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EXHIBIT 10.5
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SERVICES AGREEMENT
BY AND BETWEEN
EINSTEIN/NOAH BAGEL PARTNERS, L.P.
AND
EINSTEIN/NOAH BAGEL CORP.
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DECEMBER ____, 1997
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SERVICES AGREEMENT
This Services Agreement ("Agreement") is made as of December
__, 1997 (the "Effective Date"), by and between Einstein/Noah Bagel Partners,
L.P., a Delaware limited partnership ("Bagel Partners") and Einstein/Noah Bagel
Corp., a Delaware corporation ("ENBC").
Recitals
A. Bagel Partners develops, owns and operates certain retail
food service establishments primarily utilizing ENBC's proprietary Einstein
Bros.(R) and Noah's New York Bagels(R) concepts ("Stores") within certain
defined geographic areas.
B. As of December 15, 1997, ENBC has offered employment to
all employees of Bagel Partners (the "Transferred Employees").
C. Bagel Partners desires that ENBC provide the services
(the "Services") provided by the Transferred Employees to Bagel Partners prior
to their employment by ENBC (their "ENBC Employment"), and ENBC has agreed to
provide the Services, upon the terms and subject to the conditions forth in
this Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, as well as other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. ENGAGEMENT OF ENBC.
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1.1 Services. Bagel Partners hereby engages ENBC to
provide the Services and ENBC hereby agrees to provide the Services on the
terms and subject to the conditions set forth in this Agreement. Bagel Partners
and ENBC agree that the Services shall include, without limitation, accounting,
corporate, managerial, human resources and training, operational, marketing,
real estate and construction, insurance and information system services.
ENBC further agrees to make the Transferred Employees
and the New Employees (as defined herein) available to Bagel Partners and its
management for meetings and consultation at the reasonable request of Bagel
Partners. All direct and out-of-pocket expenses incurred by ENBC in the course
of such meetings and consultation with Bagel Partners shall be borne solely by
Bagel Partners.
1.2 Stores. Bagel Partners and ENBC agree that the
Services will be provided to Stores existing on the date hereof and developed
by Bagel Partners and its subsidiaries after the date hereof.
1.3 Personnel. Bagel Partners and ENBC agree that
the Services shall be provided by the Transferred Employees and any employees
subsequently hired by ENBC, in ENBC's sole discretion, to provide the Services
(the "New Employees").
2. TERM AND TERMINATION. Either party hereto may terminate
this Agreement upon ninety (90) days' prior written notice to the other party.
In the event of any such termination under this Section 2, Bagel Partners shall
be obligated to pay ENBC, upon termination, all fees due and payable to ENBC
under this Agreement through and as of the date of such termination, together
with such reasonable costs and expenses incurred by ENBC as a result of such
termination.
3. FEES AND COSTS. In consideration for the provision of the
Services, Bagel Partners shall pay to ENBC an amount equivalent to all payroll,
employee benefit, overhead and administrative and other expense severally
associated with fees and costs incurred by ENBC in employing the Transferred
Employees and the New Employees. Such amounts shall be paid
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by Bagel Partners as and when such expenses are incurred by ENBC. Bagel
Partners shall also reimburse ENBC for all out-of-pocket expenses incurred by
ENBC in providing services hereunder, upon receipt of appropriate supporting
documentation. Notwithstanding the foregoing, ENBC will not be entitled to
compensation from Bagel Partners with respect to any grants of options to
purchase ENBC common stock granted to any such Transferred Employees or New
Employees.
4. OTHER AGREEMENTS OF THE PARTIES.
4.1 Cooperation. Bagel Partners and ENBC make the
following material covenants, upon which each party relies as an inducement to
enter into this Agreement:
4.1.1 Bagel Partners agrees to supply ENBC all
information, materials, data, and documents reasonably necessary or advisable
for ENBC to properly perform the Services in such form, format, or media as
ENBC may reasonably request and to reasonably cooperate with ENBC in the
performance of its duties hereunder, and Bagel Partners further agrees to use
reasonable efforts to cause each of its Stores to do the same.
4.1.2 Bagel Partners agrees to provide ENBC with
reasonable access to Bagel Partners' office(s) for use by employees and/or
agents of ENBC who are providing and/or delivering Services to Bagel Partners.
