Exhibit 10.2

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

Effective Date: March 1, 2017 U.S. $770,000.00

 

FOR VALUE RECEIVED, CV Sciences, Inc., a Delaware corporation (“Borrower”),
promises to pay to Iliad Research and Trading, L.P., a Utah limited partnership,
or its successors or assigns (“Lender”), $770,000.00 and any interest, fees,
charges, and late fees on the date that is fourteen (14) months after the
Purchase Price Date (the “Maturity Date”) in accordance with the terms set forth
herein and to pay interest on the Outstanding Balance at the rate of eight
percent (8%) per annum from the Purchase Price Date until the same is paid in
full. This Secured Convertible Promissory Note (this “Note”) is issued and made
effective as of March 1, 2017 (the “Effective Date”). This Note is issued
pursuant to that certain Securities Purchase Agreement dated March 1, 2017, as
the same may be amended from time to time, by and between Borrower and Lender
(the “Purchase Agreement”). All interest calculations hereunder shall be
computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day
months, shall compound daily and shall be payable in accordance with the terms
of this Note. Certain capitalized terms used herein are defined in Attachment 1
attached hereto and incorporated herein by this reference.

 

This Note carries an OID of $15,000.00. In addition, Borrower agrees to pay
$5,000.00 to Lender to cover Lender’s legal fees, accounting costs, due
diligence, monitoring and other transaction costs incurred in connection with
the purchase and sale of this Note (the “Transaction Expense Amount”), all of
which amount is included in the initial principal balance of this Note. The
purchase price for this Note shall be $750,000.00 (the “Purchase Price”),
computed as follows: $770,000.00 original principal balance, less the OID, less
the Transaction Expense Amount. The Purchase Price shall be payable by Lender by
wire transfer of immediately available funds.

 

1.                  Payment; Prepayment. Provided there is an Outstanding
Balance, on each Redemption Date (as defined below), Borrower shall pay to
Lender an amount equal to the Redemption Amount (as defined below) due on such
Redemption Date in accordance with Section 8. All payments owing hereunder shall
be in lawful money of the United States of America or Conversion Shares (as
defined below), as provided for herein, and delivered to Lender at the address
furnished to Borrower for that purpose. All payments shall be applied first to
(a) costs of collection, if any, then to (b) fees and charges, if any, then to
(c) accrued and unpaid interest, and thereafter, to (d) principal.
Notwithstanding the foregoing, so long as Borrower has not received a Lender
Conversion Notice (as defined below) or a Redemption Notice (as defined below)
from Lender where the applicable Conversion Shares have not yet been delivered
and so long as no Event of Default has occurred since the Effective Date
(whether declared by Lender or undeclared), then Borrower shall have the right,
exercisable on not less than five (5) Trading Days prior written notice to
Lender to prepay the Outstanding Balance of this Note, in full, in accordance
with this Section 1. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to Lender at its registered address and shall state:
(i) that Borrower is exercising its right to prepay this Note, and (ii) the date
of prepayment, which shall be not less than five (5) Trading Days from the date
of the Optional Prepayment Notice. Notwithstanding the foregoing, in the event
Borrower receives a Lender Conversion Notice or Redemption Notice in advance of
its delivery of an Optional Prepayment Notice to Lender, Borrower may still
prepay the Outstanding Balance of this Note, provided, that (a) Borrower
delivers its Optional Prepayment Notice prior to the Delivery Date, (b) Borrower
must deliver its Optional Prepayment Amount (defined below) within two (2)
Business Days of its Optional Prepayment Notice, and (c) subject to Borrower’s
compliance with (a) and (b), above, Borrower delivers all Lender Conversion
Shares and Redemption Conversion Shares (as defined below) required to be
delivered under the applicable Lender Conversion Notice and/or Redemption
Notice, but subject to cap of $200,000.00 on the aggregate Conversion Amount (as
defined below) and Redemption Amount that may be converted under such Lender
Conversion Notice and/or Redemption Notice (to the extent the aggregate
Conversion Amount and Redemption Amount exceed the foregoing cap, such excess
shall be included in the Outstanding Balance of this Note and may be subject to
prepayment pursuant to the aforementioned Optional Prepayment Notice). On the
date fixed for prepayment (the “Optional Prepayment Date”), Borrower shall make
payment of the Optional Prepayment Amount (as defined below) to or upon the
order of Lender as may be specified by Lender in writing to Borrower. If
Borrower exercises its right to prepay this Note, Borrower shall make payment to
Lender of an amount in cash equal to 125% multiplied by the then Outstanding
Balance of this Note (the “Optional Prepayment Amount”). Borrower may deliver
the Optional Prepayment Amount to Lender prior to the Optional Prepayment Date
or without delivering an Optional Prepayment Notice to Lender as set forth
herein without Lender’s prior written consent. In such event, and provided that
Lender has not previously delivered a Lender Conversion Notice, Borrower’s
prepayment shall be deemed effective on Lender’s receipt of the Optional
Prepayment Amount. If Borrower delivers an Optional Prepayment Notice and fails
to pay the Optional Prepayment Amount due to Lender within two (2) Trading Days
following the Optional Prepayment Date, Borrower shall forever forfeit its right
to prepay this Note.

 

 

 

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2.                  Security. This Note is secured by that certain Security
Agreement of even date herewith, as the same may be amended from time to time
(the “Security Agreement”), executed by Borrower in favor of Lender encumbering
the collateral more specifically set forth in the Security Agreement, all the
terms and conditions of which are hereby incorporated into and made a part of
this Note.

 

3.                  Lender Optional Conversion.

 

3.1.            Lender Conversion Price. Subject to adjustment as set forth in
this Note, the conversion price for each Lender Conversion (as defined below)
shall be $0.50 (the “Lender Conversion Price”).

 

3.2.            Lender Conversions. Lender has the right at any time after the
Purchase Price Date until the Outstanding Balance has been paid in full, subject
to the limitations set forth in Section 1 following Borrower’s delivery of an
Optional Prepayment Notice to Lender, at its election, to convert (each instance
of conversion is referred to herein as a “Lender Conversion”) all or any part of
the Outstanding Balance into shares (“Lender Conversion Shares”) of fully paid
and non-assessable common stock, $0.0001 par value per share (“Common Stock”),
of Borrower as per the following conversion formula: the number of Lender
Conversion Shares equals the amount being converted (the “Conversion Amount”)
divided by the Lender Conversion Price. Conversion notices in the form attached
hereto as Exhibit A (each, a “Lender Conversion Notice”) may be effectively
delivered to Borrower by any method of Lender’s choice (including but not
limited to facsimile, email, mail, overnight courier, or personal delivery), and
all Lender Conversions shall be cashless and not require further payment from
Lender. Borrower shall deliver the Lender Conversion Shares from any Lender
Conversion to Lender in accordance with Section 9 below.

