EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is being made as of this 25th day of
October, 1996 between NEW WORLD COFFEE, INC. (the "Company"), a Delaware
corporation having its principal offices at 000 Xxxx Xxxxxxxx, Xxx Xxxx, XX
00000, and XXXXX X. XXXXXX (the "Employee"), an individual residing at 00 Xxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000.
W I T N E S S E T H :
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WHEREAS, the Company has acquired all of the capital stock of
Xxxxxxxxxx'x Incorporated, a Connecticut corporation, and desires to employ one
of its former shareholders (the "Employee"), and the Employee desires to be
employed by the Company as its Vice President - Coffee upon the terms and
conditions contained herein.
NOW THEREFORE, in consideration of the mutual premises and agreements
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. NATURE OF EMPLOYMENT; TERM OF EMPLOYMENT. The Company hereby
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employs the Employee and the Employee agrees to serve the Company in the
executive capacity of Vice President - Coffee, upon the terms and conditions
contained herein, for a term commencing as of October 25, 1996 and continuing
until January 15, 1999 (the "Employment Term"). The Company will provide
Employee with regular and timely financial information (sales, cash flow, etc.)
on a per store and plant basis.
2. DUTIES AND POWERS AS EMPLOYEE. During the Employment Term, the
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Employee shall be employed by the Company on a full-time basis and shall be
based in offices in Branford, Connecticut. The Employee's primary duties to the
Company and its subsidiaries shall be: Selecting, sourcing, negotiating for and
buying green (unroasted) coffee; directing the roasting and packaging of coffee
and its distribution to retail stores; and providing education about coffee to
employees of the Company and its subsidiaries. The Employee agrees to devote
his full working time and professional efforts to the performance of his duties.
In the performance of his duties, the Employee shall report directly to and be
subject to direction by the Chief Executive Officer of the Company. The
Employee shall be available to travel as the needs of the business require. The
Company will take all actions necessary to enable Employee to carry out his
duties hereunder.
3. COMPENSATION.
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(a) Salary. During the Employment Term, the Company shall pay the
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Employee a base salary at a rate of not less than Seventy-Five Thousand
($75,000) Dollars per annum, subject to any increase at the discretion of the
Board of Directors of the Company. All
payments of salary shall be made at such intervals as other executive officers
of the Company are paid. If Employee shall become disabled, any payments to him
during the Employment Term under any Company disability plan shall be credited
to the Company as base salary payments.
(b) Bonus. In addition to the salary provided herein, Employee
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shall receive a bonus equal to Forty (40%) Per Cent of the base salary paid to
said Employee through December 31st of the calendar year immediately preceding
the bonus payment date, subject to being supplemented at the discretion of the
Board of Directors of the Company. Said bonus shall be paid within thirty (30)
days after completing of the Company's year end audited financial statements but
in no event later than March 31.
(c) Stock Warrants. As of the Closing Date, the Employee shall be
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eligible to participate in the Stock Option Plan of the Company. Employee shall
receive warrants (the "Warrants") to purchase twenty thousand (20,000) shares of
the Company's common stock at the Closing; an additional twenty thousand
(20,000) shares if he is employed by the Company on October 15, 1997; and an
additional twenty thousand (20,000) shares if he is employed by the Company on
October 15, 1998. The Warrants shall be issued and shall have an exercise price
equal to the closing public sale price of underlying common stock on the date
the Warrants are to be issued. The Employee's right of exercise will be
cumulative. Each Warrant for twenty thousand (20,000) shares shall vest as to
five thousand (5,000) shares on an annual basis and shall fully vest over a four
(4) year period, and will be exercisable after the Employment Term has ended, by
death or otherwise. In the event of Employee's death during the Employment
Term, all Warrants theretofore granted shall immediately vest and shall be
exercisable by the executor or administrator of Employee's estate. Other than
the Warrants delivered at Closing, the Warrants shall be granted pursuant to and
shall be subject to the Company's employee stock option plan unless the terms of
this Employment Agreement conflict therewith. Further, such Warrants shall, if
meeting the requirements therefor, be considered incentive stock options.
(d) Automobile. On or about the tenth (10th) day of each month
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during the Employment Term, the Company will pay Employee Five Hundred ($500)
Dollars in consideration of Employee using his own automobile in performing his
duties hereunder and to defray Employee's expenses in operating said automobile.
(e) Health Insurance. During the Employment Term, the Company
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shall provide health insurance to Employee and his dependents through the Aetna
Managed Choice Plan which provides for choice of plan doctors (100% coverage
with $10 co-pay) or non-plan doctors (80% coverage).
