EMPLOYMENT AGREEMENT
EXHIBIT
10.5
This
Employment Agreement (the "Agreement"), effective May 1, 2005, is by and between
HOUSE
OF BRUSSELS CHOCOLATES INC.,
a
Nevada corporation (the "Company") and XXXXX
XXXXXXXX
("Employee").
W
I T N E S S E T H:
WHEREAS,
Company
desires to employ Employee as provided herein; and
WHEREAS,
Employee desires to accept such employment.
NOW,
THEREFORE,
for and
in consideration of the mutual covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
I.
CONSIDERATION
This
Agreement is executed and delivered for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged. The special training
and knowledge acquired or to be acquired by the Employee during employment
are
material factors relating to the employment of the Employee without which the
employment relationship would not be commenced. The parties hereto acknowledge
and agree that this Agreement is necessary to protect the Company's legitimate
interests, including, but not limited to, its business goodwill, trade secrets
and other confidential or proprietary information.
II.
TERM
OF EMPLOYMENT
Subject
to the terms and conditions hereof, the term of employment of Employee will
commence as of the effective date hereof (the "Commencement Date") and will
end
on April 30, 2008, unless earlier terminated by either party pursuant to the
terms hereof. The term of this Agreement is referred to herein as the "Term."
III.
DUTIES
OF EMPLOYEE
3.1
Duties.
The
Employee is hereby employed as President and Chief Executive Officer of the
Company. The Employee's responsibilities for such office shall include managing
the day-to-day operations of the Company's business and its ongoing expansion
efforts. Generally, in his capacity as President and Chief Executive Officer
of
the Company, the Employee will be primarily responsible for the general
supervision, direction, and control of the business and officers of the Company,
subject to the control of the Board of Directors. Employee will faithfully
and
diligently perform the services and functions relating to such office or
otherwise reasonably incident to such office, provided that all such services
and functions will be reasonable and within Employee's area of expertise.
Employee will, during the term of this Agreement (or any extension thereof),
devote his full business time, attention and skills and best efforts to the
promotion of the business of Company.
3.2
Engaging
in Other Employment.
The
Employee shall devote such productive time, ability, and attention to the
business of the Company during the term of this Agreement as is required to
fulfill his duties and responsibilities as set forth in Paragraph 3.1 above.
During the period of employment, the Employee further agrees not to (i) solely
or jointly with others undertake or join any planning for or organization of
any
business activity competitive with the business activities of the Company,
or
(ii) directly or indirectly, engage or participate in any other activities
in
conflict with the best interest of the Company. Notwithstanding anything herein
contained to the contrary, the Employee shall be able to devote such time as
he
deems reasonably necessary to his own private investments and affairs, so long
as the performance of the Employee hereunder is not impaired and the covenants
contained herein are not violated.
IV.
COMPENSATION
TO EMPLOYEE
4.1.
Annual
Salary.
During
the Initial Term of this Agreement, the Employee shall be entitled to an annual
salary of $250,000.00, less all payroll deductions and applicable taxes. The
time of payment for each installment shall be consistent with the general
business practices of the Company.
4.2
Other
Compensation.
The
Employee understands and agrees that any additional compensation to the Employee
(whether a bonus or other form of additional compensation) shall rest in the
sole discretion of the Board of Directors (or any Compensation Committee
consisting of members of the Board of Directors) and shall be based upon the
performance of the Company as well as participation in all benefit plans
maintained by the Company for salaried employees. Employee shall be entitled
to
the following Other Compensation:
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(a)
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Bonus.
Employee shall be paid a one-time bonus of $50,000.00 upon execution
of
this Agreement.
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(b)
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Performance
Bonus.
Employee will paid a performance bonus as
follows:
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(i)
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In
the event the Company’s annual gross revenues (as reflected in the
Company’s Form 10-KSB as filed with the U.S. Securities and Exchange
Commission for the fiscal year ended April 30, 2006, hereinafter
referred
to as the “Annual Report”) reach $22,000,000, and the Company’s net income
(as reflected in the Company’s Annual Report, less any expenses related to
the credit facility with Laurus Master Funds) reach $2,500,000, the
Employee shall receive a performance bonus of $50,000.
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(ii)
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In
the event the Company’s annual gross revenues (as reflected in the
Company’s Annual Report) reach $30,000,000, and the Company’s net income
(as reflected in the Company’s Annual Report, less any expenses related to
the credit facility with Laurus Master Funds) reach $4,000,000, then
the
Board of Directors or Compensation Committee will grant a bonus of
not
less than $75,000 nor more than
$100,000.
