SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 25, 2018
ROCKY MOUNTAIN HIGH BRANDS, INC.
(Exact name of the registrant as specified in its charter)
| Nevada | 000-55609 | 90-0895673 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
|
9101 LBJ Freeway, Suite 200; Dallas, TX |
75243 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 800-260-9062
______________________________________________________
(Former name or address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
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SECTION 1 – Registrant’s Business and Operations
Item 1.01 Entry Into A Material Definitive Agreement
On July 25, 2018, our Board of Directors approved the acquisition of BFIT Brands, LLC, an Arizona limited liability company (“BFIT”). BFIT markets and distributes FitWhey, a water-based protein drink combined with caffeine and a vitamin B pack. The acquisition is documented by an Asset Purchase Agreement dated July 25, 2018 (the “APA”). Under the APA, we have acquired all assets of BFIT for a total purchase price of $230,000, to be paid as follows:
| a. | $75,000 in cash, to be paid to BFIT in installments following the effective date of the asset purchase, payable on the 15th day the month following the end of each of our fiscal quarters. Each installment payment shall be equal to five percent (5%) of the net sales revenue generated by the BFIT business during the applicable fiscal quarter; |
| b. | $75,000-worth of our common stock to be issued on the effective date of the asset purchase. The shares shall be valued using the closing share price for our common stock on the effective date of the asset sale; |
| c. | Forgiveness of the $80,000 debt owing to us by BFIT under the Secured Promissory Note and Exclusive Option Agreement dated June 29, 2018. |
The common stock component of the purchase price, valued at $0.01005 per share, will be approximately 7,462,687 shares. The assets acquired include all trademarks, including the “FitWhey” brand, all inventory, accounts receivable, and all goodwill and other intangibles associated with BFIT’s business. We did not assume any liabilities of BFIT.
In connection with the APA, we entered into a Non-Competition Agreement with BFIT and its managers and members. The Non-Competition Agreement prohibits these individuals, for a period of one year, from participating in a business similar to that conducted by BFIT, or from participating in a business marketing products containing hemp or CBD.
Finally, the co-founder of BFIT, Erik Rothchild, has joined Rocky Mountain High Brands and will continue to run the FitWhey business as a part of our corporate family. Under an Employment Agreement with Rocky Mountain High Brands, Mr. Rothchild will serve as President of FitWhey Brands, Inc., a new wholly-owned subsidiary formed to operate the FitWhey business. In that position, Mr. Rothchild will report to our Chief Commercialization Officer and will be responsible for sales and promotion of FitWhey-branded products and related responsibilities. Mr. Rothchild’s employment is for an open term and on an at-will basis. His initial base salary will be $75,000 per year, together with bonuses and equity awards to be granted in the discretion of the Board.
The foregoing discussion is a summary of the material terms of the agreements described herein. Each of these agreements contains additional terms, covenants and conditions and should be reviewed in its entirety for additional information.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
| Exhibit No. | Description |
| 10.1 | Asset Purchase Agreement with BFIT Brands, LLC |
| 10.2 | Non-competition Agreement with members of BFIT Brands, LLC |
| 10.3 | Employment Agreement with Erik Rothchild |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned hereunto duly authorized.
ROCKY MOUNTAIN HIGH BRANDS, INC.
Date: July 26, 2018
By: /s/ Michael Welch
Michael R. Welch
President and Chief Executive Officer
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") dated as of July 25, 2018 (the “Effective Date”), is entered into by and among Rocky Mountain High Brands, Inc., a Nevada corporation, ("Purchaser"), and BFIT Brands, LLC, an Arizona limited liability company (“Seller”).
Whereas, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all of Seller’s assets relating to and used in Seller’s drink business (the “Business”), upon the terms and subject to the conditions of this Agreement.
Now, Therefore, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
Purchase and Sale. (a) On the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase from Seller, all the right, title and interest of Seller in, to and under the Acquired Assets (as hereinafter defined), for the total purchase price of $230,000 (the “Purchase Price”), to be paid as follows:
a. $75,000 in cash, to be paid to Seller in installments following the effective date of the asset purchase, payable on the 15th day the month following the end of each of the Purchaser’s fiscal quarters. Each installment payment shall be equal to five percent (5%) of the net sales revenue generated by Seller’s business during the applicable fiscal quarter. Net sales are defined as total sales less allowances, returns, discounts, and slotting fees;
| b. | $75,000 worth of validly issued, fully paid, non-assessable shares of the Purchaser’s common stock to be issued on the effective date of the asset purchase. These shares shall be restricted shares under Rule 144 of the Securities Act and shall be subject thereto. The shares shall be valued using the closing share price for the Purchaser’s common stock on the effective date of the asset sale; and |
| c. | Forgiveness of the $80,000 Secured Promissory Note dated June 29, 2018 between Purchaser and Seller. |
Section 1.1.The purchase and sale of the Acquired Assets is referred to in this Agreement as the “Acquisition.” THIS IS AN ASSET PURCHASE ONLY AND NO LIABILITIES OF SELLER ARE BEING ASSUMED BY PURCHASER.
Section 1.2. Acquired Assets.
(a) The term “Acquired Assets” means all of the assets of Seller of any nature whatsoever, including but not limited to the following assets of Seller:
(i) All trademarks and intellectual property rights of any nature relating to the Business, including but not limited to “FitWhey”;
(ii) All Accounts Receivable of Seller;
(iii) All customer lists of Seller;
(iv) All inventory on hand (including but not limited to all finished goods, packaging, work in process/progress and all raw materials) relating to the Business;
(v) All websites, ecommerce sites, Twitter, Facebook and all other social media sites of any nature related to the Business;
(vi) All recipes and formulas for the drinks and products of the Business;
(vii) All procedures relating to the operation of the Business;
(viii) All general intangibles relating or associated with the operation of the Business; and
(iv) All goodwill generated by, and associated with, the Business.
ARTICLE II
THE CLOSING
Section 2.1. Closing Date. The closing of the Acquisition (the “Closing”) shall take place on or before July 25, 2018, or at such other date as may be agreed upon in writing by Seller and Purchaser. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”. The Closing may also be effectuated with the exchange of closing documents by facsimile or electronic mail and delivery of Purchaser’s shares.
Section 2.2. Transactions To Be Effected at the Closing. At the Closing:
(a) Seller and the Shareholders shall execute and deliver, if appropriate, to Purchaser the following:
(i) A Bill of Sale and Assignment in the form attached hereto as Exhibit “A”;
(ii) the Non-Competition Agreement in the form attached hereto as Exhibit "B"; and
(iii) such other documents as Purchaser or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement.
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(b) Purchaser shall deliver to Seller the following:
(i) the Purchase Price as described in Section 1.1 hereof;
(ii) such other documents as Seller or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Purchaser as follows:
Section 3.1. Organization, Standing and Power. Seller is an Arizona limited liability company, duly organized, validly existing and in good standing under the laws of the State of Arizona and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to carry on the Business as presently conducted.
Section 3.2. Authority; Execution and Delivery; Enforceability. Seller has full power and authority to execute this Agreement and to consummate the Acquisition and the other transactions contemplated hereby. The execution and delivery by Seller of this Agreement and the consummation by Seller of the Acquisition and the other transactions contemplated hereby and thereby have been duly authorized by all necessary action. Seller and Shareholders have duly executed and delivered this Agreement, and this Agreement constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.
