EMPLOYMENT AGREEMENT
EXHIBIT
10.13
EMPLOYMENT
AGREEMENT
(this
“Agreement”)
dated
January 31, 2005, (“Effective
Date”)
between Global Matrechs, Inc.(including, as the context may require, its
subsidiaries, the “Company”),
a
Delaware limited liability company located at 00 Xxxxx Xxxxxx, Xxxxxxxxxx
XX
00000, and Xxxx Xxxxx, (“Xxxxx”), currently residing at 00 Xxxxxx Xxxxx,
Xxxxxxx, XX 00000.
WHEREAS,
the
Company wishes to employ Xxxxx to
render
services for the Company as its Executive Vice President and President of
its
whole owned subsidiary, True To Form Limited (“TTF”), on the terms and
conditions set forth in this Agreement, and Xxxxx wishes to be retained and
employed by the Company on such terms and conditions; and
NOW,
THEREFORE,
in
consideration of the promises, the mutual agreements set forth below and
other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Engagement
- The Company hereby employs Xxxxx, and Xxxxx accepts such engagement and
agrees
to perform services for the Company, for the period and upon the other terms
and
conditions set forth in this Agreement.
2. Term
-
Unless terminated at an earlier date in accordance with Section 8 of this
Agreement or otherwise extended by agreement of the parties, the term of
Xxxxx’x
engagement hereunder shall be for a period of two (2) years, commencing on
January 1, 2005. The period of engagement may be extended by written agreement
between the parties for two successive one year terms, provided that certain
provisions including without limitation those relating to compensation may
change upon commencement of any extension hereto.
3. Position
and Duties
(a) Service
With Company - During the term of Xxxxx’x engagement by the Company, Xxxxx
agrees to perform such reasonable services as the Board of Directors of the
Company (the “Board”)
shall
assign to Xxxxx from time to time. Xxxxx’x title as of the Effective Date shall
be Executive Vice President of Global Matrechs, Inc. and President of TTF.
The
Company shall not require Xxxxx to move from his principal office in Braintree,
MA without Xxxxx’x prior consent.
(b) Performance
of Duties; Duty of Loyalty and Non-Compete - Xxxxx agrees to serve the Company
faithfully and to the best of Xxxxx’x ability and to devote all of his
professional time, attention and efforts to the business and affairs of the
Company during Xxxxx’x engagement by the Company. Xxxxx hereby confirms that
Xxxxx is under no contractual commitments inconsistent with Xxxxx’x obligations
set forth in this Agreement and that during the term of this Agreement Xxxxx
will not render or perform services for, or receive any compensation from,
any
other corporation, firm, entity or person, which are inconsistent with the
provisions of this Agreement. During the term of Xxxxx’x employment with the
Company and for a period of twelve (12) months thereafter, without prior
written
consent of
-1-
the
Company Xxxxx will not consult with, work as an employee or other service
provider (whether as an individual or as a partner, shareholder, director,
officer, agent, consultant, or in any other relationship or capacity) directly
or indirectly for any third party person or entity (“Third Party”) which Third
Party is in the primary business of assembly, sale or marketing of lighting
fixtures and lighting accessories. Primary business means 50% or more of
gross
revenues are derived from the business activities described in the sub-paragraph
above. Such restriction shall be operative in any state of the United States
or
in any country outside of the United States in which the Company shall then
be
doing business, directly or indirectly.
4. Compensation
(a) Base
Salary
- As
compensation for services to be rendered by Xxxxx under this Agreement, the
Company shall pay to Xxxxx a “Base Salary.” The Base Salary shall be one hundred
fifty thousand dollars ($150,000) annually, paid in equal semi-monthly
installments in arrears or otherwise in accordance with the standard procedures
and policies of the Company.
(b) Incentive
Compensation - The Company shall establish a bonus pool (“Net Sales Bonus”) for
Xxxxx based on TTF’s 12 month trailing net sales numbers - gross sales less all
returns, cancellations, credits and rebates (“Net Sales”), calculated in
accordance with generally accepted accounting principles (“GAAP”). Net Sales
Bonus payments shall be made annually at the end of January following audit
of
the Company’s books after closure of the applicable calendar year (fiscal year
end). The Net Sales Bonus shall be payable to Xxxxx in cash or restricted
common
stock, at Xxxxx’x option, based upon achievement of the following milestones:
$25,000 in value to Xxxxx if Net Sales exceed $1,000,000; $25,000 in value
to
Xxxxx if New Sales exceed $2,000,000; $100,000 in value to Xxxxx if Net Sales
exceed $4,000,000. In addition to the foregoing, Xxxxx shall be eligible
to
participate in any stock option incentive compensation plans that may be
established by the Board from time to time applicable for Xxxxx’x
services.