4.1.3 Bagel Partners agrees that it shall carry
insurance with respect to its operations and Stores as required by ENBC under
its development agreement and license agreement with ENBC.
4.1.4 Each of ENBC and Bagel Partners will
promptly examine documents submitted by the other and will promptly render
decisions pertaining thereto, when required, to avoid excessive delay in the
performance of their respective obligations hereunder. ENBC and Bagel Partners
shall execute and deliver any and all applications and other documents as are
deemed necessary or appropriate in connection with this Agreement.
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4.1.5 ENBC and Bagel Partners will permit each
other to examine and copy data in their respective possession and control which
affect the performance of their respective obligations under this Agreement,
and will in every way reasonably cooperate with each other to enable the
performance of their respective obligations under this Agreement. Bagel
Partners shall hold in strictest confidence any and all confidential
information that may come into Bagel Partners' possession or within Bagel
Partners' knowledge concerning any of the products, services, processes,
suppliers, operations and financial information of ENBC. Bagel Partners
acknowledges that such information is of a highly confidential nature and is to
be used solely for the purpose of assisting Bagel Partners in connection with
this Agreement and in developing and refining its operations and Stores. Bagel
Partners agrees to keep such information confidential and not to divulge such
information to any third parties, except that Bagel Partners may disclose such
information to (i) Bagel Partners' agents, including, but not limited to, Bagel
Partners' accountants and/or attorneys, and Bagel Partners' investors, so long
as such agent/investors are using such information in the course of assisting
Bagel Partners with its operations and development of Stores or to assess or
evaluate their investment, respectively, or (ii) if required to do so by law,
legal process or court order.
4.2 Compliance with Laws. ENBC agrees to use its best
efforts to comply with all governmental laws, regulations, and orders
applicable to its operations with respect to performing the Services as
contemplated by this Agreement.
5. INDEMNIFICATION.
5.1 Indemnification. Notwithstanding any other
agreement between the parties, Bagel Partners shall indemnify, defend, and hold
ENBC and its officers, directors, agents, employees, contractors, and insurers
(collectively, "Indemnified Parties") harmless from, and defend all Indemnified
Parties against, all claims, losses, costs, damages and liabilities asserted
against any Indemnified Party by any person or entity that relate to or arise
from, directly or indirectly: (i) the execution or delivery of this Agreement
by ENBC or Bagel Partners; (ii) the performance by any
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Indemnified Party of the Services to be provided to Bagel Partners under this
Agreement; or (iii) the gross negligence or willful misconduct of Bagel
Partners, its agents, employees, or contractors, including, without limitation,
Bagel Partners' violation or failure to perform, or misrepresentation with
respect to, any of the terms, covenants, conditions, representations or
warranties set forth in this Agreement. The parties understand and agree that
this indemnification obligation shall apply to, without limitation, any claim
by any current or former Transferred Employee arising from any violation or
alleged violation of federal, state or local civil rights laws or ordinances,
or sounding in breach of contract (express or implied), promissory estoppel,
wrongful discharge, tort, defamation, interference with contract or business
advantage, negligence, or reckless or willful misconduct. The parties also
understand and agree that the indemnity obligation shall apply to all
attorneys' fees and related costs incurred by any Indemnified Party in
connection with any indemnified claim or in enforcing Bagel Partners'
obligations under this paragraph.
5.2 Indemnification Procedures. Any party entitled to
indemnification hereunder will give prompt written notice to the indemnifying
party of any claim with respect to which it seeks indemnification and, unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense if assumed,
the indemnifying party will not be required to pay the indemnified party's
legal fees unless the indemnifying party has specifically requested the
participation of indemnified party's counsel. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in
the reasonable judgment of such counsel a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim. Failure to provide notice of any claim hereunder shall
only relieve the indemnifying party hereunder to the extent such failure
prejudices the indemnifying party. An indemnifying party may not settle any
claim on behalf of the indemnified party without the indemnified party's
consent, which shall not be unreasonably withheld, unless such claim is
strictly
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monetary in nature and the indemnifying party is willing to satisfy
such claim in full.
6. MISCELLANEOUS.
6.1 Relationship of the Parties. In performing the
Services set forth in this Agreement, ENBC shall be an independent contractor.
