Document:

Exhibit 10.28

 

[FORM OF
EXECUTIVE OFFICER]

CHANGE
IN CONTROL SEVERANCE AGREEMENT

 

THIS CHANGE IN CONTROL
SEVERANCE AGREEMENT (this “Agreement”), effective as of                             ,
              
(the “Effective Date”), is made by and between FARMER BROS. CO., a
Delaware corporation (the “Company”), and
                                 
(the “Executive”).

 

WHEREAS, the Company
considers it essential to foster the continued employment of well qualified,
senior executive management personnel; and

 

WHEREAS, the Company has
determined that appropriate steps should be taken to foster such continued
employment by setting forth the benefits and compensation to be awarded to such
personnel in the event of a voluntary or involuntary termination within the meaning
of this Agreement; and

 

WHEREAS, the Company further
recognizes that the possibility of a Change in Control of the Company exists
and that such possibility, and the uncertainty and questions that it may raise
among executive management, may result in the departure or distraction of
executive personnel to the detriment of the Company; and

 

WHEREAS, the Company has
further determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company’s
executive management, including the Executive, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from
the possibility of a Change in Control;

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein contained, the
Company and the Executive hereby agree as follows:

 

1.                                       Term of
Agreement.  The term of
this Agreement shall commence as of the date hereof and expire on the close of
business on
                                       ,
20       ; provided, however, that (i) commencing
on January 1,
                            
and each January 1 thereafter, the term of this Agreement will
automatically be extended for an additional year unless, not later than September 30
of the immediately preceding year, the Company (provided no Change in Control
has occurred and no Threatened Change in Control is pending) or the Executive
shall have given notice that it or the Executive, as the case may be, does not
wish to have the Term extended; (ii) if, prior to a Change in Control, the
Executive ceases for any reason to be an employee of the Company, thereupon
without further action the Term shall be deemed to have expired and this
Agreement will immediately terminate and be of no further effect.

 

2.                                       Definitions

 

(a)                                  “Base Salary”
shall mean the Executive’s salary, which excludes Bonuses, at the rate in
effect when an event triggering benefits under Section 3 of this Agreement
occurs.

 

(b)                                 “Beneficial
Owner” or “Beneficial Ownership” shall have the meaning ascribed to
such term in Rule 13d-3 of the Exchange Act.

 

(c)                                  “Board”
or “Board of Directors” shall mean the Board of Directors of Farmer
Bros. Co., or its successor.

 

1

 

(d)                                 “Bonus(es)”
shall mean current cash compensation over and above Base Salary whether awarded
under the Company’s Incentive Compensation Plan or otherwise awarded.

 

(e)                                  “Cause”
shall mean:

 

(i)                                     the Executive’s
material fraud, malfeasance, or gross negligence, willful and material neglect
of Executive’s employment duties or Executive’s willful and material misconduct
with respect to business affairs of the Company or any subsidiary of the
Company or

 

(ii)                                  Executive’s
conviction of or failure to contest prosecution for a felony or a crime
involving moral turpitude.

 

A termination of Executive for “Cause” based
on clause (i) of the preceding sentence can be made only by delivery to
Executive of a resolution duly adopted by the affirmative vote of not less than
three quarters of the Board then in office at a meeting of the Board called and
held for such purpose, after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive’s counsel (if the
Executive chooses to have counsel present at such meeting), to be heard before
the Board, finding that, in the good faith opinion of the Board, the Executive
had committed an act constituting “Cause” as herein defined and specifying the
particulars thereof in detail.  Nothing herein will limit the right of the
Executive or [his/her] beneficiaries to contest the validity or propriety of
any such determination.   A termination for Cause based on clause (ii) above
shall take effect immediately upon giving of the termination notice. No act or
omission shall be deemed “willful” if it was due primarily to an error in
judgment or ordinary negligence.

 

(f)                                    “Change in
Control” shall mean:

 

(i)                                     An acquisition
by any Person (as such term is defined in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including
a “group” as defined in Section 13(d) thereof) of Beneficial
Ownership of the Shares then outstanding (the “Company Shares Outstanding”)
or the voting securities of the Company then outstanding entitled to vote
generally in the election of directors (the “Company Voting Securities
Outstanding”), if such acquisition of Beneficial Ownership results in the
Person beneficially owning (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) fifty percent (50%) or more of the Company Shares
Outstanding or fifty percent (50%) or more of the combined voting power of the
Company Voting Securities Outstanding; excluding, however, any such acquisition
by a trustee or other fiduciary holding such Shares under one or more employee
benefit plans maintained by the Company or any of its subsidiaries; or

 

(ii)                                  The approval of
the stockholders of the Company of a reorganization, merger, consolidation,
complete liquidation, or dissolution of the Company, the sale or disposition of
all or substantially all of the assets of the Company or any similar corporate
transaction (in each case referred to in this Section 2(f) as a “Corporate
Transaction”), other than a Corporate Transaction that would result in the
outstanding common stock of the Company immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into common
stock of the surviving entity or a parent or affiliate thereof) at least fifty
percent (50%) of the outstanding common stock of the Company or such surviving
entity or parent or affiliate thereof immediately after such Corporate
Transaction; provided, however, if the consummation of such Corporate
Transaction is subject, at the time of such approval by stockholders, to the
consent of any government or governmental agency, the Change in Control shall
not occur until the obtaining of such consent (either explicitly or
implicitly); or

