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Employment Agreement - RedEnvelope Inc. and Gary Michael Korotzer

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December 22, 2004

Gary Michael Korotzer
3561 Henrietta Hartford Road
Mount Pleasant, SC  29466


Dear Gary:

On behalf of RedEnvelope ("Company"), I am very pleased to offer you employment
as the Company's Vice President of Marketing.

You will report directly to Alison May, President and Chief Executive Officer,
and will work in our San Francisco office. The position of Vice President of
Marketing is exempt. Your primary high-level duties in this position will
include the management of the Company's marketing activities, including its
catalog circulation, webstore, online marketing, public relations, corporate
sales and advertising programs. You will also be responsible for any other
projects or assignments as directed by the President and Chief Executive
Officer. At all times during employment with the Company, you will devote your
full energies, abilities and productive business time to the performance of your
job for the Company and will not engage in any activity that would in any way
interfere or conflict with the full performance of any of your duties for the

You will receive an annualized salary of $225,000 and a sign-on bonus of
$35,000, less applicable payroll deductions and all required withholdings, in
accordance with the Company's regular payroll practices. In addition, we will
reimburse up to $20,000 of your expenses of moving your household from South
Carolina to the San Francisco Bay area.

Commencing on the month following your start date, you will be eligible to
participate in the Company's standard benefits package. You will also be
eligible for the Company's standard PTO and holiday benefits. The Company may
modify or cancel benefits from time to time, as it deems appropriate in its sole

In addition, we will recommend that the Board of Directors of the Company
("Board") grant you an option to purchase 30,000 shares of the Company's common
stock. The specific characteristics, terms and conditions of the options
mentioned above, including the strike price and applicable vesting schedule,
will be set forth in the option plan and grant documentation to follow after
approval by the Board.


Your employment with the Company is for no specified duration and may be
terminated either by you or the Company at any time and for any reason
whatsoever, with or without cause or advance notice. The Company also retains
the right to make all other decisions concerning your employment (e.g., changes
to your position, title, level, responsibilities, compensation, job duties,
reporting structure, work location, work schedule, goals or any other managerial
decisions) at any time, with or without cause or advance notice, as it deems
appropriate in its sole discretion. This at-will employment relationship cannot
be changed except in writing signed by you and the Company's Chief Executive
Officer. If the Company terminates your employment without cause, in exchange
for you signing a general release of any all claims, the Company will pay you
six (6) months severance in the total amount of $112,500, less applicable
payroll deductions and all required withholdings. In addition, the Company will
reimburse you for six months of premiums to continue your and your dependents'
health care insurance coverage under COBRA, if you elect to continue such
coverage. This severance amount will be paid in biweekly installments, less
applicable payroll deductions and all required withholdings, in accordance with
the Company's regular payroll schedule, during the six calendar months following
the termination of your employment.

As used in this agreement, "cause" shall mean material nonperformance or
misconduct in the performance of your duties and responsibilities as an
employee, indictment for a felony or another crime involving fraud or
dishonesty, or theft or misappropriation of assets of the Company having more
than nominal value.

Your employment with the Company is contingent on your having signed the
Company's standard employee confidentiality and invention assignment agreement
prior to your start date, providing satisfactory proof of your right to work in
the United States as required by law, and on the Company's verification of your
qualifications, background, experience and references. You will comply at all
times with all Company policies, rules and procedures as they may be
established, stated and/or modified from time to time at the Company's sole

Prior to your first day of work with the Company, you will have previously
returned any confidential, proprietary or trade secret information belonging to
any prior employer and will not use such information in your employment with the
Company. You will also strictly adhere to the terms of any lawful restrictive
covenants entered into between you and any prior employers.

Except as specified below, to the fullest extent allowed by law, any and all
disputes, claims or controversies of any kind arising out of or related in any
way to hiring, employment or the termination of employment with the Company
(including without limitation any statutory or common law claims against the
Company or any of its agents or employees) shall be fully and finally resolved
through binding arbitration, before a neutral arbitrator, pursuant to the
California Arbitration Act, California Code of Civil Procedure section 1280, et
seq. You and the Company therefore waive any right to a jury trial on any such
claims or matters. Any arbitration between the parties will be conducted before
the American Arbitration Association ("AAA") in San Francisco, California, under
the AAA's then existing national rules for the resolution of employment
disputes, as modified in any respect necessary to comply with the requirements
of California law for enforcement of arbitration agreements regarding
employment-related disputes. This arbitration provision shall not apply to any
claims for injunctive or other similar equitable relief. Before commencing any
arbitration proceedings, any dispute between you and the Company or any of its
agents or employees shall first be


submitted, in writing, to the Company's Human Resource Officer (or if none, to
the head of Finance & Accounting) for a good faith attempt at resolution.

This letter sets forth the entire agreement between you and the Company on the
terms of your employment with the Company and supersedes any prior
representations, understandings, promises or agreements, whether oral or
written, by anyone regarding employment with the Company. The employment terms
in this letter may only be modified in a writing signed by both you and the
Company's Chief Executive Officer.

If you wish to accept employment with the Company under the terms described
above, please sign and date this letter and return it to me at your earliest
convenience. If you accept our offer, we would like you to start with us on
January 3, 2005 or as soon thereafter as possible.

Gary, we are excited at the prospect of you joining our team and look forward to
working with you.


RedEnvelope, Inc.

By:  /s/ Alison May
     Alison May

Title: President and Chief Executive Officer



/s/ GARY MICHAEL KOROTZER                     12-22-04
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Signature                                     Date