Exhibit 10.25
THIS
CONSULTING AGREEMENT (this "Agreement") is entered into effective September 10,
2004, by and between Xxxxxx X. Xxxxx, an individual ("Consultant"), and Sonic Corp., a
Delaware corporation ("Sonic").
W I T N E S S E T H:
WHEREAS,
Consultant has been employed by Sonic for 12 years and currently holds the office of
President;
WHEREAS,
Consultant has indicated that it is her desire to cut back on the number of days that she
is working and have more time available for her family;
WHEREAS,
Sonic desires to respect the wishes of Consultant, but still wants to have access to her
varied talents and expertise;
WHEREAS,
Consultant is agreeable to be available for general consulting services and special
projects; and
WHEREAS,
the parties desire to enter into this Agreement to set forth the terms and conditions of
this proposed consulting arrangement.
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Engagement.
Sonic hereby agrees to engage Consultant and Consultant hereby accepts such
engagement as a consultant and advisor to Sonic on the terms and conditions as
set forth in this Agreement.
2. Consulting Services.
| |
2.1
Services to be Provided. As may be reasonably requested by Sonic from time to time
during the term hereof, Consultant shall assist Sonic with marketing, advertising, product
development, brand and concept development issues and similar projects and matters,
including the proposed retrofit of the drive-in restaurants, and shall advise and consult
with Sonic regarding such matters (collectively, the “Services”). Consultant
agrees to support all Sonic initiatives and Sonic personnel consistent with the terms of
this Agreement and to use her best efforts to achieve all Sonic initiatives assigned to
her.
|
| |
2.2
Scope of Authority. This Agreement does not confer upon Consultant any authority or
responsibility to participate in or affect the management and control of the business
affairs of Sonic, except as such affairs may be incidentally affected by the
|
1
| |
Services
provided in accordance with this Agreement. Consultant shall have no authority or
responsibility to enter into any agreement in the name of Sonic or its subsidiaries or to
otherwise bind or obligate Sonic or its subsidiaries in any manner whatsoever. |
| |
2.3
Extent of Services. Consultant and Sonic agree that Consultant will be providing
the Services during normal business hours from Consultant’s home or from office
facilities provided by Sonic in its corporate offices in Oklahoma City. Consultant shall
communicate and work directly with the Sonic personnel identified for each project.
Subject to applicability of the “Restrictive Covenants” set forth in paragraph
8, below, Consultant and Sonic agree that Consultant is not agreeing to provide consulting
services exclusively to Sonic, but Consultant agrees that during the first 12 months of
this Agreement that she will not consult with or otherwise conduct business with the
following competitors of Sonic: McDonald’s, Burger King, Wendy’s,
Hardees/Carl’s Jr., Xxxx in the Box, WhataBurger, In-n-Out Burger, Checker’s,
Rally’s, Dairy Queen, A&W, Chick-Fil-A or other regional restaurant chains with a
similar competitive set of product offerings as these national and international chains
(the “Restricted Competitors”). Consultant will be permitted to consult with and
conduct business with other “QSR” restaurant chains, as that term is generally
defined in the restaurant industry, that are not among the Restricted Competitors, and
other restaurant chains not defined as QSR. Consultant will not be limited regarding with
whom she may enter into public speaking engagements on matters not confidential or
proprietary to Sonic. During the second 12 months of the term of this Agreement Consultant
agrees to comply with the “Restrictive Covenant” defined in paragraph 8.2 of her
current Employment Agreement. Consultant acknowledges that in her continuing role as a
member of the board of directors of Sonic as described in paragraph 5, below, she will
have a fiduciary duty to Sonic and will continue to be subject to Sonic’s Code of
Business Conduct and Ethics (the “Code”). Pursuant to the Code, Consultant would
be required as a director to identify any services she proposes to provide or engagements
with other competitive QSR companies, vendors, suppliers and contractors of Sonic and
obtain approval prior to providing such services, but such approval would not be
unreasonably withheld. Consultant is specifically permitted to provide consulting services
to Sonic franchisees on matters not confidential or proprietary to Sonic, and not
otherwise in conflict with this Agreement. Consultant shall use her best efforts to
accomplish all requirements of Consultant under this Agreement; provided, Consultant and
Sonic agree that Consultant need only devote such time in the performance of the Services
as is reasonably requested by Sonic and, in Consultant’s reasonable judgment, is
necessary and appropriate for the Services to be provided in a professional manner. In no
event will Sonic require Consultant to work more than ten days per month during the first
six months of this agreement (November 1, 2004 – April 30, 2005), not more than eight
days per month during the second six months of the Agreement (May 1, 2005 – October
31, 2005), not more than six days per month during the third six months of the Agreement
(November 1, 2005 – April 30, 2006) and not more than four days per month during the
last six months of this agreement (May 1, 2006 – October 31, 2006). Consultant
acknowledges that a certain amount of travel will be required in the providing of the
Services and accepts such travel as a condition of this Agreement. Sonic agrees to be
reasonable in requesting such travel and will provide as much notice of any required
travel as far in advance as reasonably possible. Sonic will
|
2
| |
pay
directly or reimburse Consultant for all travel related expenses in accordance with