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4.3
Fringe
Benefits-Employee Benefits Plan.
The
Employee shall be entitled to participate on an equitable basis, as the Board
of
Directors may, in the exercise of its discretion deem appropriate, in any stock
option plan and any additional year-end or other profit sharing or incentive
or
deferred compensation arrangements, whether provided for in stock, cash or
otherwise, which the Company may distribute to or provide for officers and
employees generally, or for a limited or selected group, as well as under any
other plans, benefits, customs or practices now or hereinafter made available
to
other executives of the Company, including as examples only, group life
insurance and medical insurance. The Company may terminate, amend or modify
any
or all such plans at any time and may choose not to adopt additional plans.
The
Employee's rights under any benefits plans now in force or later adopted by
the
Company shall be governed solely by their terms.
4.4
Expense
Account.
The
Employee is authorized to incur reasonable and necessary expenses directly
associated with the promotion of the interests of the Company, and the
performance of his assignments, including expenditures for entertainment and
travel. The Company will reimburse the Employee from time to time for all such
business expenses, upon the Employee's presenting to the Company such
information and support as prescribed by Company policy.
4.5 Holidays
and Vacations.
The
Employee shall be entitled to three (3) weeks of paid vacation for each year
during the term hereof. Additionally, the Employee shall be entitled to such
fully paid holidays as are normally taken by other full time employees of
businesses similar to the Company, and such other holidays which may be
particular to the Employee's religious preference.
V.
TERMINATION
OF EMPLOYMENT
5.1
Termination
by the Company for Cause.
The
Company may "for cause" terminate the employment of the Employee at any time
without notice. "For cause" for the purpose of this Agreement is defined
as:
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(a)
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The
willful and continued failure to substantially perform his duties
as set
forth in this Agreement;
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(b)
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The
breach by the Employee of any of the provisions of this Agreement
or of
the covenants contained in Article VI of this Agreement;
or
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(c)
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If
the Board of Directors in the exercise of its reasonable judgment
determines that Employee has committed an act of acts constituting
a
felony or other crime involving moral turpitude, dishonesty or theft
or
fraud.
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5.2
Termination
by the Company without Cause.
The
Company may terminate this Agreement without cause and will pay the Employee
severance pay of $62,500 under this Paragraph 5.2 for termination without cause,
which represents three (3) months salary.
5.3 Voluntary
Termination.
The
Employee may terminate his employment voluntarily by providing thirty (30)
days
written notice to the Company.
5.4 Obligations
of the Company Upon Termination.
Except
with respect to the compensation discussed in Paragraph 5.2 above, in the event
of the termination of employment by the Company or the Employee for any reason
whatsoever, including resignation or voluntary termination by the Employee,
the
Employee shall only be entitled to the compensation earned by him including
all
compensation specified in Article IV herein, prior to the date of termination
as
provided for in this Agreement, computed pro rata up to and including the date
of such termination of employment. Upon such payment to the Employee, the
Company shall be relieved of further obligation as it relates to this Agreement;
however, the Employee shall still be bound by the covenants and restrictions
contained in Article VI below. Notwithstanding any of the foregoing, Employee
shall not be entitled to receive any bonuses discussed in Paragraph 4.2
above.
VI.
RESTRICTIVE
COVENANTS
6.1
Definition.
The
Employee hereby acknowledges that during the course of his employment with
the
Company, he will have access to and will become familiar with various trade
secrets and other proprietary and confidential information which are owned
by
the Company and which are used in the operation of the Company's business.
"Trade secrets and other proprietary and confidential information" consist
of,
for example, and not intending to be all inclusive, (i) methods of doing
business; (ii) financial information, consisting of financial cost, and sales
data and other information; (iii) personnel information (iv) lists of customers
and accounts, contracts, sales information, pricing list, vendor and supplier
list of the Company; (v) other information of a confidential nature which must
remain confidential for the continuing success of the Company; and (vi) such
other information concerning the business of the Company and the Company's
goodwill.
6.2
Non-Disclosure
and Confidentiality Covenants.
The
Employee acknowledges that the Company's trade secrets and other proprietary
and
confidential information, as they may exist from time to time, are valuable,
special and unique assets of the Company's business. Additionally, Employee
acknowledges that the business goodwill and business contacts of the Company
are
the sole property of the Company and are among the Company's most valuable
business property. Therefore, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and to protect the foregoing
valuable property of the Company, the Employee expressly covenants and agrees
as
follows:
Except
as
required in the course of his employment with the Company, the Employee will
not, during and after the termination of his employment:
(1)
Disclose,
directly or indirectly, the Company's trade secrets and other proprietary and
confidential information, or any part thereof, to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever;
or
(2) Directly
or indirectly use the Company's trade secrets and other proprietary and
confidential information, or any part thereof, for his own purpose or for his
own benefit in any activity of any nature whatsoever.
