Employment Agreement

EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 1st day of November, 1996, between SHONEY'S, INC., a Tennessee corporation, whose principal place of business is located at 1727 Elm Hill Pike, Nashville, Tennessee, 37210 (the "Employer"), and W. CRAIG BARBER, a resident of Williamson County, Tennessee, whose address is 807 Stuart Lane, Brentwood, Tennessee, 37027 (the "Employee").


1. TERM OF EMPLOYMENT.


1.1 EMPLOYMENT. Employer hereby employs Employee, and Employee hereby accepts employment with Employer for the Employment Term (as hereinafter defined). Notwithstanding anything to the contrary in this Agreement and subject to the other provisions of this Agreement, Employee's employment is at the will of Employer.


1.2 EMPLOYMENT TERM. The term of this Agreement and the Employment Term shall be three years, commencing on October 28, 1996, and terminating on October 27, 1999, unless sooner terminated as herein provided or extended pursuant to Section 1.3.1 hereof. Unless either party to this Agreement notifies the other in writing not less than 180 days prior to the termination date provided for herein of an intent to terminate this Agreement, the terms of this Agreement shall automatically be extended for an additional term of three (3) years and shall be so extended in future years subject to the same notification requirements set forth above.


1.3 CHANGE IN CONTROL.


1.3.1 EXTENSION BECAUSE OF CHANGE IN CONTROL. In the event of a Change in Control (as hereinafter defined), the Employment Term shall automatically be extended for two (2) calendar years on the date of the Change in Control. For purposes of this Agreement, a "Change in Control" of Employer shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Employer representing 50% or more of the combined voting power of Employer's then-outstanding voting securities; (b) all or substantially all of the assets of the Employer are sold, exchanged or otherwise transferred (other than to secure debt owed by Employer); (c) the Employer's shareholders approve a plan of liquidation or dissolution; or (d) during the Employment Term, individuals who at the beginning of the Employment Term constitute members of the Board of Directors of Employer cease for any reason to constitute a


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majority thereof unless the election, or the nomination for election by Employer's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the Employment Term.


1.3.2 POTENTIAL CHANGE IN CONTROL. In the event of a Potential Change in Control (as hereinafter defined), Employee agrees to remain employed by Employer from the time period beginning with the Potential Change in Control and continuing through the earlier of two (2) months after a Change in Control occurs (as defined in Section 1.3.1) or the one-year anniversary of the commencement of the Potential Change in Control period. If Employee chooses to terminate his employment after a Change in Control occurs, the provisions set forth at Section 4.2.1 of this Agreement control such action. For purposes of this Agreement, a "Potential Change in Control" shall occur upon the execution of any agreement or memorandum of understanding, the completion of which would result in a "Change in Control" as defined in Section 1.3.1 of this Agreement or the commencement of a proxy contest that has the potential of causing a "Change in Control" as defined in Section 1.3.1 of this Agreement.


2. DUTIES OF EMPLOYEE.


2.1 GENERAL DUTIES. Employee is hereby employed as Senior Executive Vice President, Chief Financial Officer and Chief Administrative Officer of Employer with such duties and responsibilities as Employer's Board of Directors shall designate. He shall do and perform all services, acts, or things necessary or advisable to manage and conduct the business of Employer, subject always to the policies set forth by Employer's Board of Directors, in accordance with any and all governing rules and regulations of regulatory agencies.


2.2 DEVOTION OF ENTIRE TIME TO EMPLOYER'S BUSINESS. Employee will devote his entire productive time, ability, and attention during normal business hours to the business of Employer during the Employment Term. Employee shall not, directly or indirectly, render any services of a business, commercial, or professional nature to any other person or organization, whether for compensation or otherwise, without the prior written consent of Employer's Board of Directors; provided, however, that the foregoing shall not preclude reasonable participation as a member in community, civic, or similar organizations, or the pursuit of personal investments that neither interfere nor conflict with his normal business activities for Employer.


2.3 DISCLOSURE OF INFORMATION. Employee recognizes and acknowledges that, as a result of this employment by Employer, he will become familiar with and acquire knowledge of confidential information and certain trade secrets that are valuable, special, and unique assets of Employer. Employee agrees that any such confidential information and trade secrets are the property of Employer. Therefore, Employee agrees that, for and during the entire Employment Term, any such confidential information and trade secrets shall be considered to be proprietary to Employer and kept as the private records of Employer and will not be divulged to any firm,


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individual, or institution except pursuant to and within the course and scope of Employee's employment hereunder. Further, upon termination of this Agreement for any reason whatsoever, Employee agrees that he will continue to treat as private and proprietary to Employer any such confidential information and trade secrets to any person, firm or institution, and will not use such information to the detriment of Employer. The parties agree that nothing in this Agreement shall be construed as prohibiting Employer from pursuing any remedies available to it for any breach or threatened breach of this Section 2.3, including, without limitation, the recovery of damages from Employee or any person or entity acting in concert with Employee.


3. COMPENSATION OF EMPLOYEE.


3.1 SALARY. As compensation for his services hereunder, Employee shall receive a base salary (the "Base Salary") per annum of $288,900, which shall be payable in accordance with the general payroll practices of Employer. Increases in the Base Salary may be made in the sole discretion of Employer's Board of Directors, except that employee shall be entitled to an annual minimum increase each year consistent with the performance merit matrix as established by the Board of Directors.


3.2 BONUSES. Employee shall be eligible for an annual bonus as established by the Board of Directors through the annual bonus plan.


3.3 OTHER BENEFIT PROGRAMS. Employee shall be entitled to participate in all employee benefit, bonus and similar programs, including, without limitation, programs of insurance, automobile plans, deferred compensation arrangements, and all other benefits made available by Employer to Executive Vice Presidents/Division Presidents and above. During the Employment Term, so long as any additional benefit is made available to Executive Vice Presidents/Division Presidents and above by Employer, such benefit shall be provided to Employee. By way of explanation, and not by way of limitation, Employee shall be entitled to the use of an automobile of make, model, and year of manufacture commensurate with the position of Employee.


3.4 VACATION. Employee shall be entitled annually to four (4) weeks of paid vacation.


4. TERMINATION OF EMPLOYMENT; SEVERANCE.


4.1 BY EMPLOYER.


4.1.1 TERMINATION WITHOUT CAUSE. Employer's Board of Directors may t ...