Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made by and between CBD Brands, Inc., a duly organized Delaware corporation ("Employer"), and Douglas O. McKinnon, a resident of the State of Colorado ("Employee").

 

WITNESSETH:

WHEREAS, Employer needs persons with experience at the executive level in developing and executing the business plan and related financial and reporting systems of start-up companies with the intent of listing on a recognized exchange;

 

WHEREAS, Employee has a substantial amount of the executive experience needed by Employer; and

 

WHEREAS, Employee is willing to be employed by Employer, and Employer is willing to employ Employee, on the terms, covenants and conditions hereinafter set forth; and

NOW, THEREFORE, in consideration of such employment and other valuable consideration, the receipt and adequacy of which is hereby acknowledged, Employer and Employee hereby agree as follows:

 

SECTION I. EMPLOYMENT OF EMPLOYEE

 

Employer hereby employs, engages and hires Employee as Chief Financial Officer of Employer, and Employee hereby accepts and agrees to such hiring, engagement and employment, subject to the general supervision and pursuant to the orders, advice and direction of the Chief Executive Officer and Board of Directors of Employer. Employee shall perform duties as are customarily performed by one holding such position in other, same or similar businesses or enterprises as that engaged in by Employer, and shall also additionally render such other and unrelated services and duties as may be assigned to him from time to time by Employer.

 

SECTION II. COMPENSATION OF EMPLOYEE

 

Employer shall pay Employee, and Employee shall accept from Employer, in full payment for Employee's services hereunder, compensation as follows:

A.

Execution of Agreement. Employee is aware of the general financial condition of the Employer and has agreed to waive Salary until such time as Employer has completed a satisfactory offering such that the Company can commence paying salaries to the executive team. In consideration of Employee's executing this Employment Agreement, Employer shall issue to Employee up to 300,000 shares of its common stock ("Employee Shares"). It is agreed by Employer and Employee that such shares shall be valued at par value and issued and released from escrow as follows:

i.

100,000 Employee Shares shall be issued upon signing of this Agreement;

ii.

Either i) 100,000 Employee Shares or ii) an option to purchase 100,000 Employee Shares, issued pursuant to the Company's contemplated equity incentive plan, shall be granted to Employee on the one year anniversary of this Agreement, subject to Employee's continued employment; and

iii.

Either i) 100,000 Employee Shares or ii) an option to purchase 100,000 Employee

Shares, issued pursuant to the Company's contemplated equity incentive plan, shall be granted to Employee on the two year anniversary of this Agreement, subject to Employee's continued employment.

 

B.

Salary. Employee shall be paid a salary in an amount commensurate with that of similar position in similar companies subject to mutual agreement between Employer and Employee.

 

C.

Insurance and Other Benefits. As further consideration for the covenants contained herein, Employer will provide Employee with such insurance, welfare, sick leave and other benefits as may be established by Employer from time to time with respect to its employees in accordance with Employer's established procedures. Employee shall be entitled to Directors' and Officers' indemnification insurance coverage to the same extent as is provided to other persons employed as officers of Employer.

 

D.

Other Compensation Plans. Employee shall be entitled to participate, to the same extent as is provided to other persons employed by Employer, in any future stock bonus plan, stock option plan or employee stock ownership plan of Employer.

 

 

 

 

E.

Expenses. It is acknowledged that, during the term of employment, Employee will be required to incur ordinary and necessary business expenses on behalf of Employer in connection with the performance of his duties hereunder. Employer shall reimburse Employee promptly the amount of all such expenses upon presentation of itemized vouchers or other evidence of those expenditures. Any single expense item in excess of $1,000.00 shall be approved by Employer prior to the incurrence of such expense.

 

F.

Vacations. Employee shall be entitled to three (3) weeks paid vacation each year for the term of this Agreement. Such vacations shall be taken at such times as Employer designates as to time-of year. Vacation time can be accumulated year-to-year up to three years maximum.

