AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is dated as of January 1,
2000, by and between Franchise Finance Corporation of America, a Delaware
corporation (the "Company") and Xxxxxxxxxxx X. Xxxx ("Executive").
RECITALS
In order to induce Executive to serve as President and Chief Operating
Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. DEFINED TERMS. The following terms shall have the following meanings
unless otherwise specifically defined in this Agreement:
"ACTUAL BONUS" means the highest annual cash bonus payable to Executive
with respect to any of the three years immediately preceding the Termination
Year.
"AGREEMENT" means this Amended and Restated Employment Agreement dated as
of January 1, 2000 between the Company and Executive.
"ANNUAL CASH BONUS" means the cash compensation payable to Executive as
calculated and paid in a manner substantially similar to the methods and timing
used to calculate and pay Executive's bonus for calendar year 1999; PROVIDED,
HOWEVER, that during the term of this Agreement, neither the Company nor the
Compensation Committee shall change such methods and timing in a manner which
will be less favorable to Executive.
"BASE SALARY" means the annual base salary of Executive as set forth in
Section 4(a).
"BOARD" means the board of directors of the Company.
"CAUSE" means:
(a) the willful and continued failure of Executive to perform a
substantial portion of his duties with the Company (other than any
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board, which specifically identifies the
manner in which the Board believes that Executive has not
substantially performed his duties;
(b) the willful engaging by Executive in gross misconduct
(including, without limitation, fraud or embezzlement); or
(c) the conviction of, or plea of guilty or NOLO CONTENDERE to, a
felony.
"CHANGE IN CONTROL" means:
(a) any "Person" as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and as used
in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by
the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities (other than
indirectly as a result of the Company's redemption of its securities);
PROVIDED, HOWEVER, that, in the event that any such person becomes the
beneficial owner of 25% or more, but not exceeding 50%, of the
combined voting power of the Company's then outstanding securities, no
Change of Control shall be deemed to occur so long as the Incumbent
Directors (as defined below) continue to constitute a majority of the
Board in accordance with the terms of paragraph (c) below; or
(b) the consummation of any merger or other business combination
of the Company, sale of all or substantially all of the Company's
assets (other than with respect to sales of assets in the ordinary
course of business, securitization and whole loan sales provided by
the Company's interim and permanent financing arrangements),
liquidation or dissolution of the Company or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company and any
trustee or fiduciary of any Company employee benefit plan immediately
prior to the Transaction own at least 51% of the voting power,
directly or indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser of or
successor to the Company's assets (other than with respect to sales of
assets in the ordinary course of business, securitization and whole
loan sales provided by the Company's interim and permanent financing
arrangements); (C) both the surviving corporation and the purchaser in
the event of any combination of Transactions; or (D) the parent
company owning 100% of such surviving corporation, purchaser or both
the surviving corporation and the purchaser, as the case may be; or
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(c) within any twenty-four-month period, the persons who were
directors immediately before the beginning of such period (the
"Incumbent Directors") shall cease (for any reason other than death)
to constitute at least a majority of the Board or the board of
directors of a successor to the Company. For this purpose, any
director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director was elected to
the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person who
commenced or threatened to commence an election contest or proxy
solicitation by or on behalf of a Person other than the Board) or who
has entered into an agreement to effect a Change in Control or
expressed an intention to cause such Change in Control.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
provisions of any successor law.
"COMPANY" means Franchise Finance Corporation of America, a Delaware
corporation.
"COMPENSATION COMMITTEE" means the compensation committee of the Board.
"EFFECTIVE DATE" means January 1, 2000.
"EXECUTIVE" means Xxxxxxxxxxx X. Xxxx.
"EXPENSE PAYMENT" means payments made to Executive for expenses which are
permitted under this Agreement and have been incurred but not yet reimbursed.
