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Sample Business Contracts

Employment Agreement - Legacy Brands Inc. and Thomas E. Kees

Employment Forms

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  • Executive Employment Agreement. Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
  • Sales Representative Contract. Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
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                              EMPLOYMENT AGREEMENT


     THIS AGREEMENT, dated____________, hereinafter referred to as the
"Agreement", is by and between Legacy Brands, Inc., hereinafter referred to as
the "Employer", and Thomas E. Kees, hereinafter referred to as the "Employee".


                                    ARTICLE 1
                                      Term

     1.1 Term of Employment. The Employer hereby employs the Employee and the
Employee hereby accepts employment as Chairman, President and CEO of the
Employer for a period of three (3) years (the "Term") beginning on September 1,
1995 (the "effective date"), and which will be automatically extended on the
anniversary date hereof, for an additional twelve (12) month period, unless
canceled by either party as described herein.

     1.2 Notice of Cancellation. Following the expiration of the Term hereof,
the automatic extension of this Agreement may be canceled by either party by
giving written notice to the other party not later than 60 days before the
anniversary date hereof, that the Agreement shall not be extended ("Notice of
Cancellation"). In the event that either party cancels the automatic extension
of this Agreement, such failure to extend the Agreement shall be considered a
termination of the Employee as described in Article 6, herein, and such
termination shall be subject to the termination provisions provided therein.
This Agreement may be terminated earlier as hereinafter provided.


                                    ARTICLE 2
                               Duties of Employee

     2.1 Duties of Employee. As Chairman, President and CEO, Employee shall be
responsible for all facets of the operations of the Employer. From time to time,
the Board of Directors may give Employee specific directions on certain aspects
of managing the Employer. The parties hereto agree that Employee's services are
unique. Duties include, but are not limited to, providing the Employer's Board
of Directors advice with respect to management decisions and actions necessary
to return the Employer to a sound financial condition and profitability, to work
towards its future success, and participating in negotiations of new ventures
and public financing of the Employer.

     2.2 Best Efforts of Employee. Employee agrees that he will at all times
faithfully, industriously, and to the best of his ability, experience, and
talents, perform all of the duties that may be required of and from him pursuant
to the express and implicit terms hereof to the reasonable satisfaction of
Employer. Such duties shall be rendered at the home office of Employer, and at
such other place or places as Employer shall in good faith require or as the
interest, needs, business or opportunity of Employer shall require.
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 2


     2.3 Engaging in Other Employment. The Employee shall devote his productive
time, ability, and attention to the business of the Employer during the term of
this Agreement. The Employee shall not, during his employment:

          (i) within any jurisdiction or marketing area in which the Employer or
any of its subsidiaries or affiliates is doing business or is qualified to do
business, directly or indirectly own, manage, operate, control, be employed by
or participate in ownership, management operation or control of or be connected
in any manner with any business engaged in and in competition with the business
conducted by Employer or any of its subsidiaries or affiliates. For these
purposes, ownership of securities of not in excess of one (1%) percent of any
class of securities of a public company shall not be considered to be
competition with Employer or any of its subsidiaries or affiliates; or

          (ii) solicit for himself or any person other than the Employer or any
of its subsidiaries, the business of any company which is a customer or client
of the Employer, or any of its subsidiaries, or was a customer or client of
Employer within two (2) years prior to the date of this Agreement; or

          (iii) persuade or attempt to persuade any employee of the Employer or
any of its subsidiaries to leave the Employer's or subsidiary's employ or to
become employed by any person other than the Employer or subsidiary.

     2.4 Regulations. The Employee agrees to comply with all federal, state and
local laws, ordinances and regulations in the conduct of his business on behalf
of Employer.

     If and when licenses or other registrations become required by law or
pertinent regulatory bodies or agencies, the Employee shall undertake to make
any necessary applications or do what may be required to secure such licenses or
registrations.


                                    ARTICLE 3
                               Duties of Employer

     3.1 Payment of Compensation and Provision of Benefits. During the term
hereof, Employer agrees to pay all compensation due to Employee on at least a
monthly basis as provided in Article 4, as well as to provide benefits,
allowances and vacation as set forth therein.

