Exhibit 10.7


 





KUSHCO HOLDINGS,
INC. 2016 STOCK INCENTIVE PLAN


 


Adopted
February 9, 2016, amended on May 8, 2018 and on February 21, 2019


 


THIS
KUSHCO HOLDINGS, INC. 2016 STOCK INCENTIVE PLAN (the
“Plan”) is designed to retain directors, executives, officers, selected employees, and consultants and reward
them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards
under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company.


 


1. Definitions


 


(a) “Board” —
The Board of Directors of the Company.


 


(b) “Change
in Control” — Means, and shall be deemed to have occurred upon the occurrence of, any one of the following events:


 


1.
The acquisition in one transaction by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule l3d-3 promulgated under the Exchange
Act) of shares or other securities (as defined in Section 3(a)(10) of the Exchange Act) representing 51% or more of outstanding
Stock of the Company; provided, however, that a Change in Control as defined in this clause (1) shall not be deemed to occur in
connection with any acquisition by the Company, an employee benefit plan of the Company or any Person who immediately prior to
the effective date of this Plan is a holder of Stock (a “Current Stockholder”) so long as such acquisition does
not result in any Person other than the Company, such employee benefit plan or such Current Stockholder beneficially owning shares
or securities representing 51% or more of the outstanding; or


 


2.
Any election has occurred of persons as directors of the Company that causes two-thirds or more of the Board to consist of persons
other than (i) persons who were members of the Board on the effective date of this Plan and (ii) persons who were nominated by
the Board for election as members of the Board at a time when at least two-thirds of the Board consisted of persons who were members
of the Board on the effective date of this Plan; provided, however, that any person nominated for election by the Board when at
least two-thirds of the members of the Board are persons described in sub clause (i) or (ii) and persons who were themselves previously
nominated in accordance with this clause (2) shall, for this purpose, be deemed to have been nominated by a Board composed of persons
described in sub clause (ii); or


 


3.
Approval by the stockholders of the Company of a reorganization, merger, consolidation or similar transaction (a “Reorganization
Transaction”), in each case, unless, immediately following such Reorganization Transaction, more than 50% of, respectively,
the outstanding shares of common stock (or similar equity security) of the corporation or other entity resulting from or surviving
such Reorganization Transaction and the combined voting power of the securities of such corporation or other entity entitled to
vote generally in the election of directors, is then beneficially owned, directly or indirectly, by the individuals and entities
who were the respective beneficial owners of the outstanding Stock immediately prior to such Reorganization Transaction in substantially
the same proportions as their ownership of the outstanding Stock immediately prior to such Reorganization Transaction; or


 


4. Approval by
the stockholders of the Company of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company to a corporation or other entity, unless, with respect
to such corporation or other entity, immediately following such sale or other disposition, more than 50% of, respectively,
the outstanding shares of common stock (or similar equity security) of such corporation or other entity and the combined
voting power of the securities of such corporation or other entity entitled to vote generally in the election of directors,
is then beneficially owned, directly or indirectly, by the individuals and entities who were the respective beneficial owners
of the outstanding Stock immediately prior to such sale or disposition in substantially the same proportions as their
ownership of the outstanding Stock immediately prior to such sale or disposition.


 






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(c) “Code” —
The Internal Revenue Code of 1986, as amended from time to time.


 


(d) “Committee”
— The Compensation Committee of the Company’s Board, or such other committee of the Board that is designated by the
Board to administer the Plan.


 


(e) “Company”
— KushCo Holdings, Inc. and its subsidiaries, including subsidiaries of subsidiaries.



 


(f) “Exchange Act”
— The Securities Exchange Act of 1934, as amended from time to time.


 


(g) “Fair
Market Value” — The fair market value of the Company’s issued and outstanding Stock based on the closing
price on the day of any grant or award of stock under the Plan.


 


(h) “Grant”
— The grant of any form of stock option, stock award, or stock purchase offer, whether granted singly, in combination,
or in tandem, to a Participant pursuant to such terms, conditions and limitations as the Committee may establish in order to fulfill
the objectives of the Plan.


 


(i) “Grant
Agreement” — An agreement between the Company and a Participant that sets forth the terms, conditions and limitations
applicable to a Grant.


 


(j) “Option”
— Either an Incentive Stock Option, in accordance with Section 422 of Code, or a Nonstatutory Option, to purchase the Company’s
Stock that may be awarded to a Participant under the Plan. A Participant who receives an award of an Option shall be referred to
as an “Optionee”.


 


(k) “Participant”
— A director, officer, employee, or consultant of the Company to whom an Award has been made under the Plan.


