Contract
Exhibit
10.25
This
Agreement is entered into effective as of the 7th
day of
April, 2005, by and between Sonic Corp. (the “Corporation”), a Delaware
corporation, and Xxxxx X. Xxxxxxx (the “Employee”).
RECITALS
Whereas,
the Corporation's Board of Directors (the “Board”) has elected Employee to the
office of Treasurer of the Corporation, where she will be an integral part
of
the Corporation’s management; and
Whereas,
the Board has determined that it is appropriate to support and encourage
the
attention and dedication of certain key members of the Corporation's management,
including Employee, to their assigned duties without distraction and potentially
disturbing circumstances arising from the possibility of a Change in Control
(herein defined) of the Corporation; and
Whereas,
the Corporation desires to retain the services of Employee, whose experience,
knowledge and abilities with respect to the business and affairs of the
Corporation will be extremely valuable to the Corporation; and
Whereas,
the Board on the 7th
day of
April, 2005, ratified and approved this Agreement; and
Whereas,
the parties hereto desire to enter into this Agreement setting forth the
terms
and conditions of the employment relationship of the Corporation and
Employee.
Now,
therefore, it is agreed as follows:
ARTICLE
I
Term
of Employment
1.1 Term
of Employment.
The
Corporation shall employ Employee for a period of one year from the date
hereof
(the “Initial Term”).
1.2 Extension
of Initial Term.
Upon
each annual anniversary date of this Agreement, this Agreement shall be extended
automatically for successive terms of one year each, unless either the
Corporation or the Employee gives contrary written notice to the other not
later
than the annual anniversary date.
1.3 Termination
of Agreement and Employment.
The
Corporation may terminate this Agreement and the Employee’s employment at any
time effective upon written notice to the Employee. The Corporation, in its
sole
discretion, may terminate this Agreement without terminating the employment
of
the Employee. The Employee may terminate this Agreement and the Employee’s
employment only after at least 30 days’ written notice to the Corporation,
unless otherwise agreed by the Corporation.
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ARTICLE
II
Duties
of the Employee
Employee
shall serve as the Treasurer 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 Treasurer, Employee shall be
paid
a salary at the annual rate of $130,000.00 (herein referred to as “Salary”),
payable in twenty-four equal installments on the first and fifteenth day
of each
month. On the first day of each calendar year during the term of this Agreement
with the Corporation, Employee shall be eligible for an increase in Salary
based
on an evaluation of Employee’s performance during the past year with the
Corporation. During the term of this Agreement, the Salary of the Employee
shall
not be decreased at any time from the Salary then in effect unless agreed
to in
writing by the Employee.
3.2 Bonus.
The
Employee shall be entitled to participate in an equitable manner with other
officers of the Corporation in discretionary cash bonuses as authorized by
the
Board.
ARTICLE
IV
Employee
Benefits
4.1 Use
of
Automobile.
The
Corporation shall provide Employee with either the use of an automobile for
business and personal use or a cash car allowance in accordance with the
established company car policy of the Corporation. The Corporation shall
pay all
expenses of operating, maintaining and repairing the automobile and shall
procure and maintain automobile liability insurance in respect thereof, with
such coverage insuring each Employee for bodily injury and property
damage.
4.2 Medical,
Life and Disability Insurance Benefits.
The
Corporation shall provide Employee with medical, life and disability insurance
benefits in accordance with the established benefit policies of the
Corporation.
4.3 Working
Facilities.
Employee shall be provided adequate office space, secretarial assistance,
and
such other facilities and services suitable to Employee’s position and adequate
for the performance of Employee’s duties.
4.4 Business
Expenses.
Employee shall be authorized to incur reasonable expenses for promoting the
business of the Corporation, including expenses for entertainment, travel,
and
similar items. The Corporation shall reimburse Employee for all such expenses
upon the presentation by Employee, from time to time, of an itemized account
of
such expenditures.
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4.5 Vacations.
Employee shall be entitled to an annual paid vacation commensurate with the
Corporation's established vacation policy for officers. The timing of paid
vacations shall be scheduled in a reasonable manner by the
Employee.
4.6 Disability.
Upon
disability (as defined herein) of the Employee, the Employee shall be entitled
to receive an amount equal to 50% of Employee’s Salary (in addition to any
disability insurance benefits received pursuant to Section 4.2 herein), such
amount being paid semi-monthly in twelve equal installments.
4.7 Term
Life Insurance.
