EXHIBIT 10.78
EMPLOYMENT AGREEMENT
DATED AS OF JANUARY 1, 2001 BETWEEN
AFC ENTERPRISES, INC. (THE "COMPANY") AND
XXXXX X. XXXXXXXXX ("EMPLOYEE")
WHEREAS, the Company desires to employ Employee and to enter into an
agreement embodying the terms of such employment; and
WHEREAS, Employee desires to accept such employment and to enter into
such agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Agreement
This Agreement shall be effective as of the date hereof and, unless
earlier terminated pursuant to Section 8 hereof, shall be for an initial term of
two (2) years (the "Term"). The Term of this Agreement and Employee's employment
hereunder will automatically be extended for an additional one-year period
following the expiration of each year of employment hereunder (the "Renewal
Date"), without further action by Employee or the Company. Such automatic
one-year renewal shall continue from year to year unless and until either the
Company or Employee gives to the other written notice not less than thirty (30)
days prior to the applicable Renewal Date of its decision not to renew for an
additional one year.
2. Employment
2.01 Position. Employee shall, upon election by the Board of
Directors of the Company, serve as Senior Vice President Legal Affairs, General
Counsel and Secretary of the Company, and shall perform such duties consistent
with his position as may be assigned to him from time to time by the Chief
Executive Officer or the Board of Directors of the Company.
2.02 Time and Efforts. Employee, so long as he is employed
hereunder, shall devote his full business time and attention to the services
required of him hereunder, except as otherwise agreed and for vacation time and
reasonable periods of absence due to sickness or personal injury, and shall use
his best efforts, judgment and energy to perform, improve and advance the
business and interests of the Company in a manner consistent with the duties of
his position.
3. Base Salary.
Beginning on March 1, 2001 and continuing through the end of the
fiscal year of the Company in 2001, the Company shall pay Employee, in equal
installments no less frequently than monthly, a base salary at the rate of no
less than Two Hundred Eighty Thousand Dollars ($280,000 U.S.) per annum (the
"Base Salary"), prorated for the ten (10) month period beginning
1
March 2001 through December 2001, and provided Employee is still in the employ
of the Company, a Base Salary of not less than Three Hundred Thousand Dollars
($300,000 U.S.) per annum for the period January 2002 through December 2002, and
a Base Salary of not less than Three Hundred Twenty Thousand Dollars ($320,000
U.S.) per annum for the period January 2003 through December 2003. The
Employee's Base Salary shall be reviewed by the Chief Executive Officer or the
Board of Directors of the Company on an annual basis.
4. Incentive Pay.
4.01 Annual Plan. The Board of Directors of the Company,
acting in its sole discretion, shall annually, at or prior to the beginning of
each fiscal year of the Company, approve an annual incentive plan (the "Annual
Incentive Plan") for the senior officers of the Company, including Employee,
which Plan shall contain such terms and provisions as the Board of Directors
shall determine. Any amounts payable to Employee pursuant to the Annual
Incentive Plan is hereinafter referred to as "Incentive Pay".
4.02 Target Incentive Pay. The target Incentive Pay ("Target
Incentive Pay") for Employee for the fiscal year of the Company ending in 2001
shall be not less than sixty-five percent (65%) of the annual Base Salary set
forth above; for the fiscal year of the Company ending in 2002 shall not be less
than seventy-five percent (75%) of the annual Base Salary set forth above; and
for the fiscal year of the Company ending in 2003 shall not be less than
eighty-five percent (85%) of the annual Base Salary set forth above; provided,
however, that the Target Incentive Pay with respect to any fiscal year is
subject to, and may be modified by, the Annual Incentive Plan approved by the
Board of Directors pursuant to Section 4.01 above and this Section 4.02 shall be
read accordingly. After 2001, the Target Incentive Pay for Employee as set forth
herein will be set by the Chief Executive Officer or the Board of Directors of
the Company for each fiscal year and will be included in the Annual Incentive
Plan for such year.
4.03 Payment of Incentive Pay. If Employee is entitled to
payment of any Incentive Pay for any fiscal year, an accounting will be
furnished and payment will be made to Employee as set forth in the Annual
Incentive Plan, but in no event later than 105 days following the end of each
fiscal year.