6.3
Return
of Company's Property.
The
Employee covenants and agrees that, upon the request of the Company or upon
termination of employment, the Employee shall turn over to the Company all
files, records, documents, drawings, presentations, specifications, equipment,
disks or other computer media, data, computer printouts, records, written
materials and similar items relating to the business of the Company, and any
other property of the Company in his possession or under his control. In the
event the Employee fails to return the Company's property when required or
requested to do so, the Company may, in addition to any other remedy provided
by
law, withhold any amounts due the Employee until full compliance with this
Paragraph 6.3.
6.4
Covenant
Not to Compete.
So long
as the Employee is employed by the Company and for a period of twelve (12)
months after either (i) the voluntary termination of employment by Employee,
(ii) the termination of the Employee by the Company for cause as set forth
in
Paragraph 5.1, or (iii) the expiration of the Term of this Agreement, the
Employee specifically agrees that he will not, for himself, on behalf of, or
in
conjunction with any person, firm, corporation or entity, other than the Company
(either as principal, employee, shareholder, member, director, partner,
consultant, owner or part-owner of any corporation, partnership or any type
of
business entity) anywhere in any country in which the Company is doing business
at the time of termination, directly or indirectly, own, manage, operate,
control, be employed by, participate in, or be connected in any manner with
the
ownership, management, operation, or control of any business similar to the
type
of business conducted by the Company at the time of termination of the
Employee's employment.
6.5
Inducing
Employees to Leave Company; Employment of Employees.
Any
attempt on the part of the Employee to induce others to leave the Company’s
employ, or any effort by the Employee to interfere with the Company’s
relationship with its other employees would be harmful and damaging to the
Company. The Employee covenants and agrees that during the term of employment
and for a period of twelve (12) months thereafter, the Employee will not in
any
way, directly or indirectly: (i) induce or attempt to induce any employee of
the
Company to quit employment with the Company; (ii) otherwise interfere with
or
disrupt the Company’s relationship with its employees; or (iii) solicit, entice
or hire away any employee of the Company whose employment with the Company
ceased less than one (1) year before the date of such hiring or
engagement.
6.6
Non-solicitation
of Business.
For a
period of twelve (12) months from the date of termination of employment, the
Employee will not divert or attempt to divert from the Company any business
the
Company has enjoyed or solicited from its customers during the twelve (12)
months prior to termination of his employment.
6.7
Employee's
Acknowledgements and Agreements.
The
Employee acknowledges and agrees that:
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(a)
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Due
to the nature of the Company's business, the foregoing covenants
place no
greater restraint upon the Employee than is reasonably necessary
to
protect the business and goodwill of the Company;
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(b)
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These
covenants protect a legitimate interest of the Company and do not
serve
solely to limit the Company's future
competition;
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(c)
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This
Agreement is not an invalid or unreasonable restraint of
trade;
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(d)
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A
breach of these covenants by the Employee would cause irreparable
damage
to the Company;
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(e)
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These
covenants will not preclude the Employee from becoming gainfully
employed
following termination of employment with the Company;
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(f)
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These
covenants are reasonable in scope and are reasonably necessary to
protect
the Company's business and goodwill and valuable and extensive trade
which
the Company has established through its own expense and
effort;
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(g)
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The
signing of this Agreement is necessary for the Employee's employment;
and
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(h)
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He
has carefully read and considered all provisions of this Agreement
and
that all of the restrictions set forth are fair and reasonable and
are
reasonably required for the protection of the interests of the
Company.
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6.8
Remedies,
Injunction.
In the
event of the Employee's actual or threatened breach of any provisions of this
Agreement, the Employee agrees that the Company shall be entitled to a temporary
restraining order, preliminary injunction and/or permanent injunction
restraining and enjoining the Employee from violating the provisions herein.
Nothing in this Agreement shall be construed to prohibit the Company from
pursuing any other available remedies for such breach or threatened breach,
including the recovery of damages from the Employee. The Employee further agrees
that for the purpose of any such injunction proceeding, it shall be presumed
that the Company's legal remedies would be inadequate and that the Company
would
suffer irreparable harm as a result of the Employee's violation of the
provisions of this Agreement. In any proceeding brought by the Company to
enforce the provisions of this Agreement, no other matter relating to the terms
of any claim or cause of action of the Employee against the Company will be
defense thereto.
6.9
Severability.
