Exhibit 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into this
__________ day of _______________, 2004 (the "Effective Date") by and between
XXXXXX XXXXXX (the "Executive") and COFFEE HOLDING CO., INC., a Nevada
corporation (the "Company").
BACKGROUND
WHEREAS the Executive has and is expected to continue to make a major
contribution to the growth, profitability and financial strength of the Company;
and
WHEREAS the Company desires to retain the services of the Executive,
and the Executive desires to be retained by the Company, on the terms and
conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in consideration of
the premises and the mutual promises set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms, when used in this
Agreement, shall have the following meanings, unless the context clearly
requires otherwise (such definitions to be equally applicable to both the
singular and plural of the defined terms):
(a) "Affiliate" means, (a) with respect to the Executive, any
other Person directly or indirectly Controlling, Controlled by, or
under common Control with the Executive and (b) with respect to the
Company, (i) any Person which directly or indirectly beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) securities or other equity interests
possessing more than 50% of the aggregate voting power in the election
of directors (or similar governing body) represented by all outstanding
securities of the Company or (ii) any Person with respect to which the
Company beneficially owns (within the meaning of Rule 13d promulgated
under the Securities Exchange Act of 1934, as amended) securities or
other equity interests possessing more than 50% of the aggregate voting
power in the election of directors (or similar governing body)
represented by, or more than 50% of the aggregate value of, all
outstanding securities or other equity interests of such Person.
(b) "Base Salary" shall have the meaning set forth in section
3.1.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means an omission, act or action or series of
omissions, acts or actions of the Executive which, in the determination
of the Board, cause(s), constitute(s) or result(s) in:
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(i) the Executive's material dishonesty including,
without limitation, theft, fraud, embezzlement, financial
misrepresentation or other similar behavior or action in his
dealings with or with respect to the Company or any Affiliate
thereof or entity with which the Company or any Affiliate
thereof, shall be engaged in or be attempting to engage in
commerce;
(ii) the conviction of the Executive for, or the
Executive's entry of a plea of guilty or nolo contendere to,
the commission of a felony;
(iii) the willful refusal of the Executive to follow
the lawful directives of the Board with respect to his duties
hereunder, which directives shall be consistent with his
duties and position as President of the Company, as set forth
in this Agreement, and which refusal is not cured by the
Executive within thirty (30) calendar days after written
notice from the Board of the Company to the Executive setting
forth with reasonable specificity the nature thereof; or
(iv) the material breach of any material provision of
this Agreement which is not cured by the Executive within
thirty (30) calendar days after written notice from the Board
to the Executive setting forth with reasonable specificity the
nature of such breach, unless the breach is of such nature
that it cannot be cured within such thirty (30) day period, in
which case such period will be extended by a reasonable amount
of time if, and only if (a) such breach is curable and (b)
during such thirty (30) day period the Executive commences
good faith efforts which can reasonably be expected to cure
such breach as promptly as is reasonably practicable.
(e) "Change in Control" shall mean any one of the following:
(i) the acquisition by any person or entity,
excluding, for this purpose, the Company, Xxxxxxxx Xxxxxx,
Xxxxxxxx Xxxxxx and Xxxxx Xxxxxx, and any parent,
parent-in-law, spouse, child, sibling, brother-in-law,
sister-in-law, daughter-in-law and/or son-in-law of any of
them (each a "Group Member") and any employee benefit plan of
the Company, of Beneficial Ownership of 50% or more of the
combined voting power of the then outstanding securities
entitled to vote generally in the election of directors
("Voting Securities"), of the Company; and
(ii) the approval by the stockholder or stockholders
of any of the Company of (a) a reorganization, merger,
consolidation or other business combination (other than any
reorganization, merger, consolidation or other business
combination with an Affiliate of the entity to be reorganized,
merged, consolidated or otherwise combined) of the Company
with respect to which the stockholder or stockholders of such
entity immediately prior to consummation of such
reorganization, merger, consolidation or other business
combination do not, immediately thereafter, own more than 50%
of the combined voting power of the outstanding Voting
Securities of the surviving corporation, or (b) the sale, to a
person or entity other than a Group Member, of all or
substantially all of the assets of the Company.