4.04 Termination of Employment. If Employee's employment
hereunder shall terminate other than pursuant to Sections 8.03 or 8.04, the
Employee shall receive, at the time contemplated by the Annual Incentive Plan,
such Incentive Pay, if any, to which he would have been entitled under the terms
of the Annual Incentive Plan had Employee remained in the employ of the Company
for the entire fiscal year in which such termination occurs. If Employee's
employment hereunder shall terminate pursuant to (a) Section 8.03, the
provisions of Section 8.03 shall determine the amount of Incentive Pay payable
to Employee; or (b) Section 8.04, no Incentive Pay shall be payable to Employee
after such termination.
5. Stock Options.
5.01 Stock Options. The Company has heretofore granted to
Employee certain nonqualified stock options to purchase shares of the Company's
common stock. As part of the
2
Company's compensation strategy, the Company intends to grant additional stock
options in the future based upon Employee's performance as determined in the
sole discretion of the Board of Directors of the Company. Subject to the
approval of the Board of Directors of the Company, during the fiscal year of the
Company ending in 2002, Employee shall be granted options to purchase not less
than an additional 55,000 shares of common stock of the Company; and during the
fiscal year of the Company ending 2003, Employee shall be granted options to
purchase not less than an additional 60,000 shares of common stock of the
Company.
5.02 Shareholders' Agreement. The Employee has agreed to be
bound by the terms of the shareholders' agreements (the "Shareholders'
Agreements") executed by senior officers of the Company, which Shareholders'
Agreement shall be applicable to all shares of common stock issued to Employee
upon the exercise of any stock options granted to Employee before or after the
date hereof.
6. Employee Benefits.
6.01 Executive Flex Perk. Employee shall be entitled to
participate in the Company's Executive Flex Perk Plan subject to the terms,
conditions and limitations thereof. Subject to Section 6.07 below and the terms
of the Plan, the Company will pay to, or for the benefit of Employee, an amount
equal to $15,000 per year payable in the same manner as Employee's Base Salary
is paid.
6.02 Life Insurance. Subject to Section 6.07 below, in the event
of the death of Employee during the term of his employment with the Company and
after the Company first obtains the Life Insurance Policy described herein, the
Employee's named beneficiary shall be entitled to receive an amount equal to
five (5) times Employee's Base Salary as of the date hereof (the "Death
Benefit") payable solely from, and to the extent of, the death benefit proceeds
payable under such Life Insurance Policy.
(a) As soon as practicable after the execution of this
Agreement, the Company will procure and maintain on the life of Employee life
insurance protection in an amount not less than the Death Benefit determined
based upon the Base Salary in effect as of the date hereof (any and all such
policies are referred to herein, collectively, as the "Life Insurance Policy").
The Company may, at its option, purchase term or permanent life insurance
protection on Employee. Notwithstanding the foregoing, if the premiums for the
Life Insurance Policy on Employee shall exceed regular, non-rated premiums, the
Company may, but shall have no obligation to, fund such excess premium payments.
In the event the Company determines not to fund such excess it shall promptly
notify Employee and Employee may, at his option, elect to pay the excess. If
Employee fails to pay such excess or if for any other reason the Company, after
reasonable efforts, is not able to obtain the Life Insurance Policy required
herein for Employee, then Employee shall not be entitled to any benefits
whatsoever under this Section 6.02 except as may otherwise be determined in the
discretion of the Company and set forth in writing. The Company shall have and
may exercise all ownership rights in such Life Insurance Policy, except as
provided in this Section 6.02.
3
(b) Upon issuance of the Life Insurance Policy, the Company and
Employee shall enter into an insurance agreement (the "Insurance Agreement")
which shall specify in detail the relative rights and obligations of the Company
and Employee with respect to the Life Insurance Policy including, but not
limited to, (i) obligations of the Company and the Employee with respect to the
payment of premiums, (ii) designation of beneficiaries, (iii) policy ownership
and the exercise of rights incident thereto and (iv) the relative rights of
Employee and the Company upon Employee's termination of employment.
(c) Except as otherwise provided in this Agreement or the
Insurance Agreement, the obligations of the Company and Employee under this
Section 6.02 and the Insurance Agreement shall automatically terminate upon
Employee's termination of employment for any reason prior to his death.
6.03 Disability Insurance.
(a) The Company shall procure for Employee as soon as practical
after the date hereof and shall maintain in full force and effect during the
Term a Supplemental Disability Policy which will supplement the benefits payable
under any disability benefit provided to Employee by the Company under its basic
employee health care benefit program, so that, subject to Section 6.07 below,
with respect to a disability as defined in the Supplemental Disability Policy
occurring after the Company has obtained the Supplemental Disability Policy, the
total monthly disability benefit (the "Disability Benefit") payable to Employee
under all disability policies maintained by the Company, after a maximum
elimination period of ninety (90) days, shall equal 70% of the sum of Employee's
Base Compensation and Incentive Pay for the year immediately preceding the year
in which the termination for Disability occurs.
