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Sample Business Contracts

Restricted Stock Purchase Agreement - Legacy Brands Inc. and Thomas E. Kees

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                                      6.8
                   Restricted Stock Purchase Agreement between
                     Legacy Brands, Inc. and Thomas E. Kees
                             Dated October 30, 1996
<PAGE>

                       RESTRICTED STOCK PURCHASE AGREEMENT

     THIS RESTRICTED STOCK PURCHASE AGREEMENT ("Agreement") is entered into as
of__________,__________, by and between Legacy Brands, Inc., a California
corporation (the "Company"), and Thomas E. Kees (the "Purchaser").

                                 R E C I T A L S

     A. The Purchaser is a full-time employee of the Company serving as
Chairman, President and Chief Executive Officer.

     B. The Board of Directors of the Company has determined that retaining the
services of the Purchaser is in the best interests of the Company and the
shareholders.

     C. Equity ownership in the shares of Common Stock of the Company (the
"Shares") based upon earned years in service is considered by the Board of
Directors to be a valuable employment incentive to the Purchaser.

                                A G R E E M E N T

     It is hereby agreed as follows:

     1. PURCHASE OF SHARES AND PURCHASE PRICE. As of the date of this Agreement
and subject to the terms, conditions, provisions and limitations contained in
this Agreement, the Company shall sell, transfer, convey and assign to Purchaser
free and clear of any and all liens and charges, except as specifically set
forth herein, and the Purchaser shall acquire 4,000,000 Shares from the
Purchaser in exchange for the Purchase Price, as defined and set forth below. As
consideration for the Shares, the Purchaser shall execute a promissory note, in
the form set forth in Exhibit A, in favor of the Company in the amount of
$1,000,000 bearing interest at a rate of 6.72% per annum (the "Purchase Price").

     2. PURCHASE RIGHTS, VESTING AND DEPOSIT OF SHARES. The Parties agree that
until such time as the Purchaser's right to transfer, convey and assign the
Shares has been perfected said Shares will be deposited with the Pledge Holder
pursuant to the terms and conditions of a Stock Pledge Agreement (the "Pledge
Agreement") attached hereto as Exhibit B. The Parties agree that the right to
transfer, convey and assign the Shares, or any portion thereof, will vest
quarterly, but will only be exercisable annually on each anniversary of the date
specified in Section 11, over a period of three years from such date (the
"Purchase Rights"). In no event will there be a pro-rata vesting of the Purchase
Rights hereunder, unless the Board of Directors waives this requirement. The
Board of Directors, in its sole discretion, may accelerate vesting without
regard to years of service. The Parties agree that the Purchaser's right to
acquire the


                           1-Stock Purchase Agreement
<PAGE>

Shares hereunder is expressly conditioned upon his continued service as an
employee under the Employment Agreement dated ________.

     3. REPURCHASE RIGHTS. Once any portion of the Shares has vested and
corresponding payments have been made under the Promissory Note, or the debt has
been satisfied or forgiven, such Shares shall not be subject to repurchase by
the Company.

     The Company shall have the right to repurchase any unvested portion of the
Shares (the "Repurchase Right") for the purchase price and on the terms and
conditions set forth in Section 4. In the event the Purchaser is terminated for
other than cause pursuant to the Employment Agreement between the Purchaser and
the Company, and a portion of the Shares has vested, but the Promissory Note has
neither been satisfied nor forgiven, the Purchaser shall have a period of ten
(10) days from such termination to make the necessary payments under the
Promissory Note. Failure to pay any amounts due within thirty days will subject
such Shares to repurchase by the Company.

     In the event of a sale of business, Purchaser shall be deemed fully vested
and the Company shall not have any Repurchase Rights with respect to such
Shares.

     4. PURCHASE PRICE, TERMS AND CONDITIONS FOR REPURCHASES. The purchase price
with respect to the exercise of a Repurchase Right shall be on the same terms as
the Purchase Right granted to the Purchaser (the "Repurchase Price"). The
Company shall notify the Purchaser, in writing, of its intent to exercise its
Repurchase Right. The Purchaser shall, within fifteen (15) days of the receipt
of such notice, deliver the Shares to be repurchased according to the
instructions of the Company. Said Shares shall be transferred to the Company
free and clear of all liens, charges or encumbrances.

