EX-10.3 NON-QUALIFIED STOCK OPTION CERTIFICATE



 





Exhibit 10.3




AFC ENTERPRISES, INC.

2006 INCENTIVE STOCK PLAN

NON-QUALIFIED STOCK OPTION CERTIFICATE




STOCK PRICE PERFORMANCE GRANT




     This Option Certificate evidences the grant by AFC Enterprises, Inc. (the “Company”), in
accordance with the AFC Enterprises, Inc. 2006 Incentive Stock Plan (the “Plan”), of a
Non-Qualified Stock Option (“Option”) to Cheryl A. Bachelder (“Employee”) to purchase from the
Company 200,000 shares of $.01 par value common stock of the Company (the “Stock”) at an Option
Price of $12.81 per share. This Option is granted effective November 1, 2007 (the “Grant Date”).
The Company does not intend that this Option constitute an incentive stock option under Section 422
of the Code.



	 	 	 	 	 
	 	AFC ENTERPRISES, INC.

 	 
	 	By:  	/s/ Frank J. Belatti
 	 
	 	Title:	     
 Chairman 	 
	 	 	 	 
	 



TERMS AND CONDITIONS





     § 1 Plan. This Option is subject to all of the terms and conditions set forth in this
Option Certificate and in the Plan (including, without limitation, the provisions of § 13 and § 14
of the Plan that (a) provide for adjustment upon a change in capitalization (including stock
splits) of the Company or upon certain corporate transactions and (b) address a sale, merger or
change in control of the Company). All capitalized terms not otherwise defined in this Option
Certificate shall have the respective meaning of such terms as defined in the Plan. If a
determination is made that any term or condition set forth in this Option Certificate is
inconsistent with the Plan, the Plan shall control. A copy of the Plan will be made available to
Employee at the Company’s principal executive offices upon written request to the Secretary of the
Company.



     § 2 Exercise Rights.




	 	(a)	 	General Rule. Subject to satisfying the Stock price
performance criteria set forth § 2(b), Employee shall have the right to
exercise this Option will vest with respect to:






	 	(1)	 	Twenty-five percent (25%) of the number of
shares of Stock underlying the grant of this Option (rounding down to
the nearest whole share) if Employee remains an employee of the Company
from the Grant Date through the first anniversary of the Grant Date,




 









 












	 	(2)	 	An additional twenty-five percent (25%) of the
number of shares of Stock underlying the grant of this Option (rounding
down to the nearest whole share) on each of the second, third and
fourth anniversaries of the Grant Date, if Employee remains an employee
of the Company from the Grant Date through the respective anniversary
of the Grant Date.






If rounding down to the nearest whole share results in a fractional share, the
fractional share shall be carried forward and added to the number of shares which
vest on the next anniversary of the Grant Date and, if a fractional share remains on
the fourth anniversary of the Grant Date, Employee shall forfeit the right to
exercise this Option with respect to such fractional share on such anniversary of
the Grant Date.




	 	(b)	 	Stock Price Performance Criteria.






	 	(1)	 	If at any time between the Grant Date and the
fifth anniversary of the Grant Date the Stock price maintains an
average of $20.00 per share for twenty (20) consecutive trading days,
Employee shall have the right (to the extent Employee’s exercise right
is then or thereafter vested under § 2(a)) to exercise this Option to
purchase 66,668 of the shares of Stock subject to this Option. If the
Stock price fails to maintain such average before the fifth anniversary
of the Grant Date, Employee shall forfeit any right to exercise this
Option with respect to such shares of Stock.
	 
	 	(2)	 	If at any time between the Grant Date and the
fifth anniversary of the Grant Date the Stock price maintains an
average of $25.00 per share for twenty (20) consecutive trading days,
Employee shall have the right (to the extent Employee’s exercise right
is then or thereafter vested under § 2(a)) to exercise this Option to
purchase an additional 66,666 of the shares of Stock subject to this
Option. If the Stock price fails to maintain such average before the
fifth anniversary of the Grant Date, Employee shall forfeit any right
to exercise this Option with respect to such shares of Stock.
	 