 

(iii)                               A change in the
composition of the Board such that the individuals who, as of the Effective Date,
constitute the Board (such Board shall be hereinafter referred to as the 

 

2

 

“Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided, however, for
purposes of this Section 2(f) that any individual who becomes a
member of the Board subsequent to the Effective Date whose election, or
nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of those individuals who are members of the Board and
who were also members of the Incumbent Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were a member of
the Incumbent Board; but, provided, further, that any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act, including any successor to such Rule), or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board, shall not be so considered as a member of the
Incumbent Board.

 

(g)                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

(h)                                 “Disability”
shall mean the Executive’s inability as a result of physical or mental
incapacity to substantially perform [his/her] duties for the Company on a
full-time basis for a period of six (6) months.

 

(i)                                     “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time, or any successor act thereto.

 

(j)                                     “Involuntary
Termination” shall mean a termination of the Executive’s employment by the
Company that occurs for reasons other than for Cause, Disability or death.

 

(k)                                  “Threatened
Change in Control” shall mean any bona fide pending tender offer for any
class of the Company’s outstanding Shares, or any pending bona fide offer to
acquire the Company by merger or consolidation, or any other pending action or
plan to effect, or which would lead to, a Change in Control of the Company as
determined by the Incumbent Board. A Threatened Change in Control Period shall
commence on the first day the actions described in the preceding sentence
become manifest and shall end when such actions are abandoned or the Change in
Control occurs.

 

(l)                                     “Shares”
shall mean the shares of common stock of the Company.

 

(m)                               “Resignation
for Good Reason” shall mean a termination of the Executive’s employment by
the Executive due to:

 

(i)                                     a significant
reduction of the Executive’s responsibilities, duties or authority;

 

(ii)                                  a material
reduction in the Executive’s Base Salary; or

 

(iii)                               a
Company-required material relocation of the Executive’s principal place of
employment;

 

provided, however, that any
such condition shall not constitute “Good Reason” unless both (x) the
Executive 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 the
Executive’s employment with the Company shall not be treated as a termination
for “Good Reason” unless such 

 

3

 

termination occurs not more than one (1) year
following the initial existence of the condition claimed to constitute “Good
Reason.

 

3.                                       Events That
Trigger Benefits Under This Agreement.  The Executive shall be eligible for the
compensation and benefits described in Section 4 of this Agreement as
follows:

 

(a)                                  A Change in
Control occurs and Executive’s employment is Involuntarily Terminated or
terminated by Resignation for Good Reason within twenty-four (24) months
following the occurrence of the Change in Control; or

 

(b)                                 A Threatened
Change in Control occurs and the Executive’s employment is Involuntarily
Terminated or terminated by Resignation for Good Reason during the Threatened
Change in Control Period.

 

4.                                       Benefits Upon
Termination.  If the
Executive becomes eligible for benefits under Section 3 above, the Company
shall pay or provide to the Executive the following compensation and benefits:

 

(a)                                  Salary.  The Executive will receive as severance an
amount equal to [his/her] Base Salary at the rate in effect on the date of
termination for a period of twenty-four (24) months, such payment to be made in
installments in accordance with the Company’s standard payroll practices, such
installments to commence, subject to Section 9(j)(ii), in the month
following the month in which the Executive’s Separation from Service
occurs.  The Executive shall also receive
a payment equal to one hundred percent (100%) of the Executive’s target Bonus
for the fiscal year in which the date of termination occurs (or, if no target
Bonus has been assigned to the Executive as of the date of termination, the
average Bonus paid by the Company to the Executive for the last three (3) completed
fiscal years or for the number of completed fiscal years that Executive has
been in the employ of the Company if fewer than three, prior to the termination
date), such payment to be made, subject to Section 9(j)(ii), in a lump sum
within thirty (30) days after the end of the Company’s fiscal year in which the
Executive’s date of termination occurs. 
As used herein, a “Separation from Service” occurs when the
Executive 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.

 

(b)                                 Qualified and
Non-Qualified Plan Coverage.  Subject to the eligibility provisions of the
plans, the Executive shall continue to participate in the tax-qualified and
non-qualified retirement, savings and employee stock ownership plans of the
Company during the twenty four (24) month period following the Executive’s date
of termination unless the Executive commences Employment prior to the end of
the twenty four (24) month period, in which case, such participation shall end
on the date of [his/her] new employment. The Executive shall inform the Company
promptly upon commencing new employment.

