Exhibit 10.4
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is made as of the 1st
day of May, 1998, by and between Boston Chicken, Inc., a Delaware corporation
(the "Company"), and J. Xxxxxxx Xxxxxxx, a resident of Littleton, Colorado (the
"Executive").
WHEREAS, simultaneously herewith, Executive has agreed to become a member
of the Board of Directors, Chairman, Chief Executive Officer and President of
the Company, and he and the Company have made it a condition of Executive
assuming those positions that Executive and the Company enter into this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are specifically
acknowledged, the parties hereto hereby agree as follows:
Section 1. Employment. Company hereby employs the Executive as Chairman,
Chief Executive Officer and President for a term of five (5) years from the date
hereof (the "Term" or "Employment Period") unless the Term is earlier terminated
pursuant to the provisions hereof. Executive hereby accepts employment from the
Company. Simultaneously with the execution of the Agreement the Company will
elect the Executive to its Board of Directors and the Board of Directors will
elect Executive as Chairman, Chief Executive Officer and President.
Section 2. The Executive's Duties.
The Executive hereby agrees to serve Company faithfully and honestly and to
use his best efforts and ability on behalf of Company in the position of
Chairman, Chief Executive Officer and President and, as a member of the Board of
Directors of the Company, to discharge the duties as Chairman, Chief Executive
Officer and President and shall perform such duties and services of an
executive, administrative and managerial nature, which duties are consistent
with his position in the Company, as shall be specified and designated from time
to time by the Board of Directors of the Company in connection with the business
and activities of the Company.
(a) During the Employment Period, the Company and/or the Board shall
delegate to the Executive, in his capacity as Chairman and Chief Executive
Officer, the widest latitude possible to develop and implement strategies,
procedures, policies and tactics designed to return the Company to sound
financial condition and solid operating performance and shall support the
Executive in such endeavors. The Company and/or the Board will not disseminate
information about the Company to the public without the Executive having a
reasonable period of time to review such information prior to the dissemination
thereof. Nothing in this paragraph is intended to abrogate any fiduciary
responsibility of the Board, and notwithstanding the foregoing, the Board and
its members shall be entitled at all times to act in a manner and to take such
actions as it and they believe to be in the best interests of the Company and
its shareholders, which actions shall not be deemed a breach of this paragraph.
(b) Simultaneously with the execution hereof the Company shall (i) enter
into an Indemnification Agreement with Executive providing the fullest
indemnification (including advancement of expenses) legally possible and (ii)
the Executive will have the benefit of officer and director insurance and/or By-
Law and Articles of Incorporation indemnification provisions available to any
other director or officer of the Company.
(c) During the Term hereof, the Executive shall be employed by the Company
on a full-time basis and shall perform such duties and responsibilities on
behalf of the Company consistent with Executive's position of Chairman, Chief
Executive Officer and President as may be designated from time to time by the
Board of Directors. During the term hereof, the Executive shall devote his full
business time and his best efforts, business judgment, skill and knowledge
exclusively to the advancement of the business and interests of the Company and
its affiliates and to the discharge of his duties and responsibilities
hereunder. The Executive shall not engage in any other business activity or
serve in any industry, trade, professional, governmental or academic position
during the term of this Agreement, except as may be expressly approved in
writing, which approval shall not be unreasonably withheld, by the Board, as the
Company encourages participation by the Executive in community and charitable
activities generally considered to be in the public interest and the Company's
interest. In addition, the Company recognizes that the Executive may make
passive investments which will not interfere with his commitments and duties to
the Company.
(d) The Executive agrees to observe and comply with all lawful written
rules, regulations, policies and practices adopted by Company as they now exist
and as they may be duly and properly adopted or modified from time to time.
Section 3. Compensation and Benefits.
The Company desires to employ a chief executive officer that is an
experienced restaurant executive with significant expertise in working with
under-performing restaurant enterprises. The Company is an under-performing
restaurant enterprise. Executive is a nationally recognized restaurant
executive with significant experience in working with troubled or under-
performing companies. The compensation set forth below to be paid by Company to
Executive has been specifically negotiated between Executive and the Company,
has been approved by the Board of Directors of the Company and the Compensation
Committee thereof. The Company recognizes that the Executive is giving up
significant consideration to accept the position as Chairman, Chief Executive
Officer and President of the Company.
