Exhibit 10.1
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 27th  day of
February, 2012, by and between Gallery Management Holding Corp., a Colorado
corporation (the “Company”), and R. Patrick Garrett (“Executive”).
 
RECITALS
 
A. The Company has determined that it is in the best interests of the Company
that, as of the effective date of this Agreement, the Company employs Executive
under the terms and conditions hereinafter set forth.
 
B. Executive desires to be employed by the Company under the terms and
conditions hereinafter set forth.
 
AGREEMENT
 
NOW, THEREFORE, in accordance with the recitals set forth above and AS
CONSIDERATION for the representations, warranties, covenants and agreements set
forth in this Agreement, as well as for other good and valuable consideration
the receipt and sufficiency of which hereby are acknowledged, the Company and
Executive hereby agree as follows:
 
1. Recitals an Integral Part of Agreement
 
The recitals set forth above are and for all purposes shall be interpreted as
being an integral part of this Agreement, constituting acknowledgments and
agreements by and between the parties hereto, and are incorporated in this
Agreement by this reference.
 
2. Employment
 
Subject to the terms and conditions set forth in this Agreement, the Company
hereby employs Executive, and Executive hereby accepts employment with the
Company, as the Company’s Chief Executive Officer (“CEO”) effective as of
February 27, 2012 (the “Effective Date”).
 
3. Term
 
The term of Executive’s employment under this Agreement shall commence effective
as of the Effective Date and shall continue for a period of three (3)
consecutive years (the “Term”), unless earlier terminated as herein provided or
by operation of law. Thereafter, this Agreement and the Term shall be extended
automatically for successive one (1) year periods unless terminated in
accordance with the terms of this Agreement or unless either party hereto, not
less than three (3) months before the commencement of any such one (1) year
extension period, notifies the other party hereto that this Agreement will
expire at the end of the current Term or extension, as the case may be. For all
purposes of this Agreement, the defined term “Term” shall include and be deemed
to include all extensions of this Agreement and the Term as set forth in this
Section 3. This Agreement may be terminated earlier as hereinafter provided.

 
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4. Duties and Services
 
Executive shall perform such duties and functions as Executive is instructed to
perform from time to time by the Board of Directors of the Company (the “Board
of Directors”) that are reasonably within the scope of the job description of
CEO. In the performance of Executive’s duties, Executive shall work full-time
and shall comply with the policies of the Company and be subject to the
direction of the Board of Directors.
 
At all times during the Term, Executive shall perform Executive’s duties and
obligations under this Agreement faithfully and diligently, shall devote all of
Executive’s business time, attention, abilities and efforts exclusively to the
business of the Company and shall not accept other employment or engage in any
other outside business activity that interferes with the performance of
Executive’s duties and responsibilities under this Agreement or involves actual
or potential competition with the business of the Company. Executive shall
perform industriously Executive’s duties under the supervision of and report to
the Board of Directors and shall accept and comply with all directions from and
all policies from time to time established by the Board of Directors.
 
Executive shall not directly or indirectly render any service of a business,
commercial or professional nature to any other person, entity or organization,
whether for compensation or otherwise, without the prior consent of the Board of
Directors; provided, however, that the foregoing shall not preclude Executive
from (a) serving on boards of trade associations or charitable organizations and
(b) engaging in charitable activities and community affairs, provided that such
directorships and activities do not interfere with the proper performance of
Executive’s duties and responsibilities under this Agreement.
 
In keeping with the Executive’s fiduciary duties to the Company, the Executive
agrees that he shall not, directly or indirectly, become involved in any
conflict of interest, or upon discovery thereof, allow such a conflict to
continue. Moreover, the Executive agrees that he shall promptly disclose to the
Board any facts which might involve any reasonable possibility of a conflict of
interest, or be perceived as such. Circumstances in which a conflict of interest
on the part of the Executive would or might arise, and which should be reported
immediately by the Executive to the Board, include the following: (i) ownership
of a material interest in, acting in any capacity for, or accepting directly or
indirectly any payments, services or loans from a supplier, contractor,
subcontractor, customer or other entity with which the Company does business;
(ii) misuse of information or facilities to which the Executive has access in a
manner which will be detrimental to the Company’s interest; (iii) disclosure or
other misuse of Confidential Information (as defined in Section 14);
(iv) acquiring or trading in, directly or indirectly, other properties or
interests connected with the design, manufacture or marketing of products
designed, manufactured or marketed by the Company; (v) the appropriation to the
Executive or the diversion to others, directly or indirectly, of any opportunity
in which it is known or could reasonably be anticipated that the Company would
be interested; and (vi) the ownership, directly or indirectly, of a material
interest in an enterprise in competition with the Company or its dealers and
distributors or acting as a director, officer, partner, consultant, employee or
agent of any enterprise which is in competition with the Company or its dealers
or distributors.

 
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If, at any time during the Term, Executive is a director of the Company, or is
elected or appointed as a director of the Company, Executive shall serve in such
capacity without additional compensation. At the request of the Board of
Directors or the board of directors of one or more subsidiaries of the Company
(individually, a “Subsidiary,” and, collectively, “Subsidiaries”) or of any
affiliate of the Company (individually, an “Affiliate,” and, collectively,
“Affiliates”), Executive shall serve during the Term as a director of any such
Subsidiary or Affiliate without additional compensation; and, in the performance
of such duties, Executive shall comply with the policies of the board of
directors of each such Subsidiary and Affiliate. Unless the context otherwise
requires, for purposes of this Agreement, the term “Company” shall be deemed to
include the Company’s Subsidiaries, if any, and the Company’s Affiliates, if
any. The Company is not required by this Agreement to cause Executive’s election
or appointment as a director or officer.
 
