Agreement and Release - Legacy Brands Inc. and Steven Riccardelli
AGREEMENT AND RELEASE
[EMPLOYEE STOCK PURCHASE PLAN NOTE]
[EMPLOYMENT AGREEMENT]
This Agreement and Release ("Agreement") is made and entered into as of
the 30th day of January, 1998, by and between Steven Riccardelli ("Employee")
and Legacy Brands, Inc., a California corporation (the "Company").
R E C I T A L S
A. Employee and the Company entered into an Employment Agreement
effective as of September 1, 1996 ("Employment Date")as amended (collectively
the "Employment Agreement") to extend the effective date to September 1, 1996,
pursuant to which the Employee was granted, inter alia, the following benefits
as set forth in the specified section: Section 4.1 Basic Compensation of $80,000
per annum for the period 1996-1997, $90,000 for the period 1997-1998 and
$100,000 for the period 1998-1999; Section 4.2 providing for the payment of
formula based bonuses and Sections 4.4 and 4.5 providing for the offering to
Employee of the opportunity to purchase shares of the Company's common stock
(the "Shares") pursuant to a Restricted Stock Purchase Agreement.
B. Employee and the Company entered into a Restricted Stock Purchase
Agreement dated as of October 18, 1995 pursuant to which Employee purchased
60,000 Shares on the terms and conditions set forth in the Agreement and certain
documents referenced therein, including, without limitation, the Company's
Employee Stock Purchase Plan ("Stock Purchase Plan"), and, in consideration for
the purchase of the Shares, Employee executed a promissory note, dated as of
October 18, 1995, (the "Stock Purchase Note") to the Company. Thereafter,
Employee became vested as to the obligation with respect to 45,000 shares
and interest of $5,096 has become due and payable.
C. Primarily as a result of the Company's inability to conclude the
initial underwritten public offering of its securities originally scheduled to
be completed during the second quarter of 1997 or otherwise obtain sufficient
capital to fully implement its business plan pursuant to a private placement
terminated on November 27, 1997, none of the required increases in compensation
as provided for in Sections 4.4 and 4.5 of the Employment Agreement or bonuses
provided for in Section 4.2 have been paid to Employee.
D. The Company desires to provide adequate incentives to retain the
services of Employee. One such incentive is the forgiveness of any obligations
of the Employee under the Stock Purchase Note and any stock pledge or other
security agreement which the Employee may have executed in favor of the Company
in connection with the Stock Purchase Note or pursuant to the Stock Purchase
Plan.
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NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Employee and the Company hereby agree as follows:
1. Release.
The Company hereby releases, acquits and forever discharges the
Employee and its agents, successors and assigns from any and all costs, damages,
expenses, obligations, liabilities, claims, actions, rights, demands and/or
causes of action of any kind or nature (including, but not limited to, actual
attorneys' fees and costs, and court costs) which the Company has or may have
against Employee arising out of or in connection with the Stock Purchase Note,
including, without limitation, the obligation to pay any principal or accrued
but unpaid interest thereon in the aggregate amount of $155,096.
2. Vesting of Shares.
The Company hereby agrees that the Shares are fully vested in the
Employee, and the Company hereby waives and releases any security interest in or
other restriction (other than restrictions resulting from applicable federal and
state securities laws) imposed by the Company on the Shares, including, without
limitation, any stock pledge agreement executed by the Employee in connection
with the Stock Purchase Note.
3. Representations of the Company.
The Company hereby represents and warrants to Employee that no
other person or entity has any right, title or interest in the Stock Purchase
Note. The Company further represents and warrants that the Company has the full
right, power and authority to enter into this Agreement.
4. Acknowledgments of Employee.
Employee hereby acknowledges that the release by the Company of
the Stock Purchase Note will be treated by the Company for federal and state tax
purposes as the payment by the Company to Employee of compensation equal to the
amount of outstanding principal and interest under the Stock Purchase Note. Such
treatment may have a substantial impact upon Employee's federal and state tax
liability.
EMPLOYEE HEREBY ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY THE COMPANY TO SEEK THE
ADVICE OF INDEPENDENT LEGAL AND TAX COUNSEL, AND HAS BEEN GIVEN THE OPPORTUNITY
TO SEEK SUCH ADVICE WITH RESPECT TO THE TAX CONSEQUENCES OF THIS AGREEMENT.
SR
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Acknowledgment
5. Amendment of Employment Agreement
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The compensation schedule set forth in Section 4.1 of the Employment
Agreement is hereby amended to read as follows:
<CAPTION>
For the
Period: Amount
--------- -------
1996-1999 $80,000
All Shares issued pursuant to Sections 4.5 and 4.6 have been fully paid
as of the date of this Agreement and the Stock Purchase Note deemed paid in
full.
6. WAIVER.
Each of the Company and the Employee hereby agree to waive any
claims which either may have against the other with respect only to the specific
matters which are set forth in this Agreement pertaining only to any matters
pertaining to the Employee Stock Purchase Plan and the participation therein by
Employee, the issuance of the stock by the Company to Employee and the tax
consequences which might arise out of the release of liability under the Stock
Purchase Note as set forth herein.
EACH OF THE COMPANY AND EMPLOYEE HEREBY EXPRESSLY WAIVES THE
PROVISIONS OF CALIFORNIA CIVIL CODE Section 1542, WHICH PROVIDES:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
EMPLOYEE HEREBY ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY THE COMPANY TO SEEK THE
ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS BEEN GIVEN THE OPPORTUNITY TO SEEK
SUCH ADVICE WITH RESPECT TO THE FOREGOING WAIVERS, AND THE RELEASE SET FORTH IN
PARAGRAPH 1 ABOVE, AND UNDERSTANDS AND AGREES TO THE TERMS SET FORTH HEREIN, AND
WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, AND ANY SUCCESSOR
STATUTE, CODE, LAW OR REGULATION, TO THE FULLEST EXTENT SUCH RIGHTS AND BENEFITS
MAY BE WAIVED.
7. Miscellaneous.
(a) Governing Law.This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(b) Further Assurances. The parties hereby agree to execute such
further documents and instruments, and perform such other actions, as may be
reasonably necessary or appropriate to carry out the intentions of the parties
with respect to this Agreement.
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(c) Counterparts; Facsimile. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument. This Agreement may
be delivered by executed facsimile transmission, which shall be deemed an
original.
(d) Attorneys' Fees. Should any dispute arise between the parties
hereto, or their legal representatives, successors or assigns, concerning any
provision of this Agreement or the rights or duties of any party in relation
thereto, the party prevailing in such dispute shall be entitled, in addition to
any other relief that may be granted, to recover actual attorneys' fees and
costs, and court costs, in connection with any such dispute.
IN WITNESS WHEREOF, Employee and the Company have executed this
Agreement as of the date first above written.
EMPLOYEE COMPANY
LEGACY BRANDS, INC.
By:
/s/ STEVEN RICCARDELLI /s/ THOMAS E. KEES
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Steven Riccardelli Thomas E. Kees
President & Chief Executive Officer