum allocation is three percent (3%) of the Non-Key Employee’s compensation regardless of the contribution rate for the Key Employee.

(b) Compensation. For purposes of this Section, “compensation” means compensation that would be stated on an Employee’s Form W-2, “Wage and Tax Statement,” for the calendar year that ends with or within the Plan Year. Notwithstanding the previous sentence, compensation will include amounts that would have been included on the Employee’s Form W-2 but for an election under Code Sections 125, 132(f)(4), 401(k), 403(b), 408(k), 408(p)(2)(A)(i), or 457(b). Notwithstanding the definition of Compensation in Article I, the period preceding a Participant’s Entry Date will be included in determining the minimum top-heavy allocation provided by this Section.

(c) Contribution Rate. For purposes of this Section, a Participant’s contribution rate is the sum of Employer contributions (not including Employer contributions to Social Security) and Forfeitures allocated to the Participant’s Individual Accounts for the Plan Year divided by his or her compensation for the entire Plan Year. To determine a Participant’s contribution rate, the Administrator must treat all qualified top-heavy defined contribution plans maintained by the Employer (or by any Related Employers) as a single plan.

Notwithstanding the preceding:

(i) Salary Deferral Contributions on behalf of Key Employees are taken into account in determining the minimum required contribution under Code Section 416(c)(2). However, Salary Deferral Contributions on behalf of Employees other than Key Employees may not be treated as Employer contributions for the minimum contribution or benefit requirement of Code Section 416.

(ii) Matching Contributions will be taken into account for purposes of satisfying the minimum contribution requirements of Code Section 416(c)(2). The preceding sentence will apply with respect to Matching Contributions under the Plan or, if the Plan provides that the minimum contribution requirement will be met in another Plan, such other Plan. Matching Contributions that are used to satisfy the minimum contribution requirements will be treated as matching contributions for purposes of the Actual Contribution Percentage Test and other requirements of Code Section 401(m).

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(iii) Qualified nonelective contributions described in Code Section 401(m)(4)(C) may be treated as Employer contributions for the minimum contribution or benefit requirement of Code Section 416.

(d) Participant Entitled to Top-Heavy Minimum Allocation. The minimum allocation under this Section will not be provided to any Participant who was not employed by the Employer on the last day of the Plan Year. The provisions of this Section will not apply to any Participant to the extent the Participant is covered under any other plan or plans of the Employer and any Related Employer under which the minimum allocation or benefit requirements under Code Section 416(c)(1) or (c)(2) are met for the Participant. Notwithstanding any limitations within the Plan’s definition of Compensation, amounts earned during the period preceding a Participant’s Entry Date will be included for purposes of determining the minimum top-heavy allocation provided by this Section.

(e) Compliance. The Plan will satisfy the top-heavy minimum allocation under this Section. The Administrator first will allocate the Employer contributions (and Forfeitures, if any) for the Plan Year pursuant to the allocation formula under Article IV. The Employer then will contribute an additional amount for the Individual Accounts of any Participant entitled under this Section to a top-heavy minimum allocation and whose contribution rate for the Plan Year, under this Plan and any other plan aggregated under this Section, is less than the top-heavy minimum allocation. The additional amount is the amount necessary to increase the Participant’s contribution rate to the top-heavy minimum allocation. The Administrator will allocate the additional contribution to the Individual Accounts of the Participant on whose behalf the Employer makes the contribution.

4.5 Post-Allocation Adjustments to Accounts

After the amount or amounts have been allocated and credited to each Participant’s Employer Contribution Account, as provided in this Article, the then value of each Employer Contribution Account will remain unchanged until the next Accounting Date. Notwithstanding the foregoing, the Participant’s Employer Contribution Account may be adjusted prior to the next Accounting Date under:

(a) Other provisions in this Plan authorizing the Administrator to reduce the Participant’s Individual Accounts by disbursements properly chargeable to them or increased by funds received and credited to them; or

(b) A special valuation of the Participant’s Individual Accounts.

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For purposes of this Article, reference to the Employer Contribution Accounts of Participants will include the Employer Contribution Accounts of those Participants who die, become Disabled, or retire during the Plan Year.

ARTICLE V

In-Service Distributions

5.1 Withdrawal of Employer Contributions Before Severance From Employment

Except as provided under Section 5.2 below, upon attainment of age fifty-nine and one-half (59 ¹/2) years, a Participant will have the right to request withdrawal of all or any portion of the Participant’s fully vested and Nonforfeitable Individual Account(s). All determinations of the amount credited to a Participant’s Individual Accounts will be made as of the most recent Valuation Date. A Participant will make an election under this Section on a form prescribed by and delivered to the Administrator at any time during the Plan Year for which the election will be effective. In the written election, the Participant will specify the desired percentage or dollar amount to be distributed by the Trustee to the Participant. The Trustee will distribute to a Participant as elected under this Section within the ninety (90) day period, or as soon as administratively feasible, after the Participant files the written election with the Administrator. The Trustee will distribute the balance of the Participant’s Individual Accounts not distributed pursuant to Article VIII when the Participant terminated employment with the Employer.

5.2 Withdrawal of Salary Deferral Contributions Before Severance From Employment

(a) Statutory Restriction on Disbursements. Amounts held in the Salary Deferral Contribution Account of a Participant may not be distributable prior to the earliest of:

(i) Severance from Employment, total and permanent Disability, or death. For purposes of these distribution restrictions, “Severance from Employment” means when an Employee ceases to be an Employee of the Employer maintaining the Plan. An Employee does not have a Severance from Employment if, in connection with a change of employment, the Employee’s new employer maintains the Plan with respect to the Employee, by assuming sponsorship of the Plan or by accepting a transfer of Plan assets and liabilities (within the meaning of Code Section 414(l)) with respect to the Employee;

(ii) Attainment of age fifty-nine and one-half (59 ¹/2) years;

(iii) Plan termination; or

(iv) Proven financial hardship, subject to the limitations described in Section 5.3.

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For purposes of determining whether the Employer maintains an alternative defined contribution plan (described in Treasury Regulation Section 1.401(k)-1(d)(4)(i)) that would prevent the Employer from distributing Salary Deferral Contributions (and other amounts, such as qualified nonelective contributions, which are subject to the distribution restrictions that apply to Salary Deferral Contributions) from an otherwise terminated Plan, an alternative defined contribution plan does not include an employee stock ownership plan defined in Code Sections 4975(e)(7) or 409(a), a simplified employee pension as defined in Code Section 408(k), a SIMPLE IRA plan as defined in Code Section 408(p), a plan or contract that satisfies the requirements of Code Section 403(b), or a plan that is described in Code Sections 457(b) or (f).

5.3 Hardship Distributions

Distribution of a Participant’s Nonforfeitable Salary Deferral Contributions, Profit Sharing Contributions, and Matching Contributions, may be made to a Participant in the event of hardship. For purposes of this Section, a “hardship distribution” is a distribution that is necessary to satisfy an immediate and heavy financial need of an Employee who lacks other available resources to satisfy such need.

(a) A distribution will be considered to satisfy an immediate and heavy need of a Participant if the distribution is for:

(i) Expenses incurred for or necessary to obtain medical care that would be deductible under Code Section 213(d) (determined without regard to whether the expenses exceed 7.5% of adjusted gross income);

(ii) Costs directly related to the purchase, excluding mortgage payments, of a principal residence for the Participant;

(iii) Payment of tuition, related educational fees, and room and board expenses, for up to the next twelve (12) months of post-secondary education for the Participant, or the Participant’s spouse, children or dependents (as defined in Code Section 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B));

(iv) Payments necessary to prevent the eviction of the Participant from, or a foreclosure on the mortgage of, the Participant’s principal residence;

(v) Payments for burial or funeral expenses for the Participant’s deceased parent, spouse, children or dependents (as defined in Code Section 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code Section 152(d)(1)(B)); or

(vi) Expenses for the repair of damage to the Participant’s principal residence that would qualify for the casualty deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).

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(b) A distribution will be considered necessary to satisfy an immediate and heavy financial need of a Participant who lacks other available resources only if:

(i) The Participant represents in writing that the need cannot reasonably be relieved through reimbursement or compensation by insurance or otherwise; by liquidation of the Participant’s assets; by cessation of Salary Deferral Contributions under the Plan; by obtaining all distributions, other than hardship distributions, and all nontaxable loans currently available to him under all plans currently maintained by the Employers; or by borrowing from commercial sources on reasonable commercial terms; and

(ii) The distribution is not in excess of the amount of an immediate and heavy financial need, including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution.

(c) In addition to the conditions above each plan maintained by the Employer or a legally enforceable arrangement will provide that the Participant’s Salary Deferral Contributions, if any, will be suspended for six (6) months after receipt of the hardship distribution.

(d) Effective as of January 1, 2010, a Participant’s hardship event, for purposes of this Section, includes an immediate and heavy financial need of the Participant’s primary Beneficiary, that would constitute a hardship event if it occurred with respect to the Participant’s spouse or dependent, as defined under Code Section 152. For purposes of this Subsection, such hardship events will be limited to educational expenses, funeral expenses and certain medical expenses.

5.4 Qualified Reservist Distributions

Effective as of January 1, 2010, the Plan permits a Participant to elect a qualified reservist distribution. For this purpose, a “qualified reservist distribution” is any distribution to an individual who is ordered or called to active duty after September 11, 2001, if: (i) the distribution is from amounts attributable to Salary Deferral Contributions; (ii) the individual was (by reason of being a member of a reserve component, as defined in Section 101 of Title 37 of the United States Code) ordered or called to active duty for a period in excess of one hundred seventy nine (179) days or for an indefinite period; and (iii) the Plan makes the distribution during the period beginning on the date of such order or call, and ending at the close of the active duty period.

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ARTICLE VI

Distributions After Severance from Employment

6.1 Eligibility Due to Retirement, Death, or Disability

(a) Retirement. At Normal Retirement Age, a Participant will be fully vested in his or her Individual Accounts and the Trustee will hold such Individual Accounts for the Participant’s benefit. If a Participant retires (or otherwise terminates employment) on or after his or her Normal Retirement Date, the Administrator will credit and adjust the Participant’s Individual Accounts as provided in Articles III and IV, as of the Valuation Date immediately preceding a distribution pursuant to Section 6.6 below.

(b) Death. Upon death, a Participant will be fully vested in his or her Individual Accounts and the Trustee will hold such Individual Accounts for the benefit of the Participant’s Designated Beneficiary or Beneficiaries. The Administrator will credit and adjust the deceased Participant’s Individual Accounts as provided in Articles III and IV, as of the Valuation Date immediately preceding the date of a distribution pursuant to Section 6.6 below. A Participant’s Designated Beneficiary or Beneficiaries will be entitled to benefits under Section 6.6 after the death of the Participant or Former Participant.

(c) Disability. Upon termination of employment due to Disability, a Participant will be fully vested in his or her Individual Accounts and the Trustee will hold the Individual Accounts for the Participant’s benefit. The Administrator will credit and adjust the Individual Accounts of a disabled Participant, as provided in Articles III and IV, as of the Valuation Date immediately preceding the date of a distribution pursuant to Section 6.6 below. A disabled Participant will be entitled to benefits under Section 6.6 after the Participant’s date of Disability.

6.2 Eligibility Due To Severance from Employment

If a Participant’s employment with the Employer will terminate for any reason other than retirement, death, or Disability, the Participant will become vested in his or her Individual Accounts as provided in Section 6.3 below, and the Trustee will hold the Nonforfeitable portion of the Participant’s Account Balance in his Individual Accounts for the Participant’s benefit. The Administrator will credit and adjust the Individual Accounts of the terminated Participant, as provided in Articles III and IV, as of the Valuation Date immediately preceding the date of the distribution pursuant to Section 6.6 below. A terminated Participant will be entitled to benefits under this Section 6.2 and Section 6.3 after the Participant’s date of termination.

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6.3 Vesting

A Participant to whom Section 6.2 applies will be fully vested at all times in amounts credited to his Participant Contribution Accounts. In addition, the Participant will also be entitled to receive the Nonforfeitable percentage of the balance credited to the Participant’s Employer Contribution Accounts, determined under the following vesting schedule:

Years of Service	Nonforfeitable Percentage
Less than 2 years	0%
At least 2 but less than 3 years	20%
At least 3 but less than 4 years	40%
At least 4 but less than 5 years	60%
At least 5 but less than 6 years	80%
At least 6 years	100%

Notwithstanding the preceding, if a Participant has been granted credit for Years of Service with a Predecessor Employer, such Participant’s Nonforfeitable percentage will be no less than the Participant’s Nonforfeitable percentage with his Predecessor Employer.

The foregoing vesting schedule will also apply for any Plan Year in which the Plan is a Top-Heavy Plan.

6.4 Forfeiture

A Participant to whom this Article applies will forfeit that portion of the amount of his Individual Accounts to which the Participant is not entitled pursuant to Section 6.3 above.

(a) A Participant who separates from employment without a Nonforfeitable percentage in the Participant’s Employer Contribution Account will be deemed to have received a distribution of his Nonforfeitable Account Balance on the date of separation from employment.

(b) The amount forfeited under this Section, to the extent attributable to Employer contributions, will remain in the Trust Fund and will be allocated as provided under Section 4.2 as of the Accounting Date of the Plan Year during which the forfeiture event occurred.

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6.5 Determination of Amount of Vested Undistributed Account

(a) If the Trustee pays any amount outstanding to the credit of a Participant in the Participant’s Individual Accounts while the Participant is not fully vested in his Individual Accounts, other than a lump sum distribution that occurs no later than the last day of the second Plan Year following the Plan Year in which the Participant separates from Service, and prior to the Anniversary Date on which the Participant will incur a five (5) year Break in Service, the value of his or her vested and undistributed account will be held in a separate account and will be determined at any time prior to and including the Anniversary Date on which the Participant will incur a five (5) year Break in Service under the following formula.

X = P(AB + (R x D)) - (R x D).

For this formula, the variables represent the following factors:

X is the value of the vested portion of the Participant’s Account;

P is the Participant’s Nonforfeitable percentage at the relevant time;

AB is the Account Balance at the relevant time;

D is the amount of the distribution; and

R is the ratio of the Account Balance at the relevant time to the Account Balance after the distribution.

The nonvested portion of the Participant’s Individual Accounts will be forfeited on the Anniversary Date on which the Participant incurs a five (5) year Period of Severance.

6.6 Payment of Benefits

(a) As soon as administratively feasible after a Participant separates from employment, and the Administrator has credited and adjusted the Individual Accounts of a Participant, the Trustee will make payments to the Participant or his Designated Beneficiary or Beneficiaries pursuant to Article VIII, subject to the mandatory distribution requirements of Article VII. The Administrator will charge each payment to the Participant’s Individual Accounts and payments will continue until the Nonforfeitable Account Balance is paid to the Participant in full. Notwithstanding the preceding, in the event of a Participant’s death, the Administrator will distribute the Participant’s Individual Accounts no less rapidly than is required under Article VII.

(b) Unless a Participant elects otherwise, payment of benefits will commence not later than the sixtieth (60^th) day after the end of the Plan Year in which the latest of the following events occurs: (i) the date on which the Participant attains the Normal Retirement Age under the Plan; (ii) the tenth (10th) anniversary of the year in which the Participant commenced participation in the Plan; or (iii) the date on which the Participant terminates employment with the Employer. Notwithstanding the foregoing, a Participant may not defer commencement of benefits if such deferral would result in violation of Article VII.

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(c) Notwithstanding the foregoing paragraph, if a Participant separates from employment with the Employer and the Participant’s Nonforfeitable Account Balance is $1,000 or less, the Administrator may direct the Trustee to make immediate distribution to the Participant in the form of a lump sum distribution. For purposes of this paragraph, if the value of an Employee’s Nonfofeitable Account Balance is zero (0), the Employee will be deemed to have received a distribution of his or her Account Balance. However, if such Participant made any Salary Deferral Contributions to the Plan prior to separating from employment, such Participant will not be considered non-vested under the Plan and will not be deemed to have received a distribution of his or her Account Balance. In the event of an involuntary distribution greater than $1,000, but not in excess of $5,000, if the Participant does not elect to receive such distribution or have it paid directly to an Eligible Retirement Plan (as defined in Section 8.2) specified by the Participant in a Direct Rollover, then the Administrator may pay the distribution in a Direct Rollover on behalf of the Participant to an individual retirement account (described in Code Section 408(a)) designated by the Administrator.

The value of a Participant’s Nonforfeitable Account Balance will be determined without regard to that portion of the Account Balance that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16). If the value of the Participant’s Nonforfeitable Account Balance as so determined is $1,000 or less, the Plan will immediately distribute the Participant’s entire Nonforfeitable Account Balance.

ARTICLE VII

Mandatory Distribution of Benefits

The Administrator may not direct the Trustee to distribute the Participant’s Nonforfeitable Account Balance, to the Participant or Designated Beneficiary under a method of payment that, as of the Required Beginning Date, does not satisfy the minimum distribution requirements under Code Section 401(a)(9) and the corresponding Treasury Regulations, revenue rulings, notices, and other guidance published in the Internal Revenue Bulletin. Notwithstanding any provision of the Plan to the contrary, the Plan will (i) apply the minimum distribution requirements of Code Section 401(a)(9), including the incidental death benefit rule set forth under Code Section 401(a)(9)(G), and (ii) provide distributions in accordance with the applicable provisions of final Treasury Regulation Sections 1.401(a)(9)-1 through 1.401(a)(9)-9, the provisions of which are hereby incorporated into the Plan by reference.

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ARTICLE VIII

Forms of Distribution

8.1 Forms of Payment of Benefits

(a) Whenever a Participant, Former Participant, or Beneficiary is entitled to receive a distribution of benefits, he or she will receive such distribution in the form of a lump sum, payable in cash at the fair market value of the Nonforfeitable Account Balance when distributed.

(b) Notwithstanding the above, a Participant will have the right to receive payment of his benefits in any optional form of benefit payment to which that Participant would have been entitled under a plan sponsored by a Predecessor Employer in which that Participant was a Participant.

(c) Notwithstanding the foregoing, a distribution made pursuant to this Section will be subject to the immediate cashout provisions of Section 6.6.

8.2 Direct Rollover Benefit

(a) Direct Rollover. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this Section, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover.

(b) Definitions

(i) Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s Designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9), the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities) and any distribution made on account of hardship pursuant to Section 5.2(b) hereof.

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A portion of a distribution will not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee contributions or Roth elective deferrals that are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b), or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution that is includible in gross income and the portion of such distribution that is not so includible.

(ii) Eligible Retirement Plan will mean one of the following plans or arrangements, provided such plan or arrangement accepts the Distributee’s Eligible Rollover Distribution:

(A) An individual retirement account described in Code Section 408(a) or 408A(b);

(B) An individual retirement annuity plan described in Code Section 408(b)

(C) An annuity plan described Code Section 403(a);

(D) A qualified trust described in Code Section 401(a);

(E) An annuity contract described in Code Section 403(b); and

(F) An eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and that agrees to separately account for amounts transferred into such plan from this Plan.

The definition of Eligible Retirement Plan will also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the Alternate Payee under a qualified domestic relation order, as defined in Code Section 414(p).

(iii) Distributee. A Distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s Surviving Spouse and the Employee’s or former Employee’s spouse or former spouse who is the Alternate Payee under a qualified domestic relations order, as defined in Code Section 414(p) are Distributees with regard to the interest of the spouse or former spouse.

(iv) Direct Rollover. A Direct Rollover is a payment by the plan to the Eligible Retirement Plan specified by the Distributee.

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(c) Direct Rollover of Non-Spousal Distribution

(i) Non-Spouse Beneficiary Rollover Right. For distributions on and after January 1, 2010, an individual other than the Participant’s spouse who is a Designated Beneficiary under the Plan and Code Section 401(a)(9)(E) and the Treasury Regulations thereunder, by a Direct Rollover, may roll over all or any portion of his or her distribution to an individual retirement account the Beneficiary establishes for purposes of receiving the distribution. In order to be able to roll over the distribution, the distribution otherwise must satisfy the definition of an Eligible Rollover Distribution.

(ii) Certain Requirements not Applicable. Although a non-spouse Beneficiary may roll over directly a distribution as provided in this Subsection, any distribution made prior to January 1, 2010 is not subject to the Direct Rollover requirements of Code Section 401(a)(31) (including Code Section 401(a)(31)(B), the notice requirements of Code Section 402(f), or the mandatory withholding requirements of Code Section 3405(c)). If a non-spouse Beneficiary receives a cash distribution from the Plan, the distribution is not eligible for a “60-day” rollover right.

(iii) Trust Beneficiary. If the Participant’s named Beneficiary is a trust, the Plan may make a Direct Rollover to an individual retirement account on behalf of the trust, provided the trust satisfies the requirements to be a “designated beneficiary” within the meaning of Code Section 401(a)(9)(E).

(iv) Required Minimum Distributions not Eligible for Rollover. A non-spouse Beneficiary may not roll over an amount that is a required minimum distribution, as determined under Code Section 401(a)(9), applicable Treasury Regulations, and other Internal Revenue Service guidance. If the Participant dies before his or her Required Beginning Date and the non-spouse Beneficiary rolls over to an individual retirement account the maximum amount eligible for rollover, the Beneficiary may elect to use either the five (5)-year rule or the life expectancy rule, pursuant to Treasury Regulation Section 1.401(a)(9)-3, A-4(c), in determining the required minimum distributions from the individual retirement account that receives the non-spouse Beneficiary’s distribution.

8.3 Election to Receive Benefits

Notwithstanding the foregoing, a Participant who leaves the employment of the Employer before his or her Normal Retirement Date, if any, may elect to leave his or her Nonforfeitable Account Balance under the management of the Trustee, subject to the requirements of Section 6.6 and Article VII. The Trustee will invest and reinvest and will credit and charge the Individual Accounts with their proportionate share of gains and losses of the Trust Fund pursuant to Article IV until the Nonforfeitable Account Balance is paid out to the Former Participant under this Article. The Participant, Former Participant, or Beneficiary will elect the form or forms of payment of benefits permitted in Section 8.1 that the Administrator and Trustee will implement.

