Document:

EXHIBIT 4.1

 

THIS
NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.

 

SURNA
INC.

 

CONVERTIBLE
PROMISSORY NOTE

 

	$_________
    	_____
__, 2014
	 	Boulder,
    Colorado

 

FOR
VALUE RECEIVED, Surna, Inc., a Nevada corporation (the “Company”) promises to pay to ________________________________
(the “Investor”), or its registered assigns, in lawful money of the United States of America the principal sum of
_______________________ Dollars ($__,000.00), or such lesser amount as shall equal the outstanding principal amount hereof, together
with interest from the date of this Note on the unpaid principal balance at a rate equal to ten percent (10%) per annum, computed
on the basis of the actual number of days elapsed and a year of 365 days. All unpaid principal, together with any then unpaid
and accrued interest and other amounts payable hereunder, if not converted pursuant to Section 6 herein, shall be due and payable
on the earlier of (i) ________, 2016 (the “Maturity Date”), or (ii) when, upon or after the occurrence of an Event
of Default (as defined below), such amounts are declared due and payable by Investor or made automatically due and payable in
accordance with the terms hereof. If the Note is held through the Maturity Date and not converted, the Investor shall be paid
an amount equal to the amount of the Note plus an additional amount equal to fifty percent (50%) of the Note (in lieu of the accrued
annual interest). This Note is one of the “Notes” issued pursuant to the Private Placement and Subscription Agreement
(as amended, modified or supplemented, the “Agreement”) between the Company and the Investors (as defined in the Agreement).

 

The
following is a statement of the rights of Investor and the conditions to which this Note is subject, and to which Investor, by
the acceptance of this Note, agrees:

 

1.
Definitions. As used in this Note, the following capitalized terms have the following meanings:

 

(a)
the “Company” includes the corporation initially executing this Note and any Person which shall succeed to
or assume the obligations of the Company under this Note.

 

(b)
“Event of Default” has the meaning given in Section 4 hereof.

 

(c)
“Investor” shall mean the Person specified in the introductory paragraph of this Note or any Person who shall
at the time be the registered holder of this Note.

 

(d)
“Majority in Interest” shall mean, more than 65% of the aggregate outstanding principal amount of the Notes
issued pursuant to the Agreement.

 

(e)
“Material Adverse Effect” shall mean a material adverse effect on (a) the business, assets, operations, prospects
or financial or other condition of the Company; (b) the ability of the Company to pay or perform the Obligations in accordance
with the terms of this Note and the other Transaction Documents and to avoid an Event of Default, or an event which, with the
giving of notice or the passage of time or both, would constitute an Event of Default, under any Transaction Document; or (c)
the rights and remedies of Investor under this Note, the other Transaction Documents or any related document, instrument or agreement
through no fault of the Company.

 

(f)
“Agreement” has the meaning given in the introductory paragraph hereof.

 

(g)
“Obligations” shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising,
owed by the Company to Investor of every kind and description (whether or not evidenced by any note or instrument and whether
or not for the payment of money), now existing or hereafter arising under or pursuant to the terms of this Note, the Agreement
and the other Transaction Documents, including, all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’
fees and costs chargeable to and payable by the Company hereunder and thereunder, in each case, whether direct or indirect, absolute
or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United
States Code (11 U. S. C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or
not allowed or allowable as a claim in any such proceeding.

 

    	 

    	 

    

 

(h)
“Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a
joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental
authority.

 

(i)
“Securities Act” shall mean the Securities Act of 1933, as amended.

 

(j)
“Transaction Documents” shall mean this Note, each of the other Notes issued under the Agreement and the Agreement.

 

2.
Interest. Accrued interest on this Note shall be payable at maturity.

 

3.
Prepayment. Upon the prior written consent of Investor, the Company may prepay this Note in whole or in part; provided
that: (i) any prepayment of this Note may only be made in connection with the prepayment of all Notes issued under the Agreement
on a pro rata basis, based on the respective aggregate outstanding principal amounts of each such Note, and (ii) any such prepayment
will be applied first to the payment of expenses due under this Note, second to interest accrued on this Note and third, if the
amount of prepayment exceeds the amount of all such expenses and accrued interest, to the payment of principal of this Note.

 

4.
Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this
Note and the other Transaction Documents:

 

(a)
Failure to Pay. The Company shall fail to pay (i) when due any principal or interest payment on the due date hereunder
or (ii) any other payment required under the terms of this Note or any other Transaction Document on the date due and such payment
shall not have been made within five days of the Company’s receipt of Investor’s written notice to the Company of
such failure to pay; or

 

(b)
Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing
its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its
creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined or interpreted under any applicable
statute), (vi) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of effecting any of the foregoing; or

 

(c)
Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or
custodian of the Company or of all or a substantial part of the property thereof, or an involuntary case or other proceedings
seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency
or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not
be dismissed or discharged within 30 days of commencement; or

 

(d)
Material Adverse Effect. One or more conditions exist or events have occurred which could reasonably indicate, or reasonably
result in, a Material Adverse Effect.