Section 3.3. No Conflicts; Consents. The execution and delivery by Seller of this Agreement do not (a) conflict with, (b) result in any violation of or default under, (c) give rise to (i) a right of termination, cancellation or acceleration of any obligation under, (ii) a loss of a material benefit under or (iii) increased, additional, accelerated or guaranteed rights or entitlements of any person under, or (d) result in the creation of any Lien upon any of the properties or assets of Seller under any provision of the certificate or articles of incorporation and by-laws of Seller. No consent, approval, license, permit, order or authorization (“Consent”) of, or registration, declaration or filing with, any third party or any Federal, state, local or foreign government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (a “Governmental Entity”) is required to be obtained or made by or with respect to Seller in connection with the execution, delivery and performance of this Agreement or the consummation of the Acquisition.
Section 3.4. Sufficiency of Acquired Assets. The Acquired Assets constitute all of the assets that are employed by Seller in connection with the Business. The Acquired Assets are sufficient for the conduct of the Business immediately following the Closing in substantially the same manner as currently conducted.
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Section 3.5. Proceedings. There are no pending suits, actions or proceedings (collectively, “Proceedings” and each, a “Proceeding”) or claims arising out of the conduct of the Business or against or affecting any Acquired Asset. Seller is not a party or subject to or in default under any judgment applicable to the conduct of the Business or any Acquired Asset. There is not any Proceeding or claim by Seller pending, or which Seller intends to initiate, against any other Person arising out of the conduct of the Business. To the knowledge of Seller, there is no pending or threatened investigation of or affecting the conduct of the Business or any Acquired Asset.
Section 3.6. Absence of Changes or Events. Seller has caused the Business to be conducted in the ordinary course and in substantially the same manner as previously conducted and has made all reasonable efforts consistent with past practices to preserve the relationships of the Business with customers, suppliers and others with whom the Business deals.
Section 3.7. Compliance with Applicable Laws. Seller has not received any written or oral communication from a Governmental Entity that alleges that the Business is not in compliance in any material respect with any applicable laws, regulations, ordinances and the like (“Applicable Laws”). Seller has not received any written notice that any investigation or review by any Governmental Entity with respect to any Acquired Asset or the Business is pending or that any such investigation or review is contemplated.
Section 3.8. Effect of Transaction. No vendor, customer, supplier, employee, client, creditor, or other person having a business relationship with the Business has informed Seller that such person intends to change such relationship because of the Acquisition or the consummation of any other transaction contemplated hereby.
Section 3.9. Disclosure. No representation or warranty of Seller contained in this Agreement, and no statement contained in any document, certificate, Exhibit or Schedule furnished or to be furnished by or on behalf of Seller to Purchaser or any of Purchaser’s representatives pursuant to this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading or necessary in order to fully and fairly provide the information required to be provided in any such document, certificate, Exhibit or Schedule.
Purchaser represents and warrants to Seller and the Shareholders as follows:
Section 3.10. Organization, Standing and Power. Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted.
Section 3.11.Authority; Execution and Delivery; Enforceability. Purchaser has full power and authority to execute this Agreement and to consummate the Acquisition and the other transactions contemplated hereby and thereby. The execution and delivery by Purchaser of this Agreement and the consummation by Purchaser of the Acquisition and the other transactions contemplated hereby and thereby will be duly authorized by all necessary corporate action. Purchaser has duly executed and delivered this Agreement, and this Agreement constitutes, the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms.
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Section 3.12. No Conflicts; Consents. The execution and delivery by Purchaser of this Agreement do not conflict with any contract to which Purchaser is a party. No consent of or registration, declaration or filing with any third party or any Governmental Entity is required to be obtained or made by or with respect to Purchaser in connection with the execution, delivery and performance of this Agreement or the consummation of the Acquisition or the other transactions contemplated hereby and thereby.
ARTICLE IV
COVENANTS
Section 4.1. Covenants of Seller Relating to Conduct of Business.
(a) Except as otherwise expressly permitted by the terms of this Agreement, from the date hereof to the Closing, Seller shall conduct the Business in the ordinary course in substantially the same manner as presently conducted and shall make all reasonable efforts consistent with past practices to preserve the relationships of the Business with all vendors, customers, suppliers and other persons with whom the Business deals. Prior to the Closing, Seller shall not take any action that would, or that could reasonably be expected to, result in any of the conditions to the purchase and sale of the Acquired Assets set forth herein not being satisfied. In addition, prior to the Closing and except as otherwise expressly permitted by the terms of this Agreement, Seller shall not take any significant action or make any significant decision with respect to the Business without the prior written consent of Purchaser.
Section 4.2. Confidentiality. Purchaser and Seller shall keep confidential, and cause their respective affiliates, officers, directors, employees and advisors to keep confidential, all information relating to the Business, except as required by law or administrative process and except for information that is available to the public on the Closing Date. If Purchaser completes the transactions contemplated by this Agreement, Seller’s covenant set forth herein shall survive for three (3) years after the Closing Date.
Section 4.3. Reasonable Efforts.
(a) On the terms and subject to the conditions of this Agreement, each party shall use its reasonable efforts to cause the Closing to occur as provided in Section 2.1 as soon as practicable following the satisfaction or waiver of the conditions precedent set forth herein, including taking all reasonable actions necessary to comply promptly with all legal requirements that may be imposed on it with respect to the Closing.
Section 4.4. Post-Closing Cooperation.
(a) Purchaser and Seller shall cooperate with each other, and shall cause their officers, employees, agents, auditors and representatives to cooperate with each other after the Closing to ensure the orderly transition of the Business from Seller to Purchaser and to minimize any disruption to the Business that might result from the transactions contemplated hereby. After the Closing, upon reasonable written notice, Purchaser and Seller shall furnish or cause to be furnished to each other and their employees, counsel, auditors and representatives access, during normal business hours, to such information and assistance (to the extent within the control of such party) relating to the Business as is reasonably necessary for financial reporting and accounting matters.
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Section 4.5 Further Assurances. From time to time, as and when requested by any party, each party, without expense to such party, shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions, as such other party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement, including, in the case of Seller, executing and delivering to Purchaser such assignments, deeds, bills of sale, consents and other instruments as Purchaser or its counsel may reasonably request as necessary or desirable for such purpose.
Section 4.6 Restrictive Covenants. At the Closing, Seller shall enter into the Non-Competition Agreement in the form attached hereto as Exhibit "A".
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1. Conditions to Obligations of Purchaser. The obligation of Purchaser to complete the Acquisition is subject to the satisfaction (or waiver by Purchaser) on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of Seller made in this Agreement shall be true and correct.
(b) Performance of Obligations of Seller. Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Seller by the time of the Closing.
(c) Absence of Proceedings. There shall not be pending or threatened by any Governmental Entity any Proceedings (or by any other person any Proceedings that has a reasonable likelihood of success), challenging or seeking in any respect to restrain or prohibit the Acquisition or any other transaction contemplated by this Agreement.
(d) Consents. Seller shall have received written consents from all persons necessary or appropriate to effect the Acquisition.
Section 5.2. Conditions to the Obligations of Seller. The obligation of Seller to complete the Acquisition is subject to the satisfaction (or waiver by Seller) on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of Purchaser made in this Agreement shall be true and correct.
