Document:

Exhibit

Exhibit 10.2

BELLICUM PHARMACEUTICALS, INC. 
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of May 10, 2017 (the “Effective Date”) by and between Bellicum Pharmaceuticals, Inc. a Delaware corporation (the “Company”), having an office at 2130 West Holcombe Boulevard, Suite 800, Houston, Texas 77030 (the “Company Premises”) and Alan K. Smith, Ph.D. (the “Executive”).
RECITALS
WHEREAS, Executive and the Company are currently parties to an Employment Agreement dated October 5, 2015 (the “Prior Agreement”) which is superseded and replaced in its entirety by this Agreement as of the Effective Date;  
WHEREAS, the Company desires to continue to employ Executive to provide personal services to the Company in as set forth in this Agreement and wishes to provide Executive with certain compensation and benefits in return for such services, and Executive wishes to be so employed and to receive such benefits; 
WHEREAS, Executive’s agreement to and compliance with the provisions in Sections 9 through 11 of this Agreement are a material factor, material inducement and material condition to the Company’s entering into this Agreement.  Moreover, Executive acknowledges that a substantial portion of the value of the employment of Executive is Executive’s promises to refrain from competing with the Company as identified in Sections 9 through 11 of this Agreement; and
WHEREAS, the Company and Executive wish to enter into this Agreement to define their mutual rights and duties with respect to Executive’s compensation and benefits from and following the Effective Date.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the Parties, intending to be legally bound, agree as follows: 
1.At-Will Employment.  The Company and Executive acknowledge that either party has the right to terminate Executive’s employment with the Company at any time for any reason whatsoever, with or without cause, subject to the provisions of Section 7 and 8 herein.  This at-will employment relationship cannot be changed except in a writing signed by both Executive and the Board of Directors of the Company (or a duly authorized committee thereof, if applicable) (the “Board”).  Any rights of Executive to additional payments or other benefits from the Company upon any such termination of employment shall be governed by Section 8 of this Agreement.
2.    Position.  Executive shall serve as the Executive Vice President, Technical Operations of the Company, with the responsibilities, rights, authority and duties pertaining to such office as are established from time to time by the Chief Executive Officer of the Company, and Executive shall report to the Chief Executive Officer of the Company.  Executive shall also act as an officer and/or director and/or manager of such Affiliates of the Company as may be designated by the Chief

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Executive Officer of the Company from time to time, commensurate with Executive’s office, all without further compensation, other than as provided in this Agreement.  As used herein, “Affiliate” means any entity that directly or indirectly controls, is controlled by, or is under common control with, the Company. 
3.    Commitment.  Executive will devote substantially all of his business time and best efforts to the performance of his duties hereunder; provided, however, that Executive shall be allowed, to the extent that such activities do not interfere with the performance of his duties and responsibilities hereunder and do not conflict with the financial, fiduciary or other interests of the Company (or its Affiliates), as determined in the sole discretion of the Chief Executive Officer of the Company, to manage his passive personal investments and to serve on corporate, civic, charitable and industry boards or committees.  Notwithstanding the foregoing, Executive agrees that he shall only serve on for-profit boards of directors or for-profit advisory committees if such service is approved in advance in the sole discretion of the Chief Executive Officer of the Company.
4.    Compensation.
(a)    Base Salary.  During Executive’s employment with the Company, the Company shall pay Executive a base salary at the annual rate of three hundred seventy thousand dollars ($370,000.00), less payroll deductions and withholdings, which shall be payable in accordance with the standard payroll practices of the Company.  Executive’s base salary shall be subject to periodic review and adjustment by the Board from time to time in the discretion of the Board. 
(b)    Annual Performance Bonus.  For each calendar year, (including calendar year 2017), Executive shall be eligible to receive an annual performance bonus (“Annual Performance Bonus”) from the Company, with the target amount of such bonus equal to forty percent (40%) of Executive’s annual base salary. The Annual Performance Bonus will be based on achievement of individual and/or Company goals which are established by the Board in its sole discretion at the beginning of each calendar year.  Following the close of each calendar year, the Board will determine whether Executive has earned an Annual Performance Bonus, and the amount of any such bonus.  Payment of the Annual Performance Bonus shall be expressly conditioned upon Executive’s employment with the Company on the date that the Annual Performance Bonus is paid, except as provided in Section 8(b) and Section 8(c) below. The Annual Performance Bonus shall be paid within ninety (90) days after the end of the calendar year for which it relates.  Executive’s target Annual Performance Bonus will be subject to periodic review and adjustment by the Board from time to time.  
(c)    Equity Awards.  Executive will be eligible to participate in and receive stock option or equity award grants under the Company’s equity incentive plans from time to time in the discretion of the Board, and in accordance with the terms and conditions of such plans.  As soon as practicable following the Effective Date, Executive will be granted a stock option to purchase 20,000 shares of the Company’s common in connection with his promotion to Executive Vice President, Technical Operations, effective as of its date of approval by the Company’s Board of Directors or Compensation Committee (the “Option”). The Option will be granted under, and subject to all the terms and conditions of the Company’s 2014 Equity Incentive Plan or any successor Company equity incentive plan (the “Plan”) and its standard form of stock option grant 

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notice and agreement.  The Option will have an exercise price per share equal to the Fair Market Value (as defined in the Plan) of the Company’s common stock on the applicable date of grant.  The Option will vest as follows, subject to Executive’s Continuous Services (as defined in the Plan) with the Company through each applicable vesting date:  25% of the shares of Common stock subject to the Option will vest on the one-year anniversary of the grant date and the remaining shares will vest in thirty-six (36) equal monthly installments thereafter.
(d)    Reimbursement of Business Expenses.  The Company shall reimburse Executive for reasonable travel and other business expenses incurred by Executive in the performance of his duties hereunder, in accordance with the Company’s policies as in effect from time to time.   
(e)    Reimbursement of Commuting Expenses.  The Company shall reimburse Executive’s reasonable travel costs from Virginia to Houston and reasonable accommodation costs in Houston related to the Executive’s work for the Company on a monthly basis, to the extent such costs do not exceed $4,000 in any calendar month (the “Commuting Expenses”).  To obtain reimbursement for any Commuting Expenses, Executive must submit expense reports to the Company within forty-five (45) days after the expense is incurred.  Any such reimbursements will be paid to Executive within thirty (30) days after the date Executive timely submits receipts to the Company for the Commuting Expenses and are subject to any applicable tax reporting and withholding.
5.    Benefits.  Subject to applicable eligibility requirements, Executive shall be entitled to participate in all benefit plans and arrangements and fringe benefits and programs that may be provided to senior executives of the Company from time to time, subject to plan terms and generally applicable Company policies.  Executive is entitled to participate in personal time off and holiday benefits, with personal time off to be not less than twenty-seven (27) days on an annual basis, accruing at nine (9) hours per twice monthly pay period.  Ten (10) days of personal time off may be carried over to the next year.  This paid time off allowance is subject to the Company's policies with respect to accrual of, including limitations on the maximum permitted accrual of, paid time off and is subject to change in accordance with changes in Company policy.   
6.    Relocation.  Executive shall not be required to relocate to the Houston, Texas metropolitan area at this time.  However, should the Executive be required to relocate to Houston at a later date, Executive’s continued employment at the Company through the time of relocation and the conditions in Section 6(e) below, the Company will provide Executive with the following payments and reimbursements (“Relocation Benefits”) to facilitate a smooth relocation for Executive and his family.
(a)    Household Goods.  Reimbursement for reasonable moving costs for transportation of Executive’s household goods, including one car, subject to Executive providing to Company three quotes for such services and Company approval of a quote for such services.
(b)    House finding trip.  Reimbursement for reasonable costs for economy airfare, car rental, hotel and reasonable meals to search for a new home.

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(c)    Temporary Housing/Car Rental.  Reimbursement for reasonable costs of temporary housing for Executive and his spouse and a rental car while in temporary housing, for a maximum of sixty days.
(d)    Tax Impacts.  It is recognized by the parties that certain relocation expenses listed above may not be tax deductible.  In order to offset income tax consequences for Executive, the Company will pay to Executive an amount equal to 30% of the Relocation Benefits set forth in Section 6(a) through (c) that are non-deductible for federal income tax purposes.  Such amount shall be paid in cash to Executive pursuant to the terms of Section 6(e) below.
(e)    Conditions.  To obtain reimbursement for any expense incurred under this Section 6, Executive must submit expense reports to the Company within forty-five (45) days after the expense is incurred.  Any such relocation reimbursements will be paid to Executive within thirty (30) days after the date Executive timely submits receipts for the expenses and are subject to any applicable tax reporting and withholding.  If Executive’s employment with Company is terminated by Executive other than for Good Reason or if the Company terminates Executive’s employment for Cause, in either case within 24 months after the Effective Date, the Company will have no further obligations to reimbursement Executive for any as yet unreimbursed expenses, and Executive must reimburse the Company in an amount equal to (i) the total of the amounts previously paid by the Company for relocation expenses, as reduced by (ii) 1/24th of such total amount for each full month of employment Executive has served since the Effective Date.  Executive hereby agrees that any such repayment obligation will be recovered from Executive’s final paycheck and any other amounts owed to Executive by the Company from and after Executive’s termination date.  Any additional amounts that may be owed by Executive for such repayment obligation will be paid by Executive to Company in cash within 60 days of the termination date.
7.    Termination.
(a)    Termination.  The employment of Executive under this Agreement shall terminate upon the earliest to occur of any of the following events:
(i)    the death of Executive;
(ii)    the termination of Executive’s employment by the Company due to Executive’s Disability pursuant to Section 7(b) hereof;
(iii)    the termination of Executive’s employment by Executive other than for Good Reason (as hereinafter defined);
(iv)    the termination of Executive’s employment by the Company without Cause;
(v)    the termination of Executive’s employment by the Company for Cause pursuant to Section 7(c) after providing the Notice of Termination for Cause pursuant to Section 7(d); 
(vi)    the termination by Executive of Executive’s employment for Good Reason (as hereinafter defined) pursuant to Section 7(e); or

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(vii)    the termination of Executive’s employment upon mutual agreement in writing between the Company and Executive.
(b)    Disability.  For purposes of this Agreement, “Disability” means that Executive has been unable, for ninety (90) consecutive days, or for periods aggregating one hundred and twenty (120) business days in any period of twelve consecutive months, to perform Executive’s duties under this Agreement, as a result of physical or mental impairment, illness or injury, as determined in good faith by the Board.  A termination of Executive’s employment for Disability shall be communicated to Executive by written notice, and shall be effective on the 10th day after sending such notice to Executive (the “Disability Effective Date”), unless Executive returns to performance of Executive’s duties before the Disability Effective Date.
(c)    Cause.  For purposes of this Agreement, the term “Cause” shall mean (i) Executive’s willful misconduct which is demonstrably and materially injurious to the Company’s reputation, financial condition, or business relationships; (ii) the failure of Executive to attempt in good faith to follow the legal written direction of the Board; (iii) the failure by Executive to attempt in good faith to perform the duties required of him hereunder (other than any such failure resulting from incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to Executive by the Board which specifically identifies the manner in which it is believed that Executive has failed to attempt to perform his duties hereunder; (iv) Executive being convicted of, indicted for, or pleading guilty or nolo contendere to, a felony or any crime involving dishonesty, fraud or moral turpitude; (v) Executive’s dishonesty with regard to the Company or in the performance of his duties hereunder, which in either case has a material adverse effect on the Company; (vi) Executive’s material breach of this Agreement unless corrected by Executive within ten (10) days of the Company’s written notification to Executive of such breach; or, (vii) Executive’s failure to comply in any material respect with the Company’s policies and/or procedures, unless corrected by Executive within ten (10) days of the Company’s written notification to Executive of such breach.
(d)    Notice of Termination for Cause.  Notice of Termination for Cause shall mean a notice to Executive that shall indicate the specific termination provision in Section 7(c) relied upon and shall set forth in reasonable detail the facts and circumstances which provide a basis for Termination for Cause.
(e)    Termination by Executive for Good Reason.  Executive may terminate Executive’s employment with the Company by resigning from employment with the Company for Good Reason.  The term “Good Reason” shall mean the occurrence, without Executive’s prior written consent, of any one or more of the following: (i) a material reduction in Executive’s base salary (unless pursuant to a salary reduction program applicable generally to the Company’s similarly situated senior executives); (ii) a material reduction in Executive’s authority, duties or responsibilities; (iii) a relocation of Executive’s principal place of employment with the Company (or its successor, if applicable) to a place that increases Executive’s one-way commute by more than fifty (50) miles as compared to Executive’s then-current principal place of employment immediately prior to such relocation (unless to the Houston, Texas metropolitan area, as contemplated by Section 6), except for required travel by Executive on the Company’s business to an extent substantially consistent with Executive’s business travel obligations prior to the such 

