UFOC

Sample UFOC

Johnny Rockets Licensing Corporation

A California corporation

25550 Commercentre Drive, Suite 200

Lake Forest, California 92630- ^A22

(949) 643-6100

Information for Prospective Franchisees Required by Federal Trade Commission

To protect you, we have required your franchisor to give you this information. We have not checked it, and do not know if it is correct. It should help you make up your mind. Study it carefully. While it includes some information about your contract, don't rely on it alone to understand your contract. Read all of your contract carefully. Buying a franchise is a complicated investment. Take your time to decide. If possible, show your contract and this information to an advisor, like a lawyer or an accountant. If you find anything you think may be wrong or anything important that's been left out, you should let us know about it. It may be against the law.

There may also be laws on franchising in your state. Ask your state agencies about them.

FEDERAL TRADE COMMISSION

Washington, D.C. 20580

REDLINE

FRANCHISE OFFERING CIRCULAR

Johnny Rockets Licensing Corporation

A California corporation

25550 Commercentre Drive, Suite 200

Lake Forest, California 92630- ^Ajg°i

(949)643-6100

The franchisee will operate a restaurant serving hamburgers, American fries, chili, hand-dipped shakes and malts, and other menu items in a 1950's-style setting under the name "Johnny Rockets" and "Johnny Rockets The Original Hamburger." The Initial License Fee is $49,000. The estimated initial investment for a newly developed Johnny Rockets Restaurant ranges from $^A634.000 to $^A98Q.0QQ. If you sign an Area Development Agreement, you will pay an Area Development Fee (which is the only initial investment under that Agreement) equal to $24,500 multiplied by the number of Johnny Rockets Restaurants you agree to develop. The Area Development Fee is credited against the Initial License Fee for each Johnny Rockets Restaurant you open. You must also reimburse us for our legal, accounting and other professional fees in excess of $5.000 incurred in connection with the negotiation and signing of the Area Development Agreement and related addenda and exhibits.

Risk Factors:

1. THE LICENSE AGREEMENTS REQUIRE THAT ALL DISAGREEMENTS BE ARBITRATED ONLY WHERE THE PRINCIPAL OFFICES OF JOHNNY ROCKETS LICENSING CORPORATION ARE LOCATED WHICH CURRENTLY IS ORANGE COUNTY, CALIFORNIA. OUT OF STATE ARBITRATION OR LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT ALSO MAY COST MORE TO ARBITRATE OR LITIGATE IN ORANGE COUNTY INSTEAD OF YOUR HOME STATE.

2. THE LICENSE AGREEMENTS STATE THAT CALIFORNIA LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE

LAWS.

3. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

Information comparing franchisors is available. Call the state administrators listed in Exhibit A or your public library for sources of information.

Certain states require franchisors to make additional disclosures related to the information contained in this offering circular. These disclosures are contained in Exhibit I to this offering circular. The offering circular is for use in the District of Columbia and all states ^A*.

Registration of this franchise with the state does not mean that the state recommends it or has verified the information in this offering circular. If you learn that anything in this offering circular is untrue, contact the Federal Trade Commission or the applicable state agency listed in Exhibit A.

UFOC - 07/06

LOSANGELES 263284vl2 64996-00002

^ADate of Issuance: July ^A27. 2006. except for the following states in which the Effective Date is listed below:

California

.2006 North Dakota

*________₁2^06

:" '^A ■. 200'6

⁴ ' > .'2fl'K>'

New York

September 9,2003, ^Aas amended on

■ 2006

DISCLOSURES REQUIRED BY HAWAII

THESE FRANCHISES HAVE BEEN FILED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF HAWAII. FILING DOES NOT CONSTITUTE APPROVAL,

RECOMMENDATION OR ENDORSEMENT BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS OR A FINDING BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING.

THE FRANCHISE INVESTMENT LAW MAKES IT UNLAWFUL TO OFFER OR SELL ANY FRANCHISE IN THIS STATE WITHOUT FIRST PROVIDING TO THE PROSPECTIVE FRANCHISEE, OR SUBFRANCHISOR, AT LEAST SEVEN DAYS PRIOR TO THE EXECUTION BY THE PROSPECTIVE FRANCHISEE, OF ANY BINDING FRANCHISE OR OTHER AGREEMENT, OR AT LEAST SEVEN DAYS PRIOR TO THE PAYMENT OF ANY CONSIDERATION BY THE FRANCHISEE, OR SUBFRANCHISOR, WHICHEVER OCCURS FIRST, A COPY OF THE OFFERING CIRCULAR, TOGETHER WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE.

THIS OFFERING CIRCULAR CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE REFERRED TO FOR A STATEMENT OF ALL RIGHTS, CONDITIONS, RESTRICTIONS AND OBLIGATIONS OF BOTH THE FRANCHISOR AND THE FRANCHISEE.

Registered agent in the state authorized to receive service of process: Commissioner of Securities, P.O. Box 40, Honolulu, Hawaii 96813.

DISCLOSURES REQUIRED BY MICHIGAN

THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.

Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:

(a) A prohibition of the right of a franchisee to join an association of franchisees.

(b)A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in the Michigan Franchise Investment Law. This shall not preclude a franchisee, after entering into a franchise agreement, from settling any and all claims.

(c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.

(d)A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation. This subsection applies only if: (i) The term of the franchise is less than 5 years; and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise.

(e)A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. This section does not require a renewal provision.

(f) A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.

(g)A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:

(i) The failure of the proposed transferee to meet the franchisor's then current reasonable qualifications or standards.

(ii)The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.

(iii) The unwillingness of the proposed transferee to agree in writing to comply wjth all

lawful obligations.

(iv) The failure of the franchisee or proposed transferee to pay any sums owing to the

franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.

(h)A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).

(i) A provision which permits the franchisor to directly or indirectly convey, assign, or otherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the required contractual services.

THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE ATTORNEY GENERAL DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE ATTORNEY GENERAL.

Any questions regarding this Notice shall be directed to the Department of Attorney General, Consumer Protection Division, 670 Law Building, 525 West Ottawa Street, Lansing, Michigan 48913 (517)373-7117.

DISCLOSURES REQUIRED BY THE STATE OF NEW YORK

Additional Risk Factor Required By The State of New York:

THE FRANCHISE GRANTED TO YOU UNDER THE LICENSE AGREEMENT IS NONEXCLUSIVE AND THE LICENSE AGREEMENT DOES NOT PROHIBIT JOHNNY ROCKETS LICENSING CORPORATION FROM OPERATING A JOHNNY ROCKETS RESTAURANT OR USING THE JOHNNY ROCKETS SYSTEM AND THE MARKS AT ANY OTHER LOCATION OR FOR ANY OTHER PURPOSE OR FROM LICENSING OTHERS TO DO SO.

JOHNNY ROCKETS LICENSING CORPORATION LICENSE AGREEMENT

With [DEVELOPER'S NAME]

for

(Store Name) (City, ST)

LOS ANGELES 2632 82 v7 64996-00002

07/06 JRLC License Agt.

TABLE OF CONTENTS

Page

1. INCORPORATION OF RECITALS, WARRANTIES AND REPRESENTATIONS BY DEVELOPER........................................................................................._.___.............................._____.......................................................................I

2. GRANT OF LICENSE; ORGANIZATION OF DEVELOPER................................................ ..........................2

3. TERM OF LICENSE.........................................................................................................................................._............................._..........................4

4. INITIAL LICENSE FEE.............................................................................................................................................................................................6

5. LEASE OF RESTAURANT SITE........................................................................................................................................................6

6. CONSTRUCTION AND LEASEHOLD IMPROVEMENTS, FIXTURES AND EQUIPMENT.................7

7. METHODS AND STANDARDS OF OPERATION........................................................................................................ .....10

8. SERVICES OF LICENSOR..................................................................................................................................................................................16

9. INSURANCE..................................................................................................................................................................................................................20

10. ADVERTISING.............................................................................____....................................................................................................................21

11. INDEMNIFICATION................................................................................................................................................................................................23

12. PAYMENTS TO LICENSOR.............................................................................................................................................................................23

13. PAYMENT OF FEES; REPORTING REQUIREMENTS...................................................................................................24

14. RECORDKEEPING AND ACCOUNTING...................................................................____.................................................25

15. TRANSFER.........................................................................._...........................................................................................................................................26

16. PROTECTION OF TRADEMARKS AND RELATED PROPRIETARY RIGHTS...........................................30

17. COVENANTS...................................................................................................................................................................................................................32

18. RELATIONSHIP OF THE PARTIES...........................................................................................................................................................33

19. DEFAULT____...............................................................................................................................................................................................................34

20. ENFORCEMENT.................................................................................................................................._..................._.................................................39

21. NOTICES..........................................................................................................................................................................................................................40

22. MISCELLANEOUS......................................................._........ ___........................................................................................................................41

Exhibit "A" Restaurant Site

Exhibit "B" Guaranty and Subordination Agreement

07/06 JRLC License Agt.

Developer's Name

Store Name, Location

LOS ANGELES 2 63282 v7 64996-00002

JOHNNY ROCKETS LICENSING CORPORATION LICENSE AGREEMENT

THIS LICENSE AGREEMENT ("Agreement") is made and entered intojjk dav of

("Effective Date"! by and between JOHNNY ROCKETS

LICENSING CORPORATION, a California corporation ("LICENSOR") and _________________

(ENTITY) ("DEVELOPER")^A.

RECITALS:

A. LICENSOR has acquired and developed a system for the establishment and operation of restaurants operating under the Marks (as defined below) and in accordance with the System (as defined below) and featuring the sale of hamburgers, chili, malts. American frie.^ and related products to the general public, and which may feature certain ancillary branded merchandise such as clothing, souvenirs and novelty items ("JOHNNY ROCKETS Restaurant(s)").

B. The Johnny Rockets System consists of a general restaurant layout and design, equipment, interior and exterior decorations, signage specifications, menus of standard appearance and design, recipes, formulas, specially designed paper goods and other items used in serving and dispensing food products, clothing, souvenirs and novelty items, advertising, trade practices, operating methods, various business forms, training materials, manuals, including the Johnny Rockets Confidential Development and Operations Manuals ("Manuals"), sales techniques, personnel management and management control systems as specified by LICENSOR from time to time for use in connection with the operation of JOHNNY ROCKETS Restaurants ("Johnny Rockets System" or "System").

C. LICENSOR has acquired and owns the trade name and service mark JOHNNY ROCKETS and certain designs, phrases, logos, trademarks, service marks, copyrights and other items now or hereafter owned, used or provided by LICENSOR and designated in writing by LICENSOR for the continued use by DEVELOPER in connection with the operation of JOHNNY ROCKETS Restaurants under the Johnny Rockets System pursuant to the terms of this Agreement ("Marks").

D. DEVELOPER desires to acquire a license to operate a JOHNNY ROCKETS Restaurant and LICENSOR desires to grant DEVELOPER a license on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in reliance upon and in consideration of the above facts and the terms and conditions set forth below, the parties agree as follows.

1. INCORPORATION OF RECITALS, WARRANTIES AND REPRESENTATIONS BY

DEVELOPER

The recitals set forth in Paragraphs A, B, C and D above are true and correct and are hereby incorporated by reference into this Agreement. DEVELOPER hereby warrants, represents, covenants, and acknowledges to LICENSOR that:

A. DEVELOPER has had no part in the creation or development of the System, the Marks, the Manuals or any other proprietary information provided by LICENSOR;

B. DEVELOPER is entering into this Agreement after having made an independent investigation of LICENSOR'S operations, and not upon any representation as to the sales, profits, or earnings which DEVELOPER might realize;

07/06 JRLC License Agt. Developer's Name Store Name, Location LOSANGELES 263282v7 64996-00002

C. LICENSOR has not made any representations or promises to DEVELOPER which are not contained in this Agreement, and DEVELOPER has not relied upon, nor has LICENSOR made, any warranties, expressed or implied, as to the potential success of the business contemplated herein; and

D. DEVELOPER understands that the System and Manuals are continually evolving and that LICENSOR has the right in its sole and absolute discretion to make changes therein from time to time as it may deem appropriate.

LICENSOR'S obligations and DEVELOPER'S rights pursuant to this Agreement are expressly conditioned upon the truth of the warranties and representations set forth above at the time of execution of this Agreement, their continued truth throughout the initial term of this Agreement, and any renewals or extensions of this Agreement.

2. GRANT OF LICENSE; ORGANIZATION OF DEVELOPER

A. Restaurant Site

(1) Subject to the terms and conditions set forth herein, LICENSOR hereby grants to DEVELOPER during the term of this Agreement a license to use the Johnny Rockets System and the Marks, exclusively in connection with the operation of a JOHNNY ROCKETS Restaurant at the address or location set forth in Exhibit "A" hereto ("Restaurant Site"). If LICENSOR and DEVELOPER have not agreed upon a suitable Restaurant Site at the time of execution of this Agreement, then the provisions of Section 2.A.(2) shall apply. DEVELOPER shall use the Johnny Rockets System and the Marks solely in connection with and exclusively for the promotion and conduct of the business of a JOHNNY ROCKETS Restaurant in accordance with the terms of this Agreement and with all instructions, rules and procedures which may be prescribed by LICENSOR from time to time with respect to this Agreement. The Marks shall be used solely in connection with the sale of and only to identify products and services designated by LICENSOR. Nothing contained herein shall be construed to authorize or permit the use by DEVELOPER of the Johnny Rockets System and/or the Marks at any other location or for any other purpose or to restrict LICENSOR from operating a JOHNNY ROCKETS Restaurant or using the Johnny Rockets System and the Marks at any other location or for any other purpose or licensing others to do so.

