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Exhibit 10.1
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (this “Agreement”) is made as of July 14, 2014, by and
among CannLabs, Inc., a Nevada corporation (the “Employer”), and MARK C. MIRKEN
(the “Executive”).
 
RECITALS
 
WHEREAS, the Employer considers it essential and in the best interest of the
stockholders to foster the employment of key management personnel and desires to
engage the services of the Executive on the terms and conditions hereinafter set
forth; and
 
WHEREAS, Executive desires to render services to the Employer on the terms and
conditions provided in this Agreement.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto, intending to be legally bound hereby, agree as
follows:
 
The parties, intending to be legally bound, agree as follows:
 
1.            DEFINITIONS
 
For the purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
 
“Agreement” means this Employment Agreement, as amended from time to time.
 
“Basic Compensation” shall include all items of base and bonus compensation and
benefits provided for in Section 3.1 of this Agreement.
 
“Benefits” is defined in Section 3.1(b).
 
“Board of Directors” means the board of directors of Employer.
 
“Cause” shall mean (i) a documented repeated and willful failure by the
Executive to perform his duties, (ii) Executive’s conviction or entry of a plea
of nolo contendere for fraud, misappropriation or embezzlement, or any felony or
crime of moral turpitude (iii) willful material violation of a policy which is
directly and materially injurious to the Employer or any subsidiary of the
Employer, (iv) Executive’s commission of an act of fraud, embezzlement,
misappropriation, willful misconduct, or breach of fiduciary duty against the
Employer or any of its affiliates and (v) Executive’s material breach of this
Agreement.  With respect to subsections (a) (i), (iii), (iv) and (v) above,
Cause shall exist only after written notice of such failure, violation or breach
is delivered to Executive and Executive shall have failed to cure such violation
or breach within 30 days after such notice, if curable.  For purposes of this
definition, no act or failure to act on the part of the Executive shall be
considered “willful” unless done or omitted not in good faith and without
reasonable belief that the action or omission was in the best interest of the
Employer or any of its subsidiaries or affiliate.
 

 

 

 

 
“Change of Control” shall mean (i) the closing of the sale, transfer or other
disposition of all or substantially all of the Employer’s assets, (ii) the
consummation of the merger or consolidation of the Employer with or into another
entity (except a merger or consolidation in which the holders of capital stock
of the Employer immediately prior to such merger or consolidation continue to
hold not less than fifty percent (50%) of the voting power of the capital stock
of the Employer or the surviving or acquiring entity immediately following such
merger or consolidation), or (iii) a liquidation, dissolution or winding up of
the Employer; provided, however, that a transaction shall not constitute a
Change of Control if its sole purpose is to change the state of the Employer’s
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Employer’s securities
immediately prior to such transaction.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Disability” shall mean once the Executive is unable for the “Disability Period”
(as hereafter defined) to perform the essential functions of the Executive’s
duties with reasonable accommodation.  The disability of the Executive will be
determined by a medical doctor selected by written agreement of the Employer and
the Executive upon the request of either party by notice to the other.  If the
Employer and the Executive cannot agree on the selection of a medical doctor,
each of them will select a medical doctor and the two medical doctors will
attempt to make a determination of disability.  If they cannot agree, they will
select a third medical doctor who will determine whether the Executive has a
disability.  The determination of the third medical doctor selected under this
provision will be binding on both parties.  The Executive must submit to a
reasonable number of examinations by the medical doctor making the determination
of disability under this provision, and the Executive hereby authorizes the
disclosure and release to the Employer of such determination and all supporting
medical records.  If the Executive is not legally competent, the Executive’s
legal guardian or duly authorized attorney-in-fact will act in the Executive’s
stead for the purposes of submitting the Executive to the examinations, and
providing the authorization of disclosure, required under this provision.
 
“Disability Period” shall mean 180 consecutive days or 180 days during any
twelve (12) month period; or such lesser number of days as elapse until
disability insurance benefits commence under any disability insurance coverage
furnished by Employer to Executive, if any.
 
“Effective Date” means July 14, 2014.
 
“Employment Period” means the term of the Executive’s employment under this
Agreement as defined in Section 2.2.
 