(a) In consideration for all services rendered by the Executive to Company
pursuant to this Agreement, including services as an officer, director, member
of any committee or in the performance of other like duties consistent with his
position of Chairman, Chief Executive Officer and President assigned to him by
the Board of Directors of the Company, Company hereby agrees to pay compensation
to the Executive as follows:
(i) A $5,000,000 cash signing bonus (the "Signing Bonus") payable as
follows:
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(1) $3,000,000 cash upon the execution hereof;
(2) $2,000,000 cash upon the third anniversary date of the
execution hereof.
In the event of the death or disability of the Executive all Signing Bonus
payments received by Executive at the time of such death or disability shall
irrevocably vest in the Executive or Executive's estate and in the event of
Executive's death or disability any unpaid balance of the Signing Bonus shall be
paid to the Executive or Executive's estate upon the scheduled due date thereof.
In the event the Agreement with Executive shall be terminated by the Company
without Just Cause (as herein defined) or by the Executive with Just Grounds (as
herein defined) Executive shall retain any portion of the Signing Bonus received
at the time of such event and shall receive and be paid the remaining portion of
the Signing Bonus unpaid at the time of such termination upon the scheduled due
date thereof. In the event the Agreement shall be terminated by the Executive
without Just Grounds or by the Company with Just Cause then in any such event
the Executive shall forfeit any portion of the Signing Bonus not received by him
as of the date of termination without Just Grounds or termination with Just
Cause and under certain circumstances Executive may be obligated to repay a
portion of the Signing Bonus received by him as follows:
(1) In the event a termination for Just Cause or without Just Grounds
occurs within the first twelve (12) months after the date of this
Agreement the $3,000,000 Signing Bonus payment paid upon the execution
hereof shall be prorated over such 12 month period and Executive shall
be obligated to reimburse a portion of the Signing Bonus prorated to
the end of the month when termination occurs. For example and subject
to the tax adjustment provision herein set forth, if any such
termination occurred within month six (6) Executive would retain 1/2
or 6/12th's of the $3,000,000 and return $1,500,000 of the Signing
Bonus to the Company within thirty days of the date of termination or
if any such termination occurred in the month seven (7) of this
Agreement Executive would retain 7/12th's and reimburse 5/12th's of
the Signing Bonus.
(2) The $2,000,000 Signing Bonus to be paid upon the third anniversary
date of the execution hereof will not be prorated and shall not be
subject to the proration provisions hereof once paid to Executive.
In the event a portion of the Signing Bonus shall be returned to the
Company pursuant to paragraph (1) above, the amount reimbursed to the
Company by Executive shall be adjusted and reduced to take into
consideration the tax consequences to Executive and so that such tax
consequences shall be neutral to the Executive as a result of any such
reimbursement and Executive shall not be responsible for income taxes
or sums to be reimbursed to the Company.
In the event of a "Change of Control" as defined in the Company's 1997
Stock Option Plan the proration provisions hereof shall not be applicable and
the Signing Bonuses shall be paid to Executive on the dates scheduled for
payment.
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(i) The term of the Agreement is five (5) years and Executive's base
salary beginning on the date this Agreement is signed and during the Term hereof
shall be $500,000 per year payable in equal bi-weekly installments in arrears.
(ii) Simultaneously with the execution of this Agreement, the
Executive is executing a stock option agreement under which he will be granted
stock options to purchase a total of 1,000,000 shares of the Company's common
stock (the "Stock Options") all in accordance with the terms of the Stock Option
Agreement attached hereto as Exhibit "A" and incorporated herein for all
purposes. The 1,000,000 stock option shall be granted and vest as follows:
(a) An option to purchase 1,000,000 common shares of the Company
shall be granted upon the execution hereof, which option shall
vest 25% (250,000 shares) a year commencing upon the first
anniversary date of the execution hereof and shall continue to
vest 25% (250,000 shares) a year on each anniversary date
thereafter until all 1,000,000 options to purchase common stock
as set forth in this Section 3(a)(iii)(a) are fully vested.
(b) The Stock Option Agreement shall provide for an acceleration of
vesting of all unvested options upon a Change of Control defined
in the 1997 Stock Option Plan. Pursuant to Section 8 of the 1997
Stock Option Plan the Committee, as defined in the Stock Option
Agreement, shall agree that in the event Executive's employment
is terminated by Executive with Just Grounds or by Company
without Just Cause as such terms are defined herein, then, in
such event, the vesting of all of Executive's unvested Stock
Options shall accelerate as if a "Change of Control" had
occurred.