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relocation; or (iv) any other action of inaction that constitutes a material breach by the Company (or its successor, if applicable) of any material provision of this Agreement.
No resignation for Good Reason shall be effective unless (1) Executive provides written notice, within ninety (90) days after the first occurrence of the event giving rise to Good Reason, to the Chairman of the Board setting forth in reasonable detail the material facts constituting Good Reason and the reasonable steps Executive believes necessary to cure, (2) the Company has had thirty (30) business days from the date of such notice to cure any such occurrence otherwise constituting Good Reason, and (3) if such event is not reasonably cured within such period, Executive must resign from all positions Executive then holds with the Company (including any position as a member of the Board) effective not later than ninety (90) days after the expiration of the cure period.
8.    Consequences of Termination of Employment.  
(a)    General.  If Executive’s employment is terminated for any reason or no reason, the Company shall pay to Executive or to Executive’s legal representatives, if applicable: (i) any base salary earned, but unpaid; and, (ii) any unreimbursed business expenses payable pursuant to Section 4 hereof, (iii) any unreimbursed Relocation Benefits or Commuting Expenses which are eligible for reimbursement, and any accrued but unused personal time off benefits and any other payments or benefits required by applicable law (collectively “Accrued Amounts”), which amounts shall be promptly paid in a lump sum to Executive, or in the case of Executive’s death to Executive’s estate.  Other than the Accrued Amounts, Executive or Executive’s legal representatives shall not be entitled to any additional compensation or benefits if Executive’s employment is terminated for any reason other than by reason of Executive’s Involuntary Termination (as defined in Section 8(b) below).  If Executive’s employment terminates due to an Involuntary Termination, Executive will be eligible to receive the additional compensation and benefits described in Section 8(b) and 8(c), as applicable.
(b)    Involuntary Termination.  If Executive’s employment with the Company is terminated by the Company without Cause (and other than as a result of Executive’s death or Disability) or if Executive terminates employment for Good Reason, and provided in any case such termination constitutes a “separation from service”, as defined under Treasury Regulation Section 1.409A-1(h)) (a “Separation from Service”) (such termination described in (i) or (ii), an “Involuntary Termination”), in addition to the Accrued Amounts, Executive shall be entitled to receive the severance benefits described below in this Section 8(b), subject in all events to Executive’s compliance with Section 8(d) below:  
(i)    Executive shall receive continued payment of Executive’s Base Salary (as defined below) for the first twelve (12) months after the date of such termination (the “Severance Period”), paid over the Company’s regular payroll schedule.
(ii)    Executive shall receive a lump sum amount equal to Executive’s target Annual Performance Bonus for the year of termination, pro rated based on the ratio that the number of days from the beginning of the calendar year in which such termination occurs through the date of termination bears to 365 (the “Bonus Payment”).

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(iii)    If Executive is eligible for and timely elects to continue the health insurance coverage under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985 or the state equivalent (“COBRA”) following Executive’s termination date, the Company will pay the COBRA group health insurance premiums for Executive and Executive’s eligible dependents until the earliest of (A) the close of the Severance Period, (B) the expiration of Executive’s eligibility for the continuation coverage under COBRA, or (C) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment.  For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Executive under a Section 125 health care reimbursement plan under the Internal Revenue Code of 1986, as amended and the treasury regulations thereunder (the “Code”).  Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot pay the COBRA premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether Executive elects continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead pay Executive on the last day of each remaining month of the Severance Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings (such amount, the “Health Care Benefit Payment”).  The Health Care Benefit Payment shall be paid in monthly installments on the same schedule that the COBRA premiums would otherwise have been paid and shall be equal to the amount that the Company would have otherwise paid for COBRA premiums, and shall be paid until the earlier of (i) expiration of the Severance Period or (ii) the date Executive voluntarily enrolls in a health insurance plan offered by another employer or entity.
(c)    Involuntary Termination in Connection with a Change in Control.  In the event that Executive’s Involuntary Termination occurs immediately prior to, on or within the twelve (12) months following the consummation of a Change in Control (as defined below) and subject in all events to Executive’s compliance with Section 8(d) below, then Executive shall be entitled to the benefits provided above in Section 8(b), except that:
(i)    the Bonus Payment shall equal Executive’s full target Annual Performance Bonus for the year of termination, rather than the pro-rated target bonus; and
(ii)    the vesting of all of Executive’s outstanding stock options and other equity awards that are subject to time-based vesting requirements shall accelerate in full such that all such equity awards shall be deemed fully vested as of the date of Executive’s Involuntary Termination.
For the avoidance of doubt, in no event shall Executive be entitled to benefits under both Section 8(b) and this Section 8(c).  If Executive is eligible for benefits under both Section 8(b) and this Section 8(c), Executive shall receive the benefits set forth in this Section 8(c) and such benefits will be reduced by any benefits previously provided to Executive under Section 8(b).
(d)    Conditions and Timing for Severance Benefits.  The severance benefits set forth in Section 8(b) and Section 8(c) above are expressly conditioned upon: (i) Executive continuing to comply with Executive’s obligations under this Agreement, including Sections 9 through 12; and (ii) Executive signing and not revoking a general release of legal claims in a form provided by the Company (the “Release”) within the applicable deadline set forth therein and permitting the 

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Release to become effective in accordance with its terms, which must occur no later than the Release Deadline (as defined in Section 15 below).  The salary continuation payments described in Sections 8(b) will be paid in substantially equal installments on the Company’s regular payroll schedule and subject to standard deductions and withholdings over the Severance Period following termination; provided, however, that no payments will be made prior to the effectiveness of the Release.  On the effective date of the Release, the Company will pay Executive the salary continuation payments that Executive would have received on or prior to such date in a lump sum under the original schedule but for the delay while waiting for the effectiveness of the Release, with the balance of the payments being paid as originally scheduled.   Bonus Payments described in Section 8(b) and 8(c) will be paid in a lump sum cash payment on the first regular payroll date of the Company following the effective date of the Release, but in no event later than March 15 of the year following the year in which Executive’s termination of employment occurred.  All severance benefits described in this Section 8 will be subject to all applicable standard required deductions and withholdings.
(e)    Definitions.
(i)    “Base Salary” means Executive’s annual base salary in effect immediately prior to Executive’s termination, excluding any reduction which forms the basis for Executive’s right to resign for Good Reason.
(ii)    “Change in Control” means a “Change in Control” as defined in the Company’s 2014 Equity Incentive Plan.
9.    Confidential Information.  “Confidential Information” as used in this Agreement, includes but is not limited to, specialized training received by Executive; products already developed or that will be developed by the Company, including but not limited to, products in the field of cancer immunotherapy, including metastatic castrate resistant prostate cancer and graft versus host disease; research and development materials related to the manipulation of dendritic cell signaling pathways to enhance the immune response; research and development materials, electronic databases; computer programs and technologies; marketing and/or scientific studies and analysis; product and pricing knowledge; manufacturing methods; supplier lists and information; any and all information concerning past, present and future customers, referral sources or vendors; contracts and licenses; management structure, company ownership, personnel information (including the performance, skills, abilities and payment of employees); purchasing, accounting and business systems; short and long range business planning; data regarding the Company’s past, current and future financial performance, sales performance, and current and/or future plans to increase the Company’s market share by targeting specific medical issues, demographic and/or geographic markets; standard operating procedures; financial information; trade secrets, copyrights, derivative works, patents, inventions, know-how, and other intellectual property; business policies; submissions to government or regulatory agencies and related information; methods of operation; implementation strategies; promotional information and techniques; marketing presentations; price lists; files or other information; pricing strategies; computer files; samples; customer originals; or any other confidential information concerning the business and affairs of the Company.  The Company’s Confidential Information is also comprised of the personal information received from third parties and/or confidential and proprietary information regarding research, products, or clinical trials received from third parties, but only if such 

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confidential information is reduced to writing and marked “Confidential” by the third party.  All such confidential information obtained by Executive, whether in writing, any other tangible form of expression or disclosed orally or through visual means or otherwise, and regardless of whether such information bears a confidential or proprietary legend, will be presumed to be Confidential Information.  Executive acknowledges that the Confidential Information is vital, valuable, sensitive, confidential and proprietary to Company and provides Company with a competitive advantage.  Executive further acknowledges that Company’s Confidential Information is dynamic, and constantly changes in nature and/or quantity, given that Company continues to refine its Confidential Information.  The obligations specified in this Section 9 shall not apply, and Executive shall have no further obligations under this Agreement with respect to any Confidential Information that: a) is available to the public at the time of disclosure to Executive or becomes publicly known through no breach of the undertakings hereunder by Executive or to the knowledge of Executive, any third party; b) becomes known to Executive through disclosure by sources other than the Company and its Affiliates and in the course of Executive’s service to the Company, said sources being under no obligation of confidentiality to the Company with respect to such Confidential Information; c) is approved by the Company for release; or d) has been independently developed by Executive without benefit of the Confidential Information and on Executive’s own time and without use of Company resources.  Executive understands and agrees that the Company may require him, as a condition to continued employment, to execute and abide by the terms of a standard proprietary information and inventions agreement with the Company which will further set forth the terms of, and prohibit the unauthorized use or disclosure of, the Company’s confidential and proprietary information (the “PIIA”) and that such PIIA shall become part of this Agreement and Executive’s obligations under this Agreement.
10.    Non-Competition; Non-Solicitation, Etc.
(a)    Company Promises.
(i)    This Agreement is entered into pursuant to Executive’s agreement to these non-compete and non-solicitation provisions.  Executive’s agreement to the provisions in Sections 10 through 12 is a material condition of the Company’s entering into this Agreement and continued employment of Executive.
(ii)    The Company agrees to provide Executive with access to Confidential Information and in a greater quantity and/or expanded nature than any such Confidential Information that may have already been provided to Executive and with additional opportunities to broaden the Company’s services and develop the Company’s customers in a manner not previously available to Executive including, but not limited to, information regarding the Company’s products and business plan; research results; information supporting patent applications; and Company standard operating procedures related to the Company’s research and development efforts.
(iii)    The Company promises that during Executive’s employment with the Company, the Company will provide Executive with the opportunity to develop goodwill and establish rapport with the customer contacts in a greater quantity and/or expanded nature than any such opportunities that may have already been provided to Executive.

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(iv)    The Company promises that Executive will continue to receive and have access to Confidential Information throughout Executive’s employment with the Company.
(b)    Executive’s Promises.  In exchange for the Company’s promises listed above and all other consideration provided pursuant to this Agreement, to which these promises are ancillary, Executive promises as follows:
(i)    Executive will not, during or after Executive’s employment with the Company, use, copy, remove, disclose or disseminate to any person or entity, the Company’s Confidential Information, except (i) as required in the course of performing Executive’s duties with the Company, for the benefit of the Company, or (ii) when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order Executive to divulge, disclose or make accessible such information, it being understood that Executive will promptly notify the Company of such requirement so that the Company may seek to obtain a protective order.
(ii)    Following employment termination, Executive will immediately return to the Company all materials created, received or utilized in any way in conjunction with Executive’s work performed with the Company that in any way incorporates, reflects or constitutes Company’s Confidential Information.
(iii)    Executive acknowledges that the market for the Company’s products, services, and activities is global, and that the products, services and/or activities can be provided anywhere in the world.  Executive recognizes that the Company draws its customers and/or clients from around the world because it will seek to file patents and run clinical trials in countries around the world, and sell its product to consumers around the world and/or pharmaceutical companies located around the world.  Moreover, Executive recognizes that the Company’s customers may be contacted by telephone, in person, or in writing (including e-mail via the Internet).  Executive further acknowledges that due to the international scope of the Company’s customer and client base, the following non-solicitation/non-competition restriction is necessary.
(iv)    Executive agrees and acknowledges that Company will not be provided access to Confidential Information, as defined in Section 9, from or belonging to a third party that Executive was exposed to or received from said third party prior to the execution date of this Agreement and that is the subject of any confidentiality requirement of any kind between Executive and said third party.  EXECUTIVE ALSO AGREES TO INDEMNIFY, REIMBURSE, AND HOLD HARMLESS THE COMPANY FOR ALL ATTORNEY FEES, EXPENSES, COSTS, HARM, OR RELATED COSTS TO COMPANY ARISING FROM OR AS A RESULT OF ANY ACTUAL CAUSE OF ACTION OR CLAIM BROUGHT AGAINST COMPANY OR EXECUTIVE RELATED TO ANY ACTUAL BREACH OF THIS SECTION BY EXECUTIVE.  Company agrees that: (A) Executive shall be allowed to participate fully in the defense of any such action against Company and in any settlement negotiations, and (B) any payment to Company by Executive under this Section shall be only after any settlement has been consummated or judicial action has become final and non-appealable.