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8.4 Minority or Disability

During the minority or disability of an individual entitled to receive benefits under this Plan, the court may direct the Administrator to instruct the Trustee to make payments due the individual directly to the individual or to the spouse or a relative or to any individual or institution having custody of the individual. Neither the Administrator nor the Trustee will be required to cause or to verify the application of any payments so made, and the receipt of the payee, including the endorsement of a check or checks, will be conclusive to all interested parties.

8.5 Unclaimed Account Procedure

The Plan does not require either the Trustee or the Administrator to search for, or to ascertain the whereabouts of, any Participant or Beneficiary. At the time the Participant’s or Beneficiary’s benefit becomes distributable under Article VI, the Administrator, by certified or registered mail addressed to his or her last known address of record with the Administrator or the Employer, must notify any Participant or Beneficiary, that he or she is entitled to a distribution under this Plan. The notice must quote the provisions of this Section and otherwise must comply with the applicable notice requirements of Article VI. If the Participant, or Beneficiary, fails to claim his or her distributive share or make his or her whereabouts known in writing to the Administrator, then the Administrator will treat the Participant’s or Beneficiary’s unclaimed payable Account Balance as forfeited

If a Participant or Beneficiary who has incurred a Forfeiture of his or her Account Balance under the provisions of the first paragraph of this Section makes a claim, at any time, for the forfeited Account Balance, the Administrator must restore the Participant’s or Beneficiary’s forfeited Account Balance.

Upon termination of the Plan, in lieu of the unclaimed account procedure set forth in this Section, Section 15.6 will apply.

ARTICLE IX

Plan Sponsor and Employers

9.1 Employer Action

Whenever the Employer is permitted or required to do or perform any act under this Plan, it will be done and performed by a person duly authorized to do or perform the act by its legally constituted authority.

9.2 Plan Amendment

(a) At any time, the Administrator, by formal written action, may amend or modify this Plan in any manner it deems necessary or desirable, retroactively or prospectively, in order to conform the Plan and Trust Fund to any requirement for qualification of the Plan and Trust Fund under the Code or ERISA. Notwithstanding anything to the contrary, any other amendment to the Plan will require the approval or ratification of the Plan Sponsor’s Board of Directors (or a committee thereof).

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(b) A Plan amendment will be in writing and will take effect either after the approval of such amendment, as appropriate, by written resolution of the Administrator or the Plan Sponsor, or, if such authority has been delegated to an officer of the Plan Sponsor, then, alternatively, upon execution of the amendment by such authorized officer. Notwithstanding the preceding, an amendment that impacts the authority or responsibility of the Trustee will become effective only upon the consent of the Trustee.

(c) Unless it is made to secure the approval of the Commissioner of the Internal Revenue Service or other governmental bureau or agency, no amendment or modification of this Plan will:

(i) Operate retroactively to reduce or divest the then Nonfofeitable interest in any Individual Accounts or to reduce or divest any benefit then payable hereunder unless all Participants, Former Participants, and Beneficiaries then having Individual Accounts or benefit payments affected thereby will consent to the amendments or modifications;

(ii) Directly or indirectly affect any Participant’s Nonforfeitable percentage outside the protection of Treasury Regulation Section 1.411(a)(8);

(iii) Decrease a Participant’s accrued benefit, except to the extent permitted under Code Section 412(c)(8), and reduce or eliminate Code Section 411(d)(6) protected benefits determined immediately prior to the adoption date (or, if later, the effective date) of the amendment, except as permitted by applicable Treasury Regulations. (An amendment reduces or eliminates Code Section 411(d)(6) protected benefits if the amendment has the effect of either: (A) eliminating or reducing a retirement-type subsidy (as defined in applicable Treasury Regulations); or (B) except as provided by applicable Treasury Regulations, eliminating an optional form of benefit. The Administrator must disregard an amendment to the extent application of the amendment would fail to satisfy this paragraph. If the Administrator must disregard an amendment because the amendment would violate clause (A) or clause (B), the Administrator must maintain a schedule of the optional forms of benefit the Plan must continue for the affected Participant); or

(iv) Affect the rights, duties or responsibilities of the Trustees or the Administrator without the written consent or approval of the Trustee or Administrator.

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Notwithstanding the foregoing, no amendment will retroactively decrease a Participant’s accrued benefits or otherwise retroactively place greater restrictions or conditions on a Participant’s rights to Code Section 411(d)(6) protected benefits, even if the amendment adds a restriction or condition that is otherwise permitted under Code Section 411(a), unless otherwise permitted under Treasury Regulation Sections 1.411(d)-3 or 1.411(d)-4. An optional form of benefit hereunder may be eliminated prospectively, provided that the Plan, as amended, will satisfy the requirements of Treasury Regulation Sections 1.411(d)-3(c), (d), or (e) or 1.411(d)-4.

(d) If the vesting schedule described in Section 6.3 is amended, a Participant’s vested interest in any contribution to which the vesting schedule in Section 6.3 applied, will not be less than the Nonforfeitable percentage determined as of the later of the effective date of the amendment or the date of its adoption. A Participant with at least three (3) Years of Service on the last day of the election period described in this paragraph, may elect to have the Nonforfeitable percentage of the Employer Contribution Accounts determined without regard to the amendment. If a Participant fails to make an election, then the Participant will be subject to the new vesting schedule. The election period will commence on the date the amendment is adopted or deemed to be made and will end sixty (60) days after the latest of:

(i) The date of the adoption of the amendment;

(ii) The effective date of the amendment; or

(iii) The date the Participant receives written notice of the amendment from the Employer or Administrator.

(e) The Administrator, without the consent of any Employer, may amend the Plan and Trust, from time to time, in order to conform the Plan and Trust Fund to any requirement for qualification of the Plan and Trust Fund under the Code. The Administrator may not amend the Plan in any manner that would modify any election made by an Employer without the Employer’s written consent. Furthermore, the Administrator may not amend the Plan in any manner that would violate the proscriptions of this Section 9.2. The Trustee does not have the power to amend the Plan and Trust Fund.

9.3 Discontinuance, Termination of Plan

(a) The Plan Sponsor has the right, at any time, to suspend or discontinue its contributions under the Plan to the Trust Fund, and to terminate, at any time, the Plan and the Trust. The Plan will terminate on the first to occur of the following events:

(i) The date the Plan is terminated by action of the Plan Sponsor;

(ii) The date the Plan Sponsor is judicially declared bankrupt or insolvent, unless the proceeding authorized continued maintenance of the Plan; or

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(iii) The dissolution, merger, consolidation or reorganization of the Plan Sponsor or the sale by the Plan Sponsor of all or substantially all of its assets, unless the successor or purchaser elects and makes provision to continue the Plan, in which event the successor or purchaser will substitute itself as the Plan Sponsor under this Plan.

(b) Upon either full or partial termination of the Plan, or, if applicable, upon complete discontinuance of contributions to the Plan, the Individual Accounts of all Participants, Former Participants, and Beneficiaries will be and become fully vested and Nonforfeitable, notwithstanding the Nonforfeitable percentage that otherwise would apply. The Trustee, in its discretion, may convert some or all of the Trust Fund to cash, and will deduct therefrom all unpaid charges and expenses, except as the same may be paid by the Employer. The Administrator then will adjust the balance of all Individual Accounts on the basis of the net cash balance and fair market value of all property in the Trust Fund. Thereafter, the Trustee will distribute the amount to the credit of each Participant, Former Participant, and Beneficiary in cash, in kind, or partly in cash and partly in kind, as the Administrator will direct. Notwithstanding the foregoing, a distribution made because of a termination of the Plan will be subject to the mandatory distribution requirements of Article VII and the immediate cashout distribution provisions of Section 6.6.

(c) To the extent that this Plan is maintained as a multiple employer plan, the provisions governing the discontinuance or termination of the Plan with respect to an Employer that is not a Related Employer will be governed under Section 9.5.

9.4 Prohibition Against Reversion to Plan Sponsor or an Employer

Under no circumstances or conditions, other than those specifically provided herein, will the Trust Fund or any portion thereof revert to the Plan Sponsor or any Employer or be used for or diverted to purposes other than the exclusive benefit of the Participants, Former Participants, and Beneficiaries. No amendment or revocation by the Plan Sponsor of this Section may cause or permit any portion of the Trust Fund to revert to or become a property of the Plan Sponsor or any Employer.

9.5 Adoption by Related Employers

(a) With the written consent of the Plan Sponsor, any other association, corporation, or other business organization, may adopt this Plan and Trust in its entirety, participate herein and be known as an Employer. The participation of an Employer that is a recipient of Leased Employee services from the Plan Sponsor will be limited to such Leased Employees unless otherwise provided in the Employer’s participation agreement.

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(b) The following requirements will apply to any Employer who elects to adopt this Plan pursuant to this Article:

(i) Each Employer will be required to use the same Trustee as provided in this Plan.

(ii) The Trustee may, but will not be required to, commingle, hold, and invest as one (1) Trust Fund all contributions made by Employers and all increments thereof.

(iii) The transfer of any Participant from or to any Employer participating in this Plan, whether the Participant is an Employee of the Plan Sponsor or an Employer, will not affect the Participant’s rights under the Plan; all amounts credited to the Participant’s Individual Accounts, all accumulated Service with the transferor or Predecessor Employer, and the length of participation in the Plan will continue to the Participant’s credit.

(c) All rights and values forfeited by termination of employment will inure only to the benefit of the Employees and Participants of the Employer that employed the forfeiting Participant, except, if the Forfeiture is for an Employee whose Employer is a Related Employer. Should an Employee of one (“First”) Employer be transferred to a Related (“Second”) Employer the transfer will not cause the Employee’s Account Balance, generated while an Employee of the First Employer, in any manner or by any amount, to be forfeited. The Employee’s Account Balance for all purposes of the Plan, including length of Service, will be considered as though the Employee had always been employed by the Second Employer and as such had received contributions, forfeitures, earnings or losses, and appreciation or depreciation in value of assets totaling the amount so transferred.

(d) Upon an Employee’s transfer between Employers, the Employee involved will carry accumulated Service. No transfer will effect a termination of employment under this Plan and the Employer to which the Employee transfers will thereupon become obligated under this Plan to the Employee in the same manner as the Employer from whom the Employee transfers.

(e) Any expenses of the Plan and Trust Fund that are to be paid by the Employer or borne by the Trust Fund will be paid by each Employer in the same proportion that the total amount standing to the credit of all Participants employed by the Employer bears to the total amount standing to the credit of all Participants.

(f) Any contribution made by an Employer that is a Related Employer will be paid to and held by the Trustee for the exclusive benefit of the Employees of the Employer and the Beneficiaries of the Employees, subject to all the terms and conditions of this Plan. Any payment to the Employer made by an entity that is a recipient of the services of Leased Employees pursuant to a written agreement with the Employer that is deposited with the Trustee will be held by the Trustee for the exclusive benefit of the Participants providing Leased Employee services and their Beneficiaries, subject to all the terms and conditions of this Plan.

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(g) Based on information furnished by each Employer, the Administrator and the Trustee will keep separate books and records concerning the affairs of each Employer and of the Account Balances of the Participants of each Employer. All contributions or payments made by an Employer will be determined separately on the basis of its net profit and total Compensation paid.

(h) Each Employer indemnifies and holds harmless the other Employers, the Plan Sponsor, the Administrator, the members of the Committee, the Trustee, and each of their employees and agents from and against any and all loss resulting from liability to which the other Employers, the Plan Sponsor, the Administrator, the Trustees, or the members of the Committee, or their employees and agents, may be subjected by reason of the failure by the deemed separate plan of such Employer to satisfy the minimum coverage requirements under Code Section 410(b), the nondiscrimination requirements under Code Sections 401(a)(4), 401(k), and 401(m), Code Section 415 limitations, Code Section 416 top-heavy requirements, and any other qualification requirements that may be applicable to the Employer on a deemed separate plan basis. Further, the Employers and the Plan Sponsor will indemnify and hold harmless the Administrator, the members of the Committee, the Trustee or their employees and agents, from and against any and all loss resulting from liability to which the Administrator and the Committee, or the members of the Committee, and each of their employees and agents, may be subjected by reason of any act or conduct (except willful misconduct or gross negligence) in their official capacities in the administration of this Trust Fund or Plan or both, including all expenses reasonably incurred in their defense, in case the Employers or the Plan Sponsor fail to provide such defense. The indemnification provisions of this Section do not relieve the Administrator, any Committee member, or the Trustee, or their employees and agents, from any liability under ERISA for breach of a fiduciary duty. Moreover, the Administrator, the Committee members, the Trustee, the Plan Sponsor, the Employers, and their employees and agents, may execute a letter agreement further delineating the indemnification agreement of this Section, provided the letter agreement is consistent with and does not violate ERISA.

(i) Each Employer will be deemed to be a part of this Plan. However, each Employer will be deemed to have designated irrevocably the Plan Sponsor as its agent in all of its relations with the Trustee, the Committee, and the Administrator.

(j) Any Employer will be permitted to discontinue or revoke its participation in this Plan. Upon any discontinuance or revocation, satisfactory evidence thereof, and of any applicable conditions imposed will be delivered to the Trustee. The Trustee will thereafter transfer, deliver, and assign contracts and other Trust Fund assets allocable to the Participants of the Employer to the new plan as will have been designated by the Employer, if it has established a separate employee benefit pension plan for its employees. If no successor plan is designated, the Trustee will retain the assets for the Employees of the Employer under Article IX. No part of the corpus or income of the Trust Fund relating to an Employer will be used for or diverted to purposes other than the exclusive benefit of the Employees of that Employer and the Beneficiaries of the Employees.

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(k) A withdrawal by any Employer without any provision for the continuation of a plan for its Employees or, if the Employer is a recipient of the services of Leased Employees, for its Leased Employees, will constitute a partial termination of the Plan with respect to that Employer. Withdrawal from the Plan by any Employer will not affect the continued operation of the Plan solely with respect to the other Employers; provided, however, in the event of the withdrawal of an Employer that is a member of a group of Related Employers with respect to which the Plan constitutes a single plan and in the event that provision is made for the continuation of a defined contribution plan for its Employers separate and distinct from the Plan herein set forth, the share of the assets of the Trust Fund allocable to such group of Employers that is transferred to such other Plan will be determined by the Administrator subject to the provisions of Section 14.2.

9.6 Authority of Administrator over Employers

The Administrator will have the authority to make any and all necessary rules or regulations binding on all Employers and all Participants and Beneficiaries to effectuate the purposes of this Article.

9.7 Deficiency of Earnings or Profits

If any Employer is prevented in whole or in part from making a contribution to the Trust Fund that it otherwise would have made under the Plan because of having no current or accumulated earnings or profits, or because the earnings or profits are less than the contribution that it otherwise would have made, then so much of the contribution that the Employer was prevented from making may be made for the benefit of the participating Employees of the Employer by the other Employers that are Related Employers. The contribution by each other Employer will be limited to the proportion of its total current and accumulated earnings or profits remaining after adjustment for its contribution to the Plan made without regard to this Section, which the total prevented contribution bears to the total current and accumulated earnings or profits of all the Employers remaining after adjustment for all contributions made to the Plan without regard to this Section. An Employer on behalf of whose Employees a contribution is made under this Section will not reimburse the contributing Employer unless it has otherwise agreed to do so in writing.

ARTICLE X

The Committee

10.1 Committee Appointment

The Board of Directors of the Plan Sponsor (or a committee thereof) will appoint a Committee consisting of three (3) or more members. The Board of Directors may remove any member of the Committee at any time and a member may resign by written notice to the Board of Directors. Any vacancy in the membership of the Committee will be filled by appointment made by the Board of Directors, but pending the filling of any vacancy, the then members of the Committee may act under this Plan as though they alone constitute the full Committee. The Plan Sponsor will notify the Trustee promptly of the appointment of the Committee and of any change in the membership of the Committee. Upon the termination of the employment of a Committee member with the Employer and all Related Employers, his or her membership on the Committee will be deemed to be resigned effective as of the date on which the member’s employment is terminated.

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10.2 Committee Action and Procedure

(a) Any and all acts and decisions of the Committee will be by at least a majority of the then members. The Committee may delegate to any one or more of its members the authority to sign notices or other documents on its behalf or to perform ministerial acts for it, in which event the Trustee and any other person may accept the notice, document or act without question as having been authorized by the Committee.

(b) The Committee may, but need not, call or hold formal meetings, and any decisions made or actions taken pursuant to written approval of a majority of the then members will be sufficient.

(c) The Committee will maintain adequate records of its decisions, which records will be subject to inspection by the Employer and by any Participant, Former Participant, or Beneficiary, but only to the extent that they apply to the individuals.

(d) The Committee may designate one (1) of its members as chairman and one (1) of its members as secretary and may establish policies and procedures governing it if they are consistent with this Plan.

10.3 Committee Powers and Duties

The Committee will perform the duties and may exercise the powers and discretion given to it in this Plan, and its decisions and actions will be final and conclusive regarding all persons affected thereby. The Committee will exercise its discretion at all times in a nondiscriminatory manner. Subject to any limitations stated in this Plan, the Committee is authorized and empowered with the following powers, rights, and duties:

(a) To determine the rights of eligibility of an Employee to participate in the Plan, the value of a Participant’s Account Balance, and the Nonforfeitable percentage of each Participant’s Individual Accounts;

(b) To adopt rules of procedure and regulations necessary for the proper and efficient administration of the Plan provided the rules are consistent with the terms of this Plan;

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(c) To construe and enforce the terms of the Plan and the rules and regulations it adopts, including interpretation of the Plan documents and documents related to the Plan’s operation;

(d) To direct the Trustee concerning the crediting and distribution of the Trust Fund;

(e) To review and render decisions respecting a claim for, or denial of a claim for, a benefit under the Plan;

(f) To furnish the Employer with information that the Employer may require for tax or other purposes;

(g) To engage the service of agents whom it may deem advisable to assist it with the performance of its duties;

(h) To engage the services of an Investment Manager or Managers (as defined in ERISA Section 3(38)), each of whom will have full power and authority to manage, acquire or dispose, or direct the Trustee with respect to acquisition or disposition, of any Plan asset under its control; and

(i) To establish, in its sole discretion, a nondiscriminatory policy, pursuant to this Section, which the Trustee must observe in making loans, if any, to Participants and Beneficiaries.

10.4 Committee Reliance

The Trustee may rely without question on any notices or other documents received from the Committee. The Plan Sponsor and each Employer will furnish the Committee with all data and information available to the Employer, which the Committee may reasonably require to perform its functions under this Plan. The Committee may rely without question on any data or information furnished by the Plan Sponsor and each Employer.

10.5 Committee Authority

Any and all disputes that may arise involving Participants, Former Participants, Beneficiaries, and/or the Trustee will be referred to the Committee, and its decisions will be final and conclusive regarding all affected persons. Furthermore, if any issue arises concerning the meaning, interpretation or application of any provisions of this Plan, the decision of the Committee on any issue will be final.

10.6 Conflicts of Interest

Notwithstanding any other provisions of this Plan, no member of the Committee may vote or otherwise act on any matter involving the Committee member’s rights, benefits, or other participation under this Plan.

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10.7 Appointment of Agent and Legal Counsel

The Committee may engage agents to assist it and may engage legal counsel who may be counsel for the Plan Sponsor. All reasonable expenses incurred by the Committee will be paid by the Plan Sponsor.

10.8 Annual Accounting

As soon as administratively feasible after the last day of each Plan Year, but within the time prescribed by ERISA and the applicable Labor Regulations and at least annually, the Committee will advise each Participant, Former Participant, and Beneficiary for whom Individual Accounts are held under this Plan of the then balance in the Participant’s Individual Accounts and the other information ERISA requires to be furnished. No Participant except a member of the Committee will have the right to inspect the records reflecting the Individual Accounts of any other Participant.

10.9 Funding Policy

The Committee will review, not less often than annually, all pertinent Employee information and Plan data to establish the funding policy of the Plan and to determine the appropriate methods of carrying out the Plan’s objectives. The Committee must communicate periodically, as it deems appropriate, to the Trustee the Plan’s short-term and long-term financial needs so investment policy can be coordinated with Plan financial requirements.

ARTICLE XI

Administration

11.1 Administrator Appointment

The Committee will be the Administrator of this Plan and will be responsible for filing all reporting and disclosure documents required by the Department of Labor and the Internal Revenue Service in accordance with ERISA, the Code, and the respective regulations. Service of process on the Plan or Trust Fund may be obtained by personal service on the Employer or any Committee member.

11.2 Summary Plan Description

The Administrator will furnish a summary plan description to each Participant within ninety (90) days after becoming a Participant and to each Beneficiary receiving benefits under the Plan within ninety (90) days after beginning to receive benefits. If there is a modification or change in the Plan, the Administrator will furnish to each Participant and each Beneficiary who is receiving benefits, a summary description of the change or modification not later than two hundred ten (210) days after the end of the Plan Year in which the change is adopted.

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11.3 Summary Annual Report

The Administrator will furnish to each Participant and each Beneficiary receiving benefits a summary of the Annual Return/Report of the Plan containing a statement of the Plan assets and liabilities, receipts and disbursements, and other information fairly summarizing the Plan’s financial statement within two hundred ten (210) days after the close of each Plan Year, or an extended period as may be permitted by the Secretary of Labor.

11.4 Individual Benefit Statements

The Administrator will furnish to any Participant or Beneficiary receiving benefits, who requests in writing, a statement reporting the total benefits accrued and the Nonforfeitable benefits, if any, which have accrued or the earliest date on which benefits will become Nonforfeitable. In no event will a Participant or Beneficiary be entitled to receive the report described in this Section more than once in every twelve (12) month period.

11.5 Copies of Additional Documents

Upon written request from a Participant or Beneficiary receiving benefits, the Administrator will furnish a copy of any one (1) or all of the following documents: the latest updated summary plan description, the latest annual report, any terminal report, Trust agreement, contract or other instruments under which the Plan was established or is operated. The Administrator may make a reasonable charge to cover the cost of furnishing complete copies.

11.6 Documents Available for Examination

Copies of the Plan description and the latest annual report, Trust agreement, contract or other instruments under which the Plan was established or is operated will be available for examination at the principal office of the Employer by any Participant or Beneficiary receiving benefits. Examination may be made during reasonable hours in person or by agent, accountant, or attorney.

