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AGREEMENT
This Agreement is entered into as of the 15th day of July, 1997, by and
between Shoney's, Inc. ("Employer"), a Tennessee corporation with its principal
place of business at 0000 Xxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx 00000 and Xxxxxxx
X. Xxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently employed by Employer as the Senior
Vice President, Controller of Employer, and Employer and Executive desire to set
forth certain rights and obligations of Employer and Executive in the event of a
change in control of Employer.
NOW, THEREFORE, in consideration of the premises hereof and of the
mutual promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. BENEFITS UPON TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN
CONTROL. If at any time within one year following the occurrence of a Change in
Control (as defined in Section 14 below) (i) the employment of Executive with
Employer is terminated by Employer for any reason other than Good Cause (as
defined in Section 14 below), or (ii) Executive terminates his or her employment
with Employer for Good Reason (as defined in Section 14 below), the following
provisions will apply:
(a) Employer shall pay Executive an amount equal to 200% of
Executive's Base Salary (as defined in Section 14 below). Such
amount will be paid to Executive in equal weekly payments using
Employer's regular payroll periods.
(b) For purposes of any Incentive Plans, Executive shall be given
service credit for all purposes for, and shall be deemed to
be an employee of Employer during the Coverage Period (as
defined in Section 14 below), notwithstanding the fact that
Executive is not an employee of Employer or any Affiliate
(as defined in Section 14 below) thereof during the Coverage
Period; provided that, if the terms of any of such Incentive
Plans do not permit such credit or deemed employee treatment,
Employer will make payments and distributions to Executive
outside of the Incentive Plans in amounts substantially
equivalent to the payments and distributions Executive would
have received pursuant to the terms of the Incentive Plans and
attributable to such credit or deemed employee treatment, had
such credit or deemed employee treatment been permitted pursuant
to the terms of the Incentive Plans.
(c) During the Coverage Period, Executive and his or her spouse and
family will continue to be covered by all Welfare Plans (as
defined in Section 14 below), maintained by Employer in which
Executive or his or her spouse or family were participating
immediately prior to the date of Executive's
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termination as if Executive continued to be an employee of
Employer; provided that, if participation in any one or more of
such Welfare Plans is not possible under the terms thereof,
Employer will provide substantially identical benefits. If,
however, Executive obtains employment with another employer
during the Coverage Period, such coverage shall be provided
until the earlier of: (i) the end of the Coverage Period or (ii)
the date on which the Executive and his or her spouse and family
can be covered under the plans of a new employer without being
excluded from full coverage because of any actual pre-existing
condition. Nothing contained herein is intended to in any way
limit Employee's rights under COBRA.
Compensation under Section 1(a), (b) and (c) hereof is contingent upon
Executive's compliance with Section 4 hereof.
2. SETOFF. With respect to Section 1, no payments or benefits payable
to or with respect to Executive pursuant to this Agreement shall be reduced by
any amount Executive or his or her spouse may earn or receive from employment
with another employer or from any other source, except as expressly provided in
Section 1(c).
3. DEATH. If Executive dies during the Coverage Period:
(a) All amounts not theretofore paid described in Section 1(a)
shall be paid to his or her estate.
(b) The spouse and family of Executive shall, during the remainder
of the Coverage Period, be covered under all Welfare Plans made available by
Employer to Executive or his or her spouse immediately prior to the date of
Executive's death; provided that, if participation in any one or more of such
plans and arrangements is not possible under the terms thereof, Employer will
provide substantially identical benefits.
Any benefits payable under this Section 3 are in addition to any other
benefit due to Executive or his or her spouse or beneficiaries from Employer,
including, but not limited to, payments under any Incentive Plans.
4. RESTRICTIVE COVENANTS.
(a) Confidential Information. Executive agrees not to disclose,
following termination of his or her employment hereunder under the circumstances
described in Section 1 hereof, to any person (other than to any person
specifically authorized by the Board of Directors of Employer) any material
confidential information concerning the Employer or any of its Affiliates,
including, but not limited to, strategic plans, contract terms, financial costs,
pricing terms, sales data or business opportunities whether for existing, new or
developing businesses.