“Person” means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
 

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2.           EMPLOYMENT TERMS AND DUTIES
 
2.1           EMPLOYMENT
 
Commencing on the Effective Date, the Employer agrees to employ the Executive
for the term of this Agreement upon the terms and conditions set forth in this
Agreement, and the Executive agrees to commence employment for Employer also
upon the terms and conditions set forth in this Agreement.
 
2.2           TERM
 
Subject to the provisions of Section 6, the Employment Period for the
Executive’s employment under this Agreement will be three (3) years, beginning
on the Effective Date, and shall be automatically renewed for consecutive
one-year renewal terms thereafter, unless, not less than sixty (60) days prior
to the end of the original term or any renewal term, either party gives the
other party written notice of termination of employment which termination shall
be effective as of the end of such original term or renewal term.
 
2.3           DUTIES
 
The Executive will serve as the Chief Executive Officer of Employer and will
perform all duties required in furtherance of his position, including without
limitation, all such duties as are customarily associated with such position or
such duties as are assigned or delegated to the Employer’s Board of
Directors.  The Executive agrees to perform in good faith and to the best of his
ability all services which may be required of him hereunder and will devote his
full-time efforts and business time, skill, attention and energies as are
reasonably necessary to perform his duties and responsibilities under this
Agreement and to promote the success of the Employer’s business.
 
3.           COMPENSATION
 
3.1           BASIC COMPENSATION
 
(a)   Base Salary.  The Executive will be paid an initial annual base salary of
$200,000, subject to further adjustment as provided below (the “Base Salary”),
which will be payable in equal periodic installments according to the Employer’s
customary payroll practices, but no less frequently than bi-monthly.  The
Executive’s Base Salary will be reviewed by Compensation Committee of the
Employer’s Board of Directors (or if Employer has no Compensation Committee, its
Board of Directors) not less frequently than annually, and may be adjusted
upward or downward by Employer but in no event will be less than $200,000 per
year.
 
(b)           Bonus.  Executive shall be eligible to receive annual bonus
compensation at the discretion of the Compensation Committee of Employer’s Board
of Directors (or if Employer has no Compensation Committee, its Board of
Directors) and in accordance with Employer’s executive bonus or incentive
compensation plan that may be in effect from time to time.
 

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(c)           Restricted Stock Grant.  In addition to Base Salary, as part of
the Executive’s overall compensation, the Executive shall receive a restricted
stock award of 3,000,000 shares of Employer’s common stock (the “Shares”). For
so long as the Executive remains continuously employed by the Employer, the
Shares shall vest as follows: 50% of the Shares shall vest on January 1, 2016,
and thereafter quarterly over the remaining Initial Term of the Agreement.
 
(d)           Benefits.  The Executive will, during the Employment Period, be
permitted to participate in such life insurance, hospitalization, major medical,
and other executive benefit plans of the Employer that may be in effect from
time to time, to the extent the Executive is eligible under the terms of those
plans (collectively, the “Benefits”).  The Executive shall also be entitled to
such other fringe benefits as are now or may become available to all of
Employer’s other executive officers. In the event that the Employer does not
provide hospitalization or major medical coverage to its other executive
officers, the Executive shall be entitled to be reimbursed for health coverage
that is reasonable and acceptable to Executive and Employer.
 
(e)           Relocation Expenses.  Executive shall be reimbursed for all
expenses related directly to his relocation to Denver Colorado. This
reimbursement includes all packing and moving all belongings and vehicles, fees,
flights, hotels rental cars etc, shall be capped, in total, at $25,000. All
reimbursement shall be reimbursed within 10 days of invoice submission.
 
4.            EXPENSE REIMBURSEMENT
 
The Employer will pay reasonable expenses incurred by the Executive in the
performance of the Executive’s duties pursuant to this Agreement, including
without limitation reasonable expenses incurred by the Executive in attending
conventions, other business meetings and for promotional expenses, provided that
any such activities must be related to Employer’s business and all individual
expenses (or those aggregated for a single convention, seminar or other business
trip) greater than $1,000 must be approved by either Employer’s Chief Financial
Officer or the Employer’s Compensation Committee (or if Employer has no
Compensation Committee, its Board of Directors).  The Executive must file
expense reports with respect to such expenses in accordance with the Employer’s
policies.
 
5.            VACATIONS AND HOLIDAYS
 
The Executive will be entitled to two (2) weeks paid vacation each calendar year
in accordance with the vacation policies of the Employer in effect for its
executive officers from time to time.  The Executive will also be entitled to
the paid holidays and other paid leave set forth in the Employer’s
policies.  Vacation days during any calendar year that are not used by the
Executive during such calendar year shall be forfeited.
 

