EXHIBIT 10.3
TRANSITION AND CONSULTING AGREEMENT
This Transition and Consulting Agreement (the "Agreement") is entered into
as of the 30th day of April, 1998, by and between Boston Chicken, Inc., a
Delaware corporation (the "Company") and Xxxx X. Xxxxxxxx ("Xxxxxxxx").
RECITALS
X. Xxxxxxxx was employed by the Company in the capacity of Chief Financial
Officer and served as the Vice Chairman of the Company's board of directors.
X. Xxxxxxxx has, on this date, resigned as Chief Financial Officer, Vice
Chairman of the Board of Directors and as an employee and a member of the board
of directors, and the Company desires to engage Xxxxxxxx as a consultant of the
Company on the terms and conditions set forth below.
AGREEMENT
For and in consideration of the foregoing Recitals, which are incorporated
herein as part of this Agreement, the mutual covenants, terms, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are specifically acknowledged, the parties
hereto agree as follows:
1. Consulting Arrangement. Effective on the date hereof and continuing
through January 31, 2000 (the "Term of Consultation"), the Company engages
Xxxxxxxx to render certain consulting services to the Company in Golden,
Colorado. Such consulting services shall include such services as may be
mutually agreed upon from time to time by the Company and Xxxxxxxx in connection
with the projects (the "Projects") described in paragraph 3 below (the
"Consulting Services"). The Consulting Services may also include other advice
and consultation regarding the financial affairs of the Company. Xxxxxxxx shall
devote such time and efforts as reasonably necessary, appropriate and as
requested by Company in serving as team leader for the Projects and any other
consulting services agreed to by Xxxxxxxx and Company. The Company agrees that
this Agreement shall in no way restrict Xxxxxxxx' ability to undertake any
business or other activities, including, without limitation, full-time
employment in the food or restaurant industries, provided such activities and
employment are consistent with the terms of that certain Confidentiality and
Non-Compete Agreement dated as of November 15, 1993 by and between the Company
and Xxxxxxxx (the "Confidentiality and Non-Compete Agreement").
2. The Projects. The Projects shall consist of the following:
a. Acting as team leader for the transaction involving the acquisition by
the Company of BC Equity Funding, L.L.C. and Market Partners, L.L.C.
(the "pool preferred transaction");
b. Acting as team leader for the acquisition of FAD minority equity
interests remaining outstanding after completion of the pool preferred
transaction;
c. To the extent deemed necessary by and at the request of the Company,
acting as team leader with respect to any modification to or
enhancement of the Company's senior credit facility;
d. Acting as team leader with respect to generation of a new cash infusion
in the Company in the form of a sale of assets or newly issued
securities.
The terms and conditions of each of the Projects shall be subject to the
final approval of the Company, which approval the Company may grant or refuse at
its sole discretion.
3. Payments to Xxxxxxxx. In full satisfaction of any obligations the
Company may have to Xxxxxxxx relating in any way to his employment at the
Company and for performing the Consulting Services pursuant to this Agreement,
the Company agrees to pay to Xxxxxxxx the following:
a. Upon execution of this Agreement, the Company shall pay Xxxxxxxx the
sum of $250,000 (the "Base Fee"). The Base Fee shall represent
Xxxxxxxx' base fee for Consulting Services to be rendered during the
period beginning on the date of this Agreement and ending on January
31, 1999. Thereafter, the Base Fee shall be an amount agreed upon by
the Company and Xxxxxxxx, commensurate with the nature and extent of
the Consulting Services to be rendered during such period.
b. In addition to the Base Fee, the Company shall pay to Xxxxxxxx the
following incentive fees (the "Incentive Fee"), payable as and when set
forth below:
1. For that portion of the Consulting Services rendered in connection
with the Project described in Section 2(a) above, upon completion
and closing of the pool preferred transaction, the Company shall
pay to Xxxxxxxx on the date of closing $400,000 in cash in a lump
sum payment;
2. For that portion of the Consulting Services rendered in connection
with the Project described in Section 2(b) above, upon closing of
the acquisitions by the Company of each FAD minority equity
interest, the Company shall pay to Xxxxxxxx on the date of each
closing $15,000 in cash in a lump sum payment;
3. For that portion of the Consulting Services rendered in connection
with the Project described in Section 2(c) above, upon the closing
of any transaction which modifies or enhances the Company's senior
credit facility, to the extent deemed necessary by the Company, the
Company shall pay to Xxxxxxxx on the date of closing $500,000 in
cash in a lump sum payment;
4. For that portion of the Consulting Services rendered in connection
with the Project described in Section 2(d) above, upon the closing
of a transaction
2
which results in a cash infusion to the Company, the Company shall
pay to Xxxxxxxx on the date of closing an amount equal to 1% of the
net amount of such cash proceeds received by the Company from such
infusion in cash in a lump sum payment.