11.7 Notice of Participant Rights under ERISA

The Administrator will furnish to each Participant and to each Beneficiary receiving benefits information on their rights under the Plan and how the rights may be protected by law.

11.8 Notice to Participant on Participant Termination

The Administrator will furnish a statement to a Participant who terminated Service with the Employer for any of the reasons set forth in Articles V through VIII, describing the nature, amount and form of the Nonforfeitable Account Balance, if any, to which the Participant is entitled as soon as administratively feasible after the close of the Plan Year in which the Participant terminated Service.

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11.9 Notice to Trustee on Participant Termination

(a) As soon as practicable after a Participant terminates employment with the Employer for any of the reasons set forth in Article VI, the Administrator will give written notice to the Trustee, including the following information and directions that may be necessary or advisable under the circumstances:

(i) Name and address of the Participant;

(ii) Reason the Participant terminated employment with the Employer;

(iii) Name and address of the Beneficiary or Beneficiaries of a deceased Participant;

(iv) Nonforfeitable percentage or amount to which the Participant is entitled on termination of employment pursuant to Article VI; and

(v) Time, manner, and amount of payment to be made pursuant to the Participant’s election under Article VIII.

If a Former Participant or Beneficiary dies, the Administrator will give like notice to the Trustee, but only if the Administrator learns of the death.

(b) At any time and from time to time after giving the notice provided under this Section, the Administrator may modify the original notice or any subsequent notice by a further written notice or notices to the Trustee, but any action taken or payments made by the Trustee pursuant to a prior notice will not be affected by a subsequent notice.

(c) A copy of each notice provided under this Section will be mailed by the Administrator to the Participant, Former Participant, or Beneficiary involved, but the failure to send or receive the copy will not affect the validity of any action taken or payment made pursuant thereto.

(d) Upon receipt of any notice provided under this Section, the Trustee will promptly take any action and make any payments directed in the notice. The Trustee may rely on the information and directions in the notice absolutely and without question. However, the Trustee may inform the Administrator of any error or oversight that the Trustee believes to exist in any notice.

11.10 Claims for Benefits

Normally, whenever a Participant or Beneficiary becomes entitled to benefits under this Plan, the Administrator and the Trustee will automatically initiate procedures to provide for the payment of the benefits. If a Participant or Beneficiary believes that he or she is entitled to the payment of benefits under this Plan and no action is forthcoming from the Administrator or the Trustee, then the Participant or Beneficiary may file a written claim for benefits with the Administrator or the Trustee.

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11.11 Appeals of Decisions of the Committee

(a) If any Participant or Beneficiary (“Claimant”) files a claim for benefits under this Plan and the claim is denied in whole or in part, the Administrator will give notice of the decision to the Claimant in writing setting forth:

(i) The specific reasons for the denial;

(ii) A specific reference to pertinent provisions of the Plan, if any, upon which the denial is based;

(iii) A description of any additional material or information necessary for the Claimant to perfect the claim with an explanation of the necessity therefor; and

(iv) That any appeal the Claimant wishes to make of the adverse determination must be in writing to the Administrator within sixty (60) days after receipt of the Administrator’s notice of denial of benefits. The Administrator’s notice must further advise the Claimant that failure to appeal the action in writing within the sixty (60) day period will render the Administrator’s determination final, binding and conclusive.

(b) The written notice will be given to the Claimant as soon as administratively feasible after the decision is made, but not later than sixty (60) days after the claim is filed. The Claimant will have the right to be represented, to review pertinent documents and to present written and oral evidence.

(c) If the Claimant should appeal to the Administrator, the Claimant or the duly authorized representative, may submit, in writing, issues and comments the Claimant or the duly authorized representative considers pertinent. The Administrator will render the decision on the review and will set forth the specific reasons for the decision with specific references to pertinent provisions. The Administrator will render the decision in writing within sixty (60) days after receipt of the request for review unless special circumstances, such as the need for a hearing, require an extension that will not exceed an additional sixty (60) days.

11.12 Special Rules for Disability Claims

Notwithstanding Sections 11.10 and 11.11 above, the following rules and procedures will apply to claims and appeals arising on account of a Participant’s Disability.

(a) Disability Benefit Claims. The Administrator will review all claims for Disability benefits, and will notify the Claimant of any adverse benefit determination within a reasonable period of time, but generally no later than forty five (45) days after receipt of the claim by the Plan. Such notice will contain the information required under Section 11.11(a) above.

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(i) This initial forty five (45)-day period may be extended up to an additional thirty (30) days, where the Administrator determines that the extension is necessary due to matters beyond the control of the Plan. The Administrator will notify the Claimant of any extension before the expiration of the initial forty five (45)-day period. This notice will indicate the special circumstances requiring an extension and the date by which the Administrator expects to render a decision. This notice will also specifically explain the standards on which entitlement to a claim is based, the unresolved issues that prevent a decision, and any additional information needed to resolve these issues. Where the Administrator determines that a second thirty (30)-day extension is necessary due to matters beyond the control of the Plan, a similar extension notice will be provided to the Claimant before the end of the first thirty (30)-day extension period.

(ii) The Claimant will have an additional forty five (45) days from receipt of an extension notice to provide any additional specified information. The period for making the benefit determination will be suspended until the Claimant provides this information. A Claimant’s failure to respond to a request for additional information within forty five (45) days, however, will lead to an adverse determination on his or her claim.

(b) Disability Benefit Appeals. A Claimant may file an appeal of an adverse determination on a Disability benefit claim within one hundred eighty (180) days following receipt of a notification of the adverse determination.

(i) The review will not afford deference to the initial adverse determination, and the review will be conducted by an appropriate Named Fiduciary of the Plan who is neither the individual who made the initial adverse determination, nor that individual’s subordinate.

(ii) In deciding the appeal of any adverse determination that is based in whole or in part on medical judgment, the appropriate Named Fiduciary will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment. The health care professional engaged for this purpose will be an individual who was neither consulted in connection with the initial adverse determination, nor any subordinate of such person. The Named Fiduciary will identify any medical or vocational experts whose advice was obtained in connection with a Claimant’s adverse determination, without regard to whether the advice was relied upon in making the benefit determination.

(iii) The Claims Administrator will notify the claimant of its benefit determination in writing within a reasonable period following receipt of the claimant’s request for review, but no later than forty five (45) days after receipt of the Claimant’s appeal.

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ARTICLE XII

Investment of Trust Assets

12.1 Appointment of Trustee

The Plan Sponsor will determine the number of Trustees, will appoint such Trustees, and may at any time, and from time to time, increase or decrease the number of Trustees. The Plan Sponsor may remove any Trustee at any time and appoint a successor Trustee or Trustees or reduce the number of Trustees (but not to less than one). The Trustee or Trustees will have such rights, powers, and duties as will from time to time be specified in or determined pursuant to the Trust Agreement. The Trust Agreement will form a part of the Plan, and the Trust Fund assets will be administered in accordance with the terms of the Plan and the Trust Agreement.

12.2 Investment of Accounts

(a) All Individual Accounts will be invested and reinvested by the Trustee in accordance with Participant direction, as provided herein.

(i) Each Participant, in his written application for participation or through such other means as may be authorized by the Administrator, if any, will direct the Administrator and the Trustee as to which Investment Fund(s) he wishes to utilize and the percentage of his Individual Accounts he wishes to have invested in each fund.

(ii) A Participant may change his designation of the manner for investment of such Participant’s Individual Accounts, or current contributions made on behalf of or by the Participant, or both, to any other manner permitted hereunder. This change may be made in writing to the Administrator or through such other means as may be authorized by the Administrator, if any. A change will be applicable as soon as administratively feasible following its delivery to the Trustee. In order to comply with applicable federal or state securities laws, the Administrator may establish such rules with respect to the change of investment designation by Participants as it will deem necessary or advisable to prevent possible violations of such laws.

(iii) To the extent a Participant fails to direct the investment of all or any portion of his or her Individual account, the Administrator will direct the Trustee to invest such Individual Accounts in one of the Investment Funds available for the Participants to choose among, in accordance with applicable Labor Regulations.

The Administrator may permit a Participant to make an election under this Section through any electronic or telephonic means authorized by the Administrator.

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(b) Investment Funds. The Administrator will select the “Investment Funds” available under the Plan in accordance with a separate written investment policy. The Administrator will select and maintain such Investment Funds in accordance with the Administrator’s written investment policy. Such Investment Funds will be communicated to Participants in writing. All Individual Accounts will be allocated by the Administrator to the Investment Funds specified in the separate written investment policy. Dividends, interest, and other distributions will be reinvested in the same Investment Fund from which they are received.

Except as otherwise provided, the assets of each Investment Fund will be invested exclusively in shares of the registered investment company designated by the Administrator, provided that such shares constitute securities described in ERISA Section 401(b)(1). Amounts invested in any such Investment Fund in amounts estimated by the Trustee to be needed for cash withdrawals, or in amounts too small to be reasonably invested, or in amounts that the Trustee deems to be in the best interest of the Participants, may be retained by the Trustee in cash or invested temporarily.

12.3 Income and Expenses

(a) The dividends, capital gains distributions, and other earnings received on an Investment Fund that is specifically credited to a Participant’s or Former Participant’s separate Individual Accounts under the Plan will be allocated to such separate Individual Accounts and immediately reinvested, to the extent practicable, in additional shares of such Investment Fund.

(b) Fees charged by the Trustee and other expenses of operating the Trust will be paid by the Employers or, in the absence of such payments (that are not obligatory), out of the general Trust Fund assets and charged to the separate Individual Accounts of all Participants and Former Participants under the Plan in the ratio that the fair market value of each such Individual Account bears to the total fair market value of all separate Individual Accounts; provided, however, that such amounts will be adjusted to reflect any revenue sharing payments received from an Investment Fund.

12.4 Exclusive Benefit

The Plan and the Trust Fund are established and will be maintained for the exclusive benefit of the Participants, Former Participants, and their Beneficiaries. Subject to the exceptions expressly set forth in the Plan or the Trust Agreement, no part of the Trust Fund assets may ever revert to an Employer or be used for or diverted to purposes other than the exclusive benefit of the Participants, Former Participants, and Beneficiaries.

12.5 Valuation

The value of each Participant’s Individual Accounts will be determined as of each Valuation Date, on the basis of the fair market value of the assets allocated to each such Participant’s Individual Accounts, as appraised by the Trustee.

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(a) As of each Valuation Date, the Administrator will determine the fair market value of each Investment Fund being administered by the Trustee. With respect to each such Investment Fund, the Administrator will determine (i) the change in value between the current Valuation Date and the then last preceding Valuation Date, (ii) the net gain or loss resulting from expenses paid (including fees and expenses, if any, which are to be charged to such Investment Fund), and (iii) realized and unrealized gains and losses.

The transfer of funds to or from an Investment Fund and payments, distributions, and withdrawals from an Investment Fund to provide benefits under the Plan for Participants or Beneficiaries will not be deemed to be gains, expenses, or losses of an Investment Fund.

As of each Valuation Date, the Administrator will direct the Trustee to allocate the net gain or loss of each Investment Fund on the Valuation Date to the accounts of Participants participating in such Investment Fund on such Valuation Date. Contributions and rollovers received and credited to Participants’ Individual Accounts as of such Valuation Date, or as of an earlier date since the last preceding Valuation Date will not be considered in allocating gains or losses allocated to Participants’ accounts.

(b) The reasonable and equitable decision of the Administrator as to the value of each Investment Fund, and of any Individual Account as of each Valuation Date will be conclusive and binding upon all persons having any interest, direct or indirect, in the Investment Funds or in any account.

12.6 Investment Policy

The Trustee will be obliged only to use good faith and to exercise its honest judgment as to what investments are from time to time in the best interests of the Trust Fund and the Participants and their Beneficiaries. Furthermore, the Trustee may hold any portion of the Trust Fund in cash and uninvested whenever it deems such holding necessary or advisable.

12.7 Divestment of Employer Securities

(a) Rule Applicable to Salary Deferral Contributions. For Plan Years beginning after December 31, 2006, if any portion of the Individual Accounts of a Participant (including a Beneficiary entitled to exercise the rights of a Participant) attributable to Salary Deferral Contributions is invested in publicly-traded Employer securities, the Participant may elect to direct the Plan to divest any such securities, and to reinvest an equivalent amount in other investment options that satisfy the requirements of Subsection (c).

(b) Rule Applicable to Employer Contributions. If any portion of a Participant’s Individual Accounts attributable to Matching Contributions or Profit Sharing Contributions is invested in publicly-traded Employer securities, then a Participant who has completed at least three (3) Years of Service, or a Beneficiary of any deceased Participant entitled to exercise the right of a Participant, may elect to direct the Plan to divest any such securities, and to reinvest an equivalent amount in other investment options which satisfy the requirements of Subsection (c).

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(c) Investment Options. For purposes of this Section, other investment options must include not less than three (3) investment options, other than Employer securities, to which the Participant may direct the proceeds of divestment of Employer securities required by this Section, each of which is diversified and has materially different risk and return characteristics. The Plan must provide reasonable divestment and reinvestment opportunities at least quarterly. Except as provided in regulations, the Plan may not impose restrictions or conditions on the investment of Employer securities that the Plan does not impose on the investment of other Plan assets, other than restrictions or conditions imposed by reason of the application of securities laws or a condition permitted under Internal Revenue Service Notice 2006-107 or other applicable guidance.

(d) Treatment as Publicly-Traded Employer Securities. Except as provided in Treasury Regulations or in Code Section 401(a)(35)(F)(ii) (relating to certain controlled groups), a plan holding Employer securities that are not publicly-traded Employer securities is treated as holding publicly-traded Employer securities if any Employer corporation, or any member of a controlled group of corporations which includes such Employer corporation (as defined in Code Section 401(a)(35)(F)(iii)) has issued a class of stock that is a publicly-traded Employer security.

ARTICLE XIII

Participant Loans

13.1 General

Unless otherwise provided by the Administrator, the Plan authorizes the Trustee to make loans on a nondiscriminatory basis to a Participant or Beneficiary in accordance with the written loan policy established by the Administrator, provided (i) the loan policy satisfies the requirements of Code Section 72(p); (ii) loans are available to all Participants and Beneficiaries on a reasonably equivalent basis and are not available in a greater amount for Highly Compensated Employees than for other Employees; (iii) any loan is adequately secured and bears a reasonable rate of interest; (iv) the loan provides for repayment within a specified time; (v) the default provisions of the note prohibit offset of the Participant’s Nonforfeitable Account Balance prior to the time the Trustee otherwise would distribute the Participant’s Nonforfeitable Account Balance; and (vii) the loan otherwise conforms to the exemption provided by Code Section 4975(d)(1).

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13.2 Loan Policy

If the Administrator adopts a loan policy, pursuant to Section 10.3(i), the loan policy must be a written document and must include (i) the identity of the person or positions authorized to administer the Participant loan program; (ii) a procedure for applying for the loan; (iii) the criteria for approving or denying a loan; (iv) the limitations, if any, on the types and amounts of loans available; (v) the procedure for determining a reasonable rate of interest; (vi) the types of collateral that may secure the loan; and (vii) the events constituting default and the steps the Plan will take to preserve Plan assets in the event of default. This Section specifically incorporates any written loan policy adopted by the Administrator as part of this Plan.

13.3 Special Rules under USERRA for Loan Repayments.

Loan repayments will be suspended under this Plan, as permitted under Code Section 414(u)(4), on behalf of those Participants who are on an authorized leave of absence pursuant to qualified military service.

ARTICLE XIV

Rollovers, Mergers, and Direct Transfers

14.1 Participant Rollover Contributions

Any Participant who has the Employer’s written consent and who has filed with the Trustee the form prescribed by the Administrator may contribute cash or other property to the Trust other than as a voluntary contribution if the contribution is a Rollover Contribution that the Code permits an Employee to transfer either directly or indirectly from one qualified plan to another qualified plan. Before accepting a Rollover Contribution, the Trustee may require an Employee to furnish satisfactory evidence that the proposed transfer is in fact a Rollover Contribution that the Code permits an Employee to make to a qualified plan. A Rollover Contribution is not an Annual Addition for purposes of Code Section 415.

An Eligible Employee, prior to satisfying the Plan’s conditions, may make a Rollover Contribution to the Trust Fund to the same extent and in the same manner as a Participant. If an Employee makes a Rollover Contribution to the Trust Fund prior to satisfying the Plan’s eligibility conditions, the Administrator and Trustee must treat the Eligible Employee as a Participant for all purposes of the Plan except the Eligible Employee is not a Participant for purposes of sharing in Employer contributions or Participant Forfeitures under the Plan until the Employee actually becomes a Participant in the Plan. If the Eligible Employee has a termination of employment prior to becoming a Participant, the Trustee will distribute the Rollover Account to the individual.

For any Rollover Contribution, the following requirements will be met:

(a) The Administrator will maintain a Participant’s Rollover Contributions in a separate Rollover Account.

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(b) Except with respect to a Plan asset properly subject to Employer, Participant, or Administrator direction of investment, the Trustee will invest the Rollover Contribution in a segregated investment Rollover Account for the Participant’s sole benefit unless the Trustee, in its sole discretion, agrees to invest the Rollover Contribution as part of the Trust Fund. The Trustee will not have any investment responsibility for a Participant’s segregated Rollover Account. The Participant, however, from time to time, may direct the Trustee in writing on the investment of the segregated Rollover Account in an Investment Fund. A Participant’s segregated Rollover Account alone will bear any extraordinary expenses resulting from investments made at the direction of the Participant. As of the Valuation Date, the Administrator will allocate and credit the net income or charge the net loss from a Participant’s segregated Rollover Account and credit or charge respectively the increase or decrease in the fair market value of the assets of a segregated Rollover Account solely to that Rollover Account. The Trustee is not liable nor responsible for any loss resulting to any Beneficiary, nor to any Participant, because of any sale or investment made or other action taken pursuant to and in accordance with the direction of the Participant. In all other respects, the Trustee will hold, administer, and distribute a Rollover Contribution in the same manner as any Employer contribution made to the Trust Fund.

(c) A Participant’s Rollover Contributions will not be forfeitable nor reduce in any way the obligations of the Employer under this Plan.

(d) The Plan will accept a direct rollover of an eligible rollover distribution from: (i) a qualified plan described in Code Section 401(a) or 403(a), excluding after-tax employee contributions; (ii) an annuity contract described in Code Section 403(b), excluding after-tax employee contributions; and (iii) an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.

(e) The Plan will accept a Participant Rollover Contribution of the portion of a distribution from an individual retirement account or annuity described in Code Section 408(a) or 408(b) that is eligible to be rolled over and would otherwise be includible in gross income.

14.2 Mergers and Direct Transfers

To the extent directed by the Administrator, the Trustee possesses the specific authority to enter into merger agreements or direct transfer of assets agreements with the trustees of other retirement plans described in Code Section 401(a), and to accept the direct transfer of Plan assets or to transfer plan assets, as a party to any agreement. Further, the Trustee may permit the transfer of Plan assets to an individual retirement account or an individual retirement annuity. However, the Trustee, before any merger or direct transfer is consummated, will be satisfied that the holding of any transferred assets is permitted by the transferee trusts. In addition, the Trustee must reasonably determine, prior to permitting such a transfer, that the transferee plan will continue the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10) on any transferred amounts that are attributable to Salary Deferral Contributions of Participants. When the Trustee is so satisfied, the Trustee will accept the direct transfer of plan assets or will cause to be transferred the assets directed to be transferred. The Trustee may accept a direct transfer of plan assets on behalf of an Employee prior to the date the Employee satisfies the Plan’s eligibility conditions. If the Trustee accepts a direct transfer of plan assets, the Administrator and Trustee must treat the Employee as a Participant for all purposes of the Plan except that the Employee is not a Participant for purposes of sharing in any Employer contributions or Forfeitures under the Plan until the Employee actually becomes a Participant in the Plan.

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The Trustee may not consent to, or be a party to, any merger or consolidation with another plan or to a transfer of assets and liabilities to another plan, unless, immediately after the merger, consolidation or transfer the surviving plan provides each Participant a benefit equal to or greater than the benefit each Participant would have received had the plan terminated immediately before the merger, consolidation, or transfer.

14.3 Rules Concerning Certain Rollovers, Mergers, and Direct Transfers

The Trustee will hold, administer, and distribute the transferred assets as a part of the Trust Fund and the Trustee must maintain a separate Individual Accounts for the benefit of the Employees on whose behalf the Trustee accepted the transfer to reflect the value of the transferred assets.

The Plan will preserve all Code Section 411(d)(6) protected benefits with respect to those transferred assets, in the manner described in Section 9.2(c)(iii).

If the Plan receives a direct transfer, by merger or otherwise, of Salary Deferral Contributions, or amounts treated as Salary Deferral Contributions, under a plan with a Code Section 401(k) arrangement, the distribution restrictions of Code Sections 401(k)(2) and 401(k)(10) continue to apply to those transferred Salary Deferral Contributions.

ARTICLE XV

Exclusive Benefit

15.1 Exclusive Benefit

Except as otherwise provided, no Employer will have a beneficial interest in any asset of the Trust Fund and no part of any asset in the Trust Fund may ever revert to or be repaid to an Employer, either directly or indirectly. Further, prior to the satisfaction of all liabilities with respect to the Participants and their Beneficiaries under the Plan, no part of the corpus or income of the Trust Fund, or any asset of the Trust Fund, may be used for, or diverted to, purposes other than the exclusive benefit of the Participants or their Beneficiaries. No amendment or revocation by the Administrator or Plan Sponsor of this Section may cause or permit any portion of the Trust Fund to revert to or become a property of the Employer.

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15.2 Denial of Request for Approval

Any contribution to the Trust Fund associated with this Plan is conditioned on qualification of the Plan under applicable Code Sections and of the exemption of the Trust Fund created under the Plan under Code Section 501(a). If the Commissioner of the Internal Revenue Service, upon the Plan Sponsor’s request for approval of this Plan and Trust, determines that the Plan is not qualified or the Trust Fund is not exempt, then the Trustee may return to the Employer, within one (1) year after the date of final disposition of the Plan Sponsor’s request for initial approval, any contribution made by the Employer, and any increment attributable to the contribution.

