EMPLOYMENT AGREEMENT
EXHIBIT 10.01
This
Agreement is entered into
effective as of the 18th
day of
October, 2007, by and between Sonic Corp. (the “Corporation”), a Delaware
corporation, and Xxxxxxx X. Xxxxxxx (the “Employee”).
RECITALS
Whereas,
the Employee is currently
serving as the Vice President and Chief Financial Officer of the Corporation
and
is an integral part of its management; and
Whereas,
the Corporation's Board of
Directors (the “Board”) has determined that it is appropriate to reinforce and
encourage the continued attention and dedication of certain key members of
the
Corporation's management, including Employee, to their assigned duties without
distraction and potentially disturbing circumstances arising from the
possibility of a Change in Control (herein defined) of the Corporation;
and
Whereas,
the Corporation desires to
continue the services of Employee, whose experience, knowledge and abilities
with respect to the business and affairs of the Corporation are extremely
valuable to the Corporation; and
Whereas,
the Employee and the
Corporation acknowledge that they previously entered into an Employment
Agreement dated August 20, 1996, which is hereby canceled and superseded
in its
entirety by this Agreement; and
Whereas,
the Board on the 18th
day of
October, 2007, ratified and approved this Agreement; and
Whereas,
the parties hereto desire to
enter into this Agreement setting forth the terms and conditions of the
continued employment relationship of the Corporation and Employee.
Now,
therefore, it is agreed as
follows:
ARTICLE
I
Term
of
Employment
1.1
Term of
Employment. The Corporation shall employ Employee for a period
of one year from the date hereof (the “Initial Term”).
1.2
Extension of Initial
Term. Upon each annual anniversary date of this Agreement,
this Agreement shall be extended automatically for successive terms of one
year
each, unless either the Corporation or the Employee gives contrary written
notice to the other not later than the annual anniversary date.
1.3
Termination of
Agreement and Employment. The Corporation may terminate this
Agreement and the Employee’s employment at any time effective upon written
notice to the Employee. The Corporation, in its sole discretion, may terminate
this Agreement without terminating the employment of the
Employee. The Employee may terminate this Agreement and the
Employee’s employment only after at least 30 days’ written notice to the
Corporation, unless otherwise agreed by the Corporation.
ARTICLE
II
Duties
of the
Employee
Employee
shall serve as the Vice
President and Chief Financial Officer of the
Corporation. Employee shall do and perform all services, acts, or
things necessary or advisable to manage and conduct the business of the
Corporation consistent with such position subject to such policies and
procedures as may be established by the Board.
ARTICLE
III
Compensation
3.1
Salary. For
Employee's services to the Corporation as the Vice President and Chief Financial
Officer, Employee shall be paid a salary at the annual rate of $270,000 (herein
referred to as “Salary”), payable in twenty-four equal installments on the first
and fifteenth day of each month. On the first day of each calendar
year during the term of this Agreement with the Corporation, Employee shall
be
eligible for an increase in Salary based on an evaluation of Employee’s
performance during the past year with the Corporation. During the
term of this Agreement, the Salary of the Employee shall not be decreased
at any
time from the Salary then in effect unless agreed to in writing by the
Employee.
3.2
Bonus. The
Employee shall be entitled to participate in an equitable manner with other
officers of the Corporation in discretionary cash bonuses as authorized by
the
Board.
ARTICLE
IV
Employee
Benefits
4.1
Use of
Automobile. The Corporation shall provide Employee with either the use of
an automobile for business and personal use or a cash car allowance in
accordance with the established company car policy of the
Corporation. The Corporation shall pay all expenses of operating,
maintaining and repairing the automobile provided by the Corporation and
shall
procure and maintain automobile liability insurance in respect thereof, with
such coverage insuring each Employee for bodily injury and property
damage.
4.2
Medical, Life
and
Disability Insurance Benefits. The Corporation shall provide
Employee with medical, life and disability insurance benefits in accordance
with
the established benefit policies of the Corporation.
