SECURITIES AND EXCHANGE COMMISSIONER
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
SHONEY'S, INC.
(Name of Issuer)
Common Stock, $1 par value per share
(Title of Class of Securities)
825039 10 0
(CUSIP Number)
Daniel W. Small
Attorney at Law
Suite 250,
3100 West End Avenue
Nashville, Tennessee 37203
(615) 385-1005
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices
and Communications)
March 28, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box ( ).
Check the following box if a fee is being paid with this statement [x]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such
class. See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
CUSIP No. 825039 10 0
______________________________________________________________________________
1. Names of Reporting Persons S. S. or I.R.S. Identification Nos.
of Above Persons
Raymond L. Danner
Social Security No. ###-##-####
______________________________________________________________________________
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) ( )
(b) ( )
______________________________________________________________________________
3. SEC Use Only
______________________________________________________________________________
4. Source of Funds (See Instructions)
OO
______________________________________________________________________________
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
( )
______________________________________________________________________________
6. Citizenship or Place of Organization
United States of America
______________________________________________________________________________
Number of 7. Sole Voting Power: 4,159,133
Shares _______________________________________________________
Beneficially
Owned by 8. Shared Voting Power: 90,169
Each _______________________________________________________
Reporting Person
With 9. Sole Dispositive Power: 4,159,133
_______________________________________________________
10. Shared Dispositive Power: 90,169
______________________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 4,249,303(1)
______________________________________________________________________________
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
( )
______________________________________________________________________________
13. Percent of Class Represented by Amount in Row (11):
10.26%(2)
______________________________________________________________________________
14. Type of Reporting Person (See Instructions)
IN
______________________________________________________________________________
Item 1. Security and Issuer.
-------------------
This Statement relates to the $1 par value common stock of Shoney's,
Inc., 1727 Elm Hill Pike, Nashville, Tennessee 37210.
Item 2. Identity and Background.
-----------------------
(a) The person filing this Statement is Raymond L. Danner, a
natural person;
(b) Mr. Danner's business address is Suite 510, 2 International
Plaza, Nashville, Tennessee 37217;
(c) Mr. Danner's present principal occupation or employment is as
Chairman of The Danner Company, which company owns interests in various
other companies unrelated to Shoney's, Inc. The Danner Company has its
principal business address at Suite 510, 2 International Plaza, Nashville,
Tennessee 37217;
(d) Mr. Danner has not, during the last five years, been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors);
(e) Mr. Danner has not been a party, during the last five years, to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws; and
(f) Mr. Danner is a citizen of the United States of America.
- ---------------
(1) Mr. Danner disclaims beneficial ownership of 83,068 shares held
in the name of his wife and 7,101 shares that his wife holds as Custodian
for their minor son.
(2) This is based on the number of shares that the Company reports to
be outstanding at February 7, 1995 in its proxy materials for the 1995 Annual
Meeting of Shareholders.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Mr. Danner was a founder of Shoney's, Inc. (sometimes referred to
herein as the "Company") and served for approximately 20 years as Chairman
and Chief Executive Officer. Mr. Danner has acquired the subject
securities (the "Shares") over many years beginning in 1968, principally
for cash through purchase or the exercise of options granted him by the
Company as well as through stock splits and dividends. Mr. Danner no
longer serves Shoney's, Inc. in any official capacity.
Mr. Danner disposed of 2,694,444 shares of the Company's common
stock pursuant to one certain Capital Contribution Agreement (the
"Contribution Agreement") between himself and the Company dated September
15, 1992. Pursuant to the Contribution Agreement, Mr. Danner contributed
the 2,694,444 shares to the Company in connection with a settlement of a
civil action then pending in the United States District Court for the
Southern District of Florida styled Haynes, et al. v. Shoney's, Inc., et
al., No. 89-30093 RV. Mr. Danner was a defendant in that action (the
"Haynes litigation").
Mr. Danner's most recent acquisition of shares of Shoney's, Inc. was
on July 15, 1993, when he acquired 3,000 shares of the Company for a cash
purchase price of $14.875 per share. No portion of the purchase price was
borrowed.
Item 4. Purpose of Transaction.
----------------------
This filing is made as a result of a proposal made by Mr. Danner on
March 28, 1995 to the Company regarding his offer, as further described
below, to return as the Company's Chief Executive Officer.
As a founder and former Chairman and Chief Executive Officer of
Shoney's, Inc., Mr. Danner holds the Shares for investment. Mr. Danner
has been concerned about the Company's management and performance for
several years. He resigned from the Board of Directors of the Company
effective June 30, 1993. Among the reasons that he cited for his
resignation, he stated that he had observed a continuous decline in the
quality of service at Shoney's Restaurants, that his recommendations to
former and current management to end the trend and to return Shoney's to
the high level of quality and customer service, for which Shoney's was at
one time famous, had been rejected. He stated also that, in his opinion,
current management policies had not had the effect of increasing either the
quality of the food and service of Shoney's or the stock price. Mr.
Danner suggested in June of 1993 that he could understand Shoney's steady
quality and share-price decline only in light of management's "new" but, in
the view of Mr. Danner, ineffective, policies. Mr. Danner further stated
his belief to the Company that the Company had reneged on a contract to
purchase all of the Shares.
Mr. Danner continued to monitor and to evaluate the Company's
reported operations and results, reports that he received from disgruntled
customers and Shareholders, as well as the market price of the Shares.
Then, in May of 1994, the Company announced an amendment and
restatement of its "shareholder rights" plan (the "Poison Pill" or "Plan")
that had the result of making it virtually impossible for Mr. Danner to
acquire even one additional share in the Company without triggering the
punitive provisions of the Plan. Subsequently, Mr. Danner submitted a
shareholder proposal (the "Shareholder Proposal") pursuant to Rule 14a-8 of
the Rules and Regulations of the Securities and Exchange Commission
("Commission"). The Shareholder Proposal provides that the Company should
redeem the Poison Pill. The Shareholder Proposal is included in the
Company's Proxy Materials for the 1995 Annual Meeting of the Company's
Shareholders scheduled for April 18, 1995.
The Company offered to amend the Plan in an unspecified, mutually
satisfactory manner if Mr. Danner would withdraw the Shareholder Proposal.
Mr. Danner declined. The Company has included in the 1995 Proxy Materials
a lengthy rebuttal of Mr. Danner's Shareholder Proposal ("Statement in
Opposition"). Mr. Danner has advised the Company that he believes the
Statement in Opposition to be materially misleading.
The Company announced on or about March 31, 1995, that it had
"reached agreement" with Institutional Investor Services, Inc. to amend the
Poison Pill (the "New Amendment") and to present the Plan to the 1996
Annual Meeting of the Company's Shareholders for an "advisory vote." Mr.
Danner is concerned that the New Amendment does not adequately permit the
Shareholders to obtain the rights described in his Supporting Statement for
the Shareholder Proposal. Mr. Danner may comment further in this regard
in the future and may, in accordance with Regulation 14A under the Act,
communicate with Shareholders about this and other matters.
During the period after June 30, 1993, Mr. Danner believes that the
quality of Shoney's has continued to decline. He has received verbal
reports and complaints about the reputedly bad food or service at various
Shoney's (and Shoney's affiliated) restaurants.
In approximately January of 1995, Shoney's announced that its current
Chairman and Chief Executive Officer was resigning effective year-end 1995
or upon the naming of his successor. The Company announced that it had
named a "Search Committee" to fill this position.
Concomitantly, during the period after June 30, 1993, the price of
Shoney's common voting stock has generally declined. Immediately prior to
March 28, 1995, the price of the Shares closed at less than $10, a decline
believed to be more than 50% during the preceding 12 months. Because of
the concerns that Mr. Danner has for the customers, Shareholders, and
franchisees of Shoney's, as well as his own personal investment in and
commitment to Shoney's, Mr. Danner offered by letter of March 28, 1995, to
return to the Company as Chairman, Director, and Chief Executive Officer.
He stated that the "purpose of this letter is to express my commitment to
help Shoney's, Inc. address its current problems." (Copies of Mr. Danner's
letters to the Company of March 28 and March 29, 1995, are attached hereto
as Exhibits 1 and 2 and incorporated herein by reference (the "Letters").)
