EX-10.56 EMPLOYMENT AGREEMENT/ JAMES W. LYONS



 





Exhibit 10.56




EMPLOYMENT AGREEMENT

Effective as of March 14, 2007 between

AFC Enterprises, Inc. (the “Company”) and

James W. Lyons (“Employee”)




     WHEREAS, the Company desires to continue the employment of Employee and to enter into an
agreement embodying the terms of such employment; and



     WHEREAS, Employee desires to accept such employment and to enter into such agreement;



     NOW, THEREFORE, in consideration of the 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. Employee shall serve as Chief Operating 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 Chief Executive Officer or the Board of Directors of the Company.




          2.02 Time and Efforts. Employee, so long as he is employed hereunder, shall devote
his full business time and attention to the services required of him hereunder, except as otherwise
agreed and for vacation time and reasonable periods of absence due to sickness or personal injury,
and shall use his best efforts, judgment and energy to perform, improve and advance the business
and interests of the Company in a manner consistent with the duties of his position.




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     3. Base Salary.



          Beginning as of March 2, 2007, the Company shall pay Employee, in equal installments no less
frequently than monthly, a base salary at the rate of no less than Three Hundred Thousand Dollars
($300,000 U.S.) per annum (the “Base Salary”) during the Term hereof. The Employee’s Base Salary
shall be reviewed by the Chief Executive Officer or the Board of Directors of the Company on an
annual basis.




     4. Incentive Pay.




     4.01 Annual Plan. The Board of Directors of the Company, acting in its sole
discretion, shall annually, at 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 of Directors shall determine. Any amounts payable to Employee pursuant to
the Annual Incentive Plan is hereinafter referred to as “Incentive Pay”.



     4.02 Target Incentive Pay. The target incentive pay (“Target Incentive Pay”) for
Employee for the 2007 fiscal year of the Company shall be as follows: One Hundred Eighty Thousand
Dollars (U.S. $180,000); 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
of Directors pursuant to Section 4.01 above and this Section 4.02 shall be read accordingly. After
2007, the Target Incentive Pay for Employee will be set by the Chief Executive Officer or the Board
of Directors of the Company for each fiscal year and will be included in the Annual Incentive Plan
for such year.



     4.03 Payment of Incentive Pay. If Employee is entitled to payment of any Incentive
Pay for any fiscal year, an accounting will be furnished and payment will be made to Employee as
set forth in the Annual Incentive Plan, but in no event later than two and one-half months
following the end of each fiscal year.



     4.04 Termination of Employment. If Employee’s employment hereunder shall terminate
other than pursuant to Sections 8.03 or 8.04, Employee shall receive, at the time contemplated by
the Annual Incentive Plan, such Incentive Pay, if any, to which he would have been entitled under
the terms of the Annual Incentive Plan had Employee remained in the employ of the Company for the
entire fiscal year in which such termination occurs. If Employee’s employment hereunder shall
terminate pursuant to (a) Section 8.03, the provisions of Section 8.03 shall determine the amount
of Incentive Pay payable to Employee; or (b) Section 8.04, no Incentive Pay shall be payable to
Employee after such termination.



     5. Restricted Stock Grant.



     As soon as practicable after the execution of this Agreement, the Company shall grant to
Employee 10,000 shares of restricted stock. Such shares of restricted stock shall vest over three
years, with one-third vesting on each anniversary date of the grant. As part of the Employee’s



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compensation after the Company’s 2007 fiscal year, Employee may be granted restricted stock
and/or stock options in the future based upon Employee’s performance as determined in the sole
discretion of the Board of Directors of the Company.




     6. Employee Benefits.




     6.01 Executive Flex Perk. Employee shall be entitled to participate in the Company’s
Executive Flex Perk Plan subject to the terms, conditions and limitations thereof. The Company
will pay to, or for the benefit of Employee, an amount equal to $15,000.00 per year payable in the
same manner as Employee’s Base Salary is paid.



