Document:

Exhibit 10.1 CFO Separation Agreement

    EXHIBIT
      10.1

    

    

    SEPARATION
      AGREEMENT

    AND
      RELEASE OF CLAIMS

    

    This
      SEPARATION AGREEMENT AND RELEASE OF CLAIMS (“the “Agreement”) is made and
      entered into as of the 21st day of September, 2005, by and between PCA LLC,
      a
      Delaware Limited Liability Company with its principal place of business in
      Mecklenburg County, North Carolina, USA (the "Company"), and Don Norsworthy
      a
      resident of Charlotte, NC (the “Employee”).

    

    STATEMENT
      OF PURPOSE

    

    The
      Employee's employment with the Company will end on the date stated below. The
      Company has decided to offer this Agreement to Employee to provide compensation
      not otherwise owed to Employee and in exchange for the obligations of Employee
      described below.

     

    NOW
      THEREFORE, in consideration of the mutual covenants and agreements contained
      herein and other good and valuable consideration, the Company and Employee
      hereby agree as follows:

    

    1.
      Date of Separation.
      Employee's employment with the Company and/or the Company's subsidiaries is
      hereby separated as of September 21, 2005 and Employee hereby tenders Employee's
      resignation from any positions now held with the Company and/or its
      subsidiaries, all such resignations to be effective as of September 21,
      2005.

    2.
      Separation Payment.
      Subject
      to Employee's full compliance with the terms of this Agreement, including the
      conditions set forth below, the Company shall continue to pay the base salary
      of
      Employee for a period of twenty-six (26) weeks from the date of separation
      set
      forth in paragraph 1 above. These separation payments shall be payable at a
      time
      and in accord with the regular payroll practices of the Company, except that
      payment may be by check rather than direct deposit. All such amounts shall
      be
      subject to and reduced by any applicable federal and state withholding
      taxes. 

    3.
      Benefit Plans and Fringe Benefits.
      From
      and after the employment separation date set forth in paragraph 1 above,
      Employee shall not have the right to participate in or receive any benefit
      under
      any employee benefit plan of the Company, any fringe benefit plan of the
      Company, or any other plan, policy or arrangement of the Company providing
      benefits or perquisites to employees of the Company generally or individually.
      Provided, however, that Employee shall be entitled, if otherwise eligible,
      (i)
      to exercise Employee’s right to continued coverage under the Company medical
      benefit plan as provided by federal law (and with respect to which the Company
      will provide Employee with a separate notice as required by federal law) and
      for
      which, for the period of six months, the Company will charge no more than the
      cost of similar insurance to active employees of the Company, with the Company
      paying the difference in the employee rate and the COBRA rate if necessary
      (payment to be made by deduction from amounts payable to Employee hereunder)
      and
      thereafter at the normal COBRA rate in effect at the time of the charge; and
      (ii) to elect the payment of benefits to which Employee is entitled under any
      employee pension benefit plan of the Company as provided under the terms of
      any
      such plan.               

    4.
      Vacation Pay.
      Upon
      the first regularly scheduled payday following the execution hereof, the Company
      shall pay to Employee all accrued and unused vacation pay as per the Associate
      Handbook in effect on the date of Separation. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.
      Return of Company Property.
      Employee agrees to return immediately to the Company all originals and copies
      of
      all documents, software or any other materials or property (including keys)
      relating to Employee's employment or obtained or created in the course of such
      employment, except for his cell phone, phone number, laptop computer and flat
      screen monitor.             

    6.
      Public Statements and Reference.
      Employee agrees not to make any public statements, written or oral, regarding
      employee's departure from the Company's employment except as may be approved
      by
      the Company in advance, and further agrees not to make any statement (including
      to any media source) that would disrupt, impair or affect adversely the Company,
      or its employees, officers or directors, or place the Company or such
      individuals in any negative light.             

    7.
      Admissions.
      Employee acknowledges that the payment by the Company of the benefits described
      herein is made in good faith and shall never for any purpose be considered
      an
      admission of liability on the part of the Company, by whom liability is
      expressly denied, and no past or present wrongdoing on the part of the Company
      shall be implied by such payment.             

    8.
      Release.
      As
      consideration for the payments to be made by the Company to Employee pursuant
      to
      paragraph 2 hereof, Employee agrees for Employee and for Employee's heirs,
      executors, administrators and assigns, to release and forever discharge the
      Company and Wal-Mart Stores, Inc., and all of their parent and subsidiary
      corporations, together with each of their respective agents, officers,
      employees, directors and attorneys, from and to waive any and all rights with
      respect to all manner of claims, actions, causes of action, suits, judgments,
      rights, demands, debts, damages, or accountings of whatever nature, legal,
      equitable or administrative, whether the same are now known or unknown, which
      Employee ever had, now has or may claim to have, upon or by reason of the
      occurrence of any matter, cause or thing whatsoever up to the date of this
      Agreement, including without limitation: (i) any claim whatsoever (whether
      under
      federal or state statutory or common law) arising from or relating to Employee's
      employment or changes in Employee's employment relationship with the Company,
      including Employee's separation, termination or resignation therefrom, (ii)
      all
      claims and rights for additional compensation or benefits of whatever nature;
      (iii) any claim for breach of contract, implied or express, impairment of
      economic opportunity, intentional or negligent infliction of emotional distress,
      wage or benefit claim, prima facie tort, defamation, libel, slander, negligent
      termination, wrongful discharge, or any other tort, whether intentional or
      negligent; and (iv) all claims and rights under Title VII of the Civil Rights
      Act of 1964, the Civil Rights Acts of 1866, 1871, or 1991, the Age
      Discrimination in Employment Act, the Employee Retirement Income Security Act,
      the Americans With Disabilities Act of 1993, the Family and Medical Leave Act,
      all as amended, or any other federal, state, county or municipal statute or
      ordinance relating to any condition of employment or employment discrimination.
      Provided, however, this Release shall not (i) include any claims relating to
      the
      obligations of the Company under this Agreement, (ii) operate to release
      Employee's ownership of any common stock of the Company, (iii) affect Employee's
      vested and accrued rights as a participant in the Company's 401(k) plan, or
      (iv)
      affect Employee's rights to exercise any conversion rights provided to Employee
      in the Company's group life insurance plan.

                    

    9.
      Disclosure of Confidential Information.
      For a
      period of two (2) years from the date of this Agreement, Employee shall not
      disclose to anyone outside the Company any confidential or proprietary
      information of the Company. For purposes of this paragraph, "confidential and
      proprietary information" shall mean information not generally known to the
      public that was created by, disclosed or made available to Employee in the
      course of employee's employment by the Company, and shall include, but not
      be
      limited to the following: digital technology information, proprietary production
      processes, confidential pricing information or sales results, market or
      merchandising research, and any confidential information concerning employees
      of
      the Company. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.
      Governing Law and Forum Selection.
      Employee agrees that any claim against the Company or any of its affiliates
      or
      their employees arising out of or relating in any way to this Agreement or
      to
      Employee's employment with the Company shall be brought exclusively in the
      Superior Court of Mecklenburg County, North Carolina, or the United States
      District Court for the Western District of North Carolina, and in no other
      forum. Employee hereby irrevocably consents to the personal and subject matter
      jurisdiction of these courts for the purpose of adjudicating any claims subject
      to this forum selection clause. Employee also agrees that any dispute of any
      kind arising out of or relating to this Agreement or to Employee's employment
      (including without limitation any claim released herein by Employee) shall
      at
      the Company's sole election or demand be submitted to final, conclusive and
      binding arbitration before and according to the rules then prevailing of the
      American Arbitration Association in Mecklenburg County, North Carolina, which
      election or demand may be made by the Company at any time prior to the last
      day
      to answer and/or respond to a summons and/or complaint or counterclaim made
      by
      Employee. The results of any such arbitration proceeding shall be final and
      binding both upon the Company and upon Employee, and shall be subject to
      judicial confirmation as provided by the Federal Arbitration Act or the North
      Carolina Arbitration Act, including specifically the terms of N.C. Gen. Stat.
§
      1-567.2, which are incorporated herein by reference.

    

    11.
      Acknowledgment of Waiver.
      Employee acknowledges that Employee’s waiver of rights and claims under the
      Release of Claims includes a waiver of rights and claims under the Federal
      Age
      Discrimination in Employment Act of 1967, as amended, and that such waiver
      and
      the waiver and release of all other rights and claims contemplated by the
      release set forth in paragraph 8 above are made knowingly and voluntarily.
      Employee acknowledges the Employee has been given a period of at least
      twenty-one (21) days to consider the provisions of the release stated above,
      and
      to consult with Employee’s attorney, accountant, tax advisor, spouse or other
      persons prior to making a decision to sign this document. Employee further
      acknowledges that the Company has not pressured or coerced Employee to execute
      this Release of Claims prior to the expiration of 21 days from the date it
      was
      furnished to Employee and that any decision to execute this Release of Claims
      prior to such time is done freely and voluntarily. Employee certifies that
      the
      Company has advised Employee in writing to consult an attorney regarding the
      legal consequences of the execution of this Release of Claims.

    12.
      Company’s Obligation Ends.
      The
      obligations of the Company set forth in paragraph 2 hereof are conditional
      upon
      the Employee’s execution of this Agreement no later than twenty-one (21) days
      following the date on which such Agreement is submitted to the Employee, as
      well
      as the Employee’s failure to revoke the same following the expiration of seven
      (7) days following such execution. In the event that the Employee fails to
      execute such Agreement within such 21-day period or revokes the execution
      thereof, the Company’s obligations under paragraph 2 shall be null and
      void.

    

    13.
      Waiver of Right or Claim to Reinstatement.
      Employee
      waives any right or claim he/she may have to reinstatement as an employee of
      PCA
      of any of its parent, subsidairy, or affiliated companies at any time and agrees
      never to file or submit an application for employment with any of
      them.

    

    14.
      Entire Agreement.
      This
      Agreement contains the entire agreement between the Company and Employee and
      supersedes all prior agreements relating to the subject matter hereof, and
      may
      be changed only by a writing signed by the parties hereto. Any and all prior
      representations, statements and discussions regarding the subject matter of
      this
      Agreement have been merged into and/or replaced by the terms of this
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    15.
      Ratification and Return of Consideration.
      Any
      attempt by Employee to challenge this Agreement or attempt to declare any
      provision herein void or voidable, must be preceded by a return of any and
      all
      consideration received hereunder, including all payments made to Employee
      pursuant to paragraph 2 herein. In particular, should Employee fail to return
      any part of such consideration within forty-five days hereof, Employee shall
      be
      deemed to have accepted the full benefits of this Agreement and shall be bound
      by all provisions herein. Provided, however, that nothing in this paragraph
      shall be deemed to preclude Employee's ratification of this Agreement in any
      other way allowed or permitted by law.

    

    16.
      Severability.
      If any
      of the provisions set forth in this Agreement be held invalid, illegal or
      unenforceable in any respect, such invalidity, illegality or unenforceability
      shall not affect any other provision of this Agreement, but this Agreement
      shall
      be construed as if such invalid, illegal or unenforceable provision had never
      been contained herein.              

    17.
      Voluntary Agreement.
      Employee hereby represents that Employee has carefully read and completely
      understands the provisions of this Agreement and that Employee has entered
      into
      this Agreement voluntarily and without any coercion whatsoever, and in order
      to
      receive benefits not otherwise owed to Employee by the Company.

    

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or caused
      this Agreement to be duly executed by their authorized representatives as of
      the
      day and year first above written.

    

    

    FOR
      PCA
      INTERNATIONAL, INC.            FOR
      EMPLOYEE

    

    By:
      /s/
      Barry Feld_______________   /s/
      Don Norsworthy______(SEAL)

    Position:
      CEOExhibit 10.1

    Exhibit
      10.1

    

     

    310
      Wild Geese Road

    Knoxville,
      TN

    

    500
      East Emory Road

    Powell,
      TN

    

    

    

    

    

    

    

    STEAK
      N SHAKE OPERATIONS,
      INC.

    

    

    MULTIPLE
      UNIT FRANCHISE
      AGREEMENT

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF
      CONTENTS

     

    Recitals

    

    Terms
      of
      Agreement

    

    SECTION
      1. GRANT OF FRANCHISE

    

    1.01. Exclusive
      Grant

    

    1.02. Additional
      Restaurants

    

    1.03. Franchisee
      Obligations

    

    1.04. Operating
      Manager's Duties

    

    1.05. Company
      Services

    

    SECTION
      2. TERM AND RENEWAL

    

    2.01. Term

    

    2.02. Renewal

    

    SECTION
      3. RESTAURANT PROPERTY AND EQUIPMENT

    

    3.01. Transfer
      of Personal and Real Property Interests

    

    3.02. Construction
      of Restaurant

    

    3.03. Installation
      of Equipment and Furnishings

    

    3.04. Maintenance
      and Renovation of the Restaurant

    Property,
      Equipment and Furnishings

    

    3.05. Purchase
      of Non Approved Equipment and Furnishings

    

    3.06. Eminent
      Domain

    

    SECTION
      4. SUPPLIES,
      FOOD PRODUCTS, RECIPE ITEMS

    AND
      UNIFORMS

    

    4.01. Use
      of
      Food Supplies and Other Items

    

    4.02. Samples

    

    4.03. Suppliers
      of Food Supplies and Other Items

    

    4.04. Uniforms

    

    SECTION
      5. OPERATING STANDARDS

    

    5.01. Operational
      Standards

     

                
         5.02.  Operating Hours

     

    5.03. Employee
      Lease Agreement

    

    5.04. Training

    

    5.05. Continuing
      Services

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      6. FEES AND ADVERTISING EXPENDITURES

    

    6.01. Initial
      Franchise and Royalty Fee

    

    6.02. Advertising
      and Marketing Expenditures

    

    6.03. Definition
      of Gross Receipts

    

    6.04. Interest
      on Late Payments

    

    6.05. Credit
      Cards and Other Methods
      of Payment

    

    6.06. Vending
      Machines

    

    6.07. Fees
      Non-Refundable

    

    6.08. Payment
      By Electronic Transfer

    

    SECTION
      7. ADVERTISING

    

    7.01. Origination
      and Approval of Advertising

    

    7.02. Advertising
      Agency

    

    SECTION
      8. BOOKS, RECORDS AND CONTROL PROCEDURES

    

    8.01. Reports

    

    8.02. Marketing
      Information

    

    8.03. Records
      of Franchisee

    

    8.04. Inspection
      of Franchisee's Records

    

    8.05. Company
      Provided Accounting Services

    

    SECTION
      9. INSURANCE AND INDEMNITY

    

    9.01. Indemnity

    

    9.02. Franchisee's
      Insurance

    

    9.03. Evidence
      of Insurance

    

    9.04. Notice

    

    9.05. Additional
      Insured

    

    SECTION
      10. LIMITATION
      AND USE OF PROPRIETARY MARKS

    AND
      TRADE
      SECRETS

    

    10.01.
      Proprietary Marks And Trade Secrets

    

    10.02.
      Limitation on Franchisee's Use of Marks

    

    10.03.
      Notification of Infringements and Claims

    

    10.04.
      Indemnification of Franchisee/Discontinuance of Use of Marks

    

    10.05.
      Non-Disclosure of Trade Secrets and Confidential Information

    

    10.06.
      Survival

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      11. TERMINATION

    

