Exhibit 10.1

 

CANNAVEST CORP.

 

2013 EQUITY INCENTIVE PLAN

 

Adopted by the Board: July 25, 2013

 

Approved by the Stockholders: July 25, 2013

 

Termination Date: July 24, 2023

 

1.       General.

 

(a)                 Purposes. The purposes of the Plan are as follows:

 

(i)                   To provide additional incentive for selected Employees,
Directors and Consultants to further the growth, development and financial
success of the Company by providing a means by which such persons can personally
benefit through the ownership of capital stock of the Company; and

 

(ii)                 To enable the Company to secure and retain key Employees,
Directors and Consultants considered important to the long-term success of the
Company by offering such persons an opportunity to own capital stock of the
Company.

 

(b)                 Eligible Stock Award Recipients. The persons eligible to
receive Stock Awards under the Plan are the Employees, Directors and Consultants
of the Company and its Affiliates.

 

(a)     Available Stock Awards. The following Stock Awards are available under
the Plan: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options;
(iii) stock bonuses; and (iv) rights to acquire restricted stock.

 

2.       Definitions.

 

(a)                 “Affiliate” means:

 

(i)                   with respect to Incentive Stock Options, any “parent
corporation” or “subsidiary corporation” of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively; and

 

(ii)                with respect to Stock Awards other than Incentive Stock
Options, any entity described in paragraph (a) of this Section 2(a), plus any
other corporation, limited liability company, partnership or joint venture,
whether now existing or hereafter created or acquired, with respect to which the
Company beneficially owns more than fifty percent (50%) of: (1) the total
combined voting power of all outstanding voting securities or (2) the capital or
profits interests of a limited liability company, partnership or joint venture.

 

(b)                 “Award Shares” means the shares of Common Stock of the
Company issued or issuable pursuant to a Stock Award, including Option Shares
issued or issuable pursuant to an Option.

 

(c)                 “Board” means the Board of Directors of the Company.

 

(d)                 “Change in Control” shall mean:

 

(i)                   The direct or indirect sale or transfer, in a single
transaction or a series of related transactions, by the stockholders of the
Company of voting securities, in which the holders of the outstanding voting
securities of the Company immediately prior to such transaction or series of
transactions hold, as a result of holding Company securities prior to such
transaction, in the aggregate, securities possessing less than twenty percent
(20%) of the total combined voting power all outstanding voting securities of
the Company or of the acquiring entity immediately after such transaction or
series of related transactions;

 

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(ii)                 A merger or consolidation in which the Company is not the
surviving entity, except for a transaction in which the holders of the
outstanding voting securities of the Company immediately prior to such merger or
consolidation hold as a result of holding Company securities prior to such
transaction, in the aggregate, securities possessing more than fifty percent
(50%) of the total combined voting power of all outstanding voting securities of
the surviving entity (or the parent of the surviving entity) immediately after
such merger or consolidation;

 

(iii)                A reverse merger in which the Company is the surviving
entity but in which the holders of the outstanding voting securities of the
Company immediately prior to such merger hold as a result of holding Company
securities prior to such transaction, in the aggregate, securities possessing
less than fifty percent (50%) of the total combined voting power of all
outstanding voting securities of the Company or of the acquiring entity
immediately after such merger; or

 

(iv)               The sale, transfer or other disposition (in one transaction
or a series of related transactions) of all or substantially all of the assets
of the Company, except for a transaction in which the holders of the outstanding
voting securities of the Company immediately prior to such transaction(s)
receive as a distribution with respect to securities of the Company, in the
aggregate, securities possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of the acquiring
entity immediately after such transaction(s).

 

(e)                 “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)                  “Committee” means a committee appointed by the Board in
accordance with Section 3(c).

 

(g)                 “Common Stock” means the shares of common stock of the
Company.

 

(h)                 “Company” means CannaVest Corp., a Delaware corporation.

 

(i)                   “Consultant” means any natural person, including an
advisor, engaged by the Company or an Affiliate to render bona fide services and
who is providing such services at the time a Stock Award is granted; provided
that the term “Consultant” shall not include a person who provides services in
connection with the offer and sale of securities in a capital-raising
transaction or in connection with promoting or maintaining a market for the
Company’s securities.

 

(j)                  “Director” means a member of the Board.

 

(k)                 “Disability” means total and permanent disability as defined
in Section 22(e)(3) of the Code and as interpreted by the Board in each case.

 

(l)                   “Effective Date” shall have the meaning given in Section
17 herein.

 

(m)               “Employee” means a regular employee of the Company or an
Affiliate, including an Officer or Director, who is treated as an employee in
the personnel records of the Company or an Affiliate, but not individuals who
are classified by the Company or an Affiliate as: (i) leased from or otherwise
employed by a third party, (ii) independent contractors, or (iii) intermittent
or temporary workers. The Company’s or an Affiliate’s classification of an
individual as an “Employee” (or as not an “Employee”) for purposes of this Plan
shall not be altered retroactively even if that classification is changed
retroactively for another purpose as a result of an audit, litigation or
otherwise. Neither service as a Director nor receipt of a director’s fee shall
be sufficient to make a Director an “Employee.”