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4.3
Working
Facilities. Employee shall be provided adequate office space,
secretarial assistance, and other facilities and services suitable to Employee’s
position and adequate for the performance of Employee’s duties.
4.4
Business
Expenses. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation, including expenses
for
entertainment, travel, and similar items. The Corporation shall
reimburse Employee for all such expenses upon the presentation by Employee,
from
time to time, of an itemized account of such expenditures.
4.5
Vacations. Employee
shall be entitled to an annual paid vacation commensurate with the Corporation's
established vacation policy for officers. The timing of paid
vacations shall be scheduled in a reasonable manner by the
Employee.
4.6
Disability. Upon
disability (as defined herein) of the Employee, the Employee shall be entitled
to receive an amount equal to 50% of Employee’s Salary (in addition to any
disability insurance benefits received pursuant to Section 4.2 herein), such
amount being paid semi-monthly in twelve equal installments.
4.7
Term Life
Insurance. The Corporation shall purchase term life insurance
on the life of the Employee having a face value of four times the Employee’s
Salary (to be changed as salary adjustments are made) or the face value of
life
insurance that can be purchased based upon the Employee’s health history with
the Corporation paying the standard premium rate for term insurance under
its
then current insurance program at the Employee’s age and assuming good health,
whichever amount is lesser; provided further that, such insurance can be
obtained by the Corporation in a manner which meets the requirements for
deductibility by the Corporation under Section 79 of the Internal Revenue
Code
of 1986, or as hereafter amended.
4.8
Compensation
Defined. Compensation shall be defined as all monetary
compensation and all benefits described in Articles III and IV hereunder
(as
adjusted during the term hereof).
ARTICLE
V
Termination
5.1
Death. Employee's
employment hereunder shall be terminated upon the Employee's death.
5.2
Disability. The
Corporation may terminate Employee's employment hereunder in the event Employee
is disabled and such disability continues for more than 180
days. Disability shall be defined as the inability of Employee to
render the services required of him, with or without a reasonable accommodation,
under this Agreement as a result of physical or mental incapacity.
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5.3
Cause.
(a)
The Corporation may terminate Employee's employment hereunder for cause.
For the
purpose of this Agreement, “Cause” shall mean (i) the willful and intentional
failure by Employee to substantially perform Employee’s duties hereunder, other
than any failure resulting from Employee's incapacity due to physical or
mental
incapacity, or (ii) commission by Employee, in connection with Employee’s
employment by the Corporation, of an illegal act or any act (though not illegal)
which is not in the ordinary course of the Employee's responsibilities and
exposes the Corporation to a significant level of undue
liability. For purposes of this paragraph, no act or failure to act
on Employee's part shall be considered to have met either of the preceding
tests
unless done or omitted to be done by Employee without a reasonable belief
that
Employee’s action or omission was in the best interest of the
Corporation.
(b)
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated for cause unless such action is ratified by the affirmative vote
of
not less than two-thirds of the entire membership of the Board at a meeting
held
within 30 days of such termination (after reasonable notice to Employee and
an
opportunity for Employee to be heard by members of the Board) confirming
that
Employee was guilty of the conduct set forth in this Section 5.3. Ratification
by the board will be effective as of the original date of termination of
Employee.
5.4
Compensation Upon
Termination for Cause or Upon Resignation By Employee. Except
as otherwise set forth in Section 5.7 hereof, if Employee's employment
shall be terminated for Cause or if Employee shall resign Employee’s position
with the Corporation, the Corporation shall pay Employee's Compensation only
through the last day of Employee's employment by the Corporation. The
Corporation shall then have no further obligation to Employee under this
Agreement. If the Board, pursuant to Section 5.3(b), votes to
classify Employee’s termination as “not for cause,” then Employee shall be
compensated pursuant to Section 5.5 below.