    11.01.
      Termination of the Franchise Agreement

    

    11.02. Effect
      of
      Any Termination, Cancellation or Expiration
      of this Agreement

    

    11.03.
      [INTENTIONALLY DELETED]

    

    SECTION
      12. COVENANT NOT TO COMPETE

    

    

    SECTION
      13. ASSIGNMENTS

    

    13.01.
      Assignment by the Company

    

    13.02.
      Assignment by Franchisee

    

    13.03.
      The Company’s Right of First Refusal

    

    SECTION
      14. GENERAL PROVISIONS

    

    14.01.
      Improvements to System

    

    14.02.
      Severability

    

    14.03.
      Franchisee Independent Contractor /Disclosure Thereof

    

    14.04.
      Section and Subsection Titles

    

    14.05.
      Entire Agreement

    

    14.06.
      Number and Gender

    

    14.07.
      Obligations of Interested Parties

    

    14.08.
      Written Approval, Waiver and Non-Waiver

    

    14.09.
      Notices

    

    14.10.
      Designated Agent of Franchisee

    

    14.11.
      Specific Performance

    

    14.12.
      Venue/Dispute Resolution

    

    14.13.
      Costs and Attorneys' Fees

    

    14.14.
      Interference with Employment Relations

    

    14.15.
      Acknowledgment of Differing Terms

    

    14.16.
      Acknowledgment of No Promises

    

    14.17.
      Governing Law

    

    SIGNATURE
      PAGE

    

    SCHEDULE
      1

    
      
        
          -
            -

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    STEAK
      N SHAKE

    

    MULTIPLE
      UNIT FRANCHISE AGREEMENT

    

    THIS
      MULTIPLE UNIT FRANCHISE AGREEMENT ("Agreement") is made and entered into this
      21st day of September, 2005, ("Effective Date") by and among STEAK N SHAKE
      OPERATIONS, INC., an Indiana corporation, with its principal office at 500
      Century Building, 36 South Pennsylvania Street, Indianapolis, Indiana 46204
      (the
      "Company") and Reinwald
      Enterprises Emory, LLC
      ,an
      Indiana limited liability company, and Reinwald
      Enterprises Wild Geese, LLC, an
      Indiana limited liability company, both having their principal offices at 9948
      Ridge Drive, Indianapolis, Indiana 46256 or its Permitted Assigns (as that
      term
      is defined in Section 13.2 hereof) (collectively, the "Franchisee").

     

    Recitals

    The
      Company has created and developed a unique restaurant concept, including
      buildings with a distinctive architectural design, decorative color scheme
      and
      trade dress, and has standardized methods of preparing and serving certain
      food
      products and beverages for on-premises and off-premises consumption in manuals
      and other materials of the Company (the "Operating Standards Manual") as issued
      and revised from time to time (hereinafter collectively referred to as the
      "System"). Such restaurants are operated with uniform formats, systems, methods,
      procedures and designs and are known as "STEAK N SHAKE" Restaurants. The Company
      believes that the reputation and goodwill of STEAK N SHAKE Restaurants are
      based
      upon, and can be maintained only by, the sale of distinctive, high quality
      products and services.

    The
      Company is duly licensed to use and promote certain proprietary trademarks,
      service marks, trade dress and other commercial symbols, including "STEAK N
      SHAKE", the "WINGED LOGO", "TAKHOMASAK", "IN SIGHT IT MUST BE RIGHT", "FAMOUS
      FOR STEAKBURGERS", and related logos (the "Marks"). The Company has experience
      and Know-How (as defined herein) in the operation of STEAK N SHAKE Restaurants
      and can provide assistance and guidance in connection therewith. 

    The
      Company grants franchises to own and operate STEAK N SHAKE Restaurants to
      persons who meet the Company's qualifications and are willing to undertake
      the
      investment and effort to establish and develop a STEAK N SHAKE Restaurant in
      accordance with the System.

    Franchisee
      acknowledges that he has conducted an independent investigation of the business
      contemplated by this Agreement and recognizes that it involves business risks
      which make the success of the venture largely dependent upon the business
      abilities of Franchisee.

    Franchisee
      has applied for a franchise to own and assume operations at two existing STEAK
      N
      SHAKE Restaurants at the locations identified in Section 1.01 hereof and such
      application has been approved by the Company in reliance upon all of the
      representations made by the Franchisee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Terms
      of Agreement

    Company
      and Franchisee hereby agree as follows:

     

    SECTION
      1. GRANT
      OF FRANCHISE

    1.01.
      Exclusive
      Grant.
      This
      franchise (hereinafter sometimes referred to as the "Franchise") is being
      granted based on the application, financial statements and other documents
      submitted by Franchisee to the Company prior to the execution hereof, and
      Franchisee represents and warrants:

     

    
      	(a)  	
              the
                accuracy and completeness of such submissions as of the respective
                dates
                of the documents and the date hereof;
                and

            

    

    

    
      	(b)  	
              that
                such submissions do not omit the statement of any material fact necessary
                to make them not misleading.

            

    

    

    Subject
      to the conditions of this Agreement and the continuing faithful performance
      by
      Franchisee hereunder, the Company grants to Franchisee, for and during the
      term
      hereof, the right, license and privilege: (1) to operate the following STEAK
      N
      SHAKE Restaurants: 310 Wild Geese Road, Knoxville, Tennessee (being sometimes
      referred to individually as the "Knoxville Restaurant") and the Restaurant
      at
      500 East Emory Road, Powell, Tennessee (being sometimes referred to individually
      as the "Powell Restaurant"; the Knoxville Restaurant and Powell Restaurant
      being
      sometimes collectively referred to as the "Restaurants"); (2) to use the Marks
      licensed to the Company as are now or may hereafter be specifically designated
      by the Company in writing for use only with the System; (3) to offer for sale
      all of the (and only the) food and beverage products designated by the Company
      and sold therein (as they may be changed, improved, and further developed from
      time to time); and (4) to indicate to the public that Franchisee's Restaurants
      are operated as a part of the System. During the term of this Agreement, the
      Company shall not own or operate a STEAK N SHAKE Restaurant, and shall not
      grant
      to any third party a franchise to operate a Steak n Shake restaurant at any
      location within the geographical area described or to be determined and
      described in Schedule
      1
      (the
      "Exclusive Territory"). Nothing contained herein shall limit the right of the
      Company to sell directly or through third parties any products, provided that
      the items sold by the Company are either packaged or bottled and sold for
      preparation and/or consumption off the selling premises.

    1.02.
      Additional
      Restaurants.
      Franchisee understands that the Company and its affiliated corporations
      currently operate and/or franchise, and may in the future operate and/or
      franchise, restaurants and food establishments other than STEAK N SHAKE
      Restaurants, and Franchisee agrees that the Company and/or any related entity
      may do so within the Exclusive Territory, provided that such restaurants and
      food establishments do not feature ground beef sandwiches as a primary product
      and do not utilize the following or similar names or trade names: "STEAK N
      SHAKE", "TAKHOMASAK, "IN SIGHT IT MUST BE RIGHT", and "FAMOUS FOR STEAKBURGERS".
      Franchisee further agrees that this franchise relates solely to and is limited
      to the Restaurant locations described herein, and affords Franchisee no right,
      title or interest in additional franchises to be operated at any other location
      (subject to relocation of the Restaurant as permitted under Section
      3.01).

    Neither
      this Agreement nor the franchise issued hereunder obligates the Company in
      any
      way to seek, issue, or allow the purchase of any additional franchises by
      Franchisee or others.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.03.
      Franchisee
      Obligations.
      Franchisee agrees to diligently use its best efforts to develop and operate
      the
      business franchised herein and to promote the interest of the System for the
      term of this Agreement and any renewal thereof. Franchisee accepts the grant
      of
      this franchise and agrees to maintain and operate its STEAK N SHAKE Restaurants
      only at the locations described or to be approved by the Company and described
      in Schedule
      1
      hereof
      in accordance with the Company's plans, specifications and procedures as set
      forth in the Operating Standards Manual and other applicable publications of
      the
      Company, as revised from time to time, and the terms of this Agreement.
      Franchisee agrees to use the franchised facility only for the purpose designated
      in this Franchise Agreement.

    Franchisee
      acknowledges that maintaining uniformity in every component of the operation
      of
      the System is essential to the success of the entire chain of STEAK N SHAKE
      Restaurants, including a designated menu; uniformity of food and beverage
      specifications, preparation methods, quality and appearance; and uniformity
      of
      facilities and service. Franchisee agrees to comply with the entire System,
      as
      revised from time to time by the Company.

    1.04.
      Operating
      Manager's Duties.
      At all
      times during this Agreement, Franchisee's manager in charge of operations for
      the Restaurant will have attended and successfully completed the prescribed
      manager training program of Company and all subsequent manager training,
      refresher and retraining programs offered from time to time by Company pursuant
      to Section
      5.03
      of this
      Agreement. The manager will be a full-time manager on the premises or with
      reasonable availability to the premises at all times to carry out the manager's
      day-to-day responsibilities. The manager will refrain from operational or
      management commitments in other businesses (except other STEAK N SHAKE
      Restaurants operated under franchises granted by the Company) which would in
      any
      way affect the management duties required hereunder.

    1.05.
      Company
      Services.
      The
      Company agrees to provide to Franchisee the following materials, benefits and
      services, all as hereinafter more fully set forth:

    
      	(a)  	
              Written
                guidelines for site selection (if applicable) upon
                request;

            

    

    

    
      	(b)  	
              As-Built
                Survey site plans, construction plans, drawings and specifications
                for the
                Restaurants and related facilities;

            

    

    

    
      	(c)  	
              Layouts
                and specifications for fixtures, furnishings, interior design and
                decor,
                signs and equipment required as elements of the
                System;

            

    

    

    
      	(d)  	
              Such
                training at such locations and for such periods as may be designated
                by
                the Company from time to time in the Operating Standards Manual or
                otherwise in writing, subject to Section
                5.03
                of
                this Agreement;

            

    

    

    
      	(e)  	
              Such
                assistance as the Company may determine is required in connection
                with the
                Restaurant operation by Franchisee;

            

    

    

    
      	(f)  	
              One
                (1) copy each of the Company's Operating Standards Manual and other
                applicable manuals, publications or materials issued by the Company,
                copies of which are, concurrently with the execution hereof, delivered
                and
                loaned to Franchisee for the term hereof. Any additions and modifications
                thereto as the Company may issue from time to time, in its discretion,
                to
                incorporate new developments or other changes in System standards,
                specifications, procedures, and techniques will be provided to the
                Franchisee. Franchisee must pay then-current replacement fee as
                established by the Company for replacing copies of the Operating
                Standards
                Manual or other materials;

            

    

    

    
      	(g)  	
              A
                sample of the Company's standardized chart of accounts, statement
                of
                earnings, balance sheet and other report formats to be used by Franchisee
                for purposes of reporting to the
                Company;

            

    

    

    
      	(h)  	
              The
                Company's regular and continuing consulting services and periodic
                inspections and evaluations of Franchisee's operations pursuant to
                Section
                5.04;
                and

            

    

    

    
      	(i)  	
              The
                STEAK N SHAKE advertising/marketing program(s) as developed and issued
                from time to time by the Company under Sections
                6.02 and 7.01. 

            

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SECTION
      2. TERM
      AND RENEWAL

    2.01.
      Term.
      Unless
      sooner terminated as hereinafter provided, this Franchise Agreement shall extend
      for a term commencing thirty (30) days from the date of this Agreement, but
      no
      later than September 28, 2005 ("Franchise Date") and ending on the twentieth
      (20th) anniversary of such date. If the premises of the Restaurant are leased
      by
      Franchisee, the term of the agreement shall be co-extensive with the shorter
      of
      (i) the initial term of the lease or (ii) the term as hereinabove set
      forth.

    2.02.
      Renewal.
      If all
      of the following criteria are satisfied, Franchisee may renew this Franchise
      to
      use the System and Marks at the Restaurant for one additional term equal to
      the
      term in the Company's standard form of Unit Franchise Agreement as it exists
      on
      the renewal date:

    
      	(a)  	
              Franchisee
                gives the Company written notice of its intention to renew this Franchise
                not less than six (6) months, nor more than twelve (12) months, prior
                to
                the end of the then-current term.

            

    

    

    
      	(b)  	
              Franchisee
                is not, when notice is given and when the franchise is renewed, in
                material default of any provision of this Agreement, any amendment
                hereof
                or successor hereto, or any other Unit Franchise Agreement, and has
                complied with all such agreements during the term of this
                Agreement.

            

    

    

    
      	(c)  	
              All
                monetary obligations owed by Franchisee to the Company are current
                and
                have been paid throughout the initial and all prior renewal terms
                of this
                Agreement in a timely manner.

            

    

    

    
      	(d)  	
              Franchisee
                executes the Company's standard Unit Franchise Agreement in the form
                in
                which it exists on the renewal date, which may contain certain terms
                and
                conditions substantially different from those set forth herein, including
                without limitation a different royalty fee, a different term or different
                national and local advertising and marketing expenditure requirements
                (or
                new methods of computing same), if
                any.

            

    

    

    
      	(e)  	
              Franchisee,
                its managers and any other employee of the Franchisee attend and
                satisfactorily complete such retraining or refresher training program
                as
                the Company may require, in its sole discretion, at such time and
                place as
                the Company may reasonably
                designate.

            

    

    

    
      	(f)  	
              Franchisee
                performs such remodeling, repairs, replacements and redecoration
                as the
                Company may require to cause the Restaurant, equipment, electronic
                point
                of sale systems, computer systems, fixtures, furnishings and furniture
                to
                conform to the plans and specifications being used for new or remodeled
                STEAK N SHAKE Restaurants on the renewal
                date.

            

    

    

    
      	(g)  	
              Franchisee
                pays to Company a renewal fee equal to fifty percent (50%) of the
                Initial
                Fee payable by franchisees prevailing at the renewal date, payable
                at
                least thirty (30) days prior to the renewal
                date.

            

    

    

    
      	(h)  	
              Franchisee
                executes an agreement with the Company agreeing to release any claims,
                known or unknown, Franchisee may have against the Company at the
                time of
                the renewal.

            

    

    

    SECTION
      3. RESTAURANT
      PROPERTY AND EQUIPMENT

    
      	3.01.  	
              Transfer
                of Personal and Real Property Interests.
                Franchisee desires to assume operation of the Restaurants and the
                Company
                agrees to transfer its interest in the Restaurants on the Franchise
                Date
                as follows:

            

    

    
      	(a)  	
              All
                of the Company’s right, title and interest in and to the Knoxville
                Restaurant shall be conveyed pursuant to that Contract for Purchase
                and
                Sale of Real Estate of even date herewith, attached hereto as Exhibit
                A,
                and incorporated herein by this reference (the "Contract"). It being
                acknowledged and agreed by the parties that if the Contract is terminated
                for any reason, this Agreement shall terminate immediately and the
                parties
                shall have no further obligations to each other hereunder.
                

            

    

    
      	(b)  	
              All
                of the Company’s right, title and interest in and to the Powell Restaurant
                shall be conveyed pursuant to that Assignment and Assumption of Lease
                Agreement of even date herewith attached hereto as Exhibit B and
                incorporated herein by this reference. It being acknowledged and
                agreed
                that if the Assignment and Assumption Agreement is terminated for
                any
                reason, this Agreement shall terminate immediately and the parties
                shall
                have no further obligations to each other
                hereunder.