"GOOD REASON" means any of the following without Executive's express prior
written consent:
(a) any material diminution or adverse change in Executive's duties,
titles or responsibilities with the Company (or any affiliate thereof) from
those in effect immediately prior to any such diminution or adverse change;
PROVIDED, HOWEVER, that no such diminution or adverse change shall be
deemed to exist solely as a consequence of the Company ceasing to be a
Company with publicly-traded securities or becoming a wholly-owned
subsidiary of another company;
(b) if after a Change in Control there is any reduction in Executive's
aggregate annual cash compensation (which shall include Base Salary and
Actual Bonus) in Executive's aggregate annual cash compensation in effect
immediately prior to such reduction;
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(c) any requirement that Executive be based at a location more than 35
miles from the Company's headquarters, located in Scottsdale, Arizona (or a
substantial increase in the amount of travel that Executive is required to
do because of a relocation of the Company's headquarters from Scottsdale,
Arizona);
(d) any failure by the Company to obtain from any successor to the
Company an agreement reasonably satisfactory to Executive to assume and
perform this Agreement, as contemplated by Section 13 hereof; or
(e) during the thirty-day period immediately following the first
anniversary of the Change in Control there is a Thirteenth-Month
Termination by Executive.
"PERMANENT DISABILITY" means the total and permanent disability of
Executive as defined in the Company's long-term disability benefit plan
applicable to senior executive officers in effect on the Effective Date.
"RETIREMENT" means Executive's voluntary termination of employment pursuant
to late, normal or early retirement under a pension plan (which may include a
defined benefit plan or a defined contribution plan) sponsored by the Company,
as defined in such plan, but only if such retirement occurs prior to a
termination by the Company for Cause or by Executive for Good Reason.
"TERMINATION DATE" means the date this Agreement is terminated, except to
the extent the provisions of Section 16 are applicable, which shall be the
earlier of December 31, 2002 or the date of termination of Executive's
employment pursuant to this Agreement.
"TERMINATION YEAR" means the year in which Executive's termination of
employment occurs.
"THIRTEENTH-MONTH TERMINATION" means the voluntary termination of
employment by Executive for any reason or no reason at all.
"VACATION PAYMENT" means payments made to Executive with respect to accrued
but unused vacation days.
2. EMPLOYMENT.
(a) Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as its President and
Chief Operating Officer or as an officer of the Company having the same or
a more senior title and greater responsibilities. In his capacity as the
President and Chief Operating Officer of the Company, Executive shall
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report to the Board and shall have the customary powers, responsibilities
and authorities of a President and Chief Operating Officer for corporations
of the size and character of the Company, as it exists from time to time,
and as are assigned by the Board.
(b) Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment with the Company commencing on the Effective
Date, and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection therewith. Executive shall
perform such duties and exercise such powers, commensurate with his
position, as the Board shall from time to time delegate to him on such
terms and conditions and subject to such restrictions the Board may
reasonably from time to time impose. Executive also agrees to serve, if
elected, as a member of the Board.
(c) Nothing in this Agreement shall preclude Executive, so long as in
the reasonable determination of the Board such activities do not interfere
with his duties and responsibilities hereunder, from engaging in charitable
and community affairs, from managing any passive investment made by him in
publicly traded equity securities or other property (provided that no such
investment may exceed 5% of the equity of any entity) or, without prior
notice to the Board and subject to Section 15 and Section 16(b) hereof,
from serving as a member of boards of directors or as a trustee of any
other corporation, association or entity.
3. EFFECTIVE DATE; TERM OF EMPLOYMENT. This Agreement shall be effective as
the Effective Date. Executive's term of employment under this Agreement shall
commence on the Effective Date hereof and, subject to the terms hereof, shall
terminate on the Termination Date; provided, however, that any termination of
Employment by Executive for Good Reason or pursuant to the Change in Control
provisions of Section 8 may only be made on 30 days' prior written notice and
any other termination of employment by Executive other than for death, Permanent
Disability or Good Reason may only be made upon 90 days' prior written notice to
the Company.
4. COMPENSATION.
(a) SALARY. The Company shall pay Executive during the term of this
Agreement the Base Salary, as calculated pursuant to this Section 4,
payable in cash not less frequently than bimonthly. As of the Effective
Date, the Base Salary shall be $350,000. As of January 1 of each annual
anniversary of the Effective Date, the Base Salary of Executive will be
increased from Executive's Base Salary for the preceding calendar year by
the greater of (i) five percent, (ii) the average percentage salary
increase awarded to all employees of the Company who are not senior
executive officers of the Company or (iii) an amount determined by the
Compensation Committee.
(b) ANNUAL CASH BONUS. In addition to Base Compensation, the Company
will pay to Executive on or prior to January 30 of each year for
performance in the preceding calendar year the Annual Cash Bonus.