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6.            TERMINATION
 
6.1          EVENTS OF TERMINATION
 
The Executive’s employment pursuant to this Agreement may be terminated by
Employer on the following grounds:
 
(a)           upon the death of the Executive;
 
(b)           upon the disability of the Executive immediately upon notice from
either party to the other;
 
(c)           For Cause (following the expiration of any applicable notice
period from Employer to Executive);
 
    (d)          at the discretion of Employer other than for Cause.
 
6.2          TERMINATION PAY
 
Effective upon the termination of this Agreement, the Employer will be obligated
to pay the Executive (or, in the event of his death, his designated beneficiary
as defined below) the compensation provided in this Section 6.2:
 
(a)           Termination by the Employer For Cause. If the Employer terminates
this Agreement for Cause or Executive resigns, the Executive will be entitled to
receive his Basic Compensation only through the date such termination is
effective and any current and carried-over unused vacation days, but will not be
entitled to any accrued bonus compensation for the calendar year during which
such termination occurs, however, he will be entitled to retain any bonus
compensation paid prior to such termination.
 
(b)           Termination upon Disability. If this Agreement is terminated by
either party as a result of the Executive’s Disability, the Executive will be
entitled to receive his Basic Compensation only through the date such
termination is effective. Executive shall also be entitled to receive that part
of the Executive’s accrued bonus compensation, if any, for the calendar year
during which his Disability occurs, prorated through the end of the calendar
quarter during which his termination is effective. If this Agreement is
terminated as a result of the Executive’s Disability, Executive shall be
entitled to receive that amount of Shares that would have vested through the end
of the calendar month during which his death occurs.
 
(c)           Termination upon Death. If this Agreement is terminated because of
the Executive’s death, Executive will be entitled to receive his Basic
Compensation only through the date such termination is effective, and that part
of the Executive’s accrued bonus compensation, if any, for the calendar year
during which his death occurs, prorated through the end of the calendar month
during which his death occurs. If this Agreement is terminated as a result of
the Executive’s death, Executive shall be entitled to receive that amount of
Shares that would have vested through the end of the calendar month during which
his death occurs.
 

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(d)           Termination by Employer Without Cause. If this Agreement is
terminated by Employer other than for Cause then (i) Executive shall be entitled
to receive his Base Compensation only through the date such termination is
effective; and (ii) continuation of payment of Base Salary and continuation of
all benefits which Executive would have been entitled to receive had his
employment not terminated, or compensation sufficient for Executive to replace
any such benefits if continuation is not possible under the applicable Employer
plans, at the same times as such payments would otherwise have been made
pursuant to Article 3 hereof for a period of six (6) months if, and only if, the
Executive signs a valid general release of all claims against the Employer, and
its affiliates, subsidiaries, officers, directors, and agents on terms and
conditions acceptable to the Employer.
 
(e)           Acceleration of Vesting. If this Agreement is terminated by
Employer other than for Cause within initial six (6) months of Term, 500,000
Shares shall automatically vest.  If this Agreement is terminated by Employer
without cause after first 6 months of the Term, an additional 83,333 Shares
shall vest for each month of service beyond initial 6 months of Term. If
terminated upon a Change of Control, vesting of all Shares shall immediately
accelerate.
 
7.             SECTION 409A.
 
(a)           This Agreement is intended to comply with the requirements of Code
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
Payments of Non-Qualified Deferred Compensation (as such term is defined under
Code Section 409A and the regulations promulgated thereunder) may only be made
under this Agreement upon an event and in a manner permitted by Code Section
409A. Any amounts payable solely on account of an involuntary separation from
service of Executive within the meaning of Code Section 409A shall be excludible
from the requirements of Code Section 409A, either as involuntary separation pay
or as short-term deferral amounts, to the maximum possible extent. For purposes
of Code Section 409A, the right to a series of installment payments under this
Agreement shall be treated as a right to a series of separate payments. All
reimbursements and in-kind benefits provided under this Agreement shall be made
or provided in accordance with Code Section 409A including, where applicable,
the requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in this Agreement, (ii) the amount of expenses
available for reimbursement, or the in-kind benefits provided, during a calendar
year may not affect the expenses eligible for reimbursement, or in-kind benefits
provided, in any other calendar year, (iii) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following
the year in which the expense in incurred, and (iv) the right to reimbursement
or in-kind benefits is not subject to liquidation or exchange for another
benefit.
 
