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MEMBERSHIP PURCHASE AGREEMENT 

This MEMBERSHIP PURCHASE AGREEMENT (this “Agreement”) is entered into as of the last signature date below by and between Canbiola, Inc., a Florida corporation (“Canbiola” or “Buyer”), and Pure Health Products, LLC, a New York limited liability company (“Pure Health”) and all of the current members of Pure Health, as listed on the signature page hereto (“Pure Health Members”). 

RECITALS

WHEREAS, Canbiola is a publicly traded company, quoted on OTCMarkets.com under the symbol “CANB.” 

WHEREAS, the Pure Health Members own 100% of the membership and economic interests in Pure Health (the “Membership Interests”).

WHEREAS, Canbiola has loaned Pure Health a total of $75,000, represented by a secured promissory note (the “Note”) from Seller to Purchaser, in order for Pure Health to purchase certain assets.

WHEREAS, Pure Health granted Buyer the option of acquiring the assets of Pure Health in consideration for cancellation of the Note.

WHEREAS, the parties have agreed to accomplish the foregoing acquisition as a membership acquisition rather than asset acquisition pursuant to the terms of this Agreement. 

NOW, THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, and the covenants, conditions, representations and warranties hereinafter set forth, the parties hereby agree as follows:

ARTICLE I

THE PURCHASE

1.1

The Purchase. At the Closing (as hereinafter defined), the Pure Health Members will sell, transfer, assign and convey to Buyer 100% of the Membership Interests in Pure Health, in exchange for the consideration described below (the “Purchase”).  The Purchase shall take place upon the terms and conditions provided for in this Agreement and in accordance with applicable law.

1.2

Purchase Price. As consideration for the Purchase, Buyer shall pay the sum of $83,825.00 (the “Purchase Price”), payable via cancellation of the Note and Pure Health’s obligations thereunder, and 3,096,827  newly-issued common shares in Canbiola (the “CANB Shares”), payable to the Pure Health Members in accordance with the distribution table contained in Exhibit A hereto. 

 

I.3

1.3

Closing. Subject to the provisions of this Agreement, the parties shall hold a closing of the Purchase (the “Closing”) no later than 8:00p.m. EST December 28, 2018 (“Closing Date”), which closing shall occur electronically or at such time and place as agreed by the parties. On or before Closing, (i) the Pure Health Members shall deliver to Canbiola, executed assignments, substantially in the form contained herewith as Exhibit B, representing 100% of the Membership Interests, (ii) the Pure 

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Health and Pure Health Members will deliver to Buyer all items and equipment required to operate the Pure Health, including inventory, all keys for the Pure Health’s property, all books, ledgers and records of the Pure Health, including but not limited to, minute books, financial records and statements, bank statements, account information, tax records and certificates of payments, executed contracts, stock certificates, stock powers and assignments, terminations and resignations of all officers and directors of the Pure Health, payroll and employee records, login credentials and passwords for all software systems associated with the requirements of this section, combinations or access instructions to all safes and other controlled-access devices, vendor lists, customer lists and records, analytical data, and equipment, (iii) Canbiola shall deliver to Pure Health an executed cancellation of the Note, conditioned upon Closing, and (iv) Canbiola will deliver to the Pure Health Members certificates representing the CANB Shares in accordance with Exhibit A.

 ARTICLE II

REPRESENTATIONS AND WARRANTIES

2.1

Representations and Warranties of Buyer. Buyer represents and warrants to Pure Health as follows, which representations shall be true and correct as of Closing:

 

(a)

Organization, Standing and Power.  Canbiola is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary.

(b)

Authority. Buyer has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized. No other corporate or shareholder proceedings on the part of Buyer are necessary to authorize the Purchase, or the other transactions contemplated hereby.

(c)

Conflict with Other Agreements; Approvals. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a material benefit under, or the creation of a lien, pledge, security interest or other encumbrance on assets (any such conflict, violation, default, right of termination, cancellation or acceleration, loss or creation, a “violation”) pursuant to any provision of the Articles of Incorporation or Bylaws or any organizational document of Canbiola or, result in any violation of any loan or credit agreement, note, mortgage, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Canbiola which violation would have a material adverse effect on Buyer taken as a whole.

2.3

Representations and Warranties of Pure Health and Pure Health Members. Pure Health and each of the Pure Health Members jointly and severally hereby represent and warrant to Buyer as follows, which representations shall be true and correct as of Closing:

(a)

Organization, Standing and Power. Pure Health is a limited liability company duly organized, validly existing and in good standing under the laws of the New York. Pure Health has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, 

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and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary except for any such failure, which when taken together with all other failures, is not likely to have a material adverse effect on the business of the relevant party taken as a whole. 

