Document:

Exhibit 10.2

 

DEVELOPMENT AGREEMENT

 

THIS DEVELOPMENT AGREEMENT
is made and entered into effective this 30th day of October, 2019 (the “Effective Date”), by and
between IIP-IL 3 LLC, a Delaware limited liability company (“Landlord”), PHARMACANN LLC, an Illinois limited
liability company (“Tenant”), and IIP OPERATING PARTNERSHIP, LP, a Delaware limited partnership (“Parent
Company”). Landlord, Tenant and Parent Company shall sometimes collectively be referred to herein as the “Parties.”

 

RECITALS

 

A.           
WHEREAS, concurrent with the execution of this Agreement, Landlord acquired certain real property located at 1200 East Mazon,
Dwight, Illinois, as more particularly described on Exhibit A attached hereto and incorporated herein by reference (the
 “Land”);

 

B.           
WHEREAS, concurrent with the execution of this Agreement, Landlord and Tenant entered into that certain Lease dated October
30, 2019 (as the same may be amended, supplemented or otherwise modified from time to time, the “Lease”), pursuant
to which Tenant leases the Premises;

 

C.           
WHEREAS, Tenant desires to make certain renovations to existing buildings on the Land and to construct and develop certain
new industrial and greenhouse Improvements on the Land for medical-use cannabis cultivation and processing, subject to and in accordance
with the terms and conditions of this Agreement and the Lease;

 

D.           
WHEREAS, Landlord has agreed to pay or reimburse Tenant for the costs of completing the Improvements up to the Construction
Contribution Amount, subject to and in accordance with the terms and conditions of this Agreement and the Lease; and

 

E.            
WHEREAS, Tenant will derive certain direct and indirect benefits from the construction of the Improvements pursuant to this
Agreement and the Lease.

 

NOW, THEREFORE, FOR
GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, the Parties hereby agree as follows:

 

1.             
Definitions. In addition to those terms defined elsewhere in this Agreement, the following terms shall have the meanings
set forth below:

 

“AAA”
shall have the meaning given to such term in Section 11.2 of this Agreement.

 

“AAA Rules”
shall have the meaning given to such term in Section 11.9(a) of this Agreement.

 

“Architect Arbitrator”
shall have the meaning given to such term in Section 11.4 of this Agreement.

 

“Affiliate”
shall mean any person or entity that, directly or indirectly, controls or is controlled by or is under common control with any
other entity.

 

“Agreement”
shall mean this Development Agreement, as amended from time to time.

 

“Application”
shall have the meaning given to such term in Section 6.1 of this Agreement.

 

“Attorney Arbitrator”
shall have the meaning given to such term in Section 11.4 of this Agreement.

 

     

     

    

 

“Authorized
Excess Development Costs” shall have the meaning ascribed to such term in Section 8 of this Agreement.

 

"Bankruptcy Code"
means the United States Bankruptcy Code or any successor statute (as the same may be amended from time to time).

 

“Budgeted Development
Costs” shall mean all Development Costs which are authorized pursuant to the Development Plan and Budget, which shall
include, without limitation, (a) a fee to Landlord equal to Twenty-Five Thousand Dollars ($25,000.00) to cover Landlord's overhead
and expenses for plan review, engineering review, coordination, scheduling and supervision of the Development and (b) reimbursement
for Landlord's third-party costs actually incurred in connection with the Development, including Landlord's engagement of a construction
consultant to oversee the Development, provided that any such costs shall be reasonable and shall be reasonably consistent with
market rates paid for similar services.

 

“Buildings”
shall mean an approximately Eighteen Thousand Two Hundred Sixty Five (18,265) square foot new grow facility with mechanical, electrical
and storage room support areas (which will be attached to, and integrated with, the existing approximately Forty-Eight Thousand
Three Hundred Forty One (48,341) square foot headhouse), together with all related facilities and improvements suitable for the
Permitted Use, subject to changes as may be made in accordance with this Agreement.

 

“Completion
Date” shall mean the date which corresponds to the last to occur of each of the Completion Events.

 

“Completion
Events” shall mean the following events: (a) the substantial completion of the construction, development and installation
of the Improvements and the performance of all other construction and development work for the Development in accordance with the
Development Plan and Budget, as evidenced by a Certificate of Substantial Completion in the form of the American Institute of Architects
document G704, executed by the project architect and the general contractor; (b) Landlord has received copies of all certifications
and approvals with respect to the Improvements that may be required from any governmental authority and any board of fire underwriters
or similar body for the use and occupancy of the Premises, including the issuance of a certificate of occupancy or similar governmental
approval suitable for the Permitted Use; (c) the full performance by the general contractor(s) of all of its (their) duties and
obligations under the construction contracts with regard to the Development in accordance with the Development Plan and Budget,
other than those items set forth on a Punch-List prepared by the Tenant and delivered to the general contractor(s); (d) Landlord
has received the general contractor’s final unconditional waiver and release of lien and final unconditional waivers and
releases of liens from each subcontractor and material supplier with respect to the Improvements; (e) Landlord has received complete
 “as built” drawing print sets, project specifications and shop drawings and electronic CADD files on disc for the Improvements;
(f) Landlord has received an as-built ALTA survey depicting the Improvements and otherwise reasonably acceptable to Landlord; (g)
Landlord has received a commissioning report prepared by a licensed, qualified commissioning agent hired by Tenant and approved
by Landlord for all mechanical, electrical and plumbing systems installed in connection with the Development; (h) Landlord, at
Tenant’s sole cost and expense, has received an ALTA owner’s policy of title insurance with extended coverage, with
liability coverage in the amount of $25,000,000) (including by means of endorsement or supplement to Landlord’s existing
title policy), and affirmative coverage for any appurtenant easements to the Premises, which title policy (or supplement or endorsement)
shall be issued by a title company reasonably acceptable to Landlord and shall otherwise be in form and substance reasonably acceptable
to Landlord; and (i) Landlord has received such other “close out” materials as Landlord reasonably requests.

 

“Construction
Contribution Amount” shall mean an amount not to exceed Seven Million Dollars ($7,000,000.00).

 

“Construction
Contribution Deadline” shall have the meaning given to such term in Section 6.1 of this Agreement.

 

“Construction
Payment” shall have the meaning ascribed to such term in Section 6.2 of this Agreement.

 

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“Contractor
Arbitrator” shall have the meaning given to such term in Section 11.4 of this Agreement.

 

“Default”
shall have the meaning ascribed to such term in the Lease.

 

“Development”
shall have the meaning ascribed to such term in Section 2.2 of this Agreement.

 

“Development
Approvals” shall mean: (a) any and all land use and development entitlements, permits and authorizations relating to
the Development; (b) utility hook-up rights, water allocations, water rights, sewer capacity, density allocations and other similar
rights or approvals regarding the Development; (c) any and all documents, agreements, instruments and/or understandings with any
local, state or federal governmental agency concerning the construction and development of any on-site or off-site improvements
by one or more of such governmental agencies; and (d) any and all approvals and/or consents required to be obtained in connection
with the Development for compliance with any CC&Rs (as such term is defined in the Lease).

 

“Development
Costs” shall mean, with respect to the Improvements, any and all costs, fees and expenses incurred by Tenant arising
out of and in connection with the Improvements.

 

“Development
Plan and Budget” shall have the meaning ascribed to such term in Section 5.1 of this Agreement and shall include
any Revised Development Plan and Budget if (and as) approved by Landlord in accordance with Section 5.2, below.

 

“Disbursement
Claim” shall have the meaning ascribed to such term in Section 11.1 of this Agreement.

 

“Disapproved
Matters” shall have the meaning ascribed to such term in Section 4.6 of this Agreement.

 

“Effective Date”
shall the meaning ascribed to such term in the introductory paragraph of this Agreement.

 

“Excess Development
Costs” shall mean those Development Costs which are in excess of the aggregate amounts allocated to Development Costs
in the Development Plan and Budget.

 

“Final Arbitration
Decision” shall have the meaning ascribed to such term in Section 11.10 of this Agreement.

 

“Improvements”
shall mean the Buildings and related improvements and facilities to be constructed on the Land, as generally depicted on Exhibit
B attached hereto, in accordance with the Development Plan and Budget and any work, improvements or items reasonably inferable
therefrom as necessary to produce a functional facility consistent with the Permitted Use, including, without limitation, all water
control systems, utility lines and related fixtures and improvements, drainage facilities, landscaping, fencing, signs, parking
facilities, access ways, walkways and related facilities.

 

“Initial Meeting”
shall have the meaning ascribed to such term in Section 11.1 of this Agreement.

 

“Insolvency”
shall mean either: (a) when the Tenant (i) has an order for relief entered with respect to it under Chapter 7 or
Chapter 11 of the Bankruptcy Code; (ii) makes a general assignment for the benefit of creditors; (iii) files a voluntary
petition under the Bankruptcy Code; (iv) files a petition or answer seeking for the Tenant any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code, any statute, law or
regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition
filed against the Tenant in any proceeding of this nature; and/or (vi) seeks, consents to or acquiesces the appointment of a
trustee, receiver or liquidator of the Tenant or of all or any substantial part of the Tenant’s properties; or (b) (i)
sixty (60) calendar days after the commencement of any proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code, any statute, law or regulation, the
proceeding has not been dismissed; or (ii) if, within sixty (60) calendar days after the appointment without the
Tenant’s consent or acquiescence of a trustee, receiver or liquidator of the Tenant or of all or any substantial part
of the property or estate of the Tenant, the appointment is not vacated or stayed or within sixty (60) calendar days after
the expiration of any such stay, the appointment if not vacated.

 

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“Land”
shall have the meaning ascribed to such term in the recitals to this Agreement.

 

“Lease”
shall have the meaning ascribed to such term in the recitals to this Agreement.