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(c) COMPENSATION PLANS AND PROGRAMS. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company
from time to time, which compensation plans and programs are intended to be
comparable to those currently maintained by the Company, in which other
senior executives of the Company participate on terms that are intended to
be comparable to those applicable to such other senior executives.
(d) STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Executive shall be
eligible to receive grants of stock options and restricted stock awards as
determined in the discretion of the Compensation Committee under any stock
option plan or incentive plan of the Company or any affiliate.
5. EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and
practices (commensurate with his positions in the Company from time to time
and to the extent permitted under any employee benefit plan) in accordance
with the terms thereof, which the Company makes available to its senior
executives and which employee pension and welfare benefit programs, plans
and practices that are intended to be comparable to those currently
maintained by the Company; provided, however, such programs, plans and
practices will be no less favorable than those in existence as of the date
of execution of this Agreement.
(b) VACATION AND FRINGE BENEFITS. Executive shall be entitled to no
less than the number of business days paid vacation in each calendar year
to which Executive is entitled immediately prior to execution of this
Agreement, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made
available to senior executives of the Company, commensurate with his
position with the Company.
6. EXPENSES. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR BY EXECUTIVE FOR
GOOD REASON. (i) The Company may terminate Executive's employment at any
time for any reason. If Executive's employment is terminated by the Company
other than for Cause) or if Executive terminates his employment for Good
Reason prior to the Termination Date, Executive shall receive such
payments, if any, under applicable plans or programs, including but not
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limited to those referred to in Section 4(c) hereof, to which he is
entitled pursuant to the terms of such plans or programs. In addition,
Executive shall be entitled to receive the following:
(A) A cash lump sum payment equal to the sum of three times (1)
Executive's Base Salary at the annual rate as of the date of
termination and (2) the Actual Bonus, except with respect to a
Thirteenth-Month Termination which shall be paid as provided in
Section 8(c) hereof; and
(B) a cash lump sum payment with respect to (1) the Vacation
Payment and (2) the Expense Payment which shall be paid by the Company
to Executive within 30 days after the termination of Executive's
employment by check payable to the order of Executive or by wire
transfer to an account specified by Executive;
(C) Executive shall also be entitled to the following benefits:
(i) continued medical, dental, vision, and life insurance
coverage (excluding accident, death, and disability insurance)
and any fringe benefit or perquisites in effect immediately prior
to the date of termination for Executive and Executive's eligible
dependents or, to the extent such benefits are not commercially
available, such other arrangements reasonably acceptable to
Executive, on the same basis as in effect prior to the date of
termination, whichever is deemed to provide for more substantial
benefits, for a period ending December 31, 2002;
(ii) immediate 100% vesting of all outstanding stock
options, stock appreciation rights and restricted stock granted
or issued by the Company to the extent not previously vested;
(iii) all other accrued or vested benefits in accordance
with the terms of the applicable plan, which vested benefits
shall include Executive's otherwise unvested account balances in
the Company's 401(k) plan, which shall be vested as of the date
of termination; and
(iv) if so requested by Executive, outplacement services
shall be provided by a professional outplacement provider
selected by Executive; PROVIDED, HOWEVER, that such outplacement
services shall be provided to Executive at a cost to the Company
of not more than fifteen (15) percent of such Executive's Base
Salary.
(b) CURE PERIOD OF COMPANY FOR GOOD REASON TERMINATION.
Notwithstanding the foregoing, in the event that Executive provides the
Company with a notice of termination stating Good Reason, except in the
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event of a Thirteenth-Month Termination, the Company shall have 30 days
thereafter in which to cure or resolve the behavior otherwise constituting
Good Reason. Any good faith determination by Executive that Good Reason
exists shall be presumed correct and shall be binding upon the Company.