(c) Grants
of
Options - Within 30 days after the Effective Date, the Company shall grant
to
Xxxxx a non-statutory stock option (the “Initial Option”) to purchase 600,000
shares (the “Initial Option Shares”) of the Company’s common stock, par value
$.0001 per share (the “Common Stock”). Within
30
days after December 31, 2005 the Company shall issue a second non-statutory
stock option (the “Second Option” and, with the Initial Option, the “Options”)
to purchase that number of shares of Common Stock equal to the difference
of (a)
1% of the Common Stock issued and outstanding as of December 31, 2005 (which
number shall not include, for the avoidance of doubt, Common Stock issuable
but
not yet issued, as of such date, (i) upon conversion, exercise or exchange,
as
the case may be, of common stock equivalents, or (ii) in respect of any other
rights to receive Common Stock), minus (b) the Initial Option Shares. Each
Option
shall be fully vested upon the date of the grant of such Option (such Option’s
“Grant Date”). Each Option, shall have an exercise
price per share equal to the fair market value of the Common Stock on such
Option’s Grant Date, and shall be exercisable until the earlier of: (x) ten
years following its Grant
Date,
or (y)
90 days following the termination of Xxxxx’x employment.
-2-
(d) Expenses -
The
Company will pay or reimburse Xxxxx for all reasonable and necessary
out-of-pocket expenses incurred by Xxxxx in the performance of Xxxxx’x duties
under this Agreement, subject to the Company’s normal policies for expense
verification and travel guidelines.
(e) Health,
Retirement Benefit Plans and Vacation - Xxxxx shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies and programs
applicable generally to other officers or employees of the Company. Additionally
during the term of this Agreement Xxxxx and Xxxxx’x family, as the case may be,
shall be eligible for participation in and shall receive all benefits under
Welfare Benefit Plans. “Welfare Benefit Plans” are medical, dental, disability
of other health maintenance or similar plans made generally available to
officers or employees of the Company. Should Xxxxx choose a health insurance
program different than that provided by the Company, the Company shall reimburse
Xxxxx the dollar amount that the Company otherwise would contribute to health
insurance for Xxxxx and dependants under the Company plan.
5. Confidential
Information
- Except
as permitted or directed by the Company’s Board of Directors, during the term of
Xxxxx’x engagement or at any time thereafter, Xxxxx shall not divulge, furnish
or make accessible to anyone or use in any way (other than in the ordinary
course of the business of the Company) any confidential or secret knowledge
or
information of the Company that Xxxxx has acquired or become acquainted with
or
will acquire or become acquainted with prior to the termination of the period
of
Xxxxx’x engagement by the Company (including engagement by the Company or any
affiliated companies prior to the date of this Agreement) whether developed
by
Xxxxx himself or by others, concerning any trade secrets, confidential or
secret
designs, processes, formulae, plans, devices or material (whether or not
patented or patentable) directly or indirectly useful in any aspect of the
business of the Company, any customer or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any
other
confidential information or secret aspects of the business of the Company.
Xxxxx
acknowledges that the above-described knowledge or information constitutes
a
unique and valuable asset of the Company and represents a substantial investment
of time and expense by the Company, and that any disclosure or other use
of such
knowledge or information other than for the sole benefit of the Company would
be
wrongful and would cause irreparable harm to the Company. Both during and
after
the term of Xxxxx’x engagement, Xxxxx will refrain from any acts or omissions
that would reduce the value of such knowledge or information to the Company.
The
foregoing obligations of confidentiality shall not apply to any knowledge
or
information that is now published and publicly available or which subsequently
becomes generally publicly known in the form in which it was obtained from
the
Company, other than as a direct or indirect result of the breach of this
Agreement by Xxxxx.
6. Ventures
- If, during the term of Xxxxx’x engagement Xxxxx is engaged in or associated
with the planning or implementing of any project, program or venture involving
the Company and a third party or parties, all rights in such project, program
or
venture shall belong to the Company, unless prior written consent from the
Company is obtained. Except as approved by the Company’s Board of Directors,
Xxxxx shall not be entitled to any interest in such project, program or venture
or to any commission, finder’s fee or other compensation in connection therewith
other than the compensation to be paid to Xxxxx as provided in this Agreement.
Xxxxx
-3-
shall
not
enter into any arrangement through which Xxxxx acquires or may acquire any
interest, direct or indirect, in any vendor or customer of the
Company.
