Attached files
Exhibit 10.24
October
1, 2017
Mr.
David Reichwein
208 1/2
South Poinsettia Place
Los
Angeles, CA 90036
Re:
Offer Letter
Dear
Mr. Reichwein:
On
behalf of GrowLife, Inc. (“Company”), it is my pleasure
to extend to you this letter of employment for the position of
Vice-President of Research and Development, effective as of October
1, 2017, reporting to Marco Hegyi, Chief Executive Officer of the
Company. Your duties will include the research, development and
go-to-market of innovative products and services with 50%+ gross
margins for the Company’s distribution channels, and the
management of the related personnel and resources. This agreement
is conditioned upon the close of GrowLife’s acquisition of
assets as contemplated in the Letter of Intent dated September 20,
2017.
1.
Compensation.
a. Base
Wage. In this exempt
position, you will earn a base salary of $150,000 on an annualized
basis, subject to applicable tax withholding. Your salary will be
payable pursuant to the Company’s regular payroll
policy.
b. Incentive
Compensation.
Starting on the first quarter (“Q1”) you are eligible
to earn a quarterly commission based on 10% of tile gross margin
dollars.
c.
Transfer of
Ownership Bonus. As additional compensation for the work
that you have done in the gross margin contribution to GrowLife you
will receive a one-time bonus of 6% of the gross margin of the
latest four quarter that GrowLife has received from the 100%
ownership of tile business should PHOT be sold in a majority to
another party. This bonus will represent the complete release of
all intellectual property ownership of any GrowLife related
assets.
2.
Employee
Benefits.
a. Paid
Time Off. You will be
eligible to accrue up to 15 days of paid Personal Time Off
“PTO” per calendar year, pro-rated for the remainder of
this calendar year. PTO may be used for vacation, sick or other
personal needs. The PTO days will not roll forward between
years.
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b.
Group
Plans. The Company
will provide you with the opportunity to participate in the
benefits plans made available to other similarly situated
employees, including medical, and life insurance, as available,
subject to any eligibility requirements imposed by such
plans.
3.
Equity
Award.
a. Stock
Option. Subject to
approval by the Company’s Board of Directors, the Company
will grant you an option to purchase 20,000,000 shares of the
Company’s Common Stock (“Shares”) under the
Company’s 2011 Stock Incentive Plan (“SIP”), with
an exercise price per share set at the date of grant. Upon full
ownership of the tile and coating assets, 10,000,000 of these
options will be immediately fully vested and the remaining
10,000,000 shares will vest on a quarterly basis over a period of
two years beginning on the date of grant (the “Vesting
Commencement Date”). One eight (1/8th) of the Shares will
vest one quarter after the Vesting Commencement Date, and
thereafter 1/8th of the Shares shall
vest each quarter on the same day of each quarter corresponding to
the Vesting Commencement Date until all shares have vested,
provided that you do not cease to be an employee of the Company
prior to such date. The stock option grant shall be subject to the
terms and conditions of the Company’s SIP, including vesting
requirements. No right to any stock is earned or accrued until such
time that the Shares vest, nor does the grant confer any right to
continue vesting or employment.
In
addition, notwithstanding the foregoing, in the event that your
continuous status as employee to the Company is terminated by the
Company without Cause (as defined below) or you terminate your
employment with the Company for Good Reason (as defined below), in
either case upon or within twelve (12) months after a Change in
Control (as defined in the Company’s Stock Plan) then,
subject to your execution of a standard release of claims in favor
of the Company (or its successor), 100% of the total number of
Shares shall immediately become vested.
4. Employment
Conditions.
a. Right
to Work. Add standard
terms.
b. Verification
of Information. Add
standard terms.
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c. No
Conflicting Obligations. You understand and agree that by
accepting this offer of employment, you represent to the Company
that your performance will not breach any other agreement to which
you are a party and that you have not, and will not during the term
of your employment with the Company, enter into any oral or written
agreement in conflict with any of the provisions of this letter or
the Company’s policies. You are not to bring with you to the
Company, or use or disclose to any person associated with the
Company, any confidential or proprietary information belonging to
any former employer or other person or entity with respect to which
you owe an obligation of confidentiality under any agreement or
otherwise. The Company does not need and will not use such
information and we will assist you in any way possible to preserve
and protect the confidentiality of proprietary information
belonging to third parties. Also, we expect you to abide by any
obligations to refrain from soliciting any person employed by or
otherwise associated with any former employer and suggest that you
refrain from having any contact with such persons until such time
as any non-solicitation obligation expires.
d. General
Obligations. As an
employee, you will be expected to adhere to the Company’s
standards of professionalism, loyalty, integrity, honesty,
reliability and respect for all. Please note that the Company is an
equal opportunity employer. The Company does not permit, and will
not tolerate, the unlawful discrimination or harassment of any
employees, consultants, or related third parties on the basis of
sex, race, color, religion, age, national origin or ancestry,
marital status, veteran status, mental or physical disability or
medical condition, sexual orientation, pregnancy, childbirth or
related medical condition, or any other status protected by
applicable law. Any questions regarding this EEO statement should
be directed to Human Resources.
