EMPLOYMENT AGREEMENT
AGREEMENT made as of the 18th day of April, 2000, by and between NEW WORLD
COFFEE - MANHATTAN BAGEL, INC., a Delaware corporation (hereinafter referred to
as the "Company"), having a place of business at 000 Xxxxxxxxxx Xxx Xxxx,
Xxxxxxxxx, XX 00000 and Xxxxxxx X. Xxxxxxxx, residing at 000 Xxxxx Xxxxxx,
Xxxxx, XX 00000 (hereinafter referred to as the "Employee").
WITNESSETH:
In consideration of the mutual covenants herein contained, the parties
hereto agree as follows.
1. Employment. The Company hereby agrees to employ the Employee as
President and Chief Operating Officer, and the Employee hereby agrees to accept
such employment, subject to the terms and conditions hereinafter set forth. The
Employee shall be elected an officer of the Company.
2. Term. The term of the Employee's employment hereunder, except if earlier
terminated pursuant to Paragraph 6 hereof, shall be for a period of two (2)
years beginning on May 15, 2000. The term shall then continue from year to year
thereafter unless either party gives notice to the contrary to the other party
not less than 90 days prior to the commencement of any such one year extension
period.
3. Duties.
(a) During the continuance of this Agreement, the Employee agrees to devote
his attention, full time and best efforts to the rendition of his services
hereunder, which shall include (i) overseeing the control and development of all
brands and product lines, (ii) overseeing the control and development of all
"wholesale" accounts and product lines/sales, (iii) supervision of the Marketing
Department and all real estate and construction activities, (iv) overseeing the
Franchise Sales and Services Department and, (v) overseeing the manufacturing
department (vi) such other executive responsibilities as may be assigned to him
from time to time by the Chairman or Board of Directors of the Company. The
Employee will be based at the Company's Eatontown, New Jersey facility.
(b) The Employee shall be entitled to make personal investments, provided
that none of the same is directly or indirectly competitive with the business of
the Company and further provided that any such activities do not detract from
the services due from the Employee hereunder. Purchases of up to 2% of the stock
of publicly traded companies shall not be restricted.
4. Compensation. In consideration of all of the services to be rendered by
the Employee hereunder, the Employee shall be paid, and he agrees to accept
compensation as follows:
(a) Compensation at an annual rate of one hundred sixty thousand ($160,000)
dollars payable bi-weekly less applicable withholding taxes, subject to such
increases, if any, as may be approved by the Board of Directors of the Company
(the rate per annum which is in effect from time to time being referred to
herein as the "Base Salary" of the Employee).
(b) With respect to each fiscal year of the Company, a performance bonus,
as determined by the Board of Directors, of up to 25% of the employee's base
salary and an annual service bonus of 25% of the Employee's base salary. The
Service Bonus portion shall be payable 50% on or about September 1 of each
fiscal year and the balance shall be payable at its customary time following the
end of each fiscal year of the Company during the term hereof. All bonus
payments shall be pro-rated if services are rendered during only a part of such
fiscal year.
(c) Employee shall be issued options to acquire 60,000 shares of common
stock of the Company at an exercise price equal to the closing price of the
Company's common stock as of April 12, 2000. Such options shall vest as to
15,000 shares upon commencement of duties and 15,000 shares on the first
anniversary of the date of grant, and 30,000 shares on the second anniversary of
the date of grant. The date of the grant shall be May 15, 2000. If this
Agreement is expressly extended beyond May 14, 2002, then Employee shall be
granted an option to acquire an additional 30,000 shares (at the same strike
price previously fixed), which shall vest on the third anniversary of the grant.
(d) During the term of this Agreement, Employee shall be entitled to
receive an automobile allowance of $12,000 per year payable in equal monthly
installments plus gas, oil and toll reimbursements.
(e) Employee shall be entitled to three (3) weeks paid vacation per year.
(f) Company shall reimburse Employee's expenses actually incurred to
relocate from Upton, MA to a residence located within fifty (50) miles of
Eatontown, New Jersey, subject to a $40,000 limitation. The Company will
reimburse employee for any tax consequences as a result of such reimbursement.
(g) The Company shall, at its' cost, rent an apartment for Employee's use
during the term of this Agreement. The cost to the Company of such rental and
utilities shall not exceed $12,000 annually.
5. Benefits.
(a) The Employee shall be entitled to such benefits as may be made
available by the Company to its executives, including sick leave, medical and
life insurance.
(b) Except as hereinafter provided in Paragraph 6 hereof, the Company shall
pay the Employee, for any period during which he is unable fully to perform his
duties because of physical or mental disability or incapacity, an amount equal
to the compensation due him for such period less the aggregate amount of all
income disability benefits which he may receive or to which he may be entitled
under or by reason of (i) any group health or accident insurance plan of the
Company; (ii) any applicable compulsory State disability law; (iii) the Federal
Social Security Act; and (iv) any applicable workmen's compensation law or
similar law.
(c) The Employee shall be entitled to reimbursement for expenses reasonably
and necessarily incurred by him in the course of his duties, upon accounting
therefor.
(d) The Employee shall be entitled to indemnification as provided by the
By-Laws of the Company and applicable law, and shall also be covered by existing
officer/director liability insurance.
6. Termination.
(a) The term of this Agreement may be ended prior to the date specified in
Paragraph 2, under the following conditions:
(i) Upon the death of the Employee.
(ii) Upon notice to the Employee, if the Employee has committed any
act of fraud, embezzlement or misappropriation.
