Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made by and between Vegalab,
Inc., a Nevada corporation (the “Company”) and Ryan Sweeney, an individual
residing in Kingsburg, California (“Employee”), dated as of February 1, 2018
(the “Effective Date”).

 

WITNESSETH:

 

WHEREAS, the Company desires to employ Employee as the Director of Produce, and
for Employee to hold such position, on the terms and conditions, and for the
consideration, hereinafter set forth and Employee desires to be employed by the
Company and hold such position on such terms and conditions and for such
consideration.

 

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, the Company and Employee agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

For purposes of this Agreement, the following capitalized words shall have the
meanings indicated below:

 

Section 1.1           “Board” means the board of directors of the Company.

 

Section 1.2           “Date of Termination” means the effective date of
termination of Employee’s employment with the Company under this Agreement.

 

Section 1.3           “Good Reason” means the occurrence of any of the following
without Employee’s written consent:

 

(a)          any failure by the Company or any affiliate to furnish the Employee
with base compensation (excluding any bonus, equity, or incentive compensation)
and benefits at a level equal to or exceeding the base compensation rate or
benefits as of the Effective Date, other than (i) an insubstantial and
inadvertent failure remedied by the Company, (ii) after such time as the annual
base salary of the Chief Executive Officer is at least $200,000, a reduction in
compensation which is applied to the Chief Executive Officer and the executive
team of the Company in the same percentage, or (iii) a reduction or modification
of any employee benefit program covering substantially all of the employees of
the Company, which reduction or modification generally applies to all employees
covered under such program;

 

(b)          any reduction in the bonus target or bonus opportunity of the
Employee as of the Effective Date, other than (i) an insubstantial and
inadvertent failure remedied by the Company or (ii) after such time as a bonus
target or bonus opportunity for the Chief Executive Officer is established by
the Company, a reduction in compensation that is applied to the Chief Executive
Officer and the executive team of the Company in the same percentage;

 

(c)          a material diminution in Employee’s authority, duties, or
responsibilities, or to the conditions under which Employee’s authority, duties
and/or responsibilities are to be exercised or performed, including reporting
relationships as compared to Employee’s authority, duties and/or
responsibilities as of the Effective Date; or

 

 

 

 

(d)          the Company’s material breach of any provision of this Agreement.

 

Section 1.4           “Termination Base Salary” means Employee’s annualized base
salary at the rate in effect on the date that (i) a written notice of
termination by Employee described in Section 1.4 of this Agreement is received
by the Company.

 

ARTICLE II

 

EMPLOYMENT AND DUTIES

 

Section 2.1           Employment; Effective Date. The Company agrees to employ
Employee, and Employee agrees to be employed by the Company, beginning as of the
Effective Date and continuing for the period of time set forth in ARTICLE III of
this Agreement, subject to the terms and conditions of this Agreement.

 

Section 2.2          Position. From and after the Effective Date, Employee shall
serve in the position of the Director of Produce.

 

Section 2.3          Duties and Services. Employee agrees to serve in the
position described in Section 2.2 of this Agreement, with such responsibilities,
duties and authority as are customary for such position and such other
responsibilities, duties and authority as are assigned to Employee by the Chief
Executive Officer or the Board from time to time and to endeavor to perform such
duties, responsibility and authority diligently. Employee’s employment shall
also be subject to the written policies maintained and established by the
Company that are of general applicability to the Company’s employees, as such
policies may be amended from time to time and to the extent they are not
contrary with the terms of this Agreement.

 

Section 2.4           Duty of Loyalty. Employee acknowledges and agrees that
Employee owes a fiduciary duty of loyalty to act in the best interests of the
Company and to do no act that would materially injure the business, interests or
reputation of the Company.

 

ARTICLE III

 

TERM AND TERMINATION OF EMPLOYMENT

 

Section 3.1         Term. This Agreement shall be effective as of the Effective
Date and, unless Employee’s employment with the Company is earlier terminated in
accordance with this ARTICLE III or this Agreement is otherwise terminated by
agreement pursuant to a written instrument executed by both the Company and
Employee, will remain in effect through January 31, 2023.

