EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (this “Agreement”) is made and entered into
effective this 6th day of September, 2017 by and between Surna Inc., a Nevada
corporation whose address is 1780 55th Street, Suite A, Boulder, Colorado 80301
(the “Company”) and Chris Bechtel, an adult resident of the State of Texas (the
“Executive”). The Executive and the Company may be referred to herein
individually as a “Party” or collectively as the “Parties.”

 

AGREED ACKNOWLEDGMENTS

 

A. The Company is engaged in the development, design and distribution of
cultivation technologies for controlled environment agriculture for
state-regulated cannabis cultivation facilities and traditional indoor
agricultural facilities, including lighting, environmental control and air
sanitation designed to meet the specific environmental conditions required for
indoor cultivation and to reduce energy and water consumption (the “Business”).

 

B. In connection with the Business, the Company manufactures or is developing,
sells and delivers the following products and services: (i) liquid-based process
cooling and climate control systems, (ii) reflectors and lighting systems,
including water-cooled reflectors, (iii) a full-service engineering package for
designing and engineering commercial scale thermodynamic systems specific to
indoor cultivation facility conditions, (iv) automation and control devices,
systems and technologies used for environmental, lighting and climate control in
indoor cultivation facilities, (v) a comprehensive, hybrid cultivation facility
design and building utilizing sunlight and a high-power LED lighting system, and
(vi) and other products, services, and technologies now or hereafter developed
related to the foregoing (collectively, the “Products”)

 

C. The Business of the Company is highly competitive and requires the creation
of intimate and prolonged relationships with the Company’s customers because of
the custom products developed for individual customers, and the significance of
adapting to the marketing plans continually being created by these customers.

 

D. The Company has invested and will continue to invest considerable sums of
time, money, and other resources in developing the confidence and loyalty of its
customers and potential customers and to recruit, train, support and compensate
its employees and potential employees. In addition, the Company expends
significant amounts of time and money to attract, identify, locate, and
establish contacts and business relationships with prospective customers. The
loss of these existing and prospective relationships with customers, and with
existing and potential employees, will cause substantial and irreparable harm to
the Company, which cannot be accurately or adequately compensated by money
alone.

 

E. The Company desires to retain the services of the Executive as a member of
the Company’s management team. The Executive desires to continue such employment
and commits to devote all of the Executive’s business time and attention to
services benefiting the Company. Both the Executive and the Company wish to
enter into this Agreement to set forth the terms and conditions of the
Executive’s employment with the Company.

 

F. The Executive acknowledges that, in connection with the execution of this
Agreement, the Executive is receiving new and valuable consideration from the
Company including, without limitation, an incentive bonus program and the grant
of certain restricted stock units and non-qualified stock options under the
Company’s 2017 Equity Incentive Plan, as adopted by the Company’s Board of
Directors (the “Board”) on August 1, 2017, as may be modified and amended by the
Company from time to time (the “EIP”).

 

G. The Executive acknowledges that, in the course of the Executive’s employment
with the Company, the Executive will frequently come into contact with the
Company’s customers and suppliers to such an extent that the Executive may be
able to control or direct, in whole or in part, the business and relationships
between the Company and its customers and suppliers. Accordingly, the Company
reposes its trust in the Executive not to disrupt or otherwise misappropriate
the customer and supplier relationships developed and/or supported by the
Company.

 

 

 

 

H. The Executive will also, during the course of the Executive’s employment with
the Company, have frequent and close contact with the Company’s other executive
managers, salespeople, and key staff employees. As a result of the Executive’s
position, the Executive will acquire and have access to confidential information
concerning the Company’s employees, prospective employees, customers, suppliers,
and prospective customers and suppliers that is not easily or generally
available to the Company’s competitors.

 

I. The Executive acknowledges that, by virtue of the Executive’s position with
the Company, the Executive will have access to certain secret and confidential
business data and information belonging to the Company including, but not
limited to: marketing plans, financial strategies, market surveys and
assessments, customer and Company technical information, financial statements,
budget data, personnel records, customer profiles and purchase requirements,
product design, engineering and technical specifications, pricing plans and
strategies, sales contracts and proposals, private and confidential discussions
with executive managers, legal advice and strategies, performance evaluations,
price schedules from suppliers, litigation and planned litigation, capital
needs, lists of customers and potential customers, hiring and training goals,
internal operation and production reports and schedules, compensation packages,
customer account projections, licenses, promotional plans and information,
corporate policies for internal operations, bids and proposals by suppliers and
to customers, identities and personal profiles of key persons at customers and
potential customers, expense data by customer, and other confidential and
sensitive business information developed and maintained by the Company.

 

J. The Company has a valuable and proprietary interest in the confidential
information described in paragraph I above and has expended considerable time
and money to safeguard and protect such information from direct or indirect
divulgence of same by its employees, including the Executive. In addition, as
part of the Company’s relationship with each of its customers, the Company
assures customers that the unique, confidential, and secret information shared
by customers with the Company will be protected from disclosure to and
unauthorized use by others. Any divulgence of such information will constitute
an irreparable injury to the Company and the Company’s customers.

 

K. The Executive acknowledges that (i) the Executive’s position with the Company
is one of great trust and confidence requiring that the Executive exercise a
high degree of loyalty, honesty, and integrity, (ii) the Executive has and will
receive substantial and adequate monetary consideration and benefits pursuant to
this Agreement, (iii) the Executive has read and understood the terms of this
Agreement and signed the same as a free and voluntary act, and (iv) the
Executive understands that there is no need to continue employment with the
Company, but the Executive has freely chosen to enter into this Agreement
because of a desire to take advantage of the specific and unique opportunities
offered by continued employment with the Company and the additional benefits
provided for herein.

 

AGREEMENTS

 

In consideration of the Agreed Acknowledgments and the mutual covenants and
agreements set forth in this Agreement, the Parties agree as follows:

 

1. Acknowledgments. The acknowledgments set forth above are accurate and are
hereby incorporated by reference in this Agreement.

 

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2. Employment. The Company hereby employs the Executive and the Executive hereby
accepts employment with the Company on the terms and conditions set forth in
this Agreement.

 

3. Duties. During the Term (as defined below), the Executive shall be employed
by the Company as the Chief Executive Officer and President and, as such, the
Executive shall have such responsibilities and authority as are customary for
such position of a company of similar size and nature as the Company as may be
assigned from time to time by the Board. The Executive will also hold such other
executive officer positions as the Board may appoint from time to time. The
Executive shall faithfully perform for the Company the duties of such position
and shall report directly to the Board. At all times during the Term, the
Executive shall adhere to all of the Company’s policies, rules and regulations
governing the conduct of its employees, including without limitation, any
compliance manual, code of ethics, employee handbook or other policies adopted
by the Company from time to time. The Company and the Executive acknowledge that
the Parties have entered into that certain Indemnification Agreement dated May
31, 2017 (“D&O Indemnity Agreement”). Effective as of the Effective Date, the
Executive hereby resigns from the Audit Committee of the Board.

