Exhibit 10.15
EXECUTION
VERSION
EMPLOYMENT
AGREEMENT
(Farmer Bros. Co. /
Modaro)
This Employment Agreement
(“Agreement”) is dated March 19, 2009 (the
“Signing Date”), and made effective as of March 1,
2009 (the “Commencement Date”), between FARMER BROS.
CO., a Delaware corporation (the “Company”), and HEIDI
MODARO (“Modaro”) who agree as follows:
1.
Employment
: The Company hereby employs
Modaro, and Modaro accepts employment from the Company, on the
terms and conditions herein stated.
2.
Term of Employment:
The term of Modaro’s
employment under this Agreement commenced on the Commencement Date
and shall end when terminated under Section 7
below.
3.
Duties : Modaro shall serve as Vice President
Sales and Operations, Coffee & Tea of the Company,
reporting to the Chief Operating Officer (“COO”).
Her general responsibilities shall include oversight responsibility
for the Company’s direct store delivery sales and
operations. In addition to her general responsibilities,
Modaro shall also perform such other duties as are consistent with
her position and as are directed by the Company’s COO, Chief
Executive Officer (“CEO”) or Board of Directors
(“Board”). Modaro shall devote to the
Company’s business substantially all of her working
time. Service as a director or equivalent of other for-profit
organizations shall require approval of the Board.
4.
Base Salary:
Modaro shall receive an annual base
salary of $250,000 payable in accordance with the Company’s
normal payroll practice. The annual base salary amount shall
be reviewed annually by the Company and can be adjusted upward or
downward by the Company from time to time but shall not be reduced
below $250,000 per annum.
5.
Bonuses :
A.
On the next regular payday after the
Signing Date, the Company shall pay Modaro a signing bonus of Fifty
Thousand Dollars ($50,000).
B.
Modaro shall be entitled to
participate in the Company’s 2005 Incentive Compensation Plan
or any successor plan (“Plan”) each year commencing
with fiscal 2009 so long as the Plan remains in effect and one or
more of the Company’s other executive officers who are
full-time Company employees (“Senior Executives”) also
participate. Under the terms of the Plan, the Compensation
Committee will, in its discretion, and after consultation with
Modaro, determine the Performance Criteria and all other variables
by which Modaro’s bonus for such year will be measured.
The Target Award, as defined in the Plan, for fiscal 2009 and
subsequent years shall be an amount equal to forty percent (40%) of
Modaro’s base annual salary and such bonus as may be earned
by Modaro for fiscal 2009 shall be a full year’s bonus (i.e.,
not pro-rated). Except as provided in the preceding sentence,
Modaro’s participation in the Plan is subject to all Plan
terms and conditions. Under the terms of the Plan, no bonus is
earned until awarded by the Compensation Committee after completion
of the fiscal year, and the Compensation Committee may, in its
discretion, reduce, entirely eliminate or increase the bonus
indicated by the Performance Criteria and other Plan factors.
Modaro acknowledges receipt of a copy of the Plan.
C.
If Modaro is employed by the Company
on the second anniversary of the Commencement Date (the
“Vesting Date”), the Company shall pay Modaro on the
next regular Company payday the sum of Two Hundred Thousand Dollars
($200,000). If Modaro’s employment is terminated before
the Vesting Date (i) by reason of Modaro’s death or
Permanent Incapacity, (ii) by the Company
without Cause, or by Modaro for Good Reason, the
Company shall pay to Modaro the sum of Two Hundred Thousand Dollars
($200,000) upon termination and within ten (10) days after the
release required under Section 8C below has been received by
the Company and has become effective.
D.
For the avoidance of doubt, if
Modaro’s employment is terminated before the Vesting Date by
the Company for Cause or by Modaro without Good Reason, no
retention bonus is payable under Section 5C above.
6.
Benefits : The Company will provide to Modaro
(i) all benefits and perquisites provided by the Company from
time to time to all Senior Executives, subject to the eligibility
requirements and the terms and conditions of the benefit plans and
perquisite policies (collectively “Executive Benefits”)
and (ii) an educational benefit described below
(“Educational Benefit”). For the avoidance of
doubt, the Executive Benefits include use of a Company car in
accordance with the Company’s policy on Company cars, will
receive four (4) weeks of vacation per year in accordance with
the terms of the Company’s policy, group health insurance
(PPO or HMO), life insurance, business travel insurance,
qualified retirement plan, 401(k) plan, employee stock
ownership plan, cell phone, company credit card, expense
reimbursement and coaching. Not all of the foregoing
Executive Benefits are 100% Company paid. The Company
reserves the right to alter or discontinue any or all such
Executive Benefits, provided they are so altered or discontinued as
to all Senior Executives.
