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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made as of this 12th day of November, 1997, between SHONEY'S, INC., a Tennessee
corporation, whose principal place of business is located at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Employer"), and C. ▇▇▇▇▇▇▇ ▇▇▇▇, a resident of
Nashville, Tennessee (the "Employee").
WHEREAS, the Employer and Employee entered into an Employment Agreement
dated as of April 11, 1995, as amended by an Addendum thereto dated as of April
11, 1995 (the "Employment Agreement"); and
WHEREAS, the parties wish to amend the Employment Agreement and to
restate the Employment Agreement as so amended.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, the parties agree that the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
1. TERM OF EMPLOYMENT.
1.1 Employment; Duties. Employer hereby employs Employee as
Chairman of the Board of Employer with such duties and responsibilities as
Employer's Board of Directors shall designate. In addition, Employee will render
to Employer advice and consultation from time to time as reasonably requested by
the Board of Directors of Employer. It is understood and agreed that Employee
may during the term of his employment own, manage, operate or participate in a
firm that provides venture capital financing to various portfolio companies,
including those engaged in the food service business; provided, such activities
will be consistent with Employee's commitments hereunder, Employee shall not
serve as an employee or a director of any portfolio company involved in the food
service business and such portfolio companies shall not be involved in the
family dining or fresh seafood segments of the restaurant industry. Employee
hereby accepts such employment and agrees to render such services upon the terms
and conditions hereinafter set forth. Employee hereby resigns from the offices
of President and Chief Executive Officer of Employer and resigns each of the
other offices held with the Employer or its subsidiaries.
1.2 Employment Term. ▇▇. ▇▇▇▇ shall serve as Chairman of the
Board of Employer from the date hereof through December 31, 1998 (the
"Employment Term"), unless sooner terminated as herein provided.
Employer ______ (Initial Here)
Employee ______
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2. COMPENSATION AND BENEFITS OF EMPLOYEE.
2.1 Salary. As compensation for his services hereunder,
Employee shall receive a salary of $550,000 per annum during the Employment
Term, which shall be payable in accordance with the general payroll practices of
Employer.
2.2 Additional Payments. Following the conclusion of the
Employment Term and through April 30, 1999 (the "Severance Term"), Employee
shall receive $183,333.33, which shall be payable during such period in
accordance with the general payroll practices of Employer.
2.3 Restricted Stock.
2.3.1 Shares. Subject to all of the conditions (including,
without limitation, the time of vesting and right to receive) and restrictions
set forth in this Section 2.3.1, Employer has granted to Employee an award of
50,000 shares (the "Restricted Shares") of the Employer's $1.00 par value common
stock (the "Shares"). The Restricted Shares shall become vested in, and shall be
distributed to, the Employee in three (3) installments on each of the dates set
forth below (each of which shall be referred to as a "Distribution Date," with
the three (3) dates being collectively referred to as the "Distribution Dates")
in the following respective amounts:
Number of
Distribution Date Shares
----------------- ---------
April 11, 1996 16,500
April 11, 1997 16,500
April 11, 1998 17,000
------
Total 50,000
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Immediately following each Distribution Date, the Employer shall promptly cause
its transfer agent to issue a certificate to the Employee evidencing the
Restricted Shares that became distributable to the Employee on the Distribution
Date. The Employer's obligation to cause the issuance of any stock certificate
to Employee shall be subject to any applicable federal, state, or local tax
withholding requirements. If, prior to a Distribution Date, the Employee's
employment is terminated pursuant to Section 3.1.2 or Section 3.2, all rights of
the Employee in any Restricted Shares awarded under this Section 2.3.1 that, as
of the date of such termination, have not become distributable to the Employee
shall thereupon immediately terminate and become forfeited. Employee shall not
have any rights as a shareholder with respect to any Restricted Shares until the
issuance of a stock certificate evidencing the Restricted Shares. The number of
