Document:

gallery8kex104_322012.htm

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 27th  day of February, 2012, between Gallery Management Holding Corp., a Colorado corporation (the “Company”), and Kyle Estes (“Employee”).

 

In consideration of the promises and covenants set forth below, the parties hereto agree as follows:

 

1. Employment.

 

The Company hereby agrees to employ Employee, and Employee hereby agrees to accept such employment with the Company, on the terms and conditions set forth herein.

 

2. Term.

 

The employment of Employee by the Company as provided in this Agreement will commence as of February 27, 2012 or such other date as the parties agree (the “Start Date”), and end on the date that is two (2) years later, unless further extended or sooner terminated as hereinafter provided.  On the second anniversary of the Start Date, and such date of each year thereafter (each an “Extension Date”), the term of Employee’s employment hereunder shall automatically be extended for one additional year unless, prior to such Extension Date, either party delivers written notice to the other party that the term of Employee’s employment hereunder will not be extended or that Employee’s employment is otherwise terminated pursuant to the terms of this Agreement.

 

3. Position and Duties.

 

Employee shall serve as a Project Manager or such other position or positions as may be agreed upon by Employee and the Board of Directors of the Company.  Employee shall at all times perform his duties and obligations faithfully and diligently and shall devote his business time, attention and efforts to the business of the Company.  Employee shall industriously perform his duties under the supervision of and report to the Chief Executive Officer or such other officer of the Company as he may be directed and shall accept and comply with all reasonable directions from and all reasonable written policies established from time to time by the Company.

 

4. Compensation and Related Matters.

 

(a) Salary.  During the term of Employee’s employment hereunder, the Company shall pay to Employee an annual base salary of $135,000, payable in accordance with the Company’s customary payroll practices, commencing as of January 1, 2012.  Annual base salary will be increased (but not decreased) from time to time as the Board of Directors may determine.

  

Exhibit 10.4 -- Page 1

  

 

(b) Stock Purchase Right and Options.  The Company shall grant to Employee the right to purchase 500,000 shares of restricted common stock at a purchase price of $0.001 per share, which shares shall immediately vest.  Additionally, upon the effective date of the Company’s 2012 Stock Incentive Plan (the “Plan”), the Company shall grant to Employee options to purchase 500,000 shares of Company Common Stock which options shall be subject to the terms of the Plan and the related Stock Option Agreement (as such term is defined in the Plan).  The options shall vest and become exercisable on the first anniversary of this Agreement, so long as Employee is an employee of the Company on such vesting date, subject to the other provisions of this Agreement.

 

(c) Vacations.  During the term of Employee’s employment hereunder, Employee shall be entitled to such vacation, and to compensation with respect to earned but unused vacation days, determined in accordance with the Company’s vacation policy.

 

(d) Expenses.  During the term of Employee’s employment hereunder, Employee shall be entitled to receive reimbursement for all reasonable out-of-pocket travel and other expenses (excluding ordinary commuting expenses) incurred by Employee in performing Employee’s services hereunder, provided that Employee furnishes to the Company adequate documentary evidence for the substantiation of such expenditures and Employee otherwise complies with Company policies with respect to expense reimbursement.

 

(e) Bonuses.  Employee shall be entitled to receive a bonus of $15,000 on the first anniversary date of this Agreement so long as Employee remains employed as of such date. The Board of Directors may, from time to time, establish cash and stock bonus plans or arrangements.  Employee shall be entitled to participate in such plans or arrangements in the sole discretion of the Board of Directors.

 

(f) Benefits.  If the Company provides its employees generally with health and medical insurance, disability insurance, director and officer insurance, or any other benefits and advantages, then Employee shall be entitled to the same insurance, benefits and advantages.

 

5. Termination.

 

(a) Termination for Cause.

 

(1)           The Company may at any time upon notice to Employee terminate this Agreement and Employee’s employment hereunder for “Cause” pursuant to the provisions of this Section 5(a).

