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

For the Fiscal Year Ended		Commission File Number
August 31, 2004		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 Exchange Act:

None

Securities Registered Pursuant to Section 12(g) of the Exchange Act:

Common Stock, Par Value $.01
Rights to Purchase Series A Junior Preferred Stock, Par Value $.01

        Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for the shorter period that the Registrant has had 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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.         .

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) YES   X  . NO        .

        As of February 29, 2004, the aggregate market value of the 56,561,395 shares of common stock of the Company held by non-affiliates of the Company was $1,279,814,696, based on the closing sales price for the common stock as reported for that date. As of October 31, 2004, the Registrant had 60,147,794 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, 2004.

FORM 10-K OF SONIC CORP.

TABLE OF CONTENTS

PART I
Item 1.	Business	1
Item 2.	Properties	9
Item 3.	Legal Proceedings	10
Item 4.	Submission of Matters to a Vote of Security Holders	10
Item 4A.	Executive Officers of the Company	10

PART II
Item 5.	Market for the Company's Common Stock, Related Stockholder Matters and Issuer Purchases of
	Equity Securities	11
Item 6.	Selected Financial Data	12
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A.	Quantitative and Qualitative Disclosure About Market Risks	26
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	26
Item 9A.	Controls and Procedures	26
Item 9B.	Other Information	26

PART III
Item 10.	Directors and Executive Officers of the Company	27
Item 11.	Executive Compensation	27
Item 12.	Security Ownership of Certain Beneficial Owners and Management	27
Item 13.	Certain Relationships and Related Transactions	27
Item 14.	Principal Accounting Fees and Services	27

PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	27

FORM
10-K

SONIC CORP.

PART I

Item 1. Business

General

        Sonic Corp. (the “Company”) operates and franchises the largest chain of drive-in restaurants (“Sonic Drive-Ins”) in the United States. As of August 31, 2004, the Company had 2,885 Sonic Drive-Ins in operation, consisting of 539 Partner Drive-Ins and 2,346 Franchise Drive-Ins, principally in the southern two-thirds of the United States. Partner Drive-Ins are those Sonic Drive-Ins owned and operated by either a limited liability company or a general partnership. We own a majority interest, typically at least 60%, and the supervisor and manager of the drive-in own a minority interest in each Partner Drive-In limited liability company or general partnership. Franchise Drive-Ins are owned and operated by our franchisees. At a typical Sonic Drive-In, a customer drives into one of 24 to 36 covered drive-in spaces, orders through an intercom speaker system, and has the food delivered by a carhop within an average of four minutes. Most Sonic Drive-Ins also include a drive-through lane and many include patio seating.

        The Company has two operating subsidiaries, Sonic Industries Inc. and Sonic Restaurants, Inc. Sonic Industries Inc. serves as the franchisor of the Sonic Drive-In chain, as well as the administrative services center for the Company. Sonic Restaurants, Inc. develops and operates the Partner Drive-Ins. References to “Sonic,” the “Company,” “we,” “us,” and “our” in this report are references to Sonic Corp. and its subsidiaries and predecessors, unless the context indicates otherwise.

        Our objective is to maintain our position as, or to become, a leading operator in terms of the number of quick-service restaurants within each of our core and developing markets. We have developed and are implementing a strategy designed to build the Sonic brand and to continue to achieve 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 Partner Drive-Ins and Franchise Drive-Ins within Sonic’s core and developing markets; (4) an owner/operator philosophy, in which managers have an equity interest in their restaurant, thereby providing an incentive for managers to operate restaurants profitably and efficiently; and (5) a commitment to strong franchisee relationships.

        The Sonic Drive-In restaurant chain was begun in the early 1950‘s by Sonic’s predecessors. 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.

Menu

        Sonic Drive-Ins feature Sonic signature items, such as made-to-order sandwiches and hamburgers, extra-long cheese coneys, hand-battered onion rings, tater tots, salads, specialty soft drinks including cherry limeades and slushes, and frozen desserts. In addition, Sonic Drive-Ins offer certain other items during limited-time promotions.

        All Sonic Drive-Ins also offer a breakfast menu. Items on the breakfast menu include sausage, ham, or bacon with egg and cheese Breakfast Toaster_® sandwiches, sausage and egg burritos, and specialty breakfast drinks. Sonic Drive-Ins are open beginning no later than 7 a.m. and serve the full menu all day.

Restaurant Locations

        As of August 31, 2004, Sonic owned or franchised 2,885 Sonic Drive-Ins, which are located in 29 states, principally in the southern two-thirds of the United States, and in Mexico. We identify markets based on television viewing areas and further classify markets as either core or developing. We define our core television markets as those markets where the penetration of Sonic Drive-Ins (as measured by population per restaurant, advertising levels, and share of restaurant spending) has reached a certain level of market maturity established by management. All other television markets where Sonic Drive-Ins are located are referred to as developing markets. A market may be located where it extends into more than one state. Our core markets contain approximately 71% of all Sonic Drive-Ins as of August 31, 2004. Developing markets are located in the states indicated below and Mexico. Some states have both core markets and developing markets. The following table sets forth the number of Partner Drive-Ins and Franchise Drive-Ins by core and developing markets as of August 31, 2004:

	Core Markets			Developing Markets			Total
States	Partner	Franchise	Total	Partner	Franchise	Total
Alabama	13	8	21	15	61	76	97
Arizona					82	82	82
Arkansas	25	148	173				173
California					24	24	24
Colorado				30	36	66	66
Florida				19	55	74	74
Georgia				7	87	94	94
Idaho					12	12	12
Illinois		8	8	3	19	22	30
Indiana					22	22	22
Iowa					12	12	12
Kansas	36	92	128				128
Kentucky		8	8		54	54	62
Louisiana	19	124	143				143
Mississippi		113	113				113
Missouri	39	131	170		14	14	184
Nebraska				6	14	20	20
Nevada					17	17	17
New Mexico		69	69				69
North Carolina					75	75	75
Ohio					6	6	6
Oklahoma	73	172	245				245
South Carolina					67	67	67
Tennessee	30	159	189	10		10	199
Texas	187	605	792				792
Utah				7	23	30	30
Virginia				20	18	38	38
West Virginia					1	1	1
Wyoming					4	4	4
Mexico					6	6	6
Total	422	1,637	2,059	117	709	826	2,885

Expansion

        During fiscal year 2004, we opened 21 Partner Drive-Ins and our franchisees opened 167 Franchise Drive-Ins. During fiscal year 2005, we anticipate approximately 200 to 215 new Sonic Drive-In openings, including 170 to 180 openings by our franchisees. That expansion plan involves the opening of new Sonic Drive-Ins by franchisees under existing area development agreements, single-store development by existing franchisees, and development by new

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franchisees. We believe that our existing core and developing markets offer a significant growth opportunity for both Partner Drive-In and Franchise Drive-In expansion. The ability of Sonic and its franchisees to open the anticipated number of Sonic Drive-Ins during fiscal year 2005 necessarily will depend on various factors. Those factors include (among others) the availability of suitable sites, the negotiation of acceptable lease or purchase terms for new locations, local permitting and regulatory compliance, the financial resources of Sonic and its franchisees, and the general economic and business conditions to be faced in fiscal year 2005.

        Our expansion strategy for Partner Drive-Ins involves two principal components: (1) the building-out of existing core markets and (2) the further penetration of current developing markets. The Company is always in the process of identifying new developing markets for the opening of both Partner Drive-Ins and Franchise Drive-Ins. In addition, we may consider the acquisition of other similar concepts for conversion to Sonic Drive-Ins.

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 24 to 36 parking spaces, with each space having its own intercom speaker system and menu board. In addition, since 1995, we have incorporated a drive-through service and patio seating area in most new Sonic Drive-Ins. We have 133 Sonic Drive-Ins that provide an indoor seating area, 47 of which are located in non-traditional areas such as shopping mall food courts and convenience stores.

Marketing

        We have designed our marketing program to differentiate Sonic Drive-Ins from our competitors by emphasizing five key areas of customer satisfaction: (1) wide variety of distinctive made-to-order menu items, (2) the personal manner of service by carhops, (3) speed of service, (4) quality, and (5) value. The marketing plan includes promotions for use throughout the Sonic chain. We support those promotions with television, radio commercials, point-of-sale materials, and other media as appropriate. Those promotions generally center on products which highlight signature menu items of Sonic Drive-Ins.

        Each year Sonic (with involvement of the Sonic Franchise Advisory Council) develops a marketing plan. Funding for our marketing plan has three components: (1) the Sonic Advertising Fund, (2) local advertising expenditures, and (3) the Sonic Marketing Fund. The Sonic Advertising Fund is a national media production fund that we administer. Each Sonic Drive-In must contribute 0.375% to 0.75%, depending on the type of license agreement, of the Sonic Drive-In’s gross revenues to the Sonic Advertising Fund. Once a sufficient number of Sonic Drive-Ins have been opened in a market, we require the formation of advertising cooperatives among drive-in owners to pool and direct advertising expenditures in local markets. Each Sonic Drive-In must spend 1.125% to 3.25%, depending on the type of license agreement, of the drive-in’s gross revenues on local advertising, either directly (if the advertising cooperative for the drive-in’s market is not yet formed) or through participation in the local advertising cooperative. The members of each local advertising cooperative may elect and frequently do elect to require the cooperative’s member drive-ins to contribute more than the minimum percentage of gross revenues to the advertising cooperative’s funds. For fiscal year 2004, drive-ins participating in cooperatives contributed an average of 4.04% of their Sonic Drive-In’s gross revenues to Sonic advertising cooperatives. As of August 31, 2004, 2,766 Sonic Drive-Ins (96% of the chain) participated in advertising cooperatives. The System Marketing Fund is funded out of the required local advertising expenditures by either redistributing 2.0% (1.0% prior to September 2004) of each Sonic Drive-In’s gross revenues from the local advertising cooperatives to the System Marketing Fund or, if no advertising cooperative has been formed, requiring the Sonic Drive-In to pay directly 2.0% of its gross revenues to the System Marketing Fund with a corresponding deduction in the amount the drive-in is required to spend on local advertising. The System Marketing Fund complements local advertising efforts in attracting customers to Sonic Drive-Ins by promoting the message of the Sonic brand to an expanded audience. The primary focus of the System Marketing Fund is to purchase advertising on national cable and broadcast networks and other national media and sponsorship opportunities.

        The total amount spent on media (principally television) exceeded $110 million for fiscal year 2004 and we expect media expenditures to exceed $120 million for fiscal year 2005.

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Purchasing

        We negotiate with suppliers for our primary food products (hamburger patties, dairy products, chicken products, hot dogs, french fries, tater tots, cooking oil, fountain syrup, produce and other items) 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 product specifications that we establish. Suppliers manufacture several key products for Sonic under private label and sell them to authorized distributors for resale to Partner Drive-Ins and Franchise Drive-Ins.

        We require our Partner Drive-Ins and Franchise Drive-Ins to purchase from approved distribution centers. By purchasing as a group, we have achieved cost savings, improved food quality and consistency, and helped decrease the volatility of food and supply costs for Sonic Drive-Ins. For fiscal year 2004, the average cost of food and packaging for a Sonic Drive-In, as reported to us by our Partner Drive-Ins and Franchise Drive-Ins, equaled approximately 28% of net revenues.

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 system includes employee training, supplier product testing, 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 production cycle. Employee training in food safety is covered under our Sonic Drive-In training program, referred to as the STAR Training Program. This program includes specific training information and requirements for every station in the drive-in. We also provide training in ServSafe to drive-in managers. ServSafe is the most recognized food safety training certification in the restaurant industry.

General Operations

        Management Information Systems. We utilize point-of-sale equipment in each of our Partner Drive-Ins and Franchise Drive-Ins. Certain financial and other information is polled on a daily basis from most Partner Drive-Ins and many Franchise Drive-Ins. We are continuing to develop software and hardware enhancements to our management information systems to facilitate improved communication and the exchange of information among the corporate office and Partner Drive-Ins and Franchise Drive-Ins.

        Reporting. The license agreement requires all Sonic Drive-Ins to submit a profit and loss statement on or before the 20^th of each month. All Partner Drive-Ins and 1,128 or 48% of Franchise Drive-Ins submit their data electronically. We expect to add more Sonic Drive-Ins to electronic reporting which will reduce resources needed for manual processing of restaurant level data.

        Hours of Operation. Sonic Drive-Ins typically operate seven days a week and are open from 7:00 a.m. to 11:00 p.m.

Company Operations

        Restaurant Personnel. A typical Partner 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 Partner Drive-In. Each supervisor has the responsibility of overseeing an average of four to seven Partner Drive-Ins. Sonic Restaurants, Inc. (“SRI”), Sonic’s operating subsidiary, oversees the operations and development of and provides administrative services to all Partner Drive-Ins. SRI employs directors of operations who oversee an average of five to six supervisors within their respective regions and report to either a regional vice president or a vice president of SRI. SRI’s four regional vice presidents and three vice presidents report to the president of SRI.

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        Ownership Program. The Sonic Drive-In philosophy stresses an ownership relationship with supervisors and managers. As part of the ownership program, either a limited liability company or a general partnership is formed to own and operate each individual Partner Drive-In. We own a majority interest, typically at least 60%, in each of these limited liability companies and partnerships. Generally, the supervisors and managers own a minority interest in the limited liability company or partnership. The amount of ownership percentage is separately negotiated for each Partner Drive-In. Supervisors and managers are not employees of Sonic or of the limited liability companies or partnerships in which they have an ownership interest. As owners, they share in the profits and are responsible for their share of any losses incurred by their Partner Drive-In. We believe that our ownership structure provides a substantial incentive for Partner Drive-In supervisors and managers to operate their restaurants profitably and efficiently. Additional information regarding our ownership program is incorporated herein by reference to Ownership Program/Allowance for Uncollectible Notes and Accounts Receivable in Part II, Item 7, at page 24 of this Form 10-K.

        Sonic records the interests of supervisors and managers as “minority interest in earnings of restaurants” under costs and expenses of Partner Drive-Ins on its financial statements. We estimate that the average percentage interest of a supervisor was 15% and the average percentage interest of a manager in a Partner Drive-In was 17% in fiscal year 2004. Each Partner Drive-In distributes its available cash flow to its supervisors and managers and to Sonic on a monthly basis pursuant to the terms of the operating agreement or partnership agreement for that restaurant. Sonic has the right, but not the obligation, to purchase the minority interest of the supervisor or manager in the restaurant. The amounts of the buy-in and the buy-out are based on the Partner Drive-In’s sales during the preceding 12 months and approximate the fair market value of a minority interest in that restaurant. Most supervisors and managers finance the buy-in with a loan from a financial institution.

        Each Partner Drive-In usually purchases equipment with funds borrowed from Sonic at competitive rates. In most cases, Sonic alone owns or leases the land and building and guarantees any third-party lease entered into for the site.

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

	2004			2003			2002			2001			2000
Average Sales per Partner
Drive-In (in thousands)	$	883		$	799		$	791		$	772		$	747
Number of Partner Drive-Ins:
Total Open at Beginning of Year		497			452			393			312			296
Newly-Opened and Re-Opened		21			35			40			34			24
Purchased from Franchisees*		24			52			25			50			2
Sold to Franchisees*		(3	)		(41	)		(5	)		(2	)		(6	)
Closed		0			(1	)		(1	)		(1	)		(4	)
Total Open at Year End		539			497			452			393			312

        *The relatively large number of drive-ins sold to franchisees in fiscal year 2003 and purchased from franchisees in fiscal years 2001 through 2004 represent transactions where a majority of Sonic Drive-Ins in a certain market were sold to or purchased from a multi-unit franchisee group. In all such instances where we purchased Sonic Drive-Ins, the selling multi-unit franchisee groups continued to own and operate multiple Franchise Drive-Ins.

Franchise Program

        General. As of August 31, 2004, we had 2,346 Franchise Drive-Ins operating in 29 states and Mexico. A large number of successful multi-unit franchisee groups have developed during the Sonic system's 51 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 167 Franchise Drive-Ins during fiscal year

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2004 and we expect our franchisees to open approximately 170 to 180 Franchise Drive-Ins in fiscal 2005. We consider our franchisees a vital part of our continued growth and believe our relationship with our franchisees is good.

        Franchise Agreements. Each Sonic Drive-In, including each Partner Drive-In, operates under a franchise agreement that provides for payments to Sonic of an initial franchise fee and a royalty fee based on a graduated percentage of the gross revenues of the drive-in. Our current standard license agreement provides for a franchise fee of $30,000 and an ascending royalty rate beginning at 1% of gross revenues and increasing to 5% as the level of gross revenues increases. For non-traditional drive-ins, which are those Sonic Drive-Ins located in venues such as shopping mall food courts and convenience stores, the license agreement provides for a franchise fee of $15,000 and a flat royalty rate of 5% of gross revenues. Approximately 95% of all Sonic Drive-Ins opening in fiscal year 2005 are expected to open under the current standard license agreement, with the remaining 5% expected to open in venues that would be included under the non-traditional license agreement. The current standard license agreement provides for a term of 20 years, with one 10-year renewal option. The term for a non-traditional Sonic Drive-In is typically 10 years, with two five-year renewal options. We have the right to terminate any franchise agreement for a variety of reasons, including a franchisee's failure to make payments when due or failure to adhere to our policies and standards. Many state franchise laws affect our ability to terminate or refuse to renew a franchise.

        As of August 31, 2004, 41% of all Sonic Drive-Ins were subject to the 1% to 5% graduated royalty rate, 50% were subject to a former version of the license agreement (no longer being issued) providing for a 1% to 4% graduated royalty rate, and 9% were subject to a former version of the license agreement (also no longer being issued) providing for a 1% to 3% graduated royalty rate. For fiscal year 2004, Sonic's average royalty rate equaled 3.49%. Beginning in fiscal year 2005 and continuing through fiscal year 2010, a total of 127 Franchise Drive-Ins currently operating under the license agreement providing for the 1% to 3% graduated royalty will have their royalty rates increase to the 1% to 4% graduated royalty rate. The license agreements for the remaining 132 Franchise Drive-Ins which are subject to the 1% to 3% graduated royalty rate began expiring in fiscal year 2004 and will continue to expire through fiscal year 2015. The license agreements for the 97 Franchise Drive-Ins which are subject to the 1% to 4% graduated royalty rate begin expiring in fiscal year 2004 and will continue to expire through fiscal year 2017. Franchise Drive-Ins currently operating under those expiring license agreements will either cease operations or renew their licenses pursuant to the terms of the then current license agreement. We expect that such automatic increases of royalty rates under certain existing license agreements and the renewals of the other expiring license agreements will contribute to an increase in our royalty revenues.

        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 69% of the new Franchise Drive-Ins opened during fiscal year 2004 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. If the developer does not meet the minimum opening requirements, we have the right to terminate the area development agreement and grant a new area development agreement to other franchisees for the area previously covered by the terminated area development agreement.

        During fiscal year 2004, we entered into 30 new area development agreements calling for the opening of 98 Franchise Drive-Ins and amended seven existing development agreements calling for the opening of an additional 53 Franchise Drive-Ins, all during the next six years. As of August 31, 2004, we had a total of 157 area development agreements in effect, calling for the development of 570 additional Sonic Drive-Ins during the next seven years. We cannot give any assurance that our franchisees will achieve that number of new Franchise Drive-Ins for fiscal year 2005 or during the next seven years. Of the 199 Franchise Drive-Ins scheduled to open during fiscal year 2004 under area development agreements in place at the beginning of that fiscal year, 116 or 58% opened during the period.

        Our realization of the expected benefits under various existing and future area development agreements currently depends and will continue to depend upon the ability of the developers to open the minimum number of Sonic Drive-Ins within the time periods required by the agreements. The financial resources of the developers, as well as their experience in managing quick-service restaurant franchises, represent critical factors in the success of area development agreements. Although we grant area development agreements only to those developers whom we believe possess those qualities, we cannot give any assurances that the future performance by developers will result in the

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opening of the minimum number of Sonic Drive-Ins contemplated by the area development agreements or reach the compliance rate we have previously experienced.

        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.

        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 have 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 $4.6 million as of August 31, 2004. We ceased guaranteeing new loans made under the program during fiscal year 2003 and have not been required to make any payments under our agreement with GEC.

        Franchisee Training. Each franchisee must have at least one individual working full time at the Sonic Drive-In who has completed the Sonic Management Development Program before opening or operating the Sonic Drive-In. The program consists of a minimum of 12 weeks of on-the-job training and one week of classroom development. The program emphasizes food safety, quality food preparation, quick service, cleanliness of Sonic Drive-Ins, management techniques and consistency of service. Furthermore, our management teams receive training in ServSafe, the most recognized food safety training certification in the restaurant industry.

        Franchisee Support. In addition to training, advertising and food purchasing as a system, and marketing programs, we provide various other services to our franchisees. Those services include: (1) assistance with quality control through area field representatives, to ensure that each franchisee consistently delivers high quality food and service; (2) support of new franchisees with guidance and training in the opening of their first three Sonic Drive-Ins; and (3) assistance in selecting sites for new Sonic Drive-Ins using demographic data and studies of traffic patterns. Our field services organization consists of 14 field service consultants, 12 field marketing representatives, four regional marketing directors, five new franchise consultants, four regional vice presidents, all with responsibility for defined geographic areas, a director and vice president of new franchise services, and a vice president of franchise finance. The field service consultants provide operational services and support for our franchisees, while the field marketing representatives assist the franchisees with the development of advertising cooperative and local market promotional activities. New franchise consultants support the successful integration of new franchisees into the Sonic system from training through the first months following the opening of each of the franchisee's first three Sonic Drive-Ins. We also have six real estate directors who assist the franchisees with the identification of trade areas for new Franchise Drive-Ins and the franchisees' selection of sites for their Franchise Drive-Ins, subject to Sonic's final approval of those sites. Ten field training consultants provide training to franchisees in such areas as shift management, customer service and financial controls.

        Franchise Operations. Sonic's franchisees operate all Franchise Drive-Ins in accordance with uniform operating standards and specifications. These standards pertain to the quality and preparation of menu items, selection of menu items, maintenance and cleanliness of premises, and employee responsibilities. We develop all standards and specifications with input from franchisees, and they are applied on a system-wide basis. Each franchisee has full discretion to determine the prices charged to its customers.

        Franchise Advisory Council. We have established a Franchise Advisory Council which 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 18 members selected by Sonic. Currently we have six executive committee members who are selected at large. The remaining 12 members are regional members who represent four defined regions of the country and serve three-year terms. We have six Franchise Advisory Council task groups comprised of 49 total members who serve two-year terms and lend support on individual key priorities.

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        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.

	2004			2003			2002			2001			2000
Average Sales Per Franchise
Drive-In (in thousands)	$	983		$	929		$	935		$	899		$	872
Number of Franchise Drive-Ins:
Total Open at Beginning of Year		2,209			2,081			1,966			1,863			1,715
New Franchise Drive-Ins		167			159			142			157			150
Sold to the Company*		(24	)		(52	)		(25	)		(50	)		(2	)
Purchased from the Company*		3			41			5			2			6
Closed and Terminated,
Net of Re-openings		(9	)		(20	)		(7	)		(6	)		(6	)
Total Open at Year End		2,346			2,209			2,081			1,966			1,863

        * The relatively large number of drive-ins purchased from Sonic in fiscal year 2003 and sold to Sonic in fiscal years 2001 through 2004 represent transactions where a majority of Sonic Drive-Ins in a certain market were sold to or purchased from a multi-unit franchisee group. In all such instances where Sonic purchased Sonic Drive-Ins, the selling multi-unit franchisee groups continued to own and operate multiple Franchise Drive-Ins.

Competition

        We compete in the quick-service restaurant industry, a highly competitive industry in terms of price, service, restaurant location, and food quality. The quick-service 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 speed and quality of service, method of food preparation (made-to-order), food quality and variety, signature food items, and monthly promotions. The quality of service, featuring Sonic carhops, constitutes one of our primary marketable points of difference with 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 climate of the locations of a number of Partner Drive-Ins and Franchise Drive-Ins.

Employees

        As of August 31, 2004, we had 305 full-time corporate employees. This number does not include the approximately 17,000 full-time and part-time employees employed by separate partnerships and limited liability companies that operate our Partner Drive-Ins or the supervisors or managers of the Partner Drive-Ins who own a minority interest in the separate partnerships or limited liability companies.

        None of our employees is subject to a collective bargaining agreement. We believe that we have good labor relations with our employees.

8

Trademarks and Service Marks

        Sonic owns numerous trademarks and service marks. We have registered many of those marks, including the “Sonic” logo and trademark, with the United States Patent and Trademark Office and the Mexican Institute of Industrial Property. Trademarks and service marks generally are valid as long as they are used or registered. We believe that our trademarks and service marks have significant value and play an important role in our marketing efforts.

Government Regulations

        We must comply with regulations adopted by the Federal Trade Commission (the “FTC”) and with several state laws that regulate the offer and sale of franchises. We also must comply with a number of state laws that regulate certain substantive aspects of the franchisor-franchisee relationship. The FTC’s Trade Regulation Rule on Franchising (the “FTC Rule”) requires that we furnish prospective franchisees with a franchise offering circular containing information prescribed by the FTC Rule.

        State laws that regulate the franchisor-franchisee relationship presently exist in a substantial number of states. Those laws regulate the franchise relationship, for example, by requiring the franchisor to deal with its franchisees in good faith, by prohibiting interference with the right of free association among franchisees, by regulating discrimination among franchisees with regard to charges, royalties, or fees, and by restricting the development of other restaurants within certain prescribed distances from existing franchised restaurants. Those laws also restrict a franchisor’s rights with regard to the termination of a franchise agreement (for example, by requiring “good cause” to exist as a basis for the termination), by requiring the franchisor to give advance notice and the opportunity to cure the default to the franchisee, and by requiring the franchisor to repurchase the franchisee’s inventory or provide other compensation upon termination. To date, those laws have not precluded us from seeking franchisees in any given area and have not had a significant effect on our operations.

        Each Sonic Drive-In must comply with regulations adopted by federal agencies and with licensing and other regulations enforced by state and local health, sanitation, safety, fire, and other departments. Difficulties or failures in obtaining the required licenses or approvals can delay and sometimes prevent the opening of a new Sonic Drive-In.

        Sonic Drive-Ins must comply with federal and state environmental regulations, but those regulations have not had a material effect on their operations. More stringent and varied requirements of local governmental bodies with respect to zoning, land use, and environmental factors can delay and sometimes prevent development of new Sonic Drive-Ins in particular locations.

        Sonic and its franchisees must comply with laws and regulations governing labor, employment and wage and hour issues, such as minimum wages, overtime, family and medical leave, discrimination and other working conditions. Many of the food service personnel in Sonic Drive-Ins receive compensation at rates related to federal, state and local minimum wage laws and, accordingly, increases in applicable minimum wage laws will increase labor costs at those locations.

Available Information

        We maintain an internet website with the address of http://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 internet website, free of charge, as soon as reasonably practicable after filing such material with, or furnishing it to, the Securities and Exchange Commission.

Item 2. Properties

        Of the 539 Partner Drive-Ins operating as of August 31, 2004, we operated 238 of them on property leased from third parties and 301 of them on property we own. The leases expire on dates ranging from 2005 to 2024, 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.

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        We moved our corporate headquarters to a new building in the Bricktown district of downtown Oklahoma City in November 2003 and have entered into a 15-year lease to occupy approximately 78,000 square feet in the new building. The lease expires in November 2018 and has two five-year renewal options. Formerly, our corporate headquarters were located at 101 Park Avenue where we leased 68,568 square feet of office space. This lease expired on November 30, 2003. We also leased 10,000 square feet of warehouse space in Oklahoma City. The lease for the warehouse space expired in December 2003.

Item 3. Legal Proceedings

        Sonic 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	49	Chairman of the Board of Directors, Chief Executive Officer and	June 1985
		President
W. Scott McLain	42	Executive Vice President of Sonic Corp. and President of Sonic	April 1996
		Industries Inc.
Michael A. Perry	46	President of Sonic Restaurants, Inc.	August 2003
Ronald L. Matlock	53	Senior Vice President, General Counsel and Secretary	April 1996
Stephen C. Vaughan	38	Vice President, Chief Financial Officer and Treasurer	January 1996
Terry D. Harryman	39	Controller	January 1999
Carolyn C. Cummins	46	Vice President of Compliance	April 2004

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 and Chief Executive Officer since January 2000. Mr. Hudson served as Chief Executive Officer and President of the Company from April 1995 to January 2000 and reassumed the position of President in November 2004. He has served in various other offices with the Company since 1984. Mr. Hudson has served as a Director of the Company since 1993. He served as Chairman of the Board of Securities Investor Protection Corporation, the federally-chartered organization which serves as the insurer of customer accounts with brokerage firms, from 1994 to 2001.

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        W. Scott McLain has served as Executive Vice President of the Company and President and Director of Sonic Industries Inc. since September 2004. 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 served as the Company’s Vice President of Finance and Chief Financial Officer from August 1997 until January 2000.

        Michael A. Perry has served as President and Director of Sonic Restaurants, Inc. since September 2004. He served as Senior Vice President of Operations and Director of Sonic Restaurants, Inc. from August 2003 until September 2004. Mr. Perry served as Vice President of Franchise Services of Sonic Industries Inc. from September 1998 until August 2003.

        Ronald L. Matlock has served as the Company’s Senior Vice President, General Counsel and Secretary since January 2000. Mr. Matlock served as the Company’s Vice President, General Counsel and Secretary from April 1996 until January 2000. Mr. Matlock has also served as a Director of Sonic Restaurants, Inc. and as a Director of Sonic Industries Inc. since April 1996.

        Stephen C. Vaughan has served as Vice President, Chief Financial Officer and Treasurer of the Company since November 2004. Mr. Vaughan served as Vice President of Planning and Analysis and Treasurer from November 2001 until November 2004 and served as Vice President of Planning and Analysis from January 1999 until November 2001. He joined the Company in 1992.

        Terry D. Harryman has served as the Company’s Controller since January 1999. Mr. Harryman joined the Company in 1996.

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

PART II

Item 5. Market for the Company’s Common Stock, 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 closing bids for the Company’s common stock during each fiscal quarter within the two most recent fiscal years as reported on Nasdaq. Share amounts set forth below and elsewhere in this report have been adjusted to reflect the results of the May 2004 three-for-two stock split.

Quarter Ended	High		Low		Quarter Ended	High		Low
November 30, 2003	$	20.587	$	16.260	November 30, 2002	$	16.687	$	13.920
February 29, 2004	$	23.247	$	19.673	February 28, 2003	$	15.693	$	13.107
May 31, 2004	$	24.313	$	20.233	May 31, 2003	$	18.667	$	14.040
August 31, 2004	$	23.500	$	21.100	August 31, 2003	$	17.847	$	15.473

Stockholders

        As of November 1, 2004, the Company had 533 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. As in the past, future payment of dividends will be considered after reviewing, among other factors, returns to stockholders, profitability expectations and financing needs.

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Securities

        The following table sets forth information about the Company’s equity compensation plans as of August 31, 2004.

Equity Compensation Plan Information

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan category	(a)	(b)	(c)
Equity compensation plans
approved by
security holders	5,775,322	$ 11.79	2,115,607
Equity compensation plans
not approved by
security holders	-0-	-0-	-0-

Issuer Purchases of Equity Securities

Shares repurchased during the fourth quarter of fiscal 2004 are as follows (in thousands, except share and per share amounts):

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share (b)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) (c)		Maximum Dollar Value that May Yet be Purchased Under the Program(1) (d)
June 1, 2004 through June 30, 2004		–		$0.00		–		$50,000
July 1, 2004 through July 31, 2004		–		$0.00		–		$50,000
August 1, 2004 through August 31, 2004		139,542		$21.96		139,542		$60,000
Total		139,542		$21.96		139,542

(1) All of the shares purchased during the fourth quarter of fiscal 2004 were purchased as part of the Company’s share repurchase program which was first publicly announced on April 14, 1997. In August 2004, the Company’s Board of Directors approved an increase in the share repurchase authorization and extended the program to December 31, 2005. As of August 31, 2004, the Company had $60 million available under the program.

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,
	2004			2003			2002			2001			2000
Income Statement Data:
Partner Drive-In sales	$	449,585		$	371,518		$	330,707		$	267,463		$	224,880
Franchise Drive-Ins:
Franchise royalties		77,518			66,431			61,392			54,220			47,595
Franchise fees		4,958			4,674			4,020			4,408			3,717
Other		4,385			4,017			4,043			4,547			3,864
Total revenues		536,446			446,640			400,162			330,638			280,056
Cost of drive-in sales		358,859			291,764			257,057			207,782			173,743
Selling, general and administrative		38,270			35,426			33,444			30,602			27,894
Depreciation and amortization		32,528			29,223			26,078			23,855			20,287
Provision for impairment of long-lived
assets		675			727			1,261			792			951
Total expenses		430,332			357,140			317,840			263,031			222,875
Income from operations		106,114			89,500			82,322			67,607			57,181
Net interest expense		6,378			6,216			6,319			5,525			5,186
Income before income taxes	$	99,736		$	83,284		$	76,003		$	62,082		$	51,995
Net income	$	63,015		$	52,261		$	47,692		$	38,956		$	32,627
Income per share (1):
Basic	$	1.06		$	0.89		$	0.79		$	0.65		$	0.54
Diluted	$	1.02		$	0.86		$	0.75		$	0.62		$	0.52
Weighted average shares used in
calculation (1):
Basic		59,314			58,465			60,234			59,774			60,594
Diluted		61,654			60,910			63,310			62,598			62,918
Balance Sheet Data:
Working capital (deficit)	$	(14,537	)	$	(2,875	)	$	(12,942	)	$	(3,335	)	$	(6,371	)
Property, equipment and capital leases,
net		376,315			345,551			305,286			273,198			222,318
Total assets		518,633			486,119			405,356			358,000			278,371
Obligations under capital leases
(including current portion)		40,531			27,929			12,938			13,688			7,299
Long-term debt (including current
portion)		82,169			139,587			109,375			109,168			83,881
Stockholders' equity		334,762			265,398			230,670			200,719			155,263

    (1)        Adjusted for a 3-for-2 stock split in 2004, 2002 and 2000

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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-ins in the United States and also has a small number of Franchise Drive-Ins in Mexico. As of August 31, 2004, the Sonic system was comprised of 2,885 drive-ins, of which 539 were Partner Drive-Ins and 2,346 were Franchise Drive-Ins. Sonic Drive-Ins feature Sonic signature items such as made-to-order sandwiches and hamburgers, extra-long cheese coneys, salads, hand-battered onion rings, tater tots, specialty soft drinks including cherry limeades and slushes, and frozen desserts. We derive our revenues primarily from Partner Drive-In sales and royalty fees from franchisees. We also receive revenues from initial franchise fees and the selling and leasing of signs and real estate. In addition, we also own and receive income from a minority ownership interest in a few Franchise Drive-Ins.

        Costs of Partner Drive-In sales, including minority interest in earnings of drive-ins, relate directly to Partner Drive-In sales. Other expenses, such as depreciation, amortization, and general and administrative expenses, relate to Partner Drive-In operations, as well as the Company’s franchising operations. Our revenues and expenses are directly affected by the number and sales volumes of Partner 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.

        Overview of Business Performance. Business performance was strong during fiscal year 2004 as net income increased 20.6% and earnings per share increased 18.6% to $1.02 per diluted share. We continue to experience considerable momentum in our business fueled by strong growth in same-store sales that, despite some pressure on commodity costs during the year, led to a significant increase in system-wide average profit per store. The rise in store-level profits, in turn, helped produce a record number of new drive-in openings by franchisees. We believe these results reflect our multi-layered growth strategy that features the following components:

o Solid same-store sales growth,

o Increased franchising income stemming from our unique ascending royalty rate,

o Expansion of the Sonic brand through new unit growth particularly by franchisees,

o Operating leverage at both the drive-in level and the corporate level, and

o The use of excess operating cash flow for franchise acquisitions and share repurchases.

        The following table provides information regarding the number of Partner Drive-Ins and Franchise Drive-Ins in operation as of the end of the periods indicated as well as the system-wide growth in sales and average unit volume. System-wide information includes both Partner 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,
	2004			2003			2002
Percentage increase in sales		13.1	%		7.0	%		11.9	%
System-wide drive-ins in operation:
Total at beginning of period		2,706			2,533			2,359
Opened		188			194			182
Closed (net of re-openings)		(9	)		(21	)		(8	)
Total at end of period		2,885			2,706			2,533
Core markets		2,059			1,977			1,888
Developing markets		826			729			645
All markets		2,885			2,706			2,533
Average sales per drive-in:
Core markets	$	1,004		$	947		$	939
Developing markets		861			802			819
All markets		964			907			906
Change in same-store sales - new method (1):
Core markets		6.4	%		0.5	%		4.4	%
Developing markets		6.8			(1.2	)		(0.4	)
All markets		6.5			0.3			3.5
Change in same-store sales - prior method (2):
Core markets		6.4	%		1.1	%		4.3	%
Developing markets		5.1			(5.1	)		(2.3	)
All markets		6.1			(0.3	)		3.0

(1)     Represents percentage change for drive-ins open for a minimum of 15 months.
(2)     Represents percentage change for drive-ins open for a minimum of 12 months.

        System-wide same-store sales increased 6.5% during fiscal year 2004, primarily as a result of traffic growth (an increase in the number of transactions) across all day parts (e.g. morning, lunch, afternoon, dinner, and evening). We believe this strong sales performance was not only the result of generally more favorable industry and consumer conditions but was also a consequence of our specific sales driving initiatives including:

o Growth in brand awareness through increased media spending and greater use of network cable advertising;

o Strong promotions and new product news focused on quality and expanded choices for our customers; and

o Continued growth of our business in non-traditional day parts including the morning day part, which increased significantly during the year as a percentage of sales.

        During fiscal year 2004, our total system-wide media expenditures were in excess of $110 million as compared to $100 million in fiscal year 2003, which we believe continues to increase overall brand awareness and strengthen our share of voice relative to our competitors. We have also shifted more of our marketing dollars to our system-wide marketing fund, which is largely used for network cable television advertising, growing this area of our advertising from just under $20 million in fiscal year 2003 to $32 million in fiscal year 2004. We believe this provides several benefits including the ability to target specific consumer groups more effectively and better reach

15

the network cable audience, which has now surpassed broadcast networks in terms of viewership. In addition, national cable advertising also allows us to bring additional depth to our marketing by expanding our media messages beyond a single monthly promotion. Looking forward, we expect system-wide media expenditures to be in excess of $120 million in fiscal 2005, including doubling the amount spent for network cable television advertising to $60 million.

        We continue to use our monthly promotions to highlight our distinctive food offerings and to feature new products. We also use our promotions and product news to create a strong emotional link with consumers and to align closely with consumer trends for fresh ingredients, customization, menu variety and choice. During the past year, our new product offerings showcased the breadth of our menu and emphasized the opportunity for choice at Sonic. We featured items ranging from large, higher-priced sandwiches like the Smoky SuperSONIC_™ Cheeseburger to better-for-you items such as the Grilled Chicken Wrap with the option of a carb-friendly tortilla and Fresh Tastes_™ Salads as well as our frozen and fountain favorites such as our new Diet Cherry Limeade, frozen PowerAde® Slush, and Hershey’s® S’mores Blast. We will continue to have new product news in the coming months spanning the entire breadth of our product line and all designed to meet customers’ evolving taste preferences including the growing desire for fresh, quality product offerings and more healthy alternatives.

        We continue to be pleased with our progress towards penetrating the morning day part through our breakfast program, which began in the summer of 2000. We expanded the program, which features unique breakfast items as well as our entire menu all day long, to the remaining 50% of our drive-ins during the spring of 2003. As a result, sales during the morning day part have grown to over 11% of total sales. Our experience to this point continues to lead us to believe that breakfast is a gradual build requiring two to three years to achieve a desired level. We also continue to view breakfast as instrumental in helping us grow our average unit volumes to well over $1.0 million, more in the range of our larger competitors.

        In addition to growth during the morning day part, we also experienced sales increases in every other day part during fiscal year 2004, including dinner and evening business. These day parts were the weakest during fiscal year 2003 as a result of both a disproportionate impact of weaker economic and industry conditions as well as a conscious shift in media dollars to support the breakfast day part. Our evening business rose significantly this summer as we brought back our Sonic Nights program, which featured an “Open ‘Til at Least Midnight” message supported by national cable advertising as well as an emphasis on our Frozen Favorites® and new products such as the Hershey’s® S’mores Blast and the Junior Banana Split.

        One of the more positive developments over the last several months has been the performance of developing markets. System-wide same-store sales in developing markets outpaced same-store sales in core markets increasing 6.8% during fiscal year 2004 compared to a decline of 1.2% in fiscal year 2003. We believe that this was due to increased spending on national cable, which seems to have benefited all of our markets, and particularly our developing markets. From an average unit volume standpoint, developing markets, which represent roughly 29% of the store base, increased 7.3% reversing the downward trend of the last year and slightly ahead of what we saw in core markets.

        New drive-in openings by franchisees reached a record level during the past year and were accompanied by ongoing improvement in our franchise development pipeline, which we believe has a direct correlation to the growth in average unit profitability. The combination of increased new store openings by franchisees and strong same-store sales performance translated into higher franchising income for the year, which was a large factor in our earnings growth since this incremental income has relatively lower associated cost. We also continued to benefit from other positive aspects of our “multi-layered” financial model including leverage of our corporate-level expenses and positive operating cash flow.

        At our Partner Drive-Ins, we have put in place long-term initiatives designed to help us close the $100,000 plus sales gap in average unit volumes between Partner Drive-Ins and Franchise Drive-Ins. To a large degree, this effort is modeled on the best practices of our top-volume Partner and Franchise Drive-Ins. Our intent is to complement the strong profit motive created through our partnership program with strong incentives focused on top-line growth. Initial results from these efforts are encouraging, as same-store sales growth at Partner Drive-Ins exceeded same-store sales at Franchised Drive-Ins during each of the last three quarters.

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        Over the past several years, we have completed the acquisition of several Franchise Drive-Ins in various markets including the acquisition of 51 drive-ins located in the San Antonio, Texas market in May 2003 and the acquisition of 22 drive-ins located in the Denver and Colorado Springs, Colorado markets in July 2004. These acquisitions have added to revenue growth and have been accretive to earnings over time. Our acquisitions are focused on higher volume stores with strong store-level management already in place. In addition, in each case, the selling franchisee retained a significant drive-in base and is growing with us in other areas. We continue to view these types of acquisitions of core-market drive-ins with proven track records as a very good, lower-risk use of our capital and they remain a very viable potential use of our excess cash flow in future years.

Results of Operations

        Revenues. Total revenues increased 20.1% to $536.4 million in fiscal year 2004 from $446.6 million during fiscal year 2003. The increase in revenues primarily relates to strong sales growth for Partner Drive-Ins and, to a lesser extent, a rise in franchising income.

Revenues
(in thousands)

Year Ended August 31,	2004		2003		Increase/ (Decrease)		Percent Increase/ (Decrease)
Revenues:
Partner Drive-In sales	$	449,585	$	371,518	$	78,067		21.0	%
Franchise revenues:
Franchise royalties		77,518		66,431		11,087		16.7
Franchise fees		4,958		4,674		284		6.1
Other		4,385		4,017		368		9.2
Total revenues	$	536,446	$	446,640	$	89,806		20.1

Year Ended August 31,	2003		2002		Increase/ (Decrease)			Percent Increase/ (Decrease)
Revenues:
Partner Drive-In sales	$	371,518	$	330,707	$	40,811			12.3	%
Franchise revenues:
Franchise royalties		66,431		61,392		5,039			8.2
Franchise fees		4,674		4,020		654			16.3
Other		4,017		4,043		(26	)		(0.6	)
Total revenues	$	446,640	$	400,162	$	46,478			11.6

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

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Partner Drive-In Sales
($ in thousands)

	Year Ended August 31,
	2004			2003			2002
Partner Drive-In sales	$	449,585		$	371,518		$	330,707
Percentage increase		21.0	%		12.3	%		23.6	%
Partner Drive-Ins in operation:
Total at beginning of period		497			452			393
Opened		21			35			40
Acquired from (sold to) franchisees, net		21			11			20
Closed		–			(1	)		(1	)
Total at end of period		539			497			452
Average sales per Partner Drive-In	$	886		$	799		$	791
Percentage increase		10.9	%		1.0	%		2.5	%
Change in same-store sales - new method (1)		7.8	%		(0.3	)%		2.2	%
Change in same-store sales - prior method (2)		7.4	%		0.0	%		1.7	%

(1)     Represents percentage change for drive-ins open for a minimum of 15 months.
(2)     Represents percentage change for drive-ins open since the beginning of fiscal year 2003.

        Partner Drive-In sales increased $78.1 million in fiscal year 2004, of which $49.5 million resulted from the net addition of 87 Partner Drive-Ins since the beginning of fiscal year 2003 ($61.5 million from the addition of newly constructed and acquired drive-ins less $12.0 million from drive-ins sold or closed during the period). Same-store sales increases accounted for $28.6 million of the increase.

        During fiscal year 2003, Partner Drive-In sales increased $40.8 million, of which $41.1 million resulted from the net addition of 104 Partner Drive-Ins during fiscal years 2002 and 2003 ($53.6 million from the addition of newly constructed and acquired drive-ins less $12.5 million from drive-ins sold or closed during the period). The increase in Partner Drive-In sales from the net addition of drive-ins was partially offset by slight sales decreases in the amount of $.03 million by stores open the full reporting periods of fiscal years 2003 and 2002.

        During fiscal year 2004, same-store sales at Partner Drive-Ins exceeded the same-store sales performance of Franchise Drive-Ins. The increase in average unit volume was even stronger – growing 10.9% during the year as a result of the acquisition of higher volume drive-ins in San Antonio and Colorado in May 2003 and July 2004, respectively, as well as continued strong performance from new store openings.

        The following table reflects the growth in franchise revenues (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 performance of our Franchise Drive-Ins.

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Franchise Information
($ in thousands)

	Year Ended August 31,
	2004			2003			2002
Franchise fees and royalties (1)	$	82,476		$	71,105		$	65,412
Percentage increase		16.0	%		8.7	%		11.6	%
Franchise Drive-Ins in operation:
Total at beginning of period		2,209			2,081			1,966
Opened		167			159			142
Acquired from (sold to) company, net		(21	)		(11	)		(20	)
Closed		(9	)		(20	)		(7	)
Total at end of period		2,346			2,209			2,081
Franchise Drive-In sales	$	2,219,340		$	1,988,842		$	1,874,562
Percentage increase		11.6	%		6.1	%		10.0	%
Effective royalty rate		3.49	%		3.34	%		3.27	%
Average sales per Franchise Drive-In	$	983		$	929		$	935
Change in same-store sales - new method (2)		6.2	%		0.4	%		3.7	%
Change in same-store sales - prior method (3)		5.9	%		(0.1	)%		3.2	%

(1)     See Revenue Recognition Related to Franchise Fees and Royalties in the Critical Accounting Policies and Estimates section of MD&A.
(2)     Represents percentage change for drive-ins open for a minimum of 15 months.
(3)     Represents percentage change for drive-ins open for a minimum of one year.

        Franchise income, which consists of franchise royalties and franchise fees, increased 16% to $82.5 million in fiscal year 2004.

        Franchise royalties increased 16.7% to $77.5 million in fiscal year 2004, compared to $66.4 million in fiscal year 2003. Of the $11.1 million increase, approximately $6.7 million resulted from Franchise Drive-Ins' same-store sales growth of 6.2% in fiscal year 2004, combined with an increase in the effective royalty rate to 3.49% during fiscal year 2004 compared to 3.34% during fiscal year 2003. Each of our license agreements contains an ascending royalty rate whereby royalties, as a percentage of sales, increase as sales increase. The balance of the increase was attributable to growth in the number of Franchise Drive-Ins over the prior period.

        Franchise royalties increased 8.2% to $66.4 million in fiscal year 2003, compared to $61.4 million during fiscal year 2002. Of the $5.0 million increase, approximately $3.9 million was primarily attributable to an increase in the number of Franchise Drive-Ins operating in fiscal year 2003 compared to fiscal year 2002. The balance of the increase resulted from an increase in the effective royalty rate from 3.27% in fiscal year 2002 to 3.34% in fiscal year 2003 as substantially all of the new stores opened under the newest license agreement, which has a higher average royalty rate.

        Franchise fees increased 6.1% to $5.0 million as franchisees opened 167 new drive-ins in fiscal year 2004 as compared to 159 openings in fiscal year 2003. Franchise fees increased 16.3% to $4.7 million during fiscal 2003 as 159 Franchise Drive-Ins opened compared to 142 during the previous year.

        At August 31, 2004, we had 158 franchise area development agreements compared to 149 such agreements at August 31, 2003. We anticipate 170 to 180 store openings by franchisees during fiscal year 2005. Substantially all of these new drive-ins will open under our newest form of license agreement, which contains a higher average

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royalty rate and initial opening fee. As a result of these new Franchise Drive-In openings and the continued benefit of the ascending royalty rate, we expect approximately $8.0 to $9.0 million in incremental franchise income in fiscal year 2005.

        Operating Expenses. Overall, drive-in cost of operations, as a percentage of Partner Drive-In sales, increased to 79.8% in fiscal year 2004 compared to 78.5% in fiscal year 2003. Minority interest in earnings of drive-ins is included as a part of cost of sales, in the table below, since it is directly related to Partner Drive-In cost of operations.

Operating Margins

	Year Ended August 31,
	2004			2003			2002
Cost and Expenses:
Partner Drive-Ins (1):
Food and packaging		26.3	%		26.0	%		26.0	%
Payroll and other employee benefits		30.2			29.6			28.7
Minority interest in earnings of
drive-ins		4.4			3.9			4.5
Other operating expenses		18.9			19.0			18.5
Total drive-in cost of operations		79.8			78.5			77.7

(1)     As a percentage of Partner Drive-In sales.

        After remaining flat during fiscal year 2003, food and packaging costs increased, as a percentage of Partner Drive-In sales, 0.3% during fiscal year 2004 as a result of higher unit level costs for most commodities, which offset the benefit of price increases taken during the year. The pressure on commodity prices is expected to continue for the next several months and as a result we expect our food and packaging costs, as a percentage of sales, will continue to be higher on a year-over-year basis.

        Labor costs increased, as a percentage of Partner Drive-In sales, 0.6% during fiscal year 2004 following a 0.9% increase in fiscal year 2003. The 2004 increase was primarily a result of significant payments made under a new sales incentive bonus program for drive-in management as well as higher staffing levels reflecting successful ongoing efforts to reduce turnover at Partner Drive-Ins. The increase during 2003 primarily resulted from increased investment in store-level labor, particularly assistant managers, as well as higher worker’s compensation and health insurance costs.

        Looking forward, we will continue to benefit from a relatively flat average wage rate and we expect to continue making significant payments under our sales incentive program. However, we will be modifying the program to add a profit qualifier to enhance flow-through from the incremental sales. As a result of that change and lapping the beginning of the sales incentive bonus program that began in September 2003, the opportunity to leverage labor costs, as a percentage of sales, during the next fiscal year is more favorable.

        Minority interest, which reflects our store-level partners’ pro-rata share of earnings from our partnership program, increased by $5.5 million during fiscal year 2004 as the increase in average dollar profit per store more than offset the decline in drive-in-level margins. During fiscal year 2003, lower average unit profits combined with declining drive-in-level margins resulted in a $0.5 million decrease in minority interest. Overall, we continue to view the partnership program as an integral part of our culture at Sonic and a large factor in the success of our business, and we are pleased that profit distributions to our partners increased during fiscal year 2004. Since we expect our average store level profits to continue to grow in fiscal year 2005 and we expect less margin pressure, we would expect minority interest to increase in real terms but stay relatively flat as a percentage of sales.

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        Other operating expenses improved, as a percentage of Partner Drive-In sales, by 0.1% during fiscal year 2004 as the leverage of operating at higher unit volumes more than offset increased costs. In real dollar terms, the increase in other operating expenses in fiscal year 2004 was comprised of several factors including higher marketing expenditures, utilities, credit card charges resulting from an increase in customer credit card usage, and a fairly sharp increase in repair and maintenance expense as we have focused on the physical appearance of our stores, both inside and out. While we expect cost increases in many of the items listed above to carry over into fiscal year 2005, we anticipate that the benefit of operating at higher unit volumes will lead to an improvement in other operating expenses, as a percentage of sales, over the next few quarters. During fiscal year 2003, other operating expenses, as a percentage of Partner Drive-In sales, deteriorated 0.5% primarily as a result of the lack of growth in average store volumes, an increase in the rate of advertising contributions in preparation for the breakfast rollout and rent expense related to the acquisition of Franchise Drive-Ins where the franchisee retained the real estate.

        Selling, General and Administrative. Selling, general and administrative expenses increased 8.0% to $38.3 million during fiscal year 2004 and 5.9% to $35.4 million during fiscal year 2003. However, we continue to see leverage as the growth in these expenses was considerably less than the growth in revenues. As a percentage of total revenues, selling, general and administrative expenses decreased to 7.1% in fiscal year 2004, compared with 7.9% in fiscal year 2003 and 8.4% in fiscal year 2002. We anticipate that these costs will increase in the range of 10% to 12% in fiscal year 2005 but expect them to continue to decline as a percentage of total revenues.

        Depreciation and Amortization. Depreciation and amortization expense increased 11.3% to $32.5 million in fiscal year 2004 due, in part, to additional depreciation stemming from the San Antonio and Colorado acquisitions, as well as the capital lease on our new corporate office space. Similarly, depreciation and amortization expense increased 12.1% to $29.2 million in fiscal year 2003 as a result of new drive-in development and acquisitions of existing Franchise Drive-Ins. Capital expenditures, excluding acquisitions, were $57.7 million in fiscal year 2004. Looking forward, with $60 to $70 million in capital expenditures planned for fiscal year 2005, we expect depreciation and amortization to increase in the range of 8% to 9% for the year.

        Provision for Impairment of Long-lived Assets. One Partner Drive-In became impaired during fiscal year 2004 under the guidelines of FAS 144 – “Accounting for the Impairment or Disposal of Long-Lived Assets.” As a result, a provision for impairment of long-lived assets of $0.7 million was recorded for the drive-in’s carrying cost in excess of its estimated fair value. Two Partner Drive-Ins became impaired during fiscal year 2003 which resulted in a provision for impairment of $0.7 million to reduce the drive-ins’ carrying cost to their estimated fair value. During fiscal year 2002, two Partner Drive-Ins became impaired and estimates were revised on two stores that were previously impaired, resulting in a provision for impairment of $1.3 million. 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 may change in the near future resulting in the need to write-down assets associated with one or more of these drive-ins to fair value.

        Interest Expense. Net interest expense increased 2.6% in fiscal year 2004 compared to a 1.6% decrease in fiscal year 2003. While interest expense increased in fiscal year 2004 largely due to the addition of the capital lease associated with our new office space, a continued favorable interest rate environment combined with the refinancing of $20 million in senior notes that occurred in April of fiscal year 2003 and reduced borrowing levels in fiscal year 2004 mostly offset the increase. Our ability to generate positive operating cash flow enabled us to expend $74.4 million in capital expenditures, $3.1 million in share repurchases and still reduce our long-term debt by $57.4 million.

        During the fourth quarter of fiscal year 2004, we outsourced the financing of our partner notes to a third-party financial institution in an effort to strengthen our partnership program, which will result in a decrease in interest income in the range of $0.6 million annually. Going forward, we expect our strong cash flow and reduced borrowing levels to mitigate the reduction in interest income associated with the partner notes to produce slightly higher net interest expense in fiscal year 2005.

        Income taxes. The provision for income taxes reflects an effective federal and state tax rate of 36.82% for fiscal year 2004 compared with 37.25% in fiscal years 2003 and 2002. The reduction in our effective tax rate in fiscal year 2004 was primarily a result of the benefit of higher tax credits. Going forward, new interpretive accounting guidance will likely result in greater variability in our tax rate from quarter to quarter as circumstances on

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individual tax matters change. However, overall we anticipate that our effective tax rate will remain relatively flat or decrease slightly during fiscal year 2005.

Financial Position

        During fiscal year 2004, current assets decreased 7.3% to $34.6 million compared to $37.3 million as of the end of fiscal year 2003 as excess cash was used, in part, to fund capital expenditures, the Colorado acquisition, and to repay long-term debt. Notes receivable was reduced as a result of the outsourcing of our partner notes to a third party financial institution in the amount of $6.1 million. Net property, equipment and goodwill increased by 9.6% as a result of capital expenditures, drive-in acquisitions, and the addition of the capital lease for our new corporate office facilities, which combined with the reduction in current assets and notes receivable to produce a 6.7% increase in total assets to $518.6 million as of the end of fiscal year 2004.

        Total current liabilities increased $8.9 million or 22.2% during fiscal year 2004 as a result of a number of factors including obligations relating to the Colorado acquisition, an increase in health insurance and other accrued liabilities, franchise deposits and trade payables. The net increase in capital lease obligations of $12.6 million, which primarily relates to the lease obligation on the new headquarters building, was more than offset by the net repayment of long-term debt in the amount of $57.4 million. Overall, total liabilities decreased $36.8 million or 16.7% as a result of the items discussed above.

        Stockholders’ equity increased $69.4 million or 26.1% during fiscal year 2004 primarily resulting from earnings during the period of $63.0 million. Proceeds and the related tax benefit from the exercise of stock options accounted for the balance of the increase. At the end of fiscal year 2004, our debt-to-total capital ratio stood at 26.8%, down from 38.7% at the end of fiscal year 2003. For the twelve months ended August 31, 2004, return on average stockholder’s equity was 21.0% and return on average assets was 12.5%.

Liquidity and Sources of Capital

        Net cash provided by operating activities increased $16.4 million or 18.2% to $106.7 million in fiscal year 2004 as compared to $90.2 million in fiscal year 2003, primarily as a result of an increase in operating profit before depreciation and amortization and the provision for deferred income taxes. We also anticipate continuing to generate increasing positive free cash flow going forward. We believe free cash flow, which we define as net income plus depreciation and amortization less capital expenditures, is useful in evaluating the liquidity of the Company by assessing the level of funds available for share repurchases, acquisitions of Franchise Drive-Ins, and repayment of debt. We expect free cash flow to exceed $40 million for fiscal year 2005.

        We have an agreement with a group of banks that provides us with a $125.0 million line of credit expiring in July 2006. As of August 31, 2004, our outstanding borrowings under the line of credit were $14.1 million, at an effective borrowing rate of 4.5%, as well as $0.7 million in outstanding letters of credit. The amount available under the line of credit as of August 31, 2004, was $110.2 million. We have long-term debt maturing in fiscal years 2005 and 2006 of $38.1 million and $22.2 million, respectively. We plan to refinance $30.0 million of long-term debt under our senior unsecured notes that will be maturing in April 2005 using amounts available under our line of credit. We also plan to extend the amounts maturing in 2006 under the line of credit. We believe that free cash flow will be adequate for repayment of any long-term debt that does not get refinanced or extended. We plan to use the line of credit to finance the opening of newly constructed drive-ins, acquisitions of existing drive-ins, purchases of the Company’s common stock and for other general corporate purposes, as needed. See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding our long-term debt.

        As we announced in August 2004, our Board of Directors approved an increase in our share repurchase authorization and extended the program to December 31, 2005. We made approximately $3.1 million in share repurchases during fiscal year 2004, all of which were acquired during the fourth quarter. As of August 31, 2004, we had $60.0 million available under the program.

        We opened 21 newly constructed Partner Drive-Ins and acquired a net of 21 drive-ins from franchisees during fiscal year 2004. We funded total capital additions for fiscal year 2004 of $74.4 million, which included the cost of newly opened drive-ins, new equipment for existing drive-ins, drive-ins under construction, the acquisition of Franchise Drive-Ins, and other capital expenditures, from cash generated by operating activities, borrowings under

22

our line of credit, and seller-provided financing for the Colorado acquisition. During fiscal year 2004, we purchased the real estate for 13 of the 45 newly constructed and acquired drive-ins. We also sold real estate for cash in the amount of $8.8 million relating to drive-ins previously sold to franchisees.

        We plan capital expenditures of approximately $60 to $70 million in fiscal year 2005, excluding potential acquisitions and share repurchases. These capital expenditures primarily relate to the development of additional Partner Drive-Ins, stall additions, relocations of older drive-ins, store equipment and point of sale system upgrades, and enhancements to existing financial and operating information systems. We expect to fund these capital expenditures through cash flow from operations and borrowings under our existing line of credit.

        We entered into an agreement with certain franchisees during fiscal year 2003, which provides them with the option to sell 50 drive-ins to us anytime during the period commencing January 1, 2004 and ending June 30, 2005. We estimate that the cost of the acquisition, if it were to occur, would be in the range of $32 to $38 million and anticipate that the acquisition would be funded through operating cash flows and borrowings under our existing line of credit.

        As of August 31, 2004, our total cash balance of $8.0 million reflected the impact of the cash generated from operating activities, borrowing activity, and capital expenditures mentioned above. We believe that existing cash and funds generated from operations, as well as borrowings under the line of credit, will meet our needs for the foreseeable future.

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, 2004 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	$	82,169	$	3,495	$	61,478	$	7,544	$	9,652
Capital leases		63,930		5,011		9,810		9,488		39,621
Operating leases		105,617		9,329		18,586		17,836		59,866
Vendor purchase agreements		1,660		1,660		–		–		–
Total	$	253,376	$	19,495	$	89,874	$	34,868	$	109,139

Impact of Inflation

        Though increases in labor, food or other operating costs could adversely affect our operations, we do not believe that inflation has had a material effect on income during the past several years.

Seasonality

        We do not expect seasonality to affect our operations in a materially adverse manner. Our results during the second fiscal quarter (the months of December, January and February) generally are lower than other quarters because of the climate of the locations of a number of Partner and Franchise Drive-Ins.

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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.

        Impairment of Long-Lived Assets. We review each drive-in for impairment when events or circumstances indicate it 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. In addition, at least annually, we assess the recoverability of goodwill and other intangible assets related to our brand and drive-ins. These impairment tests require us to estimate fair values of our brand and our drive-ins by making assumptions regarding future cash flows and other factors. If these assumptions change in the future, we may be required to record impairment charges for these assets.

        Ownership Program/Allowance for Uncollectible Notes and Accounts Receivable. Our drive-in philosophy stresses an ownership relationship with supervisors and drive-in managers. Most supervisors and managers of Partner Drive-Ins own an equity interest in the drive-in, which was previously financed by the Company. We outsourced the financing of partner notes to a third party in the fourth fiscal quarter of 2004. Supervisors and managers are not employees of Sonic or of the drive-in in which they have an ownership interest.