 

Section 3.2           Employee’s Right to Terminate. Notwithstanding the
provisions of Section 3.1 of this Agreement, Employee may terminate Employee’s
employment under this Agreement as follows:

 

(a)          for Good Reason (subject to the notice and cure period provisions
contained in the definition of the term “Good Reason”); or

 

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(b)          for any other reason whatsoever or for no reason at all, so long as
the reason is not unlawful, in the sole discretion of Employee, upon at least
thirty (30) days written notice to the Company, which written notice shall state
the Date of Termination and reason for such termination, if any.

 

Employee must provide reasonable notice to the Company of the existence of any
of the unfavorable conditions described in the preceding Section 1.3 within
thirty (30) calendar days following the date Employee first becomes aware of the
existence of the condition(s), which notice shall specifically identify any such
conditions that Employee believes exist. The Company shall have twenty (20)
calendar days after it receives such notice from Employee to remedy the
condition to Employee’s reasonable satisfaction. If the Company has not remedied
the condition to Employee’s reasonable satisfaction within such 20-day period,
Employee may terminate this Agreement on no less than twenty (20) calendar days’
notice, which termination shall be deemed to be a termination by Employee for
“Good Reason” under this Agreement.

 

ARTICLE IV

 

COMPENSATION AND BENEFITS

 

Section 4.1           Base Salary. Subject to Section 4.3, below, Employee shall
receive an annualized base salary of $100,000 to be paid in substantially equal
installments over the calendar year in accordance with the Company’s standard
policy regarding payment of compensation to executives but no less frequently
than monthly.

 

Section 4.2           Commission. Subject to Section 4.3, below, Employee shall
be paid a commission equal to $1.50 on every gallon of Bactor Boost sold prior
to the Date of Termination of this Agreement; provided, however, that for each
gallon of Bactor Boost sold that has a cost of goods greater than $9.50 or is
sold at a price (excluding sales tax and shipping) less than $19.00, the
commission shall be equal to sixteen percent (16%) of the difference between the
sale price and cost of goods, but in no event greater than $1.50. The total
amount of the commission for the period from the Effective Date through December
31, 2018, (“2018 Commission”) will be paid in twelve (12) equal monthly
installments beginning February 1, 2019. The total amount of the commission for
the calendar year ending December 31, 2019 (“2019 Commission”), will be paid in
twelve (12) equal monthly installments beginning February 1, 2020. The total
amount of the commission for the calendar year ending December 31, 2020 (“2020
Commission”), will be paid in twelve (12) equal monthly installments beginning
February 1, 2021. The total amount of the commission for the period from January
1, 2021, to the Date of Termination will be paid on March 1, 2021.

 

Section 4.3           Benefits. Employee and his dependents shall be entitled to
the benefits the Company makes generally available from time to time to its
employees, in each case in accordance with the terms of those benefit plans.

 

Section 4.4           Business Expenses. Company shall reimburse Employee for
all expenses incurred in relation to his duties and services for Company.

 

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ARTICLE V

 

EFFECT OF TERMINATION OF EMPLOYMENT ON COMPENSATION AND DUTIES

 

Section 5.1           By Employee for Good Reason. If any termination of this
Agreement shall be by Employee for Good Reason pursuant to Section 3.2(a) of
this Agreement, then Employee shall receive the following:

 

(a)          Base Salary under Section 4.1, earned through the Date of
Termination;

 

(b)          Commissions under Section 4.2, earned prior to the Date of
Termination;

 

(c)          Benefits payable under Section 4.3 to Employee under this Agreement
through the Date of Termination, terminating contemporaneously with such
termination of employment; and

 

(d)          A severance package covering a period equal to the number of full
calendar months from the Date of Termination through January 31, 2023 (the
“Severance Period”), consisting of:

 

(i)          Payment of the Base Salary in effect as of the Date of Termination
on the terms stated in Section 4.1;

 

(ii)         Commissions on the items stated in Section 4.2; and

 

(iii)        The longer of (A) the number of months in the Severance Period, and
(B) twelve (12) months, of health insurance benefits for Employee and his
dependents (meaning the Company will calculate the monthly cost to Employee and
his dependents to continue their health care coverage under COBRA and will
multiply that amount by the number of months remaining in the Severance Period
or twelve months whichever is longer.

