Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
July 6, 2016 (the “Effective Date”), by and between CV SCIENCES INC., a Delaware
corporation (the "Company"), and MICHAEL J. MONA, JR. ("Executive").

 

Recitals

 

A.         The Company operates two distinct business segments: a specialty
pharmaceutical division focused on developing and commercializing novel
therapeutics utilizing synthetic Cannabidiol (“CBD”); and, a consumer product
division in manufacturing, marketing and selling plant-based CBD product to a
range of market sectors.

 

B.        Executive is the Founder, President and Chief Executive Officer of the
Company, and Executive and the Company desire to set forth the terms and
conditions of the Executive's employment by the Company.

 

Agreement

 

NOW, THEREFORE, in consideration of these premises, the mutual covenants and
agreements of the parties hereunder, and for other good and valuable
consideration the sufficiency and receipt of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

1.        Employment and Duties.

 

1.1               Position. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, as President and Chief Executive
Officer of the Company.

 

1.2               Duties. Executive agrees to devote his best efforts, and shall
have primary responsibility within the Company, to act as the senior executive
of the Company and have responsibility for the effective operation of the
Company, the overall leadership and strategic directions of the Company, and to
perform such other duties assigned to him by the Board of Directors of the
Company (the "Board of Directors"). Executive shall perform his duties in a
trustworthy, businesslike and loyal manner.

 

1.3               Reporting. Executive shall report to the Board of Directors.

 

1.4               Place of Employment. Executive shall perform his services
hereunder at the Company's Las Vegas, NV and San Diego, CA offices. Executive's
primary office shall be in Las Vegas, NV, however, Executive shall spend a
portion of his time in the Company's primary office for operations and for
certain executive functions of the Company located in San Diego, CA.

 

1.5               Change of Duties. The duties of Executive may be modified from
time to time by the mutual consent of the Company and Executive without
resulting in a rescission of this Agreement. The mutual written consent of the
Company and Executive shall constitute execution of that modification.
Notwithstanding any such change, the employment of Executive shall be construed
as continuing under this Agreement as so modified.

 

1.6                  Devotion of Time to Company's Business. During the Term of
this Agreement (as such term is defined in Section 1.7 hereof), Executive agrees
(i) to devote substantially all of his productive time, ability and attention to
the business of the Company during normal working hours, (ii) not to engage in
any other business duties or business pursuits whatsoever which conflict with
his duties to the Company, (iii) whether directly or indirectly, not to render
any services of a commercial or professional nature to any individual, trust,
partnership, company, corporation, business, organization, group or other entity
(each, a "Person") which conflict with his duties to the Company, whether for
compensation or otherwise, without the prior written consent of the Board of
Directors, and (iv) whether directly or indirectly, not to acquire, hold or
retain more than a one percent (1%) interest in any business competing with or
similar in nature to the business of the Company or any of its Affiliates (as
such term is defined below); provided, however, the expenditure of reasonable
amounts of time for other matters and charitable, educational and professional
activities or, subject to the foregoing, the making of passive personal
investments shall not be deemed a breach of this Agreement or require the prior
written consent of the Company if those activities do not materially interfere
with the services required of Executive under this Agreement. For purposes of
this Agreement, "Affiliates" shall mean any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Company.

 

 

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1.7                Term. Unless sooner terminated as provided in Section 4
hereof, the term of this Agreement shall commence on the Effective Date and
shall continue through December 31, 2018 (the "Term”). The Company and Executive
shall consult on extension of the Term as soon as reasonably practicable in the
month of September 2018 but neither the Company nor Executive shall be under any
obligation to extend the Term. The Term, together with any extensions or renewal
terms shall be referred to in this Agreement as the "Term of this Agreement."

 

1.8                Observance of Company Rules. Regulations and Policies.
Executive shall duly, punctually and faithfully perform and observe any and all
rules, regulations and policies which the Company may now or hereafter
reasonably establish governing the conduct of its business or its employees to
the extent such rules, regulations and policies are not in conflict with this
Agreement. Executive shall promptly provide written notice to the Board of
Directors of any such apparent conflict of which Executive becomes aware.