5.5
Compensation Upon
Termination Other Than For Cause Or Disability. Except as
otherwise set forth in Section 5.7 hereof, if the Company shall terminate
Employee's employment other than for Cause or Disability, the Company shall
continue to be obligated to pay Employee’s Salary for a period of one year,
beginning on the date of termination, but shall not be obligated to provide
any
other benefits described in Articles III and IV hereof, except to the extent
required by law.
5.6
Compensation Upon
Non-Renewal of Agreement. Except as otherwise set forth in
Section 5.7 hereof, if the Company shall give notice to Employee in accordance
with Section 1.2 hereof that this Agreement will not be renewed but Employee’s
employment is not terminated, the Company shall continue to be obligated
to pay
Employee’s Compensation for a period of one year beginning on the date notice of
non-renewal is given.
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5.7
Termination of
Employee or Resignation by Employee for Good Reason. If at any
time within the first twelve months subsequent to a Change in Control, the
Employee’s employment with the Corporation is terminated other than as provided
for in Section 5.1, 5.2 or 5.3 hereof, or the Corporation violates any provision
of this Agreement or Employee shall resign Employee's employment for Good
Reason
(as defined herein), the Corporation shall be obligated to pay to Employee
a
lump sum payment upon the effective date of such termination or resignation
or
breach (as determined in Employee's sole discretion), in an amount equal
to two
times the Employee's compensation payable under paragraph 5.5 above, but
in no
event to exceed an amount equal to $1.00 less than three (3) times the mean
average annual compensation paid to Employee by the Corporation and any of
its
subsidiaries during the five calendar years ending before the date on which
the
Change in Control occurred (or if Employee was not employed for that entire
five
year period, then the mean average annual compensation paid to employee during
such shorter period, with the Employee's compensation annualized for any
calendar year during which the employee was not employed for the entire calendar
year); provided, however, that if the lump-sum severance payment under this
Section 5.7, either alone or together with any other payments or compensation
which Employee has a right to receive from the Corporation, would constitute
a
“parachute payment” (as defined in Section 280G (or any equivalent term defined
in any successor or equivalent provision) of the Internal Revenue Code of
1986,
as amended (the “Code”)), then such lump-sum severance payment shall be reduced
to the largest amount as will result in no portion of the lump-sum severance
payment under this Section 5.7 being subject to the excise tax imposed by
Section 4999 (or any successor or equivalent provision) of the
Code. For the purpose of this Section 5.7, the Employee's annual
compensation from the Corporation and its subsidiaries for a given year shall
equal Employee’s compensation as reflected on Employee’s Form W-2 for that year
(unless the Employee was not employed for the entire calendar year, in which
case Employee’s Form W-2 compensation for such year shall be
annualized). The determination of any reduction in lump-sum severance
payment under this Section 5.7 pursuant to the foregoing provision shall
be
conclusive and binding on the Corporation. Notwithstanding any other
provision of this Section 5.7, Employee may elect to have the lump sum severance
payment hereunder paid in equal monthly installments over a period not to
exceed
12 consecutive months.
