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EXHIBIT
10.28
EMPLOYMENT
AGREEMENT
AGREEMENT made and entered
into in Waterbury, Vermont, by and between Green Mountain Coffee
Roasters, Inc. (the “Company”), a Delaware corporation
with its principal place of business in Waterbury, Vermont, and
Larry Blanford, of Toronto, Ontario (the “Executive”),
effective as of the 3rd day of May, 2007.
WHEREAS, the operations of
the Company and its Affiliates are a complex matter requiring
direction and leadership in a variety of areas, including
financial, strategic planning, regulatory, community relations and
others;
WHEREAS, the Executive is
possessed of certain experience and expertise that qualify him to
provide the direction and leadership required by the Company and
its Affiliates; and
WHEREAS, subject to the terms
and conditions hereinafter set forth, the Company therefore wishes
to employ the Executive as its President and Chief Executive
Officer and the Executive wishes to accept such
employment;
NOW, THEREFORE, in
consideration of the foregoing premises and the mutual promises,
terms, provisions and conditions set forth in this Agreement, the
parties hereby agree:
1. Employment .
Subject to the terms and conditions set forth in this Agreement,
the Company hereby offers, and the Executive hereby accepts,
employment.
2. Term . Subject to
earlier termination as hereafter provided, the Executive’s
employment hereunder shall be for a term of five (5) years,
commencing on the effective date hereof, and may be extended or
renewed only by a written agreement signed by the Executive and an
expressly authorized representative of the Company. The term of
this Agreement, as from time to time extended or renewed, is
hereafter referred to as “the term of this Agreement”
or “the term hereof.”
3. Capacity and
Performance .
(a) During the term hereof,
the Executive shall serve the Company as its President and Chief
Executive Officer, subject to his appointment by the Board of
Directors of the Company (the “Board”). In addition,
and without further compensation, (i) the Board will nominate
and, so long as Executive is employed hereunder, renominate as
necessary and recommend the Executive’s election to serve or
continue to serve as a member of the Board and the Executive shall
so serve if elected or re-elected, and (ii) the Executive
shall serve as a director and/or officer of one or more of the
Company’s Affiliates if so elected or appointed from time to
time.
(b) As a condition of
employment, the Executive must execute the Company’s Code of
Conduct no later than the date he executes this Agreement. The
Company’s Code of Conduct that the Executive is required to
execute at this time is attached hereto as Exhibit A
.
(c) During the term hereof,
the Executive shall be employed by the Company on a full-time basis
and shall perform the duties and responsibilities of his position,
together with such other duties and responsibilities on behalf of
the Company and its Affiliates as may reasonably be designated from
time to time by the Board or by its designees.
(d) During the term hereof,
the Executive shall devote his full business time and his best
efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and its
Affiliates and to the discharge of his duties and responsibilities
hereunder. The Executive shall not engage in any other business
activity or serve in any industry, trade, professional or
governmental position during the term of this Agreement, except as
may be expressly approved in advance by the Board in writing. The
Executive may participate in reasonable charitable and academic
endeavors (including as a board member) so long as they do not
materially interfere with his duties hereunder.
(e) Upon advance approval by
the Company’s Governance and Nominating Committee, which
approval shall not be unreasonably withheld, the Executive may
serve as an outside director of other companies, including public
companies, so long as in the reasonable judgment of the Board such
activities do not interfere with the performance of his duties as
Chief Executive Officer of the Company.
4. Compensation and
Benefits . As compensation for all services performed by the
Executive under and during the term hereof, and subject to
performance of the Executive’s duties and fulfillment of the
obligations of the Executive to the Company and its Affiliates,
pursuant to this Agreement or otherwise:
(a) Base Salary .