 

1.9                Intellectual Property. Executive hereby assigns and agrees to
assign in the future to the Company all Executive’s right, title and interest in
and to any and all such work products and designs (whether or not patentable or
registerable under copyright or similar statutes) made or conceived or reduced
to practice or learned by Executive, either individually or jointly with others,
during Executive’s employment with the Company (“Intellectual Property”).

 

2.       Compensation.

 

2.1                  Base Salary. During the Term of this Agreement, the Company
shall pay to Executive or his nominee an annual base salary in such amounts as
the Compensation Committee of the Board of Directors (the "Compensation
Committee") shall recommend to the full Board of Directors for approval (the
"Base Salary") and the Base Salary for 2016 shall initially be set at $330,000,
commencing on the date Executive, as the Chief Executive Officer, reasonably
determines such increase from Executive’s current salary of $300,000 is prudent,
payable in accordance with the Company's standard payroll procedures in effect
at the time of payment. The Company shall withhold from any payroll or other
amounts payable to Executive pursuant to this Agreement all federal, state, city
or other taxes and contributions as are required pursuant to any law or
governmental regulation or ruling now applicable or that may be enacted and
become applicable in the future.

 

2.2                 Performance Bonuses. In addition to the Base Salary, the
Company may pay to Executive, or his nominee, annual bonuses based on the
Company's performance and/or Executive's performance (“Annual Bonus”) as
follows:

 

(a)             Bonus based on Achievement of Annual Performance Goals. Based
upon performance of the Company as reflected by satisfaction of the performance
goals listed in Exhibit A, attached hereto, the Company may pay Executive, or
his nominee, a bonus in addition to Base Salary in such amount as may be
determined by the Board of Directors.

 

(b)            Establishment of Annual Bonus Performance Goals. The Company may
propose new performance goals for purposes of determining additional annual
bonuses payable to Executive, or his nominee, in consultation with Executive.

 

The targeted amount of the Annual Bonus shall be 60% of Executive’s then
effective Base Salary; provided, however, that the payment and amount of any
Annual Bonus shall be in the sole discretion of the Board of Directors.

 

2.3               Stock Options.

 

(a)                The Company and Executive acknowledge that on July 6, 2016,
the Board approved upon recommendation by the Compensation Committee the
issuance of stock options to Executive to purchase 6,000,000 shares of the
Common Stock of the Company (the “Stock Options”). The Stock Options shall be
issued to Executive under applicable exemptions from securities law
registration, and shall not be issued under the Company’s Amended and Restated
2013 Equity Incentive Plan (“Plan”). Executive has had the opportunity to
consult with his financial and tax advisors regarding the Stock Options and,
particularly, the tax and other financial effect and results of Executive
receiving stock options outside of the Plan.

 

 

 

 

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(b)               The Stock Options shall vest and become exercisable solely
upon achievement of the organizational performance goals set forth in Exhibit B
attached hereto, or as more particularly set forth in Section 4.7 hereof.

 

(c)                In the event of a sale of the Company or other change of
control transaction (as customarily defined and set forth in Executive’s Stock
Option Grant to be delivered concurrently herewith), or upon a Disposition
Event, as defined under the Agreement and Plan of Reorganization dated December
30, 2015 by and among CannaVest Corp., CannaVest Merger Sub, Inc., CannaVest
Acquisition LLC, CanX, Inc. and The Starwood Trust, the Stock Options shall
immediately vest and become exercisable.

 

2.4                      Incentive Plans. In addition to all other benefits and
compensation provided by this Agreement, Executive shall be eligible to
participate in such of the Company's equity, compensation and incentive plans as
are generally available to any of the management executives of the Company,
including without limitation any executive and performance bonus or incentive
plans.

 

2.5                      Vacation. Executive shall be entitled to such annual
vacation time with full pay as the Company may provide in its standard policies
and practices for any other management executives; provided, however, that in
any event Executive shall be entitled to a minimum of twenty (20) days annual
paid vacation time exclusive of holidays.