15.3 Mistake of Fact

Notwithstanding any contrary provision in this Plan, if a contribution is made by an Employer by a mistake of fact, the contribution may be returned to the Employer within one (1) year after the payment of the contribution. The amount of the mistaken contribution is equal to the excess of (i) the amount contributed over (ii) the amount that would have been contributed had there not occurred a mistake of fact. Earnings attributable to mistaken contributions may not be returned to the Employer, but losses attributable thereto will reduce the amount to be returned.

15.4 Disallowance of Deduction

Notwithstanding any contrary provision in this Plan, any contributions by the Employer to the Plan and Trust are conditioned on the deductibility of the contribution by the Employer under the Code. To the extent any deduction is disallowed, the Employer, within one (1) year following a final determination of the disallowance, whether by agreement with the Internal Revenue Service or by final decision in a court of competent jurisdiction, may demand repayment of the disallowed contribution, and the Trustee will return the contribution within one (1) year following the disallowance. Earnings attributable to excess contributions may not be returned to the Employer, but losses attributable thereto will reduce the amount to be returned.

15.5 Spendthrift Clause

Except as provided below, no Participant, Former Participant, or Beneficiary will have the right to anticipate, assign, or alienate any benefit provided under the Plan and the Trustee will not recognize any anticipation, assignment or alienation. Furthermore, a benefit under the Plan is not subject to attachment, garnishment, levy, execution, or other legal or equitable process. All provisions of this Plan will be for the exclusive benefit of those designated herein. These restrictions will not apply in the following case(s):

(a) Distributions Pursuant to Qualified Domestic Relations Orders. The Administrator may direct the Trustee under the nondiscriminatory policy adopted by the Administrator to pay an Alternate Payee designated under a qualified domestic relations order as defined in Code Section 414(p) or any domestic relations order entered before January 1, 1985 if payment of benefits pursuant to the order has commenced as of that date. To the extent provided under a qualified domestic relations order, a former spouse of a Participant will be treated as the spouse or for all purposes of the Plan.

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Effective April 6, 2007, a domestic relations order that otherwise satisfies the requirements for a qualified domestic relations order will not fail to be qualified: (i) solely because the order is issued after, or revises, another domestic relations order; or (ii) solely because of the time at which the order is issued, including issuance after the Participant’s death.

(b) Participant Loans. If a Participant, Former Participant, or Beneficiary who has become entitled to receive payment of benefits under this Plan is indebted to the Trustee, by virtue of a Participant loan, the Administrator may direct the Trustee to pay the indebtedness and charge it against the Account Balance of the Participant, Former Participant, or Beneficiary.

(c) Distributions Under Certain Judgments and Settlements. Nothing contained in this Plan prevents the Trustee from complying with a judgment or settlement that requires the Trustee to reduce a Participant’s benefits under the Plan by an amount that the Participant is ordered or required to pay to the Plan if each of the following criteria are satisfied:

(i) The order or requirement must arise –

(A) Under a judgement or conviction for a crime involving the Plan;

(B) Under a civil judgment (including a consent order or decree) entered by a court in an action brought in connection with an actual or alleged violation of Part 4 of Title I of ERISA; or

(C) Under a settlement agreement with either the Secretary of Labor or the Pension Benefit Guarantee Corporation and the Participant in connection with an actual or alleged violation of Part 4 of Title I of ERISA by a fiduciary or any other person.

(ii) The decree, judgment, order, or settlement expressly provides for the offset of all or part of the amount ordered or required to be paid to the Plan against the Participant’s benefits under the Plan.

15.6 Termination

Upon termination of the Plan, in lieu of the distribution provisions of Article VIII, the Administrator will direct the Trustee to distribute each Participant’s Nonforfeitable Account Balance, in a single sum, as soon as administratively feasible after the later of the termination of the Plan or the receipt of a favorable determination letter from the Internal Revenue Service, if an application is filed, irrespective of the present value of the Participant’s Nonforfeitable Account Balance and whether the Participant consents to that distribution. This paragraph applies only if:

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(a) The Plan does not provide an annuity option;

(b) The Plan is a profit sharing plan on its termination date; and

(c) As of the period between the Plan termination date and the final distribution of assets, the Employer does not maintain any other defined contribution plan (other than an employee stock ownership plan).

For Participants or Beneficiaries who cannot be located upon Plan termination, and whose Nonforfeitable Account Balance exceeds $1,000, to liquidate the Trust, the Trustee will purchase a deferred annuity contract, distribute the benefits to an individual retirement account, or transfer the account to an ongoing qualified plan of the Employer or a Related Employer. If the Administrator distributes the lost Participant’s or Beneficiary’s benefits to an individual retirement account or purchases an annuity, and the Participant’s or Beneficiary’s whereabouts remain unknown for the duration of the escheat period, the benefits will ultimately escheat to the state under applicable state law.

Notwithstanding the foregoing, distributions may not be made following termination of the Plan if the Plan Sponsor establishes or maintains an alternative defined contribution plan as described in Treasury Regulation Section 1.401(k)-1(d)(4)(i).

ARTICLE XVI

Construction

16.1 Headings

The headings in this Plan are for convenience only and will not be considered in construing this Plan.

16.2 Context

In this Plan, wherever the context of the Plan dictates, words used in the masculine may be construed in the feminine, the plural includes the singular and the singular includes the plural.

16.3 Employment Not Guaranteed

Nothing contained in this Plan, or regarding the establishment of the Plan or Trust Fund, or any modification or amendment to the Plan or Trust Fund, or in the creation of any Individual Accounts, or the payment of any benefit, will be construed as giving any Employee, Participant, or Beneficiary any right to continue in the employment of the Employer, any legal or equitable right against the Administrator, against the Employer, its stockholders, officers, or directors, or against the Trustee, except as expressly provided by the Plan, the Trust Fund, ERISA, or by separate agreement. Employment of all persons by the Employer will remain subject to termination by the Employer to the same extent as if this Plan had never been executed.

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16.4 Waiver of Notice

Any person entitled to notice under the Plan may waive the notice unless the Code or Treasury Regulations prescribe the notice or ERISA specifically or impliedly prohibits a waiver.

16.5 State Law

This Plan and each of its provisions will be construed and their validity determined by the laws of the State of Oklahoma and applicable Federal law to the extent Federal statute supersedes Oklahoma law.

16.6 Parties Bound

This Plan will be binding on all persons entitled to benefits under the Plan, their respective heirs and legal representatives, on the Employer, its successors and assigns, and on the Trustee, the Administrator, and their successors.

16.7 Severance

If any provisions of this Plan will be invalid or unenforceable, the remaining provisions will continue to be fully effective.

16.8 Employees in Qualified Military Service

Notwithstanding any provision of this Plan to the contrary, contributions, benefits, and Service credits, with respect to qualified military service, will be provided in accordance with Code Section 414(u).

(a) Death Benefits. In the case of a death occurring on or after January 1, 2007, if a Participant dies while performing qualified military service (as defined in Code Section 414(u)), the survivors of the Participant are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the Participant had resumed and then terminated employment on account of death.

(b) Benefit Accrual. Continued benefit accruals pursuant to the HEART Act are not provided under the Plan.

(c) Differential Wage Payments. For years beginning after December 31, 2008,

(i) An individual receiving a differential wage payment, as defined by Code Section 3401(h)(2), is treated as an Employee of the Employer making the payment;

(ii) The differential wage payment is treated as Compensation; and

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(iii) The Plan is not treated as failing to meet the requirements of any provision described in Code Section 414(u)(1)(C) by reason of any contribution or benefit which is based on the differential wage payment.

(d) Severance from Employment. Notwithstanding Subsection (c)(i), for purposes of Code Section 401(k)(2)(B)(i)(I), an individual is treated as having been severed from employment during any period the individual is performing service in the uniformed services described in Code Section 3401(h)(2)(A).

(i) If an individual elects to receive a distribution by reason of severance from employment, death, or Disability, the individual may not make Salary Deferral Contributions during the six (6)-month period beginning on the date of the distribution.

(ii) Subsection (c)(iii) applies only if all employees of the Employer performing service in the uniformed services described in Code Section 3401(h)(2)(A) are entitled to receive differential wage payments (as defined in Code Section 3401(h)(2)) on reasonably equivalent terms, and, if eligible to participate in a retirement plan maintained by the Employer, to make contributions based on the payments on reasonably equivalent terms (taking into account Code Sections 410(b)(3), (4), and (5)).

IN WITNESS WHEREOF, the Plan Sponsor, SONIC CORP., has caused this instrument to be executed on October 1, 2010.

SONIC CORP.
By:	/s/ Claudia San Pedro
Title:	Vice President of Investor Relations and Treasurer

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EX-10.23

Exhibit 10.23

EMPLOYMENT AGREEMENT

This Agreement is entered into effective as of the 5^th day of August, 2010, by and between Sonic Corp. (the “Corporation”), a Delaware corporation, and Danielle Vona (the “Employee”).

RECITALS

Whereas, the Employee is currently serving as the Vice President and Chief Marketing Officer of the Corporation and is an integral part of its management; and

Whereas, the Corporation’s Board of Directors (the “Board”) has determined that it is appropriate to support and encourage the attention and dedication of certain key members of the Corporation’s management, including Employee, to their assigned duties without distraction and potentially disturbing circumstances arising from the possibility of a Change in Control (herein defined) of the Corporation; and

Whereas, the Corporation desires to continue the services of Employee, whose experience, knowledge and abilities with respect to the business and affairs of the Corporation will be extremely valuable to the Corporation; and

Whereas, the parties hereto desire to enter into this Agreement setting forth the terms and conditions of the employment relationship of the Corporation and Employee.

Now, therefore, it is agreed as follows:

ARTICLE I

Term of Employment

1.1 Term of Employment. The Corporation shall employ Employee for a period of one year from the date hereof (the “Initial Term”).

1.2 Extension of Initial Term. Upon each annual anniversary date of this Agreement, this Agreement shall be extended automatically for successive terms of one year each, unless either the Corporation or the Employee gives contrary written notice to the other not later than the annual anniversary date. As used herein, “Term” shall mean the Initial Term together with any renewal term(s) pursuant to this Section 1.2.

1.3 Termination of Agreement and Employment. The Corporation may terminate this Agreement and the Employee’s employment at any time effective upon written notice to the Employee. The Employee may terminate this Agreement and the Employee’s employment only after at least 30 days’ written notice to the Corporation, unless otherwise agreed by the Corporation.

ARTICLE II

Duties of the Employee

Employee shall serve as the Vice President and Chief Marketing Officer of the Corporation. Employee shall do and perform all services, acts, or things necessary or advisable to manage and conduct the business of the Corporation consistent with such position subject to such policies and procedures as may be established by the Board.

ARTICLE III

Compensation

3.1 Salary. For Employee’s services to the Corporation as the Vice President and Chief Marketing Officer, Employee shall be paid a salary at the annual rate of $250,000 (herein referred to as “Salary”), payable in 24 equal installments on the 1^st and 15^th day of each month. On the first day of each calendar year during the term of this Agreement with the Corporation, Employee shall be eligible for an increase in Salary based on an evaluation of Employee’s performance during the past year with the Corporation. During the term of this Agreement, the Salary of the Employee shall not be decreased at any time from the Salary then in effect unless agreed to in writing by the Employee.

3.2 Bonus. The Employee shall be entitled to participate in an equitable manner with other officers of the Corporation in discretionary cash bonuses as authorized by the Board. Such bonuses shall be paid not later than the 15^th day of the third month following the later of the end of the Corporation’s tax year or the Employee’s tax year in which the bonuses are no longer subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

ARTICLE IV

Employee Benefits

4.1 Use of Automobile. The Corporation shall provide Employee with either the use of an automobile for business and personal use or a cash car allowance in accordance with the established company car policy of the Corporation. The Corporation shall pay all expenses of operating, maintaining and repairing the automobile provided by the Corporation and shall procure and maintain automobile liability insurance in respect thereof, with such coverage insuring each Employee for bodily injury and property damage. Reimbursement of automobile-related expenses shall be made as soon as practicable after the request for reimbursement is submitted, but in no event later than the last day of the calendar year next following the calendar year in which such expense was incurred. Additionally, neither the provision of in-kind benefits nor the reimbursement of expenses in any one calendar year shall affect the level or amount of in-kind benefits to be provided, or the expenses eligible for reimbursement, in any other calendar year. The Employee’s right to reimbursement or in-kind benefits under this Section 4.1 is not subject to liquidation or exchange for another benefit.

4.2 Medical, Life and Disability Insurance Benefits. The Corporation shall provide Employee with medical, life and disability insurance benefits in accordance with the established benefit policies of the Corporation.

4.3 Working Facilities. Employee shall be provided adequate office space, secretarial assistance, and such other facilities and services suitable to Employee’s position and adequate for the performance of Employee’s duties.

4.4 Business Expenses. Employee shall be authorized to incur reasonable expenses for promoting the business of the Corporation, including expenses for entertainment, travel, and similar items. The Corporation shall reimburse Employee for all such expenses upon the presentation by Employee, from time to time, of an itemized account of such expenditures. Reimbursement shall be made as soon as practicable after the request for reimbursement is submitted, but in no event later than the last day of the calendar year next following the calendar year in which such expense was incurred. Additionally, the reimbursement of expenses in any one calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. The Employee’s right to reimbursement under this Section 4.4 is not subject to liquidation or exchange for another benefit.

4.5 Vacations. Employee shall be entitled to an annual paid vacation commensurate with the Corporation’s established vacation policy for officers. The timing of paid vacations shall be scheduled in a reasonable manner by the Employee.

4.6 Disability Benefit. Upon disability (as defined herein) of the Employee, the Employee shall be entitled to receive up to six months’ of Employee’s Salary (less any deductions required by law) payable in 12 equal installments of  ¹/24 of the Salary, with the first installment occurring on the first regularly scheduled payroll date following the determination of disability and the remaining installments occurring on a semi-monthly basis thereafter, provided that such disability payments shall continue only so long as the disability continues, and provided further that each such disability payment shall be reduced by any benefit payment the Employee is entitled to receive under the Corporation’s group disability insurance plans during the corresponding payroll period.

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4.7 Term Life Insurance. The Corporation shall purchase term life insurance on the life of the Employee having a face value of four times the Employee’s Salary (to be changed as salary adjustments are made) or the face value of life insurance that can be purchased based upon the Employee’s health history with the Corporation paying the standard premium rate for term insurance under its then current insurance program at the Employee’s age and assuming good health, whichever amount is lesser, provided that such insurance can be obtained by the Corporation in a manner which meets the requirements for deductibility by the Corporation under Section 79 of the Code.

4.8 Compensation Defined. Compensation shall be defined as all monetary compensation and all benefits described in Articles III and IV hereunder (as adjusted during the term hereof).

ARTICLE V

Termination

5.1 Separation from Service. For purposes of this Agreement, the terms “terminate,” “terminated” and “termination” with respect to the Employee’s employment mean a termination of the Employee’s employment that constitutes a “separation from service” within the meaning of the default rules of Section 409A of the Code.

5.2 Death. Employee’s employment hereunder shall be terminated upon the Employee’s death.

5.3 Disability. The Corporation may terminate Employee’s employment hereunder in the event Employee is disabled and such disability continues for more than 180 days. “Disability” shall be defined as the inability of Employee to render the services required of him under this Agreement, with or without a reasonable accommodation, as a result of physical or mental incapacity.

5.4 Cause.

(a) The Corporation may terminate Employee’s employment hereunder for Cause. For the purpose of this Agreement, “Cause” shall mean (i) the willful and intentional failure by Employee to substantially perform Employee’s duties hereunder, other than any failure resulting from Employee’s incapacity due to physical or mental incapacity, or (ii) commission by Employee, in connection with Employee’s employment by the Corporation, of an illegal act or any act (though not illegal) which is not in the ordinary course of the Employee’s responsibilities and exposes the Corporation to a significant level of undue liability. For purposes of this paragraph, no act or failure to act on Employee’s part shall be considered to have met either of the preceding tests unless done or omitted to be done by Employee without a reasonable belief that Employee’s action or omission was in the best interest of the Corporation.

(b) Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for cause unless such action is ratified by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting held within 30 days of such termination (after reasonable notice to Employee and an opportunity for Employee to be heard by members of the Board) confirming that Employee was guilty of the conduct set forth in this Section 5.4. Ratification by the Board will be effective as of the original date of termination of Employee.

5.5 Compensation Upon Termination for Cause or Upon Resignation By Employee. Except as otherwise set forth in Section 5.8 hereof, if Employee’s employment shall be terminated for Cause or if Employee shall resign Employee’s position with the Corporation, the Corporation shall pay Employee’s Compensation only through the last day of Employee’s employment by the Corporation. The Corporation shall then have no further obligation to Employee under this Agreement. If the Board, pursuant to Section 5.4(b), votes to classify Employee’s termination as “not for cause,” then Employee shall be compensated pursuant to Section 5.6 below.

5.6 Compensation Upon Termination Other Than For Cause Or Disability. Except as otherwise set forth in Section 5.8 hereof, if the Corporation shall terminate Employee’s employment other than for Cause or Disability, the Corporation shall continue to be obligated to pay 12 months’ of Employee’s Salary (payable in 24 equal installments, with the first installment occurring on the first regularly scheduled payroll date following the date of termination, and the remaining installments occurring on a semi-monthly basis thereafter), but shall not be obligated to provide any other benefits described in Articles III and IV hereof, except to the extent required by law.

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5.7 Compensation Upon Non-Renewal of Agreement. Except as otherwise set forth in Section 5.8 hereof, if the Corporation shall give notice to Employee in accordance with Section 1.3 hereof that this Agreement will not be renewed but Employee’s employment is not terminated, the Corporation shall continue to be obligated to pay Employee’s Salary for a period of 12 months beginning on the date notice of non-renewal is given, on regularly scheduled payroll dates, but shall not be obligated to provide any other benefits described in Articles III and IV hereof, except to the extent required by law.

5.8 Termination of Employee or Resignation by Employee for Good Reason Following a Change in Control. If at any time within the first 12 months subsequent to a Change in Control, the Employee’s employment with the Corporation is terminated other than as provided for in Section 5.2, 5.3 or 5.4 hereof, or the Corporation violates any provision of this Agreement or Employee shall resign his or her employment for Good Reason (as defined herein), the Corporation shall be obligated to pay to Employee a severance payment in an amount equal to two times the Employee’s compensation payable under paragraph 5.6 above, but in no event to exceed an amount equal to $1.00 less than three times the mean average annual compensation paid to Employee by the Corporation and any of its subsidiaries during the five calendar years ending before the date on which the Change in Control occurred (or if Employee was not employed for that entire five-year period, then the mean average annual compensation paid to employee during such shorter period, with the Employee’s compensation annualized for any calendar year during which the employee was not employed for the entire calendar year); provided, however, that if the severance payment under this Section 5.8, either alone or together with any other payments or compensation which Employee has a right to receive from the Corporation, would constitute a “parachute payment” (as defined in Section 280G (or any equivalent term defined in any successor or equivalent provision) of the Code), then such severance payment shall be reduced to the largest amount as will result in no portion of the severance payment under this Section 5.8 being subject to the excise tax imposed by Section 4999 (or any successor or equivalent provision) of the Code. For the purpose of this Section 5.8, the Employee’s annual compensation from the Corporation and its subsidiaries for a given year shall equal Employee’s compensation as reflected on Employee’s Form W-2 for that year (unless the Employee was not employed for the entire calendar year, in which case Employee’s Form W-2 compensation for such year shall be annualized). The determination of any reduction in severance payment under this Section 5.8 pursuant to the foregoing provision shall be conclusive and binding on the Corporation.

If the Change in Control implicated by this Section 5.8 is also a “change in control event” within the meaning of the default rules of the final regulations promulgated under Section 409A(a)(2)(A)(v) of the Code, then the severance payment due under this Section 5.8 shall be made in a lump sum, payable no later than the 15th day of the third month following the later of the end of the Corporation’s tax year or the Employee’s tax year in which occurs the Employee’s effective date of termination under this Section 5.8. If the Change in Control is not a “change in control event” within the meaning of the default rules of the final regulations promulgated under Section 409A(a)(2)(A)(v) of the Code, the severance payment contemplated by this Section 5.8 shall be made in 12 semi-monthly installment payments, beginning on the first regularly scheduled payroll date following the Employee’s effective date of termination under this Section 5.8. For purposes of this Section 5.8, the Employee’s effective date of termination shall mean, as applicable, (x) the effective date of such termination of employment by the Corporation or (y) the effective date of the Employee’s resignation for Good Reason, which date shall be stated in the Employee’s written notice to the Corporation of his resignation for Good Reason and shall be no later than 60 days following the date of such notice.

“Good Reason” shall mean any of the following which occur during the term of this Agreement without Employee’s express written consent:

In the Event of a Change in Control:

(a) the assignment to Employee of duties inconsistent with Employee’s position, office, duties, responsibilities and status with the Corporation immediately prior to a Change in Control; or, a change in Employee’s titles or offices as in effect immediately prior to a Change in Control; or, any removal of Employee from or any failure to re-elect Employee to any such position or office, except in connection with the termination of Employee’s employment by the Corporation for Disability or Cause or as a result of Employee’s death or by Employee other than for Good Reason as set forth in this Section 5.8(a); or

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(b) a reduction by the Corporation in Employee’s Salary as in effect as of the date of this Agreement or as the same may be increased from time-to-time during the term of this Agreement or the Corporation’s failure to increase (within 12 months of the Employee’s last increase in Salary) Employee’s Salary after a Change in Control in an amount which at least equals, on a percentage basis, the highest percentage increase in salary for all officers of the Corporation or any parent or affiliated company effected in the preceding 12 months; or

(c) the failure of the Corporation to provide Employee with the same fringe benefits (including, without limitation, life insurance plans, medical or disability plans, retirement plans, incentive plans, stock option plans, stock purchase plans, stock ownership plans, or bonus plans) that were provided to Employee immediately prior to the Change in Control, or with a package of fringe benefits that, if one or more of such benefits varies from those in effect immediately prior to such Change in Control, is in Employee’s sole judgment substantially comparable in all material respects to such fringe benefits taken as a whole; or

(d) relocation of the Corporation’s principal executive offices to a location outside of Oklahoma City, Oklahoma, or Employee’s relocation to any place other than the location at which Employee performed Employee’s duties prior to a Change in Control, except for required travel by Employee on the Corporation’s business to an extent substantially consistent with Employee’s business travel obligations at the time of the Change in Control; or

(e) any failure by the Corporation to provide Employee with the same number of paid vacation days to which Employee is entitled at the time of the Change in Control; or

(f) the failure of a successor to the Corporation to assume the obligation of this Agreement as set forth in Section 7.1 herein.

