Exhibit 10.1
EMPLOYMENT AGREEMENT
Effective as of October 9, 2007 between
AFC Enterprises, Inc. (the “Company”) and
Cheryl A. Bachelder (“Employee”)
     WHEREAS, the Company desires to employ Employee and to enter into an
agreement embodying the terms of such employment (the “Agreement”); and
     WHEREAS, Employee desires to accept such employment and to enter into such
agreement;
     NOW, THEREFORE, in consideration of the promises 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 or Section 9 hereof, shall be for an initial
term of one (1) year (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.
     For purposes of this Section 1 only, the first “year” of the Term shall be
deemed to begin as of the date hereof and end on December 28, 2008, and each one
(1) year period thereafter shall coincide with the Company’s fiscal year.
     2. Employment.
     2.01 Position. Beginning on November 1, 2007 (the “Start Date”), Employee
shall serve as Chief Executive Officer of the Company and President of its
Popeyes Chicken & Biscuits division, and shall perform such duties consistent
with her position as may be assigned to her from time to time by the Board of
Directors of the Company (the “Board”). Employee shall perform her duties
hereunder at the Company’s offices at 5555 Glenridge Connector, NE, Suite 300,
Atlanta, Georgia, subject to such reasonable amount of travel as is necessary to
render the services provided hereunder. Employee shall remain a member of the
Board during the term hereof.
     2.02 Time and Efforts. Employee, so long as she is employed hereunder,
shall devote her full business time and attention to the services required of
her hereunder, except as otherwise agreed and for vacation time and reasonable
periods of absence due to sickness or personal injury, and shall use her 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 her position.

      Employee’s Initials:                                                     
 

 

--------------------------------------------------------------------------------

 

Anything herein to the contrary notwithstanding, nothing shall preclude Employee
from (i) serving on one board of a for-profit organization, presently True
Value, with future board service at other companies subject to prior approval of
the Board, (ii) serving on the boards of directors of trade associations,
(iii) engaging in charitable activities and community affairs; or (iv) managing
her personal investments and affairs, provided that the activities described in
the preceding clauses (i) through (iv) do not interfere with the proper
performance of her duties and responsibilities hereunder.
     3. Base Salary.
     Beginning on the Start Date, the Company shall pay Employee, in equal
installments no less frequently than monthly, a base salary at the rate of Six
Hundred Fifty Thousand Dollars ($650,000) per annum (the “Base Salary”) during
the Term hereof. The Employee’s Base Salary shall be reviewed by the Board on an
annual basis.
     4. Incentive Pay and Special Bonus Pay.
     4.01 Annual Plan. The Board, acting in its sole discretion, shall annually,
at the beginning of each fiscal year of the Company, approve an annual incentive
plan (the “Annual Incentive Plan”) for Employee, which Plan shall contain such
terms and provisions as the Board shall determine. The Annual Incentive Plan
shall set forth the specific financial and performance goals which must be
achieved for Employee to be entitled to receive payment under such Annual
Incentive Plan. 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 each of the 2007 and 2008 fiscal years of the Company
shall be as follows: Six Hundred Fifty Thousand Dollars ($650,000); 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 pursuant to Section 4.01 above and this Section 4.02 shall be read
accordingly. For the 2007 fiscal year, Employee’s Target Incentive Pay, if
earned, shall be prorated for the amount of time remaining in the Company’s 2007
fiscal year by dividing the actual number of days of Employee’s employment with
the Company during fiscal 2007 by the total number of days in the Company’s
fiscal 2007. After 2008, the Target Incentive Pay for Employee will be set by
the Board of the Company for each fiscal year and will be included in the Annual
Incentive Plan for such year. The Company agrees to establish Employee’s
specific financial and performance goals for each Annual Incentive Plan prior to
the start of any applicable performance measurement period.
     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 two and one-half months following the end of each fiscal year.