5. Base Salary; Accrued Salary.
 
(a) As compensation for the services rendered by Executive under this Agreement,
including all services rendered by Executive as an officer or director of the
Company (as applicable), the Company agrees to pay to Executive, and Executive
agrees to accept, a base salary in an amount of One Hundred Eighty-Five Thousand
Dollars ($185,000), as such annual salary may be increased (but not decreased)
(the “Base Salary”) by the Compensation Committee of the Board of Directors (the
“Compensation Committee”) or, if no Compensation Committee exists, by the Board
of Directors, payable on the Company’s regular payroll dates for salaried
executives, and subject to such withholdings and deductions as are required by
law. Such Base Salary shall commence as of February 1, 2012.
 
(b) In recognition of the services rendered by Executive to the business of the
Company prior to incorporation, the Company acknowledges and agrees that
Executive shall be entitled to reimbursement of pre-employment expenses in the
amount of $50,000, which amount shall be payable upon the Company’s receipt of
not less than $1,000,000 in gross proceeds from the sale of debt or equity
securities.  Executive agrees that such amount is paid in full satisfaction of
any and all expenses incurred on the Company’s behalf rendered prior to the date
hereof.
 
6. Additional Compensation.
 
(a) Stock Grant
 
In addition to the Base Salary, the Company shall grant to Executive the right
to purchase 2,445,000 shares of restricted common stock at a purchase price of
$0.001 per share, which shares shall be fully vested as of the date
hereof.  Additionally, upon effectiveness of the Company’s 2012 Stock Incentive
Plan (the “Plan”), Executive shall be granted options to purchase 2,500,000
shares of Common Stock pursuant to the Plan at an exercise price equal to the
fair market value of one share of Common Stock on the date of grant.  Such
options shall vest and become exercisable on the date of the first anniversary
of this Agreement, so long as Executive is an employee of the Company on each
such vesting date, subject to acceleration or cancellation of vesting as
provided in this Agreement.

 
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7. Other Compensation and Benefits
 
Executive shall be entitled to receive a bonus of $25,000 on the first
anniversary date of this Agreement so long as Executive remains employed as of
such date. During the Term, Executive shall be eligible to participate in and
receive other compensation and benefits provided by the Company to its senior
management personnel or its employees generally. Such benefits may include
compensation and benefits provided under any profit sharing plan, 401(k) plan,
stock option plan, stock purchase plan, pension plan, short and long-term
disability insurance plan, hospital insurance plan, major medical insurance
plan, dental insurance plan, retirement plan and group life insurance plan in
accordance with the terms of such plans, as such plans may be in effect from
time to time. The Company reserves the right, in its sole and absolute
discretion, to amend, modify or discontinue any of such benefits, in accordance
with applicable law.
 
8. Vacation
 
Executive shall accrue paid vacation each calendar year during the Term in
accordance with the Company’s vacation policy, which shall comply with the
requirements of Oregon law.
 
9. Indemnification Insurance; Indemnification
 
During the Term, for the period in which Executive is a director or officer of
the Company, the Company shall provide Executive with director’s and officer’s
liability insurance to the extent that such insurance is provided to other
directors and officers of the Company and is available at commercially
reasonable premiums. Such insurance shall be in such form, and shall provide for
such coverage and deductibles, as shall be commercially reasonable and standard
for companies in businesses and circumstances similar to those of the Company.
 
10. Reimbursement of Expenses
 
The Company shall, upon presentation of appropriate vouchers or receipts in
accordance with the Company’s customary policies and practices, promptly
reimburse Executive for reasonable out-of-pocket expenses paid for by Executive
in connection with the performance of Executive’s duties under this Agreement.
 
11. Termination.
 
(a) Termination by the Company
 
Executive’s employment under this Agreement may be terminated by the Company
giving appropriate written notice of termination upon the occurrence of any of
the following events:
 
(i) Death.  Executive’s Employment shall terminate upon his death.
 
 
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(ii) Disability. For purposes of this Agreement, the term “Disability” shall
mean the inability of Executive, due to illness, accident or any other physical
or mental impairment, to perform the essential functions of Executive’s position
under this Agreement with or without reasonable accommodation for a period of
ninety (90) days in the aggregate, whether or not consecutive, during any twelve
(12) consecutive months during the Term. The determination of whether Executive
is unable to perform the essential functions of Executive’s position with or
without reasonable accommodation shall be made by an independent physician
mutually selected by the Company and Executive within five (5) days after the
Company’s written request that Executive undergo an examination for such
purpose. If the Company and Executive are unable to agree within that time on
the identity of the physician who will perform such examination, then the
Company and Executive each shall immediately appoint a physician experienced in
evaluating the disability at issue, and the two (2) appointed physicians
together shall within ten (10) days after such appointment mutually select and
appoint a third physician, similarly qualified, to conduct such examination. If
the physicians appointed by the Company and Executive are unable to agree upon
such third physician within such ten (10) days, then the appointment of such
third physician to examine Executive shall occur in accordance with the
procedural rules of AAA. The Company shall treat any and all medical information
regarding Executive as confidential, in accordance with applicable law. The
Company and Executive acknowledge and agree that, should Executive have a
Disability as herein defined, continued employment of Executive would constitute
an undue hardship for the Company.
 