        The investments made by managers and supervisors in each partnership or limited liability company are accounted for as minority interests in the financial statements. The ownership agreements contain provisions, which give Sonic the right, but not the obligation, to purchase the minority 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, primarily upon the drive-in’s financial performance for the preceding 12 months, and are intended to approximate the fair value of a minority interest in the drive-in.

        The net book value of a minority interest acquired by the Company in a Partner Drive-In is recorded as an investment in partnership, which results in a reduction in the minority interest liability on the Consolidated Balance Sheet. If the purchase price exceeds the net book value of the assets underlying the partnership interest, the excess is recorded as goodwill. The acquisition of a minority interest for less than book value results in a decrease in purchased goodwill. Any subsequent sale of the minority interest to another minority partner is recorded as a pro-rata reduction of goodwill and investment, and no gain or loss is recognized on the sale of the minority ownership interest. Goodwill created as a result of the acquisition of minority interests in Partner Drive-Ins is not amortized but is tested annually for impairment under the provisions of FAS 142, “Goodwill and Other Intangible Assets.”

        We collect royalties from franchisees and provide for estimated losses for receivables that are not likely to be collected. General allowances for uncollectible receivables are estimated based on historical trends. Although we have a good relationship with our franchisees and collection rates are currently high, if average sales or the financial health of franchisees were to deteriorate, we may have to increase reserves against collection of franchise revenues.

        Contingency Reserves. From time to time, we are involved in various legal proceedings and have certain unresolved claims pending involving taxing authorities, franchisees, suppliers, employees, competitors and others.

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We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as estimate potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each issue. In addition, our estimate of probable losses may change in the future due to new developments or changes in approach such as a change in settlement strategy in dealing with these matters. Based on the information currently available, we believe that all claims currently pending are either covered by insurance or would not have a material adverse effect on our business or financial condition.

        Advertising. Under our license agreements, both Partner Drive-Ins and Franchise Drive-Ins must contribute a minimum percentage of revenues to a national media production fund (Sonic Advertising 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 the System Marketing Fund, which purchases advertising on national cable and broadcast networks and 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 Advertising Fund, or the System Marketing Fund are included in our consolidated financial statements. However, all advertising contributions by Partner Drive-Ins are recorded as an expense in the Company’s financial statements.

        Revenue Recognition Related to Franchise Fees and Royalties. Initial franchise fees are nonrefundable and are recognized in income when we have substantially performed or satisfied all material services or conditions relating to the sale of the franchise. Area development fees are nonrefundable and are recognized in income on a pro-rata basis when the conditions for revenue recognition under the individual 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.

        Our franchisees are required under the provisions of the license agreements to pay Sonic royalties each month based on a percentage of actual net sales. However, the royalty payments and supporting financial statements are not due until the 20^th of the following month. As a result, we accrue royalty revenue in the month earned based on estimates of Franchise Drive-In sales. These estimates are based on actual sales at Partner Drive-Ins and projections of average unit volume growth at Franchise Drive-Ins.

        Income Taxes. We provide for income taxes based on our estimate of federal and state tax liability. In making this estimate, we consider the impact of legislative and judicial developments. As these developments evolve, we will update our estimate, which could result in an adjustment to the tax rate.

Forward-looking Statements

        This annual report contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements represent our expectations or beliefs concerning future events, including the following: any statements regarding future sales or expenses, any statements regarding the continuation of historical trends, and any statements regarding the sufficiency of our working capital and cash generated from operating and financing activities for our future liquidity and capital resource needs. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. We caution that those statements are further qualified by important economic and competitive factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, risks of the restaurant industry, including risks of and publicity surrounding food-borne illness, a highly competitive industry and the impact of changes in consumer spending patterns, consumer tastes, local, regional and national economic conditions, weather, demographic trends, traffic patterns, employee availability and cost increases. In addition, the opening and success of new drive-ins will depend on various factors, including the availability of suitable sites for new drive-ins, the negotiation of acceptable lease or purchase terms for new locations, permitting and regulatory compliance, our ability to manage the anticipated expansion and hire and train personnel, the financial viability of our franchisees, particularly multi-unit operators, and general economic and business conditions. Accordingly, such

25

forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

        We are exposed to market risk from changes in interest rates on debt and notes receivable, as well as changes in commodity prices.

        Our exposure to interest rate risk currently consists of our senior notes, outstanding line of credit, and notes receivable. The senior notes bear interest at fixed rates which average 6.8%. The aggregate balance outstanding under the senior notes as of August 31, 2004 was $59.0 million. Should interest rates increase or decrease, the estimated fair value of these notes would decrease or increase, respectively. As of August 31, 2004, the estimated fair value of the senior notes exceeded the carrying amount by approximately $1.6 million. The line of credit bears interest at a rate benchmarked to U.S. and European short-term interest rates. The balance outstanding under the line of credit was $14.1 million as of August 31, 2004. The impact on our results of operations of a one-point interest rate change on the outstanding balances under the line of credit as of the end of fiscal year 2004 would be approximately $0.1 million. We have made certain loans to our franchisees totaling $7.5 million as of August 31, 2004. The interest rates on these notes are generally between 7.8% and 10.5%. We believe the fair market value of these notes approximates their carrying amount.

        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 and any commodity price aberrations are generally short term in nature.

        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.

Item 9B. Other Information

        No information was required to be disclosed in a Form 8-K during the Company’s fourth quarter of its 2004 fiscal year which was not reported.

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PART III

Item 10. Directors and Executive Officers of the Company

        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 the 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 day after August 31, 2004 (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.”

Item 12. Security Ownership of Certain Beneficial Owners and Management

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

Item 13. Certain Relationships and Related Transactions

        The information required by this item is incorporated by reference from the Proxy Statement under the caption “Certain Relationships and Related Transactions.”

Item 14. Principal Accounting Fees and Services

        The information required by this item is incorporated by reference from the Proxy Statement under the caption “Report of Audit Committee.”

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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, 2004 and 2003	F-2
Consolidated Statements of Income for each of the three years
in the period ended August 31, 2004	F-4
Consolidated Statements of Stockholders’ Equity for each of the three years
in the period ended August 31, 2004	F-5
Consolidated Statements of Cash Flows for each of the three years
in the period ended August 31, 2004	F-6
Notes to Consolidated Financial Statements	F-8

27

Financial Statement Schedules

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

	Page
Schedule II-Valuation and Qualifying Accounts	F-31

        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 employment 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.

    3.02.        Bylaws of the Company, which the Company hereby incorporates by reference from Exhibit 3.2 to the Company’s Form S-1 Registration Statement No. 33-37158.

    3.03.        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.

    3.04.        Rights Agreement, which the Company hereby incorporates by reference from Exhibit 99.1 to Sonic’s Form 8-K filed on June 17, 1997.

    3.05.        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.

    3.06.        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.

    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.

    4.02.        Specimen Certificate for Rights, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K filed on June 17, 1997.

    10.01.        Form of Sonic Industries Inc. License Agreement (the Number 4 License Agreement), which the Company hereby incorporates by reference from Exhibit 10.1 to the Company’s Form S-1 Registration Statement No. 33-37158.

    10.02.        Form of Sonic Industries Inc. License Agreement (the Number 5 License Agreement), which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form S-1 Registration Statement No. 33-37158.

    10.03.        Form of 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 Sonic’s Form 10-K for the fiscal year ended August 31, 1994.

28

    10.04.        Form of 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 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.

    10.06.        Form of Sonic Industries Inc. License Agreement (the Number 5.2 License Agreement), which the Company hereby incorporates by reference from Exhibit 10.06 to the Company’s Form 10-K for the fiscal year ended August 31, 1998.

    10.07.        Form of Sonic Industries Inc. License Agreement (the Number 6NT License Agreement).

    10.08.        Form of Sonic Industries Inc. Area Development 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, 1995.

    10.09.        Form of Sonic Industries 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.

    10.10.        Form of General Partnership Agreement, Limited Liability Company Operating Agreement and Master Agreement, which the Company hereby incorporates by reference from Exhibit 10.09 to the Company’s Form 10-K for fiscal year ended August 31, 2003.

    10.11.        1991 Sonic Corp. Stock Option Plan, which the Company hereby incorporates by reference from Exhibit 10.5 to the Company’s Form S-1 Registration Statement No. 33-37158.^*

    10.12.        1991 Sonic Corp. Stock Purchase Plan, which the Company hereby incorporates by reference from Exhibit 10.6 to the Company’s Form S-1 Registration Statement No. 33-37158.^*

    10.13.        1991 Sonic Corp. Directors’ Stock Option Plan, which the Company hereby incorporates by reference from Exhibit 10.08 to the Company’s Form 10-K for the fiscal year ended August 31, 1991.^*

    10.14.        Sonic Corp. Savings and Profit Sharing Plan, which the Company hereby incorporates by reference from Exhibit 10.8 to the Company’s Form S-1 Registration Statement No. 33-37158.^*

    10.15.        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.^*

    10.16.        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.^*

    10.17.        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.^*

    10.18.        Sonic Corp. 1995 Stock Incentive Plan, which the Company hereby incorporates by reference from Exhibit 10.15 to the Company’s Form 10-K for the fiscal year ended August 31, 1996.^*

    10.19.        Employment Agreement with J. Clifford Hudson dated August 20, 1996, which the Company hereby incorporates by reference from Exhibit 10.18 to the Company’s Form 10-K for the fiscal year ended August 31, 2002. ^*

    10.20.        Employment Agreement with Ronald L. Matlock dated August 20, 1996, which the Company hereby incorporates by reference from Exhibit 10.20 to the Company’s Form 10-K for the fiscal year ended August 31, 2002. ^*

    10.21.        Employment Agreement with W. Scott McLain dated January 27, 1998, 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, 2002. ^*

29

    10.22.        Employment Agreement with Michael A. Perry dated August 20, 2003, which the Company hereby incorporates by reference from Exhibit 10.22 to the Company’s Form 10-K for the fiscal year ended August 31, 2003. ^*

    10.23.        Employment Agreement with Stephen C. Vaughan dated August 20, 1996, which the Company hereby incorporates by reference from Exhibit 10.23 to the Company’s Form 10-K for the fiscal year ended August 31, 2002. ^*

    10.24.        Employment Agreement with Terry D. Harryman dated January 19, 2000, which the Company hereby incorporates by reference from Exhibit 10.24 to the Company’s Form 10-K for the fiscal year ended August 31, 2002. ^*

    10.25.        Employment Agreement with Carolyn C. Cummins dated April 29, 2004. ^*

    10.26.        Consulting Agreement with Pattye L. Moore dated September 10, 2004. ^*

    10.27.        Credit Agreement with Bank of America, N.A., dated April 23, 2003.

    10.28.        Note Purchase Agreement dated April 1, 1998, which the Company hereby incorporates by reference from Exhibit 10.23 to the Company’s 10-Q for the fiscal quarter ended May 31, 1998.

    10.29.        Form of 6.652% Senior Notes, Series A, due April 1, 2003, which the Company hereby incorporates by reference from Exhibit 10.24 to the Company’s 10-Q for the fiscal quarter ended May 31, 1998.

    10.30.        Form of 6.759% Senior Notes, Series B, due April 1, 2003, which the Company hereby incorporates by reference from Exhibit 10.24 to the Company’s 10-Q for the fiscal quarter ended May 31, 1998.

    10.31.        2001 Sonic Corp. Stock Option Plan, which the Company hereby incorporates by reference from Exhibit No. 10.32 to the Company’s Form 10-K for the fiscal year ended August 31, 2001.

    10.32.        2001 Sonic Corp. Directors’ Stock Option Plan, which the Company hereby incorporates by reference from Exhibit No. 10.33 to the Company’s Form 10-K for the fiscal year ended August 31, 2001.

    10.33.        Note Purchase Agreement dated August 10, 2001, which the Company hereby incorporates by reference from Exhibit No. 10.34 to the Company’s Form 10-K for the fiscal year ended August 31, 2001.

    10.34.        Form of 6.58% Senior Notes, Series A, due August 10, 2008, which the Company hereby incorporates by reference from Exhibit No. 10.35 to the Company’s Form 10-K for the fiscal year ended August 31, 2001.

    10.35.        Form of 6.87% Senior Notes, Series B, due August 10, 2011, which the Company hereby incorporates by reference from Exhibit No. 10.36 to the Company’s Form 10-K for the fiscal year ended August 31, 2001.

    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.

30

Reports on Form 8-K

        The Company filed a report on Form 8-K on June 29, 2004, reporting its press release announcing results for the Company’s third fiscal quarter.

31

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, 2004 and 2003, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended August 31, 2004. 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, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended August 31, 2004, 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.

	ERNST & YOUNG LLP
Oklahoma City, Oklahoma October 12, 2004

F-1

Sonic Corp.

Consolidated Balance Sheets

	August 31,
	2004		2003
	(In Thousands)
Assets
Current assets:
Cash and cash equivalents	$	7,993	$	13,210
Accounts and notes receivable, net		18,087		16,990
Net investment in direct financing leases		1,054		943
Inventories		3,551		2,713
Deferred income taxes		798		1,210
Prepaid expenses and other		3,100		2,246
Total current assets		34,583		37,312
Notes receivable, net		5,459		9,650
Net investment in direct financing leases		6,107		6,823
Property, equipment and capital leases, net		376,315		345,551
Goodwill, net		87,420		77,551
Trademarks, trade names and other intangibles, net		6,450		6,481
Other assets, net		2,299		2,751
Total assets	$	518,633	$	486,119

F-2

Sonic Corp.

Consolidated Balance Sheets (continued)

	August 31,
	2004			2003
	(In Thousands)
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	7,695		$	6,939
Deposits from franchisees		2,867			2,060
Accrued liabilities		32,552			29,614
Long-term debt and obligations under capital leases due within one year		6,006			1,574
Total current liabilities		49,120			40,187
Obligations under capital leases due after one year		38,020			26,437
Long-term debt due after one year		78,674			139,505
Other noncurrent liabilities		8,231			7,863
Deferred income taxes		9,826			6,729
Commitments and contingencies (Notes 6, 7, 14, and 15)
Stockholders' equity:
Preferred stock, par value $.01; 1,000,000 shares authorized; none outstanding		–			–
Common stock, par value $.01; 100,000,000 shares authorized; shares issued
74,617,554 in 2004 and 73,770,840 in 2003		746			738
Paid-in capital		105,012			95,300
Retained earnings		351,402			288,387
		457,160			384,425
Treasury stock, at cost; 15,098,687 shares in 2004 and 14,945,898 shares in
2003		(122,398	)		(119,027	)
Total stockholders' equity		334,762			265,398
Total liabilities and stockholders' equity	$	518,633		$	486,119

See accompanying notes.

F-3

Sonic Corp.

Consolidated Statements of Income

	Year ended August 31,
	2004			2003			2002
	(In Thousands, Except Per Share Data)
Revenues:
Partner Drive-In sales	$	449,585		$	371,518		$	330,707
Franchise Drive-Ins:
Franchise royalties		77,518			66,431			61,392
Franchise fees		4,958			4,674			4,020
Other		4,385			4,017			4,043
		536,446			446,640			400,162
Costs and expenses:
Partner Drive-Ins:
Food and packaging		118,073			96,568			85,838
Payroll and other employee benefits		135,880			110,009			95,085
Minority interest in earnings of Partner Drive-Ins		19,947			14,398			14,864
Other operating expenses		84,959			70,789			61,270
		358,859			291,764			257,057
Selling, general and administrative		38,270			35,426			33,444
Depreciation and amortization		32,528			29,223			26,078
Provision for impairment of long-lived assets and other		675			727			1,261
		430,332			357,140			317,840
Income from operations		106,114			89,500			82,322
Interest expense		7,684			7,464			7,406
Interest income		(1,306	)		(1,248	)		(1,087	)
Net interest expense		6,378			6,216			6,319
Income before income taxes		99,736			83,284			76,003
Provision for income taxes		36,721			31,023			28,311
Net income	$	63,015		$	52,261		$	47,692
Basic income per share	$	1.06		$	.89		$	.79
Diluted income per share	$	1.02		$	.86		$	.75

See accompanying notes.

F-4

Sonic Corp.

Consolidated Statements of Stockholders’ Equity

	Common Stock									Treasury Stock
	Shares		Amount		Paid-in Capital			Retained Earnings		Shares		Amount
	(In Thousands)
Balance at August 31, 2001		31,914	$	319	$	78,427		$	188,434		5,029	$	(66,461	)
Exercise of common stock options		512		5		4,823			–		–		–
Tax benefit related to exercise of
employee stock options		–		–		3,474			–		–		–
Purchase of treasury stock		–		–		–			–		1,033		(26,043	)
Three-for-two stock split		16,052		161		(161	)		–		2,675		–
Net income		–		–		–			47,692		–		–
Balance at August 31, 2002		48,478		485		86,563			236,126		8,737		(92,504	)
Exercise of common stock options		703		7		5,671			–		–		–
Tax benefit related to exercise of
employee stock options		–		–		3,312			–		–		–
Purchase of treasury stock		–		–		–			–		1,227		(26,523	)
Net income		–		–		–			52,261		–		–
Balance at August 31, 2003		49,181		492		95,546			288,387		9,964		(119,027	)
Exercise of common stock options		592		6		5,608			–		–		–
Tax benefit related to exercise of
employee stock options		–		–		4,106			–		–		–
Purchase of treasury stock		–		–		–			–		148		(3,371	)
Three-for-two stock split		24,845		248		(248	)		–		4,987		–
Net income		–		–		–			63,015		–		–
Balance at August 31, 2004		74,618	$	746	$	105,012		$	351,402		15,099	$	(122,398	)

See accompanying notes.

F-5

Sonic Corp.

Consolidated Statements of Cash Flows

	Year ended August 31,
	2004			2003			2002
	(In Thousands)
Cash flows from operating activities
Net income	$	63,015		$	52,261		$	47,692
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation		32,060			28,542			25,531
Amortization		468			681			547
Gains on dispositions of assets		(868	)		(1,149	)		(179	)
Amortization of franchise and development fees		(4,839	)		(4,675	)		(4,020	)
Franchise and development fees collected		4,974			4,791			4,116
Provision for deferred income taxes		3,509			1,277			2,895
Provision for impairment of long-lived assets		675			727			1,261
Tax benefit related to exercise of employee stock options		4,106			3,312			3,474
Other		145			(141	)		380
(Increase) decrease in operating assets:
Accounts and notes receivable		(737	)		(3,291	)		(1,152	)
Inventories and prepaid expenses		(1,691	)		1,666			(2,530	)
Increase (decrease) in operating liabilities:
Accounts payable		1,389			1,098			(1,235	)
Accrued and other liabilities		4,452			5,112			6,703
Total adjustments		43,643			37,950			35,791
Net cash provided by operating activities		106,658			90,211			83,483
Cash flows from investing activities
Purchases of property and equipment		(57,728	)		(54,417	)		(50,572	)
Acquisition of businesses, net of cash received		(8,518	)		(35,557	)		(20,505	)
Investments in direct financing leases		(539	)		(654	)		(893	)
Collections on direct financing leases		1,124			1,074			810
Proceeds from dispositions of assets		18,505			9,151			4,072
(Increase) decrease in intangibles and other assets		434			(4,395	)		(1,234	)
Net cash used in investing activities		(46,722	)		(84,798	)		(68,322	)

(Continued on following page)

F-6

Sonic Corp.

Consolidated Statements of Cash Flows (continued)

	Year ended August 31,
	2004			2003			2002
	(In Thousands)
Cash flows from financing activities
Proceeds from long-term borrowings	$	76,421		$	171,523		$	115,275
Payments on long-term debt		(141,978	)		(141,310	)		(115,083	)
Purchases of treasury stock		(3,067	)		(34,348	)		(17,137	)
Payments on capital lease obligations		(1,839	)		(1,793	)		(887	)
Exercises of stock options		5,310			4,774			4,651
Net cash used in financing activities		(65,153	)		(1,154	)		(13,181	)
Net increase (decrease) in cash and cash equivalents		(5,217	)		4,259			1,980
Cash and cash equivalents at beginning of the year		13,210			8,951			6,971
Cash and cash equivalents at end of the year	$	7,993		$	13,210		$	8,951
Supplemental cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized of $338, $481 and
$433, respectively)	$	7,739		$	7,996		$	7,641
Income taxes (net of refunds)		29,869			24,002			19,190
Additions to capital lease obligations		16,098			16,783			137
Accounts and notes receivable and decrease in capital lease
obligations from property and equipment sales		1,656			1,352			1,650
Obligation to acquire treasury stock		–			–			8,729
Stock options exercised by stock swap		304			904			177
Store acquisitions financed through long-term notes		8,139			–			–

See accompanying notes.

F-7

Sonic Corp.

Notes to Consolidated Financial Statements

August 31, 2004, 2003 and 2002

(In Thousands, Except 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 and Mexico. It derives its revenues primarily from Partner Drive-In sales and royalty fees from franchisees. The Company also leases signs and real estate, and owns a minority interest in several Franchise Drive-Ins. The Company grants credit to its franchisees, all of whom are in the restaurant business. Substantially all of the notes receivable and direct financing leases are collateralized by real estate or equipment.

From time to time, the Company purchases existing Franchise Drive-Ins with proven track records in core markets from franchisees and other minority investors as a means to deploy excess cash generated from operating activities and provide a foundation for future earnings growth. On April 1, 2002, the Company acquired 23 existing Franchise Drive-Ins located in the Wichita, Kansas market from a franchisee and other minority investors. The acquisitions were accounted for under the purchase method of accounting, with the results of operations of these drive-ins included with that of the Company’s commencing April 1, 2002. The Company’s cash acquisition cost, prior to post-closing adjustments, of approximately $19.4 million consisted of real estate ($10.7 million), equipment ($1.7 million) and goodwill ($7.0 million, which is expected to be fully deductible for tax purposes). The Company funded this acquisition through operating cash flows and borrowings under its bank line of credit.

On May 1, 2003, the Company acquired 51 existing drive-ins located in the San Antonio, Texas market from its franchisees for cash consideration of approximately $34.6 million, prior to post closing adjustments. The acquisitions were accounted for under the purchase method of accounting. The Company also entered into long-term lease agreements on each of the acquired drive-ins, which have future minimum rental payments aggregating $3.5 million annually. The following condensed balance sheet reflects the amount assigned to each major asset and liability category as of the acquisition date:

As of May 1, 2003
Current assets	$	322
Property and equipment		7,250
Goodwill		26,995
Total assets acquired	$	34,567

The Company did not assume any liabilities in connection with the acquisition and expects the amount assigned to goodwill to be fully deductible for tax purposes. The results of operations of these drive-ins were included with that of the Company’s commencing May 1, 2003. If the acquisition had been completed as of the beginning of fiscal year 2002, pro forma revenues, net income and basic and diluted earnings per share would have been as follows for the years ending August 31:

F-8

	2003		2002
Revenues	$	475,052	$	446,838
Net income	$	53,235	$	50,115
Net income per share:
Basic	$	.91	$	.83
Diluted	$	.87	$	.79

The Company completed the sale of 41 Partner Drive-Ins to franchisees during fiscal year 2003, the majority of which were located in developing markets. A total of eight drive-ins were sold in January 2003, eight were sold in April 2003, 15 were sold in May 2003, and the balance were sold at various times during fiscal year 2003. The Company recognized a net gain of $1.6 million in other revenues resulting from the dispositions of these drive-ins.

Principles of Consolidation

The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and its majority-owned, Partner Drive-Ins, organized as general partnerships and limited liability companies. All significant intercompany accounts and transactions have been eliminated.

Certain amounts have been reclassified in the consolidated balance sheets to conform to the fiscal year 2004 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.

Inventories

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

F-9

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 capital leases are computed by the straight-line method over the estimated useful lives or initial terms of the leases, respectively, and are combined for presentation in the financial statements.

Accounting for Long-Lived Assets

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. The fair value of the asset is measured by calculating the present value of estimated future cash flows using a discount rate equivalent to the rate of return the Company expects to achieve from its investment in newly constructed drive-ins.

Assets held for disposal are carried at the lower of depreciated cost or fair value less cost to sell. Fair values are estimated based upon appraisals or independent assessments of the assets’ estimated sales values. During the period in which assets are being held for disposal, depreciation and amortization of such assets are not recognized.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 requires that an impairment loss be recognized only if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flows and that the measurement of any impairment loss be the difference between the carrying amount and the fair value of the asset. The Company adopted the Statement effective September 1, 2002, which did not result in a material impact on its consolidated financial position or results of operations.

Goodwill and Other Intangible Assets

The Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” effective September 1, 2001. Statement No. 142 eliminates the amortization for goodwill and other intangible assets with indefinite lives. Intangible assets with lives restricted by contractual, legal, or other means will continue to be amortized over their useful lives. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. SFAS No. 142 requires a two-step process for testing impairment. First, the fair value of each reporting unit is compared to its carrying value to determine whether an indication of impairment exists. If an impairment is indicated, then the fair value of the reporting unit’s goodwill is determined by allocating the unit’s fair value to its assets and liabilities (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination.

F-10

The amount of impairment for goodwill and other intangible assets is measured as the excess of its carrying value over its fair value.

The Company’s intangible assets subject to amortization under SFAS No. 142 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 15 years. The Company’s trademarks and trade names were deemed to have indefinite useful lives and are not subject to amortization. See Note 5 for additional disclosures related to goodwill and other intangibles.

Franchise Fees and Royalties

Initial franchise fees are nonrefundable and 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. Area development fees are nonrefundable and are recognized in income on a pro rata basis when the conditions for revenue recognition under the individual 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 net royalty sales. However, the royalty payments and supporting financial statements are not due until the 20^th of the following month. As a result, the Company accrues royalty revenue in the month earned based on estimates of Franchise Drive-In sales. These estimates are based on actual sales at Partner Drive-Ins and projections of average unit volume growth at Franchise Drive-Ins.

Advertising Costs

Costs incurred in connection with the advertising and promotion of the Company’s products are expensed as incurred. Such costs amounted to $23,664, $19,665, and $16,544 for fiscal years 2004, 2003 and 2002, respectively.

Under the Company’s license agreements, both Partner Drive-Ins and Franchise Drive-Ins must contribute a minimum percentage of revenues to a national media production fund (Sonic Advertising 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 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 Advertising Fund, or the System Marketing Fund are included in the Company’s consolidated financial statements. However, all advertising contributions by Partner Drive-Ins are recorded as expense on the Company’s financial statements.

Cash Equivalents

Cash equivalents consist of highly liquid investments that mature in three months or less from date of purchase.

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Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations in accounting for its stock options because, as discussed below, the alternative fair value accounting provided for under FASB Statement No. 123, “Accounting for Stock-Based Compensation,” requires the use of option valuation models that were not developed for use in valuing such stock options. Under APB 25, because the exercise price of the Company’s stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and net income per share is required by Statement 123, which also requires that the information be determined as if the Company has accounted for its stock options granted subsequent to August 31, 1995 under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:

Year of Grant	Risk-Free Interest Rate			Expected Dividend Yield		Expected Volatility		Expected Life (years)
2004		3.8	%	0.0	%	45.6	%	5.8
2003		3.2		0.0		46.3		5.7
2002		4.4		0.0		46.3		5.3

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation:

	2004			2003			2002
Net income, as reported	$	63,015		$	52,261		$	47,692
Less stock-based compensation expense using the fair value
method, net of related tax effects		(4,984	)		(4,460	)		(3,828	)
Pro forma net income	$	58,031		$	47,801		$	43,864

F-12

Net income per share:
Basic:
As reported	$	1.06	$	.89	$	.79
Pro forma	$	.98	$	.82	$	.73
Diluted:
As reported	$	1.02	$	.86	$	.75
Pro forma	$	.94	$	.79	$	.69

Ownership Program

The Company’s drive-in philosophy stresses an ownership relationship with drive-in supervisors and managers. Most supervisors and managers of Partner Drive-Ins own an equity interest in the drive-in, which was previously financed by the Company. The Company outsourced the financing of partner notes to a third party in the fourth fiscal quarter of 2004. Supervisors and managers are not employees of the Company or of the drive-in in which they have an ownership interest.

The investments made by managers and supervisors in each partnership or limited liability company are accounted for as minority interests in the financial statements. The ownership agreements contain provisions, which give the Company the right, but not the obligation, to purchase the minority 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, primarily upon the drive-in’s financial performance for the preceding 12 months, and is intended to approximate the fair value of a minority interest in the drive-in.

The net book value of a minority interest acquired by the Company in a Partner Drive-In is recorded as an investment in partnership, which results in a reduction in the minority interest liability on the Consolidated Balance Sheet. If the purchase price exceeds the net book value of the assets underlying the partnership interest, the excess is recorded as goodwill. The acquisition of a minority interest for less than book value results in a decrease in purchased goodwill. Any subsequent sale of the minority interest to another minority partner is recorded as a pro-rata reduction of goodwill and investment, and no gain or loss is recognized on the sale of the minority ownership interest. Goodwill created as a result of the acquisition of minority interests in Partner Drive-Ins is not amortized but is tested annually for impairment under the provisions of FAS 142.

New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51,” (“FIN 46”). FIN 46 provides a new framework for identifying variable interest entities (“VIEs”) and determining when a company should include the assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements. Previously, entities were generally consolidated by an enterprise when a controlling financial interest through ownership of a majority voting interest in the entity was obtained. In December 2003, the FASB published a revision to FIN 46 (“FIN 46R”) to make certain technical corrections and address certain

F-13

implementation issues that had arisen. In addition, FIN 46R added several new scope limitations, including one which provides that companies are not required to apply the Interpretation to an entity that meets the criteria to be considered a “business,” as defined in the Interpretation, unless certain conditions exist.

In general, a VIE is a corporation, partnership, limited-liability corporation, trust, or any other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations.

FIN 46 requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in the VIE (a “variable interest holder”) is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of the VIE’s residual returns (if no party absorbs a majority of the VIE’s losses), or both. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities and non-controlling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. FIN 46 also requires disclosures about VIEs that the variable interest holder is not required to consolidate but in which it has a significant variable interest.

We have performed a review of the franchisees and other entities with which we conduct business to identify ownership, contractual or other financial interests and determine if any of these entities require further evaluation as potential VIEs. Based on our review and analysis, we have determined that each of these entities either meet the criteria to be considered a “business,” and therefore will not be subject to the Interpretation due to the “business scope” exception or would not be considered a significant variable interest.

In performing our review, we specifically addressed four conditions, which if met, might preclude a franchise from being considered a “business.” These conditions are (1) whether Sonic or its related parties participated significantly in the design or redesign of the entity, (2) whether the franchise entities were designed so that substantially all of their activities either involve or are conducted on behalf of Sonic, (3) whether Sonic and its related parties provide more than half of the equity, subordinated debt and other forms of subordinated financial support to the entity based on an analysis of the fair values of the interests in the franchisees, and (4) whether the activities of the franchise entities are primarily related to securitizations, other forms of asset-backed financing, or single-lessee leasing arrangements. We concluded that Sonic does not meet conditions one, two or four in any case and does not meet the third condition in most cases. However, there are a few instances where Sonic does provide more than half of the subordinated financial support to franchise entities, primarily in the form of loans. In these instances, Sonic is not required to determine if the franchise entities are VIEs since the interests in those entities would not be significant variable interests, as discussed in paragraph 6 of FIN 46R.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB Statement No. 123.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation which includes the prospective method, modified prospective method and retroactive restatement method. SFAS No. 148 also amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and

F-14

interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Adoption of the annual disclosure and voluntary transition requirements of SFAS No. 148 is required for annual financial statements issued for fiscal years ending after December 15, 2002. Pursuant to the provisions of SFAS No. 123, the Company has elected to continue using the intrinsic value method of accounting for its stock-based employee compensation plans in accordance with APB 25. See “Stock-Based Compensation” in Note 1 for a further discussion.

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:

	2004		2003		2002
Numerator:
Net income	$	63,015	$	52,261	$	47,692
Denominator:
Weighted average shares outstanding - basic		59,313,614		58,465,029		60,233,283
Effect of dilutive employee stock options		2,340,687		2,444,669		3,076,841
Weighted average shares - diluted		61,654,301		60,909,698		63,310,124
Net income per share - basic	$	1.06	$	.89	$	.79
Net income per share - diluted	$	1.02	$	.86	$	.75
Anti-dilutive employee stock options excluded		259,382		933,774		157,209

See Note 12 for information regarding shares available for grant under the 2001 Sonic Corp. Stock Option Plan and the 2001 Sonic Corp. Directors' Stock Option Plan.

3. Impairment of Long-Lived Assets

As of August 31, 2004 and 2003, the Company had identified certain underperforming drive-ins whose operating results indicated that certain assets of these drive-ins might be impaired. The buildings and improvements of these drive-ins had combined carrying amounts of $4,747 and $2,786 respectively. During fiscal years 2004 and 2003, the Company performed quarterly analyses of these and other drive-ins that had incurred operating losses. As a result of these analyses, the Company determined that certain drive-ins with then-existing carrying amounts of $1,021 and $1,214, respectively, were impaired and wrote them down by $675 and $727, respectively, to their fair values. Management’s estimate of undiscounted future cash flows indicates that the remaining carrying amounts as of August 31, 2004 are expected to be recovered. However, it is reasonably possible that the estimate of cash flows may change in the near future resulting in the need to write-down one or more of the identified assets to fair value.

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4. Accounts and Notes Receivable

Accounts and notes receivable consist of the following at August 31, 2004 and 2003:

	2004		2003
Royalties and other trade receivables	$	9,042	$	8,052
Notes receivable – current		1,812		3,061
Other		7,489		6,410
		18,343		17,523
Less allowance for doubtful accounts and notes receivable		256		533
	$	18,087	$	16,990
Notes receivable – noncurrent	$	5,729	$	10,274
Less allowance for doubtful notes receivable		270		624
	$	5,459	$	9,650

The Company collects royalties from franchisees and provides for estimated losses for receivables that are not likely to be collected. General allowances for uncollectible receivables are estimated based on historical trends.

During fiscal year 2004, the Company outsourced the financing of partner notes to a third-party financial institution, which resulted in a $6.1 million reduction in notes receivable.

As of August 31, 2004 and 2003, notes receivable from one franchisee totaled $3,404 and $3,370 respectively. The underlying drive-in assets collateralize these notes.

5. Goodwill, Intangibles and Other Assets

The gross carrying amount of franchise agreements, franchise fees and other intangibles subject to amortization was $2,505 and $2,399 at August 31, 2004 and 2003, respectively. Accumulated amortization related to these intangible assets was $2,099 and $1,962 at August 31, 2004 and 2003, respectively. The carrying amount of trademarks and trade names not subject to amortization was $6,044 at August 31, 2004 and 2003.

Aggregate amortization expense related to intangible assets was $185 and $420 in fiscal years 2004 and 2003, respectively. Estimated amortization expense for the next five fiscal years beginning with fiscal year 2005 is as follows:

For the year ending August 31, 2005	$	134
For the year ending August 31, 2006	$	105
For the year ending August 31, 2007	$	85
For the year ending August 31, 2008	$	26
For the year ending August 31, 2009	$	26

F-16

The changes in the carrying amount of goodwill for fiscal years ending August 31, 2004 and 2003 were as follows:

	2004			2003
Balance as of September 1,	$	77,551		$	46,826
Goodwill acquired during the year		11,374			28,640
Impairment losses		–			–
Goodwill (disposed of) acquired related to the acquisitions and
dispositions of minority interests in Partner Drive-Ins, net		(929	)		2,340
Goodwill disposed of related to the sale of Partner Drive-Ins		(576	)		(255	)
Balance as of August 31,	$	87,420		$	77,551

6. 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 15 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. These options enable the Company to retain use of properties in desirable operating areas.

Certain Partner Drive-Ins lease land and buildings from third parties. These leases, which expire over the next 20 years, include provisions for contingent rentals that may be paid on the basis of a percentage of sales in excess of stipulated amounts. The land portions of these leases are classified as operating leases and the buildings portions are classified as capital leases.

Direct Financing Leases

Components of net investment in direct financing leases are as follows at August 31, 2004 and 2003:

F-17

	2004		2003
Minimum lease payments receivable	$	10,313	$	11,625
Less unearned income		3,152		3,859
Net investment in direct financing leases		7,161		7,766
Less amount due within one year		1,054		943
Amount due after one year	$	6,107	$	6,823

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.

Future minimum rental payments receivable as of August 31, 2004 are as follows:

	Operating		Direct Financing
Year ending August 31:
2005	$	730	$	1,982
2006		730		1,971
2007		714		1,912
2008		744		1,755
2009		750		1,240
Thereafter		4,976		1,453
		8,644		10,313
Less unearned income		–		3,152
	$	8,644	$	7,161

Capital Leases

Components of obligations under capital leases are as follows at August 31, 2004 and 2003:

	2004		2003
Total minimum lease payments	$	63,937	$	44,533
Less amount representing interest averaging 13.1% in 2004 and 13.9% in 2003		23,406		16,604
Present value of net minimum lease payments		40,531		27,929
Less amount due within one year		2,511		1,492
Amount due after one year	$	38,020	$	26,437

F-18

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, 2004 are as follows:

	Operating		Capital
Year ending August 31:
2005	$	9,329	$	5,018
2006		9,361		4,973
2007		9,225		4,837
2008		9,052		4,712
2009		8,784		4,776
Thereafter		59,866		39,621
		105,617		63,937
Less amount representing interest		–		23,406
	$	105,617	$	40,531

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

	2004			2003			2002
Operating leases:
Minimum rentals	$	9,292		$	8,118		$	6,574
Contingent rentals		254			232			145
Sublease rentals		(596	)		(321	)		(407	)
Capital leases:
Contingent rentals		789			658			684
	$	9,739		$	8,687		$	6,996

The aggregate future minimum rentals receivable under noncancelable subleases of operating leases as of August 31, 2004 was $3,220.

F-19

7.  Property, Equipment and Capital Leases

Property, equipment and capital leases consist of the following at August 31, 2004 and 2003:

	Estimated Useful Life		2004		2003
Property and equipment:
Home office:
Land and leasehold improvements	Life of lease	$	3,011	$	3,762
Computer and other equipment	2 - 5 yrs		29,188		25,972
Drive-ins, including those leased to others:
Land			113,778		105,883
Buildings	15 - 25 yrs		199,578		185,747
Equipment	5 - 7 yrs		119,971		114,170
Property and equipment, at cost			465,526		435,534
Less accumulated depreciation			126,998		115,933
Property and equipment, net			338,528		319,601
Capital Leases:
Leased home office building	Life of lease		9,321		–
Leased drive-in buildings and equipment under capital leases,
including those held for sublease	Life of lease		36,320		31,943
Less accumulated amortization			7,854		5,993
Capital leases, net			37,787		25,950
Property, equipment and capital leases, net		$	376,315	$	345,551

Land, buildings and equipment with a carrying amount of $39,671 at August 31, 2004 were leased under operating leases to franchisees or other parties. The accumulated depreciation related to these buildings and equipment was $6,713 at August 31, 2004. As of August 31, 2004, the Company had drive-ins under construction with costs to complete which aggregated $4,818.

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8. Accrued Liabilities

Accrued liabilities consist of the following at August 31, 2004 and 2003:

	2004		2003
Wages and other employee benefits	$	5,751	$	3,881
Taxes, other than income taxes		10,904		10,107
Income taxes payable		4,841		5,583
Accrued interest		2,920		2,975
Minority interest in consolidated drive-ins		2,012		1,917
Other		6,124		5,151
	$	32,552	$	29,614

9.  Long-Term Debt

Long-term debt consists of the following at August 31, 2004 and 2003:

	2004		2003
Senior unsecured notes (A)	$	30,000	$	30,000
Borrowings under line of credit (B)		14,075		79,340
Senior unsecured notes (C)		29,000		30,000
Other		9,094		247
		82,169		139,587
Less long-term debt due within one year		3,495		82
Long-term debt due after one year	$	78,674	$	139,505

(A) The Company has $30,000 of senior unsecured Series B notes maturing in April 2005. The Company has the intent and the ability to refinance the $30,000 maturing in 2005 through availability under its line of credit and has classified that amount as long-term debt as of August 31, 2004 on the consolidated balance sheet. Interest is payable semi-annually and accrues at 6.76%. The related agreement requires, among other things, the Company to maintain equity of a specified amount, maintain ratios of debt to total capital and fixed charge coverage and limits additional borrowings.

F-21

(B) The Company has an agreement with a group of banks that provides for a $125,000 line of credit, including a $2,000 sub-limit for letters of credit, expiring in July 2006. The Company plans to use the line of credit to finance the opening of newly-constructed drive-ins, acquisitions of existing drive-ins, purchases of the Company’s common stock, retirement of senior notes and for general corporate purposes. Borrowings under the line of credit are unsecured and bear interest at a specified bank’s prime rate or, at the Company’s option, LIBOR plus 0.50% to 1.25%. In addition, the Company pays an annual commitment fee ranging from .125% to .25% on the unused portion of the line of credit. As of August 31, 2004, the Company’s effective borrowing rate was 4.5%. As of August 31, 2004 there were $676 in letters of credit outstanding under the line of credit. The agreement requires, among other things, the Company to maintain equity of a specified amount, maintain ratios of debt to EBITDA and fixed charge coverage and limits additional borrowings and acquisitions and dispositions of businesses.

(C) The Company has $29,000 of senior unsecured notes with $4,000 of Series A notes maturing in August 2008 and $25,000 of Series B notes maturing in August 2011. Interest is payable semi-annually and accrues at 6.58% for the Series A notes and 6.87% for the Series B notes. Required annual prepayments amount to $1,000 from August 2004 to August 2007 on the Series A notes and $3,571 from August 2005 to August 2010 on the Series B notes. The Company has the intent and the ability to refinance the required annual prepayments in 2005 through availability under its line of credit and has classified those amounts as long-term debt as of August 31, 2004 on the consolidated balance sheet. The related agreement requires, among other things, the Company to maintain equity of a specified amount, and maintain ratios of debt to equity and fixed charge coverage.

Maturities of long-term debt for each of the five years after August 31, 2004 are $3,495 in 2005, $56,724 in 2006, $4,754 in 2007, $3,766 in 2008, $3,778 in 2009 and $9,652 thereafter.

10.  Other Noncurrent Liabilities

Other noncurrent liabilities consist of the following at August 31, 2004 and 2003:

	2004		2003
Minority interest in consolidated drive-ins	$	4,339	$	4,117
Deferred area development fees		1,108		1,147
Other		2,784		2,599
	$	8,231	$	7,863

F-22

11.  Income Taxes

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

	2004		2003		2002
Current:
Federal	$	30,980	$	27,126	$	23,690
State		2,232		2,620		1,726
		33,212		29,746		25,416
Deferred:
Federal		3,050		1,110		2,517
State		459		167		378
		3,509		1,277		2,895
Provision for income taxes	$	36,721	$	31,023	$	28,311

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:

	2004		2003		2002
Amount computed by applying a tax rate of 35%	$	34,908	$	29,149	$	26,601
State income taxes (net of federal income tax benefit)		1,749		1,812		1,368
Other		64		62		342
Provision for income taxes	$	36,721	$	31,023	$	28,311

F-23

Deferred tax assets and liabilities consist of the following at August 31, 2004 and 2003:

	2004			2003
Current deferred tax assets (liabilities):
Allowance for doubtful accounts and notes receivable	$	77		$	314
Property, equipment and capital leases		326			326
Accrued litigation costs		119			93
Accrued liabilities		(432	)		–
Deferred income from affiliated technology fund		710			479
Other		(2	)		(2	)
Current deferred tax assets, net	$	798		$	1,210
Noncurrent deferred tax assets (liabilities):
Net investment in direct financing leases including differences related to
capitalization and amortization	$	(2,705	)	$	(2,569	)
Investment in partnerships, including differences in capitalization and
depreciation related to direct financing leases and different year ends for
financial and tax reporting purposes		(6,040	)		(4,862	)
State net operating losses		3,460			3,112
Property, equipment and capital leases		(3,732	)		(1,301	)
Allowance for doubtful accounts and notes receivable		201			238
Deferred income from affiliated franchise fees		1,239			1,083
Accrued liabilities		1,131			331
Intangibles and other assets		164			152
Other		(84	)		199
		(6,366	)		(3,617	)
Valuation allowance		(3,460	)		(3,112	)
Noncurrent deferred tax liabilities, net	$	(9,826	)	$	(6,729	)
Deferred tax assets and (liabilities):
Deferred tax assets (net of valuation allowance)	$	3,967		$	3,215
Deferred tax liabilities		(12,995	)		(8,734	)
Net deferred tax liabilities	$	(9,028	)	$	(5,519	)

State net operating loss carryforwards expire generally beginning in 2010. Management does not believe the Company will be able to realize the state net operating loss carryforwards and therefore has provided a valuation allowance as of August 31, 2004 and 2003.

F-24

12. Stockholders’ Equity

On January 17, 2002, the Company’s board of directors authorized a three-for-two stock split in the form of a stock dividend. A total of 16,051,750 shares of common stock were issued on February 8, 2002 in connection with the split, and an aggregate amount equal to the par value of the common stock issued of $161 was reclassified from paid-in capital to common stock. In addition, shareholders approved an increase in common stock authorized from 40,000,000 to 100,000,000 shares. The stated par value of each share was not changed from $.01.

On April 30, 2004, the Company’s board of directors authorized a three-for-two stock split in the form of a stock dividend. A total of 24,845,132 shares of common stock were issued on May 21, 2004 in connection with the split, and an aggregate amount equal to the par value of the common stock issued of $248 was reclassified from paid-in capital to common stock.

All references in the accompanying consolidated financial statements to weighted average numbers of shares outstanding, per share amounts and Stock Purchase Plan and Stock Options share data have been adjusted to reflect the stock splits on a retroactive basis.

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. The aggregate amount of stock that employees may purchase under this plan is limited to 759,375 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 Options

In January 2001 the stockholders of the Company adopted the 2001 Sonic Corp. Stock Option Plan (the “2001 Employee Plan”) and the 2001 Sonic Corp. Directors’ Stock Option Plan (the “2001 Directors’ Plan”). (The 2001 Employee Plan and the 2001 Directors’ Plan are referred to collectively as the “2001 Plans.”) The 2001 Plans were adopted to replace the 1991 Sonic Corp. Stock Option Plan and the 1991 Sonic Corp. Directors’ Stock Option Plan (collectively, the “1991 Plans”), because the 1991 Plans were expiring after ten years as required by the Internal Revenue Code. Options previously granted under the 1991 Plans continue to be outstanding after the adoption of the 2001 Plans and are exercisable in accordance with the original terms of the applicable 1991 Plan.

Under the 2001 Employee Plan, the Company is authorized to grant options to purchase up to 4,050,000 shares of the Company’s common stock to employees of the Company and its subsidiaries. Under the 2001 Directors’ Plan, the Company is authorized to grant options to purchase up to 675,000 shares of the Company’s common stock to the Company’s independent directors. At August 31, 2004, 1,082,857 shares were available for grant under the 2001 Employee Plan and 425,250 shares were available for grant under the 2001 Director’s Plan. The exercise price of the options to be granted is equal to the fair market value of the Company’s common stock on the date of grant. Unless otherwise provided by the Company’s Compensation Committee, options under both plans become exercisable ratably over a three-year period or immediately upon change in control of the Company, as defined by the plans. All options expire at the earlier of 30 days after termination of employment or ten years after the date of grant.

F-25

A summary of the Company’s stock option activity (adjusted for the stock splits), and related information was as follows for the years ended August 31:

	2004					2003					2002
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding—beginning of year		5,949,084		$	9.93		6,274,796		$	8.22		6,628,365		$	6.66
Granted		743,135			21.39		878,552			17.57		808,280			18.23
Exercised		(846,746	)		6.63		(1,054,362	)		5.39		(909,962	)		5.30
Forfeited		(70,151	)		17.82		(149,902	)		14.99		(251,887	)		9.97
Outstanding—end of year		5,775,322		$	11.79		5,949,084		$	9.93		6,274,796		$	8.22
Exercisable at end of year		4,271,690		$	9.08		4,292,694		$	7.36		4,480,329		$	5.90
Weighted average fair value of
options granted during the year	$	10.34				$	8.30				$	8.63

A summary of the Company’s options was as follows as of August 31, 2004:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding as of 8/31/2004		Weighted Average Remaining Contractual Life (Yrs.)		Weighted Average Exercise Price		Number Exercisable as of 8/31/2004		Weighted Average Exercise Price
$ 2.99  to $ 3.80		1,029,702		1.93	$	3.59		1,029,702	$	3.59
$ 4.35  to $ 8.56		1,218,623		4.43	$	7.06		1,218,623	$	7.06
$ 8.59  to $11.04		1,192,394		5.86	$	10.05		1,192,394	$	10.05
$13.64 to $18.13		1,156,961		8.22	$	16.82		531,859	$	16.29
$19.54 to $21.33		1,079,939		8.81	$	20.55		299,112	$	19.54
$21.41 to $22.33		97,703		9.50	$	22.16		–		–
$ 2.99 to $22.33		5,775,322		5.94	$	11.79		4,271,690	$	9.08

Stockholder Rights Plan

The Company has a stockholder rights plan which is designed to deter coercive takeover tactics and to prevent a potential acquirer from gaining control of the Company without offering a fair price to all of the Company’s stockholders.

F-26

The plan provided for the issuance of one common stock purchase right for each outstanding share of the Company’s common stock. Each right initially entitles stockholders to buy one unit of a share of preferred stock for $85. The rights will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company’s common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15% or more of the Company’s common stock. At August 31, 2004, 50,000 shares of preferred stock have been reserved for issuance upon exercise of these rights.

If any person becomes the beneficial owner of 15% or more of the Company’s common stock, other than pursuant to a tender or exchange offer for all outstanding shares of the Company approved by a majority of the independent directors not affiliated with a 15%-or-more stockholder, then each right not owned by a 15%-or-more stockholder or related parties will then entitle its holder to purchase, at the right’s then current exercise price, shares of the Company’s common stock having a value of twice the right’s then current exercise price. In addition, if, after any person has become a 15%-or-more stockholder, the Company is involved in a merger or other business combination transaction with another person in which the Company does not survive or in which its common stock is changed or exchanged, or sells 50% or more of its assets or earning power to another person, each right will entitle its holder to purchase, at the right’s then current exercise price, shares of common stock of such other person having a value of twice the right’s then current exercise price. Unless a triggering event occurs, the rights will not trade separately from the common stock.

The Company will generally be entitled to redeem the rights at $0.01 per right at any time until 10 days (subject to extension) following a public announcement that a 15% position has been acquired. The rights expire on June 16, 2007.

13. 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 $3,070, $2,038, and $2,264 during fiscal years 2004, 2003 and 2002, respectively.

14.  Employment Agreements

The Company has employment contracts with its Chairman and Chief Executive Officer and several members of its senior management. These contracts provide for use of Company automobiles or related allowances, medical, life and disability insurance, annual base salaries, as well as an incentive bonus. These contracts also contain provisions for payments in the event of the termination of employment and provide for payments aggregating $6,934 at August 31, 2004 due to loss of employment in the event of a change in control (as defined in the contracts).

15.  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

F-27

insurance or would not have a material adverse effect on the Company’s business or financial condition.

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 $5.0 million. As of August 31, 2004, the total amount guaranteed under the GEC agreement was $4.6 million. The Company ceased guaranteeing new loans under the program during fiscal year 2002 and has not been required to make any payments under its agreement with GEC. Existing loans under guarantee will expire through 2012. 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.

The Company has obligations under various lease agreements with third party lessors related to the real estate for Partner 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, 2004, the amount remaining under the guaranteed lease obligations totaled $3.1 million.

The Company has not recorded a liability for its obligations under the guarantees and none of the notes or leases related to the guarantees were in default as of August 31, 2004.

The Company entered into an agreement with certain franchisees during fiscal year 2003, which provides the franchisees with the option to sell 50 drive-ins to the Company anytime during the period commencing January 1, 2004 and ending June 30, 2005. The Company estimates that the cost of the acquisition, if it were to occur, would be in the range of $32 to $38 million and anticipates that the acquisition would be funded through operating cash flows and borrowings under its existing line of credit.

F-28

16.  Selected Quarterly Financial Data (Unaudited)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter				Full Year
	2004		2003		2004		2003		2004		2003		2004		2003		2004		2003
Income statement data:
Partner Drive-In sales	$	99,745	$	81,574	$	94,105	$	74,828	$	121,630	$	102,214	$	134,105	$	112,902	$	449,585	$	371,518
Other		18,963		17,011		17,490		15,524		24,312		20,391		26,096		22,196		86,861		75,122
Total revenues		118,708		98,585		111,595		90,352		145,942		122,605		160,201		135,098		536,446		446,640
Partner Drive-In operating expenses		79,852		64,873		76,320		60,628		95,723		78,587		106,964		87,676		358,859		291,764
Selling, general and administrative		9,121		8,222		9,083		8,418		9,914		9,483		10,152		9,303		38,270		35,426
Other		7,823		6,973		8,840		6,994		8,285		7,330		8,255		8,653		33,203		29,950
Total expenses		96,796		80,068		94,243		76,040		113,922		95,400		125,371		105,632		430,332		357,140
Income from operations		21,912		18,517		17,352		14,312		32,020		27,205		34,830		29,466		106,114		89,500
Interest expense, net		1,579		1,559		1,679		1,600		1,586		1,441		1,534		1,616		6,378		6,216
Income before income taxes		20,333		16,958		15,673		12,712		30,434		25,764		33,296		27,850		99,736		83,284
Provision for income taxes		7,574		6,317		5,838		4,735		11,337		9,597		11,972		10,374		36,721		31,023
Net income	$	12,759	$	10,641	$	9,835	$	7,977	$	19,097	$	16,167	$	21,324	$	17,476	$	63,015	$	52,261
Net income per share:
Basic	$	.22	$	.18	$	.17	$	.14	$	.32	$	.28	$	.36	$	.30	$	1.60	$	.89
Diluted	$	.21	$	.17	$	.16	$	.13	$	.31	$	.27	$	.34	$	.29	$	1.02	$	.86
Weighted average shares outstanding:
Basic		58,908		58,823		59,237		58,033		59,512		58,250		59,598		58,754		59,314		58,465
Diluted		61,194		61,457		61,689		60,444		61,832		60,796		61,902		60,941		61,654		60,910

F-29

17. 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 the provisions of SFAS No. 107, “Disclosures About Fair Value of Financial Instruments,” do 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, 2004 and 2003, 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 of similar amounts and terms to those currently outstanding. Carrying values for variable-rate borrowings approximate their fair values.

The carrying amounts, including accrued interest, and estimated fair values of the Company’s fixed-rate borrowings at August 31, 2004 were $59,955 and $61,515, respectively, and at August 31, 2003 were $60,959 and $63,803, respectively.

18. Subsequent Events

Subsequent to August 31, 2004, the Company repaid the balance outstanding under its line of credit in the amount of $14,075.

F-30

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
Year ended:
August 31, 2004		1,157		351		982		–		526
August 31, 2003		1,993		177		1,013		–		1,157
August 31, 2002		1,267		999		273		–		1,993
Accrued carrying costs
for drive-in closings and
disposals
Year ended:
August 31, 2004		774		–		576		–		198
August 31, 2003		946		145		317		–		774
August 31, 2002		675		793		522		–		946

F-31

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Company has caused the undersigned, duly-authorized, to sign this report on its behalf on this 12th day of November, 2004.

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

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the undersigned have signed this report on behalf of the Company, 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, Chief Executive Officer and President	November 12, 2004
/s/ Stephen C. Vaughan Stepehn C. Vaughan, Principal Financial Officer	Vice President and Chief Financial Officer	November 12, 2004
/s/ Terry D. Harryman Terry D. Harryman, Principal Accounting Officer	Controller	November 12, 2004
/s/ Margaret M. Blair Margaret M. Blair	Director	November 12, 2004
/s/ Leonard Lieberman Leonard Lieberman	Director	November 12, 2004
/s/ Pattye L. Moore Pattye L. Moore	Director	November 12, 2004
/s/ Federico F. Peña Federico F. Peña	Director	November 12, 2004
/s/ H.E. Rainbolt H.E. Rainbolt	Director	November 12, 2004
/s/ Frank E. Richardson Frank E. Richardson	Director	November 12, 2004
/s/ Robert M. Rosenberg Robert M. Rosenberg	Director	November 12, 2004
/s/ E. Dean Werries E. Dean Werries	Director	November 12, 2004

EXHIBIT INDEX

Exhibit Number and Description

10.07.	Form of Sonic Industries Inc. License Agreement (the Number 6NT License Agreement)
10.24.	Employment Agreement with Carolyn C. Cummins dated April 29, 2004*
10.25.	Consulting Agreement with Pattye L. Moore dated September 10, 2004*
10.27.	Credit Agreement with Bank of America, N.A., dated April 23, 2003
21.01.	Subsidiaries of the Company
23.01.	Consent of Independent Registered Independent 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-10

Exhibit 10.07

SONIC INDUSTRIES INC.

NON-TRADITIONAL LICENSE AGREEMENT

BY AND BETWEEN

SONIC INDUSTRIES INC.

AND

_____________________________________

_____________________________________

_____________________________________

Non-Traditional Sonic Location

_____________________________________

_____________________________________

Effective as of __________ __, 200__.

CIF No. __________

NON-TRADITIONAL LICENSE AGREEMENT

(CIF ____)

        Sonic Industries, Inc. (the "Licensor") and the individuals listed below (jointly and severally, the “Licensees”)     enter into this Non-Traditional License Agreement (this “Agreement”) as of the ____ day of __________, 200__.

__________________________	(the "Principal Licensee")
__________________________
__________________________

        Licensor is the developer and the sole and exclusive owner of the right to license the distinctive and proprietary food service system under which food is sold to the public from drive-in restaurants and other facilities operated under the trade name and federally registered trademark and service mark “Sonic.” The Sonic System so developed now includes, among other things, the following elements, all or some of which may be deleted, changed, improved or further developed by Licensor from time to time:

        A.  Methods and procedures for the preparation and serving of food and beverage products.

        B.  Confidential recipes for food products and distinctive service accessories (including, but not limited to, uniforms, menus, packages, containers and additional paper or plastic items). 

        C.  Plans and specifications for distinctive standardized premises featuring characteristic exterior style, colors, and design (including angled parking stalls equipped with menu housings, speakers and tray supports), interior furnishings, equipment layout, exterior signage, and marketing techniques and materials.

        D.  A uniform method of operating which is described in the Sonic Operations Manual.

        E.  Distinctive and characteristic trade names, trade dress, trademarks and service marks, including, but not limited to: “Sonic,” “Sonic Happy Eating,” “America’s Favorite Drive-In — Sonic,” signs, menu housings, table ordering stations, designs, color schemes, standardized premises featuring characteristic exterior style, canopies, colors, and design (including angled parking stalls equipped with menu housings, speakers and tray supports), interior furnishings and equipment layout, and emblems as Licensor designates in the Sonic Operations Manual or

otherwise in writing or through usage as prescribed for use with the Sonic System and as may from time to time be developed.

        F.  Such exclusive and trade secrets as have been and may from time to time be developed, which are owned by Licensor and which are disclosed to its licensees in confidence in connection with the construction and operation of a Sonic drive-in restaurant or Non-Traditional Sonic.

        Licensee wishes to obtain a license from Licensor to operate a Non-Traditional Sonic pursuant to the Sonic System and to be afforded the assistance provided by Licensor in connection therewith, and understands and accepts the terms, conditions and covenants set forth herein as those which are reasonably necessary to maintain Licensor’s high and uniform standards of quality and service designed to protect the goodwill and enhance the public image of the Proprietary Marks and the Sonic System, and recognizes the necessity of operating the licensed Non-Traditional Sonic in faithful compliance therewith, and with Licensor’s standards and specifications.

1. DEFINITIONS.

        Unless the context of their use in this Agreement requires otherwise, the following words and phrases shall have the following meanings when used in initially-capitalized form in this Agreement.

        1.01.Affiliate. The word “Affiliate” shall mean (a) any stockholder, director or officer of a specified Person (if the specified Person is a corporation), (b) any partner of a specified Person (if the specified Person is a partnership), (c) any member of a specified Person (if the specified Person is a limited liability company), (d) any employee of a specified Person, and (e) any Person which directly or indirectly through one or more intermediaries Controls the specified Person, the specified Person Controls, or shares a common Control with the specified Person.

        1.02. Control. The word “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person or entity, whether through the ownership of voting securities, by contract, or otherwise.

        1.03. DMA. The term “DMA” shall mean a Designated Market Area as defined by A.C. Nielsen Company from time to time.

        1.04. Facility. The word “Facility” shall mean the building or structure in which a Non-Traditional Sonic may operate, including (without limitation) military bases and other governmental facilities; universities and schools; airports and other transportation facilities; stadiums, arenas and other sports and entertainment venues; amusement and theme parks; cafeterias and food courts in shopping centers, shopping malls, office buildings, hospitals and industrial facilities; museums, zoos and other public facilities, and highway travel plazas, convenience stores, and gasoline filling stations.

2

        1.05. Gross Sales. The phrase “Gross Sales” shall mean all revenues from sales resulting from all business conducted upon or from the Non-Traditional Sonic, whether evidenced by check, cash, credit, charge account, exchange or otherwise, and shall include (without limitation) the amounts received from the sale of goods, wares and merchandise, including sales of food, beverages and tangible property of every kind and nature, promotional or otherwise (excluding restaurant equipment) and for services performed from or at the Non-Traditional Sonic, whether the Licensee fills the orders from the Non-Traditional Sonic or elsewhere. Each charge or sale upon credit shall constitute a sale for the full price in the month during which the charge or sale occurs, regardless of the time when the Licensee receives payment (in whole or in part) for the charge or sale. The phrase “Gross Sales” shall not include (a) sales of merchandise for which the Licensee makes a cash refund, if previously included in Gross Sales; (b) the price of merchandise returned by customers for exchange, if the Licensee previously included the sales price of the merchandise returned by the customer in Gross Sales and includes the sales price of merchandise delivered to the customer in exchange in Gross Sales; (c) amounts received from the sale of tobacco products; (d) the amount of any sales tax imposed by any governmental authority directly on sales and collected from customers, if the Licensee adds the amount of the tax to the sales price or absorbs the amount of the sales tax in the sales price and the Licensee actually pays the tax to the governmental authority; and (e) amounts not received for menu items because of discounts or coupons, if properly documented. The phrase “Gross Sales” also shall not include any proceeds received by the Licensee pursuant to an assignment made in accordance with the provisions of Section 13.

        1.06. License. The word “License” shall mean the rights granted the Licensee pursuant to Section 2 of this Agreement.

        1.07. Non-Traditional Sonic. The phrase “Non-Traditional Sonic” shall mean any location licensed to use the Sonic System other than a free-standing building with canopies devoted, in whole or in part, to the operation of a Sonic drive-in restaurant and accessible to the general public by automobile from public thoroughfares.