 

    	 

    	 

    

 

5.
Rights of Investor upon Default. Upon the occurrence or existence of any Event of Default and at any time thereafter during
the continuance of such Event of Default, Investor may, with the consent of a Majority in Interest of the holders of the Notes
issued under the Agreement, by written notice to the Company, declare all outstanding Obligations payable by the Company hereunder
to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the other Transaction Documents to the contrary notwithstanding. Upon the occurrence
or existence of any Event of Default described in Sections 4(b) and 4(c), immediately and without notice, all outstanding Obligations
payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction
Documents to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event
of Default, Investor may exercise any other right, power or remedy granted to it by the Transaction Documents or otherwise permitted
to it by law, either by suit in equity or by action at law, or both.

 

6.
Conversion.

 

(a)
Conversion. This Note shall be convertible at the option of the Investor into that number of shares of the Company’s
Common Stock as is determined by dividing such principal amount and accrued interest by the lesser of (i) $1.00 per share or (ii)
eighty percent (80%) of the prior thirty day weighted average market price for the Company’s common stock (both (i) and
(ii) adjusted to reflect subsequent stock dividends, stock splits, combinations or recapitalizations). Before Investor shall be
entitled to convert this Note into shares of Common Stock under this Section 6(a), the Investor shall execute and deliver to the
Company a common stock purchase agreement reasonably acceptable to the Company containing customary representations and warranties
and transfer restrictions. Upon conversion, Company shall place Investor’s Common Stock (“Converted Stock”)
into the escrow account of the Company’s Transfer Agent. The Converted Stock shall include a lock-up agreement for the six
month period following the Rule 144 six month holding period (“Lockup”). During the Lockup, Company agrees to release
to Investor up to ten percent (10%) of Investor’s Converted Stock, per month, for a period of six months. On the one year
anniversary of conversion, no matter how much Converted Stock has been released to Investor, Company agrees to release to Investor,
without restriction, all remaining Converted Stock. In addition, before Investor shall be entitled to convert this Note into 100%
of the shares of Common Stock the Investor is entitled to, Investor shall surrender this Note, duly endorsed, at the office of
the Company and shall give written notice to the Company at its principal corporate office, of the election to convert the same
pursuant to this Section, and shall state therein the amount of the unpaid principal amount of this Note to be converted and the
name or names in which the certificate or certificates for shares of Common Stock are to be issued. The Company shall, as soon
as practicable thereafter, issue instructions to its transfer agent to issue to Investor a certificate or certificates for the
number of shares of Common Stock to which Investor shall be entitled upon conversion (bearing such legends as are required by
the common stock purchase agreement, the Agreement and applicable state and federal securities laws in the opinion of counsel
to the Company), together with a replacement Note (if any principal amount is not converted) and any other securities and property
to which Investor is entitled upon such conversion under the terms of this Note. The conversion shall be deemed to have been made
immediately prior to the close of business on the date of the surrender of this Note, and the Person or Persons entitled to receive
the shares of Common Stock upon such conversion shall be treated for all purposes as the record Investor or Investors of such
shares of Common Stock as of such date.

 

(b)
Fractional Shares; Interest; Effect of Conversion. No fractional shares shall be issued upon conversion of this Note. In
lieu of the Company issuing any fractional shares to Investor upon the conversion of this Note, the Company shall pay to Investor
an amount equal to the product obtained by multiplying the conversion price by the fraction of a share not issued pursuant to
the previous sentence. In addition, the Company shall pay to Investor any interest accrued on the amount to be paid to the Company
pursuant to the previous sentence. Upon conversion of this Note in full and the payment of any amounts specified in this Section
6(a), the Company shall be forever released from all its obligations and liabilities under this Note.

 

7.
Successors and Assigns. Subject to the restrictions on transfer described in Sections 9 and 10 below, the rights and obligations
of the Company and Investor shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of
the parties.

 

8.
Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company
and the holders of a Majority in Interest.