 

(c)                                  Health, Dental,
and Life Insurance Coverage.  The health, dental, and life insurance
benefits coverage provided to the Executive at [his/her] date of termination
shall be continued by the Company during the twenty-four (24) month period
following the Executive’s date of termination unless the Executive commences
employment prior to the end of the twenty four (24) month period and qualifies
for substantially equivalent insurance benefits with the Executive’s new
employer , in which case, such insurance coverages shall end on the date of
qualification.  The Executive shall inform the Company promptly of
[his/her] qualification for any of such insurance coverages.  . The
Company shall provide for such insurance coverages at its expense at the same level
and in the same manner as if the Executive’s employment had not terminated
(subject to the customary changes in such coverages if the 

 

4

 

Executive retires under a Company retirement
plan, reaches age 65, or similar events and subject to Executive’s right to
make any changes in such coverages that an active employee is permitted to
make). Any additional coverages the Executive had at termination, including
dependent coverage, will also be continued for such period on the same terms,
to the extent permitted by the applicable policies or contracts. Any costs the
Executive was paying for such coverages at the time of termination shall be
paid by the Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section do
not permit continued participation by the Executive, the Company will arrange
for other coverage at its expense providing substantially similar benefits. If
the Executive is covered by a split-dollar or similar life insurance program at
the date of termination, [he/she] shall have the option in [his/her] sole
discretion to have such policy transferred to him upon termination, provided
that the Company is paid for its interest m the policy upon such transfer.

 

(d)                                 Outplacement
Services.  The Company
shall provide the Executive with outplacement services by a firm selected by
the Executive, at the expense of the Company, in an amount up to $25,000.

 

(e)                                  No Mitigation
Obligation.  The Company
hereby acknowledges that it will be difficult and may be impossible for the
Executive to find reasonably comparable employment following termination of
Executive’s employment by the Company and that the non-solicitation covenant
contained in Section 6 may further limit the employment opportunities for
the Executive.  Accordingly, the payment of the compensation and benefits
by the Company to the Executive in accordance with the terms of this Agreement
is hereby acknowledged by the Company to be reasonable, and the Executive will
not be required to mitigate the amount of any payment provided for this
Agreement by seeking other employment or otherwise, nor will any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the first
sentence of Section 4(c).

 

5.                                       Parachute
Payments. 
Notwithstanding anything contained in this Agreement to the contrary, in
the event that the compensation and benefits provided for in this Agreement to
Executive together with all other payments and the value of any benefit
received or to be received by Executive:

 

(a)                                  constitute “parachute
payments” within the meaning of Section 280G of the Code, and

 

(b)                                 but for this
Section, would be subject to the excise tax imposed by Section 4999 of the
Code, the Executive’s compensation and benefits pursuant to the terms of this
Agreement shall be payable either:

 

(i)                                     in full, or

 

(ii)                                  in such lesser
amount which would result in no portion of such compensation and benefits being
subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the
receipt by Executive on an after-tax basis, of the greatest amount of
compensation and benefits under this Agreement, notwithstanding that all or
some portion of such compensation and benefits may be subject to the excise tax
imposed under Section 4999 of the Code.  Unless the Company and
Executive otherwise agree in writing, any determination required under this Section 5
shall be made in writing by the Company’s independent public accountants serving
immediately before the Change in Control (the “Accountants”), whose
determination shall be conclusive and binding upon Executive and the Company
for all purposes.  For purposes of making the calculations required by
this Section 5, the Accountants may make reasonable assumptions and
approximations 

 

5

 

concerning applicable taxes and may rely on
reasonable good faith interpretations concerning the applications of Section 280G
and 4999 of the Code.  The Company shall cause the Accountants to provide
detailed supporting calculations of its determination to Executive and the
Company.  Executive and the Company shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 5.

 

6.                                       Obligation Not
to Solicit

 

(a)                                  Executive
hereby agrees that while Executive is receiving compensation and benefits under
this Agreement, Executive shall not in any manner attempt to induce or assist
others to attempt to induce any officer, employee, customer or client of the
Company to terminate its association with the Company, nor do anything directly
or indirectly to interfere with the relationship between the Company and any
such persons or concerns.

 

(b)                                 In the event
that the Executive engages in any activity in violation of Section 6(a),
all compensation and benefits described in Section 4 shall immediately
cease.

 

7.                                       Confidentiality.  The terms of this Agreement are to be of the
highest confidentiality. In order to insure and maintain such confidentiality,
it is agreed that neither party, including all persons and entities under a
party’s control, shall, directly or indirectly, publicize or disclose to third
persons the terms of this Agreement or the substance of negotiations with
respect to it; provided, however, that nothing herein shall be construed to prevent
disclosures which are reasonably necessary to enforce the terms of this
Agreement or which are otherwise required by law to be made to governmental
agencies or others; moreover, nothing herein shall be construed to prevent the
parties hereto, or their attorneys, from making such disclosures for legitimate
business purposes to their respective insurers, financial institutions,
accountants and attorneys or, in the case of a corporation, limited liability
company or partnership, to its respective officers, directors, employees,
managers, members and agents or any of its respective subsidiaries, group or
divisions, provided that each such recipient of such disclosures agrees to be
bound by the requirements concerning disclosure of confidential information as
set forth in this Paragraph 7.