 


(l) “Restricted
Stock Purchase Offer” — A Grant of the right to purchase a specified number of shares of Stock pursuant to a written
agreement issued under the Plan.


 


(m) “Securities Act”
— The Securities Act of 1933, as amended from time to time.


 


(n) “Stock” —
Authorized and issued or unissued shares of common stock of the Company.


 


(o) “Stock
Award” — A Grant made under the Plan in stock or denominated in units of stock for which the Participant is not
obligated to pay additional consideration.


 


2. Administration.
The Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the Committee.
Subject to the provisions of the Plan, the Board and/or the Committee shall have authority to (a) grant, in its discretion, Incentive
Stock Options in accordance with Section 422 of the Code, or Nonstatutory Options, Stock Awards or Restricted Stock Purchase Offers;
(b) determine the Fair Market Value of the Stock covered by any Grant; (c) determine which eligible persons shall receive Grants
and the number of shares, restrictions, terms and conditions to be included in such Grants; (d) construe and interpret the Plan;
(e) promulgate, amend and rescind rules and regulations relating to its administration, and correct defects, omissions and inconsistencies
in the Plan or any Grant; (f) consistent with the Plan and with the consent of the Participant, as appropriate, amend any outstanding
Grant or amend the exercise date or dates thereof; (g) determine the duration and purpose of leaves of absence which may be granted
to Participants without constituting termination of their employment for the purpose of the Plan or any Grant; and (h) make all
other determinations necessary or advisable for the Plan’s administration. The interpretation and construction by the Board
of any provisions of the Plan or selection of Participants shall be conclusive and final. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect to the Plan or any Grant made thereunder.


 


3. Eligibility.


 


(a) General: The
persons who shall be eligible to receive Grants shall be directors, officers, employees or consultants to the Company. The
term consultant shall mean any person, other than an employee, who is engaged by the Company to render services and is
compensated for such services. An Optionee may hold more than one Option. Any issuance of a Grant to an officer or director
of the Company subsequent to the first registration of any of the securities of the Company under the Exchange Act shall
comply with the requirements of Rule 16b-3.


 


(b)
Incentive Stock Options: Incentive Stock Options may only be issued to employees of the Company. Incentive Stock Options
may be granted to officers or directors, provided they are also employees of the Company. Payment of a director’s fee shall
not be sufficient to constitute employment by the Company.





 


(c) The Company
shall not grant an Incentive Stock Option under the Plan to any employee if such Grant would result in such employee holding the
right to exercise for the first time in any one calendar year, under all Incentive Stock Options granted under the Plan or any
other plan maintained by the Company, with respect to shares of Stock having an aggregate fair market value, determined as of the
date the Option is granted, in excess of $100,000. Should it be determined that an Incentive Stock Option granted under the Plan
exceeds such maximum for any reason other than a failure in good faith to value the Stock subject to such option, the excess portion
of such option shall be considered a Nonstatutory Option. To the extent the employee holds two (2) or more such Options which become
exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such Option as Incentive
Stock Options under the Federal tax laws shall be applied on the basis of the order in which such Options are granted. If, for
any reason, an entire Option does not qualify as an Incentive Stock Option by reason of exceeding such maximum, such Option shall
be considered a Nonstatutory Option.


 






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(d) Nonstatutory
Option: The provisions of the foregoing Section 3(b) shall not apply to any Option designated as a “Nonstatutory Option”
or which sets forth the intention of the parties that the Option be a Nonstatutory Option.


 


(e) Stock
Awards and Restricted Stock Purchase Offers: The provisions of this Section 3 shall not apply to any Stock Award or Restricted
Stock Purchase Offer under the Plan.


 


4. Stock


 


(a) Authorized Stock: Stock
subject to Grants may be either unissued or reacquired Stock.


 


(b)
Number of Shares: Subject to adjustment as provided in Section 5(i) of the Plan, the total number of shares of Stock which
may be purchased or granted directly by Options, Stock Awards or Restricted Stock Purchase Offers, or purchased indirectly through
exercise of Options granted under the Plan shall not exceed eighteen million (18,000,000).
If any Grant shall for any reason terminate or expire, any shares allocated thereto but remaining unpurchased upon such expiration
or termination shall again be available for Grants with respect thereto under the Plan as though no Grant had previously occurred
with respect to such shares. Any shares of Stock issued pursuant to a Grant and repurchased pursuant to the terms thereof shall
be available for future Grants as though not previously covered by a Grant.


 


(c) Reservation
of Shares: The Company shall reserve and keep available at all times during the term of the Plan such number of shares as shall
be sufficient to satisfy the requirements of the Plan. If, after reasonable efforts, which efforts shall not include the registration
of the Plan or Grants under the Securities Act, the Company is unable to obtain authority from any applicable regulatory body,
which authorization is deemed necessary by legal counsel for the Company for the lawful issuance of shares hereunder, the Company
shall be relieved of any liability with respect to its failure to issue and sell the shares for which such requisite authority
was so deemed necessary unless and until such authority is obtained.


