THIS EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made and
entered into as of the 1 st day of August, 2008 (the “ Effective
Date ”) by and between Caribou Coffee Company, Inc., (the
“ Company ”) and Michael Tattersfield (“
Employee ”).
WHEREAS,
The Company desires to employ Employee and to have the benefit of
his skills and services, and Employee desires to accept employment
with the Company, on the terms and conditions set forth
herein.
NOW,
THEREFORE, in consideration of the mutual promises, terms,
covenants, and conditions set forth herein, and the performance of
each, the parties hereto, intending to be legally bound, agree as
follows:
§1.
Term . The term of this Agreement shall begin on the
Effective Date and shall end on the fourth anniversary of the
Effective Date (the “ Initial Term ”), unless
extended or earlier terminated in accordance with the terms of this
Agreement (the Initial Term and any extension or earlier
termination thereof is referred to as the “ Term
”). If not earlier terminated, the Term of this Agreement
shall be automatically extended for an additional one (1) year on
the fourth anniversary of the Effective Date and on each
anniversary of such date unless, at least sixty (60) days
before the fourth anniversary of the Effective Date or on any
subsequent anniversary thereof, one party has given the other party
written notice of its or his intention not to extend the Term, in
which case the Term and Employee’s employment shall
automatically terminate at the end of the Initial Term or
applicable anniversary thereof.
§2.
Position and Duties . The Company hereby employs
Employee as the President and Chief Executive Officer of the
Company. Employee shall have such responsibilities, duties, and
authorities as are typically commensurate with those positions and
as are assigned to him by Company’s Board of Directors (the
“ Board ”). Employee shall fulfill his duties
and responsibilities in a reasonable and appropriate manner and in
compliance with the Company’s policies and practices and the
laws and regulations that apply to the Company’s operation
and administration. During the Term, Employee shall devote his full
business time and attention to the business and affairs of the
Company and shall not be engaged in, or employed by or provide
services to, any other business enterprise without the written
approval of the Board. Employee warrants and represents that he is
under no fiduciary or contractual obligation to another business or
employer that would prevent Employee from being employed by the
Company as set forth herein; provided, however , that
nothing herein shall be construed as precluding Employee from
devoting a reasonable amount of time to current board of director
commitments (Peter Piper Pizza and Cycle Gear), civic or
charitable, or similar activities, so long as such activities do
not materially interfere with the performance of Employee’s
duties hereunder. So long as Employee is President and Chief
Executive Officer, the Company shall use its best efforts to have
Employee nominated and elected to the Board; provided ,
however , that Employee shall not be
entitled to
vote on any matters brought before the Board which relate directly
to his compensation or employment.
§3.
Compensation . For all services rendered by Employee,
the Company shall (subject to applicable tax withholding
requirements) compensate Employee as follows:
(a) Base Salary. As of the Effective Date, the gross
annual salary payable to Employee shall be at least Four Hundred
Twenty-Five Thousand Dollars ($425,000.00) per year payable on a
regular basis in accordance with the Company’s standard
payroll policies and procedures (the “ Base Salary
”). The Base Salary shall be subject to adjustment by the
Board (or a properly formulated committee of the Board to which
such responsibility is delegated) from time-to-time in its
discretion.
(b) Perquisites, Benefits, and Other Compensation.
Employee shall be eligible for the same perquisites and benefits as
are made available to other senior executive employees of the
Company, as well as such other perquisites or benefits as may be
specified from time to time by the Company. The Company reserves
the right at any time and from time to time to change, amend, or
terminate any such perquisites and benefits as the Company in its
discretion deems appropriate or necessary under the
circumstances.
(c) Annual Bonus. Employee shall be eligible for an
annual bonus each fiscal year (“ Annual Bonus ”)
of up to one-hundred percent (100%) of Employee’s
then-existing Base Salary paid for such year, as determined by the
Board based upon the Company’s achievement of financial and
other goals approved by the Board, provided Employee remains
employed by the Company through the end of such fiscal year.
Employee’s Annual Bonus for each fiscal year shall be paid in
accordance with the Company’s customary practices for payment
of annual bonuses, but shall be paid in any event no later than
March 15 immediately following the end of such fiscal year.