 

Section 5.2           Duty to Cooperate. Employee shall have a duty to cooperate
with the Company in transitioning his responsibilities and knowledge to a
successor.

 

Section 5.3           Release of All Claims. Any severance package offered to
Employee will contain a release of all claims to the Date of Termination.
Payment of all severance benefits is contingent on Employee’s consent to such
release of all claims.

 

Section 5.4           No Disparagement. Employee hereby agrees that he shall not
make any statements, written or verbal, or cause or encourage others to make any
statements, written or verbal, that defame, disparage or in any way criticize
the personal or business reputation, practices, or conduct of Company.

 

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ARTICLE VI

 

DISPUTE RESOLUTION

 

Section 6.1           Dispute Resolution. Except as provided in any provision of
this Agreement that provides for relief by way of specific performance,
injunction or other equitable relief, if any dispute arises out of this
Agreement, the “complaining party” shall give the “other party” written notice
of such dispute. The other party shall have ten (10) business days to resolve
the dispute to the complaining party’s satisfaction. If the dispute is not
resolved by the end of such period, the parties shall proceed to mediation. The
mediation shall be conducted using a mediator or mediation service of mutual
choice. If a selection cannot be made, the mediation services of the American
Arbitration Association shall be used. The parties shall share equally in the
cost of the mediation. In the event the dispute remains unresolved following
mediation, the parties shall submit the matter to binding arbitration. There
shall be one arbitrator. If the Parties cannot agree to an arbitrator or to an
arbitration service, the American Arbitration Association shall be used pursuant
to its Commercial Rules then existing. California Code of Civil Procedure
section 1283.05 is incorporated into this Agreement by this reference. The
prevailing Party in an arbitration or any court action shall be entitled to its
reasonable costs and attorneys' fees and the arbitrator shall make that award.
Venue for any mediation, arbitration or court action shall be Fresno, California
unless the parties agree otherwise. This Agreement and each of its terms shall
be governed by and construed in accordance with the laws of the State of
California.

 

ARTICLE VII

 

CONFIDENTIALITY

 

Section 7.1           Confidential Information Defined. As used herein, the term
“Confidential Information” means, individually or in any combination, all trade
secrets, business techniques, strategies, proprietary computer software and
related documentation (whether in use or under development), and other
proprietary or confidential information that is not generally known in the
Company’s industry, gives the Company a competitive advantage, or enhances the
Company’s goodwill, whether developed by the Company, by Employee in the course
and scope of Employee’s employment with the Company, by any other employee or
independent contractor of the Company, or by any third party that has provided
the information to the Company on a confidential basis, whether or not any such
information is reduced to writing and whether or not it is patentable or
protected by copyright. Confidential Information includes, but is not limited
to:

 

(a)          The names, addresses, telephone numbers, contact persons, and other
identifying and confidential information about persons, firms, corporations, or
other entities that are or become customers, accounts, vendors, independent
contractors, licensors, and/or suppliers of goods or services of or to the
Company;

 

(b)          The details of any agreements or contracts between the Company and
any customer, supplier, vendor, and/or independent contractor;

 