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For purposes of this section 1.1(e):
"Affiliate" means a person or entity that directly,
or indirectly through one or more intermediaries, controls or
is controlled by, or is under common control with, the person
or entity specified.
"Beneficial Ownership" shall be determined within the
meaning of Rule 13d-3 promulgated under the Exchange Act.
"Person" shall include persons as that term is
understood under Sections 13(d)(3) and 14(d)(2) of the
Exchange Act.
"Voting Securities" shall be deemed to include all
outstanding securities of a corporation that are then
exchangeable or convertible into securities of that
corporation entitled to vote generally in the election of
directors, as if same shall have been exchanged or converted
into such voting securities.
(f) "Confidential Information" means:
(i) proprietary information, trade secrets and
know-how of the Company and its Affiliates;
(ii) confidential information relating to the
business, operations, systems, networks, services, data bases,
customer lists, pricing policies, business plans, marketing
plans, product development plans, strategies, inventions and
research of the Company or its Affiliates; and
(iii) confidential information relating to the
financial affairs and results of operations and forecasts or
projections of the Company or its Affiliates;
provided that information shall not constitute Confidential Information
if such information: (i) is generally known by Persons other than the
Company or its Affiliates or Persons employed by, in control of or
otherwise affiliated with the Company or its Affiliates, (ii) is known
by Persons other than the Company or its Affiliates or Persons employed
by, in control of or otherwise affiliated with the Company or its
Affiliates by reason of the action of such Person or Persons other than
the Executive or any Person acting at the Executive's direction or with
the Executive's consent, (iii) was known by the Executive, by lawful
means, prior to the date of the Executive's employment with the Company
or (iv) is compelled to be disclosed by law, regulation or legal
process.
(g) "Control" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or
as a trustee or executor, of the power to direct or cause the direction
of the management of a Person, whether through the ownership of stock,
as a trustee or executor, by contract or credit agreement or otherwise.
(h) "Disability" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder as determined in good faith by the Board.
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(i) "Effective Date" shall have the meaning set forth in the
preamble.
(j) "Employment Term" shall have the meaning set forth in
section 2.2.
(k) "Good Reason" means:
(i) the assignment to Executive, without Executive's
expressed written approval, of duties or responsibilities
materially inconsistent with the Executive's position of
President of the Company, or any material reduction in
Executive's duties, responsibilities or authority from those
in effect on the date hereof;
(ii) the Company's failure to continue in effect any
material benefit plan, program or policy in which Executive is
participating (other than any plan, program or policy which is
available to the salaried employees of the Company generally),
or the taking of any action by the Company that would
adversely affect Executive's participation in or materially
reduce Executive's benefits under any such benefit plan,
program or policy or that would deprive Executive of any
material fringe benefit enjoyed by Executive; provided,
however, that no Good Reason shall occur if the aggregate
value of the benefit plans, programs and policies in which the
Executive is participating remains substantially equivalent;
(iii) a relocation of the Executive's primary place
of employment to any location that is both (a) greater than 50
miles away from the location at which Executive is currently
working, and (b) greater than 50 miles away from the
Executor's primary residence, except for required travel by
Executive on the Company's business to an extent substantially
consistent with Executive's past business travel obligations;
(iv) any material breach of any material provision of
this Agreement by the Company; or
(v) the date three months after the occurrence of a
Change in Control;
which, in any case described in Sections 1.1(k)(i), (ii), (iii) or
(iv), is not cured by the Company within thirty (30) calendar days
after written notice from the Executive to the Board setting forth with
reasonable specificity the nature of such breach or event, unless the
breach or event is of such nature that it cannot be cured within such
thirty (30) day period, in which case such period will be extended by a
reasonable amount of time if, and only if (a) such breach is curable
and (b) during such thirty (30) day period the Company commences good
faith efforts which can reasonably be expected to cure such breach as
promptly as is reasonably practicable. For purposes of this Agreement,
any action or inaction described in Sections 1.1(k)(i), (ii), (iii) or
(iv) shall constitute Good Reason only if written notice thereof as
contemplated by the preceding sentence is given within 180 days after
the date on which such action or inaction first occurs (or, if later,
the earliest date on which the Executive knows or reasonably should
know of such action or inaction).