     6.02 Life Insurance. During the term and any renewal term of this Agreement,
Employee shall be entitled to life insurance coverage paid by the Company with a death benefit in
an amount not less than $1,500,000.



     6.03 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 his 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 6.07 below, with respect to a disability as defined in the Supplemental
Disability Policy (a “Disability”) 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 Salary and Incentive Pay
for the year immediately preceding the year in which the Disability occurs.




          (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 his option, elect to pay the excess.
If Employee fails to pay such excess or if for any other reason the Company, after reasonable
efforts, is not able to obtain the Supplemental Disability Income Policy required herein, then
Employee shall not be entitled to any Disability Benefit hereunder except as may otherwise be
determined in the discretion of the Company and set forth in writing.




     6.04 Executive Medical Benefit. The Company, at its expense, shall provide Employee
with an annual physical examination to be conducted by a physician or physicians as determined by
the Company, or by Employee with the approval of the Company.



     6.05 Other Benefits. Employee shall be provided additional employee benefits,
including health, accident and disability insurance under the Company’s regular and ongoing plans,
policies and programs available, from time to time, to senior officers of the Company, in
accordance with the provisions of such plans, policies and programs governing eligibility and



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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 vacation each year
during the Term hereof and any renewal therof. Any vacation not used in any year shall not accrue
for use in subsequent years and shall be forfeited as of the end of such year.



     6.07 Paramount Provisions.


             (a) Notwithstanding anything in Sections 6.02 and 6.03 above or any other provision of this
Agreement to the contrary, if the Company has met all of its obligations under this Agreement 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 minimum death benefit described therein 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 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 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 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 Chief Executive Officer or the Board of Directors shall have full
authority to make all determinations deemed necessary or advisable for the administration of the
benefits described in this Section 6. The good faith interpretation and construction by the Chief
Executive Officer or the Board of Directors of the terms of this Section 6 or the benefit programs
described herein shall be final, conclusive and binding on Employee.




     7. Business Expenses.




     All reasonable and customary business expenses incurred by Employee in the performance of his
duties hereunder shall be paid or reimbursed by the Company in accordance with the Company’s
policies in effect, from time to time.



     8. Termination of Employment.



     8.01 Definitions. For purposes of this Section 8, the following terms shall have the
following meanings:



          (a) Cause. The term “Cause” shall mean (i) Employee commits fraud or is convicted of
a crime involving moral turpitude, (ii) Employee, in carrying out his duties hereunder, has




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been
guilty of gross neglect or gross misconduct resulting in harm to the Company or any of its
subsidiaries or affiliates, (iii) Employee shall have failed to materially comply with the policies
of the Company or shall have refused to follow or comply with the duly promulgated directives of
the Chief Executive Officer or the Board of Directors of the Company, (iv) Employee has breached
any of the provisions of Section 10.02 through and including 10.04 or (v) Employee otherwise
materially breaches this Agreement.




          (b) Disability. The term “Disability” shall mean the good faith determination by the
Chief Executive Officer or of the Board of Directors of the Company that Employee has failed to or
has been unable to perform his duties as the result of any physical or mental disability for a
period of ninety (90) consecutive days during any one period of Disability.




     8.02 Termination upon Death or Disability. If Employee’s employment is terminated
due to his death or Disability, the Company shall pay to the estate of the Employee or to the
Employee, as the case may be, within fifteen (15) days following Employee’s death or upon his
termination in the event of Disability, all amounts then payable to Employee pro rated through the
date of termination pursuant to Sections 3 and 6.01, and the amount of any accrued but unused
vacation under Section 6.06 for the year in which such termination occurs and any reimbursable
amounts owed Employee under Section 7. In addition, the Company shall pay to Employee any
Incentive Pay payable pursuant to Section 4.04 hereof in accordance with the terms thereof.



