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Exhibit 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 1st day
of November, 1996, between SHONEY'S, INC., a Tennessee corporation, whose
principal place of business is located at 0000 Xxx Xxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxx, 00000 (the "Employer"), and W. XXXXX XXXXXX, a resident of
Xxxxxxxxxx County, Tennessee, whose address is 000 Xxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxx, 00000 (the "Employee").
1. TERM OF EMPLOYMENT.
1.1 EMPLOYMENT. Employer hereby employs Employee, and
Employee hereby accepts employment with Employer for the Employment Term (as
hereinafter defined). Notwithstanding anything to the contrary in this
Agreement and subject to the other provisions of this Agreement, Employee's
employment is at the will of Employer.
1.2 EMPLOYMENT TERM. The term of this Agreement and the
Employment Term shall be three years, commencing on October 28, 1996, and
terminating on October 27, 1999, unless sooner terminated as herein provided or
extended pursuant to Section 1.3.1 hereof. Unless either party to this
Agreement notifies the other in writing not less than 180 days prior to the
termination date provided for herein of an intent to terminate this Agreement,
the terms of this Agreement shall automatically be extended for an additional
term of three (3) years and shall be so extended in future years subject to the
same notification requirements set forth above.
1.3 CHANGE IN CONTROL.
1.3.1 EXTENSION BECAUSE OF CHANGE IN CONTROL. In
the event of a Change in Control (as hereinafter defined), the Employment Term
shall automatically be extended for two (2) calendar years on the date of the
Change in Control. For purposes of this Agreement, a "Change in Control" of
Employer shall mean a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if (a) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Employer representing 50% or more of the
combined voting power of Employer's then-outstanding voting securities; (b) all
or substantially all of the assets of the Employer are sold, exchanged or
otherwise transferred (other than to secure debt owed by Employer); (c) the
Employer's shareholders approve a plan of liquidation or dissolution; or (d)
during the Employment Term, individuals who at the beginning of the Employment
Term constitute members of the Board of Directors of Employer cease for any
reason to constitute a
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majority thereof unless the election, or the nomination for election by
Employer's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the Employment Term.
1.3.2 POTENTIAL CHANGE IN CONTROL. In the
event of a Potential Change in Control (as hereinafter defined), Employee
agrees to remain employed by Employer from the time period beginning with the
Potential Change in Control and continuing through the earlier of two (2)
months after a Change in Control occurs (as defined in Section 1.3.1) or the
one-year anniversary of the commencement of the Potential Change in Control
period. If Employee chooses to terminate his employment after a Change in
Control occurs, the provisions set forth at Section 4.2.1 of this Agreement
control such action. For purposes of this Agreement, a "Potential Change in
Control" shall occur upon the execution of any agreement or memorandum of
understanding, the completion of which would result in a "Change in Control" as
defined in Section 1.3.1 of this Agreement or the commencement of a proxy
contest that has the potential of causing a "Change in Control" as defined in
Section 1.3.1 of this Agreement.
2. DUTIES OF EMPLOYEE.
2.1 GENERAL DUTIES. Employee is hereby employed as
Senior Executive Vice President, Chief Financial Officer and Chief
Administrative Officer of Employer with such duties and responsibilities as
Employer's Board of Directors shall designate. He shall do and perform all
services, acts, or things necessary or advisable to manage and conduct the
business of Employer, subject always to the policies set forth by Employer's
Board of Directors, in accordance with any and all governing rules and
regulations of regulatory agencies.
2.2 DEVOTION OF ENTIRE TIME TO EMPLOYER'S BUSINESS.
Employee will devote his entire productive time, ability, and attention during
normal business hours to the business of Employer during the Employment Term.
Employee shall not, directly or indirectly, render any services of a business,
commercial, or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior written consent of Employer's
Board of Directors; provided, however, that the foregoing shall not preclude
reasonable participation as a member in community, civic, or similar
organizations, or the pursuit of personal investments that neither interfere
nor conflict with his normal business activities for Employer.
2.3 DISCLOSURE OF INFORMATION. Employee recognizes and
acknowledges that, as a result of this employment by Employer, he will become
familiar with and acquire 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. Therefore, Employee agrees that, for and during the
entire Employment 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,
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individual, or institution except pursuant to and within the course and scope
of Employee's employment hereunder. Further, upon termination of 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 to any person, firm or institution, and will not use such
information 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
2.3, including, without limitation, the recovery of damages from Employee or
any person or entity acting in concert with Employee.
