EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into on the
5th day of May, 2003 by and between CNL Franchise Network GP Corp., a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ("Executive").
Preliminary Statement
WHEREAS, the Company is the general partner of CNL Franchise Network
LP, a Delaware limited partnership ("▇▇▇▇▇"); and
WHEREAS, the Company desires to employ or continue to employ Executive,
and Executive desires to be employed by the Company; and
WHEREAS the Company and Executive desire to enter into this Agreement
which sets forth the terms and conditions of Executive's employment;
NOW, THEREFORE, in consideration of the mutual covenants set forth
below, the Company and Executive agree as follows:
1. Employment. The Company hereby employs the Executive, and Executive
agrees to serve the Company, on the terms and conditions set forth, below.
Except as otherwise provided in this Agreement, Executive's employment shall be
subject to the employment policies and practices of the Company in effect from
time to time during the Term of Executive's employment.
2. Term of Agreement. The term of Executive's employment pursuant to
this Agreement shall commence on September 1, 2002 and shall continue in effect
for a period of three (3) years and four (4) months to and including December
31, 2005, unless terminated sooner in accordance with Section 5 below.
Thereafter, this Agreement may renew for additional one-year terms, upon written
notice by the Company to Executive no later than ninety (90) days prior to the
termination date of any such term, unless terminated sooner in accordance with
Section 5 below. (The natural termination date of the initial term or any
successive term of this Agreement shall be referred to as the "Termination
Date.")
3. Position and Duties. Executive shall serve as the Executive Vice
President and Chief Financial Officer of the Company and shall have such duties,
authority and responsibilities as are normally associated with and appropriate
for such position. Executive shall devote substantially all of his working time
and efforts to the business and affairs of the Company, except that Executive
may perform personal or charitable activities which do not interfere with
Executive's employment duties.
4. Compensation and Related Matters.
4.1. Base Salary. During the term of this Agreement, the Company
shall pay to Executive a Base Salary at an annual rate as specified in
Attachment "A" to this Agreement ("Base Salary"). Base Salary shall be paid in
equal installments in accordance with the Company's usual and customary payroll
practices, but not less frequently than monthly. The Base Salary may be
increased each year in an amount approved by the Company's Board of Directors.
4.2. Bonus and Additional Compensation. Executive will be entitled
to an annual bonus as set forth in Attachment "A". Pending the Company's
approval, the Executive may also be entitled to participate in a long-term
compensation program to be implemented at a later date.
4.3. Benefit Plans and Arrangements. Executive shall be entitled to
participate in and to receive benefits under all existing and future employee
benefit plans, perquisites and fringe benefit programs of the Company that are
provided to other similarly situated executives of the Company, on terms no less
favorable than those provided to such other executives, to the extent Executive
is eligible under the terms of such plans or programs.
4.4. Expenses. The Company shall promptly reimburse Executive for
all reasonable and customary expenses incurred by Executive in performing
services for the Company, including all expenses of travel while away from home
on business or at the request of and in the service of the Company, provided
that such expenses are incurred and accounted for by Executive in accordance
with the policies and procedures established by the Company.
4.5. Paid Time Off. Executive shall be entitled to no fewer than
fifteen (15) days of paid time off (PTO) per year.
5. Termination. The term of Executive's employment pursuant to this
Agreement may be terminated under the following circumstances:
5.1. Death. The term of Executive's employment shall terminate upon
his death.
5.2. Disability. The Company may terminate the term of Executive's
employment as a result of Executive's Disability. For purposes of this
Agreement, "Disability" is defined as the inability, by reason of illness or
other physical or mental incapacity or limitation, of Executive substantially to
perform the duties of his employment with the Company, which inability continues
for at least one hundred twenty (120) consecutive days, or for shorter periods
aggregating one hundred twenty (120) days during any consecutive twelve (12)
month period.