 

(n)                 “Fair Market Value” means, as of any date, the value of the
Common Stock of the Company determined as follows:

 

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(i)                   If the Common Stock is then listed or admitted to trading
on a Nasdaq market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the closing sale price on the date of valuation
on such Nasdaq market system or principal stock exchange on which the Common
Stock is then listed or admitted to trading, or, if no closing sale price is
quoted on such day, then the Fair Market Value shall be the closing sale price
of the Common Stock on such Nasdaq market system or such exchange on the next
preceding day for which a closing sale price is reported;

 

(ii)                 If the Common Stock is not then listed or admitted to
trading on a Nasdaq market system or a stock exchange which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market on the date of
valuation; or

 

(iii)                If neither (i) nor (ii) is applicable as of the date of
valuation, then the Fair Market Value shall be determined by the Board in good
faith using any reasonable method of valuation, which determination shall be
conclusive and binding on all interested parties.

 

(o)                 “Incentive Stock Option” means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

 

(p)                 “Nonstatutory Stock Option” means an Option not intended to
qualify as an Incentive Stock Option.

 

(q)                 “Officer” means any person designated by the Board as an
officer.

 

(r)                  “Option” means a stock option granted pursuant to the Plan.

 

(s)                  “Option Agreement” means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan and any rules and regulations adopted by the Board and incorporated
therein.

 

(t)                  “Optionee” means the Participant to whom an Option is
granted or, if applicable, such other person who holds an outstanding Option.

 

(u)                 “Option Shares” means the shares of Common Stock of the
Company issued or issuable pursuant to the exercise of an Option.

 

(v)                 “Participant” means an Optionee or any other person to whom
a Stock Award is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Stock Award.

 

(w)                “Plan” means this 2013 Equity Incentive Plan.

 

(x)                 “Securities Act” means the Securities Act of 1933, as
amended.

 

(b)     “Stock Award” means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

 

(c)     “Stock Award Agreement” means a written agreement, including an Option
Agreement, between the Company and a holder of a Stock Award evidencing the
terms and conditions of an individual Stock Award grant. Each Stock Award
Agreement shall be subject to the terms and conditions of the Plan and any
additional rules and regulations adopted by the Board and incorporated therein.

 

(d)     “Ten Percent Stockholder” means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates.

 

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(y)     “Termination of Service” means:

 

(i)                   With respect to Stock Awards granted to a Participant in
his or her capacity as an Employee, the time when the employer-employee
relationship between the Participant and the Company (or an Affiliate) is
terminated for any reason, including, without limitation a termination by
resignation, discharge, death or retirement;

 

(ii)                 With respect to Stock Awards granted to a Participant in
his or her capacity as a Director, the time when the Participant ceases to be a
Director for any reason, including without limitation a cessation by
resignation, removal, failure to be reelected, death or retirement, but
excluding cessations where there is a simultaneous or continuing employment of
the former Director by the Company (or an Affiliate) and the Board expressly
deems such cessation not to be a Termination of Service;

 

(iii)                With respect to Stock Awards granted to a Participant in
his or her capacity as a Consultant, the time when the contractual relationship
between the Participant and the Company (or an Affiliate) is terminated for any
reason; and

 

(iv)               With respect to Stock Awards granted to a Participant in his
or her capacity as an Employee, Director or Consultant of an Affiliate, when
such entity ceases to qualify as an Affiliate under this Plan, unless earlier
terminated as set forth above.

 

Notwithstanding anything to the contrary herein set forth, a change in status
from an Employee to a Consultant or from a Consultant to an Employee shall not
constitute a Termination of Service for the purposes hereof, if and to the
extent so determined by the Board. The Board, in its sole and absolute
discretion, shall determine the effect of all other matters and issues relating
to a Termination of Service.

 

3.       Administration.

 

(a)                 Administration by Board. The Plan shall be administered by
the Board unless and until the Board delegates administration to a Committee or
an Officer, as provided in Section 3(c) and 3(d), respectively, below.

 

(b)                 Powers of the Board. The Board shall have the power, except
as otherwise provided in the Plan:

 

(i)                   To determine from time to time: (A) which of the persons
eligible under the Plan shall be granted Stock Awards; (B) when and how the
Stock Awards shall be granted; (C) what type or combination of types of Stock
Awards will be granted; (D) the terms and conditions of each Stock Award granted
(which need not be identical), including, without limitation, the
transferability or repurchase of such Stock Awards or Award Shares issuable
thereunder, as applicable, and the circumstances under which Stock Awards become
exercisable or vested or are forfeited or expire, which terms may but need not
be conditioned upon the passage of time, continued employment, the satisfaction
of performance criteria, the occurrence of certain events, or other factors; and
(E) the number of Award Shares subject to a Stock Award that shall be granted to
a Participant.