        1.08. Person. The word “Person” shall mean any individual or business entity, including (without limitation) corporation, joint venture, general partnership, limited partnership, limited liability company, or trust.

        1.09. Proprietary Marks. The phrase “Proprietary Marks” shall mean the distinctive and characteristic trade names, trademarks, service marks, logotypes and trade dress which the Licensor designates in writing or through usage from time to time as prescribed for use with the Sonic System, including (without limitation) the terms “Sonic,” “Happy Eating,” and “America’s Favorite Drive-In”; signs; emblems; menu housings and/or table ordering stations; designs; color schemes; standardized premises featuring characteristic exterior style, canopies, colors and design (including angled parking stalls equipped with menu housings, speakers and tray supports); interior furnishings; and equipment layout.

        1.10. Sonic System. The phrase “Sonic System” shall mean the unique, proprietary and confidential information of the Licensor, including (without limitation) the Sonic Operations

3

Manual and consisting of (a) methods and procedures for the preparation of food and beverage products; (b) confidential recipes for food products; (c) distinctive service and accessories; (d) plans and specifications for interior and exterior signs, designs, layouts and color schemes (whether copyrighted or not); (e) methods, techniques, formats, systems, specifications, procedures, information, trade secrets, sales and marketing programs; (f) methods of business operations and management; and (g) knowledge and experience regarding the operation and franchising of Sonic drive-in restaurants and Non-Traditional Sonics.

2. LICENSE GRANT. Licensor grants to Licensee for the following stated term the right, the license and privilege:

        2.01. (a) To adopt and use the Sonic System at the Non-Traditional Sonic located within the _________________________ located at ____________________________________, ___________________________, ______________________ (the “Facility”).

        (b) To have the exclusive rights to adopt and use the Sonic System for a Non-Traditional Sonic to be constructed within a Facility within the current boundaries of the town or city of __________, __________, for a period of six months from the date hereof, with the obligation of selecting and having such site approved within such six-month period and completing Section 2.01(a), above, within such six-month period.

        2.02. The Licensor shall not own or operate a Non-Traditional Sonic and shall not franchise any other Person to own or operate a Non-Traditional Sonic within the Facility identified in Section 2.01.

        2.03. To advertise to the public as a Licensee of Licensor.

        2.04. To adopt and use, but only in connection with the sale of those food and beverage products which have been designated in the Sonic menu as specified in an attachment to this Agreement or in any future operations manual designed for Non-Traditional Sonics, the Proprietary Marks which the Licensor shall designate from time to time to be part of the Sonic System.

        2.05. In the event the Licensee receives this license pursuant to Section 2.01(b), above, the selection of a site by Licensee shall be subject to the approval of Licensor in accordance with the standard site approval procedures required by this Agreement and the standard practices of the Licensor. In the event a site for the Non-Traditional Sonic has not been approved by the Licensor before the expiration of the six month period provided for by Section 2.01(b), above, then this Agreement shall expire and be of no further force or effect.

        2.06. If the Licensee relocates the Non-Traditional Sonic during the term of this Agreement with the written consent of the Licensor (which consent the Licensor shall not withhold unreasonably), this Agreement shall continue to apply to the Non-Traditional Sonic in accordance with the terms contained in this Agreement, except that the Licensor and the Licensee shall enter

4

into an amendment to this Agreement to change the address of the Non-Traditional Sonic accordingly.

3. TERM.

        3.01. Initial Term. Unless sooner terminated as hereafter provided, the term of this License shall end _____ years after the effective date of this Agreement as set forth on the cover page of this Agreement.

        3.02. Opening of Restaurant. The Licensee expressly acknowledges and agrees that a pre-condition to opening the Non-Traditional Sonic shall be the Licensor’s written authorization to open, which authorization shall be given only upon the Licensee’s completing, to the Licensor’s satisfaction, (i) construction of the Non-Traditional Sonic, (ii) preparation of the Non-Traditional Sonic for commencement of operations, and (iii) training as required by Section 6.04 of this Agreement.

        3.03. Option. At the end of the term, if the Licensee desires, the Licensee may renew the License to adopt and use the Sonic System at the Non-Traditional Sonic for one additional _____-year term, provided that prior to the expiration of the initial term:

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

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

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

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

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

5

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

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

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

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

4. DUTIES OF LICENSOR. The Licensor agrees to regularly advise and consult with the Licensee in connection with the operation of the Non-Traditional Sonic and to provide to the Licensee:

        4.01. Site Selection Services. The Licensor shall provide the Licensee with the Licensor’s experience in the selection of Sonic restaurant sites through the use of the forms, criteria and materials which the Licensor makes available to new licensees from time to time, as well as the benefit of its review and evaluation of any proposed sites selected by the Licensee.

        4.02. Plans and Specifications. If and when developed, the Licensor shall provide the Licensee with its standard construction plans, specifications and layouts for the structure, equipment, decor and signs for a Non-Traditional Sonic which Sonic makes available to new licensees from time to time. The Licensor shall review the Licensee’s site plan and final construction plans and specifications for conformity to the Licensor’s then current construction standards and specifications, if any.

        4.03. Operations Manual.  The Licensor shall loan the Licensee one copy of the Sonic Operations Manual containing the standards, specifications, procedures and methods for operating a traditional Sonic drive-in restaurant. If and when, the Licensor develops a separate operations manual for Non-Traditional Sonics, the Licensor shall loan one copy of that manual to the Licensee.

        4.04. Training. The Licensor shall provide the Licensee with initial training in the standards, methods, procedures and techniques of operating a Non-Traditional Sonic. the Licensor shall provide that training to the Licensee (if the Licensee is an individual) or to one principal of the

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Licensee selected by the Licensor (if the Licensee is a corporation, partnership, limited liability

company, other entity, or group of individuals). The Licensor shall provide that training at the times and places designated by the Licensor from time to time for its training program.

        4.05.Marketing Assistance. The Licensor shall provide the Licensee with the marketing materials and merchandising, marketing and advertising research data and advice as the Licensor may develop from time to time and deem helpful in the operation of a Non-Traditional Sonic.

        4.06. Communication. The Licensor shall provide the Licensee with management development and motivational seminars and periodic newsletters which communicate to the Licensee available advertising materials and new developments, techniques and improvements in areas of restaurant equipment, management, food preparation and service pertinent to the operation of a restaurant using the Sonic System.

        4.07. Evaluation Program. The Licensor shall conduct periodic field evaluations of the Non-Traditional Location for the mutual benefit of Licensor and the Licensee to promote uniform standards of operation and quality control.

        4.08. Advice. The Licensor shall provide the Licensee with periodic individual or group advice, consultation and assistance by personal visit, by telephone, or by newsletters or bulletins which the Licensor makes available to new licensees from time to time.

        4.09. Written Materials. The Licensor shall provide the Licensee with bulletins, brochures and reports which the Licensor publishes from time to time regarding its plans, policies, research, developments and activities.

        4.10. Other. The Licensor shall provide the Licensee with other resources and assistance which the Licensor may develop and make available to its new licensees from time to time.

5. FEES.

        5.01. License Fee.  The Licensee acknowledges that (a) the initial grant of this license constitutes the sole consideration for the payment of a license fee of $__________ paid by the Licensee to the Licensor concurrently with the execution hereof and (b) the fee has been earned by the Licensor (except where the construction of the Non-Traditional Sonic has not been completed within one year after the date of this Agreement). The Licensor reserves the right, in case construction of the Non-Traditional Sonic should be abandoned, the lease assigned, or other interest in the premises be relinquished, and the Licensee shall have the right, if the Licensee does not consummate a lease for the Non-Traditional Sonic within one year after the date of this Agreement, to terminate this Agreement upon written request to the Licensor, after which the Licensor will immediately refund to the Licensee the license fee less one-third of that amount, which the Licensor shall earn in full upon the execution and delivery of this Agreement. At such time as the Non-Traditional Sonic is completed and ready for occupancy, the license fee shall be deemed to be earned.

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        5.02. Royalty Fees. On or before the 20^th day of each calendar month, the licensee shall pay a royalty fee determined by the following scale based on Gross Sales received by the Licensee from the operation of the Non-Traditional Sonic during the calendar month next preceding the date of the payment:

Gross Sales Greater Than		But Not More Than		Royalty Rate
$	0.00	$	5,000.00		1.00	%
$	5,000.00	$	10,000.00		2.00	%
$	10,000.00	$	15,000.00		3.00	%
$	15,000.00	$	30,000.00		4.00	%
$	30,000.00	$	40,000.00		4.25	%
$	40,000.00	$	50,000.00		4.50	%
$	50,000.00	$	60,000.00		4.75	%
$	60,000.00		Not Applicable		5.00	%

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

        5.03. Advertising Fee. On or before the 20th day of each calendar month throughout the term of this Agreement, the Licensee shall pay to the Sonic Advertising Fund, which is administered by the Licensor, an advertising contribution fee in an amount equal to .75% of the Gross Sales received by Licensee from the operation of the Non-Traditional Sonic during the calendar month next preceding the date of the payment. Such payment shall be forwarded with the profit and loss statement required to be provided pursuant to Section 10.01 of this Agreement. The amount due the Licensor from the Licensee pursuant to this Section 5.03 shall be in addition to and separate from that which the Licensee is obligated to spend pursuant to Section 11.01(a) of this Agreement.

        5.04. Transfer Fee. A transfer fee in the amount of $500 shall be paid by the Licensee in the event of a transfer or assignment of this Agreement (resulting in a change in Control of the License) to another qualified Sonic licensee, excluding assignments pursuant to Sections 13.02 or 13.03 of this Agreement. A transfer fee in the amount of $1,500 shall be paid by the Licensee in the event of a transfer or assignment of this Agreement (resulting in a change in Control of this Agreement) to a Person other than a qualified Sonic licensee, excluding assignments pursuant to Sections 13.02 or 13.03 of this Agreement.

        5.05. Late Charges. In the event any payments required by Sections 5.02, 5.03 or 5.04, above, are not paid on or before the date on which they are due, a late charge in an amount equal to

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1.75% per month shall be levied against such amounts due and shall be owing to the Licensor by the Licensee from the date on which such obligations were due until any such obligations are paid in full. In the event the interest rate set out in this Section 5.05 exceeds that amount permitted by Oklahoma law, then the maximum interest rate permitted by Oklahoma law shall be charged.

6. DUTIES OF LICENSEE.

        6.01. Non-Traditional Sonic Site. 

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

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

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

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

        6.02. Construction.

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

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

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

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

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

        6.03. Equipment and Sign.

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

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

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

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

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

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

        6.04. Training.

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

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

        6.05. Compliance with Entire System.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

        6.06.Approved Suppliers and Advertising Agencies.

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

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

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

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

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

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

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

        6.07.Best Efforts.  the Licensee shall diligently and fully exploit his rights in this Agreement by personally devoting his best efforts and, in case more than one individual has executed this Agreement as the Licensee, at least one individual Licensee shall devote his full time and best efforts to the operation of the Non-Traditional Sonic.  The Licensee shall keep free from any activities which would be detrimental to or interfere with the business of the Non-Traditional Sonic, the Sonic System, or the Licensor.

        6.08.Interference with Employment Relations of Others.  During the term of this Agreement, the Licensee shall not employ or seek to employ any person who is at the time employed by the Licensor or any of its subsidiaries in a management level position. In addition, during the term of this License, the Licensor agrees not to employ or seek to employ any person who is at the time employed by the Licensee in a management level position. This Subsection 6.08 shall not be violated if such person has left the employ of any of the foregoing parties for a period in excess of six months.

        6.09.Licensor’s Standards.  The Licensee shall operate the Non-Traditional Sonic specified in this Agreement in conformity with the Sonic System and the obligations set forth in this Agreement and shall strictly adhere to the Licensor’s standards and policies as they exist now and as they may be from time to time modified.

        6.10.Majority Interest Owner. The Licensee represents, warrants and agrees that Licensee actually owns the majority interest in the legal and equity ownership and Control of the operation of the Non-Traditional Sonic, and that the Licensee shall maintain such interest during the term of this Agreement except only as otherwise permitted pursuant to the terms and conditions of this Agreement. The Licensee shall furnish the Licensor with such evidence as the Licensor may request from time to time for the purpose of assuring the Licensor that the Licensee’s interest remains as represented herein.

7. PROPRIETARY MARKS.

        7.01.Licensor’s Representations.  The Licensor represents with respect to the Proprietary Marks that the Licensor will use and permit the Licensee and other licensees to use the Proprietary Marks only in accordance with the Sonic System and the standards and specifications attendant thereto which underlie the goodwill associated with and symbolized by the Proprietary Marks.

        7.02. Use of Marks.  With respect to the Licensee’s licensed use of the Proprietary Marks pursuant to this agreement, the Licensee agrees that:

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

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

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

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

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

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

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

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

        7.03. Licensee’s Understanding.  The Licensee expressly understands and acknowledges that:

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

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

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

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

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

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

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

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

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

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

8. MANUAL. The Licensor shall loan to the Licensee for use at the Non-Traditional Sonic the Sonic Operations Manual prepared by Licensor for use by licensees of traditional Sonic drive-in restaurants.  The Licensee recognizes that the Sonic Operations Manual contains detailed information relating to operation of the Sonic restaurants including (a) food formulas and specifications for designated food and beverage products; (b) methods of inventory control; (c) bookkeeping and accounting procedures; (d) business practices and policies; and (e) other management, advertising and personnel policies.  The Licensee agrees to promptly adopt and use exclusively the formulas, methods and policies contained in the Sonic Operations Manual, now and as they may be modified by Licensor from time to time, except to the extent the Licensee cannot comply as a practical matter because of the physical layout and structure of the Non-Traditional Sonic. The Licensee shall return the manual to the Licensor at the expiration or earlier termination of this Agreement.

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9. CONFIDENTIAL INFORMATION.

        9.01. The Licensor possesses certain unique, proprietary and confidential information, consisting of methods and procedures for preparation of food and beverage products, confidential recipes for food products, distinctive service and accessories, plans and specifications for interior and exterior signs, designs, layouts and color schemes, and methods, techniques, formats, systems, specifications, procedures, information, trade secrets, sales and marketing programs, methods of

business operations and management, and knowledge of and experience in the operation and franchising of Sonic restaurants and the Sonic System (collectively, the “Confidential Information”). The Licensor will disclose the Confidential Information to the Licensee in furnishing the Licensee the Sonic Plans and Specifications for a Non-Traditional Sonic, the training program, and the Sonic Operations Manual, and in providing guidance and assistance to Licensee during the term of this Agreement. The Sonic Operations Manual, as modified by the Licensor from time to time, and the policies contained therein, are incorporated in this Agreement by reference.

        9.02. The Licensee acknowledges and agrees that the Licensee shall not acquire any interest in the Confidential Information, other than the right to utilize it in the development and operation of the Non-Traditional Sonic (and other Sonic drive-in restaurants and Non-Traditional Sonics under license agreements with the Licensor) during the term of this Agreement, and that the use or duplication of the Confidential Information in any other business would constitute an unfair method of competition. The Licensee acknowledges and agrees that the Confidential Information is proprietary to the Licensor, may constitute the trade secrets of the Licensor and is disclosed to the Licensee solely on the condition that the Licensee agrees, and the Licensee does hereby agree, that the Licensee:

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

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

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

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

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        9.03. The Licensee may not at any time, in any manner, directly or indirectly, and whether or not intentionally, copy any part of the Sonic Operations Manual, permit any part of it to be copied, disclose any part of it except to employees or other Persons having a need to know its contents for purposes of operating the Non-Traditional Sonic, or permit its removal from the Non-Traditional Sonic without the prior written consent from the Licensor. Notwithstanding anything to the contrary contained in this agreement and provided the Licensee shall have obtained

the Licensor’s prior written consent, the restrictions on the Licensee’s disclosure and use of the Confidential Information shall not apply to the following:

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

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

10. ACCOUNTING AND RECORDS.

        10.01. On or before the 20th day of each month, the Licensee shall submit to the Licensor a complete profit and loss statement in a form prescribed by the Licensor and such statistical reports in such form as the Licensor shall reasonably require from time to time, for the previous month immediately ended.

        10.02. The Licensee shall keep and preserve full and complete records of the Non-Traditional Sonic business for at least three years in a manner and form satisfactory to the Licensor and shall also deliver such additional financial, operating and other information and reports as the Licensor may reasonably request on the forms and in the manner prescribed by the Licensor; provided, however, that the Licensee shall maintain, at a minimum, those books and records required to be kept by the Internal Revenue Service under the Internal Revenue Code for purposes of its regulation of the Licensee’s business and make the same books available to the Licensor.

        10.03. In meeting the requirements set forth in Sections 10.01 and 10.02, above, the Licensee shall keep records substantiating and enter as a line item on its financial statements amounts representing the valuation for goods (whether food, paper or otherwise) which constitute charitable contributions to third parties from the same goods out of the Non-Traditional Sonic. Likewise, the Licensee shall maintain records and enter on its financial statements (particularly a line item on its profit and loss statement) information representing the value or amount of sales represented by coupons traded with and discounts granted by the Licensee at the Non-Traditional Sonic.

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        10.04. The Licensee further agrees to submit, within 90 days after the close of each fiscal year of the Licensor, a profit and loss statement covering operations during such fiscal year and the balance sheet taken as of the close of such fiscal year.

        10.05. The Licensor shall have the right to inspect and audit the Licensee’s accounts, books, records and tax returns at all times during and after the term of this Agreement. If such inspection discloses that Gross Sales actually exceeded the amount reported by the Licensee or that the Licensee failed to make advertising expenditures required by Sections 11.01(a) or 11.01(b), the Licensee shall immediately pay the Licensor (a) the additional royalty fee, advertising fee, and advertising expenditures; (b) interest on all unpaid amounts (from the original due date) at a rate equal to that provided by Section 5.05 of this Agreement; and (c) a 10% surcharge on all unpaid amounts.  If such inspection discloses that Gross Sales actually exceeded the amount reported by the Licensee as the Licensee’s Gross Sales by an amount equal to 3% or more of the Gross Sales originally reported to the Licensor or, in the case of failing to make required advertising expenditures, that such unpaid expenditures exceeded 3% of the amount required to be expended, the Licensee shall bear the cost of such inspection and audit at rates and fees customarily charged by the Licensor for such auditing and inspecting services and duties. Unpaid advertising expenditures, including interest and surcharges collected by the Licensor pursuant to this section, shall be used in accordance with the expenditures authorized by Section 5.03; nevertheless, the Licensor may, on a case by case basis, at the Licensor’s sole discretion, use such collected amounts in accordance with the expenditures authorized by Sections 11.01(a) and 11.01(b). The Licensor shall have the right to bring an action in its own name to collect unpaid advertising expenditures required by Section 11 of this Agreement.

        10.06. If the Licensor has reason to believe that the Licensee may not have reported all of its Gross Sales, the Licensor may require the Licensee to have its profit and loss statement and balance sheet certified by an independent public accountant.  The Licensee shall at its expense cause a certified public accountant to consult with the Licensor concerning such statement and balance sheet.  The original of each such reports required by this Section 10.06 shall be mailed to the Licensor’s business office at the address designated in Section 19, below.

        10.07. If the Licensee fails to timely provide the Licensor with complete profit and loss statements, accounts, books, records and tax returns pertaining to the Non-Traditional Sonic business, or fails to fully cooperate with the Licensor’s audit of the Non-Traditional Sonic business, the Licensor shall have the right to estimate the Licensee’s Gross Sales for the Non-Traditional Sonic using information available on the Non-Traditional Sonic or other Sonic drive-in restaurants and Non-Traditional Sonics. The Licensee agrees to accept the Licensor’s estimates as conclusively correct until the Licensee fully complies with the Licensor’s accounting and disclosure requirements under this agreement. However, if the Licensee’s subsequent accounting and disclosures reveal that the Licensee under-reported Gross Sales or underpaid fees due under this agreement, the Licensor may recover all deficiencies and may litigate claims of fraud even though the Licensor may have already obtained a judgment using the Licensor’s estimates. Furthermore, nothing in this agreement or any judgment using estimates shall prevent or hinder the Licensor’s

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further efforts and rights to obtain the accounting and disclosures which the Licensee is required to give to the Licensor under this agreement.

        10.08. The Licensor shall have the right to assemble and disseminate to third parties financial and other information regarding the Licensee and other licensees of the Licensor to the extent required by law or to the extent necessary or appropriate to further the interests of the Sonic System as a whole. The Licensor shall have the right to disclose the business name, address and telephone number of the Licensee as they appear in the Licensor’s records to any Person making inquiry as to the ownership of the Non-Traditional Sonic. The Licensor shall not disclose specific financial information regarding the Licensee or the Non-Traditional Sonic to any Person without (a) the Licensee’s prior, written consent or (b) being directed to disclose the information pursuant to the order of a court or other governmental agency.

11. ADVERTISING EXPENDITURES. 

        11.01. Standard Program.  Recognizing the value of advertising and the importance of the standardization of advertising programs to the furtherance of the goodwill and public image of the System, the parties agree as follows:

        (a)        In the event the Non-Traditional Sonic lies within a DMA for which a Licensor-approved advertising cooperative has been formed, the Licensee shall contribute to such advertising cooperative an amount required by such advertising cooperative on a schedule required by such advertising cooperative, provided that such contributions shall occur no less often than each calendar quarter and shall be of an amount not less than 3.25% of the Licensee’s Gross Sales from the operation of the Non-Traditional Sonic during each partial or full calendar month.

        (b)        In the event there exists no Licensor-approved advertising cooperative in the DMA in which the Non-Traditional Sonic is located, during each calendar quarter of the term of this agreement, the Licensee shall spend for approved advertising and promotion of the Non-Traditional Sonic (including, but not limited to, television time, radio time, newspaper display space, distributed promotional materials, but not including any amount spent on sign rent, paper products, candy or other foods which evidence the Licensor’s trademarks or color patterns and the like) an amount equal to but not less than 3.25% of Licensee’s Gross Sales from the operation of the Non-Traditional Sonic during each partial or full calendar month.

        (c)        For purposes of determining the amount which the Licensee is required to spend pursuant to Sections 11.01(a), 11.01(b) and 5.03, above, for each calendar quarter which is the subject of review, the parties hereto agree that the first two months of such calendar quarter and last month of the preceding calendar quarter shall be used in determining the Gross Sales of the Non-Traditional Sonic to determine the expenditures required hereunder. For example, to determine the expenditures required for January, February and March, the parties hereto agree that they will look to December, January, and

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February’s sales in order to determine the Gross Sales to determine the amount which must be expended by the Licensee under these Sections 11.01(a), 11.01(b) and 5.03. In the event the amounts required by Section 11.01(a) or 11.01(b) are not spent in a timely fashion, the Licensee shall pay the Licensor in accordance with Section 10.05.

        (d)        All advertising by the Licensee in any medium which utilizes the Proprietary Marks or refers in any way to the Non-Traditional Sonic shall be conducted in a dignified manner and shall conform to such standards and requirements as the Licensor may specify from time to time in writing.  The Licensee shall submit to the Licensor (in accordance with the notice provisions contained herein), for the Licensor’s prior approval (except with respect to prices to be charged), samples of all advertising and promotional plans and materials that the Licensee desires to use, that use the Proprietary Marks or refer to the Non-Traditional Sonic and that have not been prepared or previously approved by the Licensor.  If written disapproval thereof is not received by the Licensee within 15 days after the date of receipt by the Licensor of such materials, the Licensor shall be deemed to have given the required approval.  Upon notice from the Licensor, the Licensee shall discontinue and/or remove any objectionable advertising material, whether or not same was previously approved by the Licensor.  If said materials are not discontinued and/or removed within five days after notice, the Licensor or its authorized agents, may, at any time, enter upon the Licensee’s premises, or elsewhere, and remove any objectionable signs or advertising media and may keep or destroy such signs or other media without paying therefore, and without being guilty of trespass or other tort.

        (e)        The Licensor may offer from time to time to provide, upon terms subject to the discretion of the Licensor, approved local advertising and promotional plans and materials, including, without limitation, newspaper display space, distributed promotional materials.

        (f)        The Licensor or its designee shall maintain and administer an advertising fund for the System as follows:

        (i)        As provided in Subsection 5.03 of this Agreement, the Licensee shall pay an advertising contribution fee to the Sonic Advertising Fund, which shall be administered by the Licensor, and shall be deposited in a separate bank account denoted as the Sonic Advertising Fund (the “Fund”). 

        (ii)        The Licensor shall direct all advertising programs with sole discretion over the creative concepts, materials, and media used in such programs.  The Fund is intended to maximize general public recognition and acceptance of the Proprietary Marks for the benefit of the Sonic System and the Licensee acknowledges that the Licensor and its designees undertake no obligation in administering the Fund to make expenditures for the Licensee which are equivalent or proportionate to the Licensee’s contribution, and

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nothing in this section shall contravene the intent in subparagraph (iv) of paragraph (f) of this Section 11.01.

        (iii)        The Fund and all earnings thereof shall be used exclusively to meet any and all costs of maintaining, administering, directing and preparing advertising (including, without limitation, the cost of preparing and conducting television, radio, magazine and newspaper advertising campaigns and other public relations activities; employing advertising agencies to assist therein; and providing promotional brochures and other marketing materials to licensees in the Sonic System).  All sums paid by licensees to the Fund shall be maintained in a separate account from the other funds of the Licensor. The Fund shall pay the Licensor monthly an amount equal to 15% of the Fund’s receipts during the preceding month, but not to exceed the Licensor’s actual administrative costs and overhead, if any, as the Licensor may incur in activities reasonably related to the administration or direction of the Fund and advertising programs for the licensees and the Sonic System, including without limitation, conducting market research, preparing marketing and advertising materials, and collecting and accounting for assessments for the Fund. The Fund and its earnings shall not inure to the benefit of the Licensor.

        (iv)        All materials produced by the Fund shall be made available to all licensees without cost on a regular basis, excluding distribution costs.  This subparagraph (iv) of paragraph (f) of Section 11.01 shall not preclude the Licensor from offering other materials not produced by the Fund upon terms subject to the discretion of the Licensor.  (See paragraph (e) of this Section 11.01.)

        (v)        The Fund is not an asset of the Licensor, and an independent certified public accountant designated by the Licensor shall review the operation of the Fund annually, and the report shall be made available to the Licensee upon request. Notwithstanding the foregoing, the body approved and designated by the Licensor as the body to consult with regarding the Licensor’s maintenance and administration of the Fund (such as the current Franchise Advisory Council or its successor) may designate the independent public accountant to conduct the required review of the operation of the Fund, if requested in writing at least 30 but not more than 60 days prior to the end of each fiscal year.

        (vi)        It is anticipated that most contributions to the Fund shall be expended for advertising and/or promotional purposes during the year within which the contributions are made.  If, however, excess amounts remain in the Fund at the end of such year, all expenditures in the following year(s)

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shall be made first out of accumulated earnings, next out of current earnings, and finally from contributions.

        (vii)        Although the Licensor intends the Fund to be of perpetual duration, the Licensor maintains the right to terminate the Fund.  Such Fund shall not be terminated, however, until all monies in the Fund have been expended for advertising and promotional purposes as aforesaid.

        (g)        On at least a quarterly basis, the Licensor shall consult with the body approved and designated by Sonic (such as the current Franchise Advisory Council or its successor) regarding the Licensor’s maintenance and administration of the Fund and shall report to that body on the Fund’s operation.

        11.02. Publicity.  The Licensor shall have the right to photograph the Non-Traditional Sonic’s exterior and/or interior, and the various foods served, and to use any such photographs in any of its publicity or advertising, and the Licensee shall cooperate in securing such photographs and consent of Persons pictured.

12. INSURANCE.

        12.01. Insurance Amounts. Prior to opening or taking possession of the Non-Traditional Sonic, the Licensee shall acquire and thereafter maintain insurance from insurance companies acceptable to the Licensor. The Licensee shall determine the appropriate limits of liability insurance but the Licensor shall require the following minimum amounts and policy forms of insurance:

        (a)        The Licensee shall maintain statutory worker’s compensation insurance and employer’s liability insurance having a minimum limit of liability of the greater of $500,000 or the minimum amount otherwise required by applicable state law. The Licensor shall accept participation in the Texas Sonic Employee Accident Program (“TSEAP”) or in the non-subscriber program for Sonic drive-in restaurants and Non-Traditional Sonics located in Texas as long as Texas law does not require statutory worker’s compensation insurance.

        (b)        The Licensee shall maintain commercial general liability insurance, including bodily injury, property damage, products, personal and advertising injury coverage on an occurrence policy form having a minimum per occurrence and general aggregate limits of at least $1,000,000 per location.

        (c)        The Licensee shall maintain non-owned automobile liability insurance having a minimum limit of $1,000,000. The automobile policy also shall provide coverage for owned automobiles if owned or leased in the name of the Licensee.

        (d)        The Licensor shall have the right to require the Licensee to increase the insurance specified above by giving the Licensee 60 days’ written notice in accordance with

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the notice provisions of this Agreement, and the Licensee shall comply no later than the first policy renewal date after that 60-day period.

        12.02. Licensor as Additional Insured. The Licensee shall name the Licensor and the Licensor’s subsidiaries and Affiliates as additional insureds under the insurance policies specified in paragraphs (a), (b) and (c) of Section 12.01, above. The Licensee’s policies shall constitute primary policies of insurance with regard to other insurance, shall contain a waiver of subrogation provision in favor of the Licensor as it relates to the operation of the Non-Traditional Sonic, and shall provide for at least 30 days’ written notice to the Licensor prior to their cancellation or amendment.

        12.03. General Conditions. Prior to opening or taking possession of the Non-Traditional Sonic, the Licensee shall furnish the Licensor with certificates of insurance evidencing that the Licensee has obtained the required insurance in the form and amounts as specified above. In addition, the Licensee shall deliver evidence of the continuation of the required insurance policies at least 30 days prior to the expiration dates of each existing insurance policy. If the Licensee at any time fails to acquire and maintain the required insurance coverage, the Licensor shall have the right, at the Licensee’s expense, to acquire and administer the required minimum insurance coverage on behalf of the Licensee. However, the Licensor shall not have any obligation to assume the premium expense and nothing in this Agreement shall constitute a guaranty by the Licensor against any losses sustained by the Licensee. The Licensor may relieve itself of all duties with respect to the administration of any required insurance policies by giving 10 days’ written notice to the Licensee.

13. TRANSFER OF INTEREST.

        13.01. Assignment.  The rights and duties created by this agreement are personal to the Licensee and the Licensor has granted the Agreement in reliance on the collective character, skill, aptitude and business and financial capacity of the Licensee and the Licensee’s principals. Accordingly, except as may be otherwise permitted by this Section 13, neither the Licensee nor any Person or entity with an interest in the Licensee shall directly or indirectly, through one or more intermediaries, without the Licensor’s prior written consent, sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any direct or indirect interest in this Agreement; any interest in the Licensee, if the Licensee is a partnership, joint venture or closely held corporation; or any interest which, together with other related previous simultaneous or proposed transfers, constitutes a transfer of Control of the Licensee where the Licensee is registered under the Securities Exchange Act of 1934.  Any such purported assignment occurring by operation of law or without the Licensor’s prior written consent and pursuant to the terms of this Section 13, shall constitute a default of this agreement by the Licensee and such purported assignment shall be null and void.

        13.02. Death or Permanent Incapacity of Licensee.  Upon the death or permanent incapacity of the Licensee, the interest of the Licensee in this Agreement may be assigned either pursuant to the terms of Section 13.04 of this Agreement to one or more of the Licensee’s spouse, heirs or nearest relatives by blood or marriage, subject to the following conditions:  (1) If, in the sole

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discretion of the Licensor, such Persons shall be capable of conducting the Non-Traditional Sonic business in accordance with the terms and conditions of this Agreement, and (2) if such Persons shall also execute an agreement by which they personally assume full and unconditional liability for and agree to perform all the terms and conditions of this Agreement to the same extent as the original Licensee.  In the event that the Licensee’s heirs do not obtain the consent of the Licensor as assignees of this Agreement, the personal representative of the Licensee shall have the greater of 120 days or the completion of the probate of the Licensee’s estate to dispose of the Licensee’s interest under this Agreement, which disposition shall be subject to all the terms and conditions for assignments under Section 13.04.

        13.03. Assignment to Licensee’s Corporation.  The Licensor may, upon the Licensee’s compliance with the following requirements, consent to an assignment of this Agreement to a corporation whose shares are owned and Controlled by the Licensee. Such written materials shall be supplied to the Licensor within 15 days after the request by the Licensor.

        (a)        The Licensee’s corporation shall be newly organized, and its charter shall provide that its activities are confined exclusively to operating Sonic drive-in restaurants and/or Non-Traditional Sonics.

        (b)        The Licensee and the Licensee’s corporation shall maintain stop transfer instructions against the transfer on the Licensee’s corporation’s records of any securities with any voting rights subject to the restrictions of Section 13 of this Agreement, and shall issue no securities upon the face of which the following printed legend does not legibly and conspicuously appear. 

The transfer of this stock is subject to terms and conditions of one or more license agreements with Sonic Industries Inc.  Reference is made to said license agreement(s) and the restrictive provisions of the articles and bylaws of this corporation.  By agreeing to receive these securities, the transferee hereby agrees to be bound by the terms of such agreements, articles and bylaws.

        (c)        At any time upon the Licensor’s request, the Licensee and the Licensee’s corporation shall furnish company with a list of all shareholders having an interest in the Licensee’s corporation, the percentage interest of such shareholder and a list of all officers and directors in such form as the Licensor may require.

        (d)        The corporate name of the Licensee’s corporation shall not include any of the Proprietary Marks granted by this Agreement.  The Licensee and the Licensee’s corporation shall not use any mark nor any name deceptively similar thereto in a public or private offering of its securities, except to reflect the Licensee’s corporation’s franchise relationship with the Licensor.  Any prospectus or registration the Licensee or the Licensee’s corporation would propose to use in such a public or private offering shall be submitted to the Licensor within a reasonable time prior to the effective date thereof for the

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purpose of permitting the Licensor to verify compliance with this requirement by the Licensee and the Licensee’s corporation.

        (e)        Articles of incorporation, bylaws and all other documents governing the Licensee’s corporation shall be forwarded to the Licensor for approval.  The articles of incorporation, bylaws and other organization and governing documents shall recite that the issuance and transfer of any interest in the Licensee’s corporation are restricted by the terms of Section 13 of this Agreement.

        (f)        Each shareholder of the Licensee’s corporation shall personally guarantee performance under this Agreement and shall be personally bound by the terms of this Agreement.

        (g)        Any breach of this Agreement by the Licensee’s corporation shall be deemed a breach of this agreement by each shareholder of the Licensee’s corporation and each shareholder shall be personally and fully liable and obligated by any and all such breaches.

        (h)        The Licensee and the Licensee’s corporation shall submit to the Licensor, prior to any assignment under this Section 13, a shareholders agreement executed by the board of directors and ratified by all shareholders, which states that, except as may be permitted by Section 13 of this Agreement, no shares of stock or other interest in the Licensee’s corporation shall be issued, transferred, or assigned to any Person or entity without the Licensor’s prior written consent.

        (i)        Each and every shareholder of the Licensee’s corporation or any party owning a security issued by, or owning any legal or equitable interest in the Licensee’s corporation or in any security convertible to a legal or equitable interest in the Licensee’s corporation shall meet those same standards of approval as an individual licensee shall be required to meet prior to being included as a licensee on a standard license agreement with the Licensor.

        13.04. Other Assignment.

        (a)        In addition to any assignments or contingent assignments contemplated by the terms of Sections 13.02 and 13.03 of this Agreement, the Licensee shall not sell, transfer or assign this Agreement to any Person or Persons without the Licensor’s prior written consent.  Such consent shall not be unreasonably withheld.

        (b)        In determining whether to grant or to withhold such consent, the following requirements must be met by the Licensee:

        (i)        All of the Licensee’s accrued monetary obligations shall have been satisfied whether due under this agreement or otherwise.

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

        (iii)        The Licensee shall not be in material breach of this agreement or any other agreement between the Licensor and the Licensee.

        (iv)        Assignee (or the assignee’s management, as the case may be) shall at the Licensor’s sole discretion, enroll in and successfully complete such training programs as the Licensor shall at that time designate according to Section 6.04 of this Agreement.

        (v)        The Licensor shall consider of each prospective transferee, by way of illustration, the following:  (a) work experience and aptitude, (b) financial background, (c) character, (d) ability to personally devote full time and best efforts to managing the Non-Traditional Sonic, (e) residence in the locality of the Non-Traditional Sonic, (f) equity interest in the Non-Traditional Sonic, (g) conflicting interests and (h) such other criteria and conditions as the Licensor shall apply in the case of an application for a new license to operate a Non-Traditional Sonic.  The Licensor’s consent shall also be conditioned each upon such transferee’s execution of an agreement by which the transferee personally assumes full and unconditional liability for and agrees to perform from the date of such transfer all obligations, covenants and agreements contained in this Agreement to the same extent as if the transferee had been an original party to this Agreement.

        13.05. Licensor’s Right of First Refusal.

        (a)        If the Licensee or any Person or entity with an interest in the Licensee has received and desires to accept any bona fide offer to purchase all or any part of the Licensee’s interest in this Agreement or in the Licensee and the transfer of such interest would (1) result in a change of Control of the Licensee or of this Agreement or (2) constitute a transfer of interest held by a Controlling Person of the Licensee or of this Agreement, the Licensee or such Person shall notify the Licensor in writing of each such offer, with such notice including the name and address of the proposed purchaser, the amount and terms of the proposed purchase price, a copy of the proposed purchase contract

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(signed by the parties, but expressly subject to the Licensor’s right of first refusal), and all other terms and conditions of such offer. The Licensor shall have the right and option, exercisable within 20 days after the Licensor’s receipt of such written notification, to send written notice to the Licensee or such Person or entity that the Licensor or its designee intends to purchase the interest which is proposed to be transferred on the same terms and conditions offered by the third party.  Any material change in the terms of an offer prior to

closing shall cause it to be deemed a new offer, subject to the same right of first refusal by the Licensor or its designee as in the initial offer.  The Licensor’s failure to exercise such option shall not constitute a waiver of any other provision of this Agreement, including any of the requirements of this section with respect to the proposed transfer.  Silence on the part of the Licensor shall constitute rejection.  If the proposed sale includes assets of the Licensee not related to the operation of the Non-Traditional Sonic, the Licensor may purchase not only the assets related to the operation of the Non-Traditional Sonic, but may also purchase the other assets. An equitable purchase price shall be allocated to each asset included in the proposed sale.

        (b)        The election by the Licensor not to exercise its right of first refusal as to any offer shall not affect its right of first refusal as to any subsequent offer.

        (c)        Any sale or attempted sale effected without first giving the Licensor the right of first refusal described above shall be void and of no force and effect.

        (d)        If the Licensor does not accept the offer to purchase the Non-Traditional Sonic, the Licensee may conclude the sale to the purchaser who made the offer so long as the terms and conditions of such sale are identical to those originally offered to the Licensor; provided, however, that the Licensor’s approval of the assignee be first obtained, which consent shall not be unreasonably withheld upon compliance with the conditions on assignment imposed by this agreement.

        (e)        The provisions of this Section 13.05 shall not apply to any proposed transfers to members of the Licensee’s immediate family. For the purposes of this Section 13.05, a member of the Licensee’s immediate family shall mean the Licensee’s spouse and children (by birth or adoption). In addition, the provisions of this Section 13.05 shall not apply to any proposed transfers to Persons who already own an interest (directly or indirectly) in this Agreement or the Licensee as long as the transfer will not result in a change in Control of this Agreement or the Licensee.

        13.06. Consent to Assignments.  With regard to any transfer, assignment or pledge of any interest in this Agreement or in the Licensee pursuant to the foregoing provisions of this Section 13, the Licensor shall not withhold its consent unreasonably as long as the proposed transfer, assignment or pledge otherwise complies with the other requirements set forth in this Section 13.

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14.     DEFAULT AND TERMINATION.

        14.01. Automatic Termination.  The Licensee shall be deemed to be in breach of this Agreement and all rights granted under this Agreement shall automatically terminate with notice from the Licensor if any of the following events occur:

        (a)        The Licensee shall become insolvent.

        (b)        The Licensee, either personally, through an equity owner, or through the Licensee’s attorney, shall give oral or written notice to the Licensor of the Licensee’s intent to file a voluntary petition under any bankruptcy law.

        (c)        A final judgment aggregating in excess of $5,000 against the Non-Traditional Sonic or property connected with the Non-Traditional Sonic which remains unpaid for 30 days.

        (d)        Suit to foreclose any lien against any assets of the Non-Traditional Sonic is instituted against the Licensee and (i) is not dismissed within 30 days, (ii) such lien is not contested and challenged through the applicable administrative agencies or courts, or (iii) a bond is not posted (if such remedy is available) to delay any such foreclosure and guarantee performance.

        (e)        The assets of the Non-Traditional Sonic are sold after being levied thereupon by sheriff, marshal or a constable.

        (f)        Transfer of this Agreement, in whole or in part, is effected in any manner inconsistent with Section 13.

        14.02. Optional Termination.  The Licensee shall be deemed to be in breach of this Agreement and the Licensor may, at its option, terminate this Agreement and all rights granted in this Agreement at any time during the term of this Agreement without affording the Licensee any opportunity to cure the breach, effective immediately upon the Licensee’s receipt of a notice of termination, upon the occurrence of any of the following events:

        (a)        If the Licensee ceases to operate the Non-Traditional Sonic or otherwise abandons the Non-Traditional Sonic (other than closure permitted pursuant to Section 6.05(c)(v) of this Agreement) or forfeits the legal right to do or transact business at the location licensed by this Agreement. However, a default under this Agreement shall not occur and the Licensee shall have the right to terminate this Agreement upon written notice to the Licensor after the Licensee loses its lease or other legal right to conduct business at the location of the Non-Traditional Sonic if and only if the loss of the Licensee’s lease or legal right to conduct business did not result from the Licensee’s breach of its obligations or failure to exercise any contractual or legal rights available to it.

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        (b)        If the Licensee is convicted of a felony, a crime involving moral turpitude, or any other crime or offense that is reasonably likely, in the sole opinion of the Licensor, to adversely affect the Sonic System, the Proprietary Marks, the goodwill associated therewith or the Licensor’s rights therein.

        (c)        If the Licensee misuses or makes any unauthorized use of any of the Proprietary Marks or any other identifying characteristic of the Sonic System or otherwise materially impairs the goodwill associated therewith or the Licensor’s rights in the Sonic System and the Licensee cannot cure the default within 30 days.

        (d)        If the Licensee improperly discloses trade secrets or confidential information and the Licensee cannot cure the default within 30 days.

        (e)        If continued operation of the Non-Traditional Sonic might endanger public health or safety.

        (f)        If the Licensee knowingly or through gross negligence maintains false books or records or knowingly or through gross negligence submits any false report to the Licensor.

        14.03. Period to Cure.  Except as provided in Sections 14.01 and 14.02, the Licensee shall have 30 days after receipt from the Licensor of a written notice of breach of this Agreement or such notice period as is required by the law of the state where the Non-Traditional Sonic is located, within which to remedy any breach under this Agreement.  However, this period to cure will not be available to the Licensee, and the Licensor will not be required to delay termination of this Agreement, where the breach involved is one which the Licensee cannot cure within the prescribed cure period or is one which is impossible to cure. The Licensor shall have the right to terminate this Agreement upon written notice to the Licensee and without any opportunity to cure after three willful and material breaches of the same provision of this Agreement within any 12-month period for which the Licensee has received written notice and an opportunity to cure. If any such breach is not cured within that time, the Licensor may, at its option, terminate this Agreement and all rights granted under this Agreement effective immediately on the date of receipt by the Licensee of written notice of termination.  The Licensee shall be in breach under this Agreement for any failure to comply with any of the terms of this Agreement or to carry out the terms of this Agreement in good faith.  Such breach shall include, but shall not be limited to, the occurrence of any of the following illustrative events:

        (a)        If the Licensee fails to pay any past due amounts owed to the Licensor after the Licensor has mailed the Licensee two or more statements at least 20 days apart.

        (b)        If the Licensee fails to promptly pay, or repeatedly delays the prompt payment of undisputed invoices from his suppliers or in the remittance of rent and property tax as required in the Licensee’s lease.

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        (c)        If the Licensee fails to maintain and operate the Non-Traditional Sonic in a good, clean, and wholesome manner or otherwise is not in compliance with the standards prescribed by the Sonic System.

        (d)        If the Licensee attempts to assign or transfer any interest in this agreement in violation of Section 13 of this Agreement.

        (e)        If the Licensee denies the Licensor the right to inspect the Non-Traditional Sonic at reasonable times, which includes the right to photograph the interior and exterior of the Non-Traditional Sonic in its entirety.

        (f)        If the Licensee fails, refuses, or neglects to obtain the Licensor’s prior written approval or consent as required by this Agreement.

        (g)        If the Licensee acquires any interest in another business in violation of Section 16 of this Agreement.

        (h)        If the Licensee fails, refuses or neglects to provide the Licensor with the Licensee’s home address and home telephone number.

        (i)        If the Licensee breaches any other requirement set forth in this Agreement.

        (j)        If the Licensee, upon the destruction of the Non-Traditional Sonic, fails to rebuild the franchised premises and resume operation within a reasonable time (cessation of the business from a franchised premises shall not constitute default of this Agreement if caused by condemnation, expiration of a location lease pursuant to its terms at execution or when failure to rebuild following destruction of the franchised premises is prohibited by law or the location lease).

        14.04. Resolution of Disputes. The following provisions shall apply to any controversy between the Licensee and the Licensor (including an Affiliate of the Licensor) and relating (a) to this Agreement (including any claim that any part of this Agreement is invalid, illegal or otherwise void or voidable), (b) to the parties’ business activities conducted as a result of this Agreement, or (c) the parties’ relationship or business dealings with one another generally, including all disputes and litigation pending or in existence as of the date of this Agreement.

        (a)        Negotiation. The parties first shall use their best efforts to discuss and negotiate a resolution of the controversy.

        (b)        Mediation. If the efforts to negotiate a resolution do not succeed, the parties shall submit the controversy to mediation by a mediation firm agreeable to the parties or by the American Arbitration Association, if the parties cannot agree.

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        (c)        Arbitration. If the efforts to negotiate and mediate a resolution do not succeed, the parties shall resolve the controversy by final and binding arbitration in accordance with the Rules for Commercial Arbitration (the “Rules”) of the American Arbitration Association in effect at the time of the execution of this Agreement and pursuant to the following additional provisions:

        (i)        Applicable Law. The Federal Arbitration Act (the “Federal Act”), as supplemented by the Oklahoma Arbitration Act (to the extent not inconsistent with the Federal Act), shall apply to the arbitration.

        (ii)        Selection of Arbitrators. The parties shall select three arbitrators within 10 days after the filing of a demand and submission in accordance with the Rules. If the parties fail to agree on three arbitrators within that 10-day period or fail to agree to an extension of that period, the arbitration shall take place before three arbitrators selected in accordance the Rules. At least one of the arbitrators shall constitute an individual selected by Sonic (or its Affiliate) who has experience with franchise law or franchise relations. A decision or award by a majority of the arbitrators shall constitute the decision or award of the arbitrators.

        (iii)        Location of Arbitration. The arbitration shall take place in Oklahoma City, Oklahoma, and the arbitrators shall issue any award at the place of arbitration. The arbitrators may conduct hearings and meetings at any other place agreeable to the parties or, upon the motion of a party, determined by the arbitrators as necessary to obtain significant testimony or evidence.

        (iv)        Discovery. The arbitrators shall have the power to authorize all forms of discovery (including depositions, interrogatories and document production) upon the showing of (a) a specific need for the discovery, (b) that the discovery likely will lead to material evidence needed to resolve the controversy, and (c) that the scope, timing and cost of the discovery is not excessive.

        (v)        Authority of Arbitrators. The arbitrators shall not have the power (a) to alter, modify, amend, add to, or subtract from any term or provision of this Agreement; (b) to rule upon or grant any extension, renewal or continuance of this Agreement; (c) to award damages or other remedies expressly prohibited by this Agreement; or (d) to grant interim injunctive relief prior to the award.

        (vi)        Scope of Proceeding. The parties shall conduct any arbitration proceeding and resolve any controversy on an individual basis only and not on a class-wide, multiple-party, or similar basis.

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        (vii)        Enforcement of Award. The prevailing party shall have the right to enter the award of the arbitrators 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 arbitrators made prior to the

award. The award of the arbitrators shall not have any precedential or collateral estoppel effect on any other controversy involving the Licensor or its Affiliates.

        (d)        Excluded Controversies. At the election of the Licensor or its Affiliate, the provisions of this Section 14.04 shall not apply to any controversies relating to any fee due the Licensor or its Affiliate; any promissory note payments due the Licensor or its Affiliate; or any trade payables due the Licensor or its Affiliate as a result of the purchase of equipment, goods or supplies. The provisions of this Section 14.04 also shall not apply to any controversies relating to the use and protection of the Proprietary Marks or the Sonic System, including (without limitation) the Licensor’s right to apply to any court of competent jurisdiction for appropriate injunctive relief for the infringement of the Proprietary Marks or the Sonic System.

        (e)        Attorneys’ Fees and Costs. The prevailing party to the arbitration shall have the right to an award of its reasonable attorneys’ fees and costs incurred after the filing of the demand and submission, including a portion of the direct costs of any in-house legal staff reasonably allocable to the time devoted to the arbitration.

15. OBLIGATIONS UPON TERMINATION.

        15.01. Effect of Termination, Cancellation or Expiration of this Agreement. Except as otherwise authorized pursuant to the terms of any other license agreement between the Licensor and the Licensee, the Licensee shall comply with the following provisions after the expiration or termination of this Agreement and the License:

        (a)        The Licensee, upon any termination, cancellation or expiration of this Agreement, shall promptly pay to the Licensor and the Licensor’s subsidiaries any and all sums owed to them.  In the event of termination for any breach by the Licensee, such sums shall include all damages, costs and expenses, including reasonable attorneys’ fees, incurred by the Licensor as a result of the breach, which obligation shall give rise to and remain, until paid in full, a lien in favor of the Licensor against any and all of the assets of the Non-Traditional Sonic owned by the Licensee at the time of default.

        (b)        Upon termination, cancellation or expiration of this Agreement for any reason, all of Licensee’s rights under this Agreement shall terminate. The Licensee shall not thereafter use or adopt any trade secrets disclosed to the Licensee under this Agreement or any paper goods, emblems, signs, displays, table ordering stations, or other property on

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which the Licensor’s name or Proprietary Marks are imprinted or otherwise form a part thereof or any confusing simulations thereof.  The Licensee shall not otherwise use or duplicate the Sonic System or any portion thereof or assist others to do so. The Licensee shall remove from the premises all signs, emblems and displays identifying it as associated with the Licensor or the Sonic System.  The Licensee shall cease to use and shall return to the Licensor all copies of the Sonic Operations Manual, instructions or materials delivered to the Licensee under this Agreement.

        (c)        Upon termination, cancellation or expiration of this Agreement, unless otherwise directed in writing by the Licensor, the Licensee shall change the exterior and interior design and the decor of said premises, including, but not limited to, changing the color scheme, and shall make or cause to be made such changes in signs and structures (excluding major structural changes) as the Licensor shall reasonably direct so as to effectively distinguish the same from its former appearance and from any other Non-Traditional Sonic or Sonic drive-in restaurant. If the Licensee fails or refuses to comply with this provision, the Licensor shall have the right to enter upon the premises where said business is being conducted without being guilty of trespass or any other tort for the purpose of making or causing to be made such changes at the expense of the Licensee, which expense the Licensee agrees to pay on demand.

        (d)        Upon termination, cancellation or expiration of this Agreement, in the event the Licensee is the owner of any signage containing or incorporating any of the Proprietary Marks, the Licensor shall have an irrevocable option to purchase the signage for its fair market value. In any event, the Licensee shall not thereafter use any signage displaying the Licensor’s name or Proprietary Marks or which primarily display the colors used in any other such sign at any other Non-Traditional Sonic or Sonic drive-in restaurant. See Section 15.04 for determining fair market value.  Any agent, servant or employee of the Licensor may remove the signage or any objectionable signs or advertising from the Non-Traditional Sonic without being guilty of trespass or other tort, and the Licensee shall be liable for the Licensor’s costs plus attorneys’ fees for any interference therewith.

        (e)        Upon termination, cancellation or expiration of this Agreement, the Licensee shall cease to hold the Licensee out in any way as a licensee of the Licensor or to do anything which would indicate any relationship between the Licensee and the Licensor.

        (f)        The covenants set forth in paragraphs (a), (b), (c), (d) and (e) of this Section 15.01 shall survive the termination, cancellation or expiration of this Agreement.

        (g)        All rights, claims and indebtedness which may accrue to the Licensor prior to termination, cancellation or expiration of this Agreement shall survive termination, cancellation or expiration and be enforceable by the Licensor.

        (h)        The Licensee shall complete all such modifications within 30 days after this Agreement has been terminated or canceled or has expired. The Licensee and the Licensor

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agree that the Licensor’s damages resulting from a breach of the provisions of this section are difficult to estimate or determine accurately.  In the event of a breach by the Licensee of the provisions of this Section, the Licensee, in addition to any and all other remedies available to the Licensor in this Agreement and elsewhere, will pay the Licensor double the royalty and advertising fees prescribed in this agreement until the Licensee satisfactorily de-identifies the restaurant premises in the manner prescribed by this section. This payment shall constitute liquidated damages and shall not be construed as a penalty since such payment has been agreed to by the Licensee and the Licensor as reasonably representative of the actual damage sustained by the Licensor in the event of such a breach.  The liquidated damages shall start on the 31st day after this agreement has been terminated or canceled or has expired. Those liquidated damages shall not constitute either a waiver of the Licensee’s obligation to de-identify or a license to use the Sonic System. Those remedies will be in addition to any other remedies the Licensor may have under this Agreement or under federal or state law.

        15.02. Licensor’s Option to Purchase.

        (a)        Upon termination, cancellation or expiration of this Agreement, the Licensor shall have the right and option to purchase all or any patented, special or unique Non-Traditional Sonic equipment, table order stations, menu housings, signs, menus and supplies of the Licensee at their fair market value. See Section 15.04 for determining fair market value.  Such right or option of the Licensor shall be exercised as provided in paragraph (b) of this Section 15.02. If the Licensor elects to exercise any option to purchase provided in this Agreement, it shall have the right to set off all amounts due from the Licensee to the Licensor and one-half of the cost of any appraisals against any payment therefor.

        (b)        In the case of termination by expiration, the Licensor shall exercise the Licensor’s option contained in this Section 15.02 by giving the Licensee written notice at least 30 days prior to expiration.  In the case of termination for any other reason, the Licensor shall exercise its option by giving the Licensee written notice within 30 days after termination.

        (c)        The Licensor’s option hereunder is without prejudice to the Licensor’s rights under any security agreement held by the Licensor or with respect to which the Licensor may have a guarantor’s or surety’s subrogation interest.  If the Licensor exercises this option, the Licensor may pay any debt which the Licensee owes to the Licensor and shall remit any balance of the purchase price to the Licensee.  There shall be no allowance for goodwill.

        15.03. Licensor’s Obligation to Purchase.

        (a)        Upon termination, cancellation or expiration of this Agreement, if the Licensee desires to sell the Licensee’s unbroken inventory packages of approved imprinted

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items and supplies with Proprietary Marks to the Licensor, excluding all food items, the Licensor shall have the obligation to repurchase such items at the Licensee’s cost.

        (b)        If the Licensee desires to sell such items to the Licensor, the Licensee shall, not later than 10 days after termination, cancellation or expiration of this Agreement, give the Licensor 10 days written notice of the Licensee’s election and, at the expiration of the 10-day notice period, deliver such items at the Licensee’s expense with an itemized inventory to the nearest Sonic drive-in restaurant or Non-Traditional Sonic owned by the Licensor or other unit designated by the Licensor. The Licensor agrees to pay the Licensee or credit the Licensee’s account within seven days after said delivery.

        15.04. Fair Market Value Determination.  If the parties cannot agree on the fair market value of any item subject to an option to purchase in this Agreement within a reasonable time, one appraiser shall be designated by the Licensor, one by the Licensee, and the two appraisers shall designate an independent appraiser, and the valuation of such third appraiser alone shall be binding.  The Licensor and the Licensee each shall pay one-half of the cost of any appraisals required pursuant to this Section 15.04.

16. COVENANTS.

        16.01. Restrictions on Licensee.  The Licensee agrees and covenants as follows:

        (a)        During the term of this License, Licensee shall not directly or indirectly through one or more intermediaries (i) engage in, (ii) acquire any financial or beneficial interest (including interests in corporations, partnerships, trusts, unincorporated associations or joint ventures) in, (iii) loan money to or (iv) become landlord of any restaurant business which has a menu similar to that of a Non-Traditional or traditional Sonic (such as hamburgers, hot dogs, onion rings, and similar items customarily sold by Non-Traditional or traditional Sonics) or which has an appearance similar to that of a Non-Traditional or traditional Sonic (such as color pattern or other items that are customarily used by a Non-Traditional or traditional Sonic).

        (b)        Licensee shall not, for a period of eighteen (18) months after termination of this License for any reason, directly or indirectly through one or more intermediaries (i) engage in, (ii) acquire any financial or beneficial interest (including interests in corporations, partnerships, trusts, unincorporated associations or joint ventures) in, (iii) loan money to or (iv) become a landlord of any restaurant business which has a menu similar to that of a Non-Traditional or traditional Sonic (such as hamburgers, hot dogs, onion rings, and similar items customarily sold by Non-Traditional or traditional Sonics) or which has an appearance similar to that of a Non-Traditional or traditional Sonic (such as color pattern or other items that are customarily used by a Non-Traditional or traditional Sonic), and which (i) is within a three (3) mile radius of the Non-Traditional Sonic formerly licensed by this agreement, (ii) is within a twenty (20) mile radius of a Non-Traditional Sonic or Sonic

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drive-in restaurant in operation or under construction, or (iii) is located within the MSA of the Non-Traditional or traditional Sonic.

        (c)        The Licensee shall not appropriate, use or duplicate the Sonic System, or any portion of the Sonic System, for use at any other restaurant business.

        (d)        During the term of this Agreement, the Licensee (1) shall use the Licensee’s best efforts to promote the business of the Non-Traditional Sonic and (2) shall not engage in any other business or activity that might detract from, interfere with, or be detrimental to the Sonic System or the Licensee’s full and timely performance under this Agreement.

        (e)        The parties agree that each of the foregoing covenants shall be construed as independent of any covenant or provision of this Agreement.  If all or any portion of a covenant in this Section 16 is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which the Licensor is a party, the Licensee expressly agrees to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Section 16.

        (f)        The Licensee expressly agrees that the existence of any claims the Licensee may have against the Licensor, whether or not arising from this Agreement, shall not constitute a defense to the enforcement by the Licensor of the covenants in this Section 16.

        (g)        The Licensee acknowledges that the Licensee’s violation of the terms of this Section 16 would result in irreparable injury to the Licensor for which no adequate remedy at law is available, and the Licensee accordingly consents to the ex parte issuance of restraining orders, temporary and permanent injunctions and cease and desist orders prohibiting any conduct by the Licensee in violation of the terms of this Section 16.

        (h)        The Licensee shall utilize at the Non-Traditional Sonic a cash register previously approved by the Licensor, which such cash register shall at all times during the term of this Agreement have a non-alterable grand total function so that each item entered in such register and each day’s totals may not be altered once entered.

        16.02. Covenants by Others.  At the time of execution of this agreement, the Licensee shall provide the Licensor with covenants similar in substance to those set forth in this Section 16 (including covenants applicable upon the termination of a Person’s relationship with the Licensee) from the following persons:  (1) all persons employed by the Licensee; and (2) all officers, directors, and holders of a direct or indirect beneficial ownership interest in the Licensee.  With respect to each Person who becomes associated with the Licensee in one of the capacities enumerated above subsequent to execution of this agreement, the Licensee shall require and obtain such covenants and promptly provide the Licensor with executed copies of such covenants.  In no event shall any Person enumerated be granted access to any confidential aspect of the Sonic System or the Non-Traditional Sonic prior to execution of such a covenant.  All covenants required by this

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Section 16 shall be furnished by the Licensee to the Licensor and shall include, without limitation, specific identification of the Licensor as a third party beneficiary of such covenants with the independent right to enforce them. The failure by the Licensee to obtain execution of a covenant required by this Section 16 shall constitute a breach of this Agreement.

17. INDEPENDENT CONTRACTOR & INDEMNIFICATION.

        17.01. Licensee not an Agent of Licensor.  It is understood and agreed that this Agreement does not create a fiduciary relationship between the Licensor and the Licensee, and that nothing contained in this Agreement shall constitute the Licensee as the agent, legal representative, partner, joint venturer or employee of the Licensor. The Licensee is, and shall remain, an independent contractor responsible for all obligations and liabilities of, and for all loss or damage to, the Non-Traditional Sonic and its business, including any personal property, equipment, fixtures or real property connected therewith and for all claims or demands based on damage or destruction of property or based on injury, illness or death of any person or persons, directly or indirectly, resulting from the operation of the Non-Traditional Sonic.

        17.02. Cost of Enforcement.  If the Licensor or the Licensor’s subsidiaries become involved in any action at law or in equity or in any proceeding opposing the Licensee to secure, enforce, protect, or defend the Licensor’s rights and remedies under this Agreement, in addition to any judgment entered in the Licensor’s favor, the Licensor shall be entitled to demand of and (in the event the Licensor prevails in such actions or proceedings) recover from the Licensee the reasonable costs, expenses and attorneys’ fees incurred by the Licensor. If, in such applicable final judgment, the Licensor does not prevail, the Licensee shall be entitled to recover from the Licensor in any such action or proceeding the reasonable costs, expenses and attorneys’ fees incurred by the Licensee.

        17.03. Indemnification.  If the Licensor or the Licensor’s subsidiaries shall be subject to any claim, demand or penalty or become a party to any suit or other judicial or administrative proceeding by reason of any claimed act or omission by the Licensee, the Licensee’s employees or agents, or by reason of any act occurring at the Non-Traditional Sonic, or by reason of any act or omission with respect to the business or operation of the Non-Traditional Sonic, the Licensee shall indemnify and hold the Licensor and the Licensor’s subsidiaries harmless against all judgments, settlements, penalties and expenses, including attorneys’ fees, court costs and other expenses of litigation or administrative proceeding, incurred by or imposed on the Licensor in connection with the investigation or defense relating to such claim or litigation or administrative proceeding and, at the election of the Licensor, the Licensee shall also defend the Licensor and the Licensor’s subsidiaries. The Licensee shall not have any obligation to indemnify, defend or hold harmless the Licensor or any other Person pursuant to the provisions of this Section 17.03 to extent the obligation arises predominantly as a proximate result of the Licensor’s act or failure to act when under a duty to act.