“Good
Reason” shall mean any of the
following which occur during the term of this Agreement without Employee's
express written consent:
In
the Event of a Change in
Control:
(a)
the assignment to Employee of duties inconsistent with Employee's position,
office, duties, responsibilities and status with the Corporation immediately
prior to a Change in Control; or, a change in Employee's titles or offices
as in
effect immediately prior to a Change in Control; or, any removal of Employee
from or any failure to reelect Employee to any such position or office,
except
in connection with the termination of Employee’s employment by the Corporation
for Disability or Cause or as a result of Employee's death or by Employee
other
than for Good Reason as set forth in this Section 5.7(a); or
(b)
a reduction by the Corporation in Employee's Salary as in effect as of
the date
of this Agreement or as the same may be increased from time-to-time during
the
term of this Agreement or the Corporation's failure to increase (within
twelve
months of the Employee's last increase in Salary) Employee's Salary after
a
Change in Control in an amount which at least equals, on a percentage basis,
the
highest percentage increase in salary for all officers of the Corporation
or any
parent or affiliated company effected in the preceding twelve months; or
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(c)
the failure of the Corporation to provide Employee with the same fringe
benefits
(including, without limitation, life insurance plans, medical or disability
plans, retirement plans, incentive plans, stock option plans, stock purchase
plans, stock ownership plans, or bonus plans) that were provided to Employee
immediately prior to the Change in Control, or with a package of fringe
benefits
that, if one or more of such benefits varies from those in effect immediately
prior to such Change in Control, is in Employee's sole judgment substantially
comparable in all material respects to such fringe benefits taken as a
whole;
or
(d)
relocation of the Corporation's principal executive offices to a location
outside of Oklahoma City, Oklahoma, or Employee's relocation to any place
other
than the location at which Employee performed Employee’s duties prior to a
Change in Control, except for required travel by Employee on the Corporation's
business to an extent substantially consistent with Employee's business
travel
obligations at the time of the Change in Control; or
(e)
any failure by the Corporation to provide Employee with the same number
of paid
vacation days to which Employee is entitled at the time of the Change in
Control; or
(f)
the failure of a successor to the Corporation to assume the obligation
of this
Agreement as set forth in Section 7.1 herein.
5.8.
Change in
Control. For the purposes of this Agreement, the phrase
“change in control” shall mean any of the following events:
(a)
Any consolidation or merger of the Corporation in which the Corporation
is not
the continuing or surviving corporation or pursuant to which shares of
the
Corporation’s capital stock would convert into cash, securities or other
property, other than a merger of the Corporation in which the holders of
the
Corporation’s capital stock immediately prior to the merger have the same
proportionate ownership of capital stock of the surviving corporation
immediately after the merger;
(b)
Any sale, lease, exchange or other transfer (whether in one transaction
or a
series of related transactions) of all or substantially all of the assets
of the
Corporation;
(c)
The stockholders of the Corporation approve any plan or proposal for the
liquidation or dissolution of the Corporation;
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(d)
Any person (as used in Section 13(d) and 14(d)(2) of the Securities and
Exchange
Act of 1934, as amended (the “Exchange Act”)) becomes the beneficial owner
(within the meaning of Rule 13D-3 under the Exchange Act) of 50% or more
of the
Corporation’s outstanding capital stock;
(e)
During any period of two consecutive years, individuals who at the beginning
of
that period constitute the entire Board of Directors of the Corporation.
cease
for any reason to constitute a majority of the Board of Directors unless
the
election or the nomination for election by the Corporation’s stockholders of
each new director received the approval of the Board of Directors by a
vote of
at least two-thirds of the directors then and still in office and who served
as
directors at the beginning of the period; or
(f)
The Corporation becomes a subsidiary of any other
corporation.
ARTICLE
VI
Obligation
to Mitigate Damages; No Effect
on
Other Contractual
Rights
6.1
Mitigation. The
Employee shall not have any obligation to mitigate damages or the amount
of any
payment provided for under this Agreement by seeking other employment or
otherwise. However, all payments required under the terms of this Agreement
shall cease 30 days after the acceptance by the Employee of employment by
another employer; provided that, this limitation shall not apply to payments
due
under paragraph 5.7, above.
6.2
Other Contractual
Rights. The provisions of this Agreement, and any payment
provided for hereunder shall not reduce any amount otherwise payable, or
in any
way diminish Employee's existing rights, or rights which would accrue solely
as
a result of passage of time under any employee benefit plan or other contract,
plan or arrangement of which Employee is a beneficiary or in which Employee
participates.
ARTICLE VII
Successors
to the
Corporation
7.1
Assumption. The
Corporation will require any successor or assignee (whether direct or indirect,
by purchase, merger, consolidation or otherwise) of all or substantially
all of
the business and/or assets of the Corporation, by agreement in form and
substance reasonably satisfactory to Employee, to expressly, absolutely and
unconditionally assume and agree to perform this Agreement in the same manner
and to the same extent that the Corporation would be required to perform
it if
no such succession or assignment had taken place. Any failure by the
Corporation to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this
Agreement.