 

2.6               Directors and Officers Liability Insurance. Executive shall be
entitled to participation in, and have the benefit of directors’ and officers’
liability insurance providing coverage consistent with standards in the life
science industry.

 

2.7               Term Life Insurance. The Company shall pay directly to the
insurance carrier the cost of premiums due on a term life insurance in the
amount of $5,000,000, with such beneficiary or beneficiaries thereunder as may
be designated from time to time by Executive. The Company shall reimburse
Executive all amounts to maintain such policy in full force and effect during
the Term of this Agreement.

 

2.8               Disability Insurance. The Company shall procure and maintain a
disability insurance policy and the Company shall pay the premiums due on such
policy and maintain such policy in full force and effect during the Term of this
Agreement.

 

2.9               Outside Counsel for Executive. In order for Executive to have
the benefit of counsel to advise and counsel Executive with respect to this
Agreement, the Company shall pay the reasonable attorneys' fees and expenses
incurred by Executive in connection with such advice and counsel and the
drafting and execution of this Agreement.

 

2.10           Other Benefits. Executive shall participate in and have the
benefits of all present and future vacation, holiday, paid leave, unpaid leave,
life, accident, disability, dental, vision and health insurance plans, pension,
profit-sharing and savings plans and all other plans and benefits which the
Company now or in the future from time to time makes available to any of its
management executives.

 

2.11           Withholding. The parties shall comply with all applicable legal
withholding requirements in connection with all regular monthly and/or
bi-monthly compensation payable to Executive hereunder.

 

3.        Expense Reimbursement. The Company shall reimburse Executive for all
business travel and other out-of-pocket expenses reasonably incurred by
Executive in the course of performing his duties under this Agreement. All
reimbursable expenses shall be appropriately documented and shall be in
reasonable detail and in a format and manner consistent with the Company's
expense reporting policy, as well as applicable federal and state tax record
keeping requirements.

 

 

 

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4.        Termination and Rights on Termination. This Agreement shall terminate
upon the occurrence of any of the following events:

 

4.1               Death. Upon the death of Executive, the Company shall, within
thirty (30) days of receiving notice of such death, pay Executive's estate or
its nominee all salary and other compensation hereunder, then due and payable
and all accrued vacation pay and bonuses, if any, in each case payable or
accrued through the date of death. In addition, the Company shall pay
Executive's estate, or its nominee, at the time or times otherwise payable under
the terms of this Agreement, all salary and accrued benefits that would have
been payable hereunder by the Company to Executive during the one-year period
immediately following Executive's death. Any payment due under this Section 4.1
may be funded by one or more policies of life insurance to be purchased by the
Company and which provide for a benefit in the amount payable to Executive as
beneficiary under such policy or policies equal to that due Executive under this
Section. In the event the Company purchases such policy or policies and
thereafter maintains such policy or policies in continuous and full force and
effect during the term hereof, then Executive agrees to look solely to such
policy or policies for payment of any amount due hereunder; provided, however,
that in the event the Company does not purchase such policy or policies and
thereafter maintain such policy or policies in continuous and full force and
effect during term hereof, then the Company shall be directly and fully
obligated to Executive for such payment.

 

4.2               Disability. Upon the mental or physical Disability (as such
term is defined below) of Executive, the Company shall, within thirty (30) days
following the determination of Disability, pay Executive or his nominee all
salary then due and payable and all accrued vacation pay and bonuses, if any, in
each case payable or accrued through the date of determination. In addition, the
Company shall pay all salary and accrued benefits that would have been payable
hereunder by the Company to Executive (or his nominee) during the one-year
period immediately following Executive's disability. For purposes of this
Agreement, "Disability" shall mean a physical or mental condition, verified by a
physician designated by the Company, which prevents Executive from carrying out
one or more of the material aspects of his assigned duties for at least ninety
(90) consecutive days, or for a total of ninety (90) days in any six (6) month
period. Any payment due under this Section 4.2 may be funded by one or more
policies of disability insurance to be purchased by the Company and which
provide for a benefit in the amount payable to Executive as beneficiary under
such policy or policies equal to that due Executive under this Section. In the
event the Company purchases such policy or policies and thereafter maintains
such policy or policies in continuous and full force and effect during the term
hereof, then Executive agrees to look solely to such policy or policies for
payment of any amount due hereunder; provided, however, that in the event the
Company does not purchase such policy or policies and thereafter maintain such
policy or policies in continuous and full force and effect during term hereof,
then the Company shall be directly and fully obligated to Executive for such
payment.