During the term hereof, the Company shall pay the Executive a base
salary at the rate of Five Hundred Forty Thousand Dollars
($540,000) per annum, payable in bi-weekly installments in
accordance with the regular payroll practices of the Company for
its executives. The Company shall increase the Executive’s
base salary to the rate of Five Hundred Ninety Thousand Dollars
($590,000) starting on October 1, 2007, and the
Executive’s base salary shall thereafter be subject to upward
adjustment from time to time by the Board, in its sole discretion.
Such base salary, as from time to time adjusted, is hereafter
referred to as the “Base Salary”.
(b) Short-Term Incentive
Compensation . The Executive shall be eligible to participate
in the Company’s Short-Term Incentive Plan
(“STIP”) made available to senior executives of the
Company, in accordance with the terms thereof, as in effect and as
amended from time to time. Prorated for 2007, and annually
thereafter, the Executive shall be eligible to earn an annual STIP
Bonus with a target of one hundred percent (100%) of Base
Salary, which bonuses shall be subject to and payable in accordance
with the terms set forth in the STIP, but in no event shall such
bonuses be paid any later than the applicable two
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and one-half (2- 1 / 2 ) month period for short-term deferrals as provided in 26
CFR §1.409A-1(b)(4). Any STIP Bonus paid to the Executive
shall be in addition to the Base Salary. The criteria for earning a
STIP bonus shall be governed by the terms of the
STIP.
(c) Long-Term Incentive
Compensation . The Company agrees to implement a Long-Term
Incentive Plan (“LTIP”) in 2007. After the Executive
completes one (1) full year of service, the Executive will be
eligible to receive annually a bonus pursuant to such LTIP or other
bonus plan of the Company in a gross amount equivalent to
approximately one hundred fifty percent (150%) of Base Salary.
The LTIP Bonus will be provided in the form of a combination of
stock option grants, restricted stock units and other equity awards
from time to time selected by the Board, as mutually agreed upon by
the Company, the members of the Board’s Compensation
Committee, and the Executive. Each LTIP Bonus will vest over four
(4) years, in accordance with and subject to the terms of the
LTIP, as then in effect and as amended from time to
time.
(d) Stock Options .
The Executive acknowledges that promptly following the date the
Executive commenced employment hereunder, the Company granted to
the Executive an option to purchase 70,000 shares of the
Company’s common stock (the “Common Stock”), with
an exercise price equal to fair market value on the date of grant
(the “Option”). The shares that are subject to the
Option shall vest at the rate of twenty percent (20%) on each
of the first five (5) anniversaries of the date of grant,
provided that the Executive is still employed by the Company on
each such vesting date. The Option and all other options granted to
the Executive by the Company shall be subject to any applicable
stock option plan, option certificate, and shareholder and/or
option holder agreements and other restrictions and limitations
generally applicable to equity held by Company executives or
otherwise required by law. The Executive shall not be eligible to
receive any stock options, restricted stock or other equity of the
Company, however, whether under an equity incentive plan or
otherwise, except as expressly provided in this Agreement or as
otherwise authorized for him expressly by the Board.
(e) Vacations . During
the term hereof, the Executive shall be entitled to paid vacation
at the rate of four (4) weeks per year, such vacation to be
taken at such times and intervals as shall be determined by the
Executive, subject to the reasonable business needs of the Company.
Unused vacation hours may be carried over from year to year, up to
a cumulative maximum of one hundred sixty (160) hours,
pursuant to the terms of the Company’s Combined Time Off
(“CTO”) program, in effect and as amended from time to
time.
(f) Other Benefits .
During the term hereof, the Executive shall be entitled to
participate in any and all employee benefit plans from time to time
in effect for employees of the Company generally, except to the
extent any such employee benefit plan is in a category of benefit
otherwise provided to the Executive ( e.g. , a severance pay
benefit), in which case the Executive shall be eligible for the
benefit as set forth in this Agreement. The Executive’s
benefit participation shall be subject to the terms of the
applicable plan documents and generally applicable Company
policies. The Company may alter, modify, add to or terminate its
employee benefit plans at any time as it, in its sole judgment,
determines to be appropriate, without recourse by the
Executive.