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7.2
Employee's Successors
and Assigns. This Agreement shall inure to the benefit of and
be enforceable by Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts are still payable
to Employee hereunder, all such amounts, unless otherwise provided herein,
shall
be paid in accordance with the terms of this Agreement to Employee's devisee,
legatee or other designee or, if there is no such designee, to Employee's
estate.
ARTICLE
VIII
Restrictions
on
Employee
8.1
Confidential
Information. During the term of the Employee’s employment and
for a period of twelve months thereafter, the Employee shall not divulge
or make
accessible to any party any Confidential Information, as defined below, of
the
Corporation or any of its subsidiaries, except to the extent authorized in
writing by the Corporation or otherwise required by law. The phrase
“Confidential Information” shall mean the unique, proprietary and confidential
information of the Corporation and its subsidiaries, consisting of: (1)
confidential financial information regarding the Corporation or its
subsidiaries, (2) confidential recipes for food products; (3) confidential
and
copyrighted plans and specifications for interior and exterior signs, designs,
layouts and color schemes; (4) confidential methods, techniques, formats,
systems, specifications, procedures, information, trade secrets, sales and
marketing programs; (5) knowledge and experience regarding the operation
and
franchising of Sonic drive-in restaurants; (6) the identities and locations
of
Sonic’s franchisees, Sonic drive-in restaurants, and suppliers to Sonic’s
franchisees and drive-in restaurants; (7) knowledge, financial information,
and
other information regarding the development of franchised and company-store
restaurants; (8) knowledge, financial information, and other information
regarding potential acquisitions and dispositions; and (9) any other
confidential business information of the Corporation or any of its subsidiaries.
The Employee shall give the Corporation written notice of any circumstances
in
which Employee has actual notice of any access, possession or use of the
Confidential Information not authorized by this Agreement.
8.2
Restrictive
Covenant. During the term of Employee’s employment, the
Employee shall not engage in or have any interest, directly or indirectly,
in
any business competing with the business being conducted by the Corporation
or
any of its subsidiaries, without the Corporation’s prior written
consent. For the six month period immediately following the
termination of Employee’s employment, the Employee shall not engage in or have
any interest, directly or indirectly, in any fast food restaurant business
that
has a menu similar to that of a Sonic drive-in restaurant (such as hamburgers,
hot dogs, onion rings and similar items customarily sold by Sonic drive-in
restaurants), or which has an appearance similar to that of a Sonic drive-in
restaurant (such as color pattern, use of canopies, use of speakers and menu
housings for ordering food, or other items that are customarily used by a
Sonic
drive-in restaurant), and which operates such restaurants within a three
mile
radius of any Sonic drive-in restaurant.
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ARTICLE
IX
Miscellaneous
9.1
Indemnification. To
the full extent permitted by law, the Board shall authorize the payment of
expenses incurred by or shall satisfy judgments or fines rendered or levied
against Employee in any action brought by a third-party against Employee
(whether or not the Corporation is joined as a party defendant) to impose
any
liability or penalty on Employee for any act alleged to have been committed
by
Employee while employed by the Corporation unless Employee was acting with
gross
negligence or willful misconduct. Payments authorized hereunder shall
include amounts paid and expenses incurred in settling any such action or
threatened action.
9.2 Resolution of
Disputes. The following provisions shall apply to any
controversy between the Employee and the Corporation and its subsidiaries
and
the Employee (including any director, officer, employee, agent or affiliate
of
the Corporation and its subsidiaries) whether or not relating to this
Agreement.
(a)
Arbitration.
The parties shall resolve all controversies by final and binding arbitration
in
accordance with the Rules for Commercial Arbitration (the “Rules”) of the
American Arbitration Association in effect at the time of the execution of
this
Agreement and pursuant to the following additional provisions:
(1)
Applicable
Law. The Federal Arbitration Act (the “Federal Act”), as
supplemented by the Oklahoma Arbitration Act (to the extent not inconsistent
with the Federal Act), shall apply to the arbitration and all procedural
matters
relating to the arbitration.