            

    

    
      	(c)  	
              All
                of the Company’s right, title and interest in and to the good will,
                inventory, equipment, furniture and fixture located at the Restaurants
                as
                of the date hereof shall be conveyed pursuant to that Personal Property
                Sales of even date herewith and attached hereto as Exhibit C. It
                being
                acknowledged and agreed that if the Personal Property Sale Agreement
                is
                terminated for any reason, this Agreement shall terminate immediately
                and
                the parties shall have no further obligation to each other
                hereunder.

            

    

    All
      of
      the Company’s right, title and interest in those contracts for outdoor
      advertising in existence at the date of the Franchise, as set forth on Exhibit
      D, will be assigned to Franchisee by the Company and the Franchisee agrees
      to
      assume all obligations thereunder. Franchisee agrees to execute any
      documentation necessary to provide for such an assignment.Franchisee may
      relocate the Restaurants to a new location approved by the Company based upon
      a
      review of various factors, such as the success of the Restaurant at its
      then-current location, and the demographics (including number of households
      and
      traffic patterns) relating to the proposed new location. Any such relocation
      will be at Franchisee's sole expense. The Company may charge Franchisee for
      reimbursement of all of the Company's costs and expenses in connection with
      such
      relocation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.02.
      Casualty.
      

    In
      the
      event either Restaurant is damaged or rendered totally or partially untenantable
      by fire or other casualty, Franchisee shall, within thirty (30) days, initiate
      repairs to the Restaurant property and diligently pursue the completion of
      such
      repairs in order to restore the Restaurant property to its former condition
      prior to the casualty within a reasonable time, not to exceed six (6) months
      after the date of the fire or casualty, which time period may be extended for
      delays resulting from acts of God, force majeure and other causes beyond the
      reasonable control of Franchisee, provided Franchisee continues to diligently
      pursue the completion of such repairs. If, in the Company's reasonable judgment,
      the damage or destruction is so extensive that substantial cost and effort
      will
      be expended in restoring the Restaurant property, the Company may require
      Franchisee, by giving written notice thereof, to restore the Restaurant property
      in conformance with the then standard STEAK N SHAKE Restaurant decor
      specifications. Notwithstanding anything herein to the contrary, Franchisee
      shall not be required to repair or restore the Restaurant property if such
      damage occurs during the final year of the Franchise unless the Company agrees
      to extend the Franchise pursuant to Section
      2.02.
      Franchisee shall be solely responsible for the cost associated with restoring
      the Restaurant property.

    3.03.
      Use
      of
      Equipment and Furnishings.
      Franchisee shall:

    
      	(a)  	
              install
                and use in and about the Restaurant only such equipment (including,
                but
                not limited to, food and beverage preparation equipment, fixtures,
                furnishings, point of sale equipment, computer hardware and software,
                interior and/or exterior signage and air handling equipment) and
                other
                personal property which strictly conforms to the appearance, uniform
                standards, specifications and procedures of the Company and the System.
                Such equipment is sometimes referred to herein collectively as "Equipment
                and Furnishings." Franchisee shall purchase and install all Equipment
                and
                Furnishings listed on the equipment and furnishings list, and not
                currently installed in the Restaurants, in the New Store Construction
                Manual from approved suppliers. The Company shall have the right
                to
                inspect and approve all Equipment and Furnishings and their installation
                to ensure Franchisee's compliance with the Company's standards and
                specifications; and

            

    

    

    
      	(b)  	
              install
                no vending machine on or about the Restaurant property, in addition
                to any
                vending machine currently installed, other than pay telephones and
                newspaper vending machines, without the Company's prior written
                consent.

            

    

    

    3.04.
      Maintenance
      and Renovation of the Restaurant Property, Equipment and
      Furnishings.

    
      	(a)  	
              Franchisee
                agrees to maintain the condition and appearance of the Restaurant
                in
                compliance with the Company's prescribed standards of quality, service
                and
                cleanliness. If at any time, in the Company's reasonable judgment,
                the
                general state of repair, appearance or cleanliness of the Restaurant
                property or its Equipment and Furnishings do not meet the Company's
                standards, the Company will so notify the Franchisee in writing,
                specifying the action to be taken by the Franchisee to correct such
                deficiency, and the Franchisee will promptly comply with the Company's
                requirements.

            

    

    

    
      	(b)  	
              If
                the Company changes the design, decor, layout or other elements of
                the
                System, the Franchisee agrees to remodel its Restaurant, at Franchisee's
                expense, to conform with the Company's new standards. Such changes
                will be
                made by Franchisee by the time the Company completes such changes
                to
                substantially all of the Company
                Restaurants.

            

    

    

    
      	(c)  	
              If
                the Company changes or modifies its electronic point of sale system
                or
                computer system used in the Company Restaurants, the Franchisee agrees
                to
                change or modify its electronic point of sale system or computer
                system to
                conform with the Company's new standards. Such changes and modifications
                will be made by the Franchisee, at the Franchisee's expense, by the
                time
                the Company completes such changes and modifications to substantially
                all
                of the Company Restaurants.

            

    

    

    
      	(d)  	
              If
                the Company changes or modifies any item or items of equipment used
                in the
                Company Restaurants, the Franchisee agrees to change or modify such
                item
                or items of equipment in the franchised Restaurant to conform with
                the
                Company's new standards. Such changes and modifications will be made
                by
                the Franchisee, at the Franchisee's expense, by the time the Company
                completes such changes and modifications to substantially all of
                the
                Company Restaurants.

            

    

    

    3.05.
      Purchase
      of Non Approved Equipment and Furnishings.
      If
      Franchisee desires to purchase or install any item that has not been
      specifically approved by the Company, or to purchase an item of equipment
      manufactured to the Company’s specifications from a supplier that has not been
      pre-approved by the Company, Franchisee shall submit to the Company a written
      request for approval of such item or supplier. The Company shall have the right
      to require, among other things, that a sample of the item to be delivered or
      manufactured be made available in a manner acceptable to the Company or to
      an
      independent certified laboratory designated by the Company for testing prior
      to
      acting on the request for approval. All costs and expenses related to such
      testing and evaluation shall be paid to the Company by Franchisee. The Company
      shall not be liable for any damage to sample items which may result from the
      testing process. The Company reserves the right to retest any items previously
      approved by it and may revoke any prior approval if the item fails to continue
      to meet the Company's standards and specifications. If the Company revokes
      the
      approval of any item or any supplier in writing or in the New Store Construction
      Manual, Franchisee shall not thereafter purchase such item from the supplier
      or
      use such item in connection with the operation of the Restaurant.

    3.06.
      Eminent
      Domain.
      If
      during the term of this Agreement, the Restaurant property shall be taken for
      any public use by an exercise of eminent domain, condemnation or by purchase
      under the threat of such power (hereinafter referred to the "Proceeding"),
      either party to this Agreement may elect to continue the Franchise under the
      terms of this Agreement at a new Restaurant location. However, such new
      Restaurant location must be approved by the Company within six (6) months of
      the
      "completion of" the Proceeding, and the location set out in a new Schedule
      1,
      to be
      attached hereto and made a part hereof. Approval of the location for the new
      Restaurant is within the sole discretion of the Company, which shall not be
      unreasonably withheld. 

    The
      right
      to elect to continue the Franchise at a new Restaurant location may be exercised
      by either party only if there is a total taking of the Restaurant property
      or a
      Material Partial Taking of the Restaurant property. For purposes of this
      Agreement, "Material Partial Taking" is the taking of any portion of the
      restaurant building, the loss of twenty percent (20%) or more of the parking
      area or number of parking spaces on the Restaurant property or the loss of
      drive-thru facilities on the Restaurant property. Regardless of the provisions
      set forth above, if any Proceeding occurs after the tenth (10th) anniversary
      of
      this Agreement, then both parties must agree in writing to continue the
      Franchise and the terms of this Agreement. In the event the Proceeding results
      in less than a total or Material Partial Taking, Franchisee agrees to repair
      or
      restore any damage to the Restaurant property in the manner set forth for fire
      and casualty losses in Section
      3.02
      herein.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      4. SUPPLIES,
      FOOD PRODUCTS, RECIPE ITEMS AND UNIFORMS

    4.01.
      Use
      of
      Food Supplies and Other Items.
      Franchisee agrees:

    
      	(a)  	
              to
                serve, sell or offer for sale all of the (and only the) food and
                beverage
                products that: (i) are listed in the then-current standard menu or
                menus
                specified by the Company, (ii) meet the Company's uniform standards
                of
                quality and portions, and (iii) have been prepared in accordance
                with the
                recipes and food handling and preparation methods and procedures
                designated from time to time in the Operating Standards Manual or
                otherwise in writing;

            

    

    

    
      	(b)  	
              to
                maintain in sufficient supply all of the food, beverage and other
                items
                served;

            

    

    

    
      	(c)  	
              not
                to deviate from the Company's standards, specifications and procedures
                for
                serving or selling the same without the Company's prior written consent;
                and

            

    

    

    
      	(d)  	
              to
                discontinue serving, selling or offering for sale any such items
                as the
                Company may, in its discretion, disapprove in writing at any
                time.

            

    

    

    4.02.
      Samples.
      Franchisee further agrees to permit the Company or its agents, at any reasonable
      time, to remove from the Restaurants certain samples of any inventory items,
      without payment therefor, in amounts reasonably necessary for testing by the
      Company or an independent certified laboratory to determine whether the samples
      meet the Company's then-current standards and specifications.

    4.03.
      Suppliers
      of Food Supplies and Other Items.
      Franchisee will purchase approved food products and other items only from
      sources approved by the Company (which may include the Company and/or its
      affiliates). The Company may from time to time modify the list of approved
      items, brands and suppliers, and Franchisee shall not, after receipt in writing
      of such modification, reorder any item or brand or reorder from any supplier
      which is no longer approved. If Franchisee proposes to use or serve any food
      or
      beverage item or other ingredient or proposes to use any item, brand or supplier
      which is not approved at that time, it shall first notify the Company and submit
      sufficient information, specifications and samples concerning such item, brand
      or supplier for a determination by the Company whether such item or brand
      complies with the Company's specifications and standards and whether such
      supplier meets the Company's approved supplier criteria. The Company shall,
      within a reasonable time, notify Franchisee whether or not such proposed item,
      brand or supplier is approved. The Company shall approve such proposed item,
      brand or supplier, if in the Company's sole judgment and discretion, it is
      satisfied that the proposed item, brand or supplier meets the Company's
      specifications, standards and requirements. The Franchisee will reimburse the
      Company for the costs and expenses relating to the testing, research and
      investigation of proposed items, brands or suppliers. Notwithstanding the above,
      the Company shall not be obligated to approve more than a reasonable number
      of
      suppliers or products used or served by the Restaurant.

    4.04.
      Uniforms.
      Franchisee shall purchase and use uniforms and costumes for its employees which
      conform strictly to the specifications, design and style of the Company existing
      from time to time, as required in the Operating Standards Manual or other-wise
      in writing.

     

    SECTION
      5. OPERATING
      STANDARDS.

    5.01.
      Operational
      Standards.

    
      	(a)  	
              The
                Company will loan to Franchisee during the term of the Franchise
                one copy
                each of the Operating Standards Manual, and other applicable manuals
                and
                publications of the Company for STEAK N SHAKE Restaurants, containing
                mandatory and suggested specifications, standards and operating procedures
                prescribed from time to time by the Company for STEAK N SHAKE Restaurants
                and information relative to other obligations of Franchisee hereunder
                for
                the operation of a STEAK N SHAKE Restaurant. The Company shall have
                the
                right to modify the Operating Standards Manual and other manuals
                and
                publications from time to time to reflect changes in authorized products
                and services, standards of product quality and services for the operation
                of a STEAK N SHAKE Restaurant.

            

    

    

    
      	(b)  	
              Franchisee
                shall keep current all copies of the Operating Standards Manual and
                other
                manuals. The master copies maintained by the Company at its principal
                office shall control in the event of a dispute relative to the contents
                thereof.

            

    

    

    
      	(c)  	
              Franchisee
                shall comply with all federal, state and local laws, rules and regulations
                and shall timely obtain any and all permits, certificates or licenses
                necessary for the full and proper conduct of the business franchised
                under
                this Agreement, including, without limitation, building and other
                required
                construction and occupancy permits, licenses to do business, fictitious
                name registration, sales tax permits, health and sanitation permits
                and
                ratings and fire code clearances. Copies of all inspection reports,
                warnings, certificates and ratings issued by any governmental entity
                during the term of this Agreement in connection with the conduct
                of the
                franchised business which cites or indicates Franchisee's failure
                to meet
                or maintain the highest governmental standards or failure to fully
                comply
                with any applicable law, rule or regulation, shall be forwarded to
                the
                Company within five (5) days of Franchisee's receipt thereof. Franchisee
                shall remedy such failure within the required time period as specified
                in
                the respective citation, report or other notices, or within ten (10)
                days
                if no time period is so specified.

            

    

    

    5.02.
      Operating
      Hours.
      During
      the term of this Agreement, Franchisee shall be open and in normal operation
      for
      twenty-four hours per day, seven days per week, or such other minimum hours
      and
      days as the Company may from time to time reasonably prescribe in
      writing.

    5.03. Employee
      Lease Agreement.

    
      	 	
              (a)

            	
              The
                Company employs qualified food service workers and, when needed,
                provides
                the services of those workers on a temporary basis to recipient companies,
                and it is acknowledged that as of the Effective Date Franchisee has
                need
                of food service workers in conjunction with its operation of the
                Restaurant.

            

    

     

    
      	 	 	
              The
                Company has agreed to provide Franchisee with the services of food
                service
                workers (hereinafter "Temporary Employees"), as needed, on a temporary
                basis for a period commencing on the Franchise Date and ending on
                November
                23, 2005 (the "Term") unless otherwise terminated by either party
                upon the
                provision of three (3) business days written notice to the other
                party of
                the intent to terminate the
                Agreement.

            

    

     

    (b) The
      Company shall lease to Franchisee such properly skilled and qualified Temporary
      Employees as Franchisee may require to perform service for, and under the direct
      supervision of Franchisee. The parties acknowledge that the relationship created
      by this Section 5.03 is one of a temporary help arrangement and does not create
      an employee leasing or professional employer organization. 

     

    (c) In consideration
      for the Company’s agreement to lease the Temporary Employees to Franchisee
      pursuant to this Section 5.03, Franchisee agrees to pay the Company a fee equal
      to the actual weekly payroll and benefits charges incurred by the Company for
      the services of the Temporary Employees plus an administrative fee of one
      percent (1%) of the actual weekly payroll and benefits charges incurred by
      the
      Company for the services of the Temporary Employees ("Employee Fee"). The
      Company shall submit its invoices to Franchisee on a weekly basis, itemizing
      all
      charges comprising the Employee Fee; Franchisee agrees to pay the Employee
      Fee
      without deduction or set-off, within five (5) days of its receipt of the
      invoices. The parties agree that the Employee Fee may be increased during the
      Term should any costs beyond the control of the Company be increased, including,
      but not limited to, payroll taxes and related wage-based taxes. 