7. Patent
and Related Matters; Disclosure and Assignment - Xxxxx will promptly disclose
in
writing to the Company complete information concerning each and every invention,
discovery, improvement, device, design, apparatus, practice, process, method
or
product, whether patentable or not, made, developed, perfected, devised,
conceived or first reduced to practice by Xxxxx, either solely or in
collaboration with others, during the term of this Agreement, whether or
not
during regular working hours, relating either directly or significantly and
indirectly to the business, products, practices or techniques of the Company
(“Developments”). Xxxxx, to the extent that Xxxxx has the legal right to do so,
hereby acknowledges that any and all of the Developments are the property
of the
Company and agrees to assign and hereby assigns to the Company any and all
of
Xxxxx’x right, title and interest in and to any and all of the Developments
(“Assignment”). During the period commencing upon the day after Xxxxx’x last day
performing services for the Company and ending one year after termination
of
Xxxxx’x engagement with the Company, at the reasonable request of the Company,
Xxxxx will xxxxxx with the Company and its representatives for the purpose
of
disclosing all Developments to the Company, provided that such conference
is at
the Company’s expense and Xxxxx is compensated at no greater than a rate of $250
per hour for Xxxxx’x time plus reasonable and necessary expenses.
(a) Limitation
on Section 7(a)
- The
provisions of Section 7 shall not apply to any Development meeting the following
conditions: (i) such Development was developed entirely on Xxxxx’x own time
without the use of any Company equipment, supplies, facility or trade secret
information; and (ii) such Development does not relate directly or significantly
to the business of the Company to the Company’s actual or demonstrably
anticipated research or development; or result from any work performed by
Xxxxx
for the Company.
(b) Copyrightable
Material - All right, title and interest in all copyrightable material that
Xxxxx shall conceive or originate, either individually or jointly with others,
and which arise out of the performance of this Agreement, will be the property
of the Company and are by this Agreement assigned to the Company along with
ownership of any and all copyrights in the copyrightable material. Upon request
and without further compensation therefor, but at no expense to Xxxxx, Xxxxx
shall execute all papers and perform all other acts necessary to assist the
Company to obtain and register copyrights on such materials in any and all
countries, except that Xxxxx shall be compensated at no greater than a rate
of
$250 per hour plus reasonable and necessary expenses for Xxxxx’x time for
compliance with this provision following termination or expiration of this
Agreement. Where applicable, works of authorship created by Xxxxx for the
Company in performing Xxxxx’x responsibilities under this Agreement shall be
considered “works
made for hire,”
as
defined in the U.S. Copyright Act. To the extent not considered as work made
for
hire, such works will be considered assigned to the Company under the Assignment
provision of this Section 7.
(c) Know-How
and Trade Secrets - All know-how and trade secret information conceived or
originated by Xxxxx that arises out of the performance of Xxxxx’x obligations or
responsibilities under this Agreement or any related material or information
shall be the property of the Company, and all rights therein are by this
Agreement assigned to the Company.
-4-
8. Termination
of Engagement;
(a) Grounds
for Termination -
(a)
Xxxxx’x engagement shall terminate prior to the expiration of the initial term
set forth in Section 2 or any extension thereof in the event that at any
time:
(i) Xxxxx dies or is permanently disabled (substantially unable to perform
his
duties due to physical or mental incapacity for a period of ninety (90)
consecutive days or one-hundred and twenty (120) out of one hundred and fifty
(150) consecutive days), (ii) The Board elects to terminate this Agreement
for
“cause” and notifies Xxxxx in writing of such election, (iii) The Board elects
to terminate this Agreement without “cause” and notifies Xxxxx in writing of
such election, (iv) Xxxxx elects to terminate this Agreement and notifies
the
Company in writing of such election, or (v) Xxxxx elects to terminate this
Agreement for “good reason” (as defined below) and notifies the Company in
writing of such election or (vi) the Company undergoes a change of control
by
which the majority of the beneficial and voting ownership interest in the
Company changes hands.
If
this
Agreement is terminated pursuant to clause (i), (ii) or (iv) of this Section
8(a), such termination shall be effective immediately. If this Agreement
is
terminated pursuant to clause (iii), (v) or (vi) of this Section 8(a), such
termination shall be effective 15 days after delivery of the notice of
termination.
(b) “Cause”
Defined - “Cause” means: (i) Xxxxx has breached the provisions of Section 5, 6
or 7 of this Agreement in any material respect, (ii) Xxxxx has engaged in
willful and material misconduct, including willful and material failure to
perform Xxxxx’x duties as an officer of the Company and has failed to cure such
default within 10 days after receipt of written notice of default from the
Company, (iii) Xxxxx has committed fraud, misappropriation or embezzlement
in
connection with the Company’s business, or (iv) Xxxxx has been convicted or has
pleaded nolo
contendere
to
criminal misconduct (except for parking violations, occasional minor traffic
violations and other similar minor violations).