 

“Landlord”
shall the meaning ascribed to such term in the introductory paragraph of this Agreement.

 

“Landlord Event
of Default” shall have the meaning ascribed to such term in Section 9.7 of this Agreement.

 

“Legal Requirements”
shall mean any and all laws, statutes, ordinances, codes, orders, rules, regulations, permits, licenses, authorizations, entitlements
(including, without limitations, any and all Development Approvals), official orders and requirements of, or conditions imposed
by, all federal (to the extent not in direct conflict with applicable state, municipal or local cannabis licensing and program
laws, rules and regulations), state, municipal and local laws, codes, ordinances, rules and regulations of governmental authorities,
committees, associations, or other regulatory committees, agencies or governing bodies having jurisdiction over the Premises or
any portion thereof, Landlord or Tenant, including both statutory and common law, hazardous waste rules and regulations, and state
cannabis licensing and program laws, rules and regulations, state, and local governmental regulatory agencies and authorities and
any covenants, conditions and restrictions of record encumbering the Land, in each case which are as of the date hereof or hereafter
become applicable to the construction, development or operation of the Improvements, including, without limitation, any of the
foregoing relating in any way to hazardous material and/or hazardous waste.

 

“Notice of Demand”
shall have the meaning ascribed to such term in Section 11.2 of this Agreement.

 

“Panel”
shall have the meaning ascribed to such term in Section 11.3 of this Agreement.

 

“Parent Company”
shall the meaning ascribed to such term in the introductory paragraph of this Agreement.

 

“Parties”
shall have the meaning ascribed to such term in the introductory paragraph of this Agreement.

 

“Permitted Use”
shall have the meaning ascribed to such term in the Lease.

 

“Premises”
shall have the meaning ascribed to such term in the Lease.

 

“Prior Course
of Dealing” shall have the meaning ascribed to such term in the Lease.

 

“Project Agreements”
shall have the meaning ascribed to such term in Section 3.5 of this Agreement.

 

“Punch-Lists”
shall have the meaning ascribed to such term in Section 3.12 of this Agreement.

 

“Required Arbitration
Construction Payments” shall have the meaning ascribed to such term in Section 11.10 of this Agreement.

 

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“Revised Development
Plan and Budget” shall have the meaning ascribed to such term in Section 5.2 of this Agreement.

 

“Schedule”
shall have the meaning ascribed to such term in Section 5.4 of this Agreement.

 

"SEC Information"
shall have the meaning ascribed to such term in Section 3.19 of this Agreement.

 

“Submission”
shall have the meaning ascribed to such term in Section 4.1 of this Agreement.

 

“Tenant”
shall the meaning ascribed to such term in the introductory paragraph of this Agreement.

 

“Tenant Event
of Default” shall have the meaning ascribed to such term in Section 9.2 of this Agreement.

 

“Term”
shall have the meaning ascribed to such term in Section 9.1 of this Agreement.

 

“Termination
Event” shall have the meaning ascribed to such term in Section 9.1 of this Agreement.

 

“Unauthorized
Excess Development Costs” shall have the meaning ascribed to such term in Section 8 of this Agreement.

 

2.                  
Tenant Improvements.

 

2.1               
Incorporation Into Lease. The Parties acknowledge and agree that the terms and conditions of this Agreement shall
be deemed part of and incorporated into the Lease. For the avoidance of doubt, the occurrence of a Tenant Event of Default or a
Landlord Event of Default under this Agreement shall constitute a Default by such Party under the Lease.

 

2.2               
General Requirements. Tenant hereby agrees to secure all necessary Development Approvals in connection with the construction
and development of the Improvements, all in accordance with the Development Plan and Budget (collectively, the “Development”);
and (b) perform all other duties and obligations to be performed by Tenant in accordance with the terms and conditions of this
Agreement, including without limitation, those duties, responsibilities and obligations set forth in Section 3 hereof. Without
limiting the foregoing, Tenant shall use commercially reasonable and diligent efforts to cause the Completion Date to occur no
later than the date set forth in the Schedule, provided that the Completion Date shall be subject to a day-for-day extension for
any actual delays resulting from events of force majeure beyond the reasonable control of Tenant.

 

During the Term of
this Agreement, Tenant shall fully and timely perform all of the duties, responsibilities and obligations required to be performed
by Tenant pursuant to this Agreement and the Development Plan and Budget in a commercially reasonable manner, comparable with other
similar quality industrial developments to be used for similar uses in the greater Dwight, Illinois market. In connection with
the foregoing, Tenant hereby covenants to furnish its commercially reasonable skill and judgment in performing its obligations
hereunder. Tenant shall perform its duties, responsibilities and obligations under this Agreement in a reasonably timely, efficient,
expeditious, prudent and economical manner, consistent with the interest of Landlord, subject in any event to and in accordance
with commercially reasonable standards, and this Agreement and the Development Plan and Budget.

 

2.3                Employees
and Independent Contractors. Tenant shall employ, on its own behalf and not as employees or independent contractors of
Landlord, at all times a sufficient number of capable employees and/ or independent contractors to enable it to fulfill
Tenant’s duties, responsibilities and obligations under this Agreement. All salaries, wages, compensation and
benefits paid or payable to any employees and/ or independent contractors of Tenant shall be borne solely by Tenant and shall
not be borne by Landlord, provided such costs shall be reimbursable to Tenant as a Budgeted Development Cost to the extent
the same is included in the Development Plan and Budget, subject to the terms and conditions of this Agreement. The
architect, engineering consultants, design team, general contractor and subcontractors responsible for the construction of
the Development shall be selected by Tenant and approved by Landlord, which approval Landlord shall not unreasonably
withhold, condition or delay. All Tenant contracts related to the Tenant Improvements shall provide that Tenant may assign
such contracts and any warranties with respect to the Tenant Improvements to Landlord at any time.

 

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2.4               
Other Activities. This Agreement shall not restrict Tenant or any of its Affiliates from engaging in any other development
or business activities. Notwithstanding the foregoing, in no event shall Tenant, during the Term of this Agreement, engage in any
other development or business activities which might or will materially interfere with Tenant’s ability to perform its duties,
responsibilities and obligations under this Agreement.

 

2.5               
Authorized Representatives.

 

(a)                
Landlord designates, as Landlord’s authorized representative (“Landlord’s Authorized Representative”),
(i) Catherine Hastings as the person authorized to initial plans, drawings, approvals and to sign change orders pursuant to this
Agreement and (ii) an officer of Landlord as the person authorized to sign any amendments to this Agreement or the Lease. Tenant
shall not be obligated to respond to or act upon any such item until such item has been initialed or signed (as applicable) by
the appropriate Landlord’s Authorized Representative. Landlord may change either Landlord’s Authorized Representative
upon one (1) business day’s prior written notice to Tenant.

 

(b)               
Tenant designates Chris Atkinson (“Tenant’s Authorized Representative”) as the person authorized
to initial and sign all plans, drawings, change orders and approvals pursuant to this Agreement. Landlord shall not be obligated
to respond to or act upon any such item until such item has been initialed or signed (as applicable) by Tenant’s Authorized
Representative. Tenant may change Tenant’s Authorized Representative upon one (1) business day’s prior written notice
to Landlord.

 

3.                  
Duties of Tenant. Subject to the terms and conditions of this Agreement and the Development Plan and Budget, and
in addition to the other duties, responsibilities and obligations of Tenant under this Agreement, Tenant hereby agrees to and shall,
at Tenant’s sole cost and expense, fully and timely perform (or cause to be performed) in a commercially reasonable manner
the duties, responsibilities and obligations set forth in this Agreement including, without limitation, the duties, responsibilities
and obligations set forth below. Tenant shall not undertake the performance of any of the duties, responsibilities and obligations
set forth in this Section 3 or elsewhere in this Agreement unless such duties, responsibilities and obligations are expressly authorized
pursuant to the Development Plan and Budget or are otherwise approved by Landlord pursuant to Section 4 hereof.

 

3.1              
Secure all Development Approvals and all other necessary permits, licenses, consents, authorizations, zoning variances or
changes, (whether regulatory, governmental, quasi-governmental or otherwise), which may be reasonably necessary or appropriate
in connection with the Development.

 

3.2               
Secure all surveys, soil tests and other studies and reports necessary to secure all Development Approvals reasonably required
for the Development and provide Landlord with electronic copies of all of the foregoing to the extent in Tenant’s possession
or reasonable control.

 

3.3               
Cause to be prepared and review all preliminary plans, working drawings, plans and specifications and construction cost
estimates reasonably required for the Development (and provide Landlord with electronic copies of all of the foregoing to the extent
in Tenant’s possession or reasonable control), and verify the compliance of such plans, working drawings, plans and specifications
and construction cost estimates with this Agreement and the Development Plan and Budget.

 

3.4               
Secure all other documents, agreements, instruments, reports, studies, surveys, maps, and all other materials reasonably
necessary for the Development.

 

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3.5               
Solicit and negotiate all agreements, contracts, documents and other instruments reasonably necessary in order to undertake
the activities required to be performed by Tenant pursuant to Sections 3.1, 3.2, 3.3 and 3.4 above and/or to otherwise commence
and/or complete the Development (“Project Agreements”), which Project Agreements may include, without limitation,
any and all construction contracts and subcontracts, architectural and engineering contracts, supply contracts, applications and/or
agreements with governmental authorities, as the same may be amended from time to time. In the event any proposed Project Agreements
are with any Affiliate of Tenant, Tenant shall specifically notify Landlord when processing such proposed Project Agreement with
Landlord for Landlord’s approval pursuant to Section 4 hereof. In connection with Landlord’s review of such Project
Agreements pursuant to Section 4 hereof, Landlord shall not unreasonably disapprove a proposed Project Agreement which is consistent
with the Development Plan and Budget. In no event shall Tenant be authorized to enter into or execute any such Project Agreements
in the name of or on behalf of Landlord.