 

(ii)                 To construe and interpret the Plan and Stock Awards granted
under it, and to make exceptions to any such provisions in good faith and for
the benefit of the Company, and to establish, amend and revoke rules and
regulations for the Plan’s administration. The Board, in the exercise of its
power, may correct any defect, omission or inconsistency in the Plan or in any
Stock Award Agreement in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

 

(iii)                To settle all controversies regarding the Plan and Stock
Awards granted under it.

 

(iv)               To accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will vest
in accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

 

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(v)                 To suspend or terminate the Plan at any time. Suspension or
termination of the Plan shall not impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the written consent of the
affected Participant.

 

(vi)               To submit any amendment to the Plan for stockholder approval.

 

(vii)              To amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options or to bring the Plan or Incentive
Stock Options granted under it into compliance therewith.

 

(viii)            To amend the terms of any one or more Stock Awards, including,
but not limited to, amendments to provide terms more favorable than previously
provided in the Stock Award Agreement, subject to any specified limits in the
Plan that are not subject to Board discretion; provided, however, that the
rights under any Stock Award shall not be impaired by any such amendment unless
(a) the Company requests the consent of the affected Participant, and (b) such
Participant consents in writing. Notwithstanding the foregoing, subject to the
limitations of applicable law, if any, and without the affected Participant’s
consent, the Board may amend the terms of any one or more Stock Awards if
necessary to maintain the qualified status of the Stock Award as an Incentive
Stock Option or to bring the Stock Award into compliance with Section 409A of
the Code and Department of Treasury regulations and other interpretive guidance
issued thereunder.

 

(ix)               To amend the Plan as provided in Section 15.

 

(x)                 To prescribe and amend the terms of the agreements or other
documents evidencing Stock Awards made under this Plan (which need not be
identical).

 

(xi)               To place such restrictions on the sale or other disposition
of Award Shares as may be deemed appropriate by the Board.

 

(xii)              To determine whether, and the extent to which, adjustments
are required pursuant to Section 10.

 

(xiii)            Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.

 

(c)                 Delegation to a Committee. The Board may delegate
administration of the Plan to a committee of the Board composed of not fewer
than two (2) members (the “Committee”). If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in the
Plan to the Board shall thereafter be deemed to be references to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.

 

(d)                 Delegation to an Officer. The Board may delegate to one or
more Officers of the Company the authority to do one or both of the following
(i) designate Employees who are not Officers to be recipients of Stock Awards
and the terms thereof, and (ii) determine the number of shares of Common Stock
to be subject to Stock Awards granted to such Employees; provided, however, that
the Board resolutions regarding such delegation shall specify the total number
of shares of Common Stock that may be subject to the Stock Awards granted by
such Officer and that such Officer may not grant a Stock Award to himself or
herself. Notwithstanding anything to the contrary in this Section 3(d), the
Board may not delegate to an Officer authority to determine the Fair Market
Value of the Common Stock as herein contemplated.

 

(e)                 Effect of Change in Status. The Board shall have the
absolute discretion to determine the effect upon a Stock Award, and upon an
individual’s status as an Employee, Consultant or Director under the Plan,
including whether a Participant shall be deemed to have experienced a
Termination of Service or other change in status, and upon the vesting,
expiration or forfeiture of a Stock Award or Award Shares issuable in respect
thereof, in the case of (i) a Termination of Service for Cause, (ii) any leave
of absence approved by the Company or an Affiliate, (iii) any transfer between
the Company and any Affiliate or between any Affiliates, (iii) any change in the
Participant’s status from an Employee to a Consultant or member of the Board of
Directors, or vice versa, and (v) any Employee who becomes employed by any
partnership, joint venture, corporation or other entity not meeting the
requirements of an Affiliate.

 

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(f)                  Determinations of the Board. All decisions, determinations
and interpretations by the Board regarding this Plan shall be final and binding
on all Participants or other persons claiming rights under the Plan or any Stock
Award. The Board shall consider such factors as it deems relevant to making such
decisions, determinations and interpretations including, without limitation, the
recommendations or advice of any Director, Officer or Employee of the Company
and such attorneys, consultants and accountants as it may select. A Participant
or other holder of a Stock Award may contest a decision or action by the Board
with respect to such person or Stock Award only on the grounds that such
decision or action was arbitrary or capricious or was unlawful, and any review
of such decision or action shall be limited to determining whether the Board’s
decision or action was arbitrary or capricious or was unlawful.

 

(g)                 Arbitration. Any dispute or claim concerning any Stock
Awards granted (or not granted) pursuant to the Plan or any disputes or claims
relating to or arising out of the Plan shall be fully, finally and exclusively
resolved by binding and confidential arbitration conducted pursuant to the rules
of Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in the County of
Clark, Nevada. In addition to any other relief, the arbitrator may award to the
prevailing party recovery of its attorneys’ fees and costs. By accepting a Stock
Award, Participants and the Company waive their respective rights to have any
such disputes or claims tried by a judge or jury.