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18. EFFECT OF WAIVERS. No waiver by the Licensor of any breach or series of breaches of this Agreement shall constitute a waiver of any subsequent breach or waiver of the terms of this Agreement.

19. NOTICES.

        19.01. Any notice required under this Agreement, if not specified, shall be in writing and shall be delivered by (a) personal service; (b) by overnight, receipted delivery service; or (c) by United States certified or registered mail, with postage prepaid, addressed to the Licensee at the Non-Traditional Sonic or at such other address of the Licensee then appearing on the records of the Licensor or to the Licensor at 300 Johnny Bench Drive, Oklahoma City, Oklahoma 73104, or at the subsequent address of the Licensor’s corporate headquarters. Either party, by a similar written notice, may change the address to which notices shall be sent.

        19.02. If the Licensor is unable to give actual notice of any breach or termination of this agreement because the Licensee has failed to provide the Licensor with a current address, because the Licensee fails to accept or pick up a mailed notice, or due to any reason which is not the fault of the Licensor, then such notice shall be deemed as given when the Licensor sends such notice by overnight receipted delivery service or registered or certified mail, postage prepaid.

        19.03. The Licensee has designated on the first page of this agreement a Principal to serve as the party receiving primary notice on behalf of the parties to this Agreement. Each Licensee hereby agrees that the Licensor may send its notices and communications under this Agreement to the Principal provided for in this Agreement, that the Licensor may use the Principal as its primary contact for purposes of communications and notices permitted or required under this Agreement, and that all communications and notices given by the Licensor to the Principal will be just as effective on each Licensee as though the same had been given to each Licensee.

20. ENTIRE AGREEMENT.

        20.01. No Oral Agreements.  This Agreement and all addenda, appendices and amendments to this Agreement constitute the entire agreement between the parties and supersede all prior and contemporaneous, oral and written agreements and understandings of the parties.

        20.02. Scope and Modification of Agreement.  No interpretation, change, termination or waiver of any of the provisions of this Agreement shall be binding upon the Licensor unless in writing signed by an executive officer of the Licensor.  No modification, waiver, termination, rescission, discharge or cancellation of this Agreement shall affect the right of any party hereto to enforce any claim or right hereunder, whether or not liquidated, which occurred prior to the date of such modification, waiver, termination, rescission, discharge or cancellation.

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21. CONSTRUCTION AND SEVERABILITY.

        21.01. Interpretation.  The recitals shall be considered a part of this agreement.  Captions are used only for convenience and are in no way to be construed as part of this Agreement or as a limitation of the scope of the particular sections, subsections, paragraphs and subparagraphs to which they refer.  Words of any gender used in this Agreement shall include any other gender, and words in the singular shall include the plural where the context requires.

        21.02. Invalidity.  If any part of this Agreement for any reason shall be declared invalid, such decision shall not affect the validity of any remaining portion, which shall remain in full force and effect.  In the event any material provision of this Agreement shall be stricken or declared invalid, the Licensor reserves the right to terminate this Agreement.

        21.03. Binding Effect.  This Agreement shall be binding upon the parties, their heirs, executors, personal representatives, successors or assigns.

        21.04. Survival.  Any provisions of this Agreement which impose an obligation after termination or expiration of this Agreement shall survive the termination or expiration of this Agreement and be binding on the parties.

        21.05. Liability of Multiple Licensees.  If the Licensee consists of more than one Person or entity, each such Person and entity, and each proprietor, partner or shareholder of each such entity shall be jointly and severally liable for any and all of the Licensee’s obligations and prohibitions under this Agreement. Consequently, if and when a Person or entity as the Licensee is in breach of this Agreement and fails or is unable to cure such breach in a timely manner, the Licensor may terminate the rights of the so-affected Person or entity under this Agreement whereby this Agreement is terminated as to only such Person or entity while remaining fully effective as to all other Persons and entities remaining as a Licensee on this Agreement. The Person or entity removed as a Licensee shall remain jointly and severally obligated with the Persons and entities remaining as a Licensee for any and all obligations and liabilities of the Licensee which occurred or accrued through the date of the removal of said Person or entity.

22. BUSINESS ENTITY LICENSEES

        22.01. Corporate Licensee. If the Licensee is a corporation, the Licensee shall comply with the following provisions:

        (a)        Purpose. The certificate of incorporation of the Licensee, if incorporated after August 31, 1994, shall provide that the purpose of the corporation shall consist only in the development, ownership, operation and maintenance of Sonic drive-in restaurants and/or Non-Traditional Sonics.

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        (b)        Transfer Restrictions. The certificate of incorporation of the Licensee shall provide that the Licensee shall not issue any additional capital stock of the Licensee and that no stockholder may transfer, assign or pledge any issued capital stock of the Licensee without the prior, written consent of the Licensor, and each stock certificate issued to evidence the capital stock of the Licensee shall contain a legend disclosing the foregoing restriction. The Licensor shall not withhold its consent to the issuance of additional capital stock or a transfer, assignment or pledge without a reasonable basis. In giving its consent, the Licensor shall have the right (but not the obligation) to impose one or more reasonable conditions, including (without limitation) the requirement that the recipient of the capital stock execute an agreement substantially similar to the Guaranty and Restriction Agreement attached as Attachment I to this Agreement.

        (c)        Stockholder Guaranty. Each stockholder of the Licensee shall execute the Guaranty and Restriction Agreement attached as Attachment I to this Agreement.

        (d)        Documents. Prior to the Licensor’s execution of this Agreement, the Licensee shall deliver to the Licensor photocopies of its certificate of incorporation and issued stock certificates reflecting compliance with the provisions of this Section 22.01.

        22.02. Partnership Licensee. If the Licensee is a partnership, the Licensee shall comply with the following provisions:

        (a)        Purpose. The partnership agreement and certificate of limited partnership (if applicable) of the Licensee, if formed after August 31, 1994, shall provide that the purpose of the partnership shall consist only in the development, ownership, operation and maintenance of Sonic drive-in restaurants and/or Non-Traditional Sonics.

        (b)        Transfer Restrictions. The partnership agreement and certificate of limited partnership (if applicable) of the Licensee shall provide that the Licensee shall not issue any additional partnership interests in the Licensee and that no partner may transfer, assign or pledge a partnership interest in the Licensee without the prior, written consent of the Licensor. The Licensor shall not withhold its consent to the issuance of additional partnership interests or a transfer, assignment or pledge without a reasonable basis. In giving its consent, the Licensor shall have the right (but not the obligation) to impose one or more reasonable conditions, including (without limitation) the requirement that the recipient of the partnership interest execute an agreement substantially similar to the Guaranty and Restriction Agreement attached as Attachment I to this Agreement.

        (c)        Partner Guaranty. Each partner of the Licensee shall execute the Guaranty and Restriction Agreement appearing as Attachment I to this Agreement.

        (d)        Documents. Prior to the Licensor’s execution of this Agreement, the Licensee shall deliver to the Licensor photocopies of its partnership agreement and

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certificate of limited partnership (if applicable) reflecting compliance with the provisions of this Section 22.02.

        22.03. Limited Liability Company Licensee. If the Licensee is a limited liability company, the Licensee shall comply with the following provisions:

        (a)        Purpose. The articles of organization and operating agreement of the Licensee, if organized after August 31, 1994, shall provide that the purpose of the limited liability company shall consist only in the development, ownership, operation and maintenance of Sonic drive-in restaurants and/or Non-Traditional Sonics.

        (b)        Transfer Restrictions. The articles of organization and operating agreement of the Licensee shall provide that the Licensee shall not issue any additional membership interests in the Licensee and that no member may transfer, assign or pledge any membership interests in the Licensee without the prior, written consent of the Licensor. The Licensor shall not withhold its consent to the issuance of additional membership interests or a transfer, assignment or pledge without a reasonable basis. In giving its consent, the Licensor shall have the right (but not the obligation) to impose one or more reasonable conditions, including (without limitation) the requirement that the recipient of the membership interest execute an agreement substantially similar to the Guaranty and Restriction Agreement attached as Attachment I to this Agreement.

        (c)        Member Guaranty. Each member of the Licensee shall execute the Guaranty and Restriction Agreement appearing as Attachment I to this Agreement.

        (d)        Documents. Prior to the Licensor’s execution of this Agreement, the Licensee shall deliver to the Licensor photocopies of its articles of organization and operating agreement reflecting compliance with the provisions of this Section 22.03.

        22.04. Other Entity Licensee. If the Licensee is any other form of business entity, the Licensee shall deliver to the Licensor photocopies of its organizational documents containing provisions substantially similar to those required by Sections 22.01 through 22.03.

        22.05. Employee Stock Purchase Plans. The Licensee shall have the right to transfer up to 49% of its outstanding capital stock or other equity interests to an employee stock purchase plan as long as one individual who qualifies as a licensee of the Licensor continues to own and Control, directly or indirectly, at least 51% of the Licensee’s outstanding capital stock or other equity interests.

23. APPLICABLE LAWS. The terms and provisions of this Agreement shall be interpreted in accordance with and governed by the laws of the State of Oklahoma, provided that if the laws of the State of Oklahoma would not permit full enforcement of Section 16 of this Agreement, then the laws of the state in which the Non-Traditional Sonic is located or the Licensee is domiciled shall apply to the extent that any or all of such laws more fully permit enforcement of Section 16 of this

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Agreement. Notwithstanding the foregoing, the franchise laws or regulations of the state in which the Non-Traditional Sonic is located, in effect on the original date of this Agreement, shall apply to this Agreement. The Licensee agrees that jurisdiction over the Licensee and venue exist and are proper within the same federal judicial district where the corporate headquarters of the Licensor are located and within any and all other courts, whether federal, state or local, located within that district. The Licensee waives any and all defenses and objections, and the Licensee agrees not to assert any defense or objection to jurisdiction over the Licensee and to venue as described in this section regarding any action, proceeding or litigation instituted by the Licensor against the Licensee. The Licensor and the Licensee agree that any and all breaches of this agreement, including breaches occurring after termination, cancellation, or expiration of this agreement, shall be deemed to have occurred where the corporate headquarters of the Licensor are located.

24. ACKNOWLEDGEMENT. The Licensee acknowledges that:

        24.01. Consultation with Counsel.  The Licensee hereby represents that the Licensee has received a copy of this Agreement and has had an opportunity to consult with the Licensee’s attorney with respect thereto at least 10 business days prior to the Licensee’s execution hereof. The Licensee further represents that the Licensee has had this agreement in hand for review at least five business days prior to the Licensee’s execution hereof.

        24.02. Profitability.  No representation has been made by the Licensor as to the future profitability of the Non-Traditional Sonic, and the Licensee has not relied on any representations from the Licensor or its Affiliates with regard to the profitability of the Non-Traditional Sonic.

        24.03. Licensee’s Investigation.  Prior to the execution of this Agreement, the Licensee has had ample opportunity to contact the existing licensees of the Licensor and to investigate all representations made by the Licensor relating to the Sonic System. The Licensee has conducted an independent investigation of the business contemplated by this Agreement and recognizes that it involves substantial business risks making the success of the venture largely dependent on the business abilities of the Licensee. The Licensor disclaims and the Licensee has not received from the Licensor or its Affiliates any express or implied warranty or guaranty regarding the potential volume, profits or success of the business venture contemplated by this Agreement. The Licensee has not relied on any express or implied warranty or guaranty from the Licensor or its Affiliates regarding the potential volume, profits or success of the business venture contemplated by this Agreement.

        24.04. Contrary Representations. The Licensee knows of no representations by the Licensor or its Affiliates about the business contemplated by this Agreement which contradict the terms of this Agreement. The Licensee has not relied on any representations from the Licensor or its Affiliates about the business contemplated by this Agreement which contradict the terms of this Agreement or the disclosures set forth in the Franchise Offering Circular delivered to the Licensee in connection with the issuance of this Agreement.

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        24.05. Variances to Other Licensees. The Licensee understands that other developers and licensees may operate under different forms of agreements and, consequently, that the Licensor’s rights and obligations with regard to its various licensees may differ materially in certain circumstances.

        24.06. Complete Agreement.  This Agreement supersedes any and all other agreements or representations respecting the Non-Traditional Sonic and contains all the terms, conditions and obligations of the parties with respect to the subject matter of this Agreement.

25. Input and Advice from Licensees. In connection with the implementation of or significant changes in the programs or policies referred to in Sections 6.04, 6.05(c), 6.06, 8, and 11.01(f) of this Agreement, the Licensor shall solicit input and advice from a group of licensees gathered together for such purpose (whether established ongoing for such purpose or gathered on an ad hoc basis from time-to-time). The Licensor further shall use its best efforts to ensure that such groups

are balanced in terms of geographic base, size of operating group, and period of tenure within the Sonic System. Notwithstanding the foregoing, this Section 25 shall not have any effect unless the license agreements in effect for at least one-third of all Sonic drive-in restaurants and Non-Traditional Sonics contain this provision or a substantially similar provision.

26. Injunctive Relief. The Licensee acknowledges that the Licensor’s remedy at law for any breach of any of the Licensee’s covenants under this Agreement (other than involving only the payment of money) would not constitute an adequate remedy at law and, therefore, the Licensor shall have the right to obtain temporary and permanent injunctive relief in any proceeding brought to enforce any of those provisions, without the necessity of proof of actual damages. However, nothing in this Section 26 shall prevent the Licensor from pursuing separately or concurrently one or more of any other remedies available at law, subject to the provisions of Section 14.04 of this Agreement.

27. General Release and Covenant Not to Sue. The Licensee hereby releases Sonic Corp., its subsidiaries, and the officers, directors, employees and agents of Sonic Corp. and its subsidiaries from any and all claims and causes of action, known or unknown, which may exist in favor of the Licensee as of the date of this Agreement. In addition, the Licensee covenants that the Licensee shall not file or pursue any legal action or complaint against any of the foregoing entities or Persons with regard to any of the foregoing claims or causes of action released pursuant to this Section 27. The Licensor hereby releases the Licensee and its officers, directors, employees and agents from any and all claims and causes of action, known or unknown, which may exist in favor of the Licensor as of the date of this Agreement, except for any claims for (a) unpaid moneys due the Licensor or its Affiliates, (b) a material breach of the provisions of this Agreement regarding the Proprietary Marks, or (c) the violation of the Licensor’s legal rights regarding the Proprietary Marks. In addition, the Licensor covenants that the Licensor shall not file or pursue any legal action or complaint against any of the foregoing entities or Persons with regard to any of the claims or causes of action released by the Licensor pursuant to this Section 27.

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        Executed on the dates set forth below, to have effect as of the effective date set forth on the cover page of this Agreement.

Licensor:	Sonic Industries Inc.
	By:	(Vice) President Date: ____________________________, 200___

Attest:
_________________________________ (Assistant) Secretary
Licensee:	_______________________________________ Name:

Date: ____________________________, 200___

____________________________________
Name:

Date: ____________________________, 200___

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Schedule I

Guaranty and Restriction Agreement

GUARANTY AND RESTRICTION AGREEMENT

        The undersigned (the “Guarantor”), Sonic Industries Inc. (“Sonic”), and __________ (the “Licensee”) enter into this Guaranty and Restriction Agreement (this “Agreement”) as of the ____ day of __________, 200__.

        W I T N E S S E T H:

        Whereas, Sonic is entering into a Non-Traditional License Agreement (the "License Agreement") dated the same date as this Agreement with the Licensee for the Non-Traditional Sonic located at ____________________________; and

        Whereas, as a condition to entering into the License Agreement, Sonic has asked that the Guarantor provide a personal guaranty of certain of the obligations of the Licensee set forth in the License Agreement; and

        Whereas, Sonic also has asked that the Guarantor and the Licensee agree to a restriction on the transfer of the equity interests in the Licensee; and

        Whereas, the Guarantor and the Licensee are willing to enter into those agreements in accordance with the terms and conditions of this Agreement.

        Now, therefore, in consideration of the mutual covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties agree as follows:

        1.       Personal Guaranty of Payments. The Guarantor hereby guarantees the prompt and full payment of the following obligations under the License Agreement:

        (a)        All royalties due Sonic pursuant to the License Agreement.

        (b)        All advertising contribution fees to the Sonic Advertising Fund pursuant to the License Agreement.

        (c)        All contributions to approved advertising cooperatives pursuant to the License Agreement.

        (d)        Any other miscellaneous obligations owing to Sonic or its Affiliates relating to the Non-Traditional Sonic covered by the License Agreement.

        2.       Nature of Guaranty. This guaranty shall constitute an absolute, unconditional, irrevocable and continuing guaranty. Sonic shall not have any obligation to take any action against any other person or entity for collection of any payments prior to making any demand for payment or bringing any action against the Guarantor.

        3.       Permitted Actions. From time to time, Sonic shall have the right to take, permit or suffer to occur any “Permitted Action,” as defined below, without modifying, reducing, waiving, releasing, impairing or otherwise affecting the obligations of the Guarantor under this Agreement, without giving notice to the Guarantor or obtaining the Guarantor’s consent, without the necessity of any reservations of rights against the Guarantor, and without liability on the part of Sonic. As used in this Section 3, the phrase “Permitted Action” shall mean (a) an agreed extension of time for payment of any sum due under the License Agreement, (b) an agreed change in the manner or place of payment of any sums due under the License Agreement, (c) any waiver by Sonic of any defaults under the provisions of the License Agreement, (d) any delay or failure by Sonic to exercise any right or remedy Sonic may have under the License Agreement, (e) the granting by Sonic of any leniencies, waivers, extensions and indulgences under the License Agreement, and (f) any agreed amendments to the License Agreement.

        4.       Waiver of Notice of Acceptance. The Guarantor acknowledges and waives notice of Sonic’s acceptance of the Guarantor’s guaranty pursuant to the terms of this Agreement.

        5.       Restrictions on Transfer. The Licensee shall not issue any additional shares of capital stock without the prior, written consent of Sonic. The Guarantor shall not transfer, assign or pledge any of its shares of capital stock in the Licensee to any person without the prior, written consent of Sonic.

        6.       Disputes. The Guarantor agrees to resolve any dispute with Sonic and its Affiliates pursuant to the provisions of Section 14.04 of the License Agreement. If Sonic files suit to enforce the provisions of this Agreement, the federal and state courts in Oklahoma shall have personal jurisdiction over the Guarantor. The Guarantor expressly waives any and all objections as to venue in any of those courts and agrees that Sonic may serve process by mailing a copy of the summons by certified mail, return receipt requested, with sufficient postage prepaid, to the address of the Guarantor as specified in this Agreement.

        7.       Attorneys’ Fees, Costs and Expenses. In any action brought by Sonic to enforce the obligations of the Guarantor, Sonic also shall have the right to collect its reasonable attorneys’ fees, court costs, and expenses incurred in the action.

        8.       Headings. The headings used in this Agreement appear strictly for the parties’ convenience in identifying the provisions of this Agreement and shall not affect the construction or interpretation of the provisions of this Agreement.

        9.       Binding Effect. This Agreement binds and inures to the benefit of the parties and their respective successors, legal representatives, heirs and permitted assigns.

        10.       Waiver. The failure of a party to insist in any one or more instances on the performance of any term or condition of this Agreement shall not operate as a waiver of any future performance of that term or condition.

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        11.       Governing Law. Notwithstanding the place where the parties execute this Agreement, the internal laws of Oklahoma shall govern the construction of the terms and the application of the provisions of this Agreement.

        12.       Amendments. No amendments to this Agreement shall become effective or binding on the parties, unless agreed to in writing by all of the parties.

        13.       Time. Time constitutes an essential part of each and every part of this Agreement.

        14.       Notice. Except as otherwise provided in this Agreement, when this Agreement makes provision for notice or concurrence of any kind, the sending party shall deliver or address the notice to the other party by certified mail, telecopy, or nationally-recognized overnight delivery service to the following address or telecopy number:

Sonic:	300 Johnny Bench Drive
	Oklahoma City, Oklahoma 73104
	(405) 225-4035
Guarantor:	____________________________________
	____________________________________
	(___) ___-____
Licensee:	____________________________________
	____________________________________
	(___) ___-____

        All notices pursuant to the provisions of this Agreement shall run from the date that the other party receives the notice or three business days after the party places the notice in the United States mail. Each party may change the party’s address by giving written notice to the other parties.

        15.       Release and Covenant Not To Sue. The Guarantor hereby releases all claims and causes of action which the Guarantor may have against Sonic Corp., its subsidiaries, and the stockholders, directors, officers, employees and agents of Sonic Corp. and its subsidiaries. The Guarantor further covenants not to sue any of the foregoing persons or entities on account of any of the foregoing claims or causes of action.

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        Executed and delivered as of the day and year first set forth above.

Sonic:	Sonic Industries Inc.
	By:	(Vice) President

Attest:
_________________________________________ (Assistant) Secretary
Guarantor:		___________________________________________
Licensee:		___________________________________________ ___________________________________________
	By:	(Vice) President
Attest:
_________________________________________ (Assistant) Secretary

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EX-10

Exhibit 10.24

EMPLOYMENT AGREEMENT

        This Agreement is entered into effective as of the 29th day of April, 2004, by and between Sonic Corp. (the "Corporation"), a Delaware corporation, and Carolyn C. Cummins (the "Employee").

RECITALS

        Whereas, the Corporation’s Board of Directors (the “Board”) has elected Employee to the office of Vice President of Compliance of the Corporation, where she will be an integral part of the Corporation’s management; and

        Whereas, 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 retain 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 Board on the 29^th day of April, 2004, ratified and approved this Agreement; 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.

        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 Corporation, in its sole discretion, may terminate this Agreement without terminating the employment of 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 of Compliance 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 of Compliance, Employee shall be paid a salary at the annual rate of $137,203 (herein referred to as “Salary”), payable in twenty-four equal installments on the first and fifteenth 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.

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 and shall procure and maintain automobile liability insurance in respect thereof, with such coverage insuring each Employee for bodily injury and property damage.

        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.

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        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. Upon disability (as defined herein) of the Employee, the Employee shall be entitled to receive an amount equal to 50% of Employee’s Salary (in addition to any disability insurance benefits received pursuant to Section 4.2 herein), such amount being paid semi-monthly in twelve equal installments.

        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 further 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 Internal Revenue Code of 1986, or as hereafter amended.

        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 Death. Employee's employment hereunder shall be terminated upon the Employee's death.

        5.2 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, with or without a reasonable accommodation, under this Agreement as a result of physical or mental incapacity.

        5.3 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.

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        (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 5.3. Ratification by the board will be effective as of the original date of termination of Employee.

        5.4 Compensation Upon Termination for Cause or Upon Resignation By Employee. Except as otherwise set forth in Section 5.7 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 5.3(b), votes to classify Employee’s termination as “not for cause,” then Employee shall be compensated pursuant to Section 5.5 below.

        5.5 Compensation Upon Termination Other Than For Cause Or Disability. Except as otherwise set forth in Section 5.7 hereof, if the Company shall terminate Employee’s employment other than for Cause or Disability, the Company shall continue to be obligated to pay Employee’s Salary for a period of six months, beginning on the date of termination, but shall not be obligated to provide any other benefits described in Articles III and IV hereof, except to the extent required by law.

        5.6 Compensation Upon Non-Renewal of Agreement. Except as otherwise set forth in Section 5.7 hereof, if the Company shall give notice to Employee in accordance with Section 1.2 hereof that this Agreement will not be renewed but Employee’s employment is not terminated, the Company shall continue to be obligated to pay Employee’s Compensation for a period of six months beginning on the date notice of non-renewal is given.

        5.7 Termination of Employee or Resignation by Employee for Good Reason. If at any time within the first twelve months subsequent to a Change in Control, the Employee’s employment with the Corporation is terminated other than as provided for in Section 5.1, 5.2 or 5.3 hereof, or the Corporation violates any provision of this Agreement or Employee shall resign Employee’s employment for Good Reason (as defined herein), the Corporation shall be obligated to pay to Employee a lump sum payment upon the effective date of such termination or resignation or breach (as determined in Employee’s sole discretion), in an amount equal to two times the Employee’s compensation payable under paragraph 5.5 above, but in no event to exceed an amount equal to $1.00 less than three (3) 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 lump-sum severance payment under this Section 5.7, 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 Internal Revenue Code of 1986, as amended (the “Code”)), then such

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lump-sum severance payment shall be reduced to the largest amount as will result in no portion of the lump-sum severance payment under this Section 5.7 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 5.7, 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 lump-sum severance payment under this Section 5.7 pursuant to the foregoing provision shall be conclusive and binding on the Corporation. Notwithstanding any other provision of this Section 5.7, Employee may elect to have the lump sum severance payment hereunder paid in equal monthly installments over a period not to exceed 12 consecutive months.

        “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 reelect 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 5.7(a); or

    (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 twelve 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 twelve 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

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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.

        5.8. 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 5.7, 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 twelve 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

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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.

        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

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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)        Discovery. The arbitrator shall have the power to authorize all forms of discovery (including depositions, interrogatories and document production) upon the showing of (a) a specific need for the discovery, (b) that the discovery likely will lead to material evidence needed to resolve the controversy, and (c) that the scope, timing and cost of the discovery is not excessive.

    (5)        Authority of Arbitrator. The arbitrator shall not have the power (a) to alter, modify, amend, add to, or subtract from any term or provision of this Agreement; (b) to rule upon or grant any extension, renewal or continuance of this Agreement; or (c) to grant interim injunctive relief prior to the award.

    (6)        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

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        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.

    (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.

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        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.

        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:
	By:	/s/ Pattye L. Moore
		Pattye L. Moore, President
Attest:
/s/ Ronald L. Matlock
Ronald L. Matlock, Secretary
The Employee:		/s/ Carolyn C. Cummins
		Carolyn C. Cummins

EX-10

Exhibit 10.25

CONSULTING AGREEMENT

        THIS CONSULTING AGREEMENT (this "Agreement") is entered into effective September 10, 2004, by and between Pattye L. Moore, an individual ("Consultant"), and Sonic Corp., a Delaware corporation ("Sonic").

W I T N E S S E T H:

        WHEREAS, Consultant has been employed by Sonic for 12 years and currently holds the office of President;

        WHEREAS, Consultant has indicated that it is her desire to cut back on the number of days that she is working and have more time available for her family;

        WHEREAS, Sonic desires to respect the wishes of Consultant, but still wants to have access to her varied talents and expertise;

        WHEREAS, Consultant is agreeable to be available for general consulting services and special projects; and

        WHEREAS, the parties desire to enter into this Agreement to set forth the terms and conditions of this proposed consulting arrangement.

        NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

        1. Engagement. Sonic hereby agrees to engage Consultant and Consultant hereby accepts such engagement as a consultant and advisor to Sonic on the terms and conditions as set forth in this Agreement.

        2. Consulting Services.

        2.1 Services to be Provided. As may be reasonably requested by Sonic from time to time during the term hereof, Consultant shall assist Sonic with marketing, advertising, product development, brand and concept development issues and similar projects and matters, including the proposed retrofit of the drive-in restaurants, and shall advise and consult with Sonic regarding such matters (collectively, the “Services”). Consultant agrees to support all Sonic initiatives and Sonic personnel consistent with the terms of this Agreement and to use her best efforts to achieve all Sonic initiatives assigned to her.

        2.2 Scope of Authority. This Agreement does not confer upon Consultant any authority or responsibility to participate in or affect the management and control of the business affairs of Sonic, except as such affairs may be incidentally affected by the

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Services provided in accordance with this Agreement. Consultant shall have no authority or responsibility to enter into any agreement in the name of Sonic or its subsidiaries or to otherwise bind or obligate Sonic or its subsidiaries in any manner whatsoever.

        2.3 Extent of Services. Consultant and Sonic agree that Consultant will be providing the Services during normal business hours from Consultant’s home or from office facilities provided by Sonic in its corporate offices in Oklahoma City. Consultant shall communicate and work directly with the Sonic personnel identified for each project. Subject to applicability of the “Restrictive Covenants” set forth in paragraph 8, below, Consultant and Sonic agree that Consultant is not agreeing to provide consulting services exclusively to Sonic, but Consultant agrees that during the first 12 months of this Agreement that she will not consult with or otherwise conduct business with the following competitors of Sonic: McDonald’s, Burger King, Wendy’s, Hardees/Carl’s Jr., Jack in the Box, WhataBurger, In-n-Out Burger, Checker’s, Rally’s, Dairy Queen, A&W, Chick-Fil-A or other regional restaurant chains with a similar competitive set of product offerings as these national and international chains (the “Restricted Competitors”). Consultant will be permitted to consult with and conduct business with other “QSR” restaurant chains, as that term is generally defined in the restaurant industry, that are not among the Restricted Competitors, and other restaurant chains not defined as QSR. Consultant will not be limited regarding with whom she may enter into public speaking engagements on matters not confidential or proprietary to Sonic. During the second 12 months of the term of this Agreement Consultant agrees to comply with the “Restrictive Covenant” defined in paragraph 8.2 of her current Employment Agreement. Consultant acknowledges that in her continuing role as a member of the board of directors of Sonic as described in paragraph 5, below, she will have a fiduciary duty to Sonic and will continue to be subject to Sonic’s Code of Business Conduct and Ethics (the “Code”). Pursuant to the Code, Consultant would be required as a director to identify any services she proposes to provide or engagements with other competitive QSR companies, vendors, suppliers and contractors of Sonic and obtain approval prior to providing such services, but such approval would not be unreasonably withheld. Consultant is specifically permitted to provide consulting services to Sonic franchisees on matters not confidential or proprietary to Sonic, and not otherwise in conflict with this Agreement. Consultant shall use her best efforts to accomplish all requirements of Consultant under this Agreement; provided, Consultant and Sonic agree that Consultant need only devote such time in the performance of the Services as is reasonably requested by Sonic and, in Consultant’s reasonable judgment, is necessary and appropriate for the Services to be provided in a professional manner. In no event will Sonic require Consultant to work more than ten days per month during the first six months of this agreement (November 1, 2004 – April 30, 2005), not more than eight days per month during the second six months of the Agreement (May 1, 2005 – October 31, 2005), not more than six days per month during the third six months of the Agreement (November 1, 2005 – April 30, 2006) and not more than four days per month during the last six months of this agreement (May 1, 2006 – October 31, 2006). Consultant acknowledges that a certain amount of travel will be required in the providing of the Services and accepts such travel as a condition of this Agreement. Sonic agrees to be reasonable in requesting such travel and will provide as much notice of any required travel as far in advance as reasonably possible. Sonic will

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pay directly or reimburse Consultant for all travel related expenses in accordance with paragraph 4.2, below.

        3. Term. The term of this Agreement shall be for a period of two (2) years, commencing upon November 1, 2004, and ending on October 31, 2006, unless sooner terminated as provided in this Agreement (the “Term”).

        4. Compensation.

        4.1 Consulting Fee. As compensation for the Services, Consultant shall receive a monthly retainer in the amount of $15,000.00 per month during the Term (the “Consulting Fee”) payable in arrears on a monthly basis. It is acknowledged by Consultant and Sonic that the Services to be provided hereunder and the compensation set forth herein is not considered a per diem amount and that the Consulting Fee is based in part on Consultant’s agreement to be readily available to provide the Services to Sonic on a timely basis and to withhold such services from competitors during the term of this Agreement. Consultant shall receive full payment of the Consulting Fee whether or not, or to what extent, Sonic makes use of her Services in any given month or other time period of this Agreement as long as she does not breach this Agreement as provided herein.

        4.2 Expense Reimbursement. Sonic agrees to pay the reasonable and direct expenses actually incurred by Consultant in providing the Services, provided such expenses are pre-approved in writing by Sonic.

        4.3 Benefits. Consultant shall not be entitled or qualified for coverage under any benefits package available to employees of Sonic or its subsidiaries.

        4.4 Taxes. Consultant assumes full responsibility for the reporting and payment of workers’ compensation insurance, if required, and all social security, withholding, unemployment compensation, and other applicable taxes under federal, state and local laws, which are assessable against Consultant’s compensation under this Agreement. Consultant agrees to indemnify Sonic against any charges, taxes, penalties and interest assessed against Sonic by any taxing authority arising from Consultant’s failure to comply with this Section 4.4.

        5. Continuation of Current Employment. Sonic and Consultant agree that as a condition precedent to this Agreement becoming effective, Consultant will continue to serve in her current position as President of Sonic through October 31, 2004. Effective October 31, 2004, Consultant’s employment with Sonic, provided Sonic has complied with its obligations under Consultant’s Employment Agreement and under this Agreement between the date of this Agreement and October 31, 2004, will terminate and Consultant will be deemed to have resigned as President of Sonic. Consultant agrees to resign from all other positions, offices and directorships of Sonic and it’s subsidiaries, and this agreement will serve as all applicable resignations effective October 31, 2004, unless otherwise requested in the discretion of Sonic prior to such date. Notwithstanding the preceding, Consultant agrees to separately resign from

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the Sonic board of directors on a date to be determined by Sonic and she will be re-appointed to the board of directors for a term that will run from her appointment until the annual meeting of the shareholders of Sonic in January 2006. Consultant will not receive separate compensation for her service on the Sonic board of directors, but all of her expenses incurred in performing her duties on the board will be reimbursed pursuant to paragraph 4.2, above. From the date of this Agreement until October 31, 2004, Consultant will continue to perform all services currently performed and will continue to have all rights and privileges provided for under the terms of her Employment Agreement dated August 20, 1996 (“Employment Agreement”), including participation in any bonus amounts approved by the Board of Directors of Sonic and distributed to the officers of Sonic for fiscal year 2004 performance. Sonic and Consultant agree that all customary matters associated with the termination of employment such as health and dental benefits, life insurance, disability insurance, rights under COBRA, vacation pay, exercise and expiration of stock options and return of Sonic property will be addressed in the normal course of business prior to October 31, 2004.

        6. Sale of Sonic Common Stock. Consultant understands that because of applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and federal securities laws, she cannot sell Sonic common stock or exercise Sonic stock options until after the expiration of any applicable black-out periods associated with an announcement of this Agreement, or during any other black-out periods as may be implemented from time to time in the normal course of business of Sonic during the remaining time of her employment by Sonic. Consultant agrees to fully comply with all securities laws regarding the sale of Sonic common stock while she is an “insider” as defined in the rules and regulations promulgated by the SEC. Consultant further acknowledges that in providing the Services contemplated hereunder she may have access to highly confidential inside information and may continue to be deemed an “insider” during the term of this Agreement. Upon request of Consultant, Sonic’s Legal Department will provide Consultant with advice regarding these matters.

        7. Release and Covenant Not to Sue Sonic. In consideration of the terms and covenants set forth in this Agreement and the entering into a new business relationship with Sonic, you agree not to sue and irrevocably release and forever discharge Sonic and it’s subsidiaries, including their respective stockholders, directors, officers, and employees, from any and all claims and causes of action of any kind whatsoever, including any under your Employment Agreement, that may have occurred or accrued in your favor as of the later of the effective date of this Agreement or your last day of employment as an employee of Sonic and that you may have the right to pursue in any federal, state, or local court or administrative proceeding or in arbitration. In addition, you agree that you will not file or pursue any legal action, complaint, or administrative proceeding against any of the foregoing entities or persons with regard to any of the claims and causes of action released in this Agreement. If you breach or attempt to breach your release, you agree to indemnify, defend, and hold harmless each party that you have released in this Agreement who is damaged by your breach or attempted breach. You also agree that each released party damaged by your breach or attempted breach will be entitled to recover from you all costs, expenses, and reasonable attorneys’ fees incurred in enforcing this Agreement. However, your release does not extend to nor include any workers’ compensation claims that you might have the right to file.

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        8. Restrictive Covenants.

        8.1 Confidentiality. Because of your role as President of Sonic and your access to and participation in various employment, administrative, marketing, advertising, development, restaurant operations and sales meetings, plans, and projects related to Sonic and it’s subsidiaries, you acknowledge the sensitive and trade secret nature of this information and your continuing duty not to disclose any of such information to anyone outside of Sonic during this Agreement and after your employment. Furthermore, you acknowledge that you have no interest whatsoever in the unique, proprietary, and confidential information of Sonic and it’s subsidiaries, consisting of: (a) methods and procedures for the preparation of food and beverage products; (b) confidential recipes for food products; (c) distinctive drive-in services and accessories; (d) plans and specifications for interior and exterior signs, designs, layouts and color schemes; (e) methods, techniques, formats, systems, specifications, procedures, information, trade secrets, sales, and advertising and marketing programs, concepts, strategies, calendars, and promotions; (f) methods of business operations and management; (g) the identities and locations of Sonic franchisees, Sonic drive-in restaurants, and suppliers to Sonic franchisees and drive-in restaurants; and (h) knowledge and experience regarding the operation and franchising of Sonic drive-in restaurants and the Sonic system; (i) information pertaining to Sonic’s present and future business plans and objectives that have not been officially released to the public, and (j) other non-public information regarding Sonic and it’s subsidiaries and its corporate activities, functions, equipment, procedures, programs, contracts, and future plans (collectively, the “Confidential Information”). You acknowledge that the Confidential Information constitutes the proprietary information and trade secrets belonging to Sonic and that the use or duplication of the Confidential Information would constitute the misappropriation of trade secrets and unfair competition. You must maintain the absolute confidentiality of the Confidential Information and may not disclose or divulge the Confidential Information to any unauthorized person or entity. Furthermore, you must not use the Confidential Information in any business or capacity or for the benefit of any person or entity or to the detriment of Sonic.

Further, during the term of this Agreement, Consultant will continue to maintain in confidence and not intentionally use to the material detriment of Sonic such Confidential Information obtained during the term of this Agreement or from the transactions contemplated under this Agreement going forward, unless (a) such information is already known to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of Consultant, or (b) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.

        8.2 Non-Interference with Business Relations. During Consultant’s term of service as an independent contractor for Sonic, Consultant will not engage in or become employed by or act on behalf of any other person, corporation or firm which is engaged in any business competitive with that of Sonic or its subsidiaries, or franchised Sonic drive-in restaurants, unless such contract has been approved by Sonic in writing. Consultant agrees, that during her service as an independent contractor and for a period

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of one (1) year thereafter, Consultant will not, without the prior written approval of Sonic, directly or indirectly through any other person, firm, or corporation, whether individually or in conjunction with any other person, or as an employee, agent, representative, independent contractor, partner, or holder of any interest in any other person, firm, corporation or other association:

(i)         encourage, entice, induce, solicit or influence, directly or indirectly, any employee, customer, client, supplier, or other person or entity having a business relationship with Sonic or its subsidiaries, or franchised Sonic drive-in restaurants, to terminate or alter such business relationships to the disadvantage of Sonic or its subsidiaries, or franchised Sonic drive-in restaurants, or

(ii)         encourage, entice, induce, solicit or influence, directly or indirectly, any person or entity not to enter into a business relationship with Sonic or its subsidiaries, or franchised Sonic drive-in restaurants, or impair or attempt to impair any relationships between Sonic or its subsidiaries, or franchised Sonic drive-in restaurants, and any of their respective employees, customers, clients, suppliers, or other persons or entities with whom any of them has business relationships.

        Consultant acknowledges and agrees that:

(i)         the restrictions under this Agreement are reasonable in light of Sonic and its subsidiaries, and its franchised Sonic drive-in restaurants, significant business interests; and

(ii)         Consultant acknowledges that she has received sufficient consideration to support these obligations under this Agreement.

        8.3 Enforcement. The parties acknowledge that the terms of this Section 8 and the restrictive covenants contained in Section 2.3, “Extent of Services” above, are essential to Sonic entering into this Agreement and that the enforcement of such terms is essential to the use and enjoyment of the consideration bargained for by Sonic in this Agreement. If any part of Sections 8 or 2.3 should for any reason be determined to be unenforceable, but would be valid and enforceable if any part thereof were deleted or otherwise modified, then the covenants and obligations of Consultant as set forth in Sections 8 and 2.3 shall be deemed to be modified to the extent necessary to make them enforceable.

        8.4 Remedies. Sonic shall have the right, on behalf of itself and its subsidiaries, to enforce Sections 8 and 2.3 of this Agreement by withholding payment for the year in which any breach of Sections 8 or 2.3 occur and all succeeding years during the Term, or by injunction, specific performance or other equitable relief, without prejudice to any other rights or remedies that Sonic or its subsidiaries may otherwise have for a breach of Sections 8 or 2.3.

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        9. Termination. This Agreement and the engagement of Consultant shall be terminated, and except as to any liabilities or claims that shall have accrued or arisen prior to such termination, all obligations under this Agreement shall cease upon the happening of any of the following events:

        9.1 If Consultant, in the reasonable determination of Sonic, shall have committed a material breach of this Agreement, provided Sonic shall have served written notice to Consultant setting forth the details of such alleged breach, and within ten (10) days of receipt of such notice, Consultant shall not have cured such breach. Any such termination shall be without prejudice to all rights and remedies of Sonic; and

        9.2 Upon written notice from Consultant, if at any time during the Term Sonic fails to pay the Consulting Fee within ten (10) days of receipt of such notice. In the event this Agreement is terminated under this Section 9.2 or for any other reason (except as a result of termination under Section 9.1 hereof), Sonic shall pay Consultant as severance a dollar amount equal to the remaining unpaid Consulting Fee for the remaining Term, payable within ten (10) days after the effective date of the termination.

        10. Independent Contractor. The relationship of Sonic and Consultant under this Agreement is a consulting relationship only. Consultant shall be an independent contractor and shall determine the means and methods by which she performs the Services. Nothing contained in this Agreement shall constitute or be construed to constitute or to create a partnership or joint venture, or a principal and agent, or an employer and employee relationship between Sonic and Consultant. This Agreement shall not be deemed at any time to be or to create an interest inuring to Consultant in the business, financial and operating affairs of Sonic or its subsidiaries.

        11. Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by fax or email (with written confirmation of receipt), provided that a copy is mailed by certified mail, return receipt requested, (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), or (d) three days after placed in US Mail with proper postage, in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties):

"Consultant"	Pattye L. Moore
	13801 Plantation Way
	Edmond, Oklahoma 73013
	Fax: 405-478-3063
with a copy to	Randall Mock, Esq.
	Mock Schwabe Waldo Elder Reeves & Bryant
	211 North Robinson 14th Floor
	Oklahoma City, Oklahoma 73102
	Fax: 405-235-0333

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"Sonic"	Sonic Corp.
	300 Johnny Bench Drive
	Oklahoma City, Oklahoma 73104
	Attention: General Counsel
	Fax: (405) 225-5973

        12. Arbitration. The parties shall resolve any controversy by final and binding arbitration in accordance with the Rules for Commercial Arbitration (the “Rules”) of the American Arbitration Association in effect at the time of the execution of this Agreement and pursuant to the following additional provisions:

        12.1 Applicable Law. The Oklahoma Arbitration Act shall apply to the arbitration and all procedural matters relating to the arbitration.

        12.2 Selection of Arbitrators. The parties shall select one arbitrator within ten (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 ten (10) day period or fail to agree to an extension of that period, the arbitration shall take place before an arbitrator selected in accordance the Rules.

        12.3 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.

        12.4 Discovery. The arbitrator shall have the power to authorize all forms of discovery (including depositions, interrogatories and document production) upon the showing of (i) a specific need for the discovery, (ii) that the discovery likely will lead to material evidence needed to resolve the controversy, and (iii) that the scope, timing and cost of the discovery is not excessive.

        12.5 Authority of Arbitrator. The arbitrator shall not have the power (i) to alter, modify, amend, add to, or subtract from any term or provision of this Agreement or (ii) to grant interim injunctive relief prior to the award.

        12.6 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.

        12.7 Excluded Controversies. The provisions of this Section 12 shall not apply to any controversies relating to the ownership, use or protection of the trademarks, service marks, trade names, logotypes, trade dress, copyrights, or patent rights of Sonic or its affiliates, including (without limitation) the right of Sonic or its

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affiliates to apply to any court of competent jurisdiction for injunctive relief.

        12.8 Attorneys’ Fees and Costs. The prevailing party to the arbitration shall have the right to an award of its reasonable attorneys’ fees and costs incurred after the filing of the demand and submission. If Sonic prevails, the award shall include a reasonable amount for that portion of Sonic’s administrative overhead allocable to the time devoted by Sonic’s in-house legal staff.

        13. Miscellaneous.

        13.1 Amendment and Modification. Neither this Agreement nor any of the provisions hereof may be amended or modified other than by an instrument in writing signed by the parties hereto.

        13.2 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto and, as of the effective date of this Agreement, the terms and provisions contained herein shall supersede all other agreements between the parties hereto with respect to the matters contained herein.

        13.3 Assignability. This Agreement is personal to the parties and may not be assigned by either of the parties without the prior written consent of the other party.

        13.4 Binding Effect. This Agreement shall be binding upon, and shall inure to the benefit of, the parties and their respective successors, legal representatives, heirs and, to the extent herein permitted, assigns.

        13.5 Severability. All agreements and covenants contained herein are severable, and in the event any of them should be held unenforceable, shall be interpreted and enforced as if such invalid agreements or covenants were not contained herein.

        13.6 Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall, for all purposes of this Agreement, be deemed an original, but all of which shall constitute one and the same instrument.

        13.7 Remedies Cumulative. No remedy conferred under this Agreement shall be exclusive of any other remedy, and each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more remedies by a party hereto shall not be deemed, and shall not constitute, a waiver of that party’s right to pursue any other available remedy or remedies.

        13.8 Captions. The captions in this Agreement are for convenience of reference only and shall not affect the meaning, substance, or construction of any of the provisions or terms of this Agreement.

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        13.9 Computation of Periods. If the final date of any period falls upon a Saturday, Sunday or legal holiday under the laws of the state of Oklahoma, then in such event the time of such period shall be extended to the next day which is not a Saturday, Sunday or legal holiday under the laws of Oklahoma.

        13.10 Time of the Essence. Time is of the essence of this Agreement.

        13.11 Governing Law. This Agreement and any performance hereunder shall be construed and enforced in accordance with and governed by the laws of the state of Oklahoma.

        IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above

"Consultant"
		/s/ Pattye L. Moore
		Pattye L. Moore, an individual
"Sonic"		Sonic Corp.
	By:	/s/ Clifford Hudson
		Clifford Hudson,       Chief Executive Officer

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EX-10

Exhibit 10.27

CREDIT AGREEMENT

Dated as of April 23, 2003

among

SONIC CORP.
as the Borrower,

BANK OF AMERICA, N.A.,
as Administrative Agent and L/C Issuer,

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,
AS
SOLE LEAD ARRANGER AND SOLE BOOK MANAGER

TABLE OF CONTENTS

Section		Page
ARTICLE I.	DEFINITIONS AND ACCOUNTING TERMS
1.01	Defined Terms	1
1.02	Other Interpretive Provisions>	21
1.03	Accounting Terms	21
1.04	Rounding	22
1.05	References to Agreements and Laws	22
1.06	Times of Day	22
1.07	Letter of Credit Amounts	22
ARTICLE II.	THE COMMITMENT AND CREDIT EXTENSIONS
2.01	Loans	22
2.02	Borrowings, Conversions and Continuations of Loans	23
2.03	Letters of Credit	24
2.04	Voluntary Prepayments	31
2.05	Termination or Reduction of Commitments	31
2.06	Repayment of Loans	32
2.07	Interest	32
2.08	Fees	33
2.09	Computation of Interest and Fees	33
2.10	Evidence of Debt	33
2.11	Payments Generally	34
2.12	Sharing of Payments	35
ARTICLE III.	TAXES, YIELD PROTECTION AND ILLEGALITY
3.01	Taxes	36
3.02	Illegality	38
3.03	Inability to Determine Rates	39
3.04	Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate	39
3.05	Funding Losses	40
3.06	Matters Applicable to all Requests for Compensation.	41
3.07	Survival	41
ARTICLE IV.	CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01	Conditions of Initial Credit Extension	41
4.02	Conditions to all Credit Extensions	44
ARTICLE V.	REPRESENTATIONS AND WARRANTIES
5.01	Existence, Qualification and Power; Compliance with Laws	45
5.02	Authorization; No Contravention	45
5.03	Governmental Authorization; Other Consents	45
5.04	Binding Effect	45
5.05	Financial Statements; No Material Adverse Effect	46
5.06	Litigation	46
5.07	No Default	46

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5.08	Ownership of Property; Liens	47
5.09	Environmental Matters	47
5.10	Insurance	47
5.11	Taxes	47
5.12	ERISA Compliance	48
5.13	Subsidiaries; Affiliates	48
5.14	Margin Regulations; Investment Company Act; Public Utility Holding Company Act	49
5.15	Disclosure	49
5.16	Compliance with Laws	49
5.17	Intellectual Property; Licenses, Etc	50
5.18	Businesses	50
5.19	Common Enterprise	50
5.20	Solvent	50
ARTICLE VI.	AFFIRMATIVE COVENANTS
6.01	Financial Statements	50
6.02	Certificates; Other Information	51
6.03	Notices	52
6.04	Payment of Obligations	53
6.05	Preservation of Existence, Etc	53
6.06	Maintenance of Properties	53
6.07	Maintenance of Insurance	54
6.08	Compliance with Laws	54
6.09	Books and Records	54
6.10	Inspection Rights	54
6.11	Use of Proceeds	54
6.12	Further Assurances	54
ARTICLE VII.	NEGATIVE COVENANTS
7.01	Liens	55
7.02	Investments	56
7.03	Indebtedness	56
7.04	Merger, Consolidation, Etc	57
7.05	Dispositions	57
7.06	Restricted Payments	58
7.07	Change in Nature of Business	58
7.08	Transactions with Affiliates	58
7.09	Burdensome Agreements	58
7.10	Use of Proceeds	58
7.11	Financial Covenants	59
7.12	Environmental Protection	59
7.13	Fiscal Year and Accounting Methods	59
7.14	Amendment and Waivers in respect of Senior Notes	59
7.15	Sale and Leaseback	60
ARTICLE VIII.	EVENTS OF DEFAULT AND REMEDIES
8.01	Events of Default	60
8.02	Remedies Upon Event of Default	62
8.03	Application of Funds	62

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ARTICLE IX.	ADMINISTRATIVE AGENT
9.01	Appointment and Authorization of Administrative Agent	63
9.02	Delegation of Duties	64
9.03	Liability of Administrative Agent	64
9.04	Reliance by Administrative Agent	65
9.05	Notice of Default	65
9.06	Credit Decision; Disclosure of Information by Administrative Agent	65
9.07	Indemnification of Administrative Agent	66
9.08	Administrative Agent in its Individual Capacity	67
9.09	Successor Administrative Agent	67
9.10	Administrative Agent May File Proofs of Claim	68
9.11	Collateral and Guaranty Matters	68
ARTICLE X.	MISCELLANEOUS
10.01	Amendments, Etc	69
10.02	Notices and Other Communications; Facsimile Copies	70
10.03	No Waiver; Cumulative Remedies	71
10.04	Attorney Costs, Expenses and Taxes	71
10.05	Indemnification by the Borrower	72
10.06	Payments Set Aside	73
10.07	Successors and Assigns	73
10.08	Confidentiality	76
10.09	Set-off	77
10.10	Interest Rate Limitation	77
10.11	Counterparts	78
10.12	Integration	78
10.13	Survival of Representations and Warranties	78
10.14	Severability	78
10.15	Tax Forms	78
10.16	Replacement of Lenders	81
10.17	Construction	81
10.18	Independence of Covenants	81
10.19	Governing Law	81
10.20	Waiver of Right to Trial by Jury	82
10.21	Entire Agreement	82
SIGNATURES		S-1

iii

SCHEDULES
1.01(a)	Borrower's Investment Policy
1.01(b)	Existing Letter of Credit
2.01	Commitments and Pro Rata Shares
5.06	Existing Litigation
5.09	Environmental Matters
5.13	Subsidiaries; Affiliates
7.01	Existing Liens
7.02	Existing Investments
7.03	Existing Indebtedness
10.02	Administrative Agent's Office, Certain Addresses for Notices
EXHIBITS
	Form of
A	Loan Notice
B	Note
C	Assignment and Assumption
D	Compliance Certificate
E	Corporate Guaranty
F	Opinion Matters
G	Partnership Guaranty
H	LLC Guaranty

iv

CREDIT AGREEMENT

        This CREDIT AGREEMENT (“Agreement”) is entered into as of April 23, 2003, among Sonic Corp., a Delaware corporation (the “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer.

        The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein.

        In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS

        1.01   Defined Terms.   As used in this Agreement, the following terms shall have the meanings set forth below:

        “Acquisition” means the acquisition by any Person of (a) a majority of the Capital Stock of another Person, (b) all or substantially all of the assets of another Person or (c) all or substantially all of a line of business of another Person, in each case (i) whether or not involving a merger or consolidation with such other Person and (ii) whether in one transaction or a series of related transactions.

        “Acquisition Consideration” means the consideration given by the Borrower or any of its Subsidiaries for an Acquisition, including but not limited to the sum of (without duplication) (a) the fair market value of any cash, property (including Capital Stock) or services given, plus (b) the amount of any Indebtedness assumed, incurred or guaranteed (to the extent not otherwise included) in connection with such Acquisition by the Borrower or any of its Subsidiaries.

        “Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

        “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.

        “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote 5% or more of the Voting Stock of such Person.

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        “Agent-Related Persons” means the Administrative Agent, together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, the Arranger), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

        “Aggregate Commitments” has the meaning specified in the definition of “Commitment.”

        “Agreement” means this Credit Agreement.

        “Amended and Restated Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement, dated as of August 10, 2001, originally among the holders of the Senior Notes and the lenders under the Existing Loan Agreement.

        “Annual Business Plan” has the meaning specified in Section 6.02(d).

        “Applicable Law” means (a) in respect of any Person, all provisions of Laws applicable to such Person, and all orders and decrees of all courts and determinations of arbitrators applicable to such Person and (b) in respect of contracts made or performed in the State of Oklahoma, “Applicable Law” shall also mean the laws of the United States of America, including, without limitation the foregoing, 12 USC Sections 85 and 86, as amended to the date hereof and as the same may be amended at any time and from time to time hereafter, and any other statute of the United States of America now or at any time hereafter prescribing the maximum rates of interest on loans and extensions of credit, and the laws of the State of Oklahoma.

        “Applicable Rate” means the following percentages per annum:

Pricing Level	Leverage Ratio	Commitment Fee	Eurodollar Rate Letters of Credit
1	Less than 0.50 to 1	0.125	0.750
2	Greater than or equal to 0.50 to 1 but	0.200	1.000
	less than 1.00 to 1
3	Greater than or equal to 1.00 to 1 but	0.200	1.250
	less than 1.50 to 1
4	Greater than or equal to 1.50 to 1 but	0.250	1.500
	less than 2.00 to 1
5	Greater than or equal to 2.00 to 1	0.250	1.750

        Any increase or decrease in the Applicable Rate resulting from a change in the Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(a); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then Pricing Level 5 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the first Business Day immediately following the date such Compliance Certificate is actually delivered to the Administrative Agent. Notwithstanding the foregoing, the Applicable Rate in effect from and

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after the Closing Date through and including the date the first Compliance Certificate is delivered pursuant to Section 6.02(a) after the Closing Date shall be Pricing Level 3.

        “Approved Fund” has the meaning specified in Section 10.07(g).

        “Arranger” means Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager.

        “Assignment and Assumption” means an Assignment and Assumption substantially in the form of Exhibit C.

        “Attorney Costs” means and includes all reasonable fees, expenses and disbursements of any law firm or other external counsel.

        “Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease.

        “Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended August 31, 2002, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

        “Auto-Renewal Letter of Credit” has the meaning specified in Section 2.03(b)(iii).

        “Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.05, and (c)  the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02 or pursuant to any other term or provision of this Agreement or any other Loan Document.

        “Bank of America” means Bank of America, N.A. and its successors.

        “Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

        “Base Rate Loan” means a Loan that bears interest based on the Base Rate.

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        “Borrower” has the meaning specified in the introductory paragraph hereto.

        “Borrower’ Investment Policy” means that certain Working Capital Investment Policy of the Borrower in effect as of [April 27, 1999], as set forth on Schedule 1.01(a).

        “Borrowing” means a borrowing by the Borrower consisting of simultaneous Loans of the same Type and having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

        “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

        “Capital Lease” means, as of any date, any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on the balance sheet of the lessee.

        “Capital Stock” means, as to any Person, the equity interests in such Person, including, without limitation, the shares of each class of capital stock in any Person that is a corporation, each class of partnership interest in any Person that is a partnership, and each class of membership interest in any Person that is a limited liability company, and any warrants or options to purchase or otherwise acquire any such equity interests.

        “Cash Collateralize” has the meaning specified in Section 2.02(g).

        “Change of Control” means, with respect to the Borrower, an event or series of events by which:

    (a)        any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 20% or more of the Voting Stock of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

    (b)        during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or

4

equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

    (c)        any merger or consolidation of the Borrower with or into any Person, or any sale, transfer or other conveyance, whether direct or indirect, of all or substantially al of the assets of the Borrower, in one transaction or a series of transactions.

        “Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 4.01 (or, in the case of Section 4.01(b), waived by the Person entitled to receive the applicable payment).

        “Code” means the Internal Revenue Code of 1986.

        “Collateral” means any cash collateral provided to the Administrative Agent pursuant to Section 2.03(g).

        “Commitment” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.01, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01, as such amount may be reduced, increased or adjusted from time to time in accordance with this Agreement (collectively, the “Aggregate Commitments”).

        “Commitment Fee” has the meaning specified in Section 2.08(a).

        “Compensation Period” has the meaning specified in Section 2.11(c)(ii).

        “Compliance Certificate” means a certificate substantially in the form of Exhibit D hereto, or in such other form acceptable to the Administrative Agent.

        “Contractual Obligation” means, as to any Person, any material obligation of such Person under any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

        “Control” has the meaning specified in the definition of “Affiliate.”

        “Corporate Guarantor” means each Subsidiary of the Borrower which is a corporation or a business trust and that executes a Corporate Guaranty.

        “Corporate Guaranty” means the Corporate Guaranty made by the Corporate Guarantors in favor of the Administrative Agent on behalf of the Lenders, substantially in the form of Exhibit E.

5

        “Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

        “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

        “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

        “Default Rate” means an interest rate equal to the lesser of (a) the Highest Lawful Rate and (b) the sum of (i) the Base Rate plus (ii) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by Applicable Laws and not in any event to exceed the Highest Lawful Rate.

        “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans or participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

        “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including without limitation any Capital Stock and any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

        “Dividends”, in respect of any Person, means (a) cash dividends or any other distributions of property, or otherwise, on, or in respect of, any class of Capital Stock of such Person (other than dividends or other distributions payable solely in Capital Stock of such Person or options, warrants or other rights to purchase capital stock of such Person), and (b) any and all funds, cash or other payments made in respect of the redemption, repurchase or acquisition of such Capital Stock (specifically including, without limitation, a Treasury Stock Purchase).

        “Dollar” and “$” mean lawful money of the United States.

        “EBIT” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to Net Income for such period plus (a) the following to the extent deducted in calculating such Net Income: (i) Interest Expense for such period, (ii) federal, state, local and foreign income taxes payable for such period, and (iii) losses from the sale of fixed assets not in the ordinary course of business and other extraordinary or nonrecurring items, and minus (b) to the extent added in calculating such Net Income, gains from the sale of fixed assets not in the ordinary course of business and other extraordinary or nonrecurring items.

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        “EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to EBIT for such period, plus, to the extent deducted in calculating Net Income for such period, depreciation, amortization and other non-cash items for such period.

        “Eligible Assignee” has the meaning specified in Section 10.07(g).

        “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

        “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

        “ERISA” means the Employee Retirement Income Security Act of 1974.

        “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

        “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

        “Eurodollar Rate” means for any Interest Period with respect to any Eurodollar Rate Loan (rounded upwards, as necessary, to the nearest 1/100th of 1%):

    (a)        the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on Telerate Page 3750 (or any successor thereto)

7

that displays an average British Bankers Association LIBOR Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

    (b)        if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

    (c)        if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the first day of such Interest Period.

        “Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the Eurodollar Rate.

        “Event of Default” has the meaning specified in Section 8.01.

        “Existing Letter of Credit” means that Letter of Credit set forth on Schedule 1.01(b).

        “Existing Loan Agreement” means that certain Loan Agreement, dated as of July 12, 1995, among the Borrower, the banks or other lending institutions party thereto and Bank of America, as agent thereunder, as amended, modified or supplemented from time to time prior to the Closing Date.

        “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

        “Fee Letter” means the letter agreement, dated April 1, 2003 among the Borrower, the Administrative Agent and the Arranger, and any other fee letter entered into from time to time among the Administrative Agent, the Borrower and the Arranger, or any of them.

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        “Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (a) the sum of (i) EBIT plus (ii) non-capitalized lease obligations, in each case for the period of four consecutive fiscal quarters ending on such date to (b) the sum of (i) Interest Expense, plus (ii) non-capitalized lease obligations, in each case for the period of four consecutive fiscal quarters ending on such date.

        “Foreign Lender” has the meaning specified in Section 10.15(a)(i).

        “FRB” means the Board of Governors of the Federal Reserve System of the United States.

        “Fund” has the meaning specified in Section 10.07(g).

        “Funded Debt” means, as to the Borrower and its Subsidiaries at a particular time, all of the following (without duplication):

    (a)        obligations for borrowed money and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

    (b)        Attributable Indebtedness in respect of Capital Leases and Synthetic Lease Obligations;

    (c)        any direct or contingent obligations arising under letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, surety bonds and similar instruments;

    (d)        all obligations to pay the deferred purchase price of property or services, including all Seller Financing (other than trade payables incurred in the ordinary course of business or accrued liabilities arising in the ordinary course of business that are not overdue or that are being contested in good faith), and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed or is limited in recourse; and

    (e)        any Receivables Facility Attributed Indebtedness.

        “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

        “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

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        “Guaranties” means, collectively, (a) the Corporate Guaranty, (b) the LLC Guaranty, and (c) the Partnership Guaranty.

        “Guarantors” means, collectively, (a) the Corporate Guarantors, (b) the LLC Guarantors, and (c) the Partnership Guarantors.

        “Guaranty Obligation” means, as to any Person, any (a) obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

        “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

        “Highest Lawful Rate” means at the particular time in question the maximum rate of interest which, under Applicable Law, any Lender is then permitted to charge on the Obligations. If the maximum rate of interest which, under Applicable Law, any Lender is permitted to charge on the Obligations shall change after the date hereof, the Highest Lawful Rate shall be automatically increased or decreased, as the case may be, from time to time as of the effective time of each change in the Highest Lawful Rate without notice to the Borrower.

        “Honor Date” has the meaning specified in Section 2.03(c)(i).

        “ICC” has the meaning specified in Section 2.03(h).