(b) Notwithstanding anything herein to the contrary, if the
premiums for the Supplemental Disability Income Policy for Employee shall exceed
regular, non-rated premiums, the Company may, but shall have no obligation to,
fund such excess. In the event the Company determines not to fund such excess it
shall promptly notify Employee and Employee may, at his option, elect to pay the
excess. If Employee fails to pay such excess or if for any other reason the
Company, after reasonable efforts, is not able to obtain the Supplemental
Disability Income Policy required herein, then Employee shall not be entitled to
any Disability Benefit hereunder except as may otherwise be determined in the
discretion of the Company and set forth in writing.
6.04 Executive Medical Benefit. Subject to Section 6.07, the
Company, at its expense, shall provide Employee with an annual physical
examination to be conducted by a physician or physicians as determined by the
Company, or by Employee with the approval of the Company.
6.05 Other Benefits. Employee shall be provided additional
employee benefits, including health, accident and disability insurance under the
Company's regular and ongoing plans, policies and programs available, from time
to time, to senior officers of the Company, in accordance with the provisions of
such plans, policies and programs governing eligibility and participation;
provided, however, that such benefits may be modified, amended or rescinded by
4
the Board of Directors of the Company in its sole discretion. In addition,
Employee will be entitled to 100% participation in the Long-Term Employee
Success Plan.
6.06 Vacation. Employee shall be entitled to four (4) weeks paid
vacation each year during the term hereof. Any vacation not used in any year
shall not accrue for use in subsequent years and shall be forfeited as of the
end of such year.
6.07 Paramount Provisions.
(a) Notwithstanding anything in Sections 6.02 and 6.03 above or
any other provision of this Agreement to the contrary, if the Company has met
all of its obligations under this Agreement (and the Insurance Agreement, if
applicable) with respect to obtaining and maintaining in force (i) the Life
Insurance Policy described in Section 6.02 hereof on the life of Employee to
fund the Death Benefit or (ii) the Supplemental Disability Policy maintained for
Employee pursuant to Section 6.03 hereof to fund such Employee's Disability
Benefit, but all or any portion of the proceeds under any such policy are not
actually received by the Company for any reason whatsoever, including without
limitation the insolvency of the insurer or any misrepresentation made by
Employee in the application for such insurance, then the right of Employee or
his designated beneficiary to receive a Disability Benefit or a Death Benefit,
as the case may be, shall be reduced (but not below zero) by the amount by which
the Disability Benefit or Death Benefit otherwise payable exceeds the insurance
proceeds actually received.
(b) Anything in Sections 6.01, 6.02, 6.03 and 6.04 to the
contrary notwithstanding, the amount of the benefits provided for herein are
subject to reduction or other adjustment as shall be provided for in the plan or
insurance contract, as the case may be, pursuant to which such benefit is being
paid or as may be determined by the Chief Executive Officer or the Board of
Directors of the Company, provided that in no event shall any such adjustment
exceed the maximum benefit provided for herein. The initial amount of each such
benefit is set forth on Exhibit A, attached hereto, and such amounts may be
increased or decreased pursuant to the plan or insurance contract pursuant to
which such benefit is being paid or by the Chief Executive Officer or the Board
of Directors at any time or from time to time hereafter and the Employee will be
given written notice of any such change. Anything in this Agreement to the
contrary notwithstanding, the Chief Executive Officer or the Board of Directors
shall have full authority to make all determinations deemed necessary or
advisable for the administration of the benefits described in this Section 6.
Subject to Section 12.04, the good faith interpretation and construction by the
Chief Executive Officer or the Board of Directors of the terms of this Section 6
or the benefit programs described herein shall be final, conclusive and binding
on Employee.
7. Business Expenses.
All reasonable and customary business expenses incurred by Employee in
the performance of his duties hereunder shall be paid or reimbursed by the
Company in accordance with the Company's policies in effect, from time to time.