      Employee’s Initials:   2                                                 
 

 

--------------------------------------------------------------------------------

 

     4.04 Termination of Employment. If Employee’s employment hereunder shall
terminate other than pursuant to Sections 8.03 or 8.04, Employee shall receive,
at the time contemplated by the Annual Incentive Plan, such Incentive Pay, if
any, to which she 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.
     4.05 Special Bonus Pay. In addition to any Annual Incentive Pay that
Employee may earn pursuant to Employee’s Annual Incentive Plan, Employee shall
receive a one-time guaranteed payment in the amount of One Hundred Thousand
Dollars ($100,000) payable within thirty (30) days of Employee’s Start Date.
     4.06 Relocation and Temporary Living Expenses. Employee shall be entitled
to receive reimbursement of relocation expenses in accordance with the terms and
conditions of the Company’s executive relocation package. Additionally, Employee
shall be entitled to receive reimbursement for temporary living expenses,
personal travel expenses, and other related expenses as incurred by Employee
pending Employee’s permanent relocation to Atlanta, Georgia. The total amount of
temporary living expenses to be reimbursed shall not exceed One Hundred Fifty
Thousand Dollars ($150,000). Employee shall be grossed up in order to pay all
federal, state and local income tax and social security and other employment tax
on the reimbursed amounts.
     5. Stock Options and Restricted Stock Grants.
          Effective upon the Employee’s Start Date, the Company shall grant to
Employee certain restricted stock shares and stock options, pursuant to the
Company’s 2006 Incentive Stock Plan, as hereinafter set forth.
     (a) The Company shall grant to Employee 30,000 shares of restricted stock
which shall vest 100% on the first anniversary of Employee’s Start Date,
provided she is still employed by the Company on such anniversary date.
     (b) The Company shall grant to Employee an option to purchase 200,000
shares of the Company’s common stock (“Stock”) which shall have an exercise
price equal to the closing price of the Stock on the date of the grant, and
shall vest over four years, with one-fourth vesting on each anniversary date of
the grant, provided she is still employed by the Company on such anniversary
date.
     (c) The Company shall grant to Employee an additional option to purchase
200,000 shares of Stock which shall have an exercise price equal to the closing
price of the Stock on the date of the grant, and shall vest over four years,
with one-fourth vesting on each anniversary date of the grant provided she is
still employed by the Company on such anniversary date; further provided,
however, the option to purchase such Stock to the extent so vested shall only be
exercisable, in whole or in part, if any of the following performance criterion
are satisfied:

      Employee’s Initials:   3                                                 
 

 

--------------------------------------------------------------------------------

 

  (i)   If the Stock price maintains an average of $20.00 per share for twenty
(20) consecutive trading days, then Employee shall have the right to the extent
her right to exercise the option is then vested to purchase 66,668 shares of the
Stock;     (ii)   If the Stock price maintains an average of $25.00 per share
for twenty (20) consecutive trading days, then Employee shall have the right to
the extent her right to exercise the option is then vested to purchase 66,666
shares of the Stock;     (iii)   If the Stock price maintains an average of
$30.00 per share for twenty (20) consecutive trading days, then Employee shall
have the right to the extent her right to exercise the option is then vested to
purchase 66,666 shares of the Stock.

Once a performance criterion has been satisfied, Employee shall have the right
to exercise her option if, and when, her right to exercise the option vests
without regard to any decline in the average price per share following the
satisfaction of such criteria. To the extent that any or all of the foregoing
performance criteria are not satisfied by the fifth (5th) anniversary of the
grant date, then any portion of such option not exercisable due to such failure
to satisfy such performance criterion shall automatically terminate on the fifth
(5th) anniversary of the grant date.
     The terms of this Section 5 are subject to the applicable provisions of
Section 8 hereof.
     As part of the Employee’s compensation after the foregoing grants of
restricted stock shares and stock options have been made, Employee may be
granted additional stock options, restricted stock shares and/or other forms of
equity compensation based upon Employee’s performance as determined in the sole
discretion of the Board.
     6. Employee Benefits.
     6.01 Life Insurance.
          During the Term and any renewal term of this Agreement, Employee shall
be entitled to term life insurance coverage paid by the Company with a death
benefit in an amount of $3,250,000.
     6.02 Disability Insurance.
          (a) During the Term and any renewal term of this Agreement, Employee
shall be entitled to disability insurance coverage in an amount not less than
her disability coverage on the date of this Agreement and the Company 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 6.06 below, with respect to a disability as
defined in the Supplemental Disability Policy (a “Policy Disability”) occurring
after the Company has