 

3.6              
Oversee, supervise and manage the planning, design, construction, and development of the Improvements, all in accordance
with the Development Plan and Budget and in compliance with the Development Approvals and other Legal Requirements.

 

3.7              
Oversee, supervise, manage and coordinate on a daily basis, the services of all employees, architects, contractors, subcontractors,
supervisors, engineers and other individuals and entities to carry out the Development, or any portion thereof.

 

3.8               
 Coordinate and conduct bi-weekly on-site meetings with members of the construction and development team.

 

3.9               
Prepare and submit to Landlord a monthly status report with respect to the progress of the Development, which status report
shall be in form and substance reasonably satisfactory to Landlord.

 

3.10             
Review applications for payment by its contractors and their subcontractors in connection with the Development and process
applications for payment in accordance with the terms and conditions of this Agreement, including satisfying the conditions necessary
to secure any disbursement of funds for payment of such application pursuant to Section 6 below.

 

3.11             
Undertake commercially reasonable efforts to determine and verify the substantial and final completion of all construction
and development work to be performed and/or services to be provided in connection with the Development including, without limitation,
the substantial and final completion of all obligations to be performed pursuant to the applicable Project Agreements.

 

3.12            
Undertake commercially reasonable efforts to ensure that its contractor prepares any and all punch-lists of incomplete or
unsatisfactory work and other activities in connection with the Development (“Punch-Lists”), and undertake commercially
reasonable efforts to cause contractor to complete all items on such Punch-Lists.

 

3.13             
Coordinate and arrange for all utility services and required easements necessary for the Development.

 

3.14            
Prepare and submit all applications, forms and packages to secure the payment of any and all discounts, rebates, refunds,
subsidies, or other concessions referenced in the Development Plan and Budget (if any).

 

3.15            
Upon completion of the Development, procure an as-built ALTA survey that depicts the Improvements and is otherwise reasonably
acceptable to Landlord.

 

3.16             Promptly
notify Landlord of any material disputes with contractors, vendors, materialmen or suppliers, in any case, of which it has
received written notice, and exert all commercially reasonable efforts to give notice to Landlord prior to any liens filed
against all or any portion of the Land to the extent the Tenant has received written notice of the same. As soon as
reasonably practicable following its receipt of written notice of, or otherwise becoming aware of, any labor or
materialmen’s liens or any other liens, liabilities or encumbrances against all or any portion of the Land relating to
the Development, Tenant shall provide written notice of such liens, liabilities or encumbrances to Landlord. The amount of
such lien, liability or encumbrance shall be fully paid or otherwise satisfied by Tenant (or insured over by the title
company selected by Tenant, at Tenant's sole cost and expense). As used herein, "actual knowledge" of Tenant shall
mean the actual (and not imputed) knowledge of each of Teddy Scott, Brett Novey, Chris Atkinson and Robert McQueen without
duty to inquire or investigate.

 

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3.17            
Promptly notify Landlord in writing of any potential construction defects and warranty claims in connection with the Development
of which Tenant has actual knowledge and Tenant’s recommendation for prosecuting such matters. Upon instruction from Landlord,
Tenant shall pursue the course of action directed by Landlord.

 

3.18             
Secure and maintain at Tenant’s principal place of business all guarantees, warranties, affidavits, waivers, releases,
bonds, keys, operating and maintenance manuals, certificates of occupancy and other permits and approvals with respect to the Development
and provide Landlord with electronic copies of all of the foregoing to the extent in Tenant’s possession or reasonable control.

 

3.19             
Establish and maintain complete and accurate books and records with respect to the Development, together with sufficient
documentation to fully support each of the entries in such books and records. Such books and records shall include proper entries
of all receipts, income and disbursements pertaining to the Development. Such books and records shall be and remain the property
of the Landlord (subject to Tenant’s right to retain copies) and be maintained by Tenant at Tenant’s principal place
of business or at the on-site construction office on or near the Land. In connection with the foregoing, Tenant shall make such
books and records available to Landlord and its representatives for inspection and audit at Tenant’s principal place of business
or at the on-site office (or at another location previously approved by Landlord) at any time and from time to time during regular
business hours. Without limiting the foregoing, Tenant shall provide, as reasonably requested by Landlord, any necessary or appropriate
documents, periodic reports, materials and information to Landlord and/or any other financial institution or lenders designated
by Landlord, or attorneys and accountants selected by Landlord. Tenant shall cooperate with accountants and attorneys selected
by Landlord in the preparation of all tax returns and reports required to be filed by Landlord and/or its Affiliates (including,
without limitation, federal income tax returns, state income tax and/or franchise tax returns, if any, state intangible tax returns,
if any, and state annual reports, if any) and shall provide to such accountants and/or attorneys all books and records pertaining
to the Development that are requested and that are in the possession and control of Tenant, it being understood and agreed that
Tenant shall have no authority or responsibility to execute or file any returns of Landlord or its Affiliates. Additionally, Tenant
acknowledges that Landlord or one of its Affiliates may be required to file various reports and other information with the Securities
and Exchange Commission and other regulatory agencies. Accordingly, Tenant hereby agrees to and shall timely provide to Landlord
and/or such Affiliates any and all reports and other information required pursuant to this Section (provided such reports and other
information pertain directly to the services to be performed by Tenant pursuant to this Agreement), together with all other reports
and other information that may be reasonably requested from time to time by Landlord and/or its Affiliates (provided such reports
and other information pertain directly to the services to be performed by Tenant pursuant to this Agreement), all of which shall
be in form and content reasonably satisfactory to Landlord or such Affiliate (“SEC Information”). All SEC Information
requested by Landlord and/or any of its Affiliates shall be delivered by Tenant to Landlord or such Affiliate within ten (10) calendar
days of the date of such request by Landlord and/or such Affiliate.

 

3.20             
Establish and maintain complete and orderly files containing correspondence, insurance policies, receipts, all paid and
unpaid bills, vouchers and all other documents and papers pertaining to the Development, all of which shall be and remain the property
of Landlord (subject to Tenant’s right to retain copies) and shall be available to Landlord and its representatives for inspection
at Tenant’s principal place of business, the construction office located on-site for the Development or at another location
previously approved by Landlord at any time and from time to time during regular business hours.

 

3.21              
Immediately advise Landlord of the discovery of any hazardous substances or materials in, on or about the Land.

 

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3.22            
Promptly advise the Landlord of any actual or threatened legal action, condemnation proceeding, claim, tax assessment or
damage adversely affecting the Land and/or the Development which becomes known to Tenant.

 

3.23            
At all times comply with all statutes, ordinances, rules and regulations, licenses and permits, and other Legal Requirements
applicable to the performance of its duties, responsibilities and obligations under this Agreement.

 

3.24            
At all times comply with all covenants, conditions and restrictions of record affecting the Land, including, without limitation,
all Project Agreements.

 

3.25            
Perform all other duties and obligations to be performed by Tenant in accordance with the terms and conditions of this Agreement
and in accordance with the Prior Course of Dealing.

 

4.                  
Landlord’s Approvals. In connection with the performance by Tenant of all of its duties and obligations as
set forth in this Agreement, Tenant acknowledges and agrees that it is obligated to secure the prior written approval from Landlord
with respect to all matters not previously authorized pursuant to the Development Plan and Budget in accordance with the procedures
set forth below. Without limiting the foregoing, Tenant shall submit to Landlord, for Landlord’s review and approval, which
approval shall not be unreasonably withheld, such items expressly requiring Landlord’s prior written approval pursuant to
this Agreement. Landlord’s prior written approval shall be secured by Tenant in accordance with the following procedures:

 

4.1               
Tenant shall prepare and submit to the Landlord, for Landlord’s review and approval, all matters expressly required
to be reviewed and approved by Landlord pursuant to this Agreement, together with any original documents, agreements, instruments,
correspondence and other information reasonably required by Landlord to make a determination as to the matters being reviewed and
approved “Submission”). All Submissions to be made to Landlord pursuant to this Section 4 shall only be effective
if such Submissions are delivered pursuant to the provisions of this Agreement.

 

4.2               
Each Submission shall include a notation on the transmittal letter accompanying such Submission, which states that the matters
being delivered to Landlord shall be deemed approved by Landlord, unless Landlord timely delivers its notice of disapproval pursuant
to this Section 4.

 

4.3               
Landlord shall have a period of ten (10) calendar days after receipt by Landlord of each Submission in which to review such
Submission and deliver to Tenant written notice of either its approval or disapproval with respect to the matters being reviewed
or of any additional information reasonably required by Landlord in order to make such a determination. Landlord shall notify Tenant
as soon as reasonably practicable in the event Landlord requires such additional information.

 

4.4               
In the event Landlord fails to timely deliver to Tenant written notice of its approval or disapproval of the Submission
pursuant to Section 4.3 hereof, the Submission shall be deemed approved.

 

4.5               
In the event Landlord timely approves (or is deemed to have approved) any such Submission, the Landlord and/or the Tenant,
as applicable, shall take such actions required to implement such approved matters.

 

4.6               
In the event Landlord disapproves of any of the matters of such Submission (“Disapproved Matters”), Landlord
shall advise Tenant in writing of its disapproval and the basis for such disapproval. In such a case, Tenant may take such actions
required to satisfy Landlord with respect to the Disapproved Matters and resubmit such matters to Landlord, for Landlord’s
review and approval, pursuant to this Section 4.

 

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5.                  
Development Plan, Budget and Schedule.