 

8.                                       Settlement of
Disputes; Arbitration

 

(a)                                  All disputes
arising under or in connection with this Agreement, shall be submitted to
binding arbitration in Los Angeles County before an arbitrator selected by
mutual agreement of the parties.  If the parties are unable to agree
mutually on an arbitrator within thirty (30) days after a written demand for
arbitration is made, the matter shall be submitted to JAMS/ENDISPUTE (“JAMS”)
or successor organization for binding arbitration in Los Angeles County by a
single arbitrator who shall be a former California Superior Court judge. 
The arbitrator shall be selected by JAMS in an impartial manner determined by
it.  Except as may be otherwise provided herein, the arbitration shall be
conducted under the California Arbitration Act, Code of Civil Procedure §1280
et seq.  The parties shall have the discovery rights provided in Code of
Civil Procedure §§1283.05 and 1283.1.  The arbitration hearing shall be
commenced within ninety (90) days of the appointment of the arbitrator, and a
decision shall be rendered by the arbitrator within thirty (30) days of the
conclusion of the hearing.  The arbitrator shall have complete authority
to render any and all relief, legal and equitable, appropriate under California
law, including the award of punitive damages where legally available and
warranted.  The arbitrator shall award costs of the proceeding, including
reasonable attorneys’ fees, to the party or parties determined to have
substantially prevailed, but such award for attorneys’ fees shall not exceed
One Hundred Thousand Dollars ($100,000).  Judgment on the award can be
entered in a court of competent jurisdiction.

 

6

 

(b)                                 The foregoing
notwithstanding, if the amount in controversy exceeds $200,000, exclusive of
attorneys’ fees and costs, the matter shall be litigated in the Los Angeles
County Superior Court as a regular civil action except that a former California
Superior Court Judge selected by JAMS in an impartial manner shall be appointed
as referee to determine, sitting without a jury (a jury being waived by all
parties hereto), all issues pursuant to California Code of Civil Procedure
§638(1).  Judgment entered on the decision of the referee shall be
appealable as a judgment of the Superior Court.  The prevailing party
shall be entitled to receive its reasonable attorneys’ fees and costs from the
other party, but such award for attorneys’ fees shall not exceed One Hundred
Thousand Dollars ($100,000).

 

9.                                       Miscellaneous

 

(a)                                  Notices. Any
notice or other communication required or permitted under this Agreement shall
be effective only if it is in writing and shall be deemed to have been duly
given when delivered personally or seven days after mailing if mailed first
class by registered or certified mail, postage prepaid, addressed as follows:

 

If to the Company:                                           Farmer Bros. Co

20333
South Normandie Avenue

Torrance,
CA  90502

Attn:
Chief Executive Officer

 

with a copy to:                                                               John M. Anglin, Esq.

Anglin,
Flewelling, Rasmussen, Campbell & Trytten LLP

199
South Los Robles Avenue, Suite 600

Pasadena,
CA  91101-2459

 

If
to the Executive:

 

 

 

or to such other address as any party may
designate by notice to the others.

 

(b)                                 Assignment.  This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives, and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be assigned
or transferred by either party thereto, or by any beneficiary or any other
person, nor be subject to alienation, anticipation, sale, pledge, encumbrance,
execution, levy, or other legal process of any kind against the Executive,
[his/her] beneficiary or any other person. Notwithstanding the foregoing, any
person or business entity succeeding to substantially all of the business of
the Company by purchase, merger, consolidation, sale of assets, or otherwise,
shall be bound by and shall adopt and assume this Agreement and the Company
shall cause the assumption of this Agreement by such successor. If Executive
shall die while any amount would still be payable to Executive hereunder (other
than amounts that, by their terms, terminate upon the death of Executive) if
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of Executive’s estate.

 

(c)                                  No Obligation
to Fund.  The agreement of the Company
(or its successor) to make payments to the Executive hereunder shall represent
solely the unsecured obligation of the Company (and its successor), except to
the extent the Company (or its successors) in its sole discretion elects in
whole or in part to fund its obligations under this Agreement pursuant to a
trust arrangement or otherwise.

 

7

 

(d)                                 Applicable Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without giving effect to conflict of law principles.

 

(e)                                  Amendment.  This Agreement may only be amended by a
written instrument signed by the parties hereto, which makes specific reference
to this Agreement.

 

(f)                                    Severability.  If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.

 

(g)                                 Withholding.  The Company shall have the right to withhold
any and all local, state and federal taxes which may be withheld in accordance
with applicable law.

 

(h)                                 Other Benefits.  Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive’s rights, under any other benefit plan, program, or
agreement to which Executive is a party.

 

(i)                                     Employment
Rights.  Nothing expressed or implied
in this Agreement will create any right or duty on the part of the Company or
the Executive to have the Executive remain in the employment of the Company or
any Subsidiary prior to or following any Change in Control.  The Company
and Executive are parties to an Employment Agreement executed concurrently herewith. 
Except as provided in [Section 11] of the Employment Agreement, the
provisions of the Employment Agreement and this Agreement are cumulative.

 

(j)                                     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 the Executive 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 the Executive.