Restricted Shares awarded the Employee under this Section 2.3.1 shall be
proportionately adjusted to reflect any stock dividend, stock split or share
combination of the Shares or any recapitalization of the Employer occurring
prior to a Distribution Date. Except as provided in the preceding sentence,
Employer ______ (Initial Here)
Employee ______
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no adjustment shall be made on the issuance of a stock certificate to the
Employee as to any dividends or other rights for which the record date occurred
prior to a Distribution Date. The right of the Employee to receive the
Restricted Shares shall not be assignable or transferable otherwise than by will
or the laws of descent and distribution. If in the opinion of its counsel, the
issuance of any Shares hereunder shall not be lawful for any reason, including
the inability of the Employer to obtain from any regulatory body having
jurisdiction or authority deemed by such counsel to be necessary for such
issuance, the Employer shall not be obligated to issue any such Restricted
Shares, but, in such event, shall be obligated to provide Employee with cash or
non-cash consideration having equivalent after tax value which is acceptable to
the Employee in the exercise of Employee's reasonable discretion. Upon receipt
of Restricted Shares at a time when there is not in effect under the Securities
Act of 1933, as amended, a current registration statement relating to the
Restricted Shares, the Employee shall represent and warrant in writing to the
Employer that the Restricted Shares are being acquired for investment and not
with a view to the distribution thereof and shall agree to the placement of a
legend on the certificate or certificates representing the Restricted Shares
evidencing the restrictions on transfer under said Act and the issuance of
stop-transfer instructions by the Employer to its transfer agent with respect
thereto. No Restricted Shares shall be issued hereunder unless and until the
then applicable requirements of the Securities Act of 1933, the Tennessee
Business Corporation Act, the Tennessee Securities Act of 1980, as any of the
same may be amended, the rules and regulations of the Securities and Exchange
Commission and any other regulatory agencies and laws having jurisdiction over
or applicability to the Employer, and the rules and regulations of any
securities exchange on which the Shares may be listed, shall have been fully
complied with and satisfied. Employer shall use its best efforts to cause all
such requirements to be promptly and completely satisfied.
2.3.2 Cash Component. Upon the issuance of a
certificate for any Restricted Shares pursuant to Section 2.3.1, Employee shall
be paid a cash bonus by the Employer. The bonus payable pursuant to the
preceding sentence shall be determined by subtracting the Restricted Share Value
from the Restricted Share Gross Up. "Restricted Share Value" shall mean the fair
market value of any Restricted Shares on the date that they become distributable
to the Employee. "Restricted Share Gross Up" shall mean an amount equal to the
result derived by dividing: (a) the Restricted Share Value by (b) the Tax
Factor. "Tax Factor" shall mean the greater of: (i) sixty-four percent (64%); or
(ii) the difference between one hundred percent (100%) and the highest marginal
individual income tax rate set forth in the Internal Revenue Code of 1986, as
amended, in the year in which the Employee receives the portion of the
Restricted Shares with respect to which this bonus is being calculated.
2.4 Other Benefit Programs. Employee shall be entitled to
continue to receive during the Employment Term and the Severance Term
substantially equivalent medical, disability and other employee benefit
programs, excluding bonus, as Employee receives on the date of this Agreement.
Employer ______ (Initial Here)
Employee ______
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2.5 Office Space; Secretarial Services. Promptly following the
date of this Agreement, Employee shall vacate his office at the Employer's
headquarters. The Employer will reimburse Employee during the Employment Term
and the Severance Term for accountable, out of pocket expenses incurred by
Employee for office space, furniture and equipment, not to exceed an amount
mutually agreeable to Employer and Employee, and for secretarial services
substantially comparable to those currently provided, not to exceed the
Employer's current cost for such services
2.6 Legal Fees. Employer shall reimburse Employee for his
reasonable legal expenses incurred in connection with the negotiation of this
Agreement.