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(c)    Non-Compete.  Ancillary to the consideration reflected within this Agreement, the Company and Executive agree to the following non-competition provisions.  Executive agrees that during Executive’s employment with the Company and for a period of twelve (12) months following the termination of his employment (“Non-Compete Period”):
(i)    Executive shall not, directly or indirectly, engage in or participate (including, without limitation, as an investor, officer, employee, director, agent, or consultant (any such capacity, being a “Participant”)) in or on behalf of any entity engaging in the “Company’s Business”, said Company’s Business being defined as: (A) genetically modified cell products for the treatment of cancer; and (B) other genetically modified products for which the Company has an active development program at the termination or expiration of the Employment Term (the “Non-Compete Obligations”), provided, however, that nothing herein shall prevent him from investing as a less than 5% shareholder in securities of any company listed on a national securities exchange or quoted on an automated quotation system;
(ii)    Geographic Limitation.  The geographic limitation for the Non-Compete Obligations is North America, Europe and Japan; and
(iii)    During Executive’s employment with the Company and for a period of twelve (12) months after Executive’s employment has ended, Employee will not directly or indirectly become employed or otherwise associated with any of the following entities, which are direct competitors of the Company, in any geographic region:
	
		
	Adaptimmune Limited
	91 Park Drive
Milton Park, Abingdon Oxon
OX14 4RY
UK

	bluebird bio, Inc.
	150 2nd Street 
Cambridge, MA 02141

	Celgene Corporation
	86 Morris Avenue 
Summit, NJ 07901

	Cellectis
	8 rue de la Croix Jarry 
75013 Paris
France

	Cell Medica Limited
	1 Canal Side Studios, 8-14 St Pancras Way
London, NW1 0QG
UK

	Immune Design Corp.
	1616 Eastlake Ave. E., Suite 310 
Seattle, WA 98102

	Intrexon Corporation
	1872 Pratt Drive  
Blacksburg, VA 24060

	Juno Therapeutics, Inc.
	307 Westlake Avenue North 
Suite 300 
Seattle, WA 98109

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	Kiadis Pharma B.V.
	Entrada 231-234  
1096 EG Amsterdam  
The Netherlands

	Kite Pharma, Inc.
	2225 Colorado Avenue
Santa Monica, CA 90404

	Lion Biotechnologies, Inc.
	21900 Burbank Blvd., Third Floor 
Woodland Hills, CA 91367

	Medigene AG
	Lochhamer Str. 11 
82152 Planegg/Martinsried 
Germany

	MolMed S.p.A.
	Via Olgettina, 58  
20132 Milan
Italy

	Novartis AG
	Basel
Switzerland

	Pfizer Inc.
	235 East 42nd Street 
New York, NY 10017

	Precision Biosciences, Inc.
	302 East Pettigrew St. Suite A-100
Durham, NC 27701

	Unum Therapeutics
	One Broadway 4th Floor 
Cambridge, MA 02142

Executive and the Company agree that with respect to the foregoing entities such names are the common names of such entities.  Executive and the Company agree that the restrictions contained in this Agreement are binding whether or not Executive and the Company have used the correct legal name, address, affiliated entity, or new owner of such entity, however, if said new owner of such entity has other divisions that are not involved in carrying out the work of the acquired listed entity, then Executive may be employed or otherwise associated with these other divisions.
(iv)    Executive agrees that Executive’s work for any third party engaged in the Company’s Business during the Non-Compete Period inevitably would lead to Executive’s unauthorized use of Company’s Confidential Information, even if such use is unintentional.  Because it would be impossible, as a practical matter, to monitor, restrain, or police Executive’s use of such Confidential Information other than by Executive’s not working for such third party, and because the Company’s Business is highly specialized, the competitors are identifiable, the market for the Company’s product, services, and activities is global, and the Company’s customers are located throughout the world, Executive agrees that restricting such employment as set forth in this Agreement is the narrowest way to protect Company’s legitimate business interests, and the narrowest way of enforcing Executive’s consideration for the receipt of Company’s consideration (namely, Executive’s promise not to use or disclose Confidential Information).
(d)    Nonsolicitation of Employees.  Executive agrees that during the Non-Compete Period, Executive will not, directly or indirectly, (i) induce or solicit any person who was an employee, consultant or independent contractor of the Company or any of its Affiliates, to terminate such individual’s employment or service with the Company or any of its Affiliates or (ii) assist any other person or entity in such activities.

12
 

(e)    Extension of Non-Solicitation/Non-Competition and Non-Recruitment Periods.  If Executive is found by a court of competent jurisdiction to have breached any promise made in Section 10 of this Agreement, the periods specified in Section 10(c) of this Agreement shall be extended by one month for every month in which Executive was in breach so that the Company has the full benefit of the time period Section 10(c).
11.    Injunction.  Executive recognizes that Executive’s services hereunder are of a special, unique, unusual, extraordinary and intellectual character giving them a peculiar value, the loss of which cannot be reasonably or adequately compensated for in damages.  Executive acknowledges that if Executive were to leave the employ of the Company for any reason and compete, directly or indirectly, with the Company, or solicit the Company’s employees, or use or disclose, directly or indirectly, the Company’s Confidential Information (whether in tangible form or memorized), that such competition, solicitation, use and/or disclosure would cause the Company irreparable harm and injury for which no adequate remedy at law exists.  Executive agrees this Agreement is the narrowest way to protect the Company’s interests.  Therefore, in the event of the breach or threatened breach of the provisions of this Agreement by Executive, the Company shall be entitled to obtain injunctive relief to enjoin such breach or threatened breach, in addition to all other remedies and alternatives that may be available at law or in equity.  Executive acknowledges that the remedies contained in this Agreement for violation of this Agreement are not the exclusive remedies that the Company may pursue.
12.    Inventions.
(a)    Inventions Retained and Licensed.  Executive has attached hereto as Exhibit A, a list describing all inventions, original works of authorship, derivative works, developments, improvements and trade secrets that (i) were made by Executive prior to his employment with the Company, (ii) belong to Executive, (iii) relate to the Company’s proposed business, products or research and development and (iv) are not assigned to the Company hereunder (collectively, “Prior Inventions”); or, if no such list is attached, Executive represents that there are no such Prior Inventions.  Executive agrees that Executive will not incorporate, or permit to be incorporated, any Prior Invention owned by Executive or in which Executive has an interest into a Company product, process or service without the Company’s prior written consent.  Nevertheless, if, in the course of Executive’s employment with the Company, Executive incorporates into a Company product, process or service a Prior Invention owned by Executive or in which Executive has an interest, Executive hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, transferable, sublicensable, worldwide license to reproduce, make derivative works of, distribute, perform, display, import, make, have made, modify, use, sell, offer to sell, and exploit in any other way such Prior Invention as part of or in connection with such product, process or service, and to practice any method related thereto.
(b)    Assignment of Inventions.  Executive agrees that Executive will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assign to the Company, or its designee, all Executive’s right, title, and interest in and to any and all inventions, original works of authorship, derivative works, developments, concepts, modifications, improvements (including improvements to Confidential Information), designs, discoveries, ideas, know-how, trademarks, trade dress, trade secrets or other intellectual property, whether or not patentable or registrable under copyright or similar laws, 

13
 

which Executive may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, whether or not reduced to drawings, written descriptions, documentation or other tangible form, as applicable, during the period of time Executive is employed by the Company (collectively, “Inventions”), except as provided in Section 12(f) below.  Executive further acknowledges that all original works of authorship which are made by Executive (solely or jointly with others) within the scope of and during the period of Executive’s employment with the Company and which are protectable by copyright are “works made for hire” as that term is defined in the United States Copyright Act.  Executive understands and agrees that the decision whether or not to commercialize or market any Invention is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty will be due to Executive as a result of the Company’s efforts to commercialize or market any such Invention,
(c)    Inventions Assigned to the United States.  Executive agrees to assign to the United States government all Executive’s right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Company and the United States or any of its agencies.
(d)    Maintenance of Records.  Executive agrees to keep and maintain adequate and current written records of all Inventions during the term of Executive’s employment with the Company.  The records will be in the form of notes, sketches, drawings and any other format that may be specified by the Board.  The records will be available to and remain the Company’s sole property at all times.
(e)    Patent and Copyright Registrations.  Executive agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in any Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including, but not limited to, the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, declarations, assignments and all other instruments that the Company deems necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto.  Executive further agrees that Executive’s obligations to execute or cause to be executed, when it is in Executive’s power to do so, any such instrument or papers shall continue after the termination of this Agreement.  If the Company is unable because of Executive’s mental or physical incapacity or for any other reason to secure Executive’s signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering any Inventions or original works of authorship assigned to the Company as above, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and in Executive’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by Executive.
(f)    Exception to Assignments.  Executive understands that the provisions of this Agreement requiring assignment of Inventions to the Company does not apply to any Invention that Executive has developed entirely on Executive’s own time without using the Company’s 

14
 

equipment, supplies, facilities, trade secret information or Confidential Information (an “Other Invention”), except for those Other Inventions that either (i) relate in any way at the time of conception or reduction to practice of such Other Invention to the Company’s Business or (ii) result from any work that Executive performed for the Company.  Executive will advise the Company promptly in writing, under a confidentiality agreement, of any Invention that Executive believes constitutes an Other Invention and is not otherwise disclosed on Exhibit A.  Executive agrees that Executive will not incorporate, or permit to be incorporated, any Other Invention owned by Executive or in which Executive has an interest into a Company product, process or service without the Company’s prior written consent.  Notwithstanding the foregoing sentence, if, in the course of Executive’s employment with the Company, Executive incorporates into a Company product, process or service an Other Invention owned by Executive or in which Executive has an interest, Executive hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, transferable, sublicensable, worldwide license to reproduce, make derivative works of, distribute, perform, display, import, make, have made, modify, use, sell, offer to sell, and exploit in any other way such Other Invention as part of or in connection with such product, process or service, and to practice any method related thereto.
13.    Disputes.  Any dispute or controversy between the Company and Executive, arising out of or relating to this Agreement, the breach of this Agreement, the Company’s employment of Executive, or otherwise, shall be settled by binding arbitration conducted by and before a single arbitrator in Houston, Texas administered by the American Arbitration Association in accordance with its Employment Arbitration Rules (the “AAA Rules”) then in effect and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  Both Employee and the Company hereby waive the right to a trial by jury or judge, or by administrative proceeding, for any covered claim or dispute.  To the extent the AAA Rules conflict with any provision or aspect of this Agreement, this Agreement shall control.  The arbitrator shall have the authority to award any remedy or relief that a court of competent jurisdiction could order or grant, including, without limitation, the issuance of an injunction.  However, either party may, without inconsistency with this arbitration provision, apply to any court having jurisdiction over such dispute or controversy and seek interim provisional, injunctive or other equitable relief until the arbitration award is rendered or the controversy is otherwise resolved.  Except as necessary in court proceedings to enforce this arbitration provision or an award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of the Company and Executive.  All claims, disputes, or causes of action under this Agreement, whether by Employee or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity.  The arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding.  This Agreement is made under the provisions of the Federal Arbitration Act (9 U.S.C., Sections 1-14) (“FAA”) and will be construed and governed accordingly.  It is the parties’ intention that both the procedural and the substantive provisions of the FAA shall apply.  Questions of arbitrability (that is whether an issue is subject to arbitration under this agreement) shall be decided by the arbitrator.  Likewise, procedural questions which grow out of the dispute and bear on the final disposition are also matters for the arbitrator.  However, where a party already has initiated a judicial proceeding, a court may decide procedural questions that grow out of the dispute and bear on the final disposition of the matter.  Each party shall bear its or his costs and 

15
 

expenses in any arbitration hereunder and one-half of the arbitrator’s fees and costs; provided, however, that the arbitrator shall have the discretion to award the prevailing party reimbursement of its or his reasonable attorney’s fees and costs, unless such award is prohibited by applicable law.  Notwithstanding the foregoing, Executive and the Company shall each have the right to resolve any dispute or cause of action involving trade secrets, proprietary information, or intellectual property (including, without limitation, inventions assignment rights, and rights under patent, trademark, or copyright law) by court action instead of arbitration.
14.    Notices.  All notices given under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) three business days after being mailed by first class certified mail, return receipt requested, postage prepaid, (c) one business day after being sent by a reputable overnight delivery service, postage or delivery charges prepaid, or (d) on the date on which a facsimile is transmitted to the parties at their respective addresses stated below.  Any party may change its address for notice and the address to which copies must be sent by giving notice of the new addresses to the other party in accordance with this Section 14, except that any such change of address notice shall not be effective unless and until received.
If to the Company:
2130 West Holcombe Boulevard, Suite 800 
Houston, Texas 77030  
Attention:  Chairman of the Board of Directors
with a copy (which shall not constitute notice) to:
Cooley LLP  
4401 Eastgate Mall 
San Diego, California 92121 
Attention:  Julie Robinson 
If to Executive, to Executive’s address on file with the Company 
15.    Tax Provisions.
(a)    Section 409A.  Notwithstanding anything in this Agreement to the contrary, the following provisions apply to the extent severance benefits provided herein are subject to the provisions of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”).  Severance benefits shall not commence until Executive’s Separation from Service.   Each installment of  severance benefits is a separate “payment” for purposes of Treasury Regulations Section 1.409A-2(b)(2)(i), and the severance benefits are intended to satisfy the exemptions from application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if such exemptions are not available and Executive is, upon Separation from Service, a “specified employee” for purposes of Section 409A, then, solely to the extent necessary to avoid adverse personal tax consequences under Section 409A, the timing of the severance benefits payments shall be delayed until the earlier of (i) six (6) months and one day after Executive’s Separation from Service, or (ii) Executive’ death.  Executive shall receive severance benefits only if Executive executes and returns to the Company the Release within the applicable time period set forth therein 

16
 

and permits such Release to become effective in accordance with its terms, which date may not be later than sixty (60) days following the date of Executive’s Separation from Service (such latest permitted date, the “Release Deadline”).  If the severance benefits are not covered by one or more exemptions from the application of Section 409A and the Release could become effective in the calendar year following the calendar year in which Executive’s Separation from Service occurs, the Release will not be deemed effective any earlier than the Release Deadline.  None of the severance benefits will be paid or otherwise delivered prior to the effective date of the Release.  Except to the minimum extent that payments must be delayed because Executive is a “specified employee” or until the effectiveness of the Release, all amounts will be paid as soon as practicable in accordance with the schedule provided herein and in accordance with the Company’s normal payroll practices. The severance benefits are intended to qualify for an exemption from application of Section 409A or comply with its requirements to the extent necessary to avoid adverse personal tax consequences under Section 409A, and any ambiguities herein shall be interpreted accordingly.
(b)    Section 280G.  If any payment or benefit Executive will or may receive from the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G Payment pursuant to this Agreement or otherwise (a “Payment”) shall be equal to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Executive.  If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).  
Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows:  (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for Executive as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A. 