 

For purposes of this Agreement, the Company shall have “Cause” to terminate Employee’s employment hereunder upon thirty (30) days written notice, and Employee’s failure to cure, any of the following:

  

Exhibit 10.4 -- Page 2

  

 

(A) Employee’s material breach of any provision or covenant of this Agreement, provided that Employee first shall have received prior written notice from the Board of Directors expressly addressed to Employee stating with specificity the nature of such material breach and affording Employee 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) Employee’s material failure or refusal to perform Employee’s duties as determined by the CEO or the Board of Directors, provided that Employee first shall have received prior written notice expressly addressed to Employee stating with specificity the nature of such material failure or refusal and affording Employee 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) Employee’s material breach of any provision or covenant of the Proprietary Information and Invention Assignment Agreement referred to in Section 6 and attached hereto as Exhibit B; or

 

(D) Employee’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) Employee’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 Employee 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 Employee in violation of Section 6 or any disclosure by Employee in violation of Section 7; or

 

(G) Employee’s engagement in any transaction involving a material conflict of interest that was not disclosed to and approved by the Chief Executive Officer or the Board of Directors; or

 

(H) An intentional misrepresentation by the Employee 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 CEO or the Board of Directors, the securing by Employee of any personal profit in connection with the Company’s business except as contemplated by this Agreement; or

  

Exhibit 10.4 -- Page 3

  

 

(J) Employee’s use of alcohol, which use interferes with the performance of Employee’s duties under this Agreement, or Employee’s use of illegal narcotics; or

 

(K) Employee’s violation of any Company policy, including any Company policy relating to discrimination or harassment; or

 

(L) Employee’s engagement in any violation of law in Employee’s capacity as an employee of the Company or any breach by Employee of Employee’s duty of loyalty to the Company.

 

(2) If this Agreement is terminated by the Company for Cause pursuant to this Section 5(a), the Company shall have no further obligation or liability to Employee, except that Employee shall be entitled to receive only (i) Employee’s salary as set forth in Section 4(a) which has been earned up to the Date of Termination, (ii) compensation for any accrued and unused vacation up to the Date of Termination, (iii) reimbursement pursuant to Section 4(c) for business expenses incurred up to the Date of Termination, and (iv) any other payments or benefits required by law (collectively, the “Minimum Payments”).  Upon any termination for Cause, all vesting of any restricted stock, options or other equity awards shall immediately cease.

 

(b) Death.

 

(1) This Agreement and Employee’s employment hereunder shall terminate automatically upon Employee’s death.

 

(2) If this Agreement is terminated because of Employee’s death pursuant to this Section 5(b), the Company shall have no further obligation or liability to Employee, except that Employee or his estate shall be entitled to receive only the Minimum Payments. Upon Employee’s death, all vesting of any restricted stock, options or other equity awards shall immediately cease.

 

(c) Disability.

 

(1) If Employee becomes disabled during Employee’s employment hereunder, this Agreement and Employee’s employment hereunder shall terminate on the date of determination by the Board of Directors of the Company of such disability. As used herein, “disability” shall mean any condition that renders Employee incapable of performing substantially all of his managerial and executive services hereunder for ninety (90) days or more in the aggregate during any calendar year, and which at any time after such ninety (90) days the Company’s Board of Directors shall determine continues to render Employee incapable of performing his managerial and executive services hereunder.

 

 

Exhibit 10.4 -- Page 4

  

 

(2) If this Agreement is terminated because of Employee’s disability pursuant to this Section 5(c), the Company shall have no further obligation or liability to Employee, except that Employee shall be entitled to receive only (i) the Minimum Payments, and (ii) a severance payment of six (6) months of Employee’s then current salary as set forth in Section 4(a) payable in a lump sum within thirty (30) days after the Date of Termination or as otherwise mutually agreed to by the parties.  Upon any termination for disability, all vesting of any restricted stock, options or other equity awards shall immediately cease.

 

(d) Termination Other Than for Cause, Death or Disability.

 

(1) The Company shall, for any reason, be entitled to terminate this Agreement and Employee’s employment hereunder at any time without Cause and other than on account of Employee’s death or disability pursuant to this Section 5(d).