(c) Effect
of
Termination - Notwithstanding any termination of this Agreement, Xxxxx, in
consideration of Xxxxx’x engagement hereunder to the date of such termination,
shall remain bound by the provisions of this Agreement which specifically
relate
to periods, activities or obligations upon or subsequent to the termination
of
Xxxxx’x engagement.
(d) Surrender
of Records and Property -
Upon
termination of Xxxxx’x engagement with the Company, Xxxxx shall deliver promptly
to the Company all records, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, calculations or copies
thereof that relate in any way to the business, products, practices or
techniques of the Company, and all other property, trade secrets and
confidential information of the Company, including, but not limited to, all
documents that in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in Xxxxx’x
possession or under Xxxxx’x control.
(e) Payment
Continuation - If Xxxxx’x engagement by the Company is terminated by the Company
pursuant to clause (iii) of Section 8(a) or by Xxxxx for Good Reason pursuant
to
clause (v) of Section 8(a), or by a change in control pursuant to clause
(vi) of
Section 8(a), the Company shall continue to pay to Xxxxx Xxxxx’x Base Salary
(less any payments received by Xxxxx from any disability income insurance
policy
provided to Xxxxx) plus the pro-rata portion of the Net Sales Bonus calculated
through the date of termination through the earlier
-5-
of
(a)
the date that Xxxxx has obtained other professional engagement with a total
compensation package (i.e. Salary plus benefits) equivalent to at least 80%
of
his total compensation under the terms of this agreement as of the date of
termination, or (b) twelve (12) months from the date of termination of
engagement. Any payment made pursuant to this section shall be payable over
the
12 month period following termination pursuant to the normal semi-monthly
pay
cycle and not as a lump sum. If this Agreement is terminated pursuant to
clauses
(i), (ii) or (iv) of Section 8(a), Xxxxx’x right to Base salary and benefits
shall immediately terminate, except as may otherwise be required by applicable
law.
(f) “Good
Reason” defined - Good Reason shall mean: (i) the assignment of Xxxxx to any
duties inconsistent in any respect with Xxxxx'x position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a) or any other action by the
Company which results in a diminution in such position, authority, duties
or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by Xxxxx; (ii) any termination
or
reduction of a material benefit under any benefits plan in which Xxxxx
participates unless (1) there is substituted a comparable benefit that is
economically substantially equivalent to the terminated or reduced benefit
prior
to such termination or reduction or (2) benefits under such plan are terminated
or reduced with respect to all employees previously granted benefits thereunder.
9. Indemnification
- In the
event that Xxxxx is made, or threatened to be made, a party to any action
or
proceeding, whether civil or criminal, by reason of the fact that Xxxxx,
at the
request of the Company, is or was a director, officer, or member of a committee
of the Board or serves or served any other corporation, partnership, joint
venture, trust, benefit plan or other enterprise in any capacity, or resulting
from any of Xxxxx’x actions in any of the foregoing roles, Xxxxx shall be
indemnified and held harmless by the Company and the Company shall advance
Xxxxx’x related expenses to the fullest extent permitted by law (including
without limitation, damages, costs and reasonable attorney fees), as may
otherwise be provided in the Company’s Certificate of Incorporation and ByLaws
or its Operating Agreement. The
Company further covenants not to amend or repeal any provisions of such
documents which would adversely affect the indemnification or exculpatory
provisions contained therein as they pertain to Xxxxx. The provisions of
this
Section are
intended to be for the benefit of, and shall be enforceable by Xxxxx and
his
heirs and representatives. If
the
Company or any of its successors or assigns (i) shall consolidate with or
merge
into any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets, then and
in each
such case, proper provisions shall be made so that the successors and assigns
of
the Company shall assume all of the obligations set forth in this Section
9.
10. Miscellaneous
(a) Counterparts
- This
Agreement may be executed in separate counterparts, each of which will be
an
original and all of which taken together shall constitute one and the same
agreement, and any party hereto may execute this Agreement by signing any
such
counterpart.
-6-
(b) Severability
- Whenever possible, each provision of this Agreement shall be interpreted
in
such a manner as to be effective and valid under applicable law but if any
provision of this Agreement is held to be invalid, illegal or unenforceable
under any applicable law or rule, the validity, legality and enforceability
of
the other provisions of this Agreement will not be affected or impaired thereby.
In furtherance and not in limitation of the foregoing, should the duration
or
geographical extent of, or business activities covered by, any provision
of this
Agreement be in excess of that which is valid and enforceable under applicable
law, then such provision shall be construed to cover only that duration,
extent
or activities which may validly and enforceably be covered.