(c)          Any and all inventions; improvements; designs; original works of
authorship; derivative works; formulas; processes; compositions of matter;
computer software and related information, including without limitation
programs, code, concepts, methods, routines, formulas, algorithms, designs,
specifications, architectures, or inventions embodied therein, as well as all
data, documentation, and copyrights related thereto; patent applications;
databases; mask works; trade secrets; know-how; technology; ideas; copyrights;
planned or proposed trademarks, trade dress, trade names, or service marks;
planned or proposed website ideas and plans, including but not limited to look
and feel; and other intellectual property or proprietary information rights and
any and all rights, applications, extensions and renewals in connection
therewith (either proposed, filed, or in preparation for filing);

 

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(d)          Any and all information disclosed to Employee or known, learned,
created, or observed as a consequence of Employee’s employment with the Company
regarding or relating in any respect to the Company’s inventions; improvements;
designs; original works of authorship; derivative works; formulas; processes;
compositions of matter; computer software and related information, including
without limitation programs, code, concepts, methods, routines, formulas,
algorithms, designs, specifications, architectures, or inventions embodied
therein, as well as all data, documentation, and copyrights related thereto;
patent applications; databases; mask works; trade secrets; know-how; technology;
ideas; copyrights; planned or proposed trademarks, trade dress, trade names, or
service marks; planned or proposed website ideas and plans, including but not
limited to look and feel; and other intellectual property or proprietary
information rights and any and all rights, applications, extensions, and
renewals in connection therewith (either proposed, filed, or in preparation for
filing);

 

(e)          Any and all information disclosed to Employee or known, learned,
created, or observed as a consequence of Employee’s employment with the Company
regarding or relating in any respect to the Company’s business methods and
techniques (including all customer lists, records of customer usage and
requirements, and similar information relating to customers or to prospective
customers), marketing or sales plans or proposals, cost information, financial
information, pricing materials, non-public price lists, machines, research and
development, hardware, manufacture, purchasing, accounting, engineering, or
business communications;

 

(f)          Any and all information regarding or relating in any respect to any
employee of the Company; or

 

(g)          Any other information or documentation that Employee has a
reasonable basis to believe to be proprietary or confidential information or
that is treated as proprietary or confidential information by the Company.

 

Notwithstanding the foregoing, Confidential Information excludes information not
protected by trademark, copyright, patent, or other similar state, federal, or
worldwide protection and that, through no fault of Employee, is generally known
to the public, is generally employed in the Company’s industry at or after the
time Employee first learns of such information, or generic information or
knowledge that Employee would have learned in the course of similar employment
or work elsewhere in the Company’s industry.

 

Section 7.2           Covenant Not to Disclose. As a material term of this
Agreement, and to protect the goodwill, the Confidential Information, and the
Company Business (as defined below), Employee shall not, either during or after
Employee’s employment with the Company and without the express, prior written
consent of the Board in each instance, ever directly or indirectly,
intentionally or unintentionally, reveal, disclose, furnish, make accessible, or
disseminate any Confidential Information of the Company or of any customer or
supplier of the Company or any other third party that has provided Confidential
Information to the Company, except only as may be expressly required in properly
performing services for the Company.

 

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Section 7.3           Third Party Information. Employee covenants and agrees
that during the Term, Employee will not use or disclose any confidential or
proprietary information or trade secrets of any third person or entity,
including but not limited to, any former employer(s) of Employee, without first
obtaining and providing to the Company the advance written consent of each such
third person or entity expressly authorizing the use or disclosure of such
information. The provisions of this Agreement are not intended to create any
rights as an intended or third-party beneficiary for any third party.

 

Section 7.4           Other Information. Employee recognizes that the Company
has received and in the future will receive confidential or proprietary
information from third parties. Employee agrees to hold all such confidential or
proprietary information in the strictest confidence and not to disclose it to
any person or entity or to use it except as necessary in carrying out Employee’s
work for the Company consistent with the Company’s agreement with such third
party. The provisions of this Agreement are not intended to create any rights as
an intended or third-party beneficiary for any third party.