(2) If the Restaurant Site has not been designated at the time of execution of this Agreement, the Restaurant Site shall be selected by DEVELOPER from within a general area mutually agreed to in writing by LICENSOR and DEVELOPER. Within one hundred and eighty (180) days from the execution of this Agreement, DEVELOPER shall submit to LICENSOR a site proposal package in the format prescribed by LICENSOR in its Manuals, describing a site proposed by DEVELOPER, together with demographic and traffic information and such other information as LICENSOR shall designate. LICENSOR may seek such additional information as it deems necessary within thirty (30) days after DEVELOPER'S submission of the site proposal package, and DEVELOPER shall respond promptly, accurately and completely to such request for additional information. LICENSOR shall at its expense review each proposed site and shall, in its reasonable discretion, reject or provide comments to DEVELOPER regarding such proposal within thirty (30) days after receipt of the location report, or receipt of the additional information requested by LICENSOR, if applicable. At such time as LICENSOR and DEVELOPER shall agree upon a suitable Restaurant Site, the parties shall define such site in an exhibit, which they shall initial, date and annex to this Agreement as Exhibit "A." DEVELOPER specifically acknowledges that LICENSOR does not, by accepting the Restaurant Site, guarantee the success or profitability of the JOHNNY ROCKETS Restaurant to be operated at the Restaurant Site.

(3) LICENSOR'S approval of a proposed Restaurant Site shall not unreasonably be withheld. Among the factors that LICENSOR may consider in determining whether to accept a proposed Restaurant Site are the proposed Restaurant Site's proximity to other LICENSOR owned or Licensed sites and LICENSOR'S evaluation of the likelihood of success at such Restaurant Site. DEVELOPER acknowledges that the selection of a Restaurant Site, although subject to LICENSOR'S approval, is the responsibility of

07/06 JRLC License Agt. Developer's Name Store Name, Location LOSANGELES 263282v7 64996-00002

DEVELOPER and in reviewing any such proposal, LICENSOR makes no warranty or guarantee of any kind that the site will be economically successful for DEVELOPER.

(4) Within sixty (60) days after LICENSOR'S approval of a Restaurant Site, DEVELOPER shall submit to LICENSOR a lease for the approved Restaurant Site. The lease shall be in an executable form and shall satisfy the requirements of Section 5 of this Agreement. Following submission of the lease, DEVELOPER shall comply with Section 5 of this Agreement concerning execution of the Lease.

(5) DEVELOPER shall commence operations at the Restaurant Site not later than one hundred and eighty (180) days after the date of execution of the lease for the Restaurant Site.

B. No Territorial Rights

This Agreement does not give DEVELOPER any exclusive rights to use the Johnny Rockets System or the Marks in any geographic area. LICENSOR expressly reserves the exclusive, unrestricted right, in its sole and absolute discretion, directly and indirectly, through its employees, affiliates, representatives, licensees, assigns, agents and others (which may include its affiliates and joint ventures in which it or its affiliates are participants) to:

(1) Own, operate or license others to operate JOHNNY ROCKETS Restaurants at any location regardless of the proximity to any JOHNNY ROCKETS Restaurant developed or under development at the Restaurant Site, or under consideration by DEVELOPER;

(2) Own, operate or license others to operate restaurants and other businesses which operate under names other than JOHNNY ROCKETS at any location, regardless of the proximity to any JOHNNY ROCKETS Restaurant developed or under development at the Restaurant Site, or under consideration by DEVELOPER;

(3) Manufacture and sell, or cause to be manufactured and sold, food, goods, wares, merchandise, services, products, whether or not authorized for sale at JOHNNY ROCKETS Restaurants, under the Marks or other trademarks, service marks, logos or commercial symbols, at wholesale or retail, through any distribution channel, including by means of mail order catalogs, direct mail advertising, the Internet, and other distribution methods, regardless of the proximity to any JOHNNY ROCKETS Restaurant developed or under development at the Restaurant Site, or under consideration by DEVELOPER; and

(4) Produce, distribute and sell food and beverage products, as well as clothing, souvenirs and novelty items under the Marks or other marks regardless of the proximity to any JOHNNY ROCKETS Restaurant developed or under development at the Restaurant Site, or under consideration by DEVELOPER, and to use, in connection with such production, distribution and sale, any and all trademarks, trade names, service marks, logos, insignia, slogans, emblems symbols, designs and other identifying characteristics as may be developed or used from time to time by LICENSOR.

C. Business Entity Documents

If DEVELOPER is a Business Entity, or if this Agreement is assigned to a business entity, such entity shall conduct no business other than the business contemplated under this Agreement. All Owners of such business entity represent and warrant their percentage ownership interest in DEVELOPER and that they are all the persons required to sign this Agreement pursuant to this Section. The articles of incorporation, articles of organization, articles of partnership, partnership agreement, articles of association, memorandum of association, and other organizational documents of such business entity shall recite that the issuance and transfer of any interest therein is subject to the restrictions set forth in this Agreement. All issued and outstanding stock or share certificates, if any of such business entity shall bear a legend referring to the restrictions in this

07/06 JRLC License Agt. Developer's Name Store Name, Location LOSANGELES 263282v7 64996-00002

Agreement. DEVELOPER shall not conduct any public offering of its securities unless LICENSOR in its sole and absolute discretion consents in writing to such offering.

D. Guaranty of License Agreement

If DEVELOPER is a Business Entity, all of DEVELOPER'S Owners shall execute the Guaranty and Subordination Agreement attached to this Agreement as Exhibit "B" and thereby guaranty the full, faithful and timely performance by DEVELOPER of all of the payments, covenants and other obligations of DEVELOPER under this Agreement. The guarantors under such Guaranty have waived all requirements of notice, demand and presentment, as well as the right to require LICENSOR to first pursue any other remedy in LICENSOR'S power and other similar procedural and substantive rights. The Guaranty is an absolute and unconditional obligation and survives the termination of this Agreement, including upon DEVELOPER'S bankruptcy or insolvency.

3. TERM OF LICENSE

The term of this Agreement (the "Term") is as indicated by the parties' initials in the table below:

A. Initial Term

(1) If the box for "Initial Term" is initialed in the table above, then the Term of this Agreement (the "Initial Term") begins on the date of this Agreement and continues until the earlier of: (a) 11:59 p.m. on the day preceding the tenth (10^th) anniversary of the date DEVELOPER commences operations at the Restaurant Site; or (b) the expiration of the term of DEVELOPER'S lease (inclusive of renewal options of such lease, assuming exercise thereof by DEVELOPER) for the Restaurant Site, unless sooner terminated by LICENSOR as provided for in this Agreement, The parties shall execute a certificate certifying the date when DEVELOPER commenced operations at the Restaurant Site, provided that the failure of the parties to execute such a certificate shall not affect the Term of this Agreement. In that instance, the date indicated in LICENSOR'S books and records as the date DEVELOPER commenced operations at the Restaurant Site shall be deemed correct.

(2) Provided that DEVELOPER'S lease for the Restaurant Site is still in effect at the end of the Initial Term, DEVELOPER shall have the right to enter into a new license agreement ("Renewal License Agreement") for a period of five (5) years or such shorter period as such lease remains in effect. Except as to the provision for the length of Term, the Renewal License Agreement shall be in the then-current form of LICENSOR'S License Agreement being offered to new licensees at the time of the exercise of this option to renew, including the then-current Weekly Royalty Fee and Weekly Creative Marketing Fees; provided that, if at the time LICENSOR is not granting franchises, then such form selected by LICENSOR which previously shall have been delivered to and executed by a franchisee or licensee of LICENSOR.

B. First Renewal Term

(1) If the box for "First Renewal Term" is initialed in the table above, then the Term of this Agreement ("First Renewal Term") begins on the date of expiration of the Initial Term of the License Agreement previously in effect for the Restaurant Site and continues until the earlier of: (a) 11:59 p.m. on the day preceding the fifth (5^th) anniversary of that date; or (b) the expiration of the term of DEVELOPER'S lease (inclusive of renewal options of such lease, assuming exercise thereof by DEVELOPER) for the Restaurant

07/06 JRLC License Agt. Developer's Name Store Name, Location LOSANGELES 263282v7 64996-00002

Site, unless sooner terminated by LICENSOR as provided for in this Agreement.

(2) Provided that DEVELOPER'S lease for the Restaurant Site is still in effect at the end of the First Renewal Term, DEVELOPER shall have the right to enter into an additional Renewal License Agreement for a period of five (5) years or such shorter period as such lease remains in effect. Except as to the provision for the length of Term, the Renewal License Agreement shall be in the then-current form of LICENSOR'S License Agreement being offered to new licensees at the time of the exercise of this option to renew, including the then-current Weekly Royalty Fee and Weekly Creative Marketing Fees; provided that, if at the time LICENSOR is not granting franchises, then such form selected by LICENSOR which previously shall have been delivered to and executed by a franchisee or licensee of LICENSOR.

C. Final Renewal Term

If the box for "Final Renewal Term" is initialed in the table above, then the Term of this Agreement ("Final Renewal Term") begins on the date of expiration of the First Renewal Term of the Renewal License Agreement previously in effect for the Restaurant Site and continues until the earlier of: (a) 11:59 p.m. on the day preceding the fifth (5^th) anniversary of that date; or (b) the expiration of the term of DEVELOPER'S lease (inclusive of renewal options of such lease, assuming exercise thereof by DEVELOPER) for the Restaurant Site, unless sooner terminated by LICENSOR as provided for in this Agreement. Upon expiration of the Final Renewal Term, DEVELOPER shall have no further options to renew.

D. Conditions to Renewal

Approximately six (6) to twelve (12) months before the scheduled expiration date of the Initial Term or the First Renewal Term (as then in effect), LICENSOR will deliver to DEVELOPER (a) a notice of the impending expiration of the term; (b) a copy of LICENSOR'S then-current form of franchise offering circular ("UFOC"), if LICENSOR is required by applicable law to deliver a UFOC to DEVELOPER; and (c) two (2) copies of the Renewal License Agreement. The right of DEVELOPER to exercise either the First Renewal Term or the Final Renewal Term shall be subject to satisfaction of each of the following conditions at the time DEVELOPER signs the Renewal License Agreement and at the end of the then-current Term:

(1) Promptly upon receipt of the UFOC and copies of the Renewal License Agreement," DEVELOPER will sign the receipt(s) delivered by LICENSOR with those items, and return the receipt(s) to LICENSOR.

(2) No less than fifteen (15) days and no more than forty-five (45) days after receipt of the counterpart copies of the Renewal License Agreement from LICENSOR, DEVELOPER must sign and return to LICENSOR both copies of the Renewal License Agreement, accompanied by payment of an additional license fee equal to the lesser of: (a) the initial license fee provided in Section 4 of this Agreement; or (b) Renewal Term, fifty percent L50%> of the initial license fee then charged bv LICENSOR to new Hcen< for the Final Renewal Term, twenty-five percent (25%) of the initial license fee then charged by LICENSOR to new licensees.

(3) DEVELOPER'S options to renew shall not be exercisable if, at the time of renewal, DEVELOPER is in material default under any provision of this Agreement or any other agreement between LICENSOR, its parent or affiliates and DEVELOPER.

(4) As determined by LICENSOR in its sole discretion, DEVELOPER has operated the JOHNNY ROCKETS Restaurant and any other of its licensed JOHNNY ROCKETS Restaurants in accordance with the applicable license agreements and with the Johnny Rockets System (as set forth in the Manuals or otherwise and as revised from time to time by LICENSOR).

07/06 JRLC License Agt. Developer's Name Store Name, Location LOSANGELES 263282v7 64996-00002

(5) DEVELOPER'S right to renew the license shall also be subject to LICENSOR'S approval, not to be unreasonably withheld, of the lease for the Restaurant Site prior to the renewal date.

(6) ^ADEVELOPER or its Owners (as defined in Section 7.G.), officers, directors or any of its employees may be required to complete to LICENSOR'S satisfaction any training program offered for the renewal of a license.

(7) ^ADEVELOPER and its Owners and all guarantors of DEVELOPER'S obligations shall have executed a general release and a covenant not to sue, in a form satisfactory to LICENSOR, of any and all claims against LICENSOR, and its parent and affiliates, and their respective officers, directors, shareholders, and employees, in their corporate and individual capacities, including claims arising under federal, state, and local laws, rules, and ordinances.

(8) ^ALICENSOR may require DEVELOPER to renovate or remodel its JOHNNY ROCKETS Restaurant to conform to the then-current format and style of JOHNNY ROCKETS Restaurants as specified to DEVELOPER by LICENSOR in writing, which may include the layout and design of the building, the exterior and interior decoration, furniture and fixtures, the equipment and the signs. DEVELOPER shall have a period of one (1) year from the renewal date to complete such remodeling to LICENSOR'S satisfaction.

4. INITIAL LICENSE FEE

DEVELOPER shall pay LICENSOR an initial license fee of Forty-Nine Thousand Dollars ($49,000) concurrently with the execution of this Agreement. If DEVELOPER is party to an Area Development Agreement with LICENSOR, then DEVELOPER will receive a credit against the initial license fee in accordance with that Area Development Agreement.

