Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

EXHIBITS A and B

 

This Employment Agreement supersedes the Employment Agreement entered into on
October 27, 2009 between ML Macadamia Orchards, L.P. and Randolph H. Cabral
(“Employee”) (referred to hereinafter as the “Prior Agreement”). For purposes of
clarity, the Prior Agreement is attached as Exhibit A.

 

RECITALS

 

Whereas, on October 1, 2012, ML Macadamia Orchards L.P. changed its name to
Royal Hawaiian Orchards, L.P. (hereinafter “RHO”);

 

Whereas, RHO has transitioned all of its employees to its general partner, Royal
Hawaiian Resources, Inc. (the “Company”);

 

Whereas the Company has an employer-employee relationship with Employee pursuant
to the Prior Agreement; and

 

Whereas the Company and Employee wish to change the terms and conditions of
employment set forth in the Prior Agreement on the terms set forth herein;

 

NOW, THEREFORE, in consideration for the mutual covenants set forth in this
Agreement, the sufficiency of which is hereby recognized, THE PARTIES AGREE AS
FOLLOWS:

 

I.     Effective Date

 

The Effective Date of this Agreement is January 30, 2015.

 

II.     Rescission of Prior Agreement

 

The Parties mutually rescind the Prior Agreement.

 

III.     Term

 

The Term of this Agreement begins on the Effective Date and shall expire on
September 30, 2015.

 

IV.     Employee Duties

 

Employee shall advise and assist the Director of Farming and shall perform such
other related tasks as reasonably directed by the Company President.

 

V.     Retention Bonus

 

Upon completion of the Term of this Agreement in “Good Standing” as defined in
Section V, Subsection B, and execution and delivery of the Waiver and Release
Agreement attached as Exhibit B (the “Waiver and Release”) within the twenty-one
(21) day period set forth therein, Employee shall be paid a retention bonus in
the amount of $222,300.00 (the “Retention Bonus”), which represents the
equivalent of eighteen months of the Employee’s annual salary. Said Retention
Bonus will be subject to applicable withholding and employment taxes. Employee
shall be paid his Retention Bonus according to the following schedule:

 

 
 

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A.

Beginning on the Company’s first payroll date in October, 2015 following
expiration of the seven day revocation period set forth in the Waiver and
Release and continuing through March, 2016, the Retention Bonus shall be paid in
installments equivalent to Employee’s salary per pay period as it existed on
December 31, 2014.

 

 

B.

The remainder of the Retention Bonus shall be paid in full by certified check on
the Company’s first payroll date in April, 2016.

 

 

C.

Any violation of sub-sections “A” and “B”, including any check being returned
for any reason, including but not limited to, insufficient funds, and/or not
honored by any financial institution shall be considered a substantial and
material breach of this Agreement and not subject to Arbitration or alternative
dispute resolution process, as previously agreed to between parties.

 

 

D.

It is understood that no Retention Bonus shall be due or owing in the event that
Employee timely revokes the Waiver and Release, as provided therein.

 

The Parties agree that the Employee is not waiving any of his legal rights and
remedies as set out in the Waiver and Release until the Employee becomes
eligible for the Retention Bonus.

 

VI.     Termination of Employment

 

A.     Termination With or Without Cause

 

Each Party reserves the right to terminate the employment relationship at any
time during the Term with or without cause.

 

B.     “Good Standing”

 

For purposes of this Agreement, “Good Standing” means that Employee has not
committed any actions that would constitute “misconduct connected with work” as
that term is interpreted and applied by the Hawaii Department of Labor and
Industrial Relations for purposes of determining qualification for unemployment
insurance benefits under Hawaii law, and as set forth in Hawaii Administrative
Rule 12-5-51, which states: “Misconduct connected with work consists of actions
which show a willful or wanton disregard of the employer’s interests, such as
deliberate violations of or deliberate disregard of the standards of behavior
which the employer has a right to expect of an employee, or carelessness, or
negligence of such a degree or recurrence as to show wrongful intent or evil
design. Mere inefficiency, unsatisfactory conduct, poor performance because of
inability or incapacity, isolated instances of ordinary negligence or
inadvertence, or good-faith errors in judgment or discretion are not misconduct.
The misconduct shall be related to the work of the individual or the
individual’s status as an employee.”

 

 
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C.     Voluntary Resignation

 

In the event Employee resigns voluntarily at any time during the Term, Employee
shall be paid his salary and accrued vacation pay earned as of the date of
resignation. Employee’s eligibility for benefits other than earned pay and
vacation payout, if any, shall be determined according to then applicable plan
documents and applicable law. Employee shall not be entitled to salary or
accrued vacation that he would have earned for the balance of the Term or a
Retention Bonus.

 

D.     Involuntary Termination in Good Standing

 

In the event Employee is terminated involuntarily prior to expiration of the
Term and is in Good Standing at the time of termination, Employee shall be paid:
(a) his salary and accrued vacation earned as of the date of termination; (b)
the balance of the salary and vacation that the Employee would have earned
during the remainder of the Term less applicable employment taxes, with said
amount due ten business days from the date of termination; and (c) the full
Retention Bonus, upon execution and delivery of the Waiver and Release within
the twenty-one (21) day period set forth therein, according to the following
schedule:

 

 

(1)

Beginning on the Company’s first payroll date following termination and
continuing for six (6) months thereafter, the Retention Bonus shall be paid in
installments equivalent to Employee’s salary per pay period as it existed on
December 31, 2014, in accordance with the Company’s regular payroll schedule.