 

(2) If this Agreement is terminated by the Company pursuant to this Section 5(d), the Company shall have no further obligation or liability to Employee, except that Employee shall be entitled to receive only (i) the Minimum Payments, and (ii) a severance payment of six (6) months of Employee’s then current salary as set forth in Section 4(a) payable in a lump sum within thirty (30) days after the Date of Termination or as otherwise mutually agreed to by the parties.  Upon any termination under this Section 5(d), all restricted shares, options and other equity awards subject to any vesting restrictions shall immediately vest and become exercisable.

 

(e) Termination of Employment Following a Change of Control.  If within one year following a “Change of Control of the Company” (i) Employee terminates his employment for Good Reason, (ii) the Company terminates Employee’s employment other than for Cause, death or disability, or (iii) the Company delivers notice to Employee that it is not extending the term of Employee’s employment pursuant to Section 2 of this Agreement for one year, then the Company shall be obligated to pay to Employee or Employee’s estate the payments and benefits provided in Subsection 5(d)(2) above.

 

For purposes of this Agreement, “Good Reason” means and shall exist if, without Employee’s express written consent, (i) the Company substantially reduces Employee’s salary or other fixed compensation 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 Employee.

 

For purposes of this Agreement, a “Change of Control” of the Company shall be deemed to have occurred if:

 

(1)           the members or Board of Directors of the Company approve a definitive agreement to sell, transfer, or otherwise dispose of all or substantially all of the Company’s assets and properties; or

  

Exhibit 10.4 -- Page 5

  

 

(2)           any “person” (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities; provided, however, that the following shall not constitute a “Change in Control” of the Company:

 

	
  

	
(A)

	
any acquisition directly from the Company (excluding any acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities); or

 

	
  

	
(B)

	
any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or

 

	
  

	
(3)

	
the members of the Company approve the dissolution or liquidation of the Company; or

 

	
  

	
(4)

	
the member of the Company approve a definitive agreement to merge or consolidate the Company with or into another entity or entities or to otherwise reorganize the Company, the result of which merger, consolidation or reorganization is that less than 50% of the outstanding voting securities of the surviving, resulting or acquiring entity are, or are to be, owned by holders of the Company’s membership interests immediately prior to the merger.

 

Upon any termination following a Change in Control or for Good Reason under this Section, all shares of restricted stock, options and other equity awards subject to vesting shall immediately vest and shall become exercisable, if applicable.

 

(f) Resignation.  Employee may resign and terminate this Agreement at any time, in writing or verbally to any executive officer of the Company without “Good Reason.”  Upon any resignation, the Company shall have no further obligation or liability to Employee, except that Employee shall be entitled to receive the Minimum Payment.

 

(g) Notice of Termination.  Any termination of Employee’s employment by the Company or by Employee (other than termination pursuant to Section 5(b) above or a resignation by Employee under Section 5(f) above) shall be communicated by a written Notice of Termination to the other party hereto.

 

For purposes of this Agreement, a “Notice of Termination” means a notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth the circumstances which provide a basis for termination of Employee’s employment under the provisions so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall not be more than thirty (30) days after the giving of such notice).

  

Exhibit 10.4 -- Page 6

  

 

 

(h) Date of Termination.  “Date of Termination” shall mean the date of death, the date of the determination of a disability, or the date of receipt of the Notice of Termination or the date specified therein, as the case may be.

 

(i) Release and Waiver.  Payments to the Employee under this Section 5 are contingent upon the Executive’s execution of a release and waiver substantially in the form of Exhibit A hereto.

 

6. 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 Employee shall not engage in Competition, as defined below, with the Company; provided, that it shall not be a violation of this Section 6 for the Employee 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 Employee does not actively participate in the business of such corporation until such time as this covenant expires.

 

For purposes of this Agreement, “Competition” by the Employee means the Employee’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 Employee 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:

(1) solicit from any customer doing business with the Company as of the date of termination that is known to Employee, business of the same or of a similar nature to the business of the Company with such customer;

 

(2) solicit from any potential customer of the Company that is known to the Employee 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;

 

(3) 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

 

(4) otherwise knowingly interfere with the business or accounts of the Company.