Mr. Danner made the following offer to the Board in the March 28,
1995 Letter:
First, noting that, the share price has dropped to less than $10.00
(close of business March 27, 1995), Mr. Danner opined that the "continuing
collapse of Shoney's share price emphasizes Shoney's need for experienced
management with in-depth knowledge of the Company's operations." He said
further that:
"Shoney's just doesn't have any time to waste. I think it would
be a mistake to continue looking for people who don't already
know Shoney's, inside and out."
"For all these reasons, I am today offering to return to Shoney's as
its Chief Executive Officer and Chairman of the Board. I am willing
to serve as CEO and Chairman for a total cash compensation of $1.00
per year, plus stock options".
Mr. Danner described the stock options as becoming valuable "only after
the stock price reaches $20.00 per share."
Mr. Danner stated that he was available immediately to begin work
and to do his best to help the Company through this difficult period.
However, because of Mr. Danner's belief that some of the harsh
racial accusations made against him needed to be addressed at the outset,
Mr. Danner restated his absolute commitment to a continuation and
enhancement of the affirmative action and equal employment opportunity
goals of the Company. He made it a condition to his offer that a
representative of the plaintiffs in the Haynes litigation (described in
Item 3) be offered a seat on the Company's Board.
Mr. Danner's offer was conditioned upon the following matters:
1. The Board of Directors was to eliminate immediately all of its
own Board and Committee compensation;
2. The Board was to make available four (4) Board seats for
nominees to be selected by Mr. Danner (one of them being the
representative of the plaintiffs from the Haynes litigation); and
3. The Board was to appoint Mr. Danner to the retiring Chairman's
Board seat (as his successor) and to name him as Chairman and
Chief Executive Officer with wide latitude in all aspects of
management and operations of the Company, pursuant to a written
agreement.
In addition, as an investor and the Company's largest shareholder, Mr.
Danner asked to be fully informed of any pressing operational and financial
matters.
By letter of March 29, 1995, Mr. Danner clarified the reasons for
his offer and further addressed the issue of Board compensation. He stated
that he wanted to clarify his reasons for volunteering for service to the
Company. He stated to the Board members that over the years a number of
people, including mutual friends, have invested a substantial amount of
their future in Shoney's. Mr. Danner stated that his interest is to
restore the "patterns for success" that have been, in his view, lost, with
a view toward rebuilding the value of their investment. In that letter Mr.
Danner stated that he wanted Board compensation to be fair to all
concerned. He said: "Once we have established our team, and the respective
committees for the Company, we will then meet and decide upon compensation
that is fair for the Company and the Directors. I however still stand by
my offer of $1.00 per year total cash compensation (including Board and
Committee fees)."
The Company responded by advising Mr. Danner by letter of March 31,
1995, that it was treating his letter as an application for the Chief
Executive Officer's position (see Exhibit 3, Letter from Victoria B.
Jackson to Raymond L. Danner dated March 30, 1995.)
Since March 28, 1995, Mr. Danner has had informal, general
discussions about his offer, as well as about the performance of the
Company, with certain members of the Company's Board of Directors. He has
been contacted by franchisees, by customers, by certain Directors, by
Shareholders, and by members of the press in connection with the offer. A
representative of Mr. Danner contacted an institutional investor to
determine that investor's position on the Shareholder Proposal and tried to
make the institutional investor aware verbally of Mr. Danner's offer
(which, according to a representative of the institutional investor, the
Company had already disclosed to such investor.)
A group of the Company's franchisees has endorsed Mr. Danner's offer
to the Company. (See Exhibit 4 - Memorandum from the NASIF Board of
Directors to the Shoney's Board of Directors dated March 31, 1995.)
On April 4, 1995, Mr. Danner sent a letter to the Chair of the
Shoney's Search Committee asking about the status of his offer. (See
Exhibit 5, Letter from Raymond L. Danner to Victoria B. Jackson dated
April 4, 1995.) He has not yet received a reply to this letter.
On April 6, 1995, in light of the Shoney's lack of response to his
offer to return as Chief Executive Officer, Mr. Danner sent a letter to
the Company withdrawing his offer. (See Exhibit 6, Letter from Raymond L.
Danner to the Company dated April 6, 1995.)
In addition, Mr. Danner remains committed to the approval of the
Shareholder Proposal. In this regard, and as a right of a Shareholder, Mr.
Danner has requested that the Company furnish him with a list of
Shareholders (a request that has been withdrawn without prejudice to Mr.
Danner's ability to request it again in the future) and to permit him to
inspect the Company's alphabetical Shareholders' List. The Company has
notified Mr. Danner that he may inspect, but not copy, the said list.
Mr. Danner expects to continue to give and to receive communications
from the Board of the Company and others. For instance, Mr. Danner has
received a number of letters of support for his offer and he has received
also a number of "$1.00" contributions (apparently in response to his offer
to work for $1.00 total cash compensation).
Mr. Danner reviews from time to time the Company's business affairs
and financial position. Based on such evaluation and review, as well as
general economic and industry conditions existing at the time, Mr. Danner
may consider from time to time various alternative courses of action. Such
actions may include the acquisition of additional Shares through open
market purchases, privately negotiated transactions, or otherwise.
Alternatively, such actions may involve the sale of all or a portion of the
Shares in the open market, in privately negotiated transactions or
otherwise. Mr. Danner may also, consistent with the requirements of
Regulation 14A, communicate with other Company shareholders regarding the
Company's performance generally. Except as set forth above, Mr. Danner
has no plan or proposals which relate to or would result in any of the
transactions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Company.
-------------------------------------
(a) Mr. Danner owns directly, with sole voting and dispositive
authority, 4,159,133 shares of the Company. The Company states in its
current proxy materials that it has 41,405,113 shares outstanding at
February 7, 1995. Consequently, Mr. Danner owns beneficially
approximately 10.0% of the subject securities.
Mr. Danner disclaims beneficial ownership of the following shares
pursuant to Rule 13d-4:
1. Shares held by his wife: 83,068; and
2. Shares held by his wife as Custodian for their son: 7,101.
The aggregate number of the securities as to which Mr. Danner disclaims
beneficial ownership is 90,169 ( approximately .26% of the class).
(b) Mr. Danner has had no transactions in the subject class of
securities in the past sixty days.
(d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, the Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Company.
Except as disclosed above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons
named in Item 2 and between such persons and any person with respect to any
securities of the Company, including but not limited to transfer or voting
of any of the securities, finder's fees, joint ventures, loan or option
arrangements, put or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
--------------------------------
The following Exhibits are filed herewith:
Exhibit 1: Letter of Raymond L. Danner to Board of Directors,
Shoney's, Inc., dated March 28, 1995
Exhibit 2: Letter of Raymond L. Danner to Board of Directors,
Shoney's, Inc., dated March 29, 1995
Exhibit 3: Letter of Victoria B. Jackson to Ray Danner, dated March
30, 1995
Exhibit 4: Memorandum of the NASIF Board of Directors to Shoney's Board
of Directors
Exhibit 5: Letter of Raymond L. Danner to Victoria Jackson, dated
April 4, 1995
Exhibit 6: Letter of Raymond L. Danner to Board of Directors,
Shoney's, Inc., dated April 6, 1995
Exhibit 7: Letter of Daniel W. Small to Robert D. Tuke, dated
March 28, 1995
Exhibit 8: Letter of Robert D. Tuke to Daniel W. Small, dated
March 29, 1995
Exhibit 9: Letter of Daniel W. Small to Robert D. Tuke, dated
March 30, 1995
Exhibit 10: Letter of Raymond L. Danner to Shoney's, Inc., dated
March 31, 1995
Exhibit 11: Letter of Daniel W. Small to Robert D. Tuke, dated
April 3, 1995
Exhibit 12: Letter of Robert D. Tuke to Daniel W. Small, dated
April 4, 1995
Exhibit 13: Capital Contribution Agreement dated September 15, 1992 by
and between Shoney's, Inc. and Raymond L. Danner
Exhibit 14: Agreement dated September 15, 1992 by and between Shoney's,
Inc. and Raymond L. Danner
Exhibit 15: Escrow Agreement dated September 15, 1992 among Shoney's,
Inc., Raymond L. Danner and Equitable Trust Company
Exhibit 16: Press Release dated April 7, 1995
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: April 6, 1995 /s/ Raymond L. Danner
--------------------------------
Raymond L. Danner
Exhibit 1
[Letterhead The Danner Company International Plaza]
2 International Drive
Suite 510
Nashville, Tennessee 37217
March 28, 1995
Board of Directors
Shoney's Inc.