5.9 Change in Control. For the purposes of this Agreement, the phrase “change in control” shall mean any of the following events:

(a) Any consolidation or merger of the Corporation in which the Corporation is not the continuing or surviving corporation or pursuant to which shares of the Corporation’s capital stock would convert into cash, securities or other property, other than a merger of the Corporation in which the holders of the Corporation’s capital stock immediately prior to the merger have the same proportionate ownership of capital stock of the surviving corporation immediately after the merger;

(b) Any sale, lease, exchange or other transfer (whether in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation;

(c) The stockholders of the Corporation approve any plan or proposal for the liquidation or dissolution of the Corporation;

(d) Any person (as used in Section 13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the beneficial owner (within the meaning of Rule 13D-3 under the Exchange Act) of 50% or more of the Corporation’s outstanding capital stock;

(e) During any period of two consecutive years, individuals who at the beginning of that period constitute the entire Board of Directors of the Corporation cease for any reason to constitute a majority of the Board of Directors unless the election or the nomination for election by the Corporation’s stockholders of each new director received the approval of the Board of Directors by a vote of at least two-thirds of the directors then and still in office and who served as directors at the beginning of the period; or

(f) The Corporation becomes a subsidiary of any other corporation.

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ARTICLE VI

Obligation to Mitigate Damages;

No Effect on Other Contractual Rights

6.1 Mitigation. The Employee shall not have any obligation to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise. However, all payments required under the terms of this Agreement shall cease 30 days after the acceptance by the Employee of employment by another employer; provided that, this limitation shall not apply to payments due under paragraph 5.8, above.

6.2 Other Contractual Rights. The provisions of this Agreement, and any payment provided for hereunder shall not reduce any amount otherwise payable, or in any way diminish Employee’s existing rights, or rights which would accrue solely as a result of passage of time under any employee benefit plan or other contract, plan or arrangement of which Employee is a beneficiary or in which Employee participates.

ARTICLE VII

Successors to the Corporation

7.1 Assumption. The Corporation will require any successor or assignee (whether direct or indirect, by purchase, merger, consolidation or otherwise) of all or substantially all of the business and/or assets of the Corporation, by agreement in form and substance reasonably satisfactory to Employee, to expressly, absolutely and unconditionally assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession or assignment had taken place. Any failure by the Corporation to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement.

7.2 Employee’s Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable by Employee’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amounts are still payable to Employee hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee’s devisee, legatee or other designee or, if there is no such designee, to Employee’s estate.

ARTICLE VIII

Restrictions on Employee

8.1 Confidential Information. During the term of the Employee’s employment and for a period of 12 months thereafter, the Employee shall not divulge or make accessible to any party any Confidential Information, as defined below, of the Corporation or any of its subsidiaries, except to the extent authorized in writing by the Corporation or otherwise required by law. The phrase “Confidential Information” shall mean the unique, proprietary and confidential information of the Corporation and its subsidiaries, consisting of: (1) confidential financial information regarding the Corporation or its subsidiaries, (2) confidential recipes for food products; (3) confidential and copyrighted plans and specifications for interior and exterior signs, designs, layouts and color schemes; (4) confidential methods, techniques, formats, systems, specifications, procedures, information, trade secrets, sales and marketing programs; (5) knowledge and experience regarding the operation and franchising of Sonic drive-in restaurants; (6) the identities and locations of Sonic’s franchisees, Sonic drive-in restaurants, and suppliers to Sonic’s franchisees and drive-in restaurants; (7) knowledge, financial information, and other information regarding the development of franchised and company-store restaurants; (8) knowledge, financial information, and other information regarding potential acquisitions and dispositions; and (9) any other confidential business information of the Corporation or any of its subsidiaries. The Employee shall give the Corporation written notice of any circumstances in which Employee has actual notice of any access, possession or use of the Confidential Information not authorized by this Agreement.

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8.2 Restrictive Covenant. During the term of Employee’s employment, the Employee shall not retain in or have any interest, directly or indirectly, in any business competing with the business being conducted by the Corporation or any of its subsidiaries, without the Corporation’s prior written consent. For the six month period immediately following the termination of Employee’s employment, the Employee shall not engage in or have any interest, directly or indirectly, in any fast food restaurant business that has a menu similar to that of a Sonic drive-in restaurant (such as hamburgers, hot dogs, onion rings and similar items customarily sold by Sonic drive-in restaurants), or which has an appearance similar to that of a Sonic drive-in restaurant (such as color pattern, use of canopies, use of speakers and menu housings for ordering food, or other items that are customarily used by a Sonic drive-in restaurant), and which operates such restaurants within a three mile radius of any Sonic drive-in restaurant.

ARTICLE IX

Miscellaneous

9.1 Indemnification. To the full extent permitted by law, the Board shall authorize the payment of expenses incurred by or shall satisfy judgments or fines rendered or levied against Employee in any action brought by a third-party against Employee (whether or not the Corporation is joined as a party defendant) to impose any liability or penalty on Employee for any act alleged to have been committed by Employee while employed by the Corporation unless Employee was acting with gross negligence or willful misconduct. Payments authorized hereunder shall include amounts paid and expenses incurred in settling any such action or threatened action.

9.2 Resolution of Disputes. The following provisions shall apply to any controversy between the Employee and the Corporation and its subsidiaries and the Employee (including any director, officer, employee, agent or affiliate of the Corporation and its subsidiaries) whether or not relating to this Agreement.

(a) Arbitration. The parties shall resolve all controversies 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:

(1) 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 and all procedural matters relating to the arbitration.

(2) Selection of Arbitrators. The parties shall select one arbitrator within 10 days after the filing of a demand and submission in accordance with the Rules. If the parties fail to agree on an arbitrator within that 10-day period or fail to agree to an extension of that period, the arbitration shall take place before an arbitrator selected in accordance with the Rules.

(3) 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.

(4) 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.

(b) Attorneys’ Fees and Costs. The prevailing party to the arbitration shall have the right to an award of its reasonable attorneys’ fees and costs (including the cost of the arbitrator) incurred after the filing of the demand and submission. If the Corporation or any of its subsidiaries prevails, the award shall include an amount for that portion of the administrative overhead reasonably allocable to the time devoted by the in-house legal staff of the Corporation or any subsidiary.

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(c) Excluded Controversies. At the election of the Corporation or its subsidiaries, the provisions of this Section 9.2 shall not apply to any controversies relating to the enforcement of the covenant not to compete or the use and protection of the trademarks, service marks, trade names, copyrights, patents, confidential information and trade secrets of the Corporation or its subsidiaries, including (without limitation) the right of the Corporation or its subsidiaries to apply to any court of competent jurisdiction for appropriate injunctive relief for the infringement of the rights of the Corporation or its subsidiaries.

(d) Other Rights. The provisions of this Section 9.2 shall not prevent the Corporation, its subsidiaries, or the Employee from exercising any of their rights under this agreement, any other agreement, or under the common law, including (without limitation) the right to terminate any agreement between the parties or to end or change the party’s legal relationship.

9.3 Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the subject matter of this Agreement and replaces and supersedes all other written and oral agreements and statements of the parties relating to the subject matter of this Agreement.

9.4 Notices. Any notices required or permitted to be given under this Agreement shall be sufficient if in writing and sent by mail to Employee’s residence, in the case of Employee, or to its principal office, in the case of the Corporation.

9.5 Waiver of Breach. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party.

9.6 Amendment. No amendment or modification of this Agreement shall be deemed effective unless or until executed in writing by the parties hereto.

9.7 Validity. This Agreement, having been executed and delivered in the State of Oklahoma, its validity, interpretation, performance and enforcement will be governed by the laws of that state.

9.8 Section Headings. Section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

9.9 Counterpart Execution. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.

9.10 Exclusivity. Specific arrangements referred to in this Agreement are not intended to exclude Employee’s participation in any other benefits available to executive personnel generally or to preclude other compensation or benefits as may be authorized by the Board from time to time.

9.11 Partial Invalidity. If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

9.12 Section 409A of the Code.

(a) Notwithstanding anything herein to the contrary, if, at the time of the Employee’s termination of employment with the Corporation, the Employee is a “specified employee” within the meaning of Section 409A of the Code, as determined under the Corporation’s established methodology for determining specified employees, then, solely to the extent necessary to avoid the imposition of additional taxes, penalties or interest under Section 409A of the Code, any payments to the Employee hereunder which provide for the deferral of compensation, within the meaning of Section 409A of the Code (which shall not include any compensation that is exempt from Section 409A of the Code), and which are scheduled to be made as a result of the Employee’s termination of employment during the period beginning on the date of the Employee’s date of termination and ending on the six-month anniversary of such date shall be delayed and not paid to the Participant until the first business day following such sixth month anniversary date, at which time such delayed amounts will be paid to the Employee in a cash lump sum. If the Employee dies on or after the date of the Employee’s date of termination and prior to the payment of the delayed amounts pursuant to this Section 9.12, any amount delayed pursuant to this Section 9.12 shall be paid to the Employee’s estate within 30 days following the Employee’s death.

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(b) To the extent this Agreement is subject to Section 409A of the Code, the Corporation and Employee intend all payments under this Agreement to comply with the requirements of such section, and this Agreement shall, to the extent reasonably practicable, be operated and administered to effectuate such intent.

In witness whereof, the Corporation has caused this Agreement to be executed and its seal affixed hereto by its officers thereunto duly authorized; and the Employee has executed this Agreement, as of the day and year first above written.

The Corporation:	Sonic Corp.
	By:	/s/ W. Scott McLain
		Name:    W. Scott McLain
		Title:      President
The Employee:	/s/ Danielle Vona
	Name:	Danielle Vona

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EX-10.25

Exhibit 10.25

1991 SONIC CORP. DIRECTORS’ STOCK OPTION PLAN

(as amended and restated October 14, 2009)

1. Purpose.

The purposes of the Plan are to enable the Company to attract and retain the services of members of the Board and to provide them with increased motivation and incentive to exert their best efforts on behalf of the Company by enlarging their personal stake in the Company.

2. Definitions.

A. As used in the Plan, the following definitions apply to the terms indicated below:

“Board” means the Board of Directors of the Company.

“Change in Control” means the occurrence of any of the following:

(a) any “person” (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), an “Acquiring Person”) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act, a “Beneficial Owner”), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities;

(b) an Acquiring Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company’s then outstanding securities and, during the two-year period commencing at the time such Acquiring Person becomes the Beneficial Owner of such securities, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof;

(c) the Company’s shareholders approve an agreement to merge or consolidate the Company with another corporation (other than a corporation 50% or more of which is controlled by, or is under common control with, the Company) and, during the period commencing six months before such approval and ending two years after such approval, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof; and

(d) during any two year period, individuals who at the date on which the period commences constitute a majority of the Board cease to constitute a majority thereof as a result of one or more contested elections for positions on such Board.

“Committee” means the committee appointed by the Board from time to time to administer the Plan pursuant to Section 4 hereof.

“Company” means Sonic Corp., a Delaware corporation.

“Fair Market Value” of a Share on a given day means, if Shares are listed on an established stock exchange or exchanges, the highest closing sales price of a Share as reported on such stock exchange or exchanges; or if not so reported, the average of the bid and asked prices, as reported on the National Association of Securities Dealers Automated Quotation System. If the price of a Share shall not be so quoted the Fair Market Value shall be determined by the Committee taking into account all relevant facts and circumstances.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

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“Option” means a right to purchase Shares under the terms and conditions of the Plan as evidenced by an option certificate in such form not inconsistent with the Plan, as the Committee may adopt for general use or for specific cases from time to time.

“Participant” means a director, eligible to participate in the Plan under Section 5 hereof, to whom an Option is granted under the Plan.

“Plan” means the 1991 Sonic Corp. Directors’ Stock Option Plan, including any amendments to the Plan.

“Shares” means shares of the Company’s Common Stock, par value $0.01 per share, now or hereafter owned by the Company as treasury stock or authorized but unissued shares of the Company’s Common Stock, subject to adjustment as provided in the Plan.

B. As used herein, the masculine includes the feminine, the plural includes the singular, and the singular includes the plural.

3. Plan Adoption and Term.

A. The Plan shall become effective upon its adoption by the Board, and Options may be issued upon such adoption and from time to time thereafter; provided, however, that the Plan shall be submitted to the Company’s shareholders for their approval at the next annual meeting of shareholders, or prior thereto at a special meeting of shareholders expressly called for such purpose, or by a unanimous consent of all shareholders executed in writing; and provided further, that the approval of the Company’s shareholders shall be obtained within twelve months of the date of adoption of the Plan. If the Plan is not approved at the annual meeting or special meeting by the affirmative vote of a majority of all shares entitled to vote upon the matter, or by unanimous written consent of all the shareholders, then the Plan and all options then outstanding hereunder shall forthwith automatically terminate and be of no force and effect.

B. Subject to the provisions hereinafter contained relating to amendment or discontinuance, the Plan shall continue in effect for ten years from the date of its adoption by the Board. No Option may be granted hereunder after such ten-year period.

4. Administration of the Plan.

The Plan shall be administered by the Committee, consisting of not less than three persons, who shall be directors of the Company, and who shall be appointed by the Board to serve at the pleasure of the Board. Except as otherwise expressly provided in the Plan, the Committee shall have sole and final authority to interpret the provisions of the Plan and the terms of any Option issued under it and to promulgate and interpret such rules and regulations relating to the Plan and Options as it may deem necessary or desirable for the administration of the Plan. The Committee shall report to the Board the names of those granted Options and the terms and conditions of each Option granted by it. The Committee may correct any defect in the Plan or any Option in the manner and to the extent it shall deem expedient to carry the Plan into effect and shall be the sole and final judge of such expediency.

No member of the Committee shall be liable for any action taken or omitted or any determination made by him in good faith relating to the Plan, and the Company shall indemnify and hold harmless each member of the Committee and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any act or omission in connection with the Plan, unless arising out of such person’s own fraud or bad faith.

5. Eligibility.

Each director of the Company, who is not an employee of the Company or any of its subsidiaries, in office as of the effective date of the Plan or as of any date thereafter (prior to the expiration or termination of the Plan), shall be eligible to participate in the Plan.

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6. Stock Subject to the Plan.

Subject to adjustment as provided in Section 12 hereof, Options may be issued pursuant to the Plan with respect to a number of Shares that, in the aggregate, does not exceed 1,139,063 Shares. If, prior to the termination of the Plan, an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased Shares subject thereto shall again be available for the purposes of the Plan.

7. Options.

A. Each Participant shall be granted an Option to purchase 50,625 Shares upon the Participant’s initial election to the Board. Effective October 14, 2009, each Participant will be granted an Option to purchase 6,750 shares for each year of service on the Board beginning with the later of 1994 or the first year of the Participant’s second three-year term on the Board and continuing for each additional year of service by the Participant on the Board. The Options shall be granted each year on the date of the annual meeting of shareholders of the Company (the “Date of Grant”). The price per share at which Shares may be purchased pursuant to any Option granted under the Plan shall be the Fair Market Value of a Share on the Date of Grant of the Option.

B. All Options granted under the Plan shall be evidenced by an option certificate in such form, not inconsistent with the Plan, as the Committee may adopt for general use or for specific use from time to time.

8. Duration of Options.

No Option granted hereunder shall be exercisable after the expiration of ten years from the Date of Grant. All Options shall be subject to earlier termination as provided elsewhere in the Plan.

9. Conditions Relating to Exercise of Options.

A. The following percentage of Options (rounded up to the nearest whole number of Options) granted to Participants shall become exercisable on the following anniversaries of the Date of Grant:

Anniversary of Date of Grant	Percentage
First	33 1/3
Second	33 1/3
Third	33 1/3

Once exercisable, an Option may be exercised at any time prior to its expiration, cancellation or termination as provided in the Plan. Partial exercise is permitted from time to time provided that no partial exercise of an Option shall be for a number of Shares having a purchase price of less than $1,000 or for a fractional number of Shares.

B. Unless the Committee determines otherwise, no Option or amount payable under, or interest in, the Plan shall be transferable by a Participant except by will or the laws of descent and distribution or otherwise be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; provided, however, that the Committee may, in its discretion and subject to such terms and conditions as it shall specify, permit the transfer of an Option for no consideration to a Participant’s family members or to one or more trusts or partnerships established in whole or in part for the benefit of one or more of such family members (collectively, “Permitted Transferees”); and provided further that this sentence shall not preclude a Participant from designating a Beneficiary to receive the Participant’s outstanding Option following the death of the Participant. Any Option transferred to a Permitted Transferee shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Participant. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or by a Permitted Transferee to whom such Option has been transferred in accordance with this Section 9.B.

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C. An Option shall be exercised by the delivery to the Company of a written notice signed by the Participant, which specifies the number of Shares with respect to which the Option is being exercised and the date of the proposed exercise. Such notice shall be delivered to the Company’s principal office, to the attention of its Secretary, no less than three business days in advance of the date of the proposed exercise and shall be accompanied by the applicable option certificate evidencing the Option. A Participant may withdraw such notice at any time prior to the close of business on the proposed date of exercise, in which case the option certificate evidencing the Option shall be returned to him.

D. Payment for Shares purchased upon exercise of an Option shall be made at the time of exercise either in cash, by certified check or bank cashier’s check or in Shares owned by the Participant and valued at their Fair Market Value on the date of exercise, or partly in Shares with the balance in cash or by certified check or bank cashier’s check. Any payment in Shares shall be effected by their delivery to the Secretary of the Company, endorsed in blank or accompanied by stock powers executed in blank.

E. Certificates for Shares purchased upon exercise of Options shall be issued and delivered as soon as practicable following the date the Option is exercised. Certificates for Shares purchased upon exercise of Options shall be issued in the name of the Participant.

F. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Shares to be issued upon the exercise thereof have been registered under the Securities Act of 1933 and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration. Prior to the occurrence of a Change in Control, the Company shall not be under any obligation to register under applicable federal or state securities laws any Shares to be issued upon the exercise of an Option granted hereunder, or to comply with an appropriate exemption from registration under such laws in order to permit the exercise of an Option and the issuance and sale of the Shares subject to such Option. If the Company chooses to comply with such an exemption from registration, the Shares issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Shares represented thereby, and the Committee may also give appropriate stop-transfer instructions to the transfer agent to the Company. On or after the occurrence of a Change in Control, the Company shall be under an obligation to register under applicable federal or state securities law any Shares to be issued upon the exercise of an Option granted hereunder, or to comply with an appropriate exemption from registration under the rules and regulations promulgated by the Securities and Exchange Commission in order to permit the exercise of an Option and the issuance and sale of the Shares subject to such Option.

G. Any person exercising an option or transferring or receiving Shares shall comply with all regulations and requirements of any governmental authority having jurisdiction over the issuance, transfer, or sale of capital stock of the Company, and as a condition to receiving any Shares, shall execute all such instruments as the Company in its sole discretion may deem necessary or advisable.

H. Notwithstanding Paragraph A of this Section 9, upon the occurrence of a Change in Control any Option granted under the Plan and outstanding at such time shall become fully and immediately exercisable and shall remain exercisable until its expiration or termination as provided in the Plan. Notwithstanding the foregoing, any Option that would otherwise become exercisable on a date that is not more than six months after the Date of Grant shall instead become exercisable on the first day following the close of such six month period.

I. In the event that a Participant shall cease to be director by reason of such Participant’s “Retirement,” as hereafter defined, any outstanding Option held by such Participant shall be or immediately become fully exercisable as to the total number of Shares subject thereto (whether or not exercisable to that extent prior to such date) and shall remain so exercisable but only for a period of three years after commencement of such Retirement, at the end of which time it shall terminate (unless such Option expires earlier by its terms). “Retirement” is defined as the Participant’s termination of service on the Board of Directors of the Company after the Participant has both reached the age of 65 and provided ten consecutive years of service as a director of the Company. In the event a Participant ceases to be a director under conditions not satisfying the definition of “Retirement” set forth above, any outstanding Option held by such Participant shall be or immediately become fully exercisable as to the total number of Shares subject thereto (whether or not exercisable to that extent prior to such date) and shall remain so exercisable but only for a period of three months after commencement of such retirement, at the end of which time it shall terminate (unless such Option expires earlier by its terms).

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J. In the event that a Participant shall cease to be a director by reason of such Participant’s disability within the meaning of Section 22(e)(3) of the Code, any outstanding Option held by such Participant shall be or immediately become fully exercisable as to the total number of Shares subject thereto (whether or not exercisable to that extent prior to such date) and shall remain so exercisable but only for a period of three years after such date, at the end of which time it shall terminate (unless such Option expires earlier by its terms).

K. In the event of the death of any Participant (including death during an approved leave of absence or following a Participant’s retirement or disability), any Option then held by him which shall not have lapsed or terminated prior to his death shall be or immediately become fully exercisable by the executors, administrators, legatees, or distributees of his estate, as may be appropriate, as to the total number of Shares subject thereto (whether or not exercisable to that extent prior to such date) and shall remain so exercisable but only for a period of three years after death, at the end of which time it shall terminate (unless such Option expires earlier by its terms).

L. In the event that a Participant shall, cease to be a director otherwise than as described in paragraphs (I), (J) and (K), any outstanding Option held by such Participant shall terminate.

M. In the event a Participant ceases to be a director otherwise than as described in Sections 9(J), (K) and (L), any outstanding Option held by such Participant may be exercised during the thirty day period following the date of termination to the extent such Option was vested and not already exercised as of the date of termination. The Committee shall have discretion to determine whether a Participant has ceased to be a director and the effective date of such termination.

10. No Election Rights.

Nothing contained in the Plan or any Option shall confer upon any Participant any right with respect to the continuation of his tenure as a director of the Company or interfere in any way with the right of the Company’s shareholders or the Board, at any time, to terminate such tenure or to fail to elect such Participant to the Board.