(iii) Cause. For purposes of this Agreement, the term “Cause” or “For Cause”
shall mean any of the following:
 
(A) Executive’s material breach of any provision or covenant of this Agreement,
provided that Executive first shall have received prior written notice from the
Board of Directors expressly addressed to Executive stating with specificity the
nature of such material breach and affording Executive a reasonable opportunity,
as soon as reasonably practicable, but in no event more than thirty (30) days,
to initiate appropriate action to cure the material breach complained of; or
 
(B) Executive’s material failure or refusal to perform Executive’s duties as
determined by the Board of Directors, provided that Executive first shall have
received prior written notice from the Board of Directors expressly addressed to
Executive stating with specificity the nature of such material failure or
refusal and affording Executive a reasonable opportunity, as soon as reasonably
practicable, but in no event more than thirty (30) days, to initiate appropriate
action to correct the acts or omissions complained of; or
 
(C) Executive’s material breach of any provision or covenant of the Proprietary
Information and Invention Assignment Agreement referred to in Section 15 and
attached hereto as Exhibit C; or
 
 
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(D) Executive’s conviction of, admission of guilt to or plea of nolo contendre
or similar plea (which, through lapse of time or otherwise, is not subject to
appeal) with respect to any felony or any other crime involving moral turpitude;
or
 
(E) Executive’s conviction of, admission of guilt to or plea of nolo contendre
or similar plea (which, through lapse of time or otherwise, is not subject to
appeal) with respect to any crime or offense of theft, embezzlement, fraud,
misappropriation of funds or other act of dishonesty by Executive involving
money or other property of the Company or any Subsidiary or Affiliate committed
after the date of this Agreement; or
 
(F) Any act by Executive in violation of Section 13 or any disclosure by
Executive in violation of Section 14; or
 
(G) Executive’s engagement in any transaction involving a material conflict of
interest that was not disclosed to and approved by the Board of Directors; or
 
(H) An intentional misrepresentation by the Executive that is likely to have a
material adverse impact on the business operations or financial or other
condition of the Company; or
 
(I) Unless otherwise approved by the Board of Directors, the securing by
Executive of any personal profit in connection with the Company’s business
except as contemplated by this Agreement; or
 
(J) Executive’s use of alcohol, which use interferes with the performance of
Executive’s duties under this Agreement, or Executive’s use of illegal
narcotics; or
 
(K) Executive’s violation of any Company policy, including any Company policy
relating to discrimination or harassment; or
 
(L) Executive’s engagement in any violation of law in Executive’s capacity as
CEO of the Company or any breach by Executive of Executive’s duty of loyalty to
the Company.
 
(b) Good Reason Termination by Executive
 
Executive may terminate Executive’s employment under this Agreement, for Good
Reason or without Good Reason, effective thirty (30) days after Executive’s
delivery to the Company of written notice of such termination. For purposes of
this Agreement, “Good Reason” means and shall exist if, without Executive’s
express written consent, (i) the Company substantially reduces Executive’s
duties and responsibilities such that it results in a material adverse reduction
in Executive’s position, authority or responsibilities, and the Company fails to
cure such reduction in duties and responsibilities within twenty (20) days after
Executive gives to the Company written notice specifying the particular acts
objected to and the specific cure requested or (ii) the Company breaches any
material term of this Agreement and fails to cure such breach within thirty (30)
days after receipt of written notice from Executive.
 
 
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(c) Merger, Consolidation, Reorganization or Sale of Assets
 
This Agreement shall not be terminated either (i) upon or by any merger,
consolidation, reorganization or similar transaction in which the Company is not
the surviving or resulting corporation or entity or (ii) upon or by any transfer
of all or substantially all of the assets of the Company. Upon any such merger,
consolidation, reorganization or similar transaction, or upon any such transfer
of assets, the terms and provisions of this Agreement shall be binding on and
shall inure to the benefit of the surviving or resulting corporation or other
entity or the corporation or other entity to which such assets are so
transferred; provided, however, all shares of restricted stock, options to
purchase shares and other equity awards subject to vesting shall immediately
vest and shall become exercisable upon the closing of any transaction referred
to above.
 
(d) Resignation as Director and Officer
 
In the event of any termination under this Section 11 of Executive’s employment
under this Agreement, Executive agrees that he shall be deemed to have resigned
voluntarily as a director and officer of the Company or any of its Subsidiaries
or Affiliates if Executive was serving in such capacity at the time of
termination.
 
(e) Return of Company Documents
 
In the event of any termination of Executive’s employment under this Agreement,
Executive shall before or on the date of such termination deliver to the Company
(and shall not keep in Executive’s possession or deliver to anyone else) all
devices, records, data, notes, reports, proposals, lists, customer lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property or reproductions of any of the
aforementioned items belonging to the Company, its Subsidiaries, its Affiliates,
its successors or its assigns; provided, however, that Executive shall have the
right to retain in Executive’s possession examples of Executive’s documentary
work product that contains no Confidential Information (as defined in
Section 14(a)) as determined by the Board of Directors, such determination of
the Board of Directors constituting a pre-condition to such right of retention.
On the date of termination of Executive’s employment with the Company under this
Agreement, Executive shall sign and deliver to the Company the “Termination
Certification” attached hereto as Exhibit A.
 
(f) Survival
 
The termination of Executive’s employment under this Agreement shall not affect
the enforceability of Sections 12, 13, 14 and 15.
 
 
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12. Compensation Upon Termination
 
(a) Upon Termination Upon Death
 
. If Executive’s employment is terminated upon Executive’s death in accordance
with Section 11(a), then, in exchange for execution of a general release and
waiver (a copy of which is attached hereto as Exhibit B), the Company will pay
Executive’s spouse, heirs, estate or personal representative, as the case may
be, an amount (the “Death Severance Payment”) equal to six (6) months’ Base
Salary in effect on the date of termination plus reimbursement, under
Section 10, for business expenses incurred by Executive up to the date of
termination. The Death Severance Payment will be paid within sixty (60) days
after the Company’s receipt of the executed general release and waiver. The
Death Severance Payment is in addition to payment of Base Salary earned and
payment of any unused accrued vacation through and including the date of
termination. Upon Executive’s death, all vesting of any restricted stock,
options or other equity awards shall immediately cease.
 