DEVELOPER hereby acknowledges and agrees that the grant of this license and the undertakings and agreements of LICENSOR contained in this Agreement constitute the sole and only consideration for the payment of the initial license fee and that the initial license fee shall be deemed fully earned by LICENSOR upon execution of the License Agreement and no portion thereof shall be refundable to DEVELOPER except as specifically provided for in Section 19.E.2 of this Agreement.

5. LEASE OF RESTAURANT SITE

A. Lease Terms

Within one hundred and eighty (180) days of DEVELOPER'S execution of this Agreement, DEVELOPER shall negotiate and execute a lease for the Restaurant Site with the landlord of the Restaurant Site on terms satisfactory to LICENSOR. DEVELOPER shall submit the proposed lease to LICENSOR at least 15 days prior to execution thereof for review and acceptance by LICENSOR. DEVELOPER shall not execute the lease for the Restaurant Site until it has been reviewed and accepted by LICENSOR. DEVELOPER shall deliver a fully executed copy of the lease to LICENSOR promptly following the execution of the lease, which shall be, in all material respects, identical to the form approved by LICENSOR. LICENSOR'S acceptance of such lease shall not be a representation or warranty by LICENSOR of any matter with respect to said lease, including, the adequacy of the protection of DEVELOPER and economic fairness. DEVELOPER shall consult its own attorneys and other advisors to determine the adequacy of such lease as it relates to DEVELOPER. As a condition of its approval of the lease but not by way of limitation, LICENSOR may require that the lease contain language satisfactory to LICENSOR providing for the following:

(1) The term of the lease shall be for a period of at least ten (10) years, unless LICENSOR shall approve, in writing, a shorter term.

(2) The lease shall obligate the landlord to notify LICENSOR in writing at least thirty (30) days prior to its termination or non-renewal of the lease. LICENSOR shall have the option, without cost or

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expense to LICENSOR, to assume the lease in the event of termination or expiration of this Agreement for any reason. In the case of a default by DEVELOPER, LICENSOR shall have the right, but not the obligation, to cure the breach and to succeed to DEVELOPER'S rights under the lease by giving written notice of its election to DEVELOPER and the landlord. DEVELOPER hereby appoints LICENSOR as its attorney-in-fact to execute an assignment and all other documents and instruments which LICENSOR deems necessary or appropriate to effectuate the foregoing.

(3) The lease may not be assigned, subleased, modified or amended without LICENSOR'S prior written consent. LICENSOR shall be provided with copies of all such assignments, subleases, modifications and amendments. The landlord shall consent in advance to any assignment or sublease to LICENSOR or a franchisee or licensee of LICENSOR (or its affiliates), approved by LICENSOR during the initial term or any renewal term of the lease.

(4) The lease shall neither create nor purport to create any obligations on behalf of LICENSOR, nor grant or purport to grant to the landlord any rights against LICENSOR, nor agree to any other term, condition, or covenant which is inconsistent with any provision of this Agreement.

(5) Upon expiration or termination of the lease for any reason, DEVELOPER shall, upon LICENSOR'S demand, remove all of the Marks from the Restaurant Site and modify the decor of the Restaurant Site so that it no longer resembles, in whole or in part, a JOHNNY ROCKETS Restaurant. If DEVELOPER shall fail do so, the landlord shall give LICENSOR written notice of such failure and the right to enter the Restaurant Site to make such alterations, in which event DEVELOPER shall reimburse LICENSOR for all direct and indirect costs and expenses it may incur in connection therewith, including attorneys' fees.

(6) DEVELOPER shall duly and timely perform all of the terms, conditions, covenants and obligations imposed upon him under the lease.

(7) The JOHNNY ROCKETS Restaurant at the Restaurant Site shall be constructed and improved pursuant to the provisions of this Agreement.

(8) The lease may not contain a non-competition covenant which purports to restrict LICENSOR, or any developer or licensee of LICENSOR (or its affiliates), from owing or operating a JOHNNY ROCKETS Restaurant or any other retail establishment, unless such covenant is approved by the LICENSOR in writing prior to the execution of the Lease.

(9) The lease shall contain such other terms as LICENSOR deems necessary for the benefit of LICENSOR and the Johnny Rockets System.

B. Extension of Time for Performance

Notwithstanding the provisions of Section 5.A., if DEVELOPER notifies LICENSOR in writing not later than fourteen (14) days prior to the expiration of the one hundred and eighty (180) day period described in Section 5.A. that DEVELOPER anticipates it will not satisfy the requirements of Section 5.A. within such time period, specifying the reasons why LICENSOR should grant an extension, LICENSOR may extend the period within which DEVELOPER may satisfy the requirements of Section 5.A. by a further period of ninety (90) days. LICENSOR will notify DEVELOPER of its decision in writing not later than seven (7) days after receiving DEVELOPER'S request.

6. CONSTRUCTION AND LEASEHOLD IMPROVEMENTS, FIXTURES AND EQUIPMENT

A. Obligation of DEVELOPER

Within one hundred and eighty (180) days from the date of execution of the lease, DEVELOPER shall, at its sole expense, remodel, fixturize, furnish and equip its JOHNNY ROCKETS Restaurant, all in accordance

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with LICENSOR'S current requirements and specifications as provided for below in this Section 6 and as specified to DEVELOPER by LICENSOR in writing from time to time, and commence operations of its JOHNNY ROCKETS Restaurant.

B. Layout and Specifications

(1) Within thirty (30) days after LICENSOR approves the Restaurant Site, LICENSOR shall provide DEVELOPER with a restaurant design package, including a sample layout for the interior of a typical JOHNNY ROCKETS Restaurant and a set of typical preliminary plans and equipment and decor specifications.

(2) DEVELOPER shall, at his sole expense employ architects, designers, engineers or others as may be necessary to complete, adapt, modify or substitute the sample plans and specifications for the JOHNNY ROCKETS Restaurant.

(3) DEVELOPER shall submit to LICENSOR a complete set of final plans and specifications for LICENSOR'S approval, which approval shall not be unreasonably withheld, before submitting such plans and specifications to the appropriate governmental agency for permits to commence construction of the JOHNNY ROCKETS Restaurant. LICENSOR shall review such plans and specifications promptly and accept or provide comments on the plans and specifications to DEVELOPER. Within seven (7) days after DEVELOPER'S receipt of LICENSOR'S approval of such plans and specifications, DEVELOPER shall submit the approved plans and specifications to the appropriate governmental agency for permits to commence construction. DEVELOPER shall not commence construction of the JOHNNY ROCKETS Restaurant until LICENSOR accepts in writing the final plans and specifications to be used in constructing the JOHNNY ROCKETS Restaurant, which approval shall not be unreasonably withheld. Unless LICENSOR expressly disapproves such plans and specifications within thirty (30) days from their submission to LICENSOR, they shall be deemed to be accepted.

(4) DEVELOPER must obtain LICENSOR'S written acceptance of any and all changes in the JOHNNY ROCKETS Restaurant final plans and specifications prior to construction of such JOHNNY ROCKETS Restaurant or the implementation of such changes, which acceptance shall not be unreasonably withheld. If such changes are not expressly rejected by LICENSOR within thirty (30) days, they shall be deemed to be accepted.

(5) Upon DEVELOPER'S receipt of the necessary permits and LICENSOR'S approval of the final plans and specifications as required above, DEVELOPER shall promptly begin and thereafter diligently pursue construction of the JOHNNY ROCKETS Restaurant. LICENSOR shall consult with DEVELOPER, to the extent LICENSOR deems necessary or desirable, on the construction and equipping of the JOHNNY ROCKETS Restaurant, however, it shall be and remain the sole responsibility of DEVELOPER to diligently design, construct, equip and otherwise ready and open the JOHNNY ROCKETS Restaurant.

C. Construction and Inspection

(1) DEVELOPER shall hire a licensed general contractor to perform construction work at the JOHNNY ROCKETS Restaurant.

(2) LICENSOR shall not be responsible for delays in the construction, equipping or decoration of the JOHNNY ROCKETS Restaurant or for any loss or damage to DEVELOPER or any third party resulting from the design or construction of such JOHNNY ROCKETS Restaurant and shall be indemnified by DEVELOPER as provided for in Section 11 of this Agreement.

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(3) LICENSOR shall have access to the Restaurant Site while work is in progress and may require such reasonable alterations or modification of the construction of the JOHNNY ROCKETS Restaurant, as it deems necessary.

(4) DEVELOPER'S failure to commence the design, construction, equipping and opening of its JOHNNY ROCKETS Restaurant with reasonable due diligence shall be grounds for the termination of this Agreement.

(5) LICENSOR shall conduct a final inspection of the completed JOHNNY ROCKETS Restaurant and may require such corrections and modifications, as it deems necessary to bring the JOHNNY ROCKETS Restaurant into compliance with accepted plans and specifications. Failure to promptly correct any unauthorized variance from the accepted plans and specifications will result in the termination of this Agreement.

D. Opening

DEVELOPER shall not commence operations at the JOHNNY ROCKETS Restaurant if the restaurant does not conform, in any material respect, to the plans and specifications approved by LICENSOR, including any changes to such plans and specifications accepted by LICENSOR. DEVELOPER shall not open the JOHNNY ROCKETS Restaurant to the public until LICENSOR acknowledges in writing that the JOHNNY ROCKETS Restaurant, DEVELOPER and DEVELOPER'S managers and employees are prepared for such opening.

. Remodeling

In the event that DEVELOPER alters or remodels the JOHNNY ROCKETS Restaurant or installs, substitutes or alters decorations, fixtures, furniture or equipment, or signs, all such work shall be subject to the prior written acceptance of LICENSOR and, when completed, shall conform to plans and specifications approved by LICENSOR. Although it is not obligated to do so, LICENSOR may inspect such work at any time to determine whether the work is being done in accordance with the plans and specifications previously accepted by LICENSOR.

F. Relocation

In the event that LICENSOR, in its sole and absolute discretion, permits DEVELOPER to change the location of its JOHNNY ROCKETS Restaurant at any time during the term of this Agreement or any extensions or renewals thereof, DEVELOPER shall conform such Restaurant Site to the then-current layout and specifications for the JOHNNY ROCKETS Restaurant as may be specified in writing by LICENSOR and shall be solely responsible for all costs and expenses incurred in connection therewith. Should DEVELOPER require additional layout plans for the construction of its relocated JOHNNY ROCKETS Restaurant, subject to other provisions of this Agreement, DEVELOPER shall pay LICENSOR for the costs and expenses incurred by LICENSOR in providing such suggested layout plans for the new Restaurant Site.

G. Fixtures, Furniture and Equipment

The typical fixtures, furniture and equipment specifications given to DEVELOPER by LICENSOR do not limit the obligation of DEVELOPER to provide all required fixtures, furniture and equipment for the JOHNNY ROCKETS Restaurant at DEVELOPER'S sole expense. If LICENSOR suggests certain manufacturers or suppliers, it does so only as an accommodation to DEVELOPER. DEVELOPER shall have the right to substitute manufacturers and suppliers and shall have the right to purchase the required fixtures, furniture and equipment from any source provided that the items to be purchased are in strict accordance with the specifications of LICENSOR as described in Section 8.C. of this Agreement. If DEVELOPER intends to utilize any used fixtures, furniture or equipment in its JOHNNY ROCKETS Restaurant, DEVELOPER shall

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notify LICENSOR and LICENSOR shall have the right, but not the obligation, to inspect and accept or reject such fixtures, furniture or equipment prior to the installation of such items.

H. Signs

DEVELOPER shall install and display, at its sole expense, all exterior and interior signs to be used in connection with the JOHNNY ROCKETS Restaurant, which signs must conform to LICENSOR'S sign criteria as to type, color, size, design and location as may be specified in writing by LICENSOR from time to time. AH signs must be approved in writing by LICENSOR prior to installation or display.

7. METHODS AND STANDARDS OF OPERATION

In order to maintain uniform standards of operation for all JOHNNY ROCKETS Restaurants and to protect the goodwill of LICENSOR, the Johnny Rockets System and the Marks, DEVELOPER shall follow the methods and standards of operation established by LICENSOR and set forth below:

A. Standards Established by LICENSOR

LICENSOR retains the right to prescribe, in the Manuals and in any other written communication, the standards of quality, service, production, merchandising and advertising for the JOHNNY ROCKETS Restaurant at all times during the term of this Agreement and any extension or renewal thereof. DEVELOPER agrees to comply with all of the mandatory specifications, standards and operating procedures which comprise the Johnny Rockets System as set forth in the Manuals and as communicated by LICENSOR from time to time to DEVELOPER in writing for the operation of the JOHNNY ROCKETS Restaurant and not to deviate from the same without the prior written consent of LICENSOR. Any waiver granted from the requirements of this Section 7.A. (which must be in writing) shall continue until LICENSOR provides DEVELOPER with written notice that the waiver is no longer available.

B. Supplies, Products and Menu Items

(1) Unless elsewhere provided for in this Section 7, DEVELOPER may purchase supplies, forms, food products, clothing, souvenirs and novelty items required under this Agreement, except the Proprietary Products (as defined in Section 7.C. below) from any source, provided the supplier meets the standards established from time to time by LICENSOR and provided that the items and food products to be purchased are in strict accordance with the standard specifications of LICENSOR, all as more specifically described in Section 8.C.

