Exhibit
10.1


 


 


 


December
8, 2014


 


Surna, Inc.


1780
55th Street


Boulder,
CO 80301


 


Dear David:


 


The following
is an agreement between Surna, Inc. (the “Company”) and David W. Traylor for the position with the Company of Chief
Business Officer (“CBO”) reporting to the CEO (the “Agreement”). Your preliminary responsibilities and
tasks may include but not be limited to what is listed in Exhibit A. If you decide to join the Company, there shall be a preliminary
period of employment (“Preliminary Period”) and a post-preliminary period of employment (“Post-Preliminary Period”).
Currently, the Company believes the Preliminary Period will not last longer than six (6) months.


 


Preliminary
Period Compensation and Benefits


 


During the
Preliminary Period, you will be paid on a semi-monthly basis at an annual base rate of one hundred ten thousand four hundred ($110,400).
You will be paid in accordance with the Company’s current standard payroll practices.


 


In addition,
as part of the Preliminary Period compensation you will receive a one-time sign-on bonus of twelve thousand five hundred dollars
($12,500) to be paid upon execution of this Agreement.


 


During the
Preliminary Period, you will not receive typical company-provided benefits, including healthcare and D&O insurance.


 


Post-Preliminary
Period Compensation and Benefits


 


During the
Post-Preliminary Period, your initial salary level shall be defined as an annual base that is increased from the Preliminary Period
and increased in a similar fashion to other senior level managers of the Company that were employed on the effective date of this
Agreement. You will be paid in accordance with the Company’s standard payroll practices for the Post-Preliminary Period.


 


During the
Post-Preliminary Period, you will also be eligible to participate in the Company’s standard employee benefit programs. You
should note that the Company may modify job titles, salaries, and benefits from time to time as it deems necessary. The expenses
eligible for reimbursement under this Agreement in any year shall not affect any expenses eligible for reimbursement or in-kind
benefits in any other year. Your rights under this Agreement concerning reimbursements are not subject to liquidation or exchange
for any other benefit.


 


Vacation


 


CBO shall
be entitled to three (3) weeks of paid vacation upon entrance into the Post-Preliminary Period accept that, Company agrees to
provide reasonable accommodation to immediately allow for vacation benefits.


 






    	 



    	 



    


 


Hire
Option Grant


 


Subject
to approval by the Company after the effective date of this Agreement, which will not be unreasonably withheld, the Company will
grant you a hire option grant (“Hire Option Grant”) to purchase one million one hundred forty-six thousand (1,146,000)
shares of the Company’s common stock. The per share exercise price of each Hire Option Grant shall be thirty five cents
($0.35) per share. Twenty-five percent (25%) of the shares subject to the Hire Option Grant shall vest twelve (12) months after
the effective date of this Agreement, subject to your continuing employment with the Company, and no shares shall vest before
such date. The remaining shares shall vest monthly over the next thirty-six (36) months, in equal monthly amounts, subject to
your continuing employment with the Company.


 


Milestone
Option Grant


 


Additionally,
one (1) year after the effective date of this Agreement, the Company will grant you a milestone option grant to purchase one hundred
fourteen thousand six hundred (114,600) shares of the Company’s common stock (the “Milestone Option Grant”)
subject to vesting upon attainment of the following milestone as described in this paragraph. The Milestone Option Grant will
be met upon the achievement of six million dollars ($6,000,000) in revenue for the fiscal year of 2015 and the appreciation of
the market capitalization of the Company to eighty million dollars ($80,000,000) in 2015. The per share exercise price of the
Milestone Option Grant shall be the quoted stock price of the Company at the close of trading on the one (1) year anniversary
of the effective date of this Agreement.


 


Annual Option Grants


 


You will
also be eligible for annual grants of options (“Annual Option Grants”), said Annual Option Grants to be made in the
sole discretion of the Company. Each of the Annual Option Grants shall be granted under, and shall be subject to the terms and
conditions of, the Company’s stock plan.