1727 Elm Hill Pike
Nashville, TN 37210
Re: Open letter to the Board of Directors.
Raymond Danner's Commitment to Shoney's, Inc.
Ladies and Gentlemen of the Shoney's, Inc. Board:
The purpose of this letter is to express my commitment to help Shoney's Inc.
address its current problems. As you know, the share price has dropped to
less than $10.00 (close of business March 27, 1995).
The continuing collapse of Shoney's share price emphasizes Shoney's need for
experienced management with in-depth knowledge of the Company's operations.
Shoney's just doesn't have any time to waste. I think it would be a
mistake to continue looking for people who don't already know Shoney's,
inside and out.
For all these reasons, I am today offering to return to Shoney's as its Chief
Executive Officer and Chairman of the Board. I am willing to serve as CEO and
Chairman for a total cash compensation of $1.00 per year, plus stock options.
Because of my confidence in Shoney's potential, I am willing for those options
to become valuable only after the stock price reaches $20.00 per share. I am
available immediately. I will do my best to help the Company through this
difficult period as, indeed, some Board Members have already informally
suggested I should.
I believe that the Company's financial earnings, and share-price track record
under my leadership speaks for itself. The consecutive quarterly earnings'
increases are still remembered by many shareholders.
Because of some of the harsh racial accusations made against me, I want
everyone to know that I am committed to a continuation and enhancement of the
affirmative action and equal employment opportunity goals of the Company.
Indeed, it is a condition to my offer that a representative of the plaintiffs
in the Haynes litigation be offered a seat on the Company's Board.
This offer has the following three conditions:
1. The Board of Directors eliminates immediately all of its
own Board and Committee compensation.
2. The Board will make available four (4) Board seats for
nominees that I select (one of them being the
representative of the plaintiffs from the Haynes
litigation).
3. The Board will appoint me to Mr. Henry's Board seat (as
his successor) and name me as Chairman and CEO with wide
latitude in all aspects of management and operations,
pursuant to a written agreement.
In addition, I will need to be fully informed of any pressing operational and
financial matters.
Thank you for your attention to this critical matter. I would welcome your
feedback.
Sincerely,
Raymond L. Danner
Exhibit 2
[Letterhead The Danner Company International Plaza]
2 International Drive
Suite 510
Nashville, Tennessee 37217
March 29, 1995
Board of Directors
Shoney's Inc.
1727 Elm Hill Pike
Nashville, TN 37210
Dear Members of the Board of Directors of Shoney's Inc.:
In my letter of March 28, 1995, one of the conditions of my return to Shoney's
was that the Board of Directors eliminate all of its Board and Committee
compensation. I would like to clarify my position in respect to this matter.
Once we have established our team, and the respective committees for the
Company, we will then meet and decide upon compensation that is fair for the
Company and the Directors. I however still stand by my offer of $1.00 per
year total cash compensation (including Board and Committee fees).
Also, I would like to clarify my reasons for volunteering for service to the
Company. Over the years, a number of people, including your friends and mine,
have invested a substantial amount of their future in Shoney's. My interest
is to restore the patterns of success that have been lost so as to rebuild the
value of their investment. I sincerely hope that you have the same objectives
and that you will join and support me in this effort. I look forward to
hearing from you.
Sincerely,
Raymond L. Danner
Exhibit 3
[Letterhead DSS ProDiesel]
Corporate Office:
922 Main Street
P.O. Box 60393
Nashville, Tennessee 37206 USA
(615) 227-2242
800-327-4373
Fax: (615) 228-8259
VIA FACSIMILE
March 30, 1995
Mr. Ray Danner
The Danner Company
2 International Plaza
Suite 510
Nashville, Tennessee 37217
Re: Your letters to the Board of Directors
Dear Ray:
I have received your letters of March 28 and 29, 1995. As you know, I chair
the Search Committee of the Board of Directors. In that capacity, I have
considered your letter to be an application to be considered for the position
of CEO of Shoney's, Inc. I regret that you have been unable to meet with me
personally to discuss this and other matters.
I think you know that the Search Committee commenced its efforts in January of
this year to identify the very best candidate to be CEO of Shoney's and take
this Company into the next century. Recognizing the unique challenges that
presently face the restaurant industry, the Search Committee is assisted in
this effort by the executive search firm of Spencer Stuart and its restaurant
specialists. They will advise us on your application as well.
Ray, if you have any questions regarding the search process, please do not
hesitate to contact me. We will stay in touch.
Thank you for your interest in the Company.
Sincerely yours,
Victoria B. Jackson
Chair, Search Committee for
Shoney's Board of Directors
VBJ/jo
cc: Shoney's Board of Directors
Bob Tuke
Exhibit 4
MEMO TO: SHONEY'S BOARD OF DIRECTORS
FROM: NASIF BOARD OF DIRECTORS
DATE: MARCH 31, 1995
RE: RAY DANNER PROPOSAL
The members of NASIF Board of Directors are committed to working in the best
interest of the entire organization. We have a first-hand understanding of
the needs of the system and of the responsibility with which Shoney's Board of
Directors is charged.
Therefore, after a lengthy meeting with Ray Danner to discuss his proposal to
Shoney's Board of Directors, the Board of Directors of NASIF has unanimously
accepted the following resolution.
WHEREAS, the members of the NASIF Board of Directors are keenly aware of the
current financial situation facing Shoney's and recognize the need for
immediate action to restore the patterns of success; and
WHEREAS, operations are one of the key elements of a rapid recovery for
Shoney's; and
WHEREAS, Ray Danner has board knowledge of how to improve the operational
standards within the system; and
WHEREAS, the members of the NASIF Board of Directors believe that Ray Danner
has the ability to restore those patterns for success, and that Shoney's has a
limited window of opportunity;
NOW, THEREFORE, BE IT:
RESOLVED, that the members of the NASIF Board of Directors hereby endorse and
support the offer made by Ray Danner for his return to being Chief Executive
Officer/Chairman of the Board of Shoney's and we encourage the Board of
Directors of Shoney's to accept Ray Danner's offer immediately.
We offer this resolution in the interest of the system and support the
decisions of Shoney's Board of Directors.
Exhibit 5
[Letterhead The Danner Company International Plaza]
2 International Drive
Suite 510
Nashville, Tennessee 37217
April 4, 1995
Ms. Victoria Jackson
President & CEO
ProDiesel Sales & Service, Inc.
928 Main Street
Nashville, TN 37206
Dear Victoria:
Sometime ago I made an offer to try to help Shoney's. I have not yet gotten a
yes or a no to my offer. I urge you to realize that while Shoney's is working
through its "process" the stock is sinking again.
Will you tell me what the time frame is that you envision for giving me an
answer? I would appreciate your answer by messenger. You know that I have
other obligations and I cannot wait forever for an answer. Shoney's can't
wait much longer either.
Sincerely,
Raymond L. Danner
Exhibit 6
[Letterhead The Danner Company International Plaza]
2 International Drive
Suite 510
Nashville, Tennessee 37217
April 6, 1995
To the Board of Directors
Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Dear Ladies and Gentlemen:
Some time ago, I made an offer that I would return to serve as CEO/Chairman of
the Board of Shoney's and I detailed in that offer the compensation I would
expect and the material terms. To date, I have not received any formal
response to my offer, except a notification that my offer was being turned
over to an executive search firm in Atlanta, Georgia for consideration.
My offer to return to Shoney's is being withdrawn as of today.
Time is extremely important to revive Shoney's, Inc. The Company must take
immediate steps to return to its patterns for success, as demonstrated by
yesterday's earnings report. The Earnings Per Share numbers released
yesterday show a decrease of 42% from the EPS numbers for the same quarter a
year ago; by my calculations, that is $39,000 less earnings every day.
There is not time for a new CEO to come to the Company, learn its many parts
and, at the same time, turn it around.
In my experience, I have found that actions speak louder than words. I can
only interpret the Board's failure to communicate to me a favorable response
on my offer as the same as a rejection. And if the Board has truly not yet
been able to make a decision on my offer, then I am very disappointed in their
ability to do their job.