(2)
Selection of
Arbitrators. The parties shall select one arbitrator within 10
days after the filing of a demand and submission in accordance with the
Rules. If the parties fail to agree on an arbitrator within that
10-day period or fail to agree to an extension of that period, the arbitration
shall take place before an arbitrator selected in accordance with the
Rules.
(3)
Location of
Arbitration. The arbitration shall take place in Oklahoma
City, Oklahoma, and the arbitrator shall issue any award at the place of
arbitration. The arbitrator may conduct hearings and meetings at any
other place agreeable to the parties or, upon the motion of a party, determined
by the arbitrator as necessary to obtain significant testimony or
evidence.
(4)
Enforcement of
Award. The prevailing party shall have the right to enter the
award of the arbitrator in any court having jurisdiction over one or more
of the
parties or their assets. The parties specifically waive any right
they may have to apply to any court for relief from the provisions of this
Agreement or from any decision of the arbitrator made prior to the
award.
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(b)
Attorneys' Fees
and
Costs. The prevailing party to the arbitration shall have the
right to an award of its reasonable attorneys' fees and costs (including
the
cost of the arbitrator) incurred after the filing of the demand and
submission. If the Corporation or any of its subsidiaries prevails,
the award shall include an amount for that portion of the administrative
overhead reasonably allocable to the time devoted by the in-house legal staff
of
the Corporation or any subsidiary.
(c)
Excluded
Controversies. At the election of the Corporation or its
subsidiaries, the provisions of this Section 9.2 shall not apply to any
controversies relating to the enforcement of the covenant not to compete
or the
use and protection of the trademarks, service marks, tradenames, copyrights,
patents, confidential information and trade secrets of the Corporation or
its
subsidiaries, including (without limitation) the right of the Corporation
or its
subsidiaries to apply to any court of competent jurisdiction for appropriate
injunctive relief for the infringement of the rights of the Corporation or
its
subsidiaries.
(d)
Other
Rights. The provisions of this Section 9.2 shall not prevent
the Corporation, its subsidiaries, or the Employee from exercising any of
their
rights under this agreement, any other agreement, or under the common law,
including (without limitation) the right to terminate any agreement between
the
parties or to end or change the party’s legal relationship.
9.3
Entire
Agreement. This Agreement constitutes the entire agreement of
the parties with regard to the subject matter of this Agreement and replaces
and
supersedes all other written and oral agreements and statements of the parties
relating to the subject matter of this Agreement.
9.4
Notices. Any
notices required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by mail to Employee’s residence, in the case
of Employee, or to its principal office, in the case of the
Corporation.
9.5
Waiver of
Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any
subsequent breach by any party.
9.6
Amendment. No
amendment or modification of this Agreement shall be deemed effective unless
or
until executed in writing by the parties hereto.
9.7
Validity. This
Agreement, having been executed and delivered in the State of Oklahoma, its
validity, interpretation, performance and enforcement will be governed by
the
laws of that state.
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9.8
Section
Headings. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the
meaning or interpretation of this Agreement.
9.9
Counterpart
Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.10 Exclusivity. Specific
arrangements referred to in this Agreement are not intended to exclude
Employee's participation in any other benefits available to executive personnel
generally or to preclude other compensation or benefits as may be authorized
by
the Board from time to time.
9.11 Partial
Invalidity. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
In
witness whereof, the Corporation has
caused this Agreement to be executed and its seal affixed hereto by its officers
thereunto duly authorized; and the Employee has executed this Agreement,
as of
the day and year first above written.
The
Corporation:
Sonic Corp.
By:
/s/
J. Xxxxxxxx
Xxxxxx
J.
Xxxxxxxx Xxxxxx, President
The
Employee:
/s/ Xxxxxxx X.
Xxxxxxx
Xxxxxxx
X. Xxxxxxx
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