(b) Performance of Obligations of Purchaser. Purchaser shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Purchaser by the time of the Closing.
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ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
Section 6.1. Termination.
(a) Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the Acquisition and the other transactions contemplated by this Agreement abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Purchaser and Seller;
(ii) by Seller if (i) Purchaser breaches or fails to perform or comply with any of its material covenants or agreements contained herein, or breaches its representations and warranties in any material respect, (ii) Seller has notified Purchaser in writing of the breach, and (iii) the breach is incapable of being cured or has continued without cure for a period of ten (10) days after the notice of breach; or
(iii) by Purchaser if (i) Seller breaches or fails to perform or comply with any of its material covenants or agreements contained herein, or breach the representations and warranties made by Seller in any material respect, (ii) Purchaser has notified Seller in writing of the breach and (iii) the breach is incapable of being cured or has continued without cure for a period of ten (10) days after the notice of breach.
Section 6.2. Effect of Termination. If this Agreement is terminated and the transactions contemplated hereby are abandoned as described herein, this Agreement shall become null and void and of no further force and effect.
Section 6.3. Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Indemnification by Seller. Seller shall indemnify Purchaser and its affiliates and each of their respective officers, directors, partners, members, managers, employees, stockholders, agents and representatives against, and hold them harmless from, any loss, liability, obligations, claim, damage or expense (including reasonable legal fees and expenses) (“Losses”), as incurred (payable within thirty (30) days after receipt of a written request), for or on account of, or arising from or in connection with or otherwise in respect of:
(a) any breach of any representation or warranty of Seller that survives the Closing contained in this Agreement; or
(b) any breach of any covenant of Seller contained in this Agreement.
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Section 7.2. Indemnification by Purchaser. Purchaser shall indemnify Seller and its officers, directors, shareholders, employees, agents and representatives against, and agrees to hold them harmless from, any Losses, as incurred (payable promptly upon written request), for or on account of, or arising from or in connection with or otherwise with respect of:
(a) any breach of any representation, warranty of Purchaser contained in this Agreement; or
(b) any breach of any covenant of Purchaser contained in this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. Assignment. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by Seller without the prior written consent of Purchaser. Purchaser may assign this Agreement to an entity controlled by Purchaser by providing written notice to Seller.
Section 8.2. No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal or equitable rights hereunder.
Section 8.3. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand or facsimile, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service), as follows:
To the Seller:
| BFIT Brands, LLC |
| Attn: Erik Rothchild |
| 6645 E. Gelding Dr. |
| Scottsdale, AZ 85254 |
To the Purchaser:
| Rocky Mountain High Brands, Inc. |
| Attn: David M. Seeberger |
| 9101 LBJ Freeway, Suite 200 |
| Dallas, TX 75243 |
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Section 8.4. Interpretation; Exhibits and Schedules; Certain Definitions.
(a) 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. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein, shall have the meaning as defined in this Agreement. When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.
(b) For all purposes hereof:
“affiliate” of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person, and, in the case of Seller, shall be deemed to include the shareholders of Seller.
“including” means including, without limitation.
“person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity.
Section 8.5. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties.
Section 8.6. Entire Agreement. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. No party shall be liable or bound to any other party in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein.
Section 8.7. Severability. If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances.
Section 8.8. Consent to Jurisdiction. Purchaser and Seller irrevocably submit to the exclusive jurisdiction of the courts of the State of Texas, County of Dallas, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby.
Section 8.9. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.
Section 9.10. Seller’s Knowledge. For purposes of this Agreement, “Seller’s knowledge” shall mean the actual knowledge, upon reasonable investigation or inquiry, of the Shareholders of Seller.
(Signature page follows)
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IN WITNESS WHEREOF, this Note has been executed effective the date and place first written above.
SELLER: BFIT Brands, LLC
By: /s/Tim McGeehan_________________
Tim McGeehan, Majority Shareholder
By: /s/Erik Rothchild__________________
Erik Rothchild, Co-Founder
PURCHASER: Rocky Mountain High Brands, Inc.
By: /s/Michael R. Welch_______________
Michael Welch, CEO
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NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this “Agreement”) is dated July 25, 2018, (the “Effective Date”), by and among BFIT Brands, LLC, an Arizona limited liability company, together with all members/shareholders (“Shareholder”) of BFIT Brands, LLC (BFIT Brands, LLC and Shareholder(s) collectively referred to as "Seller") and Rocky Mountain High Brands, Inc., a Nevada corporation (“Purchaser”). All capitalized terms not otherwise defined herein shall have the meaning given to them in the Asset Purchase Agreement, dated as of July 25, 2018, by and among Seller and Purchaser (the “Purchase Agreement”).
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, Seller has agreed to sell and convey to Purchaser, and Purchaser has agreed to purchase and accept from Seller, the Acquired Assets relating to Seller's Business;
WHEREAS, Purchaser would not have entered into the Purchase Agreement without ensuring certain protections against solicitation and competition by Seller subsequent to the Closing; and
WHEREAS, Seller is delivering this Agreement pursuant to the Asset Purchase Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein and in the Purchase Agreement, the benefits which Seller and Purchaser will receive from the transactions contemplated by the Purchase Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:
1. RESTRICTIVE Covenants.
1.1 Non-Competition. Seller covenants and agrees that for a period of one (1) year from the date of this Agreement (“Restricted Period”), Seller shall not engage, directly or indirectly, whether as a principal, agent, owner, employee, contractor, advisor, partner, member, shareholder, manager, officer, director, broker, consultant or otherwise, individually or in combination with any other individual, corporation or other entity, in any business dealing in any manner with beverages which are in any way similar to the products sold, or ever sold, or in development or concept stage to be sold, by BFIT Brands, LLC, or which contain hemp or CBD, other than Purchaser, within the United States of America (the “Territory”). Provided, however, that nothing contained in this Section 1.1 shall prohibit Seller from owning, directly or indirectly, solely as an investment, securities of any entity traded on any national securities exchange or over-the-counter market if the Seller are not controlling persons of, or a member of a group which controls, such entity and does not, either directly or indirectly, own one percent (1%) or more of any class of securities of such entity.
1.2 Remedies. Seller acknowledges and agrees that the Purchaser would be irreparably harmed and that remedies at law would be inadequate to redress the actual or threatened violations of the restrictive covenants set forth in this Section 1, and that, in addition to any other relief, the foregoing restrictions may be enforced by temporary and permanent injunctive relief. The time
periods referenced in the foregoing restrictions shall be extended by any period in which Seller is in breach thereof. Purchaser's breach of any provision of this Agreement shall not constitute a defense for any violation by Seller of the restrictions contained herein. Remedies referenced in this Agreement shall be considered cumulative and not exclusive, and Purchaser expressly reserve the right to pursue all remedies available to Purchaser for any breach or threatened breach, including the recovery of damages, accounting for all compensation, profits, monies, accruals, increments or other benefits resulting from a breach or threatened breach, and reasonable attorneys’ fees and costs of court. Seller agrees to pay all costs and expenses (including reasonable attorneys’ fees and court costs) incurred by Purchaser in enforcing the provisions of this Agreement, to the extent Purchaser prevails. Notwithstanding the foregoing, if any provision of this Agreement is found by a tribunal or competent jurisdiction to be illegal or unenforceable, either in whole or in part, then, but only to such extent, the parties stipulate and agree that the offending provision shall automatically be deemed modified and conformed to the minimum requirements of law and thereupon, together with all other provisions hereof (whether in their original form or as modified hereunder), shall be given full force and effect.