(b)           To the extent required by Code Section 409A, and notwithstanding
any other provision of this Agreement to the contrary, no payment of
Non-Qualified Deferred Compensation will be provided to, or with respect to, the
Executive on account of his separation from service until the first to occur of
(i) the date of Executive’s death or (ii) the date which is one day after the
six (6) month anniversary of his separation from service, and in either case
only if he is a “specified employee” (as defined under Code Section
409A(a)(2)(B)(i) of the Code and the regulations promulgated thereunder) in the
year of his separation from service.  Any payment that is delayed pursuant to
the provisions of the immediately preceding sentence shall instead be paid in a
lump sum (subject to all applicable withholding) promptly following the first to
occur of the two dates specified in such immediately preceding sentence.
 

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(c)           Any payment of Non-Qualified Deferred Compensation made under
Section 4 pursuant to a voluntary or involuntary termination of Executive’s
employment with the Employer shall be withheld until Executive incurs both (i) a
termination of his employment relationship with the Employer and (ii) the first
instance of a “separation from service” with the Employer, as such term is
defined in Treas. Reg. Section 1.409A-1(h).
 
(d)           The preceding provisions of this Section 7 shall not be construed
as a guarantee by the Employer of any particular tax effect to Executive under
this Agreement, under any plan or program sponsored or maintained by the
Employer or under any other agreement by and between Executive and the Employer.
The Employer shall not be liable to Executive for any additional tax, penalty or
interest imposed under Code Section 409A nor for reporting in good faith any
payment made under this Agreement or under any such other plan, program or
agreement as an amount includible in gross income under Code Section 409A.
 
8.           CHARACTER OF TERMINATION PAYMENTS.
 
The amounts payable to Executive upon any termination of this Agreement shall be
considered severance pay in consideration of past services rendered on behalf of
the Employer and his continued service from the date hereof to the date he
becomes entitled to such payments.
 
 
9.
CONFIDENTIALITY AND RELATED MATTERS.

 
9.1           NON-DISCLOSURE COVENANT
 
Employer and the Executive acknowledge that the services to be performed by the
Executive under this Agreement are unique and valuable and that, as a result of
the Executive’s employment, the Executive will be in a relationship of
confidence and trust with Employer and will come into possession of
“Confidential Information” (i) owned or controlled by Employer and its
subsidiaries and affiliates; (ii) in the possession of Employer and its
subsidiaries and affiliates and belonging to third parties; or (iii) conceived,
originated, discovered or developed, in whole or in part, by the Executive
during the term of this Agreement and relating to his duties for the Employer
under this Agreement.  As used herein “Confidential Information” means trade
secrets and other confidential or proprietary business, technical, personnel or
financial information of Employer, whether or not the Executive’s work product,
in written, graphic, oral or other tangible or intangible forms, including but
not limited to specifications, samples, records, data, computer programs,
drawings, diagrams, models, consumer names, ID’s or e-mail addresses, business
or marketing plans, studies, analyses, projections and reports, communications
by or to attorneys (including attorney-client privileged communications), memos
and other materials prepared by attorneys or under their direction (including
attorney work product), and software systems and processes that are not readily
available to the public, even it is not specifically marked as a trade secret or
confidential, unless Employer advises the Executive otherwise in writing or
unless the information has been shared by Employer with entities not bound by
non-disclosure agreements.  In consideration of the compensation and benefits to
be paid or provided to the Executive by the Employer under this Agreement, the
Executive agrees not to directly or indirectly use or disclose to anyone, either
during the Employment Period or after the termination of this Agreement, except
in the performance of his duties of his employment with Employer or with
Employer’s prior written consent, any Confidential Information of
Employer.  This non-disclosure covenant does not apply to information that is
disclosed or becomes public through another source that is not bound by a
confidentiality agreement with Employer; which Executive is required to disclose
pursuant to court order, subpoena or applicable law (provided that Executive
will use reasonable efforts to provide Employer with prompt notice of any such
requests or requirement so that Employer may seek an appropriate protective
order); or which is disclosed in any proceeding to enforce or interpret this
Agreement.  The Executive agrees that in the event of the termination of the
Executive’s employment for any reason, the Executive will deliver to Employer,
upon request, all property belonging to Employer, including all documents and
materials of any nature pertaining to the Executive’s work with Employer and
will not take with him any documents or materials of any description, or any
reproduction thereof of any description, containing or pertaining to any
Confidential Information.
 