 


(d) Application
of Funds: The proceeds received by the Company from the sale of Stock pursuant to the exercise of Options or rights will be
used for general corporate purposes.


 


(e) No
Obligation to Exercise: The issuance of a Grant shall impose no obligation upon the Participant to exercise any rights under
such Grant.


 


5. Terms
and Conditions of Options. Options granted hereunder shall be evidenced by agreements between the Company and the respective
Optionees, in such form and substance as the Board or Committee shall from time to time approve. Option agreements need not be
identical, and in each case may include such provisions as the Board or Committee may determine, but all such agreements shall
be subject to and limited by the following terms and conditions:


 


(a) Number of Shares: Each
Option shall state the number of shares to which it pertains.


 


(b) Exercise
Price: Each Incentive Stock Option shall state the exercise price, which shall be determined as follows:


 


(i) Any
Incentive Stock Option granted to a person who at the time the Option is granted owns (or is deemed to own pursuant to Section
424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power or value of all classes of
stock of the Company (“Ten Percent Holder”) shall have an exercise price of no less than 110% of the Fair
Market Value of the Stock as of the date of grant; and


 






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(ii)
Incentive Stock Options granted to a person who at the time the Option is granted is not a Ten Percent Holder shall have an exercise
price of no less than 100% of the Fair Market Value of the Stock as of the date of grant.


 


For
the purposes of this Section 5(b), the Fair Market Value shall be as determined by the Board in good faith, which determination
shall be conclusive and binding; provided however, that if there is an active public market for such Stock, the Fair Market Value
per share shall be the closing price if such stock is listed on such public market on the date
of grant of the Option, or if listed on a stock exchange, the closing price on such exchange on such date of grant.


 


The exercise price of each Nonstatutory
Stock Option shall be determined at the discretion of the Board of Directors of the Corporation.


 


(c) Medium
and Time of Payment: The exercise price shall become immediately due upon exercise of the Option and shall be paid in cash
or check made payable to the Company. Should the Company’s outstanding Stock be registered under Section 12(g) of the Exchange
Act at the time the Option is exercised, then the exercise price may also be paid as follows:


 


(i) in
shares of Stock held by the Optionee for the requisite period necessary to avoid a charge to the Company’s earnings for financial
reporting purposes and valued at Fair Market Value on the exercise date, or


 


(ii) through
a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions
(a) to a Company designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of
the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased
shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Company by reason
of such purchase and (b) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale transaction.


 


(iii) At
the discretion of the Board, exercisable either at the time of Option grant or of Option exercise, the exercise price may also
be paid (i) by Optionee’s delivery of a promissory note in form and substance satisfactory to the Company and permissible
under applicable securities rules and bearing interest at a rate determined by the Board in its sole discretion, but in no event
less than the minimum rate of interest required to avoid the imputation of compensation income to the Optionee under the Federal
tax laws, or (ii) in such other form of consideration permitted by the Nevada Revised Statutes as may be acceptable to the Board.


 


(d) Term
and Exercise of Options: Any Option granted to an employee of the Company shall become exercisable over a period of no longer
than ten (10) years. In no event shall any Option be exercisable after the expiration of ten (10) years from the date it is granted,
and no Incentive Stock Option granted to a Ten Percent Holder shall, by its terms, be exercisable after the expiration of ten (10)
years from the date of the Option. Unless otherwise specified by the Board or the Committee in the resolution authorizing such
Option, the date of grant of an Option shall be deemed to be the date upon which the Board or the Committee authorizes the granting
of such Option.


 


Each
Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective Option agreements may
provide. During the lifetime of an Optionee, the Option shall be exercisable only by the Optionee and shall not be assignable
or transferable by the Optionee, and no other person shall acquire any rights therein. To the extent not exercised,
installments (if more than one) shall accumulate, but shall be exercisable, in whole or in part, only during the period for
exercise as stated in the Option agreement, whether or not other installments are then exercisable.


 






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(e)
Termination of Status as Employee, Consultant or Director: If Optionee’s status as an employee shall terminate for
any reason other than Optionee’s disability or death, then Optionee (or if the Optionee shall die after such termination,
but prior to exercise, Optionee’s personal representative or the person entitled to succeed to the Option) shall have the
right to exercise the portions of any of Optionee’s Incentive Stock Options which were exercisable as of the date of such
termination, in whole or in part, within 90 days after such termination (or, in the event of “termination for good cause
“ as that term is defined in Nevada case law related thereto, or by the terms of the Plan or the Option Agreement or
an employment agreement, the Option shall automatically terminate as of the termination of employment as to all shares covered
by the Option).