 

5.1               
Development Plan and Budget. As soon as practicable following the date of this Agreement, Tenant shall prepare the
initial Development Plan and Budget in connection with the Development (if, and as, approved by Landlord, and as may be modified
from time to time hereunder, the “Development Plan and Budget”). Tenant will consult with Landlord in connection
with the preparation of the initial Development Plan and Budget. Following Landlord’s approval of the initial Development
Plan and Budget, Landlord and Tenant shall attach the same as Exhibit C to this Agreement. During the Term of this Agreement,
Tenant shall use commercially reasonable efforts to comply with the terms and conditions of the Development Plan and Budget. Notwithstanding
the foregoing, Tenant may exceed the line item amount allocated to any such expenditure as set forth in the Development Plan and
Budget, without the approval by Landlord, provided the following conditions are satisfied: (a) such expenditure does not exceed
the applicable line item (determined on an aggregate basis), by more than One Hundred Thousand Dollars ($100,000.00), or thirty
percent (30%), whichever is less; (b) Tenant has recognized cost savings in other categories of the Development Plan and Budget
of equal or greater amounts thereby resulting in no net overall increase in the Development Plan and Budget; and (c) any such expenditure
or cost savings does not result in a material modification of the conceptual plan for the Improvements as set forth in the Development
Plan and Budget.

 

5.2               
Revision of the Development Plan and Budget. During the Term of this Agreement, Tenant or Landlord may determine
that the Development Plan and Budget is no longer applicable because of changes in conditions, circumstances, planned operations,
or otherwise. In such case, Tenant shall prepare and submit to the Landlord, for Landlord’s review and approval, a revised
Development Plan and Budget (if, and as, approved by Landlord as required above, the “Revised Development Plan and Budget”)
for the remainder of the Term of this Agreement, indicating in narrative form the reasons why the assumptions used as the basis
of preparing the original Development Plan and Budget (or any Revised Development Plan and Budget currently in effect) are no longer
valid.

 

On or before the expiration
of ten (10) calendar days after receipt of the proposed Revised Development Plan and Budget, Landlord shall deliver written notice
to Tenant setting forth Landlord’s approval or disapproval of all or any portion of the same. In the event Tenant does not
receive a written notice of approval or disapproval from Landlord within such ten (10) calendar day period, then the proposed Revised
Development Plan and Budget shall be deemed approved by Landlord. Notwithstanding the foregoing, until such time as the Revised
Development Plan and Budget has been approved (or deemed approved) by the Landlord in accordance with the terms and conditions
of this Section 5.2, the Tenant shall perform its duties in accordance with the Development Plan and Budget (or any Revised Development
Plan and Budget, as the case may be), currently then in effect. Following the approval (or deemed approval) by the Landlord of
the Revised Development Plan and Budget (if required hereunder), with respect to the period of time in question, all references
in this Agreement to the Development Plan and Budget shall mean the Revised Development Plan and Budget.

 

5.3               
Emergency Expenditures. As more fully set forth in Section 5.1 hereof, Tenant shall use commercially reasonable efforts
to comply with the Development Plan and Budget. Notwithstanding anything contained in this Agreement to the contrary, in the event
of any emergency affecting the safety of persons or property, or which is likely to result in substantial injury, damage or loss
to the Landlord, Tenant is hereby authorized to act in a manner intended to mitigate or prevent threatened damage, injury or loss
and, in connection therewith, if deemed prudent by the Tenant, and Tenant shall be entitled to make expenditures in excess of the
limitations set forth in the Development Plan and Budget, without the necessity of securing the approval by the Landlord prior
to such expenditure. Tenant shall deliver written notice to Landlord summarizing such emergency expenditures, together with copies
of all invoices, receipts and other written documentation evidencing the amounts owing and/or payable. Upon Landlord’s approval
of such expenditures, which approval shall not be unreasonably withheld, such expenditures shall be deemed to constitute Budgeted
Development Costs.

 

5.4                Schedule.
The schedule for design and development of the Development, including the time periods for preparation and review of
construction documents, approvals and performance, shall be in accordance with a schedule to be prepared by Tenant (the
 “Schedule”). Tenant shall prepare the Schedule so that it is a reasonable schedule for the completion of
the Tenant Improvements. The Schedule shall clearly identify all activities requiring Landlord participation. As soon as
the Schedule is completed, Tenant shall deliver the same to Landlord for Landlord’s approval, which approval shall not
be unreasonably withheld, conditioned or delayed. Such Schedule shall be approved or disapproved by Landlord within ten (10)
business days after delivery to Landlord. Landlord’s failure to respond within such ten (10) business day period shall
be deemed approval by Landlord. If Landlord disapproves the Schedule, then Landlord shall notify Tenant in writing of its
objections to such Schedule, and the parties shall confer and negotiate in good faith to reach agreement on the Schedule. The
Schedule shall be subject to adjustment as mutually agreed upon in writing by the parties, or as provided in this
Agreement.

 

    10 

     

    

 

6.                  
Landlord's Obligations.

 

6.1               
Applications. Once each calendar month, but in no event earlier than twenty-one (21) calendar days after the last
such submission, Tenant may submit to Landlord a request for payment of a portion of Development costs (each, an “Application”).
The latest date on which Tenant may submit an Application is October 30, 2020 (the “Construction Contribution Deadline”),
and Landlord shall thereafter be completely relieved of any obligation or liability with respect to funding any portion of the
remaining portion of the Construction Contribution Amount (and Tenant shall not be entitled to apply any portion of the remaining
Construction Contribution Amount toward its obligations under the Lease); provided, however, that any amounts required to be funded
pursuant to any Application submitted to Landlord in accordance with this Agreement prior to the Construction Contribution Deadline
may be funded after such date. Each Application shall include the following:

 

(a)                
A statement setting forth the total amount of the Construction Contribution Amount requested and supporting invoices from
the general contractor, architect and any subcontractors, material suppliers and other parties requesting payment with respect
to the amount of the Construction Contribution Amount then being requested, as evidenced by AIA document G 702 Application and
Certificate for Payment.

 

(b)               
A certification by the general contractor that the Improvements, or the portion thereof for which payment is requested in
that Application, has been completed pursuant to this Agreement and the applicable construction documents;

 

(c)                
Except with respect to the final Application, conditional lien waivers signed by every contractor, subcontractor and supplier
who has a mechanics lien right for any work for which payment is requested stating:

 

(i)                 
the contractor, subcontractor, supplier or other claimant waives conditionally any liens or right to lien with respect to
any work for which payment is being requested in that Application;

 

(ii)               
the amount theretofore received by such contractor, subcontractor or supplier;

 

(iii)             
that the contract with the contractor, subcontractor or supplier has not been changed, or, if the contract has been changed,
indicating the increase or decrease in the amount of the contract; and

 

(iv)              
A list of the names and addresses of major subcontractors and major suppliers of labor and materials used in connection
with the work for which payment is requested.

 

(d)               
With respect to any work covered by the immediately preceding Application, copies of sworn statements and unconditional
lien waivers signed by each contractor, subcontractor and supplier for whom such payment was made stating:

 

(i)                 
that such contractor, subcontractor or material supplier unconditionally waives any liens or right to lien with respect
to work for which payment has been received by such contractor, subcontractor and material supplier;

 

    11 

     

    

 

(ii)               
the amount theretofore received by such contractor, subcontractor and material supplier; and

 

(iii)             
that the contract with the contractor, subcontractor or supplier has not been changed, or, if the contract has been changed,
indicating the increase or decrease in the amount of the contract.

 

6.2               
Construction Payment. Within ten (10) calendar days of receiving a complete Application, Landlord will pay to Tenant
the amount requested by Tenant in such Application (each such payment, a “Construction Payment”), provided that
the aggregate amount of the Construction Payments does not exceed the Construction Contribution Amount. Notwithstanding the foregoing
or any provision herein to the contrary, Landlord may withhold any Construction Payment, in whole or in part, upon the occurrence
and continuation of any Tenant Event of Default.

 

7.                  
No Other Compensation. Tenant acknowledges that Landlord’s agreement to enter into the Lease with Tenant and
Landlord’s agreement to pay the amounts required hereunder relating to the construction and completion of the Development
constitute the only compensation that Tenant is entitled to receive for the services to be performed and the work to be completed
by Tenant pursuant to this Agreement. Other than the Construction Payments paid to Tenant in accordance with the terms and conditions
of this Agreement, Tenant shall not be entitled to receive any payments, reimbursements or other compensation in connection with
the performance of its duties, responsibilities and obligations under this Agreement. Furthermore, to the extent that the Development
Costs exceed the amount of the Construction Contribution Amount, Tenant shall be solely responsible for all fees, costs and expenses
incurred in connection with the completion of the Development, including, without limitation, the following: (a) all salaries,
wages, compensation, bonuses and other benefits paid or payable to any and all employees, representatives, consultants, independent
contractors and agents of Tenant; (b) rent and overhead for the offices of Tenant; (c) telephone, telegraph, postage and utility
charges incurred by Tenant; (d) office supplies and materials of Tenant; and (e) any and all costs, fees and expenses incurred
by Tenant with respect to the purchase, lease, maintenance and/or repair of any equipment, machines, furniture, fixtures and other
personal property of Tenant.

 

8.                  
Authorized Excess Development Costs. In the event Tenant incurs any Excess Development Costs without first obtaining
Landlord’s prior written approval, such expenses shall be deemed to constitute “Unauthorized Excess Development
Costs,” and Tenant shall be obligated to pay or otherwise satisfy such Unauthorized Excess Development Costs. If Tenant
has obtained Landlord’s advanced written approval prior to incurring any Excess Development Costs in accordance with the
provisions of Section 4 hereof, such approved expenses shall be deemed to constitute “Authorized Excess Development Costs,”
and Landlord agrees to authorize the payment of (and reimburse Tenant for) such Authorized Excess Development Costs, subject to
and in accordance with the terms and conditions of Section 6 of this Agreement.

 

In the event Tenant
incurs any Unauthorized Excess Development Costs, Tenant hereby agrees to and shall indemnify, defend, hold harmless and protect
Landlord and the Land from and against any mechanic’s or materialmen’s liens, or other liens, liabilities or encumbrances
arising out of or in connection with any such Unauthorized Excess Development Costs.