The Death Severance Payment shall constitute Executive’s sole right and
exclusive remedy in the event of such termination of Executive’s employment, and
upon payment by the Company of the Death Severance Payment, all other rights or
remedies otherwise available shall cease immediately, and the Company shall have
no further obligations to Executive under this Agreement, except that Executive
shall have the right to exercise all benefits that have vested as of the date of
termination to which Executive is entitled under any compensation or employee
benefit plan of the Company in accordance with the terms and provisions of such
compensation or employee benefit plan, all other documents and agreements that
give rise to or otherwise govern such vested benefits and all applicable laws
and regulations.
 
(b) Upon Termination Upon Disability
 
. If Executive’s employment is terminated upon Executive’s Disability in
accordance with Section 11(a), then, in exchange for execution of a general
release and waiver (a copy of which is attached hereto as Exhibit B), the
Company will pay Executive an amount (the “Disability Severance Payment”) equal
to six (6) months’ Base Salary in effect on the date of termination plus
reimbursement, under Section 10, for business expenses incurred by Executive up
to the date of termination; provided, however, that, the Disability Severance
Payment shall be reduced by the sum of the amounts, if any, payable to Executive
at or before the time of the Disability Severance Payment under any disability
benefit plan or program of the Company. The Disability Severance Payment will be
paid within sixty (60) days after the Company’s receipt of the executed general
release and waiver. The Disability Severance Payment is in addition to payment
of Base Salary earned and payment of any unused accrued vacation through and
including the date of termination.  Upon any termination for Disability, all
vesting of any restricted stock, options or other equity awards shall
immediately cease.

 
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Except for workers’ compensation benefits to which Executive may be entitled,
the Disability Severance Payment shall constitute Executive’s sole right and
exclusive remedy in the event of such termination of Executive’s employment, and
upon payment by the Company of the Disability Severance Payment, all other
rights or remedies otherwise available shall cease immediately, and the Company
shall have no further obligations to Executive under this Agreement, except that
Executive shall have the right to exercise all benefits that have vested as of
the date of termination to which Executive is entitled under any compensation or
employee benefit plan of the Company in accordance with the terms and provisions
of such compensation or employee benefit plan, all other documents and
agreements that give rise to or otherwise govern such vested benefits and all
applicable laws and regulations.
 
(c) Upon Termination For Cause
 
. If the Company terminates Executive’s employment For Cause in accordance with
Section 11(a), then Executive will receive payment of Base Salary earned and
payment of any unused accrued vacation through and including the date of
termination and any accrued but unpaid expense reimbursement (the “For Cause
Payment”).  Upon any termination for Cause, all vesting of any restricted stock,
options or other equity awards shall immediately cease.
 
The For Cause Payment shall constitute Executive’s sole right and exclusive
remedy in the event of such termination of Executive’s employment, and upon
payment by the Company of the For Cause Payment, all other rights or remedies
otherwise available shall cease immediately, and the Company shall have no
further obligations to Executive under this Agreement, except that Executive
shall have the right to exercise all benefits that have vested as of the date of
termination to which Executive is entitled under any compensation or employee
benefit plan of the Company in accordance with the terms and provisions of such
compensation or employee benefit plan, all other documents and agreements that
give rise to or otherwise govern such vested benefits and all applicable laws
and regulations.
 
(d) Upon Voluntary Termination by Executive
 
. If Executive voluntarily terminates Executive’s employment in accordance with
Section 11(b) for Good Reason, then, in exchange for execution of a general
release and waiver (a copy of which is attached hereto as Exhibit B), the
Company will pay Executive an amount (the “Good Reason Voluntary Termination
Severance Payment”) equal to six (6) months’ Base Salary in effect on the date
of termination plus reimbursement, under Section 10, for business expenses
incurred by Executive up to the date of termination. The Good Reason Voluntary
Termination Severance Payment will be paid within sixty (60) days after the
Company’s receipt of the executed general release and waiver. The Good Reason
Voluntary Termination Severance Payment is in addition to payment of base salary
earned and payment of any unused accrued vacation through and including the date
of termination. Upon any termination by Executive for Good Reason, all shares of
restricted stock, options and other equity awards subject to vesting shall
immediately vest and shall become exercisable.
 
 
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If Executive voluntarily terminates Executive’s employment in accordance with
Section 11(b) without Good Reason, then Executive will receive payment of Base
Salary earned and payment of any unused accrued vacation through and including
the date of termination and any accrued but unpaid expense reimbursement through
the date of termination (the “Without Good Reason Voluntary Termination
Severance Payment”).
 
In either event, the Good Reason Voluntary Termination Severance Payment or the
Without Good Reason Voluntary Termination Severance Payment, as the case may be,
shall constitute Executive’s sole right and exclusive remedy in the event of
such termination of Executive’s employment, and upon payment by the Company of
either the Good Reason Voluntary Termination Severance Payment or the Without
Good Reason Voluntary Termination Severance Payment, as the case may be, all
other rights or remedies otherwise available shall cease immediately, and the
Company shall have no further obligations to Executive under this Agreement,
except that Executive shall have the right to exercise all benefits that have
vested as of the date of termination to which Executive is entitled under any
compensation or employee benefit plan of the Company in accordance with the
terms and provisions of such compensation or employee benefit plan, all other
documents and agreements that give rise to or otherwise govern such vested
benefits and all applicable laws and regulations.
 
(e) Upon Termination Other Than Upon Death or Disability or For Cause or Upon
Voluntary Termination
 
. If Executive’s employment is terminated by the Company other than pursuant to
Section 11(a) and upon termination by Executive pursuant to Section 11(b), then,
in exchange for execution of a general release and waiver (a copy of which is
attached hereto as Exhibit B), the Company will pay Executive an amount (the
“Without Cause Severance Payment”) equal to four (4) months’ Base Salary in
effect on the date of termination plus reimbursement, under Section 10, for
business expenses incurred by Executive up to the date of termination. The
Without Cause Termination Severance Payment will be paid within sixty (60) days
after the Company’s receipt of the executed general release and waiver. The
Without Cause Termination Severance Payment is in addition to payment of Base
Salary earned and payment of any unused accrued vacation through and including
the date of termination.  Upon any termination under this Section 12(e), all
restricted shares, options and other equity awards subject to any vesting
restrictions shall immediately vest and become exercisable.
 