c. In addition, the Company will reimburse Xxxxxxxx for the costs of
Xxxxxxxx' continued participation in the Company-sponsored group
health, medical and dental plans at Xxxxxxxx' current level of coverage
under the Consolidated Omnibus Budget Reconciliation Act ("COBRA")
through the earlier of January 31, 1999, or until Xxxxxxxx is eligible
to obtain coverage under an applicable policy of insurance provided by
a subsequent employer. The foregoing is expressly subject to Xxxxxxxx'
acceptance of, and continued adherence with, all of the terms and
conditions of this Agreement. In no event shall the Company reimburse
Xxxxxxxx for COBRA benefits beyond January 31, 1999. Xxxxxxxx agrees to
give the Company notice within five (5) days of obtaining full-time
employment with another employer. Company's obligation to pay or
reimburse any sums under this Agreement shall cease immediately upon a
material breach by Xxxxxxxx of any of the covenants contained herein.
5. Reasonable Business Expenses. The Company shall pay or reimburse
Xxxxxxxx for all documented expenses incurred by Xxxxxxxx in the course of
performing the Consulting Services. Xxxxxxxx shall submit expense reports
accompanied by receipts and other appropriate substantiation for all items of
business expenses for which payment or reimbursement is sought in accordance
with the Company's standard policies and practices.
6. Office Space and Support. Xxxxxxxx shall be provided, at the Company's
expense, with an office and secretarial support at the Company's principal
offices in Golden, Colorado through January 31, 1999.
7. Non-Solicitation of Employees. Xxxxxxxx agrees that, commencing on the
date of this Agreement and ending on the 2nd anniversary of such date, he will
not directly or indirectly employ or seek to employ any person who is employed
by Company, its subsidiaries or affiliates or by any area developer or
franchisee of Company, nor induce or attempt to induce any such person to leave
said employment without the prior written consent of such person's employer.
8. Release. (a) Xxxxxxxx hereby acknowledges and agrees that the payments
by and obligations of the Company described herein (including the payments by
the Company described in paragraph 3 hereof) are in partial consideration of his
release of the Company, its subsidiaries and area developers and their
respective officers, directors, employees, agents, representatives and insurers
(collectively, the "Released Parties") of any right to bring any legal claim
against the Released Parties of any nature related in any way, directly or
indirectly, to his employment relationship with the Company, including his
separation from employment or his investment in BC Equity Funding, L.L.C.,
Market Partners, L.L.C. or Bagel Store Development Funding L.L.C. This release
is intended to be interpreted in the broadest possible manner, to include all
actual or potential legal claims that Xxxxxxxx may have against the Released
Parties, except as specifically provided otherwise herein. Specifically,
Xxxxxxxx acknowledges and agrees that he,
3
for himself and his successors, assigns and legal representatives, fully and
forever releases and discharges the Released Parties, and each of them, from and
against any and all claims, liabilities, demands, obligations, damages, actions,
or causes of actions of any nature or type whatsoever, whether or not presently
known, including claims, liabilities, demands, obligations, damages, actions or
causes of actions if based in whole or part on acts or omissions occurring
before he delivers this release to the Company, in any way relating to his
employment with the Company, including his separation from employment or his
investment in BC Equity Funding, L.L.C., Market Partners, L.L.C. or Bagel Store
Development Funding, L.L.C., except for his rights described in this Agreement,
any vested rights in Company's pension plans, rights under the Company's
Director and Officer Insurance Policy and under the indemnification provisions
of the Company's Certificate of Incorporation, in each case as they relate to
his duties and service as an officer or director (as applicable) of the Company,
and his COBRA, unemployment compensation and worker's compensation rights, if
any. Xxxxxxxx acknowledges and agrees that the legal rights and claims that he
is giving up include, but are not limited to, his rights, if any, under all
state and federal statutes that protect him from discrimination in employment on
the basis of sex, race, national origin, religion, disability and age, such as
the Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights
Act of 1964, as amended, the Rehabilitation Act of 1973, the Americans With
Disabilities Act, the Family and Medical Leave Act, the Equal Pay Act, and the
Colorado Civil Rights Act, as well as all common law rights and claims, such as
breach of contract, express or implied, tort, whether negligent or intentional,
wrongful discharge and any claim for fraud, omission or misrepresentation
against the Released Parties. The release provided in this section shall become
null and void in the event the Company breaches this Agreement.
(b) In the event that Xxxxxxxx, or any of his successors, assigns or legal
representatives brings any action or legal claim against the Released Parties
that he has released herein, he will be in material breach of this Agreement and
will be obligated to pay, among other fees and expenses, all legal fees and
other costs and expenses incurred by any of the Released Parties in defending
such action or legal claim.