 

4.       Shares Subject to the Plan.

 

Subject to the provisions of Section 10 relating to adjustments upon changes in
stock, the Award Shares that may be issued pursuant to Stock Awards shall not
exceed in the aggregate up to 1,000,000 shares of the Company’s Common Stock. Of
such amount, up to 1,000,000 Award Shares may be issued under the Plan pursuant
to Incentive Stock Options. In the event that (a) all or any portion of any
Stock Award granted or offered under the Plan can no longer under any
circumstances be exercised or otherwise become vested, or (b) any Award Shares
are reacquired by the Company which were initially the subject of a Stock Award
Agreement, the Award Shares allocable to the unexercised or unvested portion of
such Stock Award, or the Award Shares so reacquired, shall again be available
for grant or issuance under the Plan.

 

5.       Eligibility.

 

(a)                 General. Incentive Stock Options may be granted only to
Employees; all other Stock Awards may be granted only to Employees, Directors
and Consultants. In the event a Participant is both an Employee and a Director,
or a Participant is both a Director and a Consultant, the Stock Award Agreement
shall specify the capacity in which the Participant is granted the Stock Award;
provided, however, if the Stock Award Agreement is silent as to such capacity,
the Stock Award shall be deemed to be granted to the Participant as an Employee
or as a Consultant, as applicable.

 

(b)                 Ten Percent Stockholders. A Ten Percent Stockholder shall
not be granted an Incentive Stock Option unless the exercise price of such
Option is at least one hundred ten percent (110%) of the Fair Market Value of
the Common Stock at the date of grant and the Option is not exercisable after
the expiration of five (5) years from the date of grant.

 

(c)                 Consultants. A Consultant shall not be eligible for the
grant of a Stock Award if, at the time of grant, either the offer or the sale of
the Company’s securities to such Consultant is not exempt under Rule 701 of the
Securities Act (“Rule 701”) because of the nature of the services that the
Consultant is providing to the Company, because the Consultant is not a natural
person, or because of any other provision of Rule 701, unless the Company
determines that such grant need not comply with the requirements of Rule 701 and
will satisfy another exemption under the Securities Act as well as comply with
the securities laws of all other relevant jurisdictions.

 

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6.       Option Agreement Provisions.

 

Each Option shall be granted pursuant to a written Option Agreement, signed by
an Officer of the Company and by the Optionee, which shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. The
provisions of separate Option Agreements need not be identical, but each Option
Agreement shall include (through incorporation of the provisions hereof by
reference in the Option Agreement or otherwise) the substance of each of the
following provisions (except to the extent that any such provision indicates it
is permissible rather than mandatory):

 

(a)                 Term. No Incentive Stock Option shall be exercisable after
the expiration of ten (10) years from the date of its grant or such shorter
period specified in the Option Agreement; provided, however, that an Incentive
Stock Option granted to a Ten Percent Stockholder shall be subject to the
provisions of Section 5(b).

 

(b)                 Exercise Price of an Option. Subject to the provisions of
Section 5(b) regarding Incentive Stock Options granted to Ten Percent
Stockholders, the exercise price of each Incentive Stock Option shall be not
less than the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. The Board shall determine the exercise price of each
Nonstatutory Stock Option. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option if
such Incentive Stock Option is granted pursuant to an assumption of or
substitution for another option in a manner consistent with the provisions of
Section 424(a) of the Code.

 

(c)                 Consideration. The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board shall have the
authority to grant Options that do not permit all of the following methods of
payment (or otherwise restrict the ability to use certain methods) and to grant
Options that require the consent of the Company to utilize a particular method
of payment. The methods of payment permitted by this Section 6(c) are:

 

(i)                   by cash or check;

 

(ii)                 pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds;

 

(iii)                by delivery to the Company (either by actual delivery or
attestation) of shares of Common Stock;

 

(iv)               by a “net exercise” arrangement pursuant to which the Company
will reduce the number of shares of Common Stock issued upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; provided, however, that the Company shall accept a
cash or other payment from the Participant to the extent of any remaining
balance of the aggregate exercise price not satisfied by such reduction in the
number of whole shares to be issued; provided, further, however, that shares of
Common Stock will no longer be outstanding under an Option and will not be
exercisable thereafter to the extent that (A) shares are used to pay the
exercise price pursuant to the “net exercise,” (B) shares are delivered to the
Participant as a result of such exercise, and (C) shares are withheld to satisfy
tax withholding obligations; or

 

(v)                 in any other form of legal consideration that may be
acceptable to the Board.