 

4. Extent of Services. Except for illnesses and vacation periods, the Executive
shall devote the Executive’s full business time and attention and the
Executive’s best efforts to the performance of the Executive’s duties and
responsibilities under this Agreement. Notwithstanding the foregoing, the
Executive may participate in charitable, academic, community religious or other
non-profit activities, and in trade or professional organizations, and engage
and participate in the specific activities listed in Exhibit A hereto (the
“Permitted Activities”) or such other activities as specifically agreed to in
writing by the Company in advance from time to time in the Company’s sole
discretion, provided that all of the Executive’s activities outside of the
Executive’s duties to the Company, individually or in the aggregate, shall
comply with the Company’s conflict of interest policies and corporate governance
guidelines as in effect from time to time, do not otherwise interfere with the
Executive’s duties and responsibilities to the Company, and do not compete with
or adversely affect the Business of the Company. Subject to the provisions of
Section 11 herein, the Executive may make any passive investment in any publicly
traded entity, or own five percent (5%) or less of the issued and outstanding
voting securities of any entity, provided, in any event, that the Executive is
not obligated or required to, and shall not in fact, devote any consulting or
managerial effort or services in connection therewith, except for the Permitted
Activities.

 

5. Place of Performance. The Executive will perform the Executive’s duties for
the Company from the Company’s corporate offices in Boulder, Colorado (the
“Corporate Office”), except that: (i) the Employee may continue to reside in
Houston, Texas, but will commute to, perform the duties hereunder at, the
Corporate Office at least fifty percent (50%) of the working days with the
Employee being allowed to work from the Employee’s residence in Houston, Texas
for the other fifty percent (50%) of the working days, and (ii) the Employee
will travel to perform services as required for the proper performance of the
Employee’s duties under this Agreement.

 

6. Term; At-Will Employment; Termination. This Agreement and the Executive’s
employment hereunder shall commence on August 17, 2017 (the “Effective Date”)
and, subject to earlier termination as provided in this Section 6, shall
continue in full force and effect thereafter until December 31, 2019 (the
“Initial Term”) and, by mutual written agreement of the Parties, may be extended
for a term of one (1) additional year (an “Extended Term”) at the end of the
Initial Term, and an additional one (1) year Extended Term at the end of each
Extended Term (the last day of the Initial Term and each such Extended Term is
referred to herein as a “Term Date”). Notwithstanding any other provision of
this Agreement to the contrary, either Party may terminate this Agreement, at
any time, with or without Cause (as defined herein), by providing the other
Party with 30-days’ prior written notice. During the Term (as defined below) and
for so long as the Executive is employed by Company, the Executive shall be an
at-will employee of Company. The employment of the Executive by the Company
shall terminate immediately upon death of the Executive. Any termination of the
Executive’s employment by the Company or by the Executive (other than
termination pursuant to death) shall be communicated by written notice of
termination to the other Party hereto in accordance with this Agreement. For
purposes of this Agreement, “Term” shall mean the actual duration of the
Executive’s employment hereunder, taking into account any extensions or any
termination of employment pursuant to this Section 6, and “Date of Termination”
shall mean the date the Executive’s employment is terminated in accordance with
this Section 6.

 

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7. Compensation.

 

a. Salary. The Company shall pay the Executive an annualized base salary (the
“Base Salary”) of $180,000 per year, which shall be payable in equal
installments in accordance with the Company’s standard payroll practice from
time to time, less customary or legally required withholdings and deductions,
for periods actually worked by the Executive.

 

b. Restricted Stock Units. Upon execution of this Agreement or as soon as
practicable thereafter, subject to the approval of the Board (or an authorized
committee thereof), as compensation for entering into this Agreement, the
Company shall grant 3,000,000 Restricted Stock Units (as defined in the EIP) to
the Executive, which shall subject to the terms of the EIP and a separate
Restricted Stock Unit Agreement to be executed by the Company and the Executive,
substantially in the form attached hereto as Exhibit B. The Restricted Stock
Units shall be valued at Fair Market Value (as defined in the EIP) on the date
such Restricted Stock Units vest and, upon vesting, the Executive will receive
one share of the Company’s common stock (“Common Stock”) for each vested
Restricted Stock Unit (with no cash purchase price to be paid by the Executive
for such share of Common Stock). As a condition to the Company’s obligations
with respect to the Restricted Stock Units (including, without limitation, any
obligation to deliver any shares of Common Stock upon vesting of the Restricted
Stock Units), the Executive shall make arrangements satisfactory to the Company
to pay to the Company any federal, state, local, or foreign taxes of any kind
required to be withheld with respect to the delivery of shares of Common Stock
corresponding to such Restricted Stock Units. The Restricted Stock Units shall
vest as follows:

 

Number of Restricted Stock Units   Vesting Schedule

 

1,500,000 shares

 

 

 

Vest on March 31, 2019, if the Company’s 2018 revenue is at least $18 million
(provided the Executive is employed by, or providing services to, the Company at
December 31, 2018)

     

 

1,500,000 shares

 

 

Vest on March 31, 2020, if the Company’s 2019 revenue is at least $25 million
(provided the Executive is employed by, or providing services to, the Company at
December 31, 2019)

 

Any Restricted Stock Units that do not vest on the date specified above due to
failure to meet the applicable performance threshold will be forfeited on such
date.

 

For purposes of determining the vesting of the Restricted Stock Units, which are
subject to a revenue threshold for 2018 and 2019, the achievement of such
revenue threshold will be based on the Company’s annual revenue as reported in
the Company’s financial statements for such year, as audited by the Company’s
accounting firm, excluding any revenue attributable to any business acquired by
the Company after the Effective Date.

 

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c. Incentive Bonus Program. The Executive shall be eligible to receive an annual
incentive bonus (each an “Annual Incentive Bonus”) for each completed year of
employment during the Term in accordance with a bonus policy adopted by the
Board (or an authorized committee thereof), as may be amended or modified from
time to time. The bonus policy will provide that the Executive shall be entitled
to earn an Annual Incentive Bonus for such completed year of employment based on
performance criteria determined in the sole discretion of the Board. The Annual
Incentive Bonus for a completed year of employment shall be paid within
forty-five (45) days following the end of the completed year. Other than as set
forth in Section 9, the Executive must be employed by, or be providing services
to, the Company or an affiliate of the Company on the date an Annual Incentive
Bonus is to be paid to be eligible to receive the Annual Incentive Bonus for
such completed year of employment. Payment of the Annual Incentive Bonus may be
made in the form of cash, stock bonus (issued pursuant to the EIP), or a
combination thereof, as determined in the sole discretion of the Board (or an
authorized committee thereof). As a condition to the Company’s obligations with
respect to any stock bonus (including, without limitation, any obligation to
deliver any shares of Common Stock with respect to any stock bonus), the
Executive shall make arrangements satisfactory to the Company to pay to the
Company any federal, state, local, or foreign taxes of any kind required to be
withheld with respect to the delivery of shares of Common Stock with respect to
such stock bonus.