3. TERMINATION OF EMPLOYMENT; SEVERANCE.
3.1 By Employer.
3.1.1 Termination Without Cause. Employer's Board of
Directors may terminate Employee's employment, with or without cause, at any
time by giving written notice of such termination to Employee, such termination
of employment to be effective on a date specified in such notice; provided,
however, that only in the event of such a termination without cause, Employee
shall be entitled to receive the sum of the amount due Employee for salary
during the balance of the Employment Term and any payments required to be made
during the Severance Term. Payments shall be made over the balance of the
Employment Term and Severance Term at the same time as current wages are
normally payable. Employee's participation in all medical insurance benefit
programs shall continue until the earlier of: (a) such time as Employee is
employed by another employer and is covered or permitted to be covered by
benefit plans of another employer; or (b) the expiration of the Severance Term.
3.1.2 Termination for Cause. If Employee is
terminated for cause, Employer shall have no further obligation whatsoever to
Employee hereunder (with the exception of the obligation to pay Employee's
salary through the date of termination of employment) and Employee's
participation in all benefit programs shall cease as of the date of termination.
For purposes of this Agreement, "cause" shall mean any one of the following:
(i) Employee's personal dishonesty;
(ii) Employee's willful misconduct;
(iii) breach of fiduciary duty to Employer
(or any of Employer's subsidiaries)
involving personal profit by Employee;
Employer ______ (Initial Here)
Employee ______
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(iv) conviction of Employee for any felony
or crime involving moral turpitude;
(v) material intentional breach by
Employee of any provision of this
Agreement; or
(vi) unsatisfactory performance by Employee
of the duties designated for Employee
by Employer's Board of Directors, if
such unsatisfactory performance is a
result of alcohol or drug abuse by
Employee.
3.2 Termination by Employee. Employee may terminate his
employment with Employer at any time without further obligation whatsoever by
either party hereunder (with the exception of Employer's obligation to pay
Employee's salary through the date of termination of employment and except for
the obligations and covenants of Employee pursuant to Sections 4.1. 4.2 and 4.3
and Section 6, which shall survive termination as specified therein) by giving
not less than sixty (60) nor more than ninety (90) days' prior written notice of
such termination to Employer.
3.3 Stock Options. Schedule A to this Agreement sets forth
certain information concerning the stock options held by Employee as of the date
of this Agreement. In the event of any termination of this Agreement and the
Employment Term pursuant to Section 3.1.2 or Section 3.2, all stock options held
by Employee that are vested prior to the effective date of the termination shall
be exercisable in accordance with their terms, and all stock options held by
Employee that are not vested prior to the effective date of the termination
shall lapse and be void. All stock options granted to the Employee shall provide
(through amendment or otherwise) that, in the event (a) there shall not have
occurred any termination of Employee's employment pursuant to Section 3.1.2 or
Section 3.2 or (b) there shall occur any termination of Employee's employment
pursuant to Section 3.1.1, then, in each case, in addition to any other rights
of Employee hereunder, all such options shall become fully vested as of the end
of the Severance Term and shall be immediately exercisable in accordance with
their respective terms for a period of ninety (90) days immediately following
the end of the Severance Term.
4. COVENANT NOT TO COMPETE; NON-DISCLOSURE; NON-SOLICITATION.
4.1 Covenant Not to Compete. Employee acknowledges that
Employer's business is built upon the confidence of its customers, suppliers,
employees, and the general public, and that Employee will acquire confidential
knowledge that should not be divulged or used for his own benefit. Employee
agrees during the term hereof and, in the event of any termination of Employee's
employment pursuant to Section 3.1.2 or Section 3.2, Employee covenants and
Employer ______ (Initial Here)
Employee ______
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agrees that, for a period of one year following the termination of his
employment under this Agreement, he will not, without the prior written consent
of the Employer, engage in, own, manage, operate, control, or participate in any
food service business that conducts or franchises activities which are the same
as or substantially similar to the restaurant concepts and operations of
Employer (determined as of the date on which Employee's employment hereunder
terminates) as an employer, employee, principal, partner, director, agent, or
otherwise, directly or indirectly, anywhere in the United States of America.