8. Termination of Employment.
5
8.01 Definitions. For purposes of this Section 8, the following
terms shall have the following meanings:
(a) Cause. The term "Cause" shall mean (i) Employee commits
fraud or is convicted of a crime involving moral turpitude, (ii) Employee, in
carrying out his duties hereunder, has been guilty of gross neglect or gross
misconduct resulting in harm to the Company or any of its subsidiaries or
affiliates, (iii) Employee shall have failed to materially comply with the
policies of the Company or shall have refused to follow or comply with the duly
promulgated directives of the Chief Executive Officer or the Board of Directors
of the Company, (iv) Employee has breached any of the provisions of Section
10.02 through and including 10.04 or (v) Employee otherwise materially breaches
this Agreement.
(b) Disability. The term "Disability" shall mean the good faith
determination by the Chief Executive Officer or of the Board of Directors of the
Company that Employee has failed to or has been unable to perform his duties as
the result of any physical or mental disability for a an aggregate of ninety
(90) calendar days.
8.02 Termination upon Death or Disability. If Employee's
employment is terminated due to his death or Disability, the Company shall pay
to the estate of the Employee or to the Employee, as the case may be, within
fifteen (15) days following Employee's death or upon his termination in the
event of Disability, all amounts then payable to Employee pro rated through the
date of termination pursuant to Sections 3, 6.01, and 7, and the amount of any
accrued but unused vacation under Section 6.06 for the year in which such
termination occurs. In addition, the Company shall pay to Employee any Incentive
Pay payable pursuant to Section 4.04 hereof in accordance with the terms
thereof.
8.03 Termination for other than Death or Disability or for
Cause. If Employee's employment is terminated by the Company other than (i) by
reason of Employee's death or Disability or (ii) for Cause, the Company shall
pay or provide to Employee, in lieu of all other amounts payable hereunder or
benefits to be provided hereunder the following: (a) a payment equal to the sum
of one (1) times Employee's Base Salary at the time of termination; (b) a
payment equal to one (1) times Employee's Target Incentive Pay for the year in
which such termination occurs (or, if no Target Incentive Pay has been
designated for such year, then the Target Incentive Pay for the last year in
which it was designated prior to such termination); and (c) the acceleration of
any unvested rights of Employee under any stock options or other equity
incentive programs such that they shall immediately vest under the terms of such
plans. As a condition precedent to the requirement of Company to make such
payments or grant such accelerated vesting, Employee shall not be in breach of
his obligations under Section 10 hereof and Employee shall execute and deliver
to Company a general release in favor of the Company in substantially the same
form as the general release then contained in the latest Severance Agreement
being used by the Company.
Any payments required to be made under this Section 8.03 shall
be made to Employee, at the election of the Company, either within thirty (30)
days after the date of Employee's termination of employment or, at the Company's
election, in fifty-two (52) equal
6
installments, payable at the same time and on the same basis as was the payment
of Employee's Base Salary prior to such termination.
8.04 Voluntary Termination by Employee or Termination for Cause.
Employee may terminate his employment hereunder at any time whatsoever, with or
without cause, upon thirty (30) days prior written notice to the Company. The
Company may terminate Employee's employment hereunder at any time without notice
for Cause. In the event Employee's employment is terminated voluntarily by
Employee or by the Company for Cause:
(a) The Company shall pay to Employee upon such termination all
amounts then due under sections 3, 4 (but only to the extent of earned but
unpaid Incentive Pay), 6, and 7, prorated, through the date of termination for
the year in which he is terminated; and
(b) The Company shall be under no obligation to make severance
payments to Employee or continue any benefits being provided to Employee beyond
the date of such termination.
9. Change of Control, Change in Responsibilities.
Upon the occurrence of both of the following events:
(a) The dissolution or liquidation of the Company, or a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the owners or all of the outstanding shares of
Common Stock immediately prior to such reorganization, merger or consolidation
own in the aggregate, directly and indirectly, less than 50% of the outstanding
shares of Common Stock of the Company or any other entity into which the Company
shall be merged or consolidated immediately following the consummation thereof,
or the sale, transfer or other disposition of all or substantially all of the
assets or more than 50% of the then outstanding shares of Common Stock of the
Company in a single transaction or series of related transactions (a "Change in
Control"); and
(b) Within one (1) year of such Change in Control there is a
termination of employment without cause or a material diminution of or change in
Employee's responsibilities, duties or title,
Employee may elect, in writing, within ninety (90) days following the
occurrence of such events, to terminate this Agreement and his employment with
the Company will terminate, effective thirty (30) days after the Company's
receipt of such notice. In such event Employee shall be deemed to have been
terminated by the Company other than for Cause and all amounts payable to
Employee pursuant to Section 8.03 shall become immediately due and payable.
