Agreement is entered into effective as of the 7th
April, 2005, by and between Sonic Corp. (the “Corporation”), a Delaware
corporation, and Renee G. Shaffer (the “Employee”).
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
the Corporation’s management; and
the Board has determined that it is appropriate to support and encourage
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
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
the Board on the 7th
April, 2005, ratified and approved this Agreement; and
the parties hereto desire to enter into this Agreement setting forth the
and conditions of the employment relationship of the Corporation and
therefore, it is agreed as follows:
Corporation shall employ Employee for a period of one year from the date
(the “Initial Term”).
of Initial Term.
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
than the annual anniversary date.
of Agreement and Employment.
Corporation may terminate this Agreement and the Employee’s employment at any
time effective upon written notice to the Employee. The Corporation, in its
discretion, may terminate this Agreement without terminating the employment
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.
of the 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
business of the Corporation consistent with such position subject to such
policies and procedures as may be established by the Board.
Employee's services to the Corporation as the Treasurer, Employee shall be
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
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
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
not be decreased at any time from the Salary then in effect unless agreed
writing by the Employee.
Employee shall be entitled to participate in an equitable manner with other
officers of the Corporation in discretionary cash bonuses as authorized by
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
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
Life and Disability Insurance Benefits.
Corporation shall provide Employee with medical, life and disability insurance
benefits in accordance with the established benefit policies of the
Employee shall be provided adequate office space, secretarial assistance,
such other facilities and services suitable to Employee’s position and adequate
for the performance of Employee’s duties.
Employee shall be authorized to incur reasonable expenses for promoting the
business of the Corporation, including expenses for entertainment, travel,
similar items. The Corporation shall reimburse Employee for all such expenses
upon the presentation by Employee, from time to time, of an itemized account
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
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.
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
Compensation shall be defined as all monetary compensation and all benefits
described in Articles III and IV hereunder (as adjusted during the term
Employee's employment hereunder shall be terminated upon the Employee's
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
him, with or without a reasonable accommodation, under this Agreement as
result of physical or mental incapacity.
Corporation may terminate Employee's employment hereunder for cause. For
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
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
be done by Employee without a reasonable belief that Employee’s action or
omission was in the best interest of the Corporation.
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
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
guilty of the conduct set forth in this Section 5.3. Ratification by the
will be effective as of the original date of termination of
Upon Termination for Cause or Upon Resignation By Employee.
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.
Upon Termination Other Than For Cause Or Disability.
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
other benefits described in Articles III and IV hereof, except to the extent
required by law.
Upon Non-Renewal of Agreement.
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
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.
of Employee or Resignation by Employee for Good Reason.
any time within the first twelve months subsequent to a Change in Control,
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
(as defined herein), the Corporation shall be obligated to pay to Employee
lump sum payment upon the effective date of such termination or resignation
breach (as determined in Employee's sole discretion), in an amount equal
times the Employee's compensation payable under paragraph 5.5 above, but
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
subsidiaries during the five calendar years ending before the date on which
Change in Control occurred (or if Employee was not employed for that entire
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
(as defined in Section 280G (or any equivalent term defined in any successor
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
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
12 consecutive months.
Reason” shall mean any of the following which occur during the term of this
Agreement without Employee's express written consent:
Event of a Change in Control:
assignment to Employee of duties inconsistent with Employee's position,
duties, responsibilities and status with the Corporation immediately
prior to a
Change in Control; or, a change in Employee's titles or offices as
immediately prior to a Change in Control; or, any removal of Employee
any failure to reelect Employee to any such position or office, except
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
for Good Reason as set forth in this Section 5.7(a); or
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
of this Agreement or the Corporation's failure to increase (within
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,
percentage increase in salary for all officers of the Corporation or
or affiliated company effected in the preceding twelve months; or
failure of the Corporation to provide Employee with the same fringe
(including, without limitation, life insurance plans, medical or disability
plans, retirement plans, incentive plans, stock option plans, stock
plans, stock ownership plans, or bonus plans) that were provided to
immediately prior to the Change in Control, or with a package of fringe
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
of the Corporation's principal executive offices to a location outside
Oklahoma City, Oklahoma, or Employee's relocation to any place other than
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
an extent substantially consistent with Employee's business travel obligations
at the time of the Change in Control; or
failure by the Corporation to provide Employee with the same number of
vacation days to which Employee is entitled at the time of the Change in
failure of a successor to the Corporation to assume the obligation of this
Agreement as set forth in Section 7.1 herein.