 

4.                  Defaults and Remedies.

 

4.1.            Defaults. The following are events of default under this Note
(each, an “Event of Default”): (a) Borrower shall fail to pay any principal,
interest, fees, charges, or any other amount when due and payable hereunder; (b)
Borrower shall fail to deliver any Lender Conversion Shares in accordance with
the terms hereof; (c) Borrower shall fail to deliver any Redemption Conversion
Shares (as defined below) in accordance with the terms hereof; (d) a receiver,
trustee or other similar official shall be appointed over Borrower or a material
part of its assets and such appointment shall remain uncontested for twenty (20)
days or shall not be dismissed or discharged within sixty (60) days; (e)
Borrower shall become insolvent or generally fails to pay, or admits in writing
its inability to pay, its debts as they become due, subject to applicable grace
periods, if any; (f) Borrower shall make a general assignment for the benefit of
creditors; (g) Borrower shall file a petition for relief under any bankruptcy,
insolvency or similar law (domestic or foreign); (h) an involuntary proceeding
shall be commenced or filed against Borrower; (i) Borrower shall default or
otherwise fail to observe or perform any covenant, obligation, condition or
agreement of Borrower contained herein or in any other Transaction Document (as
defined in the Purchase Agreement), other than those specifically set forth in
this Section 4.1 and Section 4 of the Purchase Agreement; (j) any
representation, warranty or other statement made or furnished by or on behalf of
Borrower to Lender herein, in any Transaction Document, or otherwise in
connection with the issuance of this Note shall be false, incorrect, incomplete
or misleading in any material respect when made or furnished; (k) the occurrence
of a Fundamental Transaction without Lender’s prior written consent; (l)
Borrower shall fail to maintain the Share Reserve as required under the Purchase
Agreement; (m) Borrower effectuates a reverse split of its Common Stock without
twenty (20) Trading Days prior written notice to Lender; (n) any money judgment,
writ or similar process shall be entered or filed against Borrower or any
subsidiary of Borrower or any of its property or other assets for more than
$100,000.00, and shall remain unvacated, unbonded or unstayed for a period of
twenty (20) calendar days unless otherwise consented to by Lender; (o) Borrower
shall fail to be DWAC Eligible; or (p) Borrower shall fail to observe or perform
any covenant set forth in Section 4 of the Purchase Agreement.

 

 

 

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4.2.            Remedies. At any time and from time to time after Lender
becoming aware of the occurrence of any Event of Default, Lender may accelerate
this Note by written notice to Borrower, with the Outstanding Balance becoming
immediately due and payable in cash at the Mandatory Default Amount; provided,
however, that in the event Lender accelerates this Note and an additional Event
of Default occurs thereafter (or Lender becomes aware of an Event of Default
that occurred prior to such acceleration, but for which Borrower did not
previously accelerate this Note), the Outstanding Balance may be increased by an
additional 15% (the “Balance Increase”) upon Lender’s delivery of written notice
to Borrower (for the avoidance of doubt, the Balance Increase may not be applied
with respect to more than two (2) Events of Default (including both the initial
Event of Default that gave rise to the acceleration of this Note and one (1)
additional Event of Default as set forth herein)). Notwithstanding the
foregoing, upon the occurrence of any Event of Default described in clauses (d),
(e), (f), (g) or (h) of Section 4.1, the Outstanding Balance as of the date of
acceleration shall become immediately and automatically due and payable in cash
at the Mandatory Default Amount, without any written notice required by Lender.
At any time following the occurrence of any Event of Default, upon written
notice given by Lender to Borrower, interest shall accrue on the Outstanding
Balance beginning on the date the applicable Event of Default occurred at an
interest rate equal to the lesser of 22% per annum or the maximum rate permitted
under applicable law (“Default Interest”). For the avoidance of doubt, Lender
may continue making Lender Conversions at any time following an Event of Default
until such time as the Outstanding Balance is paid in full. Additionally,
following the occurrence of any Event of Default, Borrower may, at its option,
pay any Lender Conversion in cash instead of Lender Conversion Shares by paying
to Lender on or before the applicable Delivery Date (as defined below) a cash
amount equal to the number of Lender Conversion Shares set forth in the
applicable Lender Conversion Notice multiplied by the highest intra-day trading
price of the Common Stock that occurs during the period beginning on the date
the applicable Event of Default occurred and ending on the date of the
applicable Lender Conversion Notice. In connection with acceleration described
herein, Lender need not provide, and Borrower hereby waives, any presentment,
demand, protest or other notice of any kind, and Lender may immediately and
without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable law.
Such acceleration may be rescinded and annulled by Lender at any time prior to
payment hereunder and Lender shall have all rights as a holder of the Note until
such time, if any, as Lender receives full payment pursuant to this Section 4.2.
No such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon. Nothing herein shall limit Lender’s right
to pursue any other remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief
with respect to Borrower’s failure to timely deliver Conversion Shares upon
Conversion of the Notes as required pursuant to the terms hereof.

 

4.3.            [intentionally omitted]

 

4.4.            Certain Additional Rights. Notwithstanding anything to the
contrary herein, in the event Borrower fails to make any payment or otherwise to
deliver any Conversion Shares as and when required under this Note, then the
Lender Conversion Price for all Lender Conversions occurring after the date of
such failure to pay shall equal the lower of the Lender Conversion Price and the
Market Price as of any applicable date of Conversion. For the avoidance of
doubt, Lender’s exercise of the rights granted to it pursuant to this Section
4.3 shall not relieve Borrower of its obligation to continue paying the
Redemption Amount on all future Redemption Dates.

 

4.5.            Cross Default. A breach or default by Borrower of any covenant
or other term or condition contained in any Other Agreements shall, at the
option of Lender, be considered an Event of Default under this Note, in which
event Lender shall be entitled (but in no event required) to apply all rights
and remedies of Lender under the terms of this Note.

 

5.                  Unconditional Obligation; No Offset. Borrower acknowledges
that this Note is an unconditional, valid, binding and enforceable obligation of
Borrower not subject to offset, deduction or counterclaim of any kind. Borrower
hereby waives any rights of offset it now has or may have hereafter against
Lender, its successors and assigns, and agrees to make the payments or
Conversions called for herein in accordance with the terms of this Note.

 

6.                  Waiver. No waiver of any provision of this Note shall be
effective unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action shall
constitute a waiver of any other provision or consent to any other prohibited
action, whether or not similar. No waiver or consent shall constitute a
continuing waiver or consent or commit a party to provide a waiver or consent in
the future except to the extent specifically set forth in writing.

 

 

 

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7.                  Rights Upon Issuance of Securities.

