EXHIBIT 10.4
SECOND AMENDMENT TO
AMENDED AND RESTATED
ACCOUNTING AND ADMINISTRATIVE
SERVICES AGREEMENT
This Second Amendment to Accounting and Administrative Services
Agreement ("Second Amendment") is made and entered into this 25/th/ day of June,
1998 by and between Einstein/Noah Bagel Corp., a Delaware corporation (the
"Company"), and Boston Chicken, Inc., a Delaware corporation ("BCI").
RECITALS
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The Company and BCI are parties to an amended and restated accounting
and administrative services agreement dated May 28, 1996, as amended (the
"Services Agreement"). The parties have previously agreed to extend the term of
the Services Agreement past March 26, 1998, on a month-to-month basis, and the
parties now desire to extend the term of the Services Agreement to May 31, 1999
and to amend the Services Agreement as hereafter set forth.
COVENANTS
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In consideration of the matters recited above and the mutual covenants
of the parties, the parties hereto agree as follows:
1.1 Amendment. The Services Agreement shall be amended as of the date
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hereof as follows:
(a) The Services Agreement is amended by changing "Einstein Bros.
Bagels, Inc." to "Einstein/Noah Bagel Corp." and "EBBI" to "ENBC" each
place where such terms appear.
(b) Section 1.1 of the Services Agreement is hereby amended by
deleting clause (b).
(c) Section 2.1 of the Services Agreement is hereby amended by:
(i) deleting clauses (h), (i), (j) and (l) therefrom;
(ii) relettering clause (k) as clause (h); and
(iii) adding the following clause (i):
"(i) administration and maintenance of corporate
payroll, and administration of the processing of payroll and
calculation of applicable tax and other withholdings relating to
the Units or Entities."
(d) Section 3.1 of the Services Agreement is hereby amended by
deleting such section in its entirety and substituting therefor the
following:
"3.1(a) In consideration of the Services and Admin. Items, ENBC agrees
to pay to BCI an accounting and administrative fee per four- or five-
week accounting period of BCI ("Accounting Period"), which shall be
determined for fiscal 1998 by taking the "ENBC Portion" of fees for
Accounting, Payroll & Admin. and Peoplesoft for 1998, as shown on
Exhibit B hereof, deducting therefrom fees previously paid by ENBC
hereunder for fiscal 1998 and dividing the balance by the number of
Accounting Periods remaining in fiscal 1998 for which ENBC has not yet
made payment. Such fee shall be determined for Accounting Periods
after fiscal 1998 by taking the "ENBC Portion" of fees for Accounting,
Payroll and Admin. and Peoplesoft for the applicable fiscal year (as
set forth on a revised Exhibit B prepared by BCI, based on its budget
for such fiscal year, in the same manner as Exhibit B hereof) and
dividing such amount by 13. All such fees shall be subject to
adjustment as provided in Section 3.1(b) hereof.
3.1(b) To the extent BCI's actual overhead for its accounting
department, payroll and administration departments and its
"Peoplesoft" project (including, without limitation, any salary bonus,
severance or other compensation paid to employees assigned to such
departments or projects but excluding severance paid to employees
terminated prior to fiscal 1998) for any fiscal quarter is greater or
less than the applicable proportion of the amount shown on Exhibit B
for such category of overhead, then the fees payable pursuant to
Section 3.1(a) hereof for such fiscal quarter shall be recomputed, in
the manner provided in Section 3.1(a), and any difference shall be
paid to the party entitled thereto in three equal increments over the
three Accounting Periods following the fiscal quarter for which such
adjustment is made. BCI agrees to give ENBC upon ENBC's request all
information reasonably requested by ENBC regarding the amounts BCI has
budgeted or incurred for the foregoing overhead categories.