     3.2 Working Environment. During the term hereof, Employer agrees to create
a suitable working environment, including all office amenities appropriate for
Employee's position
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 3


and employment responsibilities. Such environment shall include freedom from
unreasonable interference during office hours or after office hours.

     3.3 Advance Costs of Certain Litigation. During the term hereof and
subsequent thereto, Employer agrees to advance and incur any litigation costs
incurred by Employee in connection with any act or omission under this
Agreement, or with any product liability, tampering, officer or director
litigation brought by any investor or non-party to this Agreement. In exchange
for the Employer's promise to advance any such costs, the Employee agrees to
cooperate fully in the investigation and defense of any such claims.


                                    ARTICLE 4
                                  Compensation

     4.1 Basic Compensation. As compensation for services rendered under this
Agreement, the Employee shall be entitled to receive from the Employer a minimum
annual salary ("Annual Base Salary"), payable to Employee bi-monthly on the 1st
and 15th days of each month of the term hereof, as follows:

           For the
           Period:                                    Amount
           -------                                    ------

           1995-1996 ................................$200,000;
           1996-1997 ................................$225,000;
           1997-1998 ................................$250,000;

     The amount of Employee's actual compensation, including Annual Base Salary
and benefits, may be increased by unanimous vote of the disinterested Directors
of Employer at any time above the minimum Annual Base Salary described herein,
and such increase shall not effect the operation or validity of any other
provision of this Agreement.

     4.2 Bonus. The Employee is entitled to the payment of a bonus calculated on
a target profit amount for each year. The target profit amount is the amount
approved by the CEO and shall be calculated based upon a formula consisting of
earnings from operations before interest, taxes, depreciation and amortization.
If, in any year hereof, the Employer attains 80% to 99% of the target profit
amount, the Employee is entitled to a bonus of 50% of his Annual Base Salary for
the year, minus one percentage point for each percentage point the target profit
amount is less than 100%. If the target profit amount is met exactly, the bonus
shall be 50% of the Annual Base Salary. If the target profit amount is exceeded
by 1% to 10%, the bonus shall be 50% plus 2% of the Annual Base Salary for each
percentage point over 100%. If the target profit amount is
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 4


exceeded by 111% up to a ceiling of 150%, the bonus shall be 70% of the Annual
Base Salary plus 3% of the Annual Base Salary for each percentage point over
110%. Such bonus shall based upon the Employer's fiscal year. Bonuses will be
paid in three installments, the first payment representing 40% of the total
bonus shall be made no later than seven (7) months after the beginning of the
Employer's fiscal year, and will be calculated using Employer's unaudited
budgeted profits, the second payment representing another 40% of the bonus shall
be made no later than thirteen (13) months after the beginning of the Employer's
fiscal year and shall be calculated using Employer's unaudited actual financial
figures, and the third payment representing the final 20% shall be made no
sooner than the date upon which the Employer receives audited financial
statements. Any adjustments will be made at the time of the third payment. Any
overpayments shall be offset in the first and subsequent bonus payment(s) of the
following and subsequent fiscal year(s) until repaid. Any retroactive change in
accounting principles which might affect any prior year(s) profit shall not give
rise to any claim by the Employer against the Employee for any bonus payment.
Furthermore, any change in accounting principles which was not contemplated in
calculating the budgeted or actual profit shall not apply to the calculation of
the Employee's bonus.

     4.3 Employee Benefits.

     4.3.1 Insurance. So long as Employee is employed by Employer, Employer
shall use its best efforts to establish and maintain a group insurance policy as
follows, into which the Employee, and his dependents may participate:

          (a) Disability. To be obtained from a highly rated insurance company
so as to provide the Employee with a monthly income equal to the twelve months
average immediately preceding the disability and until the Employee reaches the
age of sixty-five (65) years.

     In the event the insurance company refuses to honor a claim against the
policy in force, and for any month benefits are not or partially not paid to the
Employee, the Employer's Board of Directors may decide, at its sole discretion,
to make monthly disability payments to the Employee to such extent that the
Employee receives a monthly income equal to the expected income under the
disability insurance.

          (b) Medical and Dental. Employee shall receive medical and dental
benefits for him and his dependents as may be determined from time to time by
the Board of Directors of the Employer.

