**Exhibit 10.13**

 

**AMENDMENT NO. 2toEMPLOYMENT AGREEMENT**

 

**THIS AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT**(this “Amendment”) is dated as of December 31, 2008, by and between FarmerBros. Co., a Delaware corporation (the “Company”), and Roger M. Laverty III (“Laverty”).

 

**WHEREAS**, Laverty iscurrently employed by the Company pursuant to that certain EmploymentAgreement, dated as of June 2, 2006 and subsequently amended as of December 6,2007 (the “Agreement”); and

 

**WHEREAS**, the Companyand Laverty desire to amend the Agreement, as provided herein, to incorporatecertain changes deemed advisable in light of Section 409A of the U.S.Internal Revenue Code.

 

**NOW, THEREFORE**, theparties agree as follows:

 

# 1.             Thelast paragraph of Section 7B of the Agreement is hereby amended andrestated to read in its entirety as follows:

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“ “Good Reason”shall consist only of (i) the Company’s material breach of this Agreement,(ii) a material reduction in Laverty’s responsibilities, duties orauthority, or (iii) a material relocation of Laverty’s principal place ofemployment more than fifty (50) miles from its present location; provided,however, that any such condition shall not constitute “Good Reason” unless both(x) Laverty provides written notice to the Company describing the conditionclaimed to constitute Good Reason in reasonable detail within ninety (90) daysof the initial existence of such condition, and (y) the Company fails toremedy such condition within thirty (30) days of receiving such written noticethereof; and provided, further, that in all events the termination of Laverty’semployment with the Company shall not be treated as a termination for “GoodReason” unless such termination occurs not more than one (1) yearfollowing the initial existence of the condition claimed to constitute “GoodReason.” ”

 

# 2.             Section 8Bof the Agreement is hereby amended and restated to read in its entirety asfollows:

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## “B.          If termination occurs at the electionof the Company without Cause or by Laverty’s resignation with Good Reason:  Laverty will receive as severance (i) anamount equal to his base salary at the rate in effect on the date oftermination for a period of one (1) year, (ii) partially Company-paidCOBRA coverage under the Company’s health care plan for himself and his spousefor one (1) year after the effective termination date (the Company willpay the same percentage of the coverage cost that it would have paid hadLaverty’s employment not terminated) and (iii) anamount equal to one hundred percent (100%) of Laverty’s Target Award for thefiscal year in which the date of termination occurs (or, if no Target Award hasbeen assigned to Laverty as of the date of termination, the average bonus paidby the Company to Laverty for the last three (3)

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## completed fiscal years or for thenumber of completed fiscal years that Laverty has been in the employ of theCompany if fewer than three,  prior tothe termination date), such amount to be prorated for the partial fiscal yearin which the termination occurs.  Laverty is notobligated to seek other employment as a condition to receipt of the paymentscalled for by this Section 8B, and Laverty’s earnings, income or profitsfrom other employment or business activities after termination of hisemployment shall not reduce the Company’s payment obligations under this Section 8B.  Subject to Section 8C and Section 12K(ii),the amount referred to in clause (i) above shall be paid in installments inaccordance with the Company’s standard payroll practices commencing in themonth following the month in which Laverty’s Separation from Service occurs,and the amount referred to in clause (iii) above shall be paid in alump sum within thirty (30) days after the end of the Company’s fiscal year inwhich Laverty’s Separation from Service occurs.  As used herein, a “Separationfrom Service” occurs when Laverty dies, retires, or otherwise has a terminationof employment with the Company that constitutes a “separation from service”within the meaning of Treasury Regulation Section 1.409A-1(h)(1), withoutregard to the optional alternative definitions available thereunder.”

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# 3.             Section 8Cof the Agreement is hereby amended and restated to read in its entirety asfollows:

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“C.          As a condition to receiving the severancepayments under Section 8B above, Laverty must execute and deliver to theCompany within twenty-one (21) days following the termination of his employment(or such longer period as may be required under applicable law) a generalrelease of claims against the Company other than claims to the payments calledfor by this Agreement, such release to be in form and content substantially asattached hereto as Exhibit A, and said release shall have become effectiveunder applicable laws, including the Age Discrimination in Employment Act of1967, as amended.”

 

# 4.             Anew Section 12K is hereby added to the Agreement to read in its entiretyas follows:

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“K**          **Section 409A.

 

(i)                                     It is intended that any amounts payable underthis Agreement shall either be exempt from or comply with Section 409A ofthe Code (including the Treasury regulations and other published guidancerelating thereto) (“Code Section 409A”) so as not to subject Lavertyto payment of any additional tax, penalty or interest imposed under Code Section 409A.  The provisions of this Agreement shall beconstrued and interpreted to avoid the imputation of any such additional tax,penalty or interest under Code Section 409A yet preserve (to the nearestextent reasonably possible) the intended benefit payable to Laverty.

 

(ii)                                  Notwithstanding anyprovision of this Agreement to the contrary, if Laverty is a “specifiedemployee” within the meaning of Treasury Regulation Section 1.409A-1(i) asof the date of Laverty’s Separation

 

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from Service, Laverty shall not be entitled to any payment or benefitpursuant to Section 8B until the earlier of (i) the date which issix (6) months after Laverty’s Separation from Service for any reasonother than death, or (ii) the date of Laverty’s death.  Any amounts otherwise payable to Laverty uponor in the six (6) month period following Laverty’s Separation fromService that are not so paid by reason of this Section 12K(ii) shallbe paid (without interest) as soon as practicable (and in all events withinthirty (30) days) after the date that is six (6) months after Laverty’sSeparation from Service (or, if earlier, as soon as practicable, and in allevents within thirty (30) days, after the date of Laverty’s death).  The provisions of this Section 12K(ii) shallonly apply if, and to the extent, required to avoid the imputation of any tax,penalty or interest pursuant to Code Section 409A.

 

(iii)                               To the extent that anybenefits pursuant to Section 8B(ii) or reimbursements pursuant to Section 6or Section 12J are taxable to Laverty, any reimbursement payment due toLaverty pursuant to any such provision shall be paid to Laverty on or beforethe last day of Laverty’s taxable year following the taxable year in which therelated expense was incurred.  Thebenefits and reimbursements pursuant to such provisions are not subject toliquidation or exchange for another benefit and the amount of such benefits andreimbursements that Laverty receives in one taxable year shall not affect theamount of such benefits or reimbursements that Laverty receives in any othertaxable year.”

 

# 5.             Exceptas expressly modified herein, the Agreement shall remain in full force andeffect in accordance with its original terms.

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# 6.             Capitalizedterms that are not defined herein shall have the meanings ascribed to them inthe Agreement.

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# 7.             ThisAmendment may be executed in one or more counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the sameinstrument.

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IN WITNESS WHEREOF, the parties have caused this Amendment to be dulyexecuted and delivered on the day and year first above written.

 

 
|   | FARMER BROS. CO.                                                                            |
|--------|---------------------------------------------------------------------------------------------|
|   |                                                                                        |
|   |                                                                                        |
|   | By:                                                                                         |      /s/ John E. Simmons |
|   |          John E. Simmons                       |
|   |         Chief Financial  Officer                    |
|   |                                                                                        |
|   |                                                                                        |
|   | LAVERTY                                                                                     |
|   |                                                                                        |
|   |                                                                                        |
|   |            /s/  Roger M. Laverty III |
|   | Roger M. Laverty III                                                                        |

 

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