The Without Cause Severance Payment shall constitute Executive’s sole right and
exclusive remedy in the event of such termination of Executive’s employment, and
upon payment by the Company of the Without Cause Severance Payment, all other
rights or remedies otherwise available shall cease immediately, and the Company
shall have no further obligations to Executive under this Agreement, except that
Executive shall have the right to exercise all benefits that have vested as of
the date of termination to which Executive is entitled under any compensation or
employee benefit plan of the Company in accordance with the terms and provisions
of such compensation or employee benefit plan, all other documents and
agreements that give rise to or otherwise govern such vested benefits and all
applicable laws and regulations.
 

 
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(f) Exclusivity of Payments
 
. Upon termination of Executive’s employment under this Agreement, Executive
shall not be entitled to any severance payment or severance benefit from the
Company other than the payments and benefits provided in this Section 12.
 
(g) Withholding of Taxes; Tax Reporting
 
. The Company may withhold from any amount payable under this Agreement all such
federal, state, city and other taxes and may file with appropriate governmental
authorities all such information, returns or other reports with respect to the
tax consequences of any amount payable under this Agreement as may in the
Company’s reasonable judgment be required.
 
(h) Section 280G
 
. Anything in this Agreement to the contrary notwithstanding, Executive’s
payments and benefits under this Agreement and all other arrangements or
programs shall not, in the aggregate, exceed the maximum amount that may be paid
to Executive without triggering golden parachute penalties under Section 280G
and related provisions of the Internal Revenue Code of 1986, as amended, as
determined in good faith by the Company’s independent auditors. If Executive’s
benefits must be cut back to avoid triggering such penalties, then Executive’s
benefits shall be cut back in the priority order that Executive designates or,
if Executive fails to designate promptly such an order, in the priority order
that the Company designates. Executive and the Company shall cooperate
reasonably with each other in connection with any administrative or judicial
proceeding about the existence or amount of golden parachute penalties on
payments or benefits that Executive receives from the Company.
 
(i) Compliance with Section 409A.  Executive and the Company agree that, to the
to the extent that the payments made pursuant to this Section 12 are taxable to
the Executive and are not otherwise exempt from Section 409A, if the Executive
is a Specified Employee, any amounts to which the Executive would otherwise be
entitled under this Section 12 during the first six months following the date of
the Executive’s Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation
From Service, with interest thereon at an annual rate equal the London Interbank
Offered Rate plus two percent (2%). For purposes of this Agreement, the term
“Separation From Service” shall have the meaning ascribed to such term in
Section 409A. The term “Specified Employee” means a person who is a “specified
employee” within the meaning of Section 409A, taking into account the elections
made and procedures established in resolutions adopted by the Board of
Directors.  Neither the Executive nor his estate shall be permitted to specify
the taxable year in which a payment described in this Section 12 shall be paid.
 
13. Covenants

(a) Noncompetition. During the Term and for a period of two (2) years following
the date of termination regardless of the reason (such period following the
Term, the “Restricted Period”), the Executive shall not engage in Competition,
as defined below, with the Company; provided, that it shall not be a violation
of this Section 13 for the Executive to become the registered or beneficial
owner of up to five percent (5%) of any class of the capital stock of a
corporation registered under the Securities Exchange Act of 1934, as amended,
provided that the Executive does not actively participate in the business of
such corporation until such time as this covenant expires.
 

 
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For purposes of this Agreement, “Competition” by the Executive means the
Executive’s engaging in, or otherwise directly or indirectly being employed by
or acting as a consultant or lender to, or being a director, officer, employee,
principal, agent, stockholder, member, owner or partner of, or permitting his
name to be used in connection with the activities of any other business or
organization which competes, directly or indirectly, with the business of the
Company as the same shall be constituted at any time during the Term.
 
(b) Solicitation of Employees
 
.  During the Restricted Period, the Executive agrees that he will not, directly
or indirectly, for his benefit or for the benefit of any other person, firm or
entity, do any of the following:

(i) solicit from any customer doing business with the Company as of the date of
termination that is known to Executive, business of the same or of a similar
nature to the business of the Company with such customer;
 
(ii) solicit from any potential customer of the Company that is known to the
Executive business of the same or of a similar nature to that which has been the
subject of a known written or oral bid, offer or proposal by the Company, or of
substantial preparation with a view to making such a bid, proposal or offer,
within six (6) months prior to such Date of Termination;
 
(iii) solicit the employment or services of any person who was known to be
employed by or was a known consultant to the Company upon the Date of
Termination, or within six (6) months prior thereto; or
 
(iv) otherwise knowingly interfere with the business or accounts of the Company.
 
The Executive and the Company agree and acknowledge that the Company has a
substantial and legitimate interest in protecting the Company’s Confidential
Information and goodwill. The Executive and the Company further agree and
acknowledge that the provisions of this Section 13 are reasonably necessary to
protect the Company’s legitimate business interests and are designed to protect
the Company’s Confidential Information and goodwill.
     
The Executive agrees that the scope of the restrictions as to time, geographic
area, and scope of activity in this Section 13 are reasonably necessary for the
protection of the Company’s legitimate business interests and are not oppressive
or injurious to the public interest. The Executive agrees that in the event of a
breach or threatened breach of any of the provisions of this Section 13 the
Company shall be entitled to injunctive relief against the Executive’s
activities to the extent allowed by law, and the Executive waives any
requirement for the posting of any bond by the Company in connection with such
action. The Executive further agrees that any breach or threatened breach of any
of the provisions of Section 13 would cause injury to the Company for which
monetary damages alone would not be a sufficient remedy.