 

In lieu of the Annual Incentive Bonus for each completed year of employment
during the Initial Term, which the Executive acknowledges that the Executive
will not be eligible to receive, the Company has adopted a special incentive
bonus program under which the Executive will be eligible to receive an incentive
bonus on each December 31 and June 30 during the Initial Term (the “Special
Incentive Bonus”). For each of the five (5) Special Incentive Bonuses payable
during the Initial Term, the Executive shall be eligible to receive a bonus of
1,000,000 shares of the Company’s Common Stock, provided the Board has
determined, in its sole discretion, that the Executive’s performance has been
average or better for such Special Incentive Bonus period. The Special Incentive
Bonus for each period shall be paid within forty-five (45) days following
December 31 or June 30, as applicable. Other than as set forth in Section 9, the
Executive must be employed by, or providing services to, the Company or an
affiliate of the Company on the date the Special Incentive Bonus is to be paid
to be eligible to receive the Special Incentive Bonus for such period. As a
condition to the Company’s obligations with respect to each Special Incentive
Bonus (including, without limitation, any obligation to deliver any shares of
Common Stock with respect to any Special Incentive Bonus), the Executive shall
make arrangements satisfactory to the Company to pay to the Company any federal,
state, local, or foreign taxes of any kind required to be withheld with respect
to the delivery of shares of Common Stock with respect to such Special Incentive
Bonus.

 

d. Non-qualified Stock Options. In consideration of the grant of the foregoing
Restricted Stock Units and the eligibility for the Special Incentive Bonus, the
Company and the Executive hereby agree that the non-qualified stock options to
purchase 900,000 shares of the Company’s common stock, which were granted to the
Executive as an equity retention award in connection with the Executive’s
appointment to the Board on August 8, 2017, are hereby terminated and cancelled
effective as of the date of this Agreement.

 

e. Clawback. Notwithstanding any other provisions in this Agreement to the
contrary, any incentive-based compensation, or any other compensation, paid to
the Executive pursuant to this Agreement or any other agreement or arrangement
with the Company which is subject to recovery under any law, governmental
regulation, or stock exchange listing requirement, will be subject to such
deductions and clawback as may be required to be made pursuant to such law,
government regulation or stock exchange listing requirement.

 

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f. Change of Control. In the event that there is a “Change in Control” (as
defined below) prior to the date on which the Restricted Stock Units become
fully vested, then 100% of the Restricted Stock Units not already vested shall
become vested on the date of the Change of Control (other than those Restricted
Stock Units that have been previously forfeited due to failure to meet the
performance threshold), provided the Executive is employed by, or providing
services to, the Company on the date immediately preceding the date of the
Change of Control. In the event of a Change of Control prior to December 31,
2019, then the remaining Special Incentive Bonuses related to any Special
Incentive Bonus period ending after the date of the Change of Control shall
become due and payable on the date of the Change of Control, provided the
Executive is employed by, or providing services to, the Company on the date
immediately preceding the date of the Change of Control. A “Change of Control”
means a reorganization, merger, statutory share exchange, or consolidation or
similar transaction involving the Company, or a sale or other disposition of all
or substantially all of the assets of the Company, unless, following such
transaction, all or substantially all of the individuals and entities who were
the beneficial owners of the Company’s equity and voting securities immediately
prior to such transaction beneficially own, directly or indirectly, more than
fifty percent (50%) of the value of the then outstanding equity securities and
the combined voting power of the then outstanding voting securities

 

8. Fringe Benefits. The Company shall provide the following benefits to the
Executive during the Term:

 

a. Executive Benefit Plans. The Executive will be eligible to participate in any
employee benefit plans including, without limitation, group insurance, profit
sharing and 401(k) plans, sponsored generally by the Company for its employees
as may be offered from time to time. Notwithstanding the foregoing, the Company
may modify or terminate any employee benefit plan at any time.

 

b. Vacation. The Executive shall accrue in accordance with the Company’s
vacation policy as in effect from time to time twenty (20) days per year of paid
vacation time, provided that, any earned but unused vacation in a year may not
be carried forward to future years.

 

c. Personal Days, Sick Leave and Holidays. The Executive shall be entitled to
receive paid personal days, sick days and holidays under the guidelines
established by the Company from time to time for the Company’s executive and
management employees, provided that, any earned but unused personal and sick
days in a year may not be carried forward to future years.

 

d. Business Expense Reimbursement. Subject to the Company’s policies and
procedures for the reimbursement of business expenses incurred by its executive
and management employees, the Company shall reimburse the Executive for
reasonable expenses incurred by the Executive in connection with the performance
of the Executive’s duties pursuant to this Agreement, including, but not limited
to, travel expenses, professional conventions or similar professional functions
and other reasonable business expenses. The Executive agrees to provide the
Company with receipts and/or documentation sufficient to permit the Company to
take its full business expense deduction. The Company shall have no obligation
to reimburse the Executive for expenses claimed if the Executive does not
provide sufficient receipts and/or documentation. The Executive shall submit
requests for reimbursement of business expenses at least once every month. The
Executive shall not be entitled to a corporate credit card, and any frequent
flyer miles earned for travel contemplated under this Agreement shall be owned
by the Executive. The Parties acknowledge and agree that, during the Term: (i)
the Executive will be reimbursed for air travel and airport parking to commute
to and from Houston and Denver, (ii) all lodging, meal and food costs incurred
by the Executive while commuting or working from the Corporate Office shall be
reimbursed, (iii) while working from the Corporate Office, the Executive will be
reimbursed for rental car and fuel costs, (iv) all costs and expenses
reimbursable under this sentence shall be subject the Company’s reimbursement
policies and procedures, and (v) the Executive shall use the Executive’s best
efforts to minimize the costs and expenses subject to reimbursement under this
sentence, and the Company shall only be required to reimburse reasonable costs
and expenses.

 

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e. Miscellaneous Benefits. The Executive is also entitled to receive any other
fringe benefits that Company may from time to time make available generally to
its management employees.