 

SECTION III. COMPANY POLICIES

 

Employee agrees to abide by the policies, rules, regulations or usages applicable to Employee as established by Employer from time to time and provided to Employee in writing.

 

SECTION IV. CONFIDENTIALITY

 

Executive shall not disclose to any non-party to the Agreement, any confidential information of Employer. Confidential information is information that relates to the Employer's research, development, trade secrets or business affairs, but does not include information which is generally known or easily ascertainable by non-parties. Employee hereby acknowledges that during the performance of this Agreement, Employee may learn or receive confidential Employer information and therefore Employee hereby confirms that all such information relating to the Employer's business will be kept confidential by the Employee, except to the extent that such information is required to be divulged to attorneys, accountants/auditors and other professionals in performance of their duties to the Employer.

 

SECTION V. TERM AND TERMINATION

 

A.

Term. The term of this Agreement shall be a period of three years, commencing on the date hereof. At the expiration date, this Agreement shall be renewed for additional one-year periods, provided neither party hereto submits a written notice of termination within sixty (60) days prior to the termination of either the initial term hereof or any renewal term.

 

B.

Termination. Employer agrees not to terminate this Agreement except for "just cause" and agrees to give Employee written notice of its belief that acts or events constituting "just cause" exist. Employee has the right to cure, within thirty (30) days of Employer's giving of such notice, the acts, events or conditions which led to Employer's notice. For purposes of this Agreement, "just cause" shall mean (I) the willful failure or refusal of Employee to implement or follow the written policies or directions of Employer's Board of Directors, provided that Employee's failure or refusal is not based upon Employee's belief in good faith, as expressed to Employer in writing, that the implementation thereof would be unlawful; (2) conduct which is inconsistent with Employee's position with Employer and which results in a material adverse effect (financial or otherwise) or misappropriation of assets of Employer; (3) conduct which violates the provisions contained in the Confidentiality Agreement or the Non-Competition Agreement; (4) the intentional causing of material damage to Employer's physical property; and (5) any act involving personal dishonesty or criminal conduct against Employer.

 

Although Employer retains the right to terminate Employee for any reason not specified above, Employer agrees that if it discharges Employee for any reason other than just cause, as is solely defined above, Employee will be entitled to full compensation, including participation in all benefit programs, for one year or the remainder of the current term, original or renewal, as the case may be, of employment, whichever is more.

 

Notwithstanding the provisions of paragraph C below, if Employee should cease his employment hereunder voluntarily for any reason, or is terminated for just cause, all compensation and benefits payable to Employee shall thereupon, without any further writing or act, cease, lapse and be terminated. However, all defined compensation, benefits and reimbursements which accrued prior to Employee's ceasing employment or termination, will become immediately due and payable and shall be payable to Employee's estate should his employment cease due to death. 

 

Notwithstanding the provisions of paragraph C below, should Employee voluntarily cease his employment, Employee retains the right to participate for the period of this Agreement in Employee's medical insurance plan and will be responsible for 100% of the cost of participation.

 

 

 

C.

Employee's Right to Terminate.

 

(1)

Change in Control of Employer. If, at any time during the term of this Agreement, including any renewal term, Employer (a) shall issue an amount of stock, in a single transaction or a related series of transactions, in excess of 50% of the then-outstanding common stock of Employer, as measured after the completion of such transaction, (b) sell all or substantially of its assets, or (c) have in excess of 50% of its stock purchased by a single buyer or group of buyers, then Employee may, in his sole discretion, terminate his employment hereunder and Employer shall be liable to Employee for all compensation remaining to be paid to Employee during the then-current term hereof, plus an additional one year period.

 

(2)

Termination for Cause. If, at any time during the term of this Agreement, including any renewal term, Employer should change the responsibilities of Employee hereunder, then Employee may, in his sole discretion, terminate his employment hereunder and Employer shall be liable to Employee for all compensation remaining to be paid to Employee during the then-current term hereof, plus an additional one year period.