3. COMPENSATION OF EMPLOYEE.
3.1 SALARY. As compensation for his services hereunder,
Employee shall receive a base salary (the "Base Salary") per annum of $288,900,
which shall be payable in accordance with the general payroll practices of
Employer. Increases in the Base Salary may be made in the sole discretion of
Employer's Board of Directors, except that employee shall be entitled to an
annual minimum increase each year consistent with the performance merit matrix
as established by the Board of Directors.
3.2 BONUSES. Employee shall be eligible for an annual
bonus as established by the Board of Directors through the annual bonus plan.
3.3 OTHER BENEFIT PROGRAMS. Employee shall be entitled
to participate in all employee benefit, bonus and similar programs, including,
without limitation, programs of insurance, automobile plans, deferred
compensation arrangements, and all other benefits made available by Employer to
Executive Vice Presidents/Division Presidents and above. During the Employment
Term, so long as any additional benefit is made available to Executive Vice
Presidents/Division Presidents and above by Employer, such benefit shall be
provided to Employee. By way of explanation, and not by way of limitation,
Employee shall be entitled to the use of an automobile of make, model, and year
of manufacture commensurate with the position of Employee.
3.4 VACATION. Employee shall be entitled annually to four
(4) weeks of paid vacation.
4. TERMINATION OF EMPLOYMENT; SEVERANCE.
4.1 BY EMPLOYER.
4.1.1 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
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specified in such notice; provided, however, that only in the event of such a
termination without cause Employee shall be entitled to receive the greater of
(a) the Base Salary and bonus paid or accrued on Employee's behalf for the
fiscal year of Employer immediately prior to the fiscal year in which the
termination took place; or (b) the amount due Employee for Base Salary and
target bonus during the balance of the then-current Employment Term. Payments
shall be made, at the option of Employer, in cash or, in the case of the
preceding item (a), in equal weekly payments using Employer's regular payroll
periods or, in the case of the preceding item (b), over the balance of the
Employment Term at the same time as current wages and bonuses are normally
payable. Employee's participation in all benefit programs other than life,
medical and disability insurance shall cease as of the date of termination.
Employee's participation in the life, medical and disability insurance 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 without regard to the extent of such coverage; (b) the
Employer no longer provides such benefit plans to individuals holding the
position of Executive Vice President/Division President and above; or (c) the
expiration of the Employment Term in effect at the time of termination. This
provision supersedes any other severance program or policy that may be offered
by Employer and is in lieu of such plan rather than in addition to other
severance plans that may be in place, except with regard to any rights Employee
may have pursuant to COBRA.
4.1.2. TERMINATION FOR CAUSE. If Employee is
terminated for cause, Employer shall have no further obligation whatsoever to
Employee hereunder, 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 involving personal profit by
Employee;
(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 as a result of alcohol or drug use by
Employee.
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4.2 TERMINATION BY EMPLOYEE.
4.2.1 TERMINATION AFTER CHANGE IN CONTROL. In the
event a Change in Control occurs, Employee, at any time within ninety (90) days
after such Change in Control, may terminate his employment with Employer by
giving not less than sixty (60) nor more than ninety (90) days' prior written
notice of such termination to Employer. In the event that Employee terminates
his employment pursuant to this Section 4.2.1, he shall be entitled to receive
the greater of: (A) an amount equal to two (2) times the base salary and bonus
paid or accrued on Employee's behalf for the fiscal year of Employer
immediately prior to the fiscal year in which the termination took place; or
(B) the amount due Employee for base salary during the balance of the
then-current Employment Term. Payments shall be made in the case of the
preceding item (A) in equal weekly payments using employer's regular payroll
periods or, in the case of the preceding item (B), over the balance of the
employment term at the same time as current wages and bonuses normally are
payable. Employee's participation in all benefit programs other than life,
medical and disability insurance shall cease as of the date of termination from
active employment with Employer. Employee's participation in the life, medical
and disability insurance 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 without regard to the extent of
such coverage; (b) the Employer no longer provides such benefit plans to
individuals holding the position of Executive Vice President/Division President
and above; or (c) the expiration of the Employment Term then in effect.
Nothing contained herein is intended to in any way limit Employee's rights
under COBRA.
4.2.2 TERMINATION OTHER THAN AFTER CHANGE IN CONTROL.
Except as limited by Section 1.3.2 of this Agreement, Employee may terminate
his employment with Employer at any time without further obligation whatsoever
by either party hereunder (except for the obligations and covenants of Employee
pursuant to Sections 2.3 and 4.4, which shall survive termination as specified
herein) by giving not less than sixty (60) nor more than ninety (90) days'
prior written notice of such termination to Employer.