 

4.3               Termination by the Company for Cause. Upon delivery by the
Board to Executive of a written notice terminating this Agreement for Cause (as
such term is defined below), which notice shall be supported by a reasonably
detailed statement of the relevant facts and reasons for termination, the
Company shall, within thirty (30) days following such termination, pay Executive
or his nominee all salary then due and payable through the date of termination.
Executive shall not be entitled to any severance compensation or any accrued
vacation pay or bonuses. For purposes of this Agreement, "Cause" shall mean:

 

(a)                Executive shall have committed an act of fraud, embezzlement
or theft with respect to the property or business of the Company, in any such
event in such a manner as to cause material loss, damage or injury to the
Company;

 

(b)               Executive shall have materially breached this Agreement as
determined by the Board and such breach shall have continued for a period of
twenty (20) days after receipt of written notice from the Board specifying such
breach;

 

(c)                Executive shall have been grossly negligent in the
performance of his duties hereunder, intentionally not performed or
mis-performed any of such duties, or refused to abide by or comply with the
reasonable and lawful directives of the Board of Directors, in each case as
reasonably determined by the Board, which action shall have continued for a
period of twenty (20) days after receipt of written notice from the Board
demanding such action cease or be cured; or

 

 

 

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(d)               Executive shall have been found guilty of, or has plead nolo
contendere to, the commission of a felony offense or other crime involving moral
turpitude.

 

4.4               Termination by the Company Without Cause. In the event the
Board delivers to Executive a written notice terminating Executive's employment
under this Agreement for any reason without Cause, the Company shall continue to
pay Executive or his nominee all salary, benefits, bonuses and other
compensation that would be due hereunder through the end of the Term of this
Agreement had the Company not terminated Executive's employment, but in any
event not less than one-year after the date of such termination, with such
amounts payable in accordance with the Company’s standard payroll.

 

4.5               Voluntary Termination by Executive. Thirty (30) days after
delivery by Executive to the Company of a written notice terminating this
Agreement for any reason without Good Reason, within thirty (30) days following
the effective date of termination, the Company shall pay Executive or his
nominee all salary then due and payable through the date of termination.
Executive shall not be entitled to any severance compensation or any accrued
vacation pay or bonuses.

 

4.6               Termination by Executive for Good Reason. Thirty (30) days
after delivery by Executive to the Company of a written notice terminating this
Agreement for Good Reason (as such term is defined below), the Company shall pay
Executive or his nominee such amounts in such manner as provided for in Section
4.4 hereof. For purposes of this Agreement, "Good Reason" shall mean:

 

(a)           The assignment of Executive to any duties inconsistent with, or
any adverse change in, Executive's positions, duties, responsibilities,
functions or status with the Company, or the removal of Executive from, or
failure to reelect Executive to, any of such positions; provided, however, that
a change in Executive's positions, duties, responsibilities, functions or status
that Executive shall agree to in writing shall not be an event of Good Reason or
give rise to termination under this Section 4.6;

 

(b)           A reduction by the Company of Executive's Base Salary without his
written consent;

 

(c)          The failure by the Company to continue in effect for Executive any
material benefit provided herein or otherwise available to any of the management
executives of the Company, including without limitation, any retirement, pension
or incentive plans, life, accident, disability or health insurance plans, equity
or cash bonus plans or savings and profit sharing plans, or any action by the
Company which would adversely affect Executive's participation in or reduce
Executive's benefits under any of such plans or deprive Executive of any fringe
benefit enjoyed by Executive; or

 

(d)         Any other material breach by the Company of this Agreement which is
not cured within twenty (20) days of delivery of written notice thereof by
Executive to the Company.