 

SECTION VI. COMPLETE AGREEMENT

 

This Agreement contains the complete agreement concerning the employment arrangement between the parties hereto and shall, as of the effective date hereof, supersede all other agreements between the parties. The parties hereto stipulate that neither of them has made any representation with respect to the subject matter of this Agreement or any representations including the execution and delivery hereof, 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 this Agreement. The parties hereto further acknowledge that any payments or representations that may have heretofore been made by either of them to the other are of no effect and that neither of them has relied thereon in connection with his or its dealings with the other.

 

SECTION VII. WAIVER; MODIFICATION

 

The waiver by either party of a breach or violation of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any subsequent breach hereof. 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 no evidence of any waiver or modification shall be offered or received in evidence of any proceeding or litigation between the parties hereto arising out of, or affecting, this Agreement, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid, and the parties further agree that the provisions of this Section IX may not be waived except as herein set forth.

 

SECTION VIII. SEVERABILITY

 

All agreements and covenants contained herein are severable, and in the event any one of them, with the exception of those contained in Sections I, II, III, and IV hereof, shall be held to be invalid in any proceeding or litigation between the parties, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein.

 

SECTION IX. NOTICES

 

Any and all notices will be sufficient if furnished in writing, sent by registered mail to his last known residence, in case of Employee, or, in case of Employer, to its principal office address.

 

SECTION XI. CORPORATE AUTHORITY OF EMPLOYER

 

The execution of this Agreement by Employer has been approved by the Board of Directors of Employer.

 

SECTION XII. REPRESENTATIONS OF EMPLOYEE

A.

Employee hereby represents to Employer that he is under no legal disability with respect to his entering into this Agreement.

 

B.

Receipt of Disclosure. Employee hereby represents and warrants that he has had an opportunity to ask questions of, and to receive answers from, the officers of Employer.

 

C.

Representations Relating to Employer Common Stock. Employee represents and warrants to Employer that the shares of Employer common stock being acquired pursuant to this Employment Agreement are being acquired for his own account and for investment and not with a view to the public resale or distribution of such shares and further acknowledges that the shares being issued have not been registered under the Securities Act or any state securities law and are "restricted securities", as that term is defined in Rule 144 promulgated by the SEC, and must be held indefinitely, unless they are subsequently registered or an exemption from such registration is available.

 

 

 

SECTION XIII. COUNTERPARTS

 

This Agreement may be executed in duplicate counterparts, each of which shall be deemed an original and, together, shall constitute one and the same agreement, with one counterpart being delivered to each party hereto.

 

SECTION XIV. BENEFIT

 

The provisions of this Agreement shall extend to the successors, surviving corporations and assigns of Employer and to any purchaser of substantially all of the assets and business of Employer. The term "Employer" shall be deemed to include Employer, any joint venture, partnership, limited liability company, corporation or other juridical entity, in which Employer shall have an interest, financial or otherwise.

 

SECTION XV. ARBITRATION

 

The parties agree that any dispute arising between them related to this Agreement or the performance hereof shall be submitted for resolution to the American Arbitration Association for arbitration in the Denver, Colorado, office of the Association under the then-current rules of arbitration. The Arbitrator or Arbitrators shall have the authority to award to the prevailing party its reasonable costs and attorney's fees. Any award of the Arbitrators may be entered as a judgment in any court competent jurisdiction.

 

SECTION XVI. GOVERNING LAW

 

It is the intention of the parties hereto that this Agreement and the performance hereunder and all suits and special proceedings hereunder be construed in accordance with and under and pursuant to the laws of the State of Florida, and that, in any action, special proceeding or other proceeding that may be brought arising out of, in connection with or by reason of this Agreement, the laws of the State of Florida shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any such action or special proceeding may be instituted.

 

 

2019.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 5th day of August,

 

	CBD BRANDS, INC.
	By:
	Brian John
	President
	Douglas O. McKinnon