(b) Non-Competition. In the event of any termination of Executive's
employment pursuant to Section 1 hereby, Executive covenants and agrees that,
for a period of
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one year from the effective date of his or her termination from active
employment with the Employer, Executive 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.
(c) Enforcement. Executive and the Employer acknowledge and
agree that any of the covenants contained in this Section 4 may be specifically
enforced through injunctive relief but such right to injunctive relief shall not
preclude the Employer from other remedies which may be available to it.
5. EXECUTIVE ASSIGNMENT. No interest of Executive or his or her spouse
or any other beneficiary under this Agreement, or any right to receive any
payment or distribution hereunder, shall be subject in any manner to sale,
transfer, assignment, pledge, attachment, garnishment, or other alienation or
encumbrance of any kind, nor may such interest or right to receive a payment or
distribution be taken, voluntarily or involuntarily, for the satisfaction of the
obligations or debts of, or other claims against, Executive or his or her spouse
or other beneficiary, including claims for alimony, support, separate
maintenance, and claims in bankruptcy proceedings.
6. BENEFITS UNFUNDED. All rights of Executive and his or her spouse or
other beneficiary under this Agreement shall at all times be entirely unfunded
and no provision shall at any time be made with respect to segregating any
assets of Employer for payment of any amounts due hereunder. Neither Executive
nor his or her spouse or other beneficiary shall have any interest in or rights
against any specific assets of Employer, and Executive and his or her spouse or
other beneficiary shall have only the rights of a general unsecured creditor of
Employer.
7. COST OF ENFORCEMENT; INTEREST. In the event that Executive collects
any part or all of the payments or benefits due hereunder or otherwise enforces
the terms of this Agreement following a dispute with Employer regarding the
terms of this Agreement by or through a lawyer or lawyers, Employer will pay all
costs of such collection or enforcement, including reasonable attorneys' and
accountants' fees and other out-of-pocket expenses incurred by the Executive, up
to that point when Employer offers to settle the dispute for an amount equal to
the amount which the Executive actually recovers; provided, however, that if the
Executive violates any provision of Section 4, this Section 7 shall be void and
of no further force and effect.
8. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered or certified
mail to Executive's residence in the case of Executive, or to its principal
office in the case of the Employer and the date of mailing shall be deemed the
date which such notice has been provided.
9. WAIVER OF BREACH. The waiver by either party of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by the other party.
10. ASSIGNMENT; SUCCESSORS. The rights and obligations of the Employer
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the
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Employer, including the surviving entity in any merger, consolidation, share
exchange or other transaction described in Section 14(c)(ii) hereof or any
person, entity or group that has acquired a majority of the outstanding shares
of Common Stock (or securities convertible into Common Stock) of Employer or
all, or substantially all, of the assets of Employer. The Executive acknowledges
that the services to be rendered by him or her are unique and personal, and
Executive may not assign any of his or her rights or delegate any of his or her
duties or obligations under this Agreement.
11. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and supersedes all other prior agreements, employment contracts and
understandings, both written and oral, express or implied with respect to the
subject matter of this Agreement and may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
12. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Tennessee, without giving effect to the principles of conflicts of law
thereof.
13. HEADINGS. The sections, subjects and headings of this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" shall have the meaning set forth in the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" means the higher of (i) Executive's annual
base salary in effect immediately prior to the occurrence of the Change in
Control giving rise of an obligation on the part of Employer to make any
payments under this Agreement or (ii) Executive's annual base salary in effect
immediately prior to the termination of Executive's employment under the
circumstances described in Section 1 above.