 

4.7               Effect of Termination; Executive's Stock Options.

 

(a)                All rights and obligations of the Company and Executive under
this Agreement shall cease as of the effective date of termination, except that
the obligations of the Company under this Section 4 and Executive's obligations
under Sections 5 and 6 hereof shall survive such termination in accordance with
their respective terms.

 

 

 

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(b)               In addition, notwithstanding anything to the contrary
contained herein or in any agreement with respect thereto, (i) upon termination
of Executive's employment pursuant to Sections 4.3 or 4.5 (termination with
Cause or voluntary termination without Good Reason) all Stock Options, other
equity options, restricted equity grants and similar rights held by Executive
with respect to securities of the Company, shall stock opt to the extent not
then fully vested, immediately terminate and revert to the Company, (ii) upon
termination of Executive's employment pursuant to Section 4.4 or Section 4.6
(termination without Cause or voluntary termination with Good Reason), all Stock
Options, other equity options, restricted equity grants and similar rights held
by Executive with respect to securities of the Company shall, remain in full
force and effect and shall not be affected by such termination, and shall
continue to vest based upon the organizational performance goals set forth in
Exhibit B, and (iii) upon termination of Executive's employment pursuant to
Section 4.1 or Section 4.2 (Executive’s death or Disability), all Stock Options,
other equity options, restricted equity grants and similar rights held by
Executive with respect to securities of the Company shall, to the extent not
then fully vested, immediately become fully vested.

 

4.8               No Termination by Merger; Transfer of Assets or Dissolution.
This Agreement shall not be terminated by any dissolution of the Company
resulting from either merger or consolidation in which the Company is not the
consolidated or surviving corporation or other entity or transfer of all or
substantially all of the assets of the Company. In such event, the rights,
benefits and obligations herein shall automatically be deemed to be assigned to
the surviving or resulting corporation or other entity or to the transferee of
the assets, as the case may be, with the consent of Executive.

 

4.9               Non-Disparagement. During the Term and at all times
thereafter, Executive agrees not to make or solicit or encourage others to make
or solicit directly or indirectly any disparaging, derogatory or negative
statement or communication, oral or written, about the Company or its business
practices, programs, products, services, operations, policies, activities,
current or former officers, directors, managerial personnel, or other employees,
or its customers to any other person or entity; provided, however, that such
restriction shall not prohibit truthful testimony compelled by valid legal
process or to the extent made in connection with filing or asserting any claims
relating to employment. The Company agrees not to make any disparaging,
derogatory or negative statement or communication, oral or written, about
Executive; provided, however, that such restriction shall not prohibit truthful
testimony compelled by valid legal process. Notwithstanding anything herein to
the contrary, nothing in this Section 4.11 shall prevent any party to this
Agreement from exercising its or his authority or enforcing its or his rights or
remedies hereunder or that such party may otherwise be entitled to enforce or
assert under another agreement or applicable law, or limit such rights or
remedies in any way.

 

5.        Restriction on Competition.

 

5.1              Covenant Not to Compete. During the Term of this Agreement and
for a period of twelve (12) months from the termination of this Agreement,
Executive shall not, without the prior written consent of the Company, either
directly or indirectly, for himself or on behalf of or in conjunction with any
other Person if such activities would necessarily involve the disclosure or use
of any of the Company’s trade secrets, confidential or other proprietary
information (i) own, manage, operate, control, be employed by, participate in,
render services to, or be associated in any manner with the ownership,
management, operation or control of, any business similar to the type of
business conducted by the Company or any of its Affiliates within any of the
geographic territories in which the Company or any of its Affiliates conducts
business, (ii) solicit business of the same or similar type being carried on by
the Company or any of its Affiliates from any Person known by Executive to be a
customer of the Company or any of its Affiliates, whether or not Executive had
personal contact with such Person during and by reason of Executive's employment
with the Company, or (iii) endeavor or attempt in any way to interfere with or
induce a breach of any contractual relationship that the Company or any of its
Affiliates may have with any employee, customer, contractor, supplier,
representative or distributor.

