SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: January 1, 2000
FRANCHISE FINANCE CORPORATION OF AMERICA
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(Exact name of Registrant as Specified in Its Charter)
Delaware 1-13116 86-0736091
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification Number)
17207 NORTH PERIMETER DRIVE, SCOTTSDALE, AZ 85255
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (480) 585-4500
NONE
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(Former Name or Former Address, if Change Since Last Report)
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ITEM 5. OTHER EVENTS.
On January 1, 2000, Franchise Finance Corporation of America (the
"Company"), entered into employment agreements (the "Employment Agreements")
with five of its executive officers (the "Executives"). The Employment
Agreements supersede and replace the Continuity Agreements between the Company
and the Executives, dated as of May 12, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 10.1 Employment Agreement, dated as of January 1, 2000,
between Franchise Finance Corporation of America and
Morton H. Fleischer.
Exhibit 10.2 Employment Agreement, dated as of January 1, 2000,
between Franchise Finance Corporation of America and
Christopher H. Volk.
Exhibit 10.3 Employment Agreement, dated as of January 1, 2000,
between Franchise Finance Corporation of America and
John Barravecchia.
Exhibit 10.4 Employment Agreement, dated as of January 1, 2000,
between Franchise Finance Corporation of America and
Stephen G. Schmitz.
Exhibit 10.5 Employment Agreement, dated as of January 1, 2000,
between Franchise Finance Corporation of America and
Dennis L. Ruben.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRANCHISE FINANCE CORPORATION OF AMERICA
Date: January 13, 2000 By: /s/ John Barravecchia
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John Barravecchia, Executive Vice
President, Chief Financial Officer,
Treasurer and Assistant Secretary
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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Exhibit 10.1 Employment Agreement, dated as of January 1, 2000, between
Franchise Finance Corporation of America and Morton H. Fleischer.
Exhibit 10.2 Employment Agreement, dated as of January 1, 2000, between
Franchise Finance Corporation of America and Christopher H. Volk.
Exhibit 10.3 Employment Agreement, dated as of January 1, 2000, between
Franchise Finance Corporation of America and John Barravecchia.
Exhibit 10.4 Employment Agreement, dated as of January 1, 2000, between
Franchise Finance Corporation of America and Stephen G. Schmitz.
Exhibit 10.5 Employment Agreement, dated as of January 1, 2000, between
Franchise Finance Corporation of America and Dennis L. Ruben.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of January 1, 2000, by and between Franchise
Finance Corporation of America, a Delaware corporation (the "Company") and
Morton H. Fleischer ("Executive").
RECITALS
In order to induce Executive to serve as Chairman and Chief Executive
Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. DEFINED TERMS. The following terms shall have the following meanings
unless otherwise specifically defined in this Agreement:
"ACTUAL BONUS" means the highest annual cash bonus payable to Executive
with respect to any of the three years immediately preceding the Termination
Year.
"AGREEMENT" means this Employment Agreement dated as of January 1, 2000
between the Company and Executive.
"ANNUAL CASH BONUS" means the cash compensation payable to Executive as
calculated and paid in a manner substantially similar to the methods and timing
used to calculate and pay Executive's bonus for calendar year 1999; PROVIDED,
HOWEVER, that during the term of this Agreement, neither the Company nor the
Compensation Committee shall change such methods and timing in a manner which
will be less favorable to Executive.
"BASE SALARY" means the annual base salary of Executive as set forth in
Section 4(a).
"BOARD" means the board of directors of the Company.
"CAUSE" means:
(a) the willful and continued failure of Executive to perform a
substantial portion of his duties with the Company (other than any
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board, which specifically identifies the
manner in which the Board believes that Executive has not
substantially performed his duties;
(b) the willful engaging by Executive in gross misconduct
(including, without limitation, fraud or embezzlement); or
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(c) the conviction of, or plea of guilty or NOLO CONTENDERE to, a
felony.
"CHANGE IN CONTROL" means:
(a) any "Person" as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and as used
in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by
the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities (other than
indirectly as a result of the Company's redemption of its securities);
PROVIDED, HOWEVER, that, in the event that any such person becomes the
beneficial owner of 25% or more, but not exceeding 50%, of the
combined voting power of the Company's then outstanding securities, no
Change of Control shall be deemed to occur so long as the Incumbent
Directors (as defined below) continue to constitute a majority of the
Board in accordance with the terms of paragraph (c) below; or
(b) the consummation of any merger or other business combination
of the Company, sale of all or substantially all of the Company's
assets (other than with respect to sales of assets in the ordinary
course of business, securitization and whole loan sales provided by
the Company's interim and permanent financing arrangements),
liquidation or dissolution of the Company or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company and any
trustee or fiduciary of any Company employee benefit plan immediately
prior to the Transaction own at least 51% of the voting power,
directly or indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser of or
successor to the Company's assets (other than with respect to sales of
assets in the ordinary course of business, securitization and whole
loan sales provided by the Company's interim and permanent financing
arrangements); (C) both the surviving corporation and the purchaser in
the event of any combination of Transactions; or (D) the parent
company owning 100% of such surviving corporation, purchaser or both
the surviving corporation and the purchaser, as the case may be; or
(c) within any twenty-four-month period, the persons who were
directors immediately before the beginning of such period (the
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"Incumbent Directors") shall cease (for any reason other than death)
to constitute at least a majority of the Board or the board of
directors of a successor to the Company. For this purpose, any
director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director was elected to
the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person who
commenced or threatened to commence an election contest or proxy
solicitation by or on behalf of a Person other than the Board) or who
has entered into an agreement to effect a Change in Control or
expressed an intention to cause such Change in Control.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
provisions of any successor law.
"COMPANY" means Franchise Finance Corporation of America, a Delaware
corporation.
"COMPENSATION COMMITTEE" means the compensation committee of the Board.
"EFFECTIVE DATE" means January 1, 2000.
"EXECUTIVE" means Morton H. Fleischer.
"EXPENSE PAYMENT" means payments made to Executive for expenses which are
permitted under this Agreement and have been incurred but not yet reimbursed.
"GOOD REASON" means any of the following without Executive's express prior
written consent:
(a) any material diminution or adverse change in Executive's
duties, titles or responsibilities with the Company (or any affiliate
thereof) from those in effect immediately prior to any such diminution
or adverse change; PROVIDED, HOWEVER, that no such diminution or
adverse change shall be deemed to exist solely as a consequence of the
Company ceasing to be a Company with publicly-traded securities or
becoming a wholly-owned subsidiary of another company;
(b) if after a Change in Control there is any reduction in
Executive's aggregate annual cash compensation (which shall include
Base Salary and Actual Bonus) in Executive's aggregate annual cash
compensation in effect immediately prior to such reduction;
(c) any requirement that Executive be based at a location more
than 35 miles from the Company's headquarters, located in Scottsdale,
Arizona (or a substantial increase in the amount of travel that
Executive is required to do because of a relocation of the Company's
headquarters from Scottsdale, Arizona);
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(d) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to Executive to
assume and perform this Agreement, as contemplated by Section 13
hereof; or
(e) during the thirty-day period immediately following the first
anniversary of the Change in Control there is a Thirteenth-Month
Termination by Executive.
"PERMANENT DISABILITY" means the total and permanent disability of
Executive as defined in the Company's long-term disability benefit plan
applicable to senior executive officers in effect on the Effective Date.
"RETIREMENT" means Executive's voluntary termination of employment pursuant
to late, normal or early retirement under a pension plan (which may include a
defined benefit plan or a defined contribution plan) sponsored by the Company,
as defined in such plan, but only if such retirement occurs prior to a
termination by the Company for Cause or by Executive for Good Reason.
"TERMINATION DATE" means the date this Agreement is terminated, except to
the extent the provisions of Section 16 are applicable, which shall be the
earlier of December 31, 2002 or the date of termination of Executive's
employment pursuant to this Agreement.
"TERMINATION YEAR" means the year in which Executive's termination of
employment occurs.
"THIRTEENTH-MONTH TERMINATION" means the voluntary termination of
employment by Executive for any reason or no reason at all.
"VACATION PAYMENT" means payments made to Executive with respect to accrued
but unused vacation days.
2. EMPLOYMENT.
(a) Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as its Chairman and Chief
Executive Officer or as an officer of the Company having the same or a more
senior title and greater responsibilities. In his capacity as the Chairman
and Chief Executive Officer of the Company, Executive shall report to the
Board and shall have the customary powers, responsibilities and authorities
of a Chairman and Chief Executive Officer for corporations of the size and
character of the Company, as it exists from time to time, and as are
assigned by the Board.
(b) Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment with the Company commencing on the Effective
Date, and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection therewith. Executive shall
perform such duties and exercise such powers, commensurate with his
position, as the Board shall from time to time delegate to him on such
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terms and conditions and subject to such restrictions the Board may
reasonably from time to time impose. Executive also agrees to serve, if
elected, as a member of the Board.
(c) Nothing in this Agreement shall preclude Executive, so long as in
the reasonable determination of the Board such activities do not interfere
with his duties and responsibilities hereunder, from engaging in charitable
and community affairs, from managing any passive investment made by him in
publicly traded equity securities or other property (provided that no such
investment may exceed 5% of the equity of any entity) or, without prior
notice to the Board and subject to Section 15 and Section 16(b) hereof,
from serving as a member of boards of directors or as a trustee of any
other corporation, association or entity.
3. EFFECTIVE DATE; TERM OF EMPLOYMENT. This Agreement shall be effective as
the Effective Date. Executive's term of employment under this Agreement shall
commence on the Effective Date hereof and, subject to the terms hereof, shall
terminate on the Termination Date; provided, however, that any termination of
Employment by Executive for Good Reason or pursuant to the Change in Control
provisions of Section 8 may only be made on 30 days' prior written notice and
any other termination of employment by Executive other than for death, Permanent
Disability or Good Reason may only be made upon 90 days' prior written notice to
the Company.
4. COMPENSATION.
(a) SALARY. The Company shall pay Executive during the term of this
Agreement the Base Salary, as calculated pursuant to this Section 4,
payable in cash not less frequently than bimonthly. As of the Effective
Date, the Base Salary shall be $525,000. As of January 1 of each annual
anniversary of the Effective Date, the Base Salary of Executive will be
increased from Executive's Base Salary for the preceding calendar year by
the greater of (i) five percent, (ii) the average percentage salary
increase awarded to all employees of the Company who are not senior
executive officers of the Company or (iii) an amount determined by the
Compensation Committee.
(b) ANNUAL CASH BONUS. In addition to Base Compensation, the Company
will pay to Executive on or prior to January 30 of each year for
performance in the preceding calendar year the Annual Cash Bonus.
(c) COMPENSATION PLANS AND PROGRAMS. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company
from time to time, which compensation plans and programs are intended to be
comparable to those currently maintained by the Company, in which other
senior executives of the Company participate on terms that are intended to
be comparable to those applicable to such other senior executives.
(d) STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Executive shall be
eligible to receive grants of stock options and restricted stock awards as
determined in the discretion of the Compensation Committee under any stock
option plan or incentive plan of the Company or any affiliate.
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5. EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and
practices (commensurate with his positions in the Company from time to time
and to the extent permitted under any employee benefit plan) in accordance
with the terms thereof, which the Company makes available to its senior
executives and which employee pension and welfare benefit programs, plans
and practices that are intended to be comparable to those currently
maintained by the Company; provided, however, such programs, plans and
practices will be no less favorable than those in existence as of the date
of execution of this Agreement.
(b) VACATION AND FRINGE BENEFITS. Executive shall be entitled to no
less than the number of business days paid vacation in each calendar year
to which Executive is entitled immediately prior to execution of this
Agreement, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made
available to senior executives of the Company, commensurate with his
position with the Company.
6. EXPENSES. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR BY EXECUTIVE FOR
GOOD REASON. (i) The Company may terminate Executive's employment at any
time for any reason. If Executive's employment is terminated by the Company
other than for Cause) or if Executive terminates his employment for Good
Reason prior to the Termination Date, Executive shall receive such
payments, if any, under applicable plans or programs, including but not
limited to those referred to in Section 4(c) hereof, to which he is
entitled pursuant to the terms of such plans or programs. In addition,
Executive shall be entitled to receive the following:
(A) A cash lump sum payment equal to the sum of three times
(1) Executive's Base Salary at the annual rate as of the date of
termination and (2) the Actual Bonus; and
(B) a cash lump sum payment with respect to (1) the Vacation
Payment and (2) the Expense Payment which shall be paid by the
Company to Executive within 30 days after the termination of
Executive's employment by check payable to the order of Executive
or by wire transfer to an account specified by Executive;
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(C) Executive shall also be entitled to the following
benefits:
(i) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and
disability insurance) and any fringe benefit or perquisites
in effect immediately prior to the date of termination for
Executive and Executive's eligible dependents or, to the
extent such benefits are not commercially available, such
other arrangements reasonably acceptable to Executive, on
the same basis as in effect prior to the date of
termination, whichever is deemed to provide for more
substantial benefits, for a period ending December 31, 2002;
(ii) immediate 100% vesting of all outstanding stock
options, stock appreciation rights and restricted stock
granted or issued by the Company to the extent not
previously vested;
(iii) all other accrued or vested benefits in
accordance with the terms of the applicable plan, which
vested benefits shall include Executive's otherwise unvested
account balances in the Company's 401(k) plan, which shall
be vested as of the date of termination; and
(iv) if so requested by Executive, outplacement
services shall be provided by a professional outplacement
provider selected by Executive; PROVIDED, HOWEVER, that such
outplacement services shall be provided to Executive at a
cost to the Company of not more than fifteen (15) percent of
such Executive's Base Salary.
(b) CURE PERIOD OF COMPANY FOR GOOD REASON TERMINATION.
Notwithstanding the foregoing, in the event that Executive provides the
Company with a notice of termination stating Good Reason, except in the
event of a Thirteenth-Month Termination, the Company shall have 30 days
thereafter in which to cure or resolve the behavior otherwise constituting
Good Reason. Any good faith determination by Executive that Good Reason
exists shall be presumed correct and shall be binding upon the Company.
(c) PERMANENT DISABILITY OF EXECUTIVE. If Executive has a Permanent
Disability, the Company or Executive may terminate Executive's employment
on written notice thereof, and Executive shall receive or commence
receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
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(ii) the Actual Bonus, prorated by a fraction, the numerator of
which is the number of days of the fiscal year until termination and
the denominator of which is 365;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
(d) DEATH. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable:
(i) the Actual Bonus, the numerator of which is the number of
days of the fiscal year until his death and the denominator of which
is 365;
(ii) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 5(a) hereof, in
accordance with their terms;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
(e) TERMINATION BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON
(i) The Company shall have the right to terminate the employment
of Executive for Cause. In the event that Executive's employment is
terminated by the Company for Cause, or by Executive other than for
Good Reason, Executive shall only be entitled to receive the Vacation
Payment and the Expense Payment. Executive shall not be entitled,
among other things, to the payment of any Annual Cash Bonus in respect
of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this
Section 7(e), the obligations of the Company under this Agreement to
make any further payments or provide any benefits specified herein to
Executive shall thereupon cease and terminate.