 
Exhibit 10.1 -- Page 12

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(c) Enforceability
 
. The covenants set forth in Sections 13(a) and 13(b) shall be construed as an
agreement independent of any other provision of this Agreement, and the
existence of any claim or cause of action of Executive against the Company or
against any of its Subsidiaries or Affiliates, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of any of such covenants. Executive expressly waives any right to assert
inadequacy of consideration as a defense to enforcement of any of the provisions
of this Section 13. Executive and the Company hereby acknowledge that it is the
desire and intent of Executive and the Company, and Executive and the Company
hereby agree, that the terms and provisions of this Section 13 shall be enforced
to the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought.
 
Publicity. The Executive agrees that the Company may use, and hereby grants the
Company the nonexclusive and worldwide right to use, the Executive’s name,
picture, likeness, photograph, signature or any other attribute of the
Executive’s persona (all of such attributes are hereafter collectively referred
to as “Persona”) in any media for any advertising, publicity or other purpose at
any time, either during or subsequent to his employment by the Company. The
Executive agrees that such use of his Persona will not result in any invasion or
violation of any privacy or property rights the Executive may have; and the
Executive agrees that he will receive no additional compensation for the use of
his Persona. The Executive further agrees that any negatives, prints or other
material for printing or reproduction purposes prepared in connection with the
use of his Persona by the Company shall be and are the sole property of the
Company.
 
14. Confidentiality
 
(a) Covenants
 
. Executive acknowledges and agrees that Executive has been and will continue to
be entrusted with trade secrets and proprietary information regarding Inventions
(as defined in the Proprietary Information and Invention Assignment Agreement
attached hereto as Exhibit C), the products, processes, know-how, designs,
formulas, marketing techniques and future business plans, customer lists and
information concerning the identity, needs and desires of actual and potential
customers of the Company, its Subsidiaries or its Affiliates, competitive
analyses, pricing policies, the substance of agreements with customers and
others, marketing or concession arrangements, servicing and training programs
and arrangements, developmental or experimental work, improvements, inventions,
formulas, ideas, designs, computer programs, data bases, other original works of
authorship, financial information or other subject matter pertaining to any
business of the Company or any of its Subsidiaries, Affiliates, consultants or
licensees and all documents embodying such confidential information
(collectively, “Confidential Information”), all of which derives significant
economic value from not being generally known by others outside the Company. In
connection with the foregoing, Executive specifically acknowledges (a) that the
customer lists of the Company are confidential and not readily known by the
Company’s competitors, (b) that such customers are particularly important to the
Company’s business, (c) that business relationships between such customers and
the Company normally would continue unless interfered with and (d) that
solicitation of such customers by Executive, following termination of
Executive’s employment under this Agreement, would cause injury to the Company’s
business.
 
During the Term and thereafter during the Restricted Peiod, except for the sole
benefit of the Company or with the express written consent of the Board of
Directors, Executive shall not at any time, directly or indirectly, disclose to
or permit to be known by any person, firm, corporation or other form of entity
any Confidential Information acquired by Executive during the course of or as an
incident to Executive’s employment under this Agreement, or as a result of
Executive’s association with the Company or any of its Subsidiaries or
Affiliates, whether or not relating to the Company or any of its Subsidiaries or
Affiliates, the directors of the Company or its Subsidiaries or Affiliates, or
any corporation, partnership or other entity owned or controlled, directly or
indirectly, by any of the foregoing, or in which any of the foregoing has a
beneficial interest, including the business affairs of each of the foregoing,
except as required by law to be disclosed (in which case Executive first shall
give the Company written notice of such requirement reasonably in advance of
such anticipated required disclosure and shall assist the Company in obtaining a
protective order or confidential treatment to the extent requested by the
Company). Notwithstanding any of the foregoing, for purposes of this Agreement,
the term “Confidential Information” shall not include any information that was
in the public domain at the time of disclosure to Executive or that comes
lawfully into the public domain without breach of this Agreement.
 

 
Exhibit 10.1 -- Page 13

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(b) Enforceability
 
. The covenants set forth in Section 14(a) shall be construed as an agreement
independent of any other provision of this Agreement, and the existence of any
claim or cause of action of Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of any of such covenants. Executive expressly waives any right to
assert inadequacy of consideration as a defense to enforcement of any of the
provisions of this Section 14. Executive and the Company hereby acknowledge that
it is the desire and intent of Executive and the Company, and Executive and the
Company hereby agree, that the terms and provisions of this Section 14 shall be
enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
 
15. Proprietary Information and Invention Assignment Agreement
 
. As a material inducement to the Company to execute and deliver to Executive
this Agreement, and as a condition to the enforceability of this Agreement
against the Company, concurrently with Executive’s execution and delivery to the
Company of this Agreement, Executive shall execute and deliver to the Company a
Proprietary Information and Invention Assignment Agreement substantially in the
form attached hereto as Exhibit C (the “Proprietary Information and Invention
Assignment Agreement”).
 
16. Unique Nature of Services; Right to Injunction
 
. Executive acknowledges and agrees that Executive’s services under this
Agreement are unique and of extraordinary character and that it would be
extremely difficult or impossible for the Company to replace such services or
determine the damages that would result from the loss of such services.
Executive therefore agrees that the Company’s remedies at law are inadequate in
the event of any breach of this Agreement by Executive, and Executive consents
to the issuance of a temporary restraining order, preliminary and permanent
injunction and other appropriate relief to restrain any actual or threatened
violation of this Agreement, without limiting any of the other remedies that the
Company may have at law or in equity. If Executive violates or threatens to
violate any of the provisions of this Agreement, then, in addition to all other
rights and remedies that the Company may have under the terms of this Agreement
and all applicable law, the Company shall have the right to seek and obtain
equitable relief in the form of a temporary restraining order and permanent
injunction against Executive and any corporation, business, firm, partnership,
limited liability company, association, consortium, group, other form of entity
or individual participating in such violation or threatened violation, without
the proof of actual damages.
 