 

Tenant shall follow
the procedures set forth in Section 6 of this Agreement with respect to processing any Application for payment requests in connection
with securing the payment of: (i) any Budgeted Development Costs; and (ii) any Authorized Excess Development Costs.

 

9.                  
Term and Termination.

 

9.1               
Term. The term of this Agreement (“Term”) shall commence on the Effective Date and shall terminate
on the earlier to occur of the following events (each, a “Termination Event”):

 

(i)                  The
Completion Date, provided, however, that in the event there are any items of work on any Punch-Lists to be
performed subsequent to the Completion Date, the Term of this Agreement shall be extended until such time as the work to be
performed pursuant to such Punch-Lists has been completed to the reasonable satisfaction of the Landlord; or

 

(ii)               
Upon the termination of the Lease.

 

    12 

     

    

 

9.2               
Default by Tenant. The occurrence of one or more of the following events shall constitute an event of default by
Tenant under this Agreement (“Tenant Event of Default”):

 

(i)                 
The failure of Tenant to timely perform and satisfy any of the material duties and obligations of Tenant under this Agreement
and/or the Development Plan and Budget; provided, however, Tenant shall not be deemed to be in default of this Agreement if: (i)
in the event the default is a monetary default and Tenant cures such monetary default within ten (10) business days after receipt
of written notice from the Landlord of such monetary default; or (ii) in the event the default is a non-monetary default and Tenant
commences the cure of such non-monetary default as soon as reasonably practicable following written notice thereof from the Landlord
and completes such cure within thirty (30) calendar days after receipt of such written notice provided, however if such non-monetary
default cannot reasonably be cured within such thirty (30) calendar day period, Tenant shall not be deemed to be in default of
this Agreement if Tenant commences to cure such non-monetary default within such thirty (30) calendar day period, and thereafter
diligently pursues the same to completion; or

 

(ii)               
The commission of any act of gross negligence, willful misconduct, fraud, or intentional misrepresentation by Tenant, or
any executive-level employee of Tenant, in connection with the performance by Tenant of its duties and obligations under this Agreement;
or

 

(iii)             
The occurrence of any Default by Tenant under the Lease.

 

Upon the occurrence
of a Tenant Event of Default, Landlord and Tenant acknowledge and agree that such Tenant Event of Default shall constitute a Default
by Tenant under the Lease and Landlord shall have all of the rights and remedies afforded to Landlord upon the occurrence of a
Default by Tenant under the Lease, as well as any other rights and remedies afforded to Landlord at law or in equity, including,
without limitation, the right to seek specific performance. Notwithstanding the foregoing, each of Landlord and Tenant hereby waive
the right to recover consequential, special or punitive damages under this Agreement.

 

9.3               
Procedure Upon Termination – Tenant Event of Default. Upon the effective date of any termination of this Agreement
by Landlord due to a Tenant Event of Default, Landlord and Tenant hereby agree as follows:

 

(i)                 
Tenant shall deliver to Landlord all notes, inspections, documents, agendas, instruments, studies, reports, surveys, maps,
working plans, plans and specifications, correspondence, books and records, and all other materials in Tenant’s possession
or control relating to the Development, including, without limitation, all original Project Agreements and Development Approvals;
and

 

(ii)               
Tenant shall assign and transfer to Landlord all of Tenant’s right, title and interest in and under to all Development
Approvals and all Project Agreements in connection with the Development.

 

9.4               
Effect of Termination. The termination of this Agreement shall not affect the rights of the terminating party with
respect to any damages it has suffered as a result of any breach of this Agreement by the other party, nor shall it affect the
rights of either party with respect to liability or claims accrued, or arising out of, events occurring prior to the date of termination.
Neither the right of termination nor the right to sue for damages, nor any other remedy available to either party hereunder, shall
be exclusive of any other remedy given hereunder or now or hereafter existing at law or in equity.

 

9.5                Inspections
by Landlord. Landlord shall have the right to inspect the Development at any time that it may elect, subject only to
reasonable notice to Tenant and reasonable safety and security precautions which Tenant may impose with respect to inspection
of the Development. At any time upon reasonable notice to Tenant, Landlord shall also have the right to inspect the books and
records of Tenant relating to the construction, development and operation of the Development. To the extent that Landlord
desires to copy books and records or other information in the files of Tenant relating to any aspect of the Development or
Tenant’s performance hereunder, it may do so upon reasonable notice during normal business hours.

 

    13 

     

    

 

9.6               
Indemnification.

 

(a)                
Indemnification by Tenant. Tenant hereby agrees to and shall indemnify, defend and hold harmless Landlord and its
Affiliates, and their respective managers, members, partners, shareholders, officers, directors, agents, employees, successors
and assigns, from and against any and all claims, demands, liabilities, causes of action, losses, costs, damages, expenses (including
reasonable attorneys’ fees) or judgments arising out of, or in connection with, the following matters: (a) a default in the
performance by Tenant of any of the covenants, duties or obligations to be performed by Tenant under this Agreement, including,
without limitation, the occurrence of a Tenant Event of Default; (b) the performance by Tenant of any acts in connection with the
Development or the Property outside the scope or the authority granted to Tenant under this Agreement; or (c) any gross negligence,
fraud or intentional misconduct on the part of Tenant in connection with the performance, or any attempted performance of its duties,
responsibilities or obligations under this Agreement; or (d) any negligence on the part of Tenant in connection with the performance,
or any attempted performance of its duties, responsibilities or obligations under this Agreement to the extent such claims, demands,
liabilities, causes of action, losses, costs, damages, expenses (including reasonable attorneys’ fees) or judgments are not
otherwise paid or fully satisfied from the proceeds of any of the insurance policies maintained by the Parties hereunder.

 

(b)               
Indemnification by Landlord. Landlord hereby agrees to and shall indemnify, defend and hold harmless Tenant and its
Affiliates, and their respective managers, members, partners, shareholders, officers, directors, agents, employees, successors
and assigns, from and against any and all claims, demands, liabilities, causes of action, losses, costs, damages, expenses (including
reasonable attorneys’ fees) or judgments arising out of, or in connection with, the following matters: (a) a default in the
performance by Landlord of any of the covenants, duties or obligations to be performed by Landlord under this Agreement, including,
without limitation, the occurrence of an Landlord Event of Default; (b) any gross negligence, fraud or intentional misconduct on
the part of Landlord in connection with the performance, or any attempted performance of its duties, responsibilities or obligations
under this Agreement; or (d) any negligence on the part of Landlord in connection with the performance, or any attempted performance
of its duties, responsibilities or obligations under this Agreement to the extent such claims, demands, liabilities, causes of
action, losses, costs, damages, expenses (including reasonable attorneys’ fees) or judgments are not otherwise paid or fully
satisfied from the proceeds of any of the insurance policies maintained by the Parties hereunder.

 

9.7               
Default by Landlord. The occurrence of one or more of the following events shall constitute an event of default by
Landlord under this Agreement (“Landlord Event of Default”):

 

(a)                
The failure of Landlord to timely perform and satisfy any of the material duties and obligations of Landlord under this
Agreement; provided, however, Landlord shall not be deemed to be in default of this Agreement if: (i) in the event the default
is a monetary default and Landlord cures such monetary default within ten (10) business days after receipt of written notice from
the Tenant of such monetary default; or (ii) in the event the default is a non-monetary default and Landlord commences the cure
of such non-monetary default as soon as reasonably practicable following written notice thereof from the Tenant and completes such
cure within thirty (30) calendar days after receipt of such written notice; provided, however if such non-monetary default cannot
reasonably be cured within such thirty (30) calendar day period, Landlord shall not be deemed to be in default of this Agreement
if Landlord commences to cure such non-monetary default within such thirty (30) calendar day period, and thereafter diligently
pursues the same to completion; and

 

(b)               
The commission of any act of gross negligence, willful misconduct, fraud, or intentional misrepresentation, or any executive-level
employee of Landlord, in connection with the performance by Landlord of its duties and obligations under this Agreement.

 

Upon the
occurrence of a Landlord Event of Default, Landlord and Tenant acknowledge and agree that such Landlord Event of Default
shall constitute a Default by Landlord under the Lease and Tenant shall have all of the rights and remedies afforded to
Tenant upon the occurrence of a Default by Landlord under the Lease, as well as any other rights and remedies afforded to
Tenant at law or in equity, including, without limitation, the right to seek specific performance.

 

    14 

     

    

 

10.               
Insurance to Be Maintained by Tenant. During the Term of this Agreement, Tenant shall, at Tenant’s sole cost
and expense, obtain and keep in full force and effect the following specified insurance:

 

10.1            
Builder’s all-risk insurance covering the Improvements and all materials stored on the Land, together with such endorsements
as may be reasonably required by Landlord.

 

10.2            
Owner’s/Contractor’s protective liability insurance written on a broad-based occurrence coverage form against
claims for personal injury (including bodily injury and death) and property damage, with a reasonably acceptable deductible, with
a combined single limit for bodily injury and property damage of at least Two Million Dollars ($2,000,000) per occurrence.

 

10.3            
Comprehensive or commercial general liability insurance written on a broad-based occurrence coverage form against claims
for personal injury (including bodily injury and death) and property damage, with a reasonably acceptable deductible, with a combined
single limit for bodily injury and property damage of at least Two Million Dollars ($2,000,000) per occurrence.

 

10.4            
Owned, hired and non-owned automobile liability insurance on a broad-based occurrence coverage form covering all use of
all automobiles, trucks and other motor vehicles utilized by Tenant and Tenant’s employees in connection with this Agreement
with a combined single limit for bodily injury and property damage of at least One Million Dollars ($1,000,000) per occurrence.

