EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
September 15, 2000 by and between NEW WORLD COFFEE - MANHATTAN BAGEL, INC., a
Delaware corporation ("Corporation"), and R. XXXXX XXXXXX ("Officer").
RECITALS
Corporation desires to continue to employ Officer as its Chairman and Chief
Executive Officer, 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 Chairman and Chief Executive Officer 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, restructuring,
or combination of the foregoing, the persons who are uninterested directors of
Corporation 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; or
(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 Company under Title
11 of the United States Code.
(vii) the stockholders of the Company approve a plan of liquidation or
dissolution of the Company.
(b) "Offer" shall mean a tender offer or exchange offer for shares of
Corporation's Common Stock where the offeror 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; 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 in a Termination
For Cause) and shall include constructive termination of Officer's employment by
reason of (i) material breach of this Agreement by Corporation or (ii) material
dimunition of the Executive's duties, authority or responsibilities as Chairman
and Chief Executive Officer or a member of the Board of Directors, or (iii)
non-renewal of the Officer's employment with substantially comparable terms,
such constructive termination to 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) constructive termination 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
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.
(h) Restructuring
2.2 Basic Term. The term of employment of Officer by Corporation shall be
from September 15 2000 through December 31, 2001, unless terminated earlier
pursuant to this Section 2. Thereafter, the term of employment of Officer by
Corporation shall automatically renew for additional one-year periods, unless
terminated earlier pursuant to this Section 2, commencing each January 1st
unless Corporation or Officer, as the case may be, gives written notice to the
other of its desire not to renew such term, which notice must be given no later
than 90 days prior to the end of the initial term on any such renewal.
2.3 Termination For Cause. Termination For Cause may be effected by
Corporation at any time during the time of this Agreement and shall be effected
by written notification to Officer. Upon Termination For Cause, Officer
immediately shall 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 effect a
Termination For Cause upon 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 determination as to whether
such Termination For Cause was proper.
2.4 Termination Other Than For Cause. Notwithstanding anything else in this
Agreement, Corporation may effect 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 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
date of termination. In such event, Corporation shall pay Officer 75% of his
Base Salary (less any amounts received by Officer under insurance policies
carried by Corporation) through December 31, 2001 (or through the December 31st
of the end of any renewal term if this Agreement is automatically renewed
pursuant to Section 2.2), on the dates specified in Section 3.1. 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 December 31,
2001 (or until the December 31st of the end of any renewal term if this
Agreement is automatically renewed pursuant to Section 2.2).
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.
2.7 Voluntary Termination. In the event of a Voluntary Termination,
Corporation shall immediately pay all accrued salary, bonus compensation of 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 no other compensation or reimbursement of any kind,
including without limitation, severance pay.
2.8 Voluntary Termination With Notice. In the event of a Voluntary
Termination With Notice, Corporation shall pay to Officer all amounts to which
Officer is entitled under Section 2.7, and shall continue to pay Officer his
Base Salary until the earlier of (i) 60 days following such Voluntary
Termination With Notice or (ii) the December 31, 2001 (or December 31st of the
end of any renewal term if this Agreement is automatically renewed pursuant to
Section 2.2).
2.9 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,
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,
Corporation agrees to pay to Officer for the calendar year 2000 a "Base Salary"
payable in equal bi-weekly installments at the rate of $300,000 per annum. The
Base Salary shall be subject to review by the Board of Directors but shall in no
event be less than a rate of $300,000 per annum.
3.2 Bonuses. Officer shall receive a bonus (a "Bonus") of between 35% and
100% of Officer's Base Salary for calendar year 2000 and each subsequent
calendar year (or portion thereof) during the term of this Agreement. The amount
of the Bonus shall be determined by the Compensation Committee of the Board of
Directors upon consideration of Officer's and Corporation's performance during
such period.
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 Company shall maintain and pay for a disability insurance policy
for Officer. In addition, Officer shall be entitled to receive an automobile
allowance of $24,000 per year payable in equal monthly installments (but no
mileage reimbursement) for business travel and reimbursement for mobile phone
expenses. 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.
4. Severance Compensation and Death Benefits
4.1 Severance Compensation. In the event Officer's employment is terminated
in a Termination Other Than For Cause or a Termination Upon a Change in Control,
(i) Officer shall be paid within five (5) days after such termination as
severance compensation an amount equal to three times his annual Base Salary (at
the rate payable at the time of such termination) plus an amount equal to three
times the greater of (a) the amount of his Bonus for the calendar year preceding
such termination or (b) 35% of his Base Salary, (ii) the Company shall continue
to provide for a period of eighteen months from the date of termination and at
its expense, the benefits then being provide to the Officer at the time of such
termination, (iii) each option to purchase shares of common stock of the Company
outstanding at the time of termination shall become fully vested and exercisable
at the time of termination and shall remain exercisable for five (5) years
following the termination date. The amount of any payment or benefit provided
for in this Section 4.1 shall not be reduced by any 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 Company or otherwise.
4.2 No Severance Compensation Upon Other Termination. In the event of a
Voluntary Termination or Termination For Cause, Officer or his estate shall not
be paid any severance compensation.
5. Covenant Not to Compete or Solicit.
5.1 Non-Competition. Until the first anniversary of Termination for Cause
or a Voluntary Termination, 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 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 any business is presently carried on by the
Company. 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 Entire Agreement; Modifications. Except as otherwise provided herein,
this Agreement represents the entire understanding among the parties with
respect to the subject matter hereof, and this Agreement supersedes any and all
prior understandings, agreements, plans and negotiations, whether written or
oral, with respect to the subject matter hereof, including without limitation,
any understandings, agreements or obligations respecting any past or future
compensation, bonuses, reimbursements, or other payments to Officer from
Corporation. All modifications to the Agreement must be in writing and signed by
the party against whom enforcement of such modification is sought.
6.4 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: Chief Executive Officer
If to Officer:
R Xxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx, #000
Xxx Xxxx, Xxx Xxxx 00000
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.4.
6.5 Headings. The Section headings herein are intended for reference and
shall not by themselves determine the construction or interpretation of this
Agreement.
6.6 Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts entered into and wholly to be performed within the State of New York
by New York 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.
6.7 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.
6.8 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.
6.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.
6.10 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.
6.11 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/ Xxxxxx Xxxxxx
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Title: Secretary
OFFICER
/s/ R. Xxxxx Xxxxxx
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R. Xxxxx Xxxxxx
