<PAGE>
PRELIMINARY PROXY STATEMENT
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
[AMENDMENT NO. 1].
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X]Preliminary Proxy Statement [_]Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SHONEY'S, INC.
- -------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RAYMOND D. SCHOENBAUM AND BETTY J. SCHOENBAUM
- -------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
.....................................................................
2) Aggregate number of securities to which transaction applies:
.....................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
.....................................................................
4) Proposed maximum aggregate value of transaction:
.....................................................................
5) Total fee paid:
.....................................................................
[_]Fee paid previously with preliminary materials:
.....................................................................
[_]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid: _____________________________________________
2) Form, Schedule or Registration Statement no.: _______________________
3) Filing Party: _______________________________________________________
4) Date Filed: _________________________________________________________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PRELIMINARY PROXY MATERIALS DATED JUNE 23, 1997
SUBJECT TO COMPLETION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The information included herein is as it is expected to be when the
definitive proxy statement is mailed to shareholders of Shoney's, Inc. This
proxy statement will be revised to reflect actual facts at the time of the
filing of the definitive proxy statement.
No GOLD Proxy Card is included with these materials.
----------------
PROXY STATEMENT OF
THE
SHONEY'S SHAREHOLDERS' COMMITTEE
----------------
----------------
SPECIAL MEETING OF THE SHAREHOLDERS
OF
SHONEY'S, INC.
----------------
We are sending this Proxy Statement to you as one of the holders (the
"Shareholders") of the common stock, $1.00 par value (the "Common Stock"), of
Shoney's, Inc., a Tennessee corporation ("Shoney's" or the "Company"). This
Proxy Statement relates to the solicitation of proxies by Raymond D. Schoenbaum
and Betty J. Schoenbaum (the "Shoney's Shareholders' Committee") for use at a
Special Meeting of the Shareholders scheduled for 10 a.m. local time, Tuesday,
August 19, 1997, in the Governor's Ballroom at the Opryland Hotel, 2800 Opryland
Drive, Nashville, Tennessee 37214, or any adjournments or postponements thereof
(the "Special Meeting"). We are soliciting proxies to remove the current Board
of Directors of the Company (the "Board"), to elect our nominees to the Board
and to adopt certain other resolutions (including certain amendments to the
Bylaws of the Company) to facilitate the replacement of the current members of
the Board.
[THIS PROXY STATEMENT AND THE ACCOMPANYING GOLD PROXY CARD ARE FIRST BEING
FURNISHED TO SHAREHOLDERS ON OR ABOUT ____________, 1997.]
WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD (THE "GOLD PROXY")
IN FAVOR OF THE SPECIAL MEETING PROPOSALS DESCRIBED HEREIN.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
SUMMARY
This summary highlights selected information from this document, and may not
contain all of the information that is important to you. To understand better
why we are asking for your vote, you should read this entire document
carefully.
Q: WHO ARE WE?
A: Raymond D. Schoenbaum and Betty J. Schoenbaum (the Shoney's Shareholders'
Committee) own together approximately 8.0% of Shoney's common stock. Alex
Schoenbaum, the father of Raymond D. Schoenbaum and husband of Betty J.
Schoenbaum, founded Shoney's in 1947 and served as its first Chairman of
the Board. Following Alex Schoenbaum's death late last year, the Shoney's
Shareholders' Committee became one of the two largest shareholders of
Shoney's.
Raymond D. Schoenbaum has extensive experience in the family and casual
restaurant industry. He has been actively involved in the restaurant industry
since 1974, and between 1985 and 1995 he developed and operated Ray's on the
River and Rio Bravo, a successful chain of casual restaurants. In 1995, he
sold his restaurant business to Applebee's International Inc. and became a
director of Applebee's following the sale.
Q: WHAT ARE WE ASKING YOU TO DO?
A: We are asking you to vote to remove the current members of the Board of
Shoney's and replace them with our nominees and to approve certain
resolutions amending the Bylaws of Shoney's in a manner designed to
facilitate the replacement of the current Board members.
Q: WHY ARE WE ASKING YOU TO REPLACE THE CURRENT DIRECTORS?
A: We have been disappointed with Shoney's performance and the performance of
Shoney's stock price in recent years. Shoney's stock price declined nearly
80% between October 29, 1993 and April 25, 1997, the day on which we filed
a Schedule 13D with the Securities and Exchange Commission indicating our
disappointment with the Company's performance and stock price in recent
years and our consideration of alternatives with respect to our
investment in Shoney's. In comparison, over the same period, the Standard &
Poor's 500 Index increased approximately 63.6% and Standard & Poor's
Restaurants Index increased approximately 66.8%. As one of the largest
shareholders of Shoney's, we are obviously concerned about the significant
loss in market value that has been suffered by all of Shoney's shareholders.
Given our family's history with Shoney's, it also has been personally very
distressing to us to watch Shoney's lose its focus on the basics of its
business which has caused it to struggle in recent years.
We believe that, under the direction of the current Board and management of
Shoney's, there has been a deterioration in the quality of many of Shoney's
restaurants and the business and reputation of Shoney's. Over the last
several years, the restaurant industry has become more competitive, and
customers now have many more choices. As a result, customers are more
interested in better price/value than in the past. In our view, the Shoney's
Board and management have failed to respond to these changing customer
preferences and that, instead of evolving to meet the preferences of today's
customers, Shoney's approach is outdated and is no longer in touch with the
customers. Indeed, we believe that the quality of the food and service
provided by Shoney's has been reduced, rather than enhanced, in recent years.
After two years under the current management, Shoney's condition has not only
failed to improve, but, in fact, has deteriorated. Accordingly, competitors
are outperforming Shoney's, while Shoney's customer base and profits have
continued to decline.
Q: WHY SHOULD YOU VOTE FOR OUR NOMINEES?
A: Since we are significant shareholders of Shoney's, our interests as
shareholders are aligned with yours and we have every incentive to increase
shareholder value. Raymond D. Schoenbaum has extensive experience in the
restaurant industry and intends to use this experience to rebuild Shoney's.
On June 5, 1997, we requested to meet with the Board at its two-day retreat
in mid-June to discuss our concerns about Shoney's continued poor
performance. We had hoped to share with the Board at such meeting our
concerns about Shoney's performance and a need for a significant change in
the direction of Shoney's. Unfortunately, the Board responded in a manner
which we believe demonstrates a lack of understanding of the urgency of
Shoney's situation and the lack of leadership under current management.
Rather than providing Raymond D. Schoenbaum, as a representative of an 8%
shareholder, with the opportunity to meet with the Board for a short time at
some point during the Board's two-day retreat, the Board suggested that we
submit our suggestions in writing, after which the Board would "consider a
time in the future" for us to meet with the Board or "a committee of the
Board." Because of Shoney's continued poor performance and the Board's
refusal to meet with Raymond D. Schoenbaum at the June Board meeting despite
the urgency of the situation, we have concluded that the Board does not
appreciate the need for a significant change in the direction of Shoney's and
we believe that we are left with no alternative but to present our case
directly to you, the shareholders and owners of Shoney's.
Q: WHO ARE OUR NOMINEES?
A: Our nominees are J. Michael Bodnar, Lawrence A. Cunningham, Nathaniel R.
Goldston III, Michael A. Leven, Raymond D. Schoenbaum, William A. Schwartz
and Richard F. Sherman. Information regarding their background and experience
is contained in pages 12 and 13.
Q: HOW MANY VOTES DOES IT TAKE TO ELECT THE NEW DIRECTORS?
A: Once the current directors are removed, the shareholders may elect new
directors. Directors are elected by a plurality of the votes. In other
words, the seven directors who obtain the most votes will be elected.
Q: WHOM SHOULD YOU CALL IF YOU HAVE QUESTIONS ABOUT GIVING YOUR PROXY OR NEED
ASSISTANCE IN VOTING YOUR SHARES?
A: MacKenzie Partners, Inc. at (212) 929-5500 (collect) or call Toll Free
(800) 322-2885.
1
<PAGE>
IMPORTANT
Please review this document and the enclosed materials carefully. It does not
matter how many shares you own. YOUR PROXY IS VERY IMPORTANT. If you are unable
to attend the Special Meeting in person, your proxy is the ONLY means available
for you to vote. Please vote FOR each of the proposals, including the amendments
to the Bylaws, the removal of the current Board members and the election of the
nominees of Raymond D. Schoenbaum and Betty J. Schoenbaum (the "Shoney's
Shareholders' Committee" or "we") to the Board, by signing, marking, dating and
mailing the enclosed GOLD Proxy as soon as possible.
Unless you indicate otherwise, the GOLD Proxy authorizes the persons named
in the proxy to vote, and such persons will vote, properly executed and duly
returned proxies FOR the amendments to the Bylaws described in this document,
FOR the removal of the current directors, FOR the election of the Shoney's
Shareholders' Committee's nominees to the Board, and FOR the Omnibus
Resolution described in this document which requires the proposals at the
Special Meeting to be considered in a specified order. We are not presently
aware of any other matters to be brought before the Special Meeting. However,
should other matters be brought before the Special Meeting, the persons named
in the proxies will vote the shares in a manner they consider to be in the
best interests of the Shareholders and Shoney's.
If you own shares of Shoney's but your stock certificate is held for you by
a brokerage firm, bank or other institution, it is very likely that the stock
certificate is actually in the name of the brokerage firm, bank or other
institution. If so, only that brokerage firm, bank or other institution can
execute the GOLD Proxy and vote your shares of Common Stock. The brokerage
firm, bank or other institution holding the shares for you is required to
forward proxy materials to you and solicit your instructions with respect to
the granting of proxies; it cannot vote your shares unless it receives your
specific instructions.