     

    
      	(d)  	
              For
                purposes of this Agreement and otherwise, the Company shall be the
                employer of Temporary Employees and, as employer, the Company shall
                be
                responsible for such duties and responsibilities that include, but
                are not
                limited to the following:

            

    

     

    
      	i.  	
              Recruiting,
                hiring, disciplining, terminating and reassigning Temporary Employees.
                The
                Company reserves a non-operational right of direction and control
                over
                Temporary Employees as is necessary to carry out its obligations
                as the
                employer of such Temporary
                Employees.

            

    

     

    
      	ii.  	
              The
                Company shall be responsible for establishing, calculating, paying,
                processing and issuing wages to Temporary Employees as calculated
                from
                data as to hours worked provided by Franchisee, such wages to be
                paid from
                the Company’s own accounts and without regard to the Employee Fee.
                

            

    

     

    
      	iii.  	
              The
                Company shall be responsible for the withholding, collection, reporting
                and payment of all applicable payroll taxes including, but not limited
                to,
                federal, state and local income tax, Social Security tax, unemployment
                contributions and other payroll taxes with respect to Temporary
                Employees.

            

    

     

    
      	iv.  	
              The
                Company shall obtain and pay the costs of providing workers’ compensation
                insurance and shall manage workers' compensation claims relating
                to
                Temporary Employees. Upon request, the Company shall furnish to Franchisee
                a certificate of insurance evidencing the issuance to the Company
                of
                policies providing such coverage. The Company and Franchisee shall
                be
                joint employers of Temporary Employees for purposes of exclusive
                remedy
                provisions of applicable workers' compensation laws. The Company
                hereby
                agrees to indemnify and hold Franchisee harmless from and against
                all
                workers’ compensation claims brought against Franchisee by Temporary
                Employees.

            

    

     

    
      	v.  	
              The
                Company shall comply with the Immigration Reform and Control
                Act.

            

    

     

    
      	vi.  	
              The
                Company shall be responsible for maintenance of personnel and payroll
                records for Temporary Employees.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      Company shall provide Temporary Employees that possess qualifications specified
      by Franchisee and shall replace any Temporary Employee that fails to meet
      Franchisee’s qualifications, provided however that the employees working at the
      Restaurants as of the Effective Date, shall be deemed qualified unless
      Franchisee otherwise indicates in writing to the Company prior to the Franchise
      Date.

     

    
      	(e)  	
              Franchisee
                shall retain sufficient responsibility for the operational direction
                and
                control of Temporary Employees, as is necessary to conduct Franchisee’s
                business and without which Franchisee would be unable to conduct
                its
                business. In accordance with this responsibility, Franchisee shall
                also
                retain the following duties and
                responsibilities:

            

    

     

    
      	i.  	
              Franchisee
                must verify skills, competency and fitness of each Temporary Employee
                necessary to perform the duties pursuant to Franchisee’s qualification
                requirements and Franchisee agrees that the acceptance of a Temporary
                Employee relieves the Company of any liability to Franchisee for
                losses,
                claims or damages arising as a result of Temporary Employee's negligence,
                theft, embezzlement, fraud, or other unlawful or willful acts committed
                by
                such Temporary Employee.

            

    

     

    
      	ii.  	
              Franchisee
                retains the right to request that a Temporary Employee no longer
                perform
                services at Franchisee’s worksite, but Franchisee may not unilaterally
                terminate any Temporary Employee and, when any such action is requested,
                Franchisee agrees to abide by all applicable federal, state and local
                employment laws. Franchisee agrees to notify the Company as soon
                as
                practicable, but in no event more than 24 hours from any Temporary
                Employee's failure to report to Franchisee’s worksite, either because
                Temporary Employee has voluntarily chosen not to continue to perform
                services for Franchisee or because Franchisee has determined that
                it no
                longer wishes Temporary Employee to perform such
                services.

            

    

     

    
      	iii.  	
              Franchisee
                shall be responsible for providing adequate work performance instruction,
                supervision and assistance to Temporary Employees necessary to perform
                tasks assigned by Franchisee and Franchisee shall be responsible
                for the
                work performed by Temporary Employees as well as any risks or liabilities
                associate therewith.

            

    

     

    
      	iv.  	
              Franchisee
                agrees to maintain records of actual time worked by Temporary Employees
                and shall not pay Temporary Employees any wages or salaries or any
                forms
                of direct or indirect compensation, including employee
                benefits.

            

    

     

    
      	v.  	
              Franchisee
                agrees to maintain a safe, healthy and legally compliant worksite
                for
                Temporary Employees and shall comply, at Franchisee’s sole expense, with
                all safety, health and work laws, including, but not limited to federal
                and state OSHA regulations and rules (including applicable recording
                keeping requirements under federal, state and local
                laws).

            

    

     

    
      	vi.  	
              Franchisee
                shall be responsible for the products and/or services of its operation
                at
                the Restaurants and any liability or other loss incurred as a result
                of
                improper supervision, safeguards or other controls relating to its
                products or services.

            

    

     

    
      	 	
              (f)

            	
              With
                respect to this Section 5.03, each party shall bear those risks and
                responsibilities inherent to their respective businesses and, as
                allowed
                under applicable law, shall be obligated to only pay or indemnify
                the
                other party for liability, claims, penalties, damages or losses of
                whatever nature to the extent that such losses arise from risks,
                duties
                and responsibilities in connection with each parties’ business pursuant to
                this Agreement, including, but not limited to court costs and attorney
                fees associated therewith. Liabilities with respect to the following
                shall
                be born by each party in proportion to their responsibility, action
                or
                failure to act. Neither the Company nor Franchisee, nor their officers,
                directors, employees and agents shall take or fail to take any action
                that, with respect to Temporary Employees, would cause or result
                in the
                filing of a claim under Title VII of the Civil Rights Act of 1964,
                the
                Americans with Disabilities Act ("ADA"), the Age Discrimination and
                Employment Act, the Fair Labor Standards Act, the Immigration Reform
                and
                Control Act, the Vietnam Era Veteran’s Readjustment Act of 1974, the
                Family and Medical Leave Act, or any other such similar law, rule
                or
                regulation governing employment relationships generally, as amended,
                enacted now or later by any federal, state or local governmental
                entity

            

    

     

    5.04.
      Training.

     

    
      	(a)  	
              All
                of the Franchisee's managerial employees are required to successfully
                complete the management training program prescribed by the Company
                at such
                place and time as the Company may designate, but prior to performing
                duties in or related to the Restaurant. At the Company's option,
                such
                training may take place at a STEAK N SHAKE Restaurant(s) operated
                by
                Franchisee and may be conducted by properly trained Franchisee personnel.
                Franchisee shall be solely responsible for the compensation of trainees
                and their travel, lodging and living expenses incurred in connection
                with
                the attendance at such programs.

            

    

    

    
      	(b)  	
              In
                addition to the required management training, all other employees
                of
                Franchisee must undergo such on-the-job and instructional training
                as the
                Company may from time to time
                require.

            

    

    

    
      	(c)  	
              Franchisee,
                and/or such executive, managerial, supervisory and other employees
                of
                Franchisee shall attend and successfully complete all subsequent
                training,
                refresher and retraining programs which the Company may conduct and
                require Franchisee and/or designated employees to attend, in its
                reasonable discretion.

            

    

    

    
      	(d)  	
              Upon
                failure of Franchisee or any manager or employee of Franchisee to
                complete
                successfully, for any reason, any training, retraining or refresher
                program required by the Company, Franchisee shall require some other
                trainee to attend and successfully complete the program, and to operate
                the franchised business thereafter as its manager or otherwise perform
                the
                functions of the category of employee for which the training program
                was
                offered, if the Company, at its option, so
                directs.

            

    

    

    
      	(e)  	
              There
                shall be no tuition charge for the training required by subsections
                (a),
                (b), (c) and (d) of this Section
                5.03,
                but Franchisee shall pay all expenses of travel, room, board, training
                supplies and materials and salaries or wages of its employees while
                in
                training. Additional training provided by the
                Company.

            

    

    

    
      	(f)  	
              The
                Company will furnish representatives who provide guidance and assistance
                in the hiring and training of new employees for a minimum of 54 eight-hour
                work days. Upon request by Franchisee or if the Company deems additional
                assistance necessary, a representative or representatives shall remain
                for
                an additional period determined by the Company, and Franchisee shall
                reimburse the Company for its reasonable expenses (including salary)
                in
                providing the representative(s) for such additional period. Franchisee's
                management staff shall be at work and on duty during the hours of
                assistance by the Company's
                representatives.

            

    

    

    
      	(g)  	
              Franchisee
                shall replace any manager who the Company determines is not qualified
                to
                manage a Restaurant in accordance with the System and its
                standards.

            

    

    

    
      	(h)  	
              The
                Company will provide the initial training materials and supplies,
                which
                are part of the System. Franchisee will purchase any additional or
                replacement training materials and supplies, as may be specified
                by the
                Company, to properly conduct such training as is established and
                published
                from time to time in the Operating Standards Manual.
                

            

    

    

    5.05.
      Continuing
      Services.
      The
      Company will:

    
      	(a)  	
              furnish
                to Franchisee, from time to time, such merchandising and operating
                aids
                and services, bulletins, newsletters, reports and other printed material
                in connection therewith, as are generally furnished to its other
                STEAK N
                SHAKE Franchisees.

            

    

    

    
      	(b)  	
              from
                time to time, at its discretion, provide written or verbal consultation
                and advice or send representatives to Franchisee's premises to consult
                with Franchisee or its management representative relative to the
                operation
                of the Restaurant; and shall periodically inspect the premises of
                the
                Restaurant (with or without prior notice) and the Equipment and
                Furnishings thereon and the products served by Franchisee therein
                to
                determine the efficiency and quality of the operation and the faithfulness
                of compliance with the System.

            

    

    

    
      	(c)  	
              on
                reasonable written request by Franchisee as determined by the Company,
                furnish services to Franchisee to aid in the solution of specific
                problems
                encountered by Franchisee which are beyond the scope of the Company's
                obligations in subsection
                (b)
                above. Franchisee shall reimburse the Company promptly for its actual
                time
                and actual expenses incurred in aiding Franchisee with such
                problems.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      6. FEES
      AND ADVERTISING EXPENDITURES.

    6.01.
      Initial
      Franchise and Royalty Fee.

    
      	(a)  	
              On
                or before the Franchise Date, Franchisee shall pay to the Company
                an
                initial nonrecurring franchise fee payable on the execution of this
                Agreement in the amount of Forty Thousand Dollars and 00/100 ($40,000.00)
                (the "Initial Fee"). Nothing herein is intended to represent or guarantee
                the amount of the Initial Fee for any Restaurant other than the two
                franchised by the terms of this Agreement. The Initial Fee is
                nonrefundable.

            

    

    

    
      	(b)  	
              On
                or before the Franchise Date, Franchisee shall pay to the Company
                as a
                royalty fee, a sum equal to four percent (4%) of Franchisee's "Gross
                Receipts" (as defined in Section
                6.03
                hereof) from the operation of each Restaurant, payable by the seventh
                (7th) day after the end of each four week accounting period, or,
                at the
                Company's option, by the seventh (7th) day after the end of each
                week for
                the preceding week's receipts. Provided however, payment of that
                portion
                of the royalty fee reflecting Gross Receipts generated by the Powell
                Restaurant required by this Section 6.02(b), shall
                be deferred
                during the time period commencing on the date of last day of the
                four-week
                accounting period
                during which television advertising purchased by Franchisee first
                airs on
                television stations serving the Knoxville, Tennessee Designated Market
                Area ("Initial Period") and ending on the last day of the thirteenth
                (13th)
                four-week
                accounting period following the Initial Period (the entire time period
                discussed in the preceding sentence referred to as the "Initial TV
                Advertising Period");
                and provided further that Franchisee’s proposed television advertising
                plan for the Initial TV Advertising Period be approved in writing
                by the
                Company’s Chief Marketing Officer, prior to the Initial Period, which
                approval shall not be unreasonably
                withheld.

            

    

    

    
      	(c)  	
              Within
                ten (10) days of the end of the Initial TV Advertising Period, the
                Company
                shall provide Franchisee with notice setting forth the amount of
                the
                royalty fees deferred during the Initial TV Advertising Period ("Deferred
                Royalty Fee"). Franchisee shall
                make payments toward the Deferred
                Royalty Fee by
                remitting an amount equal to one percent (1%) of Gross Receipts for
                the
                Powell Restaurant within twenty (20) days from the end of each four-week
                accounting period commencing on the end of the first full month following
                the end of the Initial TV Advertising Period until the Deferred Royalty
                Fee is reimbursed in full.

            

    

    

    6.02.
      Advertising
      and Marketing Expenditures.
      Franchisee understands and hereby acknowledges that advertising, marketing
      and
      promotional activities are essential to the furtherance of the goodwill and
      public image of the Company and the success of the business franchised
      hereunder, and agrees as follows:

    
      	(a)  	
              Franchisee
                will expend a reasonable amount annually, but in no event less than
                five
                percent (5%) of its Gross Receipts for advertising and marketing.
                Price
                discounts on products will not be included in calculating compliance
                with
                this requirement. Included in the required advertising and marketing
                expenditures will be a payment to the Company of one percent (1%)
                of Gross
                Receipts which will be used by the Company, at its sole discretion,
                for
                expenditures reasonably related to the creation, development,
                administration and supervision of marketing and advertising programs
                and
                menu development for all STEAK N SHAKE
                restaurants.

            

    

    

    
      	(b)  	
              At
                the Company's option, Franchisee will pay to the Company or its designee
                five percent (5%) of Franchisee's Gross Receipts from the operation
                of the
                franchised business to be credited to an advertising account for
                Franchisee payable by the seventh (7th) day after the end of each
                four
                week accounting period, or, at the Company's option, by the seventh
                (7th)
                day after the end of each week for the preceding week's receipts.
                The
                monies in the advertising account will be used by the Company, at
                its sole
                discretion, for the implementation of local and/or regional and/or
                national marketing and advertising programs intended to increase
                general
                public recognition and acceptance of STEAK N SHAKE Restaurants in
                the
                Franchisee’s Market area, with one percent (1%) of the account being used
                by the Company for creation and development of marketing as set forth
                in
                subsection (a) above. These marketing and advertising expenditures
                will be
                credited toward the advertising and marketing expenditure requirements
                described in subparagraph (a) of this Section. The Company will administer
                the advertising account, which will not be subject to audit by the
                Franchisee. The Company will create a periodic statement of monies
                collected and costs incurred for the implementation portion of the
                advertising account, and will provide such periodic statement to
                Franchisee not less frequently than semi-annually. No monies in such
                advertising account are refundable upon the termination or expiration
                of
                this Agreement, as such monies are to be used by the Company to further
                the goodwill and public image of the Marks and the STEAK N SHAKE
                brand.

            

    

    

    6.03.
      Definition
      of Gross Receipts.
      "Gross
      Receipts" for purposes herein shall mean and include the total actual gross
      charges for all food, beverages, services (including service charges in lieu
      of
      gratuities) and other products and services sold to customers of the Restaurant,
      for cash or credit, regardless of whether or not such sales are made from the
      premises of the Restaurant or any other location. Excluded from Gross Receipts
      are sales, use, service or excise taxes collected from customers and paid to
      the
      appropriate taxing authority, customer refunds and adjustments, employee
      discounts and proceeds from vending machine sales for newspapers and pay
      telephones.