 

 

 

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5.2              No Breach for Activities Deemed Not Competitive. It is further
agreed that, in the event that Executive shall cease to be employed by the
Company and enter into a business or pursue other activities that, at such time,
are not in competition with the Company or any of its Affiliates, Executive
shall not be chargeable with a violation of this Section 5 if the Company
subsequently enters the same (or a similar) competitive business or activity. In
addition, if Executive has no actual knowledge that his actions violate the
terms of this Section 5, Executive shall not be deemed to have breached the
restrictive covenants contained herein if, promptly after being notified by the
Company of such breach, Executive ceases the prohibited actions.

 

5.3              Severability. The covenants in this Section 5 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any provision of this Section 5 relating to
the time period or geographic area of the restrictive covenants shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or geographic area, as applicable, that such court deems reasonable and
enforceable, such time period or geographic area shall be deemed to be, and
thereafter shall become, the maximum time period or largest geographic area that
such court deems reasonable and enforceable and this Agreement shall
automatically be considered to have been amended and revised to reflect such
determination.

 

5.4              Fair and Reasonable. Executive has carefully read and
considered the provisions of this Section 5 and, having done so, agrees that the
restrictive covenants in this Section 5 impose a fair and reasonable restraint
on Executive and are reasonably required to protect the interests of the
Company, its Affiliates and their respective officers, directors, employees and
stockholders. It is further agreed that the Company and Executive intend that
such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company throughout the term of these
covenants.

 

6.        Confidential Information.

 

6.1               Confidential Information. Executive hereby agrees to hold in
strict confidence and not to disclose to any third party, other than employees
and agents of the Company or persons retained by the Company to represent its
interests, any of the valuable, confidential and proprietary business,
financial, technical, economic, sales and/or other types of proprietary business
information relating to the Company or any of its Affiliates (including all
trade secrets) in whatever form, whether oral, written, or electronic
(collectively, the "Confidential Information"), to which Executive has, or is
given (or has had or been given), access during the course of his employment
with the Company. It is agreed that the Confidential Information is confidential
and proprietary to the Company because such Confidential Information encompasses
technical know-how, trade secrets, or technical, financial, organizational,
sales or other valuable aspects of the business and trade of the Company or its
Affiliates, including without limitation, technologies, products, processes,
plans, clients, personnel, operations and business activities. This restriction
shall not apply to any Confidential Information that (a) becomes known generally
to the public through no fault of the Executive, (b) is required by applicable
law, legal process, or any order or mandate of a court or other governmental
authority to be disclosed, or (c) is reasonably believed by Executive, based
upon the advice of legal counsel, to be required to be disclosed in defense of a
lawsuit or other legal or administrative action brought against Executive;
provided, however, that in the case of clause (b) or (c), Executive shall give
the Company reasonable advance written notice of the Confidential Information
intended to be disclosed and the reasons and circumstances surrounding such
disclosure, in order to permit the Company to seek a protective order or other
appropriate request for confidential treatment of the applicable Confidential
Information.

 

6.2               Return of Company Property. In the event of termination of
Executive's employment with the Company for whatever reason or no reason, (a)
Executive agrees not to copy, make known, disclose or use, any of the
Confidential Information without the Company's prior written consent, and (b)
Executive or Executive's personal representative shall return to the Company (i)
all Confidential Information, (ii) all other records, designs, patents, business
plans, financial statements, manuals, memoranda, lists, correspondence, reports,
records, charts, advertising materials and other data or property delivered to
or compiled by Executive by or on behalf of the Company or its respective
representatives, vendors or customers that pertain to the business of the
Company or any of its Affiliates, whether in paper, electronic or other form,
and (iii) all keys, credit cards, vehicles and other property of the Company.
Executive shall not retain or cause to be retained any copies of the foregoing.
Executive hereby agrees that all of the foregoing shall be and remain the
property of the Company and the applicable Affiliates and be subject at all
times to their discretion and control.

 

 

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7.        Corporate Opportunities.

