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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
dated as of August 31, 2005 between
AFC Enterprises, Inc. (the "Company") and
Frank J. Belatti ("Employee")
This Agreement (this "Agreement") is made and entered into as of
August
31, 2005 by and between AFC Enterprises,
Inc., a Minnesota corporation (the
"Company"), and Frank J. Belatti
("Employee") (the Company and Employee
hereinafter referred to together as the
"Parties").
WHEREAS, the Parties have entered into that certain Employment
Agreement, dated as of December 8, 2000
(the "Employment Agreement") and
Employee is serving as Chairman of the
Board of Directors and Chief Executive
Officer of the Company pursuant to the
terms of the Employment Agreement;
WHEREAS, the Parties have agreed that Employee will resign from
his
position as Chief Executive Officer and
that the Employment Agreement shall
terminate as of August 31, 2005;
WHEREAS, the Company desires to provide Employee with the
benefits
payable to Employee as severance pursuant
to the terms of the Employment
Agreement;
WHEREAS, the Board of Directors of the Company (the "Board")
has
determined that it is in the best interests
of the Company and its stockholders
to retain Employee as Chairman of the Board
and to compensate Employee for his
services pursuant to the terms and subject
to the conditions set forth in this
Agreement;
WHEREAS, the Parties have agreed that Employee will continue
his
services to the Company by serving as
Chairman of the Board for a stated period
beginning on August 31, 2005; and
WHEREAS, the purpose of this Agreement is to confirm the agreed
upon
terms, conditions and arrangements
concerning Employee's resignation from
employment with the Company as Chief
Executive Officer and the terms, conditions
and arrangements concerning Employee's
employment as Chairman of the Board.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual
promises and agreements contained herein,
the sufficiency of which are hereby
acknowledged, the Parties, intending to be
legally bound, agree as follows:
1.
Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned
to them in the Employment Agreement.
2.
Resignation. Employee agrees to resign from his position as
Chief Executive Officer of the Company and
the Company agrees to accept
Employee's
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resignation from his position as Chief
Executive Officer, effective as of August
31, 2005 (the "Effective Date"). As of the
Effective Date, the Employment
Agreement shall terminate and Employee
shall accrue no further compensation or
rights under the Employment Agreement.
3.
Severance Payments. On the Effective Date or as soon as
practicable thereafter the Company shall
pay Employee a lump sum, in cash, in an
amount, including certain payments that
Employee would have been entitled to
receive under the Employment Agreement upon
a termination without cause, as
follows:
(a) a payment
equal to (A) a prorated portion of
Employee's Base Salary at the time of termination based on the
proportion that the number of days from January 1 in the year of
such
termination through and including August 31, 2005 bears to the
total
number of days in the year of termination less any amount of
Employee's
Base Salary for the 2005 fiscal year that that has been previously
paid
to Employee and (B) a payment equal to one (1) year of the
target
incentive pay of Employee ("Target Incentive Pay") as approved by
the
Board of Directors of the Company as part of the Company's 2005
annual
incentive plan for senior executives of the Company (the
"Annual
Incentive Plan"), to the extent earned and payable, according to
the
metrics established by the People Services (Compensation) Committee
of
the Board, to be paid at the time of payment of Target Incentive
Pay
for other senior executives; and
(b) a payment
equal to (A) two (2) times Employee's Base
Salary at the time of termination plus (B) two (2) times
Employee's
Target Incentive Pay for the 2005 fiscal year as severance
payments;
and
(c) a payment
equal to the amounts payable to Employee as
a complete discharge set forth in Section 6.02 and Section 6.03 of
the
Employment Agreement which are not being continued hereunder based
upon
the current one (1) year cost of such benefits to the Company.
Notwithstanding anything to the contrary in the Employment
Agreement,
the termination of the Employment Agreement
and the execution of this Agreement
shall not cause the acceleration of
Employee's stock options pursuant to Section
8.03(c) of the Employment Agreement.
4. Term
of Agreement.
4.01.
Initial Term. This Agreement shall be effective as of
the Effective Date and, unless earlier
terminated pursuant to Section 10 hereof,
shall be for one initial term of one (1)
year (the "Initial Term") concluding on
August 31, 2006 (the "Renewal Date").
4.02.