Notwithstanding the foregoing, the Employer agrees that Employee's participation
in the activities contemplated by Section 1.1 shall not violate this covenant
not to compete. Employee understands and acknowledges that his violation of this
covenant not to compete would cause irreparable harm to Employer and Employer
would be entitled to an injunction by any court of competent jurisdiction
enjoining and restraining Employee from any employment, service, or other act
prohibited by this Agreement. Employee and Employer recognize and acknowledge
that the scope, area and time limitations contained in this Agreement are
reasonable. In addition, Employee and Employer recognize and acknowledge that
the scope, area and time limitations are properly required for the protection of
the business interests of Employer due to Employee's status and reputation in
the industry and the knowledge acquired by Employee through his association with
Employer's business and the public's close identification of Employee with
Employer and Employer with Employee. The parties agree that nothing in this
Agreement shall be construed as prohibiting Employer from pursuing any other
remedies available to it for any breach or threatened breach of this covenant
not to compete, including, without limitation, the recovery of damages from
Employee or any other person or entity acting in concert with Employee. Employee
also agrees that, in the event he breaches this covenant not to compete,
Employee will pay reasonable attorneys fees and expenses incurred by Employer in
enforcing this covenant not to compete and that the one (1) year period of time
during which Employee shall be restricted from certain activities hereunder
shall be extended for a period of time equal to any period(s) of time during
which Employee engages in any conduct that violates this Section 4.1, the
purpose of this provision being to secure for the benefit of the Employer the
entire period of time being bargained for by the Employer for the restriction
upon the Employee's activities. Employee acknowledges and understands that, as
consideration for his execution of this Agreement and his agreement with the
terms of this covenant not to compete, Employee will receive employment by
Employer in accordance with this Agreement. Employer acknowledges that
Employee's execution of this Agreement and agreement with the terms of this
covenant not to compete is consideration for Employer's agreement to employ
Employee pursuant to this Agreement. If any part of this covenant not to compete
is found to be unreasonable, then it may be amended by appropriate order of a
court of competent jurisdiction to the extent deemed reasonable.
4.2 Non-disclosure of Information. Employee recognizes and
acknowledges that, as a result of his employment by Employer, he is familiar
with and has knowledge of confidential information and certain trade secrets
that are valuable, special, and unique assets of Employer. Employee agrees that
any such confidential information and trade secrets are the property of
Employer ______ (Initial Here)
Employee ______
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Employer. Therefore, Employee agrees that, for and during the entire Employment
Term and Severance Term, any such confidential information and trade secrets
shall be considered to be proprietary to Employer and kept as the private
records of Employer and will not be divulged to any firm, individual, or
institution except pursuant to and within the course and scope of Employee's
employment hereunder. Further, upon termination of Employee's employment, the
Employment Term and/or this Agreement for any reason whatsoever, Employee agrees
that he will continue to treat as private and proprietary to Employer any such
confidential information and trade secrets and will not release any such
confidential information and trade secrets to any person, firm, or institution,
or use them to the detriment of Employer. The parties agree that nothing in this
Agreement shall be construed as prohibiting Employer from pursuing any remedies
available to it for any breach or threatened breach of this Section 4.2,
including, without limitation, the recovery of damages from Employee or any
person or entity acting in concert with Employee.