 


Options
and Change in Control


 


All options
granted to you by the Company will become vested and exercisable in full if you are still employed by the Company at the time
of a “change of control” (as defined below) and within twelve (12) months following such “change of control”.


 


A “Change
of Control” shall mean, for purposes of the foregoing paragraph, (i) a merger or consolidation in which (A) the Company
is a constituent party, or (B) a subsidiary of the Company is a constituent party and the Company issues shares of its capital
stock pursuant to such merger or consolidation, except in the case of either clause (A) or (B) any such merger or consolidation
involving the Company or a subsidiary of the Company in which the beneficial owners of the shares of capital stock of the Company
outstanding immediately prior to such merger or consolidation continue beneficially to own, immediately following such merger
or consolidation, at least a majority by voting power of the capital stock of (x) the surviving or resulting corporation or (y)
if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger
or consolidation, the parent corporation of such surviving or resulting corporation; (ii) the sale, lease, transfer, exclusive
license or other disposition, in a single transaction or series of related transactions, by the Company or a Company subsidiary
of all or substantially all the assets of the Company and the Company subsidiaries taken as a whole (except in connection with
a merger or consolidation not constituting a Change of Control under clause (i) or where such sale, lease, transfer, exclusive
license or other disposition is to a wholly owned Company subsidiary); or (iii) the sale or transfer, in a single transaction
or series of related transactions, by the stockholders of the Company of more than fifty (50%) by voting power of the then-outstanding
capital stock of the Company to any person or entity or group of affiliated persons or entities.


 


Severance


 


In the event
that your employment were to be terminated by you for “Good Reason” or, after nine (9) months of your employment,
by the Company without “Cause” (each, as defined below), you will receive severance of six (6) months of salary then
in effect, together with reimbursement for the cost of up to six (6) months of COBRA premiums for continued health benefit coverage
(for so long as you are eligible for such coverage through COBRA). Your severance payment will be made in the form of salary continuation
in accordance with the following paragraph.


 






    	 



    	 



    

 


Any obligation
of the Company to provide you severance payments or other benefits following termination is conditioned on your signing an effective
release of claims in the form provided by the Company (the “Employee Release”) following the termination of your employment,
which release shall not apply to (i) claims for indemnification in your capacity as an officer or director of the Company under
the Company’s Certificate of Incorporation, By-laws or written agreement, if any, providing for director or officer indemnification,
(ii) rights to receive insurance payments under any policy maintained by the Company and (iii) rights to receive retirement benefits
that are accrued and fully vested at the time of your termination.


 


Any severance
payments to be made in the form of salary continuation pursuant to the terms of this Agreement shall be payable in accordance
with the normal payroll practices of the Company, and will begin at the Company’s next regular payroll period following
the effective date of the Employee Release, but shall be retroactive to the date of termination. You agree to provide the Company
prompt notice of your eligibility to participate in the health plan and, if applicable, dental plan of any employer.


 


It is intended
that this Agreement shall conform with all applicable Section 409A requirements to the extent Section 409A applies to any provisions
of this Agreement, and that payments be interpreted as exempt from Section 409A where possible. Accordingly, in interpreting,
construing or applying any provisions of this Agreement, the same shall be construed in such manner as shall meet and comply with
Section 409A, and in the event of any inconsistency with Section 409A, the same shall be reformed so as to meet the requirements
of Section 409A.


 


Cause
Definition


 


As used
in this Agreement, “Cause” shall mean: (a) commission of, or indictment or conviction of, any felony or any other
crime involving dishonesty; (b) participation in any fraud, deliberate and substantial misconduct, breach of duty of loyalty or
breach of fiduciary duty against the Company; (c) intentional and substantial damage to any property of the Company; (d) serious
misconduct by you which reflects adversely upon the company; (e) unsatisfactory performance of your material duties; or (f) your
breach of any material provision of this Agreement. Provided, however, that neither section (e) nor (f) shall constitute “Cause”
unless within thirty (30) days of the occurrence of the event the Company claims so qualifies, the Company shall have provided
you with written notice specifying in detail the basis for such claim, and a reasonable opportunity to cure the claimed unsatisfactory
performance or breach, and you fail to cure such unsatisfactory performance or breach within thirty (30) days of your receipt
of the Company’s notice.