(e) Section 4.1 of the Services Agreement is hereby amended by
deleting such section in its entirety and substituting therefor the
following:
"4.1(a) The term of this Agreement shall expire on May 31, 1999,
unless the parties mutually agree to extend such term; provided that
either party may terminate this Agreement during the term upon 180
days' prior written notice to the other party; provided, further, that
BCI may terminate this Agreement without notice and cease rendering
the Services and Admin. Items hereunder 15 days after notice of any
non-payment of the fees and expenses provided for herein when such
fees and expenses are
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due and payable, unless such non-payment is cured within such 15 day
period. In connection with any termination of this Agreement (except
where termination is based on ENBC's non-payment of fees and
expenses), BCI agrees to provide to ENBC, at ENBC's expense, all
assistance that may be reasonably requested by ENBC to assist ENBC in
effecting a smooth and orderly transition from the provision of
services hereunder by BCI to the provision of such services by ENBC
employees or other service providers. In addition to the foregoing,
and notwithstanding anything to the contrary, in the event that BCI
sells to a third party that is not an affiliate of BCI all or the
majority of its shares in ENBC and such third party purchaser desires
to transition all of the services described in this Agreement away
from BCI or desires to relocate ENBC's support center, this Agreement
may be terminated on 90 days' notice (a) in either event by ENBC, at
the direction of such purchaser or (b) by BCI in the event of a
relocation of ENBC's support center.
4.1(b) BCI and ENBC further agree that in the event ENBC gives notice
to BCI that ENBC desires to cease the purchase of such services as it
may specify in such notice (but less than all of the services being
provided by BCI hereunder), then BCI and ENBC agree that (i) ENBC
shall be permitted to cease purchasing such services within a
reasonable period of time (but in any event not more than 90 days),
provided that BCI has not reasonably concluded that the discontinuance
of such services would materially interfere with its ability to
continue to provide other services that it is obligated to provide
hereunder, and (ii) they shall negotiate in good faith to determine
the amount by which ENBC's fees hereunder should be reduced, it being
agreed that ENBC shall be entitled to a reduction in such fees to
reflect the marginal reduction to BCI in the overhead necessary to
provide services hereunder resulting from the discontinuance of such
services."
2.1 Continuing Effect of Services Agreement. The Services Agreement, as
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amended hereby, is ratified and confirmed and remains in full force and effect.
3.1 GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
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WITH AND GOVERNED BY THE LAWS OF THE STATE OF COLORADO APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF.
4.1 Counterparts. This Second Amendment may be executed in counterparts,
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each of which shall be deemed an original, but each of which together shall
constitute but one and the same instrument.
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5.1 Headings. The headings of the sections of the Second Amendment are
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inserted for convenience only and shall not be deemed to constitute a part of
this Second Amendment.
IN WITNESS WHEREOF, the parties have executed this Second Amendment to be
effective on the date provided herein.
BOSTON CHICKEN, INC. EINSTEIN/NOAH BAGEL CORP.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxx
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Its:Senior Vice President and Its:Senior Vice President
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General Counsel
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4
1998 ENBC/BCI
Fees Enbc Fee
Calculation
Exhibit B
Allocation Factors ENBC Fee Calculation
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Basis for ENBC
Number of Stores 1998 Budget Allocation Factor Portion
---------------- ------------- ------------ -------- ------------
- Number of BM Stores 1,150 68% ^
Number of EMBC Stores 250 32% ^ Systems $12,080,000 # Stores 32% $3,908,235
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1,700
Accounting $2,658,252 # Stores 32% $860,023
Number of People (12/31/97)
Number of BM People 69% ^ Payroll & Admin.
Number of ENBC People 31% ^ (Including Teleservices) $2,594,395 # People 31% $804,262
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100% PeopleSoft Project Set-up
(less Hardware)* $2,016,718 Half 50% $1,008,359
PeopleSoft Project
Hardware $470,000 # People 31% $146,700
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Total BCI Budget $19,819,365 $6,726,679
* BCI shall include $939,236 of its PeopleSoft Development Cost in its 1999 budget and
$704,427 of its PeopleSoft Development Cost in its 2000 budget. Such amounts
represent financed project costs payable by BCI after 1998, and shall be allocated 50%
to ENBC. In the event the agreement is terminated prior to the time ENBC's share of
such amounts has been recovered by BCI, then ENBC shall pay the remaining amounts to
BCI at a rate of $117,405 per fiscal quarter. BCI agrees to take all actions required
under its agreement with PeopleSoft, Inc. to assure that ENBC shall not have any
obligation to PeopleSoft to pay license fees for Peoplesoft software provided to ENBC
hereunder, including without limitation executing and delivering appropriate
assignment documents under Section 13 of such agreement.