4.3 Non-solicitation. Employee recognizes and acknowledges
that, as a result of his employment by Employer, he is familiar with and has
knowledge of confidential information and certain other information regarding
the employees of the Employer. Therefore, Employee agrees that, during the term
hereof and for a period of two (2) years from the date of termination of
Employee's employment, the Employment Term and/or this Agreement, whichever is
later, Employee shall not encourage, solicit or otherwise attempt to persuade
any person in the employment of the Employer to end his/her employment with the
Employer or to violate any confidentiality, non-competition or employment
agreement that such person may have with the Employer or any policy of the
Employer. Furthermore, neither Employee nor any person acting in concert with
the Employee nor any of Employee's affiliates shall, during the term hereof and
for a period of one (1) year from the date of termination of Employee's
employment, the Employment Term and/or this Agreement, whichever is later,
employ any person who has been an employee of Employer unless that person has
ceased to be an employee of Employer for at least six (6) months. The parties
agree that nothing in this Agreement shall be construed as prohibiting Employer
from pursuing any remedies available to it for any breach or threatened breach
of this Section 4.3, including, without limitation, the recovery of damages from
Employee or any person or entity acting in concert with Employee. Employer shall
receive injunctive relief without the necessity of posting bond or other
security, such bond or other security being hereby waived by Employee.
5. DEATH OR DISABILITY OF EMPLOYEE.
5.1 Death of Employee. In the event Employee dies during the
Employment Term, this Agreement shall terminate upon Employee's death.
Employee's estate shall be entitled only to any salary earned but not paid
through the date of death.
5.2 Disability of Employee. Employer has disability
insurance insuring certain of its employees, and Employee is included under such
disability insurance. In the event Employee
Employer ______ (Initial Here)
Employee ______
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has a disability that materially impairs Employee's ability to perform the
essential functions of his duties hereunder for a period of ninety (90)
consecutive days, this Agreement shall terminate. Upon a termination resulting
from any such disability, Employee shall be entitled to receive any salary
earned but not paid through the date that Employee becomes eligible for
disability payments under such disability insurance.
6. RELEASE. Employee, in consideration for the agreements of Employer
set forth herein, on behalf of himself, his heirs, executors and assigns, does
hereby release Employer, its subsidiaries, affiliates and successors, and all of
its officers, directors, employees and agents, and agrees to hold them, and each
of them, harmless from any and all claims or causes of action that Employee may
now have or know about, or hereafter may learn about, arising from or during his
employment or resulting from the change in Employee's employment with Employer
effected by this Agreement. Employee agrees that he will not file any claim,
charge, or lawsuit for the purpose of obtaining any monetary awards above and
beyond the amount provided for in this Agreement or for any equitable relief.
Employee acknowledges that the foregoing release includes,
but is not limited to, all claims through the date hereof arising under any
federal, state or local law, or ordinance, or any administrative regulations
prohibiting employment discrimination and all claims based on any legal
restrictions on Employer's right to terminate its employees at will including,
but not limited to, any claim based on any actual or implied contract of
employment or alleged breach of any covenant of good faith and fair dealing. The
foregoing release specifically encompasses all claims of employment
discrimination based on race, color, religion, sex, and national origin, as
provided under Title VII of the Civil Rights Act of 1964, as amended, or any
executive order, all claims of discrimination based on age under the Age
Discrimination in Employment Act of 1967, as amended, all claims of
discrimination based on handicap or disability under the Americans with
Disabilities Act, and all claims of employment discrimination under any state or
local statute, law or ordinance.
Employee agrees that if he breaches this Agreement or if he
files any claim or lawsuit against Employer seeking equitable relief, except any
lawsuit to enforce the terms of this Agreement, all payments and benefits
provided herein shall cease except as provided by law or applicable benefit
plan, and Employee or his estate shall be required to reimburse Employer for all
payments and benefits Employee received under this Agreement prior to such time.
7. GENERAL PROVISIONS.
7.1 No Mitigation. Except as expressly provided to the
contrary herein, Employee shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any
Employer ______ (Initial Here)
Employee ______
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payment provided for under this Agreement be reduced by any compensation earned
by Employee as a result of employment by another employer after Employee's
termination or resignation.