5. Severance
Benefits.
a.
General
Terms. In no way
limiting the Company’s policy of employment at-will, if your
employment is terminated by the Company without Cause (as defined
below), and other than as a result of your death or disability, the
Company may offer certain severance benefits to you. As a condition
to your receipt of such benefits, you will be required to comply
with your continuing obligations (including the return of any
Company property), resign from all positions you hold with the
Company, and execute the Company’s standard form of release
agreement releasing any claims you may have against the
Company.
b. Cause.
For the purposes of this letter, “Cause” shall mean:
(i) your engaging in illegal conduct that was or is reasonably
likely to be materially injurious to the business or reputation of
the Company or its affiliates; (ii) your violation of a
federal or state law or regulation that results in material harm to
the Company’s business; (iii) your material breach of
the terms of any confidentiality agreement or invention assignment
agreement between you and the Company; (iv) your being
convicted of, or entering a plea of nolo contendere to, a felony (other
than a traffic violation) or committing any act of fraud against,
or the misappropriation of material property belonging to, the
Company or its affiliates; or (v) your repeated failure to
substantially perform your duties and responsibilities to the
Company after notification by the President or the Board of
Directors of such failure and a reasonable opportunity to cure such
failure (30 days).
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c. Good
Reason. For the purposes of this letter, “Good Reason” shall mean
any of the following, without your express written consent:
(i) a significant reduction of your duties or responsibilities
relative to your duties or responsibilities in effect immediately
prior to such reduction or your removal from such duties or
responsibilities, unless you are provided with comparable duties
and responsibilities; provided,
however, that a reduction in duties or responsibilities
solely by virtue of the Company being acquired and made part of a
larger entity shall not constitute “Good Reason”;
(ii) a material reduction by the Company of your base salary
as in effect immediately prior to such reduction if there is no
corresponding reduction in duties or responsibilities (unless such
reduction constitutes an across-the-board salary reduction,
approved by the Board of Directors of the Company, applicable to
all similarly-situated employees at the Company); (iii) a
material reduction by the Company in the kind or level of employee
benefits to which your are entitled immediately prior to such
reduction with the result that your overall benefits package is
significantly reduced (unless such reduction constitutes an
across-the-board reduction, approved by the Board of Directors of
the Company, applicable to all similarly-situated employees at the
Company); and (iv) the failure of the Company to obtain the
assumption of the material obligations of your employment offer
letter with the Company or of the restricted stock purchase
agreement by any successors.
6.
As a Company employee, you will be expected to abide by the
Company’s rules and standards. Specifically, you will be
required to sign an acknowledgment that you have read and that you
understand the Company’s rules of conduct which are included
in the Company Handbook, which the Company will soon complete and
distribute.
7.
As a Company employee, the Company will, at the
Company’s expense, provide you with all the requisite
facilities, equipment, software, and supplies necessary for you to
complete the duties of your role in accordance with the
Company’s policies.
8.
As a condition of your employment, you are also required to sign
and comply with an At-Will Employment, Confidential Information,
Invention Assignment and Arbitration Agreement which requires,
among other provisions, the assignment of patent rights to any
invention made during your employment at the Company, and
non-disclosure of Company proprietary information. In the event of
any dispute or claim relating to or arising out of our employment
relationship, you and the Company agree that (i) any and all
disputes between you and the Company shall be fully and finally
resolved by binding arbitration, (ii) you are waiving any and
all rights to a jury trial but all court remedies will be available
in arbitration, (iii) all disputes shall be resolved by a
neutral arbitrator who shall issue a written opinion, (iv) the
arbitration shall provide for adequate discovery, and (v) the
Company shall pay all but the first $125 of the arbitration fees.
Please note that we must receive your signed Agreement before your
first day of employment.
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To
indicate your acceptance of the Company’s offer, sign and
date this letter and return it, along with a signed and dated
original copy of the Confidentiality Agreement, on or before
October 15, 2017. This letter, together with the Confidentiality
Agreement, set forth the terms of your employment with the Company
and supersedes any prior representations or agreements, whether
written or oral. This letter will be governed by the laws of
Washington, without regard to its conflict of laws provisions. This
letter may not be modified except by a written agreement, signed by
the Chief Executive Officer of the Company.
Very
truly yours,
GROWLIFE,
INC.
By: /s/
Marco Hegyi
(Signature)
Name:
Marco Hegyi
Title:
Chief Executive Officer
Agreed
to and accepted:
Signature:
/s/ David Reichwein
Printed
Name: David Reichwein
Date:
October 1, 2017
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