 

    	 

    	 

    

 

9.
Transfer of this Note or Securities Issuable on Conversion Hereof. With respect to any offer, sale or other disposition
of this Note, Investor will give written notice to the Company prior thereto, describing briefly the manner thereof, together
with a written opinion of Investor’s counsel, or other evidence if reasonably satisfactory to the Company, to the effect
that such offer, sale or other distribution may be effected without registration or qualification (under any federal or state
law then in effect). Upon receiving such written notice and reasonably satisfactory opinion, if so requested, or other evidence,
the Company, as promptly as practicable, shall notify Investor that Investor may sell or otherwise dispose of this Note, all in
accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 9
that the opinion of counsel for Investor, or other evidence, is not reasonably satisfactory to the Company, the Company shall
so notify Investor promptly after such determination has been made. Each Note thus transferred shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with the Securities Act, unless in the opinion of counsel for the
Company such legend is not required in order to ensure compliance with the Securities Act. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions. Subject to the foregoing transfers of this Note shall
be registered upon registration books maintained for such purpose by or on behalf of the Company as provided in the Note and Warrant
Purchase Agreement. Prior to presentation of this Note for registration of transfer, the Company shall treat the registered holder
hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for
all other purposes whatsoever, whether or not this Note shall be overdue and the Company shall not be affected by notice to the
contrary.

 

10.
Assignment by the Company. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned,
by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the holders of a Majority
in Interest.

 

11.
Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder
shall in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Agreement,
or at such other address or facsimile number as the Company shall have furnished to Investor in writing. All such notices and
communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business
day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one business day after being deposited
with an overnight courier service of recognized standing or (v) four days after being deposited in the U.S. mail, first class
with postage prepaid.

 

12.
Pari Passu Notes. Investor acknowledges and agrees that the payment of all or any portion of the outstanding principal
amount of this Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Notes
issued pursuant to the Agreement or pursuant to the terms of such Notes. In the event Investor receives payments in excess of
its pro rata share of the Company’s payments to the Investors of all of the Notes, then Investor shall hold in trust all
such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other
holders upon demand by such holders.

 

13.
Payment. Payment shall be made in lawful tender of the United States.

 

14.
Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed
in accordance with the laws of the State of Colorado, without regard to the conflicts of law provisions of the State of Colorado,
or of any other state.

 

15.
Usury. All agreements between the Company and the Investor, whether now existing or hereafter arising and whether written
or oral, are expressly limited so that in no contingency or event whatsoever, whether by acceleration of the maturity of this
Note or otherwise, shall the amount paid, or agreed to be paid, to the Investor for the use, forbearance or detention of the money
to be loaned under this Note or otherwise, exceed the maximum amount permissible under applicable law. If from any circumstances
whatsoever fulfillment of any provision of this Note or of any other document evidencing, securing or pertaining to the indebtedness
evidenced by this Note, at the time performance of such provision shall be due, shall involve transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from
any such circumstances the Investor shall ever receive anything of value as interest or deemed interest by applicable law under
this Note or any other document evidencing, securing or pertaining to the indebtedness evidenced by this Note or otherwise an
amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction
of the principal amount owing under this Note or on account of any other indebtedness of the Company to the Investor relating
to this Note, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of this
Note and such other indebtedness, such excess shall be refunded to the Company. In determining whether or not the interest paid
or payable with respect to any indebtedness of the Company to the Investor, under any specific contingency, exceeds the highest
lawful rate, the Company and the Investor shall, to the maximum extent permitted by applicable law, (i) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (ii) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate of interest on account of such indebtedness is
uniform throughout the term of such indebtedness, and/or (iii) allocate interest between portions of such indebtedness, to the
end that no such portion shall bear interest at a rate greater than that permitted by law. The terms and provisions of this Section
shall control and supersede every other conflicting provision of all agreements between the Company and the Investor. The Investor
has been advised by the Company to seek the advice of an attorney and an accountant in connection with the issuance of this Note.
The Company has had the opportunity to seek the advice of any attorney and accountant of the Company’s choice in connection
with issuance of this Note.

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the undersigned has executed this Convertible Promissory Note as of the date first set forth above.

 

	SURNA, INC.	 
	 	 	 
	By: 	 	 
	Tom Bollich, CEO	 
	 	 	 
	By:	 	 
	 	 	 
	 	 
	Investor (Lender)Exhibit 10(h)

		
			Exhibit 10(h)
		

		
			CHANGE OF CONTROL SEVERANCE AGREEMENT
		

		
			THIS AGREEMENT (“Agreement”) is made on this 16 day of October, 2008 (the “Effective Date”) between WD-40 COMPANY (hereinafter the “Company”) and Jay Rembolt (hereinafter the “Executive”).
		

		
			RECITALS:
		

		
			Whereas, the Company has determined that the Executive is among that group of key managers whose services and participation in management may be critical in any period of transition, such as at the time of any change in control of the Company or in the face of any proposed corporate reorganization or acquisition, friendly or hostile, affecting the Company. Accordingly, the board of directors of the Company (the “Board”) has determined that it is appropriate and in the best interests of the Company and its stockholders that provisions be made to encourage the Executive’s continued attention and undistracted dedication to the Executive’s duties in the potentially disturbing circumstances of a possible change in control of the Company, by providing the Executive with some degree of personal financial security under such circumstances.
		