17. Consent to Jurisdiction.
 
 Each of the Company and Executive hereby irrevocably submits to the exclusive
jurisdiction of the state courts of the State of Oregon, Multnomah County, or to
the exclusive jurisdiction of the United States District Court, Western District
of Oregon, in any dispute arising from or relating to this Agreement or
Executive’s employment with the Company.  Each party hereby waives the right to
assert in any such suit, action or proceeding, any claim that such party hereto
is not subject to the jurisdiction of the above-named courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement may not be
enforced in or by such courts. All actions and proceedings permitted to be
instituted under this Agreement by Executive or Executive’s successors or
assigns arising out of or related to this Agreement or the transactions
contemplated by this Agreement shall be commenced only in the courts having a
situs in Orange County, California.

 
 
Exhibit 10.1 -- Page 14

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18. Representations, Warranties and Covenants of Executive
 
. In order to induce the Company to enter into and perform this Agreement,
Executive represents and warrants that Executive is not a party to any contract,
agreement or understanding that prevents or prohibits Executive from entering
into this Agreement or fully performing all of Executive’s obligations under
this Agreement and that Executive’s performance of all of the terms of this
Agreement and Executive’s employment by the Company does not and will not breach
any agreement to keep in confidence proprietary information acquired by
Executive in confidence or in trust before Executive’s employment by the
Company.
 
19. Voluntary Execution and Delivery; Legal Counsel
 
. Executive acknowledges that Executive has read carefully this Agreement and
understands its terms and that Executive voluntarily is executing and delivering
this Agreement. Executive acknowledges that this Agreement was provided to
Executive more than two weeks prior to its execution and delivery by
Executive.  Executive acknowledges that the Company’s legal counsel is not legal
counsel to Executive and has not advised Executive in any way in connection with
or regarding this Agreement. Executive represents, warrants and acknowledges to
the Company that Executive has been given and had the opportunity to be
represented by independent legal counsel in connection with this Agreement and
has consulted with such legal counsel or has waived Executive’s right to do so.
 
20. Miscellaneous.
 
(a) Governing Law
 
. The validity, construction, interpretation and enforceability of this
Agreement shall be determined and governed by the laws of the State of Oregon.
Notwithstanding the foregoing, if any law or set of laws of the State of Oregon
requires or otherwise dictates that the laws of another state or jurisdiction be
applied in any proceeding involving this Agreement, then such law or laws of the
State of Oregon shall be superseded by this Section 20(a), and the remaining
laws of the State of Oregon nonetheless shall be applied in such proceeding.
 
(b) Severability
 
. If any court of competent jurisdiction determines that any provision of this
Agreement is, but for the provisions of this Section 20(b), illegal or void as
against public policy, for any reason, then such provision shall automatically
be amended or modified to the extent (but only to the extent) necessary to make
it sufficiently narrow in scope, time and geographic area that such court shall
determine it not to be illegal or void as against public policy. If any such
provision cannot be amended or modified to the extent provided in the
immediately-preceding sentence hereof, then such provision shall be severed from
this Agreement. In either event, all other remaining terms and provisions of
this Agreement and of each other agreement entered into pursuant to this
Agreement shall remain in full force and effect and shall remain binding on the
Company and Executive as if such severed provision had not been contained
herein. Any such amendment, modification or severance shall apply only with
respect to the operation of this Agreement in the particular jurisdiction in
which such determination of illegality or unenforceability is made.

 
Exhibit 10.1 -- Page 15

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(c) Notices
 
. Any notice or communication required or permitted under this Agreement shall
be in writing and shall be deemed to have been received by the party to whom
such notice or communication is addressed (i) upon delivery, if delivered
personally, or (ii) upon receipt by the transmitting party, if transmitting such
notice or communication via telex or facsimile machine, of an acknowledgment of
receipt of such notice or communication transmitted by the receiving party to
the transmitting party via telex or facsimile machine, or (iii) twenty four (24)
hours after deposited, prepaid, in a FedEx or similar depository for expedited
overnight delivery or (iv) ten (10) business days after deposited in the United
States mail, registered or certified, postage prepaid, return receipt requested,
addressed as follows:
 

 
If to the Company:
Gallery Management holding Corp.
   
Attn: Roger Richter, COO
   
4 Grouse Terrace
   
Lake Oswego, Oregon 97035
   
FAX: (503) 635-2409
       
If to Executive:
Executive’s address on file with the Company

or to such other persons or addresses as either of the Company or Executive from
time to time may provide in writing to each other.
 
(d) Waiver
 
. No failure on the part of either party hereto to exercise, and no delay in
exercising, any right, power or remedy under this Agreement shall operate as a
waiver thereof or as a waiver of any other right, power or remedy under this
Agreement or the performance of any obligation under this Agreement of either
party hereto; and no single or partial exercise by either party hereto of any
right, power or remedy under this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
 
(e) Amendment and Modification
 
. Subject to applicable law and upon the approval of the Board of Directors,
this Agreement may be amended, modified and supplemented with respect to any of
the terms of this Agreement by written agreement by and between the Company and
Executive. The provisions of this Agreement shall not be extended, varied,
changed, modified, amended or supplemented other than by an agreement in writing
approved by the Board of Directors and executed by both a duly authorized
officer of the Company and Executive.
 
(f) Assignability and Binding Effect
 
. This Agreement shall inure to the benefit of and be binding on the heirs,
executors, administrators, successors and legal representatives of Executive and
shall inure to the benefit of and be binding on the Company and its successors
and assigns, but the obligations of Executive under this Agreement may not be
delegated by any purported assignment of this Agreement by Executive.