(b)

Outstanding Interests.  The Membership Interests to be transferred to Canbiola hereby represent 100% of the issued and outstanding equity of Pure Health. Each of the Pure Health Members owns its portion of the Membership Interests free and clear of all liens and has the absolute right to transfer the same. There are no options, warrants, calls, convertible notes, agreements or other rights to purchase or otherwise acquire from Pure Health at any time, or upon the happening of any stated event, any share of the capital interests of Pure Health.

(c)

Authority. Pure Health and each of the Pure Health Members has all requisite power to enter into this Agreement and has the requisite power and authority to consummate the transactions contemplated hereby. Except as specified herein, no other corporate or member proceedings on the part of Pure Health are necessary to authorize the Purchase and the other transactions contemplated hereby.

(d)

Conflict with Agreements; Approvals. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of any provision of the Articles of Organization or Operating Agreement of Pure Health or of any loan or credit agreement, note, mortgage, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Pure Health or the Pure Health Members or their properties or assets except for any such conflict or violation, which when taken together with all other conflict or violation, is not likely to have a material adverse effect on the business of Pure Health or the Purchase. No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental entity is required by or with respect to Pure Health or the Pure Health Members in connection with the execution and delivery of this Agreement by Pure Health and the Pure Health Members, or the consummation of the transactions contemplated hereby.

(e)

Books and Records. Pure Health has made and will make available for inspection by Buyer upon reasonable request all the books of account, relating to the business of Pure Health. Such books of account have been maintained in the ordinary course of business. All documents furnished or caused to be furnished to Buyer by Pure Health are true and correct copies, and there are no amendments or modifications thereto except as set forth in such documents.

(f)

Compliance with Laws.  Pure Health is and has been in compliance in all material respects with all laws, regulations, rules, orders, judgments, decrees and other requirements and policies applicable to it, its properties or the operation of its businesses (excepting compliance with federal laws relating to cannabis).

(g)

Liabilities and Obligations. Pure Health has no liabilities or outstanding debt currently due or becoming due in the future unless disclosed to Canbiola in Schedule 2.3(g) hereto.  

(h)

Litigation.  There is no suit, action or proceeding pending, or threatened against or affecting Pure Health or any Pure Health Member, which is reasonably likely to have a material adverse effect on Pure Health or the Purchase, nor is there any judgment, decree, injunction, rule or order of any governmental entity or arbitrator outstanding against Pure Health or the Pure Health Members having, or which, insofar as reasonably can be foreseen, in the future could have, any such effect.

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(i)

Taxes. Pure Health has filed or will file within the time prescribed by law (including extension of time approved by the appropriate taxing authority) all tax returns and reports required to be filed with all other jurisdictions where such filing is required by law; and Pure Health has paid, or made adequate provision for the payment of all taxes, interest, penalties, assessments or deficiencies due and payable on, and with respect to such periods. Pure Health and the Pure Health Members know of (i) no other tax returns or reports which are required to be filed which have not been so filed and (ii) no unpaid assessment for additional taxes for any fiscal period or any basis therefore.

(j)

Assets, Licenses, Permits; Intellectual Property. Pure Health owns or possesses in the operation of its business all material authorizations which are necessary for it to conduct its business as now conducted. All assets of Pure Health with a fair market value of more than $2,500.00 are listed on Schedule 2.3(j) hereto. Neither the execution nor delivery of this Agreement nor the consummation of the transactions contemplated hereby will require any notice or consent from any third party or governmental agency or have any material adverse effect upon any such authorizations. Pure Health has not transferred, conveyed or sold any asset listed on the financial statements provided to Buyer or otherwise disclosed to Buyer as being owned by Pure Health. 

(k)

Investment Representations. The Pure Health Members are acquiring the CANB Shares to be issued by Canbiola hereunder for their own account with the intention of holding such securities for purposes of investment, and the Pure Health Members have no intention of selling such securities in a public distribution in violation of the United States securities laws or any applicable state securities laws. During the course of the negotiation of this Agreement, the Pure Health Members have had the opportunity to ask questions of and receive answers from representatives of Canbiola concerning all matters that the Pure Health Members consider material.  The Pure Health Members understand that the Canbiola Shares have not been registered under the Securities Act and that such securities cannot be resold in a transaction to which the Securities Act applies unless subsequently registered under the Securities Act or an exemption from such registration is available. Each Pure Health Member is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act.  