		
			NOW THEREFORE, the parties agree as follows:
		

		
			1. Change in Control: For purposes of this Agreement, Change in Control shall mean:
		

		
			(a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (C) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in subclauses (i), (ii) and (iii) of subparagraph (c) of this sentence are satisfied; or
		

		
			(b) if individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then constituting the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest subject to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
		

		
			(c) approval by the stockholders of the Company of a reorganization, merger or consolidation, unless following such reorganization, merger or consolidation (i) more than 60% of, respectively, the then-outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger, or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be (for purposes of determining whether such percentage test is satisfied, there shall be excluded from the number of shares and voting securities of the resulting corporation owned by the Company’s stockholders, but not from the total number of outstanding shares and voting securities of the resulting corporation, any shares or 
		

		 

 

		voting securities received by any such stockholder in respect of any consideration other than shares or voting securities of the Company); (ii) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company, any qualified employee benefit plan of such corporation resulting from such reorganization, merger or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors; and (iii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or
		

		
			(d)(i) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company or (ii) the first to occur of (A) the sale or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, or (B) the approval by the stockholders of the Company of any such sale or disposition, other than, in each case, any such sale or disposition to a corporation, with respect to which immediately thereafter, (1) more than 60% of, respectively, the then-outstanding shares of common stock of such corporation and the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be (for purposes of determining whether such percentage test is satisfied, there shall be excluded from the number of shares and voting securities of the transferee corporation owned by the Company’s stockholders, but not from the total number of outstanding shares and voting securities of the transferee corporation, any shares or voting securities received by any such stockholder in respect of any consideration other than shares or voting securities of the Company); (2) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company, any qualified employee benefit plan of such transferee corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of such transferee corporation and the combined voting power of the then-outstanding voting securities of such transferee corporation entitled to vote generally in the election of directors; and (3) at least a majority of the members of the board of directors of such transferee corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the board providing for such sale or other disposition of assets of the Company.
		

		
			2. Termination Following a Change in Control:
		

		
			(a) The Executive shall be entitled to the compensation provided for in Paragraph 3 if all of the following conditions are satisfied:
		

		
			(i) there is a Change in Control of the Company while the Executive is still an employee of the Company;
		

		
			(ii) the Executive’s employment with the Company is terminated within two years after the Change in Control; and
		

		
			(iii) the Executive’s termination of employment is not a result of (A) the Executive’s death; (B) the Executive’s Disability (as defined in subparagraph 2(b) below); (C) the Executive’s Retirement (as defined in subparagraph 2(c) below); (D) the Executive’s termination by the Company for Cause (as defined in subparagraph 2(d) below); or (E) the Executive’s decision to terminate employment other than for Good Reason (as defined in subparagraph 2(e) below). Notwithstanding the foregoing, if a Change of Control occurs and if the Executive’s employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in 
		

		 

 

		connection with or in anticipation of a Change of Control, then the Executive shall be entitled to the compensation provided for in Paragraph 3.
		

		
			(b) If, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been unable, with or without a reasonable accommodation, to perform the Executive’s duties with the Company on a full time basis for six months and if, within 30 days after a Notice of Termination (as defined in subparagraph 2(f)) is thereafter given by the Company, the Executive shall not have returned to the full time performance of the Executive’s duties, the Company may terminate the Executive’s employment for “Disability”.
		

		
			(c) The term “Retirement” as used in this Agreement shall mean termination by the Company or the Executive of the Executive’s employment under circumstances whereby the Executive is otherwise entitled to receive benefits payable under the presently existing Supplemental Retirement Benefit Plan entered into between the Company and the Executive or such other nonqualified retirement benefit plan providing substantially similar benefits.
		

		
			(d) The Company may terminate the Executive’s employment for Cause before or after a Change in Control. For purposes of this Agreement only, “Cause” shall mean: (i) the Executive’s commission of acts subject to prosecution as a felony involving moral turpitude; (ii) the Executive’s material breach of fiduciary duty as an executive officer of the Company which has resulted, or is likely to result, in material economic damage to the Company; or (iii) the Executive’s willful gross misconduct or willful gross neglect of duties (other than any such neglect resulting from the Executive’s incapacity due to physical or mental illness or any such neglect after the issuance of a Notice of Termination by the Executive for Good Reason, as such terms are defined in subparagraphs (e) and (f) below and as they may apply under this Paragraph 2); provided that no act or failure to act by the Executive will constitute “Cause” under clause (ii) if the Executive believed in good faith that such act or failure to act was in the best interest of the Company.
		