 


With respect
to Nonstatutory Options granted to employees, directors or consultants, the Board may specify such period for exercise, not less
than 90 days (except that in the case of “termination for cause” or removal of a director), the Option shall
automatically terminate as of the termination of employment or services as to shares covered by the Option, following termination
of employment or services as the Board deems reasonable and appropriate. The Option may be exercised only with respect to installments
that the Optionee could have exercised at the date of termination of employment or services. Nothing contained herein or in any
Option granted pursuant hereto shall be construed to affect or restrict in any way the right of the Company to terminate the employment
or services of an Optionee with or without cause.


 


(f) Disability
of Optionee: If an Optionee is disabled (within the meaning of Section 22(e)(3) of the Code) at the time of termination, the
ninety (90) day period set forth in Section 5(e) shall be a period, as determined by the Board and set forth in the Option, of
not less than six months nor more than one year after such termination.


 


(g) Death
of Optionee: If an Optionee dies while employed by, engaged as a consultant to, or serving as a Director of the Company, the
portion of such Optionee’s Option which was exercisable at the date of death may be exercised, in whole or in part, by the
estate of the decedent or by a person succeeding to the right to exercise such Option at any time within (i) a period, as determined
by the Board and set forth in the Option, of not less than six (6) months nor more than one (1) year after Optionee’s death,
which period shall not be more, in the case of a Nonstatutory Option, than the period for exercise following termination of employment
or services, or (ii) during the remaining term of the Option, whichever is the lesser. The Option may be so exercised only with
respect to installments exercisable at the time of Optionee’s death and not previously exercised by the Optionee.


 


(h) Nontransferability
of Option: No Option shall be transferable by the Optionee, except by will or by the laws of descent and distribution.


 


(i) Recapitalization:
Subject to any required action of shareholders, the number of shares of Stock covered by each outstanding Option, and the exercise
price per share thereof set forth in each such Option, shall be proportionately adjusted for any increase or decrease in the number
of issued shares of Stock of the Company resulting from a stock split, stock dividend, combination, subdivision or reclassification
of shares, or the payment of a stock dividend, or any other increase or decrease in the number of such shares affected without
receipt of consideration by the Company; provided, however, the conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration “ by the Company.


 


In the
event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving
entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a “Reorganization”),
unless otherwise provided by the Board, this Option shall terminate immediately prior to such date as is determined by the Board,
which date shall be no later than the consummation of such Reorganization. In such event, if the entity which shall be the surviving
entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised Option
a stock option or capital stock of such surviving entity, as applicable, which on an equitable basis shall provide the Optionee
with substantially the same economic benefit as such unexercised Option, then the Board may grant to such Optionee, in its sole
and absolute discretion and without obligation, the right for a period commencing thirty (30) days prior to and ending immediately
prior to the date determined by the Board pursuant hereto for termination of the Option or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without regard to the installment provisions of Paragraph
6(d) of the Plan; provided, that any such right granted shall be granted to all Optionees not receiving an offer to receive substitute
options on a consistent basis, and provided further, that any such exercise shall be subject to the consummation of such Reorganization.


 






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Subject
to any required action of shareholders, if the Company shall be the surviving entity in any merger or consolidation, each outstanding
Option thereafter shall pertain to and apply to the securities to which a holder of shares of Stock equal to the shares subject
to the Option would have been entitled by reason of such merger or consolidation.


 


In the
event of a change in the Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares
without par value into the same number of shares with a par value, the shares resulting from any such change shall be deemed to
be the Stock within the meaning of the Plan.


 


To the
extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive. Except as expressly provided in this Section 5(i),
the Optionee shall have no rights by reason of any subdivision or consolidation of shares of stock of any class or the payment
of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number or price
of shares of Stock subject to any Option shall not be affected by, and no adjustment shall be made by reason of, any dissolution,
liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class
or securities convertible into shares of stock of any class.


 


The Grant
of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make any adjustments, reclassifications,
reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve, or liquidate or to sell or
transfer all or any part of its business or assets.


 


(j) Rights
as a Shareholder: An Optionee shall have no rights as a shareholder with respect to any shares covered by an Option until the
effective date of the issuance of the shares following exercise of such Option by Optionee. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record
date is prior to the date such stock certificate is issued, except as expressly provided in Section 5(i) hereof.