	 	(3)	 	If at any time between the Grant Date and the
fifth anniversary of the Grant Date the Stock price maintains an
average of $30.00 per share for twenty (20) consecutive trading days,
Employee shall have the right (to the extent Employee’s exercise right
is then or thereafter vested under § 2(a)) to exercise this Option to
purchase an additional




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	 	 	 	66,666 of the shares of Stock subject to this Option. If the Stock
price fails to maintain such average before the fifth anniversary of
the Grant Date, Employee shall forfeit any right to exercise this
Option with respect to such shares of Stock.






	 	(c)	 	Special Rules.






	 	(1)	 	Employment Agreement. This Option has
been granted as provided in Section 5(c) of the Employment Agreement
between Employee and the Company which was signed on October 9, 2007
(the “Employment Agreement”), and any acceleration in Employee’s right
under § 2(a) to exercise this Option and any modification to the Stock
price performance criteria set forth in § 2(b) shall be determined
under the terms of the Employment Agreement.
	 
	 	(2)	 	Termination. If Employee’s employment
with the Company terminates for any reason other than death,
“Disability” (as defined in § 2(c)(3)) or “Cause” (as defined in
§ 2(c)(5)), Employee shall have the right to exercise this Option with
respect to any portion of this Option with respect to which her
exercise right has vested under this Certificate on or before the date
her employment terminates during the 90 day period which starts on the
date her employment so terminates (or during the 180 day period which
starts on the date her employment so terminates if Employee dies within
30 days after her termination of employment) or the seventh anniversary
of the Grant Date, whichever comes first (the “Standard Exercise
Period”).  At the end of such Standard Exercise Period, her right to
exercise this Option shall expire immediately and automatically. To the
extent Employee’s right to exercise all or any portion of this Option
has not vested under the terms of this Certificate on the date of
Employee’s termination of employment, this Option (or such portion of
this Option) shall expire immediately and automatically upon such
termination and shall have no further force of effect whatsoever.
	 
	 	(3)	 	Death or Disability. If Employee’s
employment with the Company terminates because Employee dies or has a
“Disability”, Employee or Employee’s estate (whichever is applicable)
shall have the right to exercise this Option with respect to any
portion of this Option that has vested under the terms of this
Certificate on the date of Employee’s termination.  In such event,
Employee or Employee’s estate




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	 	 	 	(whichever is applicable), shall have the right to exercise the
vested portion of this Option, if any, until the earlier of (A) 180
days after the date of Employee’s termination or (B)  the seventh
anniversary of the Grant Date (the “Death or Disability Exercise
Period”).  At the end of such Death or Disability Exercise Period,
this Option shall expire immediately and automatically.  To the
extent Employee’s right to exercise all or any portion of this Option
has not vested under the terms of this Certificate on the date of
Employee’s termination of employment, this Option (or such portion of
this Option) shall expire immediately and automatically upon such
termination and shall have no further force of effect whatsoever.
	 
	 	(4)	 	Termination for Cause. If the Company
terminates Employee’s employment as a result of “Cause”, the Employee’s
right to exercise this Option shall expire immediately and
automatically upon such termination and shall have no further force or
effect whatsoever unless the Committee acting in its sole and absolute
discretion grants Employee an extension of time to exercise this
Option.
	 
	 	(5)	 	Cause. For purposes of this Option
Certificate, “Cause” shall mean Cause as defined in the Employment
Agreement.
	 
	 	(6)	 	Disability.  For purposes of this
Option Certificate, the term “Disability” shall mean Disability as
defined in the Employment Agreement.





     § 3. Life of Option. This Option shall expire and shall not be exercisable for any
reason on or after the seventh anniversary of the Grant Date.



     § 4. Method of Exercise of Option. Employee may exercise that portion of this Option
that has vested under §  2 above (in whole or in part) for not less than 100 shares of Stock (or
all of the shares of Stock for which this Option is then vested if less than 100), on any business
day of the Company by (a) delivering written notice of the exercise of the Option to the Company at
its principal corporate offices to the attention of the Company’s Stock Manager or to the Company’s
designee at such other address designated by the Company, and (b) simultaneously paying to the
Company the Option Price and applicable taxes referenced in § 11 of this Option Certificate. The
payment of such Option Price shall be made either by check acceptable to the Company, by delivery
to the Company of certificates (properly endorsed) for shares of Stock registered in Employee’s
name that have been held by Employee for at least 6 months, or in any combination of check and
Stock that results in payment in full of the Option Price. In addition, the Option Price and
applicable taxes referenced in § 11 hereof may be paid through any broker-facilitated procedure
that is acceptable to the Committee or



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its delegate and that is facilitated through a sale of Stock. Stock that is so tendered as payment
(in whole or in part) of the Option Price shall be valued at its Fair Market Value on the date the
Option is exercised.