 

(ii)                                  Notwithstanding
any provision of this Agreement to the contrary, if the Executive is a “specified
employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as
of the date of the Executive’s Separation from Service, the Executive shall not
be entitled to any payment or benefit pursuant to Section 4 until the
earlier of (i) the date which is six (6) months after the Executive’s
Separation from Service for any reason other than death, or (ii) the date
of the Executive’s death.  Any amounts
otherwise payable to the Executive upon or in the six (6) month period
following the Executive’s Separation from Service that are not so paid by
reason of this Section 9(j)(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 the Executive’s Separation from Service (or,
if earlier, as soon as practicable, and in all events within thirty (30) days,
after the date of the Executive’s death).  The provisions of this Section 9(j)(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 or reimbursements pursuant to Section 4(c) or Section 4(d) are
taxable to the Executive, any reimbursement payment due to the Executive 

 

8

 

pursuant to any such provision shall be paid
to the Executive on or before the last day of the Executive’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 the Executive receives
in one taxable year shall not affect the amount of such benefits or
reimbursements that the Executive receives in any other taxable year.

 

[SIGNATURES
FOLLOW]

 

9

 

IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed on its behalf by its duly
authorized officers and the Executive has hereunder set [his/her] hand, as of
the date first above written.

 

	
  Company:

  	
  FARMER BROS. CO.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Executive:

  	
   

  
	
   

  	
  [Name of Executive]

  

 

10

 

SCHEDULE
OF EXECUTIVE OFFICERS

 

Roger M. Laverty III

Drew H. Webb

John E. Simmons

Heidi L. Modaro

 

11Exhibit 10.1

 

AIRCRAFT
DRY LEASE

 

This Lease of aircraft is
made effective as of July 13, 2009, by and between Carabo
Capital, LLC a limited liability company, with an address of 226A
Byrd Blvd. Greenville South Carolina 29605 (“Lessor”)
and Advance America, Cash Advance Centers, Inc. with
an address of 135 N. Church
Street Spartanburg, South Carolina 29306 (“Lessee”).

 

RECITALS

 

The parties recite that:

 

A.            WHEREAS, Lessor is the
registered owner of the following aircraft, together with the engines, APU(s) and
all appliances, parts, instruments, avionics and appurtenances thereto,
including any replacement part(s) or engine(s) which may be installed
on the Aircraft from time to time, and all logs, manuals and other records
relating to such Aircraft (collectively, “Aircraft”):

 

	
  FAA Registration
  Number:

  	
  XXXXXX

  
	
  Aircraft Serial Number:

  	
  XXX

  
	
  Aircraft Manufacturer:

  	
  Israel Aircraft
  Industries/Gulfstream

  
	
  Aircraft Model:

  	
  Galaxy/G200

  

 

B.            WHEREAS, Lessee
desires to lease the Aircraft under such terms and conditions as are mutually
satisfactory to the parties.

 

The parties agree as
follows:

 

Section One-Lease of Aircraft

 

For One and No/100 Dollar
($1.00) and other good and valuable consideration, Lessor agrees to lease the
Aircraft to Lessee on a nonexclusive basis.  It shall be conclusively presumed between the
parties that Lessee has fully inspected the Aircraft having knowledge that it
is in good condition and repair and that Lessee is satisfied with and has
accepted the Aircraft in such condition and repair.    THE AIRCRAFT IS LEASED “AS IS” AND “WHERE
IS”.   LESSOR HEREBY DISCLAIMS ALL
WARRANTIES, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING FITNESS FOR
A PARTICULAR PURPOSE.

 

Section Two-Term

 

This Lease will commence
on the date first above written and continue for one year after said date.  Either party may at any time terminate this
Lease upon five (5) days written notice to the other party, delivered
personally or by certified mail, return receipt requested, at the address for
said other party as set forth above.

 

1

 

Section Three-Commercial Operation
Restriction

 

Neither Lessee nor Lessor
will make the Aircraft available for hire within the meaning of the Federal
Aviation Regulations.  The Aircraft is to
be operated strictly in accordance with 14 C.F.R. Part 91.

 

Section Four-Scheduling

 

Lessee will provide
Lessor with requests for flight time and proposed flight schedules as far in
advance of any given flight as possible, and in any case, at least twelve (12)
hours in advance of Lessee’s planned departure. 
Requests for flight time will be in a form whether oral or written,
mutually convenient to and agreed upon by the parties.  In addition to proposed schedules and flight
times, Lessee will provide at least the following information for each proposed
flight at some time prior to scheduled departure as required by the Lessor:

 

(a)           Proposed
departure point;

(b)           Destination;

(c)           Time of flight;

(d)           Number of anticipated
passengers;

(e)           Nature
and extent of luggage and/or cargo to be carried;

(f)            Date
and time of return for return flight, if any;

(g)           Names
and addresses of flight crew to be hired by Lessee; and

(h)           Any
flight information concerning the proposed flight that may be pertinent or
required by Lessor.

 

Lessor has final
authority over the scheduling of the Aircraft, provided, however, that the
Lessor will use its best efforts to accommodate Lessee’s needs and to avoid
conflicts in scheduling.