 


Good
Reason Definition


 


As used
in this Agreement, “Good Reason” shall mean: (1) a material and adverse diminution of your duties with the Company,
(2) a material breach by the Company of this Agreement; provided, none of the foregoing shall qualify as Good Reason unless, within
thirty (30) days of the occurrence of the event you claim so qualifies, you shall have provided the Company with written notice
specifying in detail the basis for such claim, and a reasonable opportunity to cure the claimed Good Reason, and the Company fails
to cure such Good Reason within thirty (30) days of its receipt of your notice; provided further, no termination for Good Reason
shall so qualify unless you shall terminate your employment at the Company no more than thirty (30) days following the expiration
of the Company’s cure period.


 


At-Will
Employment


 


The Company
is excited about you joining their ranks and looks forward to a mutually beneficial and productive relationship. Nevertheless,
you should be aware that your employment with the Company is for no specified period and constitutes at-will employment. As a
result, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free to conclude its employment
relationship with you at any time, with or without cause, and with or without notice.


 






    	 



    	 



    

 


Background
Contingency


 


The Company
reserves the right to conduct background investigations and/or reference checks on all of its potential employees. Your job offer,
therefore, is contingent upon a clearance of such a background investigation and/or reference check, if any. For purposes of federal
immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment
in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment
relationship with you may be terminated.


 


Confidentiality


 


We also
ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment
that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. It is the Company’s
understanding that any such agreements will not prevent you from performing the duties of your position and you represent that
such is the case. Moreover, you agree that, during the term of your full-time employment with the Company, you will not engage
in any other employment, occupation, consulting or other business activity directly related to the business in which the Company
is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict
with your obligations to the Company. Similarly, you agree not to bring any third party confidential information to the Company,
including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any
such information.


 


Requirements


 


As a condition
of your employment, you are also required to sign and comply with a Confidential Information and Non-Competition Agreement which
requires, among other provisions, non-disclosure of Company proprietary information and an agreement not to engage in competitive
activities with the Company through the six (6) month period following the termination of your employment.


 


Database
Reimbursement


 


The Company
will reimburse you fifty percent (50%) of the subscription cost of one thousand five hundred seventy-five dollars ($1,575) of
the Thomson Reuters Recap database.


 


General


 


To accept
the Company’s offer, please sign and date this Agreement in the space provided below. A duplicate original is enclosed for
your records. If you accept our offer, your first day of employment will be on December 8, 2014. Your compensation for December
2014 shall be prorated accordingly.


 


The Company
will also clarify and assign the number of shares (7,029) granted to you under the engagement agreement and amendment previously
executed between you and the Company.


 


This Agreement,
along with any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with
the Company and supersede any prior representations or agreements including, but not limited to, any representations made during
your recruitment, interviews or pre-employment negotiations, whether written or oral. This Agreement, including, but not limited
to, its at-will employment provision, may not be modified or amended except by a written agreement signed by the Chief Executive
Officer of the Company and you.


 


We look
forward to your favorable reply and to working with you at Surna, Inc.


 


	  	Sincerely,
	 	 
	  	/s/ Tom Bollich
	  	Tom Bollich
	  	CEO


 


	Agreed
to and accepted:


 	 
	  	  	 
	Signature:	/s/
    David Traylor	 
	  	  	 
	Printed Name:	David Traylor	 
	  	  	 
	Date:	December 8, 2014	 
	 	 	 


 




    	 



    	 



    


 


Exhibit
A




Strategic/Corporate Development


 


	 	●	Competitive
    intelligence.  Responsible for monitoring market trends and the competitive landscape in order to provide continuous
    business improvement recommendations and to suggest new business venues and both traditional and nontraditional revenue opportunities.
	 	 	 