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(g) Business Expenses
. The Company shall pay or reimburse the Executive for all
reasonable, customary and necessary business and travel expenses
incurred or paid by the Executive in the performance of his duties
and responsibilities hereunder, subject to any maximum annual limit
and other restrictions on such expenses set by the Board and to
such reasonable substantiation and documentation requirements as
may be specified by the Company from time to time. The Company
shall make such reimbursement payments under this Section 4(g)
or under Section 4(h) below to Executive within thirty
(30) days of the submission of proper substantiation. In the
case of any reimbursement to which the Executive is entitled under
this Agreement, including without limitation under this
Section 4(g) or under Section 4(h) below, and that would
constitute deferred compensation subject to Section 409A of
the Internal Revenue Code of 1986, as amended (the
“Code”), the following additional rules shall apply:
(i) the reimbursable expense must have been incurred, except
as otherwise expressly provided in this Agreement, during the term
of this Agreement; (ii) the amount of expenses eligible for
reimbursement during any calendar year will not affect the amount
of expenses eligible for reimbursement in any other calendar year;
(iii) the reimbursement shall be made, if at all, not later
than December 31 of the calendar year following the calendar
year in which the expense was incurred; and (iv) the
Executive’s entitlement to reimbursement shall not be subject
to liquidation or exchange for another benefit.
(h) Moving Allowance .
The Company shall reimburse the Executive for all reasonable moving
expenses incurred or paid by the Executive in relocating his
residence from Toronto, Ontario and Atlanta, Georgia to Vermont,
subject to his providing reasonable substantiation and
documentation as specified by the Company. The Company will provide
the Executive with a gross-up payment if necessary so that such
reimbursements (and any gross-up payment) do not result in the
Executive incurring any net expense for taxes associated
therewith.
(i) Term Life
Insurance . During the term of this Agreement, the Company
shall maintain and pay for a term life insurance policy for the
benefit of the Executive and his beneficiaries, with a death
benefit no less than the Executive’s Base Salary. The
proceeds of such policy shall be paid to the Executive’s
beneficiaries in the event of the Executive’s death during
the term of the Executive’s employment hereunder.
5. Termination of
Employment and Severance Benefits . Notwithstanding the
provisions of Section 2 hereof, the Executive’s
employment under this Agreement shall terminate prior to the
expiration of the term hereof under the following
circumstances:
(a) Death . In the
event of the Executive’s death during the term hereof, the
Executive’s employment shall immediately and automatically
terminate. In such event, the Company shall pay to the
Executive’s designated beneficiary or, if no beneficiary has
been designated by the Executive in writing, to his estate,
(i) any Base Salary earned but not paid during the final
payroll period of the Executive’s employment through the date
of
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termination, (ii) pay for any
vacation time earned but not used through the date of termination,
(iii) any STIP, LTIP or other bonus compensation owed for the
year preceding that in which termination occurs, but unpaid on the
date of termination, and (iv) any business expenses incurred
by the Executive but un-reimbursed as of the date of termination,
provided that such expenses and required substantiation and
documentation are known to the Company and that such expenses are
reimbursable under Company policy (all of the foregoing,
“Final Compensation”). Final Compensation shall be paid
no later than ninety (90) days after such termination.
Additionally, in the event of the Executive’s death during
the term hereof, the Company shall pay the monthly premium costs to
continue medical and dental insurance for the Executive’s
immediate family (and who are “qualified beneficiaries”
within the meaning of Section 4980B(g)(1)(A) of the Code)
pursuant to the federal law commonly known as “COBRA,”
(“COBRA”) for a period of thirty-six (36) months;
and, if death occurs following termination of employment and a
timely COBRA election has been made, the Company shall pay such
monthly premium costs for a total of thirty-six (36) months,
measured from the date of termination. The Company shall also
assist the Executive’s beneficiaries and/or estate to obtain
the life insurance death benefit provided in Section 4(i)
herein. The Company shall have no further obligation to the
Executive hereunder; provided, however, that the Executive’s
beneficiary or estate shall be entitled to exercise any options or
receive other equity rights of the Executive which are vested as of
the date of the Executive’s death, in accordance with the
terms of the applicable equity rights plans and any related
agreements.