 

Section Five-Insurance

 

At all times during the
term of this Lease, Lessor will cause to be carried and maintained physical
damage insurance with respect to the Aircraft in the amount set forth below:

 

	
  Aircraft Physical
  Damage

  	
  $15,000,000.00

  
	
  (No Deductible While

  	
   

  
	
  In Motion or Not In
  Motion)

  	
   

  

 

At
all times during the term of this Lease, Lessor will also cause to be carried
and maintained third party aircraft liability insurance, passenger legal
liability insurance, property damage liability insurance, and medical expense
insurance in the amounts set forth below:

 

	
  Combined Liability
  Coverage for

  	
   

  
	
  Bodily Injury and
  Property Damage

  	
   

  
	
  Including Passengers -

  	
   

  
	
  Each Occurrence

  	
  $100,000,000.00

  

 

2

 

	
  Medical Expense
  Coverage -

  	
   

  
	
  Each Person

  	
  $25,000.00

  

 

Lessee’s proportionate
share of the cost of the above insurance is included in Lessee’s lease payments
to Lessor.   Lessee will also bear the
cost of paying any deductible amount on any policy of insurance in the event of
a claim or loss.

 

Any policies of insurance
carried in accordance with this Lease:  (i) shall
name Lessee as an additional insured; and (ii) shall contain a waiver by
the underwriter thereof of any right of subrogation against Lessor.  Each liability policy shall be primary
without right of contribution from any other insurance which is carried by
Lessee or Lessor and shall expressly provide that all of the provisions
thereof, except the limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured.

 

Section Six-Restrictions
on Use

 

Lessee may operate the
Aircraft only for the purposes and within the geographical limits set forth in
the insurance policy or policies obtained in compliance with this Lease.  The Aircraft will be operated at all times in
accordance with the flight manual and all manufacturers suggested operating
procedures.  Furthermore, Lessee will not
use the Aircraft in violation of any foreign, federal, state, territorial, or
municipal law or regulation and will be solely responsible for any fines,
penalties, or forfeitures occasioned by any violation by Lessee.  If such fines or penalties are imposed on
Lessor and paid by Lessor, Lessee will reimburse Lessor for the amount thereof
within thirty (30) days of receipt by Lessee of written demand from
Lessor.  Lessee will not base the
Aircraft, or permit it to be based, outside the limits of the United States of
America, without the written consent of Lessor.

 

The Aircraft will be
flown only by certificated and qualified pilots and will be maintained only by
certificated and qualified mechanics. 
Lessee, through its pilot in command, is authorized to incur up to
$5,000 worth of necessary maintenance and repair work for the Aircraft per
flight, by certificated and qualified mechanics, without the prior written
approval of Lessor.  Lessee will be
reimbursed for such expenditures upon Lessor’s receipt of invoices and proof of
payment by Lessee.  In the event the
insurance on the Aircraft would be invalidated because Lessee is unable to
obtain certificated and qualified pilots and mechanics, Lessee will not operate
the Aircraft until such time as certificated and qualified pilots and mechanics
are obtained and insurance on the Aircraft is made valid.

 

Lessee will not directly
or indirectly create, incur, assume or suffer to exist any lien on or with
respect to the Aircraft.  Lessee will
promptly, at its own expense, take such action as may be necessary to discharge
any lien not excepted above if the same will arise at any time.

 

Section Seven-Inspection by Lessor

 

Lessee agrees to permit
Lessor or any authorized agent to inspect the Aircraft at any 

 

3

 

reasonable time and to
furnish any information in respect to the Aircraft and its use that Lessor may
reasonably request.

 

Section Eight-Alterations

 

Except in accordance with
other written agreements entered into subsequent to the date of this Lease
between Lessee and Lessor regarding maintenance of the Aircraft, Lessee will
not have the right to alter, modify, or make additions or improvements to the
Aircraft without the written permission of Lessor.  All such alterations, modifications,
additions, and improvements as are so made will become the property of Lessor
and will be subject to all of the terms of this Lease.

 

Section Nine-Maintenance and Repair

 

Lessee shall inspect the
Aircraft and all maintenance records pertaining to the Aircraft and confirm the
airworthiness of the Aircraft prior to each flight under this Lease. If Lessee
determines any repair or maintenance should be completed prior to any flight,
Lessee shall not operate the Aircraft until such time as certificated and
qualified mechanics have completed such repairs or maintenance.  Lessor shall schedule and pay for all repairs
and maintenance on the Aircraft during the term of this Lease, including all
ferrying flights and transportation charges on replacements parts and
accessories.  Lessee’s proportionate
share of the cost of all such repairs and maintenance is included in Lessee’s
lease payments to Lessor.  Lessor will be
entitled to any and all salvage from broken or worn out parts.

 

All inspections, repairs,
modifications, maintenance, and overhaul work to be accomplished by Lessor will
be performed by personnel certificated to perform such work and will be
performed in accordance with the standards set by the Federal Aviation
Regulations.  Lessee will maintain all
log books and records pertaining to the Aircraft during the term of this Lease
in accordance with the Federal Aviation Regulations.  Such records will be made available for
examination by Lessor, and at the termination of this Lease, Lessee will
deliver such records to Lessor.