    6.04.
      Interest
      on Late Payments.
      All
      royalty fees, service fees, advertising contributions, amounts due for purchases
      from the Company or its affiliates and other amounts which Franchisee owes
      to
      the Company or its affiliates shall bear interest after the due date at the
      lesser of the highest legal rate permissible or 18 percent (18%) per annum.
      Franchisee acknowledges that this Section
      6.04
      shall
      not constitute the Company's agreement to accept such payments after same are
      due or a commitment by the Company to extend credit to, or otherwise finance,
      Franchisee's operation of the Restaurant. Further, Franchisee acknowledges
      that
      its failure to pay all amounts when due shall constitute grounds for termination
      of this Agreement as provided in Section
      11,
      notwithstanding the provisions of this Section
      6.04.

    6.05.
      Credit
      Cards and Other Methods of Payment.
      Franchisee shall make arrangements with the suppliers or sponsors of such credit
      cards, check verification services or electronic funds transfer systems for
      such
      services as the Company may designate from time to time in order that the
      Restaurant may accept customers’ credit cards, checks, gift cards or other
      methods of payment.

    6.06.
      Vending
      Machines.
      No
      vending machines, video games, jukeboxes, gum or candy machines, pinball
      machines, rides or other mechanical devices (other than pay telephones and
      newspaper vending machines), in addition to those (if any) already installed
      in
      the Restaurants, shall be installed or operated on the Restaurant property
      without the Company's prior written consent. 

    6.07.
      Fees
      Non-Refundable.
      All
      fees and other amounts payable to the Company under this Agreement are
      non-refundable, except for a portion of the Initial Fee as described in Section
      6.01(a).

    6.08.
      Payment
      By Electronic Transfer.
      The
      Company reserves the right to require Franchisee to pay amounts due to the
      Company under this Section
      6
      via
      electronic transfer.

     

    SECTION
      7. ADVERTISING.

    7.01.
      Origination
      and Approval of Advertising.

    
      	(a)  	
              Recognizing
                the value of advertising and the importance of the standardization
                of
                advertising to the furtherance of the goodwill and public image of
                the
                STEAK N SHAKE System, Franchisee agrees that the Company or its designee
                shall have the right to conduct, determine, maintain and administer
                all
                national, regional, local and other advertising and marketing as
                may be
                instituted by the Company from time to time, and to direct all such
                advertising and marketing with sole discretion over the concepts,
                materials, form, copy, layout and content used
                therein.

            

    

    

    
      	(b)  	
              Franchisee
                understands and acknowledges that advertising expenditures are intended
                to
                maximize general public recognition and acceptance of all STEAK N
                SHAKE
                Restaurants, and the Company and its designee(s) make no representation
                or
                warranty that any particular STEAK N SHAKE Restaurant, including
                the
                Restaurant operated under this Agreement, will benefit directly or
                pro
                rata from such advertising.

            

    

    

    
      	(c)  	
              Franchisee
                shall be free to conduct, at its separate expense, supplemental
                advertising in addition to the advertising received for the expenditures
                specified in Section
                6.02
                herein, to promote and increase the demand for the products and services
                of its own STEAK N SHAKE Restaurant. All such supplemental advertising
                shall either have been prepared or previously approved in writing
                by the
                Company.

            

    

    

    7.02.
      Advertising
      Agency.
      The
      Company shall have the right to delegate its responsibilities and duties
      hereunder to an advertising agency or any designee(s) of its choosing, provided
      that the right of final approval of all advertising programs shall be retained
      at all times by the Company. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      8. BOOKS,
      RECORDS AND CONTROL PROCEDURES.

    8.01.
      Reports.
      On an
      annual basis within sixty (60) days of the end of Franchisee’s fiscal year,
      Franchisee shall submit to the Company a statement of earnings and a balance
      sheet, current as of the end of the last fiscal year, with respect to the
      operation of all the Restaurants operated by Franchisee, including the
      Restaurants franchised hereunder. In addition, Franchisee shall submit to the
      Company, for review or auditing, such information, forms, reports and records,
      with respect to operation of the Restaurants franchised hereunder, as the
      Company may reasonably designate, in the form and at the times and places
      reasonably required by the Company. The Company may, at its option, gather
      financial and operating information from the electronic point of sale system
      and
      computer system at the Restaurant by electronic transfer.

    8.02.
      Marketing
      Information.
      The
      Company shall have the right from time to time to require Franchisee to furnish
      requested marketing information based on Franchisee's records, which information
      will be used by the Company in making surveys and analysis designed to benefit
      and improve the System, business and operating results of all STEAK N SHAKE
      Restaurants. Franchisee, upon reasonable request, shall promptly furnish such
      information to the Company or its designee(s).

    8.03.
      Records
      of Franchisee.
      Franchisee agrees to maintain and preserve, during the term of this Agreement,
      full, complete and accurate books, records and accounts relative to the
      operation of the Restaurant in accordance with generally accepted accounting
      principles. Such records shall be retained for at least three (3) years from
      the
      dates thereof and in the form and manner prescribed by the Company from time
      to
      time.

    8.04.
      Inspection
      of Franchisee's Records.

    
      	(a)  	
              The
                Company shall have the right to examine and audit Franchisee's records,
                accounts and books, federal and state income tax returns and state
                sales
                tax returns at reasonable times and places (including, without limitation,
                Franchisee's principal place of business). Franchisee shall pay the
                Company's audit fees, charges and expenses (including, without limitation,
                travel expenses and reasonable accounting and legal fees) with respect
                to
                any periodic or annual audit which reveals an understatement of Gross
                Receipts by Franchisee to the Company, if such understatement is
                in excess
                of two percent (2%) of Gross Receipts during such periodic or annual
                audit
                period.

            

    

    

    
      	(b)  	
              If
                required payments are delinquent or if an inspection should reveal
                that
                the Gross Receipts reported by Franchisee to the Company have been
                understated, Franchisee shall immediately pay to the Company the
                amount
                overdue, unreported or understated, in addition to interest thereon
                from
                the date due at the rate required under Section
                6.04
                hereof. The foregoing shall be in addition to any other rights the
                Company
                may have.

            

    

    

    8.05.
      Company
      Provided Accounting Services.
      If
      Franchisee requests the Company in writing to perform the accounting services
      discussed in this Section 8 and more particularly described in 8.05(b) herein,
      the Company will provide the same procedure for a fee ("Accounting Services
      Fee"); according to the following: 

    
      	 	
              (a)

            	
              All
                receipts from the operation of the Restaurants, net of refunds, all
                of
                which shall be documented as agreed between the parties hereto (the
                "Deposits"), shall be deposited with a banking institution acceptable
                to
                the Company, in the Company’s sole discretion, in accounts upon which the
                Company may draw (the "Accounts).

            

    

    

    
      	 	
              (b)

            	
              The
                Company shall provide the following accounting
                services:

            

    

    

    
      	 	 	
              i.

            	
              Preparation
                of financial statements for each 4-week accounting cycle and fiscal
                year
                periods, including a statement of earnings for the Restaurants, general
                and administrative expenses and distribution center. In addition,
                the
                Company shall provide a statement of financial position, statement
                of cash
                flows, and a consolidated or combined statement of earnings. Financial
                statements shall be prepared on an accrual basis of accounting in
                accordance with generally accepted accounting principles from the
                date
                provided by Franchisee;

            

    

    

    
      	 	 	
              ii.

            	
              Processing
                and payment of approved invoices for operating costs, merchandize
                and
                services and copies of check registers shall be provided to Franchisee
                while supporting documents shall be kept on file in the Company’s
                accounting office and available for
                inspection;

            

    

    

    
      	 	 	
              iii.

            	
              Processing
                and payment of Franchisee’s bi-weekly payroll. Payroll services shall
                include all normal payroll deductions, garnishments, vacation, and
                end-of-year W-2 processing.

            

    

    

    
      	 	 	
              iv.

            	
              Preparation
                and filing of payroll related tax returns (federal, state, local,
                SUTA and
                FUTA), sales and use tax returns and personal property tax
                returns.

            

    

    

    
      	 	 	
              v.

            	
              Provide
                copies of reconciliations on the Accounts for each accounting
                period.

            

    

    

    
      	 	 	
              vi.

            	
              The
                accounting and administrative services provided by the Company shall
                not
                include the administration of any group employee benefit plans or
                formulation of budgeted financial data. The Company shall not be
                responsible for computation or payment of federal, state or local
                income
                tax liabilities nor filing of related returns for Franchisee.
                (Collectively, #i-vi, the
                "Services")

            

    

    

    
      	(c)  	
              As
                payment for the Services provided by the Company as set forth above,
                Franchisee shall pay an Accounting Services Fee of Twelve Thousand
                Dollars
                ($12,000) for each of the Restaurants per annum, payable in thirteen
                (13)
                equal installments, which sum shall be deducted by the Company from
                the
                Accounts within twenty (20) days from the end of the first four-week
                accounting period following the Franchise Date and within twenty
                (20) days
                from the end of each four-week accounting period thereafter. The
                Accounting Service Fee hereunder may be adjusted, as appropriate,
                to
                equitably reflect any increase or decrease in the actual costs incurred
                by
                the Company in performing the Services. Franchisee shall not be charged
                a
                greater amount for such services than any other
                Franchisee.

            

    

    

    
      	(d)  	
              Franchisee
                shall establish the Accounts for the
                Deposits.

            

    

    

    
      	(e)  	
              All
                expenses related to the operation of the Restaurants, including by
                way of
                illustration and not limitation, rent payments, insurance premiums,
                real
                estate taxes, ADP fees, and other impositions required under the
                Leases
                will be paid by the Company from the Accounts.

            

    

    

    
      	(f)  	
              Either
                party may cancel the provision of the Services provided by this Section
                8.05 upon thirty (30) days notice to the other party. Upon such
                discontinuation of the Services, the Franchisee shall pay a prorated
                Accounting Services Fee for services provided and not billed, provided
                however that all other reports to be provided to Franchisee pursuant
                to
                this Section 8.05 will be provided within twenty (20) days from the
                end of
                the then-current accounting period.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      9. INSURANCE
      AND INDEMNITY.

    9.01.
      Indemnity.
      Franchisee agrees to indemnify and save the Company, its parent company,
      subsidiaries, affiliates, stockholders, directors, officers, employees, agents
      and assignees, harmless from liability for any and all debts, obligations,
      damages, claims, demands, actions, suits, proceedings or judgments of any kind
      or nature, arising directly or indirectly from, as a result of, or otherwise
      in
      connection with, or alleged to be in connection with, Franchisee's operation
      of
      the Restaurant. Franchisee will pay any costs arising therefrom, including
      without limitation, reasonable accountant's and attorney's fees, expert witness
      fees, court costs and other expenses of defending against them. At the election
      of Company, Franchisee shall defend the Company at Franchisee's sole cost and
      expense in any such suits, actions or proceedings in which Company is joined
      as
      a party thereto, including any such suit, action or proceeding alleging
      liability by the Company. The Company shall also have the right to defend any
      such claim itself and to be reimbursed by the Franchisee for the cost of such
      defense.

    9.02.
      Franchisee's
      Insurance.

    
      	(a)  	
              Franchisee
                shall maintain in full force and effect at all times during the term
                of
                this Agreement at its sole expense:

            

    

    

    
      	(i)  	
              Commercial
                General Liability insurance, with an endorsement deleting the contractual
                liability exclusion with respect to personal injury insurance, and
                motor
                vehicle liability insurance, if a motor vehicle, as opposed to mobile
                equipment, is employed in the operation of the
                Restaurant.

            

    

    

    
      	(ii)  	
              Such
                insurance coverage shall be maintained under one or more policies
                of
                insurance containing minimum liability protection of One Million
                Dollars
                ($l,000,000) per person for bodily and personal injury or death,
                Five
                Million Dollars ($5,000,000) per occurrence for bodily and personal
                injury
                or death and One Million Dollars ($1,000,000) per occurrence for
                property
                damage, or such greater amounts or such additional coverages as may
                be
                required by the Company or any lease for the Restaurant property.
                Such
                insurance coverage shall name the Company as an additional
                insured.

            

    

    

    
      	(iii)  	
              Further,
                Franchisee shall carry "Special Form" property insurance to keep
                the
                premises of the Restaurant and its contents insured against loss
                or damage
                by fire and such other risks covered in the Standard Extended Coverage
                Endorsement, in an amount not less than 100% of the full replacement
                cost
                of such assets.

            

    

    

    
      	(b)  	
              Franchisee
                acknowledges that the minimum coverages and policy limits required
                by this
                Section may be reasonably increased from time to time by the Company
                for
                its own and Franchisee's protection, and agrees to comply with such
                new
                requirements promptly upon receipt of written notice from the Company.
                The
                insurance policy or policies required by this Section shall be written
                by
                an insurance company or companies possessing an A.M. Best rating
                of A-, XI
                or such other rating as the Company may approve in
                writing.

            

    

    

    
      	(c)  	
              Worker's
                Compensation, Unemployment Compensation, Social Security and other
                insurance coverages shall be maintained in such statutory amounts
                as may
                now or hereafter be required by any applicable
                law.

            

    

    

    
      	(d)  	
              Franchisee's
                obligation to obtain and maintain the foregoing policies in the amounts
                specified shall not be limited by reason of any insurance which may
                be
                maintained by the Company, nor shall Franchisee's performance of
                such
                obligation relieve it of liability under the indemnity provisions
                set
                forth in Section
                9.01.

            

    

    

    9.03.
      Evidence
      of Insurance.
      Franchisee shall deliver or cause to be delivered an ACORD 25 form to evidence
      the insurance required by Section 9.02 (a)(i) and an ACORD 27 form to evidence
      the insurance required by Section 9.02 (a)(iii) to the Company prior to
      commencement of the term of this Agreement upon renewal of such policies.
      Franchisee shall also deliver to the Company evidence of payment of all
      insurance premiums at any time upon written request of the Company.

    9.04.
      Notice.
      All
      insurance policies shall provide for (a) written notice to the Company of any
      cancellation, termination, nonrenewal or material alteration thereunder thirty
      (30) days prior to such termination, nonrenewal or alteration of coverage and
      (b) the Company's right to cure any default in the payment of premiums within
      ten (10) days after written notice of such default. The Company shall not have
      any duty to cure such default; provided, however, that if the Company does
      cure
      such default, the Company shall have the right to charge Franchisee all costs
      and expenses of curing such default, which charges shall be payable by
      Franchisee immediately upon notice, subject to the provisions of Section
      6.04
      herein.

     

    SECTION
      10. LIMITATION
      AND USE OF PROPRIETARY MARKS AND TRADE SECRETS.