A Change in Control of the Company shall not be deemed to occur by
reason of any public offering of the Common Stock of the Company.
Notwithstanding any other provision contained in this Agreement, if the
aggregate of the payments provided for in this Agreement which result from
Employee's election to terminate his
7
employment under this Section 9 and the other payments and benefits which the
Employee has the right to receive from the Company as a result thereof (the
"Total Payments") would constitute a "parachute payment," as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), the
Employee shall receive, instead of the Total Payments, an increased amount (the
"Gross Up Total") equal to the product of (x) the Total Payments and (y) a
fraction, the numerator of which is 1 and the denominator of which is 1 minus
the maximum effective combined tax rate with respect to all federal, state, and
local income taxes payable by the Employee under Code Section 4999 (the "Excise
Taxes"). It is the intention of this provision that the Gross Up Total minus the
Excise Taxes shall equal the Total Payments and this provision shall be read and
interpreted accordingly.
Except as expressly contemplated by this Agreement, or in any other
agreement referred to in Section 5 hereof, no merger, reorganization,
recapitalization, sale of stock, sale of assets or other change in the capital
structure of the Company or in the identity of the legal or beneficial owners of
the Company shall affect the rights or obligations of the Company or Employee
hereunder.
10. Confidentiality and Non-Competition.
10.01 Definitions. For purposes of this Section 10, the
following terms shall have the following meanings:
"Affiliate" means any corporation, limited liability company,
partnership or other entity of which the Company owns at least fifty percent
(50%) of the outstanding equity and voting rights, directly or indirectly,
through any other corporation, limited liability company, partnership or other
entity.
"Businesses" means the businesses engaged in by the Company
directly or through its Affiliates immediately prior to termination of
employment.
"Confidential Information" means information which does not rise
to the level of a Trade Secret, but is valuable to the Company or any Affiliate
and provided in confidence to Employee.
"Proprietary Information" means, collectively, Trade Secrets and
Confidential Information.
"Restricted Period" means the period commencing as of the date
hereof and ending on that date two years (2) year after the termination of
Employee's employment with the Company for any reason, whether voluntary or
involuntary.
"Trade Secrets" means information which derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.
8
10.02 Covenant Not-To-Disclose. The Company and Employee
recognize that, during the course of Employee's employment with the Company, the
Company has disclosed and will continue to disclose to Employee Proprietary
Information concerning the Company and the Affiliates, their products, their
franchisees, their services and other matters concerning their Businesses, all
of which constitute valuable assets of the Company and the Affiliates. The
Company and Employee further acknowledge that the Company has, and will, invest
considerable amounts of time, effort and corporate resources in developing such
valuable assets and that disclosure by Employee of such assets to the public
shall cause irreparable harm, damage and loss to the Company and the Affiliates.
Accordingly, Employee acknowledges and agrees:
(a) that the Proprietary Information is and shall remain the
exclusive property of the Company (or the applicable Affiliate);
(b) to use the Proprietary Information exclusively for the
purpose of fulfilling the obligations under this Agreement;
(c) to return the Proprietary Information, and any copies
thereof, in his possession or under his control, to the Company (or the
applicable Affiliate) upon request of the Company (or the Affiliate), or
expiration or termination of Employee's employment hereunder for any reason; and
(d) to hold the Proprietary Information in confidence and not
copy, publish or disclose to others or allow any other party to copy, publish or
disclose to others in any form, any Proprietary Information without the prior
written approval of an authorized representative of the Company.
The obligations and restrictions set forth in this Section 10.02 shall survive
the expiration or termination of this Agreement, for any reason, and shall
remain in full force and effect as follows:
(x) as to Trade Secrets, indefinitely, and
(y) as to Confidential Information, for a period of two (2)
years after the expiration or termination of this Agreement for any reason.
The confidentiality, property, and proprietary rights protections
available in this Agreement are in addition to, and not exclusive of, any and
all other corporate rights, including those provided under copyright, corporate
officer or director fiduciary duties, and trade secret and confidential
information laws. The obligations set forth in this Section 10.02 shall not
apply or shall terminate with respect to any particular portion of the
Proprietary Information which (i) was in Employee's possession, free of any
obligation of confidence, prior to his receipt from the Company or its
Affiliate, (ii) Employee establishes the Proprietary Information is already in
the public domain at the time the Company or the Affiliate communicates it to
Employee, or becomes available to the public through no breach of this Agreement
by Employee, or (iii) Employee establishes that he received the Proprietary
Information independently and in good
9
faith from a third party lawfully in possession thereof and having no obligation
to keep such information confidential.