     8.03 Termination by the Company for other than Death or Disability or for Cause. The
Company may terminate Employee’s employment hereunder without cause at any time, upon written
notice. If upon expiration of the term of this Agreement or if Employee’s employment is terminated
by the Company prior to the expiration of the term of this Agreement without cause or other than
(i) by reason of Employee’s death or Disability or (ii) for Cause, the Company shall pay or provide
to Employee, in lieu of all other amounts payable hereunder or benefits to be provided hereunder
the following: (a) a payment equal to the sum of one (1) times Employee’s Base Salary at the time
of termination; (b) a payment equal to one (1) times Employee’s Target Incentive Pay for the year
in which such termination occurs (or, if no Target Incentive Pay has been designated for such year,
then the Target Incentive Pay for the last year in which it was designated prior to such
termination), and (c) the acceleration of any unvested rights of Employee under any stock options
or other equity incentive programs such that they shall immediately vest under the terms of such
plans. As a condition precedent to the requirement of Company to make such payments or grant such
accelerated vesting, Employee shall not be in breach of his obligations under Section 10 hereof and
Employee shall execute and deliver to Company a general release in favor of the Company in
substantially the same form as the general release then contained in the latest Severance Agreement
being used by the Company.



     Any payments required to be made under this Section 8.03 shall be made to Employee within
thirty (30) days after the date of Employee’s termination of employment.



     8.04 Voluntary Termination by Employee or Termination for Cause. Employee may
terminate his employment hereunder at any time whatsoever, with or without cause, upon thirty (30)
days prior written notice to the Company. The Company may terminate Employee’s



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employment hereunder
at any time without notice for Cause. In the event Employee’s employment is terminated voluntarily
by Employee or by the Company for Cause:




          (a) The Company shall pay to Employee upon such termination all amounts then due under
sections 3, 4 (but only to the extent of earned but unpaid Incentive Pay), 6, and 7, prorated,
through the date of termination for the year in which he is terminated; and




          (b) The Company shall be under no obligation to make severance payments to Employee or
continue any benefits being provided to Employee beyond the date of such termination.




     9. Change of Control, Change in Responsibilities.



     Upon the occurrence of both of the following events:



          (a) The dissolution or liquidation of the Company, or a reorganization, merger or
consolidation of the Company with one or more corporations as a result of which the owners of 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 or duties, 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.




          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:



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          “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, damage and loss to the Company and the
Affiliates. Accordingly, Employee acknowledges and agrees:



          (a) that the Proprietary Information is and shall remain the exclusive property of the Company
(or the applicable Affiliate);




          (b) to use the Proprietary Information exclusively for the purpose of fulfilling the
obligations under this Agreement;




          (c) to return the Proprietary Information, and any copies thereof, in his possession or under
his control, to the Company (or the applicable Affiliate) upon request of the Company (or the
Affiliate), or expiration or termination of Employee’s employment hereunder for any reason;
and




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          (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 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.



     10.03 Covenant of Non-Disparagement and Cooperation. Employee agrees that he shall
not at any time during or following the term of this Agreement make any remarks disparaging the
conduct or character of the Company or the Affiliates or any of the Company’s or the Affiliates’
current or former agents, employees, officers, directors, successors or assigns (collectively the
“Related Parties”). In addition, Employee agrees to cooperate with the Related Parties, at no
extra cost, in any litigation or administrative proceedings (e.g., EEOC charges) involving any
matters with which Employee was involved during Employee’s employment with the Company. The
Company shall reimburse Employee for reasonable expenses incurred by Employee in providing such
assistance.



     10.04 Covenant Not-To-Induce. Employee covenants and agrees that during the
Restricted Period, he will not, directly or indirectly, on his own behalf or in the service or on
behalf of others, hire, solicit, take away or attempt to hire, solicit or take away any person who
is or was an employee of the Company or any Affiliate during the one (1) year period preceding the
termination of Employee’s employment.