 

  

Exhibit 10.4 -- Page 7

  

 

The Employee 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 Employee and the Company further agree and acknowledge that the provisions of this Section 6 are reasonably necessary to protect the Company’s legitimate business interests and are designed to protect the Company’s Confidential Information and goodwill.

     

The Employee agrees that the scope of the restrictions as to time, geographic area, and scope of activity in this Section 6 are reasonably necessary for the protection of the Company’s legitimate business interests and are not oppressive or injurious to the public interest. The Employee agrees that in the event of a breach or threatened breach of any of the provisions of this Section 6 the Company shall be entitled to injunctive relief against the Employee’s activities to the extent allowed by law, and the Employee waives any requirement for the posting of any bond by the Company in connection with such action. The Employee further agrees that any breach or threatened breach of any of the provisions of Section 6 would cause injury to the Company for which monetary damages alone would not be a sufficient remedy.

(c) Enforceability

 

. The covenants set forth in Section 6(a) and 6(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 Employee 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. Employee expressly waives any right to assert inadequacy of consideration as a defense to enforcement of any of the provisions of this Section 6. Employee and the Company hereby acknowledge that it is the desire and intent of Employee and the Company, and Employee and the Company hereby agree, that the terms and provisions of this Section 6 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought.

 

(d) Publicity. The Employee agrees that the Company may use, and hereby grants the Company the nonexclusive and worldwide right to use, the Employee’s name, picture, likeness, photograph, signature or any other attribute of the Employee’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 Employee agrees that such use of his Persona will not result in any invasion or violation of any privacy or property rights the Employee may have; and the Employee agrees that he will receive no additional compensation for the use of his Persona. The Employee 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.

 

  

Exhibit 10.4 -- Page 8

  

 

7. Confidentiality.

 

(a) Covenants

 

. Employee acknowledges and agrees that Employee 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 B), 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, Employee 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 Employee, following termination of Employee’s employment under this Agreement, would cause injury to the Company’s business.

 

During the Term and thereafter during the Restricted Period, except for the sole benefit of the Company or with the express written consent of the Board of Directors, Employee 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 Employee during the course of or as an incident to Employee’s employment under this Agreement, or as a result of Employee’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 Employee 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 Employee or that comes lawfully into the public domain without breach of this Agreement.

 

Exhibit 10.4 -- Page 9

  

 

(b) Enforceability

 

. The covenants set forth in Section 7 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 Employee 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. Employee expressly waives any right to assert inadequacy of consideration as a defense to enforcement of any of the provisions of this Section 7. Employee and the Company hereby acknowledge that it is the desire and intent of Employee and the Company, and Employee and the Company hereby agree, that the terms and provisions of this Section 7 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought.

 

Proprietary Information and Invention Assignment Agreement

 

. As a material inducement to the Company to execute and deliver to Employee this Agreement, and as a condition to the enforceability of this Agreement against the Company, concurrently with Employee’s execution and delivery to the Company of this Agreement, Employee shall execute and deliver to the Company a Proprietary Information and Invention Assignment Agreement substantially in the form attached hereto as Exhibit B (the “Proprietary Information and Invention Assignment Agreement”).

 

8. Successors.

 

This Agreement is personal to the Employee and is not assignable by the Employee otherwise than by will or the laws of descent and distribution without the prior written consent of the Company’s Board of Directors. This Agreement shall inure to the benefit of and be enforceable by Employee’s legal representatives.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

9. Notice.

 

For purposes of this Agreement, notices, demands and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States registered mail, return receipt requested, postage prepaid, addressed as follows:

 

	
       If to Employee:

	
Employee’s address as on file with the Company

 

	
       If to Company:

	
Gallery Management Holding Corp.

	  	
4 Grouse Terrace

	  	
Lake Oswego, Oregon 97035

	  	
Attention:  R. Patrick Garrett, CEO

or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt thereof.