 

Section 7.5           Exclusive Property of the Company. Upon ceasing employment
with the Company, Employee shall immediately return to the Company and shall
have absolutely no right to use:

 

(a)          Confidential Information or any documents, drawings, reports,
correspondence, records, procedures, books, manuals, files, forms, materials,
computer programs, computer drives or other computer-stored information,
materials, or other documentation (and copies thereof) regarding or relating to
Confidential Information in Employee’s possession, custody, or control,
irrespective of whether such information and documentation was prepared or
compiled by Employee, the Company, the Company’s other employees or contractors,
or any third party. Employee agrees that Employee will not retain any copies of
any of the above-described items or information.

 

(b)          All equipment and tangible personal property entrusted to Employee
by the Company.

 

(c)          Employee expressly acknowledges that all Confidential Information,
documentation, equipment, and tangible personal property described above is and
shall remain the sole and exclusive property of the Company. Employee further
covenants that Employee shall never use such Confidential Information or other
documentation, equipment, or tangible personal property of the Company for
Employee’s own financial or personal gain or benefit or for the financial or
personal gain or benefit of any other individual, firm, corporation,
partnership, company, trust, agency, organization or other entity (each, a
“Entity”) or for any other purpose without the express prior written consent of
the Board.

 

Section 7.6           Notice of Immunity under the Economic Espionage Act of
1996, as amended by the Defend Trade Secrets Act of 2016 ("DTSA").
Notwithstanding any other provision of this Agreement:

 

(a)          Employee will not be held criminally or civilly liable under any
federal or state trade secret law for any disclosure of a trade secret that:

 

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(i)          is made: (A) in confidence to a federal, state, or local government
official, either directly or indirectly, or to an attorney; and (B) solely for
the purpose of reporting or investigating a suspected violation of law; or

 

(ii)         is made in a complaint or other document that is filed under seal
in a lawsuit or other proceeding.

 

(b)          If Employee files a lawsuit for retaliation by the Company for
reporting a suspected violation of law, Employee may disclose the Company's
trade secrets to Employee’s attorney and use the trade secret information in the
court proceeding if Employee:

 

(i)          files any document containing the trade secret under seal; and

 

(ii)         does not disclose the trade secret, except pursuant to court order.

 

ARTICLE VIII

 

NON-COMPETITION AND NON-SOLICITATION

 

Section 8.1           Company Business Defined. The Company is engaged in the
business of developing, manufacturing, and distributing pesticides, fertilizers,
and specialty biological agents used or useful in agriculture, all of which is,
for purposes of this Agreement, the “Company Business.”

 

Section 8.2           New Employer Notification. In the event that Employee
leaves the employment of the Company for any reason, Employee hereby consents to
allow the Company to notify Employee’s new employer about Employee’s rights and
obligations under this Agreement.

 

Section 8.3           Covenant Period. For purposes of this Agreement, the term
“Covenant Period” is the period beginning on the .Effective Date of this
Agreement and continuing until the date on which Employee’s employment with the
Company or its affiliates terminates under Article III of this Agreement.

 

Section 8.4           Non-competition. As a material term of this Agreement and
to protect the goodwill, the Confidential Information, or the Company Business,
and the Company’s investment in the training and education of Employee, Employee
agrees that during the Covenant Period Employee shall not, anywhere within North
America or South America, either individually or on behalf of or with any
Entity, directly or indirectly (a) compete with or against the Company or engage
in any aspect of the Company Business in competition with the Company; (b)
directly or indirectly own, manage, operate, control, be employed by, or provide
management or consulting services to any Entity (other than the Company or any
affiliate of the Company) that competes with, or is a competitor of, the Company
(“Competing Entity”); (c) render or provide any services to or for any Competing
Entity; or (d) discuss or otherwise deal with any customer, supplier, or
independent contractor of the Company regarding the extent or nature of the
present or future business of any customer, supplier, or independent contractor
with the Company as it relates to, or is competitive with, the Company Business.