paragraph 4.2, below. |
3. Term.
The term of this Agreement shall be for a period of two (2) years, commencing
upon November 1, 2004, and ending on October 31, 2006, unless sooner terminated
as provided in this Agreement (the “Term”).
4. Compensation.
| |
4.1
Consulting Fee. As compensation for the Services, Consultant shall receive a
monthly retainer in the amount of $15,000.00 per month during the Term (the
“Consulting Fee”) payable in arrears on a monthly basis. It is acknowledged by
Consultant and Sonic that the Services to be provided hereunder and the compensation set
forth herein is not considered a per diem amount and that the Consulting Fee is based in
part on Consultant’s agreement to be readily available to provide the Services to
Sonic on a timely basis and to withhold such services from competitors during the term of
this Agreement. Consultant shall receive full payment of the Consulting Fee whether or
not, or to what extent, Sonic makes use of her Services in any given month or other time
period of this Agreement as long as she does not breach this Agreement as provided herein.
|
| |
4.2
Expense Reimbursement. Sonic agrees to pay the reasonable and direct expenses
actually incurred by Consultant in providing the Services, provided such expenses are
pre-approved in writing by Sonic.
|
| |
4.3
Benefits. Consultant shall not be entitled or qualified for coverage under any
benefits package available to employees of Sonic or its subsidiaries.
|
| |
4.4
Taxes. Consultant assumes full responsibility for the reporting and payment of
workers’ compensation insurance, if required, and all social security, withholding,
unemployment compensation, and other applicable taxes under federal, state and local laws,
which are assessable against Consultant’s compensation under this Agreement.
Consultant agrees to indemnify Sonic against any charges, taxes, penalties and interest
assessed against Sonic by any taxing authority arising from Consultant’s failure to
comply with this Section 4.4.
|
5.
Continuation of Current Employment. Sonic and Consultant agree that as a
condition precedent to this Agreement becoming effective, Consultant will
continue to serve in her current position as President of Sonic through October
31, 2004. Effective October 31, 2004, Consultant’s employment with Sonic,
provided Sonic has complied with its obligations under Consultant’s
Employment Agreement and under this Agreement between the date of this
Agreement and October 31, 2004, will terminate and Consultant will be deemed to
have resigned as President of Sonic. Consultant agrees to resign from all other
positions, offices and directorships of Sonic and it’s subsidiaries, and
this agreement will serve as all applicable resignations effective October 31,
2004, unless otherwise requested in the discretion of Sonic prior to such date.
