EXHIBIT 10.7

 

CABINET GROW, INC.

2015 EQUITY COMPENSATION PLAN

STOCK OPTION AGREEMENT

 

Unless otherwise defined herein, capitalized terms shall have the meaning set
forth in the Cabinet Grow, Inc. 2015 Equity Compensation Plan (the "Plan").

 

1. NOTICE OF STOCK OPTION GRANT

 

You have been granted an option to purchase Common Stock, subject to the terms
and conditions of the Plan and this Option Agreement, as follows:

 

    Name of Awardee:   Total Number of Shares Granted:   Type of Option (check
one):

☐ Nonstatutory Stock Option

☐ Incentive Stock Option

Exercise Price per Share: $  Grant Date:   Vesting Commencement Date:   Vesting
Schedule:

This option may be exercised, in whole or in part, in accordance with the
following schedule:

[___]% of the Shares subject to the option shall vest [__] months after the
Vesting Commencement Date, and [__]% of the Shares subject to the option shall
vest each [year/quarter/month] thereafter, subject to the Awardee continuing to
be a Service Provider on such dates.

Termination Period: This option may be exercised for THREE (3) months after the
Awardee's Termination Date, except that if the Awardee's Termination of Service
is for Cause, this option shall terminate on the Termination Date. Upon the
death or Disability of the Awardee, this option may be exercised for TWELVE
(12) months after the Awardee's Termination Date. Special termination periods
are set forth in Sections 2.3(B), 2.9, and 2.10 below. In no event may this
option be exercised later than the Term of Award/Expiration Date provided below.
Term of Award/Expiration Date:  [____________]

 

2. AGREEMENT

 

2.1 Grant of Option. The Administrator hereby grants to the awardee named in the
Notice of Stock Option Grant attached as Part I of this Option Agreement (the
"Awardee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Stock Option Grant, at the exercise price per Share set
forth in the Notice of Stock Option Grant (the "Exercise Price"), subject to the
terms and conditions of this Option Agreement and the Plan. This Option is
intended to be a Nonstatutory Stock Option ("NSO") or an Incentive Stock Option
("ISO"), as provided in the Notice of Stock Option Grant.

 

2.2 Exercise of Option.

 

(A) Vesting/Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set forth in Section 1 and the applicable
provisions of this Option Agreement and the Plan. In no event will this Option
become exercisable for additional Shares after a Termination of Service for any
reason. Notwithstanding the foregoing, this Option becomes exercisable in full
if the Company is subject to a Change in Control before the Awardee's
Termination of Service, and within 12 months after the Change in Control the
Awardee is subject to a Termination of Service resulting from: (i) the Awardee's
involuntary discharge by the Company (or the Affiliate employing him or her) for
reasons other than Cause (defined below), death or Disability; or (ii) the
Awardee's resignation for Good Reason (defined below). This Option may also
become exercisable in accordance with Section 2.11 below.

 

The term "Cause" shall mean (1) the Awardee's theft, dishonesty, or
falsification of any documents or records of the Company or any Affiliate; (2)
the Awardee's improper use or disclosure of confidential or proprietary
information of the Company or any Affiliate that results or will result in
material harm to the Company or any Affiliate; (3) any action by the Awardee
which has a detrimental effect on the reputation or business of the Company or
any Affiliate; (4) the Awardee's failure or inability to perform any reasonable
assigned duties after written notice from the Company or an Affiliate, and a
reasonable opportunity to cure, such failure or inability; (5) any material
breach by the Awardee of any employment or service agreement between the Awardee
and the Company or an Affiliate, which breach is not cured pursuant to the terms
of such agreement; (6) the Awardee's conviction (including any plea of guilty or
nolo contendere) of any criminal act which impairs the Awardee's ability to
perform his or her duties with the Company or an Affiliate; or (7) violation of
a material Company policy. The term "Good Reason" shall mean, as determined by
the Administrator, (A) a material adverse change in the Awardee's title,
stature, authority, or responsibilities with the Company (or the Affiliate
employing him or her); (B) a material reduction in the Awardee's base salary or
annual bonus opportunity; or (C) receipt of notice that the Awardee's principal
workplace will be relocated by more than 50 miles.