 

9. Effects of Termination.

 

a. Accrued Benefits. If the employment of the Executive should terminate at the
election of the Company with or without Cause, at the election of the Executive,
due to the Executive’s death, or upon expiration of the Term, then the Company
will pay or provide to the Executive or, in the event of the Executive’s death,
to the estate of the Executive:

 

i. any earned and accrued but unpaid Base Salary through the Date of Termination
payable in accordance with the Company’s normal payroll practices;

 

ii. reimbursement for any unreimbursed business expenses incurred through the
Date of Termination in accordance with Section 8(d); and

 

iii. all other applicable payments or benefits to which the Executive shall be
entitled under, and paid or provided in accordance with, the terms of any
applicable arrangement, plan or program under Section 8(a)-(d) (collectively,
Sections 9(a)(i)-(iii), payable in accordance with this Section 9(a), shall be
hereafter referred to as the “Accrued Benefits”).

 

b. Death Benefit. If the employment of the Executive should terminate during the
Term due to the Executive’s death, then the Company will pay or provide to the
estate of the Executive (in addition to the Accrued Benefits payable under
Section 9(a)), subject to Section 9(e):

 

i. any accrued but unpaid Annual Incentive Bonus for any completed year of
employment prior to the year of the Executive’s death, payable when the
applicable Annual Incentive Bonus for such completed year of employment would
have otherwise been paid; and

 

ii. any accrued but unpaid Special Incentive Bonus for any completed period of
employment prior to the Executive’s death, payable when the applicable Special
Incentive Bonus for such completed period of employment would have otherwise
been paid; and

 

iii. the unvested Restricted Stock Units that are scheduled to vest under
Section 7(b) on the March 31st immediately following the calendar year in which
the Executive dies shall continue to vest in accordance with the vesting
schedule set forth in Section 7(b) notwithstanding the Executive’s death,
provided that, the Company achieves the applicable full year revenue threshold
for such vesting for the calendar year in which the Executive dies.

 

All other unvested Restricted Stock Units at the time of the Executive’s death
under Section 7(b) shall be forfeited.

 

c. Termination by the Company without Cause. If the employment of the Executive
should terminate at the election of the Company without Cause, the Company will
pay or provide to the Executive (in addition to the Accrued Benefits payable
under Section 9(a)), subject to Sections 9(e) and 10:

 

i. continued payment of the Executive’s Base Salary for a period equal to the
lesser of thirty (30) days from the Date of Termination or the then applicable
Term Date, whichever occurs first, payable in accordance with the Company’s
normal payroll practices (but off employee payroll) (the “Severance Payments”);
provided that, the first payment of the Severance Payments shall be made on the
fifteenth (15th) day after the Date of Termination, and will include payment of
any amount of the Severance Payments that were otherwise due prior thereto;

 

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ii. any accrued but unpaid Annual Incentive Bonus for any completed year of
employment prior to the year of the Executive’s termination, payable when the
applicable Annual Incentive Bonus for such completed year of employment would
have otherwise been paid; and

 

iii. any accrued but unpaid Special Incentive Bonus for any completed period of
employment prior to the Executive’s termination, payable when the applicable
Special Incentive Bonus for such completed period of employment would have
otherwise been paid; and

 

iv. the unvested Restricted Stock Units that are scheduled to vest under Section
7(b) on the March 31st immediately following the calendar year in which the
Executive’s termination occurred shall continue to vest in accordance with the
vesting schedule set forth in Section 7(b) notwithstanding the Executive’s
termination of employment with the Company, provided that, the Company achieves
the applicable full year revenue threshold for such vesting for the calendar
year in which the Executive’s termination occurred.

 

All other unvested Restricted Stock Units at the time of the Executive’s
termination of employment with the Company under Section 7(b) shall be
forfeited.

 

For purposes of this Agreement, the term “Cause” means that the Executive: (i)
has been convicted of, or entered a plea of guilty or “nolo contendere” to, a
felony or a crime involving moral turpitude causing material harm to the
standing and reputation of the Company, (ii) violated any of the Executive’s
obligations under this Agreement, any award agreement under the EIP, any
proprietary rights, non-competition, non-disclosure or other restrictive
covenant agreements in effect between the Executive and the Company, including
such agreements in this Agreement, which are demonstrably willful or deliberate
on the Executive’s part, (iii) has willfully or deliberately failed to perform
the Executive’s material duties assigned by, or to follow the lawful orders and
direction of, the Board (other than by reason of illness or temporary
disability), (iv) has engaged in illegal conduct, gross misconduct, fraud or
material dishonesty in connection with the Business of the Company, (v) has
engaged in willful misappropriation or embezzlement of any of the Company’s
funds or property, or (vi) has engaged in conduct that violated the Company’s
then existing written internal policies or procedures and which is detrimental
to the Business or reputation of the Company. Any of the aforesaid clauses (ii),
(iii) and (vi) may be cured by the Executive, if curable, if cured within
fifteen (15) days after receipt by the Executive of written notice of the same.
In the event such acts or omissions are capable of being cured, the effective
date of termination, in the event of the Executive’s failure to cure, must be at
least fifteen (15) days after such notice of termination to afford the Executive
the ability to cure the same. The Company may place the Executive on paid leave
for up to sixty (60) consecutive days while it is determining whether there is a
basis to terminate Executive’s employment for Cause.

 

d. Expiration of Term. In the event that the Initial Term expires on December
31, 2019 without being extended by the Parties, the Company will pay or provide
to the Executive (in addition to the Accrued Benefits payable under Section
9(a)), subject to Section 9(e):

 

i. any accrued but unpaid Special Incentive Bonus for the six-month period ended
December 31, 2019, payable when the applicable Special Incentive Bonus for such
completed period of employment would have otherwise been paid; and

 

ii. the unvested Restricted Stock Units that are scheduled to vest under Section
7(b) on March 31, 2020 shall continue to vest in accordance with the vesting
schedule set forth in Section 7(b) notwithstanding the Executive’s termination
of employment with the Company, provided that, the Company achieves the full
year revenue threshold for such vesting for the 2019 calendar year.

 

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e. Release. Any payments or benefits by the Company required under Sections
9(b), 9(c), and 9(d) shall be conditioned on and shall not be payable unless the
Company receives from the Executive (or, in the event of the Executive’s death,
the estate of the Executive) within thirty (30) days of the Date of Termination
a fully effective and non-revocable written release in form and substance
reasonably acceptable to the Company of any and all past, present or future
claims that the Executive (or, in the event of the Executive’s death, the estate
of the Executive) may have against the Company or any of its affiliates and any
of their respective officers, directors and other related parties (all claims
released in this Section 9(e) being referred to as the “Released Claims”),
provided, however, that the Released Claims shall not include any claim by the
Executive for indemnification from the Company relating to any act or omission
prior to the Date of Termination, in each instance to the extent the Executive
would have the right to be indemnified therefor under (and not otherwise
prohibited or restricted by) (i) the laws of the State of Nevada, (ii) any
Federal law applicable to the Company or the Executive, (iii) the Company’s
articles of incorporation or bylaws, as amended, and (iv) the D&O Indemnity
Agreement. The Company agrees to provide a form of release within seven (7) days
of the Date of Termination.