(c) "Change in Control" shall mean the occurrence of any of the
following:
(i) if any person or entity, including a "group" as defined
in Section 13(d)(3) of the Exchange Act, other than Employer
or a wholly-owned subsidiary thereof or any employee benefit
plan of Employer or any of its subsidiaries, becomes the
beneficial owner of Employer securities having 50% or more
of the combined voting power of the then outstanding
securities of Employer that may be cast for the election of
directors of Employer; or
(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale
of substantially all of the assets or contested election, or
any combination of the foregoing transactions less than a
majority of the combined voting
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power of the then-outstanding securities of Employer or any
successor corporation or entity entitled to vote generally
in the election of the directors of the Employer or such
other corporation or entity after such transaction is held
in the aggregate by the holders of Employer securities
entitled to vote generally in the election of directors of
Employer immediately prior to such transaction; or
(iii) following the date of this Agreement, individuals who on
such date constitute the Board of Directors of Employer
cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election
by Employer's shareholders, of each director of Employer
first elected following such date was approved by a vote of
at least two-thirds of the directors of Employer then still
in office who were directors on the date of this Agreement.
(d) "Coverage Period" shall mean the period beginning on the date
the Executive's employment with Employer terminates under circumstances
described in Section 1 and ending on the date that is twelve (12) months
thereafter.
(e) "Good Cause" shall mean the occurrence of any one of the
following after a Change in Control:
(i) Executive's personal dishonesty;
(ii) Executive's willful misconduct;
(iii) breach of fiduciary duty involving personal profit by
Executive;
(iv) conviction of Executive for any felony or crime involving
moral turpitude;
(v) material intentional breach by Executive of any provision of
this Agreement; or
(vi) unsatisfactory performance by Executive of the duties
designated for Executive as a result of alcohol or drug use
by Executive.
Without limiting the generality of the foregoing, if Executive acted in
good faith and in a manner he or she reasonably believed to be in, and not
opposed to, the best interest of Employer and had no reasonable cause to believe
his or her conduct was unlawful in connection with any action taken by Executive
in connection with his or her duties, it shall not constitute Good Cause.
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Notwithstanding anything herein to the contrary, in the event Employer
shall terminate the employment of Executive for Good Cause hereunder, Employer
shall give at least 30 days prior written notice to Executive specifying in
detail the reason or reasons for Executive's termination.
(f) "Good Reason" shall exist if after the occurrence of a Change
of Control:
(i) there is a significant change in the nature or the
scope of Executive's authority;
(ii) there is a reduction in Executive's rate of base
salary;
(iii) Employer changes the principal location in which
Executive is required to perform services outside a
thirty-five mile radius of such location without
Executive's consent;
(iv) there is a reasonable determination by Executive that,
as a result of a change in circumstances significantly
affecting his or her position, Executive is unable to
exercise the authority, powers, function or duties
attached to his or her position; or
(v) Employer terminates or amends any Incentive Plan so
that, when considered in the aggregate with any
substitute plan or other substitute compensation, the
Incentive Plan in which Executive is participating
fails to provide Executive with a level of benefits
equivalent to at least 75% of the value of the level of
benefits provided in the aggregate by the terminated or
amended Incentive Plan at the date of such termination
or amendment; provided, however, that Good Reason shall
not be deemed to exist under this clause (v) if the
decline in Incentive Plan compensation is related to a
decline in performance.
(g) "Incentive Plans" shall mean any incentive, bonus, deferred
compensation or similar plan or arrangement currently or hereafter made
available by Employer in which Executive is eligible to participate.
(h) "Welfare Plans" shall mean any health and dental plan,
disability plan, survivor income plan and life insurance plan or arrangement
currently or hereafter made available by Employer in which Executive is eligible
to participate.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original.
16. SEVERABILITY; CONSTRUCTION. In the event any provision of this
Agreement is held illegal or invalid, the remaining provisions of this Agreement
shall not be affected thereby. In the
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event that Section 4(b) is deemed by any court of competent jurisdiction to
be invalid due to overbreadth, such Section 4(b) shall be construed as narrowly
as necessary to be enforceable.
17. EXCLUSIVITY. The benefits provided Executive pursuant to this
Agreement shall be the exclusive benefits to which Executive is entitled upon
termination of employment following a Change in Control notwithstanding any
other plan or agreement in effect, whether written or oral, between Executive
and Employer providing for the payment of benefits following a termination of
employment.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
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Xxxxxxx X. Xxxxx
SHONEY'S, INC.
By:
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Title: Chairman, Chief Executive Officer & President
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