For the 2008 fiscal year, the target Annual Bonus will be a
pro-rata percentage of Base Salary equal to 100% times the number
of days remaining in the calendar year as of the Effective Date
divided by 365. Employee shall propose to the Board in good faith
any adjustments to the Company’s existing bonus plan and
targets for 2008.
(d) Stock Options and Restricted Stock. Employee
shall be eligible for grants of equity-based compensation under the
Caribou Coffee Company, Inc. 2005 Equity Incentive Plan and any
successor plan thereto (the “ Plan ”), as such
grants are determined by the committee administering the Plan in
its sole discretion.
§4.
Expense Reimbursement . The Company shall reimburse
Employee for (or, at the Company’s option, pay) all
reasonable and proper business travel and other out-of-pocket
expenses incurred by Employee in the performance of his duties and
responsibilities to the Company under § 2 during the Term. All
reimbursable expenses shall be appropriately documented in
reasonable detail by Employee upon submission of any request for
reimbursement, and in a format and manner consistent with the
Company’s expense reporting and reimbursement policies and
applicable federal and state tax recordkeeping requirements. All
approved expenses shall be paid within a reasonable time (not later
than March 15 of Employee’s taxable year following the
taxable year in which an expense was incurred following the
presentation of appropriate invoices to the Company). Any expenses
paid during any taxable
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year of
Employee will not affect the expenses paid by the Company in
another taxable year. Employee’s right to reimbursement of
expenses is not subject to liquidation or exchange for another
benefit.
§5.
Place of Performance .
(a) Employee shall carry out his duties and responsibilities
under § 2 principally in and from the Company’s
headquarters, which currently is in Minneapolis, Minnesota.
Employee acknowledges and agrees his position may involve
substantial business travel.
(b) In connection with Employee’s relocation to the
Company’s headquarters, the Company shall pay to Employee
$100,000 (less applicable withholdings) within ten (10) business
days after the Effective Date; provided, however, that such
amount shall be repaid by Employee to the Company within ten
(10) business days of Employee’s termination of
employment should Employee terminate his employment with the
Company without Good Reason (as defined below) on or before
September 10, 2009. Further, the Company shall reimburse
Employee for his actual, direct moving expenses incurred in
connection with Employee’s relocation to the Company’s
headquarters in accordance with the Company’s relocation
policy provided Employee timely submits the necessary documentation
to substantiate such expenses. In addition If Employee has
relocated his primary residence to the Minneapolis, Minnesota
metropolitan area and Employee elects to sell his primary residence
in Ohio, then the Company shall pay to Employee an amount equal to
six percent (6%) of the contract price of such primary residence
(subject to applicable tax withholdings) promptly after Employee
provides appropriate documentation of such proceeds to the Company
within six weeks of such sale. Employee’s right to these
payments is not subject to liquidation or exchange for any other
benefit.
§6.
Termination; Rights on Termination . Employee’s
employment and the Term may be terminated in any one of the
following ways:
(a) Termination by the Company for Good Cause. The
Company may terminate the Term and Employee’s employment for
Good Cause. For purposes of this Agreement, “ Good
Cause ” shall be determined by the Board acting in good
faith and shall mean: (i) Employee’s breach of any
material provision of this Agreement, or Employee’s
negligence in the performance or nonperformance of any of
Employee’s material duties or responsibilities after
(x) the Board has in good faith issued Employee a written
statement identifying the breach or negligence; (y) the Board
has provided the Employee 10 business days in which to cure the
breach or negligence; and (z) Employee fails to cure the
breach or negligence; (ii) Employee’s dishonesty, fraud,
or detrimental misconduct with respect to the business or affairs
of the Company; (iii) Employee’s conviction of a felony
or conviction of a misdemeanor involving theft, fraud, dishonesty
or act of moral turpitude, or a plea of “guilty,”
“no contest,” or “nolo contendre” to
the same; or (iv) Employee’s failure to implement and
monitor compliance with policies reasonably designed to comply with
the requirements of the Sarbanes-Oxley Act of 2002 to the extent
such law is applicable to the Company. In the event of termination
of Employee’s employment for Good Cause, no compensation or
benefits shall be payable to Employee after the date of
termination, except as provided for in § 6(f).
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(b) Termination for Employee’s Death or
Disability. In the event that Employee dies or becomes
Disabled, no compensation or benefits shall be payable to Employee
or his estate after the date of termination, except as provided for
in § 6(f). “ Disabled ” shall mean that the
Employee has a physical or mental disability that the Board
reasonably determines is preventing Employee, even after reasonable
accommodation, from performing the essential functions of his
position.