If you have any questions about the proxy or need assistance in voting your
shares, please call:
[LOGO OF MacKENZIE PARTNERS APPEARS HERE]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
or call Toll Free
(800) 322-2885
YOU MAY VOTE FOR THE AMENDMENTS TO THE BYLAWS, FOR THE REMOVAL OF ALL
DIRECTORS, FOR THE ELECTION OF THE NOMINEES AND FOR THE OMNIBUS RESOLUTION BY
SIGNING THE GOLD PROXY CARD, AND MARKING, DATING AND RETURNING IT IN THE
ENCLOSED POSTAGE PAID ENVELOPE. IF YOU HAVE ALREADY SUBMITTED A PROXY TO THE
SHONEY'S BOARD, YOU MAY CHANGE YOUR VOTE BY SIGNING, MARKING, DATING AND
RETURNING THE GOLD PROXY, WHICH MUST BE DATED AFTER THE PROXY YOU SUBMITTED TO
SHONEY'S.
Only Shareholders of record at the close of business on , 1997 (the
"Record Date") are entitled to vote at the Special Meeting. We believe that as
of the close of business on the Record Date, there were shares of Common
Stock of Shoney's issued and outstanding and entitled to vote. Shareholders
have one vote for each share of Common Stock they own with respect to all
matters to be considered at the Special Meeting. Directors can be removed from
office by a vote of a majority of the votes cast. Once the directors are
removed, Shareholders can elect new directors through a plurality of the votes
cast.
We are asking you to return your completed, signed and dated GOLD Proxy Card
as soon as possible.
2
<PAGE>
REASONS FOR THE SOLICITATION
The Shoney's Shareholders' Committee beneficially owns approximately 8.0% of the
the Common Stock of Shoney's. Alex Schoenbaum, the father of Raymond D.
Schoenbaum and husband of Betty J. Schoenbaum, founded Shoney's in 1947 and
served as its first Chairman of the Board. Following Alex Schoenbaum's death
late last year, the Shoney's Shareholders' Committee became one of the two
largest shareholders of Shoney's.
We have been disappointed with Shoney's performance and the performance of
Shoney's stock price in recent years. Shoney's stock price declined nearly 80%
between October 29, 1993 and April 25, 1997, the day on which we filed a
Schedule 13D with the Securities and Exchange Commission (the "SEC") indicating
our disappointment with the Company's performance and stock price in recent
years and our consideration of alternatives with respect to our investment in
Shoney's. In comparison, over the same period, the Standard & Poor's 500 Index
increased approximately 63.6% and Standard & Poor's Restaurants Index increased
approximately 66.8%. As one of the largest shareholders of Shoney's, we are
obviously concerned about the significant loss in market value that has been
suffered by all of Shoney's shareholders. Given our family's history with
Shoney's, it also has been personally very distressing to us to watch Shoney's
lose its focus on the basics of its business which has caused it to struggle in
recent years.
Alex Schoenbaum founded Shoney's 50 years ago to be a quality provider of family
dining. Shoney's has been an innovator in the restaurant industry, and its
stores historically have offered quality dining at a good price/value to the
customers. Because of the perception by customers of Shoney's good price/value,
Shoney's experienced consistent growth from its beginning until the late 1980s.
We believe that, under the direction of the current Board of Directors (the
"Board") and management of Shoney's, there has been a deterioration in the
quality of many of Shoney's restaurants and the business and reputation of
Shoney's. Over the last several years, the restaurant industry has become more
competitive, and customers now have many more choices. As a result, customers
are more interested in better price/value than in the past. In our view, the
Shoney's Board and management have failed to respond to these changing customer
preferences and that, instead of evolving to meet the preferences of today's
customers, Shoney's approach has become outdated and is no longer in touch with
the customers. Indeed, we believe that the quality of the food and service
provided by Shoney's has been reduced, rather than enhanced, in recent years.
After two years under the current management, Shoney's condition has not only
failed to improve, but, in fact, has deteriorated. Accordingly, competitors are
outperforming Shoney's, while Shoney's customer base and profits have continued
to decline.
On June 5, 1997, we requested to meet with the Board at its two-day retreat in
mid-June to discuss our concerns about Shoney's continued poor performance. We
had hoped to share with the Board at such meeting our concerns about Shoney's
performance and a need for a significant change in the direction of Shoney's.
Unfortunately, the Board responded in a manner which we believe demonstrates a
lack of understanding of the urgency of Shoney's situation and the lack of
leadership under the current management. Rather than providing Raymond D.
Schoenbaum, as a representative of an 8% shareholder, with the opportunity to
meet with the Board for a short time at some point during the Board's two-day
retreat, the Board suggested that we submit our suggestions in writing, after
which the Board would "consider a time in the future" for us to meet with the
Board or "a committee of the Board." Because of Shoney's continued poor
performance and the Board's refusal to meet with Raymond D. Schoenbaum at the
June Board meeting despite the urgency of the situation, we have concluded that
the Board does not appreciate the need for a significant change in the direction
of Shoney's and we believe that we are left with no alternative but to present
our case directly to you, the shareholders and owners of Shoney's.
Since we are significant shareholders of Shoney's, our interests as
shareholders are aligned with yours and we have every incentive to increase
shareholder value. Raymond D. Schoenbaum has been actively involved in the
restaurant industry since 1974, and he has extensive experience in the
business, including substantial experience in the full service dining industry
and in the quality fast food market. From 1974 to 1985, Raymond D. Schoenbaum
successfully grew a Wendy's franchisee (Restaurants Systems, Inc.) to in
excess of 30 stores,
3
<PAGE>
which he sold to Wendy's in 1985 for approximately $40 million. Between 1985 and
1995 he developed and operated Ray's on the River and Rio Bravo, a successful
chain of casual restaurants. In 1995, Raymond D. Schoenbaum sold Ray's on the
River and Rio Bravo to Applebee's International Inc. ("Applebee's") for
approximately $70 million, and became a director of Applebee's following the
sale. In addition, Raymond D. Schoenbaum has been involved with the turn- around
of companies in the restaurant and restaurant services industries, including
Squirrel Companies, Inc., a manufacturer of restaurant point-of-source computer
equipment, as the former chairman of the board, and Max & Erma's Restaurants,
Inc., as a former member of the board and the largest shareholder.
In order to change the direction of Shoney's in a positive manner, we now
solicit your vote in favor of resolutions to be considered at the Special
Meeting removing the current Board members and replacing them with our nominees.
In addition, at the Special Meeting, the Shareholders also will be asked to
consider certain resolutions amending the Bylaws of the Company in a manner
designed to facilitate the replacement of the current Board members. Once
elected, our nominees to the Board intend to replace certain members of the
management of the Company, and to appoint Raymond D. Schoenbaum as the Chairman
and Chief Executive Officer of the Company.
The proposals that would be considered at the Special Meeting (the "Special
Meeting Proposals") would include the following, in addition to other
proposals to take actions incidental to the removal and replacement of current
Board members:
1. To repeal any and all amendments made by the Board to the Bylaws of the
Company, as filed with the SEC as Exhibits 3(ii) and 4.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 18, 1996,
other than those provisions which were duly approved by the Shareholders
and those provisions which under Tennessee law cannot be repealed by the
Shareholders, and to provide that, without the approval of the
Shareholders, the Board may not thereafter amend any section of the Bylaws
affected by such repeal or adopt any new Bylaw provision in a manner which
serves to reinstate any repealed provision or any similar provision (the
"Bylaws Repeal Resolution");
2. To amend Article III, Section 1 of the Bylaws of the Company to fix the
number of directors at seven, and provide that, without the approval of
the Shareholders, the Board may not thereafter amend or repeal such
Section or adopt any new Bylaw provision which is inconsistent in any
manner with such Section (the "Size of Board Resolution");
3. To amend Article III, Section 3 of the Bylaws of the Company to provide
that the directors may be elected by the Shareholders at annual meetings
and special meetings of the Shareholders of the Company, and provide
that, without the approval of the Shareholders, the Board may not
thereafter amend or repeal such Section or adopt any new Bylaw provision
which is inconsistent in any manner with such Section (the "Election
Procedure Resolution");
4. To remove all of the members of the Board of Directors, including
without limitation, any of the following who are members of the Board as
of the Special Meeting: Dennis C. Bottorff, Carole F. Hoover, Victoria
B. Jackson, C. Stephen Lynn, Jeffry F. Schoenbaum, B. Franklin Skinner
and Cal Turner, Jr.; provided, however, that if, notwithstanding the
Omnibus Resolution (as defined below), any nominees of the Shoney's
Shareholders' Committee have been elected to the Board prior to the time
this Resolution is adopted, such nominees of the Shoney's Shareholder's
Committee shall not be removed from the Board (the "Director Removal
Resolution"); and
5. To elect the seven nominees of the Shoney's Shareholders' Committee, and
all other persons nominated by us (the "Nominees"), to fill all
vacancies on the Board for the balance of the terms of the present
directors and until their successors are elected and qualified (the
"Election of Directors Resolution"). The Nominees are J. Michael Bodnar,
Lawrence A. Cunningham, Nathaniel R. Goldston III, Michael A. Leven,
Raymond D. Schoenbaum, William A. Schwartz and Richard F. Sherman.
Biographical information on each of the Nominees is set forth under the
caption "The Special Meeting Proposals."
4
<PAGE>
Further, the Shareholders will be asked at the Special Meeting to consider
an Omnibus Resolution (the "Omnibus Resolution") setting forth the following
order in which the resolutions will be voted upon by the Shareholders:
1. The Omnibus Resolution;
2. The Bylaws Repeal Resolution;
3. The Size of Board Resolution;
4. The Election Procedure Resolution;
5. The Director Removal Resolution; and
6. The Election of Directors Resolution.
EXECUTING A GOLD PROXY CARD WILL ENABLE YOU--AS AN OWNER OF THE COMPANY--TO
SEND A CLEAR MESSAGE THAT YOU ARE DISSATISFIED WITH SHONEY'S PERFORMANCE AND
WANT TO ELECT A BOARD OF DIRECTORS THAT WILL GUIDE YOUR COMPANY IN THE FUTURE.