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(l) "Initial Term" means the first period that this Agreement
is in effect, as set forth in section 2.2.
(m) "Person" means an individual, corporation, partnership,
association, limited liability company or partnership, trust,
government, governmental agency or body, or any other group or entity,
no matter how organized and whether or not for profit.
(n) "Renewal Term" shall have the meaning set forth in Section
2.2.
ARTICLE II
EMPLOYMENT AND TERM
Section 2.1 Employment. The Company employs Executive and the Executive
hereby agrees to such employment by the Company during the Employment Term to
serve as Chief Executive Officer and President of the Company, with the
customary duties, authorities and responsibilities associated with such position
and such other duties, authorities and responsibilities relative to the Company
or its Affiliates that: (a) have been agreed upon by the Company and Executive
or (b) may from time to time be delegated to Executive by the Board.
Section 2.2 Employment Term.
(a) Initial Term. The "Initial Term" of this Agreement shall
commence on the Effective Date, and unless sooner terminated as
provided in Article IV, shall continue until the fifth anniversary of
such date.
(b) Renewal Term. On the day after the Effective Date and on
each day thereafter, the Employment Agreement shall be extended by one
day, such that on any date the Employment Term will expire on the day
before the fifth (5th) anniversary of such date. These extensions shall
continue in perpetuity until discontinued by: (i) notice to the
Executive given by the Company that they have elected to discontinue
the extensions; (ii) notice by the Executive to the Company that he has
elected to discontinue the extensions; or (iii) termination of the
Executive's employment with the Company, whether by resignation,
discharge or otherwise. On the date on which such a notice is deemed
given, or on the effective date of a termination of the Executive's
employment with the Company, the Employment Period shall be converted
to a fixed period of five (5) years ending on the day before the fifth
(5th) anniversary of such date. For all purposes of this Agreement, the
term "Renewal Term" shall mean the period covered by any such
extension.
(c) Employment Term. For all purposes of this Agreement, the
term "Employment Term" shall mean the Initial Term and all Renewal
Terms. Except as otherwise expressly provided in this Agreement, any
reference in this Agreement to the term "Remaining Unexpired Employment
Term" as of any date shall mean the period beginning on such date and
ending on the last day of the Employment Term.
(d) Full Working Time. During the Employment Term, the
Executive shall devote his ability and attention, all of his skill and
experience and efforts during normal business hours and at such other
times as the performance of his duties hereunder may reasonably require
to the proper performance of his duties hereunder and to the business
and affairs of the Company. During the Employment Term, the Executive,
without the prior written approval of the Board, shall not, either
directly or indirectly, actively participate in any other business or
accept any employment or business office whatsoever, including, without
limitation, serving as a director, from any other Person; provided,
however, that the foregoing shall not preclude the Executive, subject
to Article V, from:
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(i) serving as a director of or actually
participating in any non-profit or charitable organization or
(ii) making an investment in any other business, so
long as the Executive does not actively participate in another
business referred to in Section 2.3 and such activity, whether
described in Section 2.3(i) or 2.3(ii), does not materially
interfere with the Executive's ability to perform his duties
hereunder and does not constitute a conflict of interest with
the Company in the reasonable opinion of the Board.
ARTICLE III
COMPENSATION AND BENEFITS
Section 3.1 Base Salary. During the Employment Term, as compensation
for services hereunder and in consideration for the protective covenants set
forth in Article V of this Agreement, Executive shall be paid an annual base
salary of Three Hundred Twenty-Five Thousand Dollars ($325,000) or such greater
amount as may from time to time be approved by the Compensation Committee of the
Board (the "Base Salary"). Base Salary shall be paid to Executive in accordance
with the Company's normal payroll practices.