(iii) Executive shall be entitled to first class air travel and
lodging when he is traveling on Company business and shall be entitled to such
other fringe benefits as are paid to other senior executives of the Company.
(iv) The Company shall provide and maintain group medical, dental,
life and disability insurance benefits to the Executive as are provided to other
senior executives of the Company.
(v) The Executive shall receive from Company a paid vacation each
year in accordance with the present policy and practice of Company regarding
vacations for senior executives.
Section 4. Expenses. The Company shall pay or reimburse the Executive for
reasonable and necessary expenses incurred in the ordinary course of conducting
Company's business and in accordance with written policies established by the
Company. Executive shall submit expense reports accompanied by receipts and
other appropriate substantiation for all items of business expenses for which
payment or reimbursement is sought.
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Section 5. Duration and Termination.
(a) The Executive's employment shall be for a Term of five years
commencing on the date hereof and ending on the date five (5) years later,
unless terminated at an earlier date pursuant to this Section 5.
(b) If during the Employment Period the Executive shall be unable to
perform his duties hereunder on account of illness or disability, he shall be
entitled to compensation in accordance with this Agreement providing that such
illness or disability lasts for less than six (6) months. In the event such
illness or disability lasts for more than a consecutive six (6) month period,
Executive shall be entitled to compensation in accordance with the sick leave
plan of the Company, if any, and shall be covered by the Company's disability
income policy, if any and Executive shall retain the Signing Bonus paid to that
date and shall be paid any unpaid balance thereof as herein provided in Section
3(a) hereof and in all other respects the Company's obligations under this
Agreement shall terminate.
(c) In the event of the Executive's death during his employment
hereunder, his compensation shall cease as of the last day of the full calendar
month following the month in which such event occurs, or the last day of the
Employment Period, whichever is earlier. The salary for the period following
the Executive's death shall be paid to his legal heirs or the representative of
his estate and Executive's estate shall retain the Signing Bonus paid to that
date and shall be paid any unpaid balance thereof as herein provided in Section
3(a) hereof and in all other respects the Company's obligations under this
Agreement shall terminate.
(d) In the event the Executive voluntarily terminates his employment
without Just Grounds for any reason, his right to all compensation shall cease
as of the end of the month of the date of termination of his employment. "Just
Grounds" shall mean (a) resignation by the Executive due to (i) a material
breach of this Agreement by the Company and the Company has failed to cure its
breach of this Agreement within thirty (30) days after the Company receives
written notice thereof, or (ii) the Executive's duties, authority or
responsibilities as Chairman and Chief Executive Officer and a member of the
Board of Directors have been materially diminished other than actions taken in
connection with a termination of Executive's employment for Just Grounds.
(e) In the event (i) this Agreement and the Executive's employment
shall be terminated without Just Cause (as hereinafter defined) or (ii)
Executive terminates his employment with Just Grounds, the Executive shall
receive the greater of two times his then current annual salary or $5,000,000
less the amount of any Signing Bonus previously paid to the Executive, which
remaining unpaid portion of the Signing Bonus shall be paid to Executive on the
due date thereof.
(f) In the event the Board of Directors determines that this
Agreement and the Executive's services hereunder should be terminated with Just
Cause, the Executive's right to all compensation and benefit shall cease as of
the end of the month of the date of termination of his employment. In such
event, the Executive shall be entitled only to such rights as shall have vested
prior to such termination or violation, and he shall not be entitled to any
future cash or
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non-cash compensation, benefits or termination pay. For purposes of this
Agreement, termination for "Just Cause" shall mean (a) a termination due to (i)
a material breach of this Agreement by the Executive, (ii) willful or gross
neglect of duties for which employed or (iii) willful misconduct or gross
negligence in the performance of such duties, all of such facts to be determined
in good faith by the Board of Directors of the Company after Executive has been
given written notice of his purported material breach of this Agreement, willful
misconduct or gross negligence and has failed to cure his breach of this
Agreement or alter his inappropriate conduct within thirty (30) days after
Executive's receiving such written notice, or (b) a termination due to
Executive's committing a felony for which he is convicted with no further rights
of appeal.
