EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
September 19, 2001 by and between NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a
Delaware corporation ("Corporation"), and XXXXXX X. XXXXXX ("Officer").
RECITALS
Corporation desires to employ Officer as Executive Vice President, Chief
Financial Officer and Secretary, and Officer is willing to accept such
employment by Corporation, on the terms and subject to the conditions set forth
in this Agreement.
AGREEMENT
1. Duties. During the term of this Agreement, Officer agrees to be employed
by and to serve Corporation as its' Executive Vice President, Chief Financial
Officer and Secretary, and Corporation agrees to employ and retain Officer in
such capacities. Officer shall devote such of his business time, energy, and
skill to the affairs of the Corporation as shall be necessary to perform the
duties of such positions.
2. Term of Employment.
2.1 Definitions. For purposes of this Agreement the following terms shall
have the following meanings:
(a) "Change in Control" shall mean any of the following events:
(i) Any person or group (as such terms are defined in Section 13(d)(3) of
the Exchange Act) has become the holder of more than 40 percent of the
outstanding shares of Corporation entitled to vote for the election of
directors;
(ii) As a result of or in connection with any cash tender offer, merger, or
other business combination, sale of assets or contested election, or combination
of the foregoing, the directors of the Corporation who are not elected by a
contract between the Corporation and another person as of the date of this
Agreement shall cease to constitute a majority of the Board;
(iii) The stockholders of Corporation approve a definitive agreement (i) to
merge or consolidate Corporation with or into another corporation in which the
holders of Corporation's Common Stock immediately before such merger or
reorganization will not, immediately following such merger or reorganization,
hold as a group on a fully-diluted basis both the ability to elect at least a
majority of the board of directors of the surviving corporation and at least a
majority in value of the surviving corporation's outstanding equity securities,
or (ii) to sell or otherwise dispose of all or substantially all of the assets
of Corporation;
(iv) The closing of a transaction or series of transactions in which more
than 50% of the voting power of Corporation is transferred;
(v) an Offer is made;
(vi) a resolution of the Board is passed authorizing the filing or
acquiescence to the filing of a petition for or against the Corporation under
Title 11 of the United States Code; or
(vii) the stockholders of the Corporation approve a plan of liquidation or
dissolution of the Corporation.
(b) "Offer" shall mean a tender offer or exchange offer for shares of
Corporation's Common Stock where the offer or acquires more than 40 percent of
the outstanding shares of Corporation's Common Stock.
(c) "Termination For Cause" shall mean termination by Corporation of
Officer's employment by Corporation by reason of Officer's willful dishonesty
towards or fraud upon the Corporation or by reason of Officer's willful material
breach of this Agreement not cured for 60 days after written notice thereof to
the Officer entitled "Notice of Default", provided that if the same cannot
reasonably be cured in 60 days, and the Officer has promptly commenced a cure of
the same and continues all reasonable efforts to cure the same until the same is
cured, then the 60 day cure period shall be extended automatically to cover the
full period of the cure and Officer shall no longer be in default hereunder when
such cure is effected; provided, however, that Officer's employment shall not be
deemed to have been terminated in a Termination For Cause if such termination
took place as a result of any act or omission (i) believed by Officer in good
faith to have been in the best interests of Corporation or (ii) that did not
result in material injury to Corporation.
(d) "Termination Other Than for Cause" shall mean termination by
Corporation of Officer's employment by Corporation other than a Termination For
Cause and shall include constructive termination of Officer's employment by
reason of, for example (i) material breach of this Agreement by Corporation or
(ii) material diminution of the Officer's duties, authority or responsibilities
as Executive Vice President, Chief Financial Officer and Secretary and/or (iii)
non-renewal of Officer's employment with substantially comparable or better
terms favoring officer, any such constructive termination at the end of the term
shall be effective upon notice from Officer to Corporation of such constructive
termination.
(e) "Voluntary Termination" shall mean termination by Officer of Officer's
employment by Corporation other than (i) termination other than for cause as
described in subsection 2.1(d), and (ii) termination by reason of Officer's
death or disability as described in Sections 2.5 and 2.6.