(l)

Material Agreements. Pure Health has made available to CANB either an original or a correct and complete copy of each written contract to which Pure Health is currently or in the future will be bound. With respect to each such contract:  (a) the agreement is the legal, valid, binding, enforceable obligation of the Company and is in full force and effect in all material respects, subject to bankruptcy and equitable remedies exceptions; (b)(X) Pure Health is not in material breach or default thereof, (Y) no event has occurred which, with notice or lapse of time, would constitute a material breach or default of, or permit termination, modification, or acceleration under, the contract; or (Z) Pure Health has not received any notice or has any knowledge that any other party is, in default in any respect under any contract; and (c) Pure Health has not repudiated any material provision of the agreement.

(m)

Environmental Matters.  Pure Health is in compliance with all environmental laws applicable to it in all material respects.  

(n)

Compliance with Anti-Corruption Laws. Neither Pure Health nor to the knowledge of Pure Health or the Pure Health Members, any director, officer, agent, employee or other person acting on behalf of Pure Health has, in the course of its actions for, or on behalf of, Pure Health (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; or (iii) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 

(o)

OFAC. Neither Pure Health, nor to the knowledge of Pure Health or the Pure Health Members, any director, officer, agent, employee, affiliate or person acting on behalf of the Company, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. 

ARTICLE III

CONDITIONS PRECEDENT

3.1    Conditions to Each Party's Obligation to Effect the Purchase. The respective obligations of Pure Health and Buyer to effect the Purchase shall be conditional upon the filing, occurring or obtainment of all authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by any governmental entity or by any applicable law, rule, or regulation governing the transactions contemplated hereby.  

3.2    Conditions to Obligations of Buyer. The obligation of Buyer to effect the Purchase is subject to the satisfaction of the following conditions on or before the Closing Date, unless waived by Buyer:

(a)

Representations and Warranties. The representations and warranties of Pure Health and the Pure Health Members set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and the Closing as though made on and as of the Closing, except as otherwise contemplated by this Agreement.

(b)

Performance of Obligations of Pure Health. Pure Health shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing.

(c)

Closing Documents. Buyer shall have received all closing documents as counsel for Buyer shall reasonably request.

(d)

Consents. Pure Health shall have obtained the consent or approval of each person whose consent or approval shall be required in connection with the transactions contemplated hereby under any loan or credit agreement, note, mortgage, indenture, lease or other agreement or instrument, except those for which failure to obtain such consents and approvals would not, in the reasonable opinion of Buyer, individually or in the aggregate, have a material adverse effect on Pure Health and/or its subsidiaries and related entities taken as a whole upon the consummation of the transactions contemplated hereby. Pure Health shall also have received the approval of its members in accordance with applicable law.

(e)

Due Diligence. Buyer shall have confirmed to its satisfaction the business, operations, finances, assets and liabilities of Pure Health.

(f)

Pending Litigation. There shall not be any litigation or other proceeding pending or threatened to restrain or invalidate the transactions contemplated by this Agreement, which, in the sole reasonable judgment of Buyer, made in good faith, would make the consummation of the Purchase imprudent. In addition, there shall not be any other litigation or other proceeding pending or threatened against Pure Health, the consequences of which, in the judgment of Buyer, could be materially adverse to Pure Health.

(g)

Audit. Buyer shall have received audited financial statements for Pure Health. 

3.3    Conditions to Obligations of Pure Health. The obligations of Pure Health and the Pure Health Members to effect the Purchase is subject to the satisfaction of the following conditions unless waived by Pure Health:

(a)

Representations and Warranties. The representations and warranties of Buyer set forth in this Agreement jointly and severally shall be true and correct in all material respects as of the date of this Agreement and the Closing Date as though made on and as of the Closing Date, except as otherwise contemplated by this Agreement.

(b)

Performance of Obligations of Buyer. Buyer shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.

(c)

Closing Documents.  Pure Health  and the Pure Health Members shall have received all closing documents from Buyer as shall be reasonably requested.

ARTICLE IV

ADDITIONAL AGREEMENTS

 4.1

Conduct of Pure Health.  From the date of this Agreement and until the Closing Date, or until the prior termination of this Agreement, Pure Health shall not, unless agreed to by Canbiola in writing: 

(a)

engage in any transaction, except in the normal and ordinary course of business, or create or suffer to exist any security interest upon any of its assets or which will not be discharged in full prior to the Closing;

(b)

sell, assign or otherwise transfer any of its assets, or cancel or compromise any debts or claims relating to their assets, other than for fair value, in the ordinary course of business, and consistent with past practice; 

(c)

fail to use reasonable efforts to preserve intact its present business organizations, keep available the services of their employees and preserve its material relationships with customers, suppliers, licensors, licensees, distributors and others, to the end that its good will and ongoing business not be impaired prior to the Closing;

(d)          issue any shares of capital stock; permit any material adverse change to occur with respect to Pure Health or its business or assets; or make any material change with respect to its business in accounting or bookkeeping methods, principles or practices.