Unless Executive and the Company agree on an alternative accounting firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the change of control transaction triggering the Payment shall perform the foregoing 

17
 

calculations.  If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the change in control transaction, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.  The Company shall use commercially reasonable efforts to cause the accounting firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to Executive and the Company within fifteen (15) calendar days after the date on which Executive’s right to a 280G Payment becomes reasonably likely to occur (if requested at that time by Executive or the Company) or such other time as requested by Executive or the Company.  

If Executive receives a Payment for which the Reduced Amount was determined pursuant to clause (x) of the first paragraph of this Section 15(b) and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, Executive shall promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of the first paragraph of this Section 15(b) so that no portion of the remaining Payment is subject to the Excise Tax.  For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) in the first paragraph of this Section 15(b), Executive shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

16.    Miscellaneous.
(a)    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without reference to principles of conflict of laws.
(b)    Entire Agreement/Amendments.  This Agreement and the instruments contemplated herein contain the entire understanding of the parties with respect to the employment of Executive by the Company from and after the Effective Date and supersede any prior agreements or promises between the Company and Executive, except for any outstanding stock option or other equity award agreement previously entered into between Executive and the Company, including but not limited to the Prior Agreement.  There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein and therein.  This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.
(c)    No Waiver.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.  Any such waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be.
(d)    Assignment.  This Agreement shall be binding upon and inure to the benefit of the Company and Executive and their respective successors, assigns, executors and administrators.  This Agreement shall not be assignable by Executive.
(e)    Representation.  Executive represents that Executive’s employment by the Company and the performance by Executive of his obligations under this Agreement do not, and 

18
 

shall not, breach any agreement, including, but not limited to, any agreement that obligates him to keep in confidence any trade secrets or confidential or proprietary information of his or of any other party, to write or consult to any other party or to refrain from competing, directly or indirectly, with the business of any other party.  Executive shall not disclose to the Company or use any trade secrets or confidential or proprietary information of any other party.
(f)    Successors; Binding Agreement; Third Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees legatees and permitted assignees of the parties hereto.
(g)    Withholding Taxes.  The Company shall withhold from any and all compensation, severance and other amounts payable under this Agreement such Federal, state, local or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
(h)    Survivorship.  The respective rights and obligations of the parties hereunder, including without limitation Sections 9 through 12 hereof, shall survive any termination of Executive’s employment to the extent necessary to the agreed preservation of such rights and obligations.
(i)    Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
(j)    Headings.  The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.
Signature Page Follows

19
 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
By: Bellicum Pharmaceuticals, Inc.  
By: /s/ Richard A. Fair    
Name: Richard A. Fair 
Title: President and Chief Executive Officer 
    
 /s/ Alan K. Smith     
Name: Alan K. Smith, Ph.D.

Signature Page to Agreement
 

 

EXHIBIT A
INVENTIONS
None.

Exhibit Asgby_ex101.htm

EXHIBIT 10.1

 

INTELLECTUAL PROPERTY LICENSE AGREEMENT

 

This Intellectual Property License Agreement (this “Agreement”) dated as of July 27, 2017 (the “Effective Date”) by and between Signal Bay, Inc, (also referenced as “EVIO Labs”), a Colorado corporation with principal offices located at 62930 O.B. Riley Rd #300, Bend, OR 97703 (the “Licensor”) and Kaycha Holdings LLC, a Florida limited liability company, with principal offices located at 3350 SW 148th Ave., Suite 110, Miramar, FL 33027 (the “Licensee”). The Licensee and Licensor are sometimes referred to individually herein as a “Party” and collectively as the “Parties”.

 

RECITALS

 

WHEREAS, the Licensee is engaged in the business of analytical testing of cannabis and hemp services pursuant to Florida’s marijuana laws (including all regulations promulgated thereunder by the State of Florida Department of Health and any other applicable local or state laws (collectively, the “Applicable Laws”);

 

WHEREAS, Licensor owns and holds certain intellectual property and technology related to the testing of cannabis as more particularly described in Exhibit A (as the same may be updated from time to time by written notice from Licensor to Licensee) (the “Technology”), including procedures for using instruments to determine the chemical composition and active ingredients of cannabis and cannabis products including plant matter, extractions, concentrates, and infused products (collectively “Cannabis Products”) for the purpose of providing quantitative and qualitative evaluations of Cannabis Products to regulatory agencies, cannabis businesses, and patients. 

 

WHEREAS, the Licensee wishes to utilize the Technology to analyze and test Cannabis Products within the State of Florida (the “Territory”)), and Licensor desires for the Licensee to so utilize the Technology, on and subject to the terms and conditions set forth herein.

 

WHEREAS, the Parties previously entered into a “Letter of Intent” dated July 15, 2017 which contemplated that the parties would enter into this definitive agreement and that this Agreement would supersede and replace the Letter of Intent. 

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: 

 

	 
	1
	

 
	 

 

AGREEMENT

 

	1.	License of Technology. Subject to the terms and conditions of this Agreement, Licensor hereby grants to the Licensee a non-exclusive, non-transferable, non-sublicenseable license, to use the Technology only to perform testing of Cannabis Products and products related to cannabis such as soil, water, and other vegetation at the Licensee’s site, and exclusively within the Territory (the “Licensed Services”). Without limitation of the generality of the foregoing, both Parties agree and understand that Licensee shall have the exclusive rights to the Technology in the Territory with respect to the Licensed Services, provided that the exclusivity will not preclude Licensor from using or licensing (and that Licensor retains the right to use and license) the Technology in connection with the manufacture, marketing, sale, distribution and other exploitation of products, including testing products, both inside and outside the Territory.
	
 
	
 

		
The Technology shall expressly include: (a) all patents obtained, or patent applications and/or provisional patent applications submitted, by Licensor relating to the Technology or Licensed Products or Services (the “Licensed Patents”); and, (b) all know-how relating to the Technology and the Licensed Services, including the use, and application of procedures that is owned or controlled by Licensor as of the Effective Date or thereafter acquired, discovered, developed, identified, made, conceived or reduced to practice by or on behalf of Licensor, whether or not patented or patentable and whether or not maintained as trade secret (the “Licensed Know-How”). In the event that Licensor subsequently releases other services based on the Technology, Licensor will notify Licensee and provide Licensee with the right of first refusal to include such other services as Licensed Services hereunder on terms specified by Licensor, provided that such terms shall be no less favorable to Licensee than the terms offered to other licensees of Licensor (excluding affiliate licensees) in other states, which right of first refusal shall expire after a period of thirty (30) calendar days if not exercised by Licensee. The Technology may not be used by Licensee for any purpose other than the Licensed Services without the prior written consent of Licensor. The license granted by this Section 1 (a) may not be transferred or sublicensed by Licensee without Licensor’s consent; (b) does not create any rights of ownership on the part of Licensee (all rights of ownership being retained by Licensor); and, (c) except as specifically provided herein, covers only the Technology in existence on the date hereof and does not extend to any future improvements or developments of the Technology by Licensor subsequent to the date hereof. Licensee must obtain Licensor’s consent before making any improvements to the Technology. In the event that Licensee creates an improvement to the Technology (each instance, an “Improvement”), Licensee shall be deemed to have immediately assigned such Improvement to Licensor and such Improvement shall become part of the Technology licensed by Licensor under this Agreement. Licensee shall execute and deliver any requested additional written assignment of the Improvement in order for Licensor to document Licensor’s ownership of the Improvement.

 

	 
	2
	

 
	 

 

	2.	License of Trademarks. 

 

	
 
	a.	Licensee must use the Licensed Mark as (a) its trade name for the testing laboratories located at Licensee’s authorized sites, and (b) its primary service mark for the cannabis testing services that Licensee provides using the Technology.
	
 
	
 
	
 

	
 
	b.	Subject to the terms and conditions of this Agreement, Licensor hereby grants to the Licensee a non-exclusive, non-transferable, non-sublicenseable right and license to use the trademarks, service marks, trade names, trade dress, symbols and logos set forth on Exhibit B, and all applications and registrations thereof, including the goodwill associated therewith (as such Exhibit B may be updated from time to time by written notice by Licensor to Licensee, each individually a “Licensed Mark,” and collectively, the “Licensed Marks”) solely in connection with the sale and distribution of the Licensed Services during the Term. In the event that Licensee wishes to use the Licensed Marks in connection with the sale of other products or services provided by Licensee and Licensor approves such use in its sole discretion, such approved products or services shall be added as “Licensed Services” under this Agreement and Licensee shall be obligated to pay license fees in accordance with Section 9 hereof with respect to its sales of such additional Licensed Services. The license granted by this Section 2 may not be transferred or sublicensed by Licensee without Licensor’s consent, and does not create any rights of ownership on the part of Licensee (all rights of ownership being retained by Licensor). Any use of the Licensed Trademarks by Licensee shall inure to the benefit of Licensor. The Technology and the Licensed Marks are sometimes referred to herein collectively as the “Licensor IP”.
	
 
	
 
	
 

	3.	Rights and Obligations Related to Technology and Licensed Marks.
	
 
	
 

	
 
	a.	Retained Rights. All rights not expressly granted by a Party under this Agreement are reserved by such Party. For the avoidance of doubt, nothing in this Agreement or in the conduct of the Parties shall be interpreted as preventing Licensor from granting to any other person a license for use of the Technology or Licensed Marks or from using the Technology or Licensed Marks in any other manner or geographic location whatsoever. Except as expressly provided in this Section 3 or elsewhere in this Agreement, neither Party will be deemed by this Agreement to have been granted any license or other rights to the other Party's products, information or other intellectual property rights, either expressly or by implication, estoppel or otherwise.
	
 
	
 
	
 

	
 
	b.	As between the Parties, Licensor is and will be the sole and exclusive owner of all right, title and interest in and to the Licensor IP, including all intellectual property rights related thereto. Subject only to the specific licenses granted herein for the applicable License Terms, Licensor expressly reserves all rights with respect to the Licensor IP. All use of the Licensed Mark by Licensee, and all goodwill associated with such use, will inure to the sole benefit of Licensor. Except as expressly set forth herein, Licensee will not acquire or claim any right, title or interest in or to the Licensor IP, whether by implication, operation of law or otherwise.

 

	 
	3
	

 
	 

 

	
 
	c.	Nothing in this Agreement permits Licensee to develop or create any Improvements. If, however, any such Improvements are created, whether or not authorized, Licensee agrees that Licensor will own such Improvements. Accordingly, Licensee hereby assigns and agrees to assign to Licensor all right, title and interest worldwide in and to any Improvements, including all intellectual property rights relating thereto, effective immediately upon the inception, conception, creation or development thereof. Licensee will cooperate with Licensor or its designee(s) in applying for, obtaining, perfecting, evidencing, sustaining and enforcing Licensor’s intellectual property rights. Upon completion of any Improvement or at any time as requested by Licensor, Licensee will deliver to Licensor such Improvement (and any work in process related thereto) in such format as Licensor may request. As Licensor is beneficiary and owner of Licensor IP, costs to be borne by the authorized improvements shall be the obligation of Licensor.
	
 
	
 
	
 

	4.	Registration and Enforcement
	
 
	
 

	
 
	a.	As between the Parties, Licensor has the sole and exclusive right to register and apply for registration of all intellectual property rights in the Licensor IP and Licensee will not register or attempt to register any Licensor IP in any jurisdiction, whether in the Territory or elsewhere, or cause or assist or aid any third party in any of the foregoing. Any decision to apply for or maintain any registrations of any Licensor IP in any jurisdiction will be at Licensor’s sole discretion. Without limitation of the generality of the foregoing, Licensee will not (and has no right to) register any domain name using or incorporating (in whole or in part) the Licensed Mark.
	
 
	
 
	
 

	
 
	b.	Licensee will promptly notify Licensor in writing if and when Licensee becomes aware of any infringements or misappropriations or unauthorized imitations or counterfeit versions by third parties of any Licensor IP, and will fully cooperate with Licensor, at Licensor’s expense, in connection with any claim or action by Licensor for infringement and related remedies. As between the Parties, Licensor will have the sole right, though it is under no obligation, to bring any claim or action for any past, present and future infringements of the Licensor IP, and Licensee will not initiate or cause the initiation of any claim or action for infringement of any Licensor IP without the prior written authorization of Licensor.

 

	 
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	c.	Further Actions. To the extent any rights in and to the Technology (or any Improvement or other improvement thereto) or the Licensed Marks are deemed to accrue to the Licensee pursuant to this Agreement or otherwise, the Licensee hereby assigns any and all such rights, at such time as they may deem to accrue, to Licensor. The Licensee shall co-operate in the execution of any documents, or the taking of any other action, that is necessary to create, record or perfect Licensor’s sole and exclusive ownership of the Technology and the Licensed Marks, or to obtain, defend or protect registrations or applications for registration of such Technology and/or the Licensed Marks.
	