10.03 Covenant of Non-Disparagement and Cooperation. Employee
agrees that he shall not at any time during or following the term of this
Agreement make any remarks disparaging the conduct or character of the Company
or the Affiliates or any of the Company's or the Affiliates' current or former
agents, employees, officers, directors, successors or assigns (collectively the
"Related Parties"). In addition, Employee agrees to cooperate with the Related
Parties, at no extra cost, in any litigation or administrative proceedings
(e.g., EEOC charges) involving any matters with which Employee was involved
during Employee's employment with the Company. The Company shall reimburse
Employee for travel expenses approved by the Company or the Affiliates incurred
in providing such assistance.
10.04 Covenant Not-To-Induce. Employee covenants and agrees that
during the Restricted Period, he will not, directly or indirectly, on his own
behalf or in the service or on behalf of others, hire, solicit, take away or
attempt to hire, solicit or take away any person who is or was an employee of
the Company or any Affiliate during the one (1) year period preceding the
termination of Employee's employment.
10.05 Remedies. The Company and Employee expressly agree that a
violation of any of the covenants contained in subsections 10.02 through and
including 10.04 of this Section 10, or any provision thereof, shall cause
irreparable injury to the Company and that, accordingly, the Company shall be
entitled, in addition to any other rights and remedies it may have at law or in
equity, to an injunction enjoining and restraining Employee from doing or
continuing to do any such act and any other violation or threatened violation of
said Sections 10.02 through and including 10.04 hereof.
10.06 Severability. In the event any provision of this Agreement
shall be found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void part were
deleted; provided, however, if subsections 10.02 through and including 10.04 of
this Section 10 shall be declared invalid, in whole or in part, Employee shall
execute, as soon as possible, a supplemental agreement with the Company,
granting the Company, to the extent legally possible, the protection afforded by
said subsections. It is expressly understood and agreed by the parties hereto
that the Company shall not be barred from enforcing the restrictive covenants
contained in each of subsections 10.02 through and including 10.04, as each are
separate and distinct, so that the invalidity of any one or more of said
covenants shall not affect the enforceability and validity of the other
covenants.
10.07 Ownership of Property. Employee agrees and acknowledges
that all works of authorship and inventions, including but not limited to
products, goods, know-how, Trade Secrets and Confidential Information, and any
revisions thereof, in any form and in whatever stage of creation or development,
arising out of or resulting from, or in connection with, the services provided
by Employee to the Company or any Affiliate under this Agreement are works made
for hire and shall be the sole and exclusive property of the Company or such
Affiliate. Employee agrees to execute such documents as the Company may
reasonably request for the purpose of effectuating the rights of the Company or
the Affiliate in any such property.
10
10.08 No Defense. The existence of any claim, demand, action or
cause of action of the Employee against the Company shall not constitute a
defense to the enforcement by the Company of any of the covenants or agreements
herein.
11. Indemnification.
11.01 Company Obligations. The Company hereby indemnifies and
agrees to hold harmless Employee, to the extent allowed by applicable law,
against all liabilities, obligations, claims, demands, actions, causes of
action, lawsuits, judgments, expenses and costs, including but not limited to
the reasonable costs of investigation and attorney's fees, incurred by the
Employee as a result of any threat, demand, claim action or lawsuits, made,
instituted or initiated against the Employee, which arises out of, results from
or relates to this Agreement or any action taken by Employee in the course of
performance of Employee's duties hereunder, except for Employee's own gross
negligence or willful misconduct.
11.02 Notice and Defense of Claim. If any claim suit or other
legal proceeding shall be commenced, or any claim or demand be asserted against
the Employee and Employee desires indemnification pursuant to this paragraph,
the Company shall be notified to such effect with reasonable promptness and
shall have the right to assume at its full cost and expense the entire control
of any legal proceeding, subject to the right of the Employee to participate at
his full cost and expense and with counsel of his choice in the defense,
compromise or settlement thereof. The Employee shall cooperate fully in all
respects with the Company in any such defense, compromise or settlement,
including, without limitation, making available to the Company all pertinent
information under the control of the Employee. The Company may compromise or
settle any such action, suit, proceeding, claim or demand without Employee's
approval so long as the Company obtains for Employee's benefit a release of
liability with respect to such claim from the claimant and the Company assumes
and agrees to pay any amounts due with respect to such settlement. In no event
shall the Company be liable for any settlement entered into by the Employee
without the Company's prior written consent.