7.2 Notices. Any notices to be given hereunder by either
party to the other may be effected by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this Agreement (to the attention of the Secretary in
the case of notices to Employer), but each party may change such address by
written notice in accordance with this Section 7.1. Notices delivered personally
shall be deemed communicated at the time of actual receipt; mailed notices shall
be deemed communicated as of the third day following deposit in the United
States Mail.
7.3 Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the employment of Employee by Employer and contains all of the
covenants and agreements between the parties with respect to such employment in
any manner whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
embodied herein and that no other agreement shall be valid or binding unless in
writing and signed by the party against whom enforcement of such agreement is
sought. Any modification of this Agreement will be effective only if it is in
writing signed by the party against whom enforcement of such modification is
sought.
7.4 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.
7.5 Law Governing Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of Tennessee.
7.6 Waiver of Jury Trial. Employer and Employee hereby
expressly waive any right to a trial by jury in any action or proceeding to
enforce or defend any rights under this Agreement, and agree that any such
action or proceeding shall be tried before a court and not a jury. Employee and
Employer hereby agree that any action or proceeding to enforce any claim arising
out of this Agreement shall be brought and maintained in any state or federal
court having subject matter jurisdiction and located in Nashville, Tennessee.
Employee irrevocably waives, to the fullest extent permitted by law, any
objection that he may have or hereafter have to the laying of the venue of any
such action or proceeding brought in any court located in Nashville, Tennessee,
and any claim that any such action or proceeding brought in such a court has
been brought in an inconvenient forum.
Employer ______ (Initial Here)
Employee ______
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7.7 Miscellaneous. Failure or delay of either party to
insist upon compliance with any provision hereof will not operate as and is not
to be construed to be a waiver or amendment of the provision or the right of the
aggrieved party to insist upon compliance with such provision or to take
remedial steps to recover damages or other relief for noncompliance. Any express
waiver of any provision of this Agreement will not operate and is not to be
construed as a waiver of any subsequent breach, irrespective of whether
occurring under similar or dissimilar circumstances. Employee acknowledges and
represents that the services to be rendered by him are unique and personal.
Accordingly, Employee may not assign any of his rights or delegate any of his
duties or obligations under this Agreement. The rights and obligations of
Employer under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of Employer.
Employer ______ (Initial Here)
Employee ______
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IN WITNESS WHEREOF, Employee has hereunto affixed his hand and Employer
has caused this Agreement to be executed by its duly authorized officer as of
the day and year first above written.
EMPLOYEE: EMPLOYER:
/s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇ SHONEY'S, INC.
---------------------------------
C. ▇▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Chair of Human Resources and
-------------------------------
Compensation Committee
-----------------------------
Board of Directors
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Schedule A
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DATE OF OPTIONS OPTION DATE OF VESTING
GRANT GRANTED PRICE EXPIRATION SCHEDULE
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04/11/95 250,000 $10.75 04/11/05 100,000 (Vested)
50,000 on 04/11/98
50,000 on 04/11/99
50,000 on 04/11/00
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11/01/95 250,000 $15.25 11/01/05 100,000 (Vested)
50,000 on 11/01/98
50,000 on 11/01/99
50,000 on 11/01/00
-----------------------------------------------------------------------------------------------
08/21/96 1,000,000 $9.625 08/21/03 1,000,000 on 08/21/02
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11/01/96 125,000 $7.375 11/01/06 25,000 (Vested)
25,000 on 11/01/98
25,000 on 11/01/99
25,000 on 11/01/00
25,000 on 11/01/01
-----------------------------------------------------------------------------------------------
11/02/96 75,000 $16.75 11/02/06 15,000 (Vested)
15,000 on 11/02/98
15,000 on 11/02/99
15,000 on 11/02/00
15,000 on 11/02/01
-----------------------------------------------------------------------------------------------
11/03/96 50,000 $18.50 11/03/06 10,000 (Vested)
10,000 on 11/03/98
10,000 on 11/03/99
10,000 on 11/03/00
10,000 on 11/03/01
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1,750,000
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