WE STRONGLY RECOMMEND THAT YOU VOTE TO AMEND THE BYLAWS, REMOVE THE CURRENT
DIRECTORS, ELECT THE NOMINEES AND VOTE IN FAVOR OF THE OMNIBUS RESOLUTION.
BACKGROUND AND RECENT EVENTS
On April 25, 1997, we filed a Schedule 13D with the SEC indicating that we
have been disappointed with the Company's performance and the Company's stock
price in recent years. At that time we stated that we were reviewing various
alternatives with respect to our investment in the Company. These alternatives
included (i) holding discussions with third parties or with members of the
management or the Board in which we would suggest or take a position with
respect to potential changes in the operations, management or business of the
Company as a means of enhancing shareholder value, (ii) seeking the removal of
certain or all of the members of the Board, (iii) nominating our own
candidates to be elected to the Board, (iv) proposing changes in the
management of the Company and (v) acquiring additional shares in the Company.
After filing the Schedule 13D on April 25, 1997, we continued to review these
alternatives. We also met with certain members of the management of the
Company and certain members of the Board to discuss the Company's financial
condition and performance. On June 2, 1997, we amended our Schedule 13D to
reflect that we sent a letter to the Board requesting that Raymond D.
Schoenbaum be permitted to address the Board at their two-day retreat in
mid-June. The letter stated in full as follows:
June 2, 1997
Board of Directors of Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Re: Meeting of the Shoney's, Inc. Board of Directors
Ladies and Gentlemen:
As you know from our SEC filing last month, my mother and I are disappointed
with Shoney's performance and the performance of Shoney's stock price in
recent years. As one of the largest shareholders of Shoney's, we are obviously
concerned about the significant loss in market value that has been suffered by
all of Shoney's shareholders in recent years. Moreover, we regard Shoney's as
a legacy created by my father Alex, who founded the company in 1947, and, on a
personal note, it has been very distressing to us to watch Shoney's struggle
in recent years.
5
<PAGE>
As we indicated in our SEC filing, we are in the process of evaluating
various possible alternatives with respect to our investment in Shoney's.
During this process, we have been reviewing in detail the publicly available
data regarding the business, financial condition and operating results of
Shoney's, and we have had the opportunity to discuss this publicly available
data with certain members of Shoney's management. This process is ongoing,
and, while at this time we have not decided on a course of action, we expect
to make further progress during the next two weeks.
Based on our review thus far, we believe that Shoney's is at a critical
juncture and that the actions to be taken by Shoney's Board to address the
current situation will play a crucial role in determining Shoney's future. For
this reason, I would like to meet with the Board at its meeting on June 17,
1997 to discuss Shoney's current situation and our concerns regarding the
company's future. By that time, we expect to be far enough along in our
evaluation process to present to you some concrete alternatives for addressing
Shoney's current problems.
We believe that this exchange of information and ideas will be very useful
to the Board as it gathers information and formulates a plan to address
Shoney's situation in a manner which is beneficial to all of Shoney's
shareholders. In light of the company's recent performance, the Board will be
faced with some difficult decisions in the time ahead. My successful
experiences in the family and casual restaurant industry, including most
recently my founding and development of Ray's on the River and the Rio Bravo
restaurant chain which I sold to Applebee's International Inc. in 1995, have
provided me with valuable skills which I believe I can use to assist you as you
deal with Shoney's current situation.
Please let us know as soon as possible whether you will honor our request to
meet with you at the Board's meeting. We look forward to your response.
Sincerely,
Raymond D. Schoenbaum
Although acknowledging shared concerns regarding the loss of Shoney's market
value, the Board refused Raymond D. Schoenbaum's offer to address it at
its June meeting. The Board's refusal to meet with Raymond D. Schoenbaum was
communicated by means of a letter dated June 5, 1997, which was received by
Raymond D. Schoenbaum on June 9, 1997, the text of which is set forth in full
below:
June 5, 1997
Mr. Raymond D. Schoenbaum
1640 Powers Ferry Road
Building Two, Suite 100
Marietta, Georgia 30067-6050
Dear Raymond:
On behalf of the Board of Directors, I acknowledge receipt of your letter
dated June 2, 1997. We share your concerns regarding the loss of market value
that all of us as Shoney's shareholders have experienced. We believe that we
have the proper business strategy and management team in place to improve the
performance of the Company. As with all business turnarounds, time and
patience are needed before one can determine whether the business judgment of
the leadership is proven correct.
We appreciate your offer to present to the Board on June 17 some concrete
alternatives for addressing what you view to be Shoney's current situation.
Unfortunately, as you may know, our next Board meeting has been
6
<PAGE>
planned for many months as part of a working retreat meeting and the agenda is
full without any available open time for you to make your requested
presentation. However, we encourage you to submit your concrete alternatives
in writing to us before that meeting so that your ideas may be taken into
account in our discussions. After we have had the opportunity to review your
alternatives, we will consider a time in the future when you could personally
discuss those with the Board or a committee of the Board.
Management of Shoney's has consistently welcomed discussions with you and
have talked with you on a number of occasions recently to exchange information
and ideas. We continue to believe such meetings are mutually beneficial and
hope that you will continue to provide us with the benefit of your ideas.
God bless,
C. Stephen Lynn
We were surprised and disappointed with the rejection by the Board of our
request to meet with it at its meeting in June. Because of Shoney's
continued poor performance and the Board's refusal to meet with us at the June
Board meeting despite the urgency of the situation, we feel that we were left
with no alternative but to present our case directly to you, the Shareholders
and owners of Shoney's. As a result, we determined to seek agent designations to
call a special meeting of the Shareholders to act on proposals that would result
in the removal of all of the members of the current Board and replace them with
our nominees. Immediately after filing the solicitation for agent designations
and the preliminary proxy materials with the SEC, we sent a letter to the Board
which stated in full as follows:
June 16, 1997
Board of Directors of Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Re: Meeting of the Shoney's, Inc. Board of Directors
Ladies and Gentlemen:
My mother and I were surprised and disappointed by your letter in which you
rejected our request to address the Board at its two-day retreat in mid-June to
discuss Shoney's current situation and possible alternatives for resolving
Shoney's problems. We found it disturbing that you refused to meet with a
representative of shareholders holding approximately 8% of Shoney's stock,
particularly one who is interested in working with, and has the experience to
help, the Board in addressing Shoney's problems.
We also were surprised by the Board's suggestion that we submit our
proposals in writing after which the Board would "consider a time in the
future" for us to meet with the Board "or a committee of the Board." We
believe that this statement demonstrates a lack of understanding of the urgency
of Shoney's situation and the lack of leadership under the current management.
We had expected that, in order to address Shoney's current problems, the Board
would be interested in obtaining as much information and as many ideas as soon
as possible. Instead, rather than taking a small amount of time during the
Board's two-day retreat to discuss our concerns, the Board's response appears
designed only to delay our requested meeting to discuss with you the crucial
issues facing Shoney's.
As we stated in our June 2 letter, we continue to believe that Shoney's is
at a critical juncture. We, as Shoney's shareholders, have endured many years
of poor financial performance. Over the last several years, Shoney's
shareholders have provided you with time and have patiently given you the
opportunity to revitalize Shoney's. The result of this patience has been a
substantial erosion in the stock price. Despite this record, the
7
<PAGE>
Board continues to state that it has the "proper business strategy and
management team." After two years under the current management, however,
Shoney's condition has not only failed to improve, but, in fact, has
deteriorated. As a result, we believe that Shoney's shareholders no longer
have the "time", nor should we be asked to have the "patience", that you
request.
Because of Shoney's continued poor performance and the Board's refusal to
meet with me at the June Board meeting despite the urgency of the present
situation, we feel that we are left with no alternative but to present our
case directly to the shareholders. We have filed documents today with Shoney's
and with the SEC for the purpose of calling a special meeting to remove the
current members of the Board and replace them with our nominees, who would
intend to put in place a new management team committed to addressing Shoney's
condition with the urgency it requires.
We believe Shoney's is running out of time and that it's long term viability
is threatened. We need to take decisive action now to ensure the long term
survival of the company for the benefit of its shareholders.
Sincerely,
Raymond D. Schoenbaum
THE SPECIAL MEETING PROPOSALS
At the Special Meeting, Shareholders will be asked to consider and vote on
the Special Meeting Proposals set forth below. As discussed in more detail
above, we are disappointed with Shoney's performance, and we believe that
positive action needs to be taken to improve Shoney's performance and to
reestablish Shoney's as a quality provider of family dining. The Special
Meeting Proposals, if approved, will remove the current members of the Board
and replace them with our Nominees. In addition, at the Special Meeting,
Shareholders will be asked to consider certain resolutions amending the Bylaws
of the Company in a manner designed to facilitate the replacement of the
current Board members. Once elected, our Nominees intend to replace certain
members of the management of the Company, and to appoint Raymond D. Schoenbaum
as the Chairman and Chief Executive Officer of the Company.