 

  

Exhibit 10.4 -- Page 10

  

 

10. Entire Agreement.

 

This Agreement, together with the documents referenced herein, contains the entire agreement of the parties hereto with respect to the subject matter hereof.  It supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Employee by the Company.  Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, written, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding.

 

11. Amendment; Waiver; Governing Law.

 

No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Employee and by such officer of the Company as may be specifically designated by the Company’s Board of Directors.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon.

 

12. Validity.

 

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

13. Counterparts.

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.

 

14. Survivability.

 

The provisions in Sections 6 and 7 of this Agreement shall survive any termination of this Agreement.

 

15. Withholding of Taxes; Tax Reporting.

 

Except as required by law, the Company will not withhold from any amounts payable under this Agreement all such Federal, state, city and other taxes.  The Company may file with appropriate governmental authorities all such information, returns or other reports with respect to the tax consequences of any amounts payable under this Agreement, as may, in its reasonable judgment, be required by law.

 

  

Exhibit 10.4 -- Page 11

  

 

16. Arbitration.

 

The parties hereby agree to submit all claims and disputes that may arise in connection with this Agreement to binding arbitration to AAA in Multnomah County, Oregon.  One arbitrator shall be mutually agreed by the parties.  All rules of the arbitration, including permissible discovery, shall be established by the Arbitrator.  Each party shall bear its own costs and expenses of the arbitration.

  

Exhibit 10.4 -- Page 12

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

GALLERY MANAGEMENT HOLDING CORP.,                                                                                                          EMPLOYEE

a Colorado corporation

 

	
GALLERY MANAGEMENT HOLDING CORP.,

	
EMPLOYEE

	
a Colorado corporation

	  
	  	  
	  	  
	  	  
	
By: /s/ R. Patrick Garrett                                                    

	
By: /s/ Kyle Estes          

	
R. Patrick Garrett

	
Kyle Estes

	
Title:           CEO

	  

  

Exhibit 10.4 -- Page 13

  

 

EXHIBIT A

 

 

WAIVER AND RELEASE

 

 

 

For full and valuable consideration, I, Kyle Estes, 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:

	  	  	 
	  	  	  	
Kyle Estes

A-1

  

  

  

 

EXHIBIT B

 

 

FORM OF PROPRIETARY INFORMATION AND

 

 

INVENTION ASSIGNMENT AGREEMENT

 

 

 

 

 

B-1gallery8ex105k_322012.htm

Exhibit 10.5

 

CONTRIBUTION AND ASSIGNMENT AGREEMENT

This Contribution and Assignment Agreement (the “Agreement”) between R. Patrick Garrett, an individual (“Garrett”) and Mary Anne Garrett, and individual and the sole proprietor of R&M (“R&M” and, together with Garrett, the “Contributors”), on the one hand, and Gallery Management Holding Corp, a Colorado corporation (the “Company”), on the other hand, is made as of February 27, 2012, with respect to the contribution of assets and intellectual property to the Company in exchange in accordance with the following terms and conditions:

RECITALS:

WHEREAS, the Company desires to enter into the waste remediation business, particularly waste generated in connection with oil and gas production (the “Business”);

WHEREAS, the Contributors have developed and have ownership interests in technology relating to waste remediation;

WHEREAS, the Contributors have also identified prospective customers of the Business and have negotiated contracts or head of terms agreements with prospective customers of the Business and strategic alliances of the Business (the “Contracts”); 

WHEREAS, the Contributors desire to contribute to contribute the Contracts and their interests in the intellectual property necessary to conduct the Business in exchange for the consideration set forth below.

NOW THEREFORE, the Contributors and the Company agree as follows:

1. CONTRIBUTED PROPERTY

Effective immediately, the Contributors hereby contributes and conveys to the Company all of the Contributors' right, title, and interest in the following (collectively, the “Assets”), more specifically described on Exhibit A hereto:

a. Intellectual Property.  The Contributors shall contribute and caused to be assigned to the Company all intellectual property rights relating to or used in the Business, including but not limited to all patents and patent applications, trademarks, tradenames, service marks, know-how, trade secrets, copyrights, inventions, licenses and other rights to make, use or sell the products to be offered by the Business.  Exhibit A sets forth all intellectual property used in the Business and contributed to the Company.

b. Contracts - all contracts and agreements (oral or written) in effect on the as of the date hereof pertaining to the Business, including, without limitation the agreements. Understandings or arrangements listed on Exhibit A.

