SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the "Agreement") is entered into as
of the 13th day of January, 1995, by and between JAMES W. ARNETT,
JR. (hereinafter "Arnett") and SHONEY'S, INC., a Tennessee
corporation (hereinafter the "Company").
W I T N E S S E T H:
WHEREAS, Arnett has been employed by the Company pursuant to
an Employment Agreement dated July 1, 1992 (hereinafter the
"Employment Agreement") and has rendered valuable services to the
Company; and
WHEREAS, on January 13, 1995, Arnett submitted his resignation
to the Company, which resignation was accepted by the Board of
Directors of the Company on that same date; and
WHEREAS, it is the desire of Arnett and the Company to enter
into this Agreement to formally terminate the Employment Agreement
and to resolve all matters arising out of or related to Arnett'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 Agreement. Except as expressly
set forth herein, this Agreement supersedes the Employment
Agreement, 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.
2. Severance Pay. The Company will pay Arnett one year's
severance pay of Three Hundred Thirty-Five Thousand and 00/100
Dollars ($335,000.00) (equalling fiscal 1994 salary of $255,000 and
fiscal 1994 bonus of $80,000), which shall be payable at the rate
of $6,442.31 per week, effective the week ending January 20, 1995,
in accordance with Employer's regular payroll policies.
3. Stock Options. As of the date of Arnett's resignation,
Arnett had vested options remaining to purchase 15,000 shares of
the Company's common stock at an exercise prices of $24.00 per
share (10,000 shares) and $20.625 per share (5,000 shares). Arnett
hereby relinquishes any right to exercise these options or any
other 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 Arnett 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, Arnett
will have the right to continue his participation in the Company's
group health coverage plan under the applicable COBRA regulations.
4.2. Arnett will receive the stock distribution for the
1994 plan year as a result of his participation in the Company's
Employee Stock Purchase Plan (the "Plan"). Any balance remaining
on account for him will be returned with the stock certificate.
Arnett may not participate in the Plan after the 1994 plan year.
4.3. Arnett will be reimbursed for any out-of-pocket
expenses incurred through January 13, 1995 in accordance with the
Company's travel and entertainment reimbursement guidelines,
provided, however, that request for reimbursement is made by
February 28, 1995.
5. Survival of Employment Agreement Covenants.
Notwithstanding Section 1 of this Agreement, Arnett agrees to
continue to be bound by and observe the requirements of Section 2.3
of the Employment Agreement as fully as if the Employment Agreement
was in full force and effect. In addition, because the Employment
Agreement is terminated, Arnett also agrees to be bound by and
observe the requirements of Section 4.4 of the Employment Agreement
that are effective upon termination of the Employment Agreement.
6. Publicity.
6.1. At any time following the date hereof, Arnett 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 Arnett 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
Arnett. The determination whether any disclosure is required by
law shall be made by the Company in its sole discretion.
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7. Certain Remedies. In addition to any other remedies
that the parties may have at law or in equity, Arnett and the
Company agree that, in the event of a breach by Arnett of the
provisions of Section 5 hereof (incorporating Sections 2.3 and 4.4
of the Employment Agreement) or Section 6.1 hereof, damages to the
Company would be difficult to determine and, in the event of such
breach by Arnett, the Company shall be released from its obligation
to make any further payments to Arnett under Section 2 hereof and
its obligations under Section 6.2 hereof.
8. Release. Arnett 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
Arnett has or hereafter may have on account of or in any way
arising out of or related to the Employment Agreement, Arnett's
employment with the Company or the termination of Arnett's
employment with the Company. The release set forth in this Section
8 shall not release any claim, demand, right or cause of action of
any kind that Arnett may have on account of or in any way arising
out of or related to a breach of the terms and provisions of this
Agreement nor shall it release any rights that Arnett may have for
indemnification under the Company's by-laws for any claim that
might be made against Arnett by a third party arising out of the
course and scope of Arnett's employment with the Company.
9. Nonassignability. The rights of Arnett 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.
10. Company Property/Correspondence. Arnett 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.
11. Withholding. All cash payments and issuance of stock to
Arnett 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 Arnett 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
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decision of such independent public accountants shall be binding on
all parties unless Arnett, at his sole expense, shall obtain an
appropriate ruling from the Internal Revenue Service.
12. 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.
13. 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.
14. 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 Arnett, his heirs, representatives,
successors and assigns.
15. 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.
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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.
SHONEY'S, INC.
By: /s/ Taylor H. Henry
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Title: Chairman and CEO
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/s/ James W. Arnett, Jr.
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JAMES W. ARNETT, JR.
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