 

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Section 8.5           Reformation. The Company intends to restrict Employee
under this Agreement only to the extent necessary for the protection of the
Company’s legitimate business interests. The Company and Employee agree that the
scope, duration, and geographic area provisions are reasonable. In the event a
court of competent jurisdiction concludes that any provision of this Agreement
is too restrictive, such provision(s) shall nevertheless be valid and
enforceable to the fullest extent permitted by such court, and such provision(s)
shall be reformed to the maximum scope, time, or geographic limitations
determined appropriate by such court.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1           Notices. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing and shall be deemed
to have been duly given (a) when received if delivered personally or by courier,
(b) on the date receipt is acknowledged if delivered by certified mail, postage
prepaid, return receipt requested or (c) one day after transmission if sent by
email or facsimile transmission with confirmation of transmission, as follows:

 

If to Employee, addressed to:

 

Ryan Sweeney

39710 Road 16

Kingsburg, CA 93631

Email:

Facsimile:

 

If to the Company, addressed to:

 

David Selakovic, Chief Executive Officer

401 Ryland St. Suite 200-A,

Reno, NV 89502

Email: dds@vegalab.com

Facsimile:

 

or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.

 

Section 9.2           Applicable Law; Submission to Jurisdiction.

 

(a)          This Agreement is entered into under, and shall be governed for all
purposes by, the substantive laws of the State of California, without regard to
conflicts of laws principles thereof.

 

(b)          With respect to any claim or dispute related to or arising under
this Agreement with respect to which judicial relief may be had, the parties
hereto hereby consent to the exclusive jurisdiction, forum and venue of the
state and federal courts located in Fresno County, California, and each party
irrevocably submits to the personal jurisdiction of said courts.

 

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Section 9.3           No Waiver. No failure by either party hereto at any time
to give notice of any breach by the other party of, or to require compliance
with, any condition or provision of this Agreement shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

 

Section 9.4           Severability. If a court of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect. Furthermore, in lieu of
such illegal, invalid or unenforceable provision there shall be added
automatically as part of this agreement a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.

 

Section 9.5           Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

 

Section 9.6           Withholding of Taxes and Other Employee Deductions. The
Company may withhold from any benefits and payments made pursuant to this
Agreement all federal, state, city and other taxes as may be required pursuant
to any applicable laws and all other normal employee deductions made with
respect to the Company’s employees generally.

 

Section 9.7           Headings. The section headings have been inserted for
purposes of convenience and shall not be used for interpretive purposes.

 

Section 9.8           Assignment. This Agreement and the rights hereunder are
personal in nature and may not be assigned by the Company or Employee without
the prior written consent of the other. In addition, any payment owed to
Employee hereunder after the date of Employee’s death shall be paid to
Employee’s estate. Subject to the preceding provisions of this Section 9.8, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

 

Section 9.9           Term. Termination of this Agreement shall not affect any
right or obligation of any party which is accrued or vested prior to such
termination. Without limiting the scope of the preceding sentence, the
provisions of ARTICLE V, ARTICLE VI and ARTICLE VII, ARTICLE VIII, and ARTICLE
IX shall survive any termination of the employment relationship or of this
Agreement.

 

Section 9.10        Entire Agreement. Except as provided in any signed written
agreement contemporaneously or hereafter executed by the Company and Employee,
and except as provided in any agreement between the parties providing for the
protection of the Company’s intellectual property and/or the protection of the
Company against unfair competition or solicitation, this Agreement constitutes
the entire agreement of the parties with regard to the subject matter hereof.

 

Section 9.11         Modification; Waiver. Any modification to or waiver of this
Agreement will be effective only if it is in writing and signed by the parties
to this Agreement.

 

Section 9.12         Compliance with Internal Revenue Code Section 409A. This
Agreement is not intended to provide for any deferral of compensation subject to
section 409A of the Internal Revenue Code of 1986, as amended.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the Effective Date.

 

  THE COMPANY         By: /s/ David Selakovic         Name: David Selakovic    
    Title: Chief Executive Officer       EMPLOYEE       /s/ Ryan Sweeney   Ryan
Sweeney

 

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