 

Section Ten-Default and Remedy

 

Lessee shall be in breach
of this Lease if Lessee defaults in its obligations under this Lease and such
default continues for five (5) days after receipt by Lessee of written
notice thereof from Lessor,  unless such
default shall be of such a nature that the same cannot be completely remedied
or cured within such five (5) day period, then such default shall not be a
breach of this Lease for the purposes of this Section if Lessee shall have
commenced curing such default within such five (5 ) day period and shall
proceed with reasonable diligence and in good faith to remedy the default. In
the event of any breach by Lessee, Lessee shall not fly the Aircraft and Lessor
shall have the right to repossess the Aircraft without further demand, notice
or court order, or other process of law and to terminate this Lease
immediately.  Exercise by Lessor of
either or both of the rights specified above shall not prejudice Lessor’s right
to pursue any other remedy available to Lessor in law or equity.

 

Lessor shall be in breach
of this Lease if Lessor defaults in its obligations under this Lease and such
default continues for five (5) days after receipt by Lessor of written
notice 

 

4

 

thereof from Lessee,
unless such default shall be of such a nature that the same cannot be
completely remedied or cured within such five (5) day period, then such
default shall not be a breach of this Lease for the purposes of this Section if
Lessor shall have commenced curing such default within such five (5) day
period and shall proceed with reasonable diligence and in good faith to remedy
the default.  In the event of any breach
by Lessor, Lessee shall have the right to terminate this Lease
immediately.  Exercise by Lessee of any
of the rights specified above shall not prejudice Lessee’s right to pursue any
other remedy available to Lessee in law or equity.

 

The failure of either
party to enforce strictly any provision of this Lease shall not be construed as
a waiver thereof and shall not preclude such party from demanding performance
in accordance with the terms hereof.

 

Section Eleven-Title

 

The registration of and
title to the Aircraft will be in the name of the Lessor, and the Aircraft, at
all times during the term of this Lease or any extension, will bear United
States registration markings.  All responsibility
and obligations in regard to the operation of the Aircraft as above owned,
registered, and marked will be borne by Lessee during the term of this Lease.

 

Section Twelve-Payment of Taxes

 

Lessor will pay or cause
to be paid all taxes incurred by reason of ownership of the Aircraft during the
term of this Lease, including personal property taxes. Lessee shall pay its
proportional share of personal property taxes, based on Lessee’s hours of use
of the Aircraft as a percentage of the entire number of hours of use of the
Aircraft for the calendar year for which the personal property taxes are
imposed.   Lessee will pay all taxes
associated with Lessee’s use of the Aircraft on Lessee’s own business,
including landing fees, fuel taxes, and any other taxes or fees which may be
assessed against a specific flight by Lessee.

 

Section Thirteen-Assignment

 

Lessee shall not assign
this Lease or any interest in the Aircraft, or sublet the Aircraft, without
prior written consent of Lessor.  Subject
to the foregoing, this Lease inures to the benefit of, and is binding on, the
heirs, legal representatives, successors, and permitted assigns of the parties.

 

Section Fourteen-Accident
and Claims

 

Lessee will immediately
notify Lessor of each accident involving the Aircraft, which notification will
specify the time, place, and nature of the accident or damage, the names and
addresses of parties involved, persons injured, witnesses, and owners of
properties damaged, and such other information as may be known.  Lessee will advise Lessor of all
correspondence, papers, notices, and documents whatsoever received by Lessee in
connection with any claim or demand involving or relating to the Aircraft or
its operation, and will aid in 

 

5

 

any investigation
instituted by Lessor and in the recovery of damages from third persons liable
therefor.

 

Section Fifteen-Indemnification

 

Lessee assumes liability
for, and hereby agrees to indemnify, defend, protect, save, keep and hold
harmless Lessor, its successors, agents, accountants, counsel, affiliates and
assigns from and against any and all claims, liabilities, demands, obligations,
losses, damages, penalties, claims (including without limitation, claims
involving strict or absolute liability in tort), actions, suits, costs,
expenses and disbursements (including, without limitation, reasonable legal
fees and expenses) of any kind and nature whatsoever (“Claims”)
which may be imposed on, incurred by or asserted against Lessor, in any way
relating to or arising out of this Lease, and/or the operation of the Aircraft,
or the performance or enforcement of any of the terms hereof, or in any way
relating to or arising out of the manufacture, or, as contemplated under this
Lease, acceptance, rejection, ownership, delivery, lease, possession, use,
operation, maintenance, function, registration, sale, return, storage,
termination or other disposition of the Aircraft or any part thereof or any
accident in connection therewith (including, without limitation, latent and other
defects, whether or not discoverable). 
If any Claim is made against Lessor, Lessor shall promptly notify Lessee
and cooperate fully in the defense or settlement.  Whether the indemnity granted by Lessee to
Lessor herein is deemed subordinate or primary to any other indemnity to which
each Lessor may be entitled, Lessor may look solely to Lessee and need not
pursue any Claims against any third person prior to or subsequent to seeking
the indemnity from Lessee hereunder. 
Lessor shall have the opportunity, but not the obligation, to defend if
Lessee fails to assert a defense in any such Claim hereunder, the cost of which
defense shall be borne by Lessee.   THE
INDEMNITIES IN THIS SECTION SHALL CONTINUE IN FULL FORCE AND EFFECT
NOTWITHSTANDING THE EXPIRATION OR OTHER TERMINATION OF THIS LEASE.