(c) PERMANENT DISABILITY OF EXECUTIVE. If Executive has a Permanent
Disability, the Company or Executive may terminate Executive's employment
on written notice thereof, and Executive shall receive or commence
receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
(ii) the Actual Bonus, prorated by a fraction, the numerator of
which is the number of days of the fiscal year until termination and
the denominator of which is 365;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
(d) DEATH. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable:
(i) the Actual Bonus, the numerator of which is the number of
days of the fiscal year until his death and the denominator of which
is 365;
(ii) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 5(a) hereof, in
accordance with their terms;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
(e) TERMINATION BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON
(i) The Company shall have the right to terminate the employment
of Executive for Cause. In the event that Executive's employment is
terminated by the Company for Cause, or by Executive other than for
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Good Reason, Executive shall only be entitled to receive the Vacation
Payment and the Expense Payment. Executive shall not be entitled,
among other things, to the payment of any Annual Cash Bonus in respect
of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this
Section 7(e), the obligations of the Company under this Agreement to
make any further payments or provide any benefits specified herein to
Executive shall thereupon cease and terminate.
(ii) Termination of Executive for Cause shall be made by delivery
to Executive of a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the non-employee directors of the
Board at a regular or special meeting of such directors called and
held for such purpose, after 30 days' prior written notice to
Executive specifying the basis for such termination and the
particulars thereof and a reasonable opportunity for Executive to be
heard prior to or at such meeting, finding that in the reasonable
judgment of such directors, that any conduct or event constituting
Cause has occurred and that such occurrence warrants Executive's
termination.
8. CHANGE IN CONTROL.
(a) Executive shall be entitled to the compensation provided for in
this Section 8 hereof, if within two years after a Change in Control,
Executive's employment by the Company shall be terminated (A) by the
Company for any reason other than (I) Executive's Permanent Disability or
Retirement, (II) Executive's death or (III) for Cause, or (B) by Executive
with Good Reason.
(b) In addition, Executive shall be entitled to the compensation
provided for in this Section 8, if the following events occur: (A) an
agreement is signed which, if consummated, would result in a Change of
Control, (B) Executive is terminated without Cause by the Company or
terminates employment with Good Reason prior to the anticipated Change in
Control, and (C) such termination (or the action leading to such
termination, in the case of Good Reason) is at the request or suggestion of
the acquiror or merger partner or otherwise in connection with the
anticipated Change in Control, except that any termination of employment as
set forth in clause (C), above, shall be presumed, in the absence of clear
and convincing evidence to the contrary, to have occurred in connection
with a Change in Control, whether or not a Change in Control actually
occurs.
(c) The Company shall pay or cause to be paid to Executive a cash
severance amount equal to three times the sum of (i) Executive's annual
Base Salary on the date of the Change in Control (or, if higher, the annual
Base Salary in effect immediately prior to the giving of the notice of
termination), and (ii) the Actual Bonus; PROVIDED, HOWEVER, that in the
event that Executive's employment is terminated by a Thirteenth-Month
Termination, Executive's cash severance amount shall only be equal to two
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times the sum of (i) and (ii) above. This cash severance amount shall be
payable in a lump sum calculated without any discount or, at the election
of Executive, on any deferred payment schedule selected by Executive.
(d) No compensation or other benefit pursuant to this Section 8 hereof
shall be payable under this Agreement unless and until either (i) a Change
in Control shall have occurred while Executive is an employee of a Company
and Executive's employment by the Company thereafter shall have terminated
in accordance with this Section 8 hereof or (ii) Executive's employment by
the Company shall have terminated in accordance with this Section 8 hereof
in anticipation of the occurrence of a Change in Control.
(e) Executive shall also be entitled to the (i) Vacation Payment and
the Expense Payment, (ii) the medical and other benefits under Section
7(a)(C)(i), (iii) vesting of certain security rights under Section
7(a)(C)(ii), (iv) other accrued and vested plans under Section 7(a)(C)(iii)
and (v) outplacement services under Section 7(a)(C)(iv).