 

7.1.            Subsequent Equity Sales. Except with respect to Excluded
Securities, and except with respect to the Wiltshire Warrant, if Borrower or any
subsidiary thereof, as applicable, at any time this Note is outstanding, shall
sell, issue or grant any Common Stock, option to purchase Common Stock, right to
reprice, preferred shares convertible into Common Stock, or debt, warrants,
options or other instruments or securities to any third party (excluding any
affiliates and/or assigns of Lender) which are convertible into or exercisable
for shares of Common Stock (collectively, the “Equity Securities”) at an
effective price per share less than the then effective Lender Conversion Price
(such issuance is referred to herein as a “Dilutive Issuance”), then, the Lender
Conversion Price shall be automatically reduced and only reduced to equal such
lower effective price per share. If the holder of any Equity Securities so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options, or rights per share which are issued in connection
with such Dilutive Issuance, be entitled to receive shares of Common Stock at an
effective price per share that is less than the Lender Conversion Price, such
issuance shall be deemed to have occurred for less than the Lender Conversion
Price on the date of such Dilutive Issuance, and the then effective Lender
Conversion Price shall be reduced and only reduced to equal such lower effective
price per share. Such adjustments described above to the Lender Conversion Price
shall be permanent (subject to additional adjustments under this section), and
shall be made whenever such Equity Securities are issued. Borrower shall notify
Lender, in writing, no later than the Trading Day following the issuance of any
Equity Securities subject to this Section 7.1, indicating therein the applicable
issuance price, or applicable reset price, exchange price, conversion price, or
other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes
of clarification, whether or not Borrower provides a Dilutive Issuance Notice
pursuant to this Section 7.1, upon the occurrence of any Dilutive Issuance, on
the date of such Dilutive Issuance the Lender Conversion Price shall be lowered
to equal the applicable effective price per share regardless of whether Borrower
or Lender accurately refers to such lower effective price per share in any
Redemption Notice or Lender Conversion Notice.

 

7.2.            Adjustment of Lender Conversion Price upon Subdivision or
Combination of Common Stock. Without limiting any provision hereof, if Borrower
at any time on or after the Effective Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the Lender Conversion
Price in effect immediately prior to such subdivision will be proportionately
reduced. Without limiting any provision hereof, if Borrower at any time on or
after the Effective Date combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Lender Conversion Price in effect immediately
prior to such combination will be proportionately increased. Any adjustment
pursuant to this Section 7.2 shall become effective immediately after the
effective date of such subdivision or combination. If any event requiring an
adjustment under this Section 7.2 occurs during the period that a Lender
Conversion Price is calculated hereunder, then the calculation of such Lender
Conversion Price shall be adjusted appropriately to reflect such event.

 

7.3.            Other Events. In the event that Borrower (or any subsidiary)
shall take any action to which the provisions hereof are not strictly
applicable, or, if applicable, would not operate to protect Lender from dilution
or if any event occurs of the type contemplated by the provisions of this
Section 7 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then Borrower’s board of directors shall in
good faith determine and implement an appropriate adjustment in the Lender
Conversion Price so as to protect the rights of Lender, provided that no such
adjustment pursuant to this Section 7.3 will increase the Lender Conversion
Price as otherwise determined pursuant to this Section 7, provided further that
if Lender does not accept such adjustments as appropriately protecting its
interests hereunder against such dilution, then Borrower’s board of directors
and Lender shall agree, in good faith, upon an independent investment bank of
nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall be
borne by Borrower.

 

 

 

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8.                  Borrower Redemptions.

 

8.1.            Redemption Conversion Price. Subject to the adjustments set
forth herein, the conversion price for each Redemption Conversion (as defined
below) (the “Redemption Conversion Price”) shall be the lesser of (a) the Lender
Conversion Price, and (b) the Market Price.

 

8.2.            Redemption Conversions. Beginning on the date that is six (6)
months after the Purchase Price Date and continuing thereafter until the
Maturity Date (each date on which Lender delivers a Redemption Notice, a
“Redemption Date”), Lender shall have the right, exercisable at any time, to
redeem a portion of the Note in any amount up to the Maximum Monthly Redemption
Amount by providing Borrower with a notice substantially in the form attached
hereto as Exhibit B (each, a “Redemption Notice”). For the avoidance of doubt,
Lender may submit to Borrower one (1) or more Redemption Notices in any given
calendar month, provided that the aggregate amount being redeemed in any
calendar month does not exceed the Maximum Monthly Redemption Amount. Upon its
receipt of a Redemption Notice, Borrower shall pay the applicable Redemption
Amount to Lender in accordance with the provisions of this Section 8. Payments
of each Redemption Amount may be made (a) in cash, or (b) by converting such
Redemption Amount into shares of Common Stock (“Redemption Conversion Shares”,
and together with the Lender Conversion Shares, the “Conversion Shares”) in
accordance with this Section 8 (each, a “Redemption Conversion”) per the
following formula: the number of Redemption Conversion Shares equals the portion
of the applicable Redemption Amount being converted divided by the Redemption
Conversion Price, or (c) by any combination of the foregoing, so long as the
cash is delivered to Lender on the second Trading Day immediately following the
applicable Redemption Date and the Redemption Conversion Shares are delivered to
Lender on or before the applicable Delivery Date. Notwithstanding the foregoing,
Borrower will not be entitled to elect a Redemption Conversion with respect to
any portion of any applicable Redemption Amount and shall be required to pay the
entire amount of such Redemption Amount in cash if on the applicable Redemption
Date there is an Equity Conditions Failure, and such failure is not waived in
writing by Lender. Notwithstanding that failure to repay this Note in full by
the Maturity Date is an Event of Default, the Redemption Dates shall continue
after the Maturity Date pursuant to this Section 8 until the Outstanding Balance
is repaid in full, provided that the aggregate Redemption Amounts in any given
calendar month following an Event of Default may exceed the Maximum Monthly
Redemption Amount.

 

8.3.            Allocation of Redemption Amounts. Following its receipt of a
Redemption Notice, Borrower may either ratify Lender’s proposed allocation in
the applicable Redemption Notice or elect to change the allocation by written
notice to Lender by email or fax within twenty-four (24) hours of its receipt of
such Redemption Notice, so long as the sum of the cash payments and the amount
of Redemption Conversions equal the applicable Redemption Amount. If Borrower
fails to notify Lender of its election to change the allocation prior to the
deadline set forth in the previous sentence, it shall be deemed to have ratified
and accepted the allocation set forth in the applicable Redemption Notice
prepared by Lender. Borrower acknowledges and agrees that the amounts and
calculations set forth thereon are subject to correction or adjustment because
of error, mistake, or any adjustment resulting from an Event of Default or other
adjustment permitted under the Transaction Documents (an “Adjustment”).
Furthermore, no error or mistake in the preparation of such notices, or failure
to apply any Adjustment that could have been applied prior to the preparation of
a Redemption Notice may be deemed a waiver of Lender’s right to enforce the
terms of any Note, even if such error, mistake, or failure to include an
Adjustment arises from Lender’s own calculation. Borrower shall deliver the
Redemption Conversion Shares from any Redemption Conversion to Lender in
accordance with Section 9 below on or before each applicable Delivery Date. If
Borrower elects to pay a Redemption Amount in cash, such payment must be
delivered on the second Trading Day immediately following the Redemption Date.
If Borrowers elects to make a payment in cash and fails to make such payment by
the required due date on two (2) separate occasions, Borrower shall lose the
right to make payments of Redemption Amounts in cash in the future without
Lender’s written consent.