The
Corporation shall purchase term life insurance on the life of the Employee
having a face value of four times the Employee’s Salary (to be changed as salary
adjustments are made) or the face value of life insurance that can be purchased
based upon the Employee’s health history with the Corporation paying the
standard premium rate for term insurance under its then current insurance
program at the Employee’s age and assuming good health, whichever amount is
lesser; provided further that, such insurance can be obtained by the Corporation
in a manner which meets the requirements for deductibility by the Corporation
under Section 79 of the Internal Revenue Code of 1986, or as hereafter
amended.
4.8 Compensation
Defined.
Compensation shall be defined as all monetary compensation and all benefits
described in Articles III and IV hereunder (as adjusted during the term
hereof).
ARTICLE
V
Termination
5.1 Death.
Employee's employment hereunder shall be terminated upon the Employee's
death.
5.2 Disability.
The
Corporation may terminate Employee's employment hereunder in the event Employee
is disabled and such disability continues for more than 180 days. Disability
shall be defined as the inability of Employee to render the services required
of
him, with or without a reasonable accommodation, under this Agreement as
a
result of physical or mental incapacity.
5.3 Cause.
(a) The
Corporation may terminate Employee's employment hereunder for cause. For
the
purpose of this Agreement, “Cause” shall mean (i) the willful and intentional
failure by Employee to substantially perform Employee’s duties hereunder, other
than any failure resulting from Employee's incapacity due to physical or
mental
incapacity, or (ii) commission by Employee, in connection with Employee’s
employment by the Corporation, of an illegal act or any act (though not illegal)
which is not in the ordinary course of the Employee's responsibilities and
exposes the Corporation to a significant level of undue liability. For purposes
of this paragraph, no act or failure to act on Employee's part shall be
considered to have met either of the preceding tests unless done or omitted
to
be done by Employee without a reasonable belief that Employee’s action or
omission was in the best interest of the Corporation.
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(b) Notwithstanding
the foregoing, Employee shall not be deemed to have been terminated for cause
unless such action is ratified by the affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting held within
30
days of such termination (after reasonable notice to Employee and an opportunity
for Employee to be heard by members of the Board) confirming that Employee
was
guilty of the conduct set forth in this Section 5.3. Ratification by the
board
will be effective as of the original date of termination of
Employee.
5.4 Compensation
Upon Termination for Cause or Upon Resignation By Employee.
Except
as otherwise set forth in Section 5.7 hereof, if Employee's employment
shall be terminated for Cause or if Employee shall resign Employee’s position
with the Corporation, the Corporation shall pay Employee's Compensation only
through the last day of Employee's employment by the Corporation. The
Corporation shall then have no further obligation to Employee under this
Agreement. If the Board, pursuant to Section 5.3(b), votes to classify
Employee’s termination as “not for cause,” then Employee shall be compensated
pursuant to Section 5.5 below.
5.5 Compensation
Upon Termination Other Than For Cause Or Disability.
Except
as otherwise set forth in Section 5.7 hereof, if the Company shall terminate
Employee's employment other than for Cause or Disability, the Company shall
continue to be obligated to pay Employee’s Salary for a period of six months,
beginning on the date of termination, but shall not be obligated to provide
any
other benefits described in Articles III and IV hereof, except to the extent
required by law.
5.6 Compensation
Upon Non-Renewal of Agreement.
Except
as otherwise set forth in Section 5.7 hereof, if the Company shall give notice
to Employee in accordance with Section 1.2 hereof that this Agreement will
not
be renewed but Employee’s employment is not terminated, the Company shall
continue to be obligated to pay Employee’s Compensation for a period of six
months beginning on the date notice of non-renewal is given.
5.7 Termination
of Employee or Resignation by Employee for Good Reason.
If at
any time within the first twelve months subsequent to a Change in Control,
the
Employee’s employment with the Corporation is terminated other than as provided
for in Section 5.1, 5.2 or 5.3 hereof, or the Corporation violates any provision
of this Agreement or Employee shall resign Employee's employment for Good
Reason
(as defined herein), the Corporation shall be obligated to pay to Employee
a
lump sum payment upon the effective date of such termination or resignation
or
breach (as determined in Employee's sole discretion), in an amount equal
to two
times the Employee's compensation payable under paragraph 5.5 above, but
in no
event to exceed an amount equal to $1.00 less than three (3) times the mean
average annual compensation paid to Employee by the Corporation and any of
its
subsidiaries during the five calendar years ending before the date on which
the
Change in Control occurred (or if Employee was not employed for that entire
five
year period, then the mean average annual compensation paid to employee during
such shorter period, with the Employee's compensation annualized for any
calendar year during which the employee was not employed for the entire calendar
year); provided, however, that if the lump-sum severance payment under this
Section 5.7, either alone or together with any other payments or compensation
which Employee has a right to receive from the Corporation, would constitute
a
“parachute
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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
(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
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(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;
(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
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(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.