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9.2
WORK MADE FOR HIRE

 
Executive recognizes and understands that Executive’s duties at the Employer may
include the preparation of materials, including without limitation written or
graphic materials, and that any such materials conceived or written by Executive
shall be done as “work made for hire” as defined and used in the Copyright Act
of 1976, 17 U.S.C. §§ 1 et seq.  In the event of publication of such materials,
Executive understands that since the work is a “work made for hire”, the
Employer will solely retain and own all rights in said materials, including
right of copyright.
 
 
9.3
DISCLOSURE OF WORKS AND INVENTIONS/ASSIGNMENT OF PATENTS

 
In consideration of the promises set forth herein, Executive agrees to disclose
promptly to the Employer, or to such person whom the Employer may expressly
designate for this specific purpose (its “Designee”), any and all works,
inventions, discoveries and improvements authored, conceived or made by
Executive during the period of employment and related to the business or
activities of the Employer, and Executive hereby assigns and agrees to assign
all of Executive’s interest in the foregoing to the Employer or to its
Designee.  Executive agrees that, whenever he is requested to do so by the
Employer, Executive shall execute any and all applications, assignments or other
instruments which the Employer shall deem necessary to apply for and obtain
Letters Patent or Copyrights of the United States or any foreign country or to
otherwise protect the Employer’s interest therein.  Such obligations shall
continue beyond the termination or nonrenewal of Executive’s employment with
respect to any works, inventions, discoveries and/or improvements that are
authored, conceived of, or made by Executive during the period of Executive’s
employment, and shall be binding upon Executive’s successors, assigns,
executors, heirs, administrators or other legal representatives.
 

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10.
NON-COMPETITION AND NON-SOLICITATION MATTERS

 
 
10.1
NON-COMPETITION

 
During the term of this Agreement the Executive agrees that he shall not work
for or be interested in any business which provides services or products which
are directly competitive with “primary” services or products offered by the
Employer or a subsidiary or affiliate of Employer at any time during his term of
employment or at the Executive’s termination date (the “Non-Compete
Period”).  In the event the Executive is terminated for Cause, the Non-Compete
Period shall be extended until the earlier of (i) one year; or (ii) the then
scheduled expiration of the term of the Agreement.  In the event the Executive
is terminated in a manner in which he is paid severance, his Basic Compensation
is continued, the Non-Compete Period shall be extended through the period of
such severance or compensation continuation.  For the purpose of this Agreement,
a product or service shall be deemed “primary” only if such service or product
constitutes a primary component of the core business of Employer on Executive’s
termination date.  For the further purposes of this Agreement, the term “work
for or be interested in any business” means that the Executive is a stockholder,
director, officer, Executive, partner, individual proprietor, lender or
consultant with that business, but not if (i) his interest is limited solely to
the passive ownership of five percent (5%) or less of any class of the equity or
debt securities of a corporation whose shares are listed for trading on a
national securities exchange or traded in the over-the-counter market. In the
event that any part of this Section 9 is adjudged invalid or unenforceable by
any court of record, board of arbitration or judicial or quasi judicial entity
having jurisdiction thereof by reason of length of time, geographical coverage,
activities covered, or for any other reason, then the invalid or unenforceable
provisions of this covenant shall be deemed reformed and amended to the maximum
extent permissible under applicable law and shall be enforced and enforceable as
so amended in accordance with the intention of the parties as expressed herein.
 
 
10.2
NON-SOLICITATION

 
During the Non-Compete Period, the Executive also agrees that he will not
directly or indirectly: (i) solicit the trade of, or trade with, any past,
present or prospective customer of the Employer for any business purpose that
directly or indirectly competes with the business of Employer or a subsidiary or
affiliate of Employer; or (ii) solicit or induce, or attempt to solicit or
induce, any Executive of Employer to leave Employer for any reason whatsoever,
or assist or participate in the hiring of any Executive of Employer to work for
another entity.
 