 


(k) Modification,
Acceleration, Extension, and Renewal of Options: Subject to the terms and conditions and within the limitations of the Plan,
the Board may modify an Option, or, once an Option is exercisable, accelerate the rate at which it may be exercised, and may extend
or renew outstanding Options granted under the Plan or accept the surrender of outstanding Options (to the extent not theretofore
exercised) and authorize the granting of new Options in substitution for such Options, provided such action is permissible under
Section 422 of the Code and applicable state securities laws. Notwithstanding the provisions of this Section 5(k), however, no
modification of an Option shall, without the consent of the Optionee, alter to the Optionee’s detriment or impair any rights
or obligations under any Option theretofore granted under the Plan.


 


(l) Exercise
Before Exercise Date: At the discretion of the Board, the Option may, but need not, include a provision whereby the Optionee
may elect to exercise all or any portion of the Option prior to the stated exercise date of the Option or any installment thereof.
Any shares so purchased prior to the stated exercise date shall be subject to repurchase by the Company upon termination of Optionee’s
employment as contemplated by Section 5(n) hereof prior to the exercise date stated in the Option and such other restrictions and
conditions as the Board or Committee may deem advisable.


 


(m) Other
Provisions: The Option agreements authorized under the Plan shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the Options, as the Board or the Committee shall deem advisable. Shares shall not be issued pursuant
to the exercise of an Option, if the exercise of such Option or the issuance of shares thereunder would violate, in the opinion
of legal counsel for the Company, the provisions of any applicable law or the rules or regulations of any applicable governmental
or administrative agency or body, such as the Code, the Securities Act, the Exchange Act, applicable state securities laws, the
corporate law of the state of Nevada, and the rules promulgated under the foregoing or the rules and regulations of any exchange
upon which the shares of the Company are listed. Without limiting the generality of the foregoing, the exercise of each Option
shall be subject to the condition that if at any time the Company shall determine that (i) the satisfaction of withholding tax
or other similar liabilities, or (ii) the listing, registration or qualification of any shares covered by such exercise upon any
securities exchange or under any state or federal law, or (iii) the consent or approval of any regulatory body, or (iv) the perfection
of any exemption from any such withholding, listing, registration, qualification, consent or approval is necessary or desirable
in connection with such exercise or the issuance of shares thereunder, then in any such event, such exercise shall not be effective
unless such withholding, listing registration, qualification, consent, approval or exemption shall have been effected, obtained
or perfected free of any conditions not acceptable to the Company.


 






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(n) Repurchase
Agreement: The Board may, in its discretion, require as a condition to the Grant of an Option hereunder, that an Optionee execute
an agreement with the Company, in form and substance satisfactory to the Board in its discretion (“Repurchase Agreement”),
(i) restricting the Optionee’s right to transfer shares purchased under such Option without first offering such shares to
the Company or another shareholder of the Company upon the same terms and conditions as provided therein; and (ii) providing that
upon termination of Optionee’s employment with the Company, for any reason, the Company (or another shareholder of the Company,
as provided in the Repurchase Agreement) shall have the right at its discretion (or the discretion of such other shareholders)
to purchase and/or redeem all such shares owned by the Optionee on the date of termination of his or her employment at a price
equal to: (A) the fair value of such shares as of such date of termination; or (B) if such repurchase right lapses at 20% of the
number of shares per year, the original purchase price of such shares, and upon terms of payment permissible under the applicable
state securities laws; provided that in the case of Options or Stock Awards granted to officers, directors, consultants or affiliates
of the Company, such repurchase provisions may be subject to additional or greater restrictions as determined by the Board or Committee.


 


6. Stock Awards and Restricted
Stock Purchase Offers.


 


(a) Types of Grants.


 


(i) Stock
Award. All or part of any Stock Award under the Plan may be subject to conditions established by the Board or the Committee,
and set forth in the Stock Award Agreement, which may include, but are not limited to, continuous service with the Company, achievement
of specific business objectives, increases in specified indices, attaining growth rates and other comparable measurements of Company
performance. Such Awards may be based on Fair Market Value or other specified valuation.


 


(ii) Restricted
Stock Purchase Offer. A Grant of a Restricted Stock Purchase Offer under the Plan shall be subject to such (i) vesting contingencies
related to the Participant’s continued association with the Company for a specified time and (ii) other specified conditions
as the Board or Committee shall determine, in their sole discretion, consistent with the provisions of the Plan.