 

f. Termination of Authority. Immediately upon the Executive terminating or being
terminated from the Executive’s employment with the Company for any reason,
notwithstanding anything else appearing in this Agreement or otherwise, the
Executive will stop serving the functions of the Executive’s terminated or
expired position(s), including but not limited to any director or officer
positions at the Company or any of its affiliates, and shall be without any of
the authority or responsibility for such position(s).

 

10. Section 409A.

 

a. Although the Company does not guarantee the tax treatment of any payments
under this Agreement, the intent of the Parties is that the payments and
benefits under this Agreement be exempt from, or comply with, Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”), and all Treasury
Regulations and guidance promulgated thereunder (“Code Section 409A”) and to the
maximum extent permitted this Agreement shall be limited, construed and
interpreted in accordance with such intent. In no event whatsoever shall the
Company or its affiliates or their respective officers, directors, employees or
agents be liable for any additional tax, interest or penalties that may be
imposed on the Executive by Code Section 409A or damages for failing to comply
with Code Section 409A.

 

b. Notwithstanding any other provision of this Agreement to the contrary, to the
extent that any reimbursement of expenses constitutes “deferred compensation”
under Code Section 409A, such reimbursement shall be provided no later than
December 31st of the year following the year in which the expense was incurred
(or, where applicable, no later than such earlier time required by this
Agreement). The amount of expenses reimbursed in one year shall not affect the
amount eligible for reimbursement in any subsequent year. The amount of any
in-kind benefits provided in one year shall not affect the amount of in-kind
benefits provided in any other year.

 

c. For purposes of Code Section 409A (including, without limitation, for
purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), the right to
receive payments in the form of installment payments shall be treated as a right
to receive a series of separate payments and, accordingly, each installment
payment shall at all times be considered a separate and distinct payment.
Whenever a payment under this Agreement may be paid within a specified period,
the actual date of payment within the specified period shall be within the sole
discretion of the Company.

 

d. Notwithstanding any other provision of this Agreement to the contrary, if at
the time of the Executive’s separation from service (as defined in Code Section
409A), the Executive is a “Specified Executive”, then the Company will defer the
payment or commencement of any nonqualified deferred compensation subject to
Code Section 409A payable upon separation from service (without any reduction in
such payments or benefits ultimately paid or provided to the Executive) until
the date that is six (6) months following separation from service or, if
earlier, the earliest other date as is permitted under Code Section 409A (and
any amounts that otherwise would have been paid during this deferral period will
be paid in a lump sum on the day after the expiration of the six (6)- month
period or such shorter period, if applicable). The Executive will be a
“Specified Executive” for purposes of this Agreement if, on the date of the
Executive’s separation from service, the Executive is an individual who is,
under the method of determination adopted by the Company designated as, or
within the category of executives deemed to be, a “Specified Executive” within
the meaning and in accordance with Treasury Regulation Section 1.409A-1(i). The
Company shall determine in its sole discretion all matters relating to who is
designated as a “Specified Executive” and the application of and effects of the
change in such determination.

 

9

 

 

e. Notwithstanding anything in this Agreement or elsewhere to the contrary, a
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or
benefits that constitute “non-qualified deferred compensation” within the
meaning of Code Section 409A upon or following a termination of the Executive’s
employment unless such termination is also a “separation from service” within
the meaning of Code Section 409A and, for purposes of any such provision of this
Agreement, references to a “termination,” “termination of employment” or like
terms shall mean “separation from service” and the date of such separation from
service shall be the date of termination for purposes of any such payment or
benefits.

 

11. Activity Restrictions; Executive Covenants.

 

a. Purpose. As previously acknowledged, the Company has invested heavily in its
information systems, personnel, product development, customers, and customer
development. As a member of the Company’s executive management group, the
Executive is entrusted with the fruits of these investments and the decisions to
be made regarding similar future investments. In order to participate in the
benefits of a highly compensated position of trust with the Company, the Company
requires a written commitment from key employees that its trust will not be
misplaced and its investments lost or damaged. Accordingly, the Executive makes
the following promises regarding the Executive’s activities.

 

b. Best Efforts. The Executive will at all times perform all of the Executive’s
assigned duties faithfully and exert the Executive’s best efforts to fully
perform those duties pursuant to the express and implicit terms of this
Agreement to the reasonable satisfaction of the Company. During employment, the
Executive will not engage in or become interested in any calling, activity, or
other business which is or may be contrary to or in competition with the
interests and welfare of the Company.

 

c. Inventions; Intellectual Property.

 

i. Inventions. Every invention and improvement conceived, invented or developed
by the Executive relating to or useable in the Business then being carried on or
actively contemplated by the Company now existing or hereafter developed shall
become the exclusive property of the Company. With respect to all inventive
ideas originated or developed by the Executive which relate to the Business
during the Term hereof, or as to which the Executive has acquired information as
a result of the Executive’s employment with the Company, and all patents
obtained on such inventive ideas, (a) the Executive agrees to disclose and
assign, without charge, all such inventive ideas and any patents obtained
thereon to the Company, but without expense to the Executive, (b) the Executive
agrees that all such inventive ideas and any patents thereof shall be the
exclusive property of the Company, and (c) the Executive will, at any and all
times, furnish such information and assistance and execute such applications and
other documents as may be advisable in the opinion of the Company to obtain both
domestic and foreign patents, title to which is to be vested in the Company, and
the Executive shall give the Company the full and exclusive power to prosecute
all such applications and all proceedings in connection therewith.

 

10

 

 

ii. Intellectual Property. The Executive shall promptly disclose to the Company
or any successor or assign, and grant to the Company or its successors and
assigns without any separate remuneration or compensation other than that
received by the Executive in the course of the Executive’s employment, the
Executive’s entire right, title and interest in and to any and all inventions,
developments, discoveries, models, or business plans or opportunities, or any
other intellectual property of any type or nature whatsoever related to the
Business or the Products (“Intellectual Property”), developed by the Executive
during the period of the Executive’s employment by the Company or its affiliates
and whether developed by the Executive during or after business hours, or alone
or in connection with others, that is in any way related to the Business of the
Company, its successors or assigns. This provision shall not apply to books or
articles authored by the Executive during non-work hours, consistent with the
Executive’s obligations under this Agreement, so long as such books or articles
(a) are not funded in whole or in part by the Company, and (b) do not contain
any confidential information or Intellectual Property of the Company. The
Executive agrees, at the Company’s expense, to take all steps necessary or
proper to vest title to all such Intellectual Property in the Company, and
cooperate fully and assist the Company in any litigation or other proceedings
involving any such Intellectual Property.