9. EXCESS PARACHUTE EXCISE TAX.
(i) If it is determined (as hereafter provided) that any payment or
distribution by the Company to or for the benefit of Executive, whether
paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or
the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the Code by reason of being
"contingent on a change in ownership or control" of the Company, within the
meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or
penalties with respect to such excise tax (such tax or taxes, together with
any such interest and penalties, are hereafter collectively referred to as
the "Excise Tax"), then Executive shall be entitled to receive an
additional payment or payments (a "Gross-Up Payment") in an amount such
that, after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(A) Subject to the provisions of this Section 9 hereof, all
determinations required to be made under this Section 9, including
whether an Excise Tax is payable by Executive and the amount of such
Excise Tax and whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment, shall be made by the nationally recognized
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firm of certified public accountants (the "Accounting Firm") used by
the Company prior to the Change in Control (or, if such Accounting
Firm shall be a nationally recognized firm of certified public
accountants, as selected by Executive). The Accounting Firm shall be
directed by the Company or Executive to submit its preliminary
determination and detailed supporting calculations to both the Company
and Executive within 15 calendar days after the date of termination of
employment, if applicable, and any other such time or times as may be
requested by the Company or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive, the Company
shall pay the required Gross-Up Payment to, or for the benefit of,
Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines that
no Excise Tax is payable by Executive, it shall, at the same time as
it makes such determination, furnish Executive with an opinion that he
has substantial authority not to report any Excise Tax on his/her
federal, state, local income or other tax return. Any determination by
the Accounting Firm as to the amount of the Gross-Up Payment shall be
binding upon the Company and Executive absent a contrary determination
by the Internal Revenue Service or a court of competent jurisdiction;
provided, however, that no such determination shall eliminate or
reduce the Company's obligation to provide any Gross-Up Payment that
shall be due as a result of such contrary determination. As a result
of the uncertainty in the application of Section 4999 of the Code (or
any successor provision thereto) and the possibility of similar
uncertainty regarding state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should
have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts
or fails to pursue its remedies pursuant to Section 6(f)(i) hereof and
Executive thereafter is required to make a payment of any Excise Tax,
Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and Executive as
promptly as possible. Any such Underpayment shall be promptly paid by
the Company to, or for the benefit of, Executive within five business
days after receipt of such determination and calculations.
(B) The federal, state and local income or other tax returns
filed by Executive (or any filing made by a consolidated tax group
which includes the Company) shall be prepared and filed on a
consistent basis with the determination of the Accounting Firm with
respect to the Excise Tax payable by Executive. Executive shall make
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proper payment of the amount of any Excise Tax, and at the request of
the Company, provide to the Company true and correct copies (with any
amendments) of his/her federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of Executive's federal
income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, Executive shall within five
business days pay to the Company the amount of such reduction.
(ii) In the event that the Internal Revenue Service claims that any
payment or benefit received under this Agreement constitutes as "excess
parachute payment", within the meaning of Section 280G(b)(1) of the Code,
Executive shall notify the Company in writing of such claim. Such
notification shall be given as soon as practicable but no later than 10
business days after Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30 day period following the date on which
Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of
such period that it desires to contest such claim, Executive shall (1) give
the Company any information reasonably requested by the Company relating to
such claim; (2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company and
reasonably satisfactory to Executive; (3) cooperate with the Company in
good faith in order to effectively contest such claim; and (4) permit the
Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties
and related legal, consulting or other similar fees) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for and against any Excise Tax or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and any payment of costs and expenses.
(A) The Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences with
the tax authority in respect of such claim and may, at its sole
option, either direct Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest before any administrative tribunal,
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in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the
Company directs Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to Executive on an
interest-free basis, and shall indemnify and hold Executive harmless,
on an after-tax basis, from any Excise Tax or other tax (including
interest and penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to
such advance; and provide , further, that if Executive is required to
extend the statute of limitations to enable the Company to contest
such claim, Executive may limit this extension solely to such
contested amount. The Company's control of the contest shall be
limited to issues with respect to which a corporate deduction would be
disallowed pursuant to Section 280G of the Code and Executive shall be
entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
In addition, no position may be taken nor any final resolution be
agreed to by the Company without Executive's consent if such position
or resolution could reasonably be expected to adversely affect
Executive (including adversely affecting any other tax position of
Executive unrelated to matters covered hereby).
(B) If, after the receipt by Executive of any amount advanced by
the Company in connection with the contest of the Excise Tax claim,
Executive becomes entitled to receive any refund with respect to such
claim, Executive shall promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after
taxes applicable thereto); provided, however, if the amount of that
refund exceeds the amount advanced by the Company or it is otherwise
determined for any reason that additional amounts could be paid by the
Company to Executive without incurring any Excise Tax, any such amount
will be promptly paid by the Company to Executive. If, after the
receipt by Executive of an amount advanced by the Company in
connection with an Excise Tax claim, a determination is made that
Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify Executive in writing of its
intent to contest the denial of such refund prior to the expiration of
30 days after such determination, such advance shall be forgiven and
shall not be required to be repaid and shall be deemed to be in
consideration for services rendered after the date of the Termination.