I was serious when I made my offer to the Board. I could have returned
immediately and have received offers from more than two dozen top notch men
and women, black and white, who were long term staff members that had
participated in creating Shoney's many successful years of earnings and
operations. They were contributors to the many years of continual successful
growth and to the Company's patterns for success. Of this group who offered
to return, some are current franchisees, some are former franchisees, some are
former Shoney's employees, and some are long term existing employees. This
army of talent has volunteered to follow my leadership.
I wrote Victoria Jackson earlier to say that I could not hold my offer
outstanding forever, and I will not.
It is my sincere hope that the Board will make the right decision for the
Company and all its shareholders.
Sincerely,
Raymond L. Danner
Exhibit 7
[Letterhead Daniel W. Small
Attorney at Law
3100 West End Avenue
Suite 250
Nashville, Tennessee 37203
(615) 385-1005]
March 28, 1995
Via Facsimile (615) 313-3310
Robert D. Tuke, Esq.
Tuke, Yopp & Sweeney
Seventeenth Floor
Third National Bank Building
201 Fourth Avenue, North
Nashville, Tennessee 37219
Re: Shareholder List of Shoney's, Inc.
Dear Bob:
As you know, I represent Mr. Raymond L. Danner, a major shareholder
of Shoney's Inc. (the "Company"). Pursuant to Rule 14a-7 of the Rules and
Regulations of the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934, Mr. Danner is requesting a list of the
Shareholders of the Company as of the record date for the 1995 Annual
Meeting of Shareholders ("Shareholder List") in order to communicate
directly with the other Shareholders of the Company about an issue of
importance to all of the Shareholders.
In connection with this request, Mr. Danner agrees to make the
representations and undertakings required by the Rule (such as: proper
purpose, share ownership, confidentiality, and so forth). Further pursuant to
the Rule, we request a copy of the Shareholder List as soon as practicable but
in any event within the time permitted by the Rule.
In the event the Company determines to mail the communication rather
than to provide Mr. Danner with a Shareholder List, we request that:
1. The Company notify us of this determination immediately;
2. The Company notify us of the approximate cost of mailing to the
Shareholders a communication of approximately 2 to 5 pages; and
3. The Company notify us of the time that the Company anticipates
will elapse between the delivery of the proposed materials and the mailing
thereof first-class postage prepaid.
For the Company's information, the communication deals with issues
that need to be discussed among the Shareholders before the Annual Meeting of
Shareholders scheduled for on or about April 17, 1995. Because of the very
tight time frame, we request that the Company notify us of the above matters
as soon as possible. Mr. Danner is prepared to mail, or to provide to the
Company for mailing, his Shareholder Communication, immediately upon receipt
of the Shareholder List from the Company or of notice from the Company that
the Company intends to conduct the mailing.
Thank you for your assistance. I look forward to hearing from you
very soon. I trust that you will notify me immediately by telephone,
confirmed in writing, of the Company's prompt determinations under all of the
circumstances.
Very truly yours,
Daniel W. Small
Exhibit 8
[Letterhead Tuke Yopp & Sweeney
Attorneys
Third National Bank Building, 17th Floor
201 Fourth Avenue North
Nashville, Tennessee 37219-2040]
March 29, 1995
VIA TELECOPIER AND U.S. MAIL
Daniel W. Small, Esq.
3100 West End Avenue
Suite 250, One American Center
Nashville, TN 37203
RE: Shoney's Inc. and Mr. Ray Danner
Dear Dan:
I am in receipt of your letter of March 28, received in our office at
approximately 7:00 p.m. last night.
When you provide the other information required by Rule 14a-7, the
Company will treat your letter as a request under that Rule, and will respond
appropriately within the time provided by the Rule.
As you know, in order for Mr. Danner to comply with the Rule, he will
need to furnish to the Company an appropriate affidavit or other similar
document meeting the requirements of Rule 14a-7(c)(2). The Rule also
requires, among other things, that Mr. Danner "identify" the proposal or other
corporate action that will be the subject of the solicitation. The
certifications required by the Rule are obviously important to the Company.
Inasmuch as Mr. Danner's shareholder proposal was first sent to the
Board in September of last year, the "tight time frame" to which you refer
appears to be self-inflicted. In any event if you will supply the information
required by Rule 14a-7 to me at your earliest convenience, we will respond
within the time frame provided by the Rule.
With best wishes.
Very truly yours,
TUKE YOPP & SWEENEY
Robert D. Tuke
cc: Taylor H. Henry
Chairman of the Board
Chief Executive Officer
Exhibit 9
[Letterhead Daniel W. Small
Attorney At Law
3100 West End Avenue
Suite 250, One American Center
Nashville, Tennessee 37203-1323]
March 30, 1995
VIA HAND-DELIVERY
Robert D. Tuke, Esq.
TUKE, YOPP & SWEENEY
17th Floor, Third National Bank Building
Nashville, Tennessee 37219
Dear Bob:
I am in receipt of you letter of March 30, 1995 declining to provide
a list of security holders of Shoney's Inc. to Mr. Danner at this time.
Although the letter indicates that it was faxed to me on March 29, 1995, it
was in fact received on this end on March 30, 1995 (today). Until you receive
the information that you have demanded, you should consider the request under
Rule 14a-7 withdrawn.
All the best.
Very truly yours,
Daniel W. Small
cc: Mr. Danner
Exhibit 10
[Letterhead The Danner Company
International Plaza]
March 31, 1995
HAND-DELIVERY
Shoney's Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Ladies and Gentlemen:
As you know, I am a significant shareholder of Shoney's Inc. (the "Company"),
owning more than 3 million shares. Pursuant to applicable law, I hereby
demand to inspect (through my attorneys C. K. McLemore, III, and/or Dan Small)
the alphabetical list of names of all Shareholders entitled to notice of the
meeting of shareholders of the Company, showing the address of and number of
shares held by each shareholder, in each case as reflected in the records of
the Company.
Thank you for your assistance in this important matter.
Very truly yours,
Raymond L. Danner
cc: C.K. McLemore, III
Daniel W. Small
Exhibit 11
[Letterhead Daniel W. Small
Attorney at Law
3100 West End Avenue
Suite 250, One American Center
Nashville, Tennessee 37203-1323]
April 3, 1995
VIA FACSIMILE AND HAND-DELIVERY
Robert D. Tuke, Esq.
TUKE, YOPP & SWEENEY
17th Floor, Third National Bank Building
Nashville, Tennessee 37219
Dear Bob:
Enclosed please find a letter from Mr. Danner to Shoney's Inc. (the
"Company"). The original of this letter will be delivered to Shoney's Inc.
later today or early tomorrow. Either Mr. McLemore or I (or both) plan to
stop by the Company's offices tomorrow afternoon to review a copy of the
Shareholders' list described in Mr. Danner's letter. We wanted to make you
aware of this planned visit.
Best regards.
Very truly yours,
Daniel W. Small
Enclosure
cc: Mr. Danner
Mr. McLemore
Exhibit 12
[Letterhead Tuke Yopp & Sweeney
Attorneys
Third National Bank Building, 17th Floor
201 Fourth Avenue North
Nashville, Tennessee 37219-2040]
April 4, 1995
VIA FACSIMILE - 292-9004 - AND BY HAND
Daniel W. Small, Esq.
3100 West End Avenue
Suite 250, One American Center
Nashville, TN 37203-1323
RE: Inspection of Shareholder List at Shoney's, Inc.
Dear Dan:
This letter confirms my oral response last night to Mr. Danner's
letter dated March 31, 1995, and yours dated April 3, 1995, delivered to the
Company yesterday. Those letters demand that you and C.K. be permitted to
inspect Shoney's shareholder list on Mr. Danner's behalf. As I told you, you
may inspect the list at the Company's offices today, April 4, 1995. I suggest
beginning at around 2:00 p.m.
As I also mentioned last night, pursuant to T.C.A. Section 48-17-201
you may not copy the list or any part of it unless Mr. Danner complies with
T.C.A. Section 48-26-102(c). I believe you confirmed your understanding of
that matter last night.
Additionally, I want you and Mr. Danner to know how much I appreciate
our conversation last night. In that vein, I want to reiterate that our
correspondence and disagreements regarding securities and corporate law
matters in no way are meant to suggest that the Board is hostile to Mr.
Danner. As I said last night, the Board remains desirous of keeping lines of
communication open with Mr. Danner, regardless of the ultimate decision it
makes with respect to selecting a new CEO. I also would repeat that no final
decision has yet been made.
I would like to reiterate that the Board has taken Mr. Danner's offer
seriously and assumes that his offer was made with sincerity. I hope that Mr.