		
			Any termination of the Executive’s employment by the Company for Cause shall be authorized by a vote of at least a majority of the independent members of the Board (as they may be determined by the Board from time to time) within 12 months of a majority of such independent members of the Board having actual knowledge of the event or circumstances providing a basis for such termination. In the case of clauses (i) and (ii) of the second sentence of this subparagraph (d), the Executive shall be given notice by the Board specifying in detail the particular act or failure to act on which the Board is relying in proposing to terminate the Executive for Cause and offering the Executive an opportunity, on a date at least 14 days after receipt of such notice, to have a hearing, with counsel, before a majority of the independent members of the Board, including each of the members of the Board who authorized the termination for Cause. The Executive shall not be terminated for Cause if, within 30 days after the date of the Executive’s hearing before the Board (or if the Executive waives a hearing, within 30 days after receiving notice of the proposed termination), the Executive has corrected the particular act or failure to act specified in the notice given under clause (ii) of the second sentence of this subparagraph (d), and by so correcting such act or failure to act the Executive has reduced the economic damage the act or failure to act has allegedly caused the Company to a level which is no longer material or has eliminated the probability that such act or failure to act is likely to result in material economic damage to the Company. No termination for Cause shall take effect until the expiration of the correction period described in the preceding sentence and the determination by a majority of the independent members of the Board that the Executive has failed to correct the act or failure to act in accordance with the terms of the preceding sentence. Other than as specified herein, the decision of a majority of the independent members of the Board of Directors with respect to any determination of the grounds for termination of the Executive’s employment for Cause shall be binding absent evidence of bad faith or manifest injustice.
		

		
			(e) The Executive may terminate the Executive’s employment for Good Reason at any time following a Change in Control. For purposes of this Agreement, “Good Reason” shall mean, after any Change in Control and without the Executive’s express written consent, any of the following:
		

		
			(i) a significant diminution in the Executive’s duties and responsibilities, or the assignment to the Executive by the Company of duties inconsistent with the Executive’s position, duties, responsibilities or status with the Company immediately prior to a Change in Control of the Company, or any removal of the Executive from or any failure to re-elect the Executive to any of such positions, except in connection with the termination of employment for Disability, Retirement or Cause or as a result of the Executive’s death or by the Executive other than for Good Reason;
		

		

		

		 

 

		(ii) a reduction by the Company in the Executive’s annual rate of base salary as in effect immediately prior to a Change of Control or the Company’s failure to increase (within 12 months of the Executive’s last adjustment in annual rate of base salary) the Executive’s annual rate of base salary after a Change in Control of the Company in an amount which at least equals, on a percentage basis, the average percentage increase in the annual rate of base salary most recently or then currently being effected for all other executive officers of the Company;
		

		
			(iii) (A) any failure by the Company to continue in effect any benefit plan or arrangement (including, without limitation, medical, dental, and other established benefit plans (“Welfare Benefit Plans”), group life insurance and retirement plans) in which the Executive is participating at the time of a Change in Control of the Company (all hereinafter referred to as “Benefit Plans”) unless the Executive receives benefits through another plan or arrangement providing the Executive with benefits, when considered in the aggregate, that are no less favorable than the benefits under all Benefit Plans available to the Executive at the time of a Change in Control, or (B) the taking of any action by the Company which would adversely affect the Executive’s participation in or materially reduce the Executive’s benefits under the Benefit Plans or otherwise deprive the Executive of any material fringe benefit or perquisite of office enjoyed by the Executive at the time of a Change in Control of the Company considered in the aggregate with all benefits so provided to the Executive;
		

		
			(iv) (A) any failure by the Company to continue in effect any incentive plan or arrangement (including, without limitation, the Company’s incentive bonus and contingent bonus arrangements and credits and the right to receive performance awards and similar long and short-term incentive compensation benefits) in which the Executive is participating at the time of a Change in Control of the Company (hereinafter referred to as “Incentive Plans”), (B) the taking of any action by the Company which would adversely affect the Executive’s participation in any such Incentive Plan or reduce the Executive’s benefits under any such Incentive Plan, unless in the case of either sub clause (A) or (B) above, there is substituted a comparable plan or program that is economically equivalent, in terms of the benefit offered to the Executive, to the Incentive Plan being altered, reduced, affected or ended, or (C) any failure by the Company with respect to any fiscal year to make an award to the Executive pursuant to each such Incentive Plan or such substituted comparable plan or program in accordance with its terms or otherwise in a manner consistent with awards or benefits provided to other executive officers of the Company;
		

