Settlement Agreement
THIS AGREEMENT is entered into as of this 14th day of December, 1998, by
and among Xxxxxx X. Xxxxxxx, individually ("Xx. Xxxxxxx"), Xxxxxxx & Associates,
Inc. ("Xxxxxxx Firm" and collectively with Xx. Xxxxxxx, the "Xxxxxxx Parties")
and Fine Host Corporation ("Company").
Recitals
WHEREAS, pursuant to a retention agreement, dated December 16, 1997
("Retention Agreement"), the Company retained the Xxxxxxx Firm to act as its
crisis manager;
WHEREAS, pursuant to an employment letter, dated March 1, 1998 (the
"Employment Agreement"), the Company retained Xx. Xxxxxxx to serve as President
and Chief Executive Officer of the Company;
WHEREAS, Xx. Xxxxxxx'x term of employment under the Employment Agreement
expires December 31, 1998;
WHEREAS, Xx. Xxxxxxx also serves as a director of the Company;
WHEREAS, Messrs. Xxxxxxx Xxxxxxx (through his company) and Xxxxx Xxxxx are
Xxxxxxx Firm personnel who have been working at the Company pursuant to the
Retention Agreement;
WHEREAS, Paragraph 5 of the Retention Agreement contains an agreement that
Fine Host shall not employ Xxxxxxx Firm personnel during the period of the
Retention Agreement and for a period of one year after termination of the same
unless the Xxxxxxx Firm consents in writing;
WHEREAS, Messrs. Xxxxxxx and Musso are each party to engagement agreements
with the Xxxxxxx Firm which contain trade secret and nondisclosure protections
and also provide that they agree not to seek or accept employment with, or
contract to provide services to the Company at any time during the term of his
agreement with the Xxxxxxx Firm, or within 12 months following the termination
of the applicable agreement;
WHEREAS, there is a substantial dispute about the amount of severance and
incentive compensation and other payments and benefits due Xx. Xxxxxxx under his
Employment Agreement;
WHEREAS, the Company and the Xxxxxxx Parties wish to resolve various actual
and potential disputes between them; and
WHEREAS, the Company wishes to engage Messrs. Xxxxxxx and Xxxxx as its
employees;
NOW, WHEREFORE, for good and valuable consideration, including the
consideration set forth above and the compromise of claims and exchange of
mutual releases set forth below, the parties hereby agree as follows:
1. Payment. The Company shall pay Xx. Xxxxxxx on behalf of the Xxxxxxx
Parties the sum of $500,000, with (i) $200,000 of this amount to be paid in
immediately available funds by wire transfer on the date hereof, (ii) $200,000
of this amount to be paid by wire transfer two business days prior to any
bankruptcy filing (or if no bankruptcy has been filed by February 26, 1999, then
on February 26, 1999) and (iii) provided that Xx. Xxxxxxx has materially
performed his obligations hereunder, the remaining $100,000 to be paid by wire
transfer as a success fee within five business days of the effective date of a
confirmed Chapter 11 plan for the Company (or if no bankruptcy has been filed by
April 30, 1999, then on April 30, 1999). Each wire transfer will be made in
accordance with the wire transfer instructions to be furnished to the Company by
Xx. Xxxxxxx or Xxxxxxxxxxxx Xxxx & Xxxxxxxxx on his behalf. These payments shall
be treated as a lump sum settlement payment and shall not be subject to
withholding or similar taxes. Xx. Xxxxxxx shall be responsible for any personal
income or other personal taxes which he may owe in connection with these
payments.
The Xxxxxxx Firm will pay all previously unpaid fees and expenses
incurred through the date hereof from the $75,000 retainer held by the Xxxxxxx
Firm; provided, that no fee shall be incurred by the Xxxxxxx Firm for services
rendered by Xx. Xxxxxxx after the date hereof. To the extent such fees and
expenses exceed such retainer, the Company shall pay any invoice for such excess
within five business days of receipt of such invoice. To the extent that there
is any retainer on February 12, 1999 in excess of fees and expenses invoiced to
such date, the excess portion of the retainer shall be returned to the Company
by the Xxxxxxx Firm. The Company has paid $114,711.89 to the Xxxxxxx Firm for
sales tax on consulting services rendered to the Company by the Xxxxxxx Firm
through September 30, 1998. The Xxxxxxx Firm holds these funds in trust for the
State of Connecticut, is completing the necessary forms, and will remit the
funds to the State of Connecticut. The Company has also paid the Xxxxxxx Firm
for Connecticut sales tax on consulting services rendered to the Company by
Xxxxxxx from October 1, 1998 through December 4, 1998 and the Xxxxxxx Firm holds
those payments in trust for the State of Connecticut, is completing the
necessary forms, and will remit the funds to the State of Connecticut. The
Company will pay, either directly to the State of Connecticut or through the
Xxxxxxx Firm, all sales taxes relating to consulting services rendered to the
Company by the Xxxxxxx Firm since December 4, 1997 through the date hereof which
have not previously been paid to date.