Danner understands, however, that the Board has invested an enormous amount of
time and energy into the process of selecting a new CEO and restructuring the
Company. I know the Board would appreciate very much Mr. Danner's respecting
the Board's collective efforts and commitment, just as the Board respects his
commitment.
I hope fruitful discussions in this vein can continue. Please let me
know if the time I have suggested for inspecting records is not convenient.
Very truly yours,
TUKE YOPP & SWEENEY
Robert D. Tuke
RDT/azs
cc: F.E. McDaniel, Jr. (via facsimile)
Board of Directors
Exhibit 13
CAPITAL CONTRIBUTION AGREEMENT
This CAPITAL CONTRIBUTION AGREEMENT (the "Agreement") dated
15th day of September, 1992, is entered into by and between SHONEY'S, INC.
("Shoney's") and RAYMOND L. DANNER ("Danner").
W I T N E S S E T H
WHEREAS, Shoney's and Danner are co-defendants in certain
litigation pending in the United States District Court for the Southern
District of Florida, styled Haynes, et al. v. Shoney's Inc., et al., No.
89-30093 RV (the "Civil Action"); and
WHEREAS, Shoney's anticipates attempting to settle the Civil
[on and all claims that were or could have been raised by the plaintiffs
(including any class of plaintiffs certified) in the Civil Action; and
WHEREAS, the settlement of the Civil Action will require a
substantial monetary payment by Shoney's; and
WHEREAS, Danner desires to make a capital contribution to
Shoney's in the form of Shoney's Common Stock in order to attempt to enhance
the value of the remaining outstanding shares of Shoney's Common Stock
including, without limitation, those owned by Danner; and
WHEREAS, Shoney's wishes to accept such a capital contribution;
NOW, THEREFORE, in consideration of the mutual covenants and
definitions contained herein Shoney's and Danner agree as follows:
1. Definitions. In addition to words and terms that may be
defined elsewhere in this Agreement, the following words and terms used in the
Agreement shall have the following meanings unless the context or use fairly
indicates another or different meaning or context, which definitions shall be
equally applicable to both the singular and plural forms of such words and
terms:
"Common Stock" means the $1.00 par value common stock of
Shoney's.
"Contribution Shares" means 2,694,444 shares of Common Stock.
"Escrow Agent" means Equitable Trust Company.
"Notice" means a notification sent to both the Escrow Agent and
Danner signed by an authorized officer of Shoney's stating that the conditions
precedent to the release of Contribution Shares have been satisfied and
containing an acknowledgement by Danner that the condition set forth in
Section 3(b)(i) has been satisfied.
2. Capital Contribution.
(a) Subject to the terms and provisions of this Agreement,
Danner agrees to make a capital contribution to Shoney's of the Contribution
Shares (the "Capital Contribution").
(b) The Capital Contribution shall be made through delivery
to Shoney's by the Escrow Agent of the Contribution Shares.
3. Escrow and Delivery of Contribution Shares.
(a) Within five (5) business days after the execution of this
Agreement, Danner shall deposit with the Escrow Agent, pursuant to an
escrow agreement in the form of Exhibit A, the Contribution Shares,
endorsed in blank or accompanied by appropriate stock powers executed
in blank.
(b) The Contribution Shares shall be distributed by the
Escrow Agent to Shoney's within five (5) business days after
satisfaction of all of the following conditions:
(i) The approval by the court of a final settlement
agreement and/or consent decree in the Civil Action pursuant to
which Shoney's and Danner are completely and finally released
from all claims, rights and causes of action of any kind by the
plaintiffs (including any class of plaintiffs) in the Civil
Action with the exception of claims, rights and causes of
action by any plaintiffs who may opt out of any class
settlement of the Civil Action or arising out of any settlement
agreement and/or consent decree in the Civil Action or breach
thereof and such settlement agreement and/or consent decree has
become final and non-appealable; and
(ii) Delivery of the Notice to Danner and the Escrow
Agent.
(c) Unless Danner objects, in writing, to any of the
statements in the Notice within five (5) business days after the
Notice is delivered to the Escrow Agent and Danner, the Escrow Agent
may conclusively rely on the Notice's statement that conditions
(b)(i) and (b)(ii) above have been satisfied. If Danner objects to
the Notice in the manner and within the time period set forth above,
the Escrow Agent, within five (5) business days after receipt of
Danner's objection, shall interplead the Escrow Shares by causing to
be filed an appropriate action in the Chancery Court for Davidson
County, Tennessee requesting the court to determine whether the
Contribution Shares have become distributable to Shoney's.
(d) Until the Contribution Shares become distributable to
Shoney's by reason of satisfaction of the conditions in Sections
3(b)(i) and 3(b)(ii), Danner shall be entitled to receive any income
(including, without limitation, any dividends distributed with
respect to the Contribution Shares), the record date for which occurs
prior to the satisfaction of the conditions in Sections 3(b)(i) and
3(b)(ii). Shoney's shall be entitled to receive any income
(including, without limitation, any dividends) distributed with
respect to the Contribution Shares, the record date for which occurs
after (including the date that such conditions are satisfied) the
satisfaction of the conditions in Sections 3(b)(i) and 3(b)(ii).
Until Contribution Shares are actually distributed to Shoney's,
Danner shall be entitled to exercise voting rights of such shares at
any annual or special meeting of the shareholders of Shoney's, the
record date for which occurs prior to such distribution to Shoney's.
Danner covenants and agrees, however, that the Contribution Shares
are and will remain free of all liens, security interests,
encumbrances and restrictions except those created hereby and those
imposed by applicable securities laws.
(e) If this Agreement is terminated pursuant to Section 11,
the Contribution Shares, together with any stock powers that have
been delivered, shall be returned to Danner.
4. Tax Matters. The Capital Contribution shall be treated
by Shoney's on its income tax returns as a capital contribution to Shoney's in
accordance with Section 118(a) of the Internal Revenue Code of 1986, as
amended. Danner agrees to report the Capital Contribution on any income tax
returns filed by him as a contribution to Shoney's capital and not as a
deductible expenditure. Danner shall have the right to review (but not
approve) the manner in which the Capital Contribution is documented by
Shoney's.
5. Nondisclosure. Shoney's agrees not to disclose or reveal
the amount of the Capital Contribution to the plaintiffs or the attorneys
representing the plaintiffs in the Civil Action, without the prior written
consent of Danner. Danner understands and acknowledges, however, that the
plaintiffs or the attorneys representing the plaintiffs in the Civil Action
may become aware of the amount of the Capital Contribution in the event
Shoney's is required to publicly disclose the Capital Contribution.
6. Binding Effect. This Agreement shall be binding upon,
and incurs to the benefit of, the parties hereto and their respective
successors, heirs and assigns.
7. Governing Law. This Agreement shall be governed in all
respects by, and be construed in accordance with, the laws of the State of
Tennessee.
8. Time of the Essence; Remedies. Time is of the essence in
this Agreement. Shoney's understands and acknowledges that a violation of
this Agreement will cause Danner irreparable harm and damages incapable of
calculation and that Danner will be entitled to an order of any court with
jurisdiction requiring specific performance by Shoney's of its obligations
hereunder. Danner understands and acknowledges that a violation of this
Agreement will cause Shoney's irreparable harm and damages incapable of
calculation and that Shoney's will be entitled to an order of any court with
jurisdiction requiring specific performance by Danner of his obligations
hereunder. The parties agree that nothing in this Agreement shall be
construed as prohibiting either party from pursuing any other remedy available
to it in the event of a breach or threatened breach of this Agreement,
including the recovery of damages.
9. Notices. All notices and other communications provided
for herein shall be validly given or made if in writing and delivered or sent
by hand delivery to the parties at the following addresses:
If to Shoney's: Shoney's, Inc.,
1727 Elm Hill Pike
Nashville, Tennessee 37210
Attn: Secretary
If to Danner: c/o The Danner Company
1451 Elm Hill Pike
Suite 114
Nashville, Tennessee 37210
A copy of any notice sent to the Escrow Agent by either party
shall simultaneously be sent to the other party. Any notice shall be deemed
given when received or when delivery is first refused.
10. Amendments. This Agreement cannot be amended, modified,
supplemented or rescinded except in writing signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless such waiver is
in writing signed by the parties hereto.