     10.05 Remedies. The Company and Employee expressly agree that a violation of any of
the covenants contained in subsections 10.02 through and including 10.04 of this Section 10, or



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any
provision thereof, shall cause irreparable injury to the Company and that, accordingly, the Company
shall be entitled, in addition to any other rights and remedies it may have at law or in equity, to
an injunction enjoining and restraining Employee from doing or continuing to do any such act and
any other violation or threatened violation of said Sections 10.02 through and including 10.04
hereof.




     10.06 Severability. In the event any provision of this Agreement shall be found to
be void, the remaining provisions of this Agreement shall nevertheless be binding with the same
effect as though the void part were deleted; provided, however, if subsections 10.02 through and
including 10.04 of this Section 10 shall be declared invalid, in whole or in part, Employee shall
execute, as soon as possible, a supplemental agreement with the Company, granting the Company, to
the extent legally possible, the protection afforded by said subsections. It is expressly
understood and agreed by the parties hereto that the Company shall not be barred from enforcing the
restrictive covenants contained in each of subsections 10.02 through and including 10.04, as each
are separate and distinct, so that the invalidity of any one or more of said covenants shall not
affect the enforceability and validity of the other covenants.



     10.07 Ownership of Property. Employee agrees and acknowledges that all works of
authorship and inventions, including but not limited to products, goods, know-how, Trade Secrets
and Confidential Information, and any revisions thereof, in any form and in whatever stage of
creation or development, arising out of or resulting from, or in connection with, the services
provided by Employee to the Company or any Affiliate under this Agreement are works made for hire
and shall be the sole and exclusive property of the Company or such Affiliate. Employee agrees to
execute such documents as the Company may reasonably request for the purpose of effectuating the
rights of the Company or the Affiliate in any such property.



     10.08 No Defense. The existence of any claim, demand, action or cause of action of
the Employee against the Company shall not constitute a defense to the enforcement by the Company
of any of the covenants or agreements herein.



     11. 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 § 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 Employee’s right to any payments or benefits in excess of the
payments or benefits which Employee has expressly agreed to waive



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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.




     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.



     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 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.



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     12.03 Survival. The provisions of this paragraph 12 shall survive the termination of
this Agreement for a period of four (4) years, unless Employee is terminated for Cause, in which
event the provisions of this Section 12 shall not survive termination of this Agreement.



     13. Dispute Resolution.



     13.01 Agreement to Arbitrate. In consideration for his continued employment with the
Company, and other consideration, the sufficiency of which is hereby acknowledged, but subject to
Section 6.07(b) above, Employee acknowledges and agrees that any controversy or claim arising out
of or relating to Employees employment, termination of employment, or this Agreement including, but
not limited to, controversies and claims that are protected or covered by any federal, state, or
local statute, regulation or common law, shall be settled by arbitration pursuant to the Federal
Arbitration Act. This includes, but is not limited to, violations or alleged violations of any
federal or state statute or common law (including, but not limited to, the laws of the United
States or of any state, or the Constitution of the United States or of any state), or of 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.



     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 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



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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 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.



     15. Amendments.



     This Agreement may not be altered, modified or amended except by a written instrument signed
by each of the parties hereto.



     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.



Employee’s Initials:




                                        




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     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 6.07, 7, 8.03, 9,
10, and 12 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.



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


If to Employee:



James W. Lyons

145 Celandine Way

Alpharetta, Georgia 30022



If to the Company to:



AFC Enterprises, Inc.

5555 Glenridge Connector NE

Suite 300

Atlanta, Georgia 30342

Attn: Chief Executive Officer




Employee’s Initials:




                                        




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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.



[SIGNATURE PAGE FOLLOWS]




Employee’s Initials:




                                        




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     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/ Frank J. Belatti
 	 
	 	 	Frank J. Belatti 	 
	 	 	Chairman of the Board 	 
	 
	 	EMPLOYEE:

 	 
	 	/s/ James W. Lyons
 	 
	 	James W. Lyons 	 
	 	 	 
	 



Employee’s Initials:




                                        





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