PROPOSAL NO. 1: THE DIRECTOR REMOVAL RESOLUTION
Our goal is to replace the current Board with our Nominees who we believe
will be able to rebuild the Company's business and reputation. We are asking
you to vote at the Special Meeting to remove the entire Board, the members of
which currently are Dennis C. Bottorff, Carole F. Hoover, Victoria B. Jackson,
C. Stephen Lynn, Jeffry F. Schoenbaum, B. Franklin Skinner and Cal Turner, Jr.
Although the terms of the current Board members expire at the 1998 Annual
Meeting, there can be no assurance that before the Special Meeting one or more
of the current Board members will not have ceased to be a director (by reason
of resignation or otherwise) and have been succeeded by another person
appointed by the incumbent directors or that the number of directors on the
Board will not have been increased. Accordingly, the GOLD Proxy provides for
the removal of the current directors and all other persons who are serving as
directors when the removal becomes effective. Section 48-18-108 of the
Tennessee Business Corporation Act authorizes these actions, with or without
cause, by a vote of a majority of the shares cast at the Special Meeting if at
least a majority of the shares of Common Stock are represented at the meeting.
The full text of the Director Removal Resolution is contained in Schedule I
to this Proxy Statement.
8
<PAGE>
WE STRONGLY RECOMMEND A VOTE FOR THE
REMOVAL OF THE CURRENT BOARD MEMBERS OF SHONEY'S
PROPOSAL NO. 2: THE ELECTION OF DIRECTORS RESOLUTION
We also are asking you to elect at the Special Meeting the Nominees named
below as directors of the Company, to serve until the next annual meeting of
Shareholders and until their successors shall have been duly elected and
qualified. Directors will be elected at the Special Meeting by a vote of a
plurality of the shares of Common Stock represented at the Special Meeting if
at least a majority of the shares of Common Stock are represented at the
meeting.
The Nominees have furnished us with the following information concerning
their principal occupations, business addresses and certain other matters. All
of the Nominees are citizens of the United States.
Shoney's Shareholders' Committee Nominees
<TABLE>
<CAPTION>
Principal Occupation and Business Experience
Name, Age and Principal Business Address During Last Five Years; Current Directorships
- ---------------------------------------- ---------------------------------------------
<S> <C>
J. Michael Bodnar (52).................. President (January 1984 - present) of Bodnar
Bodnar Investment Group, Inc. Investment Group, Inc. (a real estate investment company);
101 Fox Hall Road President (January 1986 - May 1996)
Birmingham, Alabama 35213 of Triangle Management Group, Inc.
(a restaurant management company).
Lawrence A. Cunningham (34)............. Professor of Law (May 1997 - present) of the
Benjamin N. Cardozo School of Law, Benjamin N. Cardozo School of Law; Visiting
Yeshiva University Associate Professor of Law (August 1996 - May
55 Fifth Avenue 1997) of the George Washington University School
New York, New York 10003 of Law; Associate Professor of Law (August 1992 -
August 1996) of the Benjamin N. Cardozo School of
Law.
Nathaniel R. Goldston III (58).......... Chairman of the Board and Chief Executive Officer
The Gourmet Co. (January 1975 - present) of The Gourmet Co.
1100 Spring Street, N.E. (a food service management company).
Atlanta, Georgia 30309
Michael A. Leven (59)................... President and Chief Executive Officer (October
U.S. Franchise Systems 1995 - present) of U.S. Franchise Systems (a hotel
13 Corporate Square franchising company); Director (August 1995 - present)
Atlanta, Georgia 30329 of Starwood Lodging Corporation; President
and Chief Operating Officer (October 1990 - September
1995) of Holiday Inn Worldwide; President and Chief
Operating Officer (April 1985 - May 1990) of Days
Inn of America, Inc.
Raymond D. Schoenbaum (51).............. Private investor; Director (March 1995 - present) of Applebee's
1640 Powers Ferry Road International, Inc.; Consultant (March 1995 - March
Building Two, Suite 100 1996) of Applebee's International, Inc.; Chairman of
Marietta, Georgia 30067 the Board of Directors (June 1984 - March 1995) of Innovative
Restaurant Concepts, Inc. (a restaurant management company); Vice
Chairman of the Board of Directors (January 1974 -
January 1986) of Restaurants Systems, Inc. (Wendy's
International, Inc. franchisee); Franchisee (January
1974 - January 1986) of Wendy's International, Inc.
William A. Schwartz (58)................ Chief Executive Officer (January 1995 - present) of
FMB Enterprises First Media Television, L.P. (an operator of television
400 Perimeter Center Terrace stations); Chief Executive Officer (February 1990 -
Suite 650 present) of Cannell Communications, L.P. (an operator of
Atlanta, Georgia 30346 television stations); Chief Executive Officer
(March 1988 - present) of FMB Enterprises (an operator of
cable television systems); President and Chief Operating
Officer (1985 - 1987) of Cox Enterprises.
<PAGE>
Richard F. Sherman (53)................. Private investor and consultant (January 1991 - present);
11492 Bluegrass Parkway Director (June 1993-present) of Papa John's
Suite 175 International, Inc.; Director (October 1996-present)
Louisville, Kentucky 40299 of P.J. America, Inc. (a franchisee of Papa John's
International, Inc.); Director (January 1991-
present) of Reed's Jewelers, Inc.; Director (October
1992-present) of Taco Cabana, Inc.
</TABLE>
Each of the Nominees has consented to serve as a director of the Company, if
elected. Each of the Nominees (other than Raymond D. Schoenbaum) has entered
into an agreement with us in which we have agreed to pay each Nominee a fee of
$10,000. Additionally, we have agreed to (i) reimburse each Nominee for any
reasonable out-of-pocket expenses incurred in the performance of his service as
a Nominee and (ii) indemnify each Nominee with respect to any liabilities
relating to or arising out of such service. Raymond D. Schoenbaum is currently
on a leave of absence from his directorship of Applebee's. In order to devote
his full time and attention to the management of Shoney's, Mr. Schoenbaum
intends to resign from the board of Applebee's if the Nominees are elected to
the Board of Shoney's.
According to publicly available information, Shoney's currently has seven
Directors, all of whose terms will expire at the next Annual Meeting of
Shareholders of Shoney's in 1998 (the "1998 Annual Meeting"). Each of the
Nominees, if elected, would hold office until the 1998 Annual Meeting and
until a successor has been elected and qualified or until his earlier death,
resignation or removal. Although we have no reason to believe that any of the
Nominees will be unable to serve as directors, if any one or more of the
Nominees is not available for election, the persons named as proxies on the
GOLD Proxy will vote for the election of such other Nominees as we may
propose. Should the Board purport to increase the number of directors to be
elected at the Special Meeting, we currently intend to propose additional
Nominees for such directorships. If this happens, we will use your proxy to
vote for our Nominees to fill these directorships. However, we have proposed
an amendment to the Bylaws that would limit the number of Directors to seven.
If this is approved by the Shareholders, it will not be necessary to increase
the number of Nominees.
The Company has employment agreements with Messrs. C. Stephen Lynn, Robert M.
Langford and W. Craig Barber. Mr. Lynn's employment agreement provides for a
term from May 1, 1995 through April 30, 1998. The employment agreements with
Messrs. Langford and Barber presently provide for initial terms which terminate
on October 27, 1999. Under the terms of the employment agreements, Messrs.
Langford and Barber are each entitled to base salaries in the amount of
$288,900, with increases to be in the sole discretion of the Board. Mr. Lynn was
entitled to a base salary of $500,000 from May 1, 1996 through April 30, 1997
and is entitled to a base salary of $550,000 from May 1, 1997 through April 30,
1998. However, Mr. Lynn and the Board have agreed that Mr. Lynn's base salary
will remain at $500,000 until fiscal year 1998. In addition, the employment
agreements provide that Messrs. Langford and Barber are eligible for an annual
bonus as established by the Board through the annual bonus plan. Bonuses for Mr.
Lynn are based upon a formula to be agreed upon by the employee and the Company.
The Director Removal Resolution and the Election of Directors Resolution, if
adopted by the Shareholders together with the other Special Meeting Proposals,
would constitute a "change of control" for purposes of these employment
agreements. If a change of control under such agreements occurs, the employment
terms contained in the agreements are automatically extended for an additional
two-year term. Also, in the event of a change of control under such agreements,
each of Messrs. Lynn, Langford and Barber, at his option, may terminate his
agreement within 90 days after such change of control, in which case he will
receive the greater of: (i) two times the base salary and bonus paid during the
fiscal year immediately prior to that in which the termination took place; or
(ii) the amount due as base salary during the then remaining employment term.
Pursuant to Section 8.1.10 of the Amended and Restated Reducing Revolving Credit
Agreement (the "Credit Agreement"), as amended and restated as of May 3, 1996,
among the Company, as borrower, Canadian Imperial Bank of Commerce, Inc.
("CIBC"), as agent, and the lenders signatory thereto (the "Credit Banks"), the
Director Removal Resolution and the Election of Directors Resolution, if adopted
by the Shareholders together with the other Special Meeting Proposals, would
result in a "change of control" causing an "Event of Default" as defined in the
Credit Agreement. Pursuant to the Credit Agreement, CIBC and the Credit Banks
could cancel
9
<PAGE>
the Credit Banks' obligations to make loans to the Company and/or declare the
principal amount then outstanding of, and the accrued interest on, the loans
under the Credit Agreement due and payable. As reported in the Company's
Quarterly Report on Form 10-Q for the quarter ended February 16, 1997 (the
"February 1997 10-Q") the Company had $147.7 million of indebtedness outstanding
under the Credit Agreement as of February 16, 1997.
The Director Removal Resolution and the Election of Directors Resolution, if
adopted by the Shareholders together with the other Special Meeting Proposals,
also would result in a "change of control" causing an "Event of Default" under
Section 8.1.10 of the Bridge Loan Credit Agreement (the "Bridge Loan
Agreement"), dated as of May 3, 1996, among the Company, as borrower, CIBC, as
agent, and the lenders signatory thereto (the "Bridge Banks"). Pursuant to the
Bridge Loan Agreement, CIBC and the Bridge Banks could cancel the Bridge Banks'
obligations to make loans to the Company and/or declare the principal amount
then outstanding of, and the accrued interest on, the loans under the Bridge
Loan Agreement due and payable. As reported in the February 1997 10-Q, the
Company had $95.1 million of indebtedness outstanding under the Bridge Loan
Agreement as of February 16, 1997.
