SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the "Agreement") is entered into as
of the 15th day of January, 1995, by and between JAMES M. GROUT
(hereinafter "Grout") and SHONEY'S, INC., a Tennessee corporation
(hereinafter the "Company").
W I T N E S S E T H:
WHEREAS, Grout has been employed by the Company as President
of the Company's Shoney's Division and has rendered valuable
services to the Company; and
WHEREAS, on January 15, 1995, Grout submitted his resignation
to the Company, which resignation was accepted that same day; and
WHEREAS, it is the desire of Grout and the Company to enter
into this Agreement to resolve all matters arising out of or
related to Grout'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. Grout's employment with the
Company is hereby terminated, effective immediately. This
Agreement supersedes all prior understandings or agreements
relating to the employment of Grout by the Company. The respective
rights and obligations of the parties shall be governed hereafter
by the terms of this Agreement.
2. Severance Pay. Subject to Section 7 hereof, the Company
will pay Grout severance pay of Four Thousand Four Hundred Forty-
Two and 31/100 Dollars ($4,442.31) per week (the "Weekly Severance
Payment"), in accordance with Employer's regular payroll policies,
for twenty-six (26) weeks, effective the week ending January 20,
1995. If, at the end of such initial twenty-six (26) week period,
Grout has been unable to obtain other employment or means of
income, the Weekly Severance Payments, subject to Section 7 hereof,
shall be extended for an additional period ending the earlier of:
(a) such time as Grout has obtained other employment or means of
income; or (b) at the end of twenty-six (26) additional weeks.
3. Stock Options.
3.1. As of the date of Grout's resignation, Grout had
vested options remaining to purchase 19,250 shares of the Company's
common stock at exercise prices of $6.714 per share (8,750 shares),
$7.286 per share (3,500 shares) and $6.143 per share (7,000
shares). Grout may exercise these options on or before February 1,
1995.
3.2. As of the date of Grout's resignation, Grout also
had (or would have had within one year of his resignation) vested
options remaining to purchase 5,100 shares of the Company's common
stock at exercise prices of $14.875 per share (1,500 shares),
$20.625 per share (2,400 shares) and $23.625 per share (1,200
shares) and unvested options remaining to purchase 8,400 shares of
the Company's common stock at exercise prices of $20.625 per share
(3,600 shares) and $23.625 per share (4,800 shares). Grout 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 Grout 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, Grout will
have the right to continue his participation in the Company's group
health coverage plan under the applicable COBRA regulations.
4.2. Grout 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 "Stock Purchase Plan"). Any
balance remaining on account for him will be returned with the
stock certificate. Grout may not participate in the Stock Purchase
Plan after the 1994 plan year.
4.3. Grout will receive the stock distribution of 100
shares of the Company's common stock for the 1995 plan year as a
result of his participation in the Company's Employee Stock Bonus
Plan (the "Stock Bonus Plan"). Grout also shall receive the cash
component related to such distribution at the time the distribution
is made in accordance with the terms and conditions of the Stock
Bonus Plan. Grout will receive no further distributions from the
Stock Bonus Plan after the 1995 plan year.
4.4. Grout will be reimbursed for any out-of-pocket
expenses incurred through January 16, 1995 in accordance with the
Company's travel and entertainment reimbursement guidelines,
provided, however, that request for reimbursement is made by
February 28, 1995.
-2-
5. Nondisclosure. Grout recognizes and acknowledges that, as
a result of his employment by the Company, he has become familiar
with and has acquired knowledge of confidential information and
certain trade secrets that are valuable, special, and unique assets
of the Company. Grout agrees that any such confidential
information and trade secrets are the property of the Company.
Therefore, Grout agrees that any such confidential information and
trade secrets shall be considered to be proprietary to the Company
and will not be divulged by him to any firm, individual, or
institution nor will it be used by him to the detriment of the
Company. The parties agree that nothing in this Agreement shall be
construed as prohibiting the Company from pursuing any remedies
available to it for any breach or threatened breach of this Section
5, including, without limitation, the recovery of damages from
Grout or any person or entity acting in concert with Grout.
6. Publicity.
6.1. At any time following the date hereof, Grout 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 Grout 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
Grout. 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, Grout and the Company agree that, in the
event of a breach by Grout of the provisions of either Section 5
or Section 6.1 hereof, damages to the Company would be difficult to
determine and, in the event of such breach by Grout, the Company
shall be released from its obligation to make any further payments
to Grout under Section 2 hereof or any distributions to Grout under
Section 4.3 hereof.
8. Release. Grout 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 Grout
has or hereafter may have on account of or in any way arising out
of or related to Grout's employment with the Company or the
-3-
termination of Grout'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 Grout 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 Grout may have for indemnification under the Company's by-laws
for any claim that might be made against Grout by a third party
arising out of the course and scope of Grout's employment with the
Company.
9. Nonassignability. The rights of Grout 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. Grout 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
Grout 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 Grout 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 Grout, 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.
-4-
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 Grout, 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.
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
-------------------------------------
Title: Chairman and CEO
---------------------------------
/s/ James M. Grout
----------------------------------------
JAMES M. GROUT
-5-