(f) Reimbursement for Expenses. The Company will promptly
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reimburse the Employee for reasonable travel and other out-of-pocket expenses
incurred in the performance of his duties hereunder, upon submission of
reasonable written substantiation in accordance with the then regular procedures
of the Company.
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(g) Vacation. Employee shall be entitled to three (3) weeks paid
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vacation in calendar year 1997 and in calendar year 1998 or the maximum number
of weeks allowed to key executive employees in each of those years, whichever is
greater.
(h) Disability and Incapacity. If during the Employment Term
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Employee shall be unable to perform his duties by reason of disability or other
impairment of health for at least one hundred eighty (180) substantially
consecutive days, the Company shall have the right by written notice to Employee
to terminate the Employment Term if such disability or impairment is still
continuing at the time of the giving of the notice. During said one hundred
eighty (180) day period Employee shall continue to be paid base salary, net of
any payments received by Employee pursuant to the Company's disability plan. If
the Employment Term shall terminate pursuant to this subsection 3(h), Employee's
employment shall be deemed to have ceased and thereafter no compensation or any
other benefits shall be payable to or accrue to Employee after the date of
termination except (i) such compensation as is payable pursuant to the Company's
disability plan, and (ii) the bonus Employee would have earned prorated to the
date of termination pursuant to this subsection 3(h).
(i) Additional Fringe Benefits. At all times during the Employment
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Term, the Company shall provide the Employee with such other benefits as may
from time to time be provided generally for executive officers of the Company.
The Company agrees to pay the annual premium on Aetna Life Insurance Policy
#R2638819 insuring Employee's life during the Employment Term.
4. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee represents
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and warrants to the Company that (a) Employee is under no contractual or other
restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of his duties hereunder, or the other rights of the
Company hereunder; and (b) Employee is under no physical or mental disability
that would hinder his performance of duties under this Agreement.
5. NON-COMPETITION.
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(a) Subject to subsection (c) hereof, Employee agrees that he will
not during the period he is employed under this Agreement engage in, or
otherwise directly or indirectly be employed by, or act as a consultant or
lender to, or be a director, officer, employee, owner, or partner of, any other
business or organization that is or shall then be competing in the coffee
business with the Company.
(b) Subject to subsection (c) hereof, Employee agrees that for a
period of one (1) year after he ceases to be employed by the Company under this
Agreement: (i) Employee will not directly or indirectly compete with or be
engaged in the same coffee business as the Company, or be employed by, or act as
consultant or lender to, or be a director, officer, employee, owner, or partner
of, any business or organization which, at the time of such cessation, competes
with or is engaged in the same coffee business as the Company; and (ii) Employee
shall not, directly or indirectly, or by any act in concert with others, employ,
attempt
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to employ, recruit or otherwise solicit or induce or influence to leave his or
her employment any employee of the Company or any Company subsidiary. The
Employee and the Company agree that the restrictions on competition in the
coffee business by the Employee with the Company provided in this Section 5(b)
shall be limited geographically to the City of New Haven.
(c) The Employee and the Company agree that in the event of a
default by the Company of any of its material obligations under this Agreement
or under the Stock Purchase Agreement dated October 21, 1996 by and among Xxxxx
X. Xxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxxxxx'x Incorporated and New World Coffee,
Inc., or under the promissory notes issued to Xxxxx X. Xxxxxx or Xxxxxx X.
Xxxxxxxx pursuant to said Stock Purchase Agreement, which default is not cured
in any applicable notice, grace, or cure period, the restrictive covenants of
the Employee set forth in this Section 5 shall terminate automatically.
6. PATENTS; COPYRIGHTS. Any interest in patents, patent
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applications, inventions, copyrights, developments, and processes ("Such
Inventions") which Employee now or hereafter during the period he is employed by
the Company under this Agreement may own or develop relating to the field in
which the Company may then be engaged shall belong to the Company; and forthwith
upon request of the Company, Employee shall execute all such assignments and
other documents and take all such other actions as the Company may reasonably
request in order to vest in the Company all his right, title, and interest in
and to Such Inventions, free and clear of all liens, charges, and encumbrances.
7. CONFIDENTIAL INFORMATION. All confidential information which
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Employee may now possess, may obtain during the Employment Term, or may create
prior to the end of the period he is employed by the Company under this
Agreement relating to the business of the Company or of any customer or supplier
of the Company shall not be published, disclosed, or made accessible by him to
any other person, firm, or corporation during the Employment Term or any time
thereafter without the prior written consent of the Company. Employee shall
return all tangible evidence of such confidential information to the Company
prior to or at the termination of his employment.