The Company will pay Xx. Xxxxxxx those expenses which he has incurred
on behalf of the Company to the date hereof, but which have not been paid to
this date, up to an aggregate not to exceed $4,500.
Other than as specifically provided in this Agreement, Xx. Xxxxxxx will
not seek any other compensation or benefits under his Employment Agreement and
the Xxxxxxx Firm will not seek any other compensation or benefits under its
Retention Agreement.
2. Xx. Xxxxxxx'x Status. Xx. Xxxxxxx'x tenure as President and as an
officer or director of any subsidiary of the Company will expire upon signing
this Agreement. Xx. Xxxxxxx'x tenure as Chief Executive Officer of the Company
will continue until the term of his employment agreement expires on December 31,
1998 and as of that date, he will no longer be Chief Executive Officer of the
Company. The Company has informed Xx. Xxxxxxx that it intends to appoint Xx.
Xxxxxxx as President and Chief Operating Officer of the Company effective upon
entry into this Agreement. Except as otherwise provided in this Agreement, Xx.
Xxxxxxx will continue to perform his duties as Chief Executive Officer of the
Company until December 31, 1998 for no additional compensation.
3. Directorship. Xx. Xxxxxxx shall serve the Company as Chairman of the
Board of Directors until his successor is duly appointed or elected. Xx. Xxxxxxx
shall be entitled to a fee per meeting equal to the amount paid to other
directors per meeting (whether the meeting is in person or by telephone
conference) plus reimbursement of reasonable travel and related out of pocket
expenses. Xx. Xxxxxxx shall be entitled to the same indemnities and liability
insurance benefits as the other directors for actions taken during the period he
continues to serve as a director.
4. Further Services of Xx. Xxxxxxx. If requested by the Company, which
request will be made through a member of the Company's board of directors or its
inside general counsel, after December 31, 1998 Xx. Xxxxxxx will continue to
provide appropriate services requested upon reasonable advance notice by the
Company, including, without limitation, contacts with customers, vendors and
performance bond companies, and, as provided below, shall be paid $5,000 per day
for such services after December 31, 1998 plus reimbursement of reasonable
travel and related out of pocket expenses. To the extent requested by the
Company, Xx. Xxxxxxx will work each business day in the week leading up to and
the week of the Company's Chapter 11 filing, which is contemplated to occur on a
Friday, but he will receive no per diem compensation for services during this
two week period. He will, however, receive reimbursement of reasonable travel
and out of pocket expenses during this two week period. Notwithstanding the
foregoing, the Company understands that Xx. Xxxxxxx will be out of the country
from January 8 to January 15, 1999 and will not expect Xx. Xxxxxxx to work
during that period.
After December 31, 1998, Xx. Xxxxxxx shall be paid at the hourly rate
of $425 per hour for isolated phone calls or correspondence totalling less than
four hours' duration in a given day and that such activities shall not
constitute a reimbursable day hereunder (but this agreement shall not affect the
obligation of the Company to pay meeting fees under paragraph 3 for telephonic
board of directors meetings of any duration).
All amounts payable to Xx. Xxxxxxx under this paragraph 4 shall be paid
within five business days of his presentation of an invoice to the Company for
compensable services and reimburseable expenses permitted hereunder. Xx. Xxxxxxx
shall not be entitled to any fees or expenses under this paragraph 4 for
services rendered as a director of the Company.