4.2

Non-Compete.  The Pure Health Members agree not to engage in any business or activity, directly or indirectly, in competition with Buyer in the business of manufacturing or selling products containing CBD, for a period of two (2) years following the Closing in any jurisdiction in which Canbiola does business. 

4.3

Engagement of Pasquale Ferro. Buyer will engage Pasquale Ferro as president of the Company pursuant to terms agreed by Mr. Ferro and Buyer.

 

ARTICLE V

INDEMNIFICATION

5.1

Pure Health and the Pure Health Members shall jointly and severally indemnify and hold Buyer and Buyer’s officers, shareholders, agents and directors (the “Buyer’s Representatives”) harmless for, from and against any and all claims or losses to which they may become subject resulting from or arising out of (1) any breach of a representation, warranty or covenant made by Pure Health or the Pure Health Members as set forth herein; or (2) any and all liabilities arising out of or in connection with: (A) any of the assets of Pure Health prior to the Closing; or (B) the operations of Pure Health prior to the Closing.

5.2

Buyer shall jointly and severally indemnify and hold Pure Health and the Pure Health Members' officers, shareholders, agents and directors (the “Pure Health’s Representatives”) harmless for, from and against any and all claims and losses to which they may become subject resulting from or arising out of (1) any breach of a representation, warranty or covenant made by Buyer as set forth herein; or (2) any and all liabilities arising out of or in connection with: (A) any of the assets of Pure Health after the Closing; or (B) the operations of Pure Health after the Closing. 

ARTICLE VI

SURVIVAL AND TERMINATION

The representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing.  Buyer may terminate this Agreement by writing upon the material breach of Pure Health.  Pure Health may terminate this Agreement by writing upon the material breach of Buyer.  This Agreement may be terminated by the written agreement of all parties. 

ARTICLE VII

OTHER MATTERS

7.1    Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.  The phrase “made available” in this Agreement shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available.  Time is of the essence with respect to all obligations in this Agreement.

7.2    Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.  This Agreement may be signed and delivered by electronic means, including e-mail.

7.3    Entire Agreement; No Third Party Beneficiaries; Rights of Ownership. This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

7.4    Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California without regard to principles of conflicts of law. Each party hereby irrevocably submits to the jurisdiction of any California state court located in San Diego County, or any federal court in the State of California in respect of any suit, action or proceeding arising out of or relating to this Agreement, and irrevocably accept for themselves and in respect of their property, generally and unconditionally, the jurisdiction of the aforesaid courts.

7.5    Publicity. Except as otherwise required by law or the rules of the SEC, no party shall issue or cause the publication of any press release or other public announcement with respect to the transactions contemplated by this Agreement without the written consent of the other party, which consent shall not be unreasonably withheld.

7.6    Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Any such assignment shall be null and void. Notwithstanding, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

7.7     Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

7.8

Notices.  All notices or other written communications hereunder will be deemed to have been properly given (i) upon delivery, if delivered in person or by facsimile transmission with receipt of an electronic confirmation thereof, (ii) one business day after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three business days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed to the parties at the addresses set forth below or to such other address as may be designated to the other party in writing at the address set forth below.  

7.9

Amendment. This Agreement may be amended by mutual agreement of the parties.  Any such amendment must be by an instrument in writing signed on behalf of each of the parties hereto.

7.10    Extension; Waiver. At any time prior to the Closing, the parties hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party.

7.11

Recitals. The parties acknowledge and agree that the recitals hereto are true and correct and made a part hereof by reference. 

[Remainder of Page Intentionally Blank; Signature Page Follows]

IN WITNESS WHEREOF, this Agreement has been signed by the parties set forth below as of the date above set forth.

		
	

Canbiola, Inc.

 

______________________________

Name: Marco Alfonsi

Title: CEO

Date: 

 

Pure Health Products, LLC

______________________________

Name: Pasquale Ferro

Title: CEO

Date: 

Pure Health Members

______________________________

Name: Pasquale Ferro

Date: 

______________________________

Name: Rosemary Ferro

Date: 

	

Address:_________________________

              _________________________

              _________________________

Address:_________________________

              _________________________

              _________________________

Address:_________________________

              _________________________

              _________________________

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EXHIBIT A

Pure Health Member Distribution List

Pasquale Ferro   100% owner

EXHIBIT B

Assignment Form

(Attached)

Pure Health Products, LLC

a New York limited liability company

ASSIGNMENT OF INTERESTS

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pasquale Ferro (“Holder”) hereby transfers, assigns, deposits, sells, and conveys all (100%) of the membership interests, in whatever form held (“Interests”), in Pure Health Products, LLC, a New York limited liability company (the “Company”), to Canbiola, Inc., a Florida corporation (“Assignee”).

