Exhibit 10.6
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (the "Agreement") is entered into as of the
19th day of June, 2001, by and between J. MICHAEL BODNAR (hereinafter
"Bodnar") and SHONEY'S, INC., a Tennessee corporation (hereinafter the
"Company").
W I T N E S S E T H:
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WHEREAS, Bodnar has been employed by the Company as President and Chief
Executive Officer; and
WHEREAS, Bodnar and the Company are parties to that certain Management
Retention Agreement (the "Management Retention Agreement"), dated as of June
14, 2000, and that certain Letter Agreement (the "Letter Agreement"), dated
as of December 28, 2000; and
WHEREAS, the Company has determined to terminate Bodnar's employment
relationship with the Company and the Company and Bodnar desire to effect
such termination in an amiable manner; and
WHEREAS, it is the desire of Bodnar and the Company to enter into this
Agreement to formally terminate the Management Retention Agreement and the
Letter Agreement and to resolve all matters arising out of or related to
Bodnar's employment with the Company and the termination of his employment
with the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein, the parties hereby agree as follows:
1. Termination of Employment, Management Retention Agreement and Letter
Agreement; Resignations. This confirms that Bodnar's employment with the
Company is terminated effective June 19, 2001. This Agreement supersedes
each of the Management Retention Agreement and the Letter Agreement, each of
which is hereby wholly terminated and cancelled as of the date of this
Agreement. The respective rights and obligations of the parties shall be
governed hereafter by the terms of this Agreement. In addition. Bodnar
hereby resigns, effective immediately, as a member of the Company's Board of
Directors and as a director and officer of each of the Company's
subsidiaries.
2. Severance Pay. The Company will pay Bodnar severance pay of Five
Hundred Thousand and 00/100 Dollars ($500,000.00), which shall be payable
over 104 weeks at the rate of $4,807.69 per week, effective the week ending
June 22, 2001, in accordance with Employer's regular payroll policies;
provided, however, that in the event of a "Change in Control" as that term
was defined in the Management Retention Agreement, all then unpaid sums due
pursuant to this
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paragraph shall be immediately due and payable.
3. Stock Options. As of the date of Bodnar's resignation, Bodnar had no
options to purchase shares of the Company's common stock that were vested.
Accordingly, Bodnar hereby relinquishes any right to exercise any rights or
options that he has to purchase the Company's common stock. The terms and
provisions of this Agreement shall supersede and control over any of the
terms and provisions of any agreement between Bodnar and the Company with
respect to any options to purchase the Company's common stock.
4. Benefits and Other Matters.
4.1. Upon payment of the appropriate premiums, Bodnar will have the
right to continue his participation in the Company's group health coverage
plan under the applicable COBRA regulations.
4.2. Bodnar will be reimbursed for any out-of-pocket expenses
incurred through June 19, 2001 in accordance with the Company's travel and
entertainment reimbursement guidelines, provided, however, that request for
reimbursement is made by July 15, 2001.
4.3. Within ten (10) days after execution of this Agreement, Bodnar
will be paid for any accrued and unused vacation for 2001.
5. Covenants.
5.1. Bodnar agrees not to disclose to any person (other than to any
person specifically authorized by the Board of Directors of the Company) any
confidential information concerning the Company or any of its subsidiaries or
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.
5.2 Bodnar agrees that, until June 19, 2002, 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 the Company as an employer,
employee, principal, partner, director, agent or otherwise, directly or
indirectly, anywhere in the United States of America. This time period shall
be extended by any period of noncompliance with this covenant not to compete.
5.3 Bodnar and the Company acknowledge and agree that any of the
covenants contained in this Section 5 may be specifically enforced through
injunctive relief but such right to injunctive relief shall not preclude the
Company from other remedies which may be available to it.
6. Publicity.
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6.1. At any time following the date hereof, Bodnar shall not make any
statements, comments or take any actions detrimental to the interests of the
Company, its officers or directors. To the extent that the foregoing
prohibition might be applicable, it is not intended to prevent Bodnar from
giving testimony pursuant to compulsory process of law.