		
			(v) (A) any failure by the Company to continue in effect any plan or arrangement to receive securities of the Company (including, without limitation, the Company’s stock option plans and other equity incentive plans as authorized by the Board for the senior executive officers) in which the Executive is participating at the time of a Change in Control of the Company (hereinafter referred to as “Securities Plans”), or the taking of any action by the Company which would adversely affect the Executive’s participation in or materially reduce the Executive’s benefits under any such Securities Plan or (B) any failure by the Company in any fiscal year to grant stock options, stock appreciation rights or securities awards to the Executive pursuant to such Securities Plans or otherwise in a manner consistent with awards or grants provided to other executive officers of the Company; and provided further that the material terms and conditions of such stock options, stock appreciation rights, and securities awards granted to the Executive after the Change in Control (including, but not limited to, the exercise price, vesting schedule, period and methods of exercise, expiration date, forfeiture provisions and other restrictions) are substantially similar to the material terms and conditions of the stock options, stock appreciation rights, and securities awards granted to the Executive under the Securities Plans immediately prior to the Change in Control of the Company;
		

		
			(vi) a relocation of the Company’s principal executive offices to a location more than 100 miles outside of San Diego, California, or the Executive’s relocation more than 100 miles from the location at which the Executive performed the Executive’s duties prior to a Change in Control of the Company, except for required travel by the Executive on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations at the time of a Change in Control of the Company;
		

		
			(vii) any failure by the Company to provide the Executive with the number of annual paid vacation days to which the Executive is entitled for the year in which a Change in Control of the Company occurs;
		

		
			(viii) any material breach by the Company of any provision of this Agreement;
		

		
			(ix) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company;
		

		

		

		 

 

		(x) the Company or its successor no longer is required to have its common stock registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended; or
		

		
			(xi) any purported termination of the Executive’s employment by the Company pursuant to subparagraphs 2(b), 2(c) or 2(d) which is not effected pursuant to a Notice of Termination satisfying the requirements of subparagraph 2(f) below (and, if applicable, subparagraph 2(d) above), and for purposes of this Agreement, no such purported termination shall be effective.
		

		
			For purposes of this subparagraph (e), an isolated, immaterial, and inadvertent action not taken in bad faith by the Company in violation of clauses (i) - (v), (vii) or (xi) of this subparagraph that is remedied by the Company promptly after receipt of notice thereof given by the Executive shall not be considered Good Reason for the Executive’s termination of employment with the Company. In the event the Executive terminates the Executive’s employment for Good Reason hereunder, then notwithstanding that the Executive may also be considered retired for purposes of Benefit Plans (other than the Supplemental Retirement Benefit Plan or other non-qualified plan providing similar benefits), Incentive Plans or Securities Plans, the Executive shall be deemed to have terminated employment for Good Reason for purposes of this Agreement.
		

		
			(f) Any termination of the Executive’s employment by the Company pursuant to subparagraphs 2(b), 2(c) or 2(d), or by the Executive pursuant to subparagraph 2(e) above, shall be communicated by a Notice of Termination to the other party hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate those specific termination provisions in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. For purposes of this Agreement, no such purported termination by the Company shall be effective without such Notice of Termination.
		

		
			(g) “Date of Termination” shall mean (i) if the Executive’s employment is terminated by the Company for Disability, 30 days after Notice of Termination is given to the Executive (provided that the Executive shall not have returned to the performance of the Executive’s duties on a full time basis during such 30 day period), (ii) if the Executive’s employment is terminated by the Executive for Good Reason, the date specified in the Notice of Termination, and (iii) if the Executive’s employment is terminated by the Company for any other reason, the date on which a Notice of Termination is given; provided, however, that if within 30 days after any Notice of Termination is given to the Executive by the Company, the Executive notifies the Company that a dispute exists concerning the termination, the Date of Termination shall be a date no earlier than the date on which the Notice of Termination is given, but otherwise, if the termination is to be effective, as of the date so determined, whether by mutual written agreement of the parties or upon final judgment, order or decree of a court of competent jurisdiction.
		

		
			3. Severance Compensation Upon Termination of Employment Following a Change in Control:
		

		
			(a) If, pursuant to subparagraph 2(a), the Executive is entitled to the compensation provided for in this Paragraph 3, then, subject to the provisions of Paragraph 7 below, the Company shall pay to the Executive in a lump sum cash payment, the following:
		

		
			(i) the Change in Control Severance Amount as defined in subparagraph 3(b) below within five days following, but not earlier than, the sixth month anniversary of the Date of Termination; plus
		

		
			(ii) the Executive’s earned but unpaid base annual salary through the period ending on the Date of Termination within the time required by law for the payment of wages upon termination of employment; plus
		

		
			(iii) interest, if any, on the amounts payable pursuant to clauses (i) and (ii) above calculated from the Date of Termination until paid (including interest calculated for the six month period from the Date of Termination to the date of payment pursuant to clause (i) or from the Date of Termination to the date of payment pursuant to clause (ii) if not paid when due) at a rate equal to the prime rate as published in the Wall Street Journal on the Date of Termination plus three percentage points, compounded annually.
		

