Exhibit 10.6
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT
(the “Agreement”) is made and delivered as of
October 31, 2003, between Frances G. Rathke (the
“Executive”) and Green Mountain Coffee Roasters, Inc.,
a Delaware corporation (the “Company”).
PRELIMINARY
STATEMENT
The Company is a leader in the
specialty coffee industry, with a wholesale operation that serves
supermarkets, convenience stores, offices and other locations, and
operates a direct mail operation and an e-commerce website. The
Company desires to employ Executive, and Executive desires to
become an employee of the Company, pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of
the foregoing and the mutual promises herein contained, and in
order to provide an incentive to Executive to enter into the employ
of the Company, the parties hereby agree as follows:
ARTICLE I
TERM
1.01 Term . The term of this
Agreement shall begin on October 31, 2003, and shall continue
upon the terms and conditions hereinafter set forth.
ARTICLE II
SERVICES
2.01 Employment . The Company
hereby agrees to employ Executive and Executive hereby agrees to be
employed by the Company pursuant to the terms of this Agreement.
During working hours, Executive shall devote her full time,
attention, knowledge and skills to the business and interests of
the Company, as shall be mutually agreed upon by Executive and the
Company from time-to-time.
2.02 Reporting . Executive
shall report to the Company’s President and Chief Executive
Officer (CEO).
2.03 Title . The title of
Executive shall be Vice President, Chief Financial Officer,
Treasurer and Secretary.
2.04 Duties and
Responsibilities . Executive’s duties and
responsibilities shall be as set forth in Exhibit A
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ARTICLE III
COMPENSATION
3.01 Company Base Salary .
For all services rendered by Executive pursuant to the terms of
this Agreement, Executive shall receive through the Company payroll
system the Company Base Salary, which shall mean an annual salary
in the dollar amount set forth in Exhibit B . In addition,
the Executive shall be entitled to annual or other bonuses starting
in fiscal year 2003, commensurate with the bonus program (including
“discretionary” bonuses) used to pay other Executive
and Senior Leadership members. It is expected that the annual
bonuses will be based upon meeting or exceeding performance
criteria to be mutually agreed upon by the Executive and the CEO or
Board of Directors.
3.02 Periodic Payment . The
Company shall pay the Company Base Salary in twenty-six
(26) equal bi-weekly payments, less all applicable payroll and
other taxes required by law to be withheld.
ARTICLE IV
FRINGE BENEFITS
4.01 Holidays . Executive
shall be entitled to all paid holidays that are annually observed
at the Company.
4.02 Other Benefits and
Reimbursements . Executive shall also be entitled to
participate in (i) group medical, dental, disability and life
insurance programs, (ii) retirement plans,
(iii) vacation, (iv) expense reimbursement programs, and
(v) such other benefit programs as shall be made available to
the Company’s senior executives during the term of this
Agreement. All reimbursements made by the Company under such plans
and programs shall be governed by the Green Mountain Coffee
Roasters, Inc. 409A Reimbursement Policy. Executive shall be
entitled to a minimum of four weeks’ paid vacation per year
starting in fiscal year 2004. Any payments of benefits payable to
Executive hereunder in respect to any fiscal year during which the
Executive is employed by the Company for less than the entire year
shall, unless otherwise provided in the applicable plan or
arrangement or required by applicable law, be prorated in
accordance with the number of days in such calendar year during
which Executive is employed.
4.03 Stock Options . The
Executive shall be granted stock options as set forth in Exhibit
B .
ARTICLE V
INDEMNIFICATION AND
INSURANCE
5.01 Bylaw Indemnification .
The Company shall indemnify Executive against all liabilities
incurred by Executive resulting from Executive’s performance
of this Agreement, all pursuant to and only to the extent provided
in Article VI of the Company’s By-laws.
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5.02 D&O Insurance . The Company, at
its expense, may, in addition, provide director and officer
liability insurance covering Executive, among others.
ARTICLE VI
TERMINATION
6.01 Death .
Executive’s employment shall terminate upon her
death.