    10.01.
      Proprietary
      Marks and Trade Secrets.
      Franchisee acknowledges that the Company owns or controls the rights in the
      Marks, trade secrets, trade dress, Operating Standards Manual, instruction
      manuals and goodwill associated therewith, all of which are licensed or
      sublicensed on a non-exclusive basis to Franchisee pursuant to this Agreement.
      Franchisee's right to use the Marks, trade secrets, trade dress, Operating
      Standards Manual and instruction manuals is derived solely from this Agreement
      and is limited to the conduct of its Restaurant business pursuant to and in
      compliance with this Agreement and all applicable standards, specifications
      and
      operating procedures prescribed by the Company from time to time during the
      term
      of the Franchise. Any unauthorized use of the Marks or any colorable imitations
      thereof or confusingly similar marks or names, or trade secrets or trade dress
      by Franchisee shall constitute an infringement of the rights of the Company
      in
      the Marks, trade secrets and trade dress. Franchisee agrees that all usage
      by
      Franchisee of the Marks, trade dress and System, and any goodwill established
      thereby, shall inure to the exclusive benefit of the Company. Franchisee
      acknowledges that this Agreement does not confer any goodwill or other interests
      in the Marks and System upon Franchisee other than stated in this Section
      10.

    10.02.
      Limitation
      on Franchisee's Use of Marks.
      Franchisee agrees to use the Marks as the sole identification of the Restaurant,
      provided that Franchisee may identify itself as the independent owner thereof
      in
      the manner reasonably prescribed by the Company. Franchisee shall not use any
      Mark or colorable imitations thereof or confusingly similar name as part of
      any
      corporate or trade name or in the name of any bank account. Franchisee may
      not
      use any Mark in connection with the sale of any unauthorized product or service
      or in any other manner not expressly authorized in writing by the Company.
      Franchisee agrees to display the Marks prominently and in the manner prescribed
      by the Company on, or in connection with, exterior and interior signs, menus,
      in-store posters and displays and other forms and packaging materials designated
      by the Company. Further, Franchisee agrees to obtain such fictitious or assumed
      name registrations as may be required under applicable law. Franchisee shall
      not, in any manner, authorize or purport to authorize another to use the Marks.
      Franchisee shall not establish any internet, world wide web ("WWW"), or uniform
      resource locator ("URL") addresses, sites, or pages for the STEAK N SHAKE
      Restaurant or that use the Marks without the prior written consent of the
      Company, which consent may be withheld in the Company’s sole
      judgment.

    10.03.
      Notification
      of Infringements and Claims.
      Franchisee shall notify the Company immediately of any apparent infringement
      of
      or challenge to Franchisee's use of any Mark, or claim by any person of any
      right in any Mark or the copyrighted Operating Standards Manual, and Franchisee
      shall not communicate with any person other than the Company and its counsel
      in
      connection with any such infringement, challenge or claim. The Company shall
      have sole discretion to take such action as it deems appropriate and the right
      to exclusively control any litigation, U.S. Patent and Trademark Office or
      Copyright Office proceeding or other administrative proceeding arising out
      of
      any such infringement, challenge or claim or otherwise relating to any Mark
      or
      the copyrighted Operating Standards Manual. Franchisee agrees to execute and
      deliver any and all instruments and documents which, in the opinion of the
      Company's counsel, are necessary or advisable to protect and maintain the
      interests of the Company in any such litigation or administrative proceeding
      or
      to otherwise protect and maintain the interests of the Company in the Marks
      or
      the copyrighted Operating Standards Manual.

    10.04.
      Indemnification
      of Franchisee/Discontinuance of Use of Marks.
      The
      Company agrees to indemnify Franchisee against, and to reimburse Franchisee
      for,
      any damages for which Franchisee is held liable in any proceeding arising out
      of
      its use of any Mark or the copyrighted Operating Standards Manual pursuant
      to
      and in compliance with this Agreement. All costs reasonably incurred by
      Franchisee in the defense of any such claim brought against it in any such
      proceeding in which Franchisee is named as a party, including court costs,
      attorney's fees and other reasonable litigation expenses shall be reimbursed
      by
      the Company, provided that Franchisee has timely notified the Company of such
      claim or proceeding and has otherwise complied with this Agreement. If it
      becomes advisable at any time, in the Company's sole discretion, for the Company
      and/or Franchisee to modify or discontinue use of any Mark or the copyrighted
      Operating Standards Manual, and/or use one or more additional, substitute
      trademarks or service marks or materials, Franchisee agrees to comply therewith
      within a reasonable time after notice thereof by the Company, at the
      Franchisee's expense.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.05.
      Non-Disclosure
      of Trade Secrets and Confidential Information.

    
      	(a)  	
              The
                Company possesses certain proprietary know-how, consisting of the
                unique
                restaurant concept of a STEAK N SHAKE Restaurant and the methods,
                techniques, formats, drawings, specifications, procedures, information,
                systems and knowledge and experience in the design and operation
                thereof
                and the purchase, preparation and sale of authorized and approved
                products
                and services (the "Know-How"). The Company will disclose the Know-How
                to
                Franchisee by furnishing layouts, specifications and guidance in
                the
                development and operation of the Restaurant, the training program,
                the
                Operating Standards Manual and other instructional manuals, sale
                promotion
                aids, accounting procedures, marketing reports, informational and
                product
                bulletins, vendors price sheets and inventory systems and in guidance
                furnished to Franchisee during the term of the
                Franchise.

            

    

    

    
      	(b)  	
              Franchisee
                agrees that it will not acquire any legal or equitable interest in
                the
                Know-How, other than the right to utilize it in the development and
                operation of the Restaurant during the term of the Franchise, and
                that the
                use or duplication of the Know-How in any other restaurant business
                would
                constitute an unfair method of competition. Franchisee acknowledges
                and
                agrees that the Know-How is proprietary to the Company and, except
                to the
                extent known in the relevant market or trade, is a trade secret of
                the
                Company and is disclosed to Franchisee solely for use by Franchisee
                in the
                development and operation of the Restaurant during the term of the
                Franchise and on the condition that Franchisee does hereby agree,
                that
                it:

            

    

    

    
      	(i)  	
              will
                not use the Know-How in any other business or
                capacity;

            

    

    

    
      	(ii)  	
              will
                maintain the confidentiality of the Know-How at all times during
                and after
                the term of the Franchise;

            

    

    

    
      	(iii)  	
              will
                not make unauthorized copies of any portion of the Know-How disclosed;
                and

            

    

    

    
      	(iv)  	
              will
                adopt and implement all reasonable procedures prescribed from time
                to time
                by the Company to prevent unauthorized use or disclosure of the Know-How,
                including without limitation restrictions on disclosure thereof to
                employees of the Restaurant and the use of nondisclosure clauses
                in
                employment agreements with such
                employees.

            

    

    

    
      	(c)  	
              Franchisee
                agrees that the Company would be unable to protect its trade secrets
                and
                Know-How against unauthorized use or disclosure if Franchisee were
                permitted to hold interests in businesses similar to STEAK N SHAKE
                Restaurants. Therefore, during the term of the Franchise, Franchisee
                may
                not have any interest as an owner, investor, partner, director, officer,
                employee, consultant, representative or agent, or in any other capacity,
                in any other restaurant business offering fast service or full service
                meals which feature ground beef sandwiches as a principal product;
                provided, however, that this restriction shall not apply to (i) other
                STEAK N SHAKE Restaurants operated under Franchise Agreements previously
                or hereafter entered into with the Company or (ii) ownership of
                securities, that are publicly traded, representing five percent (5%)
                or
                less of the equity or voting power of any
                corporation.

            

    

    

    
      	(d)  	
              The
                Company has not authorized or empowered Franchisee to use the Marks
                except
                as provided by this Agreement, and Franchisee shall not employ any
                of the
                Marks in signing any contract, lease, mortgage, check, purchase agreement,
                negotiable instrument or other legal obligation without the prior
                written
                consent of the Company.

            

    

    

    
      	(e)  	
              Neither
                the Company nor Franchisee shall make any express or implied agreements,
                warranties or representations or incur any debt, in the name of or
                on
                behalf of the other or represent that their relationship is other
                than
                franchisor and franchisee and neither the Company nor Franchisee
                shall be
                obligated by or have any liability under any agreements or representations
                made by the other that are not expressly authorized
                hereunder.

            

    

    

    
      	(f)  	
              The
                Company shall have no liability for any sales, use, excise, gross
                receipts, income, property or other taxes, whether levied upon Franchisee,
                the Restaurant or its assets, in connection with the sales made,
                services
                performed or business conducted by
                Franchisee.

            

    

    

    10.06.
      Survival.
      The
      covenants set forth in this Section
      10
      shall
      survive the termination or expiration of this Agreement.

     

    SECTION
      11. TERMINATION.

    11.01.
      Termination
      of the Franchise Agreement.
      The
      Company may terminate this Agreement only for good cause.

    
      	(a)  	
              Franchisee
                agrees that the Company shall have good cause to immediately terminate
                this Franchise Agreement, without notice to Franchisee, if Franchisee
                

            

    

    

    
      	(i)  	
              files
                a voluntary petition in bankruptcy or any pleading seeking any
                reorganization, liquidation, dissolution or composition or other
                settlement with creditors under any law; admits or fails to contest
                the
                material allegations of any such pleading filed against it; is adjudicated
                a bankrupt or insolvent; a receiver is appointed for a substantial
                part of
                the assets of Franchisee or the Restaurant; a final judgment remains
                unsatisfied or of record for thirty (30) days or longer (unless a
                supersedeas bond or other appeal bond is filed); execution is levied
                against the Franchise or any substantial part of the assets of the
                Restaurant; tax levy is made; suit to foreclose any lien or mortgage
                on
                the premises or assets of the Restaurant is instituted against Franchisee
                and Franchisee fails to diligently contest such action; a substantial
                part
                of the real or personal property of the Restaurant is sold after
                levy of
                judgment thereupon by any sheriff, marshal or constable; or the claims
                of
                creditors of Franchisee or the Restaurant are abated or subject to
                a
                moratorium under any law;

            

    

    

    
      	(ii)  	
              (or
                any of Franchisee’s members, shareholders, owners, partners, managers,
                officers or directors) are convicted of or pleads no contest to a
                felony,
                a crime involving moral turpitude or any other crime or offense that
                is
                likely to adversely affect the reputation of the Restaurant and the
                goodwill associated with the Marks;

            

    

    

    
      	(iii)  	
              makes
                any unauthorized use or disclosure to any third party of the Company's
                System or utilizes, duplicates or discloses any portion of the Operating
                Standards Manual in violation of this
                Agreement;

            

    

    

    
      	(iv)  	
              denies
                the Company the right to inspect the Restaurant or to examine its
                books
                and records and other business documents in accordance with the
                Agreement;

            

    

    

    
      	(v)  	
              submits,
                or the Company learns that Franchisee has previously submitted to
                the
                Company, a franchise application, a management commitment form and/or
                capitalization plan which contains any false or misleading statements
                or
                omits any material fact necessary in order to make the statements
                made not
                misleading;

            

    

    

    
      	(vi)  	
              submits
                to the Company at any time during the term of this Agreement, reports,
                financial statements, tax returns or schedules or other information
                or
                supporting records which intentionally understate gross receipts
                for any
                period covered by such report by more than two percent
                (2%);

            

    

    

    
      	(vii)  	
              fails
                to timely pay the Company all amounts due pursuant to this Agreement,
                including but not limited to payment of the Royalty Fee and Advertising
                Fee when due; provided, however, that the Company will not terminate
                this
                Agreement for non-payment without giving Franchisee the opportunity
                to
                make such payment within 10 days after receipt of written notice
                demanding
                such payment; provided further, however, that Franchisee will be
                entitled
                to only 2 such notices in any 12 month period under this Agreement.
                Upon a
                third violation of this subsection in any 12 month period, this Agreement
                may be immediately terminated by the
                Company.

            

    

    

    
      	(viii)  	
              fails
                on two or more separate occasions within any 12 consecutive month
                period
                to submit when due financial statements, reports or other data,
                information or supporting records required by this Agreement, unless
                such
                failures are corrected within 10 days after notice is delivered to
                Franchisee; provided, however, that Franchisee will be entitled to
                only 2
                such notices in any 12 month period under this
                Agreement.

            

    

    

    
      	(ix)  	
              if
                Franchisee is a corporation, limited liability company, partnership,
                limited partnership or other entity, the transfer of any share or
                ownership interest in Franchisee without Franchisor’s prior written
                consent, which may be withheld in Franchisor’s sole
                discretion.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	(b)  	
              Franchisee
                agrees that the Company shall have good cause to terminate this Franchise
                Agreement if Franchisee commits any of the following material defaults,
                unless Franchisee promptly takes action to cure such default, and,
                within
                thirty (30) days after receipt of a notice from the Company, succeeds
                in
                curing such default:

            

    

    

    
      	(i)  	
              abandons
                or surrenders or transfers control of the operation of a Restaurant
                (including entering into a management arrangement with any person
                not a
                party to this Agreement), fails to maintain its right of possession
                of the
                premises of a Restaurant, fails to actively operate the Restaurant
                during
                required business hours, or, if applicable, commits a material default
                under any lease or sublease for a
                Restaurant;

            

    

    

    
      	(ii)  	
              makes
                an unauthorized assignment of the Franchise or an ownership interest
                in
                Franchisee or a Restaurant, or fails to assign the Franchise or an
                interest in Franchisee owned by a deceased or disabled person as
                herein
                required;

            

    

    

    
      	(iii)  	
              misuses
                or makes any unauthorized use of the Marks or commits any act which
                can
                reasonably be expected to materially impair the goodwill associated
                with
                the Marks;

            

    

    

    
      	(iv)  	
              operates
                a Restaurant in a manner that presents a health or safety hazard
                to its
                customers, employees or the public or which is deleterious to or
                reflects
                unfavorably on STEAK N SHAKE
                Restaurants;

            

    

    

    
      	(v)  	
              fails
                to maintain a responsible credit rating by failing to make prompt
                payment
                of undisputed bills, invoices and statements from suppliers of goods
                and
                services to a Restaurant;

            

    

    

    
      	(vi)  	
              fails
                to maintain and operate a Restaurant in accordance with the standards
                and
                specifications established by the Company from time to time; knowingly
                sells any product on the premises which does not conform to the Company's
                specifications; fails to sell products designated by the Company;
                or sells
                products not approved by the
                Company;

            

    

    

    
      	(vii)  	
              fails
                to repair, restore or relocate a Restaurant building and premises
                after
                damage, destruction or public taking as provided in Sections
                3.02 and 3.06
                hereof;

            

    

    

    
      	(viii)  	
              fails
                to complete all phases of any required training program to the Company's
                satisfaction;

            

    

    

    
      	(ix)  	
              defaults
                in the performance of any other term, condition or covenant contained
                herein which is not corrected within the time and under the conditions
                provided with respect thereto.

            

    

    

    
      	(c)  	
              If
                Franchisee is in substantial compliance with this Agreement and the
                Company materially breaches this Agreement and fails to cure such
                breach
                within thirty (30) days after delivery to the Company of written
                notice
                thereof, Franchisee may, at its option, terminate this Franchise
                Agreement.

            

    

    

    11.02.
      Effect
      of Any Termination, Cancellation or Expiration of this Agreement.

    
      	(a)  	
              Franchisee,
                upon any termination, cancellation or expiration of this Agreement,
                shall
                promptly pay to the Company, its affiliates and subsidiaries, any
                and all
                sums owed to them. In the event of termination for any default by
                Franchisee, such sums shall include all damages, costs and expenses,
                including reasonable attorneys' fees, incurred by the Company as
                a result
                of the default, which obligation shall give rise to and remain, until
                paid
                in full, a lien in favor of the Company against any and all of the
                assets
                of the Restaurant owned by Franchisee at the time of
                default.