Notwithstanding the preceding, Consultant agrees to separately resign from
3
the Sonic board of
directors on a date to be determined by Sonic and she will be re-appointed to
the board of directors for a term that will run from her appointment until the
annual meeting of the shareholders of Sonic in January 2006. Consultant will
not receive separate compensation for her service on the Sonic board of
directors, but all of her expenses incurred in performing her duties on the
board will be reimbursed pursuant to paragraph 4.2, above. From the date of
this Agreement until October 31, 2004, Consultant will continue to perform all
services currently performed and will continue to have all rights and
privileges provided for under the terms of her Employment Agreement dated
August 20, 1996 (“Employment Agreement”), including participation in
any bonus amounts approved by the Board of Directors of Sonic and distributed
to the officers of Sonic for fiscal year 2004 performance. Sonic and Consultant
agree that all customary matters associated with the termination of employment
such as health and dental benefits, life insurance, disability insurance,
rights under COBRA, vacation pay, exercise and expiration of stock options and
return of Sonic property will be addressed in the normal course of business
prior to October 31, 2004.
6.
Sale of Sonic Common Stock. Consultant understands that because of
applicable rules and regulations of the Securities and Exchange Commission
(“SEC”) and federal securities laws, she cannot sell Sonic common
stock or exercise Sonic stock options until after the expiration of any
applicable black-out periods associated with an announcement of this Agreement,
or during any other black-out periods as may be implemented from time to time
in the normal course of business of Sonic during the remaining time of her
employment by Sonic. Consultant agrees to fully comply with all securities laws
regarding the sale of Sonic common stock while she is an “insider” as
defined in the rules and regulations promulgated by the SEC. Consultant further
acknowledges that in providing the Services contemplated hereunder she may have
access to highly confidential inside information and may continue to be deemed
an “insider” during the term of this Agreement. Upon request of
Consultant, Sonic’s Legal Department will provide Consultant with advice
regarding these matters.
7.
Release and Covenant Not to Xxx Sonic. In consideration of the terms and
covenants set forth in this Agreement and the entering into a new business
relationship with Sonic, you agree not to xxx and irrevocably release and
forever discharge Sonic and it’s subsidiaries, including their respective
stockholders, directors, officers, and employees, from any and all claims and
causes of action of any kind whatsoever, including any under your Employment
Agreement, that may have occurred or accrued in your favor as of the later of
the effective date of this Agreement or your last day of employment as an
employee of Sonic and that you may have the right to pursue in any federal,
state, or local court or administrative proceeding or in arbitration. In
addition, you agree that you will not file or pursue any legal action,
complaint, or administrative proceeding against any of the foregoing entities
or persons with regard to any of the claims and causes of action released in
this Agreement. If you breach or attempt to breach your release, you agree to
indemnify, defend, and hold harmless each party that you have released in this
Agreement who is damaged by your breach or attempted breach. You also agree
that each released party damaged by your breach or attempted breach will be
entitled to recover from you all costs, expenses, and reasonable attorneys’ fees
incurred in enforcing this Agreement. However, your release does not extend to
nor include any workers’ compensation claims that you might have the right
to file.
4
8.
Restrictive Covenants.
| |
8.1
Confidentiality. Because of your role as President of Sonic and your access to and
participation in various employment, administrative, marketing, advertising, development,
restaurant operations and sales meetings, plans, and projects related to Sonic and
it’s subsidiaries, you acknowledge the sensitive and trade secret nature of this
information and your continuing duty not to disclose any of such information to anyone
outside of Sonic during this Agreement and after your employment. Furthermore, you
acknowledge that you have no interest whatsoever in the unique, proprietary, and
confidential information of Sonic and it’s subsidiaries, consisting of: (a) methods
and procedures for the preparation of food and beverage products; (b) confidential recipes
for food products; (c) distinctive drive-in services and accessories; (d) plans and
specifications for interior and exterior signs, designs, layouts and color schemes; (e)
methods, techniques, formats, systems, specifications, procedures, information, trade
secrets, sales, and advertising and marketing programs, concepts, strategies, calendars,
and promotions; (f) methods of business operations and management; (g) the identities and
locations of Sonic franchisees, Sonic drive-in restaurants, and suppliers to Sonic
franchisees and drive-in restaurants; and (h) knowledge and experience regarding the
operation and franchising of Sonic drive-in restaurants and the Sonic system; (i)
information pertaining to Sonic’s present and future business plans and objectives
that have not been officially released to the public, and (j) other non-public information
regarding Sonic and it’s subsidiaries and its corporate activities, functions,
equipment, procedures, programs, contracts, and future plans (collectively, the
“Confidential Information”). You acknowledge that the Confidential Information
constitutes the proprietary information and trade secrets belonging to Sonic and that the
use or duplication of the Confidential Information would constitute the misappropriation
of trade secrets and unfair competition. You must maintain the absolute confidentiality of
the Confidential Information and may not disclose or divulge the Confidential Information
to any unauthorized person or entity. Furthermore, you must not use the Confidential
Information in any business or capacity or for the benefit of any person or entity or to
the detriment of Sonic.