  

Exhibit 10.5 -- Page 1

  

c. No Prior Liabilities.  Except as set forth herein, the Assets do not include, and the Company is not accepting, assuming or agreeing to pay any liability, debt or obligation of the Contributors arising prior to the date of this Agreement relating to or arising from the ownership or use of the Assets. Notwithstanding the foregoing, to the extent that any payments, debts or obligations arise with respect to the Assets from and after the date hereof, such payments shall be the obligation of the Company.

2. COMPANY ACCEPTANCE AND ASSUMPTION

The Company hereby accepts the contribution of the Assets and agrees to make the following payments as consideration for the contribution of the Assets:

	
a.  

	
Cash payments totaling Six Hundred Thousand Dollars ($600,000) payable as follows:

	
i.  

	
$100,000 on or before March 26, 2012;

	
ii.  

	
$250,000 on or before December 31, 2012; and

	
iii.  

	
$250,000 on or before December 31, 2013.

	
iv.  

	
The Company shall execute and deliver an unsecured promissory note in the principal amount of $600,000 substantially in the form attached hereto as Exhibit C.

	
b.  

	
The Company agrees to accept and assume all obligations arising from and relating to the operation of the Business and the Assets from and after the date hereof, including but not limited to all payments due or owing under any Contract included in the Assets and incurred after the date hereof.

	
c.  

	
The Company agrees to enter into that certain Employment Agreement of even date herewith with R. Patrick Garrett pursuant to which the Contributor will be appointed as the Chief Executive Officer and receive the salary and stock and options set fort therein.

The parties acknowledge and agree that each of the payments and commitment above are a material part of the Consideration for the Assets.  If the Company breaches any of its obligations above within one year after the date of this Agreement or in the event that the Company becomes insolvent, declares bankruptcy, makes any assignment for the benefit of creditors or upon the occurrence of any similar event, then the Contributor shall be entitled to terminate this Agreement and obtain the return of the Assets, free and clear of any lien or encumbrance.

  

Exhibit 10.5 -- Page 2

  

3. REPRESENTATIONS AND WARRANTIES OF PRICE

a. Organization.  Garrett is an individual, residing in the State of Oregon and Mary Anne Garrett is an individual, residing in the State of Oregon, and is the sole proprietor of R&M, and each has the power and authority to own, transfer and convey the Assets and to carry on business as presently being conducted.

b. Authority.  The Contributors have full legal right, power and capacity to enter into, execute, deliver and perform this Agreement and all attendant documents and instruments (collectively “Documents”)  contemplated hereby which Documents shall include but not be limited to the execution of bills of sale, assignments of all intellectual property relating to the Business.   Further, the execution and delivery by the Contributors of the actions required hereunder and the consummation by them of the transactions contemplated thereby and the performance by them of their obligations therein have been duly and validly authorized by all necessary action.

c. Enforceability.  This Agreement has been duly executed and delivered and constitutes the legal, valid and binding obligation of each of the Contributors and is enforceable with respect to each of the Contributors in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, priority or other laws or court decisions relating to or affecting generally the enforcement of creditors’ rights or affecting generally the availability of equitable remedies.  The execution and delivery of this Agreement by the Contributors and the Company, and the consummation of the transactions contemplated hereby by the Contributors in accordance with the terms hereof shall not conflict with or result in a breach of, violation of, or default under, (or constitute an event that with notice, lapse of time, or both, would constitute a breach or default under) any of the terms, conditions or provisions of laws of Oregon  or the United States of America, or any note, bond, mortgage, indenture, license, lease, credit agreement or other agreement, document, instrument or obligation to which any of the Contributors is a party or by which any of the Assets are bound.

d. No Violation. The execution and consummation of this Agreement will not (i) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any governmental authority or of any arbitration award which is either applicable to, binding upon or enforceable against any of the Contributors, or the assets of the Contributors, (ii) conflict with, result in any breach of, or constitute a default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under, or give rise to a right to terminate, amend, modify, abandon or accelerate, any contract which is applicable to, binding upon or enforceable against any of the Contributors relating to the Business or the Assets, (iii) result in or require the creation or imposition of any lien or encumbrance upon or with respect to any of the Assets, or (iv) require the consent, approval, authorization or permit of, or filing with or notification to, any governmental authority, any court or tribunal or any other person.