(ii) Termination of Executive for Cause shall be made by delivery
to Executive of a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the non-employee directors of the
Board at a regular or special meeting of such directors called and
held for such purpose, after 30 days' prior written notice to
Executive specifying the basis for such termination and the
particulars thereof and a reasonable opportunity for Executive to be
heard prior to or at such meeting, finding that in the reasonable
judgment of such directors, that any conduct or event constituting
Cause has occurred and that such occurrence warrants Executive's
termination.
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8. CHANGE IN CONTROL.
(a) Executive shall be entitled to the compensation provided for
in this Section 8 hereof, if within two years after a Change in
Control, Executive's employment by the Company shall be terminated (A)
by the Company for any reason other than (I) Executive's Permanent
Disability or Retirement, (II) Executive's death or (III) for Cause,
or (B) by Executive with Good Reason.
(b) In addition, Executive shall be entitled to the compensation
provided for in this Section 8, if the following events occur: (A) an
agreement is signed which, if consummated, would result in a Change of
Control, (B) Executive is terminated without Cause by the Company or
terminates employment with Good Reason prior to the anticipated Change
in Control, and (C) such termination (or the action leading to such
termination, in the case of Good Reason) is at the request or
suggestion of the acquiror or merger partner or otherwise in
connection with the anticipated Change in Control, except that any
termination of employment as set forth in clause (C), above, shall be
presumed, in the absence of clear and convincing evidence to the
contrary, to have occurred in connection with a Change in Control,
whether or not a Change in Control actually occurs.
(c) The Company shall pay or cause to be paid to Executive a cash
severance amount equal to three times the sum of (i) Executive's
annual Base Salary on the date of the Change in Control (or, if
higher, the annual Base Salary in effect immediately prior to the
giving of the notice of termination), and (ii) the Actual Bonus;
PROVIDED, HOWEVER, that in the event that Executive's employment is
terminated by a Thirteenth-Month Termination, Executive's cash
severance amount shall only be equal to two times the sum of (i) and
(ii) above. This cash severance amount shall be payable in a lump sum
calculated without any discount or, at the election of Executive, on
any deferred payment schedule selected by Executive.
(d) No compensation or other benefit pursuant to this Section 8
hereof shall be payable under this Agreement unless and until either
(i) a Change in Control shall have occurred while Executive is an
employee of a Company and Executive's employment by the Company
thereafter shall have terminated in accordance with this Section 8
hereof or (ii) Executive's employment by the Company shall have
terminated in accordance with this Section 8 hereof in anticipation of
the occurrence of a Change in Control.
(e) Executive shall also be entitled to the (i) Vacation Payment
and the Expense Payment, (ii) the medical and other benefits under
Section 7(a)(C)(i), (iii) vesting of certain security rights under
Section 7(a)(C)(ii), (iv) other accrued and vested plans under Section
7(a)(C)(iii) and (v) outplacement services under Section (a)(C)(iv)
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9. EXCESS PARACHUTE EXCISE TAX.
(i) If it is determined (as hereafter provided) that any payment
or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of
any other agreement, policy, plan, program or arrangement, including
without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or
the vesting or exercisability of any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code
by reason of being "contingent on a change in ownership or control" of
the Company, within the meaning of Section 280G of the Code (or any
successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment
by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(A) Subject to the provisions of this Section 9 hereof, all
determinations required to be made under this Section 9,
including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made
by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change
in Control (or, if such Accounting Firm shall be a nationally
recognized firm of certified public accountants, as selected by
Executive). The Accounting Firm shall be directed by the Company
or Executive to submit its preliminary determination and detailed
supporting calculations to both the Company and Executive within
15 calendar days after the date of termination of employment, if
applicable, and any other such time or times as may be requested
by the Company or Executive. If the Accounting Firm determines
that any Excise Tax is payable by Executive, the Company shall
pay the required Gross-Up Payment to, or for the benefit of,
Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall, at the same
time as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his/her federal, state, local income or other tax
return. Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and
Executive absent a contrary determination by the Internal Revenue
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Service or a court of competent jurisdiction; provided, however,
that no such determination shall eliminate or reduce the
Company's obligation to provide any Gross-Up Payment that shall
be due as a result of such contrary determination. As a result of
the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto) and the possibility of
similar uncertainty regarding state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by
the Company should have been made (an "Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies
pursuant to Section 6(f)(i) hereof and Executive thereafter is
required to make a payment of any Excise Tax, Executive shall
direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and
Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive
within five business days after receipt of such determination and
calculations.
(B) The federal, state and local income or other tax returns
filed by Executive (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on
a consistent basis with the determination of the Accounting Firm
with respect to the Excise Tax payable by Executive. Executive
shall make proper payment of the amount of any Excise Tax, and at
the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income
tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such payment. If
prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive shall within five business
days pay to the Company the amount of such reduction.
(ii) In the event that the Internal Revenue Service claims that
any payment or benefit received under this Agreement constitutes as
"excess parachute payment", within the meaning of Section 280G(b)(1)
of the Code, Executive shall notify the Company in writing of such
claim. Such notification shall be given as soon as practicable but no
later than 10 business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30 day period
following the date on which Executive gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive
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in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (1) give the Company any
information reasonably requested by the Company relating to such
claim; (2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company and reasonably satisfactory to Executive; (3) cooperate with
the Company in good faith in order to effectively contest such claim;
and (4) permit the Company to participate in any proceedings relating
to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited to,
additional interest and penalties and related legal, consulting or
other similar fees) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for and
against any Excise Tax or other tax (including interest and penalties
with respect thereto) imposed as a result of such representation and
any payment of costs and expenses.
(A) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue
or forgo any and all administrative appeals, proceedings,
hearings and conferences with the tax authority in respect of
such claim and may, at its sole option, either direct Executive
to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and Executive agrees to prosecute such
contest before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance; and provide , further, that
if Executive is required to extend the statute of limitations to
enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to
which a corporate deduction would be disallowed pursuant to
Section 280G of the Code and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be
agreed to by the Company without Executive's consent if such
position or resolution could reasonably be expected to adversely
affect Executive (including adversely affecting any other tax
position of Executive unrelated to matters covered hereby).
(B) If, after the receipt by Executive of any amount
advanced by the Company in connection with the contest of the
Excise Tax claim, Executive becomes entitled to receive any
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refund with respect to such claim, Executive shall promptly pay
to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds
the amount advanced by the Company or it is otherwise determined
for any reason that additional amounts could be paid by the
Company to Executive without incurring any Excise Tax, any such
amount will be promptly paid by the Company to Executive. If,
after the receipt by Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination
is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive
in writing of its intent to contest the denial of such refund
prior to the expiration of 30 days after such determination, such
advance shall be forgiven and shall not be required to be repaid
and shall be deemed to be in consideration for services rendered
after the date of the Termination.
(iii) The Company and Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by this Section 9.
(iv) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by this Section 9 hereof shall be borne by the Company.
If such fees and expenses are initially advanced by Executive, the
Company shall reimburse Executive the full amount of such fees and
expenses within five business days after receipt from Executive of a
statement therefor and reasonable evidence of his payment thereof.
10. MITIGATION OF DAMAGES. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
11. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, AZ 85255
Attention: General Counsel
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To Executive:
Mr. Morton H. Fleischer
17207 North Perimeter Drive
Scottsdale, AZ 85255
Any such notice or communication shall be delivered by hand, by telecopy (with
machine confirmation) or by courier or sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in a notice duly delivered as described above), and
the third business day after the actual date of mailing shall constitute the
time at which notice was given.
12. SEVERABILITY; LEGAL FEES. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. In the event that any dispute arises between
Executive and the Company as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceedings or otherwise, including any
action that Executive takes to enforce the terms of this Agreement or to defend
against any action taken by the Company, Executive shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that Executive shall obtain a
settlement or final judgement by a court of competent jurisdiction substantially
in favor of Executive. Such reimbursement shall be paid within ten (10) days of
Executive's furnishing to the Company written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or
expenses incurred by Executive.
13. SUCCESSORS; BINDING AGREEMENT, ASSIGNMENT.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement and shall entitle
Executive to terminate Executive's employment with the Company or such
successor for Good Reason immediately prior to or at any time after such
succession. As used in this Agreement, "Company" shall mean (i) the Company
as hereinbefore defined, and (ii) any successor to all the stock of the
Company or to all or substantially all of the Company's business or assets
(other than with respect to sales of assets in the ordinary course,
securitization and whole loan sales provided by the Company's interim and
permanent financing arrangements) which executes and delivers an agreement
provided for in this Section 13(a) or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law, including
any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amount would be payable to Executive hereunder if Executive
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had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Executive's
estate or designated beneficiary. Neither this Agreement nor any right
arising hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company,
if such successor expressly agrees to assume the obligations of the Company
hereunder.
14. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. At any time during or after
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries, pursuant to the policies set forth in the Company's employee
handbook and compliance manual, as amended from time to time.
16. COVENANT NOT TO COMPETE.
(a) During the period of his employment hereunder and for the first to
occur of (i) one year following the termination of employment of Executive
or (ii) December 31, 2002, Executive agrees that, without the prior written
consent of the Company, (a) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender or employee or in any other capacity, carry on, be engaged
in or have any financial interest in (other than an ownership position of
less than five percent in any company whose shares are publicly traded),
any business, which is in Competition (as defined in Section 16(b)) with
the existing business of the Company or its subsidiaries, and (b) he shall
not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has
been employed by the Company or its subsidiaries at any time during the 12
months immediately preceding such solicitation.
(b) For purposes of this Section 16, a business shall be deemed to be
in Competition with the Company or its subsidiaries if a significant
portion of its business is providing financing to operators in the chain
restaurant, convenience store or automotive service and parts industries in
any portion of the United States.
(c) Executive and the Company agree that this covenant not to compete
is a reasonable covenant under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 16 would irreparably injure the
Company. Accordingly, Executive agrees that the Company may, in addition to
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pursuing any other remedies it may have in law or in equity, cease making
any payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
17. BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
18. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations, including
the provisions of Section 16 herein. The provisions of this Section 18 are in
addition to the survivorship provisions of any other section of this Agreement.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Arizona without reference
to rules relating to conflicts of law.
20. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive including, without limitation, the Continuity
Agreement dated as of May 12, 1999 between the Company and Executive.
21. WITHHOLDING. The Company shall be entitled to withhold from payment any
amount of withholding required by law.
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22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
FRANCHISE FINANCE CORPORATION OF AMERICA
By /s/ Christopher H. Volk
-------------------------------------
Name Christopher H. Volk
Title President, Chief Operating
Officer, Assistant Secretary
and Assistant Treasurer
/s/ Morton H. Fleischer
----------------------------------------
Morton H. Fleischer
17
EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of January 1, 2000, by and between Franchise
Finance Corporation of America, a Delaware corporation (the "Company") and
Christopher H. Volk ("Executive").
RECITALS
In order to induce Executive to serve as President and Chief Operating
Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. DEFINED TERMS. The following terms shall have the following meanings
unless otherwise specifically defined in this Agreement:
"ACTUAL BONUS" means the highest annual cash bonus payable to Executive
with respect to any of the three years immediately preceding the Termination
Year.
"AGREEMENT" means this Employment Agreement dated as of January 1, 2000
between the Company and Executive.
"ANNUAL CASH BONUS" means the cash compensation payable to Executive as
calculated and paid in a manner substantially similar to the methods and timing
used to calculate and pay Executive's bonus for calendar year 1999; PROVIDED,
HOWEVER, that during the term of this Agreement, neither the Company nor the
Compensation Committee shall change such methods and timing in a manner which
will be less favorable to Executive.
"BASE SALARY" means the annual base salary of Executive as set forth in
Section 4(a).
"BOARD" means the board of directors of the Company.
"CAUSE" means:
(a) the willful and continued failure of Executive to perform a
substantial portion of his duties with the Company (other than any
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board, which specifically identifies the
manner in which the Board believes that Executive has not
substantially performed his duties;
(b) the willful engaging by Executive in gross misconduct
(including, without limitation, fraud or embezzlement); or
<PAGE>
(c) the conviction of, or plea of guilty or NOLO CONTENDERE to, a
felony.
"CHANGE IN CONTROL" means:
(a) any "Person" as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and as used
in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by
the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities (other than
indirectly as a result of the Company's redemption of its securities);
PROVIDED, HOWEVER, that, in the event that any such person becomes the
beneficial owner of 25% or more, but not exceeding 50%, of the
combined voting power of the Company's then outstanding securities, no
Change of Control shall be deemed to occur so long as the Incumbent
Directors (as defined below) continue to constitute a majority of the
Board in accordance with the terms of paragraph (c) below; or
(b) the consummation of any merger or other business combination
of the Company, sale of all or substantially all of the Company's
assets (other than with respect to sales of assets in the ordinary
course of business, securitization and whole loan sales provided by
the Company's interim and permanent financing arrangements),
liquidation or dissolution of the Company or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company and any
trustee or fiduciary of any Company employee benefit plan immediately
prior to the Transaction own at least 51% of the voting power,
directly or indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser of or
successor to the Company's assets (other than with respect to sales of
assets in the ordinary course of business, securitization and whole
loan sales provided by the Company's interim and permanent financing
arrangements); (C) both the surviving corporation and the purchaser in
the event of any combination of Transactions; or (D) the parent
company owning 100% of such surviving corporation, purchaser or both
the surviving corporation and the purchaser, as the case may be; or
(c) within any twenty-four-month period, the persons who were
directors immediately before the beginning of such period (the
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"Incumbent Directors") shall cease (for any reason other than death)
to constitute at least a majority of the Board or the board of
directors of a successor to the Company. For this purpose, any
director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director was elected to
the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person who
commenced or threatened to commence an election contest or proxy
solicitation by or on behalf of a Person other than the Board) or who
has entered into an agreement to effect a Change in Control or
expressed an intention to cause such Change in Control.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
provisions of any successor law.
"COMPANY" means Franchise Finance Corporation of America, a Delaware
corporation.
"COMPENSATION COMMITTEE" means the compensation committee of the Board.
"EFFECTIVE DATE" means January 1, 2000.
"EXECUTIVE" means Christopher H. Volk.
"EXPENSE PAYMENT" means payments made to Executive for expenses which are
permitted under this Agreement and have been incurred but not yet reimbursed.
"GOOD REASON" means any of the following without Executive's express prior
written consent:
(a) any material diminution or adverse change in Executive's
duties, titles or responsibilities with the Company (or any affiliate
thereof) from those in effect immediately prior to any such diminution
or adverse change; PROVIDED, HOWEVER, that no such diminution or
adverse change shall be deemed to exist solely as a consequence of the
Company ceasing to be a Company with publicly-traded securities or
becoming a wholly-owned subsidiary of another company;
(b) if after a Change in Control there is any reduction in
Executive's aggregate annual cash compensation (which shall include
Base Salary and Actual Bonus) in Executive's aggregate annual cash
compensation in effect immediately prior to such reduction;
(c) any requirement that Executive be based at a location more
than 35 miles from the Company's headquarters, located in Scottsdale,
Arizona (or a substantial increase in the amount of travel that
Executive is required to do because of a relocation of the Company's
headquarters from Scottsdale, Arizona);
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(d) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to Executive to
assume and perform this Agreement, as contemplated by Section 13
hereof; or
(e) during the thirty-day period immediately following the first
anniversary of the Change in Control there is a Thirteenth-Month
Termination by Executive.