		
			(b) “Change in Control Severance Amount” shall mean an amount equal to the sum of (i) two times the greater of (A) the Executive’s base annual salary in effect as of the Date of Termination or (B) the average of the Executive’s base annual salary paid for the five fiscal years ending prior to the Date of Termination, plus (ii) two times the greater of (A) the annual cash bonus awarded by the Board to the Executive with respect to the Company’s most recent fiscal year ending prior to the Date of Termination or (B) the average of the annual cash 
		

		 

 

		bonus amounts awarded by the Board to the Executive with respect to the Company’s most recent five fiscal years ending prior to the Date of Termination.
		

		
			(c) If, pursuant to subparagraph 2(a), the Executive is entitled to the compensation provided in this Paragraph 3, then the Executive will be entitled to continued participation in all Welfare Benefit Plans (as defined in subparagraph 2(e)(iii) above) in which the Executive was participating on the Date of Termination, such continued participation to be at Company cost and otherwise on the same basis as Company employees generally, until the earlier of (i) the date, or dates, the Executive receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverages and benefits to be determined on a coverage-by-coverage or benefit-by-benefit basis) or (ii) two years from the Date of Termination; provided (A) if the Executive is precluded from continuing participation in any Welfare Benefit Plan as provided in this sentence, the Executive shall be paid, in a lump sum cash payment, within 30 days following the date it is determined the Executive is unable to participate in any Welfare Benefit Plan, the after-tax economic equivalent of the benefits provided under the plan or program in which the Executive is unable to participate for the period specified in this sentence, and (B) the economic equivalent of any benefit foregone shall be deemed to be the lowest cost that would be incurred by the Executive in obtaining such benefit (including family or dependent coverage, if applicable) on an individual basis. The Executive shall be eligible for group health plan continuation coverage under and in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, when the Executive ceases to be eligible for continued participation in the Company’s group health plan under this subparagraph (c).
		

		
			4. Company Right to Terminate Employment With or Without Cause; No Obligation of Executive to Mitigate Damages; No Effect On Other Contractual Rights :
		

		
			(a) Notwithstanding anything to the contrary herein, the Executive shall serve the Company at the pleasure of the Board and the Board may terminate the Executive’s employment at any time, with our without Cause subject to the Executive’s right to payment of the severance compensation provided for herein, if applicable. The Executive hereby acknowledges that this agreement does not guarantee continued employment with the Company for any period of time and upon termination of the Executive’s employment, the Executive shall have no claim for compensation or other benefits pursuant to this agreement except as specifically set forth herein following a Change of Control.
		

		
			(b) The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by the Executive as the result of employment by another employer after the Date of Termination or otherwise.
		

		
			(c) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish the Executive’s existing rights, or rights which would accrue solely as a result of the passage of time, under any Benefit Plan, Incentive Plan or Securities Plan, or other contract, plan or agreement with or of the Company.
		

		
			5. Options, Securities Awards, And Incentive Awards:
		

		
			(a) In the event of a Change in Control of the Company, then notwithstanding the terms and conditions of any Securities Plan or other plan, agreement or arrangement, (i) if any Securities Plan will not be continued as to the securities of the Company or as to substantially equivalent publicly traded securities of the Company or any successor entity, or (ii) if the Executive’s employment is terminated and the Executive is entitled to the compensation provided for in Paragraph 3, then the Company agrees to accelerate, vest, and make immediately exercisable in full all unexercisable installments of all options to acquire securities of the Company, to vest all unvested awards of securities of the Company and to waive any resale or other restrictions or rights of repurchase applicable to securities underlying such options or applicable to awards of securities of the Company in each case, which are held by the Executive on the date of such Change in Control, including without limitation any options or securities obtained by the Executive pursuant to any Securities Plan or securities obtained by the Executive pursuant to any discontinued Incentive Plan (as defined in subparagraph 2(e)) to the extent that the Executive may not otherwise be able to realize the expected benefits thereof upon continued employment by the Company or a publicly traded successor entity.
		

		
			(b) If the provisions of subparagraph (a) of this Paragraph 5 are applicable with respect to any Securities Plan within six (6) months following a Change in Control, any options or securities obtained by the Executive pursuant to the discontinued Securities Plan or securities obtained by the Executive pursuant to any Incentive Plan as 
		

		 

 

		described in subparagraph (a) shall have a limited right of surrender allowing the Executive to surrender such options or securities within the 30 day period following the date on which the provisions of subparagraph (a) first become applicable and to receive a cash payment in exchange for the surrender of such options or securities. The amount of such payment shall be equal to the sum of (i) the product of the number of securities obtained by the Executive pursuant to such Securities Plan or Incentive Plan multiplied by the greater of (x) the fair market value of the securities of the Company on the date prior to the Change in Control or (y) the per share price paid to shareholders in connection with such Change in Control (alternatively, the “Securities Price”) and (ii) the product of (a) the number of securities covered by options multiplied by (b) the positive amount, if any, equal to the Securities Price minus the exercise price. Notwithstanding the foregoing, if any such payment would result in liability under Section 16 of the Exchange Act, the right of surrender shall commence upon the earliest date it can be exercised by the Executive without liability and continue for thirty days thereafter.
		

