Sample Business Contracts

Employment Agreement - Diedrich Coffee Inc. and John B. Bayley

Employment Forms

Employment Contract. Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
Consulting Agreement. Answer simple questions to build a contract with a consultant. Specify the services rendered, when payment is due, as well as IP rights.
Commission Agreement. Employers who compensate their sales employees based on commissions can prepare an agreement to reduce misunderstandings by specifying the base salary and how commissions are calculated.
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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                          [DIEDRICH COFFEE LETTERHEAD]



                                                                   July 21, 1997

Mr. John B. Bayley
2144 Michelson Drive
Irvine, CA 92612

Dear John:

        On April 25, 1997, the Compensation Committee of the Board of Directors
of Diedrich Coffee, Inc. (the "Company") approved certain changes to your
compensation and employment status with the Company. If you are in agreement
with the changes set forth below, please sign a copy of this letter (the
"Letter") and return it to me.

        1. Effective April 28, 1997, you shall assume the position of Acting
Vice President of Finance and Controller of the Company.

        2. Effective May 1, 1997, your annual base salary shall be adjusted from
$75,000 to $85,000.

        3. Upon the specific achievement of criteria to be developed between you
and the Company, you shall be entitled to a "success bonus" in an amount up to
20% of your annual base salary. These criteria are to be developed in connection
with the rebudgeting process for fiscal 1998 that is currently underway. You
shall not be entitled to any bonus hereunder unless you and the Company's Chief
Executive Officer have agreed upon specific criteria that are set forth in
writing and you fulfill the requirements set forth in such document for
receiving the success bonus.

        4. Effective April 25, 1997, the Compensation Committee of the Board of
Directors of the Company granted stock options to you pursuant to the terms and
conditions of the Diedrich Coffee, Inc. 1996 Stock Incentive Plan and upon the
following additional terms and conditions. You are granted options to purchase
20,000 shares of the Company's common stock at an exercise price of $3.17 (the
average closing price of the Company's common stock reported on the NASDAQ
National Market for the period beginning 15 trading days prior to April 25, 1997
and ending 15 trading days after April 25, 1997) with the following vesting
schedule: 30% of the option shares vest on the first anniversary of the date of
grant, 30% of the option shares vest on the second anniversary of the date of
grant and 40% of the option shares vest on the third anniversary of the date of
grant. These options shall expire on April 24, 2007.

        Congratulations and I look forward to working with you to build Diedrich
Coffee into a thriving and profitable company.

                                            Sincerely,


                                    /s/  LAWRENCE GOELMAN
                                    --------------------------------------------
                                    Lawrence Goelman
                                    Chairman and Interim Chief Executive Officer

I have reviewed the foregoing and agree to be bound by the terms hereof:



/s/  JOHN B. BAYLEY                       2/23/97
--------------------------------        ------------------------
John B. Bayley                          Date