  

Exhibit 10.5 -- Page 3

  

e. Good Title, Adequacy and Condition.

i. The Contributors has good and marketable title to the Assets with full power to sell, transfer and assign the same, free and clear of any lien or encumbrance of any kind.

ii. The Assets constitute, in the aggregate, all of the assets and properties necessary for the conduct of the Business in the manner in which and to the extent to which such business is currently being conducted and include, without limitation, all tangible and intangible assets owned by the Contributors, and all contracts, licenses and permits of the Contributors related to the Business.

f. No Claims. There is no action, suit or proceeding against the Contributors or the Assets, nor is there any pending or threatened action of any kind against the Contributors or the Assets, except as set forth on Exhibit B.

4. CONDITIONS TO CLOSING

	
a.  

	
Settlement of Litigation.  The closing of the contribution of the Assets shall occur within five (5) business days after the Contributors have entered into a settlement agreement or agreement to stay execution of judgment in David Orkeny and Buckingham Investment Group, LLC v. Keith  Chapman, Ronald Patrick Garrett and Allen Adams (case no.0809-12896) in the Circuit Court of the State of Oregon for the County of Multnomah.  Such settlement or agreement to stay shall be on terms reasonably acceptable to the Company.

	
b.  

	
Assignment of Payments.  In the event that such settlement or agreement to stay requires a settlement payment by any of the Contributors, then the Company shall be entitled to pay such amounts directly to the plaintiffs or their counsel and to offset any such payments against amounts due under this Agreement; provided, however, in no event or circumstance shall the Company be required to make any payment in excess of the amount agreed in Section 2 above or to make any payment in advance of the due dates set forth in Section 2.

 

 

5. REPRESENTATIONS AND WARRANTIES OF PETROTERRA

a. Organization.  The Company is a corporation validly existing under the laws of the State of Colorado and has the requisite power and authority to carry on the Business as now being conducted.

  

Exhibit 10.5 -- Page 4

  

b. Authority.  The Company has full legal right, power and capacity to enter into, execute, deliver and perform this Agreement and all attendant documents and instruments contemplated hereby.

c. Enforceability.  This Agreement has been duly executed and delivered and constitutes the legal, valid and binding obligation of the Company and is enforceable with respect to the Company in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, priority or other laws or court decisions relating to or affecting generally the enforcement of creditors’ rights or affecting generally the availability of equitable remedies.  The execution and delivery of this Agreement by the Contributors and the Company, and the consummation of the transactions contemplated hereby by the Company in accordance with the terms hereof shall not conflict with or result in a breach of, violation of, or default under, (or constitute an event that with notice, lapse of time, or both, would constitute a breach or default under) any of the terms, conditions or provisions of the charter documents of the Company, any provision of the laws of Oregon or the United States of America, or any note, bond, mortgage, indenture, license, lease, credit agreement or other agreement, document, instrument or obligation to which the Company is a party or by which any of its assets or properties are bound.

6.  VALUATION

The Contributors and the Company agree that the fair market value of the Assets, taken as a whole, is in excess of $600,000 as of the date hereof.