(iii) Thirty (30) days after notice to the Employee of his breach of
his duties hereunder (other than as set forth in (ii) above), unless such
breach is fully remedied before the end of such thirty (30) day period or,
if such breach cannot be remedied within thirty (30) days, unless the
Employee continues to use his best efforts to cure the same until such
breach is remedied.
(iv) If the Employee shall be both absent for a period of at least 30
days continuously or a total of 60 days within any 180 day period, and
shall be so mentally or physically incapacitated or disabled as to be
unable to perform his duties hereunder during such period and at the time
of termination.
(b) Upon any termination of this Agreement under Paragraph 6(a), the
Company shall not be obligated to pay any compensation or expenses or provide
other benefits other than those accrued to the date of termination, and the
Employee shall cease to hold all positions in the Company, and such termination
shall constitute a voluntary resignation by the Employee of each office and
directorship then held by him, and the Employee shall, if requested and if able,
deliver to the Company confirmatory written resignations. The Employee shall
also deliver to the Company all property of the Company, which may then be in
the Employee's possession, including but not limited to the rental apartment.
(c) Upon any termination of this Agreement other than under Paragraph 6(a),
Employee shall be entitled to receive the following severance payments: (i)
twelve (12) months' Base Salary payable bi-weekly during the twelve (12) month
severance period, (ii) three (3) months service bonus payable bi-weekly and
(iii) twelve (12) months' automobile allowance of $1,000 per month payable
monthly and the immediate vesting of any options due to vest within a year. If
agreement is not renewed by the Company then the employee will receive six (6)
months Base Salary payable bi-weekly, six (6) months service bonus payable
bi-weekly and 6 months automobile allowance payable monthly.
(d) Upon change of control of the Company, defined as: 1) the acquisition
of more than 40% of the voting stock of the Company by a single person or group;
2) a change in the majority of the Board of Directors as a result of a cash
tender offer, merger, sale of assets or contested election; 3) the approval by
shareholders of the Company of a sale of all or substantially all of the
Company's assets; 4) the closing of a transaction in which more than 50% of the
Company's voting power is transferred and 5) a tender offer which results in a
person or group acquiring more than 40% of the Company, Employee shall be
entitled to a full Bonus payment (i.e., 50% of then prevailing Base Salary) for
the current fiscal year during which the change of control occurred within
thirty (30) days of such change in control ("Change of Control Bonus"), and, if
terminated within the six (6) month period following a change of control shall
be entitled to receive bi-weekly one (1) year's Base Salary, one (1) year's
bonus less the any bonus already paid in 6(d) above to the extent that the same
calendar period is not paid twice, automobile allowance for the twelve months
following the change of control and the right to exercises the balance of
unvested options. ("Change of Control Severance"). Notwithstanding the above,
(Change of Control will be deemed to have occurred only if employment is not
offered at the same or greater economic level as provided herein and retention
of previous job title and primary responsibilities).
7. Covenant Not to Compete or Solicit.
(a) Until the first anniversary of any termination of this Agreement under
Paragraph 6(a), Employee shall not directly or indirectly, without the prior
written consent of the Company 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 five
percent (5%) 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 that engages in the
marketing or sale of bagels as its/their principal business.
(b) The covenants contained in Section 7(a) above shall be construed as a
series of separate covenants, one for each county, city and state of any
geographic coverage, each such separate covenant shall be identical tin terms to
the covenant contained in Section 7(a). 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 7 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.
8. Non-Disclosure of Confidential Information. The Employee acknowledges
that it is the policy of the Company to maintain as secret and confidential all
information relating to its products, services and operations and the identity
of suppliers, franchisees and customers (the "Confidential Information"), and
the Employee further acknowledges that the Confidential Information is of
substantial value to the Company. Accordingly, the Employee agrees that he will
not, during or after the termination of this Agreement, disclose or use any
Confidential Information other than in connection with the business of the
Company.
9. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and shall be deemed given when
delivered to a party or five business days after the same is mailed to a party,
certified mail, return receipt requested, to the addresses set forth herein or
such other address of which notice is given in accordance herewith.
10. Modification and Waiver. This Agreement may not be changed or
terminated orally but only in writing signed by the parties hereto, and no
waiver of a breach of any provision hereof shall be effective unless in writing
signed by the party against whom enforcement is sought. No such waiver shall
operate or be construed as a waiver of any subsequent breach of such provisions.
11. Applicable Law. This Agreement shall be subject to and governed by the
laws of the State of New Jersey.
12. Remedies. The Company, in addition to any other remedy or remedies to
which it may be entitled, shall be entitled to obtain injunctive relief against
any breach or threatened breach by the Employee of the provisions of Section 7
and 8 hereof. In the event of a dispute hereunder, each party shall be
responsible for their own expenses.
13. Representation of Employee. The Employee hereby represents and warrants
that the Employee is not bound by any contract, agreement, court order or
decision which conflicts in any manner with the duties to be performed by the
Employee hereunder or which would limit, in any respect, the right of the
Employee to use any of the Employee's knowledge or experience in the performance
of the Employee's duties hereunder.
14. Representation of the Company. The execution, delivery and performance
by the Company of this Agreement has been duly authorized by all requisite
corporate action by the Company and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company, enforceable in accordance with its terms.
15. Captions. The underlined captions set forth herein are descriptive
only, and shall not be deemed to be a part of this Agreement.
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/ Xxxxx Xxxxxx
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Authorized Signature
Xxxxx Xxxxxx, VP of Finance, CFO
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, Individually