 

(d)                 Transferability. The following restrictions on the
transferability of Options shall apply:

 

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(i)                   Restrictions on Transfer. An Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionee only by the Optionee;
provided, however, that the Board may, in its sole discretion, permit transfer
of the Option to a revocable trust or as otherwise permitted by Rule 701 of the
Securities Act. Notwithstanding the foregoing, however, an Incentive Stock
Option shall not be transferable other than by will or the laws of descent and
distribution, and shall be exercisable only by the Optionee during the
Optionee’s lifetime, except as otherwise permitted by the Board and by Sections
421, 422 and 424 of the Code and the regulations and other guidance thereunder.
Notwithstanding anything herein contained to the contrary, for so long as the
Company shall have elected to be treated as a subchapter S corporation pursuant
to the Code, no Participant shall transfer any Stock Award or any Stock Award
Shares to any person or entity or in any manner which would cause the S election
theretofore made by Company to be terminated or revoked. Any such transfer or
attempted transfer shall be void ab initio.

 

(ii)                 Domestic Relations Orders. Notwithstanding the foregoing,
an Option may be transferred pursuant to a domestic relations order; provided,
however, that if an Option is an Incentive Stock Option, such Option shall be
deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(iii)                Beneficiary Designation. Notwithstanding the foregoing, the
Optionee may, by delivering written notice to the Company, in a form provided by
or otherwise satisfactory to the Company, designate a third party who, in the
event of the death of the Optionee, shall thereafter be the beneficiary of an
Option with the right to exercise the Option and receive the Common Stock or
other consideration resulting from an Option exercise. In the absence of such a
designation, the executor or administrator of the Optionee’s estate shall be
entitled to exercise the Option and receive the Common Stock or other
consideration resulting from an Option exercise.

 

(e)                 Vesting. Each Option shall vest and become exercisable in
one or more installments, at such time or times and subject to such conditions,
including without limitation the achievement of specified performance goals or
objectives established with respect to one or more performance criteria, as
shall be determined by the Board.

 

(f)                  Termination of Service. In the event of the Termination of
Service of an Optionee for any reason (other than for “Cause,” as defined in a
Stock Option Agreement, or upon the Optionee’s death or Disability), the
Optionee may exercise his or her Option, but only within such period of time as
is set forth in the Option Agreement (and in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). In the case of
an Incentive Stock Option, such exercise period provided in the Option Agreement
shall not exceed three (3) months from the date of termination.

 

(g)                 Disability of Optionee. In the event of a Termination of
Service of an Optionee as a result of the Optionee’s Disability, the Optionee
may exercise his or her Option within the period specified in the Option
Agreement (in no event to exceed twelve (12) months from the date of such
termination in the case of an Incentive Stock Option), and only to the extent
that the Optionee was entitled to exercise the Option at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement).

 

(h)                 Death of Optionee. In the event that (i) an Optionee’s
Termination of Service occurs as a result of the Optionee’s death, or (ii) an
Optionee dies within the period (if any) specified in the Option Agreement after
the Optionee’s Termination of Service for a reason other than death, then,
notwithstanding Section 6(f) above, the Option may be exercised (to the extent
the Optionee was entitled to exercise such Option as of the date of death) by
the Optionee’s estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option upon
the Optionee’s death, but only within the period ending on the earlier of
(A) the date that is twelve (12) months after the date of Termination of
Service, or (B) the expiration of the term of such Option as set forth in the
Option Agreement.

 

(i)                   Termination for Cause. In the event of the Termination of
Service of an Optionee for Cause, except as otherwise determined by the Board in
the specific situation, all Options granted to such Optionee shall expire as set
forth in the Stock Option Agreement.

 

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(j)                  Extension of Termination Date. An Optionee’s Option
Agreement may provide that if the exercise of the Option following an Optionee’s
Termination of Service (other than for Cause or upon the Optionee’s death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of a period of three (3) months after the termination of the
Optionee’s Continuous Service during which the exercise of the Option would not
be in violation of such registration requirements, or (ii) the expiration of the
term of the Option as set forth in the Option Agreement.

 

(k)                 Non-Exempt Employees. Unless otherwise determined by the
Board of Directors, no Option granted to an Employee that is a non-exempt
employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall
be first exercisable for any shares of Common Stock until at least six months
following the date of grant of the Option. The foregoing provision is intended
to operate so that any income derived by a non-exempt employee in connection
with the exercise or vesting of an Option will be exempt from his or her regular
rate of pay.

 

(l)                   Early Exercise. The Option may, but need not, include a
provision whereby the Optionee may elect at any time prior to a Termination of
Service to exercise the Option as to any part or all of the Option Shares prior
to the full vesting of the Option. Any unvested Option Shares so purchased may
be subject to an unvested share repurchase option in favor of the Company or to
any other restriction the Board determines to be appropriate.

 

(m)               Right of Repurchase. The Option Agreement may, but need not,
include a provision whereby the Company may elect to repurchase all or any part
of the vested shares of Common Stock acquired by the Optionee pursuant to the
exercise of the Option.

 

(n)                 Right of First Refusal. The Option Agreement may, but need
not, include a provision whereby the Company may elect to exercise a right of
first refusal following receipt of notice from the Optionee of the intent to
transfer all or any part of the shares of Common Stock received upon the
exercise of the Option.