     § 5 Stock Issuance. The Company shall register on the Company’s books and issue in
the name of Employee any Stock purchased pursuant to the exercise of this Option as soon as
practicable after such exercise, and such registration and issuance shall discharge the Company of
all of its duties and responsibilities with respect to that portion of this Option that is
exercised.



     § 6 Nontransferable. Except as expressly authorized by the Committee, no rights
granted under this Option shall be transferable by Employee other than by will or by the laws of
descent and distribution, and the rights granted under this Option shall be exercisable during
Employee’s lifetime only by Employee. Any attempt to sell, pledge, assign, hypothecate, transfer
or otherwise dispose of this Option in contravention of this Option Certificate and the Plan shall
be null and void and shall have no effect. Employee’s legal representative and the person or
persons, if any, to whom this Option is transferred by will or by the laws of descent and
distribution or through a Committee authorization shall be treated after Employee’s death the same
as Employee under this Option Certificate.



     § 7 No Right to Continue Service. Neither the Plan, this Option Certificate, nor any
related material shall give Employee the right to continue in employment by the Company or any
Subsidiary or shall adversely affect the right of the Company or any Subsidiary to terminate
Employee’s employment with or without Cause at any time, subject to the terms of any written
employment agreement to which Employee and the Company are parties.



     § 8 Stockholder Status. Employee shall have no rights as a stockholder with respect
to any shares of Stock under this Option until such shares have been registered on the Company’s
books and duly issued in the name of Employee. In addition, except as expressly set forth in the
Plan, no adjustment shall be made for dividends of any kind or description whatsoever or for
distributions of other rights of any kind or description whatsoever respecting such Stock.



     § 9 Securities Registration. As a condition to the delivery of the certificate for
any shares of Stock purchased pursuant to the exercise of this Option, Employee shall, if so
requested by the Company, hold such shares of Stock for investment and not with a view of resale or
distribution to the public and, if so requested by the Company, shall deliver to the Company a
written statement satisfactory to the Company to that effect. Federal and state securities laws
may require the placement of certain restrictive legends upon the certificate(s) evidencing the
Stock issued upon exercise of this Option.



     § 10 Other Agreement. If so requested by the Committee, Employee shall (as a
condition to the exercise of this Option) enter into such additional shareholder, buy-



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sell or other agreement or agreements prepared by the Company as the Company deems appropriate,
which may restrict the transfer of shares of Stock acquired pursuant to this Option and provide for
the repurchase of such Stock by the Company under certain circumstances. The certificate(s)
evidencing the Stock may include one or more legends that reference or describe the conditions upon
exercise referenced in this § 10.



     § 11 Withholding. Employee shall have the right to satisfy the minimum statutory
federal and state tax withholding requirements arising out of the exercise of this Option by
electing to have the Company withhold shares of Stock that otherwise would be transferred to
Employee as a result of the exercise of this Option in an amount equal to the tax liabilities. In
addition, the Company or any Parent, Subsidiary or Affiliate shall have the right upon the exercise
of this Option to take such action, if any, as the Company or any Parent, Subsidiary or Affiliate
deems necessary or appropriate to satisfy the minimum statutory federal and state tax withholding
requirements arising out of the exercise of this Option including (but not limited to) requiring
Employee to make a cash payment to the Company or any Parent, Subsidiary or Affiliate to satisfy
the minimum statutory withholding requirements.



     § 12 Governing Law. The Plan and this Option shall be governed by the laws of the
State of Georgia.



     § 13 Binding Effect. This Option shall be binding upon the Company and Employee and
their respective heirs, executors, administrators and successors.



     § 14 Headings and Sections. The headings contained in this Option Certificate are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Option. Any references to sections in this Option Certificate shall be to sections (§) of this
Option Certificate unless otherwise expressly stated as part of such reference.




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