 

 

 

 

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9.                  Method of Conversion Share Delivery. On or before the close
of business on the third (3rd) Trading Day following Lender’s delivery of a
Redemption Notice to Borrower or the third (3rd) Trading Day following the date
of delivery of a Lender Conversion Notice to Borrower, as applicable (the
“Delivery Date”), Borrower shall, provided it is DWAC Eligible at such time,
deliver or cause its transfer agent to deliver the applicable Conversion Shares
electronically via DWAC to the account designated by Lender in the applicable
Lender Conversion Notice or Redemption Notice. If Borrower is not DWAC Eligible,
it shall deliver to Lender or its broker (as designated in the Lender Conversion
Notice or Redemption Notice, as applicable), via reputable overnight courier, a
certificate representing the number of shares of Common Stock equal to the
number of Conversion Shares to which Lender shall be entitled, registered in the
name of Lender or its designee. For the avoidance of doubt, Borrower has not met
its obligation to deliver Conversion Shares by the Delivery Date unless Lender
or its broker, as applicable, has actually received the certificate representing
the applicable Conversion Shares no later than the close of business on the
relevant Delivery Date pursuant to the terms set forth above. Moreover, and
notwithstanding anything to the contrary herein or in any other Transaction
Document, in the event Borrower or its transfer agent refuses to deliver any
Conversion Shares to Lender on grounds that such issuance is in violation of
Rule 144 under the Securities Act of 1933, as amended (“Rule 144”), Borrower
shall deliver or cause its transfer agent to deliver the applicable Conversion
Shares to Lender with a restricted securities legend, but otherwise in
accordance with the provisions of this Section 9. In conjunction therewith,
Borrower will also deliver to Lender a written opinion from its counsel or its
transfer agent’s counsel opining as to why the issuance of the applicable
Conversion Shares violates Rule 144.

 

10.              Conversion Delays. If Borrower fails to deliver Conversion
Shares in accordance with the timeframes stated in Section 9, Lender, at any
time prior to selling all of those Conversion Shares may rescind in whole or in
part that particular Conversion attributable to the unsold Conversion Shares,
with a corresponding increase to the Outstanding Balance (any returned amount
will tack back to the Purchase Price Date for purposes of determining the
holding period under Rule 144). In addition, for each Lender Conversion, in the
event that Lender Conversion Shares are not delivered by the fourth Trading Day
(inclusive of the day of the Lender Conversion), a late fee equal to the greater
of (a) $500.00 and (b) 2% of the applicable Lender Conversion Share Value
rounded to the nearest multiple of $100.00 (but in any event the cumulative
amount of such late fees for each Lender Conversion shall not exceed 200% of the
applicable Lender Conversion Share Value) will be assessed for each day after
the third Trading Day (inclusive of the day of the Lender Conversion) until
Lender Conversion Share delivery is made; and such late fee will be added to the
Outstanding Balance (such fees, the “Conversion Delay Late Fees”). For
illustration purposes only, if Lender delivers a Lender Conversion Notice to
Borrower pursuant to which Borrower is required to deliver 100,000 Lender
Conversion Shares to Lender and on the Delivery Date such Lender Conversion
Shares have a Lender Conversion Share Value of $20,000.00 (assuming a Closing
Trade Price on the Delivery Date of $0.20 per share of Common Stock), then in
such event a Conversion Delay Late Fee in the amount of $500.00 per day (the
greater of $500.00 per day and $20,000.00 multiplied by 2%, which is $400.00)
would be added to the Outstanding Balance of the Note until such Lender
Conversion Shares are delivered to Lender. For purposes of this example, if the
Lender Conversion Shares are delivered to Lender twenty (20) days after the
applicable Delivery Date, the total Conversion Delay Late Fees that would be
added to the Outstanding Balance would be $10,000.00 (20 days multiplied by
$500.00 per day). If the Lender Conversion Shares are delivered to Lender one
hundred (100) days after the applicable Delivery Date, the total Conversion
Delay Late Fees that would be added to the Outstanding Balance would be
$40,000.00 (100 days multiplied by $500.00 per day, but capped at 200% of the
Lender Conversion Share Value).

 

11.              Ownership Limitation. Notwithstanding anything to the contrary
contained in this Note or the other Transaction Documents, if at any time Lender
shall or would be issued shares of Common Stock under any of the Transaction
Documents, but such issuance would cause Lender (together with its affiliates)
to beneficially own a number of shares exceeding 9.99% of the number of shares
of Common Stock outstanding on such date (including for such purpose the shares
of Common Stock issuable upon such issuance) (the “Maximum Percentage”), then
Borrower must not issue to Lender shares of Common Stock which would exceed the
Maximum Percentage. For purposes of this section, beneficial ownership of Common
Stock will be determined pursuant to Section 13(d) of the 1934 Act. The shares
of Common Stock issuable to Lender that would cause the Maximum Percentage to be
exceeded are referred to herein as the “Ownership Limitation Shares”. Borrower
will reserve the Ownership Limitation Shares for the exclusive benefit of
Lender. From time to time, Lender may notify Borrower in writing of the number
of the Ownership Limitation Shares that may be issued to Lender without causing
Lender to exceed the Maximum Percentage. Upon receipt of such notice, Borrower
shall be unconditionally obligated to immediately issue such designated shares
to Lender, with a corresponding reduction in the number of the Ownership
Limitation Shares. By written notice to Borrower, Lender may increase, decrease
or waive the Maximum Percentage as to itself but any such waiver will not be
effective until the 61st day after delivery thereof. The foregoing 61-day notice
requirement is enforceable, unconditional and non-waivable and shall apply to
all affiliates and assigns of Lender.

 

 

 

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12.              Payment of Collection Costs. If this Note is placed in the
hands of an attorney for collection or enforcement prior to commencing
arbitration or legal proceedings, or is collected or enforced through any
arbitration or legal proceeding, or Lender otherwise takes action to collect
amounts due under this Note or to enforce the provisions of this Note, then
Borrower shall pay the costs incurred by Lender for such collection, enforcement
or action including, without limitation, attorneys’ fees and disbursements.
Borrower also agrees to pay for any costs, fees or charges of its transfer agent
that are charged to Lender pursuant to any Conversion or issuance of shares
pursuant to this Note.\

 

13.              Opinion of Counsel. In the event that an opinion of counsel is
needed for any matter related to this Note, Lender has the right to have any
such opinion provided by its counsel. Lender also has the right to have any such
opinion provided by Borrower’s counsel.