 


(b) Conditions
and Restrictions. Shares of Stock which Participants may receive as a Stock Award under a Stock Award Agreement or Restricted
Stock Purchase Offer under a Restricted Stock Purchase Offer may include such restrictions as the Board or Committee, as applicable,
shall determine, including restrictions on transfer, repurchase rights, right of first refusal, and forfeiture provisions. When
transfer of Stock is so restricted or subject to forfeiture provisions it is referred to as “Restricted Stock.”
Further, with Board or Committee approval, Stock Awards or Restricted Stock Purchase Offers may be deferred, either in the form
of installments or a future lump sum distribution. The Board or Committee may permit selected Participants to elect to defer distributions
of Stock Awards or Restricted Stock Purchase Offers in accordance with procedures established by the Board or Committee to assure
that such deferrals comply with applicable requirements of the Code including, at the choice of Participants, the capability to
make further deferrals for distribution after retirement. Any deferred distribution, whether elected by the Participant or specified
by the Stock Award Agreement, Restricted Stock Purchase Offers or by the Board or Committee, may require the payment be forfeited
in accordance with the provisions of Section 6(c). Dividends or dividend equivalent rights may be extended to and made part of
any Stock Award or Restricted Stock Purchase Offers denominated in Stock or units of Stock, subject to such terms, conditions and
restrictions as the Board or Committee may establish.


 






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(c) Cancellation
and Rescission of Grants. Unless the Stock Award Agreement or Restricted Stock Purchase Offer specifies otherwise, the Board
or Committee, as applicable, may cancel any unexpired, unpaid, or deferred Grants at any time if the Participant is not in compliance
with all other applicable provisions of the Stock Award Agreement or Restricted Stock Purchase Offer, the Plan and with the following
conditions:


 


(i) A
Participant shall not render services for any organization or engage directly or indirectly in any business which, in the judgment
of the chief executive officer of the Company or other senior officer designated by the Board or Committee, is or becomes competitive
with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes
otherwise prejudicial to or in conflict with the interests of the Company. For Participants whose employment has terminated, the
judgment of the chief executive officer shall be based on the Participant’s position and responsibilities while employed
by the Company, the Participant’s post-employment responsibilities and position with the other organization or business,
the extent of past, current and potential competition or conflict between the Company and the other organization or business, the
effect on the Company’s customers, suppliers and competitors and such other considerations as are deemed relevant given the
applicable facts and circumstances. A Participant who has retired shall be free, however, to purchase as an investment or otherwise,
stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or
traded over-the-counter, and such investment does not represent a substantial investment to the Participant or a greater than ten
percent (10%) equity interest in the organization or business.


 


(ii) A
Participant shall not, without prior written authorization from the Company, disclose to anyone outside the Company, or use in
other than the Company’s business, any confidential information or material, relating to the business of the Company, acquired
by the Participant either during or after employment with the Company.


 


(iii)
A Participant shall disclose promptly and assign to the Company all right, title and interest in any invention or idea, patentable
or not, made or conceived by the Participant during employment by the Company, relating in any manner to the actual or anticipated
business, research or development work of the Company and shall do anything reasonably necessary to enable the Company to secure
a patent where appropriate in the United States and in foreign countries.


 


(iv) Upon
exercise, payment or delivery pursuant to a Grant, the Participant shall certify on a form acceptable to the Committee that he
or she is in compliance with the terms and conditions of the Plan. Failure to comply with all of the provisions of this Section
6(c) prior to, or during the six months after, any exercise, payment or delivery pursuant to a Grant shall cause such exercise,
payment or delivery to be rescinded. The Company shall notify the Participant in writing of any such rescission within two years
after such exercise, payment or delivery. Within ten days after receiving such a notice from the Company, the Participant shall
pay to the Company the amount of any gain realized or payment received as a result of the rescinded exercise, payment or delivery
pursuant to a Grant. Such payment shall be made either in cash or by returning to the Company the number of shares of Stock that
the Participant received in connection with the rescinded exercise, payment or delivery.


 


(d) Nonassignability.


 


(i)
Except pursuant to Section 6(e)(iii) and except as set forth in Section 6(d)(ii), no Grant or any other benefit under the Plan
shall be assignable or transferable, or payable to or exercisable by, anyone other than the Participant to whom it was granted.


 


(ii) Where
a Participant terminates employment and retains a Grant pursuant to Section 6(e)(ii) in order to assume a position with a governmental,
charitable or educational institution, the Board or Committee, in its discretion and to the extent permitted by law, may authorize
a third party (including but not limited to the trustee of a “blind” trust), acceptable to the applicable governmental
or institutional authorities, the Participant and the Board or Committee, to act on behalf of the Participant with regard to such
Awards.