Until the actual delivery to the Assignee of a membership certificate represented or issued by the Company, the Assignee shall possess, and shall be entitled to  exercise, all rights and powers of the owners and Holder of record of said Interests, including the right to receive distributions and to vote for every purpose and to consent to or waive any act of the Company of any kind; it being expressly  stipulated that no voting right, or right to give consents or waivers, remains with the Holder hereof by or under this certificate or by or under any implied agreement. This certificate is issued under and pursuant to, and the rights of the Holder hereof are subject to and limited by, the terms and conditions of the Company’s Operating Agreement and Articles of Organization of the Company.  The Assignee, by acceptance of this assignment, hereby agrees to be bound by the Operating Agreement, Articles of Organization, and other governing documents previously ratified and approved by the Company, which a copy of all such documents are held at the principal office of the Company. 

This certificate and the right, title and interest in and to the Interests, are transferable on the books of the Company by the Assignee in person or by attorney duly authorized, according to the rules established for that purpose by the Company.  

IN WITNESS WHEREOF, the Holder and Assignee execute this certificate to be effective as of the ____ day of __________________, 2019.

HOLDER:

		
	X:

	

Printed:

	

Pasquale Ferro

ASSIGNEE:

Canbiola, Inc.

		
	X:

	 

                      Marco Alfoni, CEOBOARD OF DIRECTORS  - RETAINER AGREEMENT

EMPLOYMENT AGREEMENT

This Employee Services Agreement (“Agreement”) is entered as of December 28, 2018 (“Effective Date”) by and between Pure Health Products, LLC, a New York Corporation (“Company”), and Canbiola, Inc., a Florida corporation (the “Guarantor”), and Pasquale Ferro a resident of New York located at 5507-10 Nesconset Hwy Suite 125 Mount Sinai, New York 11766 (“Employee”) and collectively as the Parties (“Parties”). The Parties agree as follows:

I.      Services Provided.

Company hereby appoints Employee to serve as its President and Employee hereby accepts such appointment. Employee shall provide those services required of an officer of like title of a company of similar size and industry, under the law of the State of Florida, the federal securities laws and other state and federal laws and regulations, as applicable.  

II.      Nature of Relationship

The Employee is entitled to all of the rights and benefits along with the responsibilities and obligations of an Employee and shall devote whatever time and effort as required to fulfill his responsibilities.

III.      Employee’s Warranties

Throughout the term of this agreement and for a period of one (1) year thereafter, the Employee agrees he will not, without obtaining Company’s prior written consent, directly or indirectly engage or prepare to engage in any activity in competition with any Company business or product, including products in the development stage, accept employment or provide services to (including service as a member of a board of directors), or establish a business in competition with Company.

IV.      Compensation

In all matters of this Section IV through and inclusive of Section VII, Guarantor shall provide a guaranty of fulfillment which shall survive any action with regards to the Company for the full term of this Agreement.

A.   Base Salary.  As compensation for Employee’s services, Employee shall receive fifteen thousand dollars ($15,000.00) per month (“Base Salary”).  The Base Salary shall be paid according to the standard payroll procedures in effect at the Company.  In any month that the full Base Salary cannot be paid, due solely to cash flow considerations as determined by the Company, the difference (“Difference”) between actual amount paid and the Base Salary paid shall be paid by issuance of common stock in the Company within 15 days of the end of each calendar quarter in an amount equal to the Difference and at a price equal to 110% of the average 5 trading day lowest price of the day for the 5 trading days immediately preceding the end of each quarter.

B.     Base Salary Increase.  At each annual anniversary of the Agreement, the Base Salary shall be increased at the greater of three percent (3%), or the prior year-end annual percentage increase in EBITDA as reported in the SEC 10K filing.

C.    Incentive Bonus.  Employee will be eligible to receive an annual cash and or stock bonus which will be determined by mutually agreed performance goals which shall be payable upon achievement of performance goals mutually agreed between Employee and the Company.  