 

7.1               Duty to Notify. During the Term of this Agreement, in the
event that Executive shall become aware of any business opportunity related to
the business of the Company, Executive shall promptly notify the Board of
Directors of such opportunity. Executive shall not appropriate for himself or
for any other Person other than the Company (or any Affiliate) any such
opportunity unless, as to any particular opportunity, the Board of Directors
fails to take appropriate action within thirty (30) days. Executive's duty to
notify the Board of Directors and to refrain from appropriating all such
opportunities for thirty (30) days shall neither be limited by, nor shall such
duty limit, the application of the general laws relating to the fiduciary duties
of an agent or employee.

 

7.2               Failure to Notify. In the event that Executive fails to notify
the Board of Directors or so appropriates any such opportunity without the
express written consent of the Board of Directors, Executive shall be deemed to
have violated the provisions of this Section notwithstanding the following:

 

(a)                The capacity in which Executive shall have acquired such
opportunity; or

 

(b)               The probable success in the hands of the Company of such
opportunity.

 

8.        No Prior Agreements. Executive hereby represents and warrants to the
Company that the execution of this Agreement by Executive, his employment by the
Company, and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer or any other Person. Further,
Executive agrees to indemnify and hold harmless the Company and its officers,
directors and representatives for any claim, including, but not limited to,
reasonable attorneys' fees and expenses of investigation, of any such third
party that such third party may now have or may hereafter come to have against
the Company or such other persons, based upon or arising out of any
non-competition agreement, invention, secrecy or other agreement between
Executive and such third party that was in existence as of the effective date of
this Agreement. To the extent that Executive had any oral or written employment
agreement or understanding with the Company, this Agreement shall automatically
supersede such agreement or understanding, and upon execution of this Agreement
by Executive and the Company, such prior agreement or understanding
automatically shall be deemed to have been terminated and shall be null and
void.

 

9.        Representation. Executive acknowledges that he (a) has reviewed this
Agreement in its entirety, (b) has had an opportunity to obtain the advice of
separate legal counsel prior to executing this Agreement, and (c) fully
understands all provisions of this Agreement.

 

10.        Assignment: Binding Effect. Executive understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, that he
cannot assign or delegate all or any portion of his performance under this
Agreement. This Agreement may not be assigned or transferred by the Company
without the prior written consent of Executive. Subject to the preceding two
sentences, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors, and assigns. Notwithstanding the foregoing, if
Executive accepts employment with an Affiliate, unless Executive and his new
employer agree otherwise in writing, this Agreement shall automatically be
deemed to have been assigned to such new employer (which shall thereafter be an
additional or substitute beneficiary of the covenants contained herein, as
appropriate), with the consent of Executive, such assignment shall be considered
a condition of employment by such new employer, and references to the "Company"
in this Agreement shall be deemed to refer to such new employer.

 

11.        Complete Agreement; Waiver: Amendment. Executive has no oral
representations, understandings or agreements with the Company or any of its
officers, directors or representatives covering the same subject matter as this
Agreement. This Agreement is the final, complete and exclusive statement and
expression of the agreement between the Company and Executive with respect to
the subject matter hereof and thereof, and cannot be varied, contradicted, or
supplemented by evidence of any prior or contemporaneous oral or written
agreements. This Agreement may not be later modified except by a further writing
signed by a duly authorized officer of the Company and Executive, and no term of
this Agreement may be waived except by writing signed by the party waiving the
benefit of such term.

 

 

 

 8 

 

 

12.        Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be given or made by personally delivering the same to or sending the same
by prepaid certified or registered mail, return receipt requested, or by
reputable overnight courier, or by facsimile machine to the party to which it is
directed at the address set out on the signature page to this Agreement, with
copies to counsel as indicated, or at such other address as such party shall
have specified by written notice to the other party as provided in this Section,
and shall be deemed to be given if delivered personally at the time of delivery,
or if sent by certified or registered mail as herein provided three (3) days
after the same shall have been posted, or if sent by reputable overnight courier
upon receipt, or if sent by facsimile machine as soon as the sender receives
written or telephonic confirmation that the facsimile was received by the
recipient and such facsimile is followed the same day by mailing by prepaid
first class mail.