11. Rights of a Shareowner.

No person shall have any rights with respect to any Shares covered by or relating to any grant hereunder of an Option until the date of issuance of a certificate to him evidencing such Shares. Except as otherwise expressly provided in the Plan, no adjustment to any Option shall be made for dividends or other rights for which the record date occurs prior to the date such certificate is issued.

12. Adjustment Upon Changes in Capital Stock.

A. If the capital stock of the Company shall be subdivided or combined, whether by reclassification, stock dividend, stock split, reverse stock split or other similar transaction, then the number of Shares authorized under the Plan, the number of Shares then subject to or relating to unexercised Options granted hereunder and the exercise price per Share will be adjusted proportionately. A stock dividend shall be treated as a subdivision of the whole number of Shares outstanding immediately prior to such dividend into a number of Shares equal to such whole number of Shares so outstanding plus the number of Shares issued as a stock dividend.

B. In the case of any capital reorganization or any reclassification of the capital stock of the Company (except pursuant to a transaction described in Paragraph A of this Section 12) (a “Reorganization”), appropriate adjustment may be made by the Committee in the number and class of shares authorized to be issued under the Plan and the number and class of shares subject to or relating to Options awarded under the Plan and outstanding at the time of such Reorganization.

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C. Each Participant will be notified of any adjustment made pursuant to this Section 12 and any such adjustment, or the failure to make such adjustment, shall be binding on the Participant.

D. Except as expressly set forth herein, the number and kind of Shares subject to Options awarded under the Plan, and the exercise prices of any such Options, shall not be affected by any transaction (including, without limitation, any merger, recapitalization, stock split, stock dividend, issuance of stock or similar transaction) affecting the capital stock of the Company and no Participant shall be entitled to any additional options on account thereof.

13. Withholding Taxes.

A. Whenever Shares are to be issued upon the exercise of an Option, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy federal, state and local withholding tax requirements, if any, prior to the delivery of any certificate or certificates for such Shares.

B. Notwithstanding Paragraph A of this Section 13, at the election of a Participant, subject to the approval of the Committee, when Shares are to be issued upon the exercise of an Option, the Participant may tender to the Company a number of Shares, or the Company shall withhold a number of such Shares, the Fair Market Value of which is sufficient to satisfy the federal, state and local tax requirements, if any, attributable to such exercise or occurrence. The Committee hereby grants its approval to any election made pursuant to this Paragraph B, but reserves the right, in its absolute discretion, to withdraw such approval in the case of any such election effective upon its delivery of notice thereof to the Participant.

14. Amendment of the Plan.

A. The Board or the Committee may at any time and from time to time suspend, discontinue, modify or amend the Plan in any respect whatsoever except that neither the Board nor the Committee may suspend, discontinue, modify or amend the Plan so as to adversely affect the rights of a Participant with respect to any grants that have theretofore been made to such Participant without such Participant’s approval.

B. No amendment to or modification of the Plan which: (i) materially increases the benefits accruing to Participants; (ii) except as provided in Section 12 hereof, increases the number of Shares that may be issued under the Plan; or (iii) modifies the requirements as to eligibility for participation under the Plan, shall be effective without shareholder approval.

15. Miscellaneous.

A. It is expressly understood that the Plan grants powers to the Committee but does not require their exercise; nor shall any person, by reason of the adoption of the Plan, be deemed to be entitled to the grant of any Option; nor shall any rights be deemed to accrue under the Plan except as Options may be granted hereunder.

B. All rights hereunder shall be governed by and construed in accordance with the laws of Oklahoma.

C. All expenses of the Plan, including the cost of maintaining records, shall be borne by the Company.

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EX-10.27

Exhibit 10.27

2001 Sonic Corp. Directors’ Stock Option Plan

January 30, 2001

(as amended and restated October 14, 2009)

I. Purpose. The purposes of the Plan are to enable the Company to attract and retain the services of members of the Board and provide them with increased motivation and incentive to exert their best efforts on behalf of the Company by enlarging their personal stake in the Company.

II. Definitions and Rules of Construction.

A. Definition. As used in the Plan, the following definitions apply to the terms indicated below:

“Administrator” means the individual or individuals to whom the committee delegates authority under the Plan in accordance with Section IV.C.

“Beneficiary” means the person designated in writing by the Participant to exercise or to receive an Option in the event of the Participant’s death or, if no such person has been designated in writing by the Participant prior to the date of death, the Participant’s estate. No Beneficiary designation under the Plan shall be effective unless it is in writing and is received by the Company prior to the date of death of the applicable Participant.

“Board” means the Board of Directors of the Company.

“Change in Control” means the occurrence of any of the following:

(1) any “person” (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), an “Acquiring Person”) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act, a “Beneficial Owner”), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities;

(2) an Acquiring Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company’s then outstanding securities and, during the two-year period commencing at the time such Acquiring Person becomes the Beneficial Owner of such securities, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof;

(3) the Company’s shareholders approve an agreement to merge or consolidate the Company with another corporation (other than a corporation 50% or more of which is controlled by, or is under common control with, the Company) and, during the period commencing six months before such approval and ending two years after such approval, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof; and

(4) during any two year period, individuals who at the date on which the period commences constitute a majority of the Board cease to constitute a majority thereof as a result of one or more contested elections for positions on such Board.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Committee” means the committee appointed by the Board from time to time to administer the Plan pursuant to Section IV hereof.

“Common Stock” means the common stock of the Company, par value $0.01 per share, now or hereafter owned by the Company as treasury stock or authorized, but unissued, shares of the Company’s common stock, subject to adjustment as provided in the Plan.

“Company” means Sonic Corp., a Delaware corporation.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

“Fair Market Value” of a Share on a given day means, if Shares are listed on an established stock exchange or exchanges, the highest closing sales price of a Share as reported on such stock exchange; or if not so reported, the final price, as reported on the National Association of Securities Dealers Automated Quotation System, as determined by the Committee. If the price of a Share shall not be so quoted the Fair Market Value shall be determined by the Committee taking into account all relevant facts and circumstances.

“Option” means a right to purchase Shares pursuant to an option that is not an incentive stock option within the meaning of Section 422 of the Code under the terms and conditions of the Plan as evidenced by an Option Agreement in such form not inconsistent with the Plan, as the Committee may adopt for general use or for specific cases from time to time.

“Option Agreement” means an instrument or agreement evidencing an Option granted hereunder, in written or electronic form, which may, but need not be executed or acknowledged by the recipient thereof.

“Participant” means a director who is not an employee of the Company or a Subsidiary, eligible to participate in the Plan under Section V hereof, to whom an Option is granted under the Plan.

“Plan” means the 2001 Sonic Corp. Directors’ Stock Option Plan, including any amendments to the Plan.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Share” or “Shares” means shares of the Company’s Common Stock.

“Subsidiary” means any corporation, now or hereafter existent, in which the Company owns, directly or indirectly, stock comprising fifty percent or more of the total combined voting power of all classes of stock of such corporation.

B. Construction. As used herein, the masculine includes the feminine, the plural includes the singular, and the singular includes the plural.

III. Plan Adoption and Term.

A. Adoption. The Plan shall become effective upon its adoption by the Board, and Options may be issued upon such adoption and from time to time thereafter; provided, that the Plan shall be submitted to the Company’s shareholders for their approval at the next annual meeting of shareholders, and provided further, that the approval of the Company’s shareholders shall be obtained within twelve months of the date of adoption of the Plan. If the Plan is not approved at the annual meeting by the affirmative vote of a majority of all shares entitled to vote upon the matter, then the Plan and all Options then outstanding hereunder shall forthwith automatically terminate and be of no force and effect.

B. Term. Subject to the provisions hereinafter contained relating to amendment or discontinuance, the Plan shall continue in effect for ten years from the date of its adoption by the Board. No Option may be granted hereunder after such ten-year period.

IV. Administration of the Plan.

A. Committee Members. The Plan shall be administered by the Committee, consisting of not less than three persons, who shall be directors of the Company, and who shall be appointed by the Board to serve at the pleasure of the Board; provided, however, that at least two of such directors shall be non-employee directors as such term is defined in Rule 16b-3 of the Exchange Act or any successor thereto.

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B. Committee Authority.

(1) General. Except as otherwise expressly provided in the Plan, the Committee shall have sole and final authority to interpret the provisions of the Plan and the terms of any Option or Option Agreement issued under it and to promulgate and interpret such rules and regulations as it may deem necessary or desirable for the administration of the Plan. All determinations by the Committee shall be final and binding on all persons having an interest in any Option under the Plan. The Committee shall report to the Board the names of those granted Options and the terms and conditions of each Option granted by it. The Committee may correct any defect in the Plan or any Option in the manner and to the extent it shall deem expedient to carry the Plan into effect and shall be the sole and final judge of such expediency.

(2) Specific Duties. The Committee shall have full power and authority:

(a) to select Participants;

(b) to grant Options in accordance with the Plan;

(c) to determine the number of shares of Common Stock subject to each Option;

(d) to determine the terms and conditions of each Option, including, without limitation, those related to vesting, forfeiture, payment and exercisability, and the effect of a Participant’s cessation of service with the Company;

(e) to specify and approve the provisions of the Option Agreements delivered to Participants in connection with their Options;

(f) to construe and interpret any Option Agreement delivered under the Plan;

(g) to amend the terms and conditions of an Option after the granting thereof or to authorize the grant of a new Option in substitution therefore; provided that, no outstanding option will be “repriced” by lowering the exercise price, or by cancellation of outstanding options with subsequent replacement, or regrant of options with lower exercise prices; provided further that, any amendment is in a manner that is not, without the consent of the Participant, prejudicial to the rights of such Participant in such Option;

(h) to prescribe, amend and rescind rules and procedures relating to the Plan;

(i) subject to the provisions of the Plan and subject to such additional limitations and restrictions as the Committee may impose, to delegate to one or more officers of the Company some or all of its authority under the Plan;

(j) to employ such legal counsel, independent auditors and consultants as it deems desirable for the administration of the Plan and to rely upon any opinion or computation received therefrom; and

(k) to make all other determinations and to formulate such procedures as may be necessary or advisable for the administration of the Plan.

C. Delegation of Authority. The Committee may, but need not, from time to time delegate some or all of its authority under the Plan to an Administrator consisting of one or more officers of the Company, one or more members of the Committee or one or more members of the Board; provided, however, that the Committee may not delegate its responsibility (i) to grant Options to individuals who are subject to Section 16 of the Exchange Act, (ii) or to amend or terminate the Plan in accordance with Section XIV. Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation or thereafter. Nothing in the Plan shall be construed as obligating the Committee to delegate authority to an Administrator, and the Committee may at any time rescind the authority delegated to an Administrator appointed hereunder or appoint a new Administrator. At all times, the Administrator appointed under this Section IV.C. shall serve in such capacity at the pleasure of the Committee. Any action undertaken by the Administrator in accordance with the Committee's delegation of authority shall have the same force and effect as if undertaken directly by the Committee, and any reference in the Plan to the Committee shall, to the extent consistent with the terms and limitations of such delegation, be deemed to include a reference to the Administrator.

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D. Committee Indemnification. No member of the Committee shall be liable for any action taken or omitted or any determination made by him in good faith relating to the Plan, and the Company shall indemnify and hold harmless each member of the Committee and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any act or omission in connection with the Plan, unless arising out of such person’s own fraud or bad faith.

V. Eligibility. Each director of the Company, who is not an employee of the Company or any of its Subsidiaries, in office as of the effective date of the Plan or as of any date thereafter (prior to the expiration or termination of the Plan), shall be eligible to participate in the Plan.

VI. Stock Subject to the Plan. Subject to adjustment as provided in Section XI hereof, Options may be issued pursuant to the Plan with respect to a number of Shares that, in the aggregate, does not exceed 1,012,500 shares. If, prior to the termination of the Plan, an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased Shares subject thereto shall again be available for the purposes of the Plan.

VII. Options.

A. Terms and Conditions. The terms and conditions of each Option shall be set forth in applicable Option Agreement and are described as follows:

B. Amount of Options. Each Participant shall be granted an Option to purchase 75,938 Shares upon the Participant’s initial election to the Board. Beginning with the first year of the Participant’s second three-year term on the Board and continuing for each additional year of service by the Participant on the Board, the Participant will be granted an Option to purchase an additional 10,125 shares.

C. Grant Date. The Options shall be granted each year on the date of the annual meeting of shareholders of the Company (the “Date of Grant”).

D. Option Price. The price per share at which Shares may be purchased pursuant to any Option granted under the Plan shall be the Fair Market Value of a Share on the Date of Grant of the Option.

E. Duration of Options. No Option granted hereunder shall be exercisable after the expiration of ten years from the Date of Grant; provided, however, that all Options shall be subject to earlier termination as provided elsewhere in the Plan.

F. Conditions Relating to Exercise of Options.

(1) Exercise. (a) The following percentage of Options (rounded up to the nearest whole number of Options) granted to Participants shall become exercisable on the following anniversaries of the Date of Grant:

Anniversary of Date of Grant	Percentage
First	33 1/3
Second	33 1/3
Third	33 1/3

(b) Once exercisable, an Option may be exercised at any time prior to its expiration, cancellation or termination as provided in the Plan. Partial exercise is permitted from time to time, provided that no partial exercise of an Option shall be for a number of Shares having a purchase price of less than $1,000 or for a fractional number of Shares.

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(2) Notice. An Option shall be exercised by the delivery to the Company of a written notice signed by the Participant, which specifies the number of Shares with respect to which the Option is being exercised and the date of the proposed exercise. Such notice shall be delivered to the Company’s principal office, to the attention of its Secretary, no less than three business days in advance of the date of the proposed exercise and shall be accompanied by the applicable option certificate evidencing the Option. A Participant may withdraw such notice at any time prior to the close of business on the proposed date of exercise, in which case the option certificate evidencing the Option shall be returned to him.

(3) Payment. Payment for Shares purchased upon exercise of an Option shall be made at the time of exercise either (a) in cash, (b) by certified check or bank cashier’s check, (c) in Shares owned by the Participant and valued at their Fair Market Value on the date of exercise provided such Shares have been held for at least six months by the Participant, (d) partly in Shares with the balance in cash or by certified check or bank cashier’s check, (e) pursuant to a broker-assisted “cashless exercise” arrangement, or (f) by any combination of the foregoing, in each such case to the extent permitted by applicable law. Any payment in Shares shall be effected by their delivery to the Secretary of the Company, endorsed in blank or accompanied by stock powers executed in blank.

(4) Certificates. Certificates for Shares purchased upon exercise of Options shall be issued and delivered as soon as practicable following the date the Option is exercised. Certificates for Shares purchased upon exercise of Options shall be issued in the name of the Participant.

(5) Buyout. The Committee may at any time offer to buy out, for a payment in cash or Common Stock, an Option previously granted, based on such terms and conditions as the Committee shall establish and communicate to the Participant at the time that such offer is made.

G. Termination of Service.

(1) Retirement. In the event that a Participant shall cease to be a director by reason of such Participant’s “Retirement,” as hereafter defined, any outstanding Option held by such Participant shall be or immediately become fully exercisable as to the total number of Shares subject thereto (whether or not exercisable to that extent prior to such date) and shall remain so exercisable but only for a period of three years after commencement of such retirement, at the end of which time it shall terminate (unless such Option expires earlier by its terms). “Retirement” is defined as the Participant’s termination of service on the Board of Directors of the Company after the Participant has both reached the age of 65 and provided ten consecutive years of service as a director of the Company. In the event a Participant ceases to be a director by reason of such Participant’s retirement under conditions not satisfying the definition of “Retirement” set forth above, any outstanding Option held by such Participant shall be or immediately become fully exercisable as to the total number of Shares subject thereto (whether or not exercisable to that extent prior to such date) and shall remain so exercisable but only for a period of three months after commencement of such retirement, at the end of which time it shall terminate (unless such Option expires earlier by its terms).

(2) Disability. In the event that a Participant shall cease to be a director by reason of such Participant’s disability within the meaning of Section 22(e)(3) of the Code, any outstanding Option held by such Participant shall be or immediately become fully exercisable as to the total number of Shares subject thereto (whether or not exercisable to that extent prior to such date) and shall remain so exercisable but only for a period of three years after such date, at the end of which time it shall terminate (unless such Option expires earlier by its terms).

(3) Death. In the event that a Participant shall cease to be a director by reason of death (including death during an approved leave of absence or following a Participant’s retirement or disability), any Option then held by such Participant which shall not have lapsed or terminated prior to his death shall be or immediately become fully exercisable by the Beneficiary of the Participant, as may be appropriate, as to the total number of Shares subject thereto (whether or not exercisable to that extent at the time of death) and shall remain so exercisable but only for a period of three years after death, at the end of which time it shall terminate (unless such Option expires earlier by its terms).

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(4) Other Reasons. In the event that a Participant shall cease to be a director otherwise than as described in Sections VII.G (1), (2) and (3), any outstanding Option held by such Participant may be exercised during the thirty day period following the date of cessation of service to the extent such Option was vested and not already exercised as of the date of such cessation of service.

VIII. No Election Rights. Nothing contained in the Plan or any Option shall confer upon any Participant any right with respect to the continuation of his tenure as a director of the Company or interfere in any way with the right of the Company’s shareholders or the Board, at any time, to terminate such tenure or to fail to elect such Participant to the Board.

IX. Rights of a Shareowner and Nontransferability.

A. No Rights. No person shall have any rights with respect to any Shares covered by or relating to any grant hereunder of an Option until the date a certificate is issued to him evidencing such Shares. Except as otherwise expressly provided in the Plan, no adjustment to any Option shall be made for dividends or other rights for which the record date occurs prior to the date such certificate is issued.

B. Nontransferability. Unless the Committee determines otherwise, no Option or amount payable under, or interest in, the Plan shall be transferable by a Participant except by will or the laws of descent and distribution or otherwise be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; provided, however, that the Committee may, in its discretion and subject to such terms and conditions as it shall specify, permit the transfer of an Option for no consideration to a Participant’s family members or to one or more trusts or partnerships established in whole or in part for the benefit of one or more of such family members (collectively, “Permitted Transferees”); and provided further that this sentence shall not preclude a Participant from designating a Beneficiary to receive the Participant’s outstanding Option following the death of the Participant. Any Option transferred to a Permitted Transferee shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Participant. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or by a Permitted Transferee to whom such Option has been transferred in accordance with this Section IX.B.

X. Registration. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Shares to be issued upon the exercise thereof have been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration. Prior to the occurrence of a Change in Control, the Company shall not be under any obligation to register under applicable federal or state securities laws any Shares to be issued upon the exercise of an Option granted hereunder, or to comply with an appropriate exemption from registration under such laws in order to permit the exercise of an Option and the issuance and sale of the Shares subject to such Option. If the Company chooses to comply with such an exemption from registration, the Shares issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Shares represented thereby, and the Committee may also give appropriate stop-transfer instructions to the transfer agent to the Company. On or after the occurrence of a Change in Control, the Company shall be under an obligation to register under applicable federal or state securities law any Shares to be issued upon the exercise of an Option granted hereunder, or to comply with an appropriate exemption from registration under rules and regulations promulgated by the Securities and Exchange Commission in order to permit the exercise of an Option and the issuance and sale of the Shares subject to such Option.

XI. Adjustment Upon Changes in Capital Stock. Notwithstanding any other provisions of the Plan, unless the Committee determines otherwise in its sole discretion, the number and class of Shares available under the Plan or any outstanding Options shall be adjusted as necessary to prevent dilution or enlargement of rights, including adjustments in the event of changes in the number of shares of outstanding Common Stock by reason of stock dividends, split-ups, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations, liquidations or any similar corporate action or proceeding.

XII. Change in Control. Notwithstanding anything in the Plan to the contrary, upon the occurrence of a Change in Control, any Option granted under the Plan and outstanding at such time shall become 100% vested and immediately exercisable for Common Stock in the case of Options effective as of the date of such Change in Control. Should the Options be assumed by the surviving or acquiring corporation at the time of the Change in Control, such Options shall continue to be exercisable following the Change in Control until their expiration or termination as provided in the Plan, with such adjustments to exercise price and number and kind of securities as the Committee shall equitably determine to preserve the value of such Options. Alternatively, in the event of a Change in Control, the Committee in its discretion may provide that all Options shall be cashed out at their Fair Market Value, as determined above.

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XIII. Withholding Taxes.

A. Withholding Generally. The Company shall have the right to withhold or require the recipient to remit to the Company an amount sufficient to satisfy federal, state, or local withholding tax requirements arising in connection with the grant, exercise or settlement of any Option under the Plan prior to the delivery of any certificate or certificates for Shares or other amounts hereunder.

B. Stock Withholding. When a Participant incurs tax liability in connection with the exercise or vesting of any Option, which tax liability is subject to tax withholding under applicable tax laws, the withholding tax obligation shall be satisfied, at the discretion of the Company, by the withholding of cash or the withholding from the Shares otherwise to be delivered, of the number of Shares having a Fair Market Value equal to the amount required to be withheld under applicable law, determined on the date that the amount of tax to be withheld is to be determined; provided, however, that the Company shall not withhold Shares (1) upon exercise or vesting of any Option in an amount which exceeds the minimum statutory withholding rates for federal, state and local tax purposes, including payroll taxes or (2) if such withholding is not permitted under local laws. All elections by a Participant to have Shares withheld for this purpose shall be made in accordance with procedures established by the Committee from time to time.

XIV. Amendment of the Plan.

A. General Rule. Subject to any approval of the shareholders of the Company that may be required (or, in the opinion of the Committee, appropriate) under law, the Committee may at any time amend, suspend or terminate the Plan. No amendment, suspension or termination of the Plan shall materially and adversely alter or impair the rights of a Participant in any Option previously made under the Plan without the consent of the holder thereof.

B. Shareholder Approval Required. No amendment to or modification of the Plan which: (i) materially increases the benefits accruing to Participants except as provided in Section XII hereof, (ii) increases the number of Shares that may be issued under the Plan, except for events described in Section XI; or (iii) modifies the requirements as to eligibility for participation under the Plan, shall be effective without shareholder approval.

XV. General Provisions.

A. No Entitlements. It is expressly understood that the Plan grants powers to the Committee but does not require their exercise; nor shall any person, by reason of the adoption of the Plan, be deemed to be entitled to the grant of any Option; nor shall any rights be deemed to accrue under the Plan except as Options may be granted hereunder.