(c) Successors
and Assigns - This Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective heirs, personal representatives and,
to
the extent permitted by subsection (d), successors and assigns.
(d) Assignability
- Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable (including by operation
of
law) by either party without the prior written consent of the other party
to
this Agreement or as specifically provided herein, except that the Company
may,
without the consent of Xxxxx, assign its rights and obligations under this
Agreement to any corporation, firm or other business entity with or into
which
the Company may merge or consolidate, or to which the Company may sell or
transfer all or substantially all of its assets, or of which 50% or more
of the
equity investment and of the voting control is owned, directly or indirectly,
by, or is under common ownership with, the Company. Provided such assignee
explicitly assumes such responsibilities, after any such assignment by the
Company, the Company shall be discharged from all further liability hereunder
and such assignee shall thereafter be deemed to be the Company for the purposes
of all provisions of this Agreement including this Section 10.
(e) Modification,
Amendment, Waiver or Termination - No provision of this Agreement may be
modified, amended, waived or terminated except by an instrument in writing
signed by the parties to this Agreement. No course of dealing between the
parties will modify, amend, waive or terminate any provision of this Agreement
or any rights or obligations of any party under or by reason of this Agreement.
No delay on the part of the Company or Xxxxx in exercising any right hereunder
shall operate as a waiver of such right. No waiver, express or implied, by
the
Company of any right or any breach by Xxxxx shall constitute a waiver of
any
other right or breach by Xxxxx.
(f) Notices
-
All notices, consents, requests, instructions, approvals or other communications
provided for herein shall be in writing and delivered by personal delivery,
overnight courier, certified mail, electronic facsimile or e-mail addressed
to
the receiving party at the address set forth herein. All such communications
shall be effective when received.
-7-
|
If
to the Company:
Xxxxxxx
Xxxxxxxx
Executive
Pavilion
00
Xxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
If
to Xxxxx:
Xxxx
Xxxxx
00
Xxxxxx Xxxxx
Xxxxxxx,
XX 00000
|
Any
party
may change the address set forth above by notice to the other party given
as
provided herein.
(g) Headings
- The
headings and any table of contents contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation
of
this Agreement.
(h) Governing
Law - ALL
MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEMENT
OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CONNECTICUT, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF,
EXCEPT AS TO CORPORATE MATTERS WHICH SHALL BE GOVERNED BY THE CORPORATION
LAWS
OF THE STATE OF DELAWARE. CHOICE OF LAW PROVISIONS WHICH WOULD OTHERWISE
RESULT
IN THE APPLICATION OF LAWS OF SATES OTHER THAN THOSE CONTEMPLATED BY THIS
PROVISION SHALL NOT APPLY.
(i) Venue;
Fees and Expenses - ANY
ACTION AT LAW, SUIT IN EQUITY OR JUDICIAL PROCEEDING ARISING DIRECTLY,
INDIRECTLY, OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS
AGREEMENT, OR ANY PROVISION HEREOF, SHALL BE LITIGATED ONLY IN THE STATE
COURTS
LOCATED IN THE STATE OF CONNECTICUT, COUNTY OF FAIRFIELD OR THE FEDERAL COURTS
IN THE DISTRICT WHICH COVERS SUCH COUNTY. XXXXX AND THE COMPANY CONSENT TO
THE
JURISDICTION OF SUCH COURTS. THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER
ITS REASONABLE ATTORNEYS’ FEES AND COSTS IN ANY SUCH
ACTION.
(j) Waiver
of
Right to Jury Trial - EACH
PARTY HERETO HEREBY WAIVES, EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY
APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
-8-
BETWEEN
THE PARTIES HERETO ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
(k) Third-Party
Benefit - Nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights, remedies, obligations or liabilities of
any
nature whatsoever.
(l) Withholding
Taxes - The Company may withhold from any benefits payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to
any law
or governmental regulation or ruling.
-9-
THE
PARTIES ACKNOWLEDGE THAT EACH HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND
AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE
THAT
THIS AGREEMENT AND ANY EXHIBITS HERETO ARE THE COMPLETE AND EXCLUSIVE STATEMENT
OF THE AGREEMENT BETWEEN THE PARTIES, WHICH SUPERSEDES ALL PROPOSALS OR ALL
PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF.
ACCEPTED
AND AGREED:
|
XXXX
XXXXX
|
|
|
By:
President
|
|
|
/s/
Xxxxxxx Xxxxxxxx
|
/s/
Xxxx Xxxxx
|
|
Date:
_____________________________
|
Date:
_____________________________
|
-10-