Section 3.2 Bonus. During the Employment Term, Executive shall be
eligible to receive an annual bonus that will be determined in accordance with
the bonus program established by the Board from time to time.
Section 3.3 Benefits. To the maximum extent that he is eligible under
the terms of the applicable plan or program, the Executive shall participate in
any and all plans or programs maintained by the Company for its employees and/or
senior executives generally that provide insurance, medical benefits, retirement
benefits, or similar fringe benefits. In addition, the Executive shall be
entitled to four weeks of paid vacation each calendar year of the Employment
Term, which must be taken in accordance with the Company's vacation policy then
in effect.
Section 3.4 Indemnification and Insurance.
(a) D&O Insurance. The Company shall cause the Executive to be
covered by and named as an insured under any policy or contract of
insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as
an officer or director of the Company or service in other capacities at
its request. The coverage provided to the Executive pursuant to this
section shall be of the same scope and on the same terms and conditions
as the coverage (if any) provided to other officers or directors of the
Company and shall continue for so long as the Executive shall be
subject to personal liability relating to such service to the extent
permitted under the Nevada General Corporation Law.
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(b) Indemnification. To the maximum extent permitted under
applicable law, the Company shall indemnify the Executive against and
hold him harmless from any costs, liabilities, losses and exposures to
the fullest extent and on the most favorable terms and conditions that
similar indemnification is offered to any director or officer of the
Company or any subsidiary or Affiliate thereof and shall continue for
so long as the Executive shall be subject to personal liability
relating to such service to the extent permitted under the Nevada
General Corporation Law.
Section 3.5 Expenses. The Company shall pay or reimburse the Executive
for reasonable business expenses actually incurred or paid by the Executive
during the Employment Term, in the performance of his services hereunder;
provided, however, that such expenses are consistent with the Company policy.
Such payment or reimbursement is expressly conditioned upon presentation of
expense statements or vouchers or other supporting documentation by the
Executive in a manner that is acceptable to the Company and otherwise in
accordance with the Company policy then in effect.
Section 3.6 Deductions. The Company shall deduct from all compensation
or benefits payable pursuant to this Agreement such payroll, withholding and
other taxes as may in the reasonable opinion of the Company be required by law
and any such additional amounts requested in writing by the Executive.
ARTICLE IV
TERMINATION
Section 4.1 General. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause, and the Executive
shall have the right to resign at any time with or without Good Reason, but the
relative rights and obligations of the parties in the event of any such
termination or resignation shall be determined under this Agreement.
Section 4.2 Termination Under Certain Circumstances.
(a) Termination Without Severance Benefits. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii)
the Executive's discharge by the Company for Cause, this Agreement
shall terminate including, without limitation, the Company's
obligations to provide any compensation, benefits or severance to the
Executive under Article IV of this Agreement or otherwise, other than
the Standard Termination Entitlements (as defined in section 4.4).
(b) Disability. The Company may terminate the Executive's
employment upon the Executive's Disability. In such event, in addition
to the Standard Termination Entitlements (as defined in section 4.4),
the Company shall continue to pay the Executive his Base Salary in
accordance with the Company's normal payroll practices, at the annual
rate in effect for him immediately prior to the termination of his
employment, during a period ending on the earliest of: (i) the date on
which long-term disability insurance benefits are first payable to him
under any long-term disability insurance plan covering employees of the
Company and providing an annual benefit for the Executive at least
equal to 60% of Base Salary; and (ii) the date of his death; and (iii)
the expiration of the Remaining Unexpired Employment Term. A
termination of employment due to Disability under this section 4.2(b)
shall be effected by notice of termination given to the Executive by
the Company and shall take effect on the later of the effective date of
termination specified in such notice or the date on which the notice of
termination is deemed given to the Executive.