 
 
Exhibit 10.1 -- Page 16

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(g) Captions and Headings
 
. The captions and headings used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any term or provision of this
Agreement, and all terms and provisions of this Agreement shall be enforced and
construed as if no captions or headings appeared in this Agreement.
 
(h) Interpretation and Construction
 
. If any provision of this Agreement requires interpretation by an arbitrator or
court, then such interpretation or construction shall not apply a presumption
that the terms hereof shall be more strictly construed against the Company by
reason of the rule of construction that a document is to be construed more
strictly against the person or agent of such person who prepared the same, it
being hereby acknowledged and agreed by both the Company and Executive that both
of them participated in the negotiation and preparation of this Agreement.
 
(i) General Usage. Except where the context clearly requires to the contrary,
(i) each reference in this Agreement to a designated “Section” is to the
corresponding Section of this Agreement; (ii) instances of gender or
entity-specific usage (e.g., “his,” “her,” “its,” “person” or “individual”)
shall not be interpreted to preclude the application of any provision of this
Agreement to any individual or entity; (iii) the word “or” shall not be applied
in its exclusive sense; (iv) the word “including” (or “include”) shall mean
“including, without limitation,” (or “include, without limitation,”); (v)
references to laws, regulations and other governmental rules, as well as to
contracts, agreements and other instruments, shall mean such rules and
instruments as in effect at the time of determination (taking into account all
amendments thereto effective at such time without regard to whether such
amendments were enacted or adopted after the effective date of this Agreement)
and shall include all successor rules and instruments thereto; and (vi)
references to “Dollars” or “$” shall mean the lawful currency of the United
States.
 
(j) Further Assurances
 
. Each of the Company and Executive shall execute and deliver all such further
instruments and take such other and further actions as reasonably may be
necessary or appropriate to carry out the provisions of this Agreement.
 
(k) Limitations on Actions
 
. Executive agrees not to commence any action arising out of or in any way
related to this Agreement or to Executive’s employment with the Company more
than six (6) months after the termination of Executive’s employment. Executive
agrees that six (6) months is a reasonable amount of time in which to commence
any such action and expressly waives any statute of limitations to the contrary.
 
(l) Entire Agreement and Binding Effect
 
. This Agreement and the Proprietary Information and Invention Assignment
Agreement (collectively, the “Agreements”) constitute the entire agreement of
the parties hereto and supersedes all prior understandings, agreements or
representations by or between the parties hereto, whether oral or in writing,
that may have been related to the subject matter of the Agreements in any
manner. No restrictions, promises, warranties, covenants or undertakings exist
relating to the subject matter of the Agreements other than those expressly
provided for in the Agreements.

 
Exhibit 10.1 -- Page 17

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(m) Counterpart Execution
 
. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original of this Agreement, but all of which together shall
constitute one instrument.
 

 
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement to be
effective as of the date first written above.
 
The “Company”:
 
“Executive”:
     
GALLERY MANAGEMENT HOLDING CORP.,
a Colorado corporation
         
By:
/s/ Roger Richter
 
/s/ R. Patrick Garrett
Name:
Title:
Roger Richter
Chief Operating Officer
 
R. Patrick Garrett

 
 
Exhibit 10.1 -- Page 18

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EXHIBIT A
 
TERMINATION CERTIFICATION
 
I hereby certify that I do not have in my possession, and I have not failed to
return to the Company (as defined below), devices, records, data, notes,
reports, proposals, lists, customer lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property or reproductions of any of the aforementioned items belonging to
Gallery Management Holding Corp., a Colorado corporation, its Subsidiaries, its
Affiliates, its successors or its assigns (together, collectively, the
“Company”).
 
I hereby further certify that I have complied with all of the terms of that
certain Employment Agreement, effective as of February 27, 2012, by and between
the Company. and me (the “Employment Agreement”). I further certify that I have
complied with all of the terms of that certain Proprietary Information and
Invention Assignment Agreement, effective as of February 27, 2012, by and
between the Company and me, including the reporting of inventions and original
works of authorship conceived or made by me (solely or jointly with others).
 
I further certify that I will comply with all provisions of the Employment
Agreement and the Proprietary Information and Invention Assignment Agreement
that survive the termination of my employment with the Company, including,
without limitation, Sections 12, 13, 14 and 15 of the Employment Agreement.
 
 
Dated:
           
R. Patrick Garrett

 
Exhibit 10.1 -- Page 19

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EXHIBIT B
 
WAIVER AND RELEASE
 
For full and valuable consideration, I, R. Patrick Garrett, hereby agree to the
following Waiver and Release provision relating to my employment and its
termination with Gallery Management Holding Corp. (the “Company”):
 
I hereby release and discharge the Company and its divisions, affiliates,
parents, subsidiaries, predecessor and successor corporations, and the past and
present directors, officers, management committees, stockholders, agents,
servants, employees, representatives, administrators, partners, general
partners, managing partners, limited partners, benefit plan fiduciaries and
administrators, assigns, heirs, successors or predecessors in interest,
adjusters and attorneys, from all rights, claims, causes of action and damages,
both known and unknown, in law or in equity, concerning or arising out of my
employment with the Company before the date of this Waiver and Release that I
now have, or ever had, including, without limitation, all rights, claims, causes
of action or damages arising under Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Older Workers’ Benefit
Protection Act, the Employee Retirement Income Security Act, the Americans with
Disabilities Act, the Oregon Labor Code. And any other applicable pro vision of
Oregon Law.
 
 
 
Dated:
           
R. Patrick Garrett

Exhibit B-1

 
Exhibit 10.1 -- Page 20

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EXHIBIT C
 
FORM OF PROPRIETARY INFORMATION AND
 
INVENTION ASSIGNMENT AGREEMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Exhibit C-1
 
 
Exhibit 10.1 -- Page 22
 

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