     4.3.2 Fringe Benefits. Commencing on the date hereof, Employee shall be
entitled to all rights and benefits to which he is otherwise eligible under any
generally instituted
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 5


insurance plans and benefits of Employer, and any additional fringe benefits
which may be authorized and approved from time to time by the Board of
Directors.

     4.4 Expenses. During the Term, Employee shall be reimbursed for his
reasonable travel, entertainment, business meeting and similar expenditures for
the benefit of Employer, but only in accordance with the policies of Employer as
adopted by the Board from time to time. With respect to any expenses which are
reimbursed by Employer to Employee, Employee shall account to Employer in
sufficient detail to allow Employer to claim an income tax deduction for such
paid item, if such item is deductible.

     4.5 Restricted Stock Award. The Employee shall be offered, pursuant to a
separate Restricted Stock Purchase Agreement, an opportunity to purchase shares
of Common Stock of the Employer (the "Shares"). The Employee's right to receive
the full amount of shares owed under the Restricted Stock Purchase Agreement
shall be contingent on the Employee's continued employment with the Employer. In
the event of a change of control resulting in a merger or acquisition, the
Employee shall be granted securities of the new entity and adjusted to assure no
diminution of the Employee's ownership in the Employer.

     4.6 Vesting. The Employee is entitled to receive annually, but based on a
quarterly calculation, a certificate of vesting from the Employer evidencing the
completion of twelve months of service under this Agreement calculated from
September 1, 1995, in the form attached hereto as Exhibit A, which the Employee
shall deliver to the Pledge Holder, as provided in the Stock Pledge Agreement,
along with certain other documents pursuant to the terms of the Restricted Stock
Purchase Agreement in order to transfer, assign or convey Shares purchased under
the Restricted Stock Purchase Agreement. Upon the expiration of one year from
September 1, 1995, and delivery of a certificate of vesting together with other
required documents, the Employee shall have the right to dispose of one-third of
the Shares and shall be obligated to pay, or otherwise satisfy, one-third of the
principal amount of the Promissory Note plus interest, if any, pursuant to the
Restricted Stock Purchase Agreement and related Promissory Note. Such right to
dispose of a percentage of Shares and corresponding duty to pay, or otherwise
satisfy, amounts owed shall increase to two-thirds on September 1, 1997. The
Employee shall not have the right to dispose of all of the Shares or the
obligation to pay, or otherwise satisfy, the full principal amount and interest
thereupon under the Promissory Note until September 1, 1998.

            Once any portion of the Shares has vested and corresponding payments
have been made pursuant to this paragraph, or under the Promissory Note, or the
debt has been forgiven, such Shares are not subject to repurchase by the
Employer. In the event the Employee is terminated without cause pursuant to
Article 6.4, upon the sale of the business or a change in CEO and a portion of
the Shares has vested, but the corresponding payments under the Promissory Note
have not been made, the Employee shall have a period of ten (10) days from such
termination to make
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 6


the necessary payments under the Promissory Note. Failure to pay within thirty
days shall subject the Shares to repurchase by the Employer.

     4.7 Vacation. Employee shall be entitled to vacation of up to thirty (30)
calendar days per year, which vacation may accrue if not taken. Employee shall
be entitled to observe all nationally observed holidays and to take and accrue
such vacation time and sick days as determined by Employer's policy on such
accruals for all employees.

                                    ARTICLE 5
                                 Confidentiality

     5.1 Confidentiality. During the course of employment, Employee shall become
aware of certain methods, practices and procedures with which Employer conducts
its business, including but not limited to: any trade secrets, confidential
information, knowledge, data or other information of Employer relating to
products, processes, know how, designs, customer lists, business plans,
marketing plans and strategies, and pricing strategies or any subject matter
pertaining to any business of Employer or any of its clients, licensees or
affiliates, all of which Employer and Employee agree are proprietary information
and as such are trade secrets. Employee agrees to keep confidential, except as
Employer may otherwise consent, and not to disclose, or make any use of except
for the benefit of Employer, at any time either during or subsequent to his
employment, any said trade secrets.

