Exhibit 10.13


 


AMENDMENT NO. 2

to

EMPLOYMENT AGREEMENT


 


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


 


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


 


WHEREAS, the Company
and Laverty desire to amend the Agreement, as provided herein, to incorporate
certain changes deemed advisable in light of Section 409A of the U.S.
Internal Revenue Code.


 


NOW, THEREFORE, the
parties agree as follows:


 


1.             The
last paragraph of Section 7B of the Agreement is hereby amended and
restated to read in its entirety as follows:


 


“ “Good Reason”
shall consist only of (i) the Company’s material breach of this Agreement,
(ii) a material reduction in Laverty’s responsibilities, duties or
authority, or (iii) a material relocation of Laverty’s principal place of
employment 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 condition
claimed to constitute Good Reason in reasonable detail within ninety (90) days
of the initial existence of such condition, and (y) the Company fails to
remedy such condition within thirty (30) days of receiving such written notice
thereof; and provided, further, that in all events the termination of Laverty’s
employment with the Company shall not be treated as a termination for “Good
Reason” unless such termination occurs not more than one (1) year
following the initial existence of the condition claimed to constitute “Good
Reason.” ”


 


2.             Section 8B
of the Agreement is hereby amended and restated to read in its entirety as
follows:


 


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


 


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completed fiscal years or for the
number of completed fiscal years that Laverty has been in the employ of the
Company if fewer than three,  prior to
the termination date), such amount to be prorated for the partial fiscal year
in which the termination occurs.  Laverty is not
obligated to seek other employment as a condition to receipt of the payments
called for by this Section 8B, and Laverty’s earnings, income or profits
from other employment or business activities after termination of his
employment 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 in
accordance with the Company’s standard payroll practices commencing in the
month following the month in which Laverty’s Separation from Service occurs,
and the amount referred to in clause (iii) above shall be paid in a
lump sum within thirty (30) days after the end of the Company’s fiscal year in
which Laverty’s Separation from Service occurs.  As used herein, a “Separation
from Service” occurs when Laverty dies, retires, or otherwise has a termination
of employment with the Company that constitutes a “separation from service”
within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without
regard to the optional alternative definitions available thereunder.”


 


3.             Section 8C
of the Agreement is hereby amended and restated to read in its entirety as
follows:


 


“C.          As a condition to receiving the severance
payments under Section 8B above, Laverty must execute and deliver to the
Company within twenty-one (21) days following the termination of his employment
(or such longer period as may be required under applicable law) a general
release of claims against the Company other than claims to the payments called
for by this Agreement, such release to be in form and content substantially as
attached hereto as Exhibit A, and said release shall have become effective
under applicable laws, including the Age Discrimination in Employment Act of
1967, as amended.”


 


4.             A
new Section 12K is hereby added to the Agreement to read in its entirety
as follows:


 


“K           Section 409A.


 


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


 


(ii)                                  Notwithstanding any
provision of this Agreement to the contrary, if Laverty is a “specified
employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as
of the date of Laverty’s Separation


 


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from Service, Laverty shall not be entitled to any payment or benefit
pursuant to Section 8B until the earlier of (i) the date which is
six (6) months after Laverty’s Separation from Service for any reason
other than death, or (ii) the date of Laverty’s death.  Any amounts otherwise payable to Laverty upon
or in the six (6) month period following Laverty’s Separation from
Service that are not so paid by reason of this Section 12K(ii) shall
be paid (without interest) as soon as practicable (and in all events within
thirty (30) days) after the date that is six (6) months after Laverty’s
Separation from Service (or, if earlier, as soon as practicable, and in all
events within thirty (30) days, after the date of Laverty’s death).  The provisions of this Section 12K(ii) shall
only 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 any
benefits pursuant to Section 8B(ii) or reimbursements pursuant to Section 6
or Section 12J are taxable to Laverty, any reimbursement payment due to
Laverty pursuant to any such provision shall be paid to Laverty on or before
the last day of Laverty’s taxable year following the taxable year in which the
related expense was incurred.  The
benefits and reimbursements pursuant to such provisions are not subject to
liquidation or exchange for another benefit and the amount of such benefits and
reimbursements that Laverty receives in one taxable year shall not affect the
amount of such benefits or reimbursements that Laverty receives in any other
taxable year.”


 


5.             Except
as expressly modified herein, the Agreement shall remain in full force and
effect in accordance with its original terms.


 


6.             Capitalized
terms that are not defined herein shall have the meanings ascribed to them in
the Agreement.


 


7.             This
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.


 


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left blank]


 


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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed 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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