        “Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

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    (a)        all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

    (b)        all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, surety bonds and similar instruments;

    (c)        net obligations of such Person under any Swap Contract;

    (d)        all obligations of such Person to pay the deferred purchase price of property or services, including all Seller Financing (other than trade accounts payable in the ordinary course of business)

    (e)        indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

    (f)        Attributable Indebtedness in respect of Capital Leases and Synthetic Lease Obligations;

    (g)        Off-Balance Sheet Liabilities;

    (h)        obligations in respect of Redeemable Stock of such Person;

    (i)        any Receivables Facility Attributed Indebtedness;

    (j)        any “withdrawal liability” of such Person as such term is defined under Part I of Subtitle E of Title IV of ERISA; and

    (k)        all Guaranty Obligations of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

        “Indemnified Liabilities” has the meaning set forth in Section 10.05.

        “Indemnitees” has the meaning set forth in Section 10.05.

        “Information” has the meaning set forth in Section 10.08.

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        “Interest Expense” means, with respect to any period, total interest expense, whether paid or accrued (including the interest component of Capital Leases), of the Borrower and Subsidiaries, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under interest rate contracts and foreign exchange contracts, amortization of discount, but excluding, however, interest expense not payable in cash (including interest accruing on deferred compensation obligations) other than amortization of discount, all as determined in conformity with GAAP.

        “Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

        “Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Loan Notice; provided that:

    (i)        any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

    (ii)        any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

    (iii)        no Interest Period shall extend beyond the Maturity Date.

        “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guaranty Obligation or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) without duplication, an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

        “IP Rights” has the meaning set forth in Section 5.17.

        “IRS” means the United States Internal Revenue Service.

        “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any

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Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

        “L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Pro Rata Share.

        “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing.

        “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.

        “L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

        “L/C Obligations” means, as at any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.

        “Lender” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the L/C Issuer.

        “Lending Office” means, as to any Lender, the office or offices of such Lender described as such on Schedule 10.02, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

        “Letter of Credit” means any letter of credit issued hereunder, and shall include the Existing Letter of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.

        “Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

        “Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

        “Letter of Credit Sublimit” means an amount equal to the lesser of (a) $2,000,000 and (b) the Aggregate Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

        “Leverage Ratio” means, as of any date of determination, the ratio of (a) Funded Debt of the Borrower and its Subsidiaries on such date to (b) EBITDA for the period of the four fiscal quarters most recently ended.

        “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or

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preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing).

        “LLC Guarantor” means each Subsidiary of the Borrower which is a limited liability company and that executes a LLC Guaranty.

        “LLC Guaranty” means the LLC Guaranty made by the LLC Guarantors in favor of the Administrative Agent on behalf of the Lenders, substantially in the form of Exhibit H.

        “LLCs” means Subsidiaries that are limited liability companies.

        “Loan” has the meaning specified in Section 2.01.

        “Loan Documents” means this Agreement, the Notes, the Fee Letter, any Swap Contract entered into with any Lender or any Affiliate of any Lender, each Guaranty, each Request for Credit Extension, each Compliance Certificate, and any other agreement executed, delivered or performable by any Loan Party in connection herewith or as security for the Obligations.

        “Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Loans as the same Type, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A, or in any other form acceptable to the Administrative Agent.

        “Loan Parties” means, collectively, the Borrower and each Guarantor.

        “Material Adverse Effect” means any of the following events: (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole; (b) an impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party; or (d) an Event of Default.

        “Material Subsidiary” means any Subsidiary (a) whose total assets, as of the last day of the immediately preceding fiscal quarter, are equal to or greater than five percent (5%) of the consolidated total assets of the Borrower and its Subsidiaries as of such date determined in accordance with GAAP or (b) whose total net income for the period of the immediately preceding four fiscal quarters is equal to or greater than five percent (5%) of consolidated net income of the Borrower and its Subsidiaries for such period determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly financial statements of the Borrower and its Subsidiaries.

        “Maturity Date” means the earliest of (a) July 12, 2006, (b) such earlier date that (i) the Obligations become due and payable pursuant to this Agreement (whether by acceleration, prepayment in full, scheduled reduction or otherwise) or (ii) there shall exist an Event of Default under Section 8.1(f).

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        “Maximum Amount” means the maximum amount of interest which, under Applicable Law, a Lender is permitted to charge on the Obligations.

        “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

        “Net Income” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the net income of the Borrower and its Subsidiaries (whether positive or negative), determined in accordance with GAAP, for that period.

        “Net Proceeds” from any issuance, sale or other disposition of any Capital Stock (or any securities convertible or exchangeable for any such Capital Stock, or any rights, warrants, or options to subscribe for or purchase any such Capital Stock) means the amount equal to (a) the aggregate gross proceeds of such issuance, sale or other disposition, less (b) the following: (i) placement agent fees, (ii) underwriting discounts and commissions, (iii) bank and other lender fees, and (iv) legal fees and other expenses payable by the issuer in connection with such issuance, sale or other disposition.

        “Net Worth” means, as of any date of determination, consolidated shareholders’ equity of the Borrower and its Subsidiaries as of that date determined in accordance with GAAP.

        “Nonrenewal Notice Date” has the meaning specified in Section 2.03(b)(iii).

        “Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B.

        “Obligations” means all debts, liabilities and obligations of any Loan Party arising under any Loan Document, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising, and shall also include all fees, expenses and other amounts owing to any Lender pursuant to cash management, depository accounts (including chargebacks) or similar agreements. Without limiting the generality of the foregoing, “Obligations” includes all amounts which would be owed by any Loan Party or any other Person (other than Administrative Agent or Lenders) to Administrative Agent, Lenders or any Affiliate of a Lender under any Loan Document, but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Loan Party or any other Person (including all such amounts which would become due or would be secured but for the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding of any other Loan Party or any other Person under any Debtor Relief Law).

        “Off-Balance Sheet Liabilities” means, with respect to any Person as of any date of determination thereof, without duplication and to the extent not included as a liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP: (a) with respect to any asset securitization transaction (including any accounts receivable purchase facility) (i) the unrecovered investment of purchasers or transferees of assets so transferred, and (ii) any other payment, recourse, repurchase, hold harmless, indemnity or similar

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obligation of such Person or any of its Subsidiaries in respect of assets transferred or payments made in respect thereof, other than limited recourse provisions that are customary for transactions of such type and that neither (x) have the effect of limiting the loss or credit risk of such purchasers or transferees with respect to payment or performance by the obligors of the assets so transferred nor (y) impair the characterization of the transaction as a true sale under applicable Laws (including Debtor Relief Laws); (b) the monetary obligations under any financing lease or so-called “synthetic,” tax retention or off-balance sheet lease transaction which, upon the application of any Debtor Relief Law to such Person or any of its Subsidiaries, would be characterized as indebtedness; or (c) the monetary obligations under any sale and leaseback transaction which does not create a liability on the consolidated balance sheet of such Person and its Subsidiaries; or (d) any other monetary obligation arising with respect to any other transaction which (i) upon the application of any Debtor Relief Law to such Person or any of its Subsidiaries, would be characterized as indebtedness or (ii) is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheet of such Person and its Subsidiaries (for purposes of this clause (d), any transaction structured to provide tax deductibility as interest expense of any dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a borrowing).

        “Operating Lease” means any lease of real or personal property that is not a Capital Lease.

        “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

        “Other Taxes” has the meaning set forth in Section 3.01(b).

        “Outstanding Amount” means (i) with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

        “Participant” has the meaning specified in Section 10.07(d).

        “Partnership Guarantor” means each Subsidiary of the Borrower which is a partnership and that executes a Partnership Guaranty.

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        “Partnership Guaranty” means the Partnership Guaranty made by the Partnership Guarantors in favor of the Administrative Agent on behalf of the Lenders, substantially in the form of Exhibit G.

        “Partnerships” means Subsidiaries that are partnerships.

        “PBGC” means the Pension Benefit Guaranty Corporation.

        “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

        “Permitted Liens” means those Liens permitted by Section 7.01.

        “Permitted Loans” means (a) loans by the Borrower or any Guarantor to any Guarantor, (b) loans by the Borrower or any Guarantor to any partners of the Partnerships, any franchisees of Sonic Industries, Inc., any advertising cooperatives in which the Borrower or its franchisees are members, or any other Person (other than any Guarantor), in an aggregate amount not to exceed $20,000,000 at any time outstanding, and (c) loans by any Guarantor to the Borrower or any other Guarantor.

        “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

        “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

        “Pro Rata Share” means, with respect to each Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the sum of the Commitment of such Lender at such time and the denominator of which is the sum of the Aggregate Commitments at such time; provided that if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, then the Pro Rata Share of each Lender shall be determined based on the Pro Rata Share of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 2.01, in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, or in any amendment of this Agreement, as applicable.

        “Quarterly Date” means the last Business Day of each March, June, September and December during the term of this Agreement.

        “Receivables Facility Attributed Indebtedness” means the amount of obligations outstanding under a receivables purchase facility on any date of determination that would be

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characterized as principal if such facility were structured as a secured lending transaction other than a purchase.

        “Redeemable Stock” means any Capital Stock of the Borrower or any of its Subsidiaries which prior to July 31, 2006 is (a) mandatorily redeemable, (b) redeemable at the option of the holder thereof or (c) convertible into Indebtedness of the Borrower or any Subsidiary of the Borrower.

        “Register” has the meaning set forth in Section 10.07(c).

        “Release Date” means the date all Obligations are paid in full, the Commitments are terminated and no Letters of Credit are outstanding.

        “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

        “Request for Credit Extension” means (a) with respect to a Borrowing or a conversion or continuation of a Loan Notice, and (b) with respect to an L/C Credit Extension, a Letter of Credit Application.

        “Required Lenders” means, as of any date of determination, Lenders having at least 66-2/3% of the Aggregate Commitment or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated, Lenders holding in the aggregate at least 66-2/3% of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this definition); provided that (i) the Commitments of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders, and (ii) Required Lenders shall never mean less than two Lenders.

        “Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

        “Restricted Payment” means (a) any Dividend and (b) any prepayment of principal, interest, premium or penalty of or in respect of the Senior Notes or any defeasance, redemption, purchase, repurchase or other acquisition or retirement for value, in whole or in part, of any of the Senior Notes.

        “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., or any successor rating agency.

        “Sale and Leaseback Transaction” means any transaction providing for the leasing to Borrower or any of its Subsidiaries of any property which has been or is to be sold or transferred

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by Borrower or any of its Subsidiaries to such Person or to any Person in exchange for funds which have been or are to be advanced by such Person on the security of such property.

        “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

        “Seller Financing” means any Indebtedness of the Borrower or any Subsidiary incurred in connection with the purchase or acquisition of, and representing the price of, all or any part of the assets of any Person or any shares or other evidence of beneficial ownership of any Person.

        “Senior Notes” means, collectively, (a) $30,000,000 6.759% Senior Notes of the Borrower, Series B, due April 1, 2005, (b) $5,000,000 6.58% Senior Notes of the Borrower, Series A, due August 10, 2008, and (c) $25,000,000 6.87% Senior Notes of the Borrower, Series B, due August 10, 2011.

        “Solvent” means, with respect to any Person, as of any date of determination, that the fair value of the assets of such Person (at fair valuation) is, on the date of determination, greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as of such date, that the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the probable liability of such Person on its debts as such debts become absolute and matured, and that, as of such date, such Person will be able to pay all liabilities of such Person as such liabilities mature and such Person does not have unreasonably small capital with which to carry on its business. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability discounted to present value at rates believed to be reasonable by such Person.

        “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

        “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the

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terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

        “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

        “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

        “Taxes” has the meaning set forth in Section 3.01(a).

        “Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

        “Treasury Stock Purchase” means any purchase, redemption, retirement, defeasance or other acquisition (including any sinking fund or similar deposit for such purpose) by the Borrower or any Subsidiary of its Capital Stock or any warrants, rights or options to acquire such Capital Stock.

        “Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

        “UCC” means the Uniform Commercial Code of Oklahoma or, where applicable to specific collateral, any other relevant state.

        “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

        “United States” and “U.S.” mean the United States of America.

        “Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).

        “Voting Stock” of any Person means Capital Stock of any class or classes having ordinary voting power for the election of at least a majority of the members of the board of

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directors, managing general partners or the equivalent governing body of such Person, irrespective of whether, at the time, Capital Stock of any other class or classes or such entity shall have or might have voting power by reason of the happening of any contingency.

        1.02  Other Interpretive Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

    (a)       The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

    (b)       (i)    The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof.

                 (ii)          Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears.

                 (iii)          The term “including”is by way of example and not limitation.

                 (iv)          The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

    (c)        In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

    (d)        Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

        1.03   Accounting Terms.

        (a)       Accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

        (b)       If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as

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reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

        (c)      For purposes of computing the Leverage Ratio (and any financial calculations required to be made or included within the Leverage Ratio) as of the end of any fiscal quarter of a fiscal year, all components of the Leverage Ratio for the four fiscal quarter period ending at the end of such fiscal quarter shall include, without duplication, such components of the Leverage Ratio attributable to any business or assets that have been acquired by the Borrower or any of its Subsidiaries after the first day of such four fiscal quarter period and prior to the end of such period and shall exclude, without duplication, such components of the Leverage Ratio attributable to any business or assets Disposed of by the Borrower or any of its Subsidiaries after the first day of such four fiscal quarter period and prior to the end of such period, as determined in good faith by the Borrower on a pro forma basis for such period as if such acquisition or Disposition had occurred on the first day of such period.

        1.04  Rounding.  Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

        1.05  References to Agreements and Laws.  Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

        1.06  Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to central time (daylight or standard, as applicable).

        1.07  Letter of Credit Amounts.  Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit or the Letter of Credit Application therefor, whether or not such maximum face amount is in effect at such time.

ARTICLE II.
THE COMMITMENT AND CREDIT EXTENSIONS

        2.01  Loans.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make Loans (each such loan, a “Loan”) to the Borrower from time to time on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Borrowing, (i) the Total Outstandings shall not exceed the Aggregate

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Commitments, and (ii) the aggregate Outstanding Amount of the Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations shall not exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

        2.02  Borrowings, Conversions and Continuations of Loans.

        (a)      Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Each such telephonic notice must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $500,000 in excess thereof. Each Loan Notice (whether telephonic or written), shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice, or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made or continued as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

        (b)      Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of its Pro Rata Share of the Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m., on the Business Day specified in the Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and

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reasonably acceptable to) the Administrative Agent by the Borrower; provided, however, that if, on the date of the Borrowing there are L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings, and second, to the Borrower as provided above.

        (c)     Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders.

        (d)     The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

        (e)     After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than eight Interest Periods in effect with respect to all Loans.

        2.03  Letters of Credit.

        (a)     The Letter of Credit Commitment.

        (i)       Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower or certain Subsidiaries, and to amend or renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower; provided that the L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit if as of the date of such L/C Credit Extension, (x) the Outstanding Amount of all L/C Obligations and Loans would exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations would exceed such Lender’s Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

        (ii)       The L/C Issuer shall be under no obligation to issue any Letter of Credit if:

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          (A)        any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

          (B)        subject to Section 2.03(b)(iii), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last renewal, unless the Required Lenders have approved such expiry date;

          (C)        the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date;

          (D)        the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer; or

          (E)        such Letter of Credit is to be denominated in a currency other than Dollars.

        (iii)        The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

        (b)     Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of Credit.

        (i)       Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary

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in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require.

        (ii)        Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Pro Rata Share times the amount of such Letter of Credit.

       (iii)         If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an “Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of Credit must permit the L/C Issuer to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Nonrenewal Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the renewal of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such renewal if (A) the L/C Issuer has determined that it would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is two Business Days before the Nonrenewal Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such renewal or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied.

        (iv)       Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the

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L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

        (c)     Drawings and Reimbursements; Funding of Participations.

        (i)        Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Pro Rata Share thereof. In such event, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

        (ii)        Each Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i)make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer.

        (iii)        With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.

        (iv)        Until each Lender funds its Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of

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Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall be solely for the account of the L/C Issuer.

        (v)        Each Lender’s obligation to make Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrower of a Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

        (vi)        If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

        (d)     Repayment of Participations.

        (i)        At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of cash collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Pro Rata Share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.

        (ii)        If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such

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amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.

        (e)      Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

        (i)        any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;

        (ii)        the existence of any claim, counterclaim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

        (iii)        any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

        (iv)        any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

        (v)        any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower.

        The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

        (f)      Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, any Agent-Related Person nor any of the respective correspondents, participants or assignees of the

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L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.02(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

        (g)      Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C Borrowing or the Letter of Credit Expiration Date, as the case may be). For purposes hereof, “Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.

        (h)      Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued, (i) the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law &Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,

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as most recently published by the International Chamber of Commerce (the “ICC”) at the time of issuance (including the ICC decision published by the Commission on Banking Technique and Practice on April 6, 1998 regarding the European single currency (euro)) shall apply to each commercial Letter of Credit.

        (i)      Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share a Letter of Credit fee for each Letter of Credit equal to the Applicable Rate times the actual daily maximum amount available to be drawn under each Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit). Such letter of credit fees shall be computed on a quarterly basis in arrears. Such letter of credit fees shall be due and payable on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there is any change in the Applicable Rate during any quarter, the daily maximum amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

        (j)      Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account the individual customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

        (k)      Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.

        2.04  Voluntary Prepayments.  The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans, and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $500,000 in excess thereof (or, in each case if less, the entire principal amount thereof then outstanding). Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Pro Rata Shares.

        2.05  Termination or Reduction of Commitments.  The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be

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received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $2,000,000 or any whole multiple of $1,000,000 in excess thereof (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving effect to any reduction of the Aggregate Commitments or the Letter of Credit Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such excess. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Once reduced in accordance with this Section, the Aggregate Commitments may not be increased. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Pro Rata Share. All commitment fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

        2.06  Repayment of Loans.  The Borrower shall repay to the Lenders, on the Maturity Date, the aggregate principal amount of Loans outstanding on such date.

        2.07  Interest.

        (a)     Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the lesser of (x) the Highest Lawful Rate or (y) the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the lesser of (x) the Highest Lawful Rate or (y) the Base Rate.

        (b)     If any amount payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by Applicable Laws. Furthermore, upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by Applicable Laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

        (c)     Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

        (d)     If the amount of interest payable in respect of any interest computation period is reduced to the Highest Lawful Rate and the amount of interest payable in respect of any subsequent interest computation period would be less than the Maximum Amount, then the amount of interest payable in respect of such subsequent interest computation period shall be

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automatically increased to the Maximum Amount; provided that at no time shall the aggregate amount by which interest paid has been increased pursuant to this sentence exceed the aggregate amount by which interest has been reduced pursuant to this sentence.

        2.08  Fees.  In addition to certain fees described in subsections (i) and (j) of Section 2.03:

        (a)     Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share, a commitment fee (“Commitment Fee”) equal to the Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Loans and (ii) the Outstanding Amount of L/C Obligations. The Commitment Fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each Quarterly Date, commencing with the first Quarterly Date to occur after the Closing Date, and on the Maturity Date. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

        (b)     Other Fees.

        (i)        The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

        (ii)        The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

        2.09  Computation of Interest and Fees.  Subject to Section 10.10, all computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one day.

        2.10  Evidence of Debt.

        (a)      The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower

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hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

        (b)     In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

        2.11  Payments Generally.

        (a)     All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. The Borrower authorizes the Administrative Agent to charge the account of the Borrower maintained with Bank of America for each payment of principal, interest and fees as it becomes due hereunder.

        (b)     Subject to the definition of “Interest Period”, if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

        (c)     Unless the Borrower or any Lender has notified the Administrative Agent, prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then:

        (i)        if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that

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was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and

        (ii)        if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder.

        A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error.

        (d)      If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

        (e)      The obligations of the Lenders hereunder to make Loans and to fund participations in Letters of Credit are several and not joint. The failure of any Lender to make any Loan or to fund any such participation on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or purchase its participation.

        (f)      Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

        2.12  Sharing of Payments. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations held by it, any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share (or other share contemplated hereunder)

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thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s Pro Rata Share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.

ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY

        3.01  Taxes.

        (a)     Any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its net income, franchise taxes, branch taxes, taxes on doing business or taxes measured by or imposed upon the overall capital or net worth of any Lender or its applicable lending office, or any branch or affiliate thereof, in each case imposed: (i) by the jurisdiction under the laws of which the Administrative Agent, or such Lender, applicable lending office, branch or affiliate is organized or is located, or in which the principal executive office of the Administrative Agent or any Lender is located or any nation within which such jurisdiction is located or any political subdivision thereof; or (ii) by reason of any present or former connection between the jurisdiction imposing such tax and the Administrative Agent or such Lender, applicable lending office, branch or affiliate other than a connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligation under, or received payment under or enforced this Agreement and/or a Note (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being

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hereinafter referred to as “Taxes”). If the Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof.

        (b)     In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other Taxes”).

        (c)     If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent or to such Lender, as the case may be, at the time interest is paid, such additional amount that the Administrative Agent or such Lender specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that the Administrative Agent or such Lender would have received if such Taxes or Other Taxes had not been imposed; provided, however, that any additional amount payable hereunder (or under any other Loan Document) by the Borrower in respect of Taxes or Other Taxes shall be reduced by (but not below zero) the amount of any “tax benefit” realized by the Administrative Agent or the relevant Lender as a result of the payment or accrual of the Taxes and/or Other Taxes that give rise to the obligation to pay such additional amount. For purposes of this Agreement, (x) the term “tax benefit” shall mean any reduction in the tax liability( including, without limitation, net income, franchise and/or branch profits tax liability) of the Administrative Agent or the relevant Lender, as the case may be, that results, whether by way of deduction, credit or refund, from the payment or accrual of such Taxes or Other Taxes by such parties and (y) any and all such “tax benefits” shall be deemed to have been realized by the relevant party in the taxable year in which such Taxes or Other Taxes are paid or accrued for the relevant tax purposes.

        (d)     The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender, (ii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor. Notwithstanding the foregoing, however, the Borrower shall not indemnify or be responsible to the Administrative Agent or a Lender for any claims of the Administrative Agent or any Lender under this Section 3.01 to the

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extent that a court having jurisdiction shall have determined by a final non-appealable judgment that any such claim shall have arisen out of or resulted from actions taken or actions omitted to be taken by the Administrative Agent or such Lender that constitute gross negligence or willful misconduct of the Administrative Agent or such Lender.

        (e)     If a Lender or the Administrative Agent, as the case may be, shall become aware that it is entitled to claim a refund in respect of Taxes or Other Taxes which have been paid by the Borrower, or which have been indemnified by the Borrower, or with respect to which the Borrower has paid an additional amount pursuant to this Section 3.01, it shall promptly notify the Borrower of the availability of such refund claim and shall, within thirty (30) days after receipt of a request by the Borrower, make a claim for such refund at the Borrower’s expense. If a Lender receives a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) in respect of any Taxes or Other Taxes which have been paid or indemnified by the Borrower or with respect to which the Borrower has paid an additional amount pursuant to this Section 3.01, it shall within thirty (30) days from the date of such receipt pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender or the Administrative Agent (as the case may be) and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the Borrower, upon the request of the applicable Lender or the Administrative Agent (as the case may be), agrees to repay the amount paid over to the Borrower (plus penalties, interest and other charges and any reasonable costs and expenses paid or payable by such Lender or the Administrative Agent (as the case may be) in connection therewith) to such Lender or the Administrative Agent (as the case may be) in the event such Lender or the Administrative Agent (as the case may be) is required to repay such refund to such Governmental Authority.

        (f)     Any Lender or the Administrative Agent claiming any additional amounts payable pursuant to this Section 3.01 shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if the making of such change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender or the Administrative Agent, be otherwise materially disadvantageous to such Lender or the Administrative Agent.

        3.02  Illegality.  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not

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lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

        3.03  Inability to Determine Rates. If the Required Lenders determine that (a) for any reason adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (b) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurodollar Rate Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing, conversion or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

        3.04  Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.

        (a)     If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements contemplated by Section 3.04(c)), then such Lender may notify the Borrower (with a copy of such demand to the Administrative Agent) of such fact.

        (b)     If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then such Lender may notify the Borrower (with a copy of such demand to the Administrative Agent) of such fact.

        (c)     If notice is given to the Borrower pursuant to clauses (a) or (b) of this Section 3.04 by any Lender, to the extent that the costs of such condition, requirement or increased capital requirements are not reflected in the Base Rate or Eurodollar Rate, as the case may be, the Borrower and such Lender shall thereafter attempt to negotiate an adjustment to the

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compensation payable hereunder which will adequately compensate such Lender in light of these circumstances. If the Borrower and such Lender are unable to agree to such adjustment within forty-five (45) days of the day on which the Borrower receives such notice, then commencing on the effective date of any such change, the fees payable by the Borrower hereunder shall increase by an amount which will, in such Lender’s reasonable determination, provide adequate compensation. In the event that an such Lender increases the fees payable under this Agreement as a result of circumstances described in this Section 3.04, and the Borrower has not approved such increase, then the Borrower may prepay all of its Obligations to such Lender hereunder, in accordance with the provisions of Section 2.04, provided that the Borrower shall be required to pay any amounts due under this Section 3.04 which accrue through the date of payment and Section 3.05 as a result of such prepayment. In making any determinations contemplated by this Section 3.04, any Lender may make such reasonable estimates, assumptions, allocations and the like that such Lender in good faith determines to be appropriate, but the Lender’s selection thereof in accordance with this Section 3.04, and the determinations made by the Lender on the basis thereof, shall be final, binding and conclusive upon the Borrower, except, in the case of such determinations, for manifest errors in computation or transmission. Each Lender shall (i) furnish to the Borrower upon request a certificate outlining in reasonable detail the computation of any amounts claimed by it under this Section 3.04 and (ii) take any reasonable actions available to it consistent with its internal policy and legal and regulatory restriction (including the designation of a different Lending Office) that will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender, be otherwise materially disadvantageous to such Lender.

        (d)     The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 15 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 15 days from receipt of such notice.

        3.05  Funding Losses.  Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

        (a)        any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or

        (b)       any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or

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        (c)       any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.16;

excluding any loss of anticipated profits, but including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

        For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded. Such compensation may include, without limitation, an amount equal to the excess, if any of (a) the amount of interest which would have accrued on the amount so paid, prepaid or converted or not borrowed, converted or prepaid for the Interest Period from the date of such payment, prepayment or conversion or failure to borrow, convert or prepay to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or prepay, the Interest Period for such Loan which would have commenced on the date of such failure to borrow, convert or prepay) at the applicable rate of interest for such Loan provided for herein (excluding, however, the Applicable Rate) over (b) the amount of interest (as reasonably determined by the Administrative Agent in connection with such Lender) such Lender would have paid on such matching Eurodollar deposits or other borrowings.

        3.06  Matters Applicable to all Requests for Compensation.

        (a)     A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods.

        (b)     Upon any Lender’s making a claim for compensation under Section 3.01 or 3.04, the Borrower may replace such Lender in accordance with Section 10.16.

        3.07  Survival.  All of the Borrower’s obligations under this Article III shall survive termination of the Commitments and repayment of all other Obligations hereunder.

ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

        4.01  Conditions of Initial Credit Extension.  The obligation of each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

        (a)     The Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly, each dated the Closing Date (or, in the case of certificates of governmental officials, a

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recent date before the Closing Date) and each in form and substance reasonably satisfactory to the Administrative Agent and its legal counsel:

        (i)        executed counterparts of this Agreement and the Guaranties, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

        (ii)        Notes executed by the Borrower in favor of each Lender requesting a Note, each in a principal amount equal to such Lender’s Commitment;

        (iii)        resolutions of the Board of Directors of the Borrower and each Corporate Guarantor, certified by the Secretary or an Assistant Secretary of such Person which authorize (A) the execution, delivery, and performance by the Borrower of this Agreement and the other Loan Documents to which the Borrower is or is to be a party, and (B) the execution, delivery, and performance by each such Guarantor of its Corporate Guaranty and the other Loan Documents to which such Guarantor is or is to be party;

        (iv)        a certificate of incumbency certified by the Secretary or an Assistant Secretary of the Borrower and each Corporate Guarantor, respectively, certifying the names of (A) the officers of the Borrower authorized to sign this Agreement and each of the other Loan Documents to which the Borrower is or is to be a party (including the certificates contemplated herein) together with specimen signatures of such officers, and (B) the officers of each such Guarantor authorized to sign its Corporate Guaranty and the other Loan Documents to which such Guarantor is or is to be a party (including the certificates contemplated therein) together with specimen signatures of such officers;

        (v)        the certificate of incorporation of the Borrower and each Corporate Guarantor, certified by the Secretary of State of the state of its incorporation;

        (vi)        bylaws of the Borrower and each Corporate Guarantor, certified by the Secretary or an Assistant Secretary of such Person;

        (vii)        (A) certificates of the appropriate governmental officials of the respective states of incorporation of the Borrower and each Corporate Guarantor, as to the existence and good standing of such Persons, and (B) with respect to the Borrower, Sonic Restaurants, Inc., Sonic Service Corp. and Sonic Industries Inc. only, certificates of the appropriate governmental officials of each state where the nature of such Person’s business in such state makes qualification to do business necessary and where failure to so qualify would have a Material Adverse Effect, as to the qualification and good standing of such Person in such states;

        (viii)        appropriate Organizational Documents and agreements relating to America’s Drive-In Trust, as the Administrative Agent may request, all certified to the satisfaction of the Administrative Agent;

        (ix)        a certificate of an authorized officer of Sonic Restaurants, Inc., certifying that (A) each of the Partnerships has been duly formed and is validly existing, (B) the Partnerships have the power and authority to execute, deliver and perform the Partnership Guaranty, and (C) Sonic Restaurants, Inc. has the power and authority to execute and

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deliver such Guaranty on behalf of the Partnerships, as the managing general partner of each of the Partnerships, and to thereby bind the Partnerships;

        (x)        a certificate of an authorized officer of Sonic Restaurants, Inc., certifying that (A) each of the LLCs has been duly formed and is validly existing, (B) the LLCs have the power and authority to execute, deliver and perform the LLC Guaranty and (C) Sonic Restaurants, Inc. has the power and authority to execute and deliver such Guaranty on behalf of the LLCs, as the manager of each of the LLCs, and to thereby bind the LLCs;

        (xi)        a favorable opinion of counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to the matters set forth in Exhibit F and such other matters concerning the Loan Parties and the Loan Documents as the Required Lenders may reasonably request;

        (xii)        copies of all UCC searches on the Borrower and the Corporate Guarantors;

        (xiii)        a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

        (xiv)        a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;

        (xv)        evidence that the Existing Loan Agreement has been or concurrently with the Closing Date will be terminated;

        (xvi)        all other Loan Documents to be delivered on the Closing Date duly executed and completed, dated the Closing Date, and enforceable against the Loan Parties thereto;

        (xvii)        acknowledgment to Amended and Restated Intercreditor Agreement executed by each Lender and each Guarantor; and

        (xviii)        such other assurances, certificates, documents, reports, consents or opinions as the Administrative Agent, the L/C Issuer or the Required Lenders reasonably may require.

        (b)     Any fees required to be paid on or before the Closing Date shall have been paid, and all Fee Letters shall be in full force and effect.

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        (c)     Unless waived by the Administrative Agent, the Borrower shall have paid all Attorney Costs of the Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

        (d)     The Closing Date shall have occurred on or before April 30, 2003.

        (e)     There shall not have occurred an event or circumstance since August 31, 2002 that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.

        (f)     There shall not have occurred any action, suit, investigation or proceeding pending or threatened in any court or before any Governmental Authority that purports to materially and adversely affect the Borrower or its Subsidiaries.

        4.02  Conditions to all Credit Extensions.  The obligation of each Lender to honor any Request for Credit Extension (other than a Loan Notice requesting only a conversion of the Loans to the other Type, or a continuation of Eurodollar Loans) is subject to the following conditions precedent:

        (a)       The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

        (b)       No Default shall exist, or would result from such proposed Credit Extension.

        (c)       The aggregate Outstanding Amount of all Loans and L/C Obligations under this Agreement shall not exceed the Aggregate Commitments;

        (d)       The Administrative Agent and, if applicable, the L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof.

        Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of the Loans to the other Type, or a continuation of Eurodollar Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

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ARTICLE V.
REPRESENTATIONS AND WARRANTIES

        The Borrower represents and warrants to the Administrative Agent and the Lenders that:

        5.01  Existence, Qualification and Power; Compliance with Laws.  The Borrower and each of its Subsidiaries (a) is a corporation, partnership, limited liability company or business trust duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, franchises, permits, authorizations, consents and approvals to (i) own its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. Sonic Restaurants, Inc. is the managing general partner of each of the Partnerships and owns at least a majority of the partnership interests in each of the Partnerships. Sonic Restaurants, Inc. is the managing member of the LLCs and owns at least a majority of the interests in each of the LLCs.

        5.02  Authorization; No Contravention.  The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, (i) any Contractual Obligation to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law, except to the extent that such violation could not reasonably be expected to have a Material Adverse Effect.

        5.03  Governmental Authorization; Other Consents.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document.

        5.04  Binding Effect.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject as to enforcement to any Debtor Relief Laws and to general equitable principles.

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        5.05  Financial Statements; No Material Adverse Effect.

        (a)     The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

        (b)     The unaudited consolidated financial statements of the Borrower and its Subsidiaries dated February 28, 2003, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end and audit adjustments.

        (c)     Except as referred to or reflected in the financial statements referred to in clauses (a) and (b) above, neither the Borrower nor any of its Subsidiaries has any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments, or unrealized or anticipated losses from any unfavorable commitments that are material with respect to the Borrower or any Subsidiary.

        (d)     Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

        (e)     There are no Off-Balance Sheet Liabilities.

        5.06  Litigation. Except as set forth on Schedule 5.06, there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

        5.07  No Default.  Neither the Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

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        5.08  Ownership of Property; Liens. Each of the Borrower and each Subsidiary has good record and indefeasible title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the Borrower and its Subsidiaries is subject to no Liens, other than Permitted Liens.

        5.09  Environmental Matters.  Except as disclosed on Schedule 5.09, (a) the Borrower and each Subsidiary is, and the operations conducted on all of its real property are, in compliance with all Environmental Laws applicable to it or its property, except where noncompliance will not have a Material Adverse Effect, (b) neither Borrower nor any Subsidiary has received any summons, complaint, order, notification, citation, or other similar notice that it or the operations conducted or the relief, disposal, or storage of Hazardous Materials on any of its real property is not in compliance with, or that any Governmental Authority is investigating its compliance with, Environmental Laws, or that it has not obtained any required permit, registration, license or similar evidence of authorization, in each case that could individually or in the aggregate be reasonably expected to have a Material Adverse Effect, (c) the Borrower is not otherwise aware of any contingent liability with respect to its, any Subsidiary’s, or any property’s noncompliance with Environmental Laws or its generation, handling, use, storage or disposal of Hazardous Materials, except any such contingent liabilities which individually or in the aggregate will not have a Material Adverse Effect, (d) there are no conditions or circumstances associated with the currently or previously owned or leased properties or operations of the Borrower or any Subsidiary that could reasonably be expected to give rise to any Environmental Liabilities of the Borrower or any Subsidiary, except any such Environmental Liabilities which individually or in the aggregate will not have a Material Adverse Effect, and (e) no Lien arising under any Environmental Law has attached to any property or revenues of the Borrower or any Subsidiary that could individually or in the aggregate be reasonably expected to have a Material Adverse Effect.

        5.10  Insurance.  The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts (after giving effect to any self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.

        5.11  Taxes.  The Borrower and its Subsidiaries have filed all material Federal, state and other tax returns and reports required to be filed, and have paid all material Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect, and there are no items that would give rise to a substantial understatement penalty for the Borrower or any Subsidiary. There are no tax agreements among any of the Borrower and its Subsidiaries.

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        5.12  ERISA Compliance.

        (a)     Each Plan is in compliance in all respects with the applicable provisions of ERISA, the Code and other Federal or state Laws, except to the extent that the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate has made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

        (b)     There are no pending or, to the knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

        (c)     (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

        5.13  Subsidiaries; Affiliates.

        (a)     Schedule 5.13 contains (except as noted therein) complete and correct lists of (i) the Borrower’s Subsidiaries (including all of the Guarantors), showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its Capital Stock outstanding owned by the Borrower and each other Subsidiary, (ii) the Borrower’s Affiliates, other than Subsidiaries and (iii) the Borrower’s directors and senior officers. As of the Closing Date, each Subsidiary of the Borrower other than Sonic Limited, a New Zealand corporation, has executed a Guaranty.

        (b)     All of the outstanding shares of Capital Stock of each Subsidiary shown on Schedule 5.13 as being owned by the Borrower and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Borrower or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.13). None of the Borrower or any Subsidiary has issued any Redeemable Stock.

        (c)     No Subsidiary is a party to, or otherwise subject to any legal restriction or any agreement (other than this Agreement, the Senior Notes, the agreements listed on Schedule 5.13

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and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Borrower or any of its Subsidiaries that owns outstanding shares of Capital Stock of such Subsidiary.

        5.14  Margin Regulations; Investment Company Act; Public Utility Holding Company Act.

        (a)     The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.

        (b)     None of the Borrower, any Person Controlling the Borrower, or any Subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

        5.15  Disclosure.  The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed by the Borrower to be reasonable at the time.

        5.16   Compliance with Laws.  Each of the Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

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        5.17  Intellectual Property; Licenses, Etc.  The Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

        5.18  Businesses.  The Borrower is presently engaged directly or through its Subsidiaries and franchisees in the business of operating and franchising a chain of drive-in restaurants.

        5.19  Common Enterprise.  The Borrower and its Subsidiaries are engaged in the businesses set forth in Section 5.18 as of the Closing Date, as well as in certain other businesses. These operations require financing on a basis such that the credit supplied can be made available from time to time to the Borrower and various of its Subsidiaries, as required for the continued successful operation of the Borrower and its Subsidiaries as a whole. The Borrower has requested the Lender to make credit available hereunder primarily for the purposes set forth in Section 6.11 and generally for the purposes of financing the operations of the Borrower and its Subsidiaries. The Borrower and each of its Subsidiaries expects to derive benefit (and the Board of Directors of the Borrower and each of its Subsidiaries has determined that such Subsidiary may reasonably be expected to derive benefit), directly or indirectly, from a portion of the credit extended by the Lenders hereunder, both in its separate capacity and as a member of the group of companies, since the successful operation and condition of the Borrower and each of its Subsidiaries is dependent on the continued successful performance of the functions of the group as a whole. The Borrower acknowledges that, but for the agreement by each of the Guarantors to execute and deliver its respective Guaranty, the Administrative Agent and the Lenders would not have made available the credit facilities established hereby on the terms set forth herein.

        5.20  Solvent.  The Borrower is, and the Borrower and its Subsidiaries are on a consolidated basis, Solvent.

ARTICLE VI.
AFFIRMATIVE COVENANTS

        From the Closing Date, so long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding:

        6.01  Financial Statements.  The Borrower shall deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

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        (a)       as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited (with respect to such consolidated financial statements) and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and

        (b)       as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in comparative form the figures for the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end and audit adjustments and the absence of footnotes.

As to any information contained in materials furnished pursuant to Section 6.02(c), the Borrower shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in subsections (a) and (b) above at the times specified therein.

        6.02  Certificates; Other Information.  The Borrower shall deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

        (a)       concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower;

        (b)       promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;

        (c)       promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower and copies of all annual, regular, periodic and special reports and registration

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statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

        (d)       as soon as available, and in any event within 60 days after the beginning of each fiscal year of the Borrower, a copy of the an annual business plan and budget of the Borrower and its Subsidiaries containing, among other things, pro forma financial statements for such fiscal year, in form and substance satisfactory to the Administrative Agent (each, an “Annual Business Plan”);

        (e)       promptly, and in any event within five days after the date on which the aggregate amount of any and all Guarantees by the Borrower or any of its Subsidiaries exceeds $500,000, written notice stating such fact and the nature of such Guarantee; and

        (f)       promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary (individually, without limitation, consolidating financial statements of the Borrower and its Subsidiaries), or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

        Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(c) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a) to the Administrative Agent and each of the Lenders. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

        6.03  Notices.  The Borrower shall promptly notify the Administrative Agent and each Lender:

        (a)       of the occurrence of any Default;

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        (b)       of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including without limitation (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

        (c)       of the occurrence of any ERISA Event;

        (d)       of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary; and

        (e)       of any attempt by any Person to initiate collection proceedings, for past due amounts through appropriate court proceeding, or enforce any account payable owed to such Person by the Borrower or any Subsidiary in excess of $2,000,000 individually or in the aggregate.

        Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

        6.04  Payment of Obligations.  The Borrower shall, and shall cause each Subsidiary to, pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, unless any of the foregoing are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary.

        6.05  Preservation of Existence, Etc.  The Borrower shall, and shall cause each Subsidiary to (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

        6.06  Maintenance of Properties.  The Borrower shall, and shall cause each Subsidiary to (a) maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear

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and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

        6.07  Maintenance of Insurance.  The Borrower shall, and shall cause each Subsidiary to, maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, (after giving effect to any self-insurance compatible with industry standards) insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

        6.08  Compliance with Laws.  The Borrower shall, and shall cause each Subsidiary to, comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, write, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

        6.09  Books and Records.  The Borrower shall, and shall cause each Subsidiary to, maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.

        6.10  Inspection Rights.  The Borrower shall, and shall cause each Subsidiary to, permit representatives of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives) may do any of the foregoing at any time during normal business hours and without advance notice.

        6.11  Use of Proceeds.  The Borrower shall use the proceeds of the Credit Extensions (a) to repay all amounts owed under the Existing Loan Agreement, (b) for Treasury Stock Repurchases, (c) for Acquisitions permitted hereunder, (d) for store development, and (e) for general corporate purposes not in contravention of any Law or of any Loan Document.

        6.12  Further Assurances.  At any time or from time to time upon reasonable request by the Administrative Agent, the Borrower shall or shall cause the Borrower or any of its Subsidiaries and each other Loan Party to execute and deliver such further documents and do such other acts and things as the Administrative Agent may reasonably request in order to effect fully the purposes of this Agreement and the other Loan Documents and to provide for payment of the Obligations in accordance with the terms of this Agreement and the other Loan Documents. The Borrower will cause each Person that becomes a Material Subsidiary (other

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than the Partnerships and LLCs) at any time after the Closing Date to execute and deliver to the Administrative Agent, immediately upon becoming a Material Subsidiary, a supplement to the Corporate Guaranty in the form of Exhibit A to the Corporate Guaranty. The Borrower will cause each Person that becomes a Partnership or a LLC at any time after the Closing Date to execute and deliver to the Administrative Agent, on or before the next date thereafter on which a Compliance Certificate is required to be delivered pursuant to Section 6.02(a), a supplement to the Partnership Guaranty or LLC Guaranty, as appropriate, in the form of Exhibit A to the Partnership Guaranty or LLC Guaranty, as appropriate.

ARTICLE VII.
NEGATIVE COVENANTS

        From the Closing Date, so long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:

        7.01  Liens.  Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

        (a)        Liens pursuant to any Loan Document;

        (b)        Liens existing on the Closing Date and listed on Schedule 7.01 and any renewals or extensions thereof, provided that the property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(a);

        (c)        Encumbrances consisting of minor easements, zoning restrictions, or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of the Borrower or the Subsidiaries to use such assets in their respective businesses, and none of which is violated in any material respect by existing or proposed structures or land use;

        (d)        Liens for taxes, assessments, or other governmental charges which are not delinquent or which are being contested in good faith and for which adequate reserves have been established;

        (e)        Statutory Liens of landlords, mechanics, materialmen, warehousemen, carriers, or other similar statutory Liens for which no filing or perfection has been made and which secure obligations that (i) are not yet due and are incurred in the ordinary course of business or (ii) are being contested in good faith by appropriate proceedings diligently pursued, and for which adequate reserves have been established;

        (f)        Liens resulting from good faith deposits to secure payments of workers’ compensation, unemployment insurance or other social security programs or to secure the performance of tenders, statutory obligations, surety and appeal bonds, binds, or contracts (other than for payment of Debt), or leases made in the ordinary course of business; and

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        (g)        Liens securing Indebtedness permitted by Section 7.03(f), provided, that (i) such Liens do not encumber any property other than the property for which such Indebtedness was incurred and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition.

        7.02  Investments.  Make any Investments, except:

        (a)        Investments in Capital Stock of the Subsidiaries existing on the Closing Date;

        (B)        Investments specified in Section II B of the Borrower’s Investment Policy, and which are made in compliance with the other requirements set forth in the Borrower’s Investment Policy;

        (c)        Permitted Loans;

        (d)        Guaranty Obligations permitted by Section 7.03; and

        (e)        Investments as a result of Acquisitions, if each of the following conditions has been satisfied: (i) immediately before and after giving effect to such Acquisition, no Default shall have occurred and be continuing, (ii) immediately after giving effect to the proposed Acquisition, the aggregate Acquisition Consideration for all Acquisitions during any fiscal year of the Borrower shall not exceed $70,000,000, and (iii) such Acquisition shall not be opposed by the board of directors of the Person or assets being acquired.

        7.03  Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness or obligations under Operating Leases, except:

        (a)        Indebtedness, other than that permitted by subsections (b) through (h) below, outstanding on the Closing Date and listed on Schedule 7.03 and any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing plus an amount equal to any existing commitments unutilized thereunder;

        (b)        Indebtedness under the Loan Documents;

        (c)        Guaranty Obligations of the Borrower or any Guarantor in respect of Indebtedness otherwise permitted hereunder of the Borrower or any other Guarantor;

        (d)        obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of

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securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

        (e)        obligations under Operating Leases which in the aggregate require the Borrower and its Subsidiaries on a consolidated basis to make payments (including taxes, insurance, maintenance and similar expenses which the Borrower or any Subsidiary is obligated to pay under such Operating Leases) in any fiscal year of the Borrower not to exceed $10,000,000 in aggregate amount;

        (f)        Indebtedness in respect of Capital Leases and purchase money obligations for fixed or capital assets; provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $45,000,000;

        (g)        unsecured Indebtedness of the Borrower or any Subsidiary evidenced by any promissory note payable to any seller, representing a portion of the purchase price for any Acquisition permitted under Section 7.02(e), provided that (i) the aggregate amount of such Indebtedness outstanding at any time shall not exceed $50,000,000, and (ii) the terms of such unsecured Indebtedness shall be reasonably satisfactory to the Required Lenders; and

        (h)        other Guaranty Obligations of the Borrower or any Subsidiary not to exceed $20,000,000 in aggregate amount.

        7.04  Merger, Consolidation, Etc. Merge, dissolve, liquidate, consolidate with or into another Person, except that, so long as no Default exists or would result therefrom, (a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging with another Subsidiary, the Guarantor shall be the continuing or surviving Person, (b) Partnerships may be dissolved in connection with the closing and re-establishing of restaurants of such Partnerships, and (c) LLCs may be dissolved in connection with the closing and re-establishing of restaurants of such LLCs.

        7.05  Dispositions.  Make any Disposition or enter into any agreement to make any Disposition, except:

        (a)        Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

        (b)        Dispositions of inventory in the ordinary course of business;

        (c)        Dispositions of assets in an aggregate amount not to exceed $10,000,000 during any fiscal year;

        (d)        Dispositions of property by any Subsidiary to the Borrower or to a Corporate Guarantor;

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        (e)        Dispositions permitted by Section 7.04;

        (f)        Sonic Restaurants, Inc. may make Dispositions of partnership interests in the Partnerships so long as Sonic Restaurants, Inc. at all times owns at least a majority of the partnership interests in each of the Partnerships; and

        (g)        Sonic Restaurants, Inc. may make Dispositions of interests in the LLCs so long as Sonic Restaurants, Inc. at all times owns a majority of the interests in each of the LLCs;

provided, however, that any Disposition pursuant to clauses (a), (b), (c), (f) and (g) shall be for fair market value.

        7.06  Restricted Payments.  Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that the Borrower and its Subsidiaries may pay or make Dividends if immediately before and immediately after any Restricted Payment, no Default exists or would result therefrom.

        7.07  Change in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.

        7.08  Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of the Borrower (other than a Guarantor), whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided, however, that the Borrower and its Subsidiaries shall be permitted to enter into transactions with such respective Affiliates involving property, assets, services and amounts that do not exceed $500,000 in the aggregate during any fiscal year, notwithstanding this Section 7.08.

        7.09   Burdensome Agreements.  Enter into any Contractual Obligation (other than this Agreement, any other Loan Document or the Senior Notes) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided, however, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 7.03(f) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

        7.10  Use of Proceeds.  Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

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        7.11  Financial Covenants.

        (a)     Minimum Net Worth. Permit Net Worth at any time to be less than the sum of (a) $200,000,000, plus (b) an amount equal to 50% of the Net Income earned in each full fiscal quarter ending after November 30, 2003 (with no deduction for a net loss in any such fiscal quarter), plus (c) an amount equal to 100% of the Net Proceeds received by the Borrower after the Closing Date by reason of the issuance, sale or other disposition of Capital Stock of the Borrower of any class (or any securities convertible or exchangeable for any such Capital Stock, or any rights, warrants, or options to subscribe for or purchase any such Capital Stock), plus (d) an amount equal to the Net Worth of any Person that becomes a Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary or substantially all of the assets of which are acquired by the Borrower or any Subsidiary, in each case after the Closing Date.

        (b)     Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio at the end of any fiscal quarter of the Borrower to be less than 2.00 to 1.

        (c)     Leverage Ratio. Permit the Leverage Ratio at the end of any fiscal quarter of the Borrower to exceed 2.50 to 1.

        7.12  Environmental Protection. (a) Use (or permit any tenant to use) any of their respective properties or assets for the handling, processing, storage, transportation, or disposal of any Hazardous Material in violation of any Environmental Law, (b) generate any Hazardous Material in violation of any Environmental Law, (c) conduct any activity that causes a release or threatened release of any Hazardous Material, or (d) otherwise conduct any activity or use any of their respective properties or assets in any manner that is likely to violate any Environmental Law or create any Environmental Liabilities for which the Borrower or any Subsidiary would be responsible.

        7.13  Fiscal Year and Accounting Methods.  Change its fiscal year or its method of accounting (other than immaterial changes in methods or as required by GAAP and disclosed to the Administrative Agent).

        7.14  Amendment and Waivers in respect of Senior Notes.  Change or permit any Subsidiary to change or amend (or take any action or fail to take any action the result of which is an effective amendment or change) or accept any waiver or consent with respect to, any document, instrument or agreement relating to any of the Senior Notes that would result in (a) an increase in the principal, interest, overdue interest, fees or other amounts payable under any of the Senior Notes, (b) an acceleration in any date fixed for payment or prepayment of principal, interest, fees or other amounts payable under any of the Senior Notes (including, without limitation, as a result of any redemption), (c) a change in any covenant, term or provision in any of the Senior Notes that would result in such term or provision being more restrictive than the terms of this Agreement and the other Loan Documents or (d) a change in any term or provision of any of the Senior Notes that could reasonably be expected to have, in any material respect, an adverse effect in the interest of the Lenders.

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        7.15  Sale and Leaseback.  Enter into any Sale and Leaseback Transaction (directly or indirectly) with any person other than among the Borrower and any Corporate Guarantor (to the extent such transaction is otherwise permitted hereunder).

ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES

        8.01  Events of Default.  Any of the following shall constitute an Event of Default:

        (a)       Non-Payment.     The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within three days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any commitment or other fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

        (b)        Specific Covenants. (i) The Borrower or any other Loan Party fails to perform or observe any term, covenant or agreement contained in any of Sections 6.03(a), 6.05, 6.10 or 6.11 or Article VII or (ii) the Borrower or any other Loan Party fails to perform or observe any term, covenant or agreement contained in any of Sections 6.03(b), 6.03(c), 6.03(d) or 6.12 and such failure continues for 10 days after the earlier of knowledge thereof by the Borrower or notice thereof by the Administrative Agent; or

        (c)        Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after the earlier of knowledge thereof by the Borrower or notice thereof by the Administrative Agent; or

        (d)        Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

        (e)        Cross-Default.     (i) The Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guaranty Obligation (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the $2,000,000, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guaranty Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guaranty

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Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guaranty Obligation to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the $2,000,000; or

        (f)        Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

        (g)        Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

        (h)        Judgments. There is entered against the Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the $2,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

        (i)        ERISA.     (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $2,000,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace

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period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $2,000,000; or

        (j)        Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document or security interest created thereby; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

        (k)        Change of Control. There occurs any Change of Control.

        8.02  Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the Administrative Agent may, in its discretion, or shall, at the request of, the Required Lenders, take any or all of the following actions:

        (a)        declare the commitment of each Lender to make Loans and/or any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and/or obligation shall be terminated, as applicable;

        (b)        declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

        (c)        require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

        (d)        exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsections (f) or (g) of Section 8.01, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

        8.03  Application of Funds.  After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received by the Administrative Agent or any Lender on account of the Obligations shall be applied by the Administrative Agent in the following order:

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        First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

        Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Secured Lenders (including Attorney Costs and amounts payable under Article III), ratably among the Secured Lenders in proportion to the amounts described in this clause Second payable to them;

        Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and L/C Borrowings included in the Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

        Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them;

        Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and

        Sixth, to payment of that portion of the Obligations constituting all amounts owed under any Swap Contract included in the Obligations (at the Swap Termination Value), ratably among the Lenders (or any Affiliate of a Lender that is a party to a Swap Contract included in the Obligations) in proportion to the amounts described in this clause Sixth payable to them;

        Seventh, to payment of all remaining outstanding and unpaid Obligations, ratably among the Lenders in proportion to the amounts described in this clause Seventh payable to them; and

        Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

ARTICLE IX.
ADMINISTRATIVE AGENT

        9.01  Appointment and Authorization of Administrative Agent.

        (a)     Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the

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contrary contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

        (b)     The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in this Article IX and in the definition of “Agent-Related Person” included the L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the L/C Issuer.

        9.02  Delegation of Duties.  The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

        9.03  Liability of Administrative Agent.  No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof.

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        9.04  Reliance by Administrative Agent.

        (a)     The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

        (b)     For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

        9.05  Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default and stating that such notice is a “notice of default.” The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default as may be directed by the Required Lenders in accordance with Article VIII; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable or in the best interest of the Lenders.

        9.06  Credit Decision; Disclosure of Information by Administrative Agent.  Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such

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documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person.

        9.07  Indemnification of Administrative Agent.  WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL INDEMNIFY UPON DEMAND EACH AGENT-RELATED PERSON (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF ANY LOAN PARTY AND WITHOUT LIMITING THE OBLIGATION OF ANY LOAN PARTY TO DO SO), PRO RATA, AND HOLD HARMLESS EACH AGENT-RELATED PERSON FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES INCURRED BY IT (WHETHER OR NOT ARISING OUT OF THE NEGLIGENCE OF SUCH AGENT-RELATED PERSON); PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT TO ANY AGENT-RELATED PERSON OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES TO THE EXTENT DETERMINED IN A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH AGENT-RELATED PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED, HOWEVER, THAT NO ACTION TAKEN IN ACCORDANCE WITH THE DIRECTIONS OF THE REQUIRED LENDERS SHALL BE DEEMED TO CONSTITUTE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT FOR PURPOSES OF THIS SECTION. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER SHALL REIMBURSE THE ADMINISTRATIVE AGENT UPON DEMAND FOR ITS RATABLE SHARE OF ANY COSTS OR OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEY COSTS) INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, TO THE EXTENT THAT THE ADMINISTRATIVE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY OR ON BEHALF OF THE BORROWER. THE UNDERTAKING IN THIS SECTION SHALL SURVIVE TERMINATION OF THE

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COMMITMENTS, THE PAYMENT OF ALL OTHER OBLIGATIONS AND THE RESIGNATION OF THE ADMINISTRATIVE AGENT.

        9.08  Administrative Agent in its Individual Capacity.  Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not the Administrative Agent or the L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent or the L/C Issuer, and the terms “Lender” and “Lenders” include Bank of America in its individual capacity.

        9.09  Successor Administrative Agent.  The Administrative Agent may resign as Administrative Agent upon 30 days’notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as L/C Issuer. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and L/C Issuer and the respective terms “Administrative Agent” and “L/C Issuer” shall mean such successor administrative agent and Letter of Credit issuer, and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated and the retiring L/C Issuer’s rights, powers and duties as such shall be terminated, without any other or further act or deed on the part of such retiring L/C Issuer or any other Lender, other than the obligation of the successor L/C Issuer to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or to make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

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        9.10  Administrative Agent May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

        (a)        to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.03(i) and (j), 2.08 and 10.04) allowed in such judicial proceeding; and

        (b)        to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.08 and 10.04.

        Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

        9.11  Collateral and Guaranty Matters.   The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion,

        (a)        to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) subject to Section 10.01, if approved, authorized or ratified in writing by the Required Lenders; and

        (b)        to release any Guarantor from its obligations under its Guaranty if (i) such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder or

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(ii) subject to Section 10.01, approved, authorized or ratified in writing by the Required Lenders;

        Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release its interest in particular types or items of property, or to release any Guarantor from its obligations under its Guaranty.

ARTICLE X.
MISCELLANEOUS

        10.01  Amendments, Etc.  No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

        (a)        waive any condition set forth in Section 4.01(a) without the written consent of each Lender;

        (b)        extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender;

        (c)        postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

        (d)        reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iii) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) to amend the Leverage Ratio (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

        (e)        change Section 2.12  or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

        (f)        change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

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        (g)        other than pursuant to a transaction permitted hereunder or under any other Loan Document, release all of, or substantially all of the Guarantors from any Guaranty;

        (h)        other than pursuant to a transaction permitted hereunder or under any other Loan Document, release all of, or substantially all of, the Collateral or subordinate the Lien in all of, or substantially all of, the Collateral;

and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitments of such Lender may not be increased without the consent of such Lender.

        10.02  Notices and Other Communications; Facsimile Copies.

        (a)     General.  Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

        (i)        if to the Borrower, the Administrative Agent or the L/C Issuer, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and

        (ii)        if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent and the L/C Issuer.

All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered;

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provided, however, that notices and other communications to the Administrative Agent and the L/C Issuer pursuant to Article II shall not be effective until actually received by such Person. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder.

        (b)     Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

        (c)     Limited Use of Electronic Mail. Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 6.02, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose.

        (d)     Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

        10.03  No Waiver; Cumulative Remedies.  No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

        10.04  Attorney Costs, Expenses and Taxes.  The Borrower agrees (a) to pay or reimburse the Administrative Agent for all costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse the Administrative Agent and each Lender for all reasonable costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any “workout” or

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restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all reasonable search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other reasonable out-of-pocket expenses incurred by the Administrative Agent and the reasonable cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 10.04 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the termination of the Commitments and repayment of all other Obligations.

        10.05  Indemnification by the Borrower.  WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, THE BORROWER SHALL INDEMNIFY AND HOLD HARMLESS EACH AGENT-RELATED PERSON, EACH LENDER AND THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, AGENTS AND ATTORNEYS-IN-FACT (COLLECTIVELY THE “INDEMNITEES”) FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS (INCLUDING REASONABLE ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE IN ANY WAY RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH (A) THE EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE OR ADMINISTRATION OF ANY LOAN DOCUMENT OR ANY OTHER AGREEMENT, LETTER OR INSTRUMENT DELIVERED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED THEREBY OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, (B) ANY COMMITMENT, LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE L/C ISSUER TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), OR (C) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY THE BORROWER, ANY SUBSIDIARY OR ANY OTHER LOAN PARTY, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER, ANY SUBSIDIARY OR ANY OTHER LOAN PARTY, OR (D) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY (INCLUDING ANY INVESTIGATION OF, PREPARATION FOR, SETTLEMENT OF, OR DEFENSE OF ANY PENDING OR THREATENED CLAIM, INVESTIGATION, LITIGATION OR PROCEEDING) AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE NEGLIGENCE OF THE INDEMNITEE;PROVIDEDTHAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS

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ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE. NO INDEMNITEE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY INDEMNITEE HAVE ANY LIABILITY FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE). ALL AMOUNTS DUE UNDER THIS SECTION 10.05 SHALL BE PAYABLE WITHIN TEN BUSINESS DAYS AFTER DEMAND THEREFOR. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE THE RESIGNATION OF THE ADMINISTRATIVE AGENT, THE REPLACEMENT OF ANY LENDER, THE TERMINATION OF THE COMMITMENTS AND THE REPAYMENT, SATISFACTION OR DISCHARGE OF ALL THE OTHER OBLIGATIONS.

        10.06  Payments Set Aside.  To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.

        10.07  Successors and Assigns.

        (a)     The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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        (b)     Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this Section) with respect to a Lender, the aggregate amount of the Commitments (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $2,500,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned; (iii) any assignment of a Commitment must be approved by the Administrative Agent and the L/C Issuer unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

        (c)     The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The Administrative Agent shall, upon receipt of instructions evidencing the transfer of the rights to the principal of, and interest on, any Loan made pursuant to this Agreement and/or any Note, record such transfer in the Register and such transfer shall be effective only upon such recordation. Coincident with the delivery of such instruments, the transferor shall surrender to the Administrative Agent the Note that is being transferred and Borrower shall issue a new note (the “New Note”) to the relevant Eligible Assignee in order to reflect the recorded transfer of

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ownership of the transferred Note. Any attempt to transfer a Note in contravention of this paragraph shall be null and void, ab initio. The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

        (d)     Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitments and/or the Loans (including such Lender’s participations in L/C Obligations) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that directly affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.12 as though it were a Lender.

        (e)     A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 10.15 as though it were a Lender.

        (f)     Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

        (g)     As used herein, the following terms have the following meanings:

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        “Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent and the L/C Issuer, and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

        “Fund”means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

        “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

        (h)     Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitments and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days’notice to the Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it shall retain all the rights and obligations of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).

        10.08  Confidentiality.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and will agree to keep such Information confidential); (b) to the extent requested by any regulatory authority; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty’s or prospective counterparty’s professional advisor) to any credit derivative transaction relating to obligations of the Loan Parties; (g) with the consent of the Borrower; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower or a party bound by confidentiality provisions; or (i) to the National Association of Insurance Commissioners or any other similar organization. In addition, the Administrative Agent and the Lenders may disclose

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the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Commitments, and the Credit Extensions. For the purposes of this Section, “Information” means all information received from any Loan Party relating to any Loan Party or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Notwithstanding anything to the contrary, “Information” shall not include, and the Administrative Agent and each Lender may disclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Administrative Agent or such Lender relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Loans, Letters of Credit and transactions contemplated hereby.

        10.09  Set-off.  In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrower or any other Loan Party, any such notice being waived by the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

        10.10  Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the Highest Lawful Rate. If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Highest Lawful Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Highest Lawful Rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee, or

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premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations.

        10.11  Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A counterpart hereof (or signature page thereto) signed and transmitted by any Person party hereto to the Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be treated as an original. The signature of such Person thereon, for purposes hereof, is to be considered as an original signature, and the counterpart (or signature page thereto) so transmitted is to be considered to have the same binding effect as an original signature on an original document.