|
| |
Further,
during the term of this Agreement, Consultant will continue to maintain in confidence and
not intentionally use to the material detriment of Sonic such Confidential Information
obtained during the term of this Agreement or from the transactions contemplated under
this Agreement going forward, unless (a) such information is already known to others not
bound by a duty of confidentiality or such information becomes publicly available through
no fault of Consultant, or (b) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings. |
| |
8.2
Non-Interference with Business Relations. During Consultant’s term of service
as an independent contractor for Sonic, Consultant will not engage in or become employed
by or act on behalf of any other person, corporation or firm which is engaged in any
business competitive with that of Sonic or its subsidiaries, or franchised Sonic drive-in
restaurants, unless such contract has been approved by Sonic in writing. Consultant
agrees, that during her service as an independent contractor and for a period
|
5
| |
of
one (1) year thereafter, Consultant will not, without the prior written approval of
Sonic, directly or indirectly through any other person, firm, or corporation, whether
individually or in conjunction with any other person, or as an employee, agent,
representative, independent contractor, partner, or holder of any interest in any other
person, firm, corporation or other association: |
| (i) |
encourage, entice, induce, solicit or influence, directly or indirectly, any
employee, customer, client, supplier, or other person or entity having a
business relationship with Sonic or its subsidiaries, or franchised Sonic
drive-in restaurants, to terminate or alter such business relationships to the
disadvantage of Sonic or its subsidiaries, or franchised Sonic drive-in
restaurants, or |
| (ii) |
encourage, entice, induce, solicit or influence, directly or indirectly, any
person or entity not to enter into a business relationship with Sonic or its
subsidiaries, or franchised Sonic drive-in restaurants, or impair or attempt to
impair any relationships between Sonic or its subsidiaries, or franchised Sonic
drive-in restaurants, and any of their respective employees, customers, clients,
suppliers, or other persons or entities with whom any of them has business
relationships. |
| |
Consultant
acknowledges and agrees that:
|
| (i) |
the restrictions under this Agreement are reasonable in light of Sonic and its
subsidiaries, and its franchised Sonic drive-in restaurants, significant
business interests; and |
| (ii) |
Consultant acknowledges that she has received sufficient consideration to
support these obligations under this Agreement. |
| |
8.3
Enforcement. The parties acknowledge that the terms of this Section 8 and the
restrictive covenants contained in Section 2.3, “Extent of Services” above, are
essential to Sonic entering into this Agreement and that the enforcement of such terms is
essential to the use and enjoyment of the consideration bargained for by Sonic in this
Agreement. If any part of Sections 8 or 2.3 should for any reason be determined to be
unenforceable, but would be valid and enforceable if any part thereof were deleted or
otherwise modified, then the covenants and obligations of Consultant as set forth in
Sections 8 and 2.3 shall be deemed to be modified to the extent necessary to make them
enforceable.
|
| |
8.4
Remedies. Sonic shall have the right, on behalf of itself and its subsidiaries, to
enforce Sections 8 and 2.3 of this Agreement by withholding payment for the year in which
any breach of Sections 8 or 2.3 occur and all succeeding years during the Term, or by
injunction, specific performance or other equitable relief, without prejudice to any other
rights or remedies that Sonic or its subsidiaries may otherwise have for a breach of
Sections 8 or 2.3.
|
6
9.