8. TERMINATION.
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(a) Involuntary Termination. Notwithstanding anything herein
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contained, if on or after the date hereof and prior to the end of the Employment
Term, Employee is terminated "For Cause" (as defined below), then the Company
shall have the right to give notice of termination of Employee's services
hereunder as of a date to be specified in such notice, and this Agreement shall
terminate on the date so specified. Termination "For Cause" shall mean Employee
shall (i) be convicted of a felony crime, (ii) commit any act or omit to take
any action in bad faith and to the detriment of the Company, (iii) commit an act
of moral turpitude which is directly related to the business or affairs of the
Company, (iv) commit an act of fraud against the Company, or (v) materially
breach any term of this Agreement and fail to correct such breach within ten
(10) days after being notified thereof in writing by the Company.
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(b) Death. In the event that Employee shall die during the
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Employment Term, then this Agreement shall terminate on the date of Employee's
death. The Company shall thereupon pay to the Employee's surviving spouse, or
his estate if there is no surviving spouse, all compensation owed up to the date
of Employee's death, including salary, earned vacation pay, and the Employee's
bonus prorated to the date of his death; and no further compensation shall be
payable to the Employee.
(c) Other. In the event Employee is terminated "For Cause", then
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Employee shall be entitled to receive his salary up to the date on which
termination takes effect.
9. CHANGE OF CONTROL.
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(a) In the event of a future disposition of the properties and
business of the Company, substantially as an entirety, by merger, consolidation,
sale of assets, sale of stock, or otherwise (each, a "Change of Control Event"),
then the Company may elect to assign this Agreement and all of its rights and
obligations hereunder to the acquiring or surviving corporation.
(b) In the event a Change of Control Event is definitively
announced by the Company, all Options and Warrants heretofore granted to
Employee hereunder shall immediately vest and be exercisable.
(c) In the event there is a Change of Control Event and Employee
is terminated prior to the end of the Employment Term, then the Company shall be
obligated to pay, as a severance payment, an amount equal to all compensation
the Employee would have received if such termination had not occurred, including
without limitation, all salary, bonuses, allowances and other forms of
compensation set forth herein. All salary, bonuses, and allowances will be paid
in one lump sum on date of termination. All other benefits shall continue in
full force and effect through January 15, 1999.
(d) Notwithstanding the foregoing, if there is a Change of Control
Event, and the acquiring party has a balance sheet net worth less than the
Company, or if the acquiring party does not expressly and directly assume all
the Company's obligations to Employee, all payments and compensation set forth
herein shall be accelerated and paid in one lump sum on the date of the Change
of Control Event.
10. INDEMNIFICATION. The Company agrees to indemnify the Employee in
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his capacity as an officer of the Company to the maximum extent permitted under
Delaware General Corporation Law. This provision for indemnification will
survive expiration of the termination of this Agreement for any reason
whatsoever so long as the Employee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
in the matter for which indemnification is sought.
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11. SURVIVAL. The covenants, agreements, representations, and
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warranties contained in or made pursuant to this Agreement shall survive
Employee's termination of employment, irrespective of any investigation made by
or on behalf of any party.
12. MODIFICATION. This Agreement sets forth the entire understanding
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of the parties with respect to the subject matter hereof, supersedes all
existing employment agreements between them concerning such subject matter, and
may be modified only by a written instrument duly executed by each party.
13. NOTICES. Any notice or other communication required or permitted
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to be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given at the address of such party set forth in the preamble to this
Agreement (or to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 13). In the case of a notice
to the Company, a copy of such notice (which copy shall not constitute notice)
shall be delivered to Camhy Karlinsky & Xxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attn. Xxxxxx X. Xx Xxxx, Esq. Notice to the Employee shall be
sufficient if addressed to the Employee as provided in this Section 13. Any
notice or other communication given by certified mail shall be deemed given at
the time of certification thereof by the U. S. Postal Service, except for a
notice changing a party's address which shall be deemed given at the time of
receipt thereof.
14. WAIVER. Any waiver by either party of a breach of any provision
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of this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
15. BINDING EFFECT. The Employee's rights and obligations under this
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Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to encumbrance or the claims of Employee's creditors, and
any attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and personal representatives, and shall be binding upon and inure to the
benefit of the Company and its successors and those who are its assigns under
Section 9.
16. HEADINGS. The headings in this Agreement are solely for the
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convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
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17. COUNTERPARTS; GOVERNING LAW. This Agreement may be executed in
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any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. It shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to the rules governing the conflicts of laws.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
NEW WORLD COFFEE, INC.
By:
__________________________
Title:
__________________________
EMPLOYEE:
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XXXXX X. XXXXXX
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