      Employee’s Initials:   4                                                 
 

 

--------------------------------------------------------------------------------

 

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 Thirty Thousand Dollars ($30,000) per month.
          (b) Notwithstanding anything herein to the contrary, if the premiums
for the Supplemental Disability 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 her 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 Policy required herein, then Employee shall not be entitled to the
Supplemental Disability Policy Benefit hereunder except as may otherwise be
determined in the discretion of the Company and set forth in writing.
          (c) If the definition of a Policy Disability does not satisfy the
requirements for a payment based on a “disability” under § 409A of the Code and
the related tax regulations, the payment of her Disability Benefit shall begin
when she has a Separation from Service (as defined in Section 8.01) as a result
of her being Disabled or, if she is a Specified Employee (as defined in Section
8.01), shall begin on her Delayed Payment Date (as defined in Section 8.01), and
the payment made on her Delayed Payment Date shall include all the payments
which would have been made on and after the date of her Separation from Service
but for her status as a Specified Employee.
     6.03 Employee Medical Benefit. The Company, at its expense, shall provide
Employee with an annual physical examination to be conducted by a physician or
physicians as determined by Employee, subject to the reasonable approval of the
Company.
     6.04 Other Benefits. Employee shall be provided additional employee
benefits in addition to those identified in Sections 6.01 — 6.03, including,
without limitation, participation in the Company’s 401(k) plan beginning on the
Start Date with immediate full vesting in the Company’s matching contributions
beginning with any matching contribution made for fiscal year 2007, 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 the Board subject to applicable law and
the terms of such plans. The Company shall also pay Employee’s initiation fee as
well as monthly membership dues at the Ashford Club, Atlanta, Georgia.
     6.05 Vacation. Employee shall be entitled to five (5) weeks paid vacation
and three (3) days of paid personal business time each year during the Term
hereof and any renewal hereof. Any vacation or personal business days not used
in any year shall be subject to forfeiture or accrual pursuant to the Company’s
then-current vacation policy.
     6.06 Paramount Provisions.

      Employee’s Initials:   5                                                 
 

 

--------------------------------------------------------------------------------

 

          (a) Notwithstanding anything in Sections 6.01and 6.02 above or any
other provision of this Agreement to the contrary, if the Company has met all of
its obligations under this Agreement (and provided that such obligations are not
relieved in accordance with the terms hereof), with respect to obtaining and
maintaining in force (i) the life insurance policy described in Section 6.01
hereof on the life of Employee to fund the minimum death benefit, or (ii) the
Supplemental Disability Policy maintained for Employee pursuant to Section 6.02
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 Employee 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 her 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. The Company agrees
that any insurance company issuing the life insurance policy described in
Section 6.01 shall have at least an “A” rating by the Best Rating Service.
          (b) Anything in Sections 6.01, 6.02, 6.03, and 6.04 to the contrary
notwithstanding, the amount of the benefits provided for in Section 6 are
subject to 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 and
the Employee will be given written notice of any such change. Anything in this
Agreement to the contrary notwithstanding, the Board shall have full authority
to make all determinations deemed necessary or advisable for the administration
of the benefits described in this Section 6. The good faith interpretation and
construction by the Board 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 her duties hereunder shall be paid or reimbursed by the Company
in accordance with the Company’s policies in effect, from time to time. The
amount of reasonable business expenses eligible for reimbursement in any taxable
year of Employee shall not affect the amount of reasonable business expenses
eligible for reimbursement in any other taxable year of Employee.
     8. Termination of Employment.
     8.01 Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
     The term “Cause” shall mean (i) Employee commits fraud or is convicted of a
crime involving moral turpitude, (ii) Employee, in carrying out her 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
Board, (iv)

      Employee’s Initials:   6                                                 
 

 

--------------------------------------------------------------------------------

 