 


(e) Termination
of Employment. If the employment or service to the Company of a Participant terminates, other than pursuant to any of the following
provisions under this Section 6(e), all unexercised, deferred and unpaid Stock Awards or Restricted Stock Purchase Offers shall
be cancelled immediately, unless the Stock Award Agreement or Restricted Stock Purchase Offer provides otherwise:


 






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(i) Retirement
Under a Company Retirement Plan. When a Participant’s employment terminates as a result of retirement in accordance with
the terms of a Company retirement plan, the Board or Committee may permit Stock Awards or Restricted Stock Purchase Offers to continue
in effect beyond the date of retirement in accordance with the applicable Grant Agreement and the exercisability and vesting of
any such Grants may be accelerated.


 


(ii) Rights
in the Best Interests of the Company. When a Participant resigns from the Company and, in the judgment of the Board or Committee,
the acceleration and/or continuation of outstanding Stock Awards or Restricted Stock Purchase Offers would be in the best interests
of the Company, the Board or Committee may (i) authorize, where appropriate, the acceleration and/or continuation of all or any
part of Grants issued prior to such termination and (ii) permit the exercise, vesting and payment of such Grants for such period
as may be set forth in the applicable Grant Agreement, subject to earlier cancellation pursuant to Section 9 or at such time as
the Board or Committee shall deem the continuation of all or any part of the Participant’s Grants are not in the Company’s
best interest.


 


(iii) Death or Disability of
a Participant.


 


1. In
the event of a Participant’s death, the Participant’s estate or beneficiaries shall have a period up to the expiration
date specified in the Grant Agreement within which to receive or exercise any outstanding Grant held by the Participant under such
terms as may be specified in the applicable Grant Agreement. Rights to any such outstanding Grants shall pass by will or the laws
of descent and distribution in the following order: (a) to beneficiaries so designated by the Participant; if none, then (b) to
a legal representative of the Participant; if none, then (c) to the persons entitled thereto as determined by a court of competent
jurisdiction. Grants so passing shall be made at such times and in such manner as if the Participant were living.


 


2. In
the event a Participant is deemed by the Board or Committee to be unable to perform his or her usual duties by reason of mental
disorder or medical condition which does not result from facts which would be grounds for termination for cause, Grants and rights
to any such Grants may be paid to or exercised by the Participant, if legally competent, or a committee or other legally designated
guardian or representative if the Participant is legally incompetent by virtue of such disability.


 


3. After
the death or disability of a Participant, the Board or Committee may in its sole discretion at any time (1) terminate restrictions
in Grant Agreements; (2) accelerate any or all installments and rights; and (3) instruct the Company to pay the total of any accelerated
payments in a lump sum to the Participant, the Participant’s estate, beneficiaries or representative; notwithstanding that,
in the absence of such termination of restrictions or acceleration of payments, any or all of the payments due under the Grant
might ultimately have become payable to other beneficiaries.


 


4. In
the event of uncertainty as to interpretation of or controversies concerning this Section 6, the determinations of the Board or
Committee, as applicable, shall be binding and conclusive.


 


7. Change in Control.
Unless otherwise provided in the applicable Grant Agreement, in the event of a Change in Control, 50% of the vesting restrictions
applicable to each Participant’s Grant(s) shall terminate fully and the Participant shall immediately have the right to the
delivery of share certificates or exercise of Options, i.e. to the extent that a Participant’s Option(s) are unvested, 50%
of such unvested portion shall vest.


 


8. Investment Intent.
All Grants under the Plan are intended to be exempt from registration under the Securities Act provided by Rule 701 thereunder.
Unless and until the granting of Options or sale and issuance of Stock subject to the Plan are registered under the Securities
Act or shall be exempt pursuant to the rules promulgated thereunder, each Grant under the Plan shall provide that the purchases
or other acquisitions of Stock thereunder shall be for investment purposes and not with a view to, or for resale in connection
with, any distribution thereof. Further, unless the issuance and sale of the Stock have been registered under the Securities Act,
each Grant shall provide that no shares shall be purchased upon the exercise of the rights under such Grant unless and until (i)
all then applicable requirements of state and federal laws and regulatory agencies shall have been fully complied with to the satisfaction
of the Company and its counsel, and (ii) if requested to do so by the Company, the person exercising the rights under the Grant
shall (A) give written assurances as to knowledge and experience of such person (or a representative employed by such person) in
financial and business matters and the ability of such person (or representative) to evaluate the merits and risks of exercising
the Option, and (B) execute and deliver to the Company a letter of investment intent and/or such other form related to applicable
exemptions from registration, all in such form and substance as the Company may require. If shares are issued upon exercise of
any rights under a Grant without registration under the Securities Act, subsequent registration of such shares shall relieve the
purchaser thereof of any investment restrictions or representations made upon the exercise of such rights.