 

14.              Governing Law; Venue. This Note shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of Utah, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Utah. The provisions set forth in the Purchase Agreement
to determine the proper venue for any disputes are incorporated herein by this
reference.

 

15.              Resolution of Disputes.

 

15.1.        Arbitration of Disputes. By its acceptance of this Note, each party
agrees to be bound by the Arbitration Provisions (as defined in the Purchase
Agreement) set forth as an exhibit to the Purchase Agreement.

 

15.2.        Calculation Disputes. Notwithstanding the Arbitration Provisions,
in the case of a dispute as to any Calculation (as defined in the Purchase
Agreement), such dispute will be resolved in the manner set forth in the
Purchase Agreement.

 

16.              Cancellation. After repayment or conversion of the entire
Outstanding Balance, this Note shall be deemed paid in full, shall automatically
be deemed canceled, and shall not be reissued.

 

17.              Amendments. The prior written consent of both parties hereto
shall be required for any change or amendment to this Note.

 

18.              Assignments. Borrower may not assign this Note without the
prior written consent of Lender. This Note and any shares of Common Stock issued
upon conversion of this Note may be offered, sold, assigned or transferred by
Lender to any person or entity affiliated with Lender without the consent of
Borrower, and to any person or entity that is not affiliated with Lender upon
consent of Borrower, such consent not to unreasonably be withheld; provided,
however, that Lender shall not be required to obtain Borrower’s consent to any
assignment, including without limitation an assignment to a person or entity
that is not affiliated with Lender, following the occurrence of any Event of
Default.

 

19.              Time is of the Essence. Time is expressly made of the essence
with respect to each and every provision of this Note and the documents and
instruments entered into in connection herewith.

 

20.              Notices. Whenever notice is required to be given under this
Note, unless otherwise provided herein, such notice shall be given in accordance
with the subsection of the Purchase Agreement titled “Notices.”

 

21.              Liquidated Damages. Lender and Borrower agree that in the event
Borrower fails to comply with any of the terms or provisions of this Note,
Lender’s damages would be uncertain and difficult (if not impossible) to
accurately estimate because of the parties’ inability to predict future interest
rates, future share prices, future trading volumes and other relevant factors.
Accordingly, Lender and Borrower agree that any fees, balance adjustments,
Default Interest or other charges assessed under this Note are not penalties but
instead are intended by the parties to be, and shall be deemed, liquidated
damages (under Lender’s and Borrower’s expectations that any such liquidated
damages will tack back to the Purchase Price Date for purposes of determining
the holding period under Rule 144).

 

 

 

 7 

 

 

22.              Waiver of Jury Trial. EACH OF LENDER AND BORROWER IRREVOCABLY
WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR
THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO
ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY
APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO
ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.

 

23.              Voluntary Agreement. Borrower has carefully read this Note and
has asked any questions needed for Borrower to understand the terms,
consequences and binding effect of this Note and fully understand them. Borrower
has had the opportunity to seek the advice of an attorney of Borrower’s
choosing, or has waived the right to do so, and is executing this Note
voluntarily and without any duress or undue influence by Lender or anyone else.

 

24.              Severability. If any part of this Note is construed to be in
violation of any law, such part shall be modified to achieve the objective of
Borrower and Lender to the fullest extent permitted by law and the balance of
this Note shall remain in full force and effect.

 

25.              Par Value Adjustments. If at any time Lender delivers a Lender
Conversion Notice or a Redemption Notice to Borrower and as of such date the
Lender Conversion Price or Redemption Conversion Price, as applicable, would be
less than the Par Value, then, as liquidated damages, Borrower must pay to
Lender the Par Value Adjustment Amount in cash within one (1) Trading Day of
delivery of the applicable Lender Conversion Notice or Redemption Notice (a “Par
Value Adjustment”). If Borrower does not deliver the Par Value Adjustment Amount
as required, then such amount shall automatically be added to the Outstanding
Balance. The number of Conversion Shares deliverable pursuant to any relevant
Lender Conversion Notice or Redemption Conversion Notice following a Par Value
Adjustment shall be equal to (a) the Conversion Amount or Redemption Amount, as
applicable, divided by (b) the Par Value. In the event of a Par Value
Adjustment, Lender will use a Lender Conversion Notice in substantially the form
attached hereto as Exhibit C or a Redemption Conversion Notice in substantially
the form attached hereto as Exhibit D.

 

[Remainder of page intentionally left blank; signature page follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 8 

 

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the
Effective Date.

 

BORROWER:

 

CV Sciences, Inc.

 

 

By:   /s/ Joseph Dowling                        

Name: Joseph Dowling                           

Title: Chief Financial Officer                  

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

LENDER:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner

 

By: Fife Trading, Inc., its Manager

 

By: /s/ John M. Fife                    

John M. Fife, President

 

 

 

 

 

 

 

 

 

[Signature Page to Secured Convertible Promissory Note]

   

 

 

ATTACHMENT 1

DEFINITIONS

 

For purposes of this Note, the following terms shall have the following
meanings:

 

A1.               “Approved Stock Plan” means any stock option plan which has
been approved by the board of directors of Borrower and is in effect as of the
Purchase Price Date, pursuant to which Borrower’s securities may be issued to
any employee, officer or director for services provided to Borrower.

 

A2.               “Bloomberg” means Bloomberg L.P. (or if that service is not
then reporting the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by Lender and reasonably
satisfactory to Borrower).

 

A3.               “Closing Bid Price” and “Closing Trade Price” means the last
closing bid price and last closing trade price, respectively, for the Common
Stock on its principal market, as reported by Bloomberg, or, if its principal
market begins to operate on an extended hours basis and does not designate the
closing bid price or the closing trade price (as the case may be) then the last
bid price or last trade price, respectively, of the Common Stock prior to
4:00:00 p.m., New York time, as reported by Bloomberg, or, if its principal
market is not the principal securities exchange or trading market for the Common
Stock, the last closing bid price or last trade price, respectively, of the
Common Stock on the principal securities exchange or trading market where the
Common Stock is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price or last trade price, respectively, of
the Common Stock in the over-the-counter market on the electronic bulletin board
for the Common Stock as reported by Bloomberg, or, if no closing bid price or
last trade price, respectively, is reported for the Common Stock by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of any market
makers for the Common Stock as reported by OTC Markets Group, Inc., and any
successor thereto. If the Closing Bid Price or the Closing Trade Price cannot be
calculated for the Common Stock on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Trade Price (as the case may be) of
the Common Stock on such date shall be the fair market value as mutually
determined by Lender and Borrower. If Lender and Borrower are unable to agree
upon the fair market value of the Common Stock, then such dispute shall be
resolved in accordance with the procedures in Section 15.2. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

 

A4.               “Conversion” means a Lender Conversion under Section 3 or a
Redemption Conversion under Section 8.