purposes of this Agreement, the phrase “change in control” shall mean any of the
consolidation or merger of the Corporation in which the Corporation is
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
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;
lease, exchange or other transfer (whether in one transaction or a series
related transactions) of all or substantially all of the assets of the
stockholders of the Corporation approve any plan or proposal for the liquidation
or dissolution of the Corporation;
person (as used in Section 13(d) and 14(d)(2) of the Securities and Exchange
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;
any period of two consecutive years, individuals who at the beginning of
period constitute the entire Board of Directors of the Corporation. cease
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
at least two-thirds of the directors then and still in office and who served
directors at the beginning of the period; or
Corporation becomes a subsidiary of any other corporation.
to Mitigate Damages; No Effect
Other Contractual Rights
Employee shall not have any obligation to mitigate damages or the amount
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
under paragraph 5.7, above.
provisions of this Agreement, and any payment provided for hereunder shall
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
any employee benefit plan or other contract, plan or arrangement of which
Employee is a beneficiary or in which Employee participates.
to the Corporation
Corporation will require any successor or assignee (whether direct or indirect,
by purchase, merger, consolidation or otherwise) of all or substantially
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
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
assignment shall be a material breach of this Agreement.
Successors and Assigns.
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
amounts are still payable to Employee hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
Agreement to Employee's devisee, legatee or other designee or, if there is
such designee, to Employee's estate.
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
Confidential Information, as defined below, of the Corporation or any of
extent authorized in writing by the Corporation or otherwise required by
The phrase “Confidential Information” shall mean the unique, proprietary and
confidential information of the Corporation and its subsidiaries, consisting
(1) confidential financial information regarding the Corporation or its
subsidiaries, (2) confidential recipes for food products; (3) confidential
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
franchising of Sonic drive-in restaurants; (6) the identities and locations
Sonic’s franchisees, Sonic drive-in restaurants, and suppliers to Sonic’s
franchisees and drive-in restaurants; (7) knowledge, financial information,
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
which Employee has actual notice of any access, possession or use of the
Confidential Information not authorized by this Agreement.
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
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.
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
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
employed by the Corporation unless Employee was acting with gross negligence
willful misconduct. Payments authorized hereunder shall include amounts paid
expenses incurred in settling any such action or threatened action.
following provisions shall apply to any controversy between the Employee
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.
parties shall resolve all controversies by final and binding arbitration
accordance with the Rules for Commercial Arbitration (the “Rules”) of the
American Arbitration Association in effect at the time of the execution of
Agreement and pursuant to the following additional provisions:
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
parties shall select one arbitrator within 10 days after the filing of a
and submission in accordance with the Rules. If the parties fail to agree
arbitrator within that 10-day period or fail to agree to an extension of
period, the arbitration shall take place before an arbitrator selected in
accordance with the Rules.
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
motion of a party, determined by the arbitrator as necessary to obtain
significant testimony or evidence.
arbitrator shall have the power to authorize all forms of discovery (including
depositions, interrogatories and document production) upon the showing of
specific need for the discovery, (b) that the discovery likely will lead
material evidence needed to resolve the controversy, and (c) that the scope,
timing and cost of the discovery is not excessive.
arbitrator shall not have the power (a) to alter, modify, amend, add to,
subtract from any term or provision of this Agreement; (b) to rule upon or
any extension, renewal or continuance of this Agreement; or (c) to grant
injunctive relief prior to the award.
prevailing party shall have the right to enter the award of the arbitrator
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
relief from the provisions of this Agreement or from any decision of the
arbitrator made prior to the award.
Fees and Costs.
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
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.
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
the rights of the Corporation or its subsidiaries.
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
or change the party’s legal relationship.
Agreement constitutes the entire agreement of the parties with regard to
subject matter of this Agreement and replaces and supersedes all other written
and oral agreements and statements of the parties relating to the subject
of this Agreement.
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
waiver by any party hereto of a breach of any provision of this Agreement
not operate or be construed as a waiver of any subsequent breach by any
amendment or modification of this Agreement shall be deemed effective unless
until executed in writing by the parties hereto.
Agreement, having been executed and delivered in the State of Oklahoma, its
validity, interpretation, performance and enforcement will be governed by
laws of that state.
and other headings contained in this Agreement are for reference purposes
and shall not affect in any way the meaning or interpretation of this
Agreement may be executed in two or more counterparts, each of which shall
deemed an original, but all of which together shall constitute but one and
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
the Board from time to time.
provision in this Agreement is held by a court of competent jurisdiction
invalid, void, or unenforceable, the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in any
witness whereof, the Corporation has caused this Agreement to be executed
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
Ronald L. Matlock
L. Matlock, Secretary
Renee G. Shaffer