 

13.        Severability: Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid and inoperative. This
severability provision shall be in addition to, and not in place of, the
provisions of Section 5.3 above. The Sections headings herein are for reference
purposes only and are not intended in any way to describe, interpret, define or
limit the extent or intent of this Agreement or of any part hereof.

 

14. Equitable Remedy. Because of the difficulty of measuring economic losses to
the Company as a result of a breach of the restrictive covenants set forth in
Sections 5 and 6 hereof, and because of the immediate and irreparable damage
that would be caused to the Company for which monetary damages would not be a
sufficient remedy, it is hereby agreed that in addition to all other remedies
that may be available to the Company or Executive at law or in equity, the
Company or Executive shall be entitled to specific performance and any
injunctive or other equitable relief as a remedy for any breach or threatened
breach of the aforementioned restrictive covenants.

 

15.        Arbitration. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. Notwithstanding the foregoing, the Company shall be
entitled to seek injunctive or other equitable relief, as contemplated by
Section 14 hereof, from any court of competent jurisdiction, without the need to
resort to arbitration. Should judicial proceedings be commenced to enforce or
carry out this provision or any arbitration award, the prevailing party in such
proceedings shall be entitled to reasonable attorneys' fees and costs in
addition to other relief.

 

16.        Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of California, without regard to its conflict
of flaws principles.

 

17.        Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties to
this Agreement, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

 

18.        Signatures. The parties shall be entitled to rely upon and enforce a
facsimile of any authorized signatures as if it were the original.

 

 

[Signatures on following page.]

 

 

 

 9 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

COMPANY:

 

CV SCIENCES, INC.

 

By: /s/ James McNulty

Name (print): James McNulty

Its: Director and Chairman of the Compensation Committee of the Board of
Directors

 

 

Address for Notices:

 

2688 South Rainbow Boulevard, Suite B

Las Vegas, NV 89146

 

 

 

EXECUTIVE:

 

MICHAEL J. MONA, JR.

 

 

(sign): /s/ Michael Mona, Jr.

 

Address for Notices:

 

Michael J. Mona, Jr.

2688 South Rainbow Boulevard, Suite B

Las Vegas, NV 89146

 

With a copy (not constituting notice) to:

 

Terry A. Coffing

Marquis Aurbach Coffing

10001 Park Run Drive

Las Vegas, Nevada 89145

 

 

 

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Exhibit A

 

2016 Performance Goals

 

Consumer Products Division

·                  Achieve 90% of revenue target

·                  Launch four new products in Consumer Products division

·                  Achieve distribution in 850 Natural Product stores

 

Drug Development Division

·                  Preclinical plan developed and completed

·                  Pre IND meeting completed

·                  IND ready for submission

 

Corporate Goals

·                  Begin “up list” process with NYSE-MKT or Nasdaq

·                  Complete new financing ($5-$10M range) - repay existing $3M
debt and provide working capital

·                  Address Item 9 Controls from 2015 10-K, including
implementation of the 2013 version of the 1992 COSO Framework

 

 

 

 

 

 

 

 

 

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Exhibit B

 

Performance Criteria and Percentage Allocation for Option Vesting

 

·1,500,000 options the first time the Company completes development of a U.S.
Food & Drug Administration (“FDA”) current good manufacturing practice grade
batch of successfully synthetically formulated CBD for use in drug development
activities;    

·1,500,000 options the first time the Company files an investigational new drug
application with the FDA in connection with a development program utilizing CBD
as the active pharmaceutical ingredient (a “CBD Drug Product”);    

·1,500,000 options the first time the Company commences a Phase I clinical trial
as authorized by the FDA for a CBD Drug Product; and    

·1,500,000 options the first time the Company commences a Phase II clinical
trial as authorized by the FDA for a CBD Drug Product.

 

Subject to acceleration of vesting as provided in Section 2.3(c) and Section
4.7(b).

 

 

 

 

 

 

 

 

 

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