 

7.       Provisions of Stock Awards Other Than Options.

 

(o)                 Stock Bonus Awards. Each stock bonus agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions (except to the extent that any
such provision indicates it is permissible rather than mandatory):

 

(i)                   Consideration. A stock bonus may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit, provided that the Participant remains eligible to receive Stock
Awards hereunder at the time of the award.

 

(ii)                 Vesting. Award Shares issued pursuant to a stock bonus
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.

 

(iii)                Termination of Service. In the event of a Termination of
Service, the Company may reacquire any or all of the Award Shares held by the
Participant which have or have not vested as of the date of termination under
the terms of the stock bonus agreement.

 

(iv)               Transferability. Unless otherwise determined by the Board,
rights to acquire Award Shares under the stock bonus agreement shall not be
transferable except by will or by the laws of descent and distribution, or, to
the extent permitted by the Board, to a revocable trust or as otherwise
permitted by Rule 701 of the Securities Act.

 

(p)                 Restricted Stock Purchase Awards. Each restricted stock
purchase agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of the
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions (except to the extent that any
such provision indicates it is permissible rather than mandatory):

 

9

 

 

(i)                   Purchase Price. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement, including no
consideration or such minimum consideration as may be required by applicable
law.

 

(ii)                 Consideration. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement, if any, shall be paid
either: (A) in cash at the time of purchase; (B) at the discretion of the Board,
according to a deferred payment or other similar arrangement with the
Participant; or (C) in any other form of legal consideration that may be
acceptable to the Board in its discretion.

 

(iii)                Vesting. Award Shares acquired under the restricted stock
purchase agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.

 

(iv)               Termination of Service. In the event of a Participant’s
Termination of Service, the Company may repurchase or otherwise reacquire any or
all of the Award Shares held by the Participant which have or have not vested as
of the date of termination under the terms of the restricted stock purchase
agreement.

 

(v)                 Transferability. Unless otherwise determined by the Board,
rights to acquire Award Shares under the restricted stock purchase agreement
shall not be transferable except by will, by the laws of descent and
distribution, or, to the extent permitted by the Board, to a revocable trust or
as otherwise permitted by Rule 701 of the Securities Act.

 

8.       Covenants of the Company.

 

(q)                 Availability of Shares. During the terms of the Stock
Awards, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Stock Awards.

 

(r)                  Compliance with Laws and Regulations. This Plan, the grant
and exercise of Stock Awards thereunder, and the obligation of the Company to
sell, issue or deliver Award Shares under such Stock Awards, shall be subject to
all applicable federal, state and local laws, rules and regulations and to such
approvals by any governmental or regulatory agency as may be required. The
Company shall not be required to register in a Participant’s name or deliver any
Award Shares prior to the completion of any registration or qualification of
such Shares under any federal, state or local law or any ruling or regulation of
any government body which the Board shall determine to be necessary or
advisable. To the extent the Company is unable to or the Board deems it
infeasible to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary or advisable
for the lawful issuance and sale of any Award Shares hereunder, the Company
shall be relieved of any liability with respect to the failure to issue or sell
such Award Shares as to which such requisite authority shall not have been
obtained. No Option shall be exercisable and no Award Shares shall be issued
and/or transferable under any other Stock Award unless a registration statement
with respect to the Award Shares underlying such Stock Award is effective and
current or the Company has determined that such registration is unnecessary.

 

9.       Use of Proceeds.

 

Proceeds from the sale of Award Shares shall constitute general funds of the
Company and shall be used for general operating capital of the Company.

 

10

 

 

10.       Adjustments Upon Change in Common Stock.

 

If any change is made in the Common Stock subject to the Plan or subject to any
Stock Award without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, dividend in property other than cash, stock split, reverse stock
split, liquidating dividend, exchange of shares, change in corporate structure
or other distribution of the Company’s equity securities), the Plan and all
outstanding Stock Awards will be appropriately adjusted in the class and maximum
number of shares subject to the Plan and the class and number of shares and
price per share of Common Stock subject to outstanding Stock Awards. Such
adjustment shall be made by the Board, the determination of which shall be
final, binding and conclusive.

 

11.       Adjustments Upon Change in Control.

 

(a)     The Board shall have the discretion to provide in each Stock Award
Agreement the terms and conditions that relate to (i) vesting of such Stock
Award in the event of a Change in Control, and (ii) assumption of such Stock
Award Agreements or issuance of comparable securities under an incentive program
in the event of a Change in Control. The aforementioned terms and conditions may
vary in each Stock Award Agreement.