D.    Benefits. During the Term, from the Effective Date through the date of termination of Employee’s engagement with the Company for any reason, Employee shall be entitled to participate in any welfare, health and life insurance and pension benefit and incentive programs as may be adopted from time to time by the Company on the same basis as that provided to similarly situated Employees or Employees of the Company generally. Without limiting the generality of the foregoing, Employee/ Employee shall be entitled to the following benefits:

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1. Vacation and Sick Pay.  Employee shall be entitled to four weeks paid vacation time and 5 paid days for illness each year. Unused vacation and sick days will roll-over to and be accrued and used in the following years. Further, Employee may take additional paid-time-off, holidays, and sick leave in accordance with the Company Employee Handbook policies.

2.  Reimbursement for Business Expenses. During the Term, the Company shall reimburse Employee for all reasonable expenses incurred by Employee in performing Employee's duties for the Company, on the same basis as similarly situated Employees of the Company generally and in accordance with the Company's policies as in effect from time to time.  This reimbursement shall include office and internet expenses, cell phone, and health insurance coverage.

E.    Preferred Share Issuance. As additional compensation, Employee shall be issued and Guarantor shall provide five (5) shares of the Guarantor’s Series A Preferred Stock upon execution of this Agreement, which shall be considered fully earned upon issuance which shall be one and one-quarter Preferred A share at December 31 2018, 2019, 2020, and 2021 and may be convertible at (.25 or one-quarter shares of the total Preferred A or twelve million five hundred thousand (12,500,000) shares of common stock each year-end commencing 12-31-2018 for 4 years of the agreement.

V.      Indemnification and Insurance

The Company hereby fully agrees to hold harmless and indemnify Employee as authorized or permitted by law and the Company’s governing documents, as the same may be amended from time to time, except for acts constituting negligence or willful misconduct by Employee.  The current Indemnity Agreement is attached as Exhibit A to this Agreement.

VI.      Term of Agreement

This Agreement shall be in effect from the Effective Date hereof and continue for an initial term of four years (“Term”). This Agreement shall be renewed for consecutive three-year Terms unless either party gives notice of its intent to terminate the Agreement at least 30 days prior to the expiration of the applicable term. 

VII.      Employee Termination

A.

Death. Upon termination of Employee’s employment prior to the expiration of the Term by reason of Employee's death, the Company shall pay Employee's designated beneficiary or beneficiaries, within 30 days of Employee's death in a lump sum in cash, (i) six months of Employee's Base Salary and pro-rated Incentive Bonus from the date of Employee's death, and (ii) any accrued obligations or benefits owed the Employee for that same period of time.

B.

Disability. If, as a result of Employee's incapacity due to physical or mental illness (“Disability”), Employee shall have been absent from the full-time performance of Employee's duties with the Company for a period of three consecutive months and, within 30 days after written notice is provided to Employee by the Company, Employee's employment under this Agreement may be terminated by the Company for Disability and paid in the same manner as in termination by Death per section VII. A. above.

C.

Termination for Cause.  The Company may terminate Employee’s employment under this Agreement with or without Cause at any time and Employee may resign under this Agreement with or without Good Reason at any time. As used herein, “Cause” shall mean: (i) the plea of guilty or nolo contendere to, conviction for, or the commission of, a felony offense by Employee that is not in connection with Employee’s duties or services to the Company and which will reasonably be expected to have a material adverse impact 

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on the Company; (ii) a willful material breach by Employee of a fiduciary duty owed to the Company or any of its subsidiaries; (iii) a knowing and material violation by Employee of any Company policy pertaining to legal compliance or conflicts of interest.  Upon Employee’s (A) termination of employment by the Company for Cause prior to the expiration of the Term or (B) resignation without Good Reason prior to the expiration of the Term, this Agreement shall terminate without further obligation by the Company, except for the payment of any accrued obligations in a lump sum in cash within 30 days of such termination.

D.

Termination by the Employee by the Company for other than Cause.  Upon termination of Employee's employment prior to the expiration of the Term by the Company without Cause or by Employee for Good Reason then:

(i) the Company shall continue to pay Employee the Base Salary through the longer of the end of the Term over the course of the then remaining Term plus 12 months in accordance with the Company’s payroll and payment practices plus an amount equal to the premiums charged by the Company to maintain COBRA benefits continuation coverage for Employee and his eligible dependents to the extent such coverage is then in place;

(ii) the Company shall pay Employee within 30 days of the date of such termination in a lump sum in cash any accrued obligations.

E.

Termination by acquisition or merger.  In the event of a merger or acquisition involving the Company where this Agreement is terminated, the Company shall arrange to pay Employee according to Section VII D. of this Agreement.

F.