6.02 Company Termination .
The Company may terminate Executive’s employment
hereunder:
(a) For Cause . The Company
shall be deemed to have cause to terminate Executive’s
employment hereunder upon Executive’s: (i) failure to
perform and discharge, faithfully, diligently, and to the best of
her abilities, the duties and responsibilities set forth herein and
on Exhibit A and such other duties and responsibilities as
may be assigned to her from time to time, or (ii) conduct that
violates a material policy or procedure applicable to or adopted by
the Company, or (iii) dishonest or unethical conduct which is
injurious to the Company, monetarily or otherwise, or
(iv) willful misconduct or gross negligence that is injurious
to the Company, monetarily or otherwise, or (v) conviction of
a misdemeanor involving moral turpitude or of a felony under the
laws of the United States or any state or political subdivision
thereof, or (vi) continued unauthorized absence from work, or
(vii) material breach of any of the provisions of this
Agreement if such breach is not cured within thirty (30) days
after written notice thereof is delivered to Executive by the CEO.
The decision to discharge Executive “for cause” shall
be made by the CEO and Board of Directors.
(b) Without Cause . The
Company may terminate Executive’s employment without cause
upon ten (10) business days advance notice to
Executive.
6.03 Executive Termination .
Executive may terminate Executive’s employment without cause
upon ten (10) business days advance notice to the
Company.
6.04 Change of Control .
Executive may terminate her employment hereunder within the first
year following a Change of Control for Good Reason (as such terms
are defined herein), upon ninety (90) days’ notice, or
such shorter period as the Company may approve or require, by
delivering a Notice of Termination to the Company pursuant to
Section 6.05 hereof. In the event of any such termination,
Executive shall continue to render services throughout said ninety
(90) day period or such shorter period as the Company approves
or requires, if requested by the Company. Regardless of whether the
Company requests that Executive render services to the Company
during such period, Executive shall be entitled to continue to
receive the Company Base Salary during such period.
As used herein, a “Change of
Control” shall mean the occurrence of any one or more of the
following events:
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i.
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(i) A sale, transfer or other
conveyance by the Company of all or substantially all of its assets
whereby any person is or becomes Beneficial Owner , directly
or
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indirectly, of securities of the
Company representing 35% or more of the combined voting power of
the Company’s then outstanding securities (except if such
Beneficial Owner is Mr. Robert P. Stiller or his
affiliates, directly or indirectly),
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ii.
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(ii) a merger
or consolidation by or with the Company in which the Company is not
the surviving corporation following such merger or consolidation
other than (A) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
being converted into voting securities of the surviving entity) 60%
or more of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (B) a merger or consolidation
affected to implement a recapitalization of the Company (or similar
transaction) in which Mr. Robert P. Stiller or his
affiliates, directly or indirectly, continues to beneficially own
at least 10% or more of the combined voting power of the
Company’s then outstanding securities,
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iii.
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(iii) the
implementation of any plan or proposal for the liquidation or
dissolution or other winding up of the Company, or
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iv.
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(iv) Mr.
Robert P. Stiller or his affiliates, directly or indirectly, fails
to continue to beneficially own securities of the Company
representing 10% or more of the combined voting power of the
Company’s then outstanding securities.
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As used herein, “Good
Reason” shall mean (i) failure of the Company to
continue the Executive in the position the Executive had prior to
the date of Change of Control, (ii) diminution in the nature
or scope of the Executive’s responsibilities, duties or
authority existing prior to the date of the Change of Control, or
(iii) failure of the Company to provide the Executive with the
base salary, bonus, and benefits and perquisites in accordance with
the terms of this Agreement, as in effect immediately prior to the
Change of Control.
6.05 Notice of Termination .
Any termination of employment, by the Company or Executive, except
termination pursuant to Section 6.01, shall be communicated by
delivery of a written notice of termination to the other party (a
“Notice of Termination”).
6.06 Date of Termination .
For purposes of this Agreement, the date of termination (the
“Date of Termination”) is defined as (i) the date
of death if the employment is terminated by death; or (ii) if
employment is terminated pursuant to Section 6.02, 6.03 or
6.04 hereof, the date specified in the Notice of
Termination.
6.07 Consequences of
Termination .