        10.12  Integration.  This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

        10.13  Survival of Representations and Warranties.  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

        10.14  Severability.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

        10.15  Tax Forms.

        (a)        (i) Each Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the Administrative

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Agent, prior to receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, U.S. withholding tax, including any exemption pursuant to Section 881(c) of the Code; provided, however, that if any Foreign Lender provides an IRS Form W-8-BEN claiming a “portfolio interest” exemption from United States withholding taxes pursuant to Code Section 871(h) or Code Section 881(c), then such Foreign Lender shall also provide the Administrative Agent and the Borrower with a certificate representing that it (w) is not a “bank” within the meaning of Section 581 of the Code, (x) has not been, on or prior to the date hereof, subject to any regulatory or other legal requirements as a bank in any jurisdiction in which it transacts business and has not been, on or prior to the date hereof, treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or any qualification for exemption from any tax, securities laws or other legal requirements, (y) does not currently own, or own unrestricted options to purchase, ten percent (10%) or more of the Capital Stock of the Borrower, and (z) is not a controlled foreign corporation related to the Borrower (within the meaning of Section 894(d)(4) of the Code). If the form provided by a Lender at the time such Lender first becomes a party to this Agreement (or obtains an interest in any payment due under this Agreement and/or the Notes) indicates a United States interest withholding tax rate in excess of zero, withholding tax as such rate shall be considered excluded from “Taxes” as defined in Section 3.01 (a) of this Agreement. Thereafter and from time to time, each such Foreign Lender shall (A) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement, (B) promptly notify the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (C) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Foreign Lender.

        (ii)        Each Foreign Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Lender under any of the Loan Documents (for example, in the case of a typical participation by such Lender), shall deliver to the Administrative Agent on the date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums

79

paid or payable, and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable exercise of its discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth above, to establish the portion of any such sums paid or payable with respect to which such Lender acts for its own account that is not subject to U.S. withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any successor thereto), together with any information such Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Code, to establish that such Lender is not acting for its own account with respect to a portion of any such sums payable to such Lender.

        (iii)        The Borrower shall not be required to pay any additional amount to (or indemnify) any Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be deducted or withheld on the basis of the information, certificates or statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this Section 10.15(a) or (B) if such Lender shall have failed to satisfy the foregoing provisions of this Section 10.15(a); provided that if such Lender shall have satisfied the requirement of this Section 10.15(a) on the date such Lender became a Lender or ceased to act for its own account with respect to any payment under any of the Loan Documents, nothing in this Section 10.15(a) shall relieve the Borrower of its obligation to pay any amounts pursuant to Section 3.01 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender or other Person for the account of which such Lender receives any sums payable under any of the Loan Documents is not subject to withholding or is subject to withholding at a reduced rate. In addition, Borrower shall not be required under any circumstances to pay any additional amount to (or indemnify) any Participant under Section 3.01 to the extent that such additional amount (or indemnity payment) exceeds that additional amount (or indemnity payment) that would have been payable to the Lender that granted the participation to such Participant if such Lender had not granted such participation to such Participant.

        (iv)        The Administrative Agent may, without reduction, withhold any Taxes required to be deducted and withheld from any payment under any of the Loan Documents with respect to which the Borrower is not required to pay additional amounts under this Section 10.15(a) and such amounts shall be deemed to have been paid by the Borrower to the relevant Lender for purposes of this Agreement. In addition, for the purposes of this Agreement, Borrower also shall have been deemed to have paid to the Administrative Agent and/or the relevant Lender the amount of any taxes that Borrower has properly withheld and paid over to a Governmental Authority on behalf of, or in respect of a payment due to, the Administrative Agent or such Lender, as the case may be.

        (b)     Upon the request of the Administrative Agent, each Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9. If such Lender fails

80

to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable back-up withholding tax imposed by the Code, without reduction.

        (c)     If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the termination of the Commitments, repayment of all other Obligations hereunder and the resignation of the Administrative Agent.

        10.16  Replacement of Lenders.  Under any circumstances set forth herein providing that the Borrower shall have the right to replace a Lender as a party to this Agreement, the Borrower may, upon notice to such Lender and the Administrative Agent, replace such Lender by causing such Lender to assign its Commitments (with the assignment fee to be paid by the Borrower in such instance) pursuant to Section 10.07(b) to one or more other Lenders or Eligible Assignees procured by the Borrower; provided, however, that if the Borrower elects to exercise such right with respect to any Lender pursuant to Section 3.06(b), it shall be obligated to replace all Lenders that have made similar requests for compensation pursuant to Section 3.01 or 3.04. The Borrower shall (x) pay in full all principal, interest, fees and other amounts owing to such Lender through the date of replacement (including any amounts payable pursuant to Section 3.05), (y) provide appropriate assurances and indemnities (which may include letters of credit) to the L/C Issuer as the L/C Issuer may reasonably require with respect to any continuing obligation to fund participation interests in any L/C Obligations or any Swing Line Loans then outstanding, and (z) release such Lender from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver an Assignment and Assumption with respect to such Lender’s Commitment and outstanding Loans and participations in L/C Obligations.

        10.17  Construction.  The Borrower, the Administrative Agent and each Lender acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Documents with its legal counsel and that this Agreement and the other Loan Documents shall be construed as if jointly drafted by the parties hereto.

        10.18  Independence of Covenants.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default if such action is taken or such condition exists.

        10.19  Governing Law.

        (a)     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF OKLAHOMA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE;

81

PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN OKLAHOMA CITY, OKLAHOMA COUNTY, OKLAHOMA.

        (b)     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF OKLAHOMA SITTING IN OKLAHOMA COUNTY, OKLAHOMA OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OKLAHOMA LOCATED IN OKLAHOMA CITY, OKLAHOMA COUNTY, OKLAHOMA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

        10.20  Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

        10.21  Entire Agreement.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

82

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

SONIC CORP.
By:	/s/ Stephen C. Vaughan Name:    Stephen C. Vaughan Title:      Vice President

S-1

BANK OF AMERICA, N.A., as Administrative Agent
By:	/s/ Suzanne M. Paul Suzanne M. Paul Vice President

S-2

BANK OF AMERICA, N.A., as a Lender and L/C Issuer
By:	/s/ Karl G. Bovee Karl G. Bovee Senior Vice President

S-3

JPMORGAN CHASE BANK
By:	/s/ Cheryl W. Rubenstein Name:    Cheryl W. Rubenstein Title:      Managing Director

S-4

ARVEST BANK
By:	/s/ Cindy Batt Name:    Cindy Batt Title:      Senior Vice President

S-5

UMB BANK, N.A
By:	/s/ Richard J. Lehrter Name:    Richard J. Lehrter Title:      Community Bank President

S-6

BANCFIRST
By:	/s/ Brian K. Renz Name:    Brian K. Renz Title:      4-23-03

S-7

MIDFIRST BANK, a federally chartered savings association
By:	/s/ James P. Boggs James P. Boggs Assistant Vice President

S-8

FLEET NATIONAL BANK
By:	/s/ Alexandra A. Burke Name:    Alexandra A. Burke Title:      Vice President

S-9

SCHEDULE 1.01(a)

SONIC CORP.
WORKING CAPITAL INVESTMENT POLICY

I.     INVESTMENT OBJECTIVE

This Investment Policy shall limit investment activities in order to insure preservation of capital and liquidity. In that regard, when possible, Sonic will hold investments until they mature. However, to maintain maximum flexibility, investments are intended to be available for sale.

Included in this document, by reference, are covenants, agreements, etc. that govern the establishment, maintenance and investment of Sonic’s funds.

II.     POLICIES

A. Sonic shall restrict its working capital investments to effective maturities of less than 14 months from the settlement date. Maturities shall be consistent with the liquidity needs of the corporation as determined by its cash forecast.

Maturity, by definition, shall include demand options to allow Sonic redemption of capital at a quantifiable price consistent with the liquidity objectives of the portfolio.

B. Sonic shall restrict its working capital to the following categories of investments:

1. Direct obligations of, and obligations fully guaranteed by, the U.S.A. or any agency thereof;

2. Direct obligations of, and obligations fully guaranteed by, any state or territory of the U.S.A;

3. Obligations of any governmental body within the U.S. with a credit quality rating of at least SP-1 or single-A by Standard and Poor’s (or equivalent);

4. Obligations of any corporation who maintains a senior debt credit quality rating of at least single-A by Standard’s & Poor’s (or equivalent);

Schedule 1.01(a)-Page 1

5. Public Securities Association (PSA) repurchase agreements, master notes or deposits with financial institutions that meet the requirements stated elsewhere in this policy.

6. Shares in open-ended money market mutual funds as defined under Rule 2a-7 of the Investment Company Act of 1940. The corporate parent, or sponsor of which, must possess a credit quality rating of at least A-1 or single-A by Standard & Poor’s (or equivalent).

7. Investments issued (guaranteed) by a financial institution that is a member of the Federal Reserve System, provided that said institution is:

a. Ranked among the fifty largest U.S. institutions by assets (as listed by American Banker); or,

b. An institution with a net worth of at least $500 million; or,

c. Whose corporate credit quality is rated at least A-1 or single-A by Standard & Poor’s (or equivalent).

8. Investments issued (guaranteed) by any non-U.S. financial institution, provided that said institution is:

a. Ranked among the fifty largest in the world, by assets (as listed by American Banker); or,

b. An institution with a net worth of at least $750 million; or,

c. Whose corporate credit quality is rated at least A-1 or single-A by Standard & Poor’s (or equivalent).

C. Sonic shall not employ leverage, whether embedded in a security structure or as part of a trading strategy. Speculation or extreme securities, such as those designed to profit from market volatility, are not appropriate for this portfolio.

D. Sonic shall diversify investments consistent with the objectives of working capital. With the exception of non-auction AAA/Aaa rated pass-through securities whose principal and interest are wholly derived from uniquely pledged assets or short-term liquidity deposits (Sub-sections B(5) and B(6)), based on trade date portfolio amounts, investment exposure shall be the aggregate of:

Schedule 1.01(a)-Page 2

1. The greater of $5 million dollars or ten percent to any one issuer or guarantor, except for the U.S. Government or any agency thereof.

2. Twenty-five percent participation in any single securities auction, where insufficient bids may result in a loss of liquidity.

E. Sonic Corp. shall eliminate foreign currency exposure in regard to investments.

III.     CONTROLS

A. Authorized investors for Sonic include its Chief Financial Officer, Treasurer, and Assistant Treasurer.

B. Treasury shall prepare and regularly publish an Investment Report to be circulated to the Investment Committee for their review. The report shall include dollar amounts and percentages of investments held, their issuers, maturity dates, and investment ratings.

Corporate Accounting will be responsible for the maintenance of all necessary records of current holdings. They shall receive all confirmations of investments and reconcile the investments to the Investment Report.

C. There shall be at least one unscheduled audit by a non-Treasury auditor of cash investment activities each year.

D. Sonic’s Investment Committee shall include its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Treasurer. The Chief Financial Officer may appoint other members to the Investment Committee, as deemed necessary.

1. The Investment Committee shall determine the total return on investments (ROI) and shall compare this ROI against a fair and neutral benchmark on an after-tax basis. An evaluation, including non-investment issues relevant to performance, shall be tendered quarterly to the Board of Directors.

2. The Investment Committee shall review this corporate investment policy as mandated by changing conditions, but no less than annually.

3. It is the responsibility of the Treasurer to immediately report to the Investment Committee any material event that may affect an investment’s value. The Investment Committee shall determine a course of action regarding such investment. The Investment Committee shall also investigate the transaction to verify the investment’s original compliance with this policy. Assuming the transaction was within this policy’s mandate, no punitive action would be appropriate.

Schedule 1.01(a)-Page 3

E. The Chief Financial Officer shall have oversight responsibility for corporate investment and shall take steps to ensure conformance to policies.

1. The Treasurer shall regularly communicate to all interested parties a list of authorized investors (names, titles and signatures), as well as the receiving location for Sonic funds and investments.

2. Exceptions to the Investment policy may be made by the Chief Financial Officer, and must be made in writing. Changes in policy must be approved by the Board of Directors.

F. The Chief Financial Officer, Treasurer or the Assistant Treasurer shall have the authority to enter into agreements, sign documents and represent the Investment Committee in matters relating to Sonic investments.

1. The Treasurer or the Assistant Treasurer shall have the authority to contract with appropriate organizations which meet the standards of solvency stated in this investment policy, and shall appoint such organizations to act as a holders-in-custody of Sonic funds and investments.

IV. EXPLANATION OF RATINGS

Credit Risk	Standard & Poor’s
Prime	AAA
Excellent	AA
Upper Medium	A
Lower Medium	BBB
Speculative	BB
Very Speculative	B, CCC
Default	D

Municipal

Standard & Poor’s rating guide is SP-1 (highest) to Sp-4 (lowest).

Commercial Paper

Standard and Poor’s uses A-1 (highest), A-2, A-3, C and D.

Schedule 1.01(a)-Page 4

SCHEDULE 1.01(b)

EXISTING LETTER OF CREDIT

Issuer	LC#	LC Amount	Beneficiary	Expiry Date
Bank of America, N.A	7405079	$150,000	Chicago Title Ins. Company	August 31, 2003

Schedule 1.01(b)

SCHEDULE 2.01

COMMITMENTS
AND PRO RATA SHARES

Lender	Commitment	Revolving Pro Rata Share
Bank of America, N.A	$35,000,000	28.000000000%
BancFirst	$15,000,000	12.000000000%
UMB Bank, N.A	$15,000,000	12.000000000%
Arvest Bank	$20,000,000	16.000000000%
JPMorgan Chase Bank	$15,000,000	12.000000000%
MidFirst Bank, a federally chartered	$15,000,000	12.000000000%
savings association
Fleet National Bank	$10,000,000	8.000000000%
Total	$125,000,000.00	100.000000000%

Schedule 2.01

SCHEDULE 5.06

EXISTING LITIGATION

None

Schedule 5.06

SCHEDULE 5.09

ENVIRONMENTAL MATTERS

None

Schedule 5.09

SCHEDULE 5.13

SUBSIDIARIES; AFFILIATES

Sonic Industries Inc., incorporated in Oklahoma on June 6, 1973, a wholly owned subsidiary of Sonic Corp.

Sonic Restaurants, Inc., incorporated in Oklahoma on July 12, 1978, a wholly owned subsidiary of Sonic Corp.

America’s Drive-In Corp., incorporated in Nevada on June 24, 1993, a wholly owned subsidiary of Sonic Corp.

America’s Drive-In Trust, a Pennsylvania business trust organized on December 31, 1993, a wholly owned by subsidiary of America’s Drive-In Corp.

Schedule 5.13 –Page 1

Schedule 5.13 continued

Partnerships and LLC’s

CIF #	Legal Name	SRI %	SII %
1010	SDI OF BLYTHEVILLE, ARKANSAS (N. 6TH) PARTNERSHIP	55	0
1013	SONIC DRIVE IN OF BAYTOWN, TEXAS	51	0
1017	SONIC DRIVE IN OF BEAUMONT, TEXAS (COLLEGE-MAJOR) PARTNERSHIP	70	0
1021	SONIC DRIVE IN OF BETHANY, OKLAHOMA (39TH)	69	0
1026	SONIC DRIVE IN OF BLYTHEVILLE #2 PARTNERSHIP	61	0
1032	SONIC DRIVE IN OF CHILLICOTHE, MISSOURI	80	0
1034	SONIC DRIVE IN OF CHANDLER, OKLAHOMA PARTNERSHIP	68	0
1037	SONIC DRIVE IN #833, HOUSTON, CHANNELVIEW C084	54	0
1038	SONIC DRIVE IN OF CABOT PARTNERSHIP	78	0
1045	SONIC DRIVE IN OF CALLAWAY, FLORIDA	68	0
1053	SONIC DRIVE IN OF DEER PARK, TEXAS PARTNERSHIP	64	0
1054	SONIC DRIVE IN #960, DAYTON, TEXAS	55	0
1055	SONIC DRIVE IN OF DALLAS, TEXAS (FOREST LANE & GREENVILLE) PARTNERSHIP	65	0
1056	SONIC DRIVE IN OF DALLAS, TEXAS (FT WORTH)	51	0
1057	SONIC DRIVE IN OF DALLAS, TEXAS (W. LEDBETTER DRIVE)	51	0
1084	SONIC DRIVE IN OF GROVES, TEXAS PARTNERSHIP	69	0
1087	SONIC DRIVE IN OF GOSNELL PARTNERSHIP	61	0
1090	SONIC DRIVE IN OF GADSDEN, ALABAMA PARTNERSHIP	63	0
1093	SONIC DRIVE IN OF GALAX, VIRGINIA PARTNERSHIP	56	0
1095	SONIC DRIVE IN #617, HOUSTON, ALDINE H030	65	0
1096	SONIC DRIVE IN OF HOMER, LOUISIANA	80	0
1099	SONIC DRIVE IN #744, HOUSTON, AIRLINE H033	64	0
1102	SONIC DRIVE IN OF HOUSTON, TEXAS (TELEPHONE ROAD) PARTNERSHIP	85	0
1103	SONIC DRIVE IN #980, HUMBLE, TEXAS H061	65	0
1104	SONIC DRIVE IN #110, HOUSTON, ROSSLYN RD, H071	66	0
1105	SONIC DRIVE IN #1119, HOUSTON DYERSDALE H072	66	0
1106	SONIC DRIVE IN OF HOUSTON, TEXAS (FUQUA DRIVE)	61	0
1107	SONIC DRIVE IN #1173 HIGHLANDS, TEXAS H081	60	0
1109	SDI OF HOUSTON, TEXAS (S POST OAK) PARTNERSHIP	65	0
1112	SONIC DRIVE IN OF HUNTSVILLE, ALABAMA (BOB WALLACE) PARTNERSHIP	66	0
1114	SONIC DRIVE IN OF HUNTSVILLE, ALABAMA (MEMORIAL PARKWAY) PARTNERSHIP	64	0

Schedule 5.13 – Page 2

1117	SONIC DRIVE IN OF HOUSTON, TEXAS (18TH & MANGUM) PARTNERSHIP	63	0
1119	SONIC DRIVE IN OF HOUSTON, TEXAS (COPPERFIELD) PARTNERSHIP	68	0
1121	SONIC DRIVE IN OF HOUSTON, TEXAS (GESSNER ROAD) PARTNERSHIP	55	0
1122	SONIC DRIVE IN OF CLEAR LAKE CITY, TEXAS PARTNERSHIP	68	0
1123	SONIC DRIVE IN OF HOUSTON, TEXAS (SCARSDALE) PARTNERSHIP	62	0
1124	SONIC DRIVE IN OF HOUSTON (JONES ROAD) TEXAS PARTNERSHIP	80	0
1125	SONIC DRIVE IN OF HOUSTON, TX (VETERAN'S MEMORIAL HIGHWAY) PARTNERSHIP	60	0
1126	SONIC DRIVE IN OF HOUSTON, TEXAS (TIDWELL) PARTNERSHIP	65	0
1127	SONIC DRIVE IN OF HOUSTON, TEXAS (BLALOCK) PARTNERSHIP	61	0
1128	SONIC DRIVE IN OF INDEPENDENCE MISSOURI #3	63	0
1129	SONIC DRIVE IN OF INDEPENDENCE MISSOURI (23RD & WESTPORT)	72	0
1132	SONIC DRIVE IN OF JONESBORO, LOUISIANA PARTNERSHIP	65	0
1135	SONIC DRIVE IN #1174, JACINTO CITY, TEXAS J025	69	0
1140	SONIC DRIVE IN #1156, KATY, TEXAS K020	67	0
1141	SONIC DRIVE IN OF KANSAS CITY, KANSAS (LEAVENWORTH)	60	0
1142	SONIC DRIVE IN OF KANSAS CITY, KANSAS (STRONG)	80	0
1143	SONIC DRIVE IN OF KANSAS CITY, MISSOURI (INDEPENDENCE AVE) PARTNERSHIP	78	0
1144	SONIC DRIVE IN OF KANSAS CITY, KANSAS (78TH STREET) PARTNERSHIP	75	0
1146	SONIC DRIVE IN OF LEE'S SUMMIT MISSOURI GENERAL PARTNERSHIP	69	0
1147	SONIC DRIVE IN OF LEAVENWORTH, KANSAS	70	0
1150	SONIC DRIVE IN OF LEAGUE CITY, TEXAS PARTNERSHIP	66	0
1155	SONIC DRIVE IN OF LYNN HAVEN, FLORIDA	67	0
1160	SONIC DRIVE IN OF LONOKE PARTNERSHIP	66	0
1161	SONIC DRIVE OF CAMP ROBINSON PARTNERSHIP	75	0
1162	SONIC DRIVE IN OF LITTLE ROCK (ASHER) PARTNERSHIP	85	0
1164	SONIC DRIVE IN OF LINDALE, TEXAS PARTNERSHIP	51	0
1168	SONIC DRIVE IN OF LITTLE ROCK, ARKANSAS (WESTHAVEN DRIVE) PARTNERSHIP	77	0
1169	SONIC DRIVE IN OF MINDEN, LOUISIANA	80	0

Schedule 5.13 – Page 3

1174	SONIC DRIVE IN OF MONROE, LOUISIANA (#1) PARTNERSHIP	60	0
1175	SONIC DRIVE IN OF MARYVILLE, MISSOURI	70	0
1177	SONIC DRIVE IN OF MINEOLA, TEXAS PARTNERSHIP	56	0
1180	SONIC DRIVE IN OF MONROE, LOUISIANA (#2) PARTNERSHIP	65	0
1183	SONIC DRIVE IN OF MANSFIELD, LOUISIANA PARTNERSHIP	75	0
1185	SONIC DRIVE IN OF MOUNTAIN GROVE, MISSOURI	80	0
1188	SONIC DRIVE IN OF MONROE, LOUISIANA (MARTIN LUTHER) PARTNERSHIP	65	0
1190	SONIC DRIVE IN OF MONROE, LOUISIANA (STERLINGTON ROAD) PARTNERSHIP	60	0
1192	SONIC DRIVE IN OF MAUMELLE PARTNERSHIP	70	0
1195	SONIC DRIVE IN OF MARIANNA, FLORIDA PARTNERSHIP	66	0
1196	SONIC DRIVE IN OF MISSOURI CITY, TEXAS PARTNERSHIP	63	0
1199	SONIC DRIVE IN, NORTHWEST OKC	51	0
1201	SONIC DRIVE IN OF NEWPORT, ARKANSAS PARTNERSHIP	72	0
1204	SONIC DRIVE IN OF NEWCASTLE, OKLAHOMA PARTNERSHIP	85	0
1205	SONIC DRIVE IN OF NORMAN, OKLAHOMA (EAST LINDSEY) PARTNERSHIP	80	0
1207	SONIC DRIVE IN OF NORMAN, OKLAHOMA (24TH AVENUE) PARTNERSHIP	88	0
1210	SONIC DRIVE IN OF NORMAN, OKLAHOMA (PORTER) PARTNERSHIP	80	0
1211	SONIC DRIVE IN OF NORMAN, OKLAHOMA (WEST LINDSEY) PARTNERS	89	0
1216	SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (19TH & MACARTHUR)	64	0
1217	SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (50th & MACARTHUR)	69	0
1219	SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (NW 63RD STREET) PARTNERSHIP	61	0
1220	SONIC DRIVE IN OF OKLAHOMA CITY (N.W. 23RD)	72	0
1221	SONIC DRIVE IN OF OLATHE, KANSAS	88	0
1222	SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (SE 29TH)	63	0
1223	SONIC DRIVE IN OF OZARK, MISSOURI	66	0
1227	SONIC DRIVE IN OF OLATHE, KANSAS #2 (SANTA FE)	90	0
1228	SONIC DRIVE IN OF OKLAHOMA CITY (119TH & S WESTERN)	65	0
1230	SDI OF PARAGOULD, ARKANSAS (KINGS HWY) PARTNERSHIP	63	0

Schedule 5.13 – Page 4

1234	SONIC DRIVE IN OF PORT ARTHUR, TEXAS (MEMORIAL) PARTNERSHIP	65	0
1237	SONIC DRIVE IN OF PANAMA CITY, FLORIDA	71	0
1244	SONIC DRIVE IN OF PENSACOLA, FLORIDA (9TH AVENUE) PARTNERSHIP	78	0
1246	SDI OF PRATTVILLE, ALABAMA (E. MAIN) PARTNERSHIP	90	0
1248	SONIC DRIVE IN OF RICHMOND, TEXAS PARTNERSHIP	58	0
1252	SONIC DRIVE IN OF RAYTOWN, MISSOURI GENERAL PARTNERSHIP	69	0
1253	SONIC DRIVE IN OF ROLLA, MISSOURI	75	0
1258	SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (S.W. 29TH) PARTNERSHIP	75	0
1262	SDI OF SPRINGFIELD, MISSOURI #2 PARTNERSHIP	85	0
1264	SONIC DRIVE IN OF SALEM, MISSOURI	78	0
1265	SONIC DRIVE IN OF SUGAR CREEK, MISSOURI	73	0
1266	SONIC DRIVE IN OF ST. JOSEPH, MISSOURI #1 PARTNERSHIP	65	0
1269	SONIC DRIVE IN OF SHREVEPORT, LOUISIANA (BERT KOUNS)	80	0
1272	SONIC DRIVE IN OF SHREVEPORT, LOUISIANA (WEST 70TH)	79	0
1276	SONIC DRIVE IN OF SHREVEPORT, LOUISIANA (EAST 70TH)	80	0
1279	SDI OF SPRINGFIELD, MISSOURI (GLENSTONE) PARTNERSHIP	70	0
1283	SONIC DRIVE IN OF ST. JOSEPH, MISSOURI #2 PARTNERSHIP	68	0
1286	SONIC DRIVE IN OF SHERWOOD, ARKANSAS PARTNERSHIP	71	0
1288	SDI OF SPRINGFIELD, MISSOURI (S. CAMPBELL) PARTNERSHIP	85	0
1289	SONIC DRIVE IN OF SULLIVAN, MISSOURI PARTNERSHIP	65	0
1293	SONIC DRIVE IN #959, TOMBALL, TEXAS T038	62	0
1294	SONIC DRIVE IN OF TUTTLE, OKLAHOMA	75	0
1298	SDI OF TAZEWELL, VIRGINIA PARTNERSHIP	56	0
1303	SONIC DRIVE IN OF WATONGA, OKLAHOMA PARTNERSHIP	65	0
1306	SONIC DRIVE IN OF WEST MONROE, LOUISIANA PARTNERSHIP	70	0
1309	SONIC DRIVE IN OF WALNUT RIDGE PARTNERSHIP	63	0
1311	SONIC DRIVE IN OF WINNFIELD, LOUISIANA PARTNERSHIP	69	0
1313	SONIC DRIVE IN OF WEST MONROE, LOUISIANA (THOMAS ROAD WEST) PARTNERSHIP	68	0

Schedule 5.13 – Page 5

1315	SONIC DRIVE IN OF WASHINGTON, MISSOURI GENERAL PARTNERSHIP	67	0
1094	SDI OF GADSDEN, ALABAMA (MEIGHAN) PARTNERSHIP	67	0
3160	SONIC DRIVE IN OF MONTGOMERY, ALABAMA (BELL AND VAUGHN) PARTNERSHIP	69	0
3161	SONIC DRIVE IN OF PENSACOLA, FLORIDA (NAVY BLVD.) PARTNERSHIP	73	0
3163	SONIC DRIVE IN OF SPRINGFIELD, MISSOURI (WEST SUNSHINE) PARTNERSHIP	75	0
3165	SONIC DRIVE IN OF HOUSTON, TEXAS (DAIRY ASHFORD) PARTNERSHIP	56	0
3166	SDI OF MONTGOMERY, ALABAMA (MCGEHEE) PARTNERSHIP	68	0
3167	SONIC DRIVE IN OF MONTGOMERY, ALABAMA (ATLANTA HIGHWAY) PARTNERSHIP	75	0
3168	SDI OF PANAMA CITY BEACH, FLORIDA (THOMAS DRIVE) PARTNERSHIP	68	0
3177	SDI OF MARY ESTHER, FLORIDA PARTNERSHIP	73	0
3179	SDI OF WEBSTER, TEXAS PARTNERSHIP	70	0
3204	SDI OF DANVILLE, KENTUCKY (BAUGHMAN) PARTNERSHIP	65	0
3205	SDI OF DALLAS, TEXAS (WHEATLAND ROAD) PARTNERSHIP	51	0
3207	SDI OF DALLAS, TEXAS (SPRING VALLEY) PARTNERSHIP	65	0
3209	SDI OF LEXINGTON, KENTUCKY PARTNERSHIP	99	1
3210	SDI OF MILTON, FLORIDA PARTNERSHIP	73	0
3213	SDI OF MUSCLE SHOALS, ALABAMA PARTNERSHIP	67	0
3214	SDI OF SHALIMAR, FLORIDA (EGLIN PARKWAY) PARTNERSHIP	71	0
3215	SDI OF UNION, MISSOURI PARTNERSHIP	67	0
3128	SDI OF WINNSBORO, TEXAS PARTNERSHIP	51	0
3257	SDI OF HOUSTON, TEXAS (BISSONETT) PARTNERSHIP	63	0
3258	SDI OF HOUSTON, TEXAS (WESTHEIMER) PARTNERSHIP	58	0
3260	SDI OF KATY, TEXAS (MASON RD.) PARTNERSHIP	70	0
3324	SDI OF GEORGETOWN, KENTUCKY (LEXINGTON) PARTNERSHIP	86	0
3348	SDI OF ATHENS, ALABAMA PARTNERSHIP	67	0
3359	SDI OF HOUSTON, TEXAS (FM 1960) PARTNERSHIP	58	0
3347	SDI OF ALEXANDER CITY, ALABAMA PARTNERSHIP	87	0
3375	SDI OF SHREVEPORT, LOUISIANA (STEEPLECHASE) PARTNERSHIP	80	0
3389	SDI OF COLUMBUS, GEORGIA PARTNERSHIP	84	0
3379	SDI OF LAPORTE, TEXAS PARTNERSHIP	65	0
3402	SDI OF HUNTSVILLE, ALABAMA (PRATT) PARTNERSHIP	76	0
3349	SDI OF NICHOLASVILLE, KENTUCKY PARTNERSHIP	52	0

Schedule 5.13 – Page 6

1841	SDI OF CLINTON, TENNESSEE L.C.	71	0
2219	SDI OF KNOXVILLE, TENNESSEE (MAYNARDVILLE), L.L.C. (FORMERLY HALLS, TN)	69	0
2360	SDI OF LAFOLLETTE, TENNESSEE L.L.C.	70	0
2492	SDI OF MARYVILLE, TENNESSEE (E. BROADWAY) L.C.	78	0
2573	SDI OF MARYVILLE, TENNESSEE (FOOTHILLS) L.C.	79	0
2675	SDI OF OAK RIDGE, TENNESSEE L.C.	80	0
3183	SDI OF KNOXVILLE, TENNESSEE (BROADWAY) L.C.	62	0
3295	SDI OF KNOXVILLE, TENNESSEE (CEDAR) L.C.	73	0
1872	SDI OF CHRISTIANSBURG, VIRGINIA L.C.	84	0
2788	SDI OF PULASKI, VIRGINIA L.C.	79	0
3236	SDI OF WYTHEVILLE, VIRGINIA L.C.	76	0
3358	SDI OF RADFORD, VIRGINIA L.C.	66	0
1697	SDI OF BRISTOL, TENNESSEE L.C.	75	0
1996	SDI OF ELIZABETHTON, TENNESSEE L.C.	65	0
2282	SDI OF JOHNSON CITY, TENNESSEE (N. ROAN) L.C.	68	0
2290	SDI OF JOHNSON CITY, TENNESSEE (MARKET) L.C.	90	0
2320	SKI OF KINGSPORT, TENNESSEE L.C.	77	0
3235	SDI OF ERWIN, TENNESSEE L.C.	77	0
3377	SDI OF OKLAHOMA CITY, OKLAHOMA (N. PENN) PARTNERSHIP	63	0
3378	SDI OF OKLAHOMA CITY, OKLAHOMA (N.E. 23RD) PARTNERSHIP	57	0
3373	SDI OF OKLAHOMA CITY, OKLAHOMA (S.W. GRAND) PARTNERSHIP	71	0
3445	SDI OF DALLAS, TEXAS (GREENVILLE) PARTNERSHIP	51	0
3460	SDI OF HOUSTON, TEXAS (N. DURHAM) PARTNERSHIP	62	0
3459	SDI OF HOUSTON, TEXAS (CROSSTIMBERS) PARTNERSHIP	99	0
2315	SDI OF KNOXVILLE, TENNESSEE (CHAPMAN HWY.), L.C.	88	0
2319	SDI OF KNOXVILLE, TENNESSEE (KINGSTON), L.C.	90	0
1091	SDI OF GREENEVILLE, TENNESSEE, L.C.	90	0
3327	SDI OF MORRISTOWN, TENNESSEE (JOHNSON HWY.), L.C.	57	0
2490	SDI OF MORRISTOWN, TENNESSEE (CUMBERLAND), L.C.	64	0
2945	SDI OF SEVIERVILLE, TENNESSEE, L.C.	66	0
3333	SDI OF WHITE PINE, TENNESSEE, L.C.	67	0
3446	SDI OF AUBURN, ALABAMA (DEAN RD.) PARTNERSHIP	87	0
3420	SDI OF GULF BREEZE, FLORIDA PARTNERSHIP	76	0
2413	SDI OF LOUDON, TENNESSEE, L.C.	85	0
3409	SDI OF LITTLE ROCK, ARKANSAS (RODNEY PARHAM) PARTNERSHIP	68	0
3440	SDI OF MADISON, ALABAMA (SULLIVAN) PARTNERSHIP	60	0
3441	SDI OF DALLAS, TEXAS (N.W. HIGHWAY) PARTNERSHIP	59	0
3444	SDI OF DALLAS, TEXAS (INWOOD ROAD) PARTNERSHIP	65	0
3480	SDI OF ROGERSVILLE, TENNESSEE, L.C.	68	0

Schedule 5.13 – Page 7

3451	SDI OF LITTLE ROCK, ARKANSAS (CANTRELL RD.) PARTNERSHIP	62	0
3493	SDI OF WINCHESTER, KENTUCKY PARTNERSHIP	56	0
3506	SDI OF BEREA, KENTUCKY PARTNERSHIP	57	0
3507	SDI OF COLUMBUS, GEORGIA (EXPRESSWAY) PARTNERSHIP	75	0
3489	SDI OF KINGSTON, TENNESSEE, L.C.	70	0
3487	SDI OF KNOXVILLE, TENNESSEE (5722 KINGSTON PIKE), L.C. (FORMERLY GORE RD.)	71	0
3559	SDI OF HOUSTON, TEXAS (SAM HOUSTON) PARTNERSHIP	55	0
3560	SDI OF HOUSTON, TEXAS (LITTLE YORK #2) PARTNERSHIP	60	0
3561	SDI OF HOUSTON, TEXAS ( N. FREEWAY) PARTNERSHIP	64	0
3562	SDI OF DALLAS, TEXAS ( N. BUCKNER) PARTNERSHIP	80	0
3557	SDI OF WILLS POINT, TEXAS PARTNERSHIP	64	0
3545	SDI OF GRAHAM, NORTH CAROLINA PARTNERSHIP	66	0
3516	SDI OF RICHARDSON, TEXAS PARTNERSHIP	74	0
3531	SDI OF FRANKFORT, KENTUCKY PARTNERSHIP	72	0
3470	SDI OF CHATTANOOGA, TENNESSEE, L.C.	80	0
3530	SDI OF LANETT, ALABAMA PARTNERSHIP	75	0
3469	SDI OF OLATHE, KANSAS #3 (BLACKBOB) PARTNERSHIP	82	0
3572	SDI OF CYPRESS, TEXAS (LOUETTA) PARTNERSHIP	80	0
3426	SDI OF PHENIX CITY, ALABAMA PARTNERSHIP	74	0
3573	SDI OF ST JOSEPH, MISSOURI #3 PARTNERSHIP	61	0
3579	SDI OF HOUSTON, TEXAS (GULF FREEWAY) PARTNERSHIP	55	0
3574	SDI OF FLORENCE, ALABAMA PARTNERSHIP	60	0
3575	SDI OF OPELIKA, ALABAMA PARTNERSHIP	87	0
3595	SDI OF DALTON, GEORGIA, L.C.	68	0
3546	SDI OF MOREHEAD, KENTUCKY PARTNERSHIP	80	0
3591	SDI OF KNOXVILLE, TENNESSEE (5101 N BROADWAY), L.C.	72	0
3614	SDI OF RICHMOND, KENTUCKY PARTNERSHIP	58	0
3592	SDI OF CHATTANOOGA, TENNESSEE (HIXON PIKE), L.C.	70	0
3593	SDI OF COLUMBUS, GEORGIA (FLOYD) PARTNERSHIP	75	0
3609	SDI OF WEST MONROE, LOUISIANA (CYPRESS) PARTNERSHIP	80	0
3616	SDI OF RICHMOND, TEXAS (FM359) PARTNERSHIP	61	0
3498	SDI OF LEE'S SUMMIT, MISSOURI (LANGSFORD) PARTNERSHIP	68	0
3652	SDI OF COLLINSVILLE, VIRGINIA (VIRGINIA) PARTNERSHIP	56	0
3617	SDI OF DALLAS, TEXAS (PLANO) PARTNERSHIP	99	1
3653	SDI OF ROWLETT, TEXAS (DALROCK ROAD) PARTNERSHIP	66	0

Schedule 5.13 – Page 8

3673	SDI OF DALLAS, TEXAS (DAVIS) PARTNERSHIP	65	0
3612	SDI OF PARIS, KENTUCKY (REINHOLD) PARTNERSHIP	99	1
3650	SDI OF MARTINSVILLE, VIRGINIA (STARLING) PARTNERSHIP	56	0
3627	SDI OF DALLAS, TEXAS (3555 FOREST LANE) PARTNERSHIP	60	0
3716	SDI OF LAWRENCEBURG, KENTUCKY (CROSSROAD) PARTNERSHIP	77	0
3675	SDI OF HOUSTON, TEXAS (13310 WEST LITTLE YORK) PARTNERSHIP	53	0
3672	SDI OF DALLAS, TEXAS (12130 INWOOD ROAD) PARTNERSHIP	87	0
3722	SDI OF DECATUR, ALABAMA (6TH AVE) PARTNERSHIP	64	0
3700	SDI OF BRISTON, VIRGINIA (OLD AIRPORT), L.L.C.	74	0
3664	SDI OF MARION, VIRGINIA (N. MAIN), L.L.C.	64	0
3772	SDI OF SPRINGFIELD, MISSOURI (E REPUBLIC) PARTNERSHIP	67	0
3724	SDI OF WICHITA FALLS, TEXAS (TAFT) PARTNERSHIP	53	0
3668	SDI OF HOUSTON, TEXAS (KUYKENDAHL) PARTNERSHIP	56	0
3733	SDI OF ALBERTVILLE, ALABAMA (U.S. HIGHWAY) PARTNERSHIP	64	0
3726	SDI OF PEARLAND, TEXAS (W BROADWAY) PARTNERSHIP	61	0
3688	SDI OF GARLAND, TEXAS (JUPITER) PARTNERSHIP	66	0
3738	SDI OF HOUSTON, TEXAS (UVALDE) PARTNERSHIP	65	0
3786	SDI OF HOUSTON, TEXAS (HILLCROFT) PARTNERSHIP	66	0
3732	SDI OF COOL VALLEY, MISSOURI (S FLORISSANT) PARTNERSHIP	68	0
3795	SDI OF SPRINGFIELD, MISSOURI (EAST SUNSHINE) PARTNERSHIP	71	0
3781	SDI OF SACHSE, TEXAS (S. HIGHWAY 78) PARTNERSHIP	64	0
3780	SDI OF CHATSWORTH, GEORGIA (THIRD), L.L.C.	66	0
3834	SDI OF MCKINNEY, TEXAS (ELDORADO) PARTNERSHIP	74	0
3844	SDI OF CASSVILLE, MISSOURI (MAIN) PARTNERSHIP	67	0
3139	SDI OF WICHITA FALLS, TEXAS (JACKSBORO) PARTNERSHIP	52	0
3671	SDI OF PORT ARTHUR, TEXAS (TWIN CITY) PARTNERSHIP	85	0
3824	SDI OF NEWPORT, TENNESSEE (BROADWAY), L.L.C.	82	0
3818	SDI OF LITTLE ROCK, ARKANSAS (MABELVALE) PARTNERSHIP-FORMERLY BASELINE DR	68	0
3667	SDI OF HOUSTON, TEXAS (BARKER-CYPRESS) PARTNERSHIP	58	0
3794	SDI OF LEAVENWORTH, KANSAS (N. 4TH ) PARTNERSHIP	63	0
3512	SDI OF DALLAS, TEXAS (GARLAND ROAD), L.L.C.	78	0
3880	SDI OF WICHITA FALLS, TEXAS (SHEPPARD) PARTNERSHIP	64	0

Schedule 5.13 – Page 9

3979	SDI OF SHREVEPORT, LOUISIANA (KINGS HIGHWAY) PARTNERSHIP	77	0
3771	SDI OF MARYVILLE, TENNESSEE (LAMAR ALEXANDER), L.L.C.	70	0
3917	SDI OF OKLAHOMA CITY, OKLAHOMA (N.W EXPRESSWAY) PARTNERSHIP	61	0
1934	SDI OF DARDANELLE, ARKANSAS (UNION) PARTNERSHIP	69	0
2094	SDI OF GRANDVIEW, MISSOURI (BLUE RIDGE) PARTNERSHIP	63	0
3871	SDI OF PERKINS, OKLAHOMA (MAIN) PARTNERSHIP	65	0
3900	SDI OF KNOXVILLE, TENNESSEE (OAKRIDGE), L.L.C.	80	0
3915	SDI OF FRIENDSWOOD, TEXAS (FM 528) PARTNERSHIP	62	0
4012	SDI OF LITTLE ROCK, ARKANSAS (STAGECOACH) PARTNERSHIP	77	0
3940	SDI OF MISSOURI CITY, TEXAS (TEXAS PKWY) PARTNERSHIP	67	0
3427	SDI OF KANSAS CITY, MISSOURI (BLUE RIDGE BLVD.) PARTNERSHIP	67	0
3941	SDI OF HOUSTON, TEXAS (9221 WEST RD) PARTNERSHIP	64	0
3912	SDI OF LEXINGTON, KENTUCKY (WINCHESTER) PARTNERSHIP	52	0
3916	SDI OF LITTLE ROCK, ARKANSAS (BROADWAY) PARTNERSHIP	72	0
4100	SDI OF MONTGOMERY, ALABAMA (2025 CARTER HILL RD) PARTNERSHIP	76	0
3946	SDI OF HUNTSVILLE, ALABAMA (11606 MEMORIAL), L.L.C.	85	0
4017	SDI OF EDGEWATER, COLORADO (SHERIDAN) L.L.C.	99	1
4011	SDI OF ENGLAND, ARKANSAS (FORDYCE), L.L.C.	68	0
4028	SDI OF LEAGUE CITY, TEXAS (2310 FM 518 EAST) PARTNERSHIP	67	0
4098	SDI OF WARR ACRES, OKLAHOMA (5750 NW EXPRESSWAY), L.L.C.	60	0
4108	SDI OF MADISON, ALABAMA (7871 HIGHWAY 72 WEST), L.L.C.	82	0
4059	SDI OF FRISCO, TEXAS (7630 PRESTON RD.) PARTNERSHIP	69	0
4104	SDI OF CHATTANOOGA, TENNESSEE (7420 E. BRAINERD), L.L.C.	71	0
2496	SDI OF MCLOUD, OKLAHOMA (BROADWAY), L.L.C.	62	0
3472	SDI OF KANSAS CITY, MISSOURI (BANNISTER), L.L.C.	64	0
4152	SDI OF HOUSTON, TX (101 DAIRY ASHFORD STREET) PARTNERSHIP	65	0
4163	SDI OF SPRINGFIELD, MO (2605 W REPUBLIC), L.L.C.	65	0
4125	SDI OF GRAND PRAIRIE, TEXAS (2650 NORTH HIGHWAY 360) PARTNERSHIP	70	0

Schedule 5.13 – Page 10

4099	SDI OF PENSACOLA, FLORIDA (1719 E NINE MILE RD) L.L.C.	71	0
4147	SDI OF KNOXVILLE, TENNESSEE (4470 WESTERN), L.L.C	75	0
4162	SDI OF SHERWOOD, ARKANSAS (KIEHEL), L.L.C.	74	0
4101	SDI OF MONTGOMERY, ALABAMA (3430 ATLANTA HIGHWAY) PARTNERSHIP	59	0
4255	SDI OF DALLAS, TEXAS (3650 FRANKFORD ROAD) PARTNERSHIP	61	0
4156	SDI OF KINGSPORT, TENNESSEE (3845 FORT HENRY), L.L.C.	75	0
4128	SDI OF OLATHE, KANSAS (E 119TH STREET), L.L.C.	82	0
4160	SDI OF NORTH RICHLAND HILLS, TEXAS (GRAPEVINE HWY) PARTNERSHIP	65	0
4206	SDI OF BEAUMONT, TEXAS (1040 S. 11TH ST) PARTNERSHIP	65	0
4201	SDI OF SHERWOOD, ARKANSAS (8601 HIGHWAY 107), L.L.C.	77	0
4259	SDI OF DALLAS, TEXAS (9613 CLARK ROAD) PARTNERSHIP	55	0
4301	SDI OF LEXINGTON, KY (E. NEW CIRCLE ROAD), L.L.C.	80	0
4265	SDI OF ARLINGTON, TEXAS (1100 NE GREEN OAKS BLVD) PARTNERSHIP	65	0
2389	SDI OF LAFAYETTE, COLORADO (WANEKA), L.L.C.	80	0
4373	SDI OF OKLAHOMA CITY, OKLAHOMA (5901 W. RENO), L.L.C.	72	0
4368	SDI OF SPRING, TEXAS (19764 INTERSTATE 45 N) PARTNERSHIP	51	0
4396	SDI OF HOUSTON, TEXAS (19625 TOMBALL PKWY), PARTNERSHIP	66	0
1769	SDI OF CLARKSVILLE, TEXAS (W MAIN), PARTNERSHIP	90	0
1935	SDI OF DALLAS, TEXAS (FERGUSON ROAD), PARTNERSHIP	84	0
2077	SDI OF GARLAND, TEXAS (FOREST LANE), PARTNERSHIP	64	0
2079	SDI OF GARLAND, TEXAS (W. MILLER RD), PARTNERSHIP	61	0
2084	SDI OF GARLAND, TEXAS (BROADWAY BLVD), PARTNERSHIP	74	0
2087	SDI OF GARLAND, TEXAS (BELTLINE ROAD), PARTNERSHIP	63	0
2334	SDI OF LANCASTER, TEXAS (W PLEASANT RUN), PARTNERSHIP	61	0
2849	SDI OF SHERMAN, TEXAS (TEXOMA PARKWAY), PARTNERSHIP	55	0
3129	SDI OF WHITEHOUSE, TEXAS PARTNERSHIP	51	0
4286	SDI OF DEKALB, TEXAS (NE FRONT STREET), PARTNERSHIP	90	0

Schedule 5.13 – Page 11

4395	SDI OF CARLISLE, ARKANSAS (N. BANKHEAD), L.L.C.	67	0
4401	SDI OF STAFFORD, TEXAS (12260 SW FRWY), PARTNERSHIP	62	0
4155	SDI OF DENVER, COLORADO (2720 W ALAMEDA), L.L.C.	83	0
2678	SDI OF ONEIDA, TENNESSEE (N ALBERTA), L.L.C	80	0
3134	SDI OF WARTBURG, TENNESSEE (MORGAN COUNTY HWY), L.L.C.	80	0
4325	SDI OF HUNTSVILLE, ALABAMA (JORDAN LANE, NW), L.L.C.	71	0
4323	SDI OF BRISTOL, TENNESSEE (2709 W STATE STREET), L.L.C.	89	0
4369	SDI OF HOUSTON, TEXAS (8404 WESTHEIMER RD), PARTNERSHIP	73	0
4378	SDI OF MONTGOMERY, ALABAMA (1901 COLISEUM BLVD), L.L.C.	74	0
4440	SDI OF NICHOLASVILLE, KENTUCKY (120 BELLERIVE BOULEVARD), L.L.C.	67	0
4402	SDI OF HOUSTON, TEXAS (5195 W 34TH ST), PARTNERSHIP	61	0
4417	SDI OF BELLEVUE, NEBRASKA (CORNHUSKER), L.L.C.	80	0
1014	SONIC DRIVE- IN OF BIXBY, OK, L.L.C	64	0
1025	SONIC DRIVE- IN OF BROKEN ARROW, GARNETT, L.L.C	62	0
1033	SONIC DRIVE- IN, CATOOSA, OKLAHOMA, L.L.C.	62	0
1256	SONIC DRIVE- IN, SAND SPRINGS, OKLAHOMA, L.L.C.	73	0
1291	SONIC DRIVE- IN, TULSA, S. UTICA, L.L.C.	71	0
1292	SONIC DRIVE- IN, TULSA, 59TH & LEWIS, L.L.C.	60	0
1295	SONIC DRIVE- IN, TULSA, 129TH E. AVENUE, L.L.C.	90	0
1296	SONIC DRIVE- IN, TULSA, E. 31ST STREET, L.L.C.	66	0
1297	SONIC DRIVE- IN, TULSA, S. HARVARD, L.L.C.	54	0
1314	SONIC DRIVE- IN, WAGONER, OK, L.L.C.	61	0
1605	SONIC DRIVE- IN, BROKEN ARROW, OK, L.L.C.	84	0
1700	SONIC DRIVE- IN, BROKEN ARROW, W. NEW ORLEANS, L.L.C.	69	0
1702	SONIC DRIVE- IN, BROKEN ARROW, E. KENOSHA, L.L.C.	60	0
1746	SONIC DRIVE- IN, CLEVELAND, OKLAHOMA, L.L.C.	87	0
1753	SONIC DRIVE- IN, CHOCTAW, OK, L.L.C.	72	0
1903	SONIC DRIVE- IN, DRUMRIGHT, OKLAHOMA, L.L.C.	68	0
2250	SONIC DRIVE- IN OF JENKS, L.L.C.	63	0
2439	SONIC DRIVE- IN, MUSKOGEE, OKMULGEE ST., L.L.C.	70	0
2568	SONIC DRIVE- IN, MUSKOGEE, YORK, L.L.C	59	0
2683	SONIC DRIVE- IN OF OWASSO, L.L.C.	77	0
2854	SONIC DRIVE- IN, SAPULPA, L.L.C.	74	0
3003	SONIC DRIVE- IN OF WESTBANK, L.L.C.	75	0
3043	SONIC DRIVE- IN, TULSA E. 71ST STREET, L.L.C.	69	0
3044	SONIC DRIVE- IN, TULSA, E. 91ST STREET, L.L.C.	55	0

Schedule 5.13 – Page 12

3049	SONIC DRIVE- IN, TULSA, 11TH STREET, L.L.C.	70	0
3051	SONIC DRIVE- IN, TULSA, HYDE PARK, L.L.C.	64	0
3055	SONIC DRIVE- IN, TULSA, LEWIS, L.L.C.	75	0
3386	SONIC DRIVE- IN, TULSA, 16TH STREET, L.L.C.	99	1
3518	SONIC DRIVE- IN, TULSA, 51ST STREET, L.L.C.	60	0
3523	SONIC DRIVE- IN, TULSA, BROOKSIDE, L.L.C.	56	0
3551	SONIC DRIVE- IN, TULSA, HUNTERS GLEN, L.L.C.	69	0
3656	SONIC DRIVE- IN, GLENPOOL, L.L.C.	69	0
3748	SONIC DRIVE- IN, TULSA, UNION, L.L.C.	59	0
3943	SONIC DRIVE- IN, MUSKOGEE, CHANDLER, L.L.C.	68	0
4214	SONIC DRIVE- IN, CHOUTEAU, L.L.C.	70	0
4439	SDI OF COLUMBUS, GEORGIA (5586 MILGEN ROAD), L.L.C.	80	0
4272	SDI OF VIRGINIA BEACH, VIRGINIA (WESLEYAN), L.L.C.	82	0
4436	SDI OF FLORENCE, ALABAMA (2841 FLORENCE BLVD.), L.L.C.	64	0
4438	SDI OF SALEM, VIRGINIA (830 W. MAIN STREET), L.L.C.	99	1
4398	SDI OF DALLAS, TEXAS (10709 AUDELIA ROAD), PARTNERSHIP	99	1
4415	SDI OF GOLDEN, COLORADO (17191 S. GOLDEN), L.L.C.	88	0
4329	SDI OF MIDVALE, UTAH (FORT UNION), L.L.C.	75	0
4161	SDI OF OLATHE, KANSAS (13730 S. BLACKBOB RD), L.L.C.	84	0
4443	SDI OF DALLAS, TEXAS (1330 EMPIRE CENTRAL), PARTNERSHIP	99	1
4418	SDI OF DALLAS, TEXAS (8045 FOREST LANE), PARTNERSHIP	65	0
1110	SDI OF HOUSTON, TEXAS (16710 CLAY RD), PARTNERSHIP	85	0
4442	SDI OF STAFFORD, TEXAS (123 DULLES AVE), PARTNERSHIP	67	0
4374	SDI OF KANSAS CITY, MISSOURI (1214 EMANUEL CLEAVER II BLVD), L.L.C.	80	0
2082	SDI OF GARLAND, TEXAS (CASTLE) PARTNERSHIP	78	0
4330	SDI OF SANDY, UTAH (STATE), L.L.C.	80	0
4434	SDI OF OVERLAND, MISSOURI (PAGE), L.L.C.	75	0
4539	SDI OF TULSA, OK (S. MEMORIAL DRIVE), L.L.C.	54	0
4394	SDI OF HOUSTON, TEXAS (8504 MAIN STREET) PARTNERSHIP	73	0
4542	SDI OF LITTLE ROCK, ARKANSAS (ARCH STREET PIKE), L.L.C.	65	0
4385	SDI OF CHESAPEAKE, VIRGINIA (BATTLEFIELD BLVD NORTH), L.L.C.	89	0
4376	SDI OF RAYTOWN, MISSOURI (9014 E 350 HWY), L.L.C.	58	0
4429	SDI OF OVERLAND PARK, KANSAS (13485 SWITZER RD) L.L.C.	88	0
4375	SDI OF KANSAS CITY, MISSOURI (822 WESTPORT RD) L.L.C.	65	0

Schedule 5.13 – Page 13

4549	SDI OF NICEVILLE, FLORIDA (HIGHWAY 20), PARTNERSHIP	71	0
4127	SDI OF DENVER, COLORADO (1300 S. SHERIDAN BLVD)	68	0
4383	SDI OF SALT LAKE CITY, UTAH (7025 SOUTH HIGHLAND DRIVE)	75	0
4302	SDI OF VIRGINIA BEACH, VIRGINIA (3581 HOLLAND ROAD)	70	0
4441	SDI OF HUMBLE, TEXAS (7102 WILL CLAYTON PKWY) PARTNERSHIP	60	0
4399	SDI OF VIRGINIA BEACH, VIRGINIA (NIMMO PKWY), L.L.C.	86	0
4541	SDI OF FORT WORTH, TEXAS (CLIFFORD), PARTNERSHIP	70	0
4558	SDI OF DALTON, GEORGIA (1369 W WALNUT AVE), L.L.C.	73	0
4547	SDI OF FLORISSANT, MISSOURI (LINDBERGH), L.L.C.	61	0
4631	SDI OF OKLAHOMA CITY, OKLAHOMA (7640 N. MAY), L.L.C.	64	0
4581	SDI OF ST. PETERS, MISSOURI (MID RIVERS MALL), L.L.C.	78	0
4602	SDI OF OMAHA, NEBRASKA (5214 N. 30TH), L.L.C.	81	0
4601	SDI OF ARLINGTON, TEXAS (3811 S. COOPER), PARTNERSHIP	90	0
4569	SDI OF HOUSTON, TEXAS (11902 BISSONNET ST), PARTNERSHIP	57	0
4620	SDI OF OKLAHOMA CITY, OKLAHOMA (5625 N WESTERN AVE), L.L.C.	67	0
4618	SDI OF TULSA, OKLAHOMA (10901 E. 41ST STREET), L.L.C.	67	0
4582	SDI OF SUGARLAND, TEXAS (11511 S HWY 6), PARTNERSHIP	89	0
1987	SDI OF EL DORADO, KANSAS (WEST CENTRAL), L.L.C.	70	0
2145	SDI OF HUTCHINSON, KANSAS (EAST 4TH), L.L.C.	74	0
2232	SDI OF HAYESNILLE, KANSAS (EAST GRAND), L.L.C	80	0
2302	SDI OF KINGMAN, KANSAS (EAST AVENUE), L.L.C.	88	0
2558	SDI OF MCPHERSON, KANSAS (EAST KANSAS), L.L.C.	75	0
2581	SDI OF MULVANE, KANSAS (SE LOUIS), L.L.C.	74	0
2757	SDI OF PARK CITY, KANSAS (BROADWAY), L.L.C.	71	0
3084	SDI OF WICHITA, KANSAS (S. WEST STREET), L.L.C	70	0
3088	SDI OF WICHITA, KANSAS (S. OLIVER), L.L.C.	61	0
3091	SDI OF WICHITA, KANSAS (N. BROADWAY), L.L.C.	78	0
3098	SDI OF WICHITA, KANSAS (S. SENECA), L.L.C.	69	0
3106	SDI OF WICHITA, KANSAS (E. HARRY), L.L.C.	73	0
3112	SDI OF WICHITA, KANSAS (N. WOODLAWN), L.L.C.	80	0
3137	SDI OF WICHITA, KANSAS (W. PAWNEE), L.L.C.	61	0
3141	SDI OF WICHITA, KANSAS (E. CENTRAL), L.L.C.	78	0
3233	SDI OF WICHITA, KANSAS (S. BROADWAY), L.L.C.	79	0
3269	SDI OF WICHITA, KANSAS (W. 21ST), L.L.C.	70	0
3634	SDI OF GODDARD, KANSAS (W. HIGHWAY 54), L.L.C.	59	0

Schedule 5.13 – Page 14

3961	SDI OF ROSEHILL, KANSAS, L.L.C.	76	0
3988	SDI OF ANDOVER, KANSAS, L.L.C.	62	0
4148	SDI OF HUTCHINSON, KANSAS (E. 30TH), L.L.C.	73	0
3113	SDI OF WICHITA, KANSAS (W. MAPLE), L.L.C.	80	0
4333	SDI OF HESSTON, KANSAS (E. LINCOLN), L.L.C.	62	0
4306	SDI OF PORT ARTHUR, TEXAS (W. PORT ARTHUR ROAD), PARTNERSHIP	69	0
4548	SDI OF ROANOKE, VIRGINIA (3755 BRAMBLETON AVE),L.L.C	84	0
4649	SDI OF PRINCETON, TEXAS, PARTNERSHIP	73	0
4616	SDI OF MONROE, LOUISIANA (4207 PECANLAND),L.L.C	90	0
4437	SDI OF DANDRIDGE, TENNESSEE (HIGHWAY 92 S), L.L.C.	90	0
3114	SDI OF WHITE SETTLEMENT, TEXAS (N. CHERRY LANE), PARTNERSHIP	78	0
4461	SDI OF DENVER, COLORADO (2611 S. BROADWAY), L.L.C.	85	0
4633	SDI OF DRAPER, UTAH (267 E. 12300 SOUTH), L.L.C.	80	0
4638	SDI OF MURPHY, TEXAS (109 W. FM 544), PARTNERSHIP	86	0
4652	SDI OF HOUSTON, TEXAS (2000 WOLLOWBROOK MALL), PARTNERSHIP	69	0
4526	SDI OF CHESTERFIELD, MISSOURI (CHESTERFIELD AIRPORT ROAD), L.L.C.	75	0
4704	SDI OF TULSA, OKLAHOMA (7021 S. MEMORIAL DRIVE), L.L.C.	78	0
4632	SDI OF ARLINGTON, TEXAS (2121 E. LAMAR BLVD.), PARTNERSHIP	72	0
4697	SDI OF ST. LOUIS, MISSOURI (85 S. COUNTY CENTER WAY), L.L.C.	99	1
4675	SDI OF AUBURN, ALABAMA (1703 S. COLLEGE), L.L.C.	84	0
4685	SDI OF DESTIN, FLORIDA (34960 EMERALD COAST PKWY), PARTNERSHIP	80	0
4587	SDI OF OMAHA, NEBRASKA (14598 W. MAPLE), L.L.C.	77	0
4698	SDI OF SAINT LOUIS, MISSOURI (44 W. COUNTY CENTER), L.L.C.	61	0
4723	SDI OF GARLAND, TEXAS (5020 N. GARLAND AVE), PARTNERSHIP	76	0
4630	SDI OF DESOTO, TX (1316 W. BELT LINE), PARTNERSHIP	76	0
4720	SDI OF FRIENDSWOOD, TEXAS (BAYBROOK MALL), PARTNERSHIP	58	0
4820	SDI OF OKLAHOMA CITY, OKLAHOMA (1901 NW EXPRESSWAY), L.L.C.	72	0
4787	SDI OF LEXINGTON, KENTUCKY (3401 NICHOLASVILLE), L.L.C.	60	0
4761	SDI OF BRECKENRIDGE HILLS, MISSOURI (9760 SAINT CHARLES ROCK), L.L.C.	85	0
4741	SDI OF HOUSTON, TEXAS (7470 BELLFORT) PARTNERSHIP	77	0

Schedule 5.13 – Page 15

4768	SDI OF OMAHA, NEBRASKA (S. 108TH), L.L.C.	99	1
4747	SDI OF PENSACOLA, FLORIDA (8990 PENSACOLA BLVD), PARTNERSHIP	75	0
4629	SDI OF TAMPA, FLORIDA (4411 W. GRANDY BLVD), PARTNERSHIP	70	0
4379	SDI OF ARVADA, COLORADO (SHERIDAN BLVD), L.L.C.	99	1
4767	SDI OF SALT LAKE CITY, UTAH (85 E. 1300 S.), L.L.C.	99	1
4599	SDI OF CHESAPEAKE, VIRGINIA (969 PROVIDENCE RD), L.L.C.	99	1
4688	SDI OF GARLAND, TEXAS (6202 BROADWAY BLVD.), PARTNERSHIP	99	1
4789	SDI OF KNOXVILLE, TENNESSEE (2742 SCHAAD RD.), L.L.C.	77	0
4836	SDI OF GRAVEL RIDGE, ARKANSAS (HIGHWAY 107), L.L.C.	99	1
4858	SDI OF CHATTANOOGA, TENNESSEE (4407 HIGHWAY 58), L.L.C	61	0
4765	SDI OF TULSA, OKLAHOMA (1919 S. MEMORIAL DR), L.L.C.	99	1
4783	SDI OF CYPRESS, TEXAS (26044 NW FREEWAY), PARTNERSHIP	83	0
4784	SDI OF TOMBALL, TEXAS (26020 TOMBALL PKWY), PARTNERSHIP	99	1
4885	SDI OF WICHITA, KANSAS (355 S. GREENWICH RD.), L.L.C.	99	1
4853	SDI OF RICHARDSON, TEXAS (605 SOUTH PLANO ROAD), PARTNERSHIP	99	1
4785	SDI OF FRIENDSWOOD, TEXAS (18214 GULF FREEWAY), PARTNERSHIP	99	1

Schedule 5.13 – Page 16

SCHEDULE 7.01

EXISTING LIENS

None

Schedule 7.01

SCHEDULE 7.02

EXISTING INVESTMENTS

None

Schedule 7.02

SCHEDULE 7.03

EXISTING INDEBTEDNESS

Sonic Corp.
Fiscal Year 2003
Private Placement

Purchaser Series B	Amount
Pacific Life Insurance Company	$10,000,000
Mony Life Insurance Company of America	$10,000,000
Massachusetts Mutual Life Insurance Company	$  4,000,000
Massachusetts Mutual Life Insurance Company	$  2,500,000
Massachusetts Mutual Life Insurance Company	$  2,000,000
CM Life Insurance Company	$  1,000,000
Bost & Co.	$     500,000
Total	$30,000,000

Series B – Issued April 1, 1998; Due April 1, 2005
Interest (6.759%) – Due April 1 and October 1

Series A Notes
Canada Life Assurance Company	$     500,000
Canada Life Assurance Company	$  1,000,000
Canada Life Assurance Company	$  3,500,000

Series B Notes
Pacific Life Insurance Company	$  8,000,000
Pacific Life & Annuity Company	$  7,000,000
Massachusetts Mutual Life Insurance Company	$  4,500,000
Massachusetts Mutual Life Insurance Company	$  2,500,000
Massachusetts Mutual Life Insurance Company	$  1,500,000
Massachusetts Mutual Life Insurance Company	$     500,000
Massachusetts Mutual Life Insurance Company	$     500,000
CM Life Insurance Company	$     500,000
Total	$30,000,000

Series A – Issued August 10, 2001; Due August 10, 2008
Series B – Issued August 10, 2001; Due August 10, 2011
Interest (A – 6.58%), (B – 6.87%) – Due February 10 and August 10

Schedule 7.03

SCHEDULE 10.02

ADMINISTRATIVE AGENT’S OFFICE,
CERTAIN ADDRESSES FOR NOTICES

SONIC CORP.