Return of Materials.  In the event of any termination of this Agreement, the Employee agrees to return any materials and confidential information of the Company.

VIII.      Sole Agreement

This Agreement supersedes all prior or contemporaneous written or oral understandings or agreements, and may not be added to, modified, or waived, in whole or in part, except by a writing signed by the party against whom such addition, modification or waiver is sought to be asserted.

IX.      Assignment

This Agreement and all of the provisions hereof shall be binding upon and insure to the benefit of the parties hereto and their respective successors and permitted assigns and, except as otherwise expressly provided herein, neither this agreement, nor any of the rights, interests or obligations hereunder shall be assigned by either of the parties hereto without the prior written consent of the other party.

X.      Notices

Any and all notices, requests and other communications required or permitted hereunder shall be in writing, registered mail or by facsimile, to each of the parties at the addresses set forth herein or as otherwise provided in writing by such party.

Any such notice shall be deemed given when received and notice given by certified mail shall be considered to have been given on the tenth (10th) day after having been sent in the manner provided for above.

XI.      Survival of Obligations

Notwithstanding the expiration of termination of this Agreement, neither party hereto shall be released hereunder from any liability or obligation to the other which has already accrued as of the time of such expiration or termination or which thereafter might accrue in respect of any act or omission of such party prior to such expiration or termination.

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XII.      Severability

Any provision of this Agreement which is determined to be invalid or unenforceable shall not affect the remainder of this Agreement, which shall remain in effect as though the invalid or unenforceable provision had not been included herein, unless the removal of the invalid or unenforceable provision would substantially defeat the intent, purpose or spirit of this agreement.

XIII.      Governing Laws

This Agreement will be construed in accordance with the laws of the state of California, without resort to conflict of law principles. 

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed by their duly authorized officers, as of the date first written above.

GUARANTOR, CANBIOLA, INC.

____________________________________

Marco Alfonsi, CEO

FOR THE COMPANY PURE HEALTH PRODUCTS, LLC

Marco Alfonsi, Canbiola, Inc. CEO

EMPLOYEE 

____________

Pasquale Ferro

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EXHIBIT A

INDEMNITY AGREEMENT

This Indemnity Agreement (“Agreement”) is made and entered into this 28th  day of December 2018 by and between Canbiola, Inc., a Florida corporation (the “Company”), and Pasquale Ferro (“Employee”).

RECITALS

WHEREAS, Employee performs a valuable service to the Company in his capacity as President of its manufacturing facility Pure Health Products, LLC.

WHEREAS, the Company has adopted Bylaws (the “Bylaws”) providing for the indemnification of the directors, officers, Employees and other agents, including persons serving at the request of the Company in such capacities with other corporations or enterprises; and

WHEREAS, in order to induce Employee to continue to serve as President of Pure Health Products, LLC, the Company has determined and agreed to enter into this Agreement with Employee;

NOW, THEREFORE, in consideration of Employee’s continued service after the date hereof, the parties hereto agree as follows:

AGREEMENT

1. Indemnity of Employee. The Company hereby agrees to hold harmless and indemnify Employee to the fullest extent authorized or permitted by the provisions of the Bylaws and applicable law against any and all expenses (including attorneys’ fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Employee becomes legally obligated to pay because of any claim or claims made against or by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative (including an action by or in the right of the Company) to which Employee is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Employee is, was or at any time becomes a director, officer, Employee or other agent of Company, or is or was serving or at any time serves at the request of the Company as a director, officer, Employee or other agent of another corporation, partnership, joint venture, trust, Employee benefit plan or other enterprise.

2. Limitations on Indemnity. No indemnity shall be paid by the Company:

(a) on account of any claim against Employee solely for an accounting of profits made from the purchase or sale by Employee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law;

(b) on account of Employee’s conduct that is established by a final judgment as knowingly fraudulent or deliberately dishonest or that constituted willful misconduct;

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(c) on account of Employee’s conduct that is established by a final judgment as constituting a breach of Employee’s duty of loyalty to the Company or resulting in any personal profit or advantage to which Employee was not legally entitled;

(d) for which payment is actually made to Employee under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, bylaw or agreement, except in respect of any excess beyond payment under such insurance, clause, bylaw or agreement;

(e) if indemnification is not lawful (and, in this respect, both the Company and Employee have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication); or

(f) in connection with any proceeding (or part thereof) initiated by Employee, or any proceeding by Employee against the Company or its directors, officers, Employees or other agents, unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the board of directors of the Company, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the NYCRR, or (iv) the proceeding is initiated pursuant to Section 9 hereof.

3. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period Employee is a director, officer, Employee or other agent of the Company (or is or was serving at the request of the Company as a director, officer, Employee or other agent of another corporation, partnership, joint venture, trust, Employee benefit plan or other enterprise) and shall continue thereafter so long as Employee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of the fact that Employee was serving in the capacity referred to herein.

4. Partial Indemnification. Employee shall be entitled under this Agreement to indemnification by the Company for a portion of the expenses (including attorneys’ fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Employee becomes legally obligated to pay in connection with any action, suit or proceeding referred to in Section 1 hereof even if not entitled hereunder to indemnification for the total amount thereof, and the Company shall indemnify Employee for the portion thereof to which Employee is entitled.

5. Notification and Defense of Claim. Not later than thirty (30) days after receipt by Employee of notice of the commencement of any action, suit or proceeding, Employee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve it from any liability which it may have to Employee otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Employee notifies the Company of the commencement thereof:

(a)   the Company will be entitled to participate therein at its own expense;

(b)   except as otherwise provided below, the Company may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense thereof, with counsel reasonably satisfactory to Employee. After notice from the Company to Employee of its election to assume the defense thereof, the Company will not be 

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liable to Employee under this Agreement for any legal or other expenses subsequently incurred by Employee in connection with the defense thereof except for reasonable costs of investigation or otherwise as provided below. Employee shall have the right to employ separate counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Employee unless (i) the employment of counsel by Employee has been authorized by the Company, (ii) Employee shall have reasonably concluded, and so notified the Company, that there is an actual conflict of interest between the Company and Employee in the conduct of the defense of such action or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of Employee’s separate counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which Employee shall have made the conclusion provided for in clause (ii) above; and

(c)   the Company shall not be liable to indemnify Employee under this Agreement for any amounts paid in settlement of any action or claim affected without its written consent, which shall not be unreasonably withheld. The Company shall be permitted to settle any action except that it shall not settle any action or claim in any manner which would impose any penalty or limitation on Employee without Employee’s written consent, which may be given or withheld in Employee’s sole discretion.

6. Expenses. The Company shall advance, prior to the final disposition of any proceeding, promptly following request therefore, all expenses incurred by Employee in connection with such proceeding upon receipt of an undertaking by or on behalf of Employee to repay said amounts if it shall be determined ultimately that Employee is not entitled to be indemnified under the provisions of this Agreement, the Bylaws, applicable law or otherwise.

7. Enforcement. Any right to indemnification or advances granted by this Agreement to Employee shall be enforceable by or on behalf of Employee in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefore. Employee, in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. It shall be a defense to any action for which a claim for indemnification is made under Section 1 hereof (other than an action brought to enforce a claim for expenses pursuant to Section 6 hereof, provided that the required undertaking has been tendered to the Company) that Employee is not entitled to indemnification because of the limitations set forth in Section 2 hereof. Neither the failure of the Company (including its board of directors or its stockholders) to have made a determination prior to the commencement of such enforcement action that indemnification of Employee is proper in the circumstances, nor an actual determination by the Company (including its board of directors or its stockholders) that such indemnification is improper shall be a defense to the action or create a presumption that Employee is not entitled to indemnification under this Agreement or otherwise.

8. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Employee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

9. Non-Exclusivity of Rights. The rights conferred on Employee by this Agreement shall not be exclusive of any other right which Employee may have or hereafter acquire under any statute, provision of the Company’s Articles of Incorporation or Bylaws, agreement, vote of stockholders 

7

or directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding office.

10. Survival of Rights.

(a)   The rights conferred on Employee by this Agreement shall continue after Employee has ceased to be a director, officer, Employee or other agent of the Company or to serve at the request of the Company as a director, officer, Employee or other agent of another corporation, partnership, joint venture, trust, Employee benefit plan or other enterprise and shall inure to the benefit of Employee’s heirs, executors and administrators.

(b)   The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

11. Severability. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. Furthermore, if this Agreement shall be invalidated in its entirety on any ground, then the Company shall nevertheless indemnify Employee to the fullest extent provided by the Bylaws, the NYCRR or any other applicable law.

12. Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of New York.

13. Amendment and Termination. No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.

14. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement.

15. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

16. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered by hand to the party to whom such communication was directed or (ii) upon the third business day after the date on which such communication was mailed if mailed by certified or registered mail with postage prepaid to the parties address of record, or to such other address as may have been furnished to Employee by the Company.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

CANBIOLA, INC.

___________________________________

By:  Marco Alfonsi, CEO 

EMPLOYEE

___________________________________

Pasquale Ferro

Ferro Empl Agr 121918 v.2

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