 

A5.               “Conversion Factor” means 70%, subject to the following
adjustments. If at any time the average of the three (3) lowest Closing Bid
Prices in the twenty (20) Trading Days immediately preceding any date of
measurement is below $0.25, then in such event the then-current Conversion
Factor shall be reduced by 10% for all future Conversions (subject to other
reductions set forth in this section). If at any time after the Effective Date,
Borrower is not DWAC Eligible, then the then-current Conversion Factor will
automatically be reduced by 5% for all future Conversions. If at any time after
the Effective Date, the Conversion Shares are not DTC Eligible, then the
then-current Conversion Factor will automatically be reduced by an additional 5%
for all future Conversions. Finally, if any Major Default occurs after the
Effective Date, the Conversion Factor shall automatically be reduced for all
future Conversions by an additional 5% for each of the first three (3) Major
Defaults that occur after the Effective Date (for the avoidance of doubt, each
occurrence of any Major Default shall be deemed to be a separate occurrence for
purposes of the foregoing reductions in Conversion Factor, even if the same
Major Default occurs three (3) separate times). For example, the first time
Borrower is not DWAC Eligible, the Conversion Factor for future Conversions
thereafter will be reduced from 70% to 65% for purposes of this example.
Following such event, the first time the Conversion Shares are no longer DTC
Eligible, the Conversion Factor for future Conversions thereafter will be
reduced from 65% to 60% for purposes of this example. If, thereafter, there are
three (3) separate occurrences of a Major Default pursuant to Section 4.1(c),
then for purposes of this example the Conversion Factor would be reduced by 5%
for the first such occurrence, and so on for each of the second and third
occurrences of such Major Default.

 

A6.               “DTC” means the Depository Trust Company or any successor
thereto.

 

 

 

 

Attachment 1 to Secured Convertible Promissory Note, Page 1

   

 

 

A7.               “DTC Eligible” means, with respect to the Common Stock, that
such Common Stock is eligible to be deposited in certificate form at the DTC,
cleared and converted into electronic shares by the DTC and held in the name of
the clearing firm servicing Lender’s brokerage firm for the benefit of Lender.

 

A8.               “DTC/FAST Program” means the DTC’s Fast Automated Securities
Transfer program.

 

A9.               “DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.

 

A10.           “DWAC Eligible” means that (a) Borrower’s Common Stock is
eligible at DTC for full services pursuant to DTC’s operational arrangements,
including without limitation transfer through DTC’s DWAC system, (b) Borrower
has been approved (without revocation) by DTC’s underwriting department, (c)
Borrower’s transfer agent is approved as an agent in the DTC/FAST Program, (d)
the Conversion Shares are otherwise eligible for delivery via DWAC; (e) Borrower
has previously delivered all Conversion Shares to Lender via DWAC; and (f)
Borrower’s transfer agent does not have a policy prohibiting or limiting
delivery of the Conversion Shares via DWAC.

 

A11.           “Equity Conditions Failure” means that any of the following
conditions has not been satisfied during any applicable Equity Conditions
Measuring Period (as defined below): (a) with respect to the applicable date of
determination all of the Conversion Shares would be freely tradable under Rule
144 or without the need for registration under any applicable federal or state
securities laws (in each case, disregarding any limitation on conversion of this
Note); (b) on each day during the period beginning one month prior to the
applicable date of determination and ending on and including the applicable date
of determination (the “Equity Conditions Measuring Period”), the Common Stock is
listed or designated for quotation (as applicable) on any of NYSE, NASDAQ,
OTCQX, or OTCQB (each, an “Eligible Market”) and shall not have been suspended
from trading on any such Eligible Market (other than suspensions of not more
than two (2) Trading Days and occurring prior to the applicable date of
determination due to business announcements by Borrower); (c) on each day during
the Equity Conditions Measuring Period, Borrower shall have delivered all shares
of Common Stock issuable upon conversion of this Note on a timely basis as set
forth in Section 9 hereof and all other shares of capital stock required to be
delivered by Borrower on a timely basis as set forth in the other Transaction
Documents; (d) any shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating Section 11
hereof (Lender acknowledges that Borrower shall be entitled to assume that this
condition has been met for all purposes hereunder absent written notice from
Lender); (e) any shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating the rules
or regulations of the Eligible Market on which the Common Stock is then listed
or designated for quotation (as applicable); (f) on each day during the Equity
Conditions Measuring Period, no public announcement of a pending, proposed or
intended Fundamental Transaction shall have occurred which has not been
abandoned, terminated or consummated; (g) Borrower shall have no knowledge of
any fact that would reasonably be expected to cause any of the Conversion Shares
to not be freely tradable without the need for registration under any applicable
state securities laws (in each case, disregarding any limitation on conversion
of this Note); (h) on each day during the Equity Conditions Measuring Period,
Borrower otherwise shall have been in material compliance with each, and shall
not have breached any, term, provision, covenant, representation or warranty of
any Transaction Document; (i) without limiting clause (j) above, on each day
during the Equity Conditions Measuring Period, there shall not have occurred an
Event of Default or an event that with the passage of time or giving of notice
would constitute an Event of Default; (k) on each Redemption Date, the average
and median daily dollar volume of the Common Stock on its principal market for
the previous twenty (20) Trading Days shall be greater than $100,000.00; (l) the
ten (10) day average VWAP of the Common Stock is greater than $0.01, and (m) the
Common Stock shall be DWAC Eligible as of each applicable Redemption Date or
other date of determination.

 

A12.           “Excluded Securities” means any shares of Common Stock, options,
or convertible securities issued or issuable in connection with any Approved
Stock Plan or issued or issuable for services rendered to Borrower, or to any
vendor or supplier in connection with services or goods rendered or delivered.