(a) Death . If
Executive’s employment terminates pursuant to
Section 6.01 hereof, the Company shall pay to
Executive’s executor, administrator or other legal
representative (i) the portion of the Company Base Salary
earned but unpaid prior to the Date of Termination, (ii) the
Executive’s accrued vacation through the date of termination,
(iii) 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
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reimbursable under Company policy (all of the
foregoing, “Accrued Obligations”). Accrued obligations
shall be paid no later than sixty (60) days after termination.
Additionally, if Executive’s employment terminates pursuant
to Section 6.01 hereof, the Company shall pay to
Executive’s executor, administrator or other legal
representative any target incentive bonus owed to Executive for a
fiscal year or other performance period preceding that in which the
termination occurs, but unpaid as of the date of termination. The
Company shall have no further obligation to Executive’s
executor, administrator or legal representative under this
Agreement or on account of, or arising out of, the termination of
Executive’s employment, except to the extent provided under
the terms of any benefit plans, and as required by
Section 4980B of the Internal Revenue Code
(“COBRA”) as it relates to the continuation of coverage
under group health plan(s) maintained by the Company.
(b) For Cause Termination by the
Company . If Executive’s employment terminates pursuant
to Section 6.02(a) hereof, the Company shall pay to Executive
(i) Accrued Obligations, which shall be paid within sixty
(60) days of such termination, and (ii) any target
incentive bonus owed to Executive for a fiscal year or other
performance period preceding that in which the termination occurs,
but unpaid as of the date of termination. The Company shall have no
further obligation to Executive and/or Executive’s executor,
administrator or other legal representative under this Agreement or
on account of, or arising out of, the termination of
Executive’s employment, except to the extent provided under
the terms of any benefit plans and as required by COBRA.
(c) Without Cause Termination by
the Company . If Executive’s employment terminates
pursuant to Section 6.02(b) hereof, the Company shall pay to
Executive (i) Accrued Obligations, which shall be paid within
sixty (60) days of such termination, and (ii) any target
incentive bonus owed to Executive for a fiscal year or other
performance period preceding that in which the termination occurs,
but unpaid as of the date of termination, provided that such amount
is approved by the Compensation Committee of the Company’s
Board of Directors in accordance with the policies and procedures
generally applicable to all senior executives, except that the
Compensation Committee shall not discretionarily reduce any such
bonus payment. The Company shall have no further obligation to
Executive and/or Executive’s executor, administrator or other
legal representative under this Agreement or on account of, or
arising out of, the termination of Executive’s employment,
except to the extent provided under the terms of any benefit plans
and as required by COBRA. Notwithstanding the foregoing, Executive
will receive the following additional benefits upon
Executive’s execution of the Release, attached hereto as
Exhibit C , which Release shall be signed and effective as
of the Date of Termination, (i) the Company shall pay to
Executive her Company Base Salary for a period of twelve
(12) months from the Date of Termination at the rate then in
effect (subject to any employee contribution for the group medical
and dental insurance plan applicable to Executive on the Date of
Termination), (ii) the Company shall continue
Executive’s employee participation in the Company’s
group medical and dental insurance plans under COBRA at then
existing employee contribution rates, which Executive shall pay,
for a period up to twelve (12) months from the Date of
Termination, or until the Employee secures other comparable
employment, whichever is sooner, (iii) the Company shall
provide, or arrange for, up to $10,000.00 in outplacement services,
(iv) unless provisions in some other agreement between the
Executive and the Company or provisions in the stock option plan
under which options held by the Executive as of the Date of
Termination were granted are more favorable to the Executive, in
which case those
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provisions shall govern, unvested stock options
that would have vested in the first six-month period after the Date
of Termination shall be accelerated by the Company and become
vested as of the Date of Termination, and all vested options as of
such date may be exercised by the Executive for up to three months
thereafter (unless exercised, such options shall terminate at the
end of such three-month period), and all unvested stock options
remaining unvested on the Date of Termination shall terminate as of
such date, and (v) the Company shall pay to Executive an
additional amount determined as follows: (a) in the event that
the Executive is eligible for a “162(m) Bonus” (as
defined below) for the fiscal year or other performance period in
which the termination occurs, the Company shall pay to Executive a
pro rata portion of the Executive’s 162(m) Bonus, if
any, that would have otherwise been payable to Executive but for
the termination (if and as approved by the Compensation Committee
of the Company’s Board of Directors in accordance with the
policies and procedures generally applicable to all senior
executives); (b) in the event that Executive is eligible for a
bonus that is not a 162(m) Bonus, the Company shall pay to
Executive the next annual cash bonus that would have otherwise been
payable to Executive but for the termination (if and as approved by
the Compensation Committee of the Company’s Board of
Directors in accordance with the policies and procedures generally
applicable to all senior executives), which amount shall be no less
than Executive’s annual cash bonus in the immediately
preceding fiscal year. As used herein, “162(m) Bonus”
for any fiscal year or performance period shall mean the bonus, if
any, intended to qualify for the performance-based compensation
exemption under Section 162(m) of the Internal Revenue Code,
based on actual performance for such year but without regard to any
discretionary reduction in the bonus amount as so
determined.