Initial Renewal. The Term of this Agreement and
Employee's employment hereunder will
automatically be extended for an additional
period
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Employee's Initials:
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terminating on the date of the Company's
Annual Meeting of Shareholders (the
"Annual Meeting") during the fiscal year
ending in 2007 without further action
by Employee or the Company unless (i)
earlier terminated pursuant to Section 10
hereof or (ii) Employee gives to the other
written notice not to renew not less
than thirty (30) days prior to the Renewal
Date. The Initial Term and any term
pursuant to a renewal under this Section
4.02 are referred to herein as the
"Term."
5.
Employment. Employee shall serve as Chairman of the Board of
Directors 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.
6. Base
Salary. During the Term, the Company shall pay Employee,
in equal installments no less frequently
than monthly, a base salary at the rate
of no less than One Hundred Fifty Thousand
Dollars ($150,000.00 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. For purposes of clarity, it is
understood that the amount described in
this Section 6 shall be in lieu of and
not in addition to annual awards of cash
received by other members of the Board,
payable in accordance with the Company's
compensation plan for non-executive
members of the Board, as such Plan may be
amended from time to time (the
"Director's Compensation Plan").
7.
Stock Options.
7.01. The
Company has heretofore granted to Employee
certain nonqualified stock options to
purchase shares of the Company's common
stock. During the Term, Employee shall be
entitled to receive annual awards of
stock options to purchase shares of the
Company's common stock in the same
amount received by other members of the
Board, payable at such times and in
accordance with the Director's Compensation
Plan.
7.02.
Shareholders' Agreement. The Employee has agreed to
be bound by the terms of any shareholders'
agreements which may be applicable
(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.
8.
Employee Benefits. Employee shall be eligible to (i) receive
health and welfare benefits 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 in its sole
discretion, and (ii) all the other rights
and benefits of an employee of the
Company. Nothing herein shall be deemed to
affect in any way Employee's rights
and the Company's obligations with respect
to medical insurance
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Employee's Initials:
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benefits arising under the terms of the
America's Favorite Chicken Company 1994
Supplemental Benefit Plan for Executive
Officers.
9.
Business Expenses.
9.01.
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.
9.02.
Office and Support Services. Employee will be
reimbursed by the Company for office and
support services up to $50,000 per
annum.
10.
Termination of Employment.
10.01.
Definitions. For purposes of this Section 10, 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
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 12.02 through and including 12.04 or
(v)
Employee otherwise materially breaches this Agreement.
(b)
Disability. The term "Disability" shall mean the good
faith 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.
10.02.
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 6
and 9, for the year in which such
termination occurs.
10.03.
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,
(ii) for Cause, or (iii) if Employee
is not re-elected to the Board at the
Annual Meeting for the purpose of election
of Directors during the Term of this
Agreement, 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 Employee's Base Salary
at the time of termination less any amount
of
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Employee's Initials:
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Employee's Base Salary for the fiscal year
including the date of termination
that has been previously paid to Employee;
and (b) 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, grant
such accelerated vesting or provide such
benefits, Employee shall not be in
breach of his obligations under Section 12
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 10.03 shall be
made
to Employee, at the election of the
Company, as soon as practicable after the
date of Employee's termination of
employment.
10.04. 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 6 and 9,
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.
11. Gross Up
Payment. The term "Gross Up Payment" as used in this
Agreement shall mean a payment to or on
behalf of Employee which shall be
sufficient to pay (1) 100% of any excise
tax described in this Section 11, (2)
100% of any federal, state and local income
tax and social security and other
employment tax on the payment made to pay
such excise tax as well as any
additional taxes on such payment and (3)
100% of any interest or penalties
assessed by the Internal Revenue Service on
Employee which are related to the
timely payment of such excise tax (unless
such interest or penalties are
attributable to Employee's willful
misconduct or gross negligence with respect
to such timely payment). A Gross Up Payment
shall be made by the Company
promptly after either the Company or the
Company's independent accountants
determine that any payments and benefits
called for under this Employment
Agreement together with any other payments
and benefits made available to
Employee by the Company and any other
person will result in Employee being
subject to an excise tax under Section 4999
of the Internal Revenue Code of
1986, as amended (which shall be referred
to in this Section 11 as the "Code")
or such an excise tax is assessed against
Employee as a result of any such
payments and other benefits if Employee
takes such action (other than waiving
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Employee's Initials:
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Employee's right to any payments or
benefits in excess of the payments or
benefits which Employee has expressly
agreed to waive under this Section 11) as
the Company reasonably requests under the
circumstances to mitigate or challenge
such excise tax; provided, however, if the
Company or the Co