 

(b)     If the terms of an outstanding Option Agreement provide for accelerated
vesting in the event of a Change in Control, or to the extent that an Option is
vested and not yet exercised, the Board in its discretion may provide, in
connection with the Change in Control transaction, for the purchase or exchange
of each Option for an amount of cash or other property having a value equal to
the difference (or “spread”) between: (x) the value of the cash or other
property that the Optionee would have received pursuant to the Change in Control
transaction in exchange for the vested Option Shares issuable upon exercise of
the Option had the Option been exercised immediately prior to the Change in
Control, and (y) the aggregate exercise price of the vested Option Shares. If in
such case the aggregate exercise price of the vested Option Shares is greater
than or equal to the value of the cash or other property that the Optionee would
have received pursuant to the Change in Control transaction in exchange for the
vested Option Shares had the Option been exercised immediately prior to the
Change in Control, then the Option shall be cancelled and Optionee shall receive
no payment for such Option Shares. Upon such purchase, exchange or cancellation,
the Option shall be terminated and Optionee shall have no further rights with
respect to such Option.

 

(c)     Outstanding Options shall terminate and cease to be exercisable upon
consummation of a Change in Control except to the extent that the Options are
assumed by the successor entity (or parent thereof) pursuant to the terms of the
Change in Control transaction.

 

12.       Acceleration of Exercisability and Vesting.

 

The Board shall have the power to accelerate the time at which any or all Stock
Awards may first be exercised or the time during which any or all Stock Awards
or any part thereof will vest in accordance with the Plan, notwithstanding the
provisions in any Stock Award stating the time at which it may first be
exercised or the time during which it will vest. By approval of the Plan, the
Company’s stockholders consent to any such accelerations in the Board’s sole
discretion.

 

13.       Dissolution or Liquidation.

 

In the event of a dissolution or liquidation of the Company, then all
outstanding Stock Awards shall terminate immediately prior to such event.

 

14.       Miscellaneous.

 

(s)                  Stockholder Rights. Neither a Participant nor any person to
whom a Stock Award is transferred shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any Award Shares unless and
until such person has satisfied all requirements for exercise of the Stock Award
pursuant to its terms and the Company has duly issued a stock certificate for
such Award Shares.

 

11

 

 

(t)                  No Employment or Other Service Rights. Nothing in the Plan
or any Stock Award Agreement shall confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in effect at the
time the Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without Cause; (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an Affiliate; or (iii)
the service of a Director pursuant to the Bylaws or Certificate of Incorporation
of the Company or an Affiliate, and any applicable provisions of the corporate
law of the state in which the Company or the Affiliate is incorporated, as the
case may be.

 

(u)                 Incentive Stock Option $100,000 Limitation. To the extent
that the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company and any Affiliates) exceeds One Hundred Thousand Dollars ($100,000), the
Options or portions thereof that exceed such limit (according to the order in
which they were granted) shall be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(v)                 Investment Assurances. The Company may require a
Participant, as a condition of exercising an Option or otherwise acquiring
Common Stock under any Stock Award, (i) to give written assurances satisfactory
to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the Stock Award; and (ii) to give written assurances satisfactory to the Company
stating that the Participant is acquiring Common Stock subject to the Stock
Award for the Participant’s own account and not with any present intention of
selling or otherwise distributing the Common Stock. The foregoing requirements,
and any assurances given pursuant to such requirements, shall be inoperative if
(x) the issuance of the shares upon the exercise or acquisition of Common Stock
under the Stock Award has been registered under a then currently effective
registration statement under the Securities Act; or (y) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common
Stock.

 

(w)                Withholding Obligations. The Company may, in its sole
discretion, satisfy any federal, state or local tax withholding obligation
relating to a Stock Award by any of the following means (in addition to the
Company’s right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) causing the Participant to
tender a cash payment; (ii) withholding shares of Common Stock from the shares
of Common Stock issued or otherwise issuable to the Participant in connection
with the Stock Award, provided that no shares of Common Stock are withheld with
a value exceeding the minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid classification of the Stock Award
as a liability); or (iii) by such other method as may be set forth in the Stock
Award Agreement.

 

(x)                 Compliance with Section 409A of the Code. To the extent
applicable, the Plan and Stock Award Agreements shall be interpreted in
accordance with Section 409A of the Code and Department of Treasury regulations
and other interpretive guidance issued thereunder, including without limitation
any such regulations or other guidance that may be issued or amended after the
Effective Date (as defined in Section 17 below). Notwithstanding any provision
of the Plan or Stock Award to the contrary, in the event that following the
Effective Date the Board determines that any Stock Award may be subject to
Section 409A of the Code and related Department of Treasury guidance (including
such Department of Treasury guidance as may be issued after the Effective Date),
the Board may adopt such amendments to the Plan and the applicable Stock Award
Agreement or adopt other policies and procedures (including amendments, policies
and procedures with retroactive effect), or take any other actions, that the
Board determines are necessary or appropriate to (i) exempt the Stock Award from
Section 409A of the Code and/or preserve the intended tax treatment of the
benefits provided with respect to the Stock Award; or (ii) comply with the
requirements of Section 409A of the Code and Department of Treasury regulations
and other interpretive guidance issued thereunder, including without limitation
any such regulations or other guidance that may be issued or amended after the
Effective Date.