1.4 Special Considerations. Seller acknowledges that the provisions of this Section 1 are agreed to by Seller and Purchasers on the basis of the following: (i) the non-competition covenant contained herein is ancillary to the agreement of Purchaser to purchase the Acquired Assets pursuant to the Purchase Agreement, and those covenants are supported by a new and independent valuable consideration in addition to the consideration paid to Seller for the Acquired Assets, and accordingly the purchase of the Acquired Assets by Purchaser gives rise to the interest of Purchaser in obtaining the non-competition covenant contained herein, (ii) the non-competition covenant, the duration of the Restricted Period and the geographical scope of the Territory are fair, reasonable and not oppressive and are necessary and designed to protect the goodwill and legitimate business interests of Purchaser in connection with the Business, and (iii) the limitations contained in this Agreement with regard to the non-competition covenant as to time, geographical area and scope of activity to be restrained do not impose a greater restraint than is reasonably necessary to protect the goodwill and legitimate business interest of Purchaser in connection with the Business and those covenants do not unreasonably impair or interfere with, either directly or indirectly, Seller's or the Shareholders' ability to secure other employment or an engagement elsewhere to utilize their professional skills, talents, and services without violating those covenants.
2. MISCELLANEOUS.
2.1 Representations of Seller. Seller represents and warrants to Purchaser that they have read and fully understand this Agreement and have consulted with legal counsel and tax advisors who have explained all of its terms and provisions and that the agreed upon consideration for the undertakings made by Seller in this Agreement is adequate.
2.2 Amendments and Waiver. No amendment, waiver or consent with respect to any provision of this Agreement shall in any event be effective unless it is in writing and signed by the parties, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Any party’s lack of enforcement of any provision of this Agreement shall not be construed as a waiver, and the non-breaching party may elect to enforce any such provision at any time in the event of a past, repeated or continuing breach. The rights and remedies in this Agreement are the exclusive rights and remedies that the parties may have upon a breach of this Agreement.
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2.3 Notices. All notices or other communications required or permitted under this Agreement shall be in writing and will be deemed to have been duly given when (a) delivered by hand, (b) sent by facsimile, provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight courier service (receipt requested), in each case to the appropriate addresses and fax numbers set forth below (or to such other addresses and fax numbers as a party may designate by notice to the other parties):
To the Seller:
| BFIT Brands, LLC |
| Attn: Erik Rothchild |
| 6645 E. Gelding Dr. |
| Scottsdale, AZ 85254 |
To the Purchaser:
| Rocky Mountain High Brands, Inc. |
| Attn: David M. Seeberger |
| 9101 LBJ Freeway, Suite 200 |
| Dallas, TX 75243 |
Any Party may change its address for receiving notice by giving written notice to the other Parties in the manner provided in this Section 2.3.
2.4 Governing Law. This Agreement shall be governed by, and construed, enforced and interpreted in accordance with, the substantive laws (without regard to its conflicts of law’s provisions) of the State of Texas, and sole and exclusive jurisdiction for any dispute over this agreement shall be in the courts of Dallas County, Texas.
2.5 Successors and Assigns. This Agreement, and the rights and obligations of the parties, shall inure to the benefit of and be binding on the parties and their respective successors and assigns. Neither Seller nor the Shareholders may not assign any rights, benefits, duties or obligations under this Agreement.
2.6 Entire Agreement. This Agreement, the Purchase Agreement, and the documents referred to therein express the entire agreement and understanding between the parties with respect to the subject matter hereof, and all promises, representations, understandings, arrangements and prior agreements are merged herein and therein and superseded hereby and thereby.
2.7 Expenses. Each party shall pay its own costs and expenses in connection with the transactions contemplated by this Agreement.
2.8 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall for all purposes be deemed to be an original and all of which, when taken together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Note has been executed effective the date and place first written above.
SELLER: BFIT Brands, LLC
By: /s/Tim McGeehan
Tim McGeehan, Majority Shareholder
By: /s/Erik Rothchild
Erik Rothchild, Co-Founder and Shareholder
By: __________________________________
____________________________, Shareholder
(Printed name)
By: __________________________________
____________________________, Shareholder
(Printed name)
By: __________________________________
____________________________, Shareholder
(Printed name)
By: __________________________________
____________________________, Shareholder
(Printed name)
PURCHASER: Rocky Mountain High Brands, Inc.
By: /s/Michael Welch
Michael Welch, President and Chief Executive Officer
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EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is made and entered effective July 15, 2018 by and between Erik Rothchild (“Executive”) and Rocky Mountain High Brands, Inc., a Nevada corporation (the “Company”). Certain capitalized terms used but not defined elsewhere in this Agreement have the meanings ascribed to them in Section 24.
WHEREAS, the Company desires to employ Executive on the terms and conditions set forth herein; and
WHEREAS, Executive desires to be employed by the Company on such terms and conditions;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to the foregoing recitals and as follows:
1. Term. Executive’s employment hereunder will be effective as of the Effective Date and will continue until terminated as provided for herein. The period during which Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
2. Position and Duties.
2.1 Position. During the Employment Term, Executive will serve as the President and Founder of FitWhey Brands, Inc., a wholly-owned subsidiary of Rocky Mountain High Brands, Inc., reporting to the Company’s Chief Commercialization Officer or to such other officer of the Company as directed by the CEO. In such position, Executive will be responsible for sales and promotion of the FitWhey Brand, and other duties attendant thereto, including assisting in production.
2.2 Duties. During the Employment Term, Executive will devote all of Executive’s business time and attention to the performance of Executive’s duties hereunder and will not, without the prior written consent of the Board of Directors of the Company (the “Board”), engage in any other business activities that conflict or interfere with the performance of such services or which engage in competition with the Company during the term of this Agreement.
3. Place of Performance. The principal place of Executive’s employment will be 195 W. Oriole Way, Chandler, AZ 85256. However, Executive shall be responsible for sales and promotion nationwide and shall be available to travel to accomplish same.
4. Compensation.
4.1 Base Salary. Subject to Section 4.1(b), the Company will pay Executive an initial annual rate of base salary of $75,000 through the Company’s payroll system for a commitment of 40 hours per week in periodic installments in accordance with the Company’s customary payroll practices, (the “Base Salary”). Executive will be eligible for annual salary increases as approved by the Company’s Board of Directors.
4.2 Annual Bonus. Executive may be eligible to receive an annual bonus to be determined by the Chief Commercialization Officer as approved by the Chief Executive Officer.
4.3 Equity Awards. Executive will be entitled to participate in any equity incentive compensation plan adopted by the Company, for the benefit of its executive level officers, during the Employment Term. Additionally, if the Company sells FitWhey Brands, Inc. to a third party purchaser, Executive will be paid an incentive of 5% of the gross sales price of the sale.
4.4 Employee Benefits. During the Employment Term, Executive will be entitled to participate in all employee benefit plans, practices and programs maintained by the Company, as in effect from time to time (collectively, “Employee Benefit Plans”), on a basis which is no less favorable than is provided to other similarly situated executives. Company agrees to cover the cost of the Executive’s medical premium for employee.