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(c) Termination with Severance Benefits. In the event that the
Executive's employment with the Company is terminated by the Executive
prior to the expiration of the Employment Term for Good Reason or by
the Company prior to the expiration of the Employment Term other than
for Cause or Disability, the Company shall pay the Standard Termination
Entitlements (as defined in section 4.4) and the Severance Benefits (as
defined in section 4.5); provided, however, that any payment required
by this section 4.2(c) is expressly conditioned upon:
(i) The Executive's compliance in all material
respects with the material terms of this Agreement, including,
without limitation, the applicable provisions of Article V;
and
(ii) The Executive's resignation from any and all
positions which he holds as an officer, director or committee
member with respect to the Company or any Affiliate thereof.
Section 4.3 Liquidated Damages. The Company and Executive hereby
stipulate that the damages which may be incurred by the Executive as a
consequence of any such termination of employment are not capable of accurate
measurement as of the date first above written and that the liquidated damages
payments provided for in this Agreement constitute a reasonable estimate under
the circumstances of, and are in full satisfaction of, all damages sustained as
a consequence of any such termination of employment.
Section 4.4 Standard Termination Entitlements. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean and
include:
(a) the Executive's earned but unpaid compensation (including,
without limitation, salary, bonus, and all other items which constitute
wages under applicable law) as of the date of his termination of
employment. This payment shall be made at the time and in the manner
prescribed by law applicable to the payment of wages but in no event
later than 30 days after the date of the Executive's termination of
employment.
(b) the benefits, if any, due to the Executive (and the
Executive's estate, surviving dependents or his designated
beneficiaries) under the employee benefit plans and programs and
compensation plans and programs (including stock option plans)
maintained for the benefit of the officers and employees of the
Company). The time and manner of payment or other delivery of these
benefits and the recipients of such benefits shall be determined
according to the terms and conditions of the applicable plans and
programs.
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Section 4.5 Severance Benefits. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean and include:
(a) During the Remaining Unexpired Employment Term, the
Company shall provide for the Executive and his dependents continued
group life, health (including hospitalization, medical and major
medical), dental, accident and long-term disability insurance benefits
on substantially the same terms and conditions (including any required
premium-sharing arrangements, co-payments and deductibles) in effect
for them immediately prior to the Executive's termination. The coverage
provided under this section may, at the election of the Company, be
secondary to the coverage provided as part of the Standard Termination
Entitlements and to any employer-paid coverage provided by a subsequent
employer or through Medicare, with the result that benefits under the
other coverages will offset the coverage required by this section.
(b) The Company shall make a lump sum payment to the Executive
(or, in the event of his death before payment, to his estate), in an
amount (without discount for early payment) equal to the value of the
salary that Executive would have earned if he had continued working for
the Company during the Remaining Unexpired Employment Period at the
highest annual rate of salary achieved during that portion of the
Employment Period which is prior to Executive's termination of
employment with the Company. Such lump sum shall be paid in lieu of all
other payments of salary provided for under this Agreement in respect
of the period following any such termination within thirty (30) days
following the Executive's termination of employment.
(c) The Company shall make a lump sum payment to the Executive
(or, in the event of his death before payment, to his estate), in an
amount equal to the payments that would have been made to Executive
under any cash bonus or long-term or short-term cash incentive
compensation plan maintained by, or covering employees of, the Company
if he had continued working for the Company during the Remaining
Unexpired Employment Period and had earned the maximum bonus or
incentive award in each calendar year that ends during the Remaining
Unexpired Employment Period, such payments to be equal to the product
of:
(i) the maximum percentage rate at which an award was
ever available to Executive under such incentive compensation
plan; multiplied by
(ii) the salary that would have been paid to
Executive during each such calendar year at the highest annual
rate of salary achieved during that portion of the Employment
Period which is prior to Executive's termination of employment
with the Company.
Such payment shall be made (without discount for early payment) within
thirty (30) days following the Executive's termination of employment.