ENBC will have neither express nor implied power or authority to execute
agreements on behalf of Bagel Partners, Bagel Partners' Stores, or any of its
or their employees. Nothing contained in this Agreement shall be construed to
constitute ENBC as a partner or employee of Bagel Partners, nor shall any party
have authority to bind the other in any respect, except as otherwise provided
herein, it being intended that each party shall remain an independent
contractor responsible for its own actions. Except as otherwise provided
herein, ENBC shall not have nor hold itself out as having, the power to make
contracts in Bagel Partners' name, to bind or to pledge Bagel Partners' credit,
or to extend credit in Bagel Partners' name.
6.2 Notices. All notices provided under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by overnight express or facsimile transmission or registered
or certified mail, return receipt requested, postage prepaid, and properly
addressed as follows:
If to ENBC:
Einstein/Noah Bagel Corp.
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
If to Bagel Partners:
c/o Einstein/Noah Bagel Corp.
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: President, Einstein/Noah Bagel Partners, Inc.
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Any 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. Any notice delivered personally or by overnight
express courier or facsimile transmission shall be deemed to have been given on
the date it is so delivered, and any notice delivered by registered or
certified mail delivery service shall be deemed to have been duly given three
business days after it is sent to the intended recipient at the address set
forth above.
6.3 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF
LAW PROVISIONS THEREOF.
6.4 Waiver of Punitive Damages and Jury Trial. IN THE
ABSENCE OF FRAUD, NO PARTY HERETO SHALL SEEK OR BE LIABLE FOR PUNITIVE,
SPECULATIVE, EXEMPLARY, OR SPECIAL DAMAGES FOR ANY ACTION OR INACTION RELATING
TO THIS AGREEMENT. NO PARTY TO THIS INSTRUMENT, WHICH INCLUDES ANY ASSIGNEE,
SUCCESSOR, HEIR, OR PERSONAL REPRESENTATIVE OF A PARTY, SHALL SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE
BASED UPON, OR ARISING OUT OF THIS AGREEMENT, ANY RELATED INSTRUMENT, OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN THE PARTIES. NO PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY HAS BEEN WAIVED, WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED.
THE PROVISIONS OF THIS SECTION 6.4 HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES IN
ENTERING INTO THIS AGREEMENT.
6.5 Waiver. A failure of any party to insist in any
instance upon the strict and punctual performance of any provisions of this
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Agreement shall not constitute a continuing waiver of such provision. No party
shall be deemed to have waived any right, power, or privilege under this
Agreement or any provisions hereof unless such waiver shall have been in
writing and duly executed by the party to be charged with such waiver, and such
waiver shall be a waiver only with respect to the specific instance involved
and shall in no way impair the rights of the waiving party or the obligations
of the other party or parties in any other respect or at any other time. If any
provision of this Agreement shall be waived, or be invalid, illegal, or
unenforceable, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain binding and in full force and effect.
6.6 Amendment. This Agreement may be amended or
modified only by a written instrument signed by each of the parties hereto.
6.7 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, either oral or
written, with respect thereto.
6.8 No Third Party Rights. Nothing contained in this
Agreement is intended, nor shall it be construed, to create any rights in any
person not a party to this Agreement.
6.9 Assignment. This Agreement will be binding and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned by
any party without the written consent of the other party.
6.10 Non-Exclusivity. Bagel Partners and ENBC
acknowledge and agree that each shall have the right to enter into service
agreements with other entities and that this Agreement is not an exclusive
contract, so long as such other service agreements do not in any way affect
ENBC's provision of Services or Bagel Partners' obligations to ENBC hereunder.
6.11 Captions and Headings. The captions and headings
in this Agreement are for convenience and reference only, and the
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words contained therein shall not be held or deemed to define, limit, describe,
explain, or modify, amplify, or add to the interpretation, construction, or
meaning of any provision, or the scope of intent, of this Agreement or to in
any way affect this Agreement.
6.12 Counterparts. This Agreement may be executed in
any number of counterparts, each of which, when so executed and delivered,
shall constitute an original and it shall not be necessary in making proof of
this Agreement to produce or account for more than one original counterpart
hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
EINSTEIN/NOAH BAGEL
PARTNERS, L.P.
By: Einstein/Noah Bagel Partners, Inc.
Its: General Partner
By:
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Name: Xxxxxxx X. Xxxxxx
Title: President
EINSTEIN/NOAH BAGEL CORP.
By:
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Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
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