 

10.5            
Workers’ compensation insurance for Tenant’s employees to the extent required by applicable law and such other
insurance that is necessary in connection with this Agreement that may be required by applicable law.

 

10.6            
In the event specific insurance coverage is required under any of the Project Agreements, the Tenant shall cause all insurance
coverages required under such Project Agreements to be obtained and maintained by the appropriate parties under the Project Agreements
in accordance with the terms and conditions of such Project Agreements.

 

Landlord and any of its
Affiliates designated by Landlord shall be included as an additional insured under the coverage specified in Sections 10.1 and
10.2 hereof. The insurance provided in this Section is primary and any other insurance maintained by such additional insured is
non-contributing with the insurance provided in this Section with respect to all claims or liabilities arising out of or resulting
from acts or omissions by or on behalf of the named insured. Each of the applicable insurance policies shall be issued by such
companies authorized to do business in the State of Illinois. As evidence of the insurance coverage required pursuant to this Section,
Landlord will accept certificates issued by Tenant’s insurance carrier, acceptable to Landlord, showing such policies are
in full force and effect for the specified period, but Landlord has the right to review certified policies as reasonably necessary.
Such evidence shall be delivered to Landlord promptly upon execution of this Agreement. Each policy and certificate shall be subject
to Landlord’s reasonable approval and shall provide that such policy shall not be subject to material alteration to the detriment
of Landlord or Tenant or cancellation without thirty (30) calendar days’ notice in writing to be delivered by certified mail
to Landlord. Should any such policy of insurance expire or be canceled before the expiration of this Agreement and Tenant fails
to immediately replace such other insurance as specified, Landlord reserves the right, but shall have no obligation, to procure
such insurance at Tenant’s sole cost and expense.

 

In addition to the insurance
required to be maintained by Tenant pursuant to this Section 10, Tenant shall be responsible for requiring all of the contractors
and subcontractors doing construction work relating to the Development to purchase and maintain such insurance in conformance to
the requirements set forth on Exhibit D attached hereto and incorporated herein by reference. Tenant shall also allow Landlord
to inspect such evidence of insurance as Tenant obtains it from such contractors and subcontractors.

 

    15 

     

    

 

 

 

11.               
Arbitration Procedure. In the event there is a dispute with respect to Landlord’s obligation to fund any Construction
Payment to Tenant pursuant to Section 6.2, such dispute shall be resolved in accordance with this Section 11. For the avoidance
of doubt, neither party shall be relieved of its obligations under this Agreement or the Lease during the pendency of any arbitration
proceeding conducted pursuant to this Section.

 

11.1            
Initial Meeting. If there is a claim, dispute, or other matter in question between Landlord and Tenant arising out
of, or relating to, Landlord’s obligation to make a Construction Payment to Tenant under this Agreement (each, a “Disbursement
Claim”), either party may give the other party written notice thereof and representatives of the parties (with or without
accompanying legal counsel) shall meet in person or via telephone conference (an “Initial Meeting”) at a mutually
agreed upon date and time (and location, if in person) within two (2) business days after the date of such notice. Each party’s
representative attending the Initial Meeting shall have plenary authority to resolve the Disbursement Claim and shall attempt
in good faith to resolve the Disbursement Claim in a mutually agreed upon manner at the Initial Meeting. If such Initial Meeting
does not result in a mutually agreed upon resolution of the Disbursement Claim, then the parties’ only options shall be to
either (i) waive the applicable Disbursement Claim, or (ii) pursue binding arbitration of the Disbursement Claim, as provided below.
If a party does not initiate the binding arbitration procedure as provided for below, then such party shall be deemed to have waived
the applicable Disbursement Claim (subject, however, to a party’s right to assert any appropriate counterclaims in the arbitration
procedure if the other party does in fact commence the binding arbitration procedure as provided below).

 

11.2            
Notice of Demand. No later than three (3) business days after the Initial Meeting, the complaining party may file
a notice of demand for arbitration (the “Notice of Demand”) with the Regional Office of the American Arbitration
Association (the “AAA”) nearest to the location of the Property and simultaneously give notice of such filing
with a copy of the Notice of Demand to the other party. The Notice of Demand shall set forth the nature of the Disbursement Claim
including the relief sought and the amount at issue.

 

11.3            
Arbitrators. The parties shall use a panel of three (3) arbitrators to resolve the Disbursement Claim (the “Panel”).
All arbitrators shall (A) be certified by the AAA, (B) have at least ten (10) years of experience in construction arbitration,
(C) be independent and unrelated in business or otherwise to the parties, and (D) have demonstrated a continuing commitment
to arbitration education and training.

 

11.4            
Selection of Arbitrator(s). The Panel shall consist of one (1) architect, engineer, licensed attorney, or former
judge (the “Architect Arbitrator”), one (1) general contractor, construction manager, licensed attorney, or
former judge (the “Contractor Arbitrator”), and one (1) licensed attorney or former judge (the “Attorney
Arbitrator”). The Attorney Arbitrator shall act as the chairperson of the Panel. The parties shall attempt to mutually
agree upon the composition of the entire Panel. If the parties are unable to agree upon the composition of the entire Panel within
three (3) business days after delivery of the Notice of Demand, the parties shall thereafter have two (2) business days to propose
the arbitrators as follows. Tenant shall select the Contractor Arbitrator and the Landlord shall select the Architect Arbitrator.
The two party-appointed arbitrators shall select the Attorney Arbitrator as the third arbitrator within two (2) business days thereafter.
If any arbitrators required to be selected are not selected within the foregoing time periods for any reason whatsoever, the AAA
shall select the applicable arbitrator(s) as soon as reasonably possible.

 

11.5            
Answer / Counterclaims. Within five (5) business days after receipt of the Notice of Demand, the other party shall
deliver to the Panel an answering statement. If no answering statement is filed within the stated time, the respondent will be
deemed to deny the claims in the Notice of Demand (and shall be deemed to have waived the right to assert any counterclaims). Failure
to file an answering statement shall not operate to delay the arbitration.

 

11.6            
Joinder of Parties. Any arbitration may include by consolidation, joinder, or otherwise, any person or entity not
a party to this Agreement if it is shown at the time the Notice of Demand is filed that (A) such person or entity is substantially
involved in a common question of fact or law, (B) the presence of such person or entity is required if complete relief is to be
afforded in the arbitration, and (C) the interest or responsibility of such person or entity in the matter is substantial;
and such person or entity consents to such consolidation or joinder. All Disbursement Claims alleged within the same Notice of
Demand shall be heard by the same Panel in the same arbitration.

 

    16

     

    

 

11.7            
Location. The arbitration hearing shall take place in the Chicago, Illinois area at a specific location mutually
agreed to by Landlord and Tenant.

 

11.8            
Brief. At least five (5) business days before the arbitration hearing, each party shall prepare and submit to the
other party and the arbitrator(s) a brief or memorandum not to exceed five (5) pages discussing the issues, facts, applicable law
and/or contract provisions and their position on the applicable Disbursement Claims together with a copy of any documents (or pertinent
part thereof) referenced therein, except that any statutes or judicial decisions may simply be cited without attaching a copy.
Each party’s brief should also specify any witnesses or documents it wishes to subpoena for the hearing.

 

11.9            
Hearing.

 

(a)                
At the hearing, the claimant shall present evidence to support the applicable Disbursement Claim(s). The respondent shall
then present evidence supporting its defense. Witnesses for each party shall also submit to questions from the arbitrator and the
adverse party. Each party shall have the opportunity to question and review subpoenaed documents and witnesses based on its brief
or memorandum submitted under Section 11.8, above. The arbitrator has the discretion to vary this procedure, provided that the
parties are treated with equality and that each party has the right to be heard and is given a fair opportunity to present its
case. Evidence shall be permitted in accordance with the current AAA Construction Industry Arbitration Rules (the “AAA
Rules”).

 

(b)               
The arbitrator, exercising his or her discretion, shall conduct the proceedings with a view toward expediting the resolution
of the dispute and may direct the order of proof, bifurcate proceedings, and direct the parties to focus their presentations on
issues the decision of which could dispose of all or part of the case.

 

(c)                
When deemed appropriate, the arbitrator may also allow for the presentation of evidence by alternative means including video
conferencing, internet communication, telephonic conferences and means other than an in-person presentation. Such alternative means
must still afford a full opportunity for all parties to present any evidence that the arbitrator deems material and relevant to
the resolution of the dispute and when involving witnesses, provide an opportunity for cross-examination.

 

(d)               
The parties may mutually agree to waive oral hearings in any case.

 

11.10        
Written Opinion. The arbitrators shall render a written reasoned opinion regarding their decision (the “Final
Arbitration Decision”) with respect to the applicable Disbursement Claims as soon as practicable after conclusion of
the arbitration hearing, but in no event later than five (5) business days after conclusion of the arbitration hearing. The Final
Arbitration Decision shall be limited to whether or not Landlord breached its obligation to fund any Construction Payments that
are the subject of the Disbursement Claims and any resulting damages, including reimbursement of attorneys’ fees, awarded
by the arbitrators to the prevailing party; provided that, in rendering such Final Arbitration Decision, the arbitrators shall
take into account the remedies afforded to each party in the event of a default by the other party under the Lease so as to avoid
either party having the right to recover amounts, directly or indirectly, in excess of the total damages awarded to such party
pursuant to the Final Arbitration Decision, including, without limitation, any adjustment to Base Rent (as defined in the Lease)
pursuant to Section 5.2.3 of the Lease. Any such Construction Payment amounts required by be funded by Landlord pursuant to the
Final Arbitration Decision are referred to in the Lease as “Required Arbitration Construction Payments.” Furthermore,
the parties acknowledge and agree that the Final Arbitration Decision shall not be deemed or construed so as to imply that Landlord
has granted its consent, approval or authorization to the construction of any Improvements under this Agreement or the Lease or
to any other matters requiring Landlord’s consent.

