In conjunction with the Company’s acquisition of certain assets from Razor Jacket, LLC, an Oregon limited liability company, Frank Gill and Ryan Johnson, the Company desires to employ Employee, and Employee desires to be employed by the Company, on the terms and conditions hereinafter provided. Employee understands and acknowledges that, notwithstanding the terms of this Agreement, Employee’s employment with the Company constitutes “at-will” employment.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:
Section 1. Term of Employment.
Subject to earlier termination in accordance with this Agreement, this Agreement will remain in effect for a period of 1 year from the Effective Date (the “Initial Term”). Provided that this Agreement has not been terminated prior to the expiration of the Initial Term in accordance with the terms contained herein, subsequent to such time, Employee’s employment hereunder shall be automatically continued for an additional term of one (1) year (the “Secondary Term”) unless written notice of non-renewal is given by either party no less than 60 days prior to the end of the Initial Term (an “Initial Non-Renewal”). Thereafter, and provided that this Agreement has not been terminated prior to the expiration of the Secondary Term in accordance with the terms contained herein, subsequent to such time, Employee’s employment hereunder shall be automatically continued for successive additional terms of one (1) year each unless written notice of non-renewal is given by either party no less than 60 days prior to the end of the Secondary Term or any additional term, as applicable (an “Extension Term Non-Renewal”, and together with the Initial Non-Renewal, a “Non-Renewal”). The period of Employee’s employment hereunder from the Effective Date until the Termination Date (as defined below), shall be referred to herein as the “Employment Period” or the “Term”.
Section 2. Responsibilities of Employee.
(a)During the Employment Period, Employee shall serve as Chief Operating Officer of the Company, in a non-executive role. Employee shall report directly to CEO at his sole discretion.
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(i)Employee’s duties shall be determined by the CEO and approved by the Board of Directors of the Company (the “Board”); and
(ii)All other such duties as may be assigned from time to time by the CEO.
Upon approval by the Board, Employee shall undertake and assume the responsibility of performing for and on behalf of the Company any and all of the above duties and shall have all other duties, functions, responsibilities and authority commensurate with such office as are from time to time delegated to Employee by the Management of the Company.
(b)Except for activities permitted in connection with the investments and activities set forth in this Section 2(b), and 7(b) below, during the Employment Period, Employee shall devote his full time, skill, and attention and his best efforts during normal business hours to the business and affairs of the Company to the extent necessary to discharge faithfully and efficiently the duties and responsibilities delegated and assigned to Employee herein or pursuant hereto, except for usual, ordinary, and customary periods of vacation and absence due to illness or other disability, and shall not be engaged (whether or not during normal business hours) in any other business or professional activity, whether or not such activity is pursued for gain, profit, or other pecuniary advantage; provided, however, that Employee may:
(i)serve or continue to serve in any capacity with any not-for-profit business or professional organization, association, or entity,
(ii)serve on the board of directors or comparable governing body of any business entity located in the same community as the Company’s headquarters and not engaged in a business or activity competitive with the business of the Company or any of its subsidiaries or Affiliates; and
(iii)deliver lectures, fulfill speaking engagements, or teach at educational institutions, so long as all activities conducted by Employee pursuant to clauses (i) through (iii) of this proviso do not unreasonably interfere with the performance and fulfillment of Employee’s duties and responsibilities as an Employee of the Company in accordance with this Agreement and are not in violation of then non-competition provisions of Section 7 of this Agreement. In the case of the activities described in clause (iii) of this proviso, Employee will give the Board at least ten (10) days prior notice of his intention to engage in any such activity, such notice to describe briefly the activities in which Employee proposes to be engaged.
For the purposes of this Agreement, “Affiliate” means (x) any Person directly or indirectly controlling, controlled by or under common control with another Person, or (y) any manager, director, officer, partner or employee of a Person; a Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to
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direct or cause the direction of the management and policies of such other Person, whether through ownership of voting securities, by contract, or otherwise; and “Person” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or governmental authority.
(c)All services that Employee may render to the Company or any of its subsidiaries or Affiliates in any capacity during the Employment Period shall be deemed to be services required by this Agreement and consideration for the compensation provided for herein.
Section 3. Compensation.
(a)As compensation for the services to be rendered by Employee for the Company under this Agreement, the Company shall pay Employee during the Employment Period an annual salary of $175,000.00 (“Base Pay”). Further, this Base Pay may be adjusted upward by the Management of the Company, in its sole discretion, from time to time. Such Base Pay shall be earned and payable periodically in equal installments in accordance with the Company’s normal payroll practices, including applicable deductions and withholdings. Base Pay will be subject to annual review pursuant to the Company’s normal review policy for other similarly situated Employees of the Company and any changes in Base Pay will be communicated in writing to Employee.
(b)With respect to stock options, if any, the Company may issue to Employee Stock Options (“Stock Options”) exercisable, on a cash and/or cashless basis, in an amount determined by the Board under any Stock Incentive or Equity Incentive Plan (the “Stock Plan”). Any unexercised vested options shall terminate within 30 days of Employee leaving the Company, unless otherwise set forth in an award.
(c)At the sole discretion of the Management of the Company and/or the Board, the Employee may earn additional stock options and cash bonuses. These additional benefits will be subject to all applicable deductions and withholdings at the discretion of the Management of the Company.