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ARTICLE V
RESTRICTIVE COVENANTS
Section 5.1 Proprietary Information. In the event that the Executive
leaves the employ of the Company due to the Company's discharge of the Executive
for Cause or the Executive's voluntary resignation from his employment hereunder
without Good Reason, the Executive shall deliver to the Company (and shall not
keep in his possession, recreate or deliver to anyone other than the Company or
its designee) any and all devices, records, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, other documents or property, together with all copies
thereof (in whatever medium recorded) belonging to the Company or any Affiliate
thereof or any of their respective successors or assigns.
Section 5.2 Non-Competition. During his employment with the Company and
continuing for one year thereafter (but only if the Executive's employment
hereunder is terminated due to the Company's discharge of the Executive for
Cause, or the Executive's voluntary resignation from his employment hereunder
without Good Reason), the Executive agrees, and shall cause each Person
Controlled by him to agree, that any such Person shall not, directly or
indirectly, through any Person Controlled by the Executive, in any form or
manner in the State of New York: (a) engage in any activities competitive with
the business of the Company and its Affiliates for his or their own account or
for the account of any other Person, or (b) become interested in any Person
engaged in activities competitive with the business of the Company and its
Affiliates as a partner, shareholder, member, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; provided, however,
that Executive may own, directly or indirectly, solely as a passive investment,
securities of any Person if the Executive (x) is not a Person in Control of, or
a member of a group that Controls, such Person and (y) does not, directly or
indirectly, own 5% or more of any voting class of securities of such Person. For
purposes of this section 5.2, the business of the Company and Affiliates shall
mean the roasting, blending, packaging and distribution of coffee for sale.
Section 5.3 Non-Solicitation. During his employment with the Company
and for a period of one year thereafter (but only if the Executive's employment
hereunder is terminated due to the Company's discharge of the Executive for
Cause, or the Executive's voluntary resignation from his employment hereunder
without Good Reason), the Executive will not, directly or indirectly, use
proprietary knowledge or information relating to the Company or its Affiliates
obtained during the course of Executive's employment with the Company with the
intention to, or which a reasonable person would construe to (a) interfere with
or disrupt any present or prospective relationship, contractual or otherwise,
between the Company or its Affiliates and any customer, supplier, employee,
consultant or other person having business dealings with the Company or its
Affiliates, or (b) employ or solicit the employment or engagement by others of
any employee or consultant of the Company or its Affiliates who was such an
employee or consultant at the time of termination of the Executive's employment
hereunder or within one year prior thereto.
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Section 5.4 Non-Disclosure. Except with the prior written consent of
the Company in each instance or as may be reasonably necessary to perform the
Executive's services hereunder, the Executive shall not disclose, use, publish,
or in any other manner reveal, directly or indirectly, at any time during or
after his employment with the Company, any Confidential Information relating to
the Company or any Affiliate thereof acquired by him prior to, during the course
of, or incident to, his employment hereunder. In the event Executive is required
(by oral questions, interrogatories, requests for information or documents in
legal proceedings, subpoenas, civil investigative demand or similar process) to
disclose any such Confidential Information, the Executive shall provide the
Company with prompt written notice of such requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this Section. If, in the absence of such a protective order or
other remedy or receipt of a waiver by the Company, the Executive is nonetheless
advised by his legal counsel that he is legally compelled to disclose such
Confidential Information, the Executive may, without liability hereunder,
disclose only that portion of such Confidential Information which such counsel
advises in writing is legally required to be disclosed.
Section 5.5 Reasonable Limitations. Executive acknowledges that given
the nature of the Company's business the covenants contained in this Article V
contain reasonable limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater restraint than is
necessary to protect and preserve the Company's business and to protect the
Company's legitimate business interests. If, however, this Article V is
determined by any court of competent jurisdiction or any arbitrator to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographic area or by reason of its being too extensive in any other
respect, or for any other reason, it will be interpreted to extend only over the
longest period of time for which it may be enforceable and/or over the largest
geographical area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court or arbitrator in such action.