(c) Xxxxxxxx acknowledges that he has been advised to consult a lawyer
concerning this Agreement and that he has up to 21 days after he has received
this Agreement to consider whether to sign it. In addition, after he has signed
and delivered this Agreement to the Company, it will not be effective or
enforceable until the end of the 7th day following Company's receipt of the
signed Agreement (the "Revocation Period"). During the Revocation Period,
Xxxxxxxx may revoke this Agreement, without reason and in his sole judgment, but
he may do so only by delivering a written notice of revocation to the Company as
provided in paragraph 21. If the Company does not receive Xxxxxxxx' written
notice of revocation by the end of the Revocation Period, then this Agreement
will become legally enforceable and Xxxxxxxx may not thereafter revoke it.
9. Indemnification. Pursuant to resolution of the Board of Directors of
the Company, during the period Xxxxxxxx is a consultant hereunder, Xxxxxxxx
shall be indemnified by the Company as provided in its certificate of
incorporation to the same extent as directors and officers of the Company are
entitled to be indemnified thereunder, even though Xxxxxxxx is not an officer or
director of the Company.
4
10. Confidentiality and Non-Compete Agreement. Xxxxxxxx acknowledges that
the Confidentiality and Non-Compete Agreement remains in full force and effect
and that any breach of that agreement shall be deemed to be a breach of this
Agreement which shall terminate any obligations on the part of the Company to
pay or reimburse, from the date of such breach, any amounts due or accruing
under this Agreement.
11. Interest in Options to Acquire Common Stock of the Company and
Einstein/Noah Bagel Corporation. The Company and Xxxxxxxx agree that all of his
options to acquire (a) from the Company shares of common stock of the Company or
(b) from Einstein/Noah Bagel Corporation ("ENBC") shares of common stock of such
company shall continue to vest pursuant to the plans under which they were
granted through January 31, 2000. Xxxxxxxx will have one year following such
date within which to exercise all options which have vested as of such date.
12. Future Cooperation. Xxxxxxxx agrees to cooperate in good faith with
the Company in any third-party litigation instituted by or against the Company
with respect to matters which occurred during the period in which Xxxxxxxx was
employed by or served as a director or officer of the Company. The Company
agrees to reimburse Xxxxxxxx for reasonable expenses incurred by him in
connection with such cooperation with respect to such matters.
13. Independent Contractor. Xxxxxxxx shall be considered an independent
contractor for purposes of this Agreement, and in connection therewith, except
as specifically provided in paragraph 3 hereof, shall not be entitled to
employee benefits normally associated with employment of individuals by the
Company. Xxxxxxxx shall assume all liabilities for all taxes on any amounts
received by him hereunder, and except as specifically provided in paragraph 3
hereof, the Company shall not be required to, but may if legally required,
withhold taxes on such amounts.
14. Communications. Xxxxxxxx and the Company each agree not to disparage,
or otherwise speak negatively of, the other. The Company further agrees to use
reasonable best efforts to cause its directors, officers and employees not to
disparage, or otherwise speak negatively of, Xxxxxxxx. Xxxxxxxx further agrees
not to disparage, or otherwise speak negatively of, any Company service-marked
or trademarked concept, or past or present employee, officer or director of the
Company. Xxxxxxxx agrees to provide the Company the opportunity to review any
press release to be issued by Xxxxxxxx that mentions the Company.
15. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of the Agreement.
16. Descriptive Headings. The descriptive headings used herein are
inserted for convenience only and do not constitute a part of this Agreement.
5
17. Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed, construed and enforced in accordance with the
internal laws of the state of Colorado applicable to contracts made and to be
performed therein.
18. Complete Agreement. This Agreement, the Confidentiality and Non-
Compete Agreement and any applicable Stock Option Plans embody the complete
agreement and understanding between the parties with respect to the subject
matter hereof, and supersede and preempt any prior understanding, agreement, or
representation by or between the parties, written or oral, which may have
related to the subject matter hereof.
19. Amendment. The parties hereto may amend, modify and supplement this
Agreement in such a manner as may be agreed upon by them in writing.
20. Waiver. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by such other party.
21. Notices. Any notice, request, information or other document to be
given hereunder shall be in writing and delivered personally, sent by facsimile
transmission or registered or certified mail, postage prepaid, or overnight
delivery service, as follows:
If to the Company:
Boston Chicken, Inc.
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
If to Xxxxxxxx:
Xxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx
Either party may change the address to which notices hereunder are to be sent to
it by giving written notice of such change of address in the manner herein
provided for giving notice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BOSTON CHICKEN, INC.
By: /s/ Xxxxxxx Xxxxxx /s/Xxxx X. Xxxxxxxx
----------------------------- ----------------------------
Its: Sr. VP & General Counsel XXXX X. XXXXXXXX
6