(d)Employee shall receive compensation in addition to his Base Pay of 3% of all net sales generated directly from his actions, to the extent the Company makes a cash basis profit (non-cash expenses shall not be included in this calculation), wherein such net sales shall be calculated as gross revenue less cost of goods sold as calculated by the Company’s CFO and approved by the Board, less any chargebacks, refunds, returns, recalls or similar transactions from prior periods. Such additional compensation shall be paid quarterly after the close of the Company’s quarterly or annual report and shall be based upon the Company’s audited financials.
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Section 4. Expenses.
The Company will advance, pay or reimburse Employee, in accordance with the regular policies of the Company, for all pre-approved reasonable and necessary business expenses incurred by Employee in furtherance of or in connection with performing his obligations under this Agreement during the Term and consistent with the Company’s annual budget. Such expenses shall be reimbursed to the extent they are incurred and accounted for in accordance with the policies and practices of the Company as in effect from time to time. At all times the CEO shall preapprove expenses.
Section 5. Vacation and Other Benefits.
(a)During the Employment Period, Employee shall be entitled to three (3) weeks of paid vacation during each twelve-month period, commencing during the calendar year beginning January 1, 2021. These three (3) weeks shall vest equally over a 12-month period. Employee shall also be entitled to all paid holidays given by the Company to its employees. Employee agrees to utilize his vacation at such time or times as are:
(i)consistent with the proper performance of his duties and responsibilities under this Agreement, and
(ii)mutually convenient for the Company and Employee.
Employee agrees only one (1) week of unused vacation shall carry forward from year to year and all other unused vacation shall expire and be lost.
(b)During the Employment Period, Employee shall be entitled to participate in all employee welfare benefit plans, programs, and arrangements provided by the Company from time to time to its employees generally, subject to and on a basis consistent with the terms, conditions, and overall administration (including eligibility and vesting requirements) of such plans, programs, and arrangements. Such plans may include health, dental, retirement or other such programs which may be to the benefit of the Company’s employees. Notwithstanding the provisions of this Section 5(b), the Company shall not be obligated to make any specific plans, programs or arrangements available to employees.
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Section 6. Business Opportunities and Intellectual Property.
(a)During the Employment Period, Employee shall promptly disclose to the Company all Business Opportunities and Intellectual Property (each as defined herein) Employee becomes aware in any way related to the Company.
(b)Employee hereby assigns and agrees to assign to the Company, its successors, assigns or designees, all of Employee’s right, title and interest in and to all Business Opportunities and Intellectual Property, and further acknowledges and agrees that all Business Opportunities and Intellectual Property constitute the exclusive property of the Company. This includes any Intellectual Property developed by Employee for Razor Jacket, LLC, related to the manufacturing of isolates or terpenes from cannabinoids.
(c)For purposes hereof, “Business Opportunities” shall mean all current and future business ideas, prospects, proposals or other opportunities pertaining to hemp isolate or terpene business and related aerosol use (aerosol use shall also include prescription and non-prescription delivery of non-hemp related medications and supplements), including, but not limited to the development of isolates or terpenes from L. Sativa or other hemp sub-species and used in aerosol and all other forms of routes of administrations, including, but not limited to oral, nasal, patches and dry powder, which are:
(i)developed by Employee:
(A)during the Employment Period; or
(B)before the Employment Period, but only to the extent:
1.Employee’s rights thereto do not conflict or frustrate the Company’s purchase of Assets of Razor Jacket, LLC;
2.it would not breach any duty or obligation of Employee to a third-party during such period (other than Razor Jacket, LLC); and
3.It does not pertain to the Hemp or Aerosol Business interest; or
(ii)originated by any third party and brought to the attention of Employee:
(A)during the Employment Period; or
(B)before the Employment Period, but only to the extent
1.Employee’s rights thereto do not conflict or frustrate the Company’s purchase of Assets from Razor Jacket, LLC;
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2.it would not breach any duty or obligation of Employee to a third-party during such period (other than Razor Jacket, LLC);
3.it does not pertain to the Hemp or Aerosol Business; or
4.it does not constitute, and/or is not included in, a Business Record (as defined herein).
(d)For purposes hereof “Intellectual Property” shall mean all ideas, inventions, discoveries, processes, designs, methods, modifications, substances, articles, computer programs and improvements relating to the Hemp or Aerosol Business (including, without limitation, enhancements to or further interpretation or processing of such information), whether or not patentable or copyrightable, which do not fall within the definition of Business Opportunities, which are discovered, conceived, invented, created or developed by Employee, alone or with others:
(i)during the Employment Period if such discovery, conception, invention, creation, or development:
(A)occurs in the course of Employee’s employment with the Company;
(B)occurs with the use of any of the Company’s time, materials, facilities or other assets; or
(C)in the opinion of the Board, relates or pertains in any way to the Company’s purposes, activities or affairs, or
(ii)before the Employment Period, but only to the extent:
(A)of Employee’s rights thereto;
(B)it would not breach any duty or obligation of Employee to a third-party during such period (except to Razor Jacket, LLC); and
(C)it does not pertain to the Hemp or Aerosol Business.
(e)In addition to the foregoing assignment of the Intellectual Property to the Company, Employee hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Intellectual Property; and (ii) any and all “Moral Rights” (as defined below) that Employee may have in or with respect to any Intellectual Property. Employee also hereby forever waives and agrees
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never to assert any and all Moral Rights Employee may have in or with respect to any Intellectual Property, even after termination of Employee’s work on behalf of the Company. “Moral Rights” means any rights to claim authorship of any Intellectual Property, to object to or prevent the modification of any Inventions, or to withdraw from circulation or control the publication or distribution of any Intellectual Property, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.