     5. EFFECT OF TERMINATION OF EMPLOYMENT. If the Purchaser's employment or
other relationship with the Company (or a Subsidiary) terminates, the effect of
the termination on the Purchaser's rights to acquire Shares shall be as follows:

          5.1 Termination for Other than Disability, Cause or Death. If the
Purchaser ceases to be employed by, or ceases to have a relationship with, the
Company or a Subsidiary for any reason other than for disability, cause or
death, the Purchase Rights pursuant described in Section 2 shall expire not
later than one (1) month after the Company issues a certificate of vesting to
the Purchaser. During such one (1) month period and prior to the expiration of
the Purchase Right, the Purchaser may exercise any right to purchase Shares
granted to him, but only to the extent and in such amount that such right
existed on the date of termination of his employment or relationship. The
decision as to whether a termination for a reason other than disability, cause
or death has occurred shall be made by the Board of Directors, whose decision
shall be final and conclusive, except that employment shall not be considered
terminated in the case of sick leave or other bona fide leave of absence
approved by the Company.


                           2-Stock Purchase Agreement
<PAGE>

          5.2 Disability. If the Purchaser ceases to be employed by, or ceases
to have a relationship with, the Company or a Subsidiary by reason of disability
(within the meaning of Internal Revenue Code Section 22(e)(3)), the Purchaser
shall be deemed to be fully vested and shall be entitled to all of the Shares
hereunder conditioned upon payment in full, or satisfaction, of the Promissory
Note. The decision as to whether a termination by reason of disability has
occurred shall be made by the Board of Directors, whose decision shall be final
and conclusive.

          5.3 Termination for Cause. If the Purchaser's employment by, or
relationship with, the Company or a Subsidiary is terminated for cause, that
portion of the Purchase Rights which has not vested shall expire immediately and
any Shares that have not vested and been paid for shall be forfeited and any
remaining balance due under the Promissory Note shall be canceled; provided,
however, the Board of Directors may, in its sole discretion, within thirty (30)
days of such termination, waive the expiration of the Purchase Rights by giving
written notice of such waiver to the Purchaser at such Purchaser's last known
address. In the event of such waiver, the Purchaser may exercise the Purchase
Rights only to such extent, for such time, and upon such terms and conditions as
if such Purchaser had ceased to be employed by, or ceased to have a relationship
with, the Company or a Subsidiary upon the date of such termination for a reason
other than disability, cause or death. In addition, the Company shall have up to
thirty (30) days after the date of termination to exercise its Repurchase Rights
to the Shares, or any portion thereof, or to waive such rights and provide
notice of such exercise or waiver to the Pledge Holder. Termination for cause
shall include any conduct so defined by the Employment Agreement between the
Company and the Purchaser, or any conduct detrimental to the interests of the
Company or a Subsidiary. The determination of the Board of Directors with
respect to whether a termination for cause has occurred shall be final and
conclusive. The Purchaser agrees to waive any right to a judicial determination
of termination under this Article 5.3.

          5.4 Death of an Purchaser. If an Purchaser ceases to be employed by,
or ceases to have a relationship with, the Company by reason of death, the
Purchaser shall be deemed to be fully vested and shall be entitled to all of the
Shares hereunder conditioned upon the payment in full, or satisfaction, of the
Promissory Note. The Purchase Rights shall expire six (6) months after the
Company issues a certificate of vesting to the Purchaser, or his heirs, or his
estate. The Purchase Rights may be transferred by will or the applicable laws of
descent and distribution, but only to the extent such rights were exercisable on
the date Purchaser ceased to be employed by, or ceased to have a relationship
with, the Company or a Subsidiary by reason of death.

     6. TRANSFERABILITY OF PURCHASE RIGHTS. The Purchase Rights shall not be
transferable, either voluntarily or by operation of law, otherwise than by will
or the laws of descent and distribution, and shall be exercisable during the
Purchaser's lifetime only by Purchaser.