(2) DEVELOPER shall sell no product, service or other item at the JOHNNY ROCKETS Restaurant other than products, services or other items approved by LICENSOR.

(3) DEVELOPER shall not, without LICENSOR'S prior written consent, sell, dispense, give away or otherwise provide LICENSOR'S products, or any products bearing the Marks, except by means of retail sales in the JOHNNY ROCKETS Restaurant.

(4) All menu items shall be made in strict compliance with LICENSOR'S specifications, recipes and requirements as may be provided for in the Manuals or prescribed in writing from time to time by LICENSOR.*

(5) DEVELOPER must, at all times, maintain an adequate inventory of products, supplies and materials sufficient to satisfy customer demand and to operate the JOHNNY ROCKETS Restaurant efficiently.

(6) LICENSOR may specify, from time to time, certain articles of clothing (such as t-shirts, sweat shirts, jackets, caps, aprons and similar items), souvenirs (such as watches, pins and records) and

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other novelty items, identified with the Marks or otherwise related to the Johnny Rockets System, which shall be offered for sale by DEVELOPER at the JOHNNY ROCKETS Restaurant. DEVELOPER shall maintain a sufficient representative inventory of each such item to ensure that such items are available on a regular basis at the JOHNNY ROCKETS Restaurant. DEVELOPER shall not sell any such articles, souvenirs and other novelty items at the Restaurant Site without LICENSOR'S prior approval. Upon receipt of written notice from LICENSOR, DEVELOPER hereby agrees to immediately remove from the Restaurant Site and to refrain from selling thereat all such items not approved by LICENSOR.

(7) LICENSOR may, from time to time, require DEVELOPER to test market products and/or services in connection with the operation of the JOHNNY ROCKETS Restaurant. DEVELOPER agrees to cooperate with LICENSOR in connection with the conduct of such test marketing programs and agrees to comply with LICENSOR'S rules and regulations established from time to time in connection herewith.

C. Purchase of Proprietary Products

(1) The seasonings and certain other products, including those which may be developed from time to time, used in the preparation of Johnny Rockets food products ("Proprietary Products") are unique and their formula and manufacturing process constitute trade secrets essential to the success of the Johnny Rockets System. The Proprietary Products must be used as prescribed and DEVELOPER shall purchase the Proprietary Products exclusively from LICENSOR or its affiliate or a supplier or suppliers designated by LICENSOR, and from no other source, at such standard prices and under such stated terms as the same are established by LICENSOR or its affiliate from time to time. The right to purchase and use the Proprietary Products is sublicensed to DEVELOPER pursuant to this Agreement and such right is only co-extensive with the Term of this Agreement.

(2) Purchases of Proprietary Products other than from LICENSOR, or its affiliates, or a supplier or suppliers designated by LICENSOR, or purchases of products used by DEVELOPER in place of LICENSOR'S Proprietary Products from any other manufacturer, or use or sale of any similar products not supplied by LICENSOR or its affiliates, or a supplier or suppliers designated by LICENSOR, including the manufacture of any such products used in place of LICENSOR'S Proprietary Products, may result in termination of this Agreement.

D. Manuals ^

(1) LICENSOR shall provide DEVELOPER access to the Manuals, as the same may be amended and revised from time to time, including all bulletins, supplements and ancillary manuals, prior to the opening of the JOHNNY ROCKETS Restaurant and throughout the term of this Agreement. At the option of LICENSOR, access to the Manuals may either be (a) electronically, via LICENSOR'S "Extranet" (as defined in Section 8.D, below) or (b) by loaning to DEVELOPER a single printed copy of the Manuals. The portions of the Manual set forth on Licensor's Extranet shall be deemed to be "written" for purposes of any provision of this Agreement requiring DEVELOPER to follow the written directions of LICENSOR. The requirements set forth in the Manuals shall govern the operation of the JOHNNY ROCKETS Restaurant.

(2) The Manuals may be amended from time to time by LICENSOR, as and when deemed advisable by LICENSOR. Modifications in the Manuals shall become effective upon (a) posting the change on LICENSOR'S Extranet, or (b) delivery of written notice thereof to DEVELOPER, unless (in either case) a longer period is specified in such notice. The Manuals, as modified from time to time shall be an integral part of this Agreement and reference made in this Agreement, or in any amendments, exhibits or schedules hereto, to the Manuals shall be deemed to mean the Manuals kept current by amendments from time to time. In the event of any discrepancy, the electronic version of the Manual maintained on LICENSOR'S Extranet shall control.

(3) DEVELOPER shall operate the JOHNNY ROCKETS Restaurant in accordance with the standards, specifications and procedures set forth in the Manuals and shall comply with and accept as

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reasonable any modifications, revisions and additions to the Manuals which LICENSOR, in the good faith exercise of its judgment, believes to be necessary or desirable, provided that no such addition or modification shall alter DEVELOPER'S fundamental status and material rights under this Agreement.

(4) DEVELOPER shall treat the Manuals as confidential, and shall use all reasonable efforts to maintain such information as secret and confidential (including protecting the passwords for access to the Extranet). Except as expressly permitted in the Manuals, DEVELOPER shall not at any time without LICENSOR'S prior written consent, copy, duplicate, record or otherwise reproduce the foregoing materials, in whole or in part, nor otherwise make the same available to any unauthorized person.

(5) Immediately upon the expiration or earlier termination of this Agreement, DEVELOPER shall return all printed copies of the Manuals to LICENSOR.

E. Interior and Exterior Upkeep

Ongoing maintenance and repair of the JOHNNY ROCKETS Restaurant is the sole responsibility of DEVELOPER. DEVELOPER shall at all times maintain the interior and exterior of the JOHNNY ROCKETS Restaurant and the surrounding area in the highest degree of cleanliness, orderliness and sanitation and shall comply with the requirements of the Manuals regarding the upkeep of the JOHNNY ROCKETS Restaurant. DEVELOPER shall repair, refinish or paint the exterior and the interior of the JOHNNY ROCKETS Restaurant at its own expense at such times as reasonably directed by LICENSOR. DEVELOPER shall maintain its equipment, decor, furnishings, fixtures and all other tangible property in the JOHNNY ROCKETS Restaurant in a clean, attractive condition and in good repair and shall replace any of the JOHNNY ROCKETS Restaurant's equipment, furniture and fixtures which become obsolete or mechanically impaired to the extent that such equipment or fixtures no longer adequately perform the functions for which they were originally intended. Replacement equipment and fixtures shall be of the same type and quality as are being used in the new JOHNNY ROCKETS Restaurants being installed at the time replacement is required. All replacement equipment and fixtures shall comply with LICENSOR'S requirements and specifications as may be provided for in the Manuals or otherwise specified in writing by LICENSOR.

F. Hours of Operation

Except as otherwise provided for in the Manuals or with the written consent of LICENSOR, DEVELOPER shall continuously operate the JOHNNY ROCKETS Restaurant from 11:00 a.m. until 12:00 midnight (except on Friday and Saturday until 2:00 a.m.), seven (7) days a week or in accordance with lease requirements. The JOHNNY ROCKETS Restaurant may be closed on Thanksgiving Day and Christmas Day. Prior to LICENSOR'S execution of this Agreement, DEVELOPER shall provide LICENSOR with adequate proof, as determined by LICENSOR in its sole discretion, that the JOHNNY ROCKETS Restaurant is not prohibited by any governmental authority under applicable state or local regulations from operating as provided in this Section.

G. Supervision, Management and Personnel of the JOHNNY ROCKETS Restaurant

(1) DEVELOPER'S JOHNNY ROCKETS Restaurant must at all times be under the direct supervision of DEVELOPER (or, in the case where DEVELOPER is a corporation, limited liability company, trust, partnership or other entity (collectively "Business Entity") by an Owner, officer or director who has been approved in writing by LICENSOR) or a manager who has successfully completed the training provided for in Section 8.A. of this Agreement and has been approved in writing by LICENSOR ("Manager"). As used in this Agreement, the term "Owner" means any and all direct and indirect shareholders, members, partners, trustees, or other equity owners of a Business Entity; except that if LICENSOR has any ownership interest in DEVELOPER, the term "Owner" shall not include or refer to the LICENSOR or its parent, Owners or affiliates, and no obligation or restriction upon the "DEVELOPER", or its Owners, directors or officers shall bind LICENSOR, its parent, Owners or affiliates, or their respective Owners, directors or officers.

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(2) DEVELOPER or one of its Owners, officers or directors must devote sufficient time and attention to the performance of his duties hereunder, including a minimum of five (5) hours per week of physical presence at the JOHNNY ROCKETS Restaurant during open and operating hours, and a failure to do so shall constitute a breach of this Agreement. i

(3) DEVELOPER or a Manager shall assume responsibility for the day-to-day management and operation of the JOHNNY ROCKETS Restaurant, oversight of the preparation of food products and supervision of personnel. DEVELOPER may designate any number of assistant managers. The Manager of the JOHNNY ROCKETS Restaurant shall be required to spend at least forty (40) hours per week overseeing the operation of the JOHNNY ROCKETS Restaurant during open and operating hours; provided, however, that at all times during open and operating hours of the JOHNNY ROCKETS Restaurant, either DEVELOPER or one of its Owners, officers or directors, a Manager or an assistant manager shall be physically present at and actively supervising the operation of the JOHNNY ROCKETS Restaurant. DEVELOPER may replace any Manager or assistant manager at any time provided that DEVELOPER'S new Manager or assistant manager immediately completes LICENSOR'S training program as described in Section 8.A.(2) of this Agreement.

(4) DEVELOPER agrees to hire, train and supervise its JOHNNY ROCKETS Restaurant employees in accordance with the specifications set forth in the Manuals. All personnel employed by DEVELOPER at the JOHNNY ROCKETS Restaurant shall maintain such standards of sanitation, cleanliness and demeanor as shall be established by LICENSOR and as set forth in the Manuals or specified in writing by LICENSOR from time to time.

H. Computer Hardware and Software

(1) Point of Sale System. DEVELOPER shall purchase, use and maintain the point of sale cash collection system, including all related hardware and software, ("POS System") as specified in the Manuals or otherwise by LICENSOR in writing for use in connection with the JOHNNY ROCKETS Restaurant. Upon at least ninety (90) days prior written notice, LICENSOR may require DEVELOPER to computerize the POS System (including, purchasing all related hardware and software). The POS System must be connected to the Internet at all times via a high-speed (broadband) line, such as DSL or cable (or other communications medium specified by LICENSOR) for the purpose of implementing software, transmitting and receiving data, accessing the Internet for ordering and maintaining the POS System. LICENSOR may require DEVELOPER to upgrade the POS System hardware and/or software from time to time upon written notice. Within a reasonable time upon LICENSOR'S request, DEVELOPER shall accept gift cards^debit cards, credit cards or other non-cash systems existing or developed in the future to enable customers to purchase authorized products via such procedure, as specified by LICENSOR, and shall obtain all necessary hardware and/or software used in connection with these non-cash systems.

(2) Computer System. DEVELOPER shall purchase, use and maintain a personal computer system ("Computer System") as specified in the Manuals or otherwise by LICENSOR in writing for use in connection with the JOHNNY ROCKETS Restaurant. LICENSOR shall designate certain computer software to be used in the operation of JOHNNY ROCKETS Restaurants. LICENSOR may require DEVELOPER to maintain an e-mail account and connect the Computer System to the Internet at all times via a high-speed (broadband) line, such as DSL or cable (or other communications medium specified by LICENSOR). DEVELOPER shall obtain all software and hardware, including digital still and video cameras, as LICENSOR may specify to enable DEVELOPER to send and receive e-mail and digital photos and streaming video or other multimedia signals and information to and from the Restaurant Site, and DEVELOPER shall, from time to time, upon LICENSOR'S request transmit digital photos and real time video and audio signals of the Restaurant Site to, and in the form and manner prescribed by, LICENSOR. DEVELOPER shall purchase any upgrades, enhancements or replacements to the Computer System and/or hardware and software as LICENSOR may from time to time require. Upon request, DEVELOPER shall permit

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LICENSOR to access the Computer System and the files stored therein via any means specified, including electronic polling communications.

(3) Proprietary Software. If LICENSOR designates certain computer software ("Proprietary Software") that is owned or licensed by LICENSOR to be used in the operation of the POS System and/or Computer System, DEVELOPER shall, at LICENSOR'S request, license or sublicense such software from LICENSOR or its designee and enter into a software (sub) license agreement on LICENSOR'S or such designee's then-current form. From time to time, DEVELOPER shall purchase any upgrades, enhancements or replacements to the Proprietary Software. DEVELOPER must incorporate any required modifications or additions within thirty (30) days after receiving written notice from LICENSOR, unless a longer time period is stated in the notice. LICENSOR shall provide to DEVELOPER, for a reasonable fee, such support services relating to the Proprietary Software, as LICENSOR deems advisable.

(4) Johnny Rockets Corporate Management System.

(a) LICENSOR is developing a Proprietary Software system known as the Johnny Rockets Corporate Management System ("JRCMS"). From time to time LICENSOR may provide information to DEVELOPER regarding the JRCMS. All such information is proprietary to the LICENSOR and shall not be disclosed to third parties by DEVELOPER. At such time as the JRCMS is available, DEVELOPER shall be required to use the JRCMS. The scope of the JRCMS includes a general ledger accounting program, inventory and cost control programs, purchasing and re-order programs, statistical and forecasting programs, and communication programs. The JRCMS may be supplemented or modified by LICENSOR from time to time.