(f) "Voluntary Termination With Notice" shall mean a Voluntary Termination
that has been preceded by written notice delivered by Officer to Corporation no
later than 60 days (or such shorter period as the parties may agree) prior to
the effective date of such Voluntary Termination.
(g) "Termination Upon a Change in Control" shall mean a termination by
Officer, in his discretion, of Officer's employment with Corporation within 30
days following a Change in Control.
2.2 Basic Term. The term of employment of Officer by Corporation shall be
effective as of July 1, 2001 and through June 30, 2002, unless terminated
earlier pursuant to this Section 2.
2.3 Termination For Cause. Termination For Cause may be affected by
Corporation at any time during the time of this Agreement and shall be affected
by written notification to Officer. Upon Termination For Cause, Officer shall
immediately be paid all accrued salary, bonus compensation to the extent earned
(but not less than the pro rata minimum amount), vested deferred compensation
(other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Corporation in which Officer is a participant to the full extent of Officer's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by Officer in connection with his duties hereunder, all to the
date of termination, but Officer shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
Officer shall have the right to contest the right of Corporation to affect a
Termination For Cause effective upon his giving written notice to Corporation.
In such case, Officer shall continue to receive all of his benefits under this
Agreement (and Officer shall continue to be treated as an employee for purposes
of Corporation stock option plans) until such time as there is a final judicial
determination or other binding administrative determination by an arbitrator
including any appeals or the termination of any applicable appeal period, as to
whether such Termination For Cause was proper.
2.4 Termination Other Than For Cause. Notwithstanding anything else in this
Agreement, Corporation may affect a Termination Other Than For Cause at any time
upon giving notice to Officer of such termination. Upon any Termination Other
Than For Cause, Officer shall immediately be paid all accrued salary, bonus
compensation to the extent earned (but not less than the pro rata minimum
amount), vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Corporation in which Officer is a participant to the
full extent of Officer's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by Officer in connection with his duties
hereunder, all to the date of termination, and all severance compensation
provided in Section 4.1, but no other compensation or reimbursement of any kind.
2.5 Termination by Reason of Disability. If, during the term of this
Agreement, Officer, in the reasonable judgement of the Board of Directors of
Corporation, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than nine (9) months, Corporation shall have the
right to terminate Officer's employment hereunder, effective upon expiration of
the 9 month term of disability by written notification to Officer and payment to
Officer of all accrued salary, bonus compensation to the extent earned (but not
less than the pro rata minimum amount), vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of Corporation in which
Officer is a participant to the full extent of Officer's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
Officer in connection with his duties hereunder, all to the effective date of
termination. Officer shall be entitled to continued participation in all of
Corporation's benefit plans (to the extent permitted by law or under the terms
of such plans) until June 30, 2002 (or until the June 30th of the end of any
renewal term if this Agreement is renewed.)
2.6 Death. In the event of Officer's death during the term of this
Agreement, Officer's employment shall be deemed to have terminated as of the
last day of the month during which his death occurs and Corporation shall pay to
his estate all accrued salary, bonus compensation to the extent earned (but not
less than the pro rata minimum amount), vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of Corporation in which
Officer is a participant to the full extent of Officer's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
Officer in connection with his duties hereunder, all to the date of termination.
In such event, Corporation shall pay Officer's estate 75% of his Base Salary and
minimum bonus (less any amounts received by Officer's estate under insurance
policies carried by Corporation) for a one year period, on the dates specified
in Section 3.1.
2.7 Voluntary Termination With Notice. In the event of a Voluntary
Termination With Notice, Corporation shall pay to Officer all compensation and
benefits due hereunder including but not limited to bonuses and vacation pay
Base Salary (i) through the effective date of such voluntary termination with
notice, and (ii) for 60 days after the effective date of such voluntary
termination with notice.
2.8 Termination Upon a Change in Control. In the event of a Termination
Upon a Change in Control, Officer shall immediately be paid all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Corporation in which Officer is a participant to the full extent of Officer's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by Officer in connection with his duties hereunder, all to the
date of termination, and all severance compensation as provided in Section 4.1,
but no other compensation or reimbursement of any kind.