(g) Notwithstanding anything above, if the Executive's employment is
terminated by the Company within 180 days after a "Change in Control" (as
defined in the Company's 1997 Stock Option Plan) has occurred, Executive shall
be entitled to receive all unpaid compensation to be paid hereunder for the
remainder of the term hereof on the due dates thereof and all stock options
granted to him pursuant to the Stock Option Agreement shall accelerate and
irrevocably vest in Executive.
Section 6. Governing Law and Arbitration.
(a) Any controversy or claim arising out of or relating to this
Agreement or its interpretation, construction or any breach thereof, or any
relationship between the parties hereto, whether such claim is grounded in
common law or statutory law, shall be settled exclusively by arbitration in the
State of Colorado, in accordance with the then-applicable rules of the American
Arbitration Association, and judgment upon the award rendered may be entered in
any court of competent jurisdiction.
(b) The failure or refusal of either party to submit to arbitration
in accordance with this provision shall be deemed a breach of this Agreement. If
either party seeks and secures judicial intervention requiring enforcement of
this arbitration provision, such party shall be entitled to recover from the
other party all costs and expenses, including reasonable attorneys' fees, that
it was thereby required to incur.
Notwithstanding anything to the contrary herein contained, neither
party shall pursue this arbitration remedy without thirty (30) days prior
written notice, which 30 day period shall be available for informal dispute
resolution discussions.
Section 7. Non-Assignment. The Executive shall have no right to assign
any of the rights, nor to delegate any of the duties, created by this Agreement,
and any assignment or attempted assignment of the Executive's rights, and any
delegation or attempted delegation of the Executive's duties, shall be null and
void. In all other respects, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
beneficiaries, personal representatives, successors, assigns, officers and
directors.
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Section 8. Authorization, Validity and No Conflict.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation of the employment of Executive and the payment of
the consideration set forth herein has been duly authorized by the Board of
Directors of the Company and constitutes a valid and legally binding obligation
of the Company enforceable in accordance with the terms hereof. The execution,
delivery and performance by the Company of this Executive Employment Agreement
will not violate the terms of any agreement or obligation of the Company.
(b) Executive represents and warrants to the Company that he is not
prohibited or restricted from executing, delivering and performing under this
Agreement, that this Agreement constitutes the valid and legally binding
obligation of the Executive enforceable in accordance with its terms, and that
the execution, delivery and performance by the Executive will not violate the
terms of any other agreement or obligation of the Executive.
Section 9. Severability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
Section 10. Waiver. No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party. The failure of either
party to require the performance of any term or obligation of this Agreement, or
the waiver by either party of any breach of this Agreement, shall not prevent
any subsequent enforcement of such term or obligation or be deemed a waiver of
any subsequent breach.
Section 11. Notices. All notices pursuant to this Agreement shall be in
writing.
a. Notice to Executive. A notice to Executive shall be sufficient in all
respects if delivered, or mailed by first class registered or certified mail,
postage and fees prepaid, or sent by an established, reputable courier service,
addressed to the following or such other address as provided by written notice
made pursuant to this Section 11:
If to Executive: J. Xxxxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
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With copy to: Xxxxx Xxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
b. Notice to Company. A notice to Company shall be sufficient in all
respects if delivered, or mailed by first class registered or certified mail,
postage and fees prepaid, or sent by an established, reputable courier service,
addressed to the following or such other address provided by written notice made
pursuant to this Section 12:
If to Company: Boston Chicken, Inc.
14123 Denver Xxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attn: General Counsel
With copy to: Xxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxx & Xxxxx
000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Section 12. Entire Agreement. Except for that certain Confidentiality
Agreement previously executed by the Company and Executive, this Agreement
constitutes the entire agreement between the parties and supersedes all prior
communications, agreements and understandings, written or oral, with respect to
the terms and conditions of the Executive's employment.
Section 13. Amendment. This Agreement may be amended or modified only by
a written instrument signed by the Executive and by an expressly authorized
representative of the Company expressly authorized by the Board of Directors to
execute any such amendment.
Section 14. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
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Section 15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
Boston Chicken, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
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Its: Senior Vice President and General Counsel
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/s/ J. Xxxxxxx Xxxxxxx
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J. Xxxxxxx Xxxxxxx
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