 

11.11         
Fees and Expenses for Arbitration. The arbitrators shall be authorized and directed to award the substantially prevailing
party in the arbitration with reimbursement of its arbitration and reasonable attorney’s fees, costs, and expenses. The arbitrators
shall select the substantially prevailing part in their reasonable discretion.

 

    17

     

    

 

11.12         
Final and Binding. In accordance with the Federal Arbitration Act, the agreement to arbitrate in this Section 11
shall be final and incontestably binding upon the parties, and judgment may be entered in any court having jurisdiction.

 

11.13         
Confidentiality. The parties (including the arbitrators) shall keep confidential and not disclose to third-parties
the existence or outcome of any arbitration proceedings, except to the extent that disclosure is required by government authorities
or under applicable law, or as necessary to preserve or pursue a claim for reimbursement, contribution, or indemnity against a
third-party, or to preserve or pursue an insurance claim.

 

12.               
Miscellaneous.

 

12.1            
Notices. Any notice, request, demand, statement, authorization, approval, consent or other communication required
or permitted under this Agreement shall be in writing and shall be delivered in accordance with the notice provisions set forth
in Section 31 of the Lease.

 

12.2            
Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject
matter covered by this Agreement. This Agreement supersedes all previous representations, arrangements, understandings and agreements
by and between the Parties and/or their Affiliates, with respect to the subject matter covered by this Agreement, and any such
representations, arrangements, understandings and agreements (other than this Agreement) are hereby cancelled and terminated in
all respects. This Agreement may not be amended, changed or modified except by a writing duly executed by both of the Parties hereto.

 

12.3            
Severability. If any provision of this Agreement, or any portion of any such provision, is held to be unenforceable
or invalid, the remaining provisions and portions shall nevertheless be carried into effect.

 

12.4            
Remedies. All rights and remedies of the Parties are separate and cumulative, and no one of them, whether exercised
or not, shall be deemed to be to the exclusion of or to limit or prejudice any other legal or equitable rights or remedies which
the Parties may have. The Parties shall not be deemed to waive any of their rights or remedies under this Agreement or otherwise
unless such waiver is in writing and signed by the party to be bound. No delay or omission on the part of either party in exercising
any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion
shall not be construed as a bar to a waiver of any right or remedy on any future occasion.

 

12.5            
Headings. The headings contained in this Agreement are for convenience only and are not a part of this Agreement,
and do not in any way interpret, limit or amplify the scope, extent or intent of this Agreement, or any of the provisions of this
Agreement.

 

12.6            
Assignment and Binding Effect. Neither Party may assign its rights or obligations under this Agreement, in whole
or in part, without the written consent of the other Party. This Agreement shall be binding upon and inure to the benefit of Landlord
and Tenant and, subject to the foregoing limitations, their respective successors and assigns.

 

12.7            
Incorporated by Reference. The Exhibits referred to in and attached to this Agreement are incorporated herein by
reference.

 

12.8            
Survival. Each provision of this Agreement which establishes rights and/or obligations which are intended to be enforceable
after termination of this Agreement (including, without limitation, Sections 9.4 and 9.6) shall survive the termination of this
Agreement and shall be binding upon the Parties for such period of time as may reasonably be required to give full effect to the
intended application thereof.

 

12.9             Capacity
to Sign. All of the parties covenant that they possess all necessary capacity and authority to sign and enter into this
Agreement. All individuals signing this Agreement for a party that is a corporation, a limited liability company, a
partnership or other legal entity, covenant that they have the necessary capacity, authority and power to act on behalf of,
sign for and bind the respective entity on whose behalf they are signing.

 

    18

     

    

 

12.10         
Attorneys’ Fees. In the event any action is initiated for any breach or default in any of the terms or conditions
of this Agreement, then the party in whose favor judgment shall be entered shall be entitled to have and recover from the non-prevailing
party all costs and expenses (including attorneys’ fees) incurred in such action and any appeal therefrom.

 

12.11         
Governing Law and Adjudication. This Agreement shall be governed by and interpreted in accordance with the laws (other
than that body of law relating to conflicts of law) of the State of Illinois.

 

12.12        
Further Assurances. Landlord and Tenant shall reasonably cooperate and execute such other documents and instruments
reasonably requested by the other Party to more clearly evidence or carry out the provisions of this Agreement. Each Party shall
cooperate with the other as reasonably appropriate to facilitate performance by the other Party of its obligations under this Agreement.

 

12.13         
Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all
of which together shall constitute one and the same agreement.

 

12.14         
Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF LANDLORD AND TENANT HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR IN ANY WAY PERTAINING
OR RELATING TO THIS CONTRACT OR IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES
HERETO WITH RESPECT TO THIS CONTRACT OR IN CONNECTION WITH THE TRANSACTIONS RELATED HERETO OR CONTEMPLATED HEREBY OR THE EXERCISE
OF ANY PARTY’S RIGHTS AND REMEDIES HEREUNDER, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH OF LANDLORD AND TENANT MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT OF THE OTHER PARTY TO WAIVE ITS RIGHT TO TRIAL BY JURY, AND
THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN LANDLORD AND TENANT SHALL INSTEAD
BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

12.15        
Venue. EACH PARTY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE COURTS SITUATED IN OR HAVING JURISDICTION
OVER THE COUNTY OF COOK, ILLINOIS IN ANY ACTION THAT MAY BE BROUGHT FOR THE ENFORCEMENT OF THIS AGREEMENT (WITH THE EXPRESS AGREEMENT
THAT NO ACTION MAY BE BROUGHT IN FEDERAL COURT RELATING IN ANY WAY TO THIS AGREEMENT).

 

[Signature Page Follows]

 

    19

     

    

 

IN WITNESS WHEREOF,
the Parties have executed this Agreement as of the date first above written.

 

	 	LANDLORD:
	 	 
	 	IIP- IL 3 LLC,
	 	a Delaware limited liability company
	 	 
	 	By:	/s/ Brian Wolfe
	 	Name: Brian Wolfe
	 	Title: Vice President, General Counsel and Secretary

 

	 	TENANT:
	 	 
	 	PHARMACANN LLC,
	 	an Illinois limited liability company
	 	 
	 	By:	/s/ Brett Novey
	 	Name: Brett Novey
	 	Title: Authorized Signatory

 

The undersigned hereby executes this agreement
to guaranty the payment obligations of the Landlord under this Agreement.

 

	 	PARENT COMPANY:
	 	 
	 	IIP OPERATING PARTNERSHIP, LP,
	 	a Delaware limited partnership
	 	 
	 	By:	/s/ Brian Wolfe
	 	Name: Brian Wolfe
	 	Title: Vice President, General Counsel and Secretary

 

 

[Signature Page to Development Agreement]

 

    20

     

    

 

EXHIBIT A

 

LEGAL DESCRIPTION OF LAND

 

PARCEL I:

 

All that certain lot or parcel of land
situate in the County of Livingston, State of Illinois, and being more particularly described as follows:

 

Lots 1 and 2 of Dwight Industrial Park
Subdivision, Village of Dwight, Livingston County, Illinois.

 

PIN: 05-05-02-300-013

 

AND

 

Lot 102 of Seniw’s Resubdivision
of Lots 9 and 10 of Dwight Industrial Park Subdivision, Village of Dwight, Livingston County, Illinois.

 

PIN: 05-05-02-300-015

 

PARCEL II:

 

Together with the benefits and subject
to the burdens as contained in Easement Agreement by and between Alan G. Seniw and Carol A. Seniw and Pharmacann, LLC, dated 8-22-2018
and recorded 8-27-2018 as Document No. 2018R-03425.

 

    B-1

     

    

 

EXHIBIT B

 

DEPICTION OF IMPROVEMENTS

 

 

    2

     

    

 

EXHIBIT C

 

DEVELOPMENT PLAN AND BUDGET

 

PHARMACANN LLC

 

Overview:

 

PharmaCann LLC is proposing to construct a cultivation addition
to the current facility at 28479 East 3200 North Road, Dwight, Illinois 60420. The existing 3.65 acres will allow the expansion
of cultivation addition to the east and directly adjacent to the existing processing facility.

 

The planned 18,265 Square feet addition will consist of five
(5) flower grow areas ranging in size from 1,515 to 1,540 square feet, one Propagation and vegetation area at 3,166 square feet
and one Mother grow area at 1,540 Square feet.

 

An 840 square feet mechanical equipment room,653 square feet
electric room, 1,005 square feet storage room and 229 square feet vestibule will be included for equipment and material storage
support area for the cultivation area addition.

 

Ten feet (10) wide corridors are planned to provide employee
and service accessibility to all grow and support areas. A 150 square feet clean vestibule will provide one point, secured, and
environmentally control access from the existing facility to the new cultivation addition.

 

PharmaCann

Dwight Building Addition Preliminary Budget

 

	Trade/Description	 	New Addition (including
 transformer) - 18,363 s.f.	 
	Sitework -- ---- General Contractor	 	$	381,000	 
	Concrete	 	$	232,000	 
	Metals	 	$	973,000	 
	Wood and Plastics	 	$	14,000	 
	Thermal and Moisture Protection	 	$	213,000	 
	Doors and Windows	 	$	34,000	 
	Finishes	 	$	254,000	 
	Mechanical	 	$	1,634,000	 
	Electrical	 	$	1,144,000	 
	IT and Fire Supression	 	$	609,000	 
	Green House	 	$	3,098,000	 
	General conditions and contigency	 	$	996,000	 
	SoftCost	 	$	218,000	 
	Total	 	$	9,800,000	 

 

    C-1

     

    

 

EXHIBIT D

 

INSURANCE SCHEDULE

 

Tenant shall be responsible
for requiring all of Tenant contractors doing construction or renovation work to purchase and maintain such insurance as shall
protect it from the claims set forth below which may arise out of or result from any work performed in connection with the Development,
whether such work is completed by Tenant or by any contractors or by any person directly or indirectly employed by Tenant or by
any person for whose acts Tenant or any contractors may be liable:

 

1.       Claims
under workers’ compensation, disability benefit and other similar employee benefit acts which are applicable to the work
to be performed.