4.5 Vacation; Paid Time-off. During the Employment Term, Executive will be entitled to 3 weeks paid vacation days, and 1 week paid sick days, per calendar year (prorated for partial years) in accordance with the Company’s vacation and sick day policies in effect from time to time. The foregoing paid vacation and sick days will be in addition to any other paid holidays declared by the Company in accordance with the Company’s paid holiday vacation policies in effect from time to time. Employee may carry up to unused 2 weeks of vacation time over each year. Sick time does not carry over from year to year.
4.6 Business Expenses. Executive will be entitled to reimbursement for all reasonable and necessary out-of-pocket business expenses incurred by Executive in connection with the performance of Executive's duties hereunder in accordance with the Company's expense reimbursement policies and procedures.
5. Termination. This Agreement may be terminated as follows:
5.1 Death. This Agreement shall terminate immediately in the event of the Employee's death, provided, however, that the Employee's estate shall be paid the Base Salary that the Employee earned through the date of his/her death, in the time and manner in which the Employee would have been paid such compensation.
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5.2 Disability. This Agreement shall terminate immediately in the event that the Employee becomes "disabled," as that term is defined in 29 C.F.R. §1630.2(g)(1), and is unable to perform the essential functions of his/her position, with reasonable accommodation for a period of 180 consecutive days.
5.3 General Termination. The Company shall be entitled to terminate this Agreement immediately, for any reason or no reason, it being understood that Executive’s employment is at will. Executive will not be entitled to any severance pay.
5.4 Resignation. The Employee shall have the right to terminate this Agreement at any time, for any reason, by providing the Company with thirty (30) days written notice ("Notice of Resignation"), provided, however, that subsequent to his/her resignation, the Employee shall be required to comply with the Non-Disclosure and/or Non Interference provisions set forth in this Agreement and shall not be entitled to any Severance Pay.
5.5 Stock Options and Rule 144 Stock. In the event that the Company terminates this Agreement, any unvested stock options will be canceled and forfeited by the Employee. The Company agrees that it will not place a stop with its Stock Transfer Agent on any of Company stock or otherwise interfere with the clearing of any Company stock in the Employee’s name in paper certificate form. Alternatively, the Company agrees to assist the Employee in clearing any and all of the Company’s Rule 144 stock in Employee’s name in paper certificate form at the time of termination.
5.6 Resignation of All Other Positions. Upon termination of Executive’s employment hereunder for any reason, Executive will automatically and without the necessity of further action be deemed to have resigned from all positions that Executive holds as an officer or member of the board of directors (or substantially similar governing body) of the Company or any of its affiliates.
6. Confidential Information. Executive understands and acknowledges that during the Employment Term Executive will have access to and learn about Confidential Information.
6.1 Company Creation and Use of Confidential Information. Executive understands and acknowledges that the Company has invested, and continues to invest, substantial time, money and specialized knowledge into developing its resources, creating a customer base, generating customer and potential customer lists, training its employees, and improving its beverage offerings. Executive understands and acknowledges that as a result of these efforts, the Company has created, and continues to use and create valuable Confidential Information which provides the Company with a competitive advantage over others in the marketplace.
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6.2 Disclosure and Use Restrictions. Executive agrees and covenants: (a) to treat all Confidential Information as strictly confidential; (b) not to directly or indirectly disclose, publish, communicate or make available Confidential Information, or allow it to be disclosed, published, communicated or made available, in whole or part, to any entity or person whatsoever (including other employees of the Company) not having a need to know and authority to know and use the Confidential Information in connection with the business of the Company and, in any event, not to anyone outside of the direct employ of the Company except as required in the performance of Executive’s authorized employment duties to the Company or with the prior written consent of the Chief Executive Officer (and then, such disclosure will be made only within the limits and to the extent of such duties or consent); and (c) not to access or use any Confidential Information, and not to copy any documents, records, files, media or other resources containing any Confidential Information, or remove any such documents, records, files, media or other resources from the premises or control of the Company, except as required in the performance of Executive’s authorized employment duties to the Company or with the prior written consent of Chief Executive Officer (and then, such disclosure will be made only within the limits and to the extent of such duties or consent). Nothing herein will be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation or order. Executive will promptly provide written notice of any such order to the Chief Executive Officer. Executive understands and acknowledges that Executive’s obligations under this Agreement with regard to any particular Confidential Information will commence immediately upon Executive first having access to such Confidential Information (whether before or after Executive begins employment with the Company) and will continue during and after Executive’s employment with the Company until such time as such Confidential Information has become public knowledge other than as a result of Executive’s breach of this Agreement or breach by those acting in concert with Executive or on Executive’s behalf.
7. Restrictive Covenants.
7.1 Acknowledgment. Executive understands that the nature of Executive’s position gives Executive access to and knowledge of Confidential Information and places Executive in a position of trust and confidence with the Company. Executive further understands and acknowledges that the Company’s ability to preserve these for the exclusive knowledge and use of the Company is of great competitive importance and commercial value to the Company, and that improper use or disclosure by Executive is likely to result in unfair or unlawful competitive activity.
7.2 Non-solicitation of Employees. Executive agrees and covenants not to directly or indirectly solicit, hire, recruit, and attempt to hire or recruit, or induce the termination of employment of any employee of the Company during the Restricted Period.
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7.3 Non-disparagement. Executive agrees and covenants that Executive will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company or its businesses, or any of its employees, officers, director (or substantial equivalent), or agents. Company agrees and covenants that it will cause its officers, directors (or substantial equivalents), and agents not to at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning Executive.
7.4 Code of Conduct and Insider Trading Policy. Executive acknowledges that Executive has been presented with the Company’s Code of Conduct and Insider Trading Policy, including the Blackout Trading Calendar, and has read, understands and has executed those agreements in conjunction with executing this Employment Agreement.
7.5 Representations. Executive represents to the Company that Executive is willing and able to engage in businesses that are not restricted pursuant to this Section 7 and that enforcement of the restrictive covenants set forth in this Section 7 will not be unduly burdensome on Executive. Executive acknowledges that Executive’s agreement to the restrictive covenants set forth in this Section 7 is a material inducement and condition to the Company’s willingness to enter into this Agreement and to perform its obligations hereunder. Executive acknowledges and agrees that the restrictive covenant and remedies set forth in this Section 7 are reasonable as to time, geographic area and scope of activity and do not impose a greater restraint than is necessary to protect the goodwill and legitimate business interests of the Company.
7.6 Court Modification. Notwithstanding the foregoing, if the restrictive covenants set forth in this Section 7 are found by a court of competent jurisdiction to contain limitations as to time, geographic area or scope of activity that are not reasonable or not necessary to protect the goodwill or legitimate business interests of the Company, then such court is hereby authorized and requested to reform such provisions to the minimum extent necessary to cause the limitations contained in this Section 7 as to time, geographical area and scope of activity to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and legitimate business interests of the Company.
8. Remedies. In the event of a breach or threatened breach by Executive of Section 6 or Section 7 of this Agreement, Executive hereby consents and agrees that the Company will be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief will be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief.
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9. Proprietary Rights.
9.1 Work Product. Executive acknowledges and agrees that all Work Product and Intellectual Property will be the sole and exclusive property of the Company.