            

    

    

    
      	(b)  	
              Upon
                termination, cancellation or expiration hereof for any reason, all
                Franchisee's rights hereunder shall terminate. Franchisee shall not
                thereafter use or adopt any secret recipes, formulas, trade secrets,
                Know-How or other proprietary information disclosed to it hereunder
                or any
                china or glassware, emblems, signs, displays or other property on
                which
                the Company's name or Marks are imprinted, or any simulation thereof.
                Franchisee shall not otherwise use or duplicate the System or any
                portion
                thereof or assist others to do so. Franchisee shall remove from the
                premises all signs, emblems and displays identifying it as associated
                with
                the Company or its System and shall surrender or destroy all written
                materials bearing the Marks. It shall cease to use and shall return
                to the
                Company all copies of the Operating Standards Manual and all other
                manuals, instructions or materials delivered to it hereunder and
                shall
                relinquish its STEAK N SHAKE Restaurant telephone number and assign
                such
                telephone number to the Company or the Company’s designee. At the
                Company’s discretion, Franchisee shall also provide written notice to
                telephone directory and yellow page providers to remove Franchisee’s STEAK
                N SHAKE Restaurant listing.

            

    

    

    
      	(c)  	
              Upon
                termination, cancellation or expiration of this Agreement, unless
                otherwise directed in writing by the Company, Franchisee shall at
                Franchisee's sole expense change the exterior and interior design,
                color
                scheme, decor and trade dress of the Restaurant premises from that
                unique
                to STEAK N SHAKE Restaurants, and shall make or cause to be made
                such
                changes in signs, building and structure as the Company shall reasonably
                direct, so as to effectively distinguish the same from its former
                appearance and from other STEAK N SHAKE Restaurant units. If Franchisee
                fails or refuses to comply herewith, then the Company shall have
                a license
                to enter upon the Restaurant property for the purpose of making or
                causing
                to be made such changes at the expense of Franchisee, payable on
                demand to
                the Company. Franchisee shall complete all such modifications within
                sixty
                (60) days after the STEAK N SHAKE Restaurant ceases to operate. No
                business shall be conducted in the former STEAK N SHAKE Restaurant
                building until such modifications have been
                completed.

            

    

    

    
      	(d)  	
              Upon
                termination, cancellation or expiration of this Agreement, Franchisee
                shall cease to hold itself out as a franchisee or affiliate of the
                Company
                or do anything which would indicate any relationship between it and
                the
                Company, and Franchisee shall take all appropriate steps to immediately
                cancel all fictitious or assumed name filings or equivalent registrations
                with state and local governmental
                agencies.

            

    

    

    
      	(e)  	
              In
                the event this Agreement is terminated by Franchisee pursuant to
                Section
                11.01(c) hereof, the Company shall reimburse Franchisee for the reasonable
                expenses incurred by Franchisee in connection with the removal from
                the
                premises of all signs, emblems and displays identifying it as associated
                with the Company or the System, and any other reasonable expenses
                incurred
                to comply with any and all other requirements of Franchisee under
                Sections
                11.02(b) and 11.02(c).

            

    

    

    
      	(f)  	
              The
                covenants set forth in subsections (a), (b), (c), (d) and (e) of
                this
                Section
                11.02
                shall survive the termination, cancellation or expiration of this
                Agreement.

            

    

    

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

            

    

    

    11.03.
      [INTENTIONALLY
      DELETED].

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SECTION
      12. COVENANT
      NOT TO COMPETE.

    If,
      prior
      to its expiration, the Franchise is terminated by the Company in accordance
      with
      the provisions of this Agreement or by Franchisee without cause, Franchisee
      agrees that for a period of one (1) year, commencing on the effective date
      of
      termination, or the date on which Franchisee ceases to conduct business pursuant
      to this Agreement, whichever is later, Franchisee will not have any interest
      as
      an owner, investor, partner, director, officer, employee, consultant,
      representative or agent, or in any other capacity, in any restaurant located
      within the Exclusive Territory described in Schedule
      1
      which
      offers fast service or full service meals which feature ground beef sandwiches
      as a principal product; provided, however, that this restriction shall not
      apply
      to other STEAK N SHAKE Restaurants operated under franchise agreements
      heretofore or hereafter entered into with the Company, or to ownership of
      securities that are publicly traded representing five percent (5%) or less
      of
      the equity or voting power thereof. Nothing in the foregoing shall be construed
      as terminating Gary T. Reinwald’s employment by the Company, or in the event
      that Gary T. Reinwald retires from the Company during the term of this
      Agreement, prohibiting Gary T. Reinwald’s future employment with the Company, in
      the event this Agreement is terminated.

     

    SECTION
      13. ASSIGNMENTS.

    13.01.
      Assignment
      by the Company.
      The
      Company may make a good faith assignment of its interests under this Agreement
      upon written notice to Franchisee, and, upon the acceptance by the assignee
      of
      all the obligations of the Company hereunder, the Company will have no further
      obligations thereafter.

    
      	13.02.  	
               Assignment
                by Franchisee.

            

    

    
      	(a)  	
              Franchisee
                understands and acknowledges that the rights and duties created by
                this
                Agreement are personal to Franchisee and that the Company has granted
                the
                Franchise in reliance upon the individual or collective character,
                skill,
                aptitude, attitude, business ability and financial capacity of Franchisee.
                Therefore, except as provided with respect to assignment to a corporation
                or partnership, or to a spouse or heirs in the event of Franchisee’s death
                or disability pursuant to subsection 13.02 (c) below, neither the
                Franchise, the Restaurant (or any interest therein), nor any part
                or all
                of the ownership of the Franchise may be voluntarily, involuntarily,
                directly or indirectly assigned, sold, subdivided, subfranchised,
                issued
                or otherwise transferred by Franchisee (including without limitation
                by
                consolidation or merger) without the prior written approval of the
                Company, which approval shall not be unreasonably withheld. Such
                assignment or transfer without approval shall constitute a breach
                hereof
                and will convey no rights or interests in the Franchise or the Restaurant
                to such assignee(s). Transferees shall be subject to the Company’s then
                current franchisee selection and qualification criteria. Grounds
                for
                withholding consent to an assignment or transfer include, but are
                not
                limited to: (i) the transfer is proposed to be made to any competitor
                of
                the Company or a transferee involved with a competitor of the Company;
                (ii) the transfer is proposed to be made to a transferee who fails
                to
                demonstrate to the Company’s satisfaction that it or its owners and
                management meet the Company’s educational, managerial and business
                standards, possess good moral character, business reputations, and
                credit
                ratings, and have the aptitude and ability to conduct the business
                contemplated by this Agreement; or (iii) in the Company’s sole judgment,
                the price, payment terms, or other material terms of the transaction
                or
                any financing incurred in connection with the transaction are so
                burdensome, individually or in the aggregate, as to threaten the
                continued
                operation of the Steak n Shake Restaurant after the transfer.
                Notwithstanding the foregoing, Franchisee may assign its ownership
                of the
                Franchise to a duly organized, validly existing partnership, limited
                liability company, corporation or other entity that is not a natural
                person provided such
                partnership,
                limited liability company, corporation or other entity that is not
                a
                natural person is
                controlled directly or indirectly through, or is under common control
                with, the Franchisee. "Control" means the possession, directly or
                indirectly, of the power to cause the direction of the management
                and
                policies of the Permitted Assignee, whether by the ownership of voting
                securities, by contract, or otherwise. Franchisee shall provide Company
                with written notice of a transfer to a Permitted Assignee along with
                other
                documentation evidencing the Permitted Assignee’s valid formation and, if
                applicable, good standing.

            

    

    

    
      	(b)  	
              In
                the event Franchisee, including any successors, is a partnership,
                limited
                liability company, corporation, or other entity that is not a natural
                person:

            

    

    

    
      	(i)  	
              The
                organizational documents shall recite that the issuance and transfer
                of
                any interest in the Franchise is restricted by the terms of this
                Franchise
                Agreement, and copies thereof shall be furnished to the Company upon
                request (together with copies of the Resolutions of the Board of
                Directors
                authorizing its entry into this
                Agreement).

            

    

    

    
      	(ii)  	
              A
                transfer of any fractional ownership interest in Franchisee from
                one
                partner, member or shareholder to another or by a partnership, limited
                liability company or corporation must be approved in advance, in
                writing,
                by the Company. One condition of any such transfer shall be the
                requirement that all general partners and all direct and indirect
                holders
                of an interest in Franchisee in excess of ten percent (10%) shall
                execute
                a written agreement with the Company, personally guaranteeing the
                full
                payment and performance of Franchisee's obligations to the Company
                and
                individually undertaking to be bound, jointly and severally, by all
                terms
                of this Agreement, including, without limitation, the restrictions
                on
                assignment in this Section
                13.

            

    

    

    
      	(iii)  	
              Franchisee
                shall not use the name "STEAK N SHAKE", any other Mark or any name
                deceptively similar thereto, in any offering of its securities, except
                to
                reflect its franchise relationship with the Company. Any prospectus,
                private placement or Registration Statement proposed to be used in
                such an
                offering shall be submitted to the Company within a reasonable time
                prior
                to the filing and effective date thereof for the limited purpose
                of
                permitting the Company to verify Franchisee's compliance with this
                requirement.

            

    

    

    
      	(iv)  	
              Franchisee
                shall furnish the Company, at the time of execution of this Agreement
                and
                upon all transfers subject to the provisions of this Section
                13
                thereafter, a list of all stockholders and/or persons having an interest
                in Franchisee which reflects the percentage interest of each stockholder
                or person, and the ownership interest directly and indirectly held
                or
                controlled by each stockholder or
                person.

            

    

    

    
      	(c)  	
              Death
                and Disability.
                In the event of the death or disability of an individual Franchisee,
                the
                Company shall consent to the transfer of the interest to Franchisee's
                devisees and heirs, whether such transfer is made by will or by operation
                of law, within six months after the death or disability of Franchisee,
                provided that the surviving spouse, heirs or estate, maintain all
                standards of the System and agree, in writing, to be bound by all
                the
                terms and provisions of this
                Agreement.

            

    

    

    In
      the
      event of the death of an interest holder of Franchisee, the Company shall
      consent to the transfer of such interest to decedent's surviving spouse, heirs
      or estate, whether such transfer is made by will or by operation of law, within
      six months of the death of the interest holder of Franchisee, provided that
      the
      surviving spouse, heirs or estate maintain all standards of the System and
      agree, in writing, to be bound by all the terms and provisions of this
      Agreement.

    

    
      	(d)  	
              Franchisee
                agrees that the restrictions on transfer imposed herein are reasonable
                and
                necessary to protect the Company's Marks, trade secrets, trade dress,
                Know-How, System and operating procedures and quality, as well as
                the
                Company's high reputation and image and are for the protection of
                the
                Company, Franchisee and other STEAK N SHAKE Franchisees. Any assignment
                or
                transfer permitted by this Section shall not take effect until the
                Company
                issues its written consent thereto, following its receipt and review
                of a
                completely executed copy of all transfer
                documents.

            

    

    

    
      	(e)  	
              In
                addition to the restrictions on assignment of the Franchisee or all
                or a
                portion of the interest in Franchisee set forth above, the Company
                shall
                have the right to condition its consent on the satisfaction of the
                following requirements:

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	(i)  	
              All
                obligations of Franchisee and its owners incurred in connection with
                this
                Agreement have been assumed by the
                assignee(s);

            

    

    

    
      	(ii)  	
              Franchisee
                shall have paid all amounts owed to the Company or its affiliates
                which
                are then due and unpaid;

            

    

    

    
      	(iii)  	
              The
                assignee(s) shall have completed the training program required of
                new
                STEAK N SHAKE franchisees pursuant to Section
                5.03;

            

    

    

    
      	(iv)  	
              The
                assignee(s) and its owner(s) shall have executed and agreed to be
                bound by
                the then existing form of Franchise Agreement and such ancillary
                agreements as are then customarily used by the Company in the grant
                of
                franchises for STEAK N SHAKE
                Restaurants;

            

    

    

    
      	(v)  	
              Franchisee
                or the assignee(s) shall have paid a transfer fee to the Company
                equal to
                Five Thousand Dollars ($5,000.00) to defray expenses incurred by
                the
                Company in connection with the assignment, including without limitation
                legal and accounting fees, credit and other investigation charges
                and
                evaluation of assignee(s) and the terms of the
                assignment;

            

    

    

    
      	(vi)  	
              The
                Company shall have approved the material terms and conditions of
                such
                assignment, including without limitation, approval that the price
                and
                terms of payment are not so burdensome so as to adversely affect
                the
                future operations of the Restaurant by such assignee(s) in compliance
                with
                the Company's then standard Franchise Agreement and ancillary
                agreements;

            

    

    

    
      	(vii)  	
              Franchisee
                and all of its shareholders, partners, members and the owners shall
                have
                executed a noncompetition covenant in favor of the Company and the
                assignee(s), agreeing that for a period of not less than one (1)
                year,
                commencing on the effective date of the assignment, Franchisee and
                its
                owners will not have any interest as an owner, investor, partner,
                director, officer, employee, consultant, representative or agent,
                or in
                any other capacity, in any restaurant featuring fast service or full
                service meals featuring ground beef sandwiches as a primary product
                and
                located within the Exclusive Territory defined in Schedule
                1
                to
                this Agreement (except ownership of publicly traded securities
                representing five percent (5%) or less of the equity or voting power
                thereof and interests in other STEAK N SHAKE Restaurants pursuant
                to other
                franchise agreements heretofore or hereafter entered into with the
                Company);

            

    

    

    
      	(viii)  	
              Franchisee
                and its owner(s) shall have entered into an agreement with the Company
                agreeing to subordinate any rights they may have to receive installment
                payments of the purchase price from the assignee(s), to the Company's
                and
                its affiliates' rights to receive monies from the assignee(s), including
                without limitation, payment of royalty fees, and service fees and
                advertising contributions; and

            

    

    

    
      	(ix)  	
              Franchisee
                shall have entered into an agreement with the Company agreeing to
                release
                any claims, known or unknown, Franchisee may have against the Company
                at
                the time of the transfer. 

            

    

    

    
      	 	 	
              The
                requirements set forth by subsections (iv) through (viii), above
                shall not
                apply to transfers or assignments pursuant to Subsection
                13.02 (c)
                in
                the event of Franchisee’s death or
                disability.

            

    

     

    
      	(f)  	
              If
                an individual Franchisee desires to assign all of its rights to a
                corporation or other entity formed for convenience of ownership,
                then the
                Company's consent to such assignment shall be conditioned on the
                following
                requirements, at the Company’s sole discretion, in addition to those in
                subsections (b), (c) and (d) of this
                Section:

            

    

    

    
      	(i)  	
              The
                Franchise and the assets and liabilities of the Restaurant may be
                assigned
                to a newly organized corporation or other entity that conducts no
                business
                other than the Restaurant (and other STEAK N SHAKE Restaurants under
                Franchise Agreements with the Company), which is actively managed
                by
                Franchisee and in which Franchisee owns and controls at least fifty-one
                percent (51%) of the equity and voting power of all issued and outstanding
                capital stock or ownership interest therein;
                and

            

    

    

    
      	(ii)  	
              All
                shareholders or owners of the assignee shall comply with the requirement
                set forth in subsection
                (b)(ii)
                of
                this Section, if applicable; and

            

    

    

    
      	(iii)  	
              The
                Assignee shall execute the Company’s then current Unit Franchise
                Agreement.