The Company will also provide to
Modaro tuition benefits equivalent to those provided by Sara Lee
Corporation under its Executive MBA Program Policy — USA, as
last updated as of November 8, 2005 (the “Policy”)
which is incorporated herein by this reference, which benefits the
Company will provide on the terms and subject to the conditions
contained in such Policy, other than the “Scope”
provision.
Modaro shall be entitled to
participate in the Company’s 2007 Omnibus Plan as
administered by the Company’s Compensation Committee.
On the first business day following the end of the blackout period
which covers the Signing Date, Modaro will be granted 7,000 stock
options and 700 shares of restricted stock. The strike price
of the options will be the closing price of the Company’s
stock on such date. The terms and conditions of the options
and restricted stock shall be the same as those applicable to the
grants made to the Company’s Senior Executives in 2008.
Modaro will be entitled to such future grants under the 2007
Omnibus Plan as are awarded to her by the Compensation Committee
from time to time in its discretion.
7.
Termination:
A.
Modaro’s employment is
terminable by the Company for Cause which shall consist only of
(i) a repeated refusal to follow reasonable directions from
the COO or CEO or Board after a warning; (ii) a material
breach of any of Modaro’s fiduciary duties to the Company (a
breach involving dishonesty or personal gain shall be deemed
material regardless of the amount involved); (iii) conviction
of a felony; (iv) commission of a willful violation of any
law, rule or regulation involving moral turpitude; (v)
commission of a willful or grossly negligent act or omission which
has a material adverse effect on the Company; or (vi) commission of
a material breach by Modaro of this Agreement which breach, if
curable, is not cured within a reasonable time after written notice
from the COO or CEO describing the nature of the breach in
reasonable detail.
B.
Modaro’s employment shall
terminate upon Modaro’s resignation, with or without Good
Reason, death or “Permanent Incapacity,” as defined
below. “Permanent Incapacity” shall be deemed to
have occurred if Modaro has been unable to perform substantially
all of her employment duties under Section 3 on a
substantially full time basis by reason of a mental or physical
condition for a
2
period of ninety (90) consecutive days or for
more than one hundred eighty days (180) in any period of three
hundred sixty-five (365) consecutive days.
Good Reason shall consist only of
(i) the Company’s material breach of this Agreement,
(ii) a material reduction in Modaro’s responsibilities,
duties or authority, or (iii) a material relocation of
Modaro’s principal place of employment more than fifty (50)
miles from its present location; provided, however, that any such
condition shall not constitute Good Reason unless both
(x) Modaro provides written notice to the Company describing
the condition claimed to constitute Good Reason in reasonable
detail within ninety (90) days of the initial existence of such
condition, and (y) the Company fails to remedy such condition
within thirty (30) days of receiving such written notice thereof;
and provided, further, that in all events the termination of
Modaro’s employment with the Company shall not be treated as
a termination for Good Reason unless such termination occurs not
more than one (1) year following the initial existence of the
condition claimed to constitute Good Reason.
C.
Modaro’s employment shall
terminate at the election of the Company at any time without
Cause.
8.
Payments upon
Termination: In
addition to any payment required by Section 5C above, the
following amounts are payable upon termination of Modaro’s
employment, as applicable:
A.
In the event of a termination for
any reason, base salary at the then existing rate, shall be
prorated and paid through the effective termination date, along
with accrued and untaken vacation (subject to the Company’s
vacation policy). If termination is due to Modaro’s
death or Permanent Incapacity, the Company shall also pay to Modaro
upon termination an additional lump sum severance amount equal to
the Target Award under the Company’s 2005 Incentive
Compensation Plan which is applicable to Modaro for the fiscal year
in which termination is effective or, if termination takes place
before a Target Award for the then current fiscal year has been
assigned to Modaro, forty percent (40%) of Modaro’s then
annual base salary, in either case prorated for the partial fiscal
year ending on the effective termination date.
B.
If termination occurs at the
election of the Company without Cause or by Modaro’s
resignation with Good Reason: Modaro will receive as
severance (i) an amount equal to her base salary at the rate
in effect on the date of termination for a period of one
(1) year, (ii) partially Company-paid COBRA coverage
under the Company’s health care plan for herself and her
spouse for one (1) year after the effective termination date
(the Company will pay the same percentage of the coverage cost that
it would have paid had Modaro’s employment not terminated)
and (iii) an amount equal to Modaro’s bonus Target Award
for the fiscal year in which the date of termination occurs (or, if
no Target Award has been assigned to Modaro as of the date of
termination, the average bonus paid by the Company to Modaro for
the last three (3) completed fiscal years or for the number of
completed fiscal years that Modaro has been in the employ of the
Company if fewer than three, prior to the termination date), such
amount to be prorated for the partial fiscal year in which the
termination occurs. Modaro is not obligated to seek other
employment as a condition to receipt of the payments called for by
this Section 8B, and Modaro’s earnings, income or
profits from other emplo