(b) At such time as the JRCMS is available, DEVELOPER may purchase the necessary software and hardware from LICENSOR at LICENSOR'S cost without mark-up, if LICENSOR offers the equipment for sale to DEVELOPER. In the alternative, DEVELOPER may purchase the recommended hardware and software for JRCMS from a supplier approved by LICENSOR. Nothing in this Agreement shall require the LICENSOR to offer such equipment or software for sale to DEVELOPER.

(c) In the event that DEVELOPER chooses to use the JRCMS, DEVELOPER will be provided with either the JRCMS or information concerning the JRCMS for use by DEVELOPER only in connection with operating the JOHNNY ROCKETS Restaurant licensed by this Agreement and complying with the accounting, record-keeping and reporting requirements of this Agreement. DEVELOPER shall not use the JRCMS or information relating thereto for any other purpose whatsoever. DEVELOPER shall not duplicate the JRCMS or any portion thereof and, upon the expiration or earlier termination of this Agreement, DEVELOPER shall immediately return the JRCMS and all related documentation to LICENSOR.

I. Cooperation

DEVELOPER shall cooperate with LICENSOR in taking any action or refraining from taking any action which, in the judgment of LICENSOR, is necessary or desirable to protect the Johnny Rockets System or the Marks or to promote and enhance the service provided by the JOHNNY ROCKETS Restaurant or the image of the JOHNNY ROCKETS Restaurant in the community.

J. Standard Menu Format

A standard menu format to be supplied by LICENSOR to DEVELOPER is required by LICENSOR and shall be used by DEVELOPER. LICENSOR may change the standard menu format at any time and from time to time. Any changes in the menu format by DEVELOPER must be accepted in writing by LICENSOR prior to its use by DEVELOPER and such acceptance may be withheld by LICENSOR in its sole discretion. DEVELOPER agrees to indemnify and hold LICENSOR, its shareholders, directors, officers, employees and agents harmless from and against any and all loss, damage, cost or expense, including attorneys' fees, resulting from any change DEVELOPER makes in the standard menu or for any deviation of products from the descriptions contained in LICENSOR'S accepted menu. At LICENSOR'S discretion, the standard menu format

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may contain advertising references to other JOHNNY ROCKETS Restaurants. Notwithstanding the foregoing, prices, which will appear on the menus, shall be established exclusively by DEVELOPER. LICENSOR'S right to accept or reject the menu format shall not apply to acceptance of the prices at which any products are sold. However, LICENSOR may suggest retail prices. DEVELOPER shall advertise, sell and serve all and only those authorized products and menu items at or from the JOHNNY ROCKETS Restaurant as specified by LICENSOR from time to time in the Manuals, or as otherwise directed by LICENSOR in writing, for sale at the JOHNNY ROCKETS Restaurant.

K. Trade Accounts

DEVELOPER agrees to maintain its trade accounts in a current status and to seek to resolve any disputes with trade suppliers promptly. Should DEVELOPER not so maintain its trade accounts, LICENSOR may, after prior reasonable notice, but shall not be required to, pay any and all such accounts on behalf of DEVELOPER, in which event DEVELOPER agrees to immediately repay LICENSOR therefor in the manner provided by Section 12.D. herein. Failure of DEVELOPER to keep its trade accounts current or to make the immediate repayment to LICENSOR specified herein shall constitute a default under this Agreement.

L. Compliance with Laws

DEVELOPER shall operate the JOHNNY ROCKETS Restaurant in strict compliance with all applicable laws, rules, and regulations of duly constituted governmental authorities. DEVELOPER shall be solely responsible for and shall, prior to opening the JOHNNY ROCKETS Restaurant, or within such shorter period as required by law, procure and maintain all necessary permits and licenses required for the operation of the JOHNNY ROCKETS Restaurant. All costs that may be incurred in order to maintain and implement such strict compliance with laws, rules and regulations and to procure and maintain such permits and licenses shall be borne by DEVELOPER at his sole expense.

M. Payment of Taxes

DEVELOPER shall be responsible for the payment of all taxes on its real and personal property, leasehold improvements, fixtures and equipment related to its JOHNNY ROCKETS Restaurant, and any and all sales, payroll, withholding and other taxes and Worker's Compensation and Unemployment Insurance payments promptly when due and hold LICENSOR harmless therefrom. All such taxes shall be paid directly to the taxing authorities prior to the delinquent date. If the amounts of such taxes become delinquent, LICENSOR may, after prior reasonable notice, in its absolute discretion, but is not obligated to, elect on behalf of DEVELOPER to pay the same, together with penalties and interest, if any, and DEVELOPER agrees to immediately repay LICENSOR therefor in the manner provided in Section 12.D. herein.

N. Uniforms

LICENSOR shall be entitled to prescribe standard uniforms and attire for all JOHNNY ROCKETS Restaurant personnel of DEVELOPER in order to enhance LICENSOR'S product and format.

O. Vending Machines

No vending machines, amusement devices, video machines, ATMs or other money dispensing equipment or other devices of any nature, whether or not coin operated, other than a five cent counter juke box and a coin operated weight scale, the specifications for and installation of which are required and specified by LICENSOR, shall be installed or used at the JOHNNY ROCKETS Restaurant without the prior written consent ofLICENSOR.

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P. Smoking

DEVELOPER shall not allow any smoking in any part of any JOHNNY ROCKETS Restaurant, subject to local ordinances, if any.

Q. Guest Satisfaction Programs

DEVELOPER shall participate in such Guest Satisfaction, Customer Service, or similar programs that LICENSOR shall establish from time-to-time, which may require (among other things) making customer comment cards available in the JOHNNY ROCKETS Restaurant, distributing "call back" cards to selected guests, or other activities. If the costs of such programs are not borne by the advertising "Fund" (as defined below), DEVELOPER shall pay the uniform fee set by LICENSOR from time-to-time (but in no event more than $150.00 per month per JOHNNY ROCKETS Restaurant) for the costs of the programs.

8. SERVICES OF LICENSOR

In addition to the services of LICENSOR set forth elsewhere in this Agreement and provided that DEVELOPER is not then in default under and has substantially complied with the terms and conditions of this Agreement or any other agreements between DEVELOPER and LICENSOR, its parent or any affiliate, LICENSOR shall perform the following:

A. Training and Assistance

(1) Initial Training

(a) Prior to the opening of DEVELOPER'S first JOHNNY ROCKETS Restaurant, LICENSOR shall provide training in the operation of a JOHNNY ROCKETS Restaurant to DEVELOPER or DEVELOPER'S Owner, officer or director who has been accepted in writing by LICENSOR, and three (3) additional persons designated by DEVELOPER as the Managers and/or assistant managers responsible for the operation of the JOHNNY ROCKETS Restaurant and who have been approved by LICENSOR in writing. Prior to the opening of any additional JOHNNY ROCKETS Restaurants developed by DEVELOPER, LICENSOR shall provide this training program to two (2) persons designated by DEVELOPER as the Managers and/or assistant managers responsible for the operation of the JOHNNY ROCKETS Restaurant and who have been approved by LICENSOR in writing. This training program and those described below will include a standard course of training covering the procedures necessary to properly operate a JOHNNY ROCKETS Restaurant. The training program will be offered free of cost to such individuals. Training will be conducted at a certified training location as designated by LICENSOR and will last for a period of up to four (4) weeks or as otherwise deemed appropriate by LICENSOR.

(b) DEVELOPER is fully responsible for maintaining worker's compensation coverage on any trainee pursuant to the laws of the trainee's home state and the state in which the training occurs. DEVELOPER also agrees to obtain and verify eligibility to work status at the training site and is fully responsible for all wages and compensation of the person being trained. DEVELOPER shall bear the cost and expenses attributable to room and board, wages and other relevant benefits and compensation, travel and other personal expenses of such individuals.

(c) DEVELOPER and each of its management personnel who participate in LICENSOR'S initial training program shall diligently pursue such training program. Successful completion of such initial training program by DEVELOPER or its Owner, officer or director, as applicable, and three (3) Managers and/or assistant managers as described above is a condition precedent to the opening of DEVELOPER'S first JOHNNY ROCKETS Restaurant to the public. Successful completion of such initial training program by two (2) Managers and/or assistant managers as described above is a condition precedent to DEVELOPER opening any additional JOHNNY ROCKETS Restaurants to the public. Failure of DEVELOPER, Owner or any Managers or assistant managers designated by DEVELOPER as provided for

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above to complete such training in a manner satisfactory to LICENSOR shall allow LICENSOR to terminate this Agreement; provided however, in the event that any Manager or assistant manager of DEVELOPER fails to complete LICENSOR'S training program satisfactorily, DEVELOPER shall have the option of sending one (1) other designated person accepted by LICENSOR to LICENSOR'S training program in place of each such individual. The training of such replacement Manager or assistant manager constitutes additional training as more specifically described in Section 8.A.(2) of this Agreement and DEVELOPER is required to reimburse LICENSOR for its cost of such additional training as provided therein.

(2) Additional Training. If, at any time after the opening of the JOHNNY ROCKETS Restaurant, LICENSOR determines that DEVELOPER or DEVELOPER'S Managers or assistant managers require additional training or DEVELOPER hires an additional or replacement Manager or assistant manager and LICENSOR determines, in its sole discretion, that DEVELOPER is unable to adequately train such Manager or assistant manager, LICENSOR may require that DEVELOPER or such Manager or assistant manager satisfactorily complete such training as may be designated by LICENSOR. Should DEVELOPER at any time desire that LICENSOR train additional persons, including any replacement Manager or assistant manager designated by DEVELOPER to complete the training required at Section 8.A.(1) above, and LICENSOR consents to such training, or should LICENSOR require that a Manager or assistant manager complete LICENSOR'S training program as provided for in this Section 8.A.(2), DEVELOPER shall pay all salary, wages and total compensation benefits, travel and lodging for such person during such training and reimburse LICENSOR for its costs of such training in the amount of Two Thousand Dollars ($2,000) for each individual.

(3) Opening Assistance. Immediately before and after the opening of the JOHNNY ROCKETS Restaurant, LICENSOR shall provide, at LICENSOR'S expense, up to three (3) operational representatives for a period of up to ten (10) days or as otherwise deemed necessary by LICENSOR, to assist in the opening of the JOHNNY ROCKETS Restaurant as deemed necessary by LICENSOR.

(4) Delays in Training. In the event DEVELOPER schedules any training and subsequently delays or reschedules such training, DEVELOPER will be responsible to pay LICENSOR for any costs and expenses incurred by LICENSOR as a result of the delay or rescheduling.

B. Inspections

(1) LICENSOR shall inspect the JOHNNY ROCKETS Restaurant from time to time to enhance uniformity and quality control. LICENSOR'S personnel or designated agents or representatives shall have the right to enter the JOHNNY ROCKETS Restaurant at any reasonable time and from time to time for the purpose of examination, conferences with DEVELOPER or his employees, inspection of the operation and testing of the products and items sold in the JOHNNY ROCKETS Restaurant and for all other purposes in connection with a determination that the JOHNNY ROCKETS Restaurant is being operated in accordance with the terms of this Agreement, the Manuals and other applicable rules of LICENSOR.

(2) DEVELOPER specifically authorizes LICENSOR to permit LICENSOR'S personnel or designated agents or representatives in the JOHNNY ROCKETS Restaurant to monitor the operation of the cash registers and accounting computers in the JOHNNY ROCKETS Restaurant for such periods of time as LICENSOR may determine to be necessary. LICENSOR shall notify DEVELOPER in writing of any defects, deficiencies or unsatisfactory conditions discovered at the JOHNNY ROCKETS Restaurant, and DEVELOPER agrees to immediately commence to correct or repair any such conditions discovered at the JOHNNY ROCKETS Restaurant by LICENSOR'S personnel immediately upon being advised of same and thereafter diligently pursue such correction or repair to completion.

(3) If DEVELOPER fails to comply with the foregoing obligation to correct or repair any condition at the JOHNNY ROCKETS Restaurant, LICENSOR, in addition to all other available rights and remedies, including the right to terminate this Agreement pursuant to Section 19 of this Agreement, shall have the right, but not the obligation, to forthwith make or cause to be made such correction or repair, and the

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expenses thereof, including meals, lodging, wages and transportation for LICENSOR'S personnel inspecting the JOHNNY ROCKETS Restaurant, if so utilized in LICENSOR'S sole discretion, shall be promptly reimbursed by DEVELOPER to LICENSOR upon request by LICENSOR.

(4) Should any deficiency or unsatisfactory condition be reported more than once within any thirty (30) day period, LICENSOR shall have the right, in addition to all other available rights and remedies, to place a representative in charge of the JOHNNY ROCKETS Restaurant for a period of up to thirty (30) days in each such instance, and the wages and expenses of meals, lodging and transportation for said representative, which shall be commensurate with that provided for managers of other JOHNNY ROCKETS Restaurants, shall promptly be reimbursed by DEVELOPER upon request by LICENSOR.