11.          REPRESENTATIONS OF EXECUTIVE
 
As a material inducement to Employer to execute this Agreement and consummate
the transactions contemplated thereby, the Executive hereby makes the following
representations to Employer, each of which are true and correct in all material
respects as of the date hereof.
 

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11.1
NO PRIOR AGREEMENTS

 
Executive represents and warrants that Executive is not a party to or otherwise
subject to or bound by the terms of any contract, agreement or understanding
which in any manner would limit or otherwise affect Executive’s ability to
perform his obligations hereunder, including without limitation any contract,
agreement or understanding containing terms and provisions similar in any manner
to those contained in Sections 9 and 10 of this Agreement.  Executive further
represents and warrants that his employment with the Employer will not under any
circumstances require him to disclose or use any confidential information
belonging to prior Employers or other persons or entities, or to engage in any
conduct which may potentially interfere with the contractual, statutory or
common-law rights of such other Employers, persons or entities.  In the event
that Executive knows or learns of any facts whatsoever which suggest that such
interference might arguably occur as the result of any proposed actions by
either Executive or the Employer, Executive expressly promises that he will
immediately bring such facts to the Employer’s attention.
 
 
11.2
REVIEW BY COUNSEL

 
Executive expressly acknowledges and represents that Executive has been given a
full and fair opportunity to review this Agreement with an attorney of
Executive’s choice, and that Executive has satisfied himself, with or without
consulting with counsel, that the terms and provisions of this Agreement,
specifically including, but not limited to, the restrictive covenant and related
provisions of Section 10 hereof, are reasonable and enforceable.
 
 
11.3
NO CONFLICTS OF INTEREST

 
Executive covenants that, as of the date hereof, he is not involved in any
venture or activity that could compete with Employer or which could potentially
interfere with his ability to perform under this Agreement.  During the Term, he
will disclose to the Employer, in writing, any and all interests he may have,
whether for profit or compensation or not, in any venture or activity which
could potentially interfere with his ability to perform under this Agreement or
create a conflict of interest for him with the Employer.  For purposes of this
Section 11.4 only, “conflict of interest” shall mean ownership of greater than
one percent (1%) of, or $25,000 worth of equity in, another company which
conducts business similar to that undertaken by the Employer.
 
 
11.4
EXECUTIVE’S ABILITY

 
Executive represents that Executive’s experience and capabilities, and the
limited provisions of Section 10, are such that he will not be prevented from
earning his livelihood in businesses similar to that of Employer.  Executive
acknowledges that there are a significant number of businesses for which his
qualifications and experience would render him qualified for employment that do
not constitute a competing businesses such that his ability to become employed
after the termination or nonrenewal of this Agreement would not be impaired.
 

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12.          GENERAL PROVISIONS
 
12.1       INJUNCTIVE RELIEF AND ADDITIONAL REMEDY
 
The Executive acknowledges that the injury that would be suffered by the
Employer as a result of a breach of the provisions of any provision of Sections
9 and 10 of this Agreement would be irreparable and that an award of monetary
damages to the Employer for such a breach would be an inadequate
remedy.  Consequently Employer will have the right, in addition to any other
rights it may have, to obtain injunctive relief to restrain any breach or
threatened breach or otherwise to specifically enforce any provisions of
Sections 9 and 10 of this Agreement, and the Employer will not be obligated to
post bond or other security in seeking such relief.
 
12.2       WAIVER
 
The rights and remedies of the parties to this Agreement are cumulative and not
alternative.  Neither the failure nor any delay by either party in exercising
any right, power, or privilege under this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege.
 
12.3       TOLLING PERIOD
 
The non-competition, non-disclosure and non-solicitation obligations contained
in Sections 9 and 10 of this Agreement shall be extended by the length of time
during which Executive shall have been in breach of any of the provisions of
such Sections 9 and 10, regardless of whether the Employer knew or should have
known of such breach.
 
12.4       EMPLOYER VIOLATION NOT A DEFENSE
 
In an action by the Employer to enforce any provision of this Agreement, any
claims asserted by Executive against the Employer shall not constitute a defense
to the Employer’s action.
 