 

(B) Method of Exercise. This Option is exercisable by delivering to the
Administrator a fully executed "Exercise Notice" or by any other method approved
by the Administrator. The Exercise Notice shall provide that the Awardee is
electing to exercise the Option, the number of Shares in respect of which the
Option is being exercised (the "Exercised Shares"), and such other
representations and agreements as may be required by the Administrator. Payment
of the full aggregate Exercise Price as to all Exercised Shares must accompany
the Exercise Notice. This Option shall be deemed exercised upon receipt by the
Administrator of such fully executed Exercise Notice accompanied by such
aggregate Exercise Price. The Awardee is responsible for filing any reports of
remittance or other foreign exchange filings required in order to pay the
Exercise Price.

 

2.3 Limitation on Exercise.

 

(A) The grant of this Option and the issuance of Shares upon exercise of this
Option are subject to compliance with all Applicable Laws. This Option may not
be exercised if the issuance of Shares upon exercise would constitute a
violation of any Applicable Laws. In addition, this Option may not be exercised
unless (i) a registration statement under the Securities Act of 1933, as amended
(the "Securities Act") is in effect at the time of exercise of this Option with
respect to the Shares; or (ii) in the opinion of legal counsel to the Company,
the Shares issuable upon exercise of this Option may be issued in accordance
with the terms of an applicable exemption from the registration requirements of
the Securities Act. The Awardee is cautioned that unless the foregoing
conditions are satisfied, the Awardee may not be able to exercise the Option
when desired even though the Option is vested. As a further condition to the
exercise of this Option, the Company may require the Awardee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company. Any Shares that are issued
will be "restricted securities" as that term is defined in Rule 144 under the
Securities Act, and will bear an appropriate restrictive legend, unless they are
registered under the Securities Act. The Company is under no obligation to
register the Shares issuable upon exercise of this Option.

 

(B) Special Termination Period. If exercise of the Option on the last day of the
termination period set forth in Section 1 is prevented by operation of paragraph
(A) of this Section 2.3, then this Option shall remain exercisable until 14 days
after the first date that paragraph (A) no longer operates to prevent exercise
of the Option.

 

2.4 Method of Payment. Payment of the aggregate Exercise Price shall be by any
of the following methods; provided, however, the payment shall be in strict
compliance with all procedures established by the Administrator:

 

(A) cash;

 

(B) check or wire transfer;

 

(C) subject to any conditions or limitations established by the Administrator,
other Shares that have a Fair Market Value on the date of surrender or
attestation equal to the aggregate Exercise Price;

 

(D) consideration received by the Company under a broker-assisted sale and
remittance program acceptable to the Administrator (Officers and Directors shall
not be permitted to use this procedure if this procedure would violate Section
402 of the Sarbanes-Oxley Act of 2002, as amended);

(E) subject to any conditions or limitations established by the Administrator,
retention by the Company of so many of the Shares that would otherwise have been
delivered upon exercise of the Option as have a Fair Market Value on the
exercise date equal to the aggregate exercise price of all Shares as to which
the Option is being exercised, provided that the Option is surrendered and
cancelled as to such Shares; or

 

(F) any combination of the foregoing methods of payment.

 

2.5 Leave of Absence. The Awardee shall not incur a Termination of Service when
the Awardee goes on a bona fide leave of absence, if the leave was approved by
the Company (or Affiliate employing him or her) in writing and if continued
crediting of service is required by the terms of the leave or by applicable law.
The Awardee shall incur a Termination of Service when the approved leave ends,
however, unless the Awardee immediately returns to active work.

 

For purposes of ISOs, no leave of absence may exceed three months, unless the
right to reemployment upon expiration of such leave is provided by statute or
contract. If the right to reemployment is not so provided by statute or
contract, the Awardee will be deemed to have incurred a Termination of Service
on the first day immediately following such three-month period of leave for ISO
purposes and this Option shall cease to be treated as an ISO and shall terminate
upon the expiration of the three-month period that begins the date the
employment relationship is deemed terminated.