3. Salary, Benefits and Bonus Compensation.
3.1 Base Salary. As payment for the services to be rendered by Officer as
provided in Section 1 and subject to the terms and conditions of Section 2 and
elsewhere in this agreement, Corporation agrees to pay to Officer a "Base
Salary" payable in equal bi-weekly installments at the rate of $300,000 per
annum. During the term the Base Salary shall be subject to review by the Board
of Directors but shall in no event shall be less than a rate of $300,000 per
annum.
3.2 Bonuses. Officer shall receive a bonus (a "Bonus") of between 30% and
100% of Officer's Base Salary for the term of this Agreement The amount of the
Bonus in excess of the minimum shall be determined by the Compensation Committee
of the Board of Directors within within 90 days after Year-end or within 45 days
after the end of term, as the case may be, and shall be paid promptly after such
determination by the Compensation Committee. Bonus determinations shall be based
upon consideration of Officer's and Corporation's performance.
3.3 Benefits. During the term of this Agreement, Officer shall be eligible
to participate in such of Corporation's benefit and deferred compensation plans
as are now generally available or later made generally available to executive
officers of Corporation, including, without limitation, profit sharing, stock
option, medical, dental, health, annual physical examination, life, disability
insurance, financial planning plans, supplemental retirement programs and
vacation. The Corporation shall maintain and pay for a disability insurance
policy for Officer. In addition, Officer shall be entitled to receive an
automobile allowance of $12,000 per year plus travel expenses (but no mileage
reimbursement) for business travel and reimbursement for mobile phone expenses.
In addition, Officer shall be entitled to receive payments made by the Company
on behalf of Officer for life insurance coverage; Company's contribution shall
be sufficient to pay the full premium on whole life coverage equal to two (2)
times Officer's Base Salary, and shall pay such pro rata amount if Officer
purchases coverage greater than two (2) times Base Salary. Without limiting the
foregoing, Officer shall be entitled to four weeks paid vacation per year.
Officer may elect to receive an amount equal to two weeks additional Salary in
lieu of two weeks of such vacation time and may request payment of any
previously earned and base accrued vacation pay at any time. All of the
foregoing is collectively referred to herein as the "Benefits."
3.4 Options. An option shall be granted to Executive, to be set forth in a
separate Option Agreement, exercisable at $.53 per share (the "Exercise Price"),
for a number of shares of common stock equal to one and one half (1.5%) percent
(the "Initial Option") of the then outstanding common stock (including the
common stock issuable under outstanding options and warrants; "Fully Diluted
Common Stock"), which option will vest as to 33.33% on July 1 ,2001, 33.33% on
June 30, 2002 and 33.33% on June 30, 2003. Executive shall have piggyback
registration rights as to the common stock he may purchase under such options,
to be confirmed by a registration rights agreement having customary terms, which
will be entered into by Corporation and Officer. Officer shall reserve the right
to exercise less than all of the options as they vest.
4. Severance Compensation and Death Benefits
4.1 Severance Compensation. In the event of Officer's death or his
employment is terminated pursuant to a Termination Other Than For Cause or a
Termination Upon a Change in Control, or this Agreement is not renewed by either
party, (i) Officer shall be paid immediately as severance compensation, within
two (2) days after such termination or expiration of agreement as severance
compensation the sum of $300,000, plus accrued bonus and vacation time earned
(ii) the Corporation shall continue to provide for a period of twelve months
from the date of termination or expiration and at its sole expense, the Benefits
then being provided to the Officer, (iii) each option to purchase shares of
common stock of the Corporation outstanding at the time of termination or
expiration of agreement shall become fully vested and exercisable and shall
remain exercisable for five (5) years following such date. The amount of any
payment or Benefit under this Section 4.1 shall not be reduced by any mitigation
or other compensation earned by the Officer as the result of employment or
engagement by another person, by retirement benefits, by offset against any
amount claimed to be owed by the Officer to the Corporation, or otherwise.