            

    

    

    The
      Company's consent to a transfer of any interest subject to the restrictions
      of
      this Section shall not constitute a waiver of any claims it may have against
      the
      assignor, nor shall it be deemed a waiver of the Company's right to demand
      exact
      compliance with any of the terms of this Agreement by the assignee.

    13.03 The
      Company’s Right of First Refusal.
      If
      Franchisee or its owner(s) shall at any time determine to sell the Franchise
      to
      any third party, Franchisee or its owner(s) shall obtain a bona fide, executed
      written offer from a responsible and fully disclosed purchaser and shall submit
      an exact copy of such offer to the Company. The Company shall have the option,
      exercisable by written notice delivered to Franchisee or its owner(s) thirty
      (30) days from the date of delivery of such offer to the Company, to purchase
      such interest in the Restaurant or such ownership interest in Franchisee for
      the
      price and on the terms and conditions contained in such offer, provided that
      the
      Company may substitute cash for any other form of payment proposed in such
      offer
      and shall have not less than thirty (30) days from the date of the exercise
      its
      option to prepare for closing. Any change in the terms of an offer prior to
      closing shall constitute a new offer that is subject to the same right of first
      refusal by the Company as in the case of an initial offer. The failure of the
      Company to exercise the option afforded by this Section
      13.03
      shall
      not constitute a waiver of any other provision of this Agreement, including
      any
      of the requirements of this Section with respect to the proposed transfer,
      or of
      its right of first refusal with respect to any subsequent offer.

     

    SECTION
      14. GENERAL
      PROVISIONS.

    14.01
      Improvements
      to System.
      Any and
      all improvements in the System developed by Franchisee, the Company or other
      Franchisees, shall be and become the sole and absolute property of the Company,
      and the Company may incorporate the same in the System and shall have the sole
      and exclusive right to copyright, patent, register and protect such improvements
      in the Company's own name to the exclusion of Franchisee, whose right to use
      such improvements are limited to its right as a Franchisee
      hereunder.

    14.02  Severability.
      Except
      as expressly provided, each section, part, term or provision of this Agreement
      shall be considered severable. If, for any reason, any section, part, term
      or
      provision herein is determined to be invalid or unenforceable, such
      determination shall not impair the operation or affect such other portions,
      sections, parts, terms or provisions of this Agreement as may remain otherwise
      intelligible, and the latter will continue to be given full force and effect
      and
      bind the parties hereto. 

    14.03
      Franchisee
      Independent Contractor /Disclosure Thereof.

    
      	(a)  	
              It
                is understood and agreed by the parties hereto that Franchisee shall
                be an
                independent contractor and that nothing herein contained shall constitute
                Franchisee as the agent, legal representative, partner, joint venturer
                or
                employee of the Company. Franchisee shall not have any right or power
                to
                and shall not bind or obligate the Company in any way or manner
                whatsoever, nor represent that it has the right to do
                so.

            

    

    

    
      	(b)  	
              Franchisee
                shall have sole responsibility for, and shall promptly pay when due,
                all
                taxes levied or assessed by reason of its operation and performance
                under
                this Agreement, including, but not limited to, local, state and federal,
                property, license, sales, use, leasehold, excise and income taxes.
                Franchisee shall have the right to contest in good faith the amount
                or
                validity of such payment by appropriate legal proceedings. Franchisee
                shall be responsible for all loss or damage and contractual liabilities
                to
                third persons originating from or in connection with the operation
                of the
                Restaurant and for all claims or demands for damages to property
                or for
                injury, illness or death of persons directly or indirectly resulting
                therefrom. Franchisee further agrees to indemnify and save the Company
                harmless from or with respect to any such claims for taxes and other
                liabilities, loss, expense or
                damage.

            

    

    

    
      	(c)  	
              In
                all building directories, public records (except in telephone directories)
                and in its relationship with other persons, Franchisee shall indicate
                its
                independent ownership of its business and that it is only a Franchisee
                of
                the Company. Franchisee shall file and maintain in the proper public
                office for the locality involved, a statement showing the actual
                name of
                Franchisee as the owner of the
                Restaurant.

            

    

    

    
      	(d)  	
              The
                Company may require Franchisee to identify itself as an independent
                operator and franchisee of the Company in a manner prescribed by
                the
                Company.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14.04.
      Section
      and Subsection Titles.
      Section
      and Subsection titles are used for convenience only and shall not affect the
      meaning or construction of any provision hereof.

    14.05
      Entire
      Agreement.
      The
      recitals to this Agreement are hereby incorporated into and made a part of
      this
      Agreement, which, together with Schedule 1, Exhibits A, B and C and any addendum
      hereto, constitute the entire agreement of the parties (and which supersedes
      all
      prior negotiations, commitments, representations and undertakings of the parties
      with respect to the subject matter hereof, all of which are deemed to have
      been
      merged into this Agreement). The Company has made no representations inducing
      the execution of this Agreement that are not incorporated herein.

    14.06
      Number
      and Gender.
      All the
      terms and words used in this Agreement, regardless of the number and gender
      in
      which they are used shall be deemed and construed to include any other number
      (singular or plural), and any other gender (masculine, feminine or neuter),
      as
      the context or sense of this Agreement or any section, paragraph or clause
      hereof may require, the same as if such words had been fully and properly
      written in the appropriate number and gender.

    14.07.
      Obligations
      of Interested Parties.

    
      	(a)  	
              Except
                as otherwise provided herein, all acknowledgments, promises, covenants,
                agreements and obligations herein made or undertaken by Franchisee
                shall
                be jointly and severally undertaken by Franchisee and all persons
                signing
                this Agreement in their individual capacities and by all
                guarantors.

            

    

    

    
      	(b)  	
              At
                the Company's request, Franchisee shall from time to time obtain
                an
                executed confidentiality and other business interests agreement,
                as it may
                be revised by the Company, from every interest holder and such employees
                of Franchisee as the Company may designate, and shall forward same
                to the
                Company.

            

    

     

    14.08.
      Written
      Approval, Waiver and Non-Waiver.

    
      	(a)  	
              Whenever
                this Agreement requires the prior approval or consent of the Company,
                Franchisee shall make a timely written request therefor, and such
                approval
                shall be obtained in writing from the Vice President of Franchising,
                President or other officer that the Company may designate from time
                to
                time. By providing any waiver, approval, consent or suggestion to
                Franchisee in connection with this Franchise, the Company makes no
                warranties or guarantees and assumes no liability or obligation to
                Franchisee.

            

    

    

    
      	(b)  	
              No
                failure of either party to exercise any power reserved to it by this
                Agreement or to insist upon strict compliance by the other party
                with any
                obligation or condition hereunder, and no custom or practice of the
                parties at variance with the terms hereof, shall constitute a waiver
                of
                either party’s right to demand exact compliance with any of the terms
                herein. Waiver by either party of any particular default by the other
                party shall not affect or impair the non-defaulting party’s rights with
                respect to any subsequent default of the same, similar or different
                nature. Any delay, forbearance or omission of either party to exercise
                any
                power or right arising out of any breach or default by the other
                party of
                any of the terms, provisions or covenants hereof, shall not affect
                or
                impair the non-breaching or non-defaulting party’s right to exercise such
                power or right, nor shall such delay, forbearance or omission constitute
                a
                waiver by the non-breaching or non-defaulting party of any right
                hereunder, or the right to declare any subsequent breach a default
                and to
                terminate this Agreement prior to the expiration of its term. Subsequent
                acceptance by the Company of any payments due to it hereunder shall
                not be
                deemed to be a waiver by the Company of any preceding breach by Franchisee
                of this Agreement and subsequent acceptance by Franchisee of any
                services
                or benefits provided under this Agreement shall not be deemed to
                be a
                waiver by Franchisee of any preceding breach by the Company of this
                Agreement.

            

    

    

    
      	(c)  	
              Each
                right or remedy conferred upon or reserved to the Company or Franchisee
                by
                this Agreement shall be cumulative of every other right or remedy
                herein
                or by law or equity and is not exclusive of any other right or
                remedy.

            

    

    

    
      	(d)  	
              No
                amendment, change or variance from this Agreement shall be binding
                on
                either party unless mutually agreed by the parties and executed in
                writing.

            

    

    

    14.09.
      Notices.

    
      	(a)  	
              All
                notices required to be given to the Company shall be in writing and
                shall
                be sent by reputable overnight delivery service or by registered
                or
                certified mail, postage fully prepaid, addressed to the attention
                of:

            

    

     

                           
      Vice President, Franchising, 

    STEAK
      N
      SHAKE OPERATIONS, INC. 

    500
      Century Building 

    36
      South
      Pennsylvania Street

    Indianapolis,
      Indiana 46204

    With
      a
      copy to the attention of the General Counsel

    

    or
      to
      such other address as the Company shall from time to time designate in writing.
      Unless otherwise instructed by the Company, all payments required to be made
      hereunder to the Company shall be sent by First Class mail, postage fully
      prepaid, addressed to the attention of the Controller at the above address,
      or
      to such address as the Company shall from time to time designate in
      writing.

    

    
      	(b)  	
              All
                notices to Franchisee shall be in writing and shall be sent by reputable
                overnight delivery service or by registered or certified mail, postage
                fully prepaid, addressed to Franchisee, care of its designated agent,
                at:
                

            

    

    

    Reinwald
      Enterprises Real Estate, LLC

    310
      Wild Geese Road

    Knoxville,
      TN 37922

    Attn.:
      Gary T. Reinwald, Jr.

    

    or
      to
      such other address as Franchisee shall from time to time designate in
      writing.

    

    
      	(c)  	
              Notice
                by mail shall be deemed delivered when received, but in no event
                later
                than the fifth (5th) business day following the date it was deposited
                in
                the mail duly addressed and posted. Notice by overnight delivery
                service
                shall be deemed delivered when actually delivered as confirmed by
                such
                delivery service.

            

    

    

    
      	(d)  	
              Any
                payment not actually received by the Company on or before the date
                specified herein shall be deemed overdue if not postmarked at least
                two
                (2) days prior to the date due.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14.10.
      Designated
      Agent of Franchisee.
      Franchisee hereby designates Gary
      T. Reinwald, Jr.
      to act
      on its behalf and to execute all documents on its behalf in all transactions
      with the Company (the "Designated Agent"). The Designated Agent must be an
      individual, not a business entity. All actions by the Designated Agent shall
      be
      binding upon Franchisee. The Company shall have no duty to deal with anyone
      other than the Designated Agent; however, any documents submitted to the Company
      executed by any other officer or partner shall be valid and binding upon
      Franchisee. Franchisee shall promptly notify the Company in writing of any
      change in its Designated Agent.

    14.11.
      Specific
      Performance.
      Nothing
      herein contained shall bar the Company's or Franchisee's right to seek specific
      performance of this Agreement and injunctive relief against threatened conduct
      that will cause it loss or damages, under customary equity rules, including
      applicable rules for obtaining restraining orders and preliminary injunctions.
      

    14.12.
      Venue/Dispute
      Resolution.
      The
      Company reserves the right to institute at any time a system of nonbinding
      arbitration or mediation. Any arbitration under this Agreement shall be held
      in
      a forum in the City of Indianapolis, State of Indiana. The Franchisee will
      be
      obligated to participate in such system, at the Company's request, in the event
      of a dispute. The Federal Arbitration Act applies to the arbitration forum
      clauses contained in this Agreement.

    14.13.
      Costs
      and Attorneys' Fees.
      If the
      Company or its affiliates assert a claim for amounts owed by Franchisee in
      any
      legal proceeding before a court of competent jurisdiction, or in arbitration,
      or
      if the Company or Franchisee is required to enforce this Agreement in a judicial
      or arbitration proceeding, the party prevailing in such proceeding shall be
      entitled to reimbursement of its costs and expenses, including reasonable legal
      fees.

    14.14.
      Interference
      with Employment Relations.
      During
      the term of this Agreement, neither Franchisee nor the Company shall employ
      or
      seek to employ any person who is at the time employed by the other party,
      including related entities, or by any other franchisee of the Company, or
      otherwise induce, directly or indirectly, such person to leave such employment;
      provided, however, that the prohibitions herein shall not apply to any such
      person who has left the employ of any of the foregoing parties for a period
      in
      excess of six (6) months.

    14.15.
      Acknowledgment
      of Differing Terms.
      Franchisee acknowledges that some present STEAK N SHAKE franchisees of the
      Company may operate under prior or different forms of unit franchise agreements
      and, consequently, that Company's obligations and rights in respect to its
      various STEAK N SHAKE franchisees may differ materially in certain
      circumstances.

    14.16.
      Acknowledgment
      of No Promises.
      Franchisee acknowledges that the Company is not a guarantor, directly or
      indirectly, of the success or profitability of any franchised restaurant or
      the
      Franchise granted hereunder.

    14.17.
      Governing
      Law.
      This
      Agreement and the Franchise granted hereunder shall be governed by the laws
      of
      Indiana except to the extent that Franchisee's state franchise disclosure law
      or
      unfair franchise practices act, or comparable law, may afford Franchisee
      additional protection. 

    

    THE
      REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE TO FOLLOW

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF the parties hereto have executed and delivered this Agreement
      on
      the day and year first above written.

    THE
      COMPANY

    

    STEAK
      N SHAKE OPERATIONS, INC.

    an
      Indiana corporation

    

    ATTEST:

    

    /s/
      David C. Milne___________________  _/s/
      Bradley Manns_______________

    Printed:__David
      C. Milne______________ 
 Bradley
      Manns

    Title:_General
      Counsel, Corporate Secretary  
Vice
      President

    

    

    FRANCHISEE

    

    Reinwald
      Enterprises Emory, LLC

     

    ATTEST/WITNESS

    

    By:_/s/
      Gary T. Reinwald__________

    Printed:
      Gary T. Reinwald

    Title:
      _Member__________________

    

    _/s/
      Michael T. Crowley________________  

    Printed:_Michael
      T. Crowley____________  

    Title:_Associate
      Counsel_______________ 

    Reinwald
      Enterprises Wild Geese, LLC

     

    ATTEST/WITNESS

    

    By:_/s/
      Gary T. Reinwald_________

    Printed:
      Gary T. Reinwald

    Title:
      _Member________________

    

    
      _/s/
        Michael T. Crowley________________  

      Printed:_Michael
        T. Crowley____________  

      Title:_Associate
        Counsel_______________ 

    

    

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      1

    

    The
      franchised STEAK N SHAKE Restaurants will be located:

    

    
      	1.  	
              310
                Wild Geese Road, Knoxville, Tennessee ("Knoxville
                Restaurant")

            

    

    500
      E. Emory Road, Powell, Tennessee ("Powell Property")

    

    

    Franchisee's
      Exclusive Territory shall comprise the following area:

    

    An
      area within a two (2) mile radius of each location described
      above.

    

    

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    Contract
      for Purchase and Sale of Real Estate (Filed as Exhbit 10.2)

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     EXHIBIT
      B

    Assignment
      and Assumption of Lease Agreement (Filed as Exhibt 10.4)

    
      
        
           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    Personal
      Property Sales Agreement (Filed as Exhibit 10.3)

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