 

d. Non-solicitation of Business. During the Term hereof and for a period of one
(1) year after the termination or expiration of this Agreement, regardless of
who initiated the termination, the Executive will not, directly or indirectly,
solicit, interfere with, or divert away from the Company any customer of the
Company who did any business with the Company during the Term hereof.

 

e. Non-enticement of Personnel. During the Term hereof and for a period of one
(1) year after the termination or expiration of this Agreement, regardless of
who initiated the termination, the Executive shall not, directly or indirectly,
as an individual or on behalf of any other person or entity, hire, solicit,
recruit, or attempt to entice away from the Company or any customer of the
Company any person employed by or providing services to the Company or any
customer of the Company. The Executive shall not approach any such employees for
such a prohibited purpose and shall not knowingly cooperate in any other person
or entity’s efforts to do so. The Company’s customers are third-party
beneficiaries of this covenant and shall have standing to enforce the terms of
this Section 11(e) by seeking whatever equitable and legal remedies may be
available to the Company hereunder.

 

f. Confidentiality. The Executive shall not at any time during the Term hereof
or at any time thereafter communicate, divulge, disclose, take, or use for
himself any information, knowledge, data, or materials that were disclosed or
obtained by the Executive during the Term (including, without limitation, any
information and knowledge that was conceived, created, or developed by the
Executive during the course of the Executive’s employment with the Company)
which is related to the Business and the Products and is not already generally
known in the Company’s trade by competitors. This restriction on confidential
information disclosure and use shall apply to knowledge or information which
relates to the Business or the business of the Company’s customers and is in the
nature of a business secret of the Company or the Company’s customers. Included
within the scope of this restriction shall be the specific items identified in
Section 11(h) hereof and any other information and matters designated by the
Company (verbally or in writing) to be confidential during the Term hereof. The
Company’s customers are third-party beneficiaries of the aforestated covenants
in this Section 11(f) and shall have standing to enforce its terms and seek
whatever equitable or legal remedy that is necessary to repay or avoid harm to
them, including, but not limited to, any remedy available to the Company under
this Agreement. The obligations of the Executive with respect to the disclosure
and use of confidential information under this Section 11(f) shall cease to the
extent such information becomes generally known in the Company’s trade by
competitors through a means other than a breach of this Agreement by the
Executive. In the event the Executive is required by any legal proceedings to
disclose confidential information, the Executive shall provide the Company with
prompt notice thereof so that the Company may seek an appropriate protective
order and/or waive compliance by the Executive with the provisions hereof.

 

11

 

 

g. Non-competition. During the Term hereof and for a period of one (1) year
after the termination or expiration of this Agreement, regardless of who
initiated the termination, the Executive shall not, alone, or as an agent,
employee, servant, officer, partner or stockholder of any other corporation or
business, directly or indirectly, engage in employment or business activity
which relates to the sale, manufacturing, or marketing of products which are
competitive with, substantially similar to, or serve the same function as the
Products manufactured, marketed or sold by the Company either now or at any time
during the Term. This post-termination restriction is limited to activities in
or directed at the geographic area located in North America where the Company
has sold or manufactured the Products at any time during the Term hereof. The
Executive specifically agrees, without limitation, that the Executive will not
accept a similar position or perform the same or similar responsibilities or
services as performed for the Company for any business entity that is engaged in
a business that is the same, or substantially similar to, the Business (i.e., a
competitor).

 

h. Return of Company Materials. Upon request at any time during the Term hereof
and without request at the time of the termination or expiration of this
Agreement, without regard for who initiated the termination, the Executive
agrees to promptly return (without retaining any copies, summaries, files or
notes derived from source materials) all information and records regarding the
Business and the Products, whether or not created by the Executive during the
Term hereof including, but not be limited to: all financial, sales and purchase
data for the Business and the Company’s customers, all financial statements and
projections, all marketing surveys and analyses, all strategic planning
material, all data on the Company’s competitors, all customer information, all
records regarding prospective customers of the Company, all documents regarding
pending or threatened litigation involving the Company, all legal opinions, all
personnel evaluations for the Company’s employees and outside vendors and
contractors, all computer hardware and software, all price lists and formulas,
all pricing quotations or proposals, all lists or compilations of customers and
prospects, all promotional materials, all internal operating reports, all
budgets and projections, all information related to the Company’s product
development and intellectual property, all product designs, specifications,
drawing, engineering, bills of material and other information related to the
Products, all corporate and equipment manuals and policies, all contracts with
customers and suppliers, all supplier prices and quotations, all business
correspondence, all catalogs and product samples, all sensitive customer
information, all sales reports and invoices, and all tangible and intangible
property owned by the Company.

 

i. Non-Disparagement. During the Term and thereafter, the Executive shall not
knowingly, directly or indirectly, make negative comments or otherwise disparage
the Company, any of its affiliates, or any of their respective officers,
directors, employees, shareholders, agents or businesses in any manner likely to
be harmful to them or their business reputations or personal reputations. The
Company shall direct its officers, directors and senior management team to not
disparage or encourage or induce others to disparage the Executive. The
foregoing shall not be violated by truthful statements in response to legal
process, required governmental testimony or filings, or administrative or
arbitral proceedings (including depositions in connection with such
proceedings), provided that the Executive has given the Company prompt written
notice of any such legal process and cooperated with the Company’s efforts to
seek a protective order.

 

j. Executive’s Representations. The Executive represents and acknowledges that
none of the activity restrictions set forth in this Section 11 will prevent the
Executive from obtaining employment, cause undue hardship, cause a relocation,
or adversely impact numerous other business and employment opportunities that
are not affected by the existence of these restrictions. The Executive further
acknowledges that the Executive believes the foregoing restrictions to be
reasonable and necessary to protect the Company’s legitimate business interests.
Any violation of the restrictions in this Section 11 can cause harm to the
Company of an irreparable nature for which money damages alone will not suffice.
The Executive agrees that the Executive will fully and promptly disclose to any
person or entity with which the Executive becomes associated subsequent to the
termination or expiration of this Agreement all of the restrictions on the
Executive’s post-termination activities. The Company shall also have the right
to disclose this Agreement to any business entity hiring or utilizing the
services of the Executive subsequent to the termination or expiration of this
Agreement.

 

12

 

 

k. Common Law and Trade Secrets. The Executive and the Company agree that
nothing in this Agreement shall be construed to limit or negate the common law
of torts or trade secrets where it provides the Company with broader protection
than that provided herein.

 

l. Tolling. In the event of any violation of the provisions of this Section 11,
the Executive acknowledges and agrees that the post-termination restrictions
contained in this Section 11 shall be extended by a period of time equal to the
period of such violation, it being the intention of the Parties hereto that the
running of the applicable post-termination restriction period shall be tolled
during any period of such violation.