Termination. This Agreement and the engagement of Consultant shall be
terminated, and except as to any liabilities or claims that shall have accrued
or arisen prior to such termination, all obligations under this Agreement shall
cease upon the happening of any of the following events:
| |
9.1
If Consultant, in the reasonable determination of Sonic, shall have committed a material
breach of this Agreement, provided Sonic shall have served written notice to Consultant
setting forth the details of such alleged breach, and within ten (10) days of receipt of
such notice, Consultant shall not have cured such breach. Any such termination shall be
without prejudice to all rights and remedies of Sonic; and
|
| |
9.2
Upon written notice from Consultant, if at any time during the Term Sonic fails to pay the
Consulting Fee within ten (10) days of receipt of such notice. In the event this Agreement
is terminated under this Section 9.2 or for any other reason (except as a result of
termination under Section 9.1 hereof), Sonic shall pay Consultant as severance a dollar
amount equal to the remaining unpaid Consulting Fee for the remaining Term, payable within
ten (10) days after the effective date of the termination.
|
10.
Independent Contractor. The relationship of Sonic and Consultant under
this Agreement is a consulting relationship only. Consultant shall be an
independent contractor and shall determine the means and methods by which she
performs the Services. Nothing contained in this Agreement shall constitute or
be construed to constitute or to create a partnership or joint venture, or a
principal and agent, or an employer and employee relationship between Sonic and
Consultant. This Agreement shall not be deemed at any time to be or to create
an interest inuring to Consultant in the business, financial and operating
affairs of Sonic or its subsidiaries.
11.
Notices. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
fax or email (with written confirmation of receipt), provided that a copy is
mailed by certified mail, return receipt requested, (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), or (d) three days after placed in US Mail with proper
postage, in each case to the appropriate addresses and facsimile numbers set
forth below (or to such other addresses and facsimile numbers as a party may
designate by notice to the other parties):
| "Consultant" |
|
Xxxxxx X. Xxxxx |
|
| | |
00000 Xxxxxxxxxx Xxx | |
| | |
Xxxxxx, Xxxxxxxx 00000 | |
| | |
Fax: 000-000-0000 | |
| | |
| |
| with a copy to | |
Xxxxxxx Xxxx, Esq. | |
| | |
Mock Xxxxxxx Xxxxx Xxxxx Xxxxxx & Xxxxxx | |
| | |
000 Xxxxx Xxxxxxxx 00xx Xxxxx | |
| | |
Xxxxxxxx Xxxx, Xxxxxxxx 00000 | |
| | |
Fax: 000-000-0000 | |
| | |
| |
7
| "Sonic" | |
Sonic Corp. | |
| | |
000 Xxxxxx Xxxxx Xxxxx | |
| | |
Xxxxxxxx Xxxx, Xxxxxxxx 00000 | |
| | |
Attention: General Counsel | |
| | |
Fax: (000) 000-0000 | |
12.
Arbitration. The parties shall resolve any controversy by final and
binding arbitration in accordance with the Rules for Commercial Arbitration
(the “Rules”) of the American Arbitration Association in effect at
the time of the execution of this Agreement and pursuant to the following
additional provisions:
| |
12.1
Applicable Law. The Oklahoma Arbitration Act shall apply to the arbitration and
all procedural matters relating to the arbitration.
|
| |
12.2
Selection of Arbitrators. The parties shall select one arbitrator within ten (10)
days after the filing of a demand and submission in accordance with the Rules. If the
parties fail to agree on an arbitrator within that ten (10) day period or fail to agree to
an extension of that period, the arbitration shall take place before an arbitrator
selected in accordance the Rules.
|
| |
12.3
Location of Arbitration. The arbitration shall take place in Oklahoma City,
Oklahoma, and the arbitrator shall issue any award at the place of arbitration. The
arbitrator may conduct hearings and meetings at any other place agreeable to the parties
or, upon the motion of a party, determined by the arbitrator as necessary to obtain
significant testimony or evidence.