	 	●	Strategy
    development.  Creates appropriate strategies and solutions to ensure a market advantage and competitive edge
    including market research at the industry, market, and economic levels, and the development of customer based research and
    analysis.
	 	 	 
	 	●	Linking
    tactics and strategy.  Work in collaboration with the CEO and other senior executives to execute the organizational
    strategic plan, setting outcome based metrics for each program, leading his/her team in creating and establishing systems
    to drive the company vision and to track progress towards those goals, and coaching the team in achieving those goals.
	 	 	 
	 	●	Potential
    collaborations.  Help identify potential collaborators/targets for corporate development initiatives.
	 	 	 
	 	●	Due
    diligence. Lead the due diligence process for companies that are perceived to be potential partners/targets for corporate
    development initiatives.
	 	 	 
	 	●	Negotiation
    assistance.  Assist or when needed drive negotiation of collaborative, JV or M&A agreements.
	 	 	 
	 	●	General.  Serve
    as a thought partner to the CEO on issues relating to business development, including the best avenues for growth, market
    opportunities, and forecasting data to drive strategy and decisions towards business development. Perform other duties, as
    assigned, by the CEO.


 


Operations/Ops
Integration


 


	 	●	Execution.  Holds
    ownership for the operational execution and delivery of results including the development of plans, the reporting of progress
    against strategic goals.
	 	 	 
	 	●	Upfront
    ERP.  Assist with evaluation of potential ERP systems.
	 	 	 
	 	●	Process
    definition.  Assist with defining the manufacturing/assembly process for ERP implementation.
	 	 	 
	 	●	ERP
    implementation. Help drive and manage ERP implementation.
	 	 	 
	 	●	General.  Interacts
    with other senior management to provide consultative support to planning initiatives through financial and management information
    analyses, reports and recommendations.


 


IR Function


 


	 	●	Press
    releases.  Manage IR process for press releases
	 	 	 
	 	●	Internal
    IR.  Work with Katie to manage the internal tasks of IR
	 	 	 
	 	●	External
    IR.  Work with consultants to manage the external tasks of IR
	 	 	 
	 	●	Presentation
    development.  Assist Tom in developing materials for conferences and other presentations
	 	 	 
	 	●	Material
    development.  Work to  standardize all external materials
	 	 	 
	 	●	Messaging.  In
    partnership with the CEO and CFO will lead the development and presentation of the Company’s value propositions and
    business partnership opportunities to high profile and valued corporate customers and investors


 


Human
Resources


 


	 	●	HR
    foundation.  Help Tae where needed to build up a human resources foundation
	 	 	 
	 	●	BOD.  Help
    identify potential BOD members
	 	 	 
	 	●	HR
    consultant.  Assist with hiring a human resource consultant
	 	 	 
	 	●	Smart
    growth.  Help company grow effectively and smartly


 






    	 



    	 



    

 


Accounting/Financing
Function


 


	 	●	Budgets.  Assist
    with budgeting process
	 	 	 
	 	●	Proformas.  Assist
    with proforma financials creation
	 	 	 
	 	●	Revenue
    modeling.  Assist with defining effective revenue models
	 	 	 
	 	●	SEC
    documents.  Assist where needed on SEC documentation submission


 


Financing
Strategy


 


	 	●	Data
    generation.  Provide data and analysis on financing options
	 	 	 
	 	●	Potential
    investors.  Identify and connect with reputable institutional investors
	 	 	 
	 	●	Bank
    selection.  Help identify and select appropriate financial entities/investment banks




 


Technology/IP Development Strategy


 


	 	●	Tech
    evaluation.  Assist in developing and managing technology evaluation
	 	 	 
	 	●	Tech
    strategy.  Assist in developing and managing technology strategy
	 	 	 
	 	●	IP
    strategy.  Assist in the development and execution of the Company’s IP strategy