     5.2 Return of Confidential Material. In the event of Employee's termination
of employment with Employer, for any reason whatsoever, Employee agrees to
promptly surrender and deliver to Employer all records, materials, equipment,
drawings and data of any nature pertaining to any invention or confidential
information of Employer or to his employment. Employee agrees not take with him
any description containing or pertaining to any confidential information,
knowledge or data of Employer which he may produce or obtain during the course
of his employment.

                                    ARTICLE 6
                                   Termination
                                       and
                                  Severance Pay

     6.1 Termination by Death or Disability. This Agreement terminates upon the
death or disability of the Employee. Compensation provided in the case of
disability is to be determined as if the Employee had been terminated for cause
per 6.3 below. All compensation ends on the
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 7


date of the Employee's death.

     6.2 Termination by Employee. If the Employee terminates this Agreement with
or without cause, he shall forfeit his compensation and bonuses remaining in
this Agreement, and shall forfeit that portion of his restricted stock award as
provided elsewhere in this Agreement. Any termination by Employee shall be with
60 days notice to the Employer.

     6.3 Termination by Employer for Cause. For purposes of this Agreement, an
event or occurrence constituting "Cause" shall mean, as determined by Employer:

                    6.3.1 Employee's willful failure or refusal after notice
                    thereof, to perform specific directives of the Board of
                    Directors of Employer, when such directives are consistent
                    with the scope and nature of Employees' duties and
                    responsibilities as set forth in clause 2.1. hereof; or

                    6.3.2 Dishonesty of Employee affecting Employer; or

                    6.3.3 Drunkenness or use of drugs which interferes with the
                    performance of Employee's duties and responsibilities under
                    this Agreement; or

                    6.3.4 Any gross or willful conduct of Employee resulting in
                    substantial loss to Employer, substantial damage to
                    Employer's reputation, or theft or defalcation from
                    Employer; or

                    6.3.5 Gross incompetence on the part of the Employee in the
                    performance of the duties and responsibilities under this
                    Agreement; or

                    6.3.6 Any material breach (not covered by any of subclauses
                    6.3.1 through 6.3.5) of Article 2 or Article 5 of this
                    Agreement if such breach is not cured within 10 days after
                    written notice thereof to Employee by Employer.

     In the event the Employee is terminated for cause, the Employee shall be
entitled to receive fifty percent (50%) of the amount of Annual Base Salary to
which he would have been entitled had he completed the full term of three years
hereof. The Employee shall continue to be bound by Article 5 hereof.

     6.4 Termination of Employee Without Cause. In the event the Employee is
terminated for any reason other than for cause, the Employee shall be entitled
to the compensation and bonuses he would have been paid had the Employer not
terminated the Employee and the Employee had continued to provide services
hereunder throughout the term of this Agreement.
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 8


The Employee shall continue to be bound by Article 5 hereof.

     6.5 Termination of Employee upon Sale of Business. This Agreement shall
survive a merger, consolidation or other business combination for the longer of
the remaining term of this Agreement or one year. In the event the Employer
decides to terminate the Employee without cause pursuant to this Article 6.5,
the Employer shall:

                    6.5.1 Have the duty to compensate the Employee under the
                    terms of this Agreement for the remaining term of this
                    Agreement;

                    6.5.2 Waive the vesting requirement as to any unvested
                    Shares such that the Employee will have the right to dispose
                    of all of the Shares contemplated by and pursuant to the
                    restricted Stock Purchase Agreement; and

                    6.5.3 Provide the Employee with an Executive Placement
                    Package.

     6.6 Effect of Termination on other Employees. In the event of termination,
the Employee shall not for a period of at least three (3) years after
termination persuade or attempt to persuade any employee of the Employer or any
of its subsidiaries to leave the Employer's or subsidiary's employ or to become
employed by any person other than the Employer or subsidiary.

     6.7 Effect of Termination on Article 5. In the event of the termination of
this Agreement, Article 5.1 and 5.2 will survive termination of this Agreement.

     6.8 Pre-Termination Election. In the event the Employee or the Employer
does not elect to renew this Agreement for a new term, for the last 12 months of
the term hereof, the Employee and the Employer may mutually elect to convert the
Employee's duties and title under this Agreement to the duties and title of
consultant. Upon the expiration of this Agreement, the Employee may continue his
employment as a consultant.