Section 5.6 Remedies for Breach. Executive acknowledges that the legal
remedies for breach of the protective covenants hereunder are inadequate and
therefore agrees that, in addition to all of the remedies available to the
Company in the event of a breach or a threatened breach of any covenant
contained in this Article V, the Company may: (a) obtain temporary, preliminary,
and permanent injunctions and any other appropriate equitable relief against any
and all such actions, (b) cease as of the date of such breach or threatened
breach any and all further payments to Executive pursuant to this Agreement and
(c) recover from Executive monetary damages to the Company or any Affiliate
arising from such breach or threatened breach and all costs and expenses
(including reasonable attorneys' fees) incurred by the Company or any Affiliate
in the enforcement of such protective covenants.
Section 5.7 Affiliates of the Company. The provisions of this Article V
shall benefit the business and proprietary rights of the Company's Affiliates
and shall be enforceable against Executive by each of such Affiliates as third
party beneficiaries.
Section 5.8 Survival of Protective Covenants. Each covenant on the part
of Executive contained in this Article V shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement, and the existence of any claim or cause of action of Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenant.
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ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Xxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
If to the Company: Coffee Holding Co, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Compensation Committee
with copy to: Xxxxxxx Xxxxxxxx & Xxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
Section 6.2 Entire Agreement. This Agreement shall constitute the
entire agreement between the Executive and the Company with respect to the
Company's employment of the Executive and supersedes any and all prior
agreements and understandings, written or oral, with respect thereto.
Section 6.3 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by (a) an instrument in writing and signed by the party
against whom such amendment or waiver is sought to be enforced, and (b) in the
case of the Company, such amendment or waiver also must be duly authorized by an
appropriate resolution of the Board.
Section 6.4 Successors and Assigns. The Company shall have the right to
assign this Agreement. The personal services of the Executive are the subject of
this Agreement and no part of his rights or obligations hereunder may be
assigned, transferred, pledged or encumbered by the Executive. This Agreement
shall inure to the benefit of, and be binding upon (a) the parties hereto, (b)
the heirs, administrators, executors and personal representatives of the
Executive and (c) the successors and assigns of the Company as provided herein.
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Section 6.5 Governing Law. This Agreement, including the validity
hereof and the rights and obligations of the parties hereunder, and all
amendments and supplements hereof and all waivers and consents hereunder, shall
be construed in accordance with and governed by the laws of the State of New
York without giving effect to any conflicts of law provisions or rule, that
would cause the application of the laws of any other jurisdiction.
Section 6.6 Severability. If any provisions of this Agreement as
applied to any part or to any circumstance shall be adjudged by a court to be
invalid or unenforceable, the same shall in no way affect any other provision of
this Agreement, the application of such provision in any other circumstances or
the validity or enforceability of this Agreement.
Section 6.7 No Conflicts. The Executive represents to the Company that
the execution, delivery and performance by the Executive of this Agreement does
not and will not conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under any
contract, agreement or understanding, whether oral or written, to which the
Executive is or was a party or of which the Executive is or should be aware.
Section 6.8 Survival. The rights and obligations of the Company and
Executive pursuant to Articles IV, V and VII shall survive the termination of
the Executive's employment with the Company and the expiration of the Employment
Term.
Section 6.9 Captions. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
Section 6.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 6.11 Non-duplication. In the event that the Executive shall
perform services for any Affiliate of the Company or any other direct or
indirect subsidiary or affiliate of the Company or any Affiliate, any
compensation or benefits provided to the Executive by such other employer shall
be applied to offset the obligations of the Company hereunder, it being intended
that this Agreement set forth the aggregate compensation and benefits payable to
the Executive for all services to the Company, its Affiliates and all of their
respective direct or indirect subsidiaries and affiliates.
ARTICLE VII
TAX INDEMNIFICATION
Section 7.1 Tax Indemnification.