9.2 Work Made for Hire; Assignment. Executive acknowledges that, by reason of being employed by the Company at the relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company. To the extent that the foregoing does not apply, Executive hereby irrevocably assigns to the Company, for no additional consideration, Executive’s entire right, title and interest in and to all Work Product and Intellectual Property rights therein, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement will be construed to reduce or limit the Company’s rights, title or interest in any Work Product or Intellectual Property so as to be less in any respect than that the Company would have had in the absence of this Agreement.
9.3 Further Assurances; Power of Attorney. During and after Executive’s employment, Executive agrees to reasonably cooperate with the Company to (a) apply for, obtain, perfect and transfer to the Company the Work Product as well as all Intellectual Property rights in the Work Product in any jurisdiction in the world; and (b) maintain, protect and enforce the same, including, without limitation, executing and delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments and other documents and instruments as will be requested by the Company. Executive hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on Executive’s behalf in Executive’s name and to do all other lawfully permitted acts to transfer the Work Product to the Company and further the transfer, issuance, prosecution and maintenance of all Intellectual Property rights therein, to the full extent permitted by law, if Executive does not promptly cooperate with the Company’s request (without limiting the rights the Company will have in such circumstances by operation of law). The power of attorney is irrevocable, coupled with an interest, and will not be affected by Executive’s subsequent incapacity.
9.4 No License. Executive understands that this Agreement does not, and will not be construed to, grant Executive any license or right of any nature with respect to any Work Product or Intellectual Property or any Confidential Information, materials, software or other tools made available to Executive by the Company.
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10. Security.
10.1 Security and Access. Executive agrees and covenants (a) to comply with all Facilities Information Technology and Access Resources of the Company; (b) not to access or use any Facilities and Information Technology and Access Resources except as authorized by the Company; and (c) not to access or use any Facilities and Information Technology and Access Resources in any manner after the termination of Executive’s employment by the Company, whether termination is voluntary or involuntary.
10.2 Exit Obligations. Upon (a) voluntary or involuntary termination of Executive’s employment or (b) the Company’s request at any time during Executive’s employment, Executive will (i) provide or return to the Company any and all Company property, including keys, key cards, access cards, identification cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, PDAs, pagers, fax machines, equipment, speakers, webcams, manuals, reports, files, books, compilations, work product, e-mail messages, recordings, tapes, disks, thumb drives or other removable information storage devices, hard drives, negatives and data and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or Work Product, that are in the possession or control of Executive, whether they were provided to Executive by the Company or any of its business associates or created by Executive in connection with Executive’s employment by the Company; and (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in Executive’s possession or control, including those stored on any non-Company devices, networks, storage locations and media in Executive’s possession or control.
11. Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, will be construed in accordance with the laws of the State of Texas without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement will be brought only in a state or federal court located in the State of Texas, county of Dallas. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.
12. Entire Agreement. Unless specifically provided herein, this Agreement contains all of the understandings and representations between Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.
13. Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by Executive and the Company. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto will be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor will the failure of or delay by either of the parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.
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14. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement will be held as unenforceable and thus stricken, such holding will not affect the validity of the remainder of this Agreement, the balance of which will continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement. The parties further agree that any such court is expressly authorized and requested to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Agreement as so modified by the court will be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement will be construed as if such invalid, illegal or unenforceable provisions had not been set forth herein.
15. Captions. Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the caption or heading of any section or paragraph.
16. Counterparts. This Agreement may be executed in any number of original, facsimile or portable document format (.pdf) separate counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.
17. Tolling. Should Executive violate any of the terms of the restrictive covenant obligations articulated herein, the obligation at issue will run from the first date on which Executive ceases to be in violation of such obligation.
18. Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code or an exemption thereunder and will be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral will be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement will be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment will only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event will the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.
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19. Successors and Assigns. This Agreement is personal to Executive and will not be assigned by Executive. Any purported assignment by Executive will be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company. This Agreement will inure to the benefit of the Company and permitted successors and assigns.
20. Notice. All notices, requests, consents, claims, demands, waivers and other communications hereunder will be in writing and will be deemed to have been given and received: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (return receipt requested); (c) on the date sent by facsimile (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as is specified in a notice given in accordance with this Section 20):
| If to the Company to: |
with a copy (which will not constitute notice) to:
|
|
Rocky Mountain High Brands, Inc. 9101 LBJ Freeway, Suite 200 Dallas, TX 75243 Attn: David Seeberger Facsimile: (214) 593-5617 david@rockymountainhighbrands.com |
Steven J. Heath 3010 LBJ Freeway Dallas, Texas 75234 Attn: Steven J. Heath Facsimile: (214) 919-6138 sheathlaw@att.net
|
|
If to Executive to:
|
|
|
Erik Rothchild 195 W. Oriole Way Chandler, AZ 85286 erik@BFITBrands.com
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21. Withholding. The Company will have the right to withhold from any amount payable hereunder any federal, state and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.
22. Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto will survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.
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23. Acknowledgment of Full Understanding. EXECUTIVE AGREES AND ACKNOWLEDGES THAT EXECUTIVE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. EXECUTIVE ACKNOWLEDGES AND AGREES THAT EXECUTIVE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF EXECUTIVE’S CHOICE BEFORE SIGNING THIS AGREEMENT.
24. Certain Defined Terms. For purposes of this Agreement, the following terms have the following meanings:
“Affiliate” means, with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries), controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control,” when used with respect to any specified Person, means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise; and the terms “controlling” and “controlled” have correlative meanings.
“Common Stock” means common stock of the Company, par value $0.001 per share.
“Common Stock Share Price” means, as of any particular date: (a) the closing sales price of the Common Stock on the domestic securities exchange, if any, on which the Common Stock is at the time listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on such exchange at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive trading days ending on the day on which the “Common Stock Share Price” is determined.
“Company Code of Conduct” means the Company’s Code of Conduct and Insider Trading Policy which may be updated from time to time. These policies define appropriate behavior in the workplace and appropriate trading guidelines for trading the Company’s stock.
“Confidential Information” means all information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending
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negotiations, know-how, trade secrets, formulas, computer programs, computer software, applications, operating systems, software design, web design, work-in-process, databases, manuals, records, articles, systems, material, sources of material, supplier information, vendor information, financial information, results, accounting information, accounting records, legal information, marketing information, advertising information, pricing information, credit information, design information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports, internal controls, security procedures, graphics, drawings, sketches, market studies, sales information, revenue, costs, notes, communications, algorithms, product plans, designs, styles, models, ideas, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, customer lists, client information, client lists, manufacturing information, factory lists, distributor lists, and buyer lists of the Company or its businesses or any existing or prospective customer, supplier, investor or other associated third party, or of any other Person that has entrusted information to the Company in confidence. Without limiting the foregoing, “Confidential Information” also includes (a) other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used, and (b) information developed by Executive in the course of Executive’s employment by the Company as if the Company furnished the same Confidential Information to Executive in the first instance. Notwithstanding the anything to the contrary, “Confidential Information” does not include information that (i) is or becomes generally available to the public other than as a result of any act or failure to act by Executive or anyone acting on Executive’s behalf; (ii) is or becomes available to Executive on a non-confidential basis from a source other than the Company, unless Executive has actual or constructive knowledge that the source of such information is prohibited from disclosing the information to Executive by a contractual, legal, fiduciary, or other obligation; (iii) was known by or in the possession of Executive, as established by documentary evidence, prior to being disclosed to Executive by or on behalf of the Company ; or (iv) was or is independently developed by Executive, as established by documentary evidence, without reference to, or use of, in whole or in part, any Confidential Information.