Employee has breached any of the provisions of Sections 10.02 through and
including 10.04 or (v) Employee otherwise materially breaches a material term of
this Agreement.
     The term “Code” shall mean the Internal Revenue Code of 1986, as amended.
     The term “Constructive Discharge” shall mean a Separation from Service by
the Employee on account of a material diminution of or change in her
responsibilities or duties; provided, however, that no Separation from Service
by the Employee shall be considered a Constructive Discharge unless, within
ninety (90) days of the initial existence of such diminution or change Employee
has first provided written notice to the Chairman of the Company’s Board of
Directors of the factual circumstances forming the basis for the claim of
constructive discharge and of her intent to treat those circumstances as a
Constructive Discharge under this Agreement, and has further provided the
Company with a period of at least thirty (30) days in which to cure such alleged
breach.
     The term “Delayed Payment Date” shall mean the date that is six (6) months
and one (1) day after the date of Employee’s Separation from Service.
     The term “Disability” shall mean the good faith determination by the Board
that Employee has failed to or has been unable to perform her duties as the
result of any physical or mental disability for a period of ninety
(90) consecutive days during any one period of Disability.
     The term “Separation from Service” shall mean a “separation from service”
with the Company within the meaning of § 409A of the Code and the related income
tax regulations.
     The term “Specified Employee” shall mean a “specified employee” within the
meaning of § 409A of the Code and the related income tax regulations.
     8.02 Termination upon Death or Disability. If Employee has a Separation
from Service due to her 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 her termination in the event of Disability,
all amounts then payable to Employee pro rated through the date of termination
pursuant to Section 3, and the amount of any accrued but unused vacation under
Section 6.05 for the year in which such termination occurs and any reimbursable
amounts owed Employee under Section 7. However, if the definition of a
Disability does not satisfy the requirements for a payment based on a
“disability” under § 409A of the Code and the related tax regulations, any
payments due hereunder shall begin when she has a Separation from Service as a
result of her being Disabled or, if she is a Specified Employee, shall begin on
her Delayed Payment Date, and the payment made on her Delayed Payment Date shall
include all the payments which would have been made on and after the date of her
Separation from Service but for her status as a Specified Employee. Finally, the
Company shall pay to Employee any Incentive Pay payable pursuant to Section 4.03
hereof. Such payment shall be made in a lump sum in cash at Employee’s
Separation from Service or, if Employee is a Specified Employee, on Employee’s
Delayed Payment Date.
     8.03 Termination by the Company without Cause or Employee’s Resignation for
a Constructive Discharge. The Company may terminate Employee’s employment under
this

      Employee’s Initials:   7                                                 
 

 

--------------------------------------------------------------------------------

 

Agreement without Cause at any time upon written notice to Employee. If Employee
has a Separation from Service as a result of a termination without Cause (other
than a Separation from Service described in Section 8.02) or as a result of her
resignation because she has experienced a Constructive Discharge or as a result
of the Company’s decision not to renew the Term pursuant to Section 1, 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 (x), (y) and (z) where (x) is two (2) times Employee’s Base
Salary at the time of termination, (y) is 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); and
(z) is a prorated portion of Employee’s Target Incentive Pay for the year in
which such termination occurs based upon her Target Incentive Pay according to
the metrics established by the People Services (Compensation) Committee of the
Board (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) based on the proportion that the number of days from January 1 in
the year of such termination through and including the date of termination bears
to the total number of days in the year of termination less any amount of
Employee’s Target Incentive Pay for such fiscal year that that has been
previously paid to Employee; and (b) the acceleration of any unvested rights of
Employee under any restricted stock, stock options (other than stock options
described in Section 5(c) for which the performance criterion required for
exercise has not been previously satisfied) or other equity incentive awards
such that they shall immediately vest under the terms of such awards. As a
condition precedent to the requirement of Company to make such payment or grant
such accelerated vesting, Employee shall not be in breach of her 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 being used by the Company.
     Any payment required to be made under this Section 8.03 shall be made to
Employee in a lump sum in cash on her Separation from Service or, if she is a
Specified Employee, on her Delayed Payment Date.
     8.04 Voluntary Termination by Employee or Termination for Cause. Employee
may resign her 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 has a Separation from Service as a result of her
resignation (other than as a result of a Constructive Discharge) or as a result
of a termination by the Company for Cause:
          (a) The Company shall pay to Employee in a lump sum in cash on her
Separation from Service or, if she is a Specified Employee, on her Delayed
Payment Date 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 she 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