 
	
 
	
 

	
 
	d.	No Challenge. The Licensee expressly acknowledges and agrees that all rights in and to the Technology and the Licensed Marks (including the goodwill related thereto) shall remain vested in Licensor both during the Term and thereafter, and that all use of the Licensed Marks by the Licensee and all goodwill derived therefrom shall inure solely to the benefit of and be on behalf of Licensor. The Licensee shall not: (a) assert rights in the Technology or the Licensed Marks, or challenge the distinctiveness of the Licensed Marks, the validity of Licensor’s rights in and to the Technology or the Licensed Marks or any application for registration thereof in any jurisdiction; (b) use the Licensed Marks in a manner which could, in the reasonable opinion of Licensor based on advice of counsel, dilute Licensor’s rights in the Licensed Marks, or which could otherwise prejudice or invalidate a registration or application for registration of any of the Licensed Marks; (c) take any action that will, in any material way, diminish, alter (excluding Improvements) or adversely affect Licensor’s rights in the Technology or the Licensed Marks or the reputation of Licensor, or otherwise damage the goodwill attached to the Licensed Marks; (d) apply to register or register any Licensed Mark or any trade name, trademark, service mark, domain name or logo that is confusingly similar to any Licensed Mark, without Licensor’s prior written consent; or (e) use or adopt any trade name, trademark, service mark, domain name or logo that is confusingly similar to the Licensed Marks, without Licensor’s prior written consent. Licensor acknowledges and agrees that use of the Technology for the Licensed Services in accordance with Licensor’s manual and operating procedures will be deemed compliance with (b) and (c) above. 
	
 
	
 
	
 

	
 
	e.	Notice Requirements. To the extent allowed by applicable rules and regulations, including the Applicable Laws related to packaging, the Licensee agrees that it will include such trademark notices and other proprietary notices on all Licensed Services or related materials that bear any Licensed Mark or contain any Technology as may be reasonably required by Licensor in order to give appropriate notice of all intellectual property rights therein or pertaining thereto. Such notices shall include the appropriate notice symbol in the form of a superscript “TM” (TM) or “C” (©) on, displays, advertising and all other uses before the public.

 

	 
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	f.	Quality Control.
	
 
	
 
	
 

	
 
	i.	The Licensee agrees to maintain and preserve the quality of the Licensed Marks, and to use the Licensed Marks in good faith and in a manner consistent with the uses approved herein. 
	
 
	
 
	
 

	
 
	ii.	The Licensee shall (a) ensure that all materials under the Licensed Marks are promoted, manufactured and distributed in a professional manner in compliance with all generally accepted industry standards, and (b) comply in all material respects with any and all laws, rules and regulations, including the Applicable Laws, that are applicable to the promotion and distribution of the Licensed Services and such related materials, and with any other quality standards reasonably requested in writing by Licensor from time to time.
	
 
	
 
	
 

	
 
	iii.	Licensor shall have the right to verify compliance with the terms of this Agreement through the use of reasonable and appropriate inspection and verification processes and programs, subject to the confidentiality provisions set forth herein. If Licensor in good faith determines that a Licensed Mark is used in an improper or objectionable manner, Licensor shall so notify the Licensee in writing and the Licensee shall have thirty (30) calendar days within which to: (a) reassure Licensor as to the propriety of the use of the Licensed Mark or (b) modify the proposed use of the Licensed Mark and submit such modified use for review by Licensor. If, at the end of such thirty (30) day period, Licensor is not satisfied with the proposed use of the Licensed Mark, Licensor may terminate this Agreement if such use is not remedied by Licensee after Licensor providing an additional thirty (30) calendar days’ written notice to the Licensee.
	
 
	
 
	
 

	
 
	iv.	The Licensee shall not use the Licensed Marks in any manner other than in accordance with the provisions of this paragraph, without the prior written approval of Licensor. Within a reasonable period of time prior to any use of any Licensed Mark by the Licensee hereunder, the Licensee shall provide to Licensor samples of the Licensed Service, packaging, advertising and promotional materials intended for use by the Licensee that will incorporate such Licensed Mark, as well as photographs or other appropriate evidence of the manner and format in which such Licensed Mark is intended for use in connection with the Licensed Service. Licensor shall notify the Licensee of its approval or disapproval (in Licensor’s sole but reasonable discretion) of the Licensee’s proposed use of such Licensed Mark within five (5) calendar days of Licensor’s receipt of such samples, photographs and other evidence (“Review Period”). If Licensor objects to the Licensee’s proposed use of a Licensed Mark prior to the expiration of the Review Period, then the Parties shall cooperate in good faith to agree upon a mutually acceptable manner of use. If Licensor fails to object to the Licensee’s proposed use prior to the expiration of the Review Period, such proposed use shall be deemed approved by Licensor. Notwithstanding the foregoing, the Licensee shall not be required to seek Licensor’s prior written approval for any use of a Licensed Mark by the Licensee that is consistent with, or substantially similar in manner, scope and format as, any use that has been previously approved by Licensor in accordance with this paragraph.

 

	 
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	g.	Prosecution and Maintenance. Licensor shall be solely responsible for, and have control of, preparing, filing, prosecuting, obtaining and maintaining the Technology (including the Licensed Patents) and Licensed Marks. Licensor shall take such actions as it shall deem to be appropriate in its discretion in connection therewith, and shall pay all costs and expenses incurred by it in connection with the foregoing activities.
	
 
	
 
	
 

	
 
	h.	Infringement. If the Licensee learns of any activity by a third party that might constitute an infringement of Licensor’s rights in any of the Technology or Licensed Marks, or if any third party asserts that the Licensee’s use of the Technology or the Licensed Marks constitutes unauthorized use or infringement, the Licensee shall so notify Licensor.
	
 
	
 
	
 

	
 
	i.	Enforcement. Licensor has the exclusive right, but not the obligation, to enforce its rights against any third party infringement and to defend the Licensee’s right to use the Technology and the Licensed Marks. If Licensor prosecutes any alleged infringement of the Technology or the Licensed Marks, or defends the Licensee’s right to use the Technology or the Licensed Marks, Licensor shall control such litigation and shall bear the expense of such actions. The Licensee shall make all reasonable efforts to assist Licensor therewith, including joining such action as a party plaintiff or providing such evidence and expert assistance as the Licensee may have within its control, provided that Licensor shall be obligated to promptly pay or advance to Licensee any costs incurred by Licensee. Nothing contained herein shall obligate Licensee to participate in any action without adequate assurances that Licensor will fund its obligations pursuant to the preceding sentence. Licensor shall retain the award of any damages.
	
 
	
 
	
 

	
 
	j.	Non-Disparagement. The Licensed Marks shall not be used in a manner or environment that disparages or reflects adversely upon Licensor, the Technology or the Licensed Services, or places Licensor, its reputation, the Technology, or the Licensed Services and associated goodwill in a negative light. Licensor acknowledges and agrees that cannabis is a Schedule 1 drug under the Controlled Substances Act, the trafficking of which is illegal under federal law, that a large percentage of the population views cannabis as negative and this shall not by itself result in a violation of this paragraph.

 

	 
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	5.	Third Party Technology
	
 
	
 

		Licensee acknowledges that it may be required to obtain additional third party software or other third party materials, technology and equipment in connection with operation of its laboratories and its use of the Licensed Technology. Licensee will be responsible for obtaining, at its own expense, any such third party software, materials, technology and equipment. If, however, Licensor obtains a license with respect to third party software that is necessary for use of the Licensed Technology, then at Licensee’s request, Licensor will use commercially reasonable efforts to obtain rights under such third-party software license to extend such license to Licensee or otherwise assist Licensee to obtain a similar license for itself, such as by providing introductions to the applicable third party licensor or supplier. 
	
 
	
 

	6.	Exclusivity. Subject to the terms and conditions set forth herein, the licenses and rights granted to the Licensee by Licensor in this Agreement are exclusive with respect to the Territory. Licensor shall be prohibited from entering into licensing or similar arrangements with respect to the Licensed Technology or the Licensed Marks within the Territory relating to the Licensed Services. Licensor shall retain the unrestricted right to provide its services alone or in conjunction with third parties in any manner.
	
 
	
 

		Changes in Law. Licensor acknowledges that Applicable Laws may be enacted or existing Applicable Law may be amended or modified during the Term (“Changes in Law”), and that such Changes in Law may limit Licensee’s ability to grant certain of the licenses granted under this Agreement or provide certain portions of the Licensors Intellectual Property to Licensee. Accordingly, notwithstanding anything to the contrary in this Agreement, Licensor will not be required to grant any license or deliver any Licensor IP to Licensee if Licensor is prohibited from doing so as a result of a Change in Law.
	
 
	
 

	7.	Term and Termination.

 

	
 
	a.	Start Date. The start date of this Agreement is August 1, 2017.
	
 
	
 
	
 

	
 
	b.	Term. This Agreement and the licenses granted hereunder shall have an initial term of five (5) years, unless earlier terminated pursuant to Section 7.d below. 
	
 
	
 
	
 

	
 
	c.	Renewal. The Licensee may elect to extend the Term of this Agreement for an additional term of five (5) years, subject to providing written notice to Licensor of intent to renew at least 180 days prior to the end of the original term at (i) an renewal fee of 50% lower than the original terms provided in this Agreement and (ii) annual royalties remain at 5% with stated minimums. Absent a separate formal agreement (or amendment), both parties agree that this Agreement shall automatically renew for an additional one-year period at (i) an renewal fee of 50% lower than the original terms provided in this agreement and (ii) annual royalties remain at 5% with stated minimums; unless not less than ninety (90) days prior to the end of the then current Term, either Party provides notice that it elects not to renew. 

 

	 
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	d.	Termination. This Agreement and the licenses granted hereunder may be terminated prior to the expiration of the initial term or any renewal term of this Agreement as follows:
	
 
	
 
	
 

	
 
	i.	This Agreement may be terminated by Licensee by written notice to Licensor:
	
 
	
 
	
 

	
 
	1.	in the event of material breach by Licensor of its obligations under this Agreement, which breach is not cured within thirty (30) calendar days after written notice of such breach from Licensee; or
	
 
	
 
	
 

	
 
	2.	Licensor ceases operations, makes a general assignment for the benefit of creditors or is the subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding (except for an involuntary proceeding that is dismissed within 30 days).
	
 
	
 
	
 

	
 
	ii.	Termination by Licensor. This Agreement and the licenses (in its entirety or with respect to any Territory) granted hereunder may be terminated prior to the expiration of the initial term or any renewal term of this Agreement upon written notice to Licensee in if:
	
 
	
 
	
 

	
 
	1.	Licensee undergoes a Change in Control involving any entity or person that is a competitor of Licensor or that Licensor reasonably believes does not possess sufficient resources and capability to fully perform this Agreement, or that Licensor reasonably believes would otherwise adversely affect Licensor’s business or the Licensor IP;
	
 
	
 
	
 

	
 
	2.	Licensee fails to pay any amounts due under this Agreement and does not correct such failure within thirty (30) days of its receipt of written notice thereof;
	
 
	
 
	
 

	
 
	3.	Licensee ceases operations, makes a general assignment for the benefit of creditors or is the subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding (except for an involuntary proceeding that is dismissed within 30 days);
	
 
	
 
	
 

	
 
	4.	Any final non-appealable determination by Florida Department of Health, Florida Department of Agriculture, or any other governmental or regulatory authority that this Agreement is violative of then-existing Applicable Laws;

 

	 
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	5.	If Licensee fails to obtain, maintain or comply with necessary permits or state licenses, provided that Licensee will have six (6) months to obtain necessary permits or licenses before such right to terminate arises and Licensee shall have until July 1, 2018 (or such later date as may be established by Applicable Laws to obtain its initial state and local (if applicable) license to operate a medical marijuana testing laboratory. Notwithstanding the foregoing, if Licensee’s failure to obtain a necessary permit or license with the applicable time period results from the malfeasance or misfeasance of public officials in the relevant state, or from regulatory delays beyond the control of the Licensee, then the Parties will discuss in good faith extending such time period accordingly prior to Licensor’s termination right arising; or
	
 
	
 
	
 

	
 
	6.	Failure of Licensee to maintain all required licenses and governmental authorizations required for the conduct of its business or to comply in all material respects with applicable state and local laws, provided that Licensee shall is not challenging the same and there has not been a final non-appealable determination;
	
 
	
 
	
 

	8.	Effect of Termination. Upon expiration or termination of this Agreement or of any individual License Term,
	
 
	
 

	
 
	a.	All licenses granted to Licensee will terminate and Licensee will have no further right to use, sublicense or otherwise exploit (and will cease all use, sublicensing and other exploitation of) the Licensor IP in such Territories, provided that Licensee shall have the limited right to fulfill all customers orders or contracts by which it is bound at the time of termination for a period of up to ninety (90) days; and
	
 
	
 
	
 

	
 
	b.	Neither Party will be liable to the other for damages of any kind solely as a result of terminating this Agreement in accordance with its terms. Upon termination of this Agreement for any reason, each Party will within thirty (30) days return or destroy all tangible or retrievable materials containing or constituting Confidential Information of the other Party, and will, at the other Party’s request, provide the other Party with a written statement signed by an officer of the first Party certifying that such return or destruction has occurred.
	
 
	
 
	
 

	9.	Compensation and Payment. In consideration for the license granted to Licensee under this Agreement, Licensee shall pay Licensor certain license fees set forth in Exhibit D (collectively, the “License Fee”). The License Fee shall be paid by the Licensee to Licensor as set forth in Exhibit D, by check or wire transfer of immediately available funds pursuant to the bank account reasonably identified by the Licensee in advance of such payment. The Licensee’s failure to pay any portion of the License Fee or any reimbursable expenses when due will be a material breach of this Agreement by the Licensee, subject to applicable grace and cure periods before becoming grounds for termination. If any payment due to either Party under this Agreement is not paid within ten (10) days following such Party’s written demand thereof, then such payment shall bear interest at the rate of three percentage points (3%) above LIBOR or the maximum amount permitted by law, whichever is less, in each case calculated on the number of days such payment is delinquent following the expiration of such thirty-day period, compounded monthly.