C. Products, Supplies and Materials

(1) In order to protect and maintain the reputation and goodwill of the Johnny Rockets System and the Marks, LICENSOR shall require that all supplies, equipment, furnishings and fixtures conform to specifications and quality standards reasonably established by LICENSOR from time to time, and shall be purchased from suppliers accepted in writing by LICENSOR. If DEVELOPER proposes to use in the operations of its JOHNNY ROCKETS Restaurant any product, supply, material, equipment or furnishing not theretofore accepted by LICENSOR as conforming to its specifications and quality standards and/or from a supplier not theretofore accepted by LICENSOR as a supplier to Johnny Rockets licensees, DEVELOPER shall first so notify LICENSOR in writing. DEVELOPER shall submit to LICENSOR, upon request, sufficient specifications, photographs and/or other information or samples for examination and/or testing and for a determination by LICENSOR of whether such product, supply or material and/or such supplier meets LICENSOR'S specifications and standards as set forth in the Manuals or as set forth in writing by LICENSOR from time to time, which determination shall be reasonably made and communicated to DEVELOPER within a reasonable time period. If LICENSOR does not respond to DEVELOPER'S request within sixty (60) days, LICENSOR shall be deemed to have denied DEVELOPER'S request.

(2) LICENSOR may, in its discretion, require as a condition to approval of any supplier that such supplier include LICENSOR and DEVELOPER as additional named insureds on such supplier's product liability insurance. LICENSOR shall also have the right to require that its representatives be permitted to inspect such supplier's facilities. LICENSOR reserves the right, at its option, to reinspect the facilities and products of any accepted supplier and to revoke its approval upon the supplier's failure to continue to meet LICENSOR'S criteria and specifications. The supplier must meet applicable federal, state and local regulatory requirements as well as certain facility, pest control, product specifications, quality assurance, employee good manufacturing practices, sanitation, bacteriological, storage, records, product recall and other standards imposed by LICENSOR. As a condition for acceptance of any new supplier, DEVELOPER shall reimburse LICENSOR for all excessive or unusual costs and expenses reasonably incurred by LICENSOR in connection with any such examination, testing or inspection, including travel and lodging expenses incurred where LICENSOR deems it necessary to visit a supplier's facilities.

(3) Nothing contained herein shall be deemed to require LICENSOR to accept an inordinate number of suppliers for a given item or approve suppliers where such approval, in the reasonable judgment of LICENSOR, would result in higher costs generally to LICENSOR'S licensees or prevent the effective and economical supervision of its approved suppliers by LICENSOR.

(4) LICENSOR shall make available to DEVELOPER, upon request, a list of suppliers, if any, that have been approved by the LICENSOR.

(5) LICENSOR shall not be liable to DEVELOPER or any other person for its failure to make available any products, equipment, materials or supplies as provided for in this Section 8.C. or any delay in connection with the delivery thereof where such failure or delay is caused by an act of God, war conditions, governmental regulations or actions, embargo, fire, floods, strikes or other labor troubles, or, without limitation

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by reference any other cause not directly under LICENSOR'S control including any act or omission of any third party.

D. Internet »

(1) Licensor has established and will maintain the "LICENSOR Web site." The LICENSOR Web site is one or more series of inter-connected "pages" on the World Wide Web portion of the Internet. The "World Wide Web" is the portion of the Internet that features graphics-rich pages using the HTTP and HTML protocols; the "Internet" is any means of electronic communication that employs interconnected computer networks to communicate information, of any kind, by fiber optics, wire, radio or other methods of transmission, including the myriad of computers, telecommunications facilities and similar means, both equipment and software, that comprise the interconnected worldwide network of networks that employ the TCP/IP (Transmission Control Protocol/Internet Protocol) or any predecessor or successor protocols to that protocol.

The LICENSOR Web site may, among other things, facilitate orders, provide information about the System and the products and services that are offered at JOHNNY ROCKETS Restaurants. LICENSOR has sole discretion and control over the design and content of LICENSOR'S Web site. LICENSOR may, at its sole option, from time to time, without prior notice to DEVELOPER: (i) change, revise, or eliminate the design, content and functionality of LICENSOR'S Web site; (ii)make operational changes to LICENSOR'S Web site; (iii) change or modify the "URL" (which is the uniform resource locator, the unique address assigned to each page of a Web site) and/or domain name of LICENSOR'S Web site; (iv) substitute, modify, or rearrange LICENSOR'S Web site, at LICENSOR'S sole option, including in any manner that LICENSOR considers necessary or desirable to, among other things, (A) comply with applicable laws, (B) respond to changes in market conditions or technology, and (C) respond to any other circumstances; (v) limit or restrict end-user access (in whole or in part) to LICENSOR'S Web site; and (vi) disable or terminate LICENSOR'S Web site without any liability to DEVELOPER.

(2) LICENSOR'S Web site may include one or more interior pages that identify JOHNNY ROCKETS Restaurants, by among other things, geographic region, address, telephone numbers, and other appropriate matters. LICENSOR'S Web site may also include one or more interior pages dedicated to franchise sales by LICENSOR and/or relations with LICENSOR'S investors.

(3) LICENSOR may, at its option, establish and maintain, either a series of "private" pages on LICENSOR'S Web site or an "Extranet" (a private method of communication for use only by employees and franchisees of LICENSOR that transmits information over the Internet, but require a password to access data on the servers used by LICENSOR) through either of which LICENSOR, franchisees of LICENSOR, and their respective employees may communicate with each other, and through which LICENSOR may disseminate the Manual, updates thereto and other confidential information. LICENSOR shall have sole discretion and control over all aspects of the Extranet, including the content and functionality thereof. LICENSOR will have no obligation to maintain the Extranet indefinitely, and may dismantle it at any time without liability to DEVELOPER.

If LICENSOR establishes an Extranet, DEVELOPER shall have the privilege to use the Extranet, subject to DEVELOPER'S strict compliance with the standards and specifications, protocols and restrictions (collectively, the "Licensor Protocols") that LICENSOR may establish from time to time. The Licensor Protocols may relate to, among other things, (i) the use of abusive, slanderous or otherwise offensive language in electronic communications; (ii) communications between or among franchisees that endorse or encourage breach of any DEVELOPER'S license agreement; (iii) confidential treatment of materials that Licensor transmits via the Intranet; (iv) password protocols and other security precautions; (v) grounds and procedures for LICENSOR'S suspending or revoking a DEVELOPER'S access to the Extranet; and (vi) a privacy policy governing LICENSOR'S access to and use of electronic communications that DEVELOPER or other franchisees' post to the Extranet. DEVELOPER acknowledges that, as administrator of the Extranet, LICENSOR can technically access and view any communication that any person posts on the Extranet.

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DEVELOPER further acknowledges that the Extranet facility and all communications that are posted to it will become LICENSOR'S property, free of any claims of privacy or privilege that DEVELOPER or any other person may assert.

(4) LICENSOR may Link LICENSOR'S Web site to the Web sites of third parties, including electronic service providers, LICENSOR'S affiliates, and other providers of goods and services. LICENSOR may also permit third parties to Link (including so-called "Deep Links" to any interior page of LICENSOR'S Web site that bypass the main page of LICENSOR'S Web site) and may "frame" LICENSOR'S Web site (a "frame" is a feature that, when used in conjunction with certain browsers, allows visitors to a Web site to view content from other Web sites without actually leaving the first page). LICENSOR may place legal notices, disclaimers, LICENSOR'S corporate logos and slogans, advertisements, endorsements, trademarks, and other identifying information on LICENSOR'S Web site, all of which may be modified, expanded, or eliminated at LICENSOR'S option. Further, LICENSOR may establish or participate in programs whereby LICENSOR refers end-users to other Web sites, or LICENSOR receives referrals from other Web sites. All consideration (monetary and non-monetary) received by LICENSOR on account of the placement or sale of advertisements, endorsements, and sponsorships on LICENSOR'S Web site, and all consideration (monetary and non-monetary) received by LICENSOR on account of affiliate programs, will belong only to LICENSOR. LICENSOR may also establish programs that encourage repeat business by end-users.

(5) If DEVELOPER breaches this Agreement or any other agreement with LICENSOR or its affiliates, LICENSOR may disable or terminate DEVELOPER'S access to the Extranet without LICENSOR having any liability to DEVELOPER, and in which case LICENSOR shall only be required to provide DEVELOPER a paper copy of the Manual and any updates thereto, if none have been previously provided to DEVELOPER, unless DEVELOPER is not otherwise entitled to the Manual. Without limiting LICENSOR'S general unrestricted right to permit, deny and regulate DEVELOPER'S participation on LICENSOR'S Web site in LICENSOR'S sole discretion, if DEVELOPER breaches this Agreement, or any other agreement with LICENSOR or its affiliates, LICENSOR may remove all references to the DEVELOPER'S JOHNNY ROCKETS Restaurant on LICENSOR'S Web site until the breach is cured.

(6) LICENSOR has no control over the stability or maintenance of the Internet generally; as a result, LICENSOR is not responsible for damage or loss caused by errors of the Internet. Furthermore, LICENSOR is not liable for any direct, indirect, special, incidental, exemplary or consequential damages arising out of the use of, or the inability to use, LICENSOR'S Web site or the Internet, including loss of profits, goodwill, or savings; downtime; or damage to or replacement of programs and data, whether based in contract, tort, product liability, or otherwise.

9. INSURANCE

DEVELOPER shall secure and maintain insurance coverage for "all operations" of DEVELOPER, including general liability and products liability, with insurance carriers acceptable to LICENSOR and in accordance with LICENSOR'S current insurance requirements as set forth in this Section 9 or as otherwise provided from time to time in the Manuals, including a waiver by the insurer of any right of subrogation. The required insurance policies must be provided by an insurer having a minimum A.M. Best's rating of A-, VII, and must include, at a minimum, the following: comprehensive general liability insurance including coverage for personal injury on an occurrence basis with policy limits of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate (although it is acceptable to have no aggregate) with Umbrella (Excess) Liability coverage (following form) of not less than $3,000,000 per occurrence; automobile liability insurance covering owned, rented and non-owned automobiles in the amount of $1,000,000; $50,000 fire damage legal; workers' compensation (statutory coverage); and employer's liability coverage at statutory limits for $1,000,000 per accident, $1,000,000 disease (policy limit) and $1,000,000 disease (per person limit). The coverage shall commence when DEVELOPER first takes possession of the Restaurant Site, comply with the requirements of the lease for the Restaurant Site and include coverage for such risks, and in such amounts, and subject to such

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policy limits and deductible amounts as LICENSOR shall determine from time to time. DEVELOPER also shall carry such Workers' Compensation insurance as may be required by applicable law.

LICENSOR shall be named as an additional insured on all of such policies to the extent of its interests and shall be provided with certificates of insurance evidencing such coverage. All policies shall be primary and non-contributing and provide LICENSOR with at least thirty (30) days' written notice of cancellation or termination of coverage. LICENSOR reserves the right to specify reasonable changes in the types and amounts of insurance coverage required by this Section 9. Should DEVELOPER fail or refuse to procure the required insurance coverage from an insurance carrier acceptable to LICENSOR or to maintain it throughout the term of this license or any renewal thereof, LICENSOR may, in its sole discretion, but shall not be obligated to, procure such coverage for DEVELOPER, in which event DEVELOPER agrees to pay the required premiums and/or to reimburse LICENSOR therefore in the manner provided by Section 12.D. herein. Failure to maintain the required insurance or to promptly reimburse LICENSOR for any premiums paid on behalf of DEVELOPER by LICENSOR shall constitute a default under this Agreement.

10. ADVERTISING

A. Advertising Fund

(1) Weekly Creative Marketing Fee

(a) Subject to Section 10.A.(l)(b) below, commencing on the date DEVELOPER opens for business and continuing during the Initial Term of this Agreement and all subsequent renewals, DEVELOPER shall pay to LICENSOR a weekly creative marketing fee ("Weekly Creative Marketing Fee") in an amount specified by LICENSOR not to exceed three percent (3%) of Weekly Gross Sales (as defined in Section 13.A. of this Agreement). Such contribution shall be payable by DEVELOPER to LICENSOR for the same period as and together with the Weekly Royalty Fee. All Weekly Creative Marketing Fees collected from DEVELOPER and all other licensees similarly situated to DEVELOPER and all restaurants owned by LICENSOR or its affiliates shall be deposited into a separate, interest-bearing account ("Fund"). Interest earned on amounts in the Fund shall become part of the Fund, to be disbursed as provided by Section 10.A.(2) of this Agreement. LICENSOR shall comply with the reporting requirements set forth in Section 10.A.(3) of this Agreement.

(b) LICENSOR shall have the right, from time to time, upon thirty (30) days' prior written notice, to suspend and/or to reinstate collection of Weekly Creative Marketing Fees, and to vary the amounts payable by DEVELOPER (but in no event shall such amount exceed three percent (3%) of Weekly Gross Sales) as LICENSOR deems appropriate in its sole discretion.

(2) Application of Weekly Creative Marketing Fees

The proceeds in the Fund shall be used and disbursed by LICENSOR for the creation, development, and/or placement of advertising, public relations, research and development, and promotional programs designed to promote, advertise and enhance the Johnny Rockets System in LICENSOR'S discretion. The proceeds shall also be used for reimbursing LICENSOR for its actual administrative costs, consulting fees, advertising agency fees and administrative, legal and overhead expenses incurred in connection therewith. LICENSOR undertakes no obligation to make expenditures for DEVELOPER, which are equivalent or proportional to DEVELOPER'S contribution or to ensure that any particular licensee benefits directly or pro rata from any such expenditure.