"PERMANENT DISABILITY" means the total and permanent disability of
Executive as defined in the Company's long-term disability benefit plan
applicable to senior executive officers in effect on the Effective Date.
"RETIREMENT" means Executive's voluntary termination of employment pursuant
to late, normal or early retirement under a pension plan (which may include a
defined benefit plan or a defined contribution plan) sponsored by the Company,
as defined in such plan, but only if such retirement occurs prior to a
termination by the Company for Cause or by Executive for Good Reason.
"TERMINATION DATE" means the date this Agreement is terminated, except to
the extent the provisions of Section 16 are applicable, which shall be the
earlier of December 31, 2002 or the date of termination of Executive's
employment pursuant to this Agreement.
"TERMINATION YEAR" means the year in which Executive's termination of
employment occurs.
"THIRTEENTH-MONTH TERMINATION" means the voluntary termination of
employment by Executive for any reason or no reason at all.
"VACATION PAYMENT" means payments made to Executive with respect to accrued
but unused vacation days.
2. EMPLOYMENT.
(a) Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as its President and
Chief Operating Officer or as an officer of the Company having the same or
a more senior title and greater responsibilities. In his capacity as the
President and Chief Operating Officer of the Company, Executive shall
report to the Board and shall have the customary powers, responsibilities
and authorities of a President and Chief Operating Officer for corporations
of the size and character of the Company, as it exists from time to time,
and as are assigned by the Board.
(b) Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment with the Company commencing on the Effective
Date, and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection therewith. Executive shall
perform such duties and exercise such powers, commensurate with his
position, as the Board shall from time to time delegate to him on such
terms and conditions and subject to such restrictions the Board may
reasonably from time to time impose. Executive also agrees to serve, if
elected, as a member of the Board.
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(c) Nothing in this Agreement shall preclude Executive, so long as in
the reasonable determination of the Board such activities do not interfere
with his duties and responsibilities hereunder, from engaging in charitable
and community affairs, from managing any passive investment made by him in
publicly traded equity securities or other property (provided that no such
investment may exceed 5% of the equity of any entity) or, without prior
notice to the Board and subject to Section 15 and Section 16(b) hereof,
from serving as a member of boards of directors or as a trustee of any
other corporation, association or entity.
3. EFFECTIVE DATE; TERM OF EMPLOYMENT. This Agreement shall be effective as
the Effective Date. Executive's term of employment under this Agreement shall
commence on the Effective Date hereof and, subject to the terms hereof, shall
terminate on the Termination Date; provided, however, that any termination of
Employment by Executive for Good Reason or pursuant to the Change in Control
provisions of Section 8 may only be made on 30 days' prior written notice and
any other termination of employment by Executive other than for death, Permanent
Disability or Good Reason may only be made upon 90 days' prior written notice to
the Company.
4. COMPENSATION.
(a) SALARY. The Company shall pay Executive during the term of this
Agreement the Base Salary, as calculated pursuant to this Section 4,
payable in cash not less frequently than bimonthly. As of the Effective
Date, the Base Salary shall be $315,000. As of January 1 of each annual
anniversary of the Effective Date, the Base Salary of Executive will be
increased from Executive's Base Salary for the preceding calendar year by
the greater of (i) five percent, (ii) the average percentage salary
increase awarded to all employees of the Company who are not senior
executive officers of the Company or (iii) an amount determined by the
Compensation Committee.
(b) ANNUAL CASH BONUS. In addition to Base Compensation, the Company
will pay to Executive on or prior to January 30 of each year for
performance in the preceding calendar year the Annual Cash Bonus.
(c) COMPENSATION PLANS AND PROGRAMS. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company
from time to time, which compensation plans and programs are intended to be
comparable to those currently maintained by the Company, in which other
senior executives of the Company participate on terms that are intended to
be comparable to those applicable to such other senior executives.
(d) STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Executive shall be
eligible to receive grants of stock options and restricted stock awards as
determined in the discretion of the Compensation Committee under any stock
option plan or incentive plan of the Company or any affiliate.
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5. EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and
practices (commensurate with his positions in the Company from time to time
and to the extent permitted under any employee benefit plan) in accordance
with the terms thereof, which the Company makes available to its senior
executives and which employee pension and welfare benefit programs, plans
and practices that are intended to be comparable to those currently
maintained by the Company; provided, however, such programs, plans and
practices will be no less favorable than those in existence as of the date
of execution of this Agreement.
(b) VACATION AND FRINGE BENEFITS. Executive shall be entitled to no
less than the number of business days paid vacation in each calendar year
to which Executive is entitled immediately prior to execution of this
Agreement, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made
available to senior executives of the Company, commensurate with his
position with the Company.
6. EXPENSES. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR BY EXECUTIVE FOR
GOOD REASON. (i) The Company may terminate Executive's employment at any
time for any reason. If Executive's employment is terminated by the Company
other than for Cause) or if Executive terminates his employment for Good
Reason prior to the Termination Date, Executive shall receive such
payments, if any, under applicable plans or programs, including but not
limited to those referred to in Section 4(c) hereof, to which he is
entitled pursuant to the terms of such plans or programs. In addition,
Executive shall be entitled to receive the following:
(A) A cash lump sum payment equal to the sum of two times
(1) Executive's Base Salary at the annual rate as of the date of
termination and (2) the Actual Bonus; and
(B) a cash lump sum payment with respect to (1) the Vacation
Payment and (2) the Expense Payment which shall be paid by the
Company to Executive within 30 days after the termination of
Executive's employment by check payable to the order of Executive
or by wire transfer to an account specified by Executive;
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(C) Executive shall also be entitled to the following
benefits:
(i) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and
disability insurance) and any fringe benefit or perquisites
in effect immediately prior to the date of termination for
Executive and Executive's eligible dependents or, to the
extent such benefits are not commercially available, such
other arrangements reasonably acceptable to Executive, on
the same basis as in effect prior to the date of
termination, whichever is deemed to provide for more
substantial benefits, for a period ending December 31, 2002;
(ii) immediate 100% vesting of all outstanding stock
options, stock appreciation rights and restricted stock
granted or issued by the Company to the extent not
previously vested;
(iii) all other accrued or vested benefits in
accordance with the terms of the applicable plan, which
vested benefits shall include Executive's otherwise unvested
account balances in the Company's 401(k) plan, which shall
be vested as of the date of termination; and
(iv) if so requested by Executive, outplacement
services shall be provided by a professional outplacement
provider selected by Executive; PROVIDED, HOWEVER, that such
outplacement services shall be provided to Executive at a
cost to the Company of not more than fifteen (15) percent of
such Executive's Base Salary.
(b) CURE PERIOD OF COMPANY FOR GOOD REASON TERMINATION.
Notwithstanding the foregoing, in the event that Executive provides the
Company with a notice of termination stating Good Reason, except in the
event of a Thirteenth-Month Termination, the Company shall have 30 days
thereafter in which to cure or resolve the behavior otherwise constituting
Good Reason. Any good faith determination by Executive that Good Reason
exists shall be presumed correct and shall be binding upon the Company.
(c) PERMANENT DISABILITY OF EXECUTIVE. If Executive has a Permanent
Disability, the Company or Executive may terminate Executive's employment
on written notice thereof, and Executive shall receive or commence
receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
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(ii) the Actual Bonus, prorated by a fraction, the numerator of
which is the number of days of the fiscal year until termination and
the denominator of which is 365;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
(d) DEATH. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable:
(i) the Actual Bonus, the numerator of which is the number of
days of the fiscal year until his death and the denominator of which
is 365;
(ii) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 5(a) hereof, in
accordance with their terms;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
(e) TERMINATION BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON
(i) The Company shall have the right to terminate the employment
of Executive for Cause. In the event that Executive's employment is
terminated by the Company for Cause, or by Executive other than for
Good Reason, Executive shall only be entitled to receive the Vacation
Payment and the Expense Payment. Executive shall not be entitled,
among other things, to the payment of any Annual Cash Bonus in respect
of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this
Section 7(e), the obligations of the Company under this Agreement to
make any further payments or provide any benefits specified herein to
Executive shall thereupon cease and terminate.
(ii) Termination of Executive for Cause shall be made by delivery
to Executive of a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the non-employee directors of the
Board at a regular or special meeting of such directors called and
held for such purpose, after 30 days' prior written notice to
Executive specifying the basis for such termination and the
particulars thereof and a reasonable opportunity for Executive to be
heard prior to or at such meeting, finding that in the reasonable
judgment of such directors, that any conduct or event constituting
Cause has occurred and that such occurrence warrants Executive's
termination.
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8. CHANGE IN CONTROL.
(a) Executive shall be entitled to the compensation provided for
in this Section 8 hereof, if within two years after a Change in
Control, Executive's employment by the Company shall be terminated (A)
by the Company for any reason other than (I) Executive's Permanent
Disability or Retirement, (II) Executive's death or (III) for Cause,
or (B) by Executive with Good Reason.
(b) In addition, Executive shall be entitled to the compensation
provided for in this Section 8, if the following events occur: (A) an
agreement is signed which, if consummated, would result in a Change of
Control, (B) Executive is terminated without Cause by the Company or
terminates employment with Good Reason prior to the anticipated Change
in Control, and (C) such termination (or the action leading to such
termination, in the case of Good Reason) is at the request or
suggestion of the acquiror or merger partner or otherwise in
connection with the anticipated Change in Control, except that any
termination of employment as set forth in clause (C), above, shall be
presumed, in the absence of clear and convincing evidence to the
contrary, to have occurred in connection with a Change in Control,
whether or not a Change in Control actually occurs.
(c) The Company shall pay or cause to be paid to Executive a cash
severance amount equal to three times the sum of (i) Executive's
annual Base Salary on the date of the Change in Control (or, if
higher, the annual Base Salary in effect immediately prior to the
giving of the notice of termination), and (ii) the Actual Bonus;
PROVIDED, HOWEVER, that in the event that Executive's employment is
terminated by a Thirteenth-Month Termination, Executive's cash
severance amount shall only be equal to two times the sum of (i) and
(ii) above. This cash severance amount shall be payable in a lump sum
calculated without any discount or, at the election of Executive, on
any deferred payment schedule selected by Executive.
(d) No compensation or other benefit pursuant to this Section 8
hereof shall be payable under this Agreement unless and until either
(i) a Change in Control shall have occurred while Executive is an
employee of a Company and Executive's employment by the Company
thereafter shall have terminated in accordance with this Section 8
hereof or (ii) Executive's employment by the Company shall have
terminated in accordance with this Section 8 hereof in anticipation of
the occurrence of a Change in Control.
(e) Executive shall also be entitled to the (i) Vacation Payment
and the Expense Payment, (ii) the medical and other benefits under
Section 7(a)(C)(i), (iii) vesting of certain security rights under
Section 7(a)(C)(ii), (iv) other accrued and vested plans under Section
7(a)(C)(iii) and (v) outplacement services under Section (a)(C)(iv)
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9. EXCESS PARACHUTE EXCISE TAX.
(i) If it is determined (as hereafter provided) that any payment
or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of
any other agreement, policy, plan, program or arrangement, including
without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or
the vesting or exercisability of any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code
by reason of being "contingent on a change in ownership or control" of
the Company, within the meaning of Section 280G of the Code (or any
successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment
by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(A) Subject to the provisions of this Section 9 hereof, all
determinations required to be made under this Section 9,
including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made
by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change
in Control (or, if such Accounting Firm shall be a nationally
recognized firm of certified public accountants, as selected by
Executive). The Accounting Firm shall be directed by the Company
or Executive to submit its preliminary determination and detailed
supporting calculations to both the Company and Executive within
15 calendar days after the date of termination of employment, if
applicable, and any other such time or times as may be requested
by the Company or Executive. If the Accounting Firm determines
that any Excise Tax is payable by Executive, the Company shall
pay the required Gross-Up Payment to, or for the benefit of,
Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall, at the same
time as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his/her federal, state, local income or other tax
return. Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and
Executive absent a contrary determination by the Internal Revenue
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Service or a court of competent jurisdiction; provided, however,
that no such determination shall eliminate or reduce the
Company's obligation to provide any Gross-Up Payment that shall
be due as a result of such contrary determination. As a result of
the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto) and the possibility of
similar uncertainty regarding state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by
the Company should have been made (an "Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies
pursuant to Section 6(f)(i) hereof and Executive thereafter is
required to make a payment of any Excise Tax, Executive shall
direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and
Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive
within five business days after receipt of such determination and
calculations.
(B) The federal, state and local income or other tax returns
filed by Executive (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on
a consistent basis with the determination of the Accounting Firm
with respect to the Excise Tax payable by Executive. Executive
shall make proper payment of the amount of any Excise Tax, and at
the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income
tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such payment. If
prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive shall within five business
days pay to the Company the amount of such reduction.
(ii) In the event that the Internal Revenue Service claims that
any payment or benefit received under this Agreement constitutes as
"excess parachute payment", within the meaning of Section 280G(b)(1)
of the Code, Executive shall notify the Company in writing of such
claim. Such notification shall be given as soon as practicable but no
later than 10 business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30 day period
following the date on which Executive gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive
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in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (1) give the Company any
information reasonably requested by the Company relating to such
claim; (2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company and reasonably satisfactory to Executive; (3) cooperate with
the Company in good faith in order to effectively contest such claim;
and (4) permit the Company to participate in any proceedings relating
to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited to,
additional interest and penalties and related legal, consulting or
other similar fees) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for and
against any Excise Tax or other tax (including interest and penalties
with respect thereto) imposed as a result of such representation and
any payment of costs and expenses.
(A) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue
or forgo any and all administrative appeals, proceedings,
hearings and conferences with the tax authority in respect of
such claim and may, at its sole option, either direct Executive
to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and Executive agrees to prosecute such
contest before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance; and provide , further, that
if Executive is required to extend the statute of limitations to
enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to
which a corporate deduction would be disallowed pursuant to
Section 280G of the Code and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be
agreed to by the Company without Executive's consent if such
position or resolution could reasonably be expected to adversely
affect Executive (including adversely affecting any other tax
position of Executive unrelated to matters covered hereby).
(B) If, after the receipt by Executive of any amount
advanced by the Company in connection with the contest of the
Excise Tax claim, Executive becomes entitled to receive any
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refund with respect to such claim, Executive shall promptly pay
to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds
the amount advanced by the Company or it is otherwise determined
for any reason that additional amounts could be paid by the
Company to Executive without incurring any Excise Tax, any such
amount will be promptly paid by the Company to Executive. If,
after the receipt by Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination
is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive
in writing of its intent to contest the denial of such refund
prior to the expiration of 30 days after such determination, such
advance shall be forgiven and shall not be required to be repaid
and shall be deemed to be in consideration for services rendered
after the date of the Termination.
(iii) The Company and Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by this Section 9.
