Exhibit 10.7
AGREEMENT
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This Agreement is entered into as of the 22 day of June, 2001, by and
between Shoney's, Inc. ("Employer"), a Tennessee corporation with its
principal place of business at 1727 Elm Hill Pike, Nashville, Tennessee 37210
and V. Michael Payne ("Executive").
W I T N E S S E T H:
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WHEREAS, the Executive is currently employed by Employer as the Chief
Financial Officer 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
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 one
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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 Employer, including the surviving entity in
any merger, consolidation, share exchange or other
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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 power of the then-
outstanding securities of Employer or any
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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.
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.
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(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 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.
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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.
/s/ V. Michael Payne
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[Executive]
V. Michael Payne
SHONEY'S, INC.
By: /s/ William M. Wilson
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Title: Chairman of the Board
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