12.5       INDEMNIFICATION
 
Employer shall indemnify and defend Executive and his heirs, executors and
administrators against any costs or expense (including reasonable attorneys’
fees and amounts paid in settlement, if such settlement is approved by the
Employer), fine, penalty, judgment and liability reasonable incurred by or
imposed upon Executive in connection with any action, suit or proceeding, civil
or criminal, to which Executive may be made a party or with which Executive
shall be threatened, by reason of Executive’s being or having been an officer or
director, unless with respect to such matter Executive shall have been
adjudicated in any proceeding not to have acted in good faith or in the
reasonable belief that the action was in the best interests of the Employer, or
unless such indemnification is precluded by law, public policy, or in the
judgment of the Employer’s Board of Directors, such indemnification is being
sought as a result of actions of Executive which were either: (i) grossly
negligent; (ii) reflective of Executive misconduct; (iii) in violation of rules,
regulations or laws applicable to the Employer; or (iv) in disregard of Employer
policies.
 

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12.6       NOTICES
 
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand, (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
 
If to Employer:           CannLabs, Inc.
3888 E. Mexico Ave., Suite B50
Denver, CO 80210
Telephone No.:            303.309.0105
Facsimile No.:
Attn:  Chief Executive Officer
 
                                If to Executive:            Mark C. Mirken
[______________]
[______________]
 
 
12.7       ENTIRE AGREEMENT; AMENDMENTS
 
This Agreement and the documents referenced herein, contain the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, between the parties hereto
with respect to the subject matter hereof. This Agreement may not be amended
orally, but only by an agreement in writing signed by the parties hereto.
 
12.8       GOVERNING LAW
 
This Agreement will be governed by the laws of the State of Nevada without
regard to conflicts of laws principles.
 
12.9       ARBITRATION, OTHER DISPUTES.
 
In the event of any dispute or controversy arising under or in connection with
this Agreement, the parties shall first promptly try in good faith to settle
such dispute or controversy by mediation under the applicable rules of the
American Arbitration Association before resorting to arbitration.  In the event
such dispute or controversy remains unresolved in whole or in part for a period
of thirty (30) days after it arises, the parties will settle any remaining
dispute or controversy exclusively by arbitration in the city in which Employer
has its principal Executive offices in accordance with the commercial
arbitration rules of the American Arbitration Association then in
effect.  Judgment may be entered on the arbitrator’s award in any court having
jurisdiction.  All administration fees and arbitration fees shall be paid solely
by Employer.  Notwithstanding the above, Employer shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of section 9 or 10 hereof.  The
prevailing party may recover attorneys’ fees in any dispute or controversy
arising under or in connection with this Agreement
 

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12.10     ASSIGNABILITY, BINDING NATURE
 
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs (in the case of the Executive) and
assigns.  No rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive other than his rights to compensation
and benefits, which may be transferred only by will or operation of law.
 
12.11     SURVIVAL
 
The respective rights and obligations of the parties hereunder shall survive any
termination of the Executive’s employment to the extent necessary to the
intended preservation of such rights and obligations.
 
12.12     SECTION HEADINGS, CONSTRUCTION
 
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation.  All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this Agreement
unless otherwise specified.  All words used in this Agreement will be construed
to be of such gender or number as the circumstances require.  Unless otherwise
expressly provided, the word “including” does not limit the preceding words or
terms.
 
12.13     SEVERABILITY
 
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
 
12.14     COUNTERPARTS
 
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.  This
Agreement (and all other agreements, documents, instruments and certificates
executed and/or delivered in connection herewith) may be executed by facsimile
signatures, each of which shall be deemed an original copy of this Agreement (or
other such agreement, document, instrument and certificate).
 

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IMPORTANT NOTICE:  THIS AGREEMENT RESTRICTS EXECUTIVE’S RIGHTS TO OBTAIN OTHER
EMPLOYMENT FOLLOWING HIS EMPLOYMENT WITH THE EMPLOYER.  BY SIGNING IT, EXECUTIVE
ACKNOWLEDGES THIS FACT, AND FURTHER ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY THE
EMPLOYER TO READ THE AGREEMENT CAREFULLY, AND/OR TO CONSULT WITH COUNSEL OF HIS
CHOICE CONCERNING THE LEGAL EFFECTS OF SIGNING THE AGREEMENT, PRIOR TO SIGNING
IT.
 

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
 
WITNESS:
 
EMPLOYER:
             
CANNLABS, INC.
         
Signature
            By: /s/ Steve Kilts         Authorized Executive Officer   Print
Name                            
Address
                           
Address
                      EXECUTIVE:               /s/ Mark C. Mirken       Mark C.
Mirken  

 

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