(b) Disability
.
(i) The Company may terminate
the Executive’s employment, upon notice to the Executive, in
the event that the Executive becomes disabled during his employment
hereunder through any illness, injury, accident or condition of
either a physical or psychological nature and, as a result, is
unable to perform substantially all of his duties and
responsibilities hereunder, notwithstanding the provision of any
reasonable accommodation, for one hundred eighty five
(185) days during any period of three hundred and sixty-five
(365) consecutive calendar days. In the event of such
termination, the Company shall have no further obligation to the
Executive, other than for payment of Final Compensation within
ninety (90) days of such termination, and Executive shall be
entitled to exercise any options or receive other equity rights of
the Executive which are vested as of the date of such termination,
in accordance with the terms of the applicable equity rights plans
and related agreements.
(ii) The Board may designate
another employee to act in the Executive’s place during any
period of the Executive’s disability. Notwithstanding any
such designation, the Executive shall continue to receive the Base
Salary in accordance with Section 4(a) and benefits in
accordance with Section 4(f), to the extent permitted by the
then-current terms of the applicable benefit plans, until the
Executive becomes eligible for disability income benefits under the
Company’s disability income plan or until the termination of
his employment, whichever shall first occur.
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(iii) While receiving
disability income payments under the Company’s disability
income plan, the Executive shall not be entitled to receive any
Base Salary under Section 4(a) hereof, but shall continue to
participate in Company employee benefit plans in accordance with
Section 4(f) and the terms of such plans, until the
termination of his employment.
(iv) If any question shall
arise as to whether, during any period, the Executive is disabled
through any illness, injury, accident or condition of either a
physical or psychological nature so as to be unable to perform
substantially all of his duties and responsibilities hereunder
(notwithstanding the provision of any reasonable accommodation),
the Executive may, and at the request of the Company shall, submit
to a medical examination by a physician selected by the Company to
whom the Executive or his duly appointed guardian, if any, has no
reasonable objection to determine whether the Executive is so
disabled, and such determination shall for the purposes of this
Agreement be conclusive of the issue. If such question shall arise
and the Executive shall fail to submit to a requested medical
examination, the Company’s determination of the issue shall
be binding on the Executive.
(v) The Executive may, in his
discretion, seek to obtain at his own expense additional disability
coverage. The Company shall not be responsible for obtaining or
paying for any such additional coverage or for providing to the
Executive any disability benefits other than those provided under
the Company’s disability plans applicable to employees
generally, but at the Executive’s request the Company shall
provide such information and related advice as in the
Company’s determination is feasible under the circumstances
and reasonably likely to assist the Executive in identifying and
obtaining such coverage.
(c) By the Company for
Cause . The Company may terminate the Executive’s
employment hereunder for Cause at any time upon notice to the
Executive setting forth in reasonable detail the nature of such
Cause. The following, as determined by the Board in its reasonable
judgment, shall constitute Cause for termination:
(i) The Executive’s
substantial and ongoing failure to perform (other than by reason of
disability), or gross negligence in the performance of, his duties
and responsibilities to the Company or any of its
Affiliates;
(ii) Material breach by the
Executive of any provision of this Agreement or any other agreement
with the Company or any of its Affiliates, provided that the
Executive has been given a reasonable opportunity to cure any such
material breach after notice from the Company, and such material
breach has not been cured by the Executive;
(iii) Fraud, embezzlement or
other dishonesty with respect to the Company or any of its
Affiliates;
(iv) Other conduct by the
Executive that is substantially harmful to the business, interests
or reputation of the Company or any of its Affiliates;
or
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(v) Commission of a felony
involving moral turpitude.