B. Compliance with Law. Any person exercising an Option or transferring or receiving Shares shall comply with all regulations and requirements of any governmental authority having jurisdiction over the issuance, transfer, or sale of capital stock of the Company, and as a condition to receiving any Shares, shall execute all such instruments as the Company in its sole discretion may deem necessary or advisable.

C. Governing Law. All rights hereunder shall be governed by and construed in accordance with the laws of Oklahoma.

D. Expenses. All expenses of the Plan, including the cost of maintaining records, shall be borne by the Company.

E. Notices. Notices required or permitted to be made under the Plan shall be sufficiently made if sent by registered or certified mail addressed (a) to the Participant at the Participant’s address as set forth in the books and records of the Company or (b) to the Company or the Committee at the principal office of the Company.

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F. Consent to Plan. By accepting any Option or other benefit under the Plan, each Participant and each person claiming under or through him shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee.

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EX-10.28

Exhibit 10.28

SONIC CORP.

2006 LONG-TERM INCENTIVE PLAN

(as amended October 13, 2010)

ARTICLE 1

PURPOSE

1.1 GENERAL. The purpose of the Sonic Corp. 2006 Long-Term Incentive Plan (the “Plan”) is to promote the success, and enhance the value, of Sonic Corp., a Delaware corporation (the “Corporation”), by linking the personal interests of its employees, officers and directors to those of Corporation shareholders and by providing such persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Corporation in its ability to motivate, attract and retain the services of employees, officers and directors upon whose judgment, interest and special effort the successful conduct of the Corporation’s operation is largely dependent. Accordingly, the Plan permits the grant of incentive awards from time to time to selected employees and officers and directors.

The Plan is intended to replace the 2001 Sonic Corp. Stock Option Plan and the 2001 Sonic Corp. Directors’ Stock Option Plan and upon the Effective Date (as defined below), no further awards shall be granted under such plans.

ARTICLE 2

EFFECTIVE DATE

2.1 EFFECTIVE DATE. The Plan shall be effective as of the date upon which it shall be approved by the Board and the shareholders of the Corporation (the “Effective Date”). In the discretion of the Committee, Awards may be made to Covered Employees which are intended to constitute qualified performance-based compensation under Section 162(m) of the Code.

ARTICLE 3

DEFINITIONS

3.1 DEFINITIONS. When a word or phrase appears in the Plan with the initial letter capitalized, and the word or phrase does not commence a sentence and is not otherwise defined in the Plan, the word or phrase shall generally be given the meaning ascribed to it in this Section 3.1. The following words and phrases shall have the following meanings:

(a) “1933 Act” means the Securities Act of 1933, as amended from time to time.

(b) “1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.

(c) “Affiliate” means any Parent or Subsidiary and any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Corporation.

(d) “Award” means any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Share Award, Performance Share Unit Award, Dividend Equivalent Award or Other Stock-Based Award, or any other right or interest relating to Stock or cash, granted to a Participant under the Plan.

(e) “Award Agreement” means any written agreement, contract or other instrument or document evidencing an Award.

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(f) “Board” means the Board of Directors of the Corporation, as constituted from time to time.

(g) “Cause” as a reason for a Participant’s termination of employment or service shall have the meaning assigned such term in the employment agreement, if any, between such Participant and the Corporation or an Affiliate, provided, however, that if there is no such employment agreement in which such term is defined, “Cause” shall mean any of the following acts by the Participant, as determined by the Board: gross neglect of duty, prolonged absence from duty without the consent of the Corporation, intentionally engaging in any activity that is in conflict with or adverse to the business or other interests of the Corporation, or willful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental to the Corporation.

(h) “Change of Control” means and includes the occurrence of any one of the following events:

(i) individuals who, at the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director after the Effective Date and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Corporation as a result of an actual or threatened election contest (as described in Rule 14a-11 under the 1934 Act (“Election Contest”)) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3) and 14(d)(2) of the 1934 Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director;

(ii) any person becomes a “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporation’s then outstanding securities eligible to vote for the election of the Board (the “Corporation Voting Securities”); or

(iii) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Corporation that requires the approval of the Corporation’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Reorganization”), or the sale or other disposition of all or substantially all of the Corporation’s assets to an entity that is not an Affiliate (a “Sale”), unless immediately following such Reorganization or Sale: (A) more than 50% of the total voting power of (x) the corporation resulting from such Reorganization or the corporation which has acquired all or substantially all of the assets of the Corporation (in either case, the “Surviving Corporation”) or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by the Corporation Voting Securities that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which such Corporation Voting Securities were converted pursuant to such Reorganization or Sale), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Corporation Voting Securities among the holders thereof immediately prior to the Reorganization or Sale, (B) no person (other than (x) the Corporation, or (y) any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation is the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Reorganization or Sale were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization or Sale (any Reorganization or Sale which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);

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provided, however, that under no circumstances shall a split-off, spin-off, stock dividend or similar transaction as a result of which the voting securities of the Corporation are distributed to shareholders of the Corporation or its successors constitute a Change of Control. Notwithstanding the foregoing, with respect to an Award that is subject to Section 409A, and the payment or settlement of which is to be accelerated in connection with an event that would otherwise constitute a Change of Control, no event set forth in the definition of “Change of Control” will constitute a Change of Control for purposes of the Plan or any Award Agreement unless such event also constitutes a “change in the ownership”, “change in the effective control” or “change in the ownership of a substantial portion of the assets” of the Corporation as defined under Section 409A.

(i) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

(j) “Committee” means, subject to the last sentence of Section 4.1, the committee of the Board described in Article 4.

(k) “Covered Employee” means a covered employee as defined in Section 162(m)(3) of the Code.

(l) “Disability” has the meaning ascribed under the long-term disability plan applicable to the Participant. Notwithstanding the above, (i) with respect to an Incentive Stock Option, Disability shall mean Permanent and Total Disability as defined in Section 22(e)(3) of the Code and (ii) to the extent an Award is subject to Section 409A, and payment or settlement of the Award is to be accelerated solely as a result of the Participant’s Disability, Disability shall have the meaning ascribed thereto under Section 409A.

(m) “Dividend Equivalent” means a right granted to a Participant under Article 11.

(n) “Effective Date” has the meaning assigned such term in Section 2.1.

(o) “Eligible Individual” has the meaning assigned to such term in Section 6.1.

(p) “Fair Market Value”, on any date, means, with respect to a share of Stock, (i) if the Stock is listed on a securities exchange or is traded over the Nasdaq National Market, the closing sales price on such exchange or over such system on such date or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported or (ii) if the Stock is not listed on a securities exchange or traded over the Nasdaq National Market, Fair Market Value will be determined by such other method as the Committee determines in good faith to be reasonable.

(q) “Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

(r) “Maximum Number” has the meaning assigned to such term in Section 5.1.

(s) “Non-Employee Director” means a member of the Board who is not an employee of the Corporation or any Parent or Affiliate.

(t) “Non-Qualified Stock Option” means an Option that is not an Incentive Stock Option.

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(u) “Option” means a right granted to a Participant under Article 7 to purchase Stock at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.

(v) “Other Stock-Based Award” means a right, granted to a Participant under Article 12 that relates to or is valued by reference to Stock or other Awards relating to Stock.

(w) “Parent” means a corporation which owns or beneficially owns a majority of the outstanding voting stock or voting power of the Corporation. Notwithstanding the above, with respect to an Incentive Stock Option, Parent shall have the meaning set forth in Section 424(e) of the Code.

(x) “Participant” means a person who, as an employee, officer or director of the Corporation or any Parent, Subsidiary or Affiliate, has been granted an Award under the Plan.

(y) “Performance Period” means the period established by the Committee and set forth in the applicable Award Agreement over which Performance Targets are measured, provided that such period shall be no less than one year.

(z) “Performance Target” means the performance targets established by the Committee and set forth in the applicable Award Agreement.

(aa) “Performance Share Award” means Stock granted to a Participant under Article 9 that is subject to certain restrictions and to risk of forfeiture upon failure to achieve Performance Targets.

(bb) “Performance Share Unit Award” means a right granted to a Participant under Article 9, to receive cash, Stock, or other property in the future that is subject to certain restrictions and to risk of forfeiture upon failure to achieve Performance Targets.

(cc) “Restricted Stock Award” means Stock granted to a Participant under Article 10 that is subject to certain restrictions and to risk of forfeiture.

(dd) “Restricted Stock Unit Award” means a right granted to a Participant under Article 10, to receive cash, Stock, or other Awards in the future that is subject to certain restrictions and to risk of forfeiture.

(ee) “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance issued thereunder.

(ff) “Stock” means the $.01 par value common stock of the Corporation and such other securities of the Corporation as may be substituted for Stock pursuant to Article 14.

(gg) “Stock Appreciation Right” or “SAR” means a right granted to a Participant under Article 8 to receive a payment equal to the difference between the Fair Market Value of a share of Stock as of the date of exercise of the SAR over the grant price of the SAR, all as determined pursuant to Article 8.

(hh) “Subsidiary” means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting equity securities or voting power is beneficially owned directly or indirectly by the Corporation. Notwithstanding the above, with respect to an Incentive Stock Option, Subsidiary shall have the meaning set forth in Section 424(f) of the Code.

(ii) “Target Number” means the target number of shares of Stock established by the Committee and set forth in the applicable Award Agreement.

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ARTICLE 4

ADMINISTRATION

4.1 COMMITTEE. The Plan shall be administered by a committee (the “Committee”) appointed by the Board (which Committee shall consist of two or more directors) or, at the discretion of the Board from time to time, the Plan may be administered by the Board. It is intended that the directors appointed to serve on the Committee shall be “non-employee directors” (within the meaning of Rule 16b-3 promulgated under the 1934 Act) and “outside directors” (within the meaning of Section 162(m) of the Code) to the extent that Rule 16b-3 and, if necessary for relief from the limitation under Section 162(m) of the Code and such relief is sought by the Corporation, Section 162(m) of the Code, respectively, are applicable. However, the mere fact that a Committee member shall fail to qualify under either of the foregoing requirements shall not invalidate any Award made by the Committee, which Award is otherwise validly made under the Plan. The members of the Committee shall be appointed by, and may be changed at any time and from time to time in the discretion of, the Board. During any time that the Board is acting as administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1) shall include the Board.

4.2 ACTION BY THE COMMITTEE. For purposes of administering the Plan, the following rules of procedure shall govern the Committee. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved unanimously in writing by the members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Corporation or any Parent or Affiliate, the Corporation’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Corporation to assist in the administration of the Plan.

4.3 AUTHORITY OF COMMITTEE. Except as provided below, the Committee has the exclusive power, authority and discretion to:

(a) Designate Participants;

(b) Determine the type or types of Awards to be granted to each Participant;

(c) Determine the number of Awards to be granted and the number of shares of Stock to which an Award will relate;

(d) Determine the terms and conditions of any Award granted under the Plan, including, but not limited to, the exercise price, grant price or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, any effect of a Participant’s termination of employment with the Corporation or a Parent or Subsidiary, and accelerations or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines;

(e) Accelerate the vesting or lapse of restrictions of any outstanding Award, based in each case on such considerations as the Committee in its sole discretion determines;

(f) Determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards or other property, or an Award may be canceled, forfeited or surrendered;

(g) Prescribe the form of each Award Agreement, which need not be identical for each Participant;

(h) Decide all other matters that must be determined in connection with an Award;

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(i) Establish, adopt or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(j) Make all other decisions and determinations that may be required under the Plan or as the Committee deems necessary or advisable to administer the Plan;

(k) Construe and interpret any Award Agreement delivered under the Plan;

(l) Make factual determinations in connection with the administration or interpretation of the Plan;

(m) Employ such legal counsel, independent auditors and consultants as it deems desirable for the administration of the Plan and to rely upon any opinion or computation received therefrom;

(n) Vary the terms of Awards to take account of tax, securities law and other regulatory requirements of foreign jurisdictions or to procure favorable tax treatment for Participants; and

(o) Amend the Plan or any Award Agreement as provided herein.

4.4 DELEGATION OF AUTHORITY. To the extent not prohibited by applicable laws, rules and regulations, the Board or the Committee may, from time to time, delegate some or all of its authority under the Plan to a subcommittee or subcommittees thereof or to one or more directors or executive officers of the Corporation as it deems appropriate under such conditions or limitations as it may set at the time of such delegation or thereafter, except that neither the Board nor the Committee may delegate its authority pursuant to Article 15 to amend the Plan. For purposes of the Plan, references to the Committee shall be deemed to refer to any subcommittee, subcommittees, directors or executive officers to whom the Board or the Committee delegates authority pursuant to this Section 4.4.

4.5 DECISIONS BINDING. The Committee’s interpretation of the Plan, any Awards granted under the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding and conclusive on all parties.

4.6 NON-EMPLOYEE DIRECTOR AWARDS. All Awards to Non-Employee Directors shall be made solely by the Committee and not by the full Board.

ARTICLE 5

SHARES SUBJECT TO THE PLAN

5.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 14.1, the aggregate number of shares of Stock reserved and available for Awards or which may be used to provide a basis of measurement for or to determine the value of an Award (such as with a Stock Appreciation Right or Performance Share Award) shall be 8,448,478 shares (the “Maximum Number”). Not more than the Maximum Number of shares of Stock shall be granted in the form of Incentive Stock Options.

5.2 PLAN SUB-LIMITS. Subject to adjustment as provided in Section 14.1, the maximum aggregate number of shares of Stock that may be issued in conjunction with (i) Restricted Stock Awards, unrestricted shares of Stock, Performance Share Awards, and Dividend Equivalents, and (ii) Restricted Stock Unit Awards, Performance Share Unit Awards and Other Awards but only if such Awards are paid or settled in shares of Stock, is 1,000,000 shares.

5.3 LAPSED AWARDS. To the fullest extent permissible under Rule 16b-3 under the 1934 Act and Section 422 of the Code and any other applicable laws, rules and regulations, (i) if an Award is canceled, terminates, expires, is forfeited or lapses for any reason without having been exercised or settled, any shares of Stock subject to the Award will be added back into the Maximum Number and will again be available for the grant of an Award under the Plan and (ii) shares of Stock subject to SARs or other Awards settled in cash shall be added back into the Maximum Number and will be available for the grant of an Award under the Plan.

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5.4 LIMITED DURATION OF CERTAIN RULES. Any rule set forth in Section 5.2 that is considered a “formula” under the rules of the NASDAQ Stock Market applicable to the Corporation shall expire on and not be applied after the tenth anniversary of the date on which the Plan is approved by the Corporation’s stockholders. The expiration of any such rule shall not affect any calculation of shares of Stock available for delivery under the Plan that was made while the rule was in effect.

5.5 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.

5.6 LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 14.1), the maximum number of shares of Stock that may be issued in respect of, or used to provide a basis of measurement for or to determine the value of, one or more Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Unit Awards, Performance Share Awards, Performance Share Unit Awards, Dividend Equivalent Awards or Other Stock-Based Awards (regardless of whether such Awards are settled in cash, Stock or a combination thereof) granted during any one calendar year under the Plan to any one Participant shall be 400,000 (all of which may be granted as Incentive Stock Options). The maximum amount of one or more Awards denominated in cash that may be received by any one Participant during any one calendar year under the Plan shall be $1,000,000.

ARTICLE 6

ELIGIBILITY

6.1 GENERAL. Awards may be granted only to individuals who are employees, officers or directors of the Corporation or a Parent or Subsidiary (each, an “Eligible Individual”). Under the Plan, references to “employment” or “employed” include the service of Participants who are Non-Employee Directors.

ARTICLE 7

STOCK OPTIONS

7.1 GENERAL. The Committee is authorized to grant Options to Eligible Individuals on the following terms and conditions:

(a) EXERCISE PRICE. The exercise price per share of Stock under an Option shall be determined by the Committee at the time of the grant but in no event shall the exercise price be less than 100% of the Fair Market Value of a share of Stock on the date of grant.

(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, subject to Section 7.1(e). The Committee also shall determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised. The Committee may waive any exercise provisions at any time in whole or in part based upon factors as the Committee may determine in its sole discretion so that the Option becomes exerciseable at an earlier date.

(c) PAYMENT. Unless otherwise determined by the Committee, the exercise price of an Option may be paid (i) in cash, (ii) by actual delivery or attestation to ownership of freely transferable shares of stock already owned; provided, however, that to the extent required by applicable accounting rules, such shares shall have been held by the Participant for at least six months, (iii) by a combination of cash and shares of Stock equal in value to the exercise price, (iv) through net share settlement or a similar procedure involving the withholding of shares of Stock subject to the Option with a value equal to the exercise price or (v) by such other means as the Committee, in its discretion, may authorize. In accordance with the rules and procedures authorized by the Committee for this purpose, an Option may also be exercised through a “cashless exercise” procedure authorized by the Committee that permits Participants to exercise Options by delivering a properly executed exercise notice to the Corporation together with a copy of irrevocable instructions to a broker to deliver promptly to the Corporation the amount of sale or loan proceeds necessary to pay the exercise price and the amount of any required tax or other withholding obligations.

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(d) EVIDENCE OF GRANT. All Options shall be evidenced by an Award Agreement between the Corporation and the Participant. The Award Agreement shall include such provisions not inconsistent with the Plan as may be specified by the Committee.

(e) EXERCISE TERM. In no event may any Option be exercisable for more than ten years from the date of its grant.

7.2 INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options granted under the Plan must comply with the following additional rules:

(a) LAPSE OF OPTION. An Incentive Stock Option shall lapse under the earliest of the following circumstances; provided, however, that the Committee may, prior to the lapse of the Incentive Stock Option under the circumstances described in paragraphs (3), (4) and (5) below, provide in writing that the Option will extend until a later date, but if an Option is exercised after the dates specified in paragraphs (3), (4) and (5) below, it will automatically become a Non-Qualified Stock Option:

(1) The Incentive Stock Option shall lapse as of the option expiration date set forth in the Award Agreement.

(2) The Incentive Stock Option shall lapse ten years after it is granted, unless an earlier time is set in the Award Agreement.

(3) If the Participant terminates employment for any reason other than as provided in paragraph (4) or (5) below, the Incentive Stock Option shall lapse, unless it is previously exercised, three months after the Participant’s termination of employment; provided, however, that if the Participant’s employment is terminated by the Corporation for Cause, the Incentive Stock Option shall (to the extent not previously exercised) lapse immediately.

(4) If the Participant terminates employment by reason of his Disability, the Incentive Stock Option shall lapse, unless it is previously exercised, one year after the Participant’s termination of employment.

(5) If the Participant dies while employed, or during the three-month period described in paragraph (3) or during the one-year period described in paragraph (4) and before the Option otherwise lapses, the Option shall lapse one year after the Participant’s death. Upon the Participant’s death, any exercisable Incentive Stock Options may be exercised by the Participant’s beneficiary, determined in accordance with Section 13.5.

Unless the exercisability of the Incentive Stock Option is accelerated as provided in Article 13, if a Participant exercises an Option after termination of employment, the Option may be exercised only with respect to the shares that were otherwise vested on the Participant’s termination of employment.

(b) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of the time an Award is made) of all shares of Stock with respect to which Incentive Stock Options are first exercisable by a Participant in any calendar year may not exceed $100,000.

(c) TEN PERCENT OWNERS. No Incentive Stock Option shall be granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Corporation or any Parent or Affiliate unless the exercise price per share of such Option is at least 110% of the Fair Market Value per share of Stock at the date of grant and the Option expires no later than five years after the date of grant.

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(d) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive Stock Option may be made pursuant to the Plan after the day immediately prior to the tenth anniversary of the Effective Date.

(e) RIGHT TO EXERCISE. During a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative.

(f) DIRECTORS. The Committee may not grant an Incentive Stock Option to a Non-Employee Director. The Committee may grant an Incentive Stock Option to a director who is also an employee of the Corporation or any Parent or Affiliate but only in that individual’s position as an employee and not as a director.

7.3 NO REPRICING OF OPTIONS. The Committee may not “reprice” any Option. “Reprice” means any of the following or any other action that has the same effect: (i) amending an Option to reduce its exercise price, (ii) canceling an Option at a time when its exercise price exceeds the Fair Market Value of a share of Stock in exchange for an Option, Restricted Stock Award or other equity award unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction, or (iii) taking any other action that is treated as a repricing under GAAP, provided that nothing in this Section 7.3 shall prevent the Committee from making adjustments pursuant to Section 14.1.

7.4 OPTION EXCHANGE OFFER. Notwithstanding any other provision of the Plan to the contrary, upon approval of the Company’s stockholders, the Committee may provide for, and the Company may implement, a one-time-only option exchange offer, pursuant to which certain outstanding Options could, at the election of the person holding such Options, be tendered to the Company in exchange for the issuance of a lesser amount of Options with a lower exercise price, provided that such one-time-only option exchange offer is commenced within six months of the date of such stockholder approval. An additional 1.6 million shares of common stock will be available for issuance of options to be granted under the Plan pursuant to the option exchange offer. These shares will be used only for options granted in the exchange program, and, notwithstanding any other provision of the Plan, if any of those shares are not issued pursuant to the new options granted in the exchange program for any reason (including upon forfeiture or expiration of the new options), they will cease to be available for issuance under the 2006 Plan.

ARTICLE 8

STOCK APPRECIATION RIGHTS

8.1 GRANT OF STOCK APPRECIATION RIGHTS. The Committee is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions:

(a) RIGHT TO PAYMENT. Upon the exercise of a Stock Appreciation Right, the Participant to whom it is granted has the right to receive the excess, if any, of:

(1) The Fair Market Value of one share of Stock on the date of exercise; over

(2) The grant price of the Stock Appreciation Right as determined by the Committee, which shall not be less than the Fair Market Value of one share of Stock on the date of grant.

(b) OTHER TERMS. All awards of Stock Appreciation Rights shall be evidenced by an Award Agreement. The terms, methods of exercise, methods of settlement, form of consideration payable in settlement, and any other terms and conditions of any Stock Appreciation Right shall be determined by the Committee at the time of the grant of the Award and shall be reflected in the Award Agreement, provided that each Stock Appreciation Right shall lapse ten years after it is granted, unless an earlier time is set in the Award Agreement.