“Customer Information” means all names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information and other information identifying facts and circumstances specific to the customer.
“Disability” means Executive’s incapacity due to physical or mental illness that: (a) prevents Executive from performing Executive’s duties for the Company on a full-time basis for 90 or more consecutive days or an aggregate of 180 days in any 365 day period; or (b)(i) the Board determines, in compliance with applicable law, is likely to prevent Executive from performing such duties for such period of time, and (ii) 30 days have elapsed since delivery of such determination of the Board to Executive and Executive has not resumed such performance.
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“Facilities Information Technology and Access Resources” means all Company security policies and procedures as in force from time to time including without limitation those regarding computer equipment, telephone systems, voicemail systems, facilities access, monitoring, key cards, access codes, Company intranet, internet, social media and instant messaging systems, computer systems, e-mail systems, computer networks, document storage systems, software, data security, encryption, firewalls, passwords and any and all other Company facilities, IT resources and communication technologies.
“Intellectual Property” means all rights in and to copyrights, trade secrets, trademarks (and related goodwill), mask works, patents and other intellectual property rights therein arising in any jurisdiction throughout the world and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations therefor, and continuations, divisions, continuations-in-part, reissues, extensions and renewals thereof.
“Person” means an individual, corporation, partnership, joint venture, Limited Liability Company, governmental authority, unincorporated organization, trust, association or other entity.
“Prohibited Activity” means any activity in which Executive contributes Executive’s knowledge, experience, services, name, likeness, credibility or reputation, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, partner, director (or substantial equivalent), stockholder (or other equity or quasi-equity holder), officer, volunteer, intern or any other similar capacity to any Person [engaged in the same or similar business as the Company, including those engaged in the beverage business]. “Prohibited Activity” also includes activity that may require or inevitably requires disclosure of trade secrets, proprietary information or Confidential Information or failure to comply with the Company’s Code of Conduct or Insider Trading Policy.
“Termination Date” means, if Executive's employment hereunder terminates on account of (a) Executive’s death, the date of Executive's death; (b) Executive’s Disability, the date that it is determined that Executive has a Disability; (c) either party providing notice of non-renewal pursuant to Section 1, the Renewal Date immediately following the date on which the applicable party delivers notice of non-renewal; and (d) any other reason, the date set forth in any valid Notice of Termination. Notwithstanding anything contained herein, the Termination Date will not occur until the date on which Executive incurs a "separation from service" within the meaning of Section 409A.
“Third Party Purchaser” means any Person who, immediately prior to any contemplated transaction, (a) does not directly or indirectly own or have the right to acquire any equity interest in the Company and (b) is not an Affiliate of any Person who does directly or indirectly own or have the right to acquire any equity interest in the Company.
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“Work Product” means all writings, works of authorship, technology, inventions, discoveries, ideas and other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived or reduced to practice by Executive individually or jointly with others during the period of Executive’s employment by the Company and relating in any way to the business or contemplated business, research or development of the Company (regardless of when or where the Work Product is prepared or whose equipment or other resources is used in preparing the same) and all printed, physical and electronic copies, all improvements, rights and claims related to the foregoing, and other tangible embodiments thereof. Without limiting the generality of the foregoing, “Work Product” includes Company plans, publications, research, strategies, techniques, agreements, documents, contracts, terms of agreements, negotiations, know-how, formulas, computer programs, computer applications, software design, web design, work in process, databases, manuals, results, developments, reports, graphics, drawings, sketches, market studies, formulae, notes, communications, algorithms, product plans, product designs, styles, models, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, client information, customer lists, client lists, manufacturing information, marketing information, advertising information, and sales information.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as of the Effective Date.
Company:
Rocky Mountain High Brands, Inc.
By: /s/Michael R. Welch
Name: Michael R. Welch
Title: President & Chief Executive Officer
Executive:
By: /s/Erik Rothchild
Name: Erik Rothchild
Title: President & Founder
FitWhey Brands, Inc.
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EXHIBIT A
FORM OF RELEASE
AGREEMENT AND MUTUAL RELEASE
IMPORTANT NOTICE TO ERIK ROTHCHILD: Various federal, state and municipal laws prohibit employment discrimination based on age, race, color, creed, religion, sex, sexual orientation, national origin, disability, citizenship, veteran status, and other prohibited criteria. These laws are enforced through the Equal Employment Opportunity Commission, the Texas Workforce Commission, and other federal, state and municipal agencies. If you believe that your agreement to accept separation pay and benefits and the signing of this Agreement was coerced or is discriminatory, you are encouraged to speak with your Officer for Human Relations about your concerns. You are advised to discuss this Agreement with your attorney. In any event, you should thoroughly review and understand the effect of this document before signing it. You have twenty-one (21) days from the date you received this Agreement to return a signed copy of the agreement to Michael Welch. Additionally, you have seven (7) days after returning a signed agreement to revoke your acceptance, if you so choose. To revoke your acceptance, you must deliver a written notice of revocation to the attention of Michael Welch, President and Chief Executive Officer, Rocky Mountain High Brands, 9101 LBJ Freeway, Suite 200, Dallas, TX 75243 within seven days after you sign the Agreement. You will not receive the severance benefits described ion your employment agreement until the revocation period has expired without revocation by you of the signed agreement. Neither this Notice nor any terms of this Agreement are acknowledgements or admissions by the Company or you of any violation of state or federal law.
This Agreement and Mutual Release (this “Agreement”), dated as of _____________________(the “Execution Date”), is entered into by and among (“Executive”) and Rocky Mountain High Brands, Inc., a Nevada corporation (the “Company”), pursuant to the terms of that certain Employment Agreement dated July 15, 2018(“Employment Agreement”), by and between Executive and Company. By letter dated ___________________, delivered by the Rocky Mountain High Brands, Inc. to Michael Welch, Executive’s employment with the Company and each of its subsidiaries and corporate affiliates has been terminated, effective ________________. Pursuant to Section 5.7 of the Employment Agreement, Executive agreed that in consideration for receiving the Severance Amount identified in the Employment Agreement, Executive would execute and deliver this Agreement to the Company. Each capitalized term used herein and not otherwise defined shall have the meaning given such term in the Employment Agreement.
1. Definitions.
“Claims” means any and all claims, complaints, charges, demands, liabilities, suits, damages, losses, expenses, attorneys' fees, obligations or causes of action. “Claims” shall not include, and nothing in this Agreement shall be construed to be a waiver or release of, (i) any rights or obligations of any party arising under or through the Certificate of Incorporation, the Bylaws, or the Shareholder Agreement of the Company and any subsequent amendments to any such documents; (ii) any rights to indemnity under Section 4.5 of the Employment Agreement; (iii) any rights or obligations under the Employment Agreement that survive the date of termination of Executive’s employment with the Company; (iv) any vested or previously accrued benefits under any retirement or welfare plan of the Company; or (v) Executive’s entitlement, if any, to continue medical and dental insurance coverage under and pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).
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“Company Parties” means the Company, each of its predecessors, successors, assigns, parents, Subsidiaries and affiliates and each of the foregoing entities' respective past, present and future members, managers, officers, employees, agents, representatives, principals, insurers, attorneys, employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs), and any Person acting by, through, under or in concert with any of the foregoing entities.