 

	 
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	10.	Obligations.

 

	
 
	a.	Obligations of Licensee. 

 

	
 
	i.	Licensee shall be solely responsible for all costs of producing the Licensed Services, including raw materials, labor and purchase of equipment specified in the standard operating procedures incorporated into the Technology. Licensee acknowledges and agrees that it is solely responsible for (i) procurement of testing equipment, supplies, standards, and other raw materials; (ii) compliance with all state and local laws relating to cannabis services; and (iii) procurement and maintenance of all required licensing and permits and/or operating authorities, including proper zoning of testing facilities.
	
 
	
 
	
 

	
 
	ii.	As a condition to the grant of the licenses provided by this Agreement, Licensee agrees to perform Licensed Services strictly in accordance with processes and procedures prescribed by Licensor, including the standard operating procedures set forth by Licensor as part of the Technology. Licensor shall have the right to implement reasonable quality standards for the Licensed Technologies from time to time upon notice to Licensee, including those set forth in Section 1 above, and Licensee agrees to conform to such standards.
	
 
	
 
	
 

	
 
	iii.	Licensee shall adhere to the minimum sales requirements set forth in Exhibit D as a condition to maintain exclusivity in the Territory.
	
 
	
 
	
 

	
 
	1.	Reporting Requirements: Licensee shall remit to Licensor, within the first ten (10) days of each month during the Term, reports for the preceding month which include, without limitation, reports of the following data of Licensee related to its marijuana testing services in form(s) provided by, or reasonably acceptable to Licensor: monthly gross and net sales; number and price of tests performed; and other reporting requirements set forth in the standard operating procedures incorporated as part of the Technology that directly relate to accounting for the sale of the Licensee’s marijuana testing services (each a “Report” and collectively, the “Reports”).

 

	 
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	2.	License Fee Payment Requirements: Together with each Report, Licensee will pay Licensor by check, wire transfer or other means satisfactory to Licensor all fees and royalties due for the applicable quarter. Licensee will also pay any sales, use, excise, import or export, value added or similar tax (other than taxes based on Licensor’s net income) imposed by any governmental authority with respect to any materials delivered or payments made under this Agreement. All amounts not paid when due will accrue interest daily at the lesser of a rate of 1.0% per month or the highest rate permissible by law, if less, on the unpaid balance until paid in full.
	
 
	
 
	
 

	
 
	3.	Record Keeping Licensee will maintain complete, clear and accurate records of its revenues and activities (including testing) under this Agreement, in accordance with standard business practices and generally accepted accounting principles. Licensor or its designees may inspect and audit such records to ensure the accuracy of the Reports and Licensee’s compliance with the Agreement. Any such inspection and audit will be conducted during regular business hours, in such a manner as not to interfere unduly with normal business activities of Licensee and shall be at the expense of Licensor. If any audit reveals an underpayment, then Licensee will promptly pay the unpaid amounts together with any accrued interest. If the underpayment is greater than five percent (5%) of the total fees and royalties being audited, then Licensee will also reimburse Licensor for the cost of the audit.
	
 
	
 
	
 

	
 
	4.	Quality Control; Conduct of Business. Licensee will ensure that its testing services comply with Applicable Law and commercially reasonable industry standards (including by obtaining, maintaining, and complying with all necessary permits and licenses), and are of such quality as will not adversely affect the goodwill, image and reputation adhering to the Licensed Mark. Licensee will use commercially reasonable efforts to operate its business in accordance with the highest ethical and business standards. Without limitation of the generality of the foregoing, in order to ensure that Licensee’s testing services represent industry-leading, best-in-class practices, Licensee will (a) use only those cannabis testing methods that Licensor has approved in advance in writing, (b) purchase, install at each Authorized Site, and maintain in accordance with the applicable manufacturers’ specifications the equipment described by materials listed in Exhibit A or otherwise reasonably directed by Licensor; and (c) use only such equipment for all of Licensee’s testing of cannabis products (and not use such equipment for any other purpose). Licensor may reasonably update Exhibit A from time-to-time upon reasonable prior notice to Licensee (in which case Licensee will update the equipment in its laboratories accordingly), and Licensor may inspect the Authorized Sites and Licensee’s testing services in order to ensure Licensee’s compliance with this Agreement.

 

	 
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	5.	Marketing Efforts. Licensee will use commercially reasonable efforts throughout the Term to diligently market and promote its testing services using the Licensor IP in the Territory. Without limitation of the generality of the foregoing, no later than (a) thirty days after the Effective Date, and (b) January 30th of each calendar year during the Term thereafter, Licensee will prepare and deliver to Licensor an annual marketing plan detailing its advertising and marketing strategy for the applicable year for each Territory. The marketing and advertising plan will be a business-to-business plan that will focus solely on Licensee’s Territory. Licensee will not be required to allot more than three percent of its projected revenues for the forthcoming year to the marketing and advertising plan. Licensor will have the opportunity to review and comment on such plan prior to implementation. Upon Licensor’s approval, Licensee will use commercially reasonable efforts to implement each such plan. All marketing materials and advertising in any format or medium that includes the Licensed Mark or otherwise references Licensor will be subject to Licensor’s prior written approval, such approval not to be unreasonably delayed or withheld. Licensee must submit the relevant materials for approval no later than three days prior to planned publication. Without limitation of the generality of the foregoing, Licensee agrees that it will use a web presence provided by Licensor within Licensor’s website located at eviolabs.com (or a successor website operated by Licensor). This web presence may include information regarding key personnel, contact information, local services, awards and news, etc. All content on such webpage will be subject to Licensor’s prior written approval.
	
 
	
 
	
 

	
 
	b.	Obligations of Licensor.
	
 
	
 
	
 

	
 
	i.	Upon execution of this Agreement, Licensor shall make the Technology and the Licensed Marks, and any documents or materials otherwise necessary to effectuate the license of the Licensor IP contemplated herein available for Licensee.
	
 
	
 
	
 

	
 
	ii.	Licensor shall provide Licensee with support, in the form of written standard operating procedures, methods, training materials, and marketing collaterals. Such support shall also include provision of print materials, web site, multimedia materials and brand use guidelines, to be provided to Licensee at cost, for which such expenses shall be paid to Licensor along with Licensee’s next installment of the License Fee as per Section 10(a)(iii)(2).
	
 
	
 
	
 

	
 
	iii.	Licensor shall provide training to the Licensee’s personnel. Such training shall relate to Licensee’s business which include, without limitation, the following components:

 

	 
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	1.	Comprehensive training to the “EVIO Playbook”. A guide to EVIO Operations including all of its standard operating procedures, technical policies, lab safety policies.
	
 
	
 
	
 

	
 
	2.	Procedure training includes training on sample handling, sample preparation, use of instruments, methods deployed, data analysis, and data reporting using our recommended LIMS systems.
	
 
	
 
	
 

	
 
	3.	Training shall occur at Licensor’s facility in Medford, Oregon, and remotely by teleconference. The Parties shall mutually agree upon the timing and frequency.
	
 
	
 
	
 

	
 
	iv.	Delivery. No later than thirty (30) days after the Effective Date, Licensor will deliver Licensed materials relevant to the Licensed Laboratory Procedures to Licensee via a delivery method and in a format reasonably acceptable to both Parties. Thereafter, Licensor may deliver updated Licensed Software and Licensed Laboratory Procedures to Licensee. Licensee will promptly implement and commence use of any such updates that Licensor delivers. Licensee is not permitted to use outdated or superseded versions of Licensed Software or Licensed Laboratory Procedures after Licensor has delivered updated versions, provided that Licensor delivers such updated versions at no additional licensing cost to Licensee (other than the fees and royalties already provided for in this Agreement).
	
 
	
 
	
 

	
 
	v.	Support . Licensor will provide certain technical support to Licensee as set forth in Exhibit C.
	
 
	
 
	
 

	11.	[INTENTIONALLY OMITTED]
	
 
	
 

	12.	Representations and Warranties.

 

	
 
	a.	Representations and Warranties of Licensee. Licensee represents and warrants to Licensor as follows: (i) Licensee is a limited liability Licensee duly organized and in good standing under the laws of the State of Florida; (ii) the execution, delivery and performance of this Agreement by Licensee has been duly authorized by all necessary action on the part of Licensee’s directors and/or officers and does not violate, conflict with, or require the consent or approval of any third party pursuant to, any contract or legally binding obligation to which Licensee is subject; (iii) this Agreement constitutes the valid and binding obligation of Licensee enforceable against Licensee in accordance with its terms; (iv) on or before commencing sale of the Licensed Services, Licensee shall possess all required licenses, permits or operating authorities necessary for its operations and the sale of the Licensed Services as medical marijuana services and shall be in compliance with all Applicable Laws and (v) .

 

	 
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	b.	Representations and Warranties of Licensor. Licensor represents and warrants to Licensee as follows: (i) Licensor is a limited liability Licensee duly organized and in good standing under the laws of the State of Colorado; (ii) the execution, delivery and performance of this Agreement by Licensor has been duly authorized by all necessary action on the part of Licensor’s directors and officers and does not violate, conflict with, or require the consent or approval of any third party pursuant to, any state or local law or regulation applicable to Licensor or any contract or legally binding obligation to which Licensor is subject; (iii) this Agreement constitutes the valid and binding obligation of Licensor enforceable against Licensor in accordance with its terms; (iv) Licensor holds and maintains the right to convey the licenses granted hereunder and the Licensor IP does not infringe upon the intellectual property rights of any third party; and (v) the Technology is free from defects and will allow Licensee to provide Licensed Services in accordance with industry standards and at a high level.

 

	13.	Confidentiality; Non-Compete; Non-Disparagement Restrictions.

 

	
 
	a.	Confidentiality. At all times during the term of this Agreement (including any renewal term) and thereafter, the Parties will not distribute or disclose and will otherwise keep confidential any trade secrets or propriety information, including, but not limited to procedures, financial information, customer data, the Technology and other intellectual property of the Parties, as applicable (collectively, the “Confidential Information”), in whole or in part, except to the extent required to perform its obligations under this Agreement. Without limitation of the foregoing, each Party will hold the Confidential Information in confidence and will (a) exercise the same degree of care, but no less than a reasonable degree of care, to prevent its disclosure as it would take to safeguard its own confidential or proprietary information, and (b) limit disclosure of Confidential Information, including any notes, extracts, analyses or materials that would disclose Confidential Information, solely to those of its employees who need to know the information for purposes of performing its obligations under this Agreement and who agree to keep such information confidential. Upon termination of this Agreement, each Party shall immediately return all Confidential Information to the other Party and they shall shall have the right to conduct an audit within three (3) business days of termination to ensure compliance with the terms of this Agreement.

 

	 
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	i.	Limitations. Section 13(a) above does not apply to any information that: (a) is already lawfully in the receiving Party's possession (unless received pursuant to a nondisclosure agreement); (b) is or becomes generally available to the public through no fault of the receiving Party; (c) is disclosed to the receiving Party by a third party who may transfer or disclose such information without restriction; (d) is required to be disclosed by the receiving Party as a matter of law (provided that the receiving Party will use all reasonable efforts to provide the disclosing Party with prior notice of such disclosure and to obtain a protective order therefor); (e) is disclosed by the receiving Party with the disclosing Party's approval; or (f) is independently developed by the receiving Party without any use of confidential information. In all cases, the receiving Party will use all reasonable efforts to give the disclosing Party ten (10) calendar days' prior written notice of any disclosure of information under this Agreement. The Parties will maintain the confidentiality of all confidential and proprietary information learned pursuant to this Agreement for a period of ten (10) years from the date of termination of this Agreement.

 

	
 
	b.	Non-Compete Restrictions. At all times during the term of this Agreement (including any renewal term), (i) Licensee agrees that it will not, directly or indirectly through any related party, engage in the sale of any testing services or any other services that are similar to the Licensed Services in the Territory other than pursuant to this Agreement.
	
 
	
 
	
 

	
 
	c.	Non-Disparagement Restrictions. During the Term and all times thereafter, each Party agrees to take no action, including without limitation, statements, comments or communications, which is intended, or would reasonably be expected, to harm, disparage, or be derogatory or negative towards the other Party or its reputation or which would be reasonably expected to lead to unwanted or unfavorable publicity toto the other Party.
	
 
	
 
	
 

	
 
	d.	Saving Provision. The Parties agree and stipulate that the agreements and covenants not to compete contained in this Section are fair and reasonable in light of all of the facts and circumstances of their relationship; however, the Parties are aware that in certain circumstances courts have refused to enforce certain agreements not to compete. Therefore, in furtherance of and not in derogation of the provisions of the preceding paragraph the parties agree that in the event a court should decline to enforce the provisions of the preceding paragraph, that paragraph shall be deemed to be modified to restrict non-enforcing Party’s rights under this Agreement to the maximum extent, in both time and geography, which the court shall find enforceable.
	
 
	
 
	
 

	
 
	e.	Injunctive Relief. The Parties agree that any breach of Section 13 shall cause the other Party immeasurable and irreparable harm and the other Party shall be entitled to seek immediate injunctive relief from any court of competent jurisdiction, in addition to any other remedies that the other Party may have at law or in equity.

 

	 
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	f.	Indemnification. 