                                    ARTICLE 7
                               General Provisions

     7.1 Succession. This Agreement shall inure to the benefit of and shall be
binding upon Employer, its successors and assigns. The obligations and duties of
Employee hereunder shall be personal and not assignable.

     7.2 Notices. Any notices to be given hereunder by either party to the other
may be effected either by personal delivery in writing or by mail, registered or
certified, postage prepaid
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 9


with return receipt requested. Notices delivered personally shall be deemed
communicated as of actual receipt; mailed notices shall be deemed communicated
as of five (5) days after mailing. Mailed notices shall be addressed to the
parties as follows, but each party may change his address by written notice in
accordance with this paragraph:

               If to Employer:

                           Legacy Brands, Inc.
                           2200-B Douglas Blvd., Suite 100
                           Roseville, California  95611

                           Attn: Secretary

               If to Employee:

                           Thomas E. Kees

     7.3 Inclusion of Entire Agreement Herein. This Agreement supersedes any and
all other agreements, either oral or in writing, between the parties hereto with
respect to the employment of the Employee by the Employer and contains all of
the covenants and agreements between the parties with respect to such employment
in any manner whatsoever with exception of such stock bonus plans, stock options
or other deferred compensation as may from time to time be granted to Employee
by action of the Board of Directors of Employer.

     7.4 Law Governing Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

                    It is the desire and intent of the parties to this Agreement
          that the provisions of this Agreement shall be enforced to the fullest
          extent permissible under the laws and public policies applied in each
          jurisdiction in which enforcement is sought; and that if any
          particular provisions or portion of this Agreement shall adjudicated
          to be invalid or unenforceable, such agreement shall be deemed amended
          to delete therefrom such provision or portion adjudicated to be
          invalid or unenforceable, such amendment to apply only with respect to
          the operation of such provision or portion in the particular
          jurisdiction in which such adjudication is made.

                    The parties to this Agreement recognize that the performance
          of the obligations under this Agreement is special, unique and
          extraordinary in character and that in the event of the
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 10


breach by Employee of the terms and conditions of this Agreement to be
performed, the Employer shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either in law or
in equity, to obtain damages for any breach of this Agreement or to enforce the
specific performance thereof by Employee or to enjoin Employee from performing
services for any such other person, firm or corporation.

     7.5 Arbitration. In the event of any dispute arising under this Employment
Agreement, including any dispute regarding the nature, scope or quality of
services provided by either party hereto, it is hereby agreed that such dispute
shall be resolved by binding arbitration to be conducted by the American
Arbitration Association (AAA), to be arbitrated in accordance with their rules
and procedures in Sacramento, California. In the event of any such arbitration,
pending resolution of the arbitration and award of costs by the arbitrator, each
party hereto shall advance one-half of the amounts, if any, requested to be
advanced to the arbitrator and/or the sponsoring organization.

     7.6 Attorney's Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which may be entitled.

     7.7 Payment of Money Due Deceased Employee. If the Employee dies prior to
the expiration of the term of employment, any money that may be due him from the
Employer under this Agreement as of the date of his death shall be paid to his
executors, administrators, heirs, personal representatives, successors, and
assigns.

     7.8 Modification or Extension of Agreement. This Agreement may not be
changed, modified, released, discharged, abandoned, or otherwise amended, in
whole or in part, except in writing, signed by the Employee and the Employer,
but only after written approval of the Employer's Board of Directors. Employee
agrees that any subsequent change or changes in his duties, salary or
compensation shall not effect the validity or scope of this Agreement.

     If, on the request or with the consent of Employer, Employee continues in
his employment beyond the period described in Article 1, this Agreement shall
remain in effect during continuance of such service.
<PAGE>

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
THOMAS E. KEES
Page 11


     IN WITNESS WHEREOF, the parties have executed this Agreement at the
Employer's offices in Roseville, California, this ____ day of______, 1996.


EMPLOYER:

Legacy Brands, Inc.



By:--------------------------
Name:
Title:



EMPLOYEE:



By:--------------------------
            Thomas E. Kees