 

 

 

 

Attachment 1 to Secured Convertible Promissory Note, Page 2

   

 

 

A13.           “Fundamental Transaction” means that (a) (i) Borrower shall,
directly or indirectly, in one or more related transactions, consolidate or
merge with or into (whether or not Borrower is the surviving corporation) any
other person or entity, except for any strategic acquisition by Borrower, or
(ii) Borrower or any of its subsidiaries shall, directly or indirectly, in one
or more related transactions, sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective properties or
assets to any other person or entity, (iii) Borrower or any of its subsidiaries
shall, directly or indirectly, in one or more related transactions, allow any
other person or entity to make a purchase, tender or exchange offer that is
accepted by the holders of more than 50% of the outstanding shares of voting
stock of Borrower (not including any shares of voting stock of Borrower held by
the person or persons making or party to, or associated or affiliated with the
persons or entities making or party to, such purchase, tender or exchange
offer), or (iv) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, consummate a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with any
other person or entity whereby such other person or entity acquires more than
50% of the outstanding shares of voting stock of Borrower (not including any
shares of voting stock of Borrower held by the other persons or entities making
or party to, or associated or affiliated with the other persons or entities
making or party to, such stock or share purchase agreement or other business
combination), or (v) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, reorganize, recapitalize or
reclassify the Common Stock, other than an increase in the number of authorized
shares of Borrower’s Common Stock, or (b) any “person” or “group” (as these
terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the
rules and regulations promulgated thereunder) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
50% of the aggregate ordinary voting power represented by issued and outstanding
voting stock of Borrower.

 

A14.           “Lender Conversion Share Value” means the product of the number
of Lender Conversion Shares deliverable pursuant to any Lender Conversion
multiplied by the Closing Trade Price of the Common Stock on the Delivery Date
for such Lender Conversion.

 

A15.           “Major Default” means any Event of Default occurring under
Sections 4.1(a) (payments), 4.1(c) (delivery of Redemption Conversion Shares),
4.1(l) (Share Reserve), or 4.1(p) (breach of certain covenants) of this Note.

 

A16.           “Mandatory Default Amount” means the greater of (a) the
Outstanding Balance divided by the Redemption Conversion Price on the date the
Mandatory Default Amount is demanded, multiplied by the VWAP on the date the
Mandatory Default Amount is demanded, or (b) 115% of the Outstanding Balance as
of the date on which the Event of Default occurred.

 

A17.           “Market Price” means the Conversion Factor multiplied by the
average of the three (3) lowest Closing Bid Prices in the twenty (20) Trading
Days immediately preceding the applicable Conversion.

 

A18.           “Maximum Monthly Redemption Amount” means $100,000.00, which is
the maximum aggregate Redemption Amount that may be redeemed in any calendar
month.

 

A19.           “Minor Default” means any Event of Default that is not a Major
Default or a Fundamental Default.

 

A20.           “OID” means an original issue discount.

 

A21.           “Other Agreements” means, collectively, (a) all existing and
future agreements and instruments between, among or by Borrower (or an
affiliate), on the one hand, and Lender (or an affiliate), on the other hand,
and (b) any financing agreement or a material agreement related to Borrower’s
ongoing business operations, the breach of which would have a material adverse
effect on Borrower.

 

A22.           “Outstanding Balance” means as of any date of determination, the
Purchase Price, as reduced or increased, as the case may be, pursuant to the
terms hereof for payment, Conversion, offset, or otherwise, plus the OID, the
Transaction Expense Amount, accrued but unpaid interest, collection and
enforcements costs (including attorneys’ fees) incurred by Lender, transfer,
stamp, issuance and similar taxes and fees related to Conversions, and any other
fees or charges (including without limitation Conversion Delay Late Fees)
incurred under this Note.

 

A23.           “Par Value” means the par value of the Common Stock on any
relevant date of determination. The Par Value as of the Effective Date is
$0.0001.

 

A24.           “Par Value Adjustment Amount” means an amount calculated as
follows: (a) the number of Conversion Shares deliverable under a particular
Lender Conversion Notice or Redemption Notice (prior to any Par Value
Adjustment) multiplied by the Par Value, less (b) the Conversion Amount or
Redemption Amount, as applicable (prior to any Par Value Adjustment), plus (c)
$500.00. For illustration purposes only, if for a given Conversion, the
Conversion Amount was $20,000.00, the Conversion Price was $0.0008 and the Par
Value was $0.001 then the Par Value Adjustment Amount would be $5,500.00
(25,000,000 Conversion Shares ($20,000.00/$0.0008) multiplied by the Par Value
of $0.001 ($25,000.00) minus the Conversion Amount of $20,000.00 plus $500.00
equals $5,500.00).

 

 

 

Attachment 1 to Secured Convertible Promissory Note, Page 3

   

 

 

A25.           “Purchase Price Date” means the date the Purchase Price is
delivered by Lender to Borrower.

 

A26.           “Redemption Amount” means the amount Lender elects to redeem
pursuant to any given Redemption Notice.

 

A27.           “Trading Day” means any day on which the New York Stock Exchange
is open for trading.

 

A28.           “VWAP” means the volume weighted average price of the Common
stock on the principal market for a particular Trading Day or set of Trading
Days, as the case may be, as reported by Bloomberg.

 

A29.           “Wiltshire Warrant” means that certain Common Stock Purchase
Warrant issued by Borrower to Wiltshire, LLC to purchase up to 2,000,000 shares
of Borrower’s common stock at an exercise price equal to $0.20 per share.

 

 

 

 

 

Attachment 1 to Secured Convertible Promissory Note, Page 4

   

 

 

EXHIBIT A

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

CV Sciences, Inc. Date: __________________

Attn: Michael Mona, Jr., CEO

2688 South Rainbow Boulevard, Suite B

Las Vegas, Nevada 89146

 

LENDER CONVERSION NOTICE

 

The above-captioned Lender hereby gives notice to CV Sciences, Inc., a Delaware
corporation (the “Borrower”), pursuant to that certain Secured Convertible
Promissory Note made by Borrower in favor of Lender on March 1, 2017 (the
“Note”), that Lender elects to convert the portion of the Note balance set forth
below into fully paid and non-assessable shares of Common Stock of Borrower as
of the date of conversion specified below. Said conversion shall be based on the
Lender Conversion Price set forth below. In the event of a conflict between this
Lender Conversion Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Lender Conversion Notice to conform to the Note.
Capitalized terms used in this notice without definition shall have the meanings
given to them in the Note.

 

  A. Date of Conversion: ____________   B. Lender Conversion #: ___________   C.
Conversion Amount: ____________ D.Lender Conversion Price: _______________

E.Lender Conversion Shares: _______________ (C divided by D)

F.Remaining Outstanding Balance of Note: ____________*

 

* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Lender Conversion Notice and such Transaction Documents.