 

	
 
	i.	Licensee agrees to indemnify Licensor and hold Licensor harmless from and against any and all liabilities, losses and expenses arising from (i) Licensee’s unauthorized use of the Technology or the Licensed Marks; (ii) Licensee’s failure to comply with applicable laws or to maintain all required licenses and governmental authorizations; (iii) any material breach of Licensee’s representations and warranties set forth herein; and (iv) any liability to third parties as a result of Licensee’s sale of Licensed Services. Licensor alone shall have the right to take such actions which it determines, in its sole discretion, are reasonably necessary or desirable in connection with any infringement or alleged infringement by a third party of any portion of the Licensor IP, and Licensee shall not undertake any action in response to any infringement or alleged infringement without Licensor’s prior written consent. Licensee agrees to cooperate with and assist Licensor by taking whatever actions determined by Licensor to be reasonably necessary or desirable. Licensee shall not have any rights against Licensor for damages or other remedy by reason of Licensor’s failure to prosecute any alleged infringements.
	
 
	
 
	
 

	
 
	ii.	Licensor agrees to indemnify Licensee and hold Licensee harmless from and against any and all liabilities, losses and expenses arising from (i) Licensor’s unauthorized licensing of the Technology or the Licensed Marks to Licensee; (ii) Licensor’s failure to comply with applicable laws or to maintain all required licenses and governmental authorizations; (iii) any material breach of Licensor’s representations and warranties set forth herein; and (iv) any liability to third parties as a result of a claim that the Technology, the Licensed Marks or third-party software required or provided by Licensor violates the rights of such parties or is invalid.

 

	14.	Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, NEITHER PARTY MAKES ANY WARRANTIES, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, ACCURACY, NON- INFRINGEMENT OF THIRD PARTY RIGHTS AND TITLE, AND ANY WARRANTIES THAT MAY ARISE FROM COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE.

 

	 
	17
	

 
	 

 

	15.	Limitation of Liability. EXCEPT WITH RESPECT TO EACH PARTY’S OBLIGATIONS UNDER SECTION 13, EITHER PARTY’S BREACH, AND LICENSEE’S OBLIGATIONS, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY OR LIMITATION OF LIABILITY, NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, EXEMPLARY, SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY KIND, OR FOR ANY DAMAGES RESULTING FROM LOSS OR INTERRUPTION OF BUSINESS, LOST DATA OR LOST PROFITS, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, HOWEVER CAUSED, EVEN IF SUCH PARTY HAS BEEN ADVISED OF OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.
	
 
	
 

	16.	Insurance. For the period of time required to cover its obligations hereunder, each Party will maintain third party provided insurance in types and amounts customary for the type of business it conducts, and in any event reasonably adequate to cover any liabilities arising out of its obligations hereunder. Notwithstanding the preceding, Licensor acknowledges that Licensee is required to accept and handle marijuana and marijuana products of its customers and because marijuana is illegal under federal law, Licensee’s ability to obtain insurance may be limited. Upon a Party’s request, the other Party will provide to the requesting Party a certificate of insurance showing that such insurance is in place, which certificate shall demonstrate the amounts, exclusions and deductibles of such insurance coverage. Each Party shall notify the other Party in writing no less than thirty calendar days prior to the cancellation, termination or modification of the insurance coverage(s) described in the notifying Party’s insurance certificate(s). Each Party shall be named as additional insureds on such certificates of insurance of the other Party. Nothing in this Section shall in any way be construed to limit the liability of a Party under this Agreement.
	
 
	
 

	17.	Compliance with Laws. In connection with this Agreement, the Licensee agrees to comply with all applicable laws, statutes and ordinances of any applicable governmental or regulatory authority, including the Applicable Laws, that may be applicable to Licensee, its activities under this Agreement or the Licensed Services. This may include compliance with the Florida Department of Health and its Office of Medical Marijuana Use. Licensor acknowledges that the business of Licensee relates to marijuana, which is illegal under federal law, and acknowledges the resulting risk involved in providing a license to Licensee.

	 
	18
	

 
	 

 

	18.	Contract Requirements. The Parties agree as follows: 

	
 
	a.	This Agreement may not be transferred or assigned except in accordance with applicable laws, including provisions of the Florida Department of Health. 
	
 
	
 
	
 

	
 
	b.	Licensor acknowledges and agrees that its relationship with Licensee is contingent upon Florida Department of Health and or other relevant regulatory agency approval throughout the entire term of its relationship with Licensee. 
	
 
	
 
	
 

	
 
	c.	If the Florida Department of Health or any other regulatory agency determines that Licensor is not in compliance, then Licensee shall discontinue sales of any service or line of services containing any of Licensor’s intellectual property within 30 days of the finding unless and until the Licensor is in compliance and shall have the right to terminate this Agreement by notice to Licensor. 

 

	19.	Employees; Agents; Representatives. Employees, agents and/or representatives, if any, of either Party, including Licensee’s Affiliates, who perform services for either Party pursuant to this Agreement shall also be bound by the provisions of this Agreement.
	
 
	
 

	20.	Relationship of Parties. The legal relationship of the Parties is exclusively that of licensor and licensee and no employer-employee, principal-agent, partnership, franchise, agency, joint venture or other legal relationship is created by this Agreement. Neither Party shall have the authority to enter into any contracts on behalf of the other Party.
	
 
	
 

	21.	Successors; Assignment; Binding Agreement. Licensee may not assign or transfer Licensee’s rights or delegate its obligations under this Agreement without Licensor's prior written consent. In the event of a sale of substantially all of the assets of Licensor, Licensor’s consent to assignment shall not be unreasonably withheld or delayed. Licensor may freely assign this Agreement or any rights under this Agreement, or delegate any duties under this Agreement without the Licensee’s consent. This Agreement inures to the benefit of, and shall be binding upon, the successors and assigns of the parties to this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns.
	
 
	
 

	22.	Modifications and Waivers. This Agreement may be amended only by a written agreement signed by both Parties. With regard to any power, remedy or right provided in this Agreement or otherwise available to any Party, no waiver or extension of time shall be effective unless expressly contained in a writing signed by the waiving Party, no alteration, modification or impairment shall be implied by reason of any previous waiver, extension of time, delay or omission in exercise or other indulgence, and waiver by any Party of the time for performance of any act or condition hereunder does not constitute a waiver of the act or condition itself.

 

	 
	19
	

 
	 

 

	23.	Notice. Except as otherwise provided in this Agreement, notices required to be given pursuant to this Agreement shall be effective when received, and shall be sufficient if given in writing, hand-delivered, sent by facsimile with confirmation of receipt, sent by First Class Mail, return receipt requested (for all types of correspondence), postage prepaid, or sent by overnight courier service and addressed as set forth below, or as amended by either Party, respectively, from time to time:

 

	
 
	
If to the Licensee:

	
 
	
Kaycha Holdings LLC 3350 SW 148th Ave Suite 110 

Miramar, FL 33027

Attn: James J Horvath 

	
 
	

If to Licensor:

	
 
	
EVIO Labs 62930 O.B. Riley Rd., Suite 300

Bend, OR 97703

Attn: Lori Glauser

		
		
No objection may be made to the manner of delivery of any notice or other communication in writing actually received by a Party.

 

	24.	Entire Agreement. This Agreement, including the attached exhibits, constitutes the entire agreement of the parties hereto relating to the subject matter hereof and there are no written or oral terms or representations made by either Party other than those contained herein. 
	
 
	
 

	25.	Publicity. Without the prior written consent of the other Party, neither Party shall disclose the terms and conditions of this Agreement, except disclosure may be made as is reasonably necessary to the disclosing Party's bankers, attorneys, or accountants or except as may be required by law.
	
 
	
 

	26.	Expenses. Each Party to this Agreement shall bear all of its own expenses in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby, including without limitation all fees and expenses of its agents, representatives, counsel and accountants.
	
 
	
 

	27.	Governing Law; Jurisdiction. The validity, interpretation, construction, performance and enforcement of this Agreement shall be governed by the laws of the State of Nevada, regardless of the choice of law provisions of Nevada or any other jurisdiction. The parties agree to submit themselves to the jurisdiction of the courts of the state of Colorado regarding any issue arising from this Agreement. Licensee and Licensor each expressly waive and disavow any rights that may accrue under any other body of law. Notwithstanding the above, the Parties acknowledge and agree that the laws of the State of Nevada, and localities therein, apply to the Licensee’s business and operations.

 

	 
	20
	

 
	 

	28.	Waiver of Trial by Jury. EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING IN CONNECTION WITH ANY MATTER RELATING TO THIS AGREEMENT.
	
 
	
 

	29.	Attorney’s Fees. In the event of any dispute between the parties arising out of this Agreement, the prevailing Party shall be entitled, in addition to any other rights and remedies it may have, to recover its reasonable attorney's fees and costs.
	
 
	
 

	30.	No Interpretation against Drafter. Each Party participated in the negotiation and drafting of this Agreement, assisted by such legal and tax counsel as it desired, and contributed to its revisions. Any ambiguities with respect to any provision of this Agreement will be construed fairly as to all Parties and not in favor of or against any Party. All pronouns and any variation thereof will be construed to refer to such gender and number as the identity of the subject may require. The terms “include” and “including” indicate examples of a predicate word or clause and not a limitation on that word or clause.
	
 
	
 

	31.	Headings. The headings of Sections are provided for convenience only and will not affect the construction or interpretation of this Agreement. 
	
 
	
 

	32.	Force Majeure. Neither Party shall be liable for any delay or failure to perform its obligations in this Agreement if such delay or failure to perform is due to any cause or condition reasonably beyond that Party’s control, including, but not limited to, acts of God, war, government intervention, riot, embargoes, acts of civil or military authorities, earthquakes, fire, flood, accident, strikes, inability to secure transportation, facilities, fuel, energy, labor or materials.
	
 
	
 

	33.	Survival. In addition to Licensee’s obligation to pay Licensor all amounts due hereunder, Licensee’s obligations, and all other provisions which by their nature are intended to survive this Agreement, shall expressly survive expiration or termination of the Agreement.

 

	 
	21
	

 
	 

 

	34.	Invalidity. The invalidity or unenforceability of any term or terms of this Agreement shall not invalidate, make unenforceable or otherwise affect any other term of this Agreement which shall remain in full force and effect.
	
 
	
 

	35.	Severability. If any terms or provisions of this Agreement shall be found to be illegal or unenforceable, notwithstanding, this Agreement shall remain in full force and effect and such terms or provisions shall be deemed stricken.
	
 
	
 

	36.	Headings. The various headings used in this Agreement are for convenience only and are not to be used in interpreting the text of the provision in which they appear to which they relate.
	
 
	
 

	37.	Further Assurances. Upon a Party’s reasonable request, the other Party shall, at its sole cost and expense, execute and deliver all further documents and instruments, and take all further acts, as are reasonably necessary to give full effect to this Agreement.
	
 
	
 

	38.	Counterparts. The Parties may execute this Agreement in multiple counterparts, each of which will constitute an original and all of which, when taken together, will constitute one and the same agreement.

 

[Remainder of page intentionally left blank; signature page follows]

 

	 
	22
	

 
	 

 

IN WITNESS WHEREOF, the parties have executed this Agreement intending to be legally bound as of the date set forth above.

 

	
LICENSOR 
Signal Bay, Inc. 		
LICENSEE
Kaycha Holdings LLC 
	
	 			 	
	
By:
			By:		
	

	William Waldrop, CEO			James Horvath, Member 	

 

 

 

 

	 
	23
	

 
	 

 

EXHIBIT A

 

TECHNOLOGY

 

The Technology consists of the training and know-how required to perform testing and analysis of cannabis products for the following: cannabinoid profiling, residual solvent detection, pesticide detection, heavy metals detection, mold and microbial analysis, water activity and moisture content

 

The following is a list of materials currently available for licensing. Additional materials are in process, and will also be provided as addendum. Current versions of all materials will be made available to Licensee via a centralized, cloud-based document control system.