5. Consent to Xxxxxxx and Musso Employment. The Xxxxxxx Firm hereby
consents to the employment of Messrs. Xxxxxxx (and/or Xx. Xxxxxxx'x company) and
Musso by the Company without payment of any placement or similar fee; provided,
however, that Messrs. Xxxxxxx and Xxxxx provide the Xxxxxxx Firm with a written
acknowledgement that their consulting relationship with the Xxxxxxx Firm is
terminated and that the Xxxxxxx Firm has performed all obligations due to them
through the date of this Agreement. The obligation of the Xxxxxxx Firm to
perform further services under the Retention Agreement shall terminate on the
date hereof.
6. Press Release, Employee and Other Corporate Communications. The
Company shall prepare press and employee releases to be issued not earlier than
the entry into this Agreement announcing the (i) expiration of Xx. Xxxxxxx'x
serving as President of the Company effective as of the date of this Agreement,
(ii) continuation of Xx. Xxxxxxx'x term as Chief Executive Officer until his
contract expires on December 31, 1998, (iii) continuation of Xx. Xxxxxxx as
Chairman of the Board of Directors and (iv) election of a new President and
Chief Operating Officer. The Company shall provide a draft of all press releases
or employee or other corporate communications relating to Xx. Xxxxxxx or the
Xxxxxxx Firm prior to its issuance to Xx. Xxxxxxx and his counsel for their
review and comment, which comments shall be reasonably accommodated by the
Company. Xx. Xxxxxxx acknowledges that the Company will be required to file this
Agreement with the Securities and Exchange Commission.
7. Disparagement. The parties shall not (nor shall they encourage their
officers, directors, employees, agents, affiliates or representatives to)
disparage each other in any way or except to the extent required by law, shall
not disclose the substance of these negotiations.
8. Letter of Commendation. On the date hereof, the Company shall
provide a letter of commendation for Xx. Xxxxxxx and the Xxxxxxx Firm,
recognizing the substantial contributions by the Xxxxxxx Parties to the improved
financial position of the Company. A draft of such letter shall be provided
prior to its issuance to the Xxxxxxx Parties and their counsel for their review
and comment, which comments shall be reasonably accommodated. The Company
consents to the Xxxxxxx Parties referring to this engagement and the letter of
commendation in their marketing and advertising efforts.
9. Chapter 11 Documents. The Company shall provide a draft of the
Company's proposed Chapter 11 plan and any other documents which may affect Xx.
Xxxxxxx or the Xxxxxxx Firm to the Xxxxxxx Parties and their counsel as promptly
as practicable prior to such document being filed with the bankruptcy court. The
Company will reasonably accommodate the comments of the Xxxxxxx Parties related
to provisions describing or which affect either of the Xxxxxxx Parties. Without
limiting the foregoing, the Company agrees that it shall use its reasonable
efforts to assure that its Chapter 11 plan provide that (i) the Xxxxxxx
Releasing Parties (as hereinafter defined) shall receive as broad and favorable
a release (and be entitled to the protections of related injunctive and other
protections) as is being received by any other Company related person under the
Chapter 11 plan, the confirmation order and similar releasing documents and (ii)
all continuing indemnification, director and officer insurance and similar
protections during the Chapter 11 case or after confirmation shall also be
extended to Xx. Xxxxxxx to the same extent they are being provided to then
current directors and executive officers of the Company. The Company will seek
to assume this Agreement as part of its Chapter 11 plan.
10. Release from Company. The Company (on behalf of itself and its
agents, affiliates, officers, directors, employees, partners, attorneys,
creditors, shareholders, successors and assigns (collectively, the "Fine Host
Parties")) hereby forever releases and acquits the Xxxxxxx Parties and their
respective agents, affiliates, shareholders, officers, employees, successors and
assigns from all actions, causes of action, suits, debts, accounts, reckonings,
sums of money, bills, covenants, contracts, controversies, agreements, promises,
damages, claims, judgments and demands whatsoever, known or unknown, in law or
equity, relating in any way to their relationship to date, including, without
limitation, under the Employment Agreement or the Retention Agreement. Nothing
herein shall release the Xxxxxxx Parties from their obligations under this
Agreement.
The Company expressly warrants and represents that the Fine Host
Parties have not sold, granted, transferred or assigned or caused to be sold,
granted, transferred or assigned to any other person, firm or corporation any
portion of the claims being released hereby.