In addition, as reported in the February 1997 10-Q, the Company had additional
debt outstanding under various notes issued under indentures and loan and credit
agreements. Cross-default and/or cross-acceleration provisions contained in some
of these agreements and repurchase rights provided in one of the indentures
would enable the lenders to declare the principal amount then outstanding of,
and the accrued interest on, the loans under such agreements or notes to be
due and payable if the Director Removal Resolution and the Election of Directors
Resolution were adopted together with the other Special Meeting Proposals.
Although the Shoney's Shareholders' Committee has not had discussions with
Shoney's lenders, the Shoney's Shareholders' Committee believes it is unlikely
that, if the Director Removal Resolution and the Election of Directors
Resolution were adopted together with the other Special Meeting Proposals, such
lenders would exercise their repurchase rights or rights to accelerate loans
made to the Company.
While there can be no assurances that the loans would not be accelerated or that
any repurchase rights would not be exercised, the Shoney's Shareholders'
Committee's belief that the acceleration of such loans and the exercise of such
rights would be unlikely if the Director Removal Resolution and the Election of
Directors Resolution were adopted together with the other Special Meeting
Proposals, is based on its view that the Nominees are qualified to oversee the
business of the Company, and that the Company's business is not dependent on
Mr. C. Stephen Lynn or any of the Company's other officers or directors.
The full text of the Election of Directors Resolution is contained in
Schedule II to this Proxy Statement.
WE STRONGLY RECOMMEND A VOTE FOR THE ELECTION
OF THE NOMINEES OF THE SHONEY'S SHAREHOLDERS' COMMITTEE
PROPOSAL NO. 3: THE BYLAWS REPEAL RESOLUTION
The Bylaws Repeal Resolution would repeal any and all amendments made by the
Board to the Bylaws, as filed with the SEC as Exhibits 3(ii) and 4.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended February 18, 1996,
other than those provisions which were duly approved by the Shareholders and
those provisions which under Tennessee law cannot be repealed by the
Shareholders. This resolution also will provide that, without the approval of
the Shareholders, the Board may not thereafter amend any section of the Bylaws
affected by such repeal or adopt any new Bylaw provision in a manner which
serves to reinstate any repealed provision or any similar provision.
Sections 48-20-201(a)(2) and (b) of the Tennessee Business Corporation Act
authorize this action by a vote of a majority of the shares cast at the Special
Meeting if at least a majority of the shares of Common Stock are represented at
the meeting.
10
<PAGE>
The Bylaws Repeal Resolution is designed to repeal any Bylaw changes that the
Board may have attempted to make yet did not disclose prior to June 16, 1997 or
may attempt to make prior to the Special Meeting. Although we are currently
unaware of any specific Bylaw provisions which would be repealed by adoption of
the Bylaws Repeal Resolution, adoption of the Bylaws Repeal Resolution would
render ineffective any attempted manipulation of the Bylaws by the Board,
whether intended to frustrate the ability of the Shareholders to elect the
Nominees or adopt any of the other Special Meeting Proposals or otherwise. The
Bylaws Repeal Resolution is intended to guarantee that any previously
undisclosed Bylaw amendment will be repealed so as to prevent the Board from
manipulatively altering the Bylaws prior to the Special Meeting without
Shareholder approval and to prevent the Board after the Special Meeting from
amending any section of the Bylaws affected by such repeal or adopting any new
Bylaw provision in a manner which serves to reinstate any repealed provision or
any similar provision.
Although adoption of the Bylaws Repeal Resolution would generally repeal
previously undisclosed Bylaw amendments without considering the beneficial
nature, if any, of such amendments to the Shareholders, it would not repeal
any such amendments which were approved by the Shareholders. The full text of
the Bylaws Repeal Resolution is contained in Schedule III to this Proxy
Statement.
WE STRONGLY RECOMMEND
A VOTE FOR THE BYLAWS REPEAL RESOLUTION
PROPOSAL NO. 4: THE SIZE OF BOARD RESOLUTION
The Company's Bylaws provide that the size of the Board shall be fixed from
time to time by the Board and shall consist of not less than three (3) nor
more than fifteen (15) directors. According to the information made publicly
available by the Company as of the date of this Preliminary Proxy Statement,
there are currently seven directors on the Board. Adoption of the Size of
Board Resolution would fix the number of directors at its present number of
seven. Such amendment would further provide that such Bylaw may not be
amended, or any
11
<PAGE>
new Bylaw provision which is in any way inconsistent therewith, be adopted,
without approval of the Shareholders. Sections 48-18-103(a) and 48-20-
201(a)(2) of the Tennessee Business Corporation Act authorize this action by a
vote of a majority of the shares cast at the Special Meeting if at least a
majority of the shares of Common Stock are represented at the meeting.
The Size of Board Resolution is designed to prevent the current Board from
frustrating the ability of the Shareholders to elect all seven Nominees to
constitute the entire Board. We are concerned that, prior to the Special
Meeting, the current Board might attempt to expand the size of the Board
beyond the current seven seats, whether by resolution, amendment of the Bylaws
or otherwise, and might attempt to do so in a manner intended to prevent us
from proposing additional Nominees.
We believe that the Board's ability to attempt to manipulate the size of the
Board is limited by its fiduciary duties. However, by fixing the number of
Board seats at seven, adoption of the Size of Board Resolution will ensure
that the election contest at the Special Meeting will take place on a level
playing field, without the incumbent Board or their nominees gaining an unfair
advantage by attempting to run for unopposed positions. We have notified the
Company that we would propose additional Nominees for election if the Company
attempts to expand the size of the Board above its existing level of seven
directors prior to the Special Meeting.
In addition, should the Shareholders choose to elect the Nominees to a
minority of the seats on the Board, adoption of the Size of Board Resolution
would have the purpose of ensuring the incumbent directors, who would continue
to constitute a majority, could not frustrate the will of the Shareholders by
increasing the size of the Board and installing hand-picked allies. Adoption
of the Size of Board Resolution would thereby prevent an incumbent majority,
if re-elected, from unilaterally "packing" the Board without Shareholder
approval and upsetting the percentage of the Nominees on the Board desired by
the Shareholders.
The full text of the Size of the Board Resolution is contained in Schedule IV
to this Proxy Statement.
WE STRONGLY RECOMMEND
A VOTE FOR THE SIZE OF THE BOARD RESOLUTION
PROPOSAL NO. 5: THE ELECTION PROCEDURE RESOLUTION
The Election Procedure Resolution provides that directors may be elected by
Shareholders at annual meetings and special meetings of the Shareholders. This
resolution also will provide that, without the approval of the Shareholders,
the Board may not thereafter amend any section of the Bylaws affected by such
repeal or adopt any new Bylaw provision in a manner which serves to reinstate
any repealed provision or any similar provision. Sections 48-20-201(a)(2) and
(b) of the Tennessee Business Corporation Act authorize this action by a vote
of a majority of the shares cast at the Special Meeting if at least a majority
of the shares of Common Stock are represented at the meeting. While we believe
that the current Bylaws provide that the Shareholders can already elect
directors at a special meeting and that this Resolution is unnecessary, we are
proposing this Resolution out of an abundance of caution.
The full text of The Election Procedure Resolution is contained in Schedule
V to this Proxy Statement.
WE STRONGLY RECOMMEND
A VOTE FOR THE ELECTION PROCEDURE RESOLUTION
PROPOSAL NO. 6: THE OMNIBUS RESOLUTION
In addition, the Shareholders will be asked at the Special Meeting to
consider the Omnibus Resolution which sets forth the following order in which
the resolutions will be voted upon by the Shareholders:
1. The Omnibus Resolution;
2. The Bylaws Repeal Resolution;
3. The Size of Board Resolution;
4. The Election Procedure Resolution;
5. The Director Removal Resolution; and
6. The Election of Directors Resolution.
The full text of the Omnibus Resolution is contained in Schedule VI to this
Proxy Statement.
WE STRONGLY RECOMMEND
A VOTE FOR THE OMNIBUS RESOLUTION
12
<PAGE>
INFORMATION ON THE SPECIAL MEETING
Based on currently available public information, a quorum will exist at the
Special Meeting if holders of not less than a majority of the shares of Common
Stock outstanding and entitled to vote at the Special Meeting are present in
person or by proxy. If a quorum is present at the Special Meeting, the
Shareholders may remove members of the Board by a majority of the votes cast at
the Special Meeting. Once the current directors are removed, Shareholders may
elect new directors to fill vacancies on the Board.
If the Shareholders are entitled to vote to elect new directors, directors
will be elected by a vote of a plurality of the shares of the Common Stock
represented by holders present at the meeting in person or by proxy. Once
elected to the Board, each director will serve until the next annual meeting
and thereafter until his or her successor has been elected and qualified or
until his or her earlier death, resignation, retirement, disqualification or
removal.
The GOLD Proxy will be voted at the Special Meeting in accordance with your
instructions. You may vote FOR the Bylaw amendments, FOR the removal of the
current directors, FOR the election of the Nominees as directors of Shoney's,
and FOR the Omnibus Resolution or withhold authority to vote for the Bylaw
amendments, for the removal of for the current directors, for the election of
the Nominees, and for the Omnibus Resolution by marking the proper boxes on
the GOLD Proxy. You also may withhold your vote from any of the Nominees by
writing the name of such nominee in the space provided on the GOLD Proxy Card.