6.2. At any time following the date hereof, the Company shall not
make any public statements, announcements or disclosures, except as may be
required by law, of any information detrimental to Bodnar. The determination
whether any disclosure is required by law shall be made by the Company in its
sole discretion.
7. Certain Remedies. In addition to any other remedies that the parties
may have at law or in equity, Bodnar and the Company agree that, in the event
of a breach by Bodnar of the provisions of Section 5.1, Section 5.2 or
Section 6.1 hereof, damages to the Company would be difficult to determine
and, in the event of such breach by Bodnar, the Company shall be released
from its obligation to make any further payments to Bodnar under Section 2
hereof and its obligations under Section 6.2 hereof.
8. Release. Bodnar hereby releases and forever discharges the Company,
each of its subsidiary corporations and each of their respective directors,
officers, agents and employees from all claims, demands, rights and causes of
action of any kind that Bodnar has or hereafter may have, known or unknown,
on account of or in any way arising out of or related to the Management
Retention Agreement, the Letter Agreement, Bodnar's employment with the
Company or the termination of Bodnar's employment with the Company. This
release includes, but is not limited to, claims based upon contract, tort as
well as those arising under federal, state or local law, regulation, or
policy or concerning worker's compensation or prohibiting employment
discrimination based on age, including the Age Discrimination in Employment
Act, or discrimination based on race, sex, national origin, religion,
disability, wrongful termination of employment, or any claim growing out of
or based on other statutes or legal restrictions on the Company's rights to
terminate its employees. The consideration set forth in this Agreement is
accepted by Bodnar in full compromise, settlement and satisfaction of all
claims, damages, rights and causes of action that Bodnar allegedly may have
based upon, arising out of, related to or in conjunction with his employment
with the Company or the termination of that employment. This release,
however, is not intended to release any rights that Bodnar has or may have to
indemnification pursuant to law or pursuant to the Company's charter or by-
laws or any rights that he has or may have to make claims under the Company's
policy of directors' and officers' liability insurance.
9. Certain Acknowledgements. Bodnar agrees that the Company has not
breached any oral or written contract that may have existed between Bodnar
and the Company with respect to his employment or termination of employment
with the Company nor has the Company violated any law, statute, rule
regulation or ordinance of any governmental authority relating to employment.
Bodnar acknowledges that the severance payments and other consideration paid
hereunder can not and shall not be construed as any admission of liability or
wrongdoing on the part of the Company.
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10. Covenant Not to Sue. In consideration of the covenants and
agreements contained herein, the Company, on its behalf and on behalf of each
of its subsidiary corporations, subject to the second sentence of this
Section 10, hereby covenants not to sue or to assert any claim against Bodnar
for, relating to or arising out of any claim, action, controversy, damage,
cause of action, liability, obligation, cost, loss or demand of any nature
whatsoever, whether known, unknown, suspected or unsuspected, contingent or
certain, on account of or in any way arising out of any events or any
activities occurring before the date of this agreement. This covenant is
intended to be given the broadest construction allowed by law; provided,
however, that it shall not apply to: (1) any derivative action in which a
court ultimately adjudges Bodnar liable to the corporation; (2) any action
for indemnification or contribution brought by the Company against Bodnar
based upon a claim against the Company by a third party for Bodnar's personal
actions where Bodnar has been adjudged individually liable for those actions;
and (3) any fraud on the part of Bodnar.
11. Nonassignability. The rights of Bodnar under this Agreement are not
transferable otherwise than by will or the laws of descent and distribution.
No assignment, pledge, anticipation or attachment of any of the benefits
under this Agreement shall be valid or recognized by the Company.
12. Company Property/Correspondence. Bodnar shall immediately return
the following to the Company:
(a) Any company credit card in his possession;
(b) Any coupons or discount cards for use at any of the
Company's facilities that are in his possession; and
(c) Any other company property in his possession.