		
			6. Termination: This Agreement shall continue in effect for a period of two (2) years and shall automatically renew for successive two (2) year periods from the earlier of (a) the next scheduled termination date, unless the Board provides the Executive with a notice of non-renewal at least 6 months before the next scheduled termination date, or (b) the effective date of a Change of Control.
		

		
			7. Adjustment Related to Application of Excise Tax: If the Executive is entitled to receive the compensation provided for in Paragraph 3 and any payment received or to be received by the Executive is or will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the adjustment set forth in subparagraph (a) shall be made to the payments provided for in Paragraph 3 above.
		

		
			(a) If the present value of all benefits and payments to the Executive included in the determination of “parachute payments” pursuant to Section 280G(b)(2) of the Code received by or to be received by the Executive (the “Parachute Payments”) is equal to or exceeds 3 times the “base amount” with respect to the Executive as determined pursuant to Section 280G(b)(3) of the Code (the “Base Amount”), then the amount payable to the Executive pursuant to Paragraph 3 above shall be reduced so that the present value of the Parachute Payments is equal to 3 times the Base Amount minus the sum of One Hundred Dollars ($100.00.)
		

		
			(b) It is the intention of the parties to this Agreement that the compensation payable to the Executive pursuant to this Agreement contingent upon a Change of Control of the Company will not result in any “excess parachute payment” to the Executive as determined under Section 280G(b) of the Code or application of the Excise Tax to any such excess parachute payment. The provisions of this Paragraph 7 shall be applied so as to carry out the parties’ intention with respect to such tax treatment. Each party agrees to take such action as may be necessary or appropriate to carry out the provisions of this Paragraph 7 and to cooperate with the other as to all required determinations, including the payment or return of any payment determined to be due to the Executive or to the Company, respectively. The Company shall pay all costs of accounting to assure compliance with the intent of this Paragraph 7.
		

		
			8. Successors: The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement and shall entitle the Executive to terminate the Executive’s employment for Good Reason and receive the compensation provided for in Paragraph 3 above. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor or assign to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Paragraph 2 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
		

		
			9. Survivorship: The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations and to the extent that any performance is required following termination of this Agreement.
		

		
			10. Notices: Any notice, request, demand or other communication required or permitted hereunder shall be deemed to be properly given when personally served in writing, when deposited in the United States mail, postage prepaid, or when communicated to a public telegraph company for transmittal, addressed to the Company at its head 
		

		 

 

		office location or the Executive at the Executive’s last known address. Either party may change its address by written notice in accordance with this paragraph.
		

		
			11. Benefit of Agreement: This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts are still payable to the Executive hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee or other designee or, if there be no such designee, to the Executive’s estate.
		

		
			12. Applicable Law: Except to the extent governed by the laws of the United States, this Agreement is to be governed by and construed under the laws of the State of California.
		

		
			13. Captions and Paragraph Headings: Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in the interpretation of this Agreement.
		

		
			14. Invalid Provisions: Should any provision of this Agreement for any reason be declared invalid, void or unenforceable by a court of competent jurisdiction, the validity and binding effect of any remaining portion shall not be affected, and the remaining portions of this Agreement shall remain in full force and effect as if this Agreement had been executed with said provision eliminated.
		

		
			15. Entire Agreement: This Agreement contains the entire agreement of the parties. It supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the matters covered herein. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement, or promise relating to the matters covered herein and not contained in this Agreement shall be valid or binding. This Agreement may not be modified or amended by oral agreement, but only by any agreement in writing signed by the Company and the Executive.
		

		
			16. Attorney’s Fees: If any action, including arbitration, is brought to enforce this Agreement or to determine the relative rights and obligations of either of the parties and a ruling is obtained in favor of either party, regardless of which party institutes the action, the prevailing party will be entitled to reasonable attorney’s fees.
		

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

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						“COMPANY”

					
					
						 

					
					
						 

					
					
						 

					
					
						“EXECUTIVE”

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						WD-40 COMPANY

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By

					
					
						 

					
					
						/s/ GARRY O. RIDGE

					
					
						 

					
					
						 

					
					
						 

					
					
						/s/ JAY REMBOLT

				
	
					
						 

					
					
						 

					
					
						President/CEO

					
					
						 

					
					
						 

					
					
						 

					
					
						VP/CFO

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By

					
					
						 

					
					
						/s/ MARIA M. MITCHELL

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						MARIA M. MITCHELL, Secretary

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