Upon the giving of notice of termination
of the Executive’s employment hereunder for Cause, the
Company shall have no further obligation to the Executive, other
than for Final Compensation which shall be paid within ninety
(90) days of such termination. All options to purchase shares
of Common Stock that were not exercisable on the date of
termination will be forfeited, and will terminate immediately upon
the date of termination; provided, however that the Executive shall
be entitled to exercise any options or receive other equity rights
that are vested as of the date of any termination pursuant to this
Section 5(c), in accordance with the terms of the applicable
equity rights plans and any related agreements.
(d) By the Company Other
than for Cause .
(i) The Company may terminate
the Executive’s employment hereunder other than for Cause at
any time upon notice to the Executive.
(ii) Except in connection
with a termination by the Company of the Executive other than for
Cause pursuant to Section 5(g) herein, in the event of a
termination by the Company of the Executive other than for Cause
within the first twelve (12) months of employment, in addition
to Final Compensation which shall be paid within ninety
(90) days of such termination, and provided that no benefits
are payable to the Executive under a separate severance agreement
or plan as a result of such termination: (A) the Company shall
pay the Executive salary continuation in the gross amount of
eighteen (18) months of Base Salary at the rate in effect on
the date of termination, (B) the Company shall pay the
Executive a pro-rated portion of his annual STIP Bonus, in an
amount to be determined following the year in which the STIP Bonus
would have been earned but for the termination, and will do so at
the time and in accordance with the terms set forth in the STIP,
and (C) if the Executive elects to continue his participation
in the Company’s health and dental insurance plans under
COBRA the Company shall continue to pay the monthly premium cost of
the Executive’s (and the Executive’s “qualified
beneficiaries” within the meaning of
Section 4980B(g)(1)(A) of the Code) participation in the
Company’s group medical and dental plans until the conclusion
of a period of eighteen (18) months following the date of
termination, provided that the Executive is entitled to continue
such participation under applicable law and plan terms.
(iii) Except in connection
with a termination by the Company of the Executive other than for
Cause pursuant to Section 5(g) herein, in the event of a
termination by the Company of the Executive other than for Cause
after the first twelve (12) months of employment, in addition
to Final Compensation which shall be paid within ninety
(90) days of such termination, and provided that no benefits
are payable to the Executive under a separate severance agreement
as a result of such termination: (A) the Company shall pay the
Executive salary continuation in the gross amount of twelve
(12) months of Base Salary at the rate in effect on the date
of termination, (B) the Company shall pay the Executive a
pro-rated portion of his annual STIP Bonus, in an amount to be
determined following the year in which the STIP Bonus would have
been earned but for the termination, and will do so at the time and
in accordance with the terms set forth in the STIP, and (C) if
the Executive elects to
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continue his participation in the
Company’s health and dental insurance plans under COBRA, the
Company shall continue to pay the monthly premium cost of the
Executive’s (and the Executive’s “qualified
beneficiaries” within the meaning of
Section 4980B(g)(1)(A) of the Code) participation in the
Company’s group medical and dental plans until the conclusion
of a period of twelve (12) months following the date of
termination, provided that the Executive is entitled to continue
such participation under applicable law and plan terms.
(iv) Any obligation of the
Company to the Executive hereunder is conditioned, however, upon
the Executive signing and returning to the Company a timely and
effective release of claims in the form provided by the Company
(the “Release of Claims”); provided, however, that such
Release of Claims shall not release any rights of the Executive
with respect to earned but unpaid Base Salary, bonuses, and
benefits in accordance with the terms of Section 4 hereof, any
rights to insurance or indemnification pursuant to the
Company’s By-laws or applicable law, or any rights arising
after the date of such Release of Claims. The Release of Claims
required for separation benefits under Section 5(d),
Section 5(e) or Section 5(g) hereof creates legally
binding obligations on the part of the Executive, and the Company
and its Affiliates th
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