      Employee’s Initials:   8                                                 
 

 

--------------------------------------------------------------------------------

 

termination other than benefits to which Employee may be entitled as a result of
Federal or state law.
     If Employee is terminated by the Company for Cause, Employee may within the
ten (10) business day period immediately following such termination request in
writing that the Chairman of the Board of Directors provide a written statement
of the facts supporting her termination for Cause, and Employee during the ten
(10) business day period immediately following the delivery of such statement
may submit a written petition to the Chairman of the Board of Directors that her
employment be reinstated with full pay retroactive to the date of her
termination of employment. Any such petition shall set forth her reason or
reasons why there was no Cause for her termination, and she may request that she
be granted a meeting with the Board of Directors so she (or Employee and her
attorney) can present such reason or reasons in person and answer any questions
which any of the members of the Board of Directors want to ask Employee. The
Board of Directors will promptly act on her petition, and the decision of the
Board of Directors shall be final and binding on the Company and on Employee.
     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 of all of the outstanding shares of
Stock immediately prior to such reorganization, merger or consolidation own in
the aggregate, directly and indirectly, less than 50% of the outstanding shares
of 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 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 (1) there is a
termination of employment without Cause or (2) there is a material diminution of
or change in Employee’s responsibilities or duties and Employee elects, in
writing, within ninety (90) days following the occurrence of such diminution or
change to resign effective thirty (30) days after the Company’s receipt of such
notice, then, if Employee has a Separation from Service as a result of such
termination or resignation, she 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 payable in a lump sum in cash on her Separation from
Service or, if she is a Specified Employee, on her Delayed Payment Date. In
addition, Employee’s right to exercise the option described in Section 5(c)
shall fully vest on her Separation from Service and, if the Stock price was at
least $20.00 a share or at least $25.00 a share or at least $30.00 a share on
the effective date of the Change in Control, such price on the effective date
shall be treated as satisfying the twenty (20) consecutive trading day Stock
price requirement under the applicable performance criterion under Section 5(c)
and Employee shall have the right to exercise such option to the extent such
performance criterion is so treated as satisfied.

      Employee’s Initials:   9                                                 
 

 

--------------------------------------------------------------------------------

 

          A Change in Control of the Company shall not be deemed to occur by
reason of any public offering of the Stock of the Company.
          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.
     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,

      Employee’s Initials:   10                                                 
 

 

--------------------------------------------------------------------------------

 

damage and loss to the Company and the Affiliates. Accordingly, Employee
acknowledges and agrees that, except as may be required by law:
          (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
her possession or under her 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:
          (a) as to Trade Secrets, indefinitely, and
          (b) 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 her 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 she 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.
     10.03 Covenant of Non-Disparagement and Cooperation. Employee agrees that
she 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

      Employee’s Initials:   11                                                 
 

 

--------------------------------------------------------------------------------

 

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 reasonable expenses incurred by Employee in providing such
assistance.
     10.04 Covenant Not-To-Induce. Employee covenants and agrees that during the
Restricted Period, she will not, directly or indirectly, on her 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 sections 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.
     10.08 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 in this
Section 10.
     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

      Employee’s Initials:   12                                                 
 

 

--------------------------------------------------------------------------------

 

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 in a lump sum at the Company’s option either directly to the United
States Treasury or to Employee after either the Company or the Company’s
independent accountants determine that any payments and benefits called for
under this 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 § 4999 of 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 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 Company’s independent accountants
make the determination described in this Section 11 and, further, determine that
Employee will not be subject to any such excise tax if Employee waives
Employee’s right to receive a part of such payments or benefits and such part
does not exceed $10,000, Employee shall irrevocably waive Employee’s right to
receive such part if an independent accountant or lawyer retained by Employee
and paid by the Company agrees with the determination made by the Company or the
Company’s independent accountants with respect to the effect of such reduction
in payments or benefits. Any determinations under this Section 11 shall be made
in accordance with § 280G of the Code and any applicable related regulations
(whether proposed, temporary or final) and any related Internal Revenue Service
rulings and any related case law and, if the Company reasonably requests that
Employee take action to mitigate or challenge, or to mitigate and challenge, any
such tax or assessment (other than waiving 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 and Employee complies with such request,
the Company shall provide Employee with such information and such expert advice
and assistance from the Company’s independent accountants, lawyers and other
advisors as Employee may reasonably request and shall pay for all expenses
incurred in effecting such compliance and any related fines, penalties, interest
and other assessments.
     12. Indemnification and Liability Insurance.
     12.01 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.