 

m. Rights and Remedies upon Breach. The Executive acknowledges and agrees that
any breach by the Executive of any of the provisions of Section 11 (the
“Restrictive Covenants”) would result in irreparable injury and damage for which
money damages would not provide an adequate remedy. Therefore, if the Executive
breaches, or threatens to commit a breach of, any of the provisions of the
Restrictive Covenants, the Company and its affiliates shall have the following
rights and remedies, each of which rights and remedies shall be independent of
the other and severally enforceable, and all of which rights and remedies shall
be in addition to, and not in lieu of, any other rights and remedies available
to the Company and its affiliates, under law or in equity (including, without
limitation, the recovery of damages):

 

i. the right and remedy to have the Restrictive Covenants specifically enforced
(without posting bond and without the need to prove damages) by any court of
competent jurisdiction, including, without limitation, the right to an entry
against the Executive of restraining orders and injunctions (preliminary,
mandatory, temporary and permanent) against violations, threatened or actual,
and whether or not then continuing, of such covenants; and

 

ii. the right and remedy to require the Executive to account for and pay over to
the Company or any of its affiliates all compensation, profits, monies,
accruals, increments or other benefits (collectively, “Benefits”) derived or
received by the Executive as the result of any transactions constituting a
breach of the Restrictive Covenants, and the Executive shall account for and pay
over such Benefits to the Company and, if applicable, its affected affiliates.

 

12. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company’s successors and assigns and the Executive’s personal
or legal representatives, executors, administrators, heirs, distributees,
devisees and legatees. This Agreement shall not be assignable by the Executive,
it being understood and agreed that this is a contract for the Executive’s
personal services. This Agreement shall not be assignable by the Company, except
that the Company may assign it to an affiliate of the Company and shall assign
it in connection with a transaction involving the succession by a third party to
all or substantially all of the Company’s business and/or assets (whether direct
or indirect and whether by purchase, merger, consolidation, liquidation or
otherwise). When assigned to a successor, the assignee shall assume this
Agreement and expressly agree to perform this Agreement in the same manner and
to the same extent as the Company would be required to perform it in the absence
of such an assignment and the Company shall be released of all obligations
hereunder. For all purposes under this Agreement, the term “Company” shall
include any successor to the Company’s business and/or assets that executes and
delivers the assumption agreement described in the immediately preceding
sentence or that becomes bound by this Agreement by operation of law. This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns as provided in this Section 12 and is not for
the benefit of, nor may any provision hereof be enforced by, any other person,
except as otherwise set forth in this Agreement.

 

13

 

 

13. Alternative Dispute Resolution.

 

a. Coverage. Except as otherwise expressly provided in this Agreement or by law,
this Section 13 is the sole and exclusive method by which the Executive and the
Company are required to resolve any and all disputes arising out of or related
to the Executive’s employment with the Company or the termination of that
employment, each of which is referred to as “Employment-Related Dispute,”
including, but not limited to, disputes arising out of or related to any of the
following subjects: (i) compensation or other terms or conditions of the
Executive’s employment, (ii) application or enforcement of any Company program
or policy to the Executive, (iii) any disciplinary action or other adverse
employment decision of the Company or any statement related to the Executive’s
employment, performance or termination, (iv) any policy of the Company or any
agreement between the Executive and the Company, (v) disputes over the
arbitrability of any controversy or claim which arguably is or may be subject to
this Section 13, (vi) claims arising out of or related to any current or future
federal, state or local civil rights laws, fair employment laws, wage and hour
laws, fair labor or employment standards laws, laws against discrimination,
equal pay laws, wage and salary payment laws, plant or facility closing or
layoff laws, laws in regard to employment benefits or protections, family and
medical leave laws, and whistleblower laws, including by way of example, but not
limited to, the federal Civil Rights Acts of 1866, 1871, 1964 and 1991, the
Pregnancy Discrimination Act of 1978, the Age Discrimination in Employment Act
of 1967, the Equal Pay Act of 1963, the Fair Labor Standards Act of 1938, the
Americans with Disabilities Act of 1990, the Family and Medical Leave Act of
1993, and the Executive Retirement Income Security Act of 1978, as they have
been or may be amended from time to time, or (vii) any other dispute arising out
of or related to the Executive’s employment or the Executive’s termination.

 

b. Negotiation; Mediation. Any Employment-Related Dispute asserted by one Party
against the other Party shall be delivered in writing to the other Party. During
the fifteen (15)-day period following receipt of the assertion by the other
Party, the Parties shall attempt in good faith to negotiate a resolution of the
Employment-Related Disputes so asserted. If the Employment-Related Disputes so
asserted cannot be settled through negotiation and remains unresolved after the
fifteen (15)-day negotiation period, the Executive or the Company may submit the
dispute to mediation and the Parties shall attempt in good faith to resolve the
dispute by mediation, under the mediation procedure of the American Arbitration
Association (“AAA”). Unless the Parties agree otherwise in writing, the
mediation shall be conducted by a single mediator, and the mediator shall be
selected from an appropriate AAA panel pursuant to the AAA rules, respectively.
The mediation shall be conducted in Denver, Colorado. Unless the Parties agree
otherwise, the cost of the mediator’s professional fees and expenses and any
reasonable administrative fee will be shared and paid equally by the Parties,
and each Party shall bear its own attorneys’ fees and costs of the mediation.

 

c. Binding Arbitration. If the Employment-Related Disputes so asserted cannot be
settled through mediation and remains unresolved thirty (30) days after the
appointment of a mediator, the Executive or the Company may submit the dispute
to arbitration and the dispute shall be settled in arbitration. Notice of a
demand to arbitrate a dispute by either Party shall be given in writing to the
other at their last known address. Arbitration shall be commenced by the filing
by a party of an arbitration demand with the AAA in its office in Denver,
Colorado. The arbitration and resolution of the dispute shall be resolved by a
single arbitrator appointed by the AAA pursuant to AAA rules. The arbitration
shall in all respects be governed and conducted by applicable AAA rules, and any
award and/or decision shall be conclusive and binding on the parties. The
arbitration shall be conducted in Denver, Colorado regardless of the particular
plant or facility of the Parties. The arbitrator shall supply a written opinion
supporting any award, and judgment may be entered on the award in any court of
competent jurisdiction. Each Party shall pay its own fees and expenses for the
arbitration except for any costs and charges imposed by the AAA which may be
assessed against the losing Party by the arbitrator. Any fees of the arbitrator
for the arbitrator’s services shall in all events be shared and paid equally by
the Parties.