IF NO MARKING IS MADE, YOU WILL BE DEEMED TO HAVE GIVEN A DIRECTION TO VOTE
THE SHARES REPRESENTED BY THE GOLD PROXY FOR THE SPECIAL MEETING PROPOSALS IN
THEIR ENTIRETY PROVIDED THAT YOU HAVE SIGNED AND DATED THE SHONEY'S
SHAREHOLDERS' PROXY CARD.
We also are requesting authority to initiate and vote for proposals to recess or
adjourn the Special Meeting for any reason, including to allow inspectors of the
election to certify the outcome of the election of directors, or to allow the
solicitation of additional votes, if necessary, to approve the Special Meeting
Proposals. We do not currently anticipate additional Special Meeting Proposals
in any substantial matters. Nevertheless, we may elect to cause additional
Special Meeting Proposals to be identified in the notice of, and in the proxy
materials for, the Special Meeting.
PROXY PROCEDURES
In order for your views on the proposals to be represented at the Special
Meeting, please mark, sign and date the enclosed GOLD Proxy and return it to
MacKenzie Partners, Inc. at 156 Fifth Avenue, New York, New York 10010, in the
enclosed postage paid envelope in time to be voted at the Special Meeting.
Execution of the GOLD Proxy will not affect your right to attend the Special
Meeting and to vote in person.
You are eligible to execute a GOLD Proxy only if you owned the Common Stock on
the Record Date. If you own your shares of Common Stock "beneficially" (i.e.,
deriving the economic benefits of ownership thereof or having the power to vote
or dispose of such shares), but not "of record" (i.e., having one's name
recorded on the stock transfer records of the Company), or if your ownership of
shares is through a broker, bank, other financial institution or other record
holder, you should contact your broker, bank, other financial institution or
other record holder and instruct such person or entity to execute the GOLD Proxy
on your behalf. If you acquired shares after the Record Date without a proxy,
you may not execute a GOLD Proxy to vote at the Special Meeting with respect to
such shares. You will retain the right to execute a proxy card in connection
with this proxy solicitation even if you sell your shares after the Record Date.
If you execute and deliver a proxy, it may subsequently be revoked by
written notice of revocation to MacKenzie Partners, Inc. at 156 Fifth Avenue,
New York, New York 10010 or the Company or by your vote at the Special
Meeting. A revocation may be in any written form validly signed and dated by
you as long as it clearly states that your prior proxy is no longer effective.
Any validly signed and dated revocation will supersede any previously dated or
undated GOLD Proxy. To be effective, your written notice of revocation must be
signed, dated and delivered prior to the Special Meeting.
13
<PAGE>
If you sign, date and deliver a GOLD Proxy and thereafter, on one or more
occasions, sign, date and deliver a later-dated proxy, the latest-dated proxy
will be controlling as to your vote and will replace your prior proxy or
proxies. However, any later-dated proxy will be of no effect if it is
delivered after the Special Meeting. ONLY YOUR LATEST DATED PROXY FOR THE
SPECIAL MEETING WILL COUNT AT THE SPECIAL MEETING.
If the Board chooses to oppose our proposals and if, in such instance, you
sign a proxy revocation card sent to you by the Board, you may override that
revocation by returning to MacKenzie Partners, Inc. at 156 Fifth Avenue, New
York, New York 10010 a subsequently dated and signed GOLD Proxy.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Raymond D. Schoenbaum, Betty J. Schoenbaum and the Nominees may be deemed to
be "participants" (as defined in Instruction 3 to Item 4 of Rule 14a-101 of
the Exchange Act) in this proxy solicitation. Certain information relating to
the beneficial ownership of Common Stock by participants in the solicitation
and certain other information is contained in Schedule VII hereto and is
incorporated in this document by reference.
OTHER REPRESENTATIVES OF THE SHONEY'S SHAREHOLDERS' COMMITTEE
WHO ALSO MAY ASSIST IN THE SOLICITATION OF PROXIES
In connection with Montgomery Securities' engagement as financial advisor,
we anticipate that certain employees of Montgomery Securities may communicate
in person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are shareholders for the purpose of assisting in
the proxy solicitation. Montgomery Securities will not receive any fee for, or
in connection with, such solicitation activities apart from the fees they are
otherwise entitled to receive under their engagement. See "General
Information" below. The principal business address of Montgomery Securities is
600 Montgomery Street, San Francisco, California 94111. Certain additional
information regarding Montgomery Securities is contained in Schedule VII hereto
and is incorporated in this document by reference.
In addition, Howard E. Sachs, John S. Ellis and W. Douglas Benn, advisors to
Raymond D. Schoenbaum, may assist in soliciting proxies although none of them
nor the Shoney's Shareholders' Committee admits that any of them is a
"participant", as defined in Schedule 14A promulgated by the SEC under the
Exchange Act. Certain additional information regarding such persons is contained
in Schedule VIII hereto and is incorporated in this document by reference.
GENERAL INFORMATION
This Proxy Statement and the accompanying GOLD Proxy Card are first being
furnished to Shareholders on or about _________, 1997. Executed proxies will be
solicited by mail advertisement, telephone, telecopier and in person.
Solicitation will be made by , none of whom will receive additional
compensation for such solicitation. Proxies will be solicited from
individuals, brokers, banks, bank nominees and other institutional holders. We
have requested banks, brokerage houses and other custodians, nominees and
fiduciaries to forward all solicitation materials to the beneficial owners of
the shares they hold of record. We will reimburse these record holders for
their reasonable out-of-pocket expenses.
In addition, we have retained MacKenzie Partners, Inc. as our information
agent and to solicit proxies in connection with the Special Meeting. We have
agreed to reimburse MacKenzie Partners, Inc. for its reasonable expenses and
to pay to MacKenzie Partners, Inc. fees not to exceed $120,000. MacKenzie
Partners, Inc. will employ approximately 40 people in its efforts. Costs
incidental to this solicitation include expenditures for printing, postage,
legal and related expenses and are expected to be approximately $ .
14
<PAGE>
We also have retained Montgomery Securities to provide certain financial
advisory services in connection with our solicitation of proxies for the
Special Meeting. Montgomery Securities engages in a full range of banking,
securities trading, market making and brokerage services for institutional and
individual clients. To date, we have paid Montgomery Securities a retainer fee
of $100,000. We have agreed to pay additional retainer fees to Montgomery
Securities up to $400,000. If we are successful in removing and replacing the
current Board members at the Special Meeting on August 19, 1997, we will be
required to pay Montgomery Securities an additional success fee of $1,000,000.
We also will reimburse Montgomery Securities for reasonable out-of-pocket
costs and expenses (including reasonable attorneys' fees and expenses), in an
amount not to exceed $25,000 per month without our prior written consent, and
indemnify Montgomery Securities against certain liabilities and expenses in
connection with our engagement of Montgomery Securities, including certain
liabilities under the federal securities laws.
The total costs incurred to date in connection with this solicitation are
not in excess of $ . If the Nominees are elected, we will ask the Board to
have the Company reimburse us for costs and expenses incurred in connection
with this solicitation. We do not intend to request that our reimbursement
request be submitted to a vote of Shareholders.
ADDITIONAL INFORMATION
The principal executive offices of the Company are at 1727 Elm Hill Pike,
Nashville, Tennessee 37210. Except as otherwise noted herein, the information
concerning the Company has been taken from or is based upon documents and
records on file with the SEC and other publicly available information.
Although we do not have any knowledge that would indicate that any statement
contained herein based upon such documents and records is untrue, we do not
take any responsibility for the accuracy or completeness of the information
contained in such documents and records, or for any failure by the Company to
disclose events that may affect the significance or accuracy of such
information.
For information regarding the security ownership of certain beneficial
owners and the management of Shoney's, see Schedule VIII.
Raymond D. Schoenbaum
Betty J. Schoenbaum
IF YOUR SHARES OF COMMON STOCK ARE HELD IN THE NAME OF A BROKERAGE FIRM,
BANK, BANK NOMINEE OR OTHER INSTITUTION, ONLY IT CAN SIGN A PROXY WITH RESPECT
TO YOUR COMMON STOCK. ACCORDINGLY, PLEASE CONTACT THE PERSON RESPONSIBLE FOR
YOUR ACCOUNT AND GIVE INSTRUCTIONS FOR A GOLD PROXY TO BE SIGNED REPRESENTING
YOUR SHARES OF COMMON STOCK.
IF YOU HAVE ANY QUESTIONS ABOUT GIVING YOUR PROXY OR REQUIRE ASSISTANCE,
PLEASE CONTACT MACKENZIE PARTNERS, INC. TOLL-FREE AT (800) 322-2885.
15
<PAGE>
SCHEDULE I
DIRECTOR REMOVAL RESOLUTION
RESOLVED: That all of the members of the Board be removed, including without
limitation, any of the following who are members of the Board as of
the Special Meeting: Dennis C. Bottorff, Carole F. Hoover, Victoria
B. Jackson, C. Stephen Lynn, Jeffry F. Schoenbaum, B. Franklin
Skinner and Cal Turner, Jr.; provided, however, that if,
notwithstanding the Omnibus Resolution, any nominees of the Shoney's
Shareholders' Committee have been elected to the Board prior to the
time this Resolution is adopted, such nominees of the Shoney's
Shareholder's Committee shall not be removed from the Board.
<PAGE>
SCHEDULE II
ELECTION OF DIRECTORS RESOLUTION
RESOLVED: That each of J. Michael Bodnar, Lawrence A. Cunningham, Nathaniel R.
Goldston III, Michael A. Leven, Raymond D. Schoenbaum, William A.
Schwartz and Richard F. Sherman as the nominees of the Shoney's
Shareholders' Committee, and all other persons nominated by the
Shoney's Shareholders' Committee, be elected to fill all vacancies on
the Board for the balance of the terms of the present directors and
until their successors are elected and qualified.