     7. TRANSFERABILITY OF SHARES. The Purchaser may transfer, assign or convey
Shares only upon delivery of a certificate of vesting, an opinion of legal
counsel to the Company, a certificate from the Company verifying that payment or
satisfaction has been made under the


                           3-Stock Purchase Agreement
<PAGE>

Promissory Note, and a certificate from the Company waiving its Repurchase
Rights to the Pledge Holder. Pursuant to the terms of the Employment Agreement
by and between the Company and the Purchaser, the Purchaser shall be entitled to
receive annually, based on a quarterly calculation, a certificate of vesting
from the Employer, but shall only be able to dispose of vested Shares upon each
anniversary of the date specified in Section 11. The opinion of legal counsel
required hereunder shall certify that such transfer of Shares will not result in
a violation of state and/or federal law, or the rulings and regulations of any
governmental body. Within ten days of receipt of the certificate of vesting,
opinion of legal counsel, certificate of payment of the Promissory Note and
certificate of waiver from the Purchaser, the Pledge Holder shall deliver the
designated Shares to the Purchaser. The Company may waive any of the foregoing
requirements and in such event shall notify the Pledge Holder of the same.

     8. CANCELLATION OF INDEBTEDNESS; REFUND OF PURCHASE PRICE. In the event the
Board of Directors, or Employer, decides to forgive any indebtedness in
connection with the promissory notes executed in connection with this Agreement
by a person who has entered into an Employment Agreement with the Company, then
any person then under an Employment Agreement that has made the required
payments for vested Shares shall be entitled to a refund of the Purchase Price,
or any portion thereof, payable in cash or equity securities of the Company.

     9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Company are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. Upon the occurrence of an Adjustment Event, (i)
appropriate and proportionate adjustments shall be made to the number and kind
and price for the shares subject to the Purchase Rights, and (ii) appropriate
amendments to this Agreement shall be executed by the Company and Purchaser if
the Board of Directors determines that such an amendment is necessary or
desirable to reflect such adjustments. If determined by the Board of Directors
to be appropriate, in the event of an Adjustment Event which involves the
substitution of securities of a company other than the Company, the Board of
Directors shall make arrangements for the assumptions by such other corporation
of the Purchase Rights. Notwithstanding the foregoing, any such adjustment to
the Purchase Rights shall be made without change in the total price applicable
to the unvested portion of the Purchase Rights, but with an appropriate
adjustment to the number of shares, kind of shares and price for each share
subject to the Purchase Rights. The determination by the Board of Directors as
to what adjustments, amendments or arrangements shall be made pursuant to this
Section 9, and the extent thereof, shall be final and conclusive. No fractional
Shares shall be issued on account of any such adjustment or arrangement.

     10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained in
this Agreement shall obligate the Company to employ or have another relationship
with Purchaser for any period or interfere in any way with the right of the
Company to reduce Purchaser's compensation or to terminate the employment of or
relationship with Purchaser at any


                           4-Stock Purchase Agreement
<PAGE>

time. The Employment Agreement, incorporated herein by reference, by and between
the Company and the Purchaser contains all the terms and conditions of
employment.

     11. TIME OF VESTING. The time the Purchase Rights shall be deemed vested,
sometimes referred to herein as the "date of vesting," shall be quarterly over a
period of three years from September 1, 1995.

     12. PRIVILEGES OF STOCK OWNERSHIP. Purchaser shall be entitled to the
privileges of stock ownership as of the date of this Agreement as to all Shares
to be issued and delivered to Purchaser pursuant to this Agreement. No Shares
shall be transferred by the Purchaser upon the exercise of any Purchase Rights
unless and until, in the opinion of the Company's counsel, any then applicable
requirements of any laws, or governmental or regulatory agencies having
jurisdiction, and of any exchanges upon which the stock of the Company may be
listed shall have been fully complied with.

     13. SECURITIES LAWS COMPLIANCE. The Company will diligently endeavor to
comply with all applicable securities laws before any stock is issued pursuant
to this Agreement. Without limiting the generality of the foregoing, the Company
may require from the Purchaser such investment representation or such agreement,
if any, as counsel for the Company may consider necessary in order to comply
with the Securities Act of 1933 as then in effect, and may require that the
Purchaser agree that any sale of the Shares will be made only in such manner as
is permitted by the Board of Directors. The Purchaser shall take any action
reasonably requested by the Company in connection with registration or
qualification of the Shares under federal or state securities laws.

     14. SHARES SUBJECT TO LEGEND. If deemed necessary by the Company's counsel,
all certificates issued to represent Shares purchased upon exercise of the
Purchase Rights shall bear such appropriate legend conditions as counsel for the
Company shall require.