 

2.6 Non-Transferability of Option. This Option may not be transferred in any
manner other than by will or by the laws of descent and distribution, and may be
exercised during the lifetime of the Awardee only by the Awardee. The terms of
this Option Agreement and the Plan shall be binding upon the executors,
administrators, heirs, successors, and assigns of the Awardee. This Option may
not be assigned, pledged, or hypothecated by the Awardee whether by operation of
law or otherwise, and is not subject to execution, attachment, or similar
process. Notwithstanding the foregoing, if this Option is designated as a
Nonstatutory Stock Option, the Administrator may, in its sole discretion, allow
the Awardee to transfer this Option as a gift to one or more family members. For
purposes of this Option Agreement, "family member" means a child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law (including adoptive relationships), any
individual sharing the Awardee's household (other than a tenant or employee), a
trust in which one or more of these individuals have more than 50% of the
beneficial interest, a foundation in which the Awardee or one or more of these
persons control the management of assets, and any entity in which the Awardee or
one or more of these persons own more than 50% of the voting interest.

 

2.7 Term of Option. This Option may be exercised only within the term set out in
the Notice of Stock Option Grant, and may be exercised during such term only in
accordance with this Option Agreement and the Plan.

 

2.8 Tax Obligations.

 

(A) Withholding Taxes. The Awardee shall make appropriate arrangements with the
Administrator for the satisfaction of all applicable Federal, state, local, and
foreign income taxes, employment tax, and any other taxes that are due as a
result of the Option exercise. With the Administrator's consent, these
arrangements may include withholding Shares that otherwise would be issued to
the Awardee pursuant to the exercise of this Option. The Company may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are
not delivered at the time of exercise.

 

(B) Notice of Disqualifying Disposition of ISO Shares. If the Option is an ISO,
and if the Awardee sells or otherwise disposes of any of the Shares acquired
pursuant to the exercise of the ISO on or before the later of (i) the date TWO
(2) years after the Grant Date, or (ii) the date one year after the date of
exercise, the Awardee shall immediately notify the Administrator in writing of
such disposition. The Awardee may be subject to income tax withholding by the
Company on the compensation income recognized by the Awardee.

 

2.9 Special Termination Period if the Awardee Subject to Section 16(b). If a
sale within the applicable termination period set forth in Section 1 of Shares
acquired upon the exercise of this Option would subject the Awardee to suit
under Section 16(b) of the Exchange Act, this Option shall remain exercisable
until the earliest to occur of (i) the TENTH (10th) day following the date on
which a sale of such shares by the Awardee would no longer be subject to such
suit, (ii) the ONE HUNDRED NINTIETH (190th) day after the Awardee's Termination
of Service, or (iii) the Expiration Date.

 

2.10 Special Termination Period if the Awardee Subject to Blackout Period. The
Company may establish an Insider Trading Policy (as such policy may be amended
from time to time, the "Policy") relative to trading while in possession of
material, undisclosed information. Such Policy would prohibit officers,
directors, employees, and consultants of the Company and its subsidiaries from
trading in securities of the Company during certain "Blackout Periods" as
described in the Policy. If the last day of the termination period set forth in
Section 1 would be during such a Blackout Period, then this Option shall remain
exercisable until FOURTEEN (14) days after the first date that there is no
longer in effect a Blackout Period applicable to the Awardee.

 

2.11 Change in Control. Upon a Change in Control before the Awardee's
Termination of Service, the Option will be assumed or an equivalent option or
right substituted by the successor corporation or a parent or subsidiary of the
successor corporation. If the successor corporation refuses to assume or
substitute for the Option, then immediately before and contingent on the
consummation of the Change in Control, the Awardee will fully vest in and have
the right to exercise the Option. In addition, if the Option becomes fully
vested and exercisable in lieu of assumption or substitution in the event of a
Change in Control, the Administrator will notify the Awardee in writing or
electronically that the Option will be fully vested and exercisable for a period
determined by the Administrator in its sole discretion, and the Option will
terminate upon the expiration of such period.

 

2.12 Restrictions on Resale. The Awardee shall not sell any Shares at a time
when Applicable Law, Company policies or an agreement between the Company and
its underwriters prohibit a sale. This restriction shall apply as long as the
Awardee is a Service Provider and for such period after the Awardee's
Termination of Service as the Administrator may specify.