(iv) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by this Section 9 hereof shall be borne by the Company.
If such fees and expenses are initially advanced by Executive, the
Company shall reimburse Executive the full amount of such fees and
expenses within five business days after receipt from Executive of a
statement therefor and reasonable evidence of his payment thereof.
10. MITIGATION OF DAMAGES. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
11. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, AZ 85255
Attention: General Counsel
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To Executive:
Mr. Christopher H. Volk
6324 North 48th Place
Paradise Valley, AZ 85253
Any such notice or communication shall be delivered by hand, by telecopy (with
machine confirmation) or by courier or sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in a notice duly delivered as described above), and
the third business day after the actual date of mailing shall constitute the
time at which notice was given.
12. SEVERABILITY; LEGAL FEES. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. In the event that any dispute arises between
Executive and the Company as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceedings or otherwise, including any
action that Executive takes to enforce the terms of this Agreement or to defend
against any action taken by the Company, Executive shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that Executive shall obtain a
settlement or final judgement by a court of competent jurisdiction substantially
in favor of Executive. Such reimbursement shall be paid within ten (10) days of
Executive's furnishing to the Company written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or
expenses incurred by Executive.
13. SUCCESSORS; BINDING AGREEMENT, ASSIGNMENT.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement prior to
the effectiveness of any such succession shall be a material breach of
this Agreement and shall entitle Executive to terminate Executive's
employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in
this Agreement, "Company" shall mean (i) the Company as hereinbefore
defined, and (ii) any successor to all the stock of the Company or to
all or substantially all of the Company's business or assets (other
than with respect to sales of assets in the ordinary course,
securitization and whole loan sales provided by the Company's interim
and permanent financing arrangements) which executes and delivers an
agreement provided for in this Section 13(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees. If Executive should die while any amount would be
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payable to Executive hereunder if Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's estate or
designated beneficiary. Neither this Agreement nor any right arising
hereunder shall be assignable or otherwise subject to hypothecation by
Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise)
to all or substantially all of the stock, assets or businesses of the
Company, if such successor expressly agrees to assume the obligations
of the Company hereunder.
14. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. At any time during or after
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries, pursuant to the policies set forth in the Company's employee
handbook and compliance manual, as amended from time to time.
16. COVENANT NOT TO COMPETE.
(a) During the period of his employment hereunder and for the
first to occur of (i) one year following the termination of employment
of Executive or (ii) December 31, 2002, Executive agrees that, without
the prior written consent of the Company, (a) he will not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other
capacity, carry on, be engaged in or have any financial interest in
(other than an ownership position of less than five percent in any
company whose shares are publicly traded), any business, which is in
Competition (as defined in Section 16(b)) with the existing business
of the Company or its subsidiaries, and (b) he shall not, on his own
behalf or on behalf of any person, firm or company, directly or
indirectly, solicit or offer employment to any person who has been
employed by the Company or its subsidiaries at any time during the 12
months immediately preceding such solicitation.
(b) For purposes of this Section 16, a business shall be deemed
to be in Competition with the Company or its subsidiaries if a
significant portion of its business is providing financing to
operators in the chain restaurant, convenience store or automotive
service and parts industries in any portion of the United States.
(c) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further
agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have
the right, power and authority to excise or modify such provision or
provisions of this covenant as to the court shall appear not
reasonable and to enforce the remainder of the covenant as so amended.
Executive agrees that any breach of the covenants contained in this
Section 16 would irreparably injure the Company. Accordingly,
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Executive agrees that the Company may, in addition to pursuing any
other remedies it may have in law or in equity, cease making any
payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
17. BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
18. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations, including
the provisions of Section 16 herein. The provisions of this Section 18 are in
addition to the survivorship provisions of any other section of this Agreement.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Arizona without reference
to rules relating to conflicts of law.
20. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive including, without limitation, the Continuity
Agreement dated as of May 12, 1999 between the Company and Executive.
21. WITHHOLDING. The Company shall be entitled to withhold from payment any
amount of withholding required by law.
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22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
FRANCHISE FINANCE CORPORATION OF AMERICA
By /s/ Morton H. Fleischer
-------------------------------------
Name: Morton H. Fleischer
Title: Chairman of the Board and
Chief Executive Officer
/s/ Christopher H. Volk
----------------------------------------
Christopher H. Volk
17
EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of January 1, 2000, by and between Franchise
Finance Corporation of America, a Delaware corporation (the "Company") and John
Barravecchia ("Executive").
RECITALS
In order to induce Executive to serve as Executive Vice President, Chief
Financial Officer, Treasurer and Assistant Secretary of the Company, the Company
desires to provide Executive with compensation and other benefits on the terms
and conditions set forth in this Agreement.
Executive is willing to accept such employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. DEFINED TERMS. The following terms shall have the following meanings
unless otherwise specifically defined in this Agreement:
"ACTUAL BONUS" means the highest annual cash bonus payable to Executive
with respect to any of the three years immediately preceding the Termination
Year.
"AGREEMENT" means this Employment Agreement dated as of January 1, 2000
between the Company and Executive.
"ANNUAL CASH BONUS" means the cash compensation payable to Executive as
calculated and paid in a manner substantially similar to the methods and timing
used to calculate and pay Executive's bonus for calendar year 1999; PROVIDED,
HOWEVER, that during the term of this Agreement, neither the Company nor the
Compensation Committee shall change such methods and timing in a manner which
will be less favorable to Executive.
"BASE SALARY" means the annual base salary of Executive as set forth in
Section 4(a).
"BOARD" means the board of directors of the Company.
"CAUSE" means:
(a) the willful and continued failure of Executive to perform a
substantial portion of his duties with the Company (other than any
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board, which specifically identifies the
manner in which the Board believes that Executive has not
substantially performed his duties;
(b) the willful engaging by Executive in gross misconduct
(including, without limitation, fraud or embezzlement); or
<PAGE>
(c) the conviction of, or plea of guilty or NOLO CONTENDERE to, a
felony.
"CHANGE IN CONTROL" means:
(a) any "Person" as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and as used
in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by
the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities (other than
indirectly as a result of the Company's redemption of its securities);
PROVIDED, HOWEVER, that, in the event that any such person becomes the
beneficial owner of 25% or more, but not exceeding 50%, of the
combined voting power of the Company's then outstanding securities, no
Change of Control shall be deemed to occur so long as the Incumbent
Directors (as defined below) continue to constitute a majority of the
Board in accordance with the terms of paragraph (c) below; or
(b) the consummation of any merger or other business combination
of the Company, sale of all or substantially all of the Company's
assets (other than with respect to sales of assets in the ordinary
course of business, securitization and whole loan sales provided by
the Company's interim and permanent financing arrangements),
liquidation or dissolution of the Company or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company and any
trustee or fiduciary of any Company employee benefit plan immediately
prior to the Transaction own at least 51% of the voting power,
directly or indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser of or
successor to the Company's assets (other than with respect to sales of
assets in the ordinary course of business, securitization and whole
loan sales provided by the Company's interim and permanent financing
arrangements); (C) both the surviving corporation and the purchaser in
the event of any combination of Transactions; or (D) the parent
company owning 100% of such surviving corporation, purchaser or both
the surviving corporation and the purchaser, as the case may be; or
(c) within any twenty-four-month period, the persons who were
directors immediately before the beginning of such period (the
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"Incumbent Directors") shall cease (for any reason other than death)
to constitute at least a majority of the Board or the board of
directors of a successor to the Company. For this purpose, any
director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director was elected to
the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person who
commenced or threatened to commence an election contest or proxy
solicitation by or on behalf of a Person other than the Board) or who
has entered into an agreement to effect a Change in Control or
expressed an intention to cause such Change in Control.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
provisions of any successor law.
"COMPANY" means Franchise Finance Corporation of America, a Delaware
corporation.
"COMPENSATION COMMITTEE" means the compensation committee of the Board.
"EFFECTIVE DATE" means January 1, 2000.
"EXECUTIVE" means John Barravecchia.
"EXPENSE PAYMENT" means payments made to Executive for expenses which are
permitted under this Agreement and have been incurred but not yet reimbursed.
"GOOD REASON" means any of the following without Executive's express prior
written consent:
(a) any material diminution or adverse change in Executive's
duties, titles or responsibilities with the Company (or any affiliate
thereof) from those in effect immediately prior to any such diminution
or adverse change; PROVIDED, HOWEVER, that no such diminution or
adverse change shall be deemed to exist solely as a consequence of the
Company ceasing to be a Company with publicly-traded securities or
becoming a wholly-owned subsidiary of another company;
(b) if after a Change in Control there is any reduction in
Executive's aggregate annual cash compensation (which shall include
Base Salary and Actual Bonus) in Executive's aggregate annual cash
compensation in effect immediately prior to such reduction;
(c) any requirement that Executive be based at a location more
than 35 miles from the Company's headquarters, located in Scottsdale,
Arizona (or a substantial increase in the amount of travel that
Executive is required to do because of a relocation of the Company's
headquarters from Scottsdale, Arizona);
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(d) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to Executive to
assume and perform this Agreement, as contemplated by Section 13
hereof; or
(e) during the thirty-day period immediately following the first
anniversary of the Change in Control there is a Thirteenth-Month
Termination by Executive.
"PERMANENT DISABILITY" means the total and permanent disability of
Executive as defined in the Company's long-term disability benefit plan
applicable to senior executive officers in effect on the Effective Date.
"RETIREMENT" means Executive's voluntary termination of employment pursuant
to late, normal or early retirement under a pension plan (which may include a
defined benefit plan or a defined contribution plan) sponsored by the Company,
as defined in such plan, but only if such retirement occurs prior to a
termination by the Company for Cause or by Executive for Good Reason.
"TERMINATION DATE" means the date this Agreement is terminated, except to
the extent the provisions of Section 16 are applicable, which shall be the
earlier of December 31, 2002 or the date of termination of Executive's
employment pursuant to this Agreement.
"TERMINATION YEAR" means the year in which Executive's termination of
employment occurs.
"THIRTEENTH-MONTH TERMINATION" means the voluntary termination of
employment by Executive for any reason or no reason at all.
"VACATION PAYMENT" means payments made to Executive with respect to accrued
but unused vacation days.
2. EMPLOYMENT.
(a) Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as its Executive Vice
President, Chief Financial Officer, Treasurer and Assistant Secretary or as
an officer of the Company having the same or a more senior title and
greater responsibilities. In his capacity as the Executive Vice President,
Chief Financial Officer, Treasurer and Assistant Secretary of the Company,
Executive shall report to the Board and shall have the customary powers,
responsibilities and authorities of an Executive Vice President, Chief
Financial Officer, Treasurer and Assistant Secretary for corporations of
the size and character of the Company, as it exists from time to time, and
as are assigned by the Board.
(b) Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment with the Company commencing on the Effective
Date, and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection therewith. Executive shall
perform such duties and exercise such powers, commensurate with his
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position, as the Board shall from time to time delegate to him on such
terms and conditions and subject to such restrictions the Board may
reasonably from time to time impose. Executive also agrees to serve, if
elected, as a member of the Board.
(c) Nothing in this Agreement shall preclude Executive, so long as in
the reasonable determination of the Board such activities do not interfere
with his duties and responsibilities hereunder, from engaging in charitable
and community affairs, from managing any passive investment made by him in
publicly traded equity securities or other property (provided that no such
investment may exceed 5% of the equity of any entity) or, without prior
notice to the Board and subject to Section 15 and Section 16(b) hereof,
from serving as a member of boards of directors or as a trustee of any
other corporation, association or entity.
3. EFFECTIVE DATE; TERM OF EMPLOYMENT. This Agreement shall be effective as
the Effective Date. Executive's term of employment under this Agreement shall
commence on the Effective Date hereof and, subject to the terms hereof, shall
terminate on the Termination Date; provided, however, that any termination of
Employment by Executive for Good Reason or pursuant to the Change in Control
provisions of Section 8 may only be made on 30 days' prior written notice and
any other termination of employment by Executive other than for death, Permanent
Disability or Good Reason may only be made upon 90 days' prior written notice to
the Company.
4. COMPENSATION.
(a) SALARY. The Company shall pay Executive during the term of this
Agreement the Base Salary, as calculated pursuant to this Section 4,
payable in cash not less frequently than bimonthly. As of the Effective
Date, the Base Salary shall be $236,250. As of January 1 of each annual
anniversary of the Effective Date, the Base Salary of Executive will be
increased from Executive's Base Salary for the preceding calendar year by
the greater of (i) five percent, (ii) the average percentage salary
increase awarded to all employees of the Company who are not senior
executive officers of the Company or (iii) an amount determined by the
Compensation Committee.
(b) ANNUAL CASH BONUS. In addition to Base Compensation, the Company
will pay to Executive on or prior to January 30 of each year for
performance in the preceding calendar year the Annual Cash Bonus.
(c) COMPENSATION PLANS AND PROGRAMS. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company
from time to time, which compensation plans and programs are intended to be
comparable to those currently maintained by the Company, in which other
senior executives of the Company participate on terms that are intended to
be comparable to those applicable to such other senior executives.
(d) STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Executive shall be
eligible to receive grants of stock options and restricted stock awards as
determined in the discretion of the Compensation Committee under any stock
option plan or incentive plan of the Company or any affiliate.
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5. EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and
practices (commensurate with his positions in the Company from time to time
and to the extent permitted under any employee benefit plan) in accordance
with the terms thereof, which the Company makes available to its senior
executives and which employee pension and welfare benefit programs, plans
and practices that are intended to be comparable to those currently
maintained by the Company; provided, however, such programs, plans and
practices will be no less favorable than those in existence as of the date
of execution of this Agreement.
(b) VACATION AND FRINGE BENEFITS. Executive shall be entitled to no
less than the number of business days paid vacation in each calendar year
to which Executive is entitled immediately prior to execution of this
Agreement, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made
available to senior executives of the Company, commensurate with his
position with the Company.
6. EXPENSES. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR BY EXECUTIVE FOR
GOOD REASON. (i) The Company may terminate Executive's employment at any
time for any reason. If Executive's employment is terminated by the Company
other than for Cause) or if Executive terminates his employment for Good
Reason prior to the Termination Date, Executive shall receive such
payments, if any, under applicable plans or programs, including but not
limited to those referred to in Section 4(c) hereof, to which he is
entitled pursuant to the terms of such plans or programs. In addition,
Executive shall be entitled to receive the following:
(A) A cash lump sum payment equal to the sum of three times
(1) Executive's Base Salary at the annual rate as of the date of
termination and (2) the Actual Bonus; and
(B) a cash lump sum payment with respect to (1) the Vacation
Payment and (2) the Expense Payment which shall be paid by the
Company to Executive within 30 days after the termination of
Executive's employment by check payable to the order of Executive
or by wire transfer to an account specified by Executive;
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(C) Executive shall also be entitled to the following
benefits:
(i) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and
disability insurance) and any fringe benefit or perquisites
in effect immediately prior to the date of termination for
Executive and Executive's eligible dependents or, to the
extent such benefits are not commercially available, such
other arrangements reasonably acceptable to Executive, on
the same basis as in effect prior to the date of
termination, whichever is deemed to provide for more
substantial benefits, for a period ending December 31, 2002;
(ii) immediate 100% vesting of all outstanding stock
options, stock appreciation rights and restricted stock
granted or issued by the Company to the extent not
previously vested;
(iii) all other accrued or vested benefits in
accordance with the terms of the applicable plan, which
vested benefits shall include Executive's otherwise unvested
account balances in the Company's 401(k) plan, which shall
be vested as of the date of termination; and
(iv) if so requested by Executive, outplacement
services shall be provided by a professional outplacement
provider selected by Executive; PROVIDED, HOWEVER, that such
outplacement services shall be provided to Executive at a
cost to the Company of not more than fifteen (15) percent of
such Executive's Base Salary.
(b) CURE PERIOD OF COMPANY FOR GOOD REASON TERMINATION.
Notwithstanding the foregoing, in the event that Executive provides the
Company with a notice of termination stating Good Reason, except in the
event of a Thirteenth-Month Termination, the Company shall have 30 days
thereafter in which to cure or resolve the behavior otherwise constituting
Good Reason. Any good faith determination by Executive that Good Reason
exists shall be presumed correct and shall be binding upon the Company.
(c) PERMANENT DISABILITY OF EXECUTIVE. If Executive has a Permanent
Disability, the Company or Executive may terminate Executive's employment
on written notice thereof, and Executive shall receive or commence
receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
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(ii) the Actual Bonus, prorated by a fraction, the numerator of
which is the number of days of the fiscal year until termination and
the denominator of which is 365;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
(d) DEATH. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable:
(i) the Actual Bonus, the numerator of which is the number of
days of the fiscal year until his death and the denominator of which
is 365;
(ii) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 5(a) hereof, in
accordance with their terms;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
(e) TERMINATION BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON
(i) The Company shall have the right to terminate the employment
of Executive for Cause. In the event that Executive's employment is
terminated by the Company for Cause, or by Executive other than for
Good Reason, Executive shall only be entitled to receive the Vacation
Payment and the Expense Payment. Executive shall not be entitled,
among other things, to the payment of any Annual Cash Bonus in respect
of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this
Section 7(e), the obligations of the Company under this Agreement to
make any further payments or provide any benefits specified herein to
Executive shall thereupon cease and terminate.
(ii) Termination of Executive for Cause shall be made by delivery
to Executive of a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the non-employee directors of the
Board at a regular or special meeting of such directors called and
held for such purpose, after 30 days' prior written notice to
Executive specifying the basis for such termination and the
particulars thereof and a reasonable opportunity for Executive to be
heard prior to or at such meeting, finding that in the reasonable
judgment of such directors, that any conduct or event constituting
Cause has occurred and that such occurrence warrants Executive's
termination.
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8. CHANGE IN CONTROL.
(a) Executive shall be entitled to the compensation provided for
in this Section 8 hereof, if within two years after a Change in
Control, Executive's employment by the Company shall be terminated (A)
by the Company for any reason other than (I) Executive's Permanent
Disability or Retirement, (II) Executive's death or (III) for Cause,
or (B) by Executive with Good Reason.
(b) In addition, Executive shall be entitled to the compensation
provided for in this Section 8, if the following events occur: (A) an
agreement is signed which, if consummated, would result in a Change of
Control, (B) Executive is terminated without Cause by the Company or
terminates employment with Good Reason prior to the anticipated Change
in Control, and (C) such termination (or the action leading to such
termination, in the case of Good Reason) is at the request or
suggestion of the acquiror or merger partner or otherwise in
connection with the anticipated Change in Control, except that any
termination of employment as set forth in clause (C), above, shall be
presumed, in the absence of clear and convincing evidence to the
contrary, to have occurred in connection with a Change in Control,
whether or not a Change in Control actually occurs.
(c) The Company shall pay or cause to be paid to Executive a cash
severance amount equal to three times the sum of (i) Executive's
annual Base Salary on the date of the Change in Control (or, if
higher, the annual Base Salary in effect immediately prior to the
giving of the notice of termination), and (ii) the Actual Bonus;
PROVIDED, HOWEVER, that in the event that Executive's employment is
terminated by a Thirteenth-Month Termination, Executive's cash
severance amount shall only be equal to two times the sum of (i) and
(ii) above. This cash severance amount shall be payable in a lump sum
calculated without any discount or, at the election of Executive, on
any deferred payment schedule selected by Executive.
(d) No compensation or other benefit pursuant to this Section 8
hereof shall be payable under this Agreement unless and until either
(i) a Change in Control shall have occurred while Executive is an
employee of a Company and Executive's employment by the Company
thereafter shall have terminated in accordance with this Section 8
hereof or (ii) Executive's employment by the Company shall have
terminated in accordance with this Section 8 hereof in anticipation of
the occurrence of a Change in Control.
(e) Executive shall also be entitled to the (i) Vacation Payment
and the Expense Payment, (ii) the medical and other benefits under
Section 7(a)(C)(i), (iii) vesting of certain security rights under
Section 7(a)(C)(ii), (iv) other accrued and vested plans under Section
7(a)(C)(iii) and (v) outplacement services under Section (a)(C)(iv)
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9. EXCESS PARACHUTE EXCISE TAX.
(i) If it is determined (as hereafter provided) that any payment
or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of
any other agreement, policy, plan, program or arrangement, including
without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or
the vesting or exercisability of any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code
by reason of being "contingent on a change in ownership or control" of
the Company, within the meaning of Section 280G of the Code (or any
successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment
by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(A) Subject to the provisions of this Section 9 hereof, all
determinations required to be made under this Section 9,
including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made
by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change
in Control (or, if such Accounting Firm shall be a nationally
recognized firm of certified public accountants, as selected by
Executive). The Accounting Firm shall be directed by the Company
or Executive to submit its preliminary determination and detailed
supporting calculations to both the Company and Executive within
15 calendar days after the date of termination of employment, if
applicable, and any other such time or times as may be requested
by the Company or Executive. If the Accounting Firm determines
that any Excise Tax is payable by Executive, the Company shall
pay the required Gross-Up Payment to, or for the benefit of,
Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall, at the same
time as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his/her federal, state, local income or other tax
return. Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and
Executive absent a contrary determination by the Internal Revenue
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Service or a court of competent jurisdiction; provided, however,
that no such determination shall eliminate or reduce the
Company's obligation to provide any Gross-Up Payment that shall
be due as a result of such contrary determination. As a result of
the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto) and the possibility of
similar uncertainty regarding state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by
the Company should have been made (an "Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies
pursuant to Section 6(f)(i) hereof and Executive thereafter is
required to make a payment of any Excise Tax, Executive shall
direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and
Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive
within five business days after receipt of such determination and
calculations.
(B) The federal, state and local income or other tax returns
filed by Executive (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on
a consistent basis with the determination of the Accounting Firm
with respect to the Excise Tax payable by Executive. Executive
shall make proper payment of the amount of any Excise Tax, and at
the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income
tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such payment. If
prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive shall within five business
days pay to the Company the amount of such reduction.
(ii) In the event that the Internal Revenue Service claims that
any payment or benefit received under this Agreement constitutes as
"excess parachute payment", within the meaning of Section 280G(b)(1)
of the Code, Executive shall notify the Company in writing of such
claim. Such notification shall be given as soon as practicable but no
later than 10 business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30 day period
following the date on which Executive gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive
in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (1) give the Company any
information reasonably requested by the Company relating to such
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claim; (2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company and reasonably satisfactory to Executive; (3) cooperate with
the Company in good faith in order to effectively contest such claim;
and (4) permit the Company to participate in any proceedings relating
to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited to,
additional interest and penalties and related legal, consulting or
other similar fees) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for and
against any Excise Tax or other tax (including interest and penalties
with respect thereto) imposed as a result of such representation and
any payment of costs and expenses.
(A) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue
or forgo any and all administrative appeals, proceedings,
hearings and conferences with the tax authority in respect of
such claim and may, at its sole option, either direct Executive
to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and Executive agrees to prosecute such
contest before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance; and provide , further, that
if Executive is required to extend the statute of limitations to
enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to
which a corporate deduction would be disallowed pursuant to
Section 280G of the Code and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be
agreed to by the Company without Executive's consent if such
position or resolution could reasonably be expected to adversely
affect Executive (including adversely affecting any other tax
position of Executive unrelated to matters covered hereby).
(B) If, after the receipt by Executive of any amount
advanced by the Company in connection with the contest of the
Excise Tax claim, Executive becomes entitled to receive any
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refund with respect to such claim, Executive shall promptly pay
to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds
the amount advanced by the Company or it is otherwise determined
for any reason that additional amounts could be paid by the
Company to Executive without incurring any Excise Tax, any such
amount will be promptly paid by the Company to Executive. If,
after the receipt by Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination
is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive
in writing of its intent to contest the denial of such refund
prior to the expiration of 30 days after such determination, such
advance shall be forgiven and shall not be required to be repaid
and shall be deemed to be in consideration for services rendered
after the date of the Termination.
(iii) The Company and Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by this Section 9.
(iv) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by this Section 9 hereof shall be borne by the Company.
If such fees and expenses are initially advanced by Executive, the
Company shall reimburse Executive the full amount of such fees and
expenses within five business days after receipt from Executive of a
statement therefor and reasonable evidence of his payment thereof.
10. MITIGATION OF DAMAGES. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
11. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, AZ 85255
Attention: General Counsel
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To Executive:
Mr. John Barravecchia
3418 E. Sequoia Trail
Phoenix, AZ 85044
Any such notice or communication shall be delivered by hand, by telecopy (with
machine confirmation) or by courier or sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in a notice duly delivered as described above), and
the third business day after the actual date of mailing shall constitute the
time at which notice was given.
12. SEVERABILITY; LEGAL FEES. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. In the event that any dispute arises between
Executive and the Company as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceedings or otherwise, including any
action that Executive takes to enforce the terms of this Agreement or to defend
against any action taken by the Company, Executive shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that Executive shall obtain a
settlement or final judgement by a court of competent jurisdiction substantially
in favor of Executive. Such reimbursement shall be paid within ten (10) days of
Executive's furnishing to the Company written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or
expenses incurred by Executive.
13. SUCCESSORS; BINDING AGREEMENT, ASSIGNMENT.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement and shall entitle
Executive to terminate Executive's employment with the Company or such
successor for Good Reason immediately prior to or at any time after such
succession. As used in this Agreement, "Company" shall mean (i) the Company
as hereinbefore defined, and (ii) any successor to all the stock of the
Company or to all or substantially all of the Company's business or assets
(other than with respect to sales of assets in the ordinary course,
securitization and whole loan sales provided by the Company's interim and
permanent financing arrangements) which executes and delivers an agreement
provided for in this Section 13(a) or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law, including
any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amount would be payable to Executive hereunder if Executive
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had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Executive's
estate or designated beneficiary. Neither this Agreement nor any right
arising hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company,
if such successor expressly agrees to assume the obligations of the Company
hereunder.
14. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. At any time during or after
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries, pursuant to the policies set forth in the Company's employee
handbook and compliance manual, as amended from time to time.
16. COVENANT NOT TO COMPETE.
(a) During the period of his employment hereunder and for the first to
occur of (i) one year following the termination of employment of Executive
or (ii) December 31, 2002, Executive agrees that, without the prior written
consent of the Company, (a) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender or employee or in any other capacity, carry on, be engaged
in or have any financial interest in (other than an ownership position of
less than five percent in any company whose shares are publicly traded),
any business, which is in Competition (as defined in Section 16(b)) with
the existing business of the Company or its subsidiaries, and (b) he shall
not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has
been employed by the Company or its subsidiaries at any time during the 12
months immediately preceding such solicitation.
(b) For purposes of this Section 16, a business shall be deemed to be
in Competition with the Company or its subsidiaries if a significant
portion of its business is providing financing to operators in the chain
restaurant, convenience store or automotive service and parts industries in
any portion of the United States.
(c) Executive and the Company agree that this covenant not to compete
is a reasonable covenant under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 16 would irreparably injure the
Company. Accordingly, Executive agrees that the Company may, in addition to
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pursuing any other remedies it may have in law or in equity, cease making
any payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
17. BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
18. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations, including
the provisions of Section 16 herein. The provisions of this Section 18 are in
addition to the survivorship provisions of any other section of this Agreement.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Arizona without reference
to rules relating to conflicts of law.
20. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive including, without limitation, the Continuity
Agreement dated as of May 12, 1999 between the Company and Executive.
21. WITHHOLDING. The Company shall be entitled to withhold from payment any
amount of withholding required by law.
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22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
FRANCHISE FINANCE CORPORATION OF AMERICA
By /s/ Morton H. Fleischer
-------------------------------------
Name: Morton H. Fleischer
Title: Chairman of the Board and
Chief Executive Officer
/s/ John Barravecchia
----------------------------------------
John Barravecchia
17
EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of January 1, 2000, by and between Franchise
Finance Corporation of America, a Delaware corporation (the "Company") and
Stephen G. Schmitz ("Executive").
RECITALS
In order to induce Executive to serve as Executive Vice President, Chief
Investment Officer and Assistant Secretary of the Company, the Company desires
to provide Executive with compensation and other benefits on the terms and
conditions set forth in this Agreement.
Executive is willing to accept such employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. DEFINED TERMS. The following terms shall have the following meanings
unless otherwise specifically defined in this Agreement:
"ACTUAL BONUS" means the highest annual cash bonus payable to Executive
with respect to any of the three years immediately preceding the Termination
Year.
"AGREEMENT" means this Employment Agreement dated as of January 1, 2000
between the Company and Executive.
"ANNUAL CASH BONUS" means the cash compensation payable to Executive as
calculated and paid in a manner substantially similar to the methods and timing
used to calculate and pay Executive's bonus for calendar year 1999; PROVIDED,
HOWEVER, that during the term of this Agreement, neither the Company nor the
Compensation Committee shall change such methods and timing in a manner which
will be less favorable to Executive.
"BASE SALARY" means the annual base salary of Executive as set forth in
Section 4(a).
"BOARD" means the board of directors of the Company.
"CAUSE" means:
(a) the willful and continued failure of Executive to perform a
substantial portion of his duties with the Company (other than any
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board, which specifically identifies the
manner in which the Board believes that Executive has not
substantially performed his duties;
(b) the willful engaging by Executive in gross misconduct
(including, without limitation, fraud or embezzlement); or
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(c) the conviction of, or plea of guilty or NOLO CONTENDERE to, a
felony.
"CHANGE IN CONTROL" means:
(a) any "Person" as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and as used
in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by
the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities (other than
indirectly as a result of the Company's redemption of its securities);
PROVIDED, HOWEVER, that, in the event that any such person becomes the
beneficial owner of 25% or more, but not exceeding 50%, of the
combined voting power of the Company's then outstanding securities, no
Change of Control shall be deemed to occur so long as the Incumbent
Directors (as defined below) continue to constitute a majority of the
Board in accordance with the terms of paragraph (c) below; or
(b) the consummation of any merger or other business combination
of the Company, sale of all or substantially all of the Company's
assets (other than with respect to sales of assets in the ordinary
course of business, securitization and whole loan sales provided by
the Company's interim and permanent financing arrangements),
liquidation or dissolution of the Company or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company and any
trustee or fiduciary of any Company employee benefit plan immediately
prior to the Transaction own at least 51% of the voting power,
directly or indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser of or
successor to the Company's assets (other than with respect to sales of
assets in the ordinary course of business, securitization and whole
loan sales provided by the Company's interim and permanent financing
arrangements); (C) both the surviving corporation and the purchaser in
the event of any combination of Transactions; or (D) the parent
company owning 100% of such surviving corporation, purchaser or both
the surviving corporation and the purchaser, as the case may be; or
(c) within any twenty-four-month period, the persons who were
directors immediately before the beginning of such period (the
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"Incumbent Directors") shall cease (for any reason other than death)
to constitute at least a majority of the Board or the board of
directors of a successor to the Company. For this purpose, any
director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director was elected to
the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person who
commenced or threatened to commence an election contest or proxy
solicitation by or on behalf of a Person other than the Board) or who
has entered into an agreement to effect a Change in Control or
expressed an intention to cause such Change in Control.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
provisions of any successor law.
"COMPANY" means Franchise Finance Corporation of America, a Delaware
corporation.
"COMPENSATION COMMITTEE" means the compensation committee of the Board.
"EFFECTIVE DATE" means January 1, 2000.
"EXECUTIVE" means Stephen G. Schmitz.
"EXPENSE PAYMENT" means payments made to Executive for expenses which are
permitted under this Agreement and have been incurred but not yet reimbursed.
"GOOD REASON" means any of the following without Executive's express prior
written consent:
(a) any material diminution or adverse change in Executive's
duties, titles or responsibilities with the Company (or any affiliate
thereof) from those in effect immediately prior to any such diminution
or adverse change; PROVIDED, HOWEVER, that no such diminution or
adverse change shall be deemed to exist solely as a consequence of the
Company ceasing to be a Company with publicly-traded securities or
becoming a wholly-owned subsidiary of another company;
(b) if after a Change in Control there is any reduction in
Executive's aggregate annual cash compensation (which shall include
Base Salary and Actual Bonus) in Executive's aggregate annual cash
compensation in effect immediately prior to such reduction;
(c) any requirement that Executive be based at a location more
than 35 miles from the Company's headquarters, located in Scottsdale,
Arizona (or a substantial increase in the amount of travel that
Executive is required to do because of a relocation of the Company's
headquarters from Scottsdale, Arizona);
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(d) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to Executive to
assume and perform this Agreement, as contemplated by Section 13
hereof; or
(e) during the thirty-day period immediately following the first
anniversary of the Change in Control there is a Thirteenth-Month
Termination by Executive.
"PERMANENT DISABILITY" means the total and permanent disability of
Executive as defined in the Company's long-term disability benefit plan
applicable to senior executive officers in effect on the Effective Date.
"RETIREMENT" means Executive's voluntary termination of employment pursuant
to late, normal or early retirement under a pension plan (which may include a
defined benefit plan or a defined contribution plan) sponsored by the Company,
as defined in such plan, but only if such retirement occurs prior to a
termination by the Company for Cause or by Executive for Good Reason.
"TERMINATION DATE" means the date this Agreement is terminated, except to
the extent the provisions of Section 16 are applicable, which shall be the
earlier of December 31, 2002 or the date of termination of Executive's
employment pursuant to this Agreement.
"TERMINATION YEAR" means the year in which Executive's termination of
employment occurs.
"THIRTEENTH-MONTH TERMINATION" means the voluntary termination of
employment by Executive for any reason or no reason at all.
"VACATION PAYMENT" means payments made to Executive with respect to accrued
but unused vacation days.
2. EMPLOYMENT.
(a) Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as its Executive Vice
President, Chief Investment Officer and Assistant Secretary or as an
officer of the Company having the same or a more senior title and greater
responsibilities. In his capacity as the Executive Vice President, Chief
Investment Officer and Assistant Secretary of the Company, Executive shall
report to the Board and shall have the customary powers, responsibilities
and authorities of an Executive Vice President, Chief Investment Officer
and Assistant Secretary for corporations of the size and character of the
Company, as it exists from time to time, and as are assigned by the Board.
(b) Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment with the Company commencing on the Effective
Date, and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection therewith. Executive shall
perform such duties and exercise such powers, commensurate with his
position, as the Board shall from time to time delegate to him on such
terms and conditions and subject to such restrictions the Board may
reasonably from time to time impose. Executive also agrees to serve, if
elected, as a member of the Board.
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(c) Nothing in this Agreement shall preclude Executive, so long as in
the reasonable determination of the Board such activities do not interfere
with his duties and responsibilities hereunder, from engaging in charitable
and community affairs, from managing any passive investment made by him in
publicly traded equity securities or other property (provided that no such
investment may exceed 5% of the equity of any entity) or, without prior
notice to the Board and subject to Section 15 and Section 16(b) hereof,
from serving as a member of boards of directors or as a trustee of any
other corporation, association or entity.
3. EFFECTIVE DATE; TERM OF EMPLOYMENT. This Agreement shall be effective as
the Effective Date. Executive's term of employment under this Agreement shall
commence on the Effective Date hereof and, subject to the terms hereof, shall
terminate on the Termination Date; provided, however, that any termination of
Employment by Executive for Good Reason or pursuant to the Change in Control
provisions of Section 8 may only be made on 30 days' prior written notice and
any other termination of employment by Executive other than for death, Permanent
Disability or Good Reason may only be made upon 90 days' prior written notice to
the Company.
4. COMPENSATION.
(a) SALARY. The Company shall pay Executive during the term of this
Agreement the Base Salary, as calculated pursuant to this Section 4,
payable in cash not less frequently than bimonthly. As of the Effective
Date, the Base Salary shall be $315,000. As of January 1 of each annual
anniversary of the Effective Date, the Base Salary of Executive will be
increased from Executive's Base Salary for the preceding calendar year by
the greater of (i) five percent, (ii) the average percentage salary
increase awarded to all employees of the Company who are not senior
executive officers of the Company or (iii) an amount determined by the
Compensation Committee.
(b) ANNUAL CASH BONUS. In addition to Base Compensation, the Company
will pay to Executive on or prior to January 30 of each year for
performance in the preceding calendar year the Annual Cash Bonus.
(c) COMPENSATION PLANS AND PROGRAMS. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company
from time to time, which compensation plans and programs are intended to be
comparable to those currently maintained by the Company, in which other
senior executives of the Company participate on terms that are intended to
be comparable to those applicable to such other senior executives.
(d) STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Executive shall be
eligible to receive grants of stock options and restricted stock awards as
determined in the discretion of the Compensation Committee under any stock
option plan or incentive plan of the Company or any affiliate.
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5. EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and
practices (commensurate with his positions in the Company from time to time
and to the extent permitted under any employee benefit plan) in accordance
with the terms thereof, which the Company makes available to its senior
executives and which employee pension and welfare benefit programs, plans
and practices that are intended to be comparable to those currently
maintained by the Company; provided, however, such programs, plans and
practices will be no less favorable than those in existence as of the date
of execution of this Agreement.
(b) VACATION AND FRINGE BENEFITS. Executive shall be entitled to no
less than the number of business days paid vacation in each calendar year
to which Executive is entitled immediately prior to execution of this
Agreement, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made
available to senior executives of the Company, commensurate with his
position with the Company.
6. EXPENSES. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR BY EXECUTIVE FOR
GOOD REASON. (i) The Company may terminate Executive's employment at any
time for any reason. If Executive's employment is terminated by the Company
other than for Cause) or if Executive terminates his employment for Good
Reason prior to the Termination Date, Executive shall receive such
payments, if any, under applicable plans or programs, including but not
limited to those referred to in Section 4(c) hereof, to which he is
entitled pursuant to the terms of such plans or programs. In addition,
Executive shall be entitled to receive the following:
(A) A cash lump sum payment equal to the sum of three times
(1) Executive's Base Salary at the annual rate as of the date of
termination and (2) the Actual Bonus; and
(B) a cash lump sum payment with respect to (1) the Vacation
Payment and (2) the Expense Payment which shall be paid by the
Company to Executive within 30 days after the termination of
Executive's employment by check payable to the order of Executive
or by wire transfer to an account specified by Executive;
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(C) Executive shall also be entitled to the following
benefits:
(i) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and
disability insurance) and any fringe benefit or perquisites
in effect immediately prior to the date of termination for
Executive and Executive's eligible dependents or, to the
extent such benefits are not commercially available, such
other arrangements reasonably acceptable to Executive, on
the same basis as in effect prior to the date of
termination, whichever is deemed to provide for more
substantial benefits, for a period ending December 31, 2002;
(ii) immediate 100% vesting of all outstanding stock
options, stock appreciation rights and restricted stock
granted or issued by the Company to the extent not
previously vested;
(iii) all other accrued or vested benefits in
accordance with the terms of the applicable plan, which
vested benefits shall include Executive's otherwise unvested
account balances in the Company's 401(k) plan, which shall
be vested as of the date of termination; and
(iv) if so requested by Executive, outplacement
services shall be provided by a professional outplacement
provider selected by Executive; PROVIDED, HOWEVER, that such
outplacement services shall be provided to Executive at a
cost to the Company of not more than fifteen (15) percent of
such Executive's Base Salary.
(b) CURE PERIOD OF COMPANY FOR GOOD REASON TERMINATION.
Notwithstanding the foregoing, in the event that Executive provides the
Company with a notice of termination stating Good Reason, except in the
event of a Thirteenth-Month Termination, the Company shall have 30 days
thereafter in which to cure or resolve the behavior otherwise constituting
Good Reason. Any good faith determination by Executive that Good Reason
exists shall be presumed correct and shall be binding upon the Company.
(c) PERMANENT DISABILITY OF EXECUTIVE. If Executive has a Permanent
Disability, the Company or Executive may terminate Executive's employment
on written notice thereof, and Executive shall receive or commence
receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
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(ii) the Actual Bonus, prorated by a fraction, the numerator of
which is the number of days of the fiscal year until termination and
the denominator of which is 365;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
(d) DEATH. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable:
(i) the Actual Bonus, the numerator of which is the number of
days of the fiscal year until his death and the denominator of which
is 365;
(ii) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 5(a) hereof, in
accordance with their terms;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
(e) TERMINATION BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON
(i) The Company shall have the right to terminate the employment
of Executive for Cause. In the event that Executive's employment is
terminated by the Company for Cause, or by Executive other than for
Good Reason, Executive shall only be entitled to receive the Vacation
Payment and the Expense Payment. Executive shall not be entitled,
among other things, to the payment of any Annual Cash Bonus in respect
of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this
Section 7(e), the obligations of the Company under this Agreement to
make any further payments or provide any benefits specified herein to
Executive shall thereupon cease and terminate.
(ii) Termination of Executive for Cause shall be made by delivery
to Executive of a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the non-employee directors of the
Board at a regular or special meeting of such directors called and
held for such purpose, after 30 days' prior written notice to
Executive specifying the basis for such termination and the
particulars thereof and a reasonable opportunity for Executive to be
heard prior to or at such meeting, finding that in the reasonable
judgment of such directors, that any conduct or event constituting
Cause has occurred and that such occurrence warrants Executive's
termination.
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8. CHANGE IN CONTROL.
(a) Executive shall be entitled to the compensation provided for
in this Section 8 hereof, if within two years after a Change in
Control, Executive's employment by the Company shall be terminated (A)
by the Company for any reason other than (I) Executive's Permanent
Disability or Retirement, (II) Executive's death or (III) for Cause,
or (B) by Executive with Good Reason.
(b) In addition, Executive shall be entitled to the compensation
provided for in this Section 8, if the following events occur: (A) an
agreement is signed which, if consummated, would result in a Change of
Control, (B) Executive is terminated without Cause by the Company or
terminates employment with Good Reason prior to the anticipated Change
in Control, and (C) such termination (or the action leading to such
termination, in the case of Good Reason) is at the request or
suggestion of the acquiror or merger partner or otherwise in
connection with the anticipated Change in Control, except that any
termination of employment as set forth in clause (C), above, shall be
presumed, in the absence of clear and convincing evidence to the
contrary, to have occurred in connection with a Change in Control,
whether or not a Change in Control actually occurs.
(c) The Company shall pay or cause to be paid to Executive a cash
severance amount equal to three times the sum of (i) Executive's
annual Base Salary on the date of the Change in Control (or, if
higher, the annual Base Salary in effect immediately prior to the
giving of the notice of termination), and (ii) the Actual Bonus;
PROVIDED, HOWEVER, that in the event that Executive's employment is
terminated by a Thirteenth-Month Termination, Executive's cash
severance amount shall only be equal to two times the sum of (i) and
(ii) above. This cash severance amount shall be payable in a lump sum
calculated without any discount or, at the election of Executive, on
any deferred payment schedule selected by Executive.
(d) No compensation or other benefit pursuant to this Section 8
hereof shall be payable under this Agreement unless and until either
(i) a Change in Control shall have occurred while Executive is an
employee of a Company and Executive's employment by the Company
thereafter shall have terminated in accordance with this Section 8
hereof or (ii) Executive's employment by the Company shall have
terminated in accordance with this Section 8 hereof in anticipation of
the occurrence of a Change in Control.
(e) Executive shall also be entitled to the (i) Vacation Payment
and the Expense Payment, (ii) the medical and other benefits under
Section 7(a)(C)(i), (iii) vesting of certain security rights under
Section 7(a)(C)(ii), (iv) other accrued and vested plans under Section
7(a)(C)(iii) and (v) outplacement services under Section (a)(C)(iv)
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9. EXCESS PARACHUTE EXCISE TAX.
(i) If it is determined (as hereafter provided) that any payment
or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of
any other agreement, policy, plan, program or arrangement, including
without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or
the vesting or exercisability of any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code
by reason of being "contingent on a change in ownership or control" of
the Company, within the meaning of Section 280G of the Code (or any
successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment
by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(A) Subject to the provisions of this Section 9 hereof, all
determinations required to be made under this Section 9,
including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made
by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change
in Control (or, if such Accounting Firm shall be a nationally
recognized firm of certified public accountants, as selected by
Executive). The Accounting Firm shall be directed by the Company
or Executive to submit its preliminary determination and detailed
supporting calculations to both the Company and Executive within
15 calendar days after the date of termination of employment, if
applicable, and any other such time or times as may be requested
by the Company or Executive. If the Accounting Firm determines
that any Excise Tax is payable by Executive, the Company shall
pay the required Gross-Up Payment to, or for the benefit of,
Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall, at the same
time as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his/her federal, state, local income or other tax
return. Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and
Executive absent a contrary determination by the Internal Revenue
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Service or a court of competent jurisdiction; provided, however,
that no such determination shall eliminate or reduce the
Company's obligation to provide any Gross-Up Payment that shall
be due as a result of such contrary determination. As a result of
the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto) and the possibility of
similar uncertainty regarding state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by
the Company should have been made (an "Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies
pursuant to Section 6(f)(i) hereof and Executive thereafter is
required to make a payment of any Excise Tax, Executive shall
direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and
Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive
within five business days after receipt of such determination and
calculations.
(B) The federal, state and local income or other tax returns
filed by Executive (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on
a consistent basis with the determination of the Accounting Firm
with respect to the Excise Tax payable by Executive. Executive
shall make proper payment of the amount of any Excise Tax, and at
the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income
tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such payment. If
prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive shall within five business
days pay to the Company the amount of such reduction.
(ii) In the event that the Internal Revenue Service claims that
any payment or benefit received under this Agreement constitutes as
"excess parachute payment", within the meaning of Section 280G(b)(1)
of the Code, Executive shall notify the Company in writing of such
claim. Such notification shall be given as soon as practicable but no
later than 10 business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30 day period
following the date on which Executive gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive
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in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (1) give the Company any
information reasonably requested by the Company relating to such
claim; (2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company and reasonably satisfactory to Executive; (3) cooperate with
the Company in good faith in order to effectively contest such claim;
and (4) permit the Company to participate in any proceedings relating
to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited to,
additional interest and penalties and related legal, consulting or
other similar fees) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for and
against any Excise Tax or other tax (including interest and penalties
with respect thereto) imposed as a result of such representation and
any payment of costs and expenses.
(A) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue
or forgo any and all administrative appeals, proceedings,
hearings and conferences with the tax authority in respect of
such claim and may, at its sole option, either direct Executive
to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and Executive agrees to prosecute such
contest before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance; and provide , further, that
if Executive is required to extend the statute of limitations to
enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to
which a corporate deduction would be disallowed pursuant to
Section 280G of the Code and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be
agreed to by the Company without Executive's consent if such
position or resolution could reasonably be expected to adversely
affect Executive (including adversely affecting any other tax
position of Executive unrelated to matters covered hereby).
(B) If, after the receipt by Executive of any amount
advanced by the Company in connection with the contest of the
Excise Tax claim, Executive becomes entitled to receive any
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refund with respect to such claim, Executive shall promptly pay
to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds
the amount advanced by the Company or it is otherwise determined
for any reason that additional amounts could be paid by the
Company to Executive without incurring any Excise Tax, any such
amount will be promptly paid by the Company to Executive. If,
after the receipt by Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination
is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive
in writing of its intent to contest the denial of such refund
prior to the expiration of 30 days after such determination, such
advance shall be forgiven and shall not be required to be repaid
and shall be deemed to be in consideration for services rendered
after the date of the Termination.
(iii) The Company and Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by this Section 9.
(iv) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by this Section 9 hereof shall be borne by the Company.
If such fees and expenses are initially advanced by Executive, the
Company shall reimburse Executive the full amount of such fees and
expenses within five business days after receipt from Executive of a
statement therefor and reasonable evidence of his payment thereof.
10. MITIGATION OF DAMAGES. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
11. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, AZ 85255
Attention: General Counsel
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To Executive:
Mr. Stephen G. Schmitz
8267 East Angel Spirit Drive
Scottsdale, AZ 85255
Any such notice or communication shall be delivered by hand, by telecopy (with
machine confirmation) or by courier or sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in a notice duly delivered as described above), and
the third business day after the actual date of mailing shall constitute the
time at which notice was given.
12. SEVERABILITY; LEGAL FEES. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. In the event that any dispute arises between
Executive and the Company as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceedings or otherwise, including any
action that Executive takes to enforce the terms of this Agreement or to defend
against any action taken by the Company, Executive shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that Executive shall obtain a
settlement or final judgement by a court of competent jurisdiction substantially
in favor of Executive. Such reimbursement shall be paid within ten (10) days of
Executive's furnishing to the Company written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or
expenses incurred by Executive.
13. SUCCESSORS; BINDING AGREEMENT, ASSIGNMENT.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement and shall entitle
Executive to terminate Executive's employment with the Company or such
successor for Good Reason immediately prior to or at any time after such
succession. As used in this Agreement, "Company" shall mean (i) the Company
as hereinbefore defined, and (ii) any successor to all the stock of the
Company or to all or substantially all of the Company's business or assets
(other than with respect to sales of assets in the ordinary course,
securitization and whole loan sales provided by the Company's interim and
permanent financing arrangements) which executes and delivers an agreement
provided for in this Section 13(a) or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law, including
any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amount would be payable to Executive hereunder if Executive
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had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Executive's
estate or designated beneficiary. Neither this Agreement nor any right
arising hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company,
if such successor expressly agrees to assume the obligations of the Company
hereunder.
14. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. At any time during or after
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries, pursuant to the policies set forth in the Company's employee
handbook and compliance manual, as amended from time to time.
16. COVENANT NOT TO COMPETE.
(a) During the period of his employment hereunder and for the first to
occur of (i) one year following the termination of employment of Executive
or (ii) December 31, 2002, Executive agrees that, without the prior written
consent of the Company, (a) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender or employee or in any other capacity, carry on, be engaged
in or have any financial interest in (other than an ownership position of
less than five percent in any company whose shares are publicly traded),
any business, which is in Competition (as defined in Section 16(b)) with
the existing business of the Company or its subsidiaries, and (b) he shall
not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has
been employed by the Company or its subsidiaries at any time during the 12
months immediately preceding such solicitation.
(b) For purposes of this Section 16, a business shall be deemed to be
in Competition with the Company or its subsidiaries if a significant
portion of its business is providing financing to operators in the chain
restaurant, convenience store or automotive service and parts industries in
any portion of the United States.
(c) Executive and the Company agree that this covenant not to compete
is a reasonable covenant under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 16 would irreparably injure the
Company. Accordingly, Executive agrees that the Company may, in addition to
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pursuing any other remedies it may have in law or in equity, cease making
any payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
17. BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
18. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations, including
the provisions of Section 16 herein. The provisions of this Section 18 are in
addition to the survivorship provisions of any other section of this Agreement.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Arizona without reference
to rules relating to conflicts of law.
20. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive including, without limitation, the Continuity
Agreement dated as of May 12, 1999 between the Company and Executive.
21. WITHHOLDING. The Company shall be entitled to withhold from payment any
amount of withholding required by law.
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22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
FRANCHISE FINANCE CORPORATION OF AMERICA
By /s/ Morton H. Fleischer
-------------------------------------
Name: Morton H. Fleischer
Title: Chairman of the Board and
Chief Executive Officer
/s/ Stephen G. Schmitz
----------------------------------------
Stephen G. Schmitz
17
EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of January 1, 2000, by and between Franchise
Finance Corporation of America, a Delaware corporation (the "Company") and
Dennis L. Ruben, Esq. ("Executive").
RECITALS
In order to induce Executive to serve as Executive Vice President, General
Counsel and Secretary of the Company, the Company desires to provide Executive
with compensation and other benefits on the terms and conditions set forth in
this Agreement.
Executive is willing to accept such employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. DEFINED TERMS. The following terms shall have the following meanings
unless otherwise specifically defined in this Agreement:
"ACTUAL BONUS" means the highest annual cash bonus payable to Executive
with respect to any of the three years immediately preceding the Termination
Year.
"AGREEMENT" means this Employment Agreement dated as of January 1, 2000
between the Company and Executive.
"ANNUAL CASH BONUS" means the cash compensation payable to Executive as
calculated and paid in a manner substantially similar to the methods and timing
used to calculate and pay Executive's bonus for calendar year 1999; PROVIDED,
HOWEVER, that during the term of this Agreement, neither the Company nor the
Compensation Committee shall change such methods and timing in a manner which
will be less favorable to Executive.
"BASE SALARY" means the annual base salary of Executive as set forth in
Section 4(a).
"BOARD" means the board of directors of the Company.
"CAUSE" means:
(a) the willful and continued failure of Executive to perform a
substantial portion of his duties with the Company (other than any
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board, which specifically identifies the
manner in which the Board believes that Executive has not
substantially performed his duties;
(b) the willful engaging by Executive in gross misconduct
(including, without limitation, fraud or embezzlement); or
<PAGE>
(c) the conviction of, or plea of guilty or NOLO CONTENDERE to, a
felony.
"CHANGE IN CONTROL" means:
(a) any "Person" as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and as used
in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by
the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities (other than
indirectly as a result of the Company's redemption of its securities);
PROVIDED, HOWEVER, that, in the event that any such person becomes the
beneficial owner of 25% or more, but not exceeding 50%, of the
combined voting power of the Company's then outstanding securities, no
Change of Control shall be deemed to occur so long as the Incumbent
Directors (as defined below) continue to constitute a majority of the
Board in accordance with the terms of paragraph (c) below; or
(b) the consummation of any merger or other business combination
of the Company, sale of all or substantially all of the Company's
assets (other than with respect to sales of assets in the ordinary
course of business, securitization and whole loan sales provided by
the Company's interim and permanent financing arrangements),
liquidation or dissolution of the Company or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company and any
trustee or fiduciary of any Company employee benefit plan immediately
prior to the Transaction own at least 51% of the voting power,
directly or indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser of or
successor to the Company's assets (other than with respect to sales of
assets in the ordinary course of business, securitization and whole
loan sales provided by the Company's interim and permanent financing
arrangements); (C) both the surviving corporation and the purchaser in
the event of any combination of Transactions; or (D) the parent
company owning 100% of such surviving corporation, purchaser or both
the surviving corporation and the purchaser, as the case may be; or
(c) within any twenty-four-month period, the persons who were
directors immediately before the beginning of such period (the
"Incumbent Directors") shall cease (for any reason other than death)
to constitute at least a majority of the Board or the board of
directors of a successor to the Company. For this purpose, any
director who was not a director at the beginning of such period shall
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be deemed to be an Incumbent Director if such director was elected to
the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person who
commenced or threatened to commence an election contest or proxy
solicitation by or on behalf of a Person other than the Board) or who
has entered into an agreement to effect a Change in Control or
expressed an intention to cause such Change in Control.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
provisions of any successor law.
"COMPANY" means Franchise Finance Corporation of America, a Delaware
corporation.
"COMPENSATION COMMITTEE" means the compensation committee of the Board.
"EFFECTIVE DATE" means January 1, 2000.
"EXECUTIVE" means Dennis L. Ruben, Esq.
"EXPENSE PAYMENT" means payments made to Executive for expenses which are
permitted under this Agreement and have been incurred but not yet reimbursed.
"GOOD REASON" means any of the following without Executive's express prior
written consent:
(a) any material diminution or adverse change in Executive's
duties, titles or responsibilities with the Company (or any affiliate
thereof) from those in effect immediately prior to any such diminution
or adverse change; PROVIDED, HOWEVER, that no such diminution or
adverse change shall be deemed to exist solely as a consequence of the
Company ceasing to be a Company with publicly-traded securities or
becoming a wholly-owned subsidiary of another company;
(b) if after a Change in Control there is any reduction in
Executive's aggregate annual cash compensation (which shall include
Base Salary and Actual Bonus) in Executive's aggregate annual cash
compensation in effect immediately prior to such reduction;
(c) any requirement that Executive be based at a location more
than 35 miles from the Company's headquarters, located in Scottsdale,
Arizona (or a substantial increase in the amount of travel that
Executive is required to do because of a relocation of the Company's
headquarters from Scottsdale, Arizona);
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(d) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to Executive to
assume and perform this Agreement, as contemplated by Section 13
hereof; or
(e) during the thirty-day period immediately following the first
anniversary of the Change in Control there is a Thirteenth-Month
Termination by Executive.
"PERMANENT DISABILITY" means the total and permanent disability of
Executive as defined in the Company's long-term disability benefit plan
applicable to senior executive officers in effect on the Effective Date.
"RETIREMENT" means Executive's voluntary termination of employment pursuant
to late, normal or early retirement under a pension plan (which may include a
defined benefit plan or a defined contribution plan) sponsored by the Company,
as defined in such plan, but only if such retirement occurs prior to a
termination by the Company for Cause or by Executive for Good Reason.
"TERMINATION DATE" means the date this Agreement is terminated, except to
the extent the provisions of Section 16 are applicable, which shall be the
earlier of December 31, 2002 or the date of termination of Executive's
employment pursuant to this Agreement.
"TERMINATION YEAR" means the year in which Executive's termination of
employment occurs.
"THIRTEENTH-MONTH TERMINATION" means the voluntary termination of
employment by Executive for any reason or no reason at all.
"VACATION PAYMENT" means payments made to Executive with respect to accrued
but unused vacation days.
2. EMPLOYMENT.
(a) Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as its Executive Vice
President, General Counsel and Secretary or as an officer of the Company
having the same or a more senior title and greater responsibilities. In his
capacity as the Executive Vice President, General Counsel and Secretary of
the Company, Executive shall report to the Board and shall have the
customary powers, responsibilities and authorities of an Executive Vice
President, General Counsel and Secretary for corporations of the size and
character of the Company, as it exists from time to time, and as are
assigned by the Board.
(b) Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment with the Company commencing on the Effective
Date, and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection therewith. Executive shall
perform such duties and exercise such powers, commensurate with his
position, as the Board shall from time to time delegate to him on such
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terms and conditions and subject to such restrictions the Board may
reasonably from time to time impose. Executive also agrees to serve, if
elected, as a member of the Board.
(c) Nothing in this Agreement shall preclude Executive, so long as in
the reasonable determination of the Board such activities do not interfere
with his duties and responsibilities hereunder, from engaging in charitable
and community affairs, from managing any passive investment made by him in
publicly traded equity securities or other property (provided that no such
investment may exceed 5% of the equity of any entity) or, without prior
notice to the Board and subject to Section 15 and Section 16(b) hereof,
from serving as a member of boards of directors or as a trustee of any
other corporation, association or entity.
3. EFFECTIVE DATE; TERM OF EMPLOYMENT. This Agreement shall be effective as
the Effective Date. Executive's term of employment under this Agreement shall
commence on the Effective Date hereof and, subject to the terms hereof, shall
terminate on the Termination Date; provided, however, that any termination of
Employment by Executive for Good Reason or pursuant to the Change in Control
provisions of Section 8 may only be made on 30 days' prior written notice and
any other termination of employment by Executive other than for death, Permanent
Disability or Good Reason may only be made upon 90 days' prior written notice to
the Company.
4. COMPENSATION.
(a) SALARY. The Company shall pay Executive during the term of this
Agreement the Base Salary, as calculated pursuant to this Section 4,
payable in cash not less frequently than bimonthly. As of the Effective
Date, the Base Salary shall be $236,250. As of January 1 of each annual
anniversary of the Effective Date, the Base Salary of Executive will be
increased from Executive's Base Salary for the preceding calendar year by
the greater of (i) five percent, (ii) the average percentage salary
increase awarded to all employees of the Company who are not senior
executive officers of the Company or (iii) an amount determined by the
Compensation Committee.
(b) ANNUAL CASH BONUS. In addition to Base Compensation, the Company
will pay to Executive on or prior to January 30 of each year for
performance in the preceding calendar year the Annual Cash Bonus.
(c) COMPENSATION PLANS AND PROGRAMS. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company
from time to time, which compensation plans and programs are intended to be
comparable to those currently maintained by the Company, in which other
senior executives of the Company participate on terms that are intended to
be comparable to those applicable to such other senior executives.
(d) STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Executive shall be
eligible to receive grants of stock options and restricted stock awards as
determined in the discretion of the Compensation Committee under any stock
option plan or incentive plan of the Company or any affiliate.
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5. EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and
practices (commensurate with his positions in the Company from time to time
and to the extent permitted under any employee benefit plan) in accordance
with the terms thereof, which the Company makes available to its senior
executives and which employee pension and welfare benefit programs, plans
and practices that are intended to be comparable to those currently
maintained by the Company; provided, however, such programs, plans and
practices will be no less favorable than those in existence as of the date
of execution of this Agreement.
(b) VACATION AND FRINGE BENEFITS. Executive shall be entitled to no
less than the number of business days paid vacation in each calendar year
to which Executive is entitled immediately prior to execution of this
Agreement, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made
available to senior executives of the Company, commensurate with his
position with the Company.
6. EXPENSES. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR BY EXECUTIVE FOR
GOOD REASON. (i) The Company may terminate Executive's employment at any
time for any reason. If Executive's employment is terminated by the Company
other than for Cause) or if Executive terminates his employment for Good
Reason prior to the Termination Date, Executive shall receive such
payments, if any, under applicable plans or programs, including but not
limited to those referred to in Section 4(c) hereof, to which he is
entitled pursuant to the terms of such plans or programs. In addition,
Executive shall be entitled to receive the following:
(A) A cash lump sum payment equal to the sum of three times
(1) Executive's Base Salary at the annual rate as of the date of
termination and (2) the Actual Bonus; and
(B) a cash lump sum payment with respect to (1) the Vacation
Payment and (2) the Expense Payment which shall be paid by the
Company to Executive within 30 days after the termination of
Executive's employment by check payable to the order of Executive
or by wire transfer to an account specified by Executive;
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(C) Executive shall also be entitled to the following
benefits:
(i) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and
disability insurance) and any fringe benefit or perquisites
in effect immediately prior to the date of termination for
Executive and Executive's eligible dependents or, to the
extent such benefits are not commercially available, such
other arrangements reasonably acceptable to Executive, on
the same basis as in effect prior to the date of
termination, whichever is deemed to provide for more
substantial benefits, for a period ending December 31, 2002;
(ii) immediate 100% vesting of all outstanding stock
options, stock appreciation rights and restricted stock
granted or issued by the Company to the extent not
previously vested;
(iii) all other accrued or vested benefits in
accordance with the terms of the applicable plan, which
vested benefits shall include Executive's otherwise unvested
account balances in the Company's 401(k) plan, which shall
be vested as of the date of termination; and
(iv) if so requested by Executive, outplacement
services shall be provided by a professional outplacement
provider selected by Executive; PROVIDED, HOWEVER, that such
outplacement services shall be provided to Executive at a
cost to the Company of not more than fifteen (15) percent of
such Executive's Base Salary.
(b) CURE PERIOD OF COMPANY FOR GOOD REASON TERMINATION.
Notwithstanding the foregoing, in the event that Executive provides the
Company with a notice of termination stating Good Reason, except in the
event of a Thirteenth-Month Termination, the Company shall have 30 days
thereafter in which to cure or resolve the behavior otherwise constituting
Good Reason. Any good faith determination by Executive that Good Reason
exists shall be presumed correct and shall be binding upon the Company.
(c) PERMANENT DISABILITY OF EXECUTIVE. If Executive has a Permanent
Disability, the Company or Executive may terminate Executive's employment
on written notice thereof, and Executive shall receive or commence
receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
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(ii) the Actual Bonus, prorated by a fraction, the numerator of
which is the number of days of the fiscal year until termination and
the denominator of which is 365;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
(d) DEATH. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable:
(i) the Actual Bonus, the numerator of which is the number of
days of the fiscal year until his death and the denominator of which
is 365;
(ii) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 5(a) hereof, in
accordance with their terms;
(iii) the Vacation Payment and the Expense Payment; and
(iv) such payments under applicable plans or programs, including
but not limited to those referred to in Section 4(c) hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
(e) TERMINATION BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON
(i) The Company shall have the right to terminate the employment
of Executive for Cause. In the event that Executive's employment is
terminated by the Company for Cause, or by Executive other than for
Good Reason, Executive shall only be entitled to receive the Vacation
Payment and the Expense Payment. Executive shall not be entitled,
among other things, to the payment of any Annual Cash Bonus in respect
of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this
Section 7(e), the obligations of the Company under this Agreement to
make any further payments or provide any benefits specified herein to
Executive shall thereupon cease and terminate.
(ii) Termination of Executive for Cause shall be made by delivery
to Executive of a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the non-employee directors of the
Board at a regular or special meeting of such directors called and
held for such purpose, after 30 days' prior written notice to
Executive specifying the basis for such termination and the
particulars thereof and a reasonable opportunity for Executive to be
heard prior to or at such meeting, finding that in the reasonable
judgment of such directors, that any conduct or event constituting
Cause has occurred and that such occurrence warrants Executive's
termination.
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8. CHANGE IN CONTROL.
(a) Executive shall be entitled to the compensation provided for
in this Section 8 hereof, if within two years after a Change in
Control, Executive's employment by the Company shall be terminated (A)
by the Company for any reason other than (I) Executive's Permanent
Disability or Retirement, (II) Executive's death or (III) for Cause,
or (B) by Executive with Good Reason.
(b) In addition, Executive shall be entitled to the compensation
provided for in this Section 8, if the following events occur: (A) an
agreement is signed which, if consummated, would result in a Change of
Control, (B) Executive is terminated without Cause by the Company or
terminates employment with Good Reason prior to the anticipated Change
in Control, and (C) such termination (or the action leading to such
termination, in the case of Good Reason) is at the request or
suggestion of the acquiror or merger partner or otherwise in
connection with the anticipated Change in Control, except that any
termination of employment as set forth in clause (C), above, shall be
presumed, in the absence of clear and convincing evidence to the
contrary, to have occurred in connection with a Change in Control,
whether or not a Change in Control actually occurs.
(c) The Company shall pay or cause to be paid to Executive a cash
severance amount equal to three times the sum of (i) Executive's
annual Base Salary on the date of the Change in Control (or, if
higher, the annual Base Salary in effect immediately prior to the
giving of the notice of termination), and (ii) the Actual Bonus;
PROVIDED, HOWEVER, that in the event that Executive's employment is
terminated by a Thirteenth-Month Termination, Executive's cash
severance amount shall only be equal to two times the sum of (i) and
(ii) above. This cash severance amount shall be payable in a lump sum
calculated without any discount or, at the election of Executive, on
any deferred payment schedule selected by Executive.
(d) No compensation or other benefit pursuant to this Section 8
hereof shall be payable under this Agreement unless and until either
(i) a Change in Control shall have occurred while Executive is an
employee of a Company and Executive's employment by the Company
thereafter shall have terminated in accordance with this Section 8
hereof or (ii) Executive's employment by the Company shall have
terminated in accordance with this Section 8 hereof in anticipation of
the occurrence of a Change in Control.
(e) Executive shall also be entitled to the (i) Vacation Payment
and the Expense Payment, (ii) the medical and other benefits under
Section 7(a)(C)(i), (iii) vesting of certain security rights under
Section 7(a)(C)(ii), (iv) other accrued and vested plans under Section
7(a)(C)(iii) and (v) outplacement services under Section (a)(C)(iv)
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9. EXCESS PARACHUTE EXCISE TAX.
(i) If it is determined (as hereafter provided) that any payment
or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of
any other agreement, policy, plan, program or arrangement, including
without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or
the vesting or exercisability of any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code
by reason of being "contingent on a change in ownership or control" of
the Company, within the meaning of Section 280G of the Code (or any
successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment
by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(A) Subject to the provisions of this Section 9 hereof, all
determinations required to be made under this Section 9,
including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made
by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change
in Control (or, if such Accounting Firm shall be a nationally
recognized firm of certified public accountants, as selected by
Executive). The Accounting Firm shall be directed by the Company
or Executive to submit its preliminary determination and detailed
supporting calculations to both the Company and Executive within
15 calendar days after the date of termination of employment, if
applicable, and any other such time or times as may be requested
by the Company or Executive. If the Accounting Firm determines
that any Excise Tax is payable by Executive, the Company shall
pay the required Gross-Up Payment to, or for the benefit of,
Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall, at the same
time as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his/her federal, state, local income or other tax
return. Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and
Executive absent a contrary determination by the Internal Revenue
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Service or a court of competent jurisdiction; provided, however,
that no such determination shall eliminate or reduce the
Company's obligation to provide any Gross-Up Payment that shall
be due as a result of such contrary determination. As a result of
the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto) and the possibility of
similar uncertainty regarding state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by
the Company should have been made (an "Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies
pursuant to Section 6(f)(i) hereof and Executive thereafter is
required to make a payment of any Excise Tax, Executive shall
direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and
Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive
within five business days after receipt of such determination and
calculations.
(B) The federal, state and local income or other tax returns
filed by Executive (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on
a consistent basis with the determination of the Accounting Firm
with respect to the Excise Tax payable by Executive. Executive
shall make proper payment of the amount of any Excise Tax, and at
the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income
tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such payment. If
prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive shall within five business
days pay to the Company the amount of such reduction.
(ii) In the event that the Internal Revenue Service claims that
any payment or benefit received under this Agreement constitutes as
"excess parachute payment", within the meaning of Section 280G(b)(1)
of the Code, Executive shall notify the Company in writing of such
claim. Such notification shall be given as soon as practicable but no
later than 10 business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30 day period
following the date on which Executive gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive
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in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (1) give the Company any
information reasonably requested by the Company relating to such
claim; (2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company and reasonably satisfactory to Executive; (3) cooperate with
the Company in good faith in order to effectively contest such claim;
and (4) permit the Company to participate in any proceedings relating
to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited to,
additional interest and penalties and related legal, consulting or
other similar fees) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for and
against any Excise Tax or other tax (including interest and penalties
with respect thereto) imposed as a result of such representation and
any payment of costs and expenses.
(A) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue
or forgo any and all administrative appeals, proceedings,
hearings and conferences with the tax authority in respect of
such claim and may, at its sole option, either direct Executive
to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and Executive agrees to prosecute such
contest before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance; and provide , further, that
if Executive is required to extend the statute of limitations to
enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to
which a corporate deduction would be disallowed pursuant to
Section 280G of the Code and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be
agreed to by the Company without Executive's consent if such
position or resolution could reasonably be expected to adversely
affect Executive (including adversely affecting any other tax
position of Executive unrelated to matters covered hereby).
(B) If, after the receipt by Executive of any amount
advanced by the Company in connection with the contest of the
Excise Tax claim, Executive becomes entitled to receive any
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refund with respect to such claim, Executive shall promptly pay
to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds
the amount advanced by the Company or it is otherwise determined
for any reason that additional amounts could be paid by the
Company to Executive without incurring any Excise Tax, any such
amount will be promptly paid by the Company to Executive. If,
after the receipt by Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination
is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive
in writing of its intent to contest the denial of such refund
prior to the expiration of 30 days after such determination, such
advance shall be forgiven and shall not be required to be repaid
and shall be deemed to be in consideration for services rendered
after the date of the Termination.
(iii) The Company and Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by this Section 9.
(iv) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by this Section 9 hereof shall be borne by the Company.
If such fees and expenses are initially advanced by Executive, the
Company shall reimburse Executive the full amount of such fees and
expenses within five business days after receipt from Executive of a
statement therefor and reasonable evidence of his payment thereof.
10. MITIGATION OF DAMAGES. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
11. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, AZ 85255
Attention: General Counsel
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To Executive:
Dennis L. Ruben, Esq.
5501 East Sanna St.
Paradise Valley, AZ 85253
Any such notice or communication shall be delivered by hand, by telecopy (with
machine confirmation) or by courier or sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in a notice duly delivered as described above), and
the third business day after the actual date of mailing shall constitute the
time at which notice was given.
12. SEVERABILITY; LEGAL FEES. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. In the event that any dispute arises between
Executive and the Company as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceedings or otherwise, including any
action that Executive takes to enforce the terms of this Agreement or to defend
against any action taken by the Company, Executive shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that Executive shall obtain a
settlement or final judgement by a court of competent jurisdiction substantially
in favor of Executive. Such reimbursement shall be paid within ten (10) days of
Executive's furnishing to the Company written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or
expenses incurred by Executive.
13. SUCCESSORS; BINDING AGREEMENT, ASSIGNMENT.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement and shall entitle
Executive to terminate Executive's employment with the Company or such
successor for Good Reason immediately prior to or at any time after such
succession. As used in this Agreement, "Company" shall mean (i) the Company
as hereinbefore defined, and (ii) any successor to all the stock of the
Company or to all or substantially all of the Company's business or assets
(other than with respect to sales of assets in the ordinary course,
securitization and whole loan sales provided by the Company's interim and
permanent financing arrangements) which executes and delivers an agreement
provided for in this Section 13(a) or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law, including
any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amount would be payable to Executive hereunder if Executive
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had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Executive's
estate or designated beneficiary. Neither this Agreement nor any right
arising hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company,
if such successor expressly agrees to assume the obligations of the Company
hereunder.
14. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. At any time during or after
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries, pursuant to the policies set forth in the Company's employee
handbook and compliance manual, as amended from time to time.
16. COVENANT NOT TO COMPETE.
(a) During the period of his employment hereunder and for the first to
occur of (i) one year following the termination of employment of Executive
or (ii) December 31, 2002, Executive agrees that, without the prior written
consent of the Company, (a) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender or employee or in any other capacity, carry on, be engaged
in or have any financial interest in (other than an ownership position of
less than five percent in any company whose shares are publicly traded),
any business, which is in Competition (as defined in Section 16(b)) with
the existing business of the Company or its subsidiaries, and (b) he shall
not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has
been employed by the Company or its subsidiaries at any time during the 12
months immediately preceding such solicitation.
(b) For purposes of this Section 16, a business shall be deemed to be
in Competition with the Company or its subsidiaries if a significant
portion of its business is providing financing to operators in the chain
restaurant, convenience store or automotive service and parts industries in
any portion of the United States.
(c) Executive and the Company agree that this covenant not to compete
is a reasonable covenant under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 16 would irreparably injure the
Company. Accordingly, Executive agrees that the Company may, in addition to
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pursuing any other remedies it may have in law or in equity, cease making
any payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
17. BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
18. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations, including
the provisions of Section 16 herein. The provisions of this Section 18 are in
addition to the survivorship provisions of any other section of this Agreement.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Arizona without reference
to rules relating to conflicts of law.
20. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive including, without limitation, the Continuity
Agreement dated as of May 12, 1999 between the Company and Executive.
21. WITHHOLDING. The Company shall be entitled to withhold from payment any
amount of withholding required by law.
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22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
FRANCHISE FINANCE CORPORATION OF AMERICA
By /s/ Morton H. Fleischer
-------------------------------------
Name: Morton H. Fleischer
Title: Chairman of the Board and
Chief Executive Officer
/s/ Dennis L. Ruben
----------------------------------------
Dennis L. Ruben, Esq.
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