 

 

(2)

The remainder of the Retention Bonus shall be paid in full no later than one
week after the last installment payment. The balance shall be paid by certified
check.

 

 

(3)

Any violation of sub-sections D (1) or (2), including any check being returned
for any reason, including but not limited to, insufficient funds, and/or not
honored by any financial institution shall be considered a substantial and
material breach of this Agreement and not subject to Arbitration or alternative
dispute resolution process, as previously agreed to between parties.

 

 

(4)

It is understood that no Retention Bonus shall be due or owing in the event that
Employee timely revokes the Waiver and Release, as provided therein.

 

E. Termination for Misconduct Connected With Work

 

In the event Employee is terminated for misconduct connected with work, as
defined herein, Employee will be paid his salary and accrued vacation earned as
of the date of termination. Employee shall not be entitled to salary or accrued
vacation that he would have earned for the balance of the Term or a Retention
Bonus.

 

VII.     Good Faith and Fair Dealing

 

The Parties intend that this Agreement shall be interpreted and applied
according to the doctrine of good faith and fair dealing, and will refrain from
actions that would be inconsistent with the intent of this Agreement.

 

 
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VIII.     Prior Agreement Provisions Adopted and Incorporated Herein

 

The following provisions set forth in the Prior Agreement (Exhibit A) are
adopted by the Parties with the intent that said provisions are incorporated
into the present Agreement, except to the extent that such provisions are
delimited by the Term of this Agreement. For purposes of this section,
references to “this Agreement” or “this Instrument” in the adopted provisions
shall mean the present Agreement, and not the Prior Agreement. The Parties
intend that there be no lapse in the applicability of said provisions to the
Parties, and that “Company” in said provisions refers to Royal Hawaiian
Resources, Inc.: Sections 3 (e) [Death], (f) [Disability]; 5 [Compensation and
Benefits (a)-(f)) inclusive]; 6 [Confidentiality]; 7 [Nondisclosure and
Non-Competition (a)-(b) inclusive]; 8 [Limited Covenant Not to Compete (a)-(c)
inclusive]; 9 [Entire Agreement]; 10 [Severability]; 11 [Governing Law
Interpretation]; 12 [No Waiver]; 13 [Voluntary and Knowing Agreement]; and
[Disputes (Mandatory Arbitration)].

 

IX.     Notice

 

The Notice provision set forth in Section 14 of the Prior Agreement is agreed to
except that “Royal Hawaiian Resources, Inc.” is substituted for “ML Macadamia
Orchards, L.P.”

 

X.     Tax and Benefits Law Compliance

 

It is understood that this Agreement shall be interpreted and applied in
accordance with all applicable tax and benefit laws, including Section 409A of
the Internal Revenue Code of 1986, as amended. The Retention Bonus provisions
under Sections V and VI.D of this Agreement are designed and intended to meet
the separation pay plan exception requirements under Section 409A of the
Internal Revenue Code of 1986, as amended (“Code”), and shall operate in a
manner consistent with guidance issued by the Department of Treasury and the
Internal Revenue Service under Section 409A. In accordance with the separation
pay plan exception under Treasury Regulation Section 1.409A-1(b)(9), and
notwithstanding any other provision in this Agreement to the contrary, the
Retention Bonus under Sections V and VI.D shall be subject to the following
additional requirements and limitations: (a) The Retention Bonus shall not
exceed two times the Employee’s annualized rate of salary based upon the annual
rate of pay for the calendar year before the year in which the Employee
terminates from service or, if less, two times the limit on annual compensation
that may be taken into account for qualified retirement plan purposes under Code
Section 401(a)(17). (b) The Retention Bonus shall be completely paid no later
than the end of the second calendar year following the calendar year in which
the Employee terminates from service. (c) The Employee’s termination from
employment by the Company under Section VI.D shall mean an “involuntary
separation from service” as defined under Treasury Regulation Section
1.409A-1(n), which provides generally that an involuntary separation from
service is a definite and complete termination of employment (e.g., Employee is
not on a bona fide leave of absence, employee does not continue to work at
reduced hours, Employee is not immediately reemployed) due to the unilateral
decision of the Company (e.g., not due to the request of the Employee) as
determined based on all the relevant facts and circumstances. The termination of
Employee’s employment at the end of the Term is due to Company’s unilateral
exercise of its authority to terminate the services of its employees and is
deemed to be an involuntary separation from service under the Code Section 409A
regulatory guidelines. In the event that any provision of this Agreement
conflicts with any tax or benefit law, this Agreement will be interpreted and
applied so as to comply with said law.

 

 
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IT IS SO AGREED:

   

THE COMPANY

 

Royal Hawaiian Resources, Inc.

 

/s/ Scott Wallace

By: Scott Wallace, President

 

Date: January 30, 2015

EMPLOYEE

 

Randolph H. Cabral

 

/s/ Randolph H. Cabral

 

Date: February 3, 2015

 

 

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