101 Park Avenue
Oklahoma City, Oklahoma
Attention:         W. Scott McLain
                           Chief Financial Officer
Telephone:       (405) 280-7654
Facsimile:        (405) 280-7516
Electronic Mail:           smclain@sonicdrivein.com
Website Address:        www.sonicdrivein.com

ADMINISTRATIVE AGENT:

Administrative Agent’s Office

(for payments and Requests for Credit Extensions):
Bank of America, N.A.
901 Main Street
Mail Code:   TX1-492-14-14
Dallas, Texas 75202
Attention:         Kimberly A. Buie
Telephone:       (214) 209-1349
Facsimile:         (214) 290-9410
Electronic Mail:           kimberly.a.buie@bankofamerica.com

Account No.:    129-2000-883
Ref:                    Sonic Corp.
ABA#                111-000-012

Other Notices as Administrative Agent:
Bank of America, N.A.
Agency Management
231 South LaSalle Street
Mail Code IL1-231-08-30
Chicago, Illinois 60604
Attention:         Suzanne M. Paul
                           Vice President
Telephone:       (312) 923-1640
Facsimile:         (877) 206-8435
Electronic Mail:           suzanne.m.paul@bankofamerica.com

Schedule 10.02 – Page 1

Other Notices as Lender:

Bank of America, N.A.
211 North Robinson
OK1-100-02-30
Oklahoma City, Oklahoma 73102-7109
Attention:         Karl G. Bovee
Telephone:       (405) 230-4935
Facsimile:         (405) 230-4089
Electronic Mail:           karl.bovee@bankofamerica.com

ARVEST BANK:

(for payments and Requests for Credit Extensions):
Arvest Bank
3900 North Lincoln Boulevard
Oklahoma City, Oklahoma 73105
Attention:         Cindy Batt
Telephone:       (405) 523-4169
Facsimile:         (405) 523-4126
Electronic Mail:           cbatt@arvest.com

Account No.:   GL 20130
Ref:                  Sonic Corp.
ABA#              082900872
Attention:        Cindy Batt – Lincoln OKC

UMB BANK, N.A.:

(for payments and Requests for Credit Extensions):
UMB Bank, N.A.
204 North Robinson, Suite 100
Oklahoma City, Oklahoma 73102
Attention:         Richard J. Lehrter
Telephone:       (405) 239-5925
Facsimile:         (405) 239-1971
Electronic Mail:           richard.lehrter@umb.com

Account No.:   000-106-002265000
Ref:                  Sonic Corp.
ABA#              101-000-695
Attention:        Vaughnda Ritchie

Schedule 10.02 – Page 2

JPMORGAN CHASE BANK:

(for payments and Requests for Credit Extensions):
JPMorgan Chase Bank
707 Travis Street, 8th Floor North
Houston, Texas 77002
Attention:         Cheryl W. Rubenstein
Telephone:       (713) 216-4330
Facsimile:         (713) 216-3486
Electronic Mail:           cheryl.rubenstein@jpmchase.com

Account No.:   0010-092-5701
Ref:                  Sonic Corp.
ABA#              113-000-609
Attention:        Debra M. Harris

MIDFIRST BANK, a federally chartered savings association:

(for payments and Requests for Credit Extensions):
MidFirst Bank, a federally chartered savings association
MidFirst Plaza
501 NW Grand Boulevard, Suite 100
Oklahoma City, Oklahoma 73118
Attention:         James P. Boggs
Telephone:       (405) 767-7115
Facsimile:         (405) 767-7120
Electronic Mail:           james.boggs@midfirst.com

Account No.:   Loan # 780980
Ref:                  Sonic Corp.
ABA#              303087995
Attention:        Sharon Bales/Sandi Bomgaars

BANCFIRST:

(for payments and Requests for Credit Extensions):
BancFirst
101 North Broadway
Oklahoma City, Oklahoma 73102
Attention:         Brian K. Renz
Telephone:       (405) 270-1051
Facsimile:         (405) 270-4790
Electronic Mail:           brenz@bancfirst.com

Schedule 10.02 – Page 3

Account No.:   Sonic
Ref:                  Sonic Corporation Participation
ABA#               1030003632
Attention:         Deidria Wilson

FLEET NATIONAL BANK:

(for payments and Requests for Credit Extensions):
Fleet National Bank
100 Federal Street
MA DE 10010B
Boston, Massachusetts 02110
Attention:         Heidi Tyng
Telephone:       (617) 434-1087
Facsimile:         (617) 434-0637
Electronic Mail:           heidi_f_tyng@fleet.com

Account No.:   151-0351-66156
Ref:                  Sonic Corp.
ABA#              011-000-138
Attention:        Elga Duarte

Schedule 10.02 – Page 4

EXHIBIT A

FORM OF LOAN NOTICE

Date: ___________, _____

To:  Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

        Reference is made to that certain Credit Agreement, dated as of April 23, 2003 (as amended, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Sonic Corp. (the “Borrower”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.

        The undersigned hereby requests (select one):

            A Borrowing of Loans                                A conversion or continuation of Loans

1. On _________________ (a Business Day).

2. In the amount of $_________________.

3. Comprised of ____________________.           

       [Type of Loan requested]

4. For Eurodollar Rate Loans: with an Interest Period of ____ months.

        [The Borrowing requested herein complies with the proviso to the first sentence of Section 2.01 of the Agreement.]

SONIC CORP.
By:	Name:  Title:

Exhibit A

EXHIBIT B

FORM OF NOTE

$_______________________ _______________________

        FOR VALUE RECEIVED, SONIC CORP., a Delaware corporation (the “Borrower”), hereby promises to pay to the order of ___________________________ (the “Lender”), on the Maturity Date (as defined in the Credit Agreement referred to below) the principal amount of __________________Dollars ($____________), or such lesser principal amount of Loans (as defined in such Credit Agreement) due and payable by the Borrower to the Lender on the Maturity Date under that certain Credit Agreement, dated as of April 23, 2003 (as amended, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.

        The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates, and at such times as are specified in the Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

        This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and is subject to optional and mandatory prepayment in whole or in part as provided therein. Upon the occurrence of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

        The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, intent to accelerate, acceleration, dishonor and non-payment of this Note.

Exhibit B-1

        THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA.

SONIC CORP.
By:	Name:  Title:

Exhibit B-2

LOANS AND PAYMENTS WITH RESPECT THERETO

Date	Type of Loan Made	Amount of Loan Made	End of Interest Period	Amount of Principal or Interest Paid This Date	Outstanding Principal Balance This Date	Notation Made By
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________
______________	______________	______________	______________	______________	______________	______________

Exhibit B-3

EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION

ASSIGNMENT AND ASSUMPTION

        This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

        For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, Letters of Credit and Guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1. Assignor: ______________________________

2. Assignee: ______________________________ [and is an Affiliate/Approved Fund of [identify Lender]¹]

3. Borrower(s): ______________________________

4. Administrative Agent: ______________________, as the administrative agent under the Credit Agreement

5. Credit Agreement: The Credit Agreement, dated as of April 23, 2003 among Sonic Corp., the Lenders parties thereto, and Bank of America, N.A., as Administrative Agent

6. Assigned Interest:²

¹         Select as applicable.

Exhibit C-1

Aggregate Amount of Commitment/Loans for all Lenders*	Amount of Commitment/Loans Assigned*	Percentage Assigned of Commitment/Loans 3
$______________	$______________	______________%
$______________	$______________	______________%
$______________	$______________	______________%

[7.               Trade Date: __________________]⁴

Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

²        Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
³        Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
⁴        To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

Exhibit C-2

        The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR [NAME OF ASSIGNOR]
By:	Title:
ASSIGNEE [NAME OF ASSIGNEE]
By:	Title:

[Consented to and]⁵ Accepted:

[NAME OF ADMINISTRATIVE AGENT], as     Administrative Agent
By:	Title:
[Consented to:]6
By:	Title:

⁵        To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.
⁶        To be added only if the consent of the Borrower and/or other parties (e.g. L/C Issuer) is required by the terms of the Credit Agreement.

Exhibit C-3

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

        SECTION 1.   Representations and Warranties.

        (a)     Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

        (b)     Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

        SECTION 2.   Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to or on or after the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.

        SECTION 3.   General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.

Exhibit C-4

This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Oklahoma.

Exhibit C – 5

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:_____________

To:     Bank of America, N.A., as Administrative Agent and L/C Issuer

Ladies and Gentlemen:

        Reference is made to that certain Credit Agreement, dated as of April 23, 2003 (as amended, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Sonic Corp. (the “Borrower”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.

        The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the _________________________________________ of the Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower, and that:

[Use following for fiscal year-end financial statements]

        Attached hereto as Schedule 1 are the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

[Use following for fiscal quarter-end financial statements]

    1.        Attached hereto as Schedule 1 are the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as of the above date. Such financial statements fairly present the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

    2.        The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by the attached financial statements.

    3.        A review of the activities of the Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Borrower performed and observed all its Obligations under the Loan Documents, and

[select one:]

        [to the best knowledge of the undersigned as of the date hereof No Default or Event of Default under the Agreement has occurred and its continuing.]

Exhibit D-1

— or —

        [the following is a list of each such Default or Event of Default and its nature and status:]

    4.        The financial covenant analyses and information set forth on Schedule 2 attached hereto are true and accurate on and as of the date of this Certificate.

        IN WITNESS WHEREOF, the undersigned has executed this Certificate as of __________________________, _____________.

SONIC CORP.
By:	Name:  Title:

Exhibit D-2

For the Quarter/Year ended ___________________("Statement Date")

SCHEDULE 2
to the Compliance Certificate
($ in 000’s)

I. Leverage Ratio – For Determination of Applicable Rate

A. Funded Debt for the Borrower and its Subsidiaries:

1. Funded Debt (without duplication):

(a)	All obligations for borrowed money and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments:	$_____________
(b)	Attributable Indebtedness in respect of Capital Leases and Synthetic Lease Obligations:	$_____________
(c)	All direct or contingent obligations arising under letters of credit (including standby and commercial), banker's acceptances, bank guaranties, surety bonds and similar instruments:	$_____________
(d)	All obligations to pay the deferred purchase price of property or services, including all Seller Financing (other than trade payables incurred in the ordinary course of business or accrued liabilities arising in the ordinary course of business that are not overdue or that are being contested in good faith), and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed or is limited in recourse:	$_____________
(e)	Any Receivables Facility Attributed Indebtedness:	$_____________
(f)	Funded Debt (Lines I.A.1(a) + (b) + (c) + (d) + (e)):	$_____________

B. EBITDA for the period of the four consecutive fiscal quarters most recently ended for which Borrower has delivered financial statements:

1. EBITDA for the Borrower and its Subsidiaries on a consolidated basis (without duplication):

(a)	Net Income for the Subject Period:	$_____________
(b)	To the extent deducted in determining Net Income, Interest Expense for the Subject Period:	$_____________
(c)	To the extent deducted in determining Net Income, the provision for federal, state, local and foreign	$_____________

Exhibit D-3

	income taxes payable by the Borrower and its Subsidiaries for the Subject Period:
(d)	To the extent deducted in determining Net Income, losses from the sale of fixed assets not in the ordi business and other extraordinary or nonrecurring items:	$_____________
(e)	To the extent added in determining Net Income, gains from the sale of fixed assets not in the ordinary course of busi and other extraordinary or non-recurring items:	$_____________
(f)	EBIT (Lines I.B.(a) + (b) + (c) + (d) - (e)):	$_____________
(g)	To the extent deducted in determining Net Income, the amount of depreciation, amortization expenses and other non- items deducted in determining Net Income for the Subject Period:	$_____________
(h)	EBITDA (Lines I.B.1(f) + (g)):	$_____________

C. Leverage Ratio (Line I.A.1.(f) / Line I.B.1.(h)): _____ to 1

II. Section 7.02(e) -- Limitation on Investments as the Result of Acquisitions

A. Aggregate Acquisition Consideration for each single Acquisition (whether in one transaction or a series of related transactions) consummated durin quarter ended on the Financial Statement Date (list each such Acqu related Acquisition Consideration): $_____________

_____________________________________________________ $_____________

_____________________________________________________ $_____________

_____________________________________________________ $_____________

B. Aggregate Acquisition Consideration for all Acquisitions, including those listed in II.A., during the fiscal year: $_____________

C. Maximum Acquisition Consideration for all Acquisitions during any fiscal year: $70,000,000

III. Section 7.03(e) -- Limitation on Indebtedness – Operating Leases

A. Aggregate payments under Operating Leases for fiscal year: $_____________

B. Maximum payments in aggregate for any fiscal year: $10,000,000

IV. Section 7.03(f) -- Limitation on Indebtedness -- Capital Leases and Purchase Money

A. Aggregate outstanding principal amount of Indebtedness in respect of Capital Leases and purchase money obligations for fixed or capital assets: $_____________

B. Maximum in aggregate principal amount at any time outstanding: $45,000,000

Exhibit D-4

V. Section 7.03(g) -- Limitation on Indebtedness - Acquisition

A. Aggregate outstanding principal amount of unsecured Indebtedness of Borrower or any Subsidiary evidenced by any promissory note representing a po purchase price for any Acquisition permitted under Schedule 7.02(e): $_____________

B. Maximum in aggregate amount at any time outstanding: $50,000,000

VI. Section 7.03(g) -- Limitation on Guaranty Obligations

A. Aggregate outstanding principal amount of other Guaranty Obligations of the Borrower or any Subsidiary: $_____________

B. Maximum amount at any time outstanding: $20,000,000

VII. Section 7.05(c) -- Limitation on Dispositions

A. Aggregate amount of disposed assets during fiscal year: $_____________

B. Maximum amount of Dispositions: $10,000,000

VIII. Section 7.11(a) – Net Worth

A. Actual Net Worth: $_____________

B. Minimum Net Worth:

1.	50% of Net Income earned in each full fiscal quarter ending after November 30, 2003 (with no deduction for a net loss du period):	$_____________
2.	100% of aggregate increases in Net Worth of the Borrower and its Subsidiaries after April 23, 2003 by reason of the issu of Capital Stock of the Borrower, including any conversion or securities of the Borrower into such Capital Stock:	$_____________
3.	An amount equal to the Net Worth of any Person that becomes a Subsidiary or is merged into or consolidated with the Bo Subsidiary or substantially all of the assets of which ar the Borrower or any Subsidiary, in each case after April 23, 2003:	$_____________
4.	Required Minimum Net Worth ($200,000,000 + Line VIII.B.1. + 2. + 3.):	$_____________

IX. Section 7.11(b) – Minimum Fixed Charge Coverage Ratio

A. EBIT (Line I.B.1.(f)): $_____________

B. Non-capitalized lease obligations: $_____________

C. Interest Expense: $_____________

Exhibit D-5

D. Non-capitalized lease obligations: $_____________

E. Fixed Charge Coverage Ratio ((Lines IX.A. + B) / (Lines IX.C. + D)): _____ to 1

F. Minimum Fixed Charge Coverage Ratio Required (at the end of any fiscal quarter): 2.00 to 1

X. Section 7.11(d) – Maximum Leverage Ratio.

A. Leverage Ratio (Line I.C.): _____ to 1

B. Maximum Leverage Ratio (at the end of any fiscal quarter): 2.50 to 1

Exhibit D-6

EXHIBIT E

CORPORATE GUARANTY

        CORPORATE GUARANTY (this “Guaranty”), dated as of April 23, 2003, made by each of the parties listed on the signature pages hereof (collectively, the “Guarantors”, and each, a “Guarantor”), in favor of the Guarantied Parties referred to below.

W I T N E S S E T H:

        WHEREAS, Sonic Corp., a Delaware corporation (the “Borrower”), has entered into a Credit Agreement, dated as of April 23, 2003, among the Lenders party thereto, and Bank of America, N.A., as the Administrative Agent and L/C Issuer (hereinafter, the “Administrative Agent”) for the Lenders (said Credit Agreement, as it may be amended, supplemented or otherwise modified from time to time, being the “Credit Agreement”, and capitalized terms not defined herein but defined therein being used herein as therein defined); and

        WHEREAS, the Borrower and each of the Guarantors are members of the same consolidated group of companies and are engaged in operations which require financing on a basis in which credit can be made available from time to time to the Borrower and the Guarantors, and the Guarantors will derive direct and indirect economic benefit from the Loans and Letters of Credit under the Credit Agreement; and

        WHEREAS, it is a condition precedent to the obligation of the Lenders to make Loans and issue Letters of Credit under the Credit Agreement that the Guarantors shall have executed and delivered this Guaranty; and

        WHEREAS, the Lenders, the Administrative Agent, any Affiliate of any Lender entering into a Swap Contract (provided that such Lender was a Lender at the time such Swap Contract was entered into) with the Borrower or any Affiliate of the Borrower and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document are herein referred to as the “Guarantied Parties”;

        NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make Loans and issue Letters of Credit the Guarantors hereby agree as follows:

        SECTION 1. Guaranty. The Guarantors hereby jointly and severally unconditionally and irrevocably guarantee the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise, of, and the performance of, (a) the Obligations, whether now or hereafter existing and whether for principal, interest, fees, expenses or otherwise, (b) any and all out-of-pocket expenses (including, without limitation, expenses and counsel fees and expenses of the Administrative Agent and the Lenders) incurred by any of the Guarantied Parties in enforcing any rights under this Guaranty and (c) all present and future amounts that would become due but for the operation of any provision of Debtor Relief Laws, and all present and future accrued and unpaid interest, including, without limitation, all post-petition interest if the Borrower or any Guarantor voluntarily or involuntarily becomes subject to any Debtor Relief Laws (the items set forth in clauses (a), (b) and (c) immediately above being herein referred to as the “Guarantied Obligations”). Upon failure of the Borrower to pay any of the Guarantied Obligations when due

1

after the giving by the Administrative Agent and/or the Lenders of any notice and the expiration of any applicable cure period in each case provided for in the Credit Agreement and other Loan Documents (whether at stated maturity, by acceleration or otherwise), the Guarantors hereby further jointly and severally agree to promptly pay the same after the Guarantors’ receipt of notice from the Administrative Agent of the Borrower’s failure to pay the same, without any other demand or notice whatsoever, including without limitation, any notice having been given to any Guarantor of either the acceptance by the Guarantied Parties of this Guaranty or the creation or incurrence of any of the Obligations. This Guaranty is an absolute guaranty of payment and performance of the Guarantied Obligations and not a guaranty of collection, meaning that it is not necessary for the Guarantied Parties, in order to enforce payment by the Guarantors, first or contemporaneously to accelerate payment of any of the Guarantied Obligations, to institute suit or exhaust any rights against any Loan Party, or to enforce any rights against any collateral. Notwithstanding anything herein or in any other Loan Document to the contrary, in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if, as a result of applicable law relating to fraudulent conveyance or fraudulent transfer, including Section 548 of Bankruptcy Code or any applicable provisions of comparable state law (collectively, “Fraudulent Transfer Laws”), the obligations of any Guarantor under this Section 1 would otherwise, after giving effect to (a) all other liabilities of such Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor in respect of intercompany Indebtedness to the Borrower to the extent that such Indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder) and (b) to the value as assets of such Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any rights of subrogation, contribution, reimbursement, indemnity or similar rights held by such Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or (iii) any other contractual obligations providing for an equitable allocation among such Guarantor and other Subsidiaries or Affiliates of the Borrower of obligations arising under this Guaranty or other guaranties of the Obligations by such parties, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under this Section 1, then the amount of such liability shall, without any further action by such Guarantor, any Lender, the Administrative Agent or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

        SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement, the Notes and the other Loan Documents, without set-off or counterclaim, and regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Guarantied Parties with respect thereto. The liability of each Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

        (a)     any lack of validity or enforceability of any provision of any other Loan Document or any other agreement or instrument relating to any Loan Document, or avoidance or subordination of any of the Guarantied Obligations;

2

        (b)     any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, all or any of the Guarantied Obligations, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, the Credit Agreement, the Notes or any of the other Loan Documents;

        (c)     any exchange, release or non-perfection of any Lien on any Collateral for, or any release of any other Loan Party or amendment or waiver of any term of any other guaranty of, or any consent to departure from any requirement of any other guaranty of, all or any of the Guarantied Obligations;

        (d)     the absence of any attempt to collect any of the Guarantied Obligations from the Borrower or from any other Loan Party or any other action to enforce the same or the election of any remedy by any of the Guarantied Parties;

        (e)     any waiver, consent, extension, forbearance or granting of any indulgence by any of the Guarantied Parties with respect to any provision of any other Loan Document;

        (f)     the election by any of the Guarantied Parties in any proceeding under any Debtor Relief Law;

        (g)     any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, under any Debtor Relief Law; or

        (h)     any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Borrower or any Guarantor other than payment or performance of the Obligations.

        SECTION 3. Waiver.

        (a)     Each Guarantor hereby (i) waives (A) promptness, diligence, notice of acceptance and any and all other notices, including, without limitation, notice of intent to accelerate and notice of acceleration, with respect to any of the Obligations or this Guaranty, (B) any requirement that any of the Guarantied Parties protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral, (C) the filing of any claim with a court in the event of receivership or bankruptcy of the Borrower or any other Person, (D) except as otherwise provided herein, protest or notice with respect to nonpayment of all or any of the Guarantied Obligations, (E) the benefit of any statute of limitation, (F) all demands whatsoever (and any requirement that demand be made on the Borrower or any other Person as a condition precedent to such Guarantor’s obligations hereunder), (G) all rights by which any Guarantor might be entitled to require suit on an accrued right of action in respect of any of the Guarantied Obligations or require suit against the Borrower or any other Guarantor or Person, (H) any defense based upon an election of remedies by any Guarantied Party, or (I) notice of any events or circumstances set forth in clauses (a) through (h) of Section 2 hereof; and (ii) covenants and agrees that, except as otherwise agreed by the parties, this Guaranty will not be discharged except (i) by complete payment and performance of the Guarantied Obligations and any other

3

obligations of such Guarantor contained herein or (ii) as to any Guarantor, upon the sale or other disposition of all of the Stock of such Guarantor as permitted under the Credit Agreement.

        (b)            If, in the exercise of any of its rights and remedies, any of the Guarantied Parties shall forfeit any of its rights or remedies, including, without limitation, its right to enter a deficiency judgment against the Borrower or any other Person, whether because of any Applicable Law pertaining to “election of remedies” or the like, each Guarantor hereby consents to such action by such Guarantied Party and waives any claim based upon such action. Any election of remedies which results in the denial or impairment of the right of such Guarantied Party to seek a deficiency judgment against the Borrower shall not impair the obligation of such Guarantor to pay the full amount of the Guarantied Obligations or any other obligation of such Guarantor contained herein.

        (c)     In the event any of the Guarantied Parties shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or under any of the Loan Documents, to the extent not prohibited by Applicable Law, such Guarantied Party may bid all or less than the amount of the Guarantied Obligations and the amount of such bid, if successful, need not be paid by such Guarantied Party but shall be credited against the Guarantied Obligations.

        (d)     Each Guarantor agrees that notwithstanding the foregoing and without limiting the generality of the foregoing if, after the occurrence and during the continuance of an Event of Default, the Guarantied Parties are prevented by Applicable Law from exercising their respective rights to accelerate the maturity of the Guarantied Obligations, to collect interest on the Guarantied Obligations, or to enforce or exercise any other right or remedy with respect to the Guarantied Obligations, or the Administrative Agent is prevented from taking any action to realize on the Collateral, such Guarantor agrees to pay to the Administrative Agent for the account of the Guarantied Parties, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Guarantied Parties.

        (e)     Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower and of each other Loan Party, and of all other circumstances bearing upon the risk of nonpayment of the Guarantied Obligations or any part thereof, that diligent inquiry would reveal. Each Guarantor hereby agrees that the Guarantied Parties shall have no duty to advise any Guarantor of information known to any of the Guarantied Parties regarding such condition or any such circumstance. In the event that any of the Guarantied Parties in its sole discretion undertakes at any time or from time to time to provide any such information to any Guarantor, such Guarantied Party shall be under no obligation (i) to undertake any investigation not a part of its regular business routine, (ii) to disclose any information which, pursuant to accepted or reasonable banking or commercial finance practices, such Guarantied Party wishes to maintain as confidential, or (iii) to make any other or future disclosures of such information or any other information to such Guarantor.

        (f)     Each Guarantor consents and agrees that the Guarantied Parties shall be under no obligation to marshal any assets in favor of any Guarantor or otherwise in connection with obtaining payment of any or all of the Guarantied Obligations from any Person or source.

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        SECTION 4. Representations and Warranties. Each Guarantor hereby represents and warrants to the Guarantied Parties that the representations and warranties set forth in Article 5 of the Credit Agreement as they relate to such Guarantor or to the Loan Documents to which such Guarantor is a party are true and correct in all material respects in the manner specified in the Credit Agreement and the Guarantied Parties shall be entitled to rely on each of them as if they were fully set forth herein.

        SECTION 5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor herefrom shall in any event be effective unless the same shall be in writing, approved by the Required Lenders (or by all the Lenders where the approval of each Lender is required under the Credit Agreement) and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

        SECTION 6. Addresses for Notices. All notices and other communications provided for hereunder shall be effectuated in the manner provided for in Section 10.02 of the Credit Agreement, provided that if a notice or communication hereunder is sent to a Guarantor, said notice shall be addressed to such Guarantor, in care of the Borrower.

        SECTION 7. No Waiver; Remedies.

        (a)     No failure on the part of any Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by Applicable Law or any of the other Loan Documents.

        (b)     No waiver by the Guarantied Parties of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by any of the Guarantied Parties permitted hereunder shall in way affect or impair any of the rights of the Guarantied Parties or the obligations of any Guarantor under this Guaranty or under any of the other Loan Documents, except as specifically set forth in any such waiver. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guarantied Obligations shall be conclusive and binding on each Guarantor irrespective of whether such Guarantor was a party to the suit or action in which such determination was made provided that the Borrower was so a party.

        SECTION 8. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default under the Credit Agreement, each of the Guarantied Parties is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set-off and apply any and all deposits (general or special (except trust and escrow accounts), time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Guarantied Party to or for the credit or the account of each Guarantor against any and all of the obligations of such Guarantor now or hereafter existing under this Guaranty, irrespective of whether or not such Guarantied Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured; provided, however, such Guarantied Party shall promptly notify such Guarantor and the Borrower after such set-off and

5

the application made by such Guarantied Party. The rights of each Guarantied Party under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Guarantied Party may have.

        SECTION 9. Continuing Guaranty; Transfer of Notes. This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until the Release Date, (ii) be binding upon each Guarantor, its permitted successors and assigns, and (iii) inure to the benefit of and be enforceable by the Guarantied Parties and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause (iii), each of the Guarantied Parties may assign or otherwise transfer any Note held by it or the Guarantied Obligations owed to it to any other Person, and such other Person shall thereupon become vested with all the rights in respect thereof granted to such Guarantied Party herein or otherwise with respect to such of the Notes and the Guarantied Obligations so transferred or assigned, subject, however, to compliance with the provisions of Section 10.07 of the Credit Agreement in respect of assignments. No Guarantor may assign any of its obligations under this Guaranty without first obtaining the written consent of the Lenders as set forth in the Credit Agreement.

        SECTION 10. Reimbursement. To the extent that any Guarantor shall be required hereunder to pay a portion of the Guarantied Obligations exceeding the greater of (a) the amount of the economic benefit actually received by such Guarantor from the Loans and the Letters of Credit and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the Guarantied Obligations (excluding the amount thereof repaid by the Borrower) in the same proportion as such Guarantor’s net worth at the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors at the date enforcement is sought hereunder, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess, pro rata, based on the respective net worths of such other Guarantors at the date enforcement hereunder is sought. Notwithstanding anything to the contrary, each Guarantor agrees that the Guarantied Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing its guaranty herein or effecting the rights and remedies of the Guarantied Parties hereunder. This Section 10 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 10 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay to the Guarantied Parties the Guarantied Obligations as and when the same shall become due and payable in accordance with the terms hereof.

        SECTION 11. Reinstatement. This Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against any Loan Party for liquidation or reorganization, should any Loan Party become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of any Loan Party’s assets, and shall, to the fullest extent permitted by Applicable Law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligees of the Obligations or such part thereof, whether as a “voidable preference,”“fraudulent transfer,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Guarantied Obligations shall, to the fullest extent

6

permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

        SECTION 12. GOVERNING LAW.

        (a)     THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF OKLAHOMA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

        (b)     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF OKLAHOMA SITTING IN OKLAHOMA COUNTY, OKLAHOMA OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OKLAHOMA LOCATED IN OKLAHOMA CITY, OKLAHOMA COUNTY, OKLAHOMA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

        SECTION 13. Waiver of Jury Trial. EACH PARTY TO THIS GUARANTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

        SECTION 14. Section Titles. The Section titles contained in this Guaranty are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Guaranty.

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        SECTION 15. Execution in Counterparts. This Guaranty may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same Guaranty.

        SECTION 16. Miscellaneous. All references herein to the Borrower or to any Guarantor shall include their respective successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower or such Guarantor. All references to the singular shall be deemed to include the plural where the context so requires.

        SECTION 17. Subrogation and Subordination.

        (a)     Subrogation. Notwithstanding any reference to subrogation contained herein to the contrary, until the Release Date, each Guarantor hereby irrevocably waives any claim or other rights which it may have or hereafter acquire against the Borrower that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of any Lender against the Borrower or any collateral which any Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statutes or common law, including without limitation, the right to take or receive from the Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Lenders, and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 17 is knowingly made in contemplation of such benefits.

        (b)     Subordination. All debt and other liabilities of the Borrower to any Guarantor (“Borrower Debt”) are expressly subordinate and junior to the Guarantied Obligations and any instruments evidencing the Borrower Debt to the extent provided below.

        (i)        Until the Release Date, each Guarantor agrees that it will not request, demand, accept, or receive (by set-off or other manner) any payment amount, credit or reduction of all or any part of the amounts owing under the Borrower Debt or any security therefor, except as specifically allowed pursuant to clause (ii) below;

        (ii)       Notwithstanding the provisions of clause (i) above, the Borrower may pay to the Guarantors and the Guarantors may request, demand, accept and receive and retain from the Borrower payments, credits or reductions of all or any part of the amounts owing under the Borrower Debt or any security therefor on the Borrower Debt, provided that the Borrower’s right to pay and the Guarantors’ right to receive any such amount shall automatically and be immediately suspended and cease (A) upon the occurrence and during the continuance of a Default or (B) if, after taking into account the effect of such

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payment, a Default would occur and be continuing. The Guarantors’ right to receive amounts under this clause (ii) (including any amounts which theretofore may have been suspended) shall automatically be reinstated at such time as the Default which was the basis of such suspension has been cured or waived (provided that no subsequent Default has occurred) or such earlier date, if any, as the Administrative Agent gives notice to the Guarantors of reinstatement by the Required Lenders, in the Required Lenders’ sole discretion;

        (iii)       If any Guarantor receives any payment on the Borrower Debt in violation of this Guaranty, such Guarantor will hold such payment in trust for the Lenders and will immediately deliver such payment to the Administrative Agent; and

        (iv)       In the event of the commencement or joinder of any suit, action or proceeding of any type (judicial or otherwise) or proceeding under any Debtor Relief Law against the Borrower (an “Insolvency Proceeding”) and subject to court orders issued pursuant to the Bankruptcy Code, the Guarantied Obligations shall first be paid, discharged and performed in full before any payment or performance is made upon the Borrower Debt notwithstanding any other provisions which may be made in such Insolvency Proceeding. In the event of any Insolvency Proceeding, each Guarantor will at any time prior to the payment in full of the Obligations on the Maturity Date (A) file, at the request of any Guarantied Party, any claim, proof of claim or similar instrument necessary to enforce the Borrower’s obligation to pay the Borrower Debt, and (B) hold in trust for and pay to the Guarantied Parties any and all monies, obligations, property, stock dividends or other assets received in any such proceeding on account of the Borrower Debt in order that the Guarantied Parties may apply such monies or the cash proceeds of such other assets to the Obligations.

        SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or become a party to or be made the subject of any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights of any Guarantied Party granted hereunder, then, the obligations of such Guarantor under this Guaranty shall be, as between such Guarantor and such Guarantied Party, a fully-matured, due, and payable obligation of such Guarantor to such Guarantied Party (without regard to whether the Borrower is then in default under the Credit Agreement or whether any part of the Guarantied Obligations is then due and owing by the Borrower to such Guarantied Party), payable in full by such Guarantor to such Guarantied Party upon demand, which shall be the estimated amount owing in respect of the contingent claim created hereunder.

        SECTION 19. Rate Provision. It is not the intention of any Guarantied Party to make an agreement violative of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in this Guaranty, no Guarantied Party shall ever be entitled to contract, charge, receive, collect or apply, as interest on the Guarantied Obligations, any amount in excess of the Highest Lawful Rate. In no event shall any Guarantor be obligated to pay any amount in excess of the Highest Lawful Rate. If from any circumstance the Administrative Agent or any Guarantied Party shall ever receive, collect or apply anything of value deemed excess interest under Applicable Law, an amount equal to such excess shall be applied to the reduction of the

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principal amount of outstanding Loans, L/C Borrowings and any remainder shall be promptly refunded to the payor. In determining whether or not interest paid or payable with respect to the Guarantied Obligations, under any specified contingency, exceeds the Highest Lawful Rate, the Guarantors and the Guarantied Parties shall, to the maximum extent permitted by Applicable Law, (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such Obligations so that the interest paid on account of such Guarantied Obligations does not exceed the Highest Lawful Rate and/or (c) allocate interest between portions of such Guarantied Obligations; provided that if the Guarantied Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Highest Lawful Rate, the Guarantied Parties shall refund to the payor the amount of such excess or credit the amount of such excess against the total principal amount owing, and, in such event, no Guarantied Party shall be subject to any penalties provided by any laws for contracting for, charging or receiving interest in excess of the Highest Lawful Rate.

        SECTION 20. Severability. Any provision of this Guaranty which is for any reason prohibited or found or held invalid or unenforceable by any court or governmental agency shall be ineffective to the extent of such prohibition or invalidity or unenforceability, without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

        SECTION 21. Guaranty Supplement. Any Subsidiary of the Borrower which becomes a party hereto after the date hereof pursuant to Section 6.12 of the Credit Agreement and a Guaranty Supplement shall be bound by all of the terms and provisions of this Guaranty, and shall be a “Guarantor” for all purposes of this Guaranty, the Credit Agreement and the other Loan Documents.

        SECTION 22. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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        IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer on the date first above written.

SONIC INDUSTRIES, INC.
By:	Name:  Title:

SONIC RESTAURANTS, INC.
By:	Name:  Title:

AMERICA'S DRIVE-IN CORP.
By:	Name:  Title:

AMERICA'S DRIVE-IN TRUST
By:	Name:  Title:

NOTICE ADDRESS FOR ALL
GUARANTORS:

101 Park Avenue
Oklahoma City, Oklahoma 73102
Fax No.:        (405) 280-7516
Phone No.:   (405) 280-7654
Attention:     Chief Financial Officer

GUARANTY SUPPLEMENT

(Corporate Guaranty)

To the Lenders under the
Credit Agreement (defined below)

Ladies and Gentlemen:

        Sonic Corp., the Lenders party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer entered into that certain Credit Agreement, dated as of April 23, 2003 (said Credit Agreement, as amended, modified and supplemented, the “Credit Agreement”; capitalized terms used herein and not defined herein shall have the meaning given to them in the Credit Agreement). Pursuant to Section 6.12 of the Credit Agreement, the undersigned, ___________________________________, a ______________ organized under the laws of the __________________ (the “Additional Guarantor”) desires to amend the definition of Guarantor (as the same may have been heretofore amended) set forth in the Corporate Guaranty attached hereto so that at all times from and after the date hereof, the Additional Guarantor shall be jointly and severally liable as set forth in the Corporate Guaranty for the obligations of the Borrower under the Credit Agreement to the extent and in the manner set forth in the Corporate Guaranty.

        The undersigned is the duly elected _________________________ of the Additional Guarantor, a Material Subsidiary of the Borrower, and is duly authorized to execute and deliver this Guaranty Supplement to each of you. The execution by the undersigned of this Guaranty Supplement shall evidence consent to and acknowledgment and approval of the terms set forth herein and in the Corporate Guaranty. The Additional Guarantor represents and warrants that the representations and warranties set forth in Section 4 of the Corporate Guaranty as to the Additional Guarantor are true and correct on and as of the date hereof.

        Upon execution of this Guaranty Supplement, the Corporate Guaranty shall be deemed to be amended as set forth above. Except as amended herein, the terms and provisions of the Corporate Guaranty, the Credit Agreement and the other Loan Documents are hereby ratified, confirmed and approved in all respects.

        Any and all notices, requests, certificates and other instruments may refer to the Credit Agreement and the Corporate Guaranty without making specific reference to this Guaranty Supplement, but nevertheless all such references shall be deemed to include this Guaranty Supplement unless the context shall otherwise require.

Exhibit A – 1

      Dated: _____________________, 20___.

[NAME OF ADDITIONAL GUARANTOR]
By:	Name:  Title:

Exhibit A – 2

EXHIBIT F

OPINION MATTERS

Exhibit F

EXHIBIT G

PARTNERSHIP GUARANTY

        PARTNERSHIP GUARANTY (this “Guaranty”), dated as of April 23, 2003, made by each of the parties listed on the signature pages hereof (collectively, the “Guarantors”, and each, a “Guarantor”), in favor of the Guarantied Parties referred to below.

W I T N E S S E T H:

        WHEREAS, Sonic Corp., a Delaware corporation (the “Borrower”), has entered into a Credit Agreement, dated as of April 23, 2003, among the Lenders party thereto, and Bank of America, N.A., as the Administrative Agent and L/C Issuer (hereinafter, the “Administrative Agent”) for the Lenders (said Credit Agreement, as it may be amended, supplemented or otherwise modified from time to time, being the “Credit Agreement”, and capitalized terms not defined herein but defined therein being used herein as therein defined); and

        WHEREAS, the Borrower and each of the Guarantors are members of the same consolidated group of companies and are engaged in operations which require financing on a basis in which credit can be made available from time to time to the Borrower and the Guarantors, and the Guarantors will derive direct and indirect economic benefit from the Loans and Letters of Credit under the Credit Agreement; and

        WHEREAS, it is a condition precedent to the obligation of the Lenders to make Loans and issue Letters of Credit under the Credit Agreement that the Guarantors shall have executed and delivered this Guaranty; and

        WHEREAS, the Lenders, the Administrative Agent, any Affiliate of any Lender entering into a Swap Contract (provided that such Lender was a Lender at the time such Swap Contract was entered into) with the Borrower or any Affiliate of the Borrower and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document are herein referred to as the “Guarantied Parties”;

        NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make Loans and issue Letters of Credit the Guarantors hereby agree as follows:

        SECTION 1. Guaranty. The Guarantors hereby jointly and severally unconditionally and irrevocably guarantee the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise, of, and the performance of, (a) the Obligations, whether now or hereafter existing and whether for principal, interest, fees, expenses or otherwise, (b) any and all out-of-pocket expenses (including, without limitation, expenses and counsel fees and expenses of the Administrative Agent and the Lenders) incurred by any of the Guarantied Parties in enforcing any rights under this Guaranty and (c) all present and future amounts that would become due but for the operation of any provision of Debtor Relief Laws, and all present and future accrued and unpaid interest, including, without limitation, all post-petition interest if the Borrower or any Guarantor voluntarily or involuntarily becomes subject to any Debtor Relief Laws (the items set forth in clauses (a), (b) and (c) immediately above being herein referred to as the “Guarantied Obligations”). Upon failure of the Borrower to pay any of the Guarantied Obligations when due

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after the giving by the Administrative Agent and/or the Lenders of any notice and the expiration of any applicable cure period in each case provided for in the Credit Agreement and other Loan Documents (whether at stated maturity, by acceleration or otherwise), the Guarantors hereby further jointly and severally agree to promptly pay the same after the Guarantors’ receipt of notice from the Administrative Agent of the Borrower’s failure to pay the same, without any other demand or notice whatsoever, including without limitation, any notice having been given to any Guarantor of either the acceptance by the Guarantied Parties of this Guaranty or the creation or incurrence of any of the Obligations. This Guaranty is an absolute guaranty of payment and performance of the Guarantied Obligations and not a guaranty of collection, meaning that it is not necessary for the Guarantied Parties, in order to enforce payment by the Guarantors, first or contemporaneously to accelerate payment of any of the Guarantied Obligations, to institute suit or exhaust any rights against any Loan Party, or to enforce any rights against any collateral. Notwithstanding anything herein or in any other Loan Document to the contrary, in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if, as a result of applicable law relating to fraudulent conveyance or fraudulent transfer, including Section 548 of Bankruptcy Code or any applicable provisions of comparable state law (collectively, “Fraudulent Transfer Laws”), the obligations of any Guarantor under this Section 1 would otherwise, after giving effect to (a) all other liabilities of such Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor in respect of intercompany Indebtedness to the Borrower to the extent that such Indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder) and (b) to the value as assets of such Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any rights of subrogation, contribution, reimbursement, indemnity or similar rights held by such Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or (iii) any other contractual obligations providing for an equitable allocation among such Guarantor and other Subsidiaries or Affiliates of the Borrower of obligations arising under this Guaranty or other guaranties of the Obligations by such parties, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under this Section 1, then the amount of such liability shall, without any further action by such Guarantor, any Lender, the Administrative Agent or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

        SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement, the Notes and the other Loan Documents, without set-off or counterclaim, and regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Guarantied Parties with respect thereto. The liability of each Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

        (a)      any lack of validity or enforceability of any provision of any other Loan Document or any other agreement or instrument relating to any Loan Document, or avoidance or subordination of any of the Guarantied Obligations;

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        (b)      any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, all or any of the Guarantied Obligations, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, the Credit Agreement, the Notes or any of the other Loan Documents;

        (c)      any exchange, release or non-perfection of any Lien on any Collateral for, or any release of any other Loan Party or amendment or waiver of any term of any other guaranty of, or any consent to departure from any requirement of any other guaranty of, all or any of the Guarantied Obligations;

        (d)      the absence of any attempt to collect any of the Guarantied Obligations from the Borrower or from any other Loan Party or any other action to enforce the same or the election of any remedy by any of the Guarantied Parties;

        (e)      any waiver, consent, extension, forbearance or granting of any indulgence by any of the Guarantied Parties with respect to any provision of any other Loan Document;

        (f)      the election by any of the Guarantied Parties in any proceeding under any Debtor Relief Law;

        (g)      any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, under any Debtor Relief Law; or

        (h)      any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Borrower or any Guarantor other than payment or performance of the Obligations.

        SECTION 3. Waiver.

        (a)      Each Guarantor hereby (i) waives (A) promptness, diligence, notice of acceptance and any and all other notices, including, without limitation, notice of intent to accelerate and notice of acceleration, with respect to any of the Obligations or this Guaranty, (B) any requirement that any of the Guarantied Parties protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral, (C) the filing of any claim with a court in the event of receivership or bankruptcy of the Borrower or any other Person, (D) except as otherwise provided herein, protest or notice with respect to nonpayment of all or any of the Guarantied Obligations, (E) the benefit of any statute of limitation, (F) all demands whatsoever (and any requirement that demand be made on the Borrower or any other Person as a condition precedent to such Guarantor’s obligations hereunder), (G) all rights by which any Guarantor might be entitled to require suit on an accrued right of action in respect of any of the Guarantied Obligations or require suit against the Borrower or any other Guarantor or Person, (H) any defense based upon an election of remedies by any Guarantied Party, or (I) notice of any events or circumstances set forth in clauses (a) through (h) of Section 2 hereof; and (ii) covenants and agrees that, except as otherwise agreed by the parties, this Guaranty will not be discharged except (i) by complete payment and performance of the Guarantied Obligations and any other

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obligations of such Guarantor contained herein or (ii) as to any Guarantor, upon the sale or other disposition of all of the Stock of such Guarantor as permitted under the Credit Agreement.

        (b)      If, in the exercise of any of its rights and remedies, any of the Guarantied Parties shall forfeit any of its rights or remedies, including, without limitation, its right to enter a deficiency judgment against the Borrower or any other Person, whether because of any Applicable Law pertaining to “election of remedies” or the like, each Guarantor hereby consents to such action by such Guarantied Party and waives any claim based upon such action. Any election of remedies which results in the denial or impairment of the right of such Guarantied Party to seek a deficiency judgment against the Borrower shall not impair the obligation of such Guarantor to pay the full amount of the Guarantied Obligations or any other obligation of such Guarantor contained herein.

        (c)      In the event any of the Guarantied Parties shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or under any of the Loan Documents, to the extent not prohibited by Applicable Law, such Guarantied Party may bid all or less than the amount of the Guarantied Obligations and the amount of such bid, if successful, need not be paid by such Guarantied Party but shall be credited against the Guarantied Obligations.

        (d)      Each Guarantor agrees that notwithstanding the foregoing and without limiting the generality of the foregoing if, after the occurrence and during the continuance of an Event of Default, the Guarantied Parties are prevented by Applicable Law from exercising their respective rights to accelerate the maturity of the Guarantied Obligations, to collect interest on the Guarantied Obligations, or to enforce or exercise any other right or remedy with respect to the Guarantied Obligations, or the Administrative Agent is prevented from taking any action to realize on the Collateral, such Guarantor agrees to pay to the Administrative Agent for the account of the Guarantied Parties, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Guarantied Parties.

        (e)      Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower and of each other Loan Party, and of all other circumstances bearing upon the risk of nonpayment of the Guarantied Obligations or any part thereof, that diligent inquiry would reveal. Each Guarantor hereby agrees that the Guarantied Parties shall have no duty to advise any Guarantor of information known to any of the Guarantied Parties regarding such condition or any such circumstance. In the event that any of the Guarantied Parties in its sole discretion undertakes at any time or from time to time to provide any such information to any Guarantor, such Guarantied Party shall be under no obligation (i) to undertake any investigation not a part of its regular business routine, (ii) to disclose any information which, pursuant to accepted or reasonable banking or commercial finance practices, such Guarantied Party wishes to maintain as confidential, or (iii) to make any other or future disclosures of such information or any other information to such Guarantor.

        (f)      Each Guarantor consents and agrees that the Guarantied Parties shall be under no obligation to marshal any assets in favor of any Guarantor or otherwise in connection with obtaining payment of any or all of the Guarantied Obligations from any Person or source.

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        SECTION 4. Representations and Warranties. Each Guarantor hereby represents and warrants to the Guarantied Parties that the representations and warranties set forth in Article 5 of the Credit Agreement as they relate to such Guarantor or to the Loan Documents to which such Guarantor is a party are true and correct in all material respects in the manner specified in the Credit Agreement and the Guarantied Parties shall be entitled to rely on each of them as if they were fully set forth herein.

        SECTION 5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor herefrom shall in any event be effective unless the same shall be in writing, approved by the Required Lenders (or by all the Lenders where the approval of each Lender is required under the Credit Agreement) and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

        SECTION 6. Addresses for Notices. All notices and other communications provided for hereunder shall be effectuated in the manner provided for in Section 10.02 of the Credit Agreement, provided that if a notice or communication hereunder is sent to a Guarantor, said notice shall be addressed to such Guarantor, in care of the Borrower.

        SECTION 7. No Waiver; Remedies.

        (a)      No failure on the part of any Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by Applicable Law or any of the other Loan Documents.

        (b)      No waiver by the Guarantied Parties of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by any of the Guarantied Parties permitted hereunder shall in way affect or impair any of the rights of the Guarantied Parties or the obligations of any Guarantor under this Guaranty or under any of the other Loan Documents, except as specifically set forth in any such waiver. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guarantied Obligations shall be conclusive and binding on each Guarantor irrespective of whether such Guarantor was a party to the suit or action in which such determination was made provided that the Borrower was so a party.

        SECTION 8. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default under the Credit Agreement, each of the Guarantied Parties is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set-off and apply any and all deposits (general or special (except trust and escrow accounts), time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Guarantied Party to or for the credit or the account of each Guarantor against any and all of the obligations of such Guarantor now or hereafter existing under this Guaranty, irrespective of whether or not such Guarantied Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured; provided, however, such Guarantied Party shall promptly notify such Guarantor and the Borrower after such set-off and

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the application made by such Guarantied Party. The rights of each Guarantied Party under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Guarantied Party may have.

        SECTION 9. Continuing Guaranty; Transfer of Notes. This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until the Release Date, (ii) be binding upon each Guarantor, its permitted successors and assigns, and (iii) inure to the benefit of and be enforceable by the Guarantied Parties and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause (iii), each of the Guarantied Parties may assign or otherwise transfer any Note held by it or the Guarantied Obligations owed to it to any other Person, and such other Person shall thereupon become vested with all the rights in respect thereof granted to such Guarantied Party herein or otherwise with respect to such of the Notes and the Guarantied Obligations so transferred or assigned, subject, however, to compliance with the provisions of Section 10.07 of the Credit Agreement in respect of assignments. No Guarantor may assign any of its obligations under this Guaranty without first obtaining the written consent of the Lenders as set forth in the Credit Agreement.

        SECTION 10. Reimbursement. To the extent that any Guarantor shall be required hereunder to pay a portion of the Guarantied Obligations exceeding the greater of (a) the amount of the economic benefit actually received by such Guarantor from the Loans and the Letters of Credit and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the Guarantied Obligations (excluding the amount thereof repaid by the Borrower) in the same proportion as such Guarantor’s net worth at the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors at the date enforcement is sought hereunder, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess, pro rata, based on the respective net worths of such other Guarantors at the date enforcement hereunder is sought. Notwithstanding anything to the contrary, each Guarantor agrees that the Guarantied Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing its guaranty herein or effecting the rights and remedies of the Guarantied Parties hereunder. This Section 10 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 10 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay to the Guarantied Parties the Guarantied Obligations as and when the same shall become due and payable in accordance with the terms hereof.

        SECTION 11. Reinstatement. This Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against any Loan Party for liquidation or reorganization, should any Loan Party become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of any Loan Party’s assets, and shall, to the fullest extent permitted by Applicable Law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligees of the Obligations or such part thereof, whether as a “voidable preference,”“fraudulent transfer,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Guarantied Obligations shall, to the fullest extent

6

permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

        SECTION 12. GOVERNING LAW.

        (a)      THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF OKLAHOMA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

        (b)      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF OKLAHOMA SITTING IN OKLAHOMA COUNTY, OKLAHOMA OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OKLAHOMA LOCATED IN OKLAHOMA CITY, OKLAHOMA COUNTY, OKLAHOMA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

        SECTION 13. Waiver of Jury Trial. EACH PARTY TO THIS GUARANTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

        SECTION 14. Section Titles. The Section titles contained in this Guaranty are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Guaranty.

7

        SECTION 15. Execution in Counterparts. This Guaranty may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same Guaranty.

        SECTION 16. Miscellaneous. All references herein to the Borrower or to any Guarantor shall include their respective successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower or such Guarantor. All references to the singular shall be deemed to include the plural where the context so requires.

        SECTION 17. Subrogation and Subordination.

        (a)     Subrogation. Notwithstanding any reference to subrogation contained herein to the contrary, until the Release Date, each Guarantor hereby irrevocably waives any claim or other rights which it may have or hereafter acquire against the Borrower that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of any Lender against the Borrower or any collateral which any Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statutes or common law, including without limitation, the right to take or receive from the Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Lenders, and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 17 is knowingly made in contemplation of such benefits.

        (b)     Subordination. All debt and other liabilities of the Borrower to any Guarantor (“Borrower Debt”) are expressly subordinate and junior to the Guarantied Obligations and any instruments evidencing the Borrower Debt to the extent provided below.

        (i)       Until the Release Date, each Guarantor agrees that it will not request, demand, accept, or receive (by set-off or other manner) any payment amount, credit or reduction of all or any part of the amounts owing under the Borrower Debt or any security therefor, except as specifically allowed pursuant to clause (ii) below;

        (ii)       Notwithstanding the provisions of clause (i) above, the Borrower may pay to the Guarantors and the Guarantors may request, demand, accept and receive and retain from the Borrower payments, credits or reductions of all or any part of the amounts owing under the Borrower Debt or any security therefor on the Borrower Debt, provided that the Borrower’s right to pay and the Guarantors’ right to receive any such amount shall automatically and be immediately suspended and cease (A) upon the occurrence and during the continuance of a Default or (B) if, after taking into account the effect of such

8

payment, a Default would occur and be continuing. The Guarantors’ right to receive amounts under this clause (ii) (including any amounts which theretofore may have been suspended) shall automatically be reinstated at such time as the Default which was the basis of such suspension has been cured or waived (provided that no subsequent Default has occurred) or such earlier date, if any, as the Administrative Agent gives notice to the Guarantors of reinstatement by the Required Lenders, in the Required Lenders’ sole discretion;

        (iii)       If any Guarantor receives any payment on the Borrower Debt in violation of this Guaranty, such Guarantor will hold such payment in trust for the Lenders and will immediately deliver such payment to the Administrative Agent; and

        (iv)       In the event of the commencement or joinder of any suit, action or proceeding of any type (judicial or otherwise) or proceeding under any Debtor Relief Law against the Borrower (an “Insolvency Proceeding”) and subject to court orders issued pursuant to the Bankruptcy Code, the Guarantied Obligations shall first be paid, discharged and performed in full before any payment or performance is made upon the Borrower Debt notwithstanding any other provisions which may be made in such Insolvency Proceeding. In the event of any Insolvency Proceeding, each Guarantor will at any time prior to the payment in full of the Obligations on the Maturity Date (A) file, at the request of any Guarantied Party, any claim, proof of claim or similar instrument necessary to enforce the Borrower’s obligation to pay the Borrower Debt, and (B) hold in trust for and pay to the Guarantied Parties any and all monies, obligations, property, stock dividends or other assets received in any such proceeding on account of the Borrower Debt in order that the Guarantied Parties may apply such monies or the cash proceeds of such other assets to the Obligations.

        SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or become a party to or be made the subject of any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights of any Guarantied Party granted hereunder, then, the obligations of such Guarantor under this Guaranty shall be, as between such Guarantor and such Guarantied Party, a fully-matured, due, and payable obligation of such Guarantor to such Guarantied Party (without regard to whether the Borrower is then in default under the Credit Agreement or whether any part of the Guarantied Obligations is then due and owing by the Borrower to such Guarantied Party), payable in full by such Guarantor to such Guarantied Party upon demand, which shall be the estimated amount owing in respect of the contingent claim created hereunder.

        SECTION 19. Rate Provision. It is not the intention of any Guarantied Party to make an agreement violative of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in this Guaranty, no Guarantied Party shall ever be entitled to contract, charge, receive, collect or apply, as interest on the Guarantied Obligations, any amount in excess of the Highest Lawful Rate. In no event shall any Guarantor be obligated to pay any amount in excess of the Highest Lawful Rate. If from any circumstance the Administrative Agent or any Guarantied Party shall ever receive, collect or apply anything of value deemed excess interest under Applicable Law, an amount equal to such excess shall be applied to the reduction of the

9

principal amount of outstanding Loans, L/C Borrowings and any remainder shall be promptly refunded to the payor. In determining whether or not interest paid or payable with respect to the Guarantied Obligations, under any specified contingency, exceeds the Highest Lawful Rate, the Guarantors and the Guarantied Parties shall, to the maximum extent permitted by Applicable Law, (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such Obligations so that the interest paid on account of such Guarantied Obligations does not exceed the Highest Lawful Rate and/or (c) allocate interest between portions of such Guarantied Obligations; provided that if the Guarantied Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Highest Lawful Rate, the Guarantied Parties shall refund to the payor the amount of such excess or credit the amount of such excess against the total principal amount owing, and, in such event, no Guarantied Party shall be subject to any penalties provided by any laws for contracting for, charging or receiving interest in excess of the Highest Lawful Rate.

        SECTION 20. Severability. Any provision of this Guaranty which is for any reason prohibited or found or held invalid or unenforceable by any court or governmental agency shall be ineffective to the extent of such prohibition or invalidity or unenforceability, without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

        SECTION 21. Guaranty Supplement. Any Subsidiary of the Borrower which becomes a party hereto after the date hereof pursuant to Section 6.12 of the Credit Agreement and a Guaranty Supplement shall be bound by all of the terms and provisions of this Guaranty, and shall be a “Guarantor” for all purposes of this Guaranty, the Credit Agreement and the other Loan Documents.

        SECTION 22. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

10

        IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer on the date first above written.

EACH OF THE PARTNERSHIPS SPECIFIED             IN ANNEX A HERETO
By:	Sonic Restaurants, Inc., Managing General Partner of each of such Partnerships
By:	Name:  Title:

ADDRESS FOR NOTICES:

101 Park Avenue
Oklahoma City, Oklahoma 73102
Fax No.:        (405) 280-7516
Phone No.:   (405) 280-7654
Attention:     Chief Financial Officer

11

GUARANTY SUPPLEMENT

(Partnership Guaranty)

To the Lenders under the
Credit Agreement (defined below)

Ladies and Gentlemen:

        Sonic Corp., the Lenders party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer entered into that certain Credit Agreement, dated as of April 23, 2003 (said Credit Agreement, as amended, modified and supplemented, the “Credit Agreement”; capitalized terms used herein and not defined herein shall have the meaning given to them in the Credit Agreement). Pursuant to Section 6.12 of the Credit Agreement, the undersigned, ___________________________________, a general partnership organized under the laws of the __________________ (the “Additional Guarantor”) desires to amend the definition of Guarantor (as the same may have been heretofore amended) set forth in the Partnership Guaranty attached hereto so that at all times from and after the date hereof, the Additional Guarantor shall be jointly and severally liable as set forth in the Partnership Guaranty for the obligations of the Borrower under the Credit Agreement to the extent and in the manner set forth in the Partnership Guaranty.

        The undersigned is the duly elected _________________________ of Sonic Restaurants, Inc., managing general partner of the Additional Guarantor, a Subsidiary of the Borrower, and is duly authorized to execute and deliver this Guaranty Supplement to each of you. The execution by the undersigned of this Guaranty Supplement shall evidence consent to and acknowledgment and approval of the terms set forth herein and in the Partnership Guaranty. The Additional Guarantor represents and warrants that the representations and warranties set forth in Section 4 of the Partnership Guaranty as to the Additional Guarantor are true and correct on and as of the date hereof.

        Upon execution of this Guaranty Supplement, the Partnership Guaranty shall be deemed to be amended as set forth above. Except as amended herein, the terms and provisions of the Partnership Guaranty, the Credit Agreement and the other Loan Documents are hereby ratified, confirmed and approved in all respects.

        Any and all notices, requests, certificates and other instruments may refer to the Credit Agreement and the Partnership Guaranty without making specific reference to this Guaranty Supplement, but nevertheless all such references shall be deemed to include this Guaranty Supplement unless the context shall otherwise require.

Exhibit A-1

      Dated: _____________________, 20___.