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
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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 retain in or have any
interest, directly or indirectly, in any business competing with the business
being conducted by the Corporation or any of its subsidiaries, without the
Corporation’s prior written consent. For the six month period immediately
following the termination of Employee’s employment, the Employee shall not
engage in or have any interest, directly or indirectly, in any fast food
restaurant business that has a menu similar to that of a Sonic drive-in
restaurant (such as hamburgers, hot dogs, onion rings and similar items
customarily sold by Sonic drive-in restaurants), or which has an appearance
similar to that of a Sonic drive-in restaurant (such as color pattern, use
of
canopies, use of speakers and menu housings for ordering food, or other items
that are customarily used by a Sonic drive-in restaurant), and which operates
such restaurants within a three mile radius of any Sonic drive-in restaurant.
ARTICLE
IX
Miscellaneous
9.1 Indemnification.
To the
full extent permitted by law, the Board shall authorize the payment of expenses
incurred by or shall satisfy judgments or fines rendered or levied against
Employee in any action brought by a third-party against Employee (whether
or not
the Corporation is joined as a party defendant) to impose any liability or
penalty on Employee for any act alleged to have been committed by Employee
while
employed by the Corporation unless Employee was acting with gross negligence
or
willful misconduct. Payments authorized hereunder shall include amounts paid
and
expenses incurred in settling any such action or threatened action.
9.2 Resolution
of Disputes.
The
following provisions shall apply to any controversy between the Employee
and the
Corporation and its subsidiaries and the Employee (including any director,
officer, employee, agent or affiliate of the Corporation and its subsidiaries)
whether or not relating to this Agreement.
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(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) Discovery.
The
arbitrator shall have the power to authorize all forms of discovery (including
depositions, interrogatories and document production) upon the showing of
(a) a
specific need for the discovery, (b) that the discovery likely will lead
to
material evidence needed to resolve the controversy, and (c) that the scope,
timing and cost of the discovery is not excessive.
(5) Authority
of Arbitrator.
The
arbitrator shall not have the power (a) to alter, modify, amend, add to,
or
subtract from any term or provision of this Agreement; (b) to rule upon or
grant
any extension, renewal or continuance of this Agreement; or (c) to grant
interim
injunctive relief prior to the award.
(6) Enforcement
of Award.
The
prevailing party shall have the right to enter the award of the arbitrator
in
any court having jurisdiction over one or more of the parties or their assets.
The parties specifically waive any right they may have to apply to any court
for
relief from the provisions of this Agreement or from any decision of the
arbitrator made prior to the award.
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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, trade names, copyrights, patents, confidential information and trade
secrets of the Corporation or its subsidiaries, including (without limitation)
the right of the Corporation or its subsidiaries to apply to any court of
competent jurisdiction for appropriate injunctive relief for the infringement
of
the rights of the Corporation or its subsidiaries.
(d) Other
Rights.
The
provisions of this Section 9.2 shall not prevent the Corporation, its
subsidiaries, or the Employee from exercising any of their rights under this
agreement, any other agreement, or under the common law, including (without
limitation) the right to terminate any agreement between the parties or to
end
or change the party’s legal relationship.
9.3 Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties with regard to
the
subject matter of this Agreement and replaces and supersedes all other written
and oral agreements and statements of the parties relating to the subject
matter
of this Agreement.
9.4 Notices.
Any
notices required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by mail to Employee’s residence, in the case
of Employee, or to its principal office, in the case of the
Corporation.
9.5 Waiver
of Breach.
The
waiver by any party hereto of a breach of any provision of this Agreement
shall
not operate or be construed as a waiver of any subsequent breach by any
party.
9.6 Amendment.
No
amendment or modification of this Agreement shall be deemed effective unless
or
until executed in writing by the parties hereto.
9.7 Validity.
This
Agreement, having been executed and delivered in the State of Oklahoma, its
validity, interpretation, performance and enforcement will be governed by
the
laws of that state.
9.8 Section
Headings.
Section
and other headings contained in this Agreement are for reference purposes
only
and shall not affect in any way the meaning or interpretation of this
Agreement.
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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.
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The
Corporation:
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By:
/s/
Xxxxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx, President
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Attest:
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/s/
Xxxxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxxxx, Secretary
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The
Employee:
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/s/
Xxxxx X. Xxxxxxx
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Xxxxx
X. Xxxxxxx
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