In the
event that any of the provisions of this Agreement are held to be invalid or
unenforceable in whole or in part, those provisions to the extent enforceable
and all other provisions shall nevertheless continue to valid and enforceable
as
though the invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time period or scope
of a restriction shall be declared by a court of competent jurisdiction to
exceed the maximum time period or scope such court deems reasonable and
enforceable, then the time period or scope of the restriction deemed reasonable
and enforceable by the court shall become and shall thereafter be the maximum
time period or the applicable scope of the restriction. The Employee further
agrees that such covenants and/or any portion thereof are severable, separate
and independent, and should any specific restriction or the application thereof,
to any person, firm, corporation, or situation be held to be invalid, that
holding shall not affect the remainder of such provisions or
covenants.
VII.
GENERAL
PROVISIONS
7.1
Notices.
Any
notices to be given hereunder by either party to the other may be effected
either by personal delivery in writing or by mail, registered or certified,
postage prepaid with return receipt requested. Mailed notices shall be addressed
to the parties at the addresses set forth below, but each party may change
their
address by written notice in accordance with this Paragraph 7.1. Notices
delivered personally shall be deemed communicated as of actual receipt; mailed
notices shall be deemed communicated as of three (3) days after mailing.
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If
to Company:
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Xxx
Xxxxxxxx, Xxxxx 0000
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Xxxxxxx,
Xxxxx, 00000
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If
to Employee:
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Xxxxx
Xxxxxxxx
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7.2
Law
Governing Agreement and Venue.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada. Venue shall be in Xxxxxx County, Texas for any legal proceeding
to enforce the terms, conditions or covenants contained herein.
7.3
Attorneys'
Fees and Costs.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing parties shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which he may be entitled.
7.4 Contract
Terms to be Exclusive.
This
Agreement contains the sole and entire agreement between the parties and shall
supersede any and all other agreements between the parties with respect to
the
Employee's employment. The parties acknowledge and agree that neither of them
has made any representation with respect to the subject matter of this Agreement
or any other agreement executed between them or any representations inducing
the
execution and delivery hereof or any other agreement executed between them
except such representations as are specifically set forth herein and each of
the
parties hereto acknowledges that he or it has relied on his or its own judgment
in entering into the same. The parties hereto further acknowledge that any
statements or representations that may have heretofore been made by either
of
them to the other are void and of no effect and that neither of them has relied
thereon in connection with his or its dealings with the other.
7.5 Waiver
or Modification Ineffective Unless in Writing.
It is
further agreed that no waiver or modification of this Agreement or of any
covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith and that no
evidence of any waiver or modification shall be offered or received in evidence
in any proceeding or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of any party hereunder,
unless such waiver or modification is in writing, duly executed as aforesaid,
and the parties further agree that the provisions of this paragraph may not
be
waived as herein set forth.
7.6 Invalidity
of Contract.
Should
any provision(s) of this Agreement be declared invalid or unenforceable by
a
court of competent jurisdiction, it shall be severed or modified and the
remainder of this Agreement shall be enforced in total. Additionally, if the
Employee claims that any provision or covenant contained herein is invalid
or
unenforceable, he nevertheless agrees to comply with such provision or covenant
as written until a court of competent jurisdiction determines the enforceability
or validity of such provision or covenant, or limits the scope thereof, and
further agrees to be liable for any and all damages to the Company pending
such
determination by the court.
7.7 Assignment.
The
rights and benefits of the Company under this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company. The
rights of the Employee hereunder are personal and nontransferable except that
the rights and benefits hereof shall inure to the benefit of the heirs,
executors and legal representatives of the Employee.
7.8
Gender.
In all
cases where a feminine or masculine pronoun is used it shall be deemed to
include the other and as may be applicable to the instant matter.
7.9 Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original and all of which will constitute one and the same instrument,
but only one of which need be produced.
7.10
Counterparts
and Facsimiles.
This
Agreement may be executed in multiple counterparts and in any number of
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute and be deemed to be one and the same instrument and
each of which shall be considered and deemed an original for all purposes.
This
Agreement shall be effective with the facsimile signature of any of the parties
set forth below and the facsimile signature shall be deemed as an original
signature for all purposes and the Agreement shall be deemed as an original
for
all purposes.
IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Agreement as of the day and year first
above written.
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COMPANY:
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By:
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/s/
Xxxx Xxxx
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By
Xxxx Xxxx
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Its:
Chairman, Compensation Committee
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EMPLOYEE:
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By:
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/s/
Xxxxx Xxxxxxxx
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Xxxxx
Xxxxxxxx
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Employment
Agreement - Page 8