11. Release from Xxxxxxx Parties. The Xxxxxxx Parties (on behalf of
themselves and their agents, affiliates, officers, directors, employees,
partners, attorneys, creditors, shareholders, successors and assigns
(collectively, the "Xxxxxxx Releasing Parties")) hereby forever release and
acquit the Fine Host Parties and their respective agents, affiliates,
shareholders, officers, employees, successors and assigns from all actions,
causes of action, suits, debts, accounts, reckonings, sums of money, bills,
covenants, contracts, controversies, agreements, promises, damages, claims,
judgments and demands whatsoever, known or unknown, in law or equity, relating
in any way to their relationship to date, including, without limitation, under
the Employment Agreement or the Retention Agreement. Nothing herein shall
release the Fine Host Parties or any insurer from (i) the Company's obligations
under this Agreement, (ii) the indemnity obligations under paragraph 10 of the
Employment Agreement, paragraph 6 of the Retention Agreement, the Company's
certificate of incorporation and bylaws or other applicable law, (iii)
solicitation or employment of any personnel (other than Messrs. Xxxxxxx and
Musso) in violation of paragraph 4 of the Retention Agreement (provided that the
employment of any party with the Xxxxxxx Firm's written consent such as the
parties set forth in Paragraph 5 hereof and Xxxxxxxx Xxxxxxx shall not be a
violation of such paragraph) or (iv) the obligation to provide director and
officer liability insurance to Xx.
Xxxxxxx pursuant to paragraph 7 of his Employment Agreement.
The Xxxxxxx Parties expressly warrant and represent that the Xxxxxxx
Releasing Parties have not sold, granted, transferred or assigned or caused to
be sold, granted, transferred or assigned to any other person, firm or
corporation any portion of the claims being released hereby.
12. Expenses of Xxxxxxx Parties. Promptly after the Xxxxxxx Parties'
submission to the Company of invoices therefore, the Company shall pay or
reimburse the Xxxxxxx Parties for the reasonable attorneys fees and expenses
incurred by the Xxxxxxx Parties in connection with (a) negotiation and
documentation of this Agreement, (b) enforcement of this Agreement, (c)
preparation of any proofs of claim for the Xxxxxxx Parties or their counsel in
the Chapter 11 case or (d) indemnification expenses (including advances of fees
and costs where applicable) within the scope of caveat (ii) of the
indemnification obligations set forth in paragraph 11 hereof. The Company will
pay $20,000 in immediately available funds to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx,
counsel to the Xxxxxxx Parties, by wire transfer in accordance with the wire
transfer instructions provided by Sonnenschein to the Company, to be held as a
retainer and applied to reimbursable expenses simultaneously with providing
copies of the invoices to the Company; provided, however, any unapplied retainer
in excess of amounts due under this paragraph 12 will be returned to the Company
on the first anniversary of the effective date of the Company's chapter 11 plan.
The Company's obligation to reimburse for expenses in connection with the
negotiation and documentation of this Agreement and the preparation of proofs of
claim is capped at $20,000; but this cap shall not apply to reimbursement for
expenses related to enforcement by the Xxxxxxx Parties of this Agreement or
indemnification expenses.
13. Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
14. Entire Agreement; Modification and Waiver. This Agreement (together
with the documents cross referenced herein) contains the entire understanding of
the parties with respect to the relationship of the Company and the Xxxxxxx
Parties. No waiver, supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by each of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar).
15. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) sent by reputable guaranteed
overnight courier, on the next business day after the date on which it is so
sent:
If to either of the Xxxxxxx Parties:
00 Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
If to Company:
0 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
or to such other address as may be furnished by the party to receive notice to
the other.
16. Governing Law. This Agreement is governed by, and construed in
accordance with, the laws of the State of New York with respect to contracts
made and to be performed entirely therein, and without regard to choice of law
or principles thereof.
17. Survival. The provisions of this Agreement shall survive any
termination of the services of either of the Xxxxxxx Parties by the Company and
shall be binding upon the successors and assigns of the Company and shall issue
to the benefit of the successors, assigns, heirs, devisees, and personal
representatives of the Xxxxxxx Parties.
18. Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
AGREED as of the date set forth above.
FINE HOST CORPORATION
By:____________________________
-----------------------------
Xxxxxx X. Xxxxxxx
Individually
XXXXXXX & ASSOCIATES, INC.
By: _______________________
Xxxxxx X. Xxxxxxx
President
