AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
Amended and Restated Employment Agreement (“Agreement”) is made and entered into
this 11th
day
of
April,
2008
(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.
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(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:
(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.
2
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.
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(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.
(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 (3) 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 one hundred eighty (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 (1) 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.
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(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:
(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 (4) 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.
6
(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.
(b) Indemnification.
To the
maximum extent permitted under applicable law, the Company shall indemnify
the
Executive against and hold him harmless from any costs, damages, losses and
exposures arising out of a bona fide action, suit or proceeding in which he
may
be involved by reason of his having been a director or officer of the Company
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.
(c) Exemption
from Section 409A. The Executive and the Company agree that the termination
benefits described in this Section 3.4 are intended to be exempt from Section
409A of the Internal Revenue Code (“Section 409A”) pursuant to Treasury
Regulation Section 1.409A-1(b)(10) as certain indemnification and liability
insurance plans.
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.
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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.
(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
8
(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, as defined in Treasury
Regulation Section 1.409A-1(h)(1)(ii). 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 thirty (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.
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.
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(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.
(d) The
Executive and the Company acknowledge that each of the payments and benefits
promised to the Executive under this Agreement must either comply with the
requirements of Section 409A and the regulations thereunder or qualify for
an
exception from compliance. To that end, the Executive and the Company agree
that
the termination benefits described in this Section 4.5 are intended to be exempt
from Section 409A as non-taxable benefits pursuant to Treasury Regulation
Section 1.409A-1(b)(1) or as short-term deferrals pursuant to Treasury
Regulation Section 1.409A-1(b)(4).
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.
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Section
5.2 Non-Competition.
During
his employment with the Company and continuing for one (1) 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 (1) 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 (1) year prior
thereto.
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.
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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.
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:
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Xxxxxx
Xxxxxx
|
|
000
Xxxxxxx Xxxxxx
|
|
|
Xxxxxx
Xxxxxx, XX 00000
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|
12
|
|
|
|
If
to the Company:
|
Coffee
Holding Co, Inc.
|
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0000
Xxxxx Xxxxxx
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|
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Xxxxxxxx,
XX 00000
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|
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Attn:
Compensation
Committee
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|
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with
copy to:
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Xxxxxxx
Xxxxxxxx & Xxxx LLP
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0000
Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 000
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Xxxxxxxxxx,
XX 00000
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|
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Attn:
Xxxxxxx
Xxxxxxx, Esq.
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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. Notwithstanding the preceding sentence,
this Agreement shall be construed and administered in such manner as shall
be
necessary to effect compliance with Section 409A and shall be subject to
amendment in the future, in such manner as the Company may deem necessary or
appropriate to effect such compliance; provided that any such amendment shall
preserve for the Executive the benefit originally afforded pursuant to this
Agreement.
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.
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.
13
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 (2) 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 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
X
0
-
[(XX x (0 - XXX)) + SLI + E + M]
|
|
where
|
|
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E =
|
the
percentage rate at which an excise tax is assessed under Section
4999 of
the Internal Revenue Code (“Code”);
|
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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.
|
14
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 (1) date the Company or any direct or indirect
subsidiary or affiliate of the Company is required to withhold such tax;
(2) 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”); or (3) within 2 ½ months following the end of the taxable
year of the Executive or the Company, whichever is longer, in which the
termination event occurs. 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.
(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, consistent with the time
limitations specified in Section 7.1(b), 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 twenty (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.
15
ARTICLE
VIII
PAYMENTS
TO KEY EMPLOYEES
Section
8.1 Payments to Key Employees. Notwithstanding anything in this
Agreement to the contrary, to the extent required under Section 409A, no payment
to be made to a key employee (within the meaning of Section 409A) shall be
made
sooner than six (6) months after such termination of employment; provided,
however, that to the extent such six (6)-month delay is imposed by Section
409A
as a result of a Change in Control as defined in Section 1.1(e), the payment
shall be paid into a rabbi trust for the benefit of the Executive as if the
six
(6)-month delay was not imposed with such amounts then being distributed to
the
Executive as soon as permissible under Section 409A.
ARTICLE
IX
INVOLUNTARY
TERMINATION PAYMENTS TO EMPLOYEES (SAFE HARBOR).
Section
9.1 Payments
to Key Employees.
In
the
event a payment is made to an employee upon an involuntary termination of
employment, as deemed pursuant to this Agreement, such payment will not be
subject to Section 409A provided that such payment does not exceed two (2)
times
the lesser of (i) the sum of the Executive’s annualized compensation based on
the taxable year immediately preceding the year in which termination of
employment occurs or (ii) the maximum amount that may be taken into account
under a qualified plan pursuant to Section 401(a)(17) of the Code for the year
in which the Executive terminates service (the “Safe Harbor Amount”). However,
if such payment exceeds the Safe Harbor Amount, only the amount in excess of
the
Safe Harbor Amount will be subject to Section 409A. In addition, if such
Executive is considered a key employee, such payment in excess of the Safe
Harbor Amount will have its timing delayed and will be subject to the six
(6)-month wait-period imposed by Section 409A as provided in Section 8.1 of
this
Agreement. The Executive and the Company agree that the termination benefits
described in this Section 9.1 are intended to be exempt from Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) as the safe harbor
for separation pay due to involuntary separation from service.
16
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:
|
|||
17
