Sample Business Contracts


Employment Agreement - Legacy Brands Inc. and Michael E. Banks

Employment Forms

  • Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
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  • 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.
  • 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.
  • 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 10/30, 1996, hereinafter referred to as the
"Agreement", is by and between Legacy Brands, Inc. hereinafter referred to as
the "Employer", and Michael E. Banks, 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 Senior Vice President of Marketing and
Sales of the Employer for a period of three (3) years (the "Term") beginning on
September 1, 1996 (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 Senior Vice President of Marketing and Sales,
Employee shall be responsible for all facets of marketing and sales of the
Employee including overall direction, creation and implementation of a sales
plan, marketing and advertising. The Employee shall also work closely with other
executives, brokers and marketing agencies to facilitate placement and
sell-through of all products. The parties hereto agree that the Employee's
services are unique. Other duties shall include, but are not limited to, working
towards Employer's future success, and working closely with the other executives
in evaluating the acquisition of additional licenses and public financing of the
Employer. Notwithstanding the preceding provisions of this Article 2.1, the
Chief Executive Officer ("CEO") shall have the right to reassign the Employee to
such duties as he deems fit and proper in his sole discretion during the term
hereof so long as such reassignment is consistent with the Employee's general
responsibilities under this Agreement. Such reassignment shall not constitute
termination.

      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

<PAGE>   2

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL E. BANKS
Page 2

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.

      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.

      The Employee may perform certain marketing functions unrelated to his
position as Senior Vice President of Marketing and Sales outside of the
Employer's principal place of business so long as these activities are approved
by the CEO of the Employer and so long as they do not interfere with the
Employee's duties under this Agreement.

      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.

<PAGE>   3

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL E. BANKS
Page 3

                                    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 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 such costs, the Employee agrees to
cooperate fully in the investigation and defense of any such claim.

                                    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:


<CAPTION>
              For the
              Period:                                      Amount
            -----------                                  ---------
                                                           
            1996-1997.................................   $120,000;
            1997-1998.................................   $132,000,
            1998-1999.................................   $145,000;


            The amount of Employee's actual compensation, including Annual Base
Salary and benefits, may be increased by the Chief Executive Officer ("CEO") 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 Chief Executive Officer (CEO) and shall be calculated based upon
a formula comprised 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 40%
of his

<PAGE>   4
EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL E. BANKS
Page 4

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 40% of the Annual Base Salary. If the target
profit amount is exceeded by 1% to 10%, the bonus shall be 40% plus 2% of the
Annual Base Salary for each percentage point over 100%. If the target profit
amount is exceeded by 111% up to a ceiling of 150%, the bonus shall be 60% of
the Annual Base Salary plus 3% of the Annual Base Salary for each percentage
point over 110%. Such bonus shall be calculated 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 the
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 Company receives
audited financial statements. Any adjustments will be made at the time of the
third payment. Any overpayments will be offset in the first and subsequent bonus
payments in 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 the 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. The Employer shall use its best efforts to procure
and maintain a group health insurance policy which shall provide the customary
benefits to the Employee, as well as any other benefits approved by the CEO. If
and when such benefits are provided to the Employee, the Employer agrees to
maintain such benefits for the remaining term of this Agreement.

     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 upon the Employee's continued employment with Employer. In
the event of a change in control resulting in a merger or acquisition, the
Employee shall be granted securities of the new entity and adjusted to assure no
dilution of the Employee's ownership in the Employer.

<PAGE>   5

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL E. BANKS
Page 5

      4.6 Vesting. The Employee is entitled to receive annually, but based on a
quarterly calculation, a certificate of vesting, in the form attached hereto as
Exhibit A, from the Employer representing the completion of twelve months of
service under this Agreement calculated from February 1, 1996, which the
Employee shall deliver to the Pledge Holder 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 February 1, 1996 and delivery of
the 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 February 1, 1998. The Employee shall not have the
right to dispose of all of the Shares or the obligation to pay, or otherwise
satisfy, the principal amount and interest under the promissory Note until
February 1, 1999.

      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, or
upon the sale of the business, or change in CEO vesting will be determined
according to Article 6.5. Any corresponding payments under the Promissory Note
that have not been made will be due thirty days from the date of such
termination. Failure to pay within thirty days will subject the Shares to
repurchase by the Employer.