11.03 Survival. The provisions of this paragraph 11 shall
survive the termination of this Agreement for a period of four (4) years, unless
Employee is terminated for Cause, in which event the provisions of this Section
11 shall not survive termination of this Agreement.
12. Dispute Resolution
12.01 Agreement to Arbitrate. In consideration for his continued
employment with the Company, and other consideration, the sufficiency of which
is hereby acknowledged, but subject to Section 6.07(b) above, Employee
acknowledges and agrees that any controversy or claim arising out of or relating
to Employees employment, termination of employment, or this Agreement including,
but not limited to, controversies and claims that are protected or covered by
any federal, state, or local statute, regulation or common law, shall be settled
by arbitration pursuant to the Federal Arbitration Act. This includes, but is
not limited to, violations or alleged violations of any federal or state statute
or common law (including, but not limited to, the laws of the United States or
of any state, or the Constitution of the United States or of any state), or of
11
any other law, statute, ordinance, including but not limited to, the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as
amended, the Americans with Disabilities Act, the Equal Pay Act, the Employee
Retirement Income Security Act, the Rehabilitation Act of 1973, and any other
statute or common law. This provision shall not, however, preclude the Company
from seeking equitable relief as provided in Section 10.06 of this Agreement.
12.02 Procedure. The arbitration shall be conducted in
accordance with the Employment Arbitration Rules of the American Arbitration
Association: a single arbitrator who is experienced in employment law shall be
selected under those Rules, and the arbitration shall be initiated in Atlanta,
Georgia, unless the parties agree in writing to a different location or the
Arbitrator directs the arbitration to be held at a different location. Except
for filing fees, all costs of the arbitrator shall be allocated by the
arbitrator. The award rendered by the arbitrator shall be final and binding on
the parties hereto and judgment thereon may be entered in any court having
jurisdiction thereof. In addition to that provided for in the Employment
Arbitration Rules, the arbitrator has sole discretion to permit discovery
consistent with the Federal Rules of Civil Procedure and the judicial
interpretation of those rules upon request by any party; provided, however, it
is the intent of the parties that the arbitrator limit the time and scope of any
such discovery to the greatest extent practicable and provide a decision as
rapidly as possible given the circumstances of the claims to be determined. The
arbitrator also shall have the power and authority to grant injunctive relief
for any violation of Sections 10.02 through and including 10.04 and the
arbitrator's order granting such relief may be entered in any court of competent
jurisdiction. The agreement to arbitrate any claim arising out of the employment
relationship or termination of employment shall not apply to those claims which
cannot be made subject to this provision by statute, regulation or common law.
These include, but are not limited to, any claims relating to work related
injuries and claims for unemployment benefits under applicable state laws.
12.03 Rights of Parties. Nothing in this clause shall be
construed to prevent the Company from asking a court of competent jurisdiction
to enter appropriate equitable relief to enjoin any violation of this Agreement
by Employee. The Company shall have the right to seek such relief in connection
with or apart from the parties' rights under this clause to arbitrate all
disputes. With respect to disputes arising under this Agreement that are
submitted to a court rather than an arbitrator, including actions to compel
arbitration or for equitable relief in aid of arbitration, the parties agree
that venue and jurisdiction are proper in any state or federal court lying
within Atlanta, Georgia and specifically consent to the jurisdiction and venue
of such court for the purpose of any proceedings contemplated by this paragraph.
By entering into this Agreement the parties have waived any right which may
exist for a trial by jury and have expressly agreed to resolve any disputes
covered by this Agreement through the arbitration process described herein.
12.04 Employee Benefit Plan Issues. With respect to any
benefits provided to Employee hereunder which may be subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended (the "Covered
Plans"), and notwithstanding Section 6.07(b) above, the adjudication of any
claims under the Covered Plans shall be administered in accordance with the
terms and conditions of such Covered Plan. If the Covered Plan does not
12
contain a claims adjudication provision then, if for any reason, a claim for
benefits under a Covered Plan is denied by the Company, the Company shall
deliver to the Employee or his representative (the "claimant") a written
explanation setting forth the specific reasons for the denial, pertinent
references to the Agreement section or section of the Covered Plan on which the
denial is based, such other data as may be pertinent and information on the
procedures to be followed by the claimant in obtaining a review of his claim,
all written in a manner calculated to be understood by the claimant. For this
purpose: (A)The claimant's claim shall be deemed filed when presented orally or
in writing to the individual at the Company then performing the duties currently
being performed by the individual in charge of the People Services and
Development Department (the "Claims Manager"). (B) The Claims Manager's
explanation shall be in writing delivered to the claimant within 90 days of the
date the claim is filed. The claimant shall have 60 days following his receipt
of the denial of the claim to file with the Claim's Manager a written request
for review of the denial. The claimant or his representative may review
pertinent documents related to this Agreement and in the Claim's Manager's
possession in order to prepare the request for review. The Claims Manager shall
decide the issue on review and furnish the claimant with a copy of its decision
within 60 days of receipt of the claimant's request for review of his claim. The
decision on review shall be in writing and, if denied, shall include specific
reasons for the decision, written in a manner calculated to be understood by the
claimant, as well as specific references to the pertinent provisions on which
the decision is based. If a copy of the decision is not so furnished to the
claimant within such 60 days, the claim shall be deemed denied on review. Any
payment to a claimant shall to the extent thereof be in full satisfaction of all
claims hereunder against the Company and the Claims Manager, either of whom may
require such claimant, as a condition to such payment, to execute a receipt and
release therefore in such form as shall be determined by the Company and the
Claims Manager. If a receipt and release is required by the claimant and the
claimant does not provide such receipt and release in a timely enough manner to
permit a timely distribution in accordance with the general timing of
distribution provisions in this Agreement, the payment of any affected
distribution may be delayed until the Company and the Claims Manager receive a
proper receipt and release.
13. Employee Acknowledgment.
By signing this Agreement, Employee acknowledges that the Company has
advised Employee of his right to consult with an attorney prior to executing
this Agreement; that he has the right to retain counsel of his own choosing
concerning the agreement to arbitrate or any waiver of rights or claims; that he
has read and fully understands the terms of this Agreement and/or has had the
right to have it reviewed and approved by counsel of choice, with adequate
opportunity and time for such review; and that he is fully aware of its contents
and of its legal effect. Accordingly, this Agreement shall not be construed
against any party on the grounds that the party drafted this Agreement. Instead,
this Agreement shall be interpreted as though drafted equally by all parties.
14. Amendments.
This Agreement may not be altered, modified or amended except by a
written instrument signed by each of the parties hereto.
13
15. Successors.
As used in this Agreement, the term the Company shall include any
successors to all or substantially all of the business and/or assets of the
Company which assumes and agrees to perform this Agreement.
16. Assignment.
Neither this Agreement nor any of the rights or obligations of either
party hereunder shall be assigned or delegated by any party hereto without the
prior written consent of the other party, except that the Company may without
the consent of Employee assign its rights and delegate its duties hereunder to
any successor to the business of the Company. In the event of the assignment by
the Company of its rights and the delegation of its duties to a successor to the
business of the Company and the assumption of such rights and obligations by
such successor, the Company shall, effective upon such assumption, be relieved
from any and all obligations whatsoever to Employee hereunder.
17. Waiver.
Waiver by any party hereto of any breach or default by any other party
of any of the terms of this Agreement shall not operate as a waiver of any other
breach or default, whether similar to or different from the breach or default
waived.
18. Severability.
In the event that any one or more of the provisions of this Agreement
shall be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
19. Survival.
Notwithstanding anything herein to the contrary, the provisions of
Sections 6.07, 7, 8.03, 9, 10, and 12 shall survive the termination of this
Agreement.
20. Entire Terms.
This Agreement contains the entire understanding of the parties with
respect to the employment of Employee by the Company. There are no restrictions,
agreements, promises, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement supersedes all prior agreements,
arrangements and understandings between the parties, whether oral or written,
with respect to the employment of Employee.
21. Notices.
14
Notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee:
Xxxxx X. Xxxxxxxxx, Esq.
0000 X. Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
If to the Company to:
AFC Enterprises, Inc.
Xxx Xxxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Chief Executive Officer
or to such other address or such other person as Employee or the Company shall
designate in writing in accordance with this Section 21 except that notices
regarding changes in notices shall be effective only upon receipt.
22. Headings.
Headings to Sections in this Agreement are for the convenience of the
parties only and are not intended to be a part of, or to affect the meaning or
interpretation of, this Agreement.
23. Governing Laws.
The Agreement shall be governed by the laws of the State of Georgia
without reference to the principles of conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and Employee has hereunto set his hand as of the day and year first
above written.
COMPANY:
AFC ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Chairman & Chief Executive Officer
15
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx
16