 






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9. Amendment, Modification,
Suspension or Discontinuance of the Plan. The Board may, insofar as permitted by law, from time to time, with respect to
any shares at the time not subject to outstanding Grants, suspend or terminate the Plan or revise or amend it in any respect whatsoever,
except that without the approval of the shareholders of the Company, no such revision or amendment shall (i) increase the number
of shares subject to the Plan, (ii) decrease the price at which Grants may be granted, (iii) materially increase the benefits to
Participants, or (iv) change the class of persons eligible to receive Grants under the Plan; provided, however, no such action
shall alter or impair the rights and obligations under any Option, or Stock Award, or Restricted Stock Purchase Offer outstanding
as of the date thereof without the written consent of the Participant thereunder. No Grant may be issued while the Plan is suspended
or after it is terminated, but the rights and obligations under any Grant issued while the Plan is in effect shall not be impaired
by suspension or termination of the Plan.


 


In the
event of any change in the outstanding Stock by reason of a stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger, or similar event, the Board or the Committee may adjust proportionally (a) the number of shares of Stock
(i) reserved under the Plan, (ii) available for Incentive Stock Options and Nonstatutory Options and (iii) covered by outstanding
Stock Awards or Restricted Stock Purchase Offers; (b) the Stock prices related to outstanding Grants; and (c) the appropriate Fair
Market Value and other price determinations for such Grants. In the event of any other change affecting the Stock or any distribution
(other than normal cash dividends) to holders of Stock, such adjustments as may be deemed equitable by the Board or the Committee,
including adjustments to avoid fractional shares, shall be made to give proper effect to such event. In the event of a corporate
merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board or the Committee
shall be authorized to issue or assume stock options, whether or not in a transaction to which Section 424(a) of the Code applies,
and other Grants by means of substitution of new Grant Agreements for previously issued Grants or an assumption of previously issued
Grants.


 


10. Tax Withholding.
The Company shall have the right to deduct applicable taxes from any Grant payment and withhold, at the time of delivery or exercise
of Options, Stock Awards or Restricted Stock Purchase Offers or vesting of shares under such Grants, an appropriate number of shares
for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy
all obligations for withholding of such taxes. If Stock is used to satisfy tax withholding, such stock shall be valued based on
the Fair Market Value when the tax withholding is required to be made. Each Participant understands that such Participant (and
not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of an award or grant
of options or Shares. Participant represents that Participant has consulted any tax consultants Participant deems advisable in
connection with the receipt of the options or Shares and that Participant is not relying on the Company or the Company’s
counsel for any tax advice. The Company intends to report the value of the options or Shares received, if applicable, to appropriate
tax authorities. The Company has the authority to require Participant to remit to the Company an amount sufficient to satisfy all
federal, state, and local taxes required by law to be withheld with respect to any taxable event arising as a result of the receipt
of the Shares.


 


11. Availability of Information.
During the term of the Plan and any additional period during which a Grant granted pursuant to the Plan shall be exercisable, the
Company shall make available, not later than one hundred and twenty (120) days following the close of each of its fiscal years,
such financial and other information regarding the Company as is required by the bylaws of the Company and applicable law to be
furnished in an annual report to the shareholders of the Company.


 






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12. Notice. Any
written notice to the Company required by any of the provisions of the Plan shall be addressed to the chief financial officer or
to the chief executive officer of the Company, and shall become effective when it is received by the office of the chief financial
officer or the chief executive officer.


 


13. Indemnification of
Board. In addition to such other rights or indemnifications as they may have as directors or otherwise, and to the extent
allowed by applicable law, the members of the Board and the Committee shall be indemnified by the Company against the reasonable
expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim, action,
suit or proceeding, or in connection with any appeal thereof, to which they or any of them may be a party by reason of any action
taken, or failure to act, under or in connection with the Plan or any Grant granted thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid
by them in satisfaction of a judgment in any such claim, action, suit or proceeding, except in any case in relation to matters
as to which it shall be adjudged in such claim, action, suit or proceeding that such Board or Committee member is liable for negligence
or misconduct in the performance of his or her duties; provided that within sixty (60) days after institution of any such action,
suit or Board proceeding the member involved shall offer the Company, in writing, the opportunity, at its own expense, to handle
and defend the same.


 


14. Governing Law.
The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Code or the
securities laws of the United States, shall be governed by the law of the State of California and construed accordingly.


 


15. Termination
Dates. The Plan shall terminate ten years following the initial adoption of the Plan by the Board of Directors,
subject to earlier termination by the Board pursuant to Section 9.


 


The
foregoing 2016 Stock Incentive Plan was duly adopted and approved by the Board of Directors as of February 9, 2016, the first amendment
thereto was duly adopted and approved by the Board of Directors as of March 9, 2018 and the second amendment thereto was
duly adopted and approved by the Board of Directors as of December 20, 2018.


 








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