EMPLOYMENT
AGREEMENT
This Agreement is entered into
effective as of the 15 th day of December 2008, by and between Sonic Corp.
(the “Corporation”), a Delaware corporation, and Paige
S. Bass (the “Employee”).
Whereas, the Employee is currently
serving as the Vice President and General Counsel of the
Corporation and is an integral part of its management;
and
Whereas, the Employee and the
Corporation acknowledge that they previously entered into an
Employment Agreement dated January 31, 2007, which is hereby
canceled and superseded in its entirety by this Agreement;
and
Whereas, the Corporation’s
Board of Directors (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
continue 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 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. As used herein, “Term” shall mean the
Initial Term together with any renewal term(s) pursuant to this
Section 1.2.
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 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 General Counsel 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 General Counsel, Employee
shall be paid a salary at the annual rate of $220,000 (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. Such bonuses shall be paid not later than the
15th day of the third month following the later of the end of the
Corporation’s tax year or the Employee’s tax year in
which the bonuses are no longer subject to a substantial risk of
forfeiture (within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the
“Code”).
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. Reimbursement of automobile-related expenses
shall be made as soon as practicable after the request for
reimbursement is submitted, but in no event later than the last day
of the calendar year next following the calendar year in which such
expense was incurred. Additionally, neither the
provision of in-kind benefits nor the reimbursement of expenses in
any one calendar year shall affect the level or amount of in-kind
benefits to be provided, or the expenses eligible for
reimbursement, in any other calendar year. The
Employee’s right to reimbursement or in-kind benefits under
this Section 4.1 is not subject to liquidation or exchange for
another benefit.
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 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. Reimbursement shall be made as soon as
practicable after the request for reimbursement is submitted, but
in no event later than the last day of the calendar year next
following the calendar year in which such expense was
incurred. Additionally, the reimbursement of expenses in
any one calendar year shall not affect the expenses eligible for
reimbursement in any other calendar year. The
Employee’s right to reimbursement under this Section 4.4 is
not subject to liquidation or exchange for another
benefit.
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 Benefit . Upon disability (as
defined herein) of the Employee, the Employee shall be entitled to
receive up to six months’ of Employee’s Salary (less
any deductions required by law) payable in twelve equal
installments of 1/24 of the Salary, with the first installment
occurring on the first regularly scheduled payroll date following
the determination of disability and the remaining installments
occurring on a semi-monthly basis thereafter, provided that such
disability payments shall continue only so long as the disability
continues, and provided further that each such disability payment
shall be reduced by any benefit payment the Employee is entitled to
receive under the Corporation’s group disability insurance
plans during the corresponding payroll period.
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 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 Code.
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
Separation from Service. For purposes of this
Agreement, the terms “terminate,”
“terminated” and “termination” with respect
to the Employee’s employment mean a termination of the
Employee’s employment that constitutes a “separation
from service” within the meaning of the default rules of
Section 409A of the Code.
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5.2
Death . Employee’s employment hereunder
shall be terminated upon the Employee’s death.
5.3
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
under this Agreement, with or without a reasonable accommodation,
as a result of physical or mental incapacity.
5.4
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
5.4. Ratification by the Board will be effective as of
the original date of termination of Employee.
5.5
Compensation Upon Termination for Cause or Upon
Resignation By Employee . Except as otherwise set
forth in Section 5.8 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
5.4(b), votes to classify Employee’s termination as
“not for cause,” then Employee shall be compensated
pursuant to Section 5.6 below.
5.6
Compensation Upon Termination Other Than For Cause Or
Disability . Except as otherwise set forth in
Section 5.8 hereof, if the Corporation shall terminate
Employee’s employment other than for Cause or Disability, the
Corporation shall continue to be obligated to pay six months’
of Employee’s Salary (payable in 12 equal installments, with
the first installment occurring on the first regularly scheduled
payroll date following the date of termination, and the remaining
installments occurring on a semi-monthly basis thereafter), but
shall not be obligated to provide any other benefits described in
Articles III and IV hereof, except to the extent required by
law.
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5.7
Compensation Upon Non-Renewal of Agreement.
Except as otherwise set forth in Section 5.8 hereof, if
the Corporation 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 Corporation
shall continue to be obligated to pay Employee’s Salary for a
period of six months beginning on the date notice of non-renewal is
given, on regularly scheduled payroll dates, but shall not be
obligated to provide any other benefits described in Articles III
and IV hereof, except to the extent required by law.
5.8
Termination of Employee or Resignation by Employee for Good
Reason Following a Change in Control . 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 5.2, 5.3 or 5.4
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 severance payment in an amount equal to two
times the Employee’s compensation payable under paragraph 5.6
above, but in no event to exceed an amount equal to $1.00 less than
three 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,