With regard to such advertising and promotion, LICENSOR has complete discretion over type, quality and quantity of promotional campaigns developed. LICENSOR shall use ^AcommerciaIlv reasonable efforts to spend during each calendar year the proceeds of the Fund received by LICENSOR during the year, but shall not

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be in breach of this Agreement in the event proceeds are not so used and are instead applied to advertising and promotion conducted in one (1) or more succeeding years.

(3) Reports

Within a reasonable time following a written request from DEVELOPER, LICENSOR shall deliver to DEVELOPER a statement of all receipts and marketing and promotional expenditures of the Fund during the LICENSOR'S fiscal year preceding the date of DEVELOPER'S request.

B. Local Advertising

(1) In addition to paying the Weekly Creative Marketing Fee, DEVELOPER is required to spend during each calendar quarter two percent (2%) of its Weekly Gross Sales for local advertising, which may include advertising published in local newspapers and promotional merchandise distributed to the community. Such local advertising must include DEVELOPER listing its JOHNNY ROCKETS Restaurant in the white pages and yellow pages of the authorized telephone company directories distributed in DEVELOPER'S area. All such advertismg shall be conducted in a dignified manner and conform to the standards and requirements prescribed by LICENSOR from time to time and to the highest ethical standards of advertising.

(2) Unless provided to DEVELOPER by LICENSOR, all local advertising, promotions or other forms of publicity to be employed by DEVELOPER, which may include newspaper and radio advertisements, signs, billboards, appearances by public figures, flyers, coupons and promotional merchandise in the form of watches, records, T-shirts, caps, buttons and similar items, shall be submitted to LICENSOR for acceptance at least thirty (30) business days prior to use. No advertising, promotion or publicity shall be employed without the prior approval of LICENSOR, which approval may be withheld by LICENSOR in its sole discretion. If any such advertising has not been expressly rejected by LICENSOR within said thirty (30) business days, it shall be deemed accepted. Notwithstanding the foregoing, if DEVELOPER is unable to submit proposed advertising and promotional material thirty (30) business days prior to use, the LICENSOR may, in its sole discretion, agree to review said material prior to use.

(3) DEVELOPER shall submit to LICENSOR, within fifteen (15) days after the end of each calendar quarter, a computation of the amount DEVELOPER was required to expend hereunder for advertising and promotion and the amount actually expended, attaching copies of all statements, invoices and checks issued during such calendar quarter by DEVELOPER evidencing the expenditure of such sum for local advertising. Excess expenditures in any calendar quarter shall not reduce the amount required to be expended in any subsequent calendar quarter.

C. Co-Op Advertising Regions

LICENSOR may in the exercise of its reasonable discretion designate certain geographic areas for the purpose of establishing co-operative advertising programs to be participated in by all Johnny Rockets licensees within such geographic area ("Co-Op Advertising Region"). If and when LICENSOR creates a Co-Op Advertising Region for the geographic area in which the JOHNNY ROCKETS Restaurant is located, DEVELOPER shall participate in such Co-Op Advertising Region. The Co-Op Advertising Region may require each member to contribute to the Co-Op Advertising Region a percentage of each member's Weekly Gross Sales not to exceed four percent (4%)^A. Such contribution shall be used for a regional co-op advertising program or programs. All contributions made by DEVELOPER to such Co-Op Advertising Region shall be credited against the minimum local advertising requirement set forth above. This fee is in addition to the other

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11. INDEMNIFICATION

A. DEVELOPER and all guarantors of DEVELOPER'S obligations under this Agreement shall, at all times, indemnify, defend (with counsel reasonably acceptable to LICENSOR), and hold harmless (to the fullest extent permitted by law) LICENSOR and its affiliates, and their respective successors, assigns, past and present stockholders, directors, officers, employees, agents and representatives (collectively "Indemnitees") from and against all "losses and expenses" (as defined below) incurred in connection with any action, suit, proceeding, claim, demand, investigation, inquiry (formal or informal), judgment or appeal thereof by or against Indemnitees or any settlement thereof (whether or not a formal proceeding or action had been instituted), arising out of or resulting from or connected with DEVELOPER'S activities under this Agreement. DEVELOPER promptly shall give LICENSOR written notice of any such action, suit, proceeding, claim, demand, inquiry or investigation filed or instituted against DEVELOPER and, upon request, shall furnish LICENSOR with copies of any documents from such matters as LICENSOR may request.

At DEVELOPER'S expense and risk, LICENSOR may elect to assume (but under no circumstances will LICENSOR be obligated to undertake), the defense and/or settlement of any action, suit, proceeding, claim, demand, investigation, inquiry, judgment or appeal thereof subject to this indemnification. Such an undertaking shall, in no manner or form, diminish DEVELOPER'S obligation to indemnify and hold harmless LICENSOR and Indemnitees. LICENSOR shall not be obligated to seek recoveries from third parties or otherwise mitigate losses.

B. As used in this Section, the phrase "losses and expenses" shall include, but not be limited to: all losses; compensatory, exemplary and punitive damages; fines; charges; costs; expenses; lost profits; reasonable attorneys' fees; expert witness fees; court costs; settlement amounts; judgments; compensation for damages to LICENSOR' reputation and goodwill; costs of or resulting from delays; financing; costs of advertising material and media time/space and the costs of changing, substituting or replacing the same; and any and all expenses of recall, refunds, compensation, public notices and other such amounts incurred in connection with the matters described.

12. PAYMENTS TO LICENSOR

In addition to all other payments provided for in this Agreement, DEVELOPER shall pay LICENSOR promptly when due (or, in the case of Section 12.D. below) upon demand by LICENSOR, the following:

A. Weekly Royalty Fee

A weekly royalty fee for the use of the Johnny Rockets System and the Marks ("Weekly Royalty Fee") in an amount equal to five percent (5%) of DEVELOPER'S "Weekly Gross Sales" for annual gross sales up to and including $2,500,000.00, and seven percent (7%) of DEVELOPER'S "Weekly Gross Sales" on the annual gross sales that are $2,500,001.00 and up, as defined in Section 13.A. herein. Royalties are calculated on a cumulative basis, but are paid weekly. Subject to LICENSOR'S approval, DEVELOPER may make such weekly payments by electronic funds transfer ("EFT").

B. Weekly Creative Marketing Fee

The Weekly Creative Marketing Fee described in Section 10.A. above.

C. Sales and Use Taxes

The amount of all sales taxes, use taxes and similar taxes imposed upon or required to be collected or paid on account of goods or services furnished to DEVELOPER by LICENSOR, whether such goods or services are furnished by sale, lease or otherwise.

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D. Advances

All amounts, if any, advanced by LICENSOR or which LICENSOR has paid, or for which LICENSOR has become obligated on behalf of DEVELOPER whether or not at DEVELOPER'S request, including any payments made on trade accounts and taxes as provided for in Section 7 of this Agreement and insurance as provided for in Section 9 of this Agreement. LICENSOR shall be under no obligation to make any such advances and any decision to do so shall be in LICENSOR'S sole discretion.

E. Late Charge

DEVELOPER agrees to pay LICENSOR, to compensate LICENSOR for its accounting, administrative costs and other damages reasonably expected to be incurred by LICENSOR with respect to any amounts payable to LICENSOR under Sections 12.A-D which are not received by LICENSOR within fifteen (15) days of the due date, a late charge equal to ten percent (10%) of such payment^ for additional administrative costs incurred hv LICENSOR, plus interest at the lower of the maximum rate permitted hv law or fifteen percent (^AI4%) ^Afrom the Mate such payment ^Awas due until it is paid.

13. PAYMENT OF FEES; REPORTING REQUIREMENTS

A. Weekly Gross Sales

The term "Weekly Gross Sales" as used in this Agreement shall mean the total revenues derived by DEVELOPER in and from its JOHNNY ROCKETS Restaurant during each one (1) week period (or portion thereof if the license term begins or ends during the middle of the week) from all sales of food, goods, wares, merchandise and all services made in, upon or from the JOHNNY ROCKETS Restaurant, whether for cash, check, credit or otherwise, without reserve or deduction for inability or failure to collect the same, including such sales and services where the orders therefore originate at and are accepted by DEVELOPER in the JOHNNY ROCKETS Restaurant, though delivery or performance thereof is made from or at any other place, or similar orders are received or billed at or from the JOHNNY ROCKETS Restaurant. Any sales made by DEVELOPER at a location away from the JOHNNY ROCKETS Restaurant, such as, by way of illustration only, at fairs, exhibits, parties or other off-site temporary venues (which DEVELOPER may make only with the prior written approval of LICENSOR) shall be part of Weekly Gross Sales. Weekly Gross Sales will not include rebates or refunds to customers, revenues generated by promotional giveaways which are solely for the benefit of recognized charitable organizations and for which all profits generated thereby are received by said charitable organization, or the amount of any sales tax or other similar taxes that DEVELOPER may be required to and does collect from customers and actually pays to any federal, state or local taxing authority.

B. Payment of Fees

(1) As additional consideration for the license, DEVELOPER agrees to pay in cash or by check, to be mailed and postmarked on or before Friday of each week, calculated upon the Weekly Gross Sales of DEVELOPER'S JOHNNY ROCKETS Restaurant during the immediately preceding calendar week (which week shall end each Sunday at 12 midnight) the Weekly Royalty Fee and Weekly Creative Marketing Fee, accompanied by Weekly Royalty Fee and Weekly Creative Marketing Fee statements in the form specified by LICENSOR and as more fully discussed in Section 14.A.

(2) DEVELOPER shall deliver to LICENSOR any sales data reasonably requested by LICENSOR in the form, manner and frequency requested. Such data may include: (a) daily sales reporting forms and accompanying cash register tapes and (b) a copy of monthly state sales tax returns to be delivered to LICENSOR concurrently with the monthly profit and loss statement described at Section 13.C. below.

(3) DEVELOPER, or an Owner, officer or director thereof or a Manager who has been approved of in writing by LICENSOR, shall be personally required to certify the completeness and accuracy of

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the accounting records, submit the financial statements and submit operating reports and sales figures with all Weekly Royalty Fees and Weekly Creative Marketing Fees as provided in this Agreement.

C. Financial Statements *

No later than thirty (30) days following the end of each four (4) week accounting period, DEVELOPER shall provide LICENSOR with "compilation report" financial statements, including a statement of profit and loss and a balance sheet reflecting the financial condition of the JOHNNY ROCKETS Restaurant as of the last day of the preceding four (4) week accounting period prepared by DEVELOPER, in the form specified by LICENSOR in the Manuals, and certified by DEVELOPER or a Owner of DEVELOPER to be true and correct. DEVELOPER also shall deliver to LICENSOR within ninety (90) days of the end of DEVELOPER'S fiscal year, "review report" financial statements, including a balance sheet, a statement of profit and loss and a statement of changes in financial position prepared by DEVELOPER'S certified public accountant.

D. Tax Returns

DEVELOPER shall submit to LICENSOR copies of DEVELOPER'S annual federal, state and city income and sales tax returns within twenty-one (21) days after filing, to the extent such returns relate to the JOHNNY ROCKETS Restaurant.

14. RECORDKEEPING AND ACCOUNTING

A. Use of Uniform System of Accounting

DEVELOPER shall use, on a continuing basis and in the manner prescribed by LICENSOR, the JRCMS or another computerized management reporting system, which meets the criteria set forth from time to time by LICENSOR in the Manuals, to maintain the books and records of the JOHNNY ROCKETS Restaurant and DEVELOPER'S business pursuant to a uniform system of accounting. The components of the uniform system may be amended or supplemented from time to time by LICENSOR and include forms for reporting Weekly Gross Sales, the Weekly Royalty Fee and the Weekly Creative Marketing Fee.

B. Records and Audits

DEVELOPER shall maintain and preserve accurate books, records and tax returns, including related material, such as cash register tapes and invoices, for the JOHNNY ROCKETS Restaurant for at least five (5) years from the date such record is prepared. Such books, records, tax returns and supporting material shall be made available by DEVELOPER for inspection, examination or audit by LICENSOR at all reasonable times and at such locations as may be designated by LICENSOR from time to time. Such examination or audit shall be at LICENSOR'S expense unless it is disclosed that the total of Weekly Gross Sales submitted by DEVELOPER for the period being inspected by LICENSOR is understated to the extent of two percent (2%) or more, in which case all costs and expenses related to such audit shall be borne by DEVELOPER. DEVELOPER shall immediately pay LICENSOR on demand any deficiency in Weekly Royalty Fee or Weekly Creative Marketing Fee payments disclosed by such audit, together with: (1) interest at the lower of the maximum rate permitted by law or fifteen percent (15%) per annum, from the date such payments were originally due for payment to LICENSOR, and (2) a late fee of ten percent (10%) of the amount of fees so understated for additional administrative fees incurred hv LICENSOR. If DEVELOPER fails to make such payment to LICENSOR within five (5) days of its receipt of LICENSOR'S demand as described above, interest as described in (1) above shall also begin to accrue on the ten percent (10%) penalty fee referred to in (2) above. LICENSOR and its representatives shall not be responsible for failure to discover any defalcations during any audit or inspection of DEVELOPER'S accounting records. In the event any such defalcation is discovered by LICENSOR or its representatives, it will be promptly reported to DEVELOPER.