5. Covenant Not to Compete or Solicit.
5.1 Non-Competition. Until the first anniversary of Termination for Cause
or a Voluntary Termination with Notice, Officer shall not directly or
indirectly, without the prior written consent of the Corporation engage anywhere
in the Northeastern United States in (whether as an employee, consultant,
proprietor, partner, director or otherwise), or have any ownership interest in
(except for ownership of ten percent (10%) or less of any outstanding entity
whose securities are listed on a national securities exchange), or participate
in the financing, operation, management or control of, any firm, corporation or
business (other than Corporation) that engages in the marketing or sale of
specialty coffee or bagels as its principal business.
5.2 Separate Covenants. The covenants contained in Section 5.1 above shall
be construed as a series of separate covenants, one for each county, city and
state of any geographic area where the Corporation presently carries on any
business. Except for geographic coverage, each such separate covenant shall be
identical in terms to the covenant contained in Section 5.1. If, in any judicial
proceeding, a court refuses to enforce any of such separate covenants (or any
part thereof), then such unenforceable covenant (or such part) shall be
eliminated from this Agreement to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 5 are deemed to exceed the time, geographic or scope
limitations permitted by applicable law, then such provisions shall be reformed
to the maximum time, geographic or scope limitations, as the case may be,
permitted by applicable laws.
6. Miscellaneous.
6.1 Confidentiality. Officer agrees that all confidential and proprietary
information relating to the business or operations of Corporation shall be kept
and treated as confidential both during and after the term of this Agreement,
except as may be permitted in writing by Corporation's Board of Directors or as
such information is within the public domain or comes within the public domain
without any breach of this Agreement.
6.2 Waiver. The waiver of the breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of the
same or other provision hereof.
6.3 Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by first-class mail, certified or
registered with return receipt requested, or by recognized overnight courier to
the respective persons named below:
If to Corporation:
New World Coffee - Manhattan Bagel, Inc.
000 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Chairman of the Board
If to Officer:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxx.
Xxxxxxxx, XX 00000
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.3.
6.4 Headings. The Section headings herein are intended for reference and
shall not by themselves determine the construction or interpretation of this
Agreement.
6.5 Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
contracts entered into and wholly to be performed within the State of New Jersey
by New Jersey residents. All claims, disputes and other matters in question
between Corporation and Officer arising out of, or relating to this Agreement or
the breach thereof, shall, if requested by Officer, be decided by arbitration in
the City of New York in accordance with the rules of the American Arbitration
Association. The arbitrators shall be empowered to award reasonable counsel fees
and expenses to the party prevailing.
6.6 Severability. Should a court or other body of competent jurisdiction
determine that any provision of this Agreement is excessive in scope or
otherwise invalid or unenforceable, such provision shall be adjusted rather than
voided, if possible, so that it is enforceable to the maximum extent possible,
and all other provisions of this Agreement shall be deemed valid and enforceable
to the extent possible.
6.7 Survival of Corporation's Obligations. Corporation's obligations
hereunder shall not be terminated by reason of any liquidation, dissolution,
bankruptcy, cessation of business, or similar event relating to Corporation.
This Agreement shall not be terminated by any merger or consolidation or other
reorganization of Corporation. In the event any such merger, consolidation, or
reorganization shall be accomplished by transfer of stock or by transfer of
assets or otherwise, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or person. This Agreement shall be binding
upon and inure to the benefit of the executors, administrators, heirs,
successors and assigns of the parties; provided, however, that except as herein
expressly provided, this Agreement shall not be assignable either by Corporation
(except to an affiliate of Corporation) or by Officer.
6.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.
6.9 Withholdings. All compensation and benefits to Officer hereunder shall
be reduced by all federal, state, local and other withholdings and similar taxes
and payments required by applicable law.
6.10 Indemnification. In addition to any rights to indemnification to which
Officer is entitled to under the corporation's Certificate of Incorporation and
Bylaws, Corporation shall indemnify officer at all times during and after the
term of this Agreement to the maximum extent permitted under Section 145 of the
Delaware Corporations Code or any successor provision thereof and any other
applicable state law, and shall pay Officer's expenses in defending any civil or
criminal action, suit or proceeding, to the maximum extent permitted under such
applicable state law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NEW WORLD COFFEE- MANHATTAN BAGEL, INC.
By: /s/ R. Xxxxx Xxxxxx
-------------------
Title: Chairman of the Board
OFFICER
/s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