(iii) The Company and Executive shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession
of the Company or Executive, as the case may be, reasonably requested by
the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination
contemplated by this Section 9.
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(iv) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by this
Section 9 hereof shall be borne by the Company. If such fees and expenses
are initially advanced by Executive, the Company shall reimburse Executive
the full amount of such fees and expenses within five business days after
receipt from Executive of a statement therefor and reasonable evidence of
his payment thereof.
10. MITIGATION OF DAMAGES. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
11. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Franchise Finance Corporation of America
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
To Executive:
Xx. Xxxxxxxxxxx X. Xxxx
0000 Xxxxx 00xx Xxxxx
Xxxxxxxx Xxxxxx, XX 00000
Any such notice or communication shall be delivered by hand, by telecopy (with
machine confirmation) or by courier or sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in a notice duly delivered as described above), and
the third business day after the actual date of mailing shall constitute the
time at which notice was given.
12. SEVERABILITY; LEGAL FEES. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. In the event that any dispute arises between
Executive and the Company as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceedings or otherwise, including any
action that Executive takes to enforce the terms of this Agreement or to defend
against any action taken by the Company, Executive shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that Executive shall obtain a
settlement or final judgement by a court of competent jurisdiction substantially
in favor of Executive. Such reimbursement shall be paid within ten (10) days of
Executive's furnishing to the Company written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or
expenses incurred by Executive.
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13. SUCCESSORS; BINDING AGREEMENT, ASSIGNMENT.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement and shall entitle
Executive to terminate Executive's employment with the Company or such
successor for Good Reason immediately prior to or at any time after such
succession. As used in this Agreement, "Company" shall mean (i) the Company
as hereinbefore defined, and (ii) any successor to all the stock of the
Company or to all or substantially all of the Company's business or assets
(other than with respect to sales of assets in the ordinary course,
securitization and whole loan sales provided by the Company's interim and
permanent financing arrangements) which executes and delivers an agreement
provided for in this Section 13(a) or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law, including
any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amount would be payable to Executive hereunder if Executive
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Executive's
estate or designated beneficiary. Neither this Agreement nor any right
arising hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company,
if such successor expressly agrees to assume the obligations of the Company
hereunder.
14. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. At any time during or after
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries, pursuant to the policies set forth in the Company's employee
handbook and compliance manual, as amended from time to time.
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16. COVENANT NOT TO COMPETE.
(a) During the period of his employment hereunder and for the first to
occur of (i) one year following the termination of employment of Executive
or (ii) December 31, 2002, Executive agrees that, without the prior written
consent of the Company, (a) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender or employee or in any other capacity, carry on, be engaged
in or have any financial interest in (other than an ownership position of
less than five percent in any company whose shares are publicly traded),
any business, which is in Competition (as defined in Section 16(b)) with
the existing business of the Company or its subsidiaries, and (b) he shall
not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has
been employed by the Company or its subsidiaries at any time during the 12
months immediately preceding such solicitation.
(b) For purposes of this Section 16, a business shall be deemed to be
in Competition with the Company or its subsidiaries if a significant
portion of its business is providing financing to operators in the chain
restaurant, convenience store or automotive service and parts industries in
any portion of the United States.
(c) Executive and the Company agree that this covenant not to compete
is a reasonable covenant under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 16 would irreparably injure the
Company. Accordingly, Executive agrees that the Company may, in addition to
pursuing any other remedies it may have in law or in equity, cease making
any payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
17. BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
18. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations, including
the provisions of Section 16 herein. The provisions of this Section 18 are in
addition to the survivorship provisions of any other section of this Agreement.
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19. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Arizona without reference
to rules relating to conflicts of law.
20. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive including, without limitation, the Continuity
Agreement dated as of May 12, 1999 between the Company and Executive.
21. WITHHOLDING. The Company shall be entitled to withhold from payment any
amount of withholding required by law.
22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
FRANCHISE FINANCE CORPORATION OF AMERICA
By /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
/s/ Xxxxxxxxxxx X. Xxxx
----------------------------------------
Xxxxxxxxxxx X. Xxxx
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