|
| |
12.4
Discovery. The arbitrator shall have the power to authorize all forms of discovery
(including depositions, interrogatories and document production) upon the showing of (i) a
specific need for the discovery, (ii) that the discovery likely will lead to material
evidence needed to resolve the controversy, and (iii) that the scope, timing and cost of
the discovery is not excessive.
|
| |
12.5
Authority of Arbitrator. The arbitrator shall not have the power (i) to alter,
modify, amend, add to, or subtract from any term or provision of this Agreement or (ii) to
grant interim injunctive relief prior to the award.
|
| |
12.6
Enforcement of Award. The prevailing party shall have the right to enter the award
of the arbitrator in any court having jurisdiction over one or more of the parties or
their assets. The parties specifically waive any right they may have to apply to any court
for relief from the provisions of this Agreement or from any decision of the arbitrator
made prior to the award.
|
| |
12.7
Excluded Controversies. The provisions of this Section 12 shall not apply to any
controversies relating to the ownership, use or protection of the trademarks, service
marks, trade names, logotypes, trade dress, copyrights, or patent rights of Sonic or its
affiliates, including (without limitation) the right of Sonic or its
|
8
| |
affiliates
to apply to any court of competent jurisdiction for injunctive relief. |
| |
12.8
Attorneys’ Fees and Costs. The prevailing party to the arbitration shall have
the right to an award of its reasonable attorneys’ fees and costs incurred after the
filing of the demand and submission. If Sonic prevails, the award shall include a
reasonable amount for that portion of Sonic’s administrative overhead allocable to
the time devoted by Sonic’s in-house legal staff.
|
13.
Miscellaneous.
| |
13.1
Amendment and Modification. Neither this Agreement nor any of the provisions hereof
may be amended or modified other than by an instrument in writing signed by the parties
hereto.
|
| |
13.2
Entire Agreement. This Agreement constitutes the entire agreement of the parties
hereto and, as of the effective date of this Agreement, the terms and provisions contained
herein shall supersede all other agreements between the parties hereto with respect to the
matters contained herein.
|
| |
13.3
Assignability. This Agreement is personal to the parties and may not be assigned by
either of the parties without the prior written consent of the other party.
|
| |
13.4
Binding Effect. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties and their respective successors, legal representatives, heirs and,
to the extent herein permitted, assigns.
|
| |
13.5
Severability. All agreements and covenants contained herein are severable, and in
the event any of them should be held unenforceable, shall be interpreted and enforced as
if such invalid agreements or covenants were not contained herein.
|
| |
13.6
Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall, for all purposes of this Agreement, be deemed an
original, but all of which shall constitute one and the same instrument.
|
| |
13.7
Remedies Cumulative. No remedy conferred under this Agreement shall be exclusive of
any other remedy, and each remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law, in equity, by statute or
otherwise. The election of any one or more remedies by a party hereto shall not be deemed,
and shall not constitute, a waiver of that party’s right to pursue any other
available remedy or remedies.
|
| |
13.8
Captions. The captions in this Agreement are for convenience of reference only and
shall not affect the meaning, substance, or construction of any of the provisions or terms
of this Agreement.
|
9
| |
13.9
Computation of Periods. If the final date of any period falls upon a Saturday,
Sunday or legal holiday under the laws of the state of Oklahoma, then in such event the
time of such period shall be extended to the next day which is not a Saturday, Sunday or
legal holiday under the laws of Oklahoma.
|
| |
13.10
Time of the Essence. Time is of the essence of this Agreement.
|
| |
13.11
Governing Law. This Agreement and any performance hereunder shall be construed
and enforced in accordance with and governed by the laws of the state of Oklahoma.
|
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first written above
| "Consultant" |
|
|
| |
|
|
| |
|
/s/ Xxxxxx X. Xxxxx
|
| |
|
Xxxxxx X. Xxxxx, an individual |
| |
|
|
| |
|
|
|
|
|
| "Sonic" |
|
Sonic Corp. |
| |
|
|
| |
|
|
| |
By: |
/s/ Xxxxxxxx Xxxxxx
|
| |
|
Xxxxxxxx Xxxxxx,
Chief Executive Officer |
10