      4.7 Vacation. Employee shall be entitled to vacation of up to fifteen (15)
calendar days per year, for the first year of this agreement and twenty (20)
calendar days per year for years two and three. Such vacation time 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

<PAGE>   6

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL E. BANKS
Page 6

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
to 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 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 Chief Executive Officer 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
<PAGE>   7

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL E. BANKS
Page 7

            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 pursuant to this Article
6.3, the Employer shall have the option to compensate the Employee pursuant to
this Agreement for a period of up to two months from the date of such
termination. If the Employer decides to compensate the Employee pursuant to this
Article, the Employee shall have the following duties and obligations for the
period so compensated: i) to cooperate with the Employer by providing consulting
services on site at any site reasonably required by the Employer, ii) to not
engage in any course of conduct which competes, directly or indirectly, with the
business of the Employer, iii) to keep confidential all of the Employer's trade
secrets, confidential information, knowledge or data, and iv) return all
confidential material to the Employer.

      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 for as long as the CEO shall deem proper which in no event shall be
less than two months from the date of termination. The Employee shall continue
to be bound by Article 5 hereof.

            If the Employer compensates the Employee pursuant to this Article
6.4, the Employee shall have the following duties and obligations for the period
so compensated: i) to cooperate with the Employer by providing consulting
services on site at any site reasonably required by the Employer, ii) to not
engage in any course of conduct which competes, directly or indirectly, with the
business of the Employer, iii) to keep confidential all of the Employer's trade
secrets, confidential information, knowledge or data, and iv) return all
confidential material to the Employer.

      6.5 Termination of Employee Upon Sale of Business; Change in CEO. This
Agreement shall survive a merger, consolidation or other business combination,
or change in the current CEO, Thomas E. Kees, for the longer of the remaining
term of this Agreement or one year. In the event

<PAGE>   8

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL E. BANKS
Page 8

of a merger, consolidation or other business combination, or change in CEO, the
Employer shall:

            6.5.1 Pay the Employee salary under the terms of this Agreement and
            may choose, at Employer's sole discretion, to utilize the services
            of the Employee on a consultant or independent contractor basis;

            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 to
utilize his services as a consultant.

      6.9 Administrative Leave. CEO shall have the right to place any Employee
on Administrative Leave for a period of up to four weeks, which shall be paid or
unpaid at the sole discretion of the CEO, during which time the Employee shall
not discharge his duties to the Employer. In the event the Employee is placed on
unpaid leave pursuant to this Article 6.9, then at the end of thirty days from
the date of effectiveness of such leave CEO shall make a determination as to
Employee's status resulting in either termination or continued employment.

                                    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

<PAGE>   9
EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL, E. BANKS
Page 9

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 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:

               Michael E. Banks
               2840 Ketchikan Drive
               Rocklin, California 95765

      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

<PAGE>   10
EMPLOYMENT AGREEMENT
LEGACY BRANDS. INC. AND
MICHAEL, E. BANKS
Page 10

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 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 CEO. 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>   11

EMPLOYMENT AGREEMENT
LEGACY BRANDS, INC. AND
MICHAEL, E. BANKS
Page 11

      IN WITNESS WHEREOF, the parties have executed this Agreement at the
Employer's offices in Roseville, California, this 30th day of Oct., 1996.

EMPLOYER:

LEGACY BRANDS, INC.

By:    /s/ THOMAS E. KEES
       ------------------------------
Name:  THOMAS E. KEES
Title: PRES., CEO & CHAIRMAN

EMPLOYEE:

By:    /s/ MICHAEL E. BANKS
       ------------------------------
       Michael E. Banks

<PAGE>   12

                                   EXHIBIT A

                             CERTIFICATE OF VESTING

<PAGE>   13


                             CERTIFICATE OF VESTING

      The: Secretary, or Assistant Secretary of Legacy Brands, Inc., ("Company")
does this ___th of ___________, certify that ___________________, an employee
of the Company, has completed _____ quarters of employment. The Employee has the
right to purchase _________ shares of Common Stock of the Company.

      The issuance of this certificate creates an obligation in the Employee to
pay such principal amount plus interest as bears relation to the portion of the
shares of Common Stock of the Company which he is entitled to dispose of
pursuant to the terms of the Employment Agreement, Restricted Stock Purchase
Agreement and related Promissory Note.

      The undersigned certifies that the foregoing is true and accurate.

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



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