13. Withholding. All cash payments and issuance of stock to Bodnar
shall be subject to any applicable federal, state or local withholding tax or
information reporting requirements. Any such withholding shall be at the
minimum rate required. In the event that Bodnar and the Company do not agree
on the amount or method of any required withholding, such matter shall be
referred to the Company's independent public accountants for resolution. The
decision of such independent public accountants shall be binding on all
parties unless Bodnar, at his sole expense, shall obtain an appropriate
ruling from the Internal Revenue Service.
14. Validity of Provisions. Whenever possible, each provision and term
of this Agreement shall be interpreted in such manner as to be valid and
enforceable, provided, however, that in the event any provision or term of
this Agreement should be determined to be invalid or unenforceable, all other
provisions and terms of this Agreement and the application thereof to all
persons and circumstances subject thereto shall remain unaffected to the
extent permitted by law. If any application of any provision or term of this
Agreement to any person or circumstances should be determined to be invalid
or unenforceable, the application of such provision or term to other persons
and circumstances shall remain unaffected to the extent permitted by law.
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15. Construction. This Agreement shall be governed by the laws of the
State of Tennessee. As herein used, the singular number shall include the
plural, and the plural the singular, unless the context would fairly not
admit of such construction. Section or paragraph headings are employed
herein solely for convenience of reference, and such headings shall not be
used in construing any term or provisions of this instrument. References
herein to a "section" shall refer to the appropriately numbered section of
this Agreement unless specific reference is made to another instrument or
document.
16. Entire Agreement/Binding Effect. This Agreement contains the entire
agreement between the parties hereto and there are no representations,
inducements, promises, agreements, arrangements or undertakings, oral or
written, between the parties other than those set forth herein. No agreement
of any kind relating to the matters covered by this Agreement shall be
binding upon either party unless and until the same is made in writing and
executed by both parties. This Agreement shall be binding upon the Company,
its successors and assigns, and upon Bodnar, his heirs, representatives,
successors and assigns.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be an original,
but all such counterparts shall constitute one and the same instrument.
18. Captain D's Guaranty. Captain D's, Inc., a wholly-owned subsidiary
of the Company, has joined this Agreement for the purpose of guaranteeing
those obligations of the Company to Bodnar under Section 2 of this Agreement
and does hereby guarantee those obligations of the Company under Section 2 of
this Agreement.
19. Acknowledgement of Opportunity to Consider and Review Agreement.
The Company acknowledges that Bodnar is entitled and has been given the
opportunity to take twenty-one (21) calendar days from June 19, 2001, to
consider this Agreement and may use as much of the twenty-one (21) day period
as Bodnar wishes prior to signing. Bodnar is strongly encouraged by the
Company to consult, and Bodnar acknowledges that, prior to entering into this
Agreement, he has consulted with legal counsel with respect to this
Agreement. Bodnar further acknowledges that Bodnar has entered into this
Agreement voluntarily and of his own free will.
20. Revocation of Agreement. Bodnar may, within seven (7) calendar days
following the execution of this Agreement, revoke it. To revoke this
Agreement, a written notice of revocation must be delivered to Chairman, 1727
Elm Hill Pike, Nashville, Tennessee 37210 before the close of business on the
seventh calendar day after signing of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement, the
corporate party by its duly authorized officer, as of the day and year first
above written.
BODNAR ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT,
AND IS VOLUNTARILY ENTERING INTO IT.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ANY AND
ALL KNOWN AND UNKNOWN CLAIMS.
SHONEY'S, INC.
By: /s/ William M. Wilson
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Title: Chairman of the Board
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For the limited purpose
set forth in Section 18
CAPTAIN D'S, INC.
By: /s/ V. Michael Payne
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Title: Vice President
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/s/ J. Michael Bodnar
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J. MICHAEL BODNAR
Date signed: 6/28/01
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