11. Term. This Agreement shall remain in effect until all
conditions for delivery of the Contribution Shares to Shoney's have been
satisfied and such delivery has occurred; provided, however, if, on or before
December 31, 1992, a motion by Danner, Shoney's and the plaintiffs in the
Civil Action seeking conditional approval of a settlement of the Civil Action,
as contemplated in Section 3(b)(i), is not filed, then this Agreement may be
terminated by either party.
12. Construction. As used herein, the single number shall
include the plural, the plural the singular, and the use of any gender shall
be applicable to all genders, unless the context would clearly not admit such
construction. This instrument shall be construed and interpreted in
accordance with the laws of the state of Tennessee. Section or paragraph
headings are employed herein solely for convenience of reference, and such
headings shall not in any way affect the meaning, validity or enforceability
of any term or provision of this instrument. All references herein to
"section" or "paragraph" shall mean the appropriate number section or
paragraph of this instrument except where reference is particularly made to
some other instrument or document.
13. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof. There are no arrangements, understandings,
restrictions, representations or warranties between the parties other than
those expressly set forth herein.
IN WITNESS WHEREOF, the parties hereto, Shoney's by its duly
authorized officer, have executed this Agreement as of the date first set
forth above.
_______________________
Raymond L. Danner
SHONEY'S, INC.
By:____________________
Title:_________________
Exhibit 14
AGREEMENT
THIS AGREEMENT (the "Agreement") dated the 15th day of
September, 1992, is entered into by and between Shoney's Inc. ("Shoney's") and
Raymond L. Danner ("Danner").
W I T N E S S E T H
WHEREAS, Shoney's and Danner are co-defendants in certain
litigation pending in the United States District Court for the Southern
District of Florida, styled Haynes, et al. v. Shoney's Inc., et al., No.
89-30093 RV (the "Civil Action"); and
WHEREAS, Danner, as a director of Shoney's, pursuant to
Shoney's bylaws, is entitled to be indemnified for all liability and expenses
that he incurs in the defense of the Civil Action to the fullest extent
allowed by the Tennessee Business Corporation Act, which would require that
he be indemnified for all reasonable expenses incurred by him in connection
with the Civil Action in the event that he is wholly successful in defending
himself in the Civil Action; and
WHEREAS, Shoney's and Danner desires to: (i) jointly settle the
Civil Action; (ii) apportion among themselves the payments to be made in
settlement of the Civil Action; and (iii) otherwise provide for Danner to be
indemnified by Shoney's from all other liabilities arising out of the Civil
Action, to the extent and in the manner set forth herein;
NOW, THEREFORE, for and in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Shoney's and Danner agree as follows:
1. Definitions. In addition to words and terms that may be
defined elsewhere in this Agreement, the following words and terms used in the
Agreement shall have the following meanings unless the context or use fairly
indicates another or different meaning or intent, which definitions shall be
equally applicable to both the singular and plural forms of such words and
terms:
"Administrative and Transaction Costs" means any and all
expenses incurred by Shoney's in implementing, monitoring (which may include,
without limitation, Plaintiffs' Attorneys' Fees) and/or enforcing any portion
of any settlement agreement and/or consent decree relating to the Civil Action
(with the exception of those provisions relating to equitable non-monetary
relief).
"After Tax Cost" means the actual amount of Litigation Expenses
accrued by Shoney's multiplied by 65.05%.
"Closing Market Price" means the price of the last trade of the
Common Stock on the New York Stock Exchange ("NYSE") as reported by The
Wall Street Journal (Eastern Edition); provided that, if there shall be any
material alternation in the present system of reporting sales of such
Common Stock, or if such Common Stock shall no longer be listed on the
NYSE, the market value of the Common Stock as of a particular date shall be
determined in such a method as may be mutually agreeable to the parties.
"Common Stock" means the $1.00 par value common stock of
Shoney's.
"Company Attorneys' Fees" means any and all amounts paid
previously or in the future by Shoney's for legal counsel (including,
without limitation, any counsel retained by Shoney's on behalf of Danner),
for experts, consultants and mediators and for all out of pocket expenses
of such persons relating to the Civil Action (which, as of August 2, 1992,
have been approximately $10.5 million); provided, however, that Danner, or
his representatives, shall have the right to review and approve (which
approval shall not be unreasonably withheld or delayed) the amounts of
Company Attorneys' Fees incurred by Shoney's subsequent to the date of a
public announcement by Shoney's of a tentative settlement of the Civil
Action.
"GAAP" means generally accepted accounting principles,
consistently applied for the period of time in question, as in effect from
time to time.
"Insurance Proceeds" means monies received by Shoney's to pay
and/or reimburse it for Plaintiffs' Damages, Company Attorneys' Fees and
Plaintiffs' Attorneys' Fees.
"IRS" means the Internal Revenue Service of the Department of
the Treasury of the United States of America.
"Litigation Expenses" equals the sum of Plaintiffs' Damages
plus Plaintiffs' Attorneys' Fees plus Company Attorneys' Fees plus Payroll
Taxes plus Administrative and Transaction Costs minus Insurance Proceeds.
"Payroll Taxes" means the FICA, FUTA, and other employment
taxes and/or premiums required to be paid by Shoney's with respect to any
portion of Plaintiffs' Damages.
"Plaintiffs' Damages" means any amounts agreed by Shoney's to
be paid in settlement of the Civil Action that are to be distributed to
plaintiffs (including, without limitation, any class of plaintiffs) in the
Civil Action including, without limitation, amounts for back pay, compensatory
damages, punitive damages or prejudgment interest, but excluding Plaintiffs'
Attorneys' Fees; provided, however, that should any portion of Plaintiffs'
Damages be payable in installments with an interest rate less than five (5%)
percent attributable to such installments, the amount of Plaintiffs' Damages
so payable shall, for the purposes of this Agreement, be the present value of
such installments (using a five (5%) percent discount factor) determined as of
the date that a consent decree settling the Civil Action becomes final and
non-appealable.
"Plaintiffs' Attorneys' Fees" means any amounts agreed by
Shoney's to be paid (whether now or in the future as part of the
Administrative and Transaction Costs) in settlement of the Civil Action
that are to be distributed to the attorneys representing the plaintiffs
(including, without limitation, any class of plaintiffs) in the Civil
Action and shall include, without limitation, fees and out of pocket
expenses of such attorneys.
"RIC Claims" means the claims, demands or causes of action of
any employee (whether past, present or prospective) of Robertson Investment
Company, Charles Robertson or Roger Danner that were raised in the Civil
Action for any type of discriminatory conduct arising out of or related to
their employment (or failure to have such employment) with any of Robertson
Investment Company, Charles Robertson or Roger Danner.
2. Settlement; Payment of Litigation Costs. Shoney's and
Danner agree to enter into a final settlement agreement and/or consent decree
in the Civil Action pursuant to which Shoney's and Danner are completely and
finally released from all claims, rights and causes of action of any kind by
the plaintiffs (including any class of plaintiffs) in the Civil Action
(including, without limitation, the RIC Claims) with the exception of claims,
rights and causes of action arising out of any plaintiffs who may opt out of
any class settlement of the Civil Action settlement agreement and/or consent
decree or breach thereof. Subject to the terms and provisions of this
Agreement, Shoney's shall pay the Litigation Expenses incurred by reason of
such a settlement of the Civil Action. Subject to Danner's obligations to
make contributions to Shoney's pursuant to Section 3 and Section 4, Shoney's,
pursuant to its bylaws, agrees to indemnify and hold Danner harmless from and
against the Litigation Expenses.
3. Contributions of Capital by Danner.
(a) Shoney's shall accrue all Litigation Expenses in
accordance with GAAP. Danner agrees to contribute capital to
Shoney's, when and in the manner provided for herein, in an amount
equal to fifty percent (50%) of the aggregate After Tax Cost of the
Litigation Expenses in excess of $97 million. When the aggregate
After Tax Costs of the Litigation Expenses exceeds $97 million,
Shoney's shall send to Danner, within thirty (30) days after the end
of each of its fiscal quarters, a statement indicating: (i) all
Litigation Expenses accrued to date and for the immediately preceding
fiscal quarter; (ii) the After Tax Cost of the Litigation Expenses
accrued to date and for the immediately preceding fiscal quarter;
(iii) one-half of the After Tax Cost of the Litigation Expenses
accrued to date; (iv) the amount of all prior contributions by Danner
pursuant to this Agreement; and (v) the contribution by Danner then
due pursuant to this Agreement. Within five (5) business days after
the receipt of any such statement, Danner shall make the contribution
then due pursuant to this Agreement.