[NAME OF ADDITIONAL GUARANTOR]
By:	Sonic Restaurants, Inc., Managing General Partner of Additional Guarantor
By:	Name:  Title:

Exhibit A-2

Annex A - Partnership Guaranty

Partnerships

SDI OF BLYTHEVILLE, ARKANSAS (N. 6TH) PARTNERSHIP

SONIC DRIVE IN OF BAYTOWN, TEXAS

SONIC DRIVE IN OF BEAUMONT, TEXAS (COLLEGE-MAJOR) PARTNERSHIP

SONIC DRIVE IN OF BETHANY, OKLAHOMA (39TH)

SONIC DRIVE IN OF BLYTHEVILLE #2 PARTNERSHIP

SONIC DRIVE IN OF CHILLICOTHE, MISSOURI

SONIC DRIVE IN OF CHANDLER, OKLAHOMA PARTNERSHIP

SONIC DRIVE IN #833, HOUSTON, CHANNELVIEW C084

SONIC DRIVE IN OF CABOT PARTNERSHIP

SONIC DRIVE IN OF CALLAWAY, FLORIDA

SONIC DRIVE IN OF DEER PARK, TEXAS PARTNERSHIP

SONIC DRIVE IN #960, DAYTON, TEXAS

SONIC DRIVE IN OF DALLAS, TEXAS (FOREST LANE & GREENVILLE) PARTNERSHIP

SONIC DRIVE IN OF DALLAS, TEXAS (FT WORTH)

SONIC DRIVE IN OF DALLAS, TEXAS (W. LEDBETTER DRIVE)

SONIC DRIVE IN OF GROVES, TEXAS PARTNERSHIP

SONIC DRIVE IN OF GOSNELL PARTNERSHIP

SONIC DRIVE IN OF GADSDEN, ALABAMA PARTNERSHIP

SONIC DRIVE IN OF GALAX, VIRGINIA PARTNERSHIP

SONIC DRIVE IN #617, HOUSTON, ALDINE H030

SONIC DRIVE IN OF HOMER, LOUISIANA

SONIC DRIVE IN #744, HOUSTON, AIRLINE H033

SONIC DRIVE IN OF HOUSTON, TEXAS (TELEPHONE ROAD) PARTNERSHIP

SONIC DRIVE IN #980, HUMBLE, TEXAS H061

SONIC DRIVE IN #110, HOUSTON, ROSSLYN RD, H071

SONIC DRIVE IN #1119, HOUSTON DYERSDALE H072

SONIC DRIVE IN OF HOUSTON, TEXAS (FUQUA DRIVE)

SONIC DRIVE IN #1173 HIGHLANDS, TEXAS H081

SDI OF HOUSTON, TEXAS (S POST OAK) PARTNERSHIP

SONIC DRIVE IN OF HUNTSVILLE, ALABAMA (BOB WALLACE) PARTNERSHIP

SONIC DRIVE IN OF HUNTSVILLE, ALABAMA (MEMORIAL PARKWAY) PARTNERSHIP

SONIC DRIVE IN OF HOUSTON, TEXAS (18TH & MANGUM) PARTNERSHIP

SONIC DRIVE IN OF HOUSTON, TEXAS (COPPERFIELD) PARTNERSHIP

SONIC DRIVE IN OF HOUSTON, TEXAS (GESSNER ROAD) PARTNERSHIP

SONIC DRIVE IN OF CLEAR LAKE CITY, TEXAS PARTNERSHIP

Annex A-1

SONIC DRIVE IN OF HOUSTON, TEXAS (SCARSDALE) PARTNERSHIP

SONIC DRIVE IN OF HOUSTON (JONES ROAD) TEXAS PARTNERSHIP

SONIC DRIVE IN OF HOUSTON, TX (VETERAN'S MEMORIAL HIGHWAY) PARTNERSHIP

SONIC DRIVE IN OF HOUSTON, TEXAS (TIDWELL) PARTNERSHIP

SONIC DRIVE IN OF HOUSTON, TEXAS (BLALOCK) PARTNERSHIP

SONIC DRIVE IN OF INDEPENDENCE MISSOURI #3

SONIC DRIVE IN OF INDEPENDENCE MISSOURI (23RD & WESTPORT)

SONIC DRIVE IN OF JONESBORO, LOUISIANA PARTNERSHIP

SONIC DRIVE IN #1174, JACINTO CITY, TEXAS J025

SONIC DRIVE IN #1156, KATY, TEXAS K020

SONIC DRIVE IN OF KANSAS CITY, KANSAS (LEAVENWORTH)

SONIC DRIVE IN OF KANSAS CITY, KANSAS (STRONG)

SONIC DRIVE IN OF KANSAS CITY, MISSOURI (INDEPENDENCE AVE) PARTNERSHIP

SONIC DRIVE IN OF KANSAS CITY, KANSAS (78TH STREET) PARTNERSHIP

SONIC DRIVE IN OF LEE'S SUMMIT MISSOURI GENERAL PARTNERSHIP

SONIC DRIVE IN OF LEAVENWORTH, KANSAS

SONIC DRIVE IN OF LEAGUE CITY, TEXAS PARTNERSHIP

SONIC DRIVE IN OF LYNN HAVEN, FLORIDA

SONIC DRIVE IN OF LONOKE PARTNERSHIP

SONIC DRIVE OF CAMP ROBINSON PARTNERSHIP

SONIC DRIVE IN OF LITTLE ROCK (ASHER) PARTNERSHIP

SONIC DRIVE IN OF LINDALE, TEXAS PARTNERSHIP

SONIC DRIVE IN OF LITTLE ROCK, ARKANSAS (WESTHAVEN DRIVE) PARTNERSHIP

SONIC DRIVE IN OF MINDEN, LOUISIANA

SONIC DRIVE IN OF MONROE, LOUISIANA (#1) PARTNERSHIP

SONIC DRIVE IN OF MARYVILLE, MISSOURI

SONIC DRIVE IN OF MINEOLA, TEXAS PARTNERSHIP

SONIC DRIVE IN OF MOANROE, LOUISIANA (#2) PARTNERSHIP

SONIC DRIVE IN OF MANSFIELD, LOUISANA PARTNERSHIP

SONIC DRIVE IN OF MOUNTAIN GROVE, MISSOURI

SONIC DRIVE IN OF MONROE, LOUISIANA (MARTIN LUTHER) PARTNERSHIP

SONIC DRIVE IN OF MONROE, LOUISIANA (STERLINGTON ROAD) PARTNERSHIP

SONIC DRIVE IN OF MAUMELLE PARTNERSHIP

SONIC DRIVE IN OF MARIANNA, FLORIDA PARTNERSHIP

SONIC DRIVE IN OF MISSOURI CITY, TEXAS PARTNERSHIP

SONIC DRIVE IN, NORTHWEST OKC

SONIC DRIVE IN OF NEWPORT, ARKANSAS PARTNERSHIP

SONIC DRIVE IN OF NEWCASTLE, OKLAHOMA PARTNERSHIP

SONIC DRIVE IN OF NORMAN, OKLAHOMA (EAST LINDSEY) PARTNERSHIP

Annex A-2

SONIC DRIVE IN OF NORMAN, OKLAHOMA (24TH AVENUE) PARTNERSHIP

SONIC DRIVE IN OF NORMAN, OKLAHOMA (PORTER) PARTNERSHIP

SONIC DRIVE IN OF NORMAN, OKLAHOMA (WEST LINDSEY) PARTNERS

SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (19TH & MACARTHUR)

SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA ( 50th & MACARTHUR)

SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (NW 63RD STREET) PARTNERSHIP

SONIC DRIVE IN OF OKLAHOMA CITY (N.W. 23RD)

SONIC DRIVE IN OF OLATHE, KANSAS

SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA ( SE 29TH)

SONIC DRIVE IN OF OZARK, MISSOURI

SONIC DRIVE IN OF OLATHE, KANSAS #2 (SANTA FE)

SONIC DRIVE IN OF OKLAHOMA CITY (119TH & S WESTERN)

SDI OF PARAGOULD, ARKANSAS (KINGS HWY) PARTNERSHIP

SONIC DRIVE IN OF PORT ARTHUR, TEXAS (MEMORIAL) PARTNERSHIP

SONIC DRIVE IN OF PANAMA CITY, FLORIDA

SONIC DRIVE IN OF PENSACOLA, FLORIDA (9TH AVENUE) PARTNERSHIP

SDI OF PRATTVILLE, ALABAMA (E. MAIN) PARTNERSHIP

SONIC DRIVE IN OF RICHMOND, TEXAS PARTNERSHIP

SONIC DRIVE IN OF RAYTOWN, MISSOURI GENERAL PARTNERSHIP

SONIC DRIVE IN OF ROLLA, MISSOURI

SONIC DRIVE IN OF OKLAHOMA CITY, OKLAHOMA (S.W. 29TH) PARTNERSHIP

SDI OF SPRINGFIELD, MISSOURI #2 PARTNERSHIP

SONIC DRIVE IN OF SALEM, MISSOURI

SONIC DRIVE IN OF SUGAR CREEK, MISSOURI

SONIC DRIVE IN OF ST. JOSEPH, MISSOURI #1 PARTNERSHIP

SONIC DRIVE IN OF SHREVEPORT, LOUISIANA (BERT KOUNS)

SONIC DRIVE IN OF SHREVEPORT, LOUISIANA (WEST 70TH)

SONIC DRIVE IN OF SHREVEPORT, LOUISIANA (EAST 70TH)

SDI OF SPRINGFIELD, MISSOURI (GLENSTONE) PARTNERSHIP

SONIC DRIVE IN OF ST. JOSEPH, MISSOURI #2 PARTNERSHIP

SONIC DRIVE IN OF SHERWOOD, ARKANSAS PARTNERSHIP

SDI OF SPRINGFIELD, MISSOURI (S. CAMPBELL) PARTNERSHIP

SONIC DRIVE IN OF SULLIVAN, MISSOURI PARTNERSHIP

SONIC DRIVE IN #959, TOMBALL, TEXAS T038

SONIC DRIVE IN OF TUTTLE, OKLAHOMA

SDI OF TAZEWELL, VIRGINIA PARTNERSHIP

SONIC DRIVE IN OF WATONGA, OKLAHOMA PARTNERSHIP

SONIC DRIVE IN OF WEST MONROE, LOUISIANA PARTNERSHIP

SONIC DRIVE IN OF WALNUT RIDGE PARTNERSHIP

Annex A-3

SONIC DRIVE IN OF WINNFIELD, LOUISIANA PARTNERSHIP

SONIC DRIVE IN OF WEST MONROE, LOUISIANA (THOMAS ROAD WEST) PARTNERSHIP

SONIC DRIVE IN OF WASHINGTON, MISSOURI GENERAL PARTNERSHIP

SDI OF GADSDEN, ALABAMA (MEIGHAN) PARTNERSHIP

SONIC DRIVE IN OF MONTGOMERY, ALABAMA (BELL AND VAUGHN) PARTNERSHIP

SONIC DRIVE IN OF PENSACOLA, FLORIDA (NAVY BLVD.) PARTNERSHIP

SONIC DRIVE IN OF SPRINGFIELD, MISSOURI (WEST SUNSHINE) PARTNERSHIP

SONIC DRIVE IN OF HOUSTON, TEXAS (DAIRY ASHFORD) PARTNERSHIP

SDI OF MONTGOMERY, ALABAMA (MCGEHEE) PARTNERSHIP

SONIC DRIVE IN OF MONTGOMERY, ALABAMA (ATLANTA HIGHWAY) PARTNERSHIP

SDI OF PANAMA CITY BEACH, FLORIDA (THOMAS DRIVE) PARTNERSHIP

SDI OF MARY ESTHER, FLORIDA PARTNERSHIP

SDI OF WEBSTER, TEXAS PARTNERSHIP

SDI OF DANVILLE, KENTUCKY (BAUGHMAN) PARTNERSHIP

SDI OF DALLAS, TEXAS (WHEATLAND ROAD) PARTNERSHIP

SDI OF DALLAS, TEXAS (SPRING VALLEY) PARTNERSHIP

SDI OF LEXINGTON, KENTUCKY PARTNERSHIP

SDI OF MILTON, FLORIDA PARTNERSHIP

SDI OF MUSCLE SHOALS, ALABAMA PARTNERSHIP

SDI OF SHALIMAR, FLORIDA (EGLIN PARKWAY) PARTNERSHIP

SDI OF UNION, MISSOURI PARTNERSHIP

SDI OF WINNSBORO, TEXAS PARTNERSHIP

SDI OF HOUSTON, TEXAS (BISSONETT) PARTNERSHIP

SDI OF HOUSTON, TEXAS (WESTHEIMER) PARTNERSHIP

SDI OF KATY, TEXAS (MASON RD.) PARTNERSHIP

SDI OF GEORGETOWN, KENTUCKY (LEXINGTON) PARTNERSHIP

SDI OF ATHENS, ALABAMA PARTNERSHIP

SDI OF HOUSTON, TEXAS (FM 1960) PARTNERSHIP

SDI OF ALEXANDER CITY, ALABAMA PARTNERSHIP

SDI OF SHREVEPORT, LOUISIANA (STEEPLECHASE) PARTNERSHIP

SDI OF COLUMBUS, GEORGIA PARTNERSHIP

SDI OF LAPORTE, TEXAS PARTNERSHIP

SDI OF HUNTSVILLE, ALABAMA (PRATT) PARTNERSHIP

SDI OF NICHOLASVILLE, KENTUCKY PARTNERSHIP

SDI OF OKLAHOMA CITY, OKLAHOMA (N. PENN) PARTNERSHIP

SDI OF OKLAHOMA CITY, OKLAHOMA (N.E. 23RD) PARTNERSHIP

SDI OF OKLAHOMA CITY, OKLAHOMA (S.W. GRAND) PARTNERSHIP

SDI OF DALLAS, TEXAS (GREENVILLE) PARTNERSHIP

SDI OF HOUSTON, TEXAS (N. DURHAM) PARTNERSHIP

SDI OF HOUSTON, TEXAS (CROSSTIMBERS) PARTNERSHIP

SDI OF AUBURN, ALABAMA (DEAN RD.) PARTNERSHIP

Annex A-4

SDI OF GULF BREEZE, FLORIDA PARTNERSHIP

SDI OF LITTLE ROCK, ARKANSAS (RODNEY PARHAM) PARTNERSHIP

SDI OF MADISON, ALABAMA (SULLIVAN) PARTNERSHIP

SDI OF DALLAS, TEXAS (N.W. HIGHWAY) PARTNERSHIP

SDI OF DALLAS, TEXAS (INWOOD ROAD) PARTNERSHIP

SDI OF LITTLE ROCK, ARKANSAS (CANTRELL RD.) PARTNERSHIP

SDI OF WINCHESTER, KENTUCKY PARTNERSHIP

SDI OF BEREA, KENTUCKY PARTNERSHIP

SDI OF COLUMBUS, GEORGIA (EXPRESSWAY) PARTNERSHIP

SDI OF HOUSTON, TEXAS (SAM HOUSTON) PARTNERSHIP

SDI OF HOUSTON, TEXAS (LITTLE YORK #2) PARTNERSHIP

SDI OF HOUSTON, TEXAS ( N. FREEWAY) PARTNERSHIP

SDI OF DALLAS, TEXAS ( N. BUCKNER) PARTNERSHIP

SDI OF WILLS POINT, TEXAS PARTNERSHIP

SDI OF GRAHAM, NORTH CAROLINA PARTNERSHIP

SDI OF RICHARDSON, TEXAS PARTNERSHIP

SDI OF FRANKFORT, KENTUCKY PARTNERSHIP

SDI OF LANETT, ALABAMA PARTNERSHIP

SDI OF OLATHE, KANSAS #3 (BLACKBOB) PARTNERSHIP

SDI OF CYPRESS, TEXAS (LOUETTA) PARTNERSHIP

SDI OF PHENIX CITY, ALABAMA PARTNERSHIP

SDI OF ST JOSEPH, MISSOURI #3 PARTNERSHIP

SDI OF HOUSTON, TEXAS (GULF FREEWAY) PARTNERSHIP

SDI OF FLORENCE, ALABAMA PARTNERSHIP

SDI OF OPELIKA, ALABAMA PARTNERSHIP

SDI OF MOREHEAD, KENTUCKY PARTNERSHIP

SDI OF RICHMOND, KENTUCKY PARTNERSHIP

SDI OF COLUMBUS, GEORGIA (FLOYD) PARTNERSHIP

SDI OF WEST MONROE, LOUISIANA (CYPRESS) PARTNERSHIP

SDI OF RICHMOND, TEXAS (FM359) PARTNERSHIP

SDI OF LEE'S SUMMIT, MISSOURI (LANGSFORD) PARTNERSHIP

SDI OF COLLINSVILLE, VIRGINIA (VIRGINIA) PARTNERSHIP

SDI OF DALLAS, TEXAS (PLANO) PARTNERSHIP

SDI OF ROWLETT, TEXAS (DALROCK ROAD) PARTNERSHIP

SDI OF DALLAS, TEXAS (DAVIS) PARTNERSHIP

SDI OF PARIS, KENTUCKY (REINHOLD) PARTNERSHIP

SDI OF MARTINSVILLE, VIRGINIA (STARLING) PARTNERSHIP

SDI OF DALLAS, TEXAS (3555 FOREST LANE) PARTNERSHIP

SDI OF LAWRENCEBURG, KENTUCKY (CROSSROAD) PARTNERSHIP

SDI OF HOUSTON, TEXAS (13310 WEST LITTLE YORK) PARTNERSHIP

SDI OF DALLAS, TEXAS (12130 INWOOD ROAD) PARTNERSHIP

SDI OF DECATUR, ALABAMA (6TH AVE) PARTNERSHIP

SDI OF SPRINGFIELD, MISSOURI (E REPUBLIC) PARTNERSHIP

SDI OF WICHITA FALLS, TEXAS (TAFT) PARTNERSHIP

Annex A-5

SDI OF HOUSTON, TEXAS (KUYKENDAHL) PARTNERSHIP

SDI OF ALBERTVILLE, ALABAMA (U.S. HIGHWAY) PARTNERSHIP

SDI OF PEARLAND, TEXAS (W BROADWAY) PARTNERSHIP

SDI OF GARLAND, TEXAS (JUPITER) PARTNERSHIP

SDI OF HOUSTON, TEXAS (UVALDE) PARTNERSHIP

SDI OF HOUSTON, TEXAS (HILLCROFT) PARTNERSHIP

SDI OF COOL VALLEY, MISSOURI (S FLORISSANT) PARTNERSHIP

SDI OF SPRINGFIELD, MISSOURI (EAST SUNSHINE) PARTNERSHIP

SDI OF SACHSE, TEXAS (S. HIGHWAY 78) PARTNERSHIP

SDI OF MCKINNEY, TEXAS (ELDORADO) PARTNERSHIP

SDI OF CASSVILLE, MISSOURI (MAIN) PARTNERSHIP

SDI OF WICHITA FALLS, TEXAS (JACKSBORO) PARTNERSHIP

SDI OF PORT ARTHUR, TEXAS (TWIN CITY) PARTNERSHIP

SDI OF LITTLE ROCK, ARKANSAS (MABELVALE) PARTNERSHIP-FORMERLY BASELINE DR

SDI OF HOUSTON, TEXAS (BARKER-CYPRESS) PARTNERSHIP

SDI OF LEAVENWORTH, KANSAS (N. 4TH ) PARTNERSHIP

SDI OF WICHITA FALLS, TEXAS (SHEPPARD) PARTNERSHIP

SDI OF SHREVEPORT, LOUISIANA (KINGS HIGHWAY) PARTNERSHIP

SDI OF OKLAHOMA CITY, OKLAHOMA (N.W EXPRESSWAY) PARTNERSHIP

SDI OF DARDANELLE, ARKANSAS (UNION) PARTNERSHIP

SDI OF GRANDVIEW, MISSOURI (BLUE RIDGE) PARTNERSHIP

SDI OF PERKINS, OKLAHOMA (MAIN) PARTNERSHIP

SDI OF FRIENDSWOOD, TEXAS (FM 528) PARTNERSHIP

SDI OF LITTLE ROCK, ARKANSAS (STAGECOACH) PARTNERSHIP

SDI OF MISSOURI CITY, TEXAS (TEXAS PKWY) PARTNERSHIP

SDI OF KANSAS CITY, MOSSOURI (BLUE RIDGE BLVD.) PARTNERSHIP

SDI OF HOUSTON, TEXAS (9221 WEST RD) PARTNERSHIP

SDI OF LEXINGTON, KENTUCKY (WINCHESTER) PARTNERSHIP

SDI OF LITTLE ROCK, ARKANSAS (BROADWAY) PARTNERSHIP

SDI OF MONTGOMERY,ALABAMA (2025 CARTER HILL RD) PARTNERSHIP

SDI OF LEAGUE CITY, TEXAS (2310 FM 518 EAST) PARTNERSHIP

SDI OF FRISCO, TEXAS (7630 PRESTON RD.) PARTNERSHIP

SDI OF HOUSTON, TX (101 DAIRY ASHFORD STREET) PARTNERSHIP

SDI OF GRAND PRAIRIE, TEXAS (2650 NORTH HIGHWAY 360) PARTNERSHIP

SDI OF MONTGOMERY, ALABAMA (3430 ATLANTA HIGHWAY) PARTNERSHIP

SDI OF DALLAS, TEXAS (3650 FRANKFORD ROAD) PARTNERSHIP

SDI OF NORTH RICHLAND HILLS, TEXAS (GRAPEVINE HWY) PARTNERSHIP

SDI OF BEAUMONT, TEXAS (1040 S. 11TH ST) PARTNERSHIP

SDI OF DALLAS, TEXAS (9613 CLARK ROAD) PARTNERSHIP

SDI OF ARLINGTON, TEXAS (1100 NE GREEN OAKS BLVD) PARTNERSHIP

Annex A-6

SDI OF SPRING, TEXAS (19764 INTERSTATE 45 N) PARTNERSHIP

SDI OF HOUSTON, TEXAS (19625 TOMBALL PKWY), PARTNERSHIP

SDI OF CLARKSVILLE, TEXAS (W MAIN), PARTNERSHIP

SDI OF DALLAS, TEXAS (FERGUSON ROAD), PARTNERSHIP

SDI OF GARLAND, TEXAS (FOREST LANE), PARTNERSHIP

SDI OF GARLAND, TEXAS (W. MILLER RD), PARTNERSHIP

SDI OF GARLAND, TEXAS (BROADWAY BLVD), PARTNERSHIP

SDI OF GARLAND, TEXAS (BELTLINE ROAD), PARTNERSHIP

SDI OF LANCASTER, TEXAS (W PLEASANT RUN), PARTNERSHIP

SDI OF SHERMAN, TEXAS (TEXOMA PARKWAY), PARTNERSHIP

SDI OF WHITEHOUSE, TEXAS PARTNERSHIP

SDI OF DEKALB, TEXAS (NE FRONT STREET), PARTNERSHIP

SDI OF STAFFORD, TEXAS (12260 SW FRWY), PARTNERSHIP

SDI OF HOUSTON, TEXAS (8404 WESTHEIMER RD), PARTNERSHIP

SDI OF HOUSTON, TEXAS (5195 W 34TH ST), PARTNERSHIP

SDI OF DALLAS, TEXAS (10709 AUDELIA ROAD), PARTNERSHIP

SDI OF DALLAS, TEXAS (1330 EMPIRE CENTRAL), PARTNERSHIP

SDI OF DALLAS, TEXAS (8045 FOREST LANE), PARTNERSHIP

SDI OF HOUSTON, TEXAS (16710 CLAY RD), PARTNERSHIP

SDI OF STAFFORD, TEXAS (123 DULLES AVE), PARTNERSHIP

SDI OF GARLAND, TEXAS (CASTLE) PARTNERSHIP

SDI OF HOUSTON, TEXAS (8504 MAIN STREET) PARTNERSHIP

SDI OF NICEVILLE, FLORIDA (HIGHWAY 20), PARTNERSHIP

SDI OF DENVER, COLORADO (1300 S. SHERIDAN BLVD)

SDI OF SALT LAKE CITY, UTAH (7025 SOUTH HIGHLAND DRIVE)

SDI OF VIRGINIA BEACH, VIRGINIA (3581 HOLLAND ROAD)

SDI OF HUMBLE, TEXAS (7102 WILL CLAYTON PKWY) PARTNERSHIP

SDI OF FORT WORTH, TEXAS (CLIFFORD), PARTNERSHIP

SDI OF ARLINGTON, TEXAS (3811 S. COOPER), PARTNERSHIP

SDI OF HOUSTON, TEXAS (11902 BISSONNET ST), PARTNERSHIP

SDI OF PORT ARTHUR, TEXAS (W. PORT ARTHUR ROAD), PARTNERSHIP

SDI OF PRINCETON, TEXAS, PARTNERSHIP

SDI OF WHITE SETTLEMENT, TEXAS (N. CHERRY LANE), PARTNERSHIP

SDI OF MURPHY, TEXAS (109 W. FM 544), PARTNERSHIP

SDI OF HOUSTON, TEXAS (2000 WOLLOWBROOK MALL), PARTNERSHIP

SDI OF ARLINGTON, TEXAS (2121 E. LAMAR BLVD.), PARTNERSHIP

SDI OF DESTIN, FLORIDA (34960 EMERALD COAST PKWY), PARTNERSHIP

SDI OF GARLAND, TEXAS (5020 N. GARLAND AVE), PARTNERSHIP

SDI OF DESOTO, TX (1316 W. BELT LINE), PARTNERSHIP

SDI OF FRIENDSWOOD, TEXAS (BAYBROOK MALL), PARTNERSHIP

SDI OF HOUSTON, TEXAS (7470 BELLFORT) PARTNERSHIP

SDI OF PENSACOLA, FLORIDA (8990 PENSACOLA BLVD), PARTNERSHIP

SDI OF TAMPA, FLORIDA (4411 W. GRANDY BLVD), PARTNERSHIP

SDI OF GARLAND, TEXAS (6202 BROADWAY BLVD.), PARTNERSHIP

Annex A-7

SDI OF CYPRESS, TEXAS (26044 NW FREEWAY), PARTNERSHIP

SDI OF TOMBALL, TEXAS (26020 TOMBALL PKWY), PARTNERSHIP

SDI OF RICHARDSON, TEXAS (605 SOUTH PLANO ROAD), PARTNERSHIP

SDI OF FRIENDSWOOD, TEXAS (18214 GULF FREEWAY), PARTNERSHIP

Annex A-8

EXHIBIT H

LLC GUARANTY

        LLC GUARANTY (this “Guaranty”), dated as of April 23, 2003, made by each of the parties listed on the signature pages hereof (collectively, the “Guarantors”, and each, a “Guarantor”), in favor of the Guarantied Parties referred to below.

W I T N E S S E T H:

        WHEREAS, Sonic Corp., a Delaware corporation (the “Borrower”), has entered into a Credit Agreement, dated as of April 23, 2003, among the Lenders party thereto, and Bank of America, N.A., as the Administrative Agent and L/C Issuer (hereinafter, the “Administrative Agent”) for the Lenders (said Credit Agreement, as it may be amended, supplemented or otherwise modified from time to time, being the “Credit Agreement”, and capitalized terms not defined herein but defined therein being used herein as therein defined); and

        WHEREAS, the Borrower and each of the Guarantors are members of the same consolidated group of companies and are engaged in operations which require financing on a basis in which credit can be made available from time to time to the Borrower and the Guarantors, and the Guarantors will derive direct and indirect economic benefit from the Loans and Letters of Credit under the Credit Agreement; and

        WHEREAS, it is a condition precedent to the obligation of the Lenders to make Loans and issue Letters of Credit under the Credit Agreement that the Guarantors shall have executed and delivered this Guaranty; and

        WHEREAS, the Lenders, the Administrative Agent, any Affiliate of any Lender entering into a Swap Contract (provided that such Lender was a Lender at the time such Swap Contract was entered into) with the Borrower or any Affiliate of the Borrower and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document are herein referred to as the “Guarantied Parties”;

        NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make Loans and issue Letters of Credit the Guarantors hereby agree as follows:

        SECTION 1. Guaranty. The Guarantors hereby jointly and severally unconditionally and irrevocably guarantee the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise, of, and the performance of, (a) the Obligations, whether now or hereafter existing and whether for principal, interest, fees, expenses or otherwise, (b) any and all out-of-pocket expenses (including, without limitation, expenses and counsel fees and expenses of the Administrative Agent and the Lenders) incurred by any of the Guarantied Parties in enforcing any rights under this Guaranty and (c) all present and future amounts that would become due but for the operation of any provision of Debtor Relief Laws, and all present and future accrued and unpaid interest, including, without limitation, all post-petition interest if the Borrower or any Guarantor voluntarily or involuntarily becomes subject to any Debtor Relief Laws (the items set forth in clauses (a), (b) and (c) immediately above being herein referred to as the “Guarantied Obligations”). Upon failure of the Borrower to pay any of the Guarantied Obligations when due

1

after the giving by the Administrative Agent and/or the Lenders of any notice and the expiration of any applicable cure period in each case provided for in the Credit Agreement and other Loan Documents (whether at stated maturity, by acceleration or otherwise), the Guarantors hereby further jointly and severally agree to promptly pay the same after the Guarantors’ receipt of notice from the Administrative Agent of the Borrower’s failure to pay the same, without any other demand or notice whatsoever, including without limitation, any notice having been given to any Guarantor of either the acceptance by the Guarantied Parties of this Guaranty or the creation or incurrence of any of the Obligations. This Guaranty is an absolute guaranty of payment and performance of the Guarantied Obligations and not a guaranty of collection, meaning that it is not necessary for the Guarantied Parties, in order to enforce payment by the Guarantors, first or contemporaneously to accelerate payment of any of the Guarantied Obligations, to institute suit or exhaust any rights against any Loan Party, or to enforce any rights against any collateral. Notwithstanding anything herein or in any other Loan Document to the contrary, in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if, as a result of applicable law relating to fraudulent conveyance or fraudulent transfer, including Section 548 of Bankruptcy Code or any applicable provisions of comparable state law (collectively, “Fraudulent Transfer Laws”), the obligations of any Guarantor under this Section 1 would otherwise, after giving effect to (a) all other liabilities of such Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor in respect of intercompany Indebtedness to the Borrower to the extent that such Indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder) and (b) to the value as assets of such Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any rights of subrogation, contribution, reimbursement, indemnity or similar rights held by such Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or (iii) any other contractual obligations providing for an equitable allocation among such Guarantor and other Subsidiaries or Affiliates of the Borrower of obligations arising under this Guaranty or other guaranties of the Obligations by such parties, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under this Section 1, then the amount of such liability shall, without any further action by such Guarantor, any Lender, the Administrative Agent or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

        SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement, the Notes and the other Loan Documents, without set-off or counterclaim, and regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Guarantied Parties with respect thereto. The liability of each Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

        (a)      any lack of validity or enforceability of any provision of any other Loan Document or any other agreement or instrument relating to any Loan Document, or avoidance or subordination of any of the Guarantied Obligations;

2

        (b)      any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, all or any of the Guarantied Obligations, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, the Credit Agreement, the Notes or any of the other Loan Documents;

        (c)      any exchange, release or non-perfection of any Lien on any Collateral for, or any release of any other Loan Party or amendment or waiver of any term of any other guaranty of, or any consent to departure from any requirement of any other guaranty of, all or any of the Guarantied Obligations;

        (d)      the absence of any attempt to collect any of the Guarantied Obligations from the Borrower or from any other Loan Party or any other action to enforce the same or the election of any remedy by any of the Guarantied Parties;

        (e)      any waiver, consent, extension, forbearance or granting of any indulgence by any of the Guarantied Parties with respect to any provision of any other Loan Document;

        (f)      the election by any of the Guarantied Parties in any proceeding under any Debtor Relief Law;

        (g)      any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, under any Debtor Relief Law; or

        (h)      any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Borrower or any Guarantor other than payment or performance of the Obligations.

        SECTION 3. Waiver.

        (a)      Each Guarantor hereby (i) waives (A) promptness, diligence, notice of acceptance and any and all other notices, including, without limitation, notice of intent to accelerate and notice of acceleration, with respect to any of the Obligations or this Guaranty, (B) any requirement that any of the Guarantied Parties protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral, (C) the filing of any claim with a court in the event of receivership or bankruptcy of the Borrower or any other Person, (D) except as otherwise provided herein, protest or notice with respect to nonpayment of all or any of the Guarantied Obligations, (E) the benefit of any statute of limitation, (F) all demands whatsoever (and any requirement that demand be made on the Borrower or any other Person as a condition precedent to such Guarantor’s obligations hereunder), (G) all rights by which any Guarantor might be entitled to require suit on an accrued right of action in respect of any of the Guarantied Obligations or require suit against the Borrower or any other Guarantor or Person, (H) any defense based upon an election of remedies by any Guarantied Party, or (I) notice of any events or circumstances set forth in clauses (a) through (h) of Section 2 hereof; and (ii) covenants and agrees that, except as otherwise agreed by the parties, this Guaranty will not be discharged except (i) by complete payment and performance of the Guarantied Obligations and any other

3

obligations of such Guarantor contained herein or (ii) as to any Guarantor, upon the sale or other disposition of all of the Stock of such Guarantor as permitted under the Credit Agreement.

        (b)      If, in the exercise of any of its rights and remedies, any of the Guarantied Parties shall forfeit any of its rights or remedies, including, without limitation, its right to enter a deficiency judgment against the Borrower or any other Person, whether because of any Applicable Law pertaining to “election of remedies” or the like, each Guarantor hereby consents to such action by such Guarantied Party and waives any claim based upon such action. Any election of remedies which results in the denial or impairment of the right of such Guarantied Party to seek a deficiency judgment against the Borrower shall not impair the obligation of such Guarantor to pay the full amount of the Guarantied Obligations or any other obligation of such Guarantor contained herein.

        (c)      In the event any of the Guarantied Parties shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or under any of the Loan Documents, to the extent not prohibited by Applicable Law, such Guarantied Party may bid all or less than the amount of the Guarantied Obligations and the amount of such bid, if successful, need not be paid by such Guarantied Party but shall be credited against the Guarantied Obligations.

        (d)      Each Guarantor agrees that notwithstanding the foregoing and without limiting the generality of the foregoing if, after the occurrence and during the continuance of an Event of Default, the Guarantied Parties are prevented by Applicable Law from exercising their respective rights to accelerate the maturity of the Guarantied Obligations, to collect interest on the Guarantied Obligations, or to enforce or exercise any other right or remedy with respect to the Guarantied Obligations, or the Administrative Agent is prevented from taking any action to realize on the Collateral, such Guarantor agrees to pay to the Administrative Agent for the account of the Guarantied Parties, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Guarantied Parties.

        (e)      Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower and of each other Loan Party, and of all other circumstances bearing upon the risk of nonpayment of the Guarantied Obligations or any part thereof, that diligent inquiry would reveal. Each Guarantor hereby agrees that the Guarantied Parties shall have no duty to advise any Guarantor of information known to any of the Guarantied Parties regarding such condition or any such circumstance. In the event that any of the Guarantied Parties in its sole discretion undertakes at any time or from time to time to provide any such information to any Guarantor, such Guarantied Party shall be under no obligation (i) to undertake any investigation not a part of its regular business routine, (ii) to disclose any information which, pursuant to accepted or reasonable banking or commercial finance practices, such Guarantied Party wishes to maintain as confidential, or (iii) to make any other or future disclosures of such information or any other information to such Guarantor.

        (f)      Each Guarantor consents and agrees that the Guarantied Parties shall be under no obligation to marshal any assets in favor of any Guarantor or otherwise in connection with obtaining payment of any or all of the Guarantied Obligations from any Person or source.

4

        SECTION 4. Representations and Warranties. Each Guarantor hereby represents and warrants to the Guarantied Parties that the representations and warranties set forth in Article 5 of the Credit Agreement as they relate to such Guarantor or to the Loan Documents to which such Guarantor is a party are true and correct in all material respects in the manner specified in the Credit Agreement and the Guarantied Parties shall be entitled to rely on each of them as if they were fully set forth herein.

        SECTION 5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor herefrom shall in any event be effective unless the same shall be in writing, approved by the Required Lenders (or by all the Lenders where the approval of each Lender is required under the Credit Agreement) and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

        SECTION 6. Addresses for Notices. All notices and other communications provided for hereunder shall be effectuated in the manner provided for in Section 10.02 of the Credit Agreement, provided that if a notice or communication hereunder is sent to a Guarantor, said notice shall be addressed to such Guarantor, in care of the Borrower.

        SECTION 7. No Waiver; Remedies.

        (a)      No failure on the part of any Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by Applicable Law or any of the other Loan Documents.

        (b)      No waiver by the Guarantied Parties of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by any of the Guarantied Parties permitted hereunder shall in way affect or impair any of the rights of the Guarantied Parties or the obligations of any Guarantor under this Guaranty or under any of the other Loan Documents, except as specifically set forth in any such waiver. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guarantied Obligations shall be conclusive and binding on each Guarantor irrespective of whether such Guarantor was a party to the suit or action in which such determination was made provided that the Borrower was so a party.

        SECTION 8. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default under the Credit Agreement, each of the Guarantied Parties is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set-off and apply any and all deposits (general or special (except trust and escrow accounts), time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Guarantied Party to or for the credit or the account of each Guarantor against any and all of the obligations of such Guarantor now or hereafter existing under this Guaranty, irrespective of whether or not such Guarantied Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured; provided, however, such Guarantied Party shall promptly notify such Guarantor and the Borrower after such set-off and

5

the application made by such Guarantied Party. The rights of each Guarantied Party under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Guarantied Party may have.

        SECTION 9. Continuing Guaranty; Transfer of Notes. This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until the Release Date, (ii) be binding upon each Guarantor, its permitted successors and assigns, and (iii) inure to the benefit of and be enforceable by the Guarantied Parties and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause (iii), each of the Guarantied Parties may assign or otherwise transfer any Note held by it or the Guarantied Obligations owed to it to any other Person, and such other Person shall thereupon become vested with all the rights in respect thereof granted to such Guarantied Party herein or otherwise with respect to such of the Notes and the Guarantied Obligations so transferred or assigned, subject, however, to compliance with the provisions of Section 10.07 of the Credit Agreement in respect of assignments. No Guarantor may assign any of its obligations under this Guaranty without first obtaining the written consent of the Lenders as set forth in the Credit Agreement.

        SECTION 10. Reimbursement. To the extent that any Guarantor shall be required hereunder to pay a portion of the Guarantied Obligations exceeding the greater of (a) the amount of the economic benefit actually received by such Guarantor from the Loans and the Letters of Credit and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the Guarantied Obligations (excluding the amount thereof repaid by the Borrower) in the same proportion as such Guarantor’s net worth at the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors at the date enforcement is sought hereunder, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess, pro rata, based on the respective net worths of such other Guarantors at the date enforcement hereunder is sought. Notwithstanding anything to the contrary, each Guarantor agrees that the Guarantied Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing its guaranty herein or effecting the rights and remedies of the Guarantied Parties hereunder. This Section 10 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 10 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay to the Guarantied Parties the Guarantied Obligations as and when the same shall become due and payable in accordance with the terms hereof.

        SECTION 11. Reinstatement. This Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against any Loan Party for liquidation or reorganization, should any Loan Party become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of any Loan Party’s assets, and shall, to the fullest extent permitted by Applicable Law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligees of the Obligations or such part thereof, whether as a “voidable preference,”“fraudulent transfer,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Guarantied Obligations shall, to the fullest extent

6

permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

        SECTION 12. GOVERNING LAW.

        (a)      THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF OKLAHOMA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

        (b)      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF OKLAHOMA SITTING IN OKLAHOMA COUNTY, OKLAHOMA OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OKLAHOMA LOCATED IN OKLAHOMA CITY, OKLAHOMA COUNTY, OKLAHOMA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

        SECTION 13. Waiver of Jury Trial. EACH PARTY TO THIS GUARANTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

        SECTION 14. Section Titles. The Section titles contained in this Guaranty are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Guaranty.

7

        SECTION 15. Execution in Counterparts. This Guaranty may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same Guaranty.

        SECTION 16. Miscellaneous. All references herein to the Borrower or to any Guarantor shall include their respective successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower or such Guarantor. All references to the singular shall be deemed to include the plural where the context so requires.

        SECTION 17. Subrogation and Subordination.

        (a)     Subrogation. Notwithstanding any reference to subrogation contained herein to the contrary, until the Release Date, each Guarantor hereby irrevocably waives any claim or other rights which it may have or hereafter acquire against the Borrower that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of any Lender against the Borrower or any collateral which any Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statutes or common law, including without limitation, the right to take or receive from the Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Lenders, and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 17 is knowingly made in contemplation of such benefits.

        (b)     Subordination. All debt and other liabilities of the Borrower to any Guarantor (“Borrower Debt”) are expressly subordinate and junior to the Guarantied Obligations and any instruments evidencing the Borrower Debt to the extent provided below.

        (i)       Until the Release Date, each Guarantor agrees that it will not request, demand, accept, or receive (by set-off or other manner) any payment amount, credit or reduction of all or any part of the amounts owing under the Borrower Debt or any security therefor, except as specifically allowed pursuant to clause (ii) below;

        (ii)       Notwithstanding the provisions of clause (i) above, the Borrower may pay to the Guarantors and the Guarantors may request, demand, accept and receive and retain from the Borrower payments, credits or reductions of all or any part of the amounts owing under the Borrower Debt or any security therefor on the Borrower Debt, provided that the Borrower’s right to pay and the Guarantors’ right to receive any such amount shall automatically and be immediately suspended and cease (A) upon the occurrence and during the continuance of a Default or (B) if, after taking into account the effect of such

8

payment, a Default would occur and be continuing. The Guarantors’ right to receive amounts under this clause (ii) (including any amounts which theretofore may have been suspended) shall automatically be reinstated at such time as the Default which was the basis of such suspension has been cured or waived (provided that no subsequent Default has occurred) or such earlier date, if any, as the Administrative Agent gives notice to the Guarantors of reinstatement by the Required Lenders, in the Required Lenders’ sole discretion;

        (iii)       If any Guarantor receives any payment on the Borrower Debt in violation of this Guaranty, such Guarantor will hold such payment in trust for the Lenders and will immediately deliver such payment to the Administrative Agent; and

        (iv)       In the event of the commencement or joinder of any suit, action or proceeding of any type (judicial or otherwise) or proceeding under any Debtor Relief Law against the Borrower (an “Insolvency Proceeding”) and subject to court orders issued pursuant to the Bankruptcy Code, the Guarantied Obligations shall first be paid, discharged and performed in full before any payment or performance is made upon the Borrower Debt notwithstanding any other provisions which may be made in such Insolvency Proceeding. In the event of any Insolvency Proceeding, each Guarantor will at any time prior to the payment in full of the Obligations on the Maturity Date (A) file, at the request of any Guarantied Party, any claim, proof of claim or similar instrument necessary to enforce the Borrower’s obligation to pay the Borrower Debt, and (B) hold in trust for and pay to the Guarantied Parties any and all monies, obligations, property, stock dividends or other assets received in any such proceeding on account of the Borrower Debt in order that the Guarantied Parties may apply such monies or the cash proceeds of such other assets to the Obligations.

        SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or become a party to or be made the subject of any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights of any Guarantied Party granted hereunder, then, the obligations of such Guarantor under this Guaranty shall be, as between such Guarantor and such Guarantied Party, a fully-matured, due, and payable obligation of such Guarantor to such Guarantied Party (without regard to whether the Borrower is then in default under the Credit Agreement or whether any part of the Guarantied Obligations is then due and owing by the Borrower to such Guarantied Party), payable in full by such Guarantor to such Guarantied Party upon demand, which shall be the estimated amount owing in respect of the contingent claim created hereunder.

        SECTION 19. Rate Provision. It is not the intention of any Guarantied Party to make an agreement violative of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in this Guaranty, no Guarantied Party shall ever be entitled to contract, charge, receive, collect or apply, as interest on the Guarantied Obligations, any amount in excess of the Highest Lawful Rate. In no event shall any Guarantor be obligated to pay any amount in excess of the Highest Lawful Rate. If from any circumstance the Administrative Agent or any Guarantied Party shall ever receive, collect or apply anything of value deemed excess interest under Applicable Law, an amount equal to such excess shall be applied to the reduction of the

9

principal amount of outstanding Loans, L/C Borrowings and any remainder shall be promptly refunded to the payor. In determining whether or not interest paid or payable with respect to the Guarantied Obligations, under any specified contingency, exceeds the Highest Lawful Rate, the Guarantors and the Guarantied Parties shall, to the maximum extent permitted by Applicable Law, (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such Obligations so that the interest paid on account of such Guarantied Obligations does not exceed the Highest Lawful Rate and/or (c) allocate interest between portions of such Guarantied Obligations; provided that if the Guarantied Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Highest Lawful Rate, the Guarantied Parties shall refund to the payor the amount of such excess or credit the amount of such excess against the total principal amount owing, and, in such event, no Guarantied Party shall be subject to any penalties provided by any laws for contracting for, charging or receiving interest in excess of the Highest Lawful Rate.

        SECTION 20. Severability. Any provision of this Guaranty which is for any reason prohibited or found or held invalid or unenforceable by any court or governmental agency shall be ineffective to the extent of such prohibition or invalidity or unenforceability, without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

        SECTION 21. Guaranty Supplement. Any Subsidiary of the Borrower which becomes a party hereto after the date hereof pursuant to Section 6.12 of the Credit Agreement and a Guaranty Supplement shall be bound by all of the terms and provisions of this Guaranty, and shall be a “Guarantor” for all purposes of this Guaranty, the Credit Agreement and the other Loan Documents.

        SECTION 22. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

10

        IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer on the date first above written.

EACH OF THE LIMITED LIABILITY             COMPANIES SPECIFIED IN ANNEX A            HERETO
By:	Sonic Restaurants, Inc., Sole Manager of each such limited liability company
By:	Name:  Title:

ADDRESS FOR NOTICES:

101 Park Avenue
Oklahoma City, Oklahoma 73102
Fax No.:        (405) 280-7516
Phone No.:   (405) 280-7654
Attention:     Chief Financial Officer

11

GUARANTY SUPPLEMENT

(LLC Guaranty)

To the Lenders under the
Credit Agreement (defined below)

Ladies and Gentlemen:

        Sonic Corp., the Lenders party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer entered into that certain Credit Agreement, dated as of April 23, 2003 (said Credit Agreement, as amended, modified and supplemented, the “Credit Agreement”; capitalized terms used herein and not defined herein shall have the meaning given to them in the Credit Agreement). Pursuant to Section 6.12 of the Credit Agreement, the undersigned, ___________________________________, a limited liability company organized under the laws of the __________________ (the “Additional Guarantor”) desires to amend the definition of Guarantor (as the same may have been heretofore amended) set forth in the LLC Guaranty attached hereto so that at all times from and after the date hereof, the Additional Guarantor shall be jointly and severally liable as set forth in the LLC Guaranty for the obligations of the Borrower under the Credit Agreement to the extent and in the manner set forth in the LLC Guaranty.

        The undersigned is the duly elected office of Sonic Restaurants, Inc., sole manager of the Additional Guarantor, a Subsidiary of the Borrower, and is duly authorized to execute and deliver this Guaranty Supplement to each of you. The execution by the undersigned of this Guaranty Supplement shall evidence consent to and acknowledgment and approval of the terms set forth herein and in the LLC Guaranty. The Additional Guarantor represents and warrants that the representations and warranties set forth in Section 4 of the LLC Guaranty as to the Additional Guarantor are true and correct on and as of the date hereof.

        Upon execution of this Guaranty Supplement, the LLC Guaranty shall be deemed to be amended as set forth above. Except as amended herein, the terms and provisions of the LLC Guaranty, the Credit Agreement and the other Loan Documents are hereby ratified, confirmed and approved in all respects.

        Any and all notices, requests, certificates and other instruments may refer to the Credit Agreement and the LLC Guaranty without making specific reference to this Guaranty Supplement, but nevertheless all such references shall be deemed to include this Guaranty Supplement unless the context shall otherwise require.

Exhibit A-1

      Dated: _____________________, 20___.

[NAME OF ADDITIONAL GUARANTOR]
By:	Sonic Restaurants, Inc., Sole Manager of Additional Guarantor
By:	Name:  Title:

Exhibit A-2

Annex A - LLC Guaranty

Limited Liability Companies

SDI OF CLINTON, TENNESSEE L.C

SDI OF KNOXVILLE, TENNESSEE (MAYNARDVILLE), L.L.C. (FORMERLY HALLS, TN)

SDI OF LAFOLLETTE, TENNESSEE L.L.C

SDI OF MARYVILLE, TENNESSEE (E. BROADWAY) L.C

SDI OF MARYVILLE, TENNESSEE (FOOTHILLS) L.C

SDI OF OAK RIDGE, TENNESSEE L.C

SDI OF KNOXVILLE, TENNESSEE (BROADWAY) L.C

SDI OF KNOXVILLE, TENNESSEE (CEDAR) L.C

SDI OF CHRISTIANSBURG, VIRGINIA L.C

SDI OF PULASKI, VIRGINIA L.C

SDI OF WYTHEVILLE, VIRGINIA L.C

SDI OF RADFORD, VIRGINIA L.C

SDI OF BRISTOL, TENNESSEE L.C

SDI OF ELIZABETHTON, TENNESSEE L.C

SDI OF JOHNSON CITY, TENNESSEE (N. ROAN) L.C

SDI OF JOHNSON CITY, TENNESSEE (MARKET) L.C

SKI OF KINGSPORT, TENNESSEE L.C

SDI OF ERWIN, TENNESSEE L.C

SDI OF KNOXVILLE, TENNESSEE (CHAPMAN HWY.), L.C

SDI OF KNOXVILLE, TENNESSEE (KINGSTON), L.C

SDI OF GREENEVILLE, TENNESSEE, L.C

SDI OF MORRISTOWN, TENNESSEE (JOHNSON HWY.), L.C

SDI OF MORRISTOWN, TENNESSEE (CUMBERLAND), L.C

SDI OF SEVIERVILLE, TENNESSEE, L.C

SDI OF WHITE PINE, TENNESSEE, L.C

SDI OF LOUDON, TENNESSEE, L.C

SDI OF ROGERSVILLE, TENNESSEE, L.C

SDI OF KINGSTON, TENNESSEE, L.C

SDI OF KNOXVILLE, TENNESSEE (5722 KINGSTON PIKE), L.C. (FORMERLY GORE RD.)

SDI OF CHATTANOOGA, TENNESSEE, L.C

SDI OF DALTON, GEORGIA, L.C

SDI OF KNOXVILLE, TENNESSEE (5101 N BROADWAY), L.C

SDI OF CHATTANOOGA, TENNESSEE (HIXON PIKE), L.C

SDI OF BRISTON, VIRGINIA (OLD AIRPORT), L.L.C

SDI OF MARION, VIRGINIA (N. MAIN), L.L.C

SDI OF CHATSWORTH, GEORGIA (THIRD), L.L.C

SDI OF NEWPORT, TENNESSEE (BROADWAY), L.L.C

SDI OF DALLAS, TEXAS (GARLAND ROAD), L.L.C

SDI OF MARYVILLE, TENNESSEE (LAMAR ALEXANDER), L.L.C

SDI OF KNOXVILLE, TENNESSEE (OAKRIDGE), L.L.C

Annex A-1

SDI OF HUNTSVILLE, ALABAMA (11606 MEMORIAL), L.L.C

SDI OF EDGEWATER, COLORADO (SHERIDAN) L.L.C

SDI OF ENGLAND, ARKANSAS (FORDYCE), L.L.C

SDI OF WARR ACRES, OKLAHOMA (5750 NW EXPRESSWAY), L.L.C

SDI OF MADISON, ALABAMA (7871 HIGHWAY 72 WEST), L.L.C

SDI OF CHATTANOOGA, TENNESSEE (7420 E. BRAINERD), L.L.C

SDI OF MCLOUD, OKLAHOMA (BROADWAY), L.L.C

SDI OF KANSAS CITY, MISSOURI (BANNISTER), L.L.C

SDI OF SPRINGFIELD, MO (2605 W REPUBLIC), L.L.C

SDI OF PENSACOLA, FLORIDA (1719 E NINE MILE RD) L.L.C

SDI OF KNOXVILLE, TENNESSEE (4470 WESTERN), L.L.C

SDI OF SHERWOOD, ARKANSAS (KIEHEL), L.L.C

SDI OF KINGSPORT, TENNESSEE (3845 FORT HENRY), L.L.C

SDI OF OLATHE, KANSAS (E 119TH STREET), L.L.C

SDI OF SHERWOOD, ARKANSAS (8601 HIGHWAY 107), L.L.C

SDI OF LEXINGTON, KY (E. NEW CIRCLE ROAD), L.L.C

SDI OF LAFAYETTE, COLORADO (WANEKA), L.L.C

SDI OF OKLAHOMA CITY, OKLAHOMA (5901 W. RENO), L.L.C

SDI OF CARLISLE, ARKANSAS (N. BANKHEAD), L.L.C

SDI OF DENVER, COLORADO (2720 W ALAMEDA), L.L.C

SDI OF ONEIDA, TENNESSEE (N ALBERTA), L.L.C

SDI OF WARTBURG, TENNESSEE (MORGAN COUNTY HWY), L.L.C

SDI OF HUNTSVILLE, ALABAMA (JORDAN LANE, NW), L.L.C

SDI OF BRISTOL, TENNESSEE (2709 W STATE STREET), L.L.C

SDI OF MONTGOMERY, ALABAMA (1901 COLISEUM BLVD), L.L.C

SDI OF NICHOLASVILLE, KENTUCKY (120 BELLERIVE BOULEVARD), L.L.C

SDI OF BELLEVUE, NEBRASKA (CORNHUSKER), L.L.C

SONIC DRIVE- IN OF BIXBY, OK, L.L.C

SONIC DRIVE- IN OF BROKEN ARROW, GARNETT, L.L.C

SONIC DRIVE- IN, CATOOSA, OKLAHOMA, L.L.C

SONIC DRIVE- IN, SAND SPRINGS, OKLAHOMA, L.L.C

SONIC DRIVE- IN, TULSA, S. UTICA, L.L.C

SONIC DRIVE- IN, TULSA, 59TH & LEWIS, L.L.C

SONIC DRIVE- IN, TULSA, 129TH E. AVENUE, L.L.C

SONIC DRIVE- IN, TULSA, E. 31ST STREET, L.L.C

SONIC DRIVE- IN, TULSA, S. HARVARD, L.L.C

SONIC DRIVE- IN, WAGONER, OK, L.L.C

SONIC DRIVE- IN, BROKEN ARROW, OK, L.L.C

SONIC DRIVE- IN, BROKEN ARROW, W. NEW ORLEANS, L.L.C

SONIC DRIVE- IN, BROKEN ARROW, E. KENOSHA, L.L.C

SONIC DRIVE- IN, CLEVELAND, OKLAHOMA, L.L.C

SONIC DRIVE- IN, CHOCTAW, OK, L.L.C

SONIC DRIVE- IN, DRUMRIGHT, OKLAHOMA, L.L.C

SONIC DRIVE- IN OF JENKS, L.L.C

Annex A-2

SONIC DRIVE- IN, MUSKOGEE, OKMULGEE ST., L.L.C

SONIC DRIVE- IN, MUSKOGEE, YORK, L.L.C

SONIC DRIVE- IN OF OWASSO, L.L.C

SONIC DRIVE- IN, SAPULPA, L.L.C

SONIC DRIVE- IN OF WESTBANK, L.L.C

SONIC DRIVE- IN, TULSA E. 71ST STREET, L.L.C

SONIC DRIVE- IN, TULSA, E. 91ST STREET, L.L.C

SONIC DRIVE- IN, TULSA, 11TH STREET, L.L.C

SONIC DRIVE- IN, TULSA, HYDE PARK, L.L.C

SONIC DRIVE- IN, TULSA, LEWIS, L.L.C

SONIC DRIVE- IN, TULSA, 16TH STREET, L.L.C

SONIC DRIVE- IN, TULSA, 51ST STREET, L.L.C

SONIC DRIVE- IN, TULSA, BROOKSIDE, L.L.C

SONIC DRIVE- IN, TULSA, HUNTERS GLEN, L.L.C

SONIC DRIVE- IN, GLENPOOL, L.L.C

SONIC DRIVE- IN, TULSA, UNION, L.L.C

SONIC DRIVE- IN, MUSKOGEE, CHANDLER, L.L.C

SONIC DRIVE- IN, CHOUTEAU, L.L.C

SDI OF COLUMBUS, GEORGIA (5586 MILGEN ROAD), L.L.C

SDI OF VIRGINIA BEACH, VIRGINIA (WESLEYAN), L.L.C

SDI OF FLORENCE, ALABAMA (2841 FLORENCE BLVD.), L.L.C

SDI OF SALEM, VIRGINIA (830 W. MAIN STREET), L.L.C

SDI OF GOLDEN, COLORADO (17191 S. GOLDEN), L.L.C

SDI OF MIDVALE, UTAH (FORT UNION), L.L.C

SDI OF OLATHE, KANSAS (13730 S. BLACKBOB RD), L.L.C

SDI OF KANSAS CITY, MISSOURI (1214 EMANUEL CLEAVER II BLVD), L.L.C

SDI OF SANDY, UTAH (STATE), L.L.C

SDI OF OVERLAND, MISSOURI (PAGE), L.L.C

SDI OF TULSA, OK (S. MEMORIAL DRIVE), L.L.C

SDI OF LITTLE ROCK, ARKANSAS (ARCH STREET PIKE), L.L.C

SDI OF CHESAPEAKE, VIRGINIA (BATTLEFIELD BLVD NORTH), L.L.C

SDI OF RAYTOWN, MISSOURI (9014 E 350 HWY), L.L.C

SDI OF OVERLAND PARK, KANSAS (13485 SWITZER RD) L.L.C

SDI OF KANSAS CITY, MISSOURI (822 WESTPORT RD) L.L.C

SDI OF VIRGINIA BEACH, VIRGINIA (NIMMO PKWY), L.L.C

SDI OF DALTON, GEORGIA (1369 W WALNUT AVE), L.L.C

SDI OF FLORISSANT, MISSOURI (LINDBERGH), L.L.C

SDI OF OKLAHOMA CITY, OKLAHOMA (7640 N. MAY), L.L.C

SDI OF ST. PETERS, MISSOURI (MID RIVERS MALL), L.L.C

SDI OF OMAHA, NEBRASKA (5214 N. 30TH), L.L.C

SDI OF OKLAHOMA CITY, OKLAHOMA (5625 N WESTERN AVE), L.L.C

SDI OF TULSA, OKLAHOMA (10901 E. 41ST STREET), L.L.C

SDI OF SUGARLAND, TEXAS (11511 S HWY 6), PARTNERSHIP

SDI OF EL DORADO, KANSAS (WEST CENTRAL), L.L.C

Annex A-3

SDI OF HUTCHINSON, KANSAS (EAST 4TH), L.L.C

SDI OF HAYESNILLE, KANSAS (EAST GRAND), L.L.C

SDI OF KINGMAN, KANSAS (EAST AVENUE), L.L.C

SDI OF MCPHERSON, KANSAS (EAST KANSAS), L.L.C

SDI OF MULVANE, KANSAS (SE LOUIS), L.L.C

SDI OF PARK CITY, KANSAS (BROADWAY), L.L.C

SDI OF WICHITA, KANSAS (S. WEST STREET), L.L.C

SDI OF WICHITA, KANSAS (S. OLIVER), L.L.C

SDI OF WICHITA, KANSAS (N. BROADWAY), L.L.C

SDI OF WICHITA, KANSAS (S. SENECA), L.L.C

SDI OF WICHITA, KANSAS (E. HARRY), L.L.C

SDI OF WICHITA, KANSAS (N. WOODLAWN), L.L.C

SDI OF WICHITA, KANSAS (W. PAWNEE), L.L.C

SDI OF WICHITA, KANSAS (E. CENTRAL), L.L.C

SDI OF WICHITA, KANSAS (S. BROADWAY), L.L.C

SDI OF WICHITA, KANSAS (W. 21ST), L.L.C

SDI OF GODDARD, KANSAS (W. HIGHWAY 54), L.L.C

SDI OF ROSEHILL, KANSAS, L.L.C

SDI OF ANDOVER, KANSAS, L.L.C

SDI OF HUTCHINSON, KANSAS (E. 30TH), L.L.C

SDI OF WICHITA, KANSAS (W. MAPLE), L.L.C

SDI OF HESSTON, KANSAS (E. LINCOLN), L.L.C

SDI OF ROANOKE, VIRGINIA (3755 BRAMBLETON AVE),L.L.C

SDI OF MONROE, LOUISIANA (4207 PECANLAND),L.L.C

SDI OF DANDRIDGE, TENNESSEE (HIGHWAY 92 S), L.L.C

SDI OF DENVER, COLORADO (2611 S. BROADWAY), L.L.C

SDI OF DRAPER, UTAH (267 E. 12300 SOUTH), L.L.C

SDI OF CHESTERFIELD, MISSOURI (CHESTERFIELD AIRPORT ROAD), L.L.C

SDI OF TULSA, OKLAHOMA (7021 S. MEMORIAL DRIVE), L.L.C

SDI OF ST. LOUIS, MISSOURI (85 S. COUNTY CENTER WAY), L.L.C

SDI OF AUBURN, ALABAMA (1703 S. COLLEGE), L.L.C

SDI OF OMAHA, NEBRASKA (14598 W. MAPLE), L.L.C

SDI OF SAINT LOUIS, MISSOURI (44 W. COUNTY CENTER), L.L.C

SDI OF OKLAHOMA CITY, OKLAHOMA (1901 NW EXPRESSWAY), L.L.C

SDI OF LEXINGTON, KENTUCKY (3401 NICHOLASVILLE), L.L.C

SDI OF BRECKENRIDGE HILLS, MISSOURI (9760 SAINT CHARLES ROCK), L.L.C

SDI OF OMAHA, NEBRASKA (S. 108TH), L.L.C

SDI OF ARVADA, COLORADO (SHERIDAN BLVD), L.L.C

SDI OF SALT LAKE CITY, UTAH (85 E. 1300 S.), L.L.C

SDI OF CHESAPEAKE, VIRGINIA (969 PROVIDENCE RD), L.L.C

SDI OF KNOXVILLE, TENNESSEE (2742 SCHAAD RD.), L.L.C

SDI OF GRAVEL RIDGE, ARKANSAS (HIGHWAY 107), L.L.C

SDI OF CHATTANOOGA, TENNESSEE (4407 HIGHWAY 58), L.L.C

SDI OF TULSA, OKLAHOMA (1919 S. MEMORIAL DR), L.L.C

Annex A-4

SDI OF WICHITA, KANSAS (355 S. GREENWICH RD.), L.L.C

Annex A-5

EX-21

Exhibit 21.01.

Subsidiaries of the Company.

Sonic Industries Inc., an Oklahoma corporation

Sonic Restaurants, Inc., an Oklahoma corporation

America’s Drive-in Corp., a Kansas corporation

EX-23

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, 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 report dated October 12, 2004, with respect to the consolidated financial statements and schedule of Sonic Corp. included in the Annual Report (Form 10-K) for the year ended August 31, 2004.

	ERNST & YOUNG LLP
Oklahoma City, Oklahoma November 9, 2004

EX-31

Exhibit 31.01

CERTIFICATION

        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 officer(s) 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)) 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 annual report is being prepared;

b. 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

c. 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 this 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 officer(s) 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:   November 12, 2004
	/s/ J. Clifford Hudson
	J. Clifford Hudson, Chief Executive Officer

EX-31

Exhibit 31.02

CERTIFICATION

        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 officer(s) 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)) 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 annual report is being prepared;

b. 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

c. 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 this 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 officer(s) 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: November 12, 2004
	/s/ Stephen C. Vaughan
	Stephen C. Vaughan, Chief Financial Officer

EX-32

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: November 12, 2004
	/s/ J. Clifford Hudson
	J. Clifford Hudson, Chief Executive Officer

EX-32

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: November 12, 2004
	/s/ Stephen C. Vaughan
	Stephen C. Vaughan, Chief Financial Officer