 

2.13 Lock-Up Agreement. In connection with any underwritten public offering of
Shares made by the Company pursuant to a registration statement filed under the
Securities Act, the Awardee shall not offer, sell, contract to sell, pledge,
hypothecate, grant any option to purchase or make any short sale of, or
otherwise dispose of any Shares (including but not limited to Shares subject to
this Option) or any rights to acquire Shares of the Company for such period
beginning on the date of filing of such registration statement with the
Securities and Exchange Commission and ending at the time as may be established
by the underwriters for such public offering; provided, however, that such
period shall end not later than ONE HUNDRED EIGHTY (180) days from the effective
date of such registration statement. The foregoing limitation shall not apply to
shares registered for sale in such public offering.

 

2.14 Entire Agreement; Governing Law. This Option Agreement and the Plan
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Awardee with respect to the subject matter hereof,
and may not be modified adversely to the Awardee's interest except by means of a
writing signed by the Company and Awardee. This Option Agreement is governed by
the internal substantive laws, but not the choice of law rules, of Nevada.

 

2.15 No Guarantee of Continued Service. The vesting of the Option pursuant to
the Vesting Schedule hereof is earned only by continuing as a Service Provider
at the will of the Company (and not through the act of being hired, being
granted an Option, or purchasing Shares hereunder). This Option Agreement, the
transactions contemplated hereunder, and the Vesting Schedule set forth herein
constitute neither an express nor an implied promise of continued engagement as
a Service Provider for the vesting period, for any period, or at all, and shall
not interfere with Awardee's right or the Company's right to terminate Awardee's
relationship as a Service Provider at any time, with or without Cause.

 

By the Awardee's signature and the signature of the Company's representative
below, the Awardee and the Company agree that this Option is granted under and
governed by the terms and conditions of this Option Agreement and the Plan. The
Awardee has reviewed this Option Agreement and the Plan in their entirety, has
had an opportunity to obtain the advice of counsel before executing this Option
Agreement and fully understands all provisions of this Option Agreement and the
Plan. The Awardee hereby agrees to accept as binding, conclusive, and final all
decisions or interpretations of the Administrator upon any questions relating to
this Option Agreement and the Plan.

 

The Awardee further agrees that the Company may deliver all documents relating
to the Plan or this Option (including prospectuses required by the Securities
and Exchange Commission), and all other documents that the Company is required
to deliver to its security Awardees or the Awardee (including annual reports,
proxy statements and financial statements), either by e-mail or by e-mail notice
of a Web site location where those documents have been posted. The Awardee may
at any time (i) revoke this consent to e-mail delivery of those documents;
(ii) update the e-mail address for delivery of those documents; (iii) obtain at
no charge a paper copy of those documents, in each case by writing the Company
at 17932 Sky Park Circle, Suite F, Irvine, California 92614.  The Awardee may
request an electronic copy of any of those documents by requesting a copy in
writing from the Company. The Awardee understands that an e-mail account and
appropriate hardware and software, including a computer or compatible cell phone
and an Internet connection, will be required to access documents delivered by
e-mail.

 

AWARDEE:

 

_________________________________

Signature

 

_________________________________

Print Name

 

_________________________________

Residence Address

CABINET GROW, INC.

 

By:_________________________________

 

 

Its:_________________________________

 

 

 

 

EXERCISE FORM

 

Cabinet Grow, Inc.

17932 Sky Park Cir., Ste. F

Irvine, CA 92614

 

Ladies and Gentlemen:

 

I hereby exercise the Option granted to me on _______________, 20__, by CABINET
GROW, INC. (the “Corporation”), subject to all the terms and provisions thereof
and of the 2015 Equity Compensation Plan (the “Plan”), and notify you of my
desire to purchase ______ incentive shares and ______ non-qualified shares of
Common Stock of the Corporation at a price of $_____ per share pursuant to the
exercise of said Option.

 

Payment Amount: $___________________

            Date:                Awardee Signature           Received by CABINET
GROW, INC. on            

 

Broker Information:

 

 

Firm Name

 

            Contact Person    

 

            Broker Address    

 

                    City, State, Zip Code   Phone Number    

 

            Broker Account Number    

 

 

            Electronic Transfer Number: