Employment Agreement - AFC Enterprises Inc. and Frank J. Belatti
EMPLOYMENT AGREEMENT
dated as of December 8, 2000 between
AFC Enterprises, Inc. (the "Company") and
Frank J. Belatti ("Employee")
WHEREAS, the Company desires to continue the employment of Employee and to
enter into an Employment 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
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This Agreement shall be effective as of the date hereof and, unless
earlier terminated pursuant to Section 9 hereof, shall be for one initial term
of three (3) years (the "Term"). The Term of this Agreement and Employee's
employment hereunder will automatically be extended for an additional one-year
following the expiration of each year of employment hereunder (the "Renewal
Date"), without further action by Employee or the Company unless either the
Company or Employee gives to the other written notice not to renew for an
additional one year not less than one (1) year prior to the Renewal Date. In the
event the Company gives the Employee written notice of non-renewal as provided
herein, Employee shall have the right to terminate this Agreement at any time
during the remaining term hereof and receive the benefits set forth in Section
8.03 hereof.
2. Employment
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2.01 Position. Employee shall serve as Chairman of the Board of
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Directors and Chief Executive Officer of the Company and shall perform such
duties consistent with his position as may be assigned to him from time to time
by the Board of Directors of the Company.
2.02 Time and Efforts. Employee, so long as he is employed
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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.
Employee's Initials:
FJB
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3. Base Salary.
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Beginning on the date hereof and continuing during the term hereof,
the Company shall pay Employee, in equal installments no less frequently than
monthly, a base salary at the rate of no less than Five Hundred Seventy-five
Thousand Dollars ($575,000.00 U.S.) per annum (the "Base Salary"). The
Employee's Base Salary shall be reviewed by the Board of Directors of the
Company on an annual basis.
4. Incentive Pay.
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4.01 Annual Plan. The Board of Directors of the Company, acting in its
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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
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Pay") for Employee for the fiscal year of the Company ending in 2000 shall be as
follows: $575,000.00
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 2000, the Target Incentive Pay for Employee will be set
by 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
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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
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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.
Employee's Initials:
FJB
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5. Stock Options.
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5.01 Stock Options. The Company has heretofore granted to Employee
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certain nonqualified stock options to purchase shares of the Company's common
stock. As part of the 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.
5.02 Shareholders' Agreement. The Employee has agreed to be bound
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by the terms of the shareholders' agreements (the "Shareholders' Agreements")
heretofore executed by Employee or identified in the stock option agreements
heretofore granted to Employee, copies of which are on file in the records of
the Company, which Shareholders' Agreements 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.
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6.01 Executive Flex Perk. Employee shall be entitled to participate in
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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
$20,000 per year payable in the same manner as Employee's Base Salary is paid.
6.02 Life Insurance. Subject to Section 6.07 below, the Company shall
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provide (or continue to provide) to Employee two (2) policies of life insurance,
one in the face amount of $1 million ("Policy #1") and one in the face amount of
five (5) times Employee's Base Salary as of the date hereof ("Policy #2"). The
death benefits ("Death Benefits") under such life insurance policies shall be
payable to the Employer's beneficiary solely from, and to the extent of the
Death Benefits proceeds actually paid, in the event of the death of the Employee
during the term of his employment with the Company and after the Company first
obtains the Life Insurance Policies described herein.
(a) As soon as practicable after the execution of this
Agreement, the Company will procure (or continue) and maintain on the life of
Employee life insurance protection in an amount not less than the face amount of
Policy #1 and Policy #2 (any and all such policies are referred to herein,
collectively, as the "Life Insurance Policies"). 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 Policies
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
Employee's Initials:
FJB
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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 Policies 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 Policies, except as provided in this Section 6.02.
(b) Upon issuance of the Life Insurance Policies, the Company
and Employee shall enter into an insurance agreement (the "Insurance Agreement")
with respect to each such policy which shall specify in detail the relative
rights and obligations of the Company and Employee with respect to each such
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.
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(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
Employee's Initials:
FJB
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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,
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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
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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 executive 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 the Board of Directors of the Company in its sole discretion.
6.06 Vacation. Employee shall be entitled to four (4) weeks paid
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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.
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(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 Board of Directors; 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 Board
of Directors at any time or from
Employee's Initials:
FJB
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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 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
Board of Directors of the terms of this Section 6 or the benefit programs
described herein shall be final, conclusive and binding on Employee.
(c) The terms of this Section 6 supercede and replace the terms
and provisions of Articles VII, VIII and IX of the Supplemental Benefit Plan -
Executive, dated May 9, 1994, as amended.
7. Business Expenses.
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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.
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8.01 Definitions. For purposes of this Section 8, the following terms
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shall have the following meanings:
(a) Cause. The term "Cause" shall mean (i) Employee commits fraud or
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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 refused to follow or comply with the duly promulgated
directives of 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
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determination by 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 an aggregate of ninety (90) calendar days.
8.02 Termination upon Death or Disability. If Employee's employment is
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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.
Employee's Initials:
FJB
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8.03 Termination for other than Death or Disability or for Cause. If
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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 two
(2) times Employee's Base Salary at the time of termination; (b) a payment equal
to two (2) 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); (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; and (d) continuation
of the employee benefits then being provided to Employee under Section 6 of this
Agreement (excluding Section 6.06) for the remaining term of this Agreement as
of the day immediately preceding the effective date of termination; provided,
however, that at the Company's election, the Company may, in complete discharge
of its obligations hereunder with respect to any or all of such benefits,
provide to Employee a cash payment in lieu of such benefit in an amount equal to
the then current one (1) year cost of such benefit to the Company. As a
condition precedent to the requirement of Company to make such payments, grant
such accelerated vesting or provide such benefits, 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 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.
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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
Employee's Initials:
FJB
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(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.
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Upon the occurrence of both of the following events:
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(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 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
Employee's Initials:
FJB
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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.
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10.01 Definitions. For purposes of this Section 10, the following
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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.
10.02 Covenant Not-To-Disclose. The Company and Employee recognize
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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
Employee's Initials:
FJB
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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 his 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
(c) 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 faith from a third party lawfully in
possession thereof and having no obligation to keep such information
confidential.
Employee's Initials:
FJB
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10
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10.03 Covenant of Non-Disparagement and Cooperation. Employee agrees
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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
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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
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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
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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
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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
Employee's Initials:
FJB
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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.
10.08 No Defense. The existence of any claim, demand, action or cause
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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.
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11.01 Company Obligations. The Company hereby indemnifies and agrees to
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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
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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 12 shall survive the
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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.
Employee's Initials:
FJB
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12. Dispute Resolution
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12.01 Agreement to Arbitrate. In consideration for his continued
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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
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.
Employee's Initials:
FJB
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13
<PAGE>
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 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,
Employee's Initials:
FJB
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14
<PAGE>
either of whom may require such claimant, as a condition to such payment, to
execute a receipt and release therefor 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.
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.
Employee's Initials:
FJB
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15
<PAGE>
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 subject matter hereof, including specifically the
Employment Agreement dated November 5, 1992, as amended, but shall not supercede
or modify any other existing agreements between Company and Employee relating to
such matters as stock options, retirement or other matters not specifically
included herein.
21. Notices.
--------
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:
Frank J. Belatti
330 Cannady Court
Dunwoody, GA 30338
Employee's Initials:
FJB
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16
<PAGE>
If to the Company to:
AFC Enterprises, Inc.
Six Concourse Parkway
Suite 1700
Atlanta, Georgia 30328-5352
Attn: Legal Department
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/ Samuel N. Frankel
--------------------------
Samuel N. Frankel
Executive Vice President
EMPLOYEE:
/s/ Frank J. Belatti
-------------------------------
Frank J. Belatti
Employee's Initials:
FJB
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17