(c) Termination by the Company Without Good Cause. At
any time during the Term, the Company may, without Good Cause and
for any reason whatsoever, terminate the Term and Employee’s
employment. Termination by the Company without good cause shall
include the Company deciding not to extend this Agreement under
§1. In the event Employee’s employment is terminated
during the Term without Good Cause, and provided that Employee
fully complies with his obligations under §7 through §10
of this Agreement, then Employee shall be entitled to compensation
pursuant to § 6(g).
(d) Termination by Employee For Good Reason. Employee
may terminate the Term and resign for Good Reason. “ Good
Reason ” shall mean: (i) a reduction in or material
delay in payment of Base Salary to which Employee has not
consented; or (ii) Employee ceases to hold position and title
of Chief Executive Officer as contemplated by § 2, or a
position and title of a more senior position which Employee
accepts; (iii) failure of Employee to be nominated and elected
to the Board as contemplated by § 2; (iv) Employee is
assigned, without Employee’s consent, authority or
responsibility materially inconsistent with authority and
responsibility as contemplated by § 2, including without
limitation any material diminution of Employee’s
responsibility for supervision of Company personnel; provided,
however , that the Board’s appointment of a non-executive
Chairman or other Board member to assist or advise Employee with
respect to his duties as CEO shall not constitute Good Reason;
(v) any requirement is imposed by the Company or under
direction of the Board or any person controlling the Company for
Employee to reside outside of the Minneapolis, Minnesota
metropolitan area; (vi) a determination by Employee acting in
good faith that there has been a breach by the Company of a
material provision of this Agreement; or (vii) any resignation
by Employee within one year from the occurrence of a “Change
in Control” as defined in the Plan; provided ,
however , Good Reason shall not exist unless
(x) Employee, before his resignation, gives the Board a
written statement of the basis for Employee’s determination
that Good Reason exists, (y) Employee gives the Board at least
ten (10) business days after receipt of such statement to cure
the basis for such determination and (z) the Board fails cure
the basis for such determination. In the event Employee resigns for
Good Reason, and provided that Employee fully complies with his
obligations under §7 through §10 of this Agreement, then
Employee shall be entitled to compensation pursuant to §
6(g).
(e) Termination by Employee Without Good Reason.
Employee may resign for any reason or no reason, effective thirty
(30) days after he provides written notice of his intent to
resign to the Company. In such event, no compensation or benefits
shall be payable to Employee after the date of termination, except
as provided for in § 6(f).
(f) Payment Through Termination. Upon termination of
Employee’s employment for any reason except a termination by
the Company without Good Cause or a resignation by Employee for
Good Reason, Employee shall be entitled to receive all
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compensation
earned and all benefits and reimbursements due under this Agreement
through the effective date of his termination of employment. No
other compensation or benefits will be due or payable to Employee
pursuant to this Agreement subsequent to such termination except as
expressly provided by this § 6 or as otherwise required by law
or agreements with the Company which are independent of this
Agreement.
(g) Payment for Termination Without Good Cause or For
Good Reason. In the event Employee’s employment is
terminated by the Company without Good Cause or Employee resigns
for Good Reason, and provided that Employee fully complies with his
obligations under §7 through §10 of this Agreement, then
Employee shall be entitled to: (i) all compensation earned and
all benefits and reimbursements due under this Agreement through
the effective date of his termination; (ii) the payment of
Employee’s then current monthly Base Salary on the
Company’s regularly scheduled monthly pay dates for a period
of eighteen (18) months from the date Employee incurs a
“separation from service” (within the meaning of
Internal Revenue Code (“Code”) Section 409A
(“Separation from Service”), pursuant to the
Company’s standard payroll policies and procedures;
provided, however , that if Employee fails to relocate his
principal residence to the Minneapolis, Minnesota metropolitan area
prior to September 30, 2009, the Company’s obligation to
continue Employee’s Base Salary shall be reduced to twelve
(12) months; (iii) an amount equal to the average of the
Annual Bonuses (including no Annual Bonus, if applicable) paid to
Employee for the two full fiscal years most recently concluded
prior to the Separation from Service, payable in a lu
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