 

Please transfer the Lender Conversion Shares electronically (via DWAC) to the
following account:

Broker:             Address:   DTC#:       Account #:       Account Name:      

 

To the extent the Lender Conversion Shares are not able to be delivered to
Lender electronically via the DWAC system, deliver all such certificated shares
to Lender via reputable overnight courier after receipt of this Lender
Conversion Notice (by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

 

 

[Remainder of page intentionally left blank]

 

 

 

 

 

 

 

 

Exhibit A to Secured Convertible Promissory Note, Page 1

   

 

 

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner

 

By: Fife Trading, Inc., its Manager

 

By:                                                                

John M. Fife, President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A to Secured Convertible Promissory Note, Page 2

   

 

 

EXHIBIT B

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

CV Sciences, Inc. Date: __________________

Attn: Michael Mona, Jr., CEO

2688 South Rainbow Boulevard, Suite B

Las Vegas, Nevada 89146

 

REDEMPTION NOTICE

 

The above-captioned Lender hereby gives notice to CV Sciences, Inc., a Delaware
corporation (the “Borrower”), pursuant to that certain Secured Convertible
Promissory Note made by Borrower in favor of Lender on March 1, 2017 (the
“Note”), that Lender elects to redeem the portion of the Note balance set forth
below in either cash or fully paid and non-assessable shares of Common Stock of
Borrower, as set forth below. By its signature below, Borrower makes the
elections and certifications set forth below. In the event of a conflict between
this Redemption Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Redemption Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to
them in the Note.

 

REDEMPTION CONVERSION AND CERTIFICATIONS

AS OF THE REDEMPTION DATE

 

A.REDEMPTION CONVERSION

 

A.Redemption Date: ____________, 201_  B.Redemption Amount: ____________

C.Portion of Redemption Amount to be Paid in Cash: ____________

D.Portion of Redemption Amount to be Converted into Common Stock: ____________
(B minus C)

E.Redemption Conversion Price: _______________ (lower of (i) Lender Conversion
Price in effect and (ii) Market Price as of Redemption Date)

F.Redemption Conversion Shares: _______________ (D divided by E)

G.Remaining Outstanding Balance of Note: ____________ *

 

* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Redemption Notice and such Transaction Documents.

 

B.EQUITY CONDITIONS CERTIFICATION

 

(Check One)

 

1._________ Borrower herby certifies that no Equity Conditions Failure exists as
of the Redemption Date.

 

2._________ Borrower hereby gives notice that an Equity Conditions Failure has
occurred and requests a waiver from Lender with respect thereto. The Equity
Conditions Failure is as follows:    

 

                   

 

 

 

Exhibit B to Secured Convertible Promissory Note, Page 1

   

 

 

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner

 

By: Fife Trading, Inc., its Manager

 

By:                                                                

John M. Fife, President

 

 

 

ACKNOWLEDGED AND CERTIFIED BY:

 

Borrower:

 

CV Sciences, Inc.

 

By:                                                                

 

Name:                                                            

 

Title:                                                              

 

 

 

 

 

 

 

 

 

Exhibit B to Secured Convertible Promissory Note, Page 2

   

 

 

EXHIBIT C

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

  

CV Sciences, Inc. Date: __________________

Attn: Michael Mona, Jr., CEO

2688 South Rainbow Boulevard, Suite B

Las Vegas, Nevada 89146

 

LENDER CONVERSION NOTICE

 

The above-captioned Lender hereby gives notice to CV Sciences, Inc., a Delaware
corporation (the “Borrower”), pursuant to that certain Secured Convertible
Promissory Note made by Borrower in favor of Lender on March 1, 2017 (the
“Note”), that Lender elects to convert the portion of the Note balance set forth
below into fully paid and non-assessable shares of Common Stock of Borrower as
of the date of conversion specified below. Said conversion shall be based on the
Lender Conversion Price set forth below. In the event of a conflict between this
Lender Conversion Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Lender Conversion Notice to conform to the Note.
Capitalized terms used in this notice without definition shall have the meanings
given to them in the Note.

 

 A.Date of Conversion: ____________  B.Lender Conversion #: ____________
 C.Conversion Amount: ____________ D.Par Value Adjustment Amount:
_______________

E.Lender Conversion Price: _______________ (Par Value)

F.Lender Conversion Shares: _______________ (C divided by E)

G.Remaining Outstanding Balance of Note: ____________*

 

* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Lender Conversion Notice and such Transaction Documents.

 

Please transfer the Lender Conversion Shares electronically (via DWAC) to the
following account:

Broker:             Address:   DTC#:       Account #:       Account Name:      

 

To the extent the Lender Conversion Shares are not able to be delivered to
Lender electronically via the DWAC system, deliver all such certificated shares
to Lender via reputable overnight courier after receipt of this Lender
Conversion Notice (by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

 

The Par Value Adjustment Amount must be paid in cash within one (1) Trading Day
of your receipt of this Conversion Notice.

 

 

 

Exhibit C to Secured Convertible Promissory Note, Page 1

   

 

 

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner

 

By: Fife Trading, Inc., its Manager

 

By:                                                                

John M. Fife, President

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit C to Secured Convertible Promissory Note, Page 2

   

 

 

EXHIBIT D

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

  

CV Sciences, Inc. Date: __________________

Attn: Michael Mona, Jr., CEO

2688 South Rainbow Boulevard, Suite B

Las Vegas, Nevada 89146

 

REDEMPTION NOTICE

 

The above-captioned Lender hereby gives notice to CV Sciences, Inc., a Delaware
corporation (the “Borrower”), pursuant to that certain Secured Convertible
Promissory Note made by Borrower in favor of Lender on March 1, 2017 (the
“Note”), that Lender elects to redeem the portion of the Note balance set forth
below in either cash or fully paid and non-assessable shares of Common Stock of
Borrower, as set forth below. By its signature below, Borrower makes the
elections and certifications set forth below. In the event of a conflict between
this Redemption Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Redemption Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to
them in the Note.

 

REDEMPTION CONVERSION AND CERTIFICATIONS

AS OF THE REDEMPTION DATE

 

A.REDEMPTION CONVERSION

 

 A.Redemption Date: ____________, 201_  B.Redemption Amount: ____________

C.Portion of Redemption Amount to be Paid in Cash: ____________

D.Portion of Redemption Amount to be Converted into Common Stock: ____________
(B minus C)

E.Par Value Adjustment Amount: ______________

F.Redemption Conversion Price: _______________ (Par Value)

G.Redemption Conversion Shares: _______________ (D divided by F)

H.Remaining Outstanding Balance of Note: ____________ *

 

* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Redemption Notice and such Transaction Documents.

 

B.EQUITY CONDITIONS CERTIFICATION

 

_________ Borrower hereby gives notice that an Equity Conditions Failure has
occurred and requests a waiver from Lender with respect thereto. The Equity
Conditions Failure is as follows:

 

                   

 

 

 

 

Exhibit D to Secured Convertible Promissory Note, Page 1

   

 

 

The Par Value Adjustment Amount must be paid in cash within one (1) Trading Day
of your receipt of this Redemption Notice.

 

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner

 

By: Fife Trading, Inc., its Manager

 

By:                                                                

John M. Fife, President

 

ACKNOWLEDGED AND CERTIFIED BY:

 

Borrower:

 

CV Sciences, Inc.

 

 

By:                                                                

 

Name:                                                            

 

Title:                                                              

 

 

 

 

Exhibit D to Secured Convertible Promissory Note, Page 2