<PAGE>
SCHEDULE III
BYLAWS REPEAL RESOLUTION
RESOLVED: That any and all amendments made by the Board to the Bylaws, as filed
with the Securities and Exchange Commission as Exhibits 3(ii) and 4.2
to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 18, 1996 be repealed, other than those provisions which were
duly approved by the Shareholders and those provisions which under
Tennessee law cannot be repealed by the Shareholders, and that,
without the approval of the Shareholders, the Board may not
thereafter amend any section of the Bylaws affected by such repeal or
adopt any new Bylaw provision in a manner which serves to reinstate
any repealed provision or any similar provision.
<PAGE>
SCHEDULE IV
SIZE OF BOARD RESOLUTION
RESOLVED: That the Bylaws of the Company be and they hereby are amended,
effective at the time this resolution is approved by the
Shareholders, by (i) deleting the first two sentences of Article
III, Section 1 in their entirety and replacing them with the
following sentence:
The business and affairs of the Corporation shall be managed and
controlled by a Board of Directors, which shall be fixed at
seven (7) members.
and, (ii) adding the following after the last sentence of Article
III, Section 1 of the Bylaws:
The Board of Directors may not amend or repeal this Section or
adopt any new Bylaw provision which is inconsistent in any
manner with this Section.
<PAGE>
SCHEDULE V
ELECTION PROCEDURES RESOLUTION
RESOLVED: That the Bylaws of the Company be and they hereby are amended,
effective at the time this resolution is approved by the
Shareholders, by (i) deleting the first sentence of Article III,
Section 3 in its entirety and replacing it with the following
sentence:
The Directors shall be elected at the annual meeting of
shareholders or at a special meeting of shareholders.
and, (ii) adding the following after the last sentence of Article
III, Section 3 of the Bylaws:
The Board of Directors may not amend or repeal this Section or
adopt any new Bylaw provision which is inconsistent in any
manner with this Section.
<PAGE>
SCHEDULE VI
OMNIBUS RESOLUTION
RESOLVED: That each of the resolutions of the Shoney's Shareholders' Committee
be voted upon by the Shareholders in the following order:
1.The Omnibus Resolution;
2.The Bylaws Repeal Resolution;
3.The Size of Board Resolution;
4.The Election Procedure Resolution;
5.The Director Removal Resolution; and
6.The Election of Directors Resolution.
<PAGE>
SCHEDULE VII
BENEFICIAL OWNERSHIP OF
SHARES BY PARTICIPANTS IN THE SOLICITATION
AND CERTAIN OTHER PERSONS
Raymond D. Schoenbaum has his principal business address at 1640 Powers
Ferry Road, Building Two, Suite 100, Marietta, Georgia 30067-6050. Betty J.
Schoenbaum has her principal residential address at 5541 Gulf of Mexico Drive,
Longboat Key, Florida 34228. Raymond D. Schoenbaum is a private investor.
Betty J. Schoenbaum is not employed.
As of the date of the Preliminary Proxy Statement, Raymond D. Schoenbaum
is deemed to own beneficially (as that term is defined in Rule 13d-3 under the
Exchange Act, as amended) 508,061 shares of Common Stock, which constitutes
approximately 1.0% of the outstanding shares of Common Stock (based on
information provided by the Company in its quarterly report on Form 10-Q for the
quarter ended February 16, 1997). As of the date of this Consent Solicitation
Statement, Betty J. Schoenbaum is deemed to own beneficially (as that term is
defined in Rule 13d-3 under the Exchange Act, as amended) 3,394,480 shares of
Common Stock, which constitutes approximately 7.0% of the outstanding shares of
Common Stock (based in information provided by the Company in its quarterly
report on Form 10-Q for the quarter ended February 16, 1997). As of the date of
this Consent Solicitation Statement, Raymond D. Schoenbaum and Betty J.
Schoenbaum, as a group, are deemed to own beneficially (as that term is defined
in Rule 13d-3 under the Exchange Act, as amended) 3,866,791 shares of Common
Stock, which constitutes approximately 8.0% of the outstanding shares of Common
Stock (based in information provided by the Company in its quarterly report on
Form 10-Q for the quarter ended February 16, 1997).
As of the date of the Preliminary Proxy Statement, J. Michael Bodnar is deemed
to own beneficially (as that term is defined in Rule 13d-3 under the Exchange
Act, as amended) 5,000 shares of Common Stock, which constitutes less than one
percent of the outstanding shares of Common Stock. Except as set forth herein,
none of the nominees is the beneficial or record owner of shares of Common
Stock.
Raymond D. Schoenbaum and Betty J. Schoenbaum have purchased or sold the
following shares of Common Stock within the last two years:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PRICE
PARTICIPANT TRANSACTION DATE PURCHASED/SOLD PER SHARE
----------- ---------------- ------------------ ----------
<S> <C> <C> <C>
Betty J. Schoenbaum April 4, 1997 60,000* purchased $4.75
Raymond D. Schoenbaum November 22, 1996 25,000 purchased $7.75
25,000 purchased $7.875
11,000 purchased $7.75
December 31, 1996 50,000 purchased $6.875
50,000 purchased $7.00
March 18, 1997 100,000 purchased $5.25
-----------------
Total: 321,000
==================
</TABLE>
- --------
* Shares purchased by the Betty Schoenbaum Revocable Trust over which Betty J.
Schoenbaum shares voting and dispositive power.
Except as otherwise set forth in this Schedule I, neither Raymond D.
Schoenbaum or Betty J. Schoenbaum or any associate of any of the foregoing
persons or any other person who may be deemed a "participant" in this
solicitation has purchased or sold any shares of Common Stock within the past
two years, borrowed any funds for the purpose of acquiring or holding any
shares of Common Stock, or is or was within the past year a party to any
contract, arrangement or understanding with any person with respect to any
shares of Common Stock. There have not been any transactions since the
beginning of the Company's last fiscal year and there is not any currently
proposed transaction to which the Company or any of its subsidiaries was or is
to be a party, in which Raymond D. Schoenbaum or Betty J. Schoenbaum or any
associate or immediate family member of any of the foregoing persons or any
other person who may be deemed a "participant" in this solicitation had or
will have a direct or indirect material interest. Other than the directorships
contemplated by the Special Meeting Proposals and other than Raymond D.
Schoenbaum becoming Chairman and Chief Executive Officer of Shoney's, neither
Raymond D. Schoenbaum or Betty J. Schoenbaum or any associate of any of the
foregoing persons or any other person who may be deemed a "participant" in
this solicitation has any arrangement or understanding with any
<PAGE>
PAGE>
person with respect to any future employment by the Company or its affiliates,
or with respect to any future transactions to which the Company or its
affiliates may or will be a party.
Jeffry F. Schoenbaum, the brother of Raymond D. Schoenbaum and the son of
Betty J. Schoenbaum, currently is a member of the Board and would be removed as
a member of the Board if the Special Meeting Proposals were adopted in their
entirety at the Special Meeting
In the ordinary course of its business, Montgomery Securities maintains
customary arrangements and may effect transactions in the securities of the
Company for the accounts of its customers. As a result of its engagement by
the Shoney's Shareholders' Committee, Montgomery Securities restricted its
proprietary trading in the securities of the Company as of June 16, 1997
(although it may still execute trades for customers on an unsolicited agency
basis). As of June 12, 1997, Montgomery Securities did not beneficially own
any Common Stock, and held of record 10,312 shares of Common Stock for
customer accounts. Montgomery Securities bought and sold 50,500 shares of
Common Stock of the Company for its own account over the last two years.
Howard E. Sachs has his principal business address at 1901 Powers Ferry
Road, Suite 260, Atlanta, Georgia 30339. As of the date of the Preliminary Proxy
Statement, Mr. Sachs was the beneficial owner of 5,250 shares of Common Stock.
Except for 4,000 shares purchased on behalf of his children, Mr. Sachs neither
bought nor sold any securities of the Company over the last two years.
John S. Ellis has his principal business address at 1640 Powers Ferry Road,
Building Two, Suite 100, Marietta, Georgia 30067. As of the date of the
Preliminary Proxy Statement, Mr. Ellis did not own beneficially or of record any
shares of Common Stock. Mr. Ellis neither bought nor sold any securities of the
Company over the last two years.
W. Douglas Benn has his principal business address at 1640 Powers Ferry
Road, Building Two, Suite 100, Marietta, Georgia 30067. As of the date of the
Preliminary Proxy Statement, Mr. Benn did not own beneficially or of record any
shares of Common Stock. Mr. Benn neither bought nor sold any securities of the
Company over the last two years.
<PAGE>
SCHEDULE VIII
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth share ownership information with respect to
persons known at such date to the Company to be beneficial owners of more than
5% of the shares of Common Stock, as such information was set forth in the 1997
Proxy Statement, and as of the date of the Preliminary Proxy Statement with
respect to the beneficial ownership of the Shoney's Shareholders' Committee.
Unless otherwise indicated, each of the shareholders has sole voting and
investment power with respect to the shares of Common Stock beneficially owned.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT OF CLASS
- ------------------------------------ --------------------- ----------------
<S> <C> <C>
Shoney's Shareholders' Committee as a
Group(2)............................... 3,866,791 8.0 %(3)
1640 Powers Ferry Road
Building Two, Suite 100
Marietta, Georgia 30067
R. L. Danner(4)......................... 4,249,303 8.76%
2 International Drive,
Suite 510
Nashville, Tennessee 37217
First Union Corporation(5).............. 2,485,675 5.12%
One First Union Center
Charlotte, North Carolina 28288-0137
</TABLE>
- --------
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any security that such person (i) has or shares "voting
power", which includes the power to dispose of, or to direct the
disposition of, such security or (ii) has the right to acquire within 60
days after the date such information was set forth in the 1997 Proxy
Statement, and the date of the Preliminary Proxy Statement with respect to
the beneficial ownership of the Shoney's Shareholders' Committee. More than
one person may be deemed to be a beneficial owner of the same securities,
and a person may be deemed to be a beneficial owner of securities as to
which he has no beneficial interest.