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8.2 NO REPRICING OF STOCK APPRECIATION RIGHTS. The Committee may not “reprice” any Stock Appreciation Right. “Reprice” means any of the following or any other action that has the same effect: (i) amending a Stock Appreciation Right to reduce its grant price, (ii) canceling a Stock Appreciation Right at a time when its grant price exceeds the Fair Market Value of a share of Stock in exchange for an Option, Restricted Stock Award or other equity award unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction, or (iii) taking any other action that is treated as a repricing under GAAP, provided that nothing in this Section 8.2 shall prevent the Committee from making adjustments pursuant to Section 14.1.

ARTICLE 9

PERFORMANCE SHARE AWARDS AND

PERFORMANCE SHARE UNIT AWARDS

9.1 PERFORMANCE SHARE AWARDS. The Committee is authorized to grant Performance Share Awards to Participants on such terms and conditions as may be selected by the Committee. The Committee shall have the complete discretion to determine the number of Performance Share Awards granted to each Participant, subject to Section 5.6. All Performance Share Awards shall be evidenced by an Award Agreement. A grant of a Performance Share Award shall consist of a Target Number of shares of Stock granted to an Eligible Individual subject to risk of forfeiture for failure to achieve the Performance Targets and subject to the terms, conditions and restrictions set forth in the Plan and the applicable Award Agreement. The Performance Targets will be evaluated at the end of the applicable Performance Period and a Participant may receive more or less than the Target Number of shares of Stock subject to a Performance Share Award, subject to Section 5.6, depending on the extent to which the Performance Targets and other terms and conditions to payment are met over the Performance Period.

9.2 PERFORMANCE SHARE UNIT AWARDS. The Committee is authorized to grant Performance Share Unit Awards to Participants on such terms and conditions as may be selected by the Committee. The Committee shall have the complete discretion to determine the number of Performance Share Unit Awards granted to each Participant, subject to Section 5.6. All Performance Share Unit Awards shall be evidenced by an Award Agreement. A Performance Stock Unit Award shall entitle a Participant to receive, subject to the terms, conditions and restrictions set forth in the Plan and established by the Committee in connection with the Award and specified in the applicable Award Agreement, a Target Number of shares of Stock based upon the achievement of Performance Targets over the applicable Performance Period. Performance Share Unit Awards may be payable in cash, Stock or other property, as determined by the Committee and reflected in the Award Agreement. The Performance Targets will be evaluated at the end of the applicable Performance Period and a Participant may receive more or less than the Target Number of shares of Stock subject to a Performance Share Unit Award, subject to Section 5.6, depending on the extent to which the Performance Targets and other terms and conditions to payment are met over the Performance Period.

ARTICLE 10

RESTRICTED STOCK AWARDS AND

RESTRICTED STOCK UNIT AWARDS

10.1 RESTRICTED STOCK AWARDS.

(a) GRANT. The Committee is authorized to grant Restricted Stock Awards to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. All Restricted Stock Awards shall be evidenced by an Award Agreement. A Restricted Stock Award shall consist of one or more shares of Stock granted to an Eligible Individual, and shall be subject to the terms, conditions and restrictions set forth in the Plan and established by the Committee in connection with the Award and specified in the applicable Award Agreement.

(b) ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.

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(c) FORFEITURE. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment during the applicable restriction period or upon failure to satisfy a performance goal during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Corporation; provided, however, that the Committee may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.

(d) CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing shares of Restricted Stock are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock.

10.2 RESTRICTED STOCK UNIT AWARDS. The Committee is authorized to grant Restricted Stock Unit Awards to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. All Restricted Stock Unit Awards shall be evidenced by an Award Agreement. A Restricted Stock Unit shall entitle a Participant to receive, subject to the terms, conditions and restrictions set forth in the Plan and established by the Committee in connection with the Award, one or more shares of Stock. Restricted Stock Units may, among other things, be subject to restrictions on transferability, vesting requirements or other specified circumstances under which they may be canceled. Restricted Stock Units may be payable in cash, shares of Stock or other property, as determined by the Committee and reflected in the Award Agreement.

10.3 VESTING PERIOD. Notwithstanding any provision in the Plan to the contrary, Restricted Stock Awards and Restricted Stock Unit Awards shall be subject to a vesting period of no less than three years and will vest at the rate of not more than one-third of the award each year.

ARTICLE 11

DIVIDEND EQUIVALENTS

11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend Equivalents to Participants subject to such terms and conditions as may be selected by the Committee. Dividend Equivalents shall entitle the Participant to receive payments (in cash, Stock or other property) equal to dividends with respect to all or a portion of the number of shares of Stock subject to an Award, as determined by the Committee. The Committee may provide that Dividend Equivalents be paid or distributed when accrued, or be deemed to have been reinvested in additional shares of Stock or otherwise reinvested; provided, however, that the terms of any reinvestment of Dividend Equivalents must comply with all applicable laws, rules and regulations, including, without limitation, Section 409A.

ARTICLE 12

OTHER STOCK-BASED AWARDS

12.1 GRANT OF OTHER STOCK-BASED AWARDS. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, shares of Stock awarded purely as a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of Stock, stock units, phantom stock and other Awards valued by reference to book value of shares of Stock or the value of securities of or the performance of specified Parents or Subsidiaries. The Committee shall determine the terms and conditions of such Awards.

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ARTICLE 13

PROVISIONS APPLICABLE TO AWARDS

13.1 STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for, any other Award granted under the Plan. If an Award is granted in substitution for another Award, the Committee may require the surrender of such other Award in consideration of the grant of the new Award. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

13.2 TERM OF AWARD. The term of each Award shall be for the period as determined by the Committee, provided that in no event shall the term of any Incentive Stock Option or a Stock Appreciation Right granted in tandem with the Incentive Stock Option exceed a period of ten years from the date of its grant (or, if Section 7.2(c) applies, five years from the date of its grant).

13.3 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any applicable law or Award Agreement, payments or transfers to be made by the Corporation or a Parent or Affiliate on the grant or exercise of an Award may be made in such form as the Committee determines at or after the time of grant, including, without limitation, cash, Stock, other Awards or other property, or any combination thereof, and may be made in a single payment or transfer, in installments or on a deferred basis, in each case determined in accordance with rules adopted by, and at the discretion of, the Committee.

13.4 LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or restricted Award may be pledged, encumbered or hypothecated to or in favor of any party other than the Corporation or a Parent or Affiliate, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Corporation or a Parent or Affiliate. No unexercised or restricted Award shall be assignable or transferable by a Participant other than by will or the laws of descent and distribution or, except in the case of an Incentive Stock Option, pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award under the Plan; provided, however, that the Committee may (but need not) permit other transfers where the Committee concludes that such transferability (i) does not result in accelerated taxation or other adverse tax consequences, (ii) does not cause any Option intended to be an Incentive Stock Option to fail to be described in Section 422(b) of the Code, (iii) does not result in cash or any other consideration being exchanged for the Award, and (iv) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including, without limitation, state or federal tax or securities laws applicable to transferable Awards.

13.5 BENEFICIARIES. Notwithstanding Section 13.4, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and such Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been designated or survives the Participant, payment shall be made to the Participant’s estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time, provided the change or revocation is filed with the Committee.

13.6 STOCK CERTIFICATES. All Stock issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted or traded. The Committee may place legends on any Stock certificate or issue instructions to the transfer agent to reference restrictions applicable to the Stock.

13.7 ACCELERATION UPON DEATH OR DISABILITY. Unless otherwise set forth in an Award Agreement, upon the Participant’s death or Disability during his employment or service as a director, all outstanding Options, Stock Appreciation Rights, Restricted Stock Awards and other Awards in the nature of rights that may be exercised shall become fully exercisable and all restrictions on outstanding Awards shall lapse. Any Option or Stock Appreciation Right shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Agreement. To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Section 7.2(b), the excess Options shall be deemed to be Non-Qualified Stock Options.

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13.8 ACCELERATION OF VESTING AND LAPSE OF RESTRICTIONS. The Committee may, in its sole discretion, at any time (including, without limitation, prior to, coincident with or subsequent to a Change of Control) determine that in the event of retirement of the Participant or in the event of a Change of Control, (a) all or a portion of a Participant’s Options, Stock Appreciation Rights and other Awards in the nature of rights that may be exercised shall become fully or partially exercisable, and/or (b) all or a part of the restrictions on all or a portion of the outstanding Awards shall lapse, in each case, as of such date as the Committee may, in its sole discretion, declare; provided, however, that, with respect to Awards that are subject to Section 409A, the Committee shall not have the authority to accelerate or postpone the timing of payment or settlement of an Award in a manner that would cause such Award to become subject to the interest and penalty provisions under Section 409A. The Committee may discriminate among Participants and among Awards granted to a Participant in exercising its discretion pursuant to this Section 13.8.

13.9 OTHER ADJUSTMENTS. If (i) an Award is accelerated under Section 13.8 or (ii) a Change of Control occurs (regardless or whether acceleration under Section 13.8 occurs), the Committee may, in its sole discretion, provide (a) that the Award will expire after a designated period of time after such acceleration or Change of Control, as applicable, to the extent not then exercised, (b) that the Award will be settled in cash rather than Stock, (c) that the Award will be assumed by another party to a transaction giving rise to the acceleration or a party to the Change of Control, (d) that the Award will otherwise be equitably converted or adjusted in connection with such transaction or Change of Control, or (e) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated; provided, however, that, with respect to Awards that are subject to Section 409A, the Committee shall not have the authority to accelerate or postpone the timing of payment or settlement of an Award in a manner that would cause such Award to become subject to the interest and penalty provisions under Section 409A.

13.10 PERFORMANCE GOALS. In order to preserve the deductibility of an Award under Section 162(m) of the Code, the Committee may determine that any Award granted pursuant to the Plan to a Participant that is or is expected to become a Covered Employee shall be determined solely on the basis of (a) the achievement by the Corporation or a Parent or Subsidiary of a specified target return, or target growth in return, on equity or assets, (b) the Corporation’s stock price, (c) the Corporation’s total shareholder return (stock price appreciation plus reinvested dividends) relative to a defined comparison group or target over a specific performance period, (d) the achievement by the Corporation or a Parent or Subsidiary, or a business unit of any such entity, of a specified target, or target growth in, net income, revenues, earnings per share, earnings before income and taxes, and earnings before income, taxes, depreciation and amortization, or (e) any combination of the goals set forth in (a) through (d) above. If an Award is made on such basis, the Committee shall establish goals prior to the beginning of the period for which such performance goal relates (or such later date as may be permitted under Section 162(m) of the Code or the regulations thereunder), and the Committee has the right for any reason to reduce (but not increase) the Award, notwithstanding the achievement of a specified goal. Any payment of an Award granted with performance goals shall be conditioned on the written certification of the Committee in each case that the performance goals and any other material conditions were satisfied.

13.11 TERMINATION OF EMPLOYMENT. Whether military, government or other service or other leave of absence shall constitute a termination of employment shall be determined in each case by the Committee at its discretion, and any determination by the Committee shall be final and conclusive. A termination of employment shall not occur (i) in a circumstance in which a Participant transfers from the Corporation to one of its Parents or Subsidiaries, transfers from a Parent or Affiliate to the Corporation, or transfers from one Parent or Affiliate to another Parent or Affiliate, or (ii) in the discretion of the Committee as specified at or prior to such occurrence, in the case of a split-off, spin-off, sale or other disposition of the Participant’s employer from the Corporation or any Parent or Affiliate. To the extent that this provision causes Incentive Stock Options to extend beyond three months from the date a Participant is deemed to be an employee of the Corporation, a Parent or Affiliate for purposes of Section 424(f) of the Code, the Options held by such Participant shall be deemed to be Non-Qualified Stock Options.

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ARTICLE 14

CHANGES IN CAPITAL STRUCTURE

14.1 GENERAL. In the event of a corporate transaction involving the Corporation (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the authorization limits under Sections 5.1 and 5.6 shall be adjusted proportionately, and the Committee may adjust Awards to preserve the benefits or potential benefits of the Awards. Action by the Committee may include: (i) adjustment of the number and kind of shares which may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards; (iv) adjustments to the type or form of Award; and (v) any other adjustments that the Committee determines to be equitable. Without limiting the foregoing, in the event a stock dividend or stock split is declared upon the Stock, the authorization limits under Sections 5.1 and 5.6 shall be increased proportionately, and the shares of Stock then subject to each Award shall be increased proportionately without any change in the aggregate purchase price therefor.

ARTICLE 15

AMENDMENT, MODIFICATION AND TERMINATION

15.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan; provided, however, that the Board or the Committee may condition any amendment or modification on the approval of shareholders of the Corporation if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws, policies or regulations.

15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the Committee may amend, modify or terminate any outstanding Award or Award Agreement without approval of the Participant; provided, however, that, subject to the terms of the applicable Award Agreement, such amendment, modification or termination shall not, without the Participant’s consent, reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment or termination; provided further, however, that the original term of any Option may not be extended. No termination, amendment, or modification of the Plan shall adversely affect any Award previously granted under the Plan, without the written consent of the Participant. Notwithstanding any provision herein to the contrary, the Committee shall have broad authority to amend the Plan or any outstanding Award under the Plan without approval of the Participant to the extent necessary or desirable (i) to comply with, or take into account changes in, applicable tax laws, securities laws, accounting rules and other applicable laws, rules and regulations or (ii) to ensure that an Award is not subject to interest and penalties under Section 409A.

ARTICLE 16

GENERAL PROVISIONS

16.1 NO RIGHTS TO AWARDS. No Participant or any Eligible Individual shall have any claim to be granted any Award under the Plan, and neither the Corporation nor the Committee is obligated to treat Participants or Eligible Individuals uniformly.

16.2 NO STOCKHOLDER RIGHTS. No Award gives the Participant any of the rights of a shareholder of the Corporation unless and until shares of Stock are in fact issued to such person in connection with the exercise, payment or settlement of such Award.

16.3 WITHHOLDING. The Corporation or any Subsidiary, Parent or Affiliate shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Corporation, an amount sufficient to satisfy federal, state, local and other taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of the Plan. With respect to withholding required upon any taxable event under the Plan, the Committee may, at the time the Award is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by (i) withholding from the Award shares of Stock or (ii) delivering shares of Stock that are already owned, having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes. The Corporation or any Subsidiary, Parent or Affiliate, as appropriate, shall also have the right to deduct from all cash payments made to a Participant (whether or not such payment is made in connection with an Award) any applicable taxes required to be withheld with respect to such payments.

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16.4 NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Corporation or any Parent or Affiliate to terminate any Participant’s employment or status as an officer or director at any time, nor confer upon any Participant any right to continue as an employee, officer or director of the Corporation or any Parent or Affiliate. In its sole discretion, the Board or the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver shares of Stock with respect to awards hereunder.

16.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Corporation or any Parent or Affiliate.

16.6 INDEMNIFICATION. To the extent allowable under applicable law, each member of the Committee shall be indemnified and held harmless by the Corporation from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit or proceeding to which such member may be a party or in which he may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by such member in satisfaction of judgment in such action, suit or proceeding against him; provided such member shall give the Corporation an opportunity, at its own expense, to handle and defend the same before such member undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Corporation’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Corporation may have to indemnify them or hold such persons harmless.

16.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Corporation or any Parent or Affiliate unless provided otherwise in such other plan.

16.8 EXPENSES; APPLICATION OF FUNDS. The expenses of administering the Plan shall be borne by the Corporation and its Parents or Subsidiaries. The proceeds received by the Corporation from the sale of shares of Stock pursuant to Awards will be used for general corporate purposes.

16.9 TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

16.10 GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

16.11 FRACTIONAL SHARES. No fractional shares of Stock shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down.

16.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Corporation to make payment of awards in Stock or otherwise shall be subject to all applicable laws, rules and regulations, and to such approvals by government agencies as may be required. To the extent that Awards under the Plan are awarded to individuals who are domiciled or resident outside of the United States or to persons who are domiciled or resident in the United States but who are subject to the tax laws of a jurisdiction outside of the United States, the Committee may adjust the terms of the Awards granted hereunder to such person (i) to comply with the laws of such jurisdiction and (ii) to avoid adverse tax consequences relating to an Award. The authority granted under the previous sentence shall include the discretion for the Committee to adopt, on behalf of the Corporation, one or more sub-plans applicable to separate classes of Participants who are subject to the laws of jurisdictions outside of the United States.

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16.13 SECURITIES LAW RESTRICTIONS. An Award may not be exercised or settled and no shares of Stock may be issued in connection with an Award unless the issuance of such shares of Stock has been registered under the 1933 Act and qualified under applicable state “blue sky” laws and any applicable foreign securities laws, or the Corporation has determined that an exemption from registration and from qualification under such state “blue sky” laws is available. The Corporation shall be under no obligation to register under the 1933 Act, or any state securities act, any of the shares of Stock issued in connection with the Plan. The shares issued in connection with the Plan may in certain circumstances be exempt from registration under the 1933 Act, and the Corporation may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption. The Committee may require each Participant purchasing or acquiring shares of Stock pursuant to an Award under the Plan to represent to and agree with the Corporation in writing that such Participant is acquiring the shares of Stock for investment purposes and not with a view to the distribution thereof. All certificates for shares of Stock delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any exchange upon which the Stock is then listed, and any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

16.14 SATISFACTION OF OBLIGATIONS. Subject to applicable law, the Corporation may apply any cash, shares of Stock, securities or other consideration received upon exercise or settlement of an Award to any obligations a Participant owes to the Corporation and its Parents, Subsidiaries or Affiliates in connection with the Plan or otherwise, including, without limitation, any tax obligations or obligations under a currency facility established in connection with the Plan.

16.15 SECTION 409A OF THE CODE. If any provision of the Plan or an Award Agreement contravenes any regulations or Treasury guidance promulgated under Section 409A or could cause an Award to be subject to the interest and penalties under Section 409A, such provision of the Plan or any Award Agreement shall be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A. Moreover, any discretionary authority that the Board or the Committee may have pursuant to the Plan shall not be applicable to an Award that is subject to Section 409A to the extent such discretionary authority will contravene Section 409A.

16.16 GOVERNING LAW. To the extent not governed by federal law, the Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware.

16.17 ADDITIONAL PROVISIONS. Each Award Agreement may contain such other terms and conditions as the Board or the Committee may determine, provided that such other terms and conditions are not inconsistent with the provisions of the Plan. In the event of any conflict or inconsistency between the Plan and an Award Agreement, the Plan shall govern and the Award Agreement shall be interpreted to minimize or eliminate such conflict or inconsistency.

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EX-21.01

Exhibit 21.01

Subsidiaries of the Company

America’s Drive-In Brand Properties LLC, a Kansas limited liability company

America’s Drive-In Restaurants LLC, a Kansas limited liability company

SDI Interests Inc., an Oklahoma corporation

Sonic Capital LLC, a Delaware limited liability company

Sonic Industries LLC, a Delaware limited liability company

Sonic Industries Services Inc., an Oklahoma corporation

Sonic Partnership Interests Inc., an Oklahoma corporation

Sonic Property Development, L.L.C., an Oklahoma limited liability company

Sonic Restaurants, Inc., an Oklahoma corporation

Sonic Technology Fund, L.L.C., an Oklahoma limited liability company

Sonic Value Card, L.L.C., a Virginia limited liability company

SPOTlight, LLC, an Oklahoma limited liability company

SRI Real Estate Holding LLC, a Delaware limited liability company

SRI Real Estate Properties LLC, a Delaware limited liability company

As of August 31, 2010, Sonic Restaurants, Inc. or America’s Drive-In Restaurants LLC owned the majority interest in 24 partnerships and limited liability companies, each of which operates a Sonic Drive-In restaurant. The names of those 24 majority-owned entities have been omitted.

EX-23.01

Exhibit 23.01

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-26359) pertaining to the Sonic Corp. Savings and Profit Sharing Plan, Registration Statement (Form S-8 No. 333-131450) pertaining to the Sonic Corp. 2006 Long-Term Incentive Plan, the Registration Statement (Form S-8 No. 333-64890) pertaining to the 1991 Sonic Corp. Stock Option Plan, 2001 Sonic Corp. Stock Option Plan and 2001 Sonic Corp. Directors’ Stock Option Plan, the Registration Statements (Forms S-8 No. 333-09373, No. 33-40989 and No. 33-78576) pertaining to the 1991 Sonic Corp. Stock Option Plan, the Registration Statement (Form S-8 No. 33-40988) pertaining to the 1991 Sonic Corp. Stock Purchase Plan, the Registration Statement (Form S-8 No. 33-40987) pertaining to the 1991 Sonic Corp. Directors’ Stock Option Plan and the Registration Statement (Form S-3 No. 33-95716) for the registration of 1,420,000 shares of its common stock, and the related Prospectuses of our reports dated October 29, 2010, with respect to the consolidated financial statements and schedule of Sonic Corp. and the effectiveness of internal control over financial reporting of Sonic Corp., included in the Annual Report (Form 10-K) for the year ended August 31, 2010.

	ERNST & YOUNG LLP
Oklahoma City, Oklahoma
October 29, 2010

EX-31.01

Exhibit 31.01

CERTIFICATION PURSUANT TO

SEC RULE 13a-14

I, J. Clifford Hudson, certify that:

1. I have reviewed this annual report on Form 10-K of Sonic Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2010

/s/ J. Clifford Hudson

J. Clifford Hudson

Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATION PURSUANT TO

SEC RULE 13a-14

I, Stephen C. Vaughan, certify that:

1. I have reviewed this annual report on Form 10-K of Sonic Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2010

/s/ Stephen C. Vaughan

Stephen C. Vaughan

Chief Financial Officer

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned hereby certifies that to his knowledge the annual report of Sonic Corp. (the “Company”) filed with the Securities and Exchange Commission on the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly represents, in all material respects, the financial condition and results of operations of the Company.

Date: October 29, 2010

/s/ J. Clifford Hudson

J. Clifford Hudson

Chief Executive Officer

EX-32.02

Exhibit 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned hereby certifies that to his knowledge the annual report of Sonic Corp. (the “Company”) filed with the Securities and Exchange Commission on the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly represents, in all material respects, the financial condition and results of operations of the Company.

Date: October 29, 2010

/s/ Stephen C. Vaughan

Stephen C. Vaughan

Chief Financial Officer