(b) Any contribution pursuant to Section 3(a) shall be in
immediately available funds deposited to an account designated by
Shoney's or, at Danner's option, may be in shares of Common Stock.
If such contribution is in Common Stock, the number of shares of
Common Stock necessary to make the contribution then due shall be
equal to the contribution then due from Danner pursuant to Section
3(a) divided by the Closing Market Price on the last business day
prior to the then applicable due date.
4. Tax Matters and Additional Contributions.
(a) In the event the IRS adjusts Shoney's income tax return
in any manner with respect to any contribution by Danner under this
Agreement or otherwise and/or with respect to any of the Litigation
Expenses and such adjustment has the effect of increasing the After
Tax Cost of the Litigation Expenses, Danner shall contribute capital
to Shoney's in an amount equal to fifty percent (50%) of the
increased After Tax Cost to Shoney's of the Litigation Expenses
resulting from such adjustment. Any such contribution shall be made
by Danner within five (5) business days of such adjustment becoming
final and not subject to further proceedings or appeal by Shoney's.
(b) Any contribution pursuant to Section 4(a) shall be in
immediately available funds deposited to an account designated by
Shoney's or, at Danner's option, may be in shares of Common Stock.
If such contribution is in Common Stock, the number of shares of
Common Stock necessary to make the contribution then due shall be
equal to the contribution then due from Danner pursuant to Section
4(a) divided by the Closing Market Price on the last business day
prior to the then applicable due date.
(c) In the event that Shoney's does not elect to challenge
any adjustment made by the IRS that increases the After Tax Cost of
the Litigation Expenses, Danner shall have the right to contest, at
his expense and through appropriate proceedings, the IRS' adjustment.
In the event that Danner exercises this right, Danner shall pay all
interest and penalties that accrue following exercise of his right to
contest the adjustment.
5. Insurance. Danner hereby assigns to the Company any and
all rights and/or claims that he may have under any insurance policies, the
premiums of which have been paid by Shoney's, that he pay and/or reimburse
Shoney's for any or all of the Litigation Expenses.
6. Mutual Release.
(a) By Danner. Upon settlement of the Civil Action, Danner
shall release and forever discharge Shoney's, and each of its
officers, agents, directors and employees from all claims, demands
and causes of action of any kind that Danner now has or hereafter may
have on account of or in any way arising out of the Civil Action,
including, without limitation, any claim for indemnity or
contribution, except that this release shall not release any claim
that Danner may have for: (i) a breach of the terms of this
Agreement; or (ii) any claims of indemnification that may arise out
of any actions other than by the plaintiffs in the Civil Action
(including any class of plaintiffs).
(b) By Shoney's. Upon settlement of the Civil Action,
Shoney's shall release and forever discharge Danner from all claims,
demands and causes of action of any kind that Shoney's now has or
hereafter may have on account of or in any way arising out of the
Civil Action, including, without limitation, any claim for indemnity
or contribution, except that this release shall not release any claim
that Shoney's may have arising out of a breach of the terms of this
Agreement.
7. Term. This Agreement shall remain in effect until all
Litigation Expenses attributable to the Civil Action have been accrued by
Shoney's or until the IRS completes the examination of and approves the tax
returns of Shoney's for any year in which Litigation Expenses have been
deducted, whichever occurs later.
8. Nondisclosure. Danner and Shoney's hereby agree not to
disclose or reveal the terms of this Agreement to the plaintiffs or the
attorneys representing the plaintiffs in the Civil Action, without the prior
written consent of Danner. Danner understands and acknowledges, however, that
the plaintiffs or the attorneys representing the plaintiffs in the Civil
Action may become aware of the terms of this Agreement in the event Shoney's
is required to publicly disclose the terms of this Agreement. Also, until
such time as a consent decree settling the Civil Action becomes final and
non-appealable, Danner shall have the right to review any news release issued
by Shoney's relating to the Civil Action. Any such news releases shall be
approved by the Executive Committee of Shoney's Board of Directors.
9. Binding Effect. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective
successors, heirs and assigns.
10. Governing Law. This Agreement shall be governed in all
respects by, and be construed in accordance with, the laws of the State of
Tennessee.
11. Time of the Essence; Remedies. Time is of the essence in
this Agreement. Each party understands and acknowledges that a violation of
this Agreement will cause the other irreparable harm and damages incapable of
calculation and that the non-defaulting party will be entitled to an order of
any court with jurisdiction requiring specific performance by the defaulting
party of that party's obligations hereunder. The parties agree that nothing
in this Agreement shall be construed as prohibiting either party from pursuing
any other remedy available to it in the event of a breach or threatened breach
of this Agreement, including the recovery of damages.
12. Notices. All notices and other communications provided
for herein shall be validly given or made if in writing and delivered or sent
by hand delivery to the parties at the following addresses:
If to Shoney's: Shoney's Inc.,
1727 Elm Hill Pike
Nashville, Tennessee 37210
Attn: Secretary
If to Danner: c/o The Danner Company
1451 Elm Hill Pike
Suite 114
Nashville, Tennessee 37210
Any notice shall be deemed given when received or when delivery
is first refused.
13. Amendments. This Agreement cannot be amended, modified,
supplemented or rescinded except in writing signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless such waiver is
in writing signed by the parties hereto.
14. Construction. As used herein, the single number shall
include the plural, the plural the singular, and the use of any gender shall
be applicable to all genders, unless the context would clearly not admit such
construction. This instrument shall be construed and interpreted in
accordance with the laws of the state of Tennessee. Section or paragraph
headings are employed herein solely for convenience of reference, and such
headings shall not in any way affect the meaning, validity or enforceability
of any term or provision of this instrument. All references herein to
"section" or "paragraph" shall mean the appropriate number section or
paragraph of this instrument except where reference is particularly made to
some other instrument or document.
15. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof. There are no arrangements, understandings,
restrictions, representations or warranties between the parties other than
those expressly set forth herein.
IN WITNESS WHEREOF, the parties hereto, Shoney's by its duly
authorized officer, have executed this Agreement as of the date first set
forth above.
SHONEY'S, INC.
By:__________________
Title:_______________
_____________________
RAYMOND L. DANNER
Exhibit 15
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement"), dated the 15th day
of September, 1992, is among SHONEY'S, INC. ("Shoney's"), RAYMOND L.
DANNER ("Danner"), and EQUITABLE TRUST COMPANY (the "Escrow Agent").
W I T N E S S E T H
WHEREAS, Shoney's and Danner are parties to a capital
contribution agreement of even date herewith (the "Capital Contribution
Agreement"), to which this Agreement is an Exhibit; and
WHEREAS, all capitalized terms used herein that are defined in
the Capital Contribution Agreement shall have the same meanings when used in
this Agreement; and
WHEREAS, pursuant to the Capital Contribution Agreement, Danner
is to deposit with the Escrow Agent the Contribution Shares, which are to be
distributed to Shoney's or returned to Danner in accordance with the terms of
the Capital Contribution Agreement; and
WHEREAS, Danner and Shoney's desire to enter into this
Agreement with the Escrow Agent and to have the Escrow Agent preform the
duties of the Escrow Agent under the Capital Contribution Agreement; and
WHEREAS, the Escrow Agent is willing to enter into this
Agreement and to perform such duties, subject to the terms and conditions of
this Agreement;
NOW, THEREFORE, in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Escrow Shares. Pursuant to the Capital Contribution
Agreement, Danner hereby deposits with the Escrow Agent the Contribution
Shares, endorsed in blank or accompanied by appropriate stock powers executed
in blank.
2. Purpose of Escrow. Shoney's and Danner have agreed to
deposit the Contribution Shares with Escrow Agent for the purpose of making a
distribution of the Contribution Shares to Shoney's and/or returning, if
appropriate, the Contribution Shares to Danner as required by the Capital
Contribution Agreement.