4.3 EFFECT OF TERMINATION ON STOCK OPTIONS. In the event
of any termination of this Agreement and the Employment Term, 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. Also, in the event of any termination of Employee's
employment pursuant to Section 4.1.1 or Section 4.2.1, then, in addition to any
other rights of Employee hereunder, Employee shall receive, within thirty (30)
days after such termination, a lump sum cash distribution equal to: (a) the
number of shares of Employer's common stock that is subject to options held by
Employee which are not vested on the date of termination of employment;
multiplied by (b) the difference between: (i) the closing price of a share of
Employer's common stock on the New York Stock Exchange as reported by The Wall
Street
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Journal as of the day prior to the effective date of termination of employment
(or, if the New York Stock Exchange is closed on that date, on the last
preceding date on which the New York Stock Exchange was open for trading), and
(ii) the applicable exercise price(s) of such non-vested shares.
4.4 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. In the
event of any termination of Employee's employment pursuant to Sections 4.1.2,
4.2.1 or 4.2.2 of this Agreement, Employee covenants and agrees that, for a
period of one year from the effective date of his termination from active
employment with the Employer, he will not engage in, own, manage, operate,
control, or participate in any food service business that conducts or
franchises activities which are the same as or similar to the restaurant
concepts and operations of Employer as an employer, employee, principal,
partner, director, agent, or otherwise, directly or indirectly, anywhere in the
United States of America. 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 seek an injunction by any court of
competent jurisdiction enjoining and restraining Employee and each and every
other person concerned from any employment, service, or other act prohibited by
this Agreement. Employee and Employer recognize and acknowledge that the area
and time limitations contained in this Agreement are reasonable. In addition,
Employee and Employer recognize and acknowledge that the 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 to be 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. 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.
Employer shall receive injunctive relief without the necessity of posting bond
or other security, such bond or other security being hereby waived by Employee.
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5. DEATH OR DISABILITY OF EMPLOYEE.
5.1 DEATH OF EMPLOYEE. In the event Employee dies during
the Employment Term, this Agreement and the Employment Term shall terminate
upon Employee's death. Employee's estate shall be entitled only to any Base
Salary earned but not paid plus any bonus accrued by Employer for Employee
through the date of death. Such payment shall be paid in lump sum to the
Employee's estate within ninety (90) days after Employer is given notice of
Employee's death.
5.2 DISABILITY OF EMPLOYEE. Employer has disability
insurance insuring those individuals holding the position of Executive Vice
President/Division President and above, and Employee is included under such
disability insurance. In the event of the Disability (as hereinafter defined)
of Employee, this Agreement and the Employment Term shall terminate. Upon a
termination resulting from the Disability of Employee, Employee shall be
entitled to receive (i) any Base Salary earned but not paid through the date
that Employee becomes eligible for disability payments under such disability
insurance, and (ii) an amount equal to the Base Salary and bonus received by
Employee in the last full fiscal year of Employer immediately prior to the
Disability of Employee, which amount shall be payable, at the option of
Employee, in a lump sum payment or in equal installments paid in accordance
with the general payroll policies of Employer over a period not to exceed three
(3) years from the effective date of a termination due to the Disability of
Employee; provided, however, that Employee shall not be entitled to any
payments under this Section 5.2 in the event this Agreement is terminated
pursuant to Section 4.1.2 hereof regardless of whether the "cause" for which
this Agreement is terminated pursuant to Section 4.1.2 also may constitute a
Disability. For purposes of this Agreement, a "Disability" of Employee shall
occur if (i) Employee suffers any mental or physical condition that impairs
Employee's ability to perform the essential functions of his duties hereunder
and (ii) Employee, within thirty (30) days after Employee receives written
notice from Employer requesting that Employee resume his duties hereunder, is
unable or refuses to do so.
6. GENERAL PROVISIONS.
6.1 EXPENSES. Employer shall reimburse Employee for all
reasonable and necessary business expenses of Employee incurred in the conduct
of his duties hereunder. Employee shall comply with all applicable policies of
Employer with respect to documentation and approval of such expenses.
6.2 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
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accordance with this Section 6.2. Notices delivered personally shall be deemed
communicated at the time of the actual receipt; mailed notices shall be deemed
communicated as of the second day following deposit in the United States Mail.
6.3 ENTIRE AGREEMENT. This Agreement supersedes any and all
other agreements (including, without limitation, that certain employment
agreement between Employer and Employee dated as of June 17, 1996), 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.
6.4 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 nonetheless continue in full
force without being impaired or invalid in any way.
6.5 LAW GOVERNING AGREEMENT. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Tennessee.
6.6 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 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.
6.7 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
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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.
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.
EMPLOYER:
SHONEY'S, INC.
By:
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Title:
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EMPLOYEE:
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W. XXXXX XXXXXX
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