5.3. By Company for Cause. The Company may terminate the term of
Executive's employment for "Cause" upon written notice to Executive. For
purposes of this Agreement, the Company shall have "Cause" to terminate
Executive's employment upon any of the following events:
(i) Executive's continued failure to perform or his habitual neglect
of his duties;
(ii) Executive's conviction of, plea of nolo contendre to, or
indictment for (which indictment is not discharged or otherwise resolved within
twelve (12) months) any felony, or any crime involving moral turpitude, or any
crime which is likely to result in material injury to the Company;
(iii) Executive's breach of a fiduciary duty relating to the
Executive's employment with the Company, including but not limited to an act of
fraud, theft or dishonesty; or
(iv) Executive's material breach of this Agreement;
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause under clause (i) or (iv) unless the Company provided
reasonable written notice to the Executive setting forth the reasons for the
Company's intention to terminate for Cause, and Executive failed within thirty
(30) days to cure the event or deficiency set forth in the written notice.
5.4. By Company Without Cause. The Company may terminate the term of
Executive's employment other than for Cause, death or Disability at any time
upon sixty (60) days prior written notice to Executive.
5.5. By Executive for Good Reason. Executive may terminate the term
of his employment for "Good Reason" upon written notice to the Company. For
purposes of this Agreement, "Good Reason" shall include the following events
unless otherwise consented to by Executive:
(i) The assignment to Executive of any duties materially
inconsistent with Executive's position, duties, responsibilities and status
within the Company;
(ii) A material reduction in Executive's reporting responsibilities
not pertaining to job performance issues;
(iii) A reduction in the Base Salary of the Executive not pertaining
to job performance issues;
(iv) A requirement by the Company that Executive's work location be
moved more than fifty (50) miles of the Company's principal place of business in
Orlando, Florida;
(v) The Company's material breach of this Agreement;
(vi) A "change in control" (as defined below) of the Company occurs;
(vii) The Company's failure to obtain an agreement from any
successor to the business of the Company by which the successor assumes and
agrees to perform this Agreement; or
(viii) A purchaser of the Company assigns this Agreement to another
person or entity without Executive's written consent.
Notwithstanding the foregoing, Executive shall not be deemed to have
terminated his employment for Good Reason under clause (i), (ii), (iii), (iv) or
(v), unless Executive provided reasonable written notice to the Company setting
forth the reasons for Executive's intention to resign for Good Reason, and the
Company failed within thirty (30) days to cure the event or deficiency set forth
in the written notice.
For purposes of this Section 5.5, a "change in control" means that an
act specified in Sections 5.5(i) through 5.5(v) of the Agreement occurs and,
within two (2) years of that act, one of the following events also occurs: (A)
the closing of any sale by ▇▇▇▇▇ or CNL Franchise Network Corp., a Delaware
corporation ("CFNC"), of all or substantially all of its assets to an acquiring
person or entity that is not an affiliate of the Company, ▇▇▇▇▇, CFNC, or CNL
American Properties Fund, Inc., a Maryland corporation ("APF"); (B) the closing
of any sale by APF of all or a majority of the shares of stock of CFNC that it
owns to an acquiring person or entity that is not an affiliate of the Company,
▇▇▇▇▇, CFC, or APF; or (C) the closing of any sale by the holders of common
stock of APF of an amount of common stock that equals or exceeds a majority of
the shares of common stock of APF immediately prior to such closing to a person
or entity such that the holders of such common stock immediately prior to the
closing are not the holders of a majority of the ordinary voting securities of
APF after the closing.
6. Compensation in the Event of Termination. Upon the termination of
this Agreement, the Company shall pay Executive compensation as set forth below:
6.1. By Company Without Cause; By Executive for Good Reason. In the
event that Executive's employment is terminated by the Company without Cause, or
by the Executive for Good Reason, the Company shall pay the Executive a cash
payment equal to two (2) times the Executive's Base Salary, which is in effect
on the date of the Executive's termination (the "Severance Payment"). The
Severance Payment shall be made payable in equal installments over a twenty-four
(24) month period in accordance with the Company's usual and customary payroll
practices, commencing on the first payday following Executive's termination.
Notwithstanding the foregoing, in the event Executive terminates his employment
due to a "change in control" (as defined in Section 5.5 above) the Company shall
pay to Executive within thirty (30) days of the date of termination a lump sum
cash payment equal to one (1) times Executive's Base Salary in effect on the
date of Executive's termination in addition to any other payments to which
Executive would otherwise be entitled under the terms of this Agreement. Within
thirty (30) days of the date of termination of Executive's employment, the
Company shall also pay Executive a lump sum equal to the sum of: (i) any accrued
but unpaid Base Salary and vacation due Executive as of the date of termination
of employment; and (ii) reimbursements for appropriately submitted expenses
which have been incurred, but have not been paid by the Company, as of the date
of termination. In addition, any stock that would otherwise vest during the next
twelve (12) months under any Company stock bonus plan, phantom stock plan or
stock option plan shall become immediately vested and remain exercisable for no
more than ninety (90) days following termination or, if shorter, for the balance
of the regular term of the stock options.
6.2. By Company for Cause; By Executive Without Good Reason. In the
event that the Company terminates Executive's employment for Cause, or Executive
terminates his employment without Good Reason, all compensation or benefits to
which Executive may otherwise be entitled to shall cease on the date of
termination, except for (i) any accrued but unpaid Base Salary due Executive as
of the date of termination of employment, and (ii) reimbursements for
appropriately submitted expenses which have been incurred, but have not been
paid by the Company, as of the date of termination.
6.3. Death or Disability. In the event that the Company terminates
Executive's employment due to his death or Disability, the Company shall pay the
Executive or his estate a lump sum equal to twelve (12) months of Executive's
Base Salary, payable within thirty (30) days of Executive's termination. This
payment shall be in addition to, rather than in lieu of, the entitlement of
Executive or his estate to any other insurance or benefit proceeds as a result
of his death or Disability.
6.4. Natural Termination. In the event that Executive's employment
by the Company pursuant to this Agreement naturally terminates on the
Termination Date, all compensation or benefits to which Executive may otherwise
be entitled to shall cease on the Termination Date, except for (i) any accrued
but unpaid Base Salary due Executive as of the Termination Date, and (ii)
reimbursements for appropriately submitted expenses which have been incurred,
but have not been paid by the Company, as of the Termination Date; provided,
however, that at the election of the Company in its sole and absolute discretion
and upon written notice to the Executive on or prior to the Termination Date,
the Company shall pay the Executive a cash payment equal to two (2) times the
Executive's Base Salary which is in effect on the Termination Date, which cash
payment shall be made payable over a twenty-four (24) month period in equal
installments in accordance with the Company's usual and customary payroll
practices, commencing on the first payday following the Termination Date (the
"Optional Severance Pay").
7. Non-Competition, Non-Solicitation and Confidentiality.
7.1. Covenant Not to Compete. While employed by the Company or any
affiliate of the Company and for a period of twenty-four (24) months thereafter,
Executive shall not, directly or indirectly, for compensation or otherwise,
engage in or have any interest in any sole proprietorship, partnership,
corporation, company, business or any other person or entity (whether as an
employee, officer, corporation, business or any holder creditor, consultant or
otherwise) that, directly or indirectly, competes with the business enterprises
in which the Company or any of its current or future subsidiaries, parent,
partners, or affiliates (collectively, the "Benefited Persons") are now or
during Executive's employment become engaged in any and all states in which the
Company or any other Benefited Person conducts such business while Executive is
employed by the Company or a subsidiary of the Company; provided, however,
Executive may continue to hold Company securities or acquire, solely as an
investment, shares of capital stock or other equity securities of any company
which are traded on any national securities exchange or are regularly quoted in
the over-the-counter market, so long as Executive does not control, acquire a
controlling interest in, or become a member of a group which exercises direct or
indirect control of more than five percent (5%) of any class of capital stock of
such corporation. Notwithstanding the foregoing, in the event that Executive's
employment by the Company naturally terminates on the Termination Date and the
Company elects not to pay Executive the Optional Severance Pay pursuant to
Section 6.4 above, then the prohibitions contained in this Section 7.1 shall
terminate on the Termination Date.
7.2. Nonsolicitation of Clients. While employed by the Company or
any affiliate of the Company and for a period of twenty-four (24) months
thereafter, Executive shall not, directly or indirectly, for himself or for any
other person, firm, corporation, partnership, company, association or other
entity, solicit, attempt to contract with, or enter into a contractual
relationship of any kind pertaining to any aspect of the development or lease of
real property, with any person or entity with which the Company or any affiliate
of the Company, had any contractual relationship or engaged in negotiations
toward a contract in the previous twenty-four (24) months.
7.3. Nonsolicitation of Employees. While employed by the Company or
any affiliate of the Company and for a period of twenty-four (24) months
thereafter, Executive shall not directly or indirectly, for himself or for any
other person, firm, corporation, partnership, company, association or other
entity, solicit, attempt to employ or enter into any contractual arrangement
with any employee or former employee of the Company or any Benefited Person,
unless such employee or former employee has not been employed by the Company or
other Benefited Person for a period in excess of six (6) months.
7.4. Nondisparagement. While employed by the Company or any
affiliate of the Company and after Executive's employment terminates, Executive
shall not disparage, denigrate or comment negatively upon, either orally or in
writing, the Company, any other Benefited Person, or any of their officers or
directors, to or in the presence of any person or entity unless compelled to act
by a valid subpoena or other legal mandate; provided, however, if Executive
receives such a subpoena or other legal mandate he shall provide the Company
with written notice of same at least five (5) business days prior to the date on
which Executive is required to make the disclosure. The Company likewise shall
not disparage, denigrate or comment negatively upon, either orally or in
writing, the Executive to any prospective employer or third party after
Executive's employment terminates unless compelled to do so by subpoena or other
legal mandate; provided however, if the Company receives such a subpoena or
other legal mandate it shall provide Executive with written notice of same at
least five (5) business days prior to the date on which the Company is required
to make the disclosure.
7.5. Confidentiality. While employed by the Company or any affiliate
of the Company and after Executive's employment terminates, Executive shall keep
secret and retain in strictest confidence, and shall not use for his benefit or
the benefit of others, except in connection with the business affairs of the
Company or the other Benefited Persons, all information relating to the business
of the Company or any of the other Benefited Persons, including, without
limitation, information concerning the financial condition, prospects, methods
of doing business, marketing and promotion of services, disclosed to or known by
the Executive as a consequence of his employment by the Company or any affiliate
of the Company, which information is not generally known or otherwise obtainable
in the public domain.
8. Tangible Items. All files, records, documents, manuals, books,
forms, reports, memoranda, studies, data, calculations, recordings, or
correspondence, in whatever form they may exist, and all copies, abstracts and
summaries of the foregoing, and all physical items related to the business of
the Company or any other Benefited Person, whether of a public nature or not,
and whether prepared by Executive or not, are and shall remain the exclusive
property of the Company or any other Benefited Person, and shall not be removed
from their premises, except as required in the course of Executive's employment
by the Company, without the prior written consent of the Company. Such items
shall be promptly returned by Executive on the termination of Executive's
employment with the Company or at any earlier time upon the request of the
Company.
9. Remedies.
9.1. Injunctive Relief. The Company and Executive acknowledge and
agree that a breach by Executive of any of the covenants contained in Section 7
of this Agreement will cause irreparable harm and damage to the Company and/or
any other Benefited Person, the monetary amount of which may be virtually
impossible to ascertain. Accordingly, Executive acknowledges that the Company
and/or any other Benefited Person affected shall be entitled to an injunction
from any court of competent jurisdiction enjoining and restraining any violation
of said covenants by Executive or any of his affiliates, associates, partners or
agents, either directly or indirectly, and that such right to injunction shall
be cumulative and in addition to other remedies the Company or such other
Benefited Person may possess. In addition, Executive acknowledges that in the
event of his breach of any of the provisions of Section 7 of this Agreement, in
addition to any other remedies the Company may have, the Company may cease
making the balance of the payments specified in Section 6.1 and recover in full
from Executive any such payments previously made.
9.2. Arbitration. Except with regard to Section 7, all disputes
between the parties concerning the performance, breach, construction or
interpretation of this Agreement, or in any manner arising out of this
Agreement, shall be submitted to binding arbitration in accordance with the
rules of the American Arbitration Association, which arbitration shall be
carried out in the manner set forth below:
(i) Within fifteen (15) days after written notice by one party to
the other party of its demand for arbitration, which demand shall set forth the
name and address of its designated arbitrator, the other party shall select its
designated arbitrator and so notify the demanding party. Within fifteen (15)
days thereafter, the two arbitrators so selected shall select the third
arbitrator. The dispute shall be heard by the arbitrators within ninety (90)
days after selection of the third arbitrator. The decision of any two
arbitrators shall be binding upon the parties. Should any party or arbitrator
fail to make a selection, the American Arbitration Association shall designate
such arbitrator upon the application of either party. The decision of the
arbitrators shall be final and binding upon the Company, its successors and
assigns and Executive.
(ii) The arbitration proceedings shall take place in Orlando,
Florida, and the judgment and determination of such proceedings shall be binding
on all parties. Judgment upon any award rendered by the arbitrators may be
entered into any court having competent jurisdiction without any right of
appeal.
(iii) Each party shall pay its or his own expenses of arbitration,
and the expenses of the arbitrators and the arbitration proceeding shall be
shared equally. However, if in the opinion of a majority of the arbitrators, any
claim or defense was unreasonable, the arbitrators may assess, as part of their
award, all or any part of the arbitration expenses of the other party (including
reasonable attorneys' fees) and of the arbitrators and the arbitration
proceeding.
10. Severability. The Company and Executive agree that if, in any
action before any court or agency legally empowered to enforce this Agreement,
any term, restriction, covenant, or promise is found to be unreasonable or
otherwise unenforceable, then such term, restriction, covenant, or promise shall
be deemed modified to the extent necessary to make it enforceable.
11. Notice. For purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when received if delivered in person or by
overnight courier, or if mailed by United States certified mail, return receipt
requested, postage prepaid, to the following addresses:
If to Executive:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Company:
CNL Franchise Network GP Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Either party may change its address for notices in accordance with this
Section 11 by providing written notice of such change to the other party.
12.Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
13. Benefits; Binding Effect. This Agreement shall be for the benefit
of and binding upon the parties and their respective heirs, personal
representatives, legal representatives, successors and assigns. If Executive is
transferred to an affiliate of the Company, such affiliate will assume this
Agreement and upon assumption shall be deemed "the Company" under this
Agreement.
14. Entire Agreement. This Agreement, including its incorporated
Attachment "A", constitutes the entire agreement between the parties, and all
prior understandings, agreements or undertakings between the parties concerning
Executive's employment or the other subject matters of this Agreement are
superseded in their entirety by this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
"Executive"
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Witness ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
"Company"
CNL Franchise Network GP Corp.,
a Delaware corporation
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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Witness Title: Chief Executive Officer
EMPLOYMENT AGREEMENT OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
ATTACHMENT "A"
1. Base Salary: The Company shall pay to the Executive a base salary of
$200,000.00 per year, increasing to $250,000.00 per year effective January 1,
2003.
2. Annual Bonus Compensation: Executive may receive annual bonus
compensation targeted at fifty percent (50%) of the Executive's base
compensation with a maximum annual bonus of two (2) times the target
($200,000.00), however, the target shall be $250,000.00 on and after January 1,
2003.
3. Long-Term Compensation: Pending the Company's approval, the
Executive may be entitled to participate in a long-term compensation program to
be implemented at a later date.