3. Delivery of Escrow Shares.
(a) The Contribution Shares shall be distributed by the
Escrow Agent to Shoney's within five (5) business days after
satisfaction of all of the following conditions:
(i) The approval by the court of a final settlement
agreement and/or consent decree in the Civil Action pursuant to
which Shoney's and Danner are completely and finally released
from all claims, rights and causes of action of any kind by the
plaintiffs (including any class of plaintiffs) in the Civil
Action with the exception of claims, rights and causes of
action by any plaintiffs who may opt out of any class
settlement of the Civil Action or arising out of any settlement
agreement and/or consent decree in the Civil Action or breach
thereof and such settlement agreement and/or consent decree has
become final and non-appealable; and
(ii) Delivery of the Notice to Danner and the Escrow
Agent.
(b) Unless Danner objects, in writing, to any of the
statements in the Notice within five (5) business days after the
Notice is delivered to the Escrow Agent and Danner, the Escrow Agent
may conclusively rely on the Notice's statement that condition (a)(i)
above has been satisfied.
(c) If Danner objects to the Notice in the manner and within
the time period set forth above, the Escrow Agent, within five (5)
business days after receipt of Danner's objection, shall interplead
the Escrow Shares by causing to be filed an appropriate action in the
Chancery Court for Davidson County, Tennessee requesting the court to
determine whether the Contribution Shares are distributable to
Shoney's.
(d) If, on or before December 31, 1992, a motion by Danner,
Shoney's and the plaintiffs in the Civil Action seeking conditional
approval of a settlement of the Civil Action, as contemplated in
Section 3(a)(i), is not filed, the Contribution Shares shall be
returned to Danner.
4. Acts and Duties of the Escrow Agent.
(a) The Escrow Agent may engage the services of such
accountants and of professionals as the Escrow Agent, may, in its
sole discretion, deem advisable to carry out its duties under this
Agreement. Shoney's and Danner jointly and severally agree to
reimburse the Escrow Agent for all costs, expenses and professional
fees incurred hereunder.
(b) The Escrow Agent's sole duties are to hold and distribute
the Contribution Shares as provided for in the Capital Contribution
Agreement and in this Agreement, and upon delivery of the
Contribution Shares to Shoney's and/or the return to Danner, if and
when appropriate, of the Contribution Shares, the Escrow Agent's
obligations hereunder shall cease. The Escrow Agent is acting
hereunder only as a conduit for the convenience of the parties, and
has no legal or equitable interest in, or control over, the Escrow
Shares.
(c) The Escrow Agent shall have no duties or obligations
hereunder except as expressly set forth herein, shall be responsible
only for the performance of such duties and obligations and shall not
be required to take any action otherwise than in accordance with the
terms hereof. The Escrow Agent shall not be in any manner liable or
responsible for any loss or damage arising by reason of any act or
omission to act by it hereunder or in connection with any of the
transactions contemplated hereby, including, but not limited to, any
loss that may occur by reason of forgery, false representations, the
exercise of its discretion, or any other reason, except for its gross
negligence or willful misconduct. The Escrow Agent may rely on, and
shall be protected in acting or refraining from acting on, any
instrument believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not
be liable for any action taken or omitted by it in good faith and
believed by it to be authorized hereby. Shoney's and Danner each
hereby release the Escrow Agent from any liability from any act done
or omitted to be done by the Escrow Agent in the performance of the
Escrow Agent's duties hereunder, except for acts or omissions that
constitute gross negligence or willful misconduct. In no event will
Escrow Agent have any liability for consequential, special or
incidental damages of any kind. Shoney's and Danner hereby jointly
and severally indemnify and hold the Escrow Agent free and harmless
from and against any claim, liability, expenses, damages, suit, costs
(including reasonable attorneys' fees and disbursements) or other
obligation incurred or arising out of or in connection with this
Agreement or the Escrow Shares, excluding only Escrow Agent's
liability for its own willful misconduct or gross negligence.
(d) The Escrow Agent may resign and be discharged from its
duties hereunder at any time by giving notice of such resignation to
Shoney's and Danner specifying a date (not less than ten or more than
thirty days after the giving of such notice) when such registration
shall take effect. Escrow Agent shall continue to serve until Danner
and Shoney's appoint a successor Escrow Agent by mutual agreement,
provided however, that if Danner and Shoney's are unable to agree
upon a successor Escrow Agent within thirty days after such notice,
the Escrow Agent shall be entitled to appoint its successor.
5. Termination of Escrow. Upon the distribution of the
Contribution Shares to Shoney's and/or the return to Danner, if and when
appropriate, of all or a portion of the Escrow Shares, this Agreement shall
terminate.
6. Counterparts. This Agreement may be executed in several
counterparts, each of which, when executed, shall be deemed to be an original,
and all such counterparts shall together constitute one and the same
instrument.
7. Notices. Any notice or demand given or served by one
party to the other shall not be deemed to have been duly given or served
unless in writing and forwarded by hand delivery, addressed as follows:
If to Shoney's: Shoney's, Inc.,
1727 Elm Hill Pike
Nashville, Tennessee 37210
Attn: Secretary
If to Danner: c/o The Danner Company
1451 Elm Hill Pike
Suite 114
Nashville, Tennessee 37210
If to Escrow Agent: Equitable Trust Company
Suite 800
Nashville City Center
Nashville, Tennessee 37219
Attn: Kirk M. Scobey, Jr.
The person and place to which notices are to be delivered may be changed by a
party upon written notice to the others.
8. Binding Effect. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective
successors, heirs and assigns.
9. Amendments. This Agreement cannot be amended, modified,
supplemented or rescinded except in writing signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless such waiver is
in writing signed by the parties hereto.
10. Construction. As used herein, the single number shall
include the plural, the plural the singular, and the use of any gender shall
be applicable to all genders, unless the context would clearly not admit such
construction. This instrument shall be construed and interpreted in
accordance with the laws of the state of Tennessee. Section or paragraph
headings are employed herein solely for convenience of reference, and such
headings shall not in any way affect the meaning, validity or enforceability
of any term or provision of this instrument. All references herein to
"section" or "paragraph" shall mean the appropriate number section or
paragraph of this instrument except where reference is particularly made to
some other instrument or document.
11. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof. There are no arrangements, understandings,
restrictions, representations or warranties between the parties other than
those expressly set forth herein.
IN WITNESS WHEREOF, the parties hereto, Shoney's by its duly
authorized officer, have executed this Agreement as of the date first set
forth above.
_______________________
Raymond L. Danner
SHONEY'S, INC.
By:____________________
Title:_________________
ESCROW AGENT:
EQUITABLE TRUST COMPANY
By:____________________
Title:_________________
Exhibit 16
DANNER WITHDRAWS OFFER TO RETURN TO SHONEY'S AS CEO
Ray Danner, co-founder and retired Chairman and Chief Executive Officer of
Shoney's Inc., today withdrew his offer to return to the faltering company in
that position for a total cash compensation of $1.00 per year.
On March 28, Danner communicated to the Shoney's Inc. board of directors his
willingness to assist the company by immediately returning to the position of
Chairman and CEO. His intent was to return Shoney's to a profitable state.
During Danner's tenure as CEO of Shoney's, the company reported more than 100
consecutive quarters of record growth and profit.
In response, the Shoney's board of directors notified Danner that his offer
had been turned over to "an executive search firm in Atlanta, Georgia, for
consideration."
In today's letter to the board, Danner pointed out the urgency required in
taking action.
"Time is extremely important to revive Shoney's Inc.," Danner said. "The
company must take immediate steps to return to its patterns for success, as
demonstrated by yesterday's earnings report."
Danner's move to withdraw his offer came on the heels of the company's first
quarterly earnings reports, issued yesterday.
Danner pointed out that the company revealed a "decrease of 42% from the
earnings per share numbers for the same quarter a year ago."
Danner has further said "I am very disappointed, by my calculations, that is
$39,000.00 less earnings every day.
"No company in this country can have losses like that and expect to continue
to exist," he added.
Gary Neill, Chief Operating Officer of the Danner Company, said that he and
his associates are "relieved that Ray has withdrawn the Shoney's offer."
The Danner Company, formed after Danner's 1988 retirement from Shoney's, is an
international investment and management firm. In its first five years, the
Danner Company has started and acquired over 40 companies, with more that 2800
employees worldwide.
"Obviously Ray has continued about the business of creating jobs for people,"
Neill said. "We are glad that he's staying."
Danner's offer has met with a string of positive reactions, as more that 200
people have sent him the $1.00 per year salary requested.
"I think it's a very positive response to my offer and I really appreciate the
support of these people," said Danner. "That's what I call a great vote of
confidence."