(a) If the Executive's employment terminates under
circumstances entitling him (or in the event of his death, his estate)
to the Severance Benefits, the Company shall pay to the Executive (or
in the event of his death, his estate) an additional amount intended to
indemnify him against the financial effects of the excise tax imposed
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on excess parachute payments under section 280G of the Internal Revenue
Code (the "Tax Indemnity Payment"). The Tax Indemnity Payment shall be
determined under the following formula:
X = E x P
---------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the percentage rate at which an excise tax is assessed under section
4999 of the Internal Revenue Code ("Code");
P = the amount with respect to which such excise tax is assessed,
determined without regard to this section 7.1;
FI = the highest marginal rate of income tax applicable to the Executive
under the Code for the taxable year in question;
SLI = the sum of the highest marginal rates of income tax applicable to
the Executive under all applicable state and local laws for the
taxable year in question; and
M = the highest marginal rate of Medicare tax applicable to the
Executive under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by an
attorney or a firm of independent certified public accountants selected
by the Executive and reasonably satisfactory to the Company (the "Tax
Advisor") and shall be based on the following assumptions: (i) that a
change in ownership, a change in effective ownership or control, or a
change in the ownership of a substantial portion of the assets, of the
Company has occurred within the meaning of section 280G of the Code (a
"280G Change of Control"); (ii) that all direct or indirect payments
made to or benefits conferred upon the Executive on account of his
termination of employment are "parachute payments" within the meaning
of section 280G of the Code; and (iii) that no portion of such payments
is reasonable compensation for services rendered prior to the
Executive's termination of employment.
(b) With respect to any payment that is presumed to be a
parachute payment for purposes of section 280G of the Code, the Tax
Indemnity Payment shall be made to the Executive on the earlier of the
date the Company or any direct or indirect subsidiary or affiliate of
the Company is required to withhold such tax or the date the tax is
required to be paid by the Executive, unless, prior to such date, the
Company delivers to the Executive the written opinion, in form and
substance reasonably satisfactory to the Executive, of the Tax Advisor
or of an attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to the Executive,
to the effect that the Executive has a reasonable basis on which to
conclude that (i) no 280G Change in Control has occurred, or (ii) all
or part of the payment or benefit in question is not a parachute
payment for purposes of section 280G of the Code, or (iii) all or a
part of such payment or benefit constitutes reasonable compensation for
services rendered prior to the 280G Change of Control, or (iv) for some
other reason which shall be set forth in detail in such letter, no
excise tax is due under section 4999 of the Code with respect to such
payment or benefit (the "Opinion Letter"). If the Company delivers an
Opinion Letter, the Tax Advisor shall recompute, and the Company shall
make, the Tax Indemnity Payment in reliance on the information
contained in the Opinion Letter.
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(c) In the event that the Executive's liability for the excise
tax under section 4999 of the Code for a taxable year is subsequently
determined to be different than the amount with respect to which the
Tax Indemnity Payment is made, the Executive or the Company, as the
case may be, shall pay to the other party at the time that the amount
of such excise tax is finally determined, an appropriate amount, plus
interest, such that the payment made under section 7.1(b), when
increased by the amount of the payment made to the Executive under this
section 7.1(c), or when reduced by the amount of the payment made to
the Company under this section 7.1(c), equals the amount that should
have properly been paid to the Executive under section 7.1(a). The
interest paid to the Company under this section 7.1(c) shall be
determined at the rate provided under section 1274(b)(2)(B) of the
Code. The payment made to the Executive shall include such amount of
interest as is necessary to satisfy any interest assessment made by the
Internal Revenue Service and an additional amount equal to any monetary
penalties assessed by the Internal Revenue Service on account of an
underpayment of the excise tax. To confirm that the proper amount, if
any, was paid to the Executive under this section 7.1, the Executive
shall furnish to the Company a copy of each tax return which reflects a
liability for an excise tax, at least 20 days before the date on which
such return is required to be filed with the Internal Revenue Service.
Nothing in this Agreement shall give the Company any right to control
or otherwise participate in any action, suit or proceeding to which the
Executive is a party as a result of positions taken on his federal
income tax return with respect to his liability for excise taxes under
section 4999 of the Code.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST:
By:
-------------------------------- --------------------------------
Name: XXXXXX XXXXXX
Title:
ATTEST: COFFEE HOLDING CO., INC.
By:
-------------------------------- --------------------------------
Name: Name:
Title: Title:
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