“Executive Parties” means Executive and Executive’s family, attorneys, heirs, estate, agents, executors, representatives, administrators and each of their respective successors and assigns.
2. Executive’s General Release and Covenant Not to Sue.
a. Executive, on behalf of Executive and each of the other Executive Parties, hereby generally releases and forever discharges the Company Parties from any and all Claims, known or unknown, of any kind and every nature whatsoever, and whether or not accrued or matured, which any of them have or may have arising out of or relating to any transaction, dealing, relationship, conduct, act or omission, or any other matters or things occurring or existing at any time prior to and including the Execution Date, including but not limited to any Claims against any of the Company Parties based on, relating to or arising under wrongful discharge, retaliation, breach of contract (whether oral or written), tort, fraud, defamation, slander, breach of privacy, violation of public policy, negligence, promissory estoppel, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974, or any other federal, state or local law relating to employment (or unemployment), the payment of wages, salary or other compensation, civil or human rights, or discrimination in employment (based on age or any other factor) in all cases arising out of or relating to Executive's employment by the Company or any Subsidiary thereof or Executive’s investment in the Company or any Subsidiary thereof or Executive’s services as an officer or employee of the Company or any Subsidiary thereof, or otherwise relating to the termination of such employment or services.
b. Executive, on behalf of Executive and each of the other Executive Parties, hereby covenants forever not to assert, file, prosecute, commence, institute (or sponsor or purposely facilitate any person in connection with the foregoing), any complaint or lawsuit or any legal, equitable, arbitral or administrative proceeding of any nature, against any of the Company Parties in connection with any released Claims, and represents and warrants that no other person or entity has initiated or, to the extent within Executive’s control, will initiate any such proceeding on Executive’s behalf, and that if such a proceeding is initiated, Executive shall accept no benefit therefrom. Provided, however, the Parties acknowledge that this Agreement does not prohibit Executive from pursuing an administrative claim with a local, state or federal administrative body, but does preclude Executive from pursuing court action regarding any such claim.
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3. Company’s General Release and Covenant Not to Sue.
a. The Company, on its own behalf and on behalf of the other Company Parties, hereby generally releases and forever discharges the Executive Parties from any and all Claims, known or unknown, of any kind and every nature whatsoever, and whether or not accrued or matured, which any of them may have, arising out of or relating to any transaction, dealing, relationship, conduct, act or omission, or any other matters or things occurring or existing at any time prior to and including the Execution Date (including but not limited to any Claims based on, relating to or arising under breach of contract (whether oral or written), tort, fraud, defamation, slander, violation of public policy, negligence, promissory estoppel, or any other federal, state or local law relating to employment or discrimination in employment) in all cases arising out of or relating to Executive's employment by the Company or any Subsidiary thereof or Executive’s investment in the Company or any Subsidiary thereof or Executive’s services as a director, officer or employee of any Company Party (or of any entity for which Executive has served in any such capacity or a similar capacity at the request of the Company), or otherwise relating to the termination of such employment or services.
b. The Company, on behalf of itself and the other Company Parties, hereby covenants forever not to assert, file, prosecute, commence, institute (or sponsor or purposely facilitate any person in connection with the foregoing), any complaint or lawsuit or any legal, equitable, arbitral or administrative proceeding of any nature, against any of the Executive Parties in connection with any released Claims, and represents and warrants that no other person or entity has initiated or to the extent within its control, will initiate any such proceeding on its behalf, and that if such a proceeding is initiated, the Company and the other Company Parties shall accept no benefit therefrom.
4. Acknowledgments. Executive and the Company acknowledge that, by entering into this Agreement, neither the Executive nor the Company admits to any wrongdoing in connection with Executive’s employment, and that this Agreement is intended as a compromise of any Claims that any Party has or may have against the other. Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
5. Resignation. Executive hereby confirms Executive’s resignations from all officer positions with Company and each of its direct or indirect subsidiaries and corporate or non-corporate affiliates, effective immediately.
6. Injunctive Relief. The parties hereto acknowledge that money damages would be both incalculable and an insufficient remedy for a breach of this Agreement by either party hereto and that any such breach would cause the non-breaching party irreparable harm. Accordingly, each party hereto, in addition to any other remedies at law or in equity it may have, shall be entitled, without the requirement of posting of bond or other security, to equitable relief, including injunctive relief and specific performance, in connection with a breach of this Agreement by the other party. If either party hereto files a pleading with a court seeking immediate injunctive relief and this pleading is challenged by the other party and the injunctive relief sought is not awarded, the party seeking injunctive relief shall pay all of the costs and attorneys’ fees of the other party.
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7. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. 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.
8. Attorney’s Fees. Executive agrees to pay the reasonable attorney’s fees, costs and any damages any Company Party may incur as a result of Executive breaching a promise Executive made in this Agreement (such as by suing a Company Party over a released Claim) or if any representation Executive made in this Agreement is false. The Company agrees to pay the reasonable attorney’s fees, costs and any damages any Executive Party may incur as a result of the Company breaching a promise the Company made in this Agreement (such as by suing an Executive Party over a released Claim) or if any representation the Company made in this Agreement is false.
9. Counterparts. This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together shall constitute one and the same instrument. Any counterpart of this Agreement that has attached to it separate signature pages which together contain the signature of all parties hereto shall for all purposes be deemed a fully executed original. Facsimile or pdf signatures shall constitute original signatures.
10. Governing Law; Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without reference to principles of conflict of laws of Texas or any other jurisdiction.
11. Older Worker Benefit Protection Act (OWBPA) Acknowledgement. Executive is fully aware of all facts with regard to Executive’s rights, including Executive’s rights under the Age Discrimination in Employment Act (“ADEA”), and acknowledges receipt of a disclosure statement in compliance with the OWBPA, which is attached to this Agreement. Executive understands that by executing this Agreement, Executive is waiving Executive’s right to any relief for any claim under the ADEA. Executive may still file a charge of discrimination with the Equal Employment Opportunity Commission regarding such claims, but this Agreement and waiver will bar Executive from receiving any compensation or personal relief in the event of such a charge. Executive is hereby notified that Executive has 21 days to consider this Agreement although Executive may waive that period and sign the Agreement at any time prior to the end of the 21-day period. Executive is advised in writing by this Agreement to consult with an attorney prior to signing this Agreement, and by Executive’s signature below Executive represents Executive has consulted with an attorney, or voluntarily elected not to consult with an attorney, with respect to this Agreement. In addition, Executive understands that Executive may revoke this Agreement within 7 days after Executive has signed it by written notice to:
Rocky Mountain High Brands, Inc.
9101 LBJ Freeway, Suite 200
Dallas, TX 75243
Attn: Michael Welch
michael@rockymountainhighbrands.com
This Agreement shall not become effective or enforceable until the 7-day revocation period has expired without Executive’s revocation. Executive acknowledges that if Executive accepts any of the Severance Amount identified in the Employment Agreement after the expiration of the 7-day period, such acceptance shall constitute confirmation by Executive that Executive did not revoke this Agreement during the 7-day period.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.
Company:
Rocky Mountain High Brands, Inc.
By: /s/Michael R. Welch
Name: Michael R. Welch
Title: President & Chief Executive Officer
Executive:
By: /s/Erik Rothchild
Name: Erik Rothchild
Title: President & Founder
FitWhey Brands, Inc.
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