 

14

 

 

d. Equitable Relief. In the event that preliminary or permanent injunctive
relief is necessary or desirable in order to prevent a Party from acting
contrary to this Agreement or to prevent irreparable harm prior to a
confirmation of an arbitration award, including without limitation as provided
under Section 14(h) hereof, then either Party is authorized and entitled to
commence a lawsuit solely to obtain equitable relief against the other pending
the completion of the arbitration in a court having jurisdiction over the
Parties. All rights and remedies of the parties shall be cumulative and in
addition to any other rights and remedies obtainable from arbitration.

 

e. Severability. In the event that any court or arbitrator finds or holds any
restriction contained in this Agreement, including the Restrictive Covenants, to
be unreasonable, invalid, or unenforceable, then it is the express intent of the
Parties that the court or arbitrator so holding shall modify or amend the
offending restriction or restrictions in any reasonable fashion so as to render
it or them enforceable to the fullest extent possible under prevailing law. In
the event that any restriction is deemed void and unenforceable and not suitable
or capable of being so modified, then such restriction shall be severed. Each
term and provision of this Agreement is and shall be construed as severable in
whole or in part, and, if any provision or the application thereof to particular
circumstances should be invalid, illegal, or unenforceable, then the remaining
terms and provisions shall not be affected and shall remain fully enforceable.
An adjudication or finding of invalidity or unenforceability for one
jurisdiction of any particular provision shall not invalidate or void such
provision in any other jurisdiction. It is the express intent of the Parties
that all restrictions imposed by this Agreement be construed and applied to
avoid legal nullities and with a view towards enforcement whenever possible

 

14. Miscellaneous.

 

a. Time of the Essence. Time is of the essence with respect to this Agreement.
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall not be a business day (i.e, a
Saturday, Sunday or federal holiday), then such action may be taken or such
right may be exercised on the next succeeding business day.

 

b. Entire Agreement. This Agreement constitutes the entire understanding or
agreement between the Company and the Executive relating to the subject matter
hereof and there is no understanding or agreement, oral or written, which is not
set forth herein. This Agreement supersedes and replaces any prior employment
agreement or understanding, oral or written, between the Company and the
Executive. This Agreement may only be amended by a writing signed by the Company
and the Executive.

 

c. Waiver. No provision of this Agreement may be waived, modified, supplemented
or amended except in a written instrument signed by the Parties. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any Party to exercise any
right hereunder in any manner impair the exercise of any such right.

 

d. Construction. In the event of a conflict or ambiguity created between the
Company’s current personnel manual for all employees and this Agreement, it is
agreed that this Agreement shall control. No policies, procedures, or statements
of any nature by the Company shall modify this Agreement or be construed to
create express or implied obligations to the Executive. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. The Parties agree that
each of them and/or their respective counsel have reviewed and had an
opportunity to revise this Agreement and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting Party shall not be employed in the interpretation of this Agreement or
any amendments thereto. The word “including” shall be construed to include the
words “without limitation.” In this Agreement, unless the context otherwise
requires, references to the singular shall include the plural and vice versa.
The word “Company” shall be construed to include the Company and its
subsidiaries and affiliates, whether now existing or hereafter established.

 

15

 

 

e. Notices. All notices and other communications hereunder shall be in writing,
and shall be deemed to have been duly given if delivered personally or if sent
by overnight courier or by certified mail, return receipt requested, postage
prepaid, to the relevant address set forth below, or to such other address as
the recipient of such notice or communication shall have specified in writing to
the other Party hereto, in accordance with this Section 14(e).

 

  i. If to the Company:   Surna Inc.       1780 55th Street, Suite A      
Boulder, Colorado 80301       Attention: CEO

 

ii. If to the Executive, at the Executive’s last residence shown on the records
of the Company.

 

f. Public Announcements. The Company intends to publicly announce and disclose
this Agreement and the subject matter hereof in accordance with applicable laws.
Until such time as the Company has publicly announced and/or disclosed this
Agreement and the subject matter hereof, the Executive shall not publicly
announce or disclose to any third party the existence of this Agreement or the
subject matter hereof.

 

g. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Colorado, without regard to the principles of conflicts of law thereof.

 

h. Equitable Relief. The Executive acknowledges and agrees that, notwithstanding
anything herein to the contrary, including without limitation Section 13(d)
hereof, upon any breach by the Executive of the Executive’s obligations under
Section 11, the Company will have no adequate remedy at law, and accordingly
shall be immediately entitled to specific performance and other appropriate
injunctive and equitable relief in a court of competent jurisdiction.

 

i. Cooperation in Future Matters. The Executive hereby agrees that for a period
of eighteen (18) months following the Executive’s termination of employment, the
Executive shall cooperate fully with the Company’s reasonable requests relating
to matters that pertain to the Executive’s employment by the Company, including,
without limitation, providing information or limited consultation as to such
matters, participating in legal proceedings, investigations or audits on behalf
of the Company, or otherwise making himself reasonably available to the Company
for other related purposes. Any such cooperation shall be performed at scheduled
times taking into consideration the Executive’s other commitments. The Executive
shall not be required to perform such cooperation to the extent it conflicts
with any requirements of exclusivity of services for another employer or
otherwise, nor in any manner that in the good faith belief of the Executive
would conflict with the Executive’s rights under or ability to enforce this
Agreement.

 

j. Withholding. Any payments provided for in this Agreement shall be paid net of
any applicable income tax withholding required under federal, state or local
law.

 

k. Survival. Notwithstanding anything in this Agreement or elsewhere to the
contrary, the provisions of Sections 9, 10, 11, 12, 13 and 14 shall survive the
termination of the Executive’s employment or this Agreement.

 

l. Execution and Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. ESIGN Act of 2000, e.g., www.docusign.com) or
other transmission method and any counterpart so delivered shall be deemed to
have been duly and validly delivered and be valid and effective for all
purposes.

 

[Remainder of this page intentionally left blank. Signature page follows.]

 

16

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year written below.

 

EXECUTIVE   COMPANY         Surna Inc.         /s/ Chris Bechtel   By: /s/
Timothy J. Keating Chris Bechtel, Individually     Timothy J. Keating, Chairman
of the Board  

 

[Signature Page to Executive Employment Agreement]

 

   

 

 

EXHIBIT A

 

Permitted Activities

 

Bechtel Consulting, LLC – during the Term, the Executive will not engage in or
provide any consulting services either individually or through Bechtel
Consulting, LLC without the prior approval of the Board.

 

Ravencrest Resources, Inc. (CSE: RVT) – during the Term, the Executive may act
as an independent director of Ravencrest Resources, provided that the Board may
require the Executive to resign from such director position if such position
creates a conflict of interest with the Company or requires more than ten (10)
hours per month.

 

   

 

 

EXHIBIT B

 

Form of Restricted Stock Unit Agreement