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period beginning May 1, 1989, based on a percentage of net sales.
The employment agreement stated that the aggregate commission for
that period would be a minimum of $200,000 and a maximum of
$900,000. In addition, paragraph 5 of the employment agreement
set forth a noncompete agreement, under which Harmony Foods
agreed to pay petitioner $500,000.
Paragraph 12.E of the employment agreement provided that it
would be construed and enforced in accordance with the laws of
the State of Washington. Petitioner participated in the
negotiation of the purchase agreement and employment agreement
and personally executed these documents. Lynch was not involved
in the drafting of these documents.
After Harmony Foods and petitioner executed the employment
agreement, petitioner began serving as an employee of Harmony
Foods. Petitioners subsequently changed the name of Washington
Chocolate to RLK Management, Inc., and in August 1989 liquidated
that corporation.
On May 31, 1990, MEI Diversified, Inc. (MEI), the parent
corporation of Harmony Foods, sold Harmony Foods to Glico Harmony
Foods Corp. (Glico). In connection with this sale, Glico,
Harmony Foods, and Glico U.S.A., Inc., the parent corporation of
Glico, entered into an assumption agreement under which Glico
assumed all of Harmony Foods' obligations under the employment
agreement, except for those relating to the noncompete agreement.
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