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15. TRANSFER

A. Transfer by LICENSOR

This Agreement is fully assignable by LICENSOR and inures to the benefit of any assignee or any other legal successor to the interest of LICENSOR. DEVELOPER agrees to execute any forms that LICENSOR may reasonably request to effectuate any such transfer or assignment by LICENSOR.

B. Transfer by DEVELOPER

(1) Restrictions on Transfer

(a) This Agreement has been entered into by LICENSOR in reliance upon and in consideration of the individual or collective character, reputation, skill, attitude, business ability, and financial capacity of DEVELOPER or, if applicable, its Owners who will actively and substantially participate in the development, ownership and operation of the JOHNNY ROCKETS Restaurant. Accordingly, except as permitted by Section 15.B.(3) neither DEVELOPER nor any of DEVELOPER'S Owners shall cause or allow any direct or indirect sale, assignment, transfer, conveyance, gift, declaration of trust, pledge, mortgage or other encumbrance, voluntarily or involuntarily, by operation of law or otherwise of any interest in DEVELOPER, this Agreement, the license, the JOHNNY ROCKETS Restaurant or the Restaurant Site (collectively "Transfer") without (1) LICENSOR'S prior written consent, which consent LICENSOR shall not unreasonably withhold (subject to conditions imposed pursuant to Section 15.B.(2) below), and (2) giving LICENSOR an opportunity to exercise its right of first refusal as described in Section 15.C. below. Any attempt at such a Transfer without LICENSOR'S approval and opportunity to exercise its right of first refusal shall constitute a breach of this Agreement and shall convey no right or interest in this Agreement.

(b) As used in this Agreement the term "Transfer" shall also mean and include each of the following: (1) the Transfer by DEVELOPER or its Owner(s) of more than 25% in the aggregate, whether in one or more transactions, of the assets, capital stock, membership interests or voting power of DEVELOPER; (2) the issuance of any securities by DEVELOPER, which itself or in combination with any other transaction(s), results in the Owners existing as of the Effective Date, owning less than 75% of the outstanding shares, membership interests or voting power of DEVELOPER as constituted as of the Effective Date; (3) if DEVELOPER is a Partnership, the withdrawal, death or legal incapacity of a general partner or limited partner (each a "Partner") owning more than 25% of the voting power, property, profits or losses, or partnership interests of a Partner ("Partnership Rights"), or the admission of any additional general partner or the Transfer by any general partner of any of its Partnership Rights in the Partnership; (4) the death or legal incapacity of any Owner owning more than 25% of the capital stock, voting power of DEVELOPER; or (5) any merger, stock redemption, consolidation, reorganization, recapitalization or other transfer of control of DEVELOPER, however effected.

(2) Conditions of Transfer. LICENSOR shall not unreasonably withhold its consent to any Transfer, provided, however, that prior to the time of Transfer, LICENSOR may, in its sole discretion, require that the conditions specified below are met:

(a) All of DEVELOPER'S accrued monetary obligations to LICENSOR and all other outstanding obligations related to DEVELOPER'S JOHNNY ROCKETS Restaurant shall have been satisfied;

(b) DEVELOPER'S right to receive compensation pursuant to any agreement or agreements for the purchase of any interest in DEVELOPER or in its JOHNNY ROCKETS Restaurant shall be subordinated and secondary to LICENSOR'S rights to receive any outstanding monetary obligations or other outstanding obligations due from DEVELOPER pursuant to this Agreement or any other agreement between LICENSOR, its parent or any affiliate, and DEVELOPER, whether arising before or after said Transfer;

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(c) DEVELOPER shall have executed a general release in a form satisfactory to LICENSOR and its parent and affiliates, effective as of the date of Transfer, of any and all claims against LICENSOR, and its parent and affiliates, and their respective officers, directors, shareholders, and employees, in their corporate and individual capacities, including claims arising under federal, state, and local laws, rules, and ordinances;

(d) The transferee licensee shall enter into a written assumption agreement in a form satisfactory to LICENSOR, assuming and agreeing to discharge all of DEVELOPER'S obligations under this Agreement prior to and after the date of the assumption and to fully repair, refurbish and update the restaurant facility located on the Restaurant Site and the equipment and signs therein, in accordance with LICENSOR'S most current specifications prior to the completion of such sale or Transfer. Notwithstanding anything to the contrary contained herein, the transferee shall not be required to update or refurbish the JOHNNY ROCKETS Restaurant prior to the expiration of the Initial Term of this Agreement;

(e) The transferee licensee (and its Owners) shall demonstrate to LICENSOR'S satisfaction that it meets LICENSOR'S reasonable educational, managerial and business standards; possesses a good moral character, business reputation and credit rating; has the aptitude and ability to conduct the business licensed herein (as may be evidenced by prior related business experience or otherwise); and has adequate financial resources and capital to operate the business;

(f) The transferee licensee shall execute LICENSOR'S then-current standard form license agreement (providing for the payment of royalties at the then-current rate for new licensees and the determination of the noncompetition radius of the JOHNNY ROCKETS Restaurant, if any, according to LICENSOR'S then-current criteria for new licensees) and other ancillary agreements as LICENSOR may require for the JOHNNY ROCKETS Restaurant for a term ending on the date of expiration of this Agreement and including option periods, if any;

(g) At transferee licensee's expense and upon such other terms and conditions as LICENSOR may reasonably require, the transferee licensee and its Manager shall complete the training course then in effect for licensees;

(h) Either DEVELOPER or the transferee licensee shall pay to LICENSOR a transfer fee of Ten Thousand Dollars ($10,000) ("Transfer Fee") to cover LICENSOR'S administrative and other expenses in connection with the Transfer; provided, however, that the Transfer Fee shall not be required in case of (1) a Transfer by DEVELOPER upon the death of DEVELOPER as described in Section 15.D. below or (2) a Transfer by DEVELOPER to a corporation formed by DEVELOPER solely for the convenience of ownership as described in Section 15.B.(3) below;

(i) The name of neither the transferor nor the transferee licensee shall consist of or contain the Marks or any colorable variation thereof or any other mark in which LICENSOR has or claims a proprietary interest without LICENSOR'S prior written approval; and

(j) If the proposed transferee licensee is a corporation, the corporation's performance of its obligations shall be guaranteed by all of its shareholders as from time to time constituted and the transferee licensee shall place upon the certificates representing its voting shares of stock, the form of the legend set forth in Section 15.B.(3)(d) below.

Notwithstanding the foregoing, except in the case where DEVELOPER is a publicly-held corporation at the time it executes this Agreement, LICENSOR may, in its sole discretion, withhold its consent to any public offering of stock or other securities to be issued by DEVELOPER.

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(3) Assignment to a Controlled Corporation or Limited Liability Company.

If DEVELOPER is an individual and in the event that DEVELOPER proposes to Transfer all of its interest to a corporation or limited liability company formed by DEVELOPER solely for the convenience of ownership, LICENSOR'S consent to such Transfer may be conditioned on the following requirements:

(a) The transferee corporation or limited liability company shall be newly organized and its articles, bylaws, and operating agreement, as applicable, shall provide that its activities are confined exclusively to developing and operating JOHNNY ROCKETS Restaurants;

(b) DEVELOPER shall own not less than seventy-five percent (75%) of the voting stock and shall not diminish its proportionate interest in the transferee corporation, except as may be required by law, and its Owner shall act as its principal executive and operating officer;

(c) DEVELOPER shall enter into an agreement, in a form satisfactory to LICENSOR, unconditionally guaranteeing the full payment and performance of the transferee corporation's obligations to LICENSOR;

(d) Each stock certificate or other evidence of ownership of the transferee corporation or limited liability company, as applicable, shall have conspicuously endorsed upon its face the substantially following legend (amended accordingly if a limited liability company):

The transfer of this stock certificate is subject to the terms and conditions of one or more license agreements entered into with Johnny Rockets Licensing Corporation. Reference is made to the provisions of said license agreements and to the articles and bylaws of this corporation.

(e) Copies of transferee corporation's articles of incorporation or organization, as applicable, bylaws, operating agreement and other governing documents, as applicable, including the resolutions of the Board of Directors or Manger(s), as applicable, authorizing entry into or assumption of this Agreement, shall be promptly furnished to LICENSOR; and

(f) The name of transferee corporation or limited liability company shall not consist of or contain the Marks or any colorable variation thereof or any other mark in which LICENSOR, its parent or affiliates has or claims a proprietary interest, without LICENSOR'S prior written approval.

(4) Other Agreements. If LICENSOR consents to the Transfer of this Agreement, it shall also consent to the assignment of the lease for the Restaurant Site and any and all other agreements between LICENSOR and/or its parent and affiliates, and DEVELOPER. In the event of Transfer of this Agreement, DEVELOPER shall also assign all of its right, title and interest in and to the lease for the JOHNNY ROCKETS Restaurant and all other agreements for this JOHNNY ROCKETS Restaurant between DEVELOPER and LICENSOR, its parent and affiliates, to the same transferee. Nothing in this paragraph shall affect LICENSOR'S right to assume the obligations of the lease in the event of termination of this Agreement.

C. LICENSOR'S Right of First Refusal

(1) If DEVELOPER or its owners shall at any time decide to undertake any Transfer requiring LICENSOR'S consent pursuant to Section 15.B., DEVELOPER or its owners shall first obtain a bona fide, executed, written offer from a responsible and fully disclosed purchaser and shall submit an exact copy of such offer to LICENSOR. LICENSOR shall have the option, exercisable within thirty (30) days after receipt of such offer, or if LICENSOR requires further information, within thirty (30) days after LICENSOR receives such further information from DEVELOPER, to purchase the same interests for the price and on the terms and conditions of the proposed sale as set forth in the offer submitted. If the offer received by DEVELOPER

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involves assets in addition to this Agreement, the JOHNNY ROCKETS Restaurant, the Restaurant Site and DEVELOPER'S other license agreements for licensed JOHNNY ROCKETS Restaurants, the offer to LICENSOR shall state the cash value of that portion of the offer received by DEVELOPER related to those agreements and restaurants and LICENSOR or its designee may exercise its purchase option by paying that cash value. The written offer shall specify the name and address of the proposed transferee, shall enclose a completed license application form from the proposed transferee, shall enclose proof of the proposed transferee's financial ability to complete the purchase, shall set forth the price, terms, conditions and date and place of closing of the proposed sale and shall enclose copies of all offer and/or sales documents reflecting the terms of such proposed sale.

(2) If the offer received by DEVELOPER provides for payment of consideration other than cash or it involves intangible benefits, LICENSOR or its designee may elect to purchase the interest proposed to be sold for the reasonable equivalent in cash. If the parties are unable to agree within 30 days on the reasonable equivalent in cash of the non-cash part of the offer received by DEVELOPER or the cash value of that portion of the offer received by DEVELOPER relating to this Agreement, the Restaurant Site, the JOHNNY ROCKETS Restaurant and those other restaurants, this amount shall be determined by two professionally certified appraisers, DEVELOPER selecting one and LICENSOR or its designee selecting one. If the amounts set by the two appraisers differ by more than 10%, the two appraisers shall select a third professionally certified appraiser who also shall determine the reasonable equivalent in cash of the non-cash part of the offer received by DEVELOPER. The average value set by the appraisers (whether two or three appraisers as the case may be) shall be conclusive and LICENSOR or its designee may exercise its right of first refusal within 60 days after being advised in writing of the decision of the appraisers. The cost of the appraisers shall be shared equally by the parties.

(3) Should LICENSOR not exercise this right and should the contemplated sale not be completed within one hundred twenty (120) days after LICENSOR has failed to exercise its option, or should the terms and conditions thereof be altered in any way, this right of first refusal shall be reinstated and any subsequent proposed sale, or the altered terms and conditions of the current transaction, must again be offered to LICENSOR in accordance with this Section 15.C.

(4) If a contemplated Transfer would have the effect of assigning more than twenty-five percent (25%) of the capital stock of a corporate licensee, more than twenty-five percent (25%) of the membership interests of a limited liability company licensee, or more than twenty-five percent (25%) of partnership interests of a partnership licensee, LICENSOR shall have the option to purchase not only the interests being transferred but also the remaining interests so that its ownership will be one hundred percent (100%) of such capital stock, membership interests, or partnership interests. Any purchase of such remaining interests shall be valued on a basis proportionate to the price of the interests initially being offered.

(5) Should LICENSOR elect to exercise its right of first refusal, DEVELOPER shall take all action necessary to cause his lease for the Restaurant Site to be assigned to LICENSOR in accordance with the terms of the lease agreement or the lease assignment agreement, as applicable, as set forth in Section 5 of this Agreement. The above provisions shall apply to both voluntary and involuntary dispositions or transfers.

D. Death or Disability of DEVELOPER

(1) Notwithstanding Sections 15.B. and 15.C, a Transfer to the heirs, surviving spouse, conservators or personal or other legal representative of DEVELOPER (collectively, "Successor Transferees") upon the death or permanent disability of DEVELOPER or of a partner or shareholder owning more than twenty-five percent (25%) equity interest in DEVELOPER shall not be subject to LICENSOR'S right of first refusal or right to terminate for failure to obtain written approval, so long as the Successor Transferee: (a) within thirty (30) days of such death or permanent disability, satisfies LICENSOR, that he is qualified to act as a developer pursuant to this Section 15 and is approved in writing by LICENSOR, or retains an individual or

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