(2) Includes shares held by these individuals as a "group" as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act").
(3) Based on 48,551,609 shares outstanding on March 28, 1997 as disclosed by
the Company in its Quarterly Report on Form 10-Q for the quarter ended
February 16, 1997.
(4) Includes 83,068 shares of Common Stock owned by Mrs. Danner and 7,101
shares of Common Stock held in trust for Mr. Danner's son, over which Mrs.
Danner has sole voting and investment power.
(5) First Union Corporation ("First Union") has sole voting power as to all
shares of Common Stock and has sole power to dispose or to direct the
disposition of 2,471,224 shares of Common Stock.
The following table sets forth, according to the 1997 Proxy Statement (except as
otherwise noted below), the name of, and the total number of shares of Common
Stock (if any) beneficially owned (as defined in Rule 13d-3 under the Exchange
Act) and the percentage of outstanding shares of Common Stock beneficially owned
by, (i) each director of the Company, (ii) the Company's Chief Executive Officer
and each of its executive officers and (iii) all directors and executive
officers as a group. The information presented below has been taken from or is
based upon documents and records on file with the Commission and other publicly
available information. Since the 1997 Proxy Statement, the total outstanding
number of shares of Common Stock has increased from 48,531,075 to 48,551,609
(based on information provided by Company in its Quarterly Report on Form 10-Q
for the quarter ended February 16, 1997). Although we do not have any knowledge
that would indicate that any statement contained herein based upon such
documents and records is untrue, we do not take
<PAGE>
any responsibility for the accuracy or completeness of the information
contained in such documents and records, or for any failure by the Company to
disclose events that may affect the significance or accuracy of such
information.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES(1) PERCENTAGE OF CLASS
- ------------------------------------ --------- -------------------
<S> <C> <C>
John W. Alderson................................. 10,000 *
W. Craig Barber.................................. 65,859 *
Dennis C. Bottorff............................... 9,000 *
Carole F. Hoover................................. 1,400 *
Victoria B. Jackson.............................. 3,094 *
Robert M. Langford............................... 15,000 *
C. Stephen Lynn.................................. 219,000 *
Jeffry Schoenbaum(2)............................. 582,192 1.19%
B. Franklin Skinner.............................. 3,500 *
Cal Turner, Jr................................... 28,000 *
Ronald E. Walker................................. 21,341 *
All directors and executive officers as a group
(11 persons).................................... 1,110,065 2.27%
</TABLE>
- --------
* Less than 1%.
(1) Includes shares subject to options to purchase shares which are
exercisable or become exercisable within 60 days after January 23, 1997,
and are held by the following persons: John W. Alderson (10,000); W. Craig
Barber (56,500); Dennis C. Bottorff (1,000); Carole F. Hoover (1,000);
Victoria B. Jackson (1,000); Robert M. Langford (15,000); C. Stephen Lynn
(100,000); Jeffry Schoenbaum (0); B. Franklin Skinner (3,000); Cal Turner,
Jr. (3,000); Ronald E. Walker (10,100); Directors and Executive Officers
as a Group (287,047).
(2) Includes 17,340 shares held by Chase Manhattan Bank as custodian for Mr.
Schoenbaum's children, 2,953 shares held by his wife, Sue Schoenbaum, and
432,902 shares held in an irrevocable trust for the benefit of Mr.
Schoenbaum. Also includes 35,750 shares owned by the Schoenbaum Family
Foundation, of which Mr. Schoenbaum is a director. Mr. Schoenbaum
disclaims beneficial ownership of the shares owned by the Schoenbaum
Family Foundation. Mr. Schoenbaum is the son of Alex Schoenbaum, who until
his death in December 1996 was Chairman Emeritus of the Company's Board of
Directors.
<PAGE>
PRELIMINARY COPY
(FRONT OF PROXY CARD)
PROXY SOLICITATION
SHONEY'S, INC.
THIS REVOCABLE PROXY IS SOLICITED BY
THE SHONEY'S SHAREHOLDERS' COMMITTEE
The undersigned shareholder of Shoney's, Inc. (the "Company") hereby appoints
Raymond D. Schoenbaum and Betty J. Schoenbaum and ______________, and each of
them, proxies with full power of substitution and resubstitution, the proxies of
each of the undersigned (said proxies, together with each substitute appointed
by any of them, if any, collectively the "Proxies"), to vote all shares of
Common Stock of the Company, $1.00 par value per share, that the undersigned is
entitled to vote if personally present at the Special Meeting of Shareholders of
the Company to be held on Tuesday, August 19, 1997 at 10:00 a.m. local time in
the Governor's Ballroom at the Opryland Hotel, 2800 Opryland Drive, Nashville,
Tennessee 37214 and at any adjournment or postponement thereof. The undersigned
hereby revokes any previous proxies with respect to the matters covered by this
Proxy.
THE SHONEY'S SHAREHOLDERS' COMMITTEE RECOMMENDS A VOTE "FOR" EACH OF THE
PROPOSALS SET FORTH BELOW.
(Please mark each proposal with an "X" in the appropriate box)
1. To remove all of the members of the Board of Directors, including
without limitation, any of the following who are members of the Board
as of the Special Meeting: Dennis C. Bottorff, Carole F. Hoover,
Victoria B. Jackson, C. Stephen Lynn, Jeffry F. Schoenbaum, B. Franklin
Skinner and Cal Turner, Jr.; provided, however, that if,
notwithstanding the Omnibus Resolution (as defined below), any nominees
of the Shoney's Shareholders' Committee have been elected to the Board
prior to the time this Resolution is adopted, such nominees of the
Shoney's Shareholder's Committee shall not be removed from the Board
(the "Director Removal Resolution").
[_] FOR [_] AGAINST [_] ABSTAIN
2. To elect J. Michael Bodnar, Lawrence A. Cunningham, Nathaniel R.
Goldston III, Michael A. Leven, Raymond D. Schoenbaum, William A.
Schwartz and Richard F. Sherman (the "Nominees"), and all other persons
nominated by the Shoney's Shareholders' Committee as of the date of the
Special Meeting to fill all vacancies on the Board for the balance of
the terms of the present directors and until their successors are
elected and qualified (the "Election of Directors Resolution").
[_] FOR all [_] WITHHOLD AUTHORITY
Nominees for all Nominees
(INSTRUCTION: To withhold authority to vote for one or more nominees,
mark FOR above and print the name(s) of the person(s) with respect to
whom you wish to withhold authority in the space provided below.)
-------------------------------------------------------------------
3. To repeal any and all amendments made by the Board of Directors (the
"Board") to the Bylaws of the Company, as filed with the Securities and
Exchange Commission as Exhibits 3(ii) and 4.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 18, 1996,
other than those provisions which were duly approved by the
Shareholders and those provisions which under Tennessee law cannot be
repealed by the Shareholders, and to provide that, without the approval
of the Shareholders, the Board may not thereafter amend any section of
the Bylaws affected by such repeal or adopt any new Bylaw provision in
a manner which serves to reinstate any repealed provision or any
similar provision (the "Bylaws Repeal Resolution").
[_] FOR [_] AGAINST [_] ABSTAIN
4. To amend Article III, Section 1 of the Company's Bylaws to fix the
number of directors on the Company's Board of Directors at seven and
provide that, without the approval of the Shareholders, the Board may
not thereafter amend or repeal such Section or adopt any new Bylaw
provision which is inconsistent in any manner with such Section (the
"Size of Board Resolution").
[_] FOR [_] AGAINST [_] ABSTAIN
5. To amend Article III, Section 3 of the Company's Bylaws to provide that
directors shall be elected by the Shareholders at annual meetings and
special meetings of the Shareholders of the Company, and provide that,
without the approval of the Shareholders, the Board may not thereafter
amend or repeal such Section or adopt any new Bylaw provision which is
inconsistent in any manner with such Section (the "Election Procedure
Resolution").
[_] FOR [_] AGAINST [_] ABSTAIN
6. To set forth the following order in which the resolutions would be
voted upon by the Shareholders (the "Omnibus Resolution"):
1. The Omnibus Resolution;
2. The Bylaws Repeal Resolution;
3. The Size of Board Resolution;
4. The Election Procedure Resolution;
5. The Director Removal Resolution; and
6. The Election of Directors Resolution.
7. To authorize the proxies in their discretion to vote upon any and all
actions proposed by the Shoney's Shareholders' Committee incidental to
the removal and replacement of the current directors of the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
This proxy, when properly executed, will be voted in the manner marked herein by
the undersigned shareholder. IF NO MARKING IS MADE, THIS PROXY WILL BE DEEMED TO
BE A DIRECTION TO VOTE FOR THE FOREGOING PROPOSALS IN THEIR ENTIRETY.
THE SHONEY'S SHAREHOLDERS' COMMITTEE STRONGLY RECOMMENDS THAT YOU VOTE "FOR" THE
PRECEDING ACTIONS.
<PAGE>
(BACK OF REQUEST CARD)
Dated:_____________, 1997
Signature______________________
Signature (if jointly held)_______________________
Title:
Please sign exactly as your name appears on your stock certificate. When shares
are held by joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee or guardian, give full title as such. If a
corporation, sign in full corporate name by president or other authorized
officer. If a partnership, sign in partnership name by authorized person.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENCLOSED ENVELOPE.