     15. CONDITIONS TO PURCHASE RIGHTS.

          15.1 Compliance with Applicable Laws. The Company's obligation to
issue Shares is expressly conditioned upon the completion by the Company of any
registration or other qualification of such Shares under any state and/or
federal law or rulings or regulations of any governmental regulatory body, or
the making of such investment representations or other representations by the
Purchaser or any person entitled to exercise the Purchase Rights in order to
comply with the requirements of any exemption from any such registration or
other qualification of Shares which the Board of Directors shall, in its sole
discretion, deem necessary or advisable. Such required representations and
undertakings may include representations and agreements that the Purchaser or
any person entitled to exercise the Purchase Rights (i) is not purchasing such
Shares for distribution, and (ii) agrees to have placed upon the face and
reverse of any certificates a legend setting forth any representations and
undertakings which have been given to the Board of Directors or a reference
thereto.


                           5-Stock Purchase Agreement
<PAGE>

          15.2 Board of Directors Approval of Agreement. If the Purchase Rights
granted hereby are granted prior to approval of this Agreement by the Board of
Directors of the Company, the grant of the Purchase Rights made hereby is
expressly conditioned upon and such Purchase Rights shall not be exercisable
until the approval of this Agreement by the Board of Directors of the Company.

          15.3 Maximum Exercise Period. Notwithstanding any provision of this
Agreement to the contrary, the Purchase Rights shall expire no later than six
years from the date hereof or five years if, as of the date hereof, the
Purchaser owns or is considered to own by reason of Internal Revenue Code
Section 424(d) more than 10% of the total combined voting power of all classes
of stock of the Company or any Subsidiary or parent corporation of the Company.

          15.4 Opinion of Counsel. The Company's obligation to issue Shares to
the Purchaser is expressly conditioned upon the receipt of an opinion from
counsel to the Company certifying that the issuance of Shares and exercise of
Purchase Rights is not in violation of any state and/or federal law or rulings
or regulations of any governmental body.

     16. MISCELLANEOUS.

          16.1 Binding Effect. This Agreement shall bind and inure to the
benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.

          16.2 Further Acts. Each party agrees to perform any further acts and
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.

          16.3 Amendment. This Agreement may be amended at any time by the
written agreement of the Company and the Purchaser.

          16.4 Syntax. Throughout this Agreement, whenever the context so
requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.

          16.5 Interpretation. Any conflict between the provisions of this
Agreement and the Employment Agreement between the Company and the Purchaser
shall be governed by the Employment Agreement.

          16.6 Choice of Law. The parties hereby agree that this Agreement has
been executed and delivered in the State of California and shall be construed,
enforced and governed by the laws thereof. This Agreement is in all respects
intended by each party hereto to be deemed and construed to have been jointly
prepared by the parties and the parties hereby expressly agree


                           6-Stock Purchase Agreement
<PAGE>

that any uncertainty or ambiguity existing herein shall not be interpreted
against either of them.

          16.7 Severability. In the event that any provision of this Agreement
shall be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.

          16.8 Notices. All notices and demands between the parties hereto shall
be in writing and shall be served either by registered or certified mail, and
such notices or demands shall be deemed given and made forty-eight (48) hours
after the deposit thereof in the United States mail, postage prepaid, addressed
to the party to whom such notice or demand is to be given or made, and the
issuance of the registered receipt therefor. If served by telegraph, such notice
or demand shall be deemed given and made at the time the telegraph agency shall
confirm to the sender, delivery thereof to the addressee. All notices and
demands to Purchaser or the Company may be given to them at the following
addresses:

If to Purchaser:

            Thomas E. Kees
           
If to Company:

            Legacy Brands, Inc.
            2200-B Douglas Blvd., Suite 100
            Roseville, California 95661

Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.

          16.9 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, this
Agreement supersedes all prior and contemporaneous agreements and understandings
of the parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.

          16.10 Arbitration. In the event of any dispute arising under this
Agreement, including any dispute regarding the nature or scope of any Purchase
Rights hereunder, it is hereby


                           7-Stock Purchase Agreement
<PAGE>

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.

          16.11 Attorneys' Fees. In the event that any party to this Agreement
institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.


     IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.

                              "COMPANY"                  
                             
                              LEGACY BRANDS, INC.
                              a California corporation
                             
                             
                              By:--------------------------
                             
                             
                             
                              "PURCHASER"


                                 --------------------------
                                 Thomas E. Kees


                           8-Stock Purchase Agreement
<PAGE>

                                    EXHIBIT A

                                 PROMISSORY NOTE
<PAGE>

                                    EXHIBIT B

                             STOCK PLEDGE AGREEMENT