      Employee’s Initials:   13                                                 
 

 

--------------------------------------------------------------------------------

 

     12.02 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 her
full cost and expense and with counsel of her 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.
     12.03 Survival. The provisions of Sections 12.01 and 12.02 shall survive
the termination of this Agreement for a period of four (4) years, unless
Employee is terminated for Cause, in which event such provisions shall not
survive termination of this Agreement.
     12.04 Liability Insurance. The Company shall use commercially reasonable
efforts to obtain and maintain directors’ and officers’ liability insurance
covering the Employee to the same extent as the Company covers its other
officers and directors.
     13. Dispute Resolution.
     13.01 Agreement to Arbitrate. In consideration for her continued employment
with the Company, and other consideration, the sufficiency of which is hereby
acknowledged, Employee acknowledges and agrees that any controversy or claim
arising out of or relating to Employee’s 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 of 1972, as amended, 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.
     13.02 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

      Employee’s Initials:   14                                                 
 

 

--------------------------------------------------------------------------------

 

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.
     13.03 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.
     14. Employee Acknowledgment.
     By signing this Agreement, Employee acknowledges that the Company has
advised Employee of her right to consult with an attorney prior to executing
this Agreement; that she has the right to retain counsel of her own choosing
concerning the agreement to arbitrate or any waiver of rights or claims; that
she 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 she 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.
     15. Amendments.
     This Agreement may not be altered, modified or amended except by a written
instrument signed by each of the parties hereto.

      Employee’s Initials:   15                                                 
 

 

--------------------------------------------------------------------------------

 

     16. 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.
     17. 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.
     18. 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.
     19. 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.
     20. Survival.
     Notwithstanding anything herein to the contrary, the provisions of
Sections 6.06, 7, 8.03, 9, 10, 11, 12 and 13 shall survive the termination of
this Agreement.
     21. 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.
     22. Notices.

      Employee’s Initials:   16                                                 
 

 

--------------------------------------------------------------------------------

 

     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 if mailed in the manner herein specified, five (5) days after
postmark of such mailing when mailed by United States registered mail, return
receipt requested, postage prepaid, addressed as follows:
     If to Employee:

     
 
  Cheryl A. Bachelder
5555 Glenridge Connector, NE
Atlanta, Georgia 30342
 
   
 
  If to the Company to:
 
   
 
  AFC Enterprises, Inc.
5555 Glenridge Connector NE
Suite 300
Atlanta, Georgia 30342
Attn: General Counsel

or to such other address or such other person as Employee or the Company shall
designate in writing in accordance with this Section 22 except that notices
regarding changes in notices shall be effective only upon receipt.
     23. 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.
     24. Governing Laws.
     The Agreement shall be governed by the laws of the State of Georgia without
reference to the principles of conflict of laws.
     25. Compliance with § 409A of the Code. To the extent this Agreement is
subject to § 409A of the Code, the Company and Employee intend all payments
under this Agreement to comply with the requirements of such section, and this
Agreement shall, to the extent reasonably practicable, be operated and
administered to effectuate such intent.

      Employee’s Initials:   17                                                 
 

 

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and Employee has hereunto set her hand as of the day and year first above
written.

            COMPANY:

AFC ENTERPRISES, INC.
      By:    /s/ Frank J. Belatti       Frank J. Belatti        Chairman of the
Board        EMPLOYEE:
     /s/ Cheryl A. Bachelder     Cheryl A. Bachelder           

      Employee’s Initials:   18