 

Section Sixteen-Return of Aircraft to Lessor

 

On the termination of
this Lease by expiration or otherwise, Lessee will return the Aircraft to
Lessor at the City of Spartanburg Municipal Airport in Spartanburg, South Carolina,
in as good operating condition and appearance as when received, ordinary wear,
tear and deterioration excepted, and will indemnify Lessor against any claim
for loss or damage occurring prior to the actual physical delivery of the
Aircraft to Lessor.

 

Section Seventeen-Modification of Agreement

 

This Lease constitutes
the entire understanding between the parties, and any change or modification
must be in writing and signed by both parties.

 

6

 

Section Eighteen-Notices

 

All communications and
notices provided for herein shall be in writing and shall become effective when
telecopied at time of transmission by electronic facsimile transmission
equipment, which equipment shall furnish written confirmation of successful and
completed transmission of all pages without error in transmission  or the next business day after delivered to a
reputable overnight courier or four (4) days following deposit in the
United States mail, with correct postage for first-class mail  prepaid, addressed to Lessor or Lessee at
their respective addresses set forth herein, or else as otherwise directed by
the other party from time to time in writing.

 

Section Nineteen-Governing
Law

 

This Lease is entered
into under, and is to be construed in accordance with, the laws of the State of
South Carolina.

 

[Remainder
of this page intentionally left blank]

 

7

 

SECTION TWENTY-TRUTH IN LEASING STATEMENT

 

THE AIRCRAFT, A Galaxy/Gulfstream
G200, MANUFACTURER’S SERIAL NO. XXX, CURRENTLY REGISTERED WITH THE FEDERAL
AVIATION ADMINISTRATION AS XXXXXX, HAS BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91
DURING THE 12 MONTH PERIOD PRECEDING THE DATE OF THIS LEASE.

 

THE AIRCRAFT WILL BE
MAINTAINED AND INSPECTED UNDER FAR PART 91 FOR OPERATIONS TO BE CONDUCTED
UNDER THIS LEASE.  DURING THE DURATION OF
THIS LEASE, CARABO CAPITAL, LLC WITH AN ADDRESS OF 226A BYRD BLVD. GREENVILLE,
SOUTH CAROLINA IS CONSIDERED RESPONSIBLE FOR OPERATIONAL CONTROL OF THE
AIRCRAFT UNDER THIS LEASE.

 

AN EXPLANATION OF FACTORS
BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL AVIATION REGULATIONS CAN
BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.

 

THE “INSTRUCTIONS FOR
COMPLIANCE WITH TRUTH IN LEASING REQUIREMENTS” ATTACHED HERETO ARE INCORPORATED
HEREIN BY REFERENCE.

 

I, WILLIAM WEBSTER IV OF CARABO
CAPITAL, LLC. WITH AN ADDRESS OF 226A BYRD BLVD. GREENVILLE, SOUTH CAROLINA
29605 CERTIFY THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT
AND THAT I UNDERSTAND THE RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE
FEDERAL AVIATION REGULATIONS.

 

IN WITNESS WHEREOF, the
parties have executed this Lease.

 

Carabo Capital, LLC

	
  By:

  	
  /s/ William M. Webster
  IV

  	
   

  
	
  Name:

  	
  William M. Webster IV

  	
   

  
	
  Title:

  	
  Member

  	
   

  
	
   

  	
   

  
	
  Date and Time of
  Execution

  	
   

  

 

Advance America, Cash Advance
Centers, Inc.

	
  By:

  	
  /s/ Ken E. Compton

  	
   

  
	
  Name:

  	
  Ken E. Compton

  	
   

  
	
  Title: Chief Executive
  Officer

  	
   

  
	
  August 18, 2009 @ 9:00 am

  	
   

  
	
  Date and Time of
  Execution

  	
   

  

 

8

 

INSTRUCTIONS FOR COMPLIANCE WITH “TRUTH IN LEASING”

REQUIREMENTS

 

1.             Mail
a copy of the lease agreement to the following address via certified mail,
return receipt requested, immediately upon execution of the agreement (14
C.F.R. 91.23 requires that the copy be sent within twenty-four hours after it
is signed):

 

Federal
Aviation Administration

Aircraft
Registration Branch

ATTN:  Technical Section

P.O. Box
25724

Oklahoma
City, Oklahoma  73125

 

2.             Telephone
the nearest Flight Standards District Office at least forty-eight hours prior
to the first flight under this lease agreement.

 

3.             Carry
a copy of the lease agreement in the aircraft at all times.

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