 

	
Document ID
	
Document Description

	
NA
	
EVIO Labs Playbook

	
QMS.100.010 r1.0
	
EVIO Labs Quality Manual

	
POL.100.010 r1.0
	
Client Privacy Policy

	
POL.100.020 r1.0
	
Maintaining Confidentiality of Client Information

	
POL.200.020 r1.0
	
Sample Acceptance Policy

	
POL.300.010 r1.0
	
Electronic Signature Policy

	
POL.400.010 r1.0
	
Code of Ethics

	
POL.500.010 r1.0
	
Lab Safety Training Manual and Chemical Hygiene Plan

	
SOP.M.10.010 r1.0
	
Opening Procedures

	
SOP.M.10.020 r1.0
	
Prevention of Laboratory Cross Contamination

	
SOP.M.10.030 r1.0
	
Lab Procedures: Washing Labware, Solvent Dispensing, Hood, Scale and Centrifuge Operation

	
SOP.M.20.010 r1.0
	
Approval of Suppliers

	
SOP.M.20.020 r1.0
	
Ordering and Receiving Laboratory Equipment and Supplies

	
SOP.M.20.030 r1.0
	
Receipt and Storage of Equipment and Consumables

	
SOP.M.30.010 r1.0
	
Changing the GC Column (BND)

	
SOP.M.30.020 r1.0
	
HPLC Maintenance

	
SOP.M.30.021 r1.0
	
Operation and Calibration of HP 1050 HPLC DAD

	
SOP.M.30.030 r1.0
	
Operation and Calibration of Micropipettors

	
SOP.M.50.010 r1.0
	
Traceability of Samples, Reagents, Standards and Supplies

	
SOP.M.50.020 r1.0
	
Use of Secondary Containers

	
SOP.M.50.030 r1.0
	
Waste Disposal Procedures

	
SOP.M.70.010 r1.0
	
Security Procedures

	 
	24
	

 
	 

 

	
SOP.QA.100.010 r1.0
	
Corrective and Preventive Actions

	
SOP.QA.400.010 r1.0
	
Writing an SOP

	
SOP.QA.400.020 r1.0
	
Use of Laboratory Notebooks

	
SOP.QA.500.010 r1.0
	
Data Integrity Management

	
SOP.S.10.010 r1.0
	
MarComm Procedures

	
SOP.T.10.010 r1.0
	
Sample Intake

	
SOP.T.20.020 r1.0
	
Sample Handling and Storage

	
SOP.T.20.030 r1.0
	
Documenting and Storing Retention Samples

	
SOP.T.20.010 r1.0
	
Procedures for Sampling

	
SOP.T.30.010 r1.0
	
Photographing Samples

	
SOP.T.30.020 r1.0
	
Sample Homogenization

	
SOP.T.30.030 r1.0
	
Sample Weighing

	
SOP.T.30.040 r1.0
	
Sample Drying

	
SOP.T.30.050 r1.0
	
Sample Preparation for Potency Analysis 

	
SOP.T.30.060 r1.0
	
Sample Prep for Pesticide Analysis

	
SOP.T.30.061 r1.0
	
Pesticide Prep and Shipment (KRL)

	
SOP.T.40.010 r1.0
	
Loss on Drying and Moisture Content Determination Method

	
SOP.T.40.011 r1.0
	
General Water Activity Measurement Procedures

	
SOP.T.40.012 r1.0
	
Moisture Sorption Isotherm Characterization for Cannabis Inflorescence

	
SOP.T.40.020 r1.0
	
Cannabinoid Quantitation via HPLC-UV 

	
SOP.T.40.021 r1.0
	
HPLC Batch Run Initiation (LabSolutions)

	
SOP.T.40.022 r1.0
	
HPLC Mobile Phase Preparation

	
SOP.T.40.023 r1.0
	
Cannabinoid Content Analysis by HPLC-DAD

	
SOP.T.40.024 r1.0
	
Cannabinoid Quantitation via GC-FID

	
SOP.T.40.025 r1.0
	
Qualitative CBD:THC Cannabinoid Ratio Determination via GC-FID

	
SOP.T.40.030 r1.0
	
Residual Solvent Analysis via HS-GC/MS

	
SOP.T.40.040 r1.0
	
Rapid Yeast and Mold Enumeration via Petrifilm

	
SOP.T.40.041 r1.0
	
E. coli and Coliforms Enumeration via Petrifilm

	
SOP.T.40.042 r1.0
	
Salmonella Determination

	
SOP.T.40.050 r1.0
	
Terpenoid Analysis (OAS)

	
SOP.T.40.100 r1.0
	
General Procedures of Subcontracted Analyses

	
SOP.T.50.010 r1.0
	
Cannabinoid Matrix Spike Procedures

	
SOP.T.50.011 r1.0
	
Cannabinoid LCS/LCS Duplicate Procedures

	
SOP.T.60.010 r1.0
	
Validation Protocol for Chromatographic Methods

	
SOP.T.60.020 r1.0
	
Estimating Uncertainty

	
SOP.T.60.030 r1.0
	
Use of Control Charts for Cannabinoids

	
SOP.T.60.040 r1.0
	
Data Review and Reporting Procedures

	 
	25
	

 
	 

 

Laboratory Forms:

 

	
FRM.F.20.010 r1.0
	
Expense Reimbursement Form

	
FRM.H.20.010 r1.0
	
Employee Signature Register

	
FRM.H.20.020 r1.0
	
Document Agreement Form

	
FRM.H.30.010 r1.0
	
Training Documentation Worksheet

	
FRM.H.30.020 r1.0
	
Training Documentation Form

	
FRM.H.30.030 r1.0
	
Scheduled Training

	
FRM.M.10.010 r1.0
	
Temperature Log

	
FRM.M.20.010 r1.0
	
Purchase Request Form

	
FRM.M.20.020 r1.0
	
Equipment and Supply Receipt Log

	
FRM.M.20.030 r1.0
	
Chemical Supply Log

	
FRM.M.20.040 r1.0
	
Reference Materials Log

	
FRM.M.20.050 r1.0
	
Compressed Gas Cylinder Log

	
FRM.M.30.010 r1.0
	
Analytical Balance Daily Calibration Verification Record

	
FRM.M.30.020 r1.0
	
Calibration Log

	
FRM.M.30.030 r1.0
	
Equipment Maintenance Log

	
FRM.M.30.040 r1.0
	
Instrument Calibration Status Log

	
FRM.M.30.050 r1.0
	
Volumetric Calibration Log

	
FRM.M.30.051 r1.0
	
Micropipette Calibration Worksheet

	
FRM.M.30.060 r1.0
	
Analytical Balance Calibration Record

	
FRM.M.30.070 r1.0
	
Thermometer Calibration Form

	
FRM.M.30.080 r1.0
	
GC-MS Plunger Rinse Vials Log

	
FRM.M.50.010 r1.0
	
Lab Reagent/Materials Prep Log

	
FRM.M.50.020 r1.0
	
Sample Disposal Log

	
FRM.M.50.030 r1.0
	
Hazardous Material Transfer Form

	
FRM.M.50.040 r1.0
	
Equipment Sign Out Form

	
FRM.M.70.010 r1.0
	
Surveillance Equipment Maintenance Log

	
FRM.QA.100.010 r1.0
	
Corrective Action Request

	
FRM.QA.100.020 r1.0
	
Root Cause Analysis Worksheet

	
FRM.QA.100.030 r1.0
	
Preventative Action Request

	
FRM.QA.200.010 r1.0
	
Laboratory Visitor Log

	
FRM.QA.300.010 r1.0
	
Customer Feedback and Complaint Form

	 
	26
	

 
	 

 

	
FRM.QA.400.010 r1.0
	
Document Change Request

	
FRM.QA.400.020 r1.0
	
Archived Information Access Log

	
FRM.S.20.010 r1.0
	
Client Information and Terms of Service Agreement

	
FRM.T.10.020 r1.0
	
Sampling Plan/Appointment Form

	
FRM.T.10.030 r1.0
	
Analysis Request/Batch Information Form

	
FRM.T.10.040 r1.0
	
Secondary Composite Sampling Request

	
FRM.T.10.050 r1.0
	
Control Study Request

	
FRM.T.20.010 r1.0
	
Sampling Diagram (6 Batches)

	
FRM.T.20.030 r1.0
	
Subcontracted Sample Chain of Custody Form

	
FRM.T.30.010 r1.0
	
Unique Sample Matrix Worksheet

	
FRM.T.30.020 r1.0
	
General Sample Prep Worksheet

	
FRM.T.30.040 r1.0
	
Loss on Drying Worksheet

	
FRM.T.30.050 r1.0
	
QuEChERS Pesticide Prep Worksheet

	
FRM.T.30.060 r1.0
	
Microbiology Sample Prep Worksheet

	
FRM.T.40.010 r1.0
	
Moisture Content (Loss on Drying) Analysis Worksheet

	
FRM.T.40.011 r1.0
	
Water Activity Measurement Log

	
FRM.T.50.010 r1.0
	
Demonstration of Capability - Chemistry

	
FRM.T.50.011 r1.0
	
Demonstration of Capability - Microbiology

	
FRM.T.50.020 r1.0
	
MDL Form

	
FRM.T.50.030 r1.0
	
Matrix Matched Calibration Log

	
FRM.T.50.040 r1.0
	
Management Review Checklist

	
FRM.T.60.010 r1.0
	
Analytical Data Review Checklist - General

	
FRM.T.60.020 r1.0
	
Data Review Worksheet

 

Additional Training Materials:

Data Integrity and Ethics Training

Introduction to Quality Systems

Cannabis Samplers Workshop

Sampling and Testing Guide

Hazardous Materials and Communications 

Promium Element LIMS

 

Live Training Segments:

Laboratory Technician Training – Sample Preparation and Lab Management

Laboratory Technician Training – Potency Analysis

Laboratory Technician Training – Pesticide Analysis

Laboratory Technician Training – Residual Solvent Analysis

Laboratory Technician Training – Terpene Analysis

Laboratory Technician Training – Water Activity and Moisture Content Analysis

Laboratory Technician Training – Promium Element LIMS and Confident Cannabis

	 
	27
	

 
	 

 

EXHIBIT B

 

LICENSED MARKS

 

The EVIO Labs Brand

 

The company maintains brand identify information on its website at www.eviolabs.com/identity. Refer to this page to download most current logos, marks, taglines, and templates. Licensor will notify Licensee of any changes or additions to Licensed Marks.

 

The primary EVIO logo is a lowercase "e" formed from a series of rhombus shapes of two alternating shades of green. The logo may be combined with "EVIOLABS" to form several approved variations of the EVIO logo that may be used on lab and marketing materials. 

 

The fonts used in the logo are Helevetica Nueue.

 

 

	

	
 
	

 

	 
	28
	

 
	 

 

EXHIBIT C

 

TECHNICAL SUPPORT

 

	
 
	1.	Licensor will provide five days of training for Licensee personnel at Licensor’s Medford, OR location during the initial set up phase of the first laboratory, with dates determined by mutual agreement. Should more than one lab location be established by Licensee, Licensor will conduct training at Licensor’s Medford, OR location for each additional location, subject to availability and at Licensee’s expense.
	
 
	
 
	
 

	
 
	2.	Licensor will provide up to 32 hours of training onsite at the first laboratory, with dates and locations determined by mutual agreement. Should more than one lab location be established by Licensee, Licensor will conduct training on site at each additional location, subject to availability and at Licensee’s expense (including reimbursement of all travel-related expenses), with dates and locations determined by mutual agreement.
	
 
	
 
	
 

	
 
	3.	Forty hours of remote technical assistance annually are included. Any additional remote technical assistance will be charged at a rate of $250 per hour for support from our Chief Science Officer or other Executive Staff, $150 per hour for support from one of our Laboratory Directors, Operations Director, or Senior Technicians, and $100 for technician level support staff. If Licensee requires onsite technical assistance from Licensor, then Licensee will provide such assistance, subject to availability and at Licensee’s expense (including reimbursement of all travel-related expenses).
	
 
	
 
	
 

	
 
	4.	Licensee will reimburse Licensor for all travel-related expenses incurred in connection with any onsite training and technical assistance and Licensee is responsible for all travel related expenses for its personnel.

	 
	29
	

 
	 

 

EXHIBIT D

 

LICENSE FEE

 

In consideration of the licenses contemplated hereunder, the Licensee shall pay to Licensor the License Fee as set forth below. The License Fee shall by payable in monthly installments payable in accordance with Section 10(a)(iii)(1).

 

The fees payable with respect to the license of the Licensors Intellectual Property include the following license fees and the royalties:

 

License Fee Upon Opening:

 

	
 
	a.	Licensee will pay Licensor an initial license fee of $75,000: (i) $37,500 upon execution of this Agreement; and (ii) $37,500 after delivery of the Licensor IP and supporting materials, but prior to initial training, and in any event within thirty (30) days following execution of this Agreement; and
	
 
	
 
	
 

	
 
	b.	Licensee will pay Licensor an initial license fee of $75,000 upon receiving approval to test recreational cannabis; and
	
 
	
 
	
 

	
 
	c.	Licensee will pay Licensor a license fee of $25,000 upon notification of intent to open each additional medical cannabis testing facility; and
	
 
	
 
	
 

	
 
	d.	Licensee will pay Licensor a license fee of $25,000 upon notification of intent to open each additional recreational cannabis testing facility; and
	
 
	
 
	
 

	
 
	e.	Licensee will pay Licensor a royalty on sales of products or services covered by this agreement:
	
 
	
 
	
 

	
 
	i.	3% of gross sales during first year (No Annual Minimum, payable monthly)
	
 
	
 
	
 

	
 
	ii.	4% of gross sales during second year (No Annual Minimum, payable monthly)
	
 
	
 
	
 

	
 
	iii.	5% of gross sales during all remaining years of the agreement, subject to the following minimum payments (payable monthly).
	
 
	
 
	
 

	
 
	1.	$75,000 for the first medical testing lab or,
	
 
	
 
	
 

	
 
	2.	$150,000 for the first lab that tests for recreational and/or medical cannabis, and,
	
 
	
 
	
 

	
 
	3.	$25,000 for each incremental medical lab, or $50,000 for each lab that tests for both recreational and/or medical cannabis.
	
 
	
 
	
 

	
 
	4.	Any short-falls on annual minimums shall be paid within 30 days following the contract anniversary each year.

 

	
 
	f.	If the State allows for sale of recreational cannabis, and does not differentiate licenses between medical and recreational cannabis, the initial license fee shall be increased to $150,000, and $50,000 for each additional lab.
	
 
	
 
	
 

	
 
	g.	All dates, inclusive of renewals are based on the start date of this agreement as identified in Section 7(a). Labs started in the middle of the contract year, shall be pro-rated accordingly.

 

Notwithstanding the foregoing, the License Fee may be renegotiated from time to time upon the mutual agreement of the Parties.

 

 

	
30

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