(d) Without Cause Termination by
Executive . If Executive’s employment terminates pursuant
to Section 6.03 hereof, the Company shall pay to Executive
(i) Accrued Obligations, which shall be paid within sixty
(60) days of such termination, and (ii) any target
incentive bonus owed to Executive for a fiscal year or other
performance period preceding that in which the termination occurs,
but unpaid as of the date of termination. The Company shall have no
further obligation to Executive and/or Executive’s executor,
administrator or other legal representative under this Agreement or
on account of, or arising out of, the termination of
Executive’s employment, except to the extent provided under
the terms of any benefit plans and as required by COBRA.
(e) Change of Control . If
Executive’s employment terminates pursuant to
Section 6.04 hereof, the Company shall pay to Executive
(i) Accrued Obligations, which shall be paid within sixty
(60) days of such termination, and (ii) any target
incentive bonus owed to Executive for a period preceding that in
which the termination occurs, but unpaid as of the date of
termination, provided that such amount is approved by the
Compensation Committee of the Company’s Board of Directors in
accordance with the policies and procedures generally applicable to
all senior executives, except that the Compensation Committee shall
not discretionarily reduce any such bonus. The Company shall have
no further obligation to Executive and/or Executive’s
executor, administrator or other legal representative under this
Agreement or on account of, or arising out of, the termination of
Executive’s employment, except to the extent provided under
the terms of any benefit plans and as required by COBRA.
Notwithstanding the foregoing, Executive will receive the following
additional benefits upon Executive’s execution of the
Release, attached hereto as Exhibit C , which Release shall
be signed and effective as of the Date of Termination, (i) the
Company shall pay to Executive a single lump sum equal to the
greater of:
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(I) the sum of (a) one and a
half times (i.e., 18 months) Executive’s annual Base Salary
in effect immediately prior to the date of the Change in Control or
immediately prior to the date of termination (whichever is greater)
and (b) an amount equal to one and a half times the last
year’s annual cash bonus paid to the Executive (subject to
any employee contribution for the group medical and dental
insurance plan applicable to Executive on the Date of Termination),
or
(II) the sum of
(a) Executive’s target incentive bonus, if any, for the
fiscal year in which termination occurs, multiplied by a fraction,
the numerator of which is the number of days elapsed between the
beginning of such year and the date of termination and the
denominator of which is 365; and (b) an amount equal to the
sum of (x) the Executive’s Base Salary and (y) the
greater of (1) the annual average of the annual bonuses or
other annual incentive compensation amounts paid in cash to the
Executive (or that would have been so paid absent deferral) by the
Company in its three most recent fiscal years ended prior to the
date of the date of termination or the three most recent fiscal
years ended prior to the Change in Control if greater, or
(2) the Executive’s target incentive bonus for the
fiscal year in which the Change in Control occurs,
(ii) the Company shall continue
Executive’s employee participation in the Company’s
group medical and dental insurance plans under COBRA at then
existing employee contribution rates, which Executive shall pay,
for a period up to twelve (12) months from the Date of
Termination, (iii) the Company shall provide, or arrange for,
up to $10,000.00 in outplacement services, (iv) unless
provisions in some other agreement between the Executive and the
Company or provisions in the stock option plan under which options
held by the Executive as of the Date of Termination under a Change
of Control were granted are more favorable to the Executive, in
which case those provisions shall govern, unvested stock options
that would have vested after the Date of Termination shall be
accelerated by the Company and become vested immediately prior to
the Change of Control and sha