7. INDEMNIFICATION

a. Agreement by the Contributors to Indemnify. The Contributors agrees to indemnify, defend,  and hold the Company and the officers, managers, directors, employees and agents of each thereof (collectively, the “Indemnified Party”) harmless from and against the aggregate of all expenses, losses, costs, deficiencies, liabilities and damages (including, without limitation, related counsel fees and expenses) incurred or suffered by the Indemnified Party  resulting from or arising out of (i) any breach of a representation or warranty made by the Contributors in or pursuant to this Agreement, (ii) any breach of the covenants, agreements, or any terms by the Contributors under this Agreement, (ii) any infringement of the proprietary rights of any third party, or (iv) any liabilities or obligations of the Contributors.

b. Survival of Representations and Warranties. Each of the representations and warranties made by the Contributors in this Agreement or pursuant hereto shall survive for a period of two (2) years from the date of this Agreement.

  

Exhibit 10.5 -- Page 5

  

8. GENERAL

a. Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other shall be in writing and delivered personally or sent by certified mail, postage prepaid, by telecopy (with receipt confirmed), or by courier service, as follows:

 

 

	
If to the Company to:

	
Gallery Management Holding Corp.

	  	
c/o Allen Adams

	  	
4 Grouse Terrace

	  	
Lake Oswego, Oregon 97035

	  	  
	
with a copy to:

	
Christopher A. Wilson.

	  	
9110 Irvine Center Drive

	  	
Irvine, CA 92618

	  	  
	
If to a Contributor:

	
c/o R. Patrick Garrett

	  	
39380 Amherst Street

	  	
Sandy, Oregon 97055

b. Headings.  The headings of the several sections of this Agreement are inserted for convenience of reference only and are not intended to affect the meaning or interpretation of this Agreement.

c. Counterparts.  This Agreement may be executed in counterparts, and when so executed each counterpart shall be deemed to be an original, and said counterparts together shall constitute one and the same instrument.

d. Binding Nature.  This Agreement shall be binding upon and inure to the benefit of the parties hereto.  No party may assign or transfer any rights under this Agreement; provided, however, the Company may assign this Agreement to any successor in interest, and entity into which it merges, or any entity that acquires substantially all of the assets of the Company.

e.  Applicable Law.  This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Oregon as applied to contracts entered into solely between residents of, and to be performed entirely in, such state.

  

Exhibit 10.5 -- Page 6

  

IN WITNESS WHEREOF, the parties have executed this Contribution and Assignment Agreement as of the date above written.

GALLERY MANAGEMENT HOLDING CORP.,

A Colorado corporation

By:            /s/ Roger Richter

Roger Richter, COO

R. PATRICK GARRETT, an individual

 

 

/s/ R. Patrick Garrett

R. Patrick Garrett

MARY ANNE GARRETT, sole proprietor of R&M

/s/ Mary Anne Garrett

Mary Anne Garrett

  

Exhibit 10.5 -- Page 7

  

EXHIBIT A

List of Assets

Contracts

1.  Colombia—all contracts with Oilfield Services and Supplies, SAS, ATP, EcoPetrol and related parties

2. Teaming agreements with Remedial Construction Services, L.P, including agreements for the Motiva refinery

3. The Bakken – all contracts with

4. Kazakhstan – the right to negotiate contracts with Steelmaster and

5. Acquisition of OSS/ATP

6. Acquisition of Thunderridge –

7. Agreement with AquaTech

8. Manufacturing Agreement with Chapman Industries

Intellectual Property

	
1.  

	
 All proprietary rights relating to the infrared unit technology.

	
2.  

	
All proprietary rights relating to indirect thermal unit technology.

	
3.  

	
All proprietary rights relating to the clean-up of oil ponds.

	
4.  

	
All proprietary rights relating to the remediation of produced and production water.

A-1

  

Exhibit 10.5 -- Page 8

  

EXHIBIT B

Pending and Threatened Proceedings

	
1.  

	
  Orkeny v. Chapman described in the Agreement.

	
2.  

	
Base Industries, LLC v. MECO Environmental, LLC et al., (case no 602755) in the 19th Judicial District Court for the Parish of East Baton Rouge, State of Louisiana.

B-1

  

Exhibit 10.5 -- Page 9

  

EXHIBIT C

Form of Promissory Note and Security Agreement

 

 

 

 

 

 

 

 

 

C-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00200-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00200-of-00352.parquet"}]]