 

12

 

 

15.    Amendment of the Plan.

 

(y)                 In General. The Board at any time, and from time to time,
may amend the Plan. However, no amendment shall be effective unless approved by
the stockholders of the Company within twelve (12) months before or after the
adoption of the amendment where the amendment will:

 

(i)                   Increase the number of shares reserved for Stock Awards
under the Plan, except as provided in Section 10 relating to adjustments upon
changes in Common Stock;

 

(ii)                 Modify the requirements as to eligibility for participation
in the Plan (to the extent such modification requires stockholder approval in
order for the Plan to satisfy the requirements of Section 422 of the Code); or

 

(iii)                Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code.

 

(z)                 Amendment to Maximize Benefits. It is expressly contemplated
that the Board may amend the Plan in any respect the Board deems necessary or
advisable to provide Participants with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under the Plan into compliance therewith.

 

(aa)             No Impairment. The rights and obligations under any Stock Award
granted before any amendment of the Plan shall not be altered or impaired by
such amendment unless the Company requests the consent of the person to whom the
Stock Award was granted and such person consents in writing; provided, however,
that notwithstanding anything to the contrary in this Section 15 or elsewhere in
this Plan, no such consent shall be required with respect to any amendment or
alteration if the Board determines in its sole discretion that such amendment or
alteration either (i) is required or advisable in order for the Company, the
Plan or the Stock Award to satisfy or conform to any law or regulation or to
meet the requirements of any accounting standard, or (ii) is not reasonably
likely to significantly diminish the benefits provided under such Award, or that
any such diminishment has been adequately compensated.

 

16.    Termination or Suspension of the Plan.

 

(bb)             Termination or Suspension. The Board may suspend or terminate
the Plan at any time. Unless sooner terminated, the Plan shall terminate on July
24, 2023 (which shall be within ten (10) years from the date the Plan is adopted
by the Board or approved by the stockholders of the Company, whichever is
earlier), and no Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated, but Stock Awards and Stock Award Agreements
then outstanding shall continue in effect in accordance with their respective
terms.

 

(cc)              No Impairment. Rights and obligations under any Stock Award
granted while the Plan is in effect shall not be altered or impaired by
suspension or termination of the Plan, except as otherwise provided herein or
with the consent of the person to whom the Stock Award was granted.

 

17.    Effective Date of Plan.

 

The Plan shall become effective on July 25, 2013, which is the date that the
Plan was adopted by the Board (the “Effective Date”), provided that the
stockholders of the Company approve or have approved the Plan within twelve (12)
months of such date. No Options granted under the Plan shall be exercised unless
and until the Plan has been approved by the stockholders of the Company, and all
Stock Awards granted under the Plan shall be rescinded if stockholder approval
of the Plan is not obtained within such 12-month period.

 

13

 

 

18.    Non-Exclusivity of the Plan

 

Neither the adoption of this Plan by the Board nor the submission of this Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board to adopt such other incentive
arrangements as either may deem desirable, including, without limitation, the
granting of stock options or restricted stock otherwise than under this Plan,
and such arrangements may be either generally applicable or applicable only in
specific cases.

 

19.    Liability of the Company.

 

The Company and the members of the Board shall not be liable to a Participant or
any other persons as to: (a) the non-issuance or non-transfer, or any delay of
issuance or transfer, of any Award Shares which results from the inability of
the Company to comply with, or to obtain, or from any delay in obtaining from
any regulatory body having jurisdiction, all requisite authority to issue or
transfer Award Shares if counsel for the Company deems such authority reasonably
necessary for lawful issuance or transfer of any such shares and, in furtherance
thereof, appropriate legends may be placed on the stock certificates evidencing
Award Shares to reflect such transfer restrictions; and (b) any tax consequence
expected, but not realized, by any Participant or other person due to the
receipt, exercise or settlement of any Option or other Stock Award granted
hereunder.

 

20.    Choice of Law.

 

The laws of the State of Nevada shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.

 

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14

 

 

 

====================================================================

 

 

 

 

2013

  

 

EQUITY INCENTIVE PLAN

  

 

OF

  

 

cannavest Corp.

  

 

Adopted July 25, 2013

 

 

 

 

 

 

====================================================================

 

 

 

 

 

1. General. 1       2. Definitions. 1       3. Administration. 4       4. Shares
Subject to the Plan. 6       5. Eligibility. 6       6. Option Agreement
Provisions. 7       7. Provisions of Stock Awards Other Than Options. 9       8.
Covenants of the Company. 10       9. Use of Proceeds. 10       10. Adjustments
Upon Change in Common Stock. 11       11. Adjustments Upon Change in Control. 11
      12. Acceleration of Exercisability and Vesting. 11       13. Dissolution
or Liquidation. 11       14. Miscellaneous. 11       15. Amendment of the Plan.
13       16. Termination or Suspension of the Plan. 13       17. Effective Date
of Plan. 13       18. Non-Exclusivity of the Plan 14       19. Liability of the
Company. 14       20. Choice of Law. 14