 

2.       Claims
for damages because of bodily injury, occupational sickness or disease, or death of employees under any applicable employer’s
liability law.

 

3.       Claims
for damages because of bodily injury, or death of any person other than Tenant’s employees or any contractors’ employees.

 

4.       Claims
for damages insured by usual personal injury liability coverage which are sustained (a) by any person as a result of an offense
directly or indirectly related to the employment of such person by Tenant or any contractors or (b) by any other person.

 

5.       Claims
for damages, other than for the work itself, because of injury to or destruction of tangible property, including loss of use therefrom.

 

6.       Claims
for damages because of bodily injury or death of any person or property damage arising out of the ownership, maintenance or use
of any motor vehicle.

 

Each contractor’s
Commercial General, Automobile, Employers and Umbrella Liability Insurance shall be written for not less than limits of liability
as follows:

 

	
        a.       Commercial
        General Liability:

         

        Bodily Injury and Property Damage

        

         
	
        Commercially reasonable amounts, but in
        any event no less than $1,000,000 per occurrence and $2,000,000 general aggregate, with $2,000,000 products and completed operations
        aggregate.

         

	
        b.       Commercial
        Automobile Liability:

         

        Bodily Injury and Property Damage

         
	$1,000,000 per accident
	
        c.       Employer’s
        Liability:

         

        Each Accident

        Disease – Policy Limit

        Disease – Each Employee

         
	
         

         

        $500,000

        $500,000

        $500,000

         

	
        d.       Umbrella
        Liability:

         

        Bodily Injury and Property Damage

         
	Commercially reasonable amounts (excess of coverages a, b and c above), but in any event no less than $5,000,000 per occurrence / aggregate.

 

All subcontractors shall carry the same
coverages and limits as specified above, unless different limits are reasonably approved by Landlord. The foregoing policies shall
contain a provision that coverages afforded under the policies shall not be canceled or not renewed until at least thirty (30)
days’ prior written notice has been given to Landlord. Certificates of insurance including required endorsements showing
such coverages to be in force shall be filed with Landlord prior to the commencement of any work by such contractor or subcontractor
and prior to each renewal. Coverage for completed operations must be maintained for the lesser of ten (10) years and the applicable
statue of repose following completion of the Improvements, and certificates evidencing this coverage must be provided to Landlord.
The minimum A.M. Best’s rating of each insurer shall be A- VII. Landlord shall be named as an additional insured under each
contractor’s Commercial General Liability, Commercial Automobile Liability and Umbrella Liability Insurance policies as
respects liability arising from work or operations performed, or ownership, maintenance or use of autos, by or on behalf of such
contractor. Each contractor and its insurers shall provide waivers of subrogation with respect to any claims covered or that should
have been covered by valid and collectible insurance, including any deductibles or self-insurance maintained thereunder.

 

    D-1Exhibit 4.1 2019 Stock Incentive Plan

 

Exhibit 4.1

 

KYTO TECHNOLOGY AND LIFE SCIENCE, INC.

2019 STOCK AND INCENTIVE PLAN

 

Section 1. Purpose 

 

The purpose of the Plan is to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors and non-employee Directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through various stock based arrangements and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s shareholders.

 

Section 2. Definitions 

 

As used in the Plan, the following terms shall have the meanings set forth below:

 

(a)“Affiliate” shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company. 

 

(b)“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Dividend Equivalent or Other Stock-Based Award granted under the Plan. 

 

(c)“Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 9(b).  

 

(d)“Board” shall mean the Board of Directors of the Company. 

 

(e)“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. 

 

(f)“Committee” shall mean the Compensation Committee of the Board or such other committee designated by the Board to administer the Plan. “Company” shall mean Kyto Technology and Life Science, Inc. and any successor corporation. 

 

(g)“Director” shall mean a member of the Board. 

 

(h)“Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan. 

 

(i)“Eligible Person” shall mean any employee, officer, non-employee Director, consultant, independent contractor or advisor providing services to the Company or any Affiliate, or any such person to whom an offer of employment or engagement with the Company or any Affiliate is extended. 

 

(j)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 

 

(k)“Fair Market Value” with respect to one Share as of any date shall mean (a) if the Share is listed on any established stock exchange, the price of one Share at the close of the regular trading session of such market or exchange on such date, as reported by The Wall Street Journal or a comparable reporting service, or, if no sale of Shares shall have occurred on such date, on the next preceding date on which there was a sale of Shares; (b) if the Shares are not so listed on any established stock exchange, the average of the closing “bid” and “asked” prices quoted by the OTC Bulletin Board, the National Quotation Bureau, or any comparable reporting service on such date or, if there are no quoted “bid” and “asked” prices on such date, on the next preceding date for which there are such quotes for a Share; or (c) if the Shares are not publicly traded as of such date, the per share value of one Share, as determined by the Board, or any duly authorized Committee of the Board, in its sole discretion, by applying principles of valuation with respect thereto. 

 

(l)“Full Value Award” shall mean any Award other than an Option, Stock Appreciation Right or similar Award, the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award. 

 

(m)“Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision. 

1

 

 

(n)“Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. 

 

(o)“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option to purchase shares of the Company. 

 

(p)“Other Stock-Based Award” shall mean any right granted under Section 6(f) of the Plan. 

 

(q)“Participant” shall mean an Eligible Person designated to be granted an Award under the Plan. 

 

(r)“Person” shall mean any individual or entity, including a corporation, partnership, limited liability company, association, joint venture or trust. 

 

(s)“Plan” shall mean the Kyto Technology and Lice Science, Inc. 2019 Stock and Incentive Plan, as amended from time to time. 

 

(t)“Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan. 

 

(u)“Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date. 

 

(v)“Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation. 

 

(w)“Section 409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder. 

 

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

 

(y)“Share” or “Shares” shall mean common shares $0.01 par value in the capital of the Company (or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan). 

 

(z)“Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A. 

 

(aa)“Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan. 

2

 

 

Section 3. Administration 

 

(a)Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement, including any terms relating to the forfeiture of any Award and the forfeiture, recapture or disgorgement of any cash, Shares or other amounts payable with respect to any Award; (v) amend the terms and conditions of any Award or Award Agreement, subject to the limitations under Section 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating to any Award, subject to the limitations in Section 7, (vii) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended, subject to the limitations in Section 7; (viii) determine whether, to what extent and under what circumstances amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee, subject to the requirements of Section 409A; (ix) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt such modifications, rules, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate. 

 

(b)Delegation. The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee shall not delegate such authority (i) with regard to grants of Awards to be made to officers of the Company or any Affiliate who are subject to Section 16 of the Exchange Act or (ii) in such a manner as would cause the Plan not to comply with the requirements of applicable exchange rules or applicable corporate law. 

 

(c)Power and Authority of the Board. Notwithstanding anything to the contrary contained herein, (i) the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of Rule 16b-3; and (ii) only the Committee (or another committee of the Board comprised of directors who qualify as independent directors within the meaning of the independence rules of any applicable securities exchange where the Shares are then listed) may grant Awards to Directors who are not also employees of the Company or an Affiliate. 

 

(d)To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue of such person’s position with the Company. 

 

Section 4. Shares Available for Awards 

 

(a)Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued under all Awards under the Plan shall equal 2,000,000 Shares. The aggregate number of Shares that may be issued under all Awards under the Plan shall be reduced by Shares subject to Awards issued under the Plan in accordance with the Share counting rules described in Section 4(b) below. When determining the Shares added to and subtracted from the aggregate reserve under paragraphs (ii) and (iii) above, the number of Shares added or subtracted shall be also determined in accordance with the Share counting rules described in Section 4(b) below (including, for avoidance of doubt, the fungibility ratio and Share recycling rules).  

3

 

 

(b)Counting Shares. For purposes of this Section 4, except as set forth in this Section 4(b) below, if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan.  

 

(c)Shares Added Back to Reserve. Subject to the limitations in (ii) below, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company (including any Shares withheld by the Company or Shares tendered to satisfy any tax withholding obligation on Full Value Awards or Shares covered by an Award that are settled in cash), or if an Award otherwise terminates or is cancelled without delivery of any Shares, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall again be available for granting Awards under the Plan.  

 

(i)Shares Not Added Back to Reserve. Notwithstanding anything to the contrary in (i) above, the following Shares will not again become available for issuance under the Plan: (A) any Shares which would have been issued upon any exercise of an Option but for the fact that the exercise price was paid by a “net exercise” pursuant to Section 6(a)(iii)(B) or any Shares tendered in payment of the exercise price of an Option; (B) any Shares withheld by the Company or Shares tendered to satisfy any tax withholding obligation with respect to an Option or Stock Appreciation Right; (C) Shares covered by a stock-settled Stock Appreciation Right issued under the Plan that are not issued in connection with settlement in Shares upon exercise; or (D) Shares that are repurchased by the Company using Option exercise proceeds. 

 

(ii)Cash-Only Awards. Awards that do not entitle the holder thereof to receive or purchase Shares shall not be counted against the aggregate number of Shares available for Awards under the Plan.  

 

(iii)Substitute Awards Relating to Acquired Entities. Shares issued under Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Shares available for Awards under the Plan. 

 

(d)Adjustments. In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any Award and (iv) the limitations contained in Section 4(d) (i) below; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. Such adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding and conclusive.  

 

(e)Award Limitations Under the Plan. The limitation contained in this Section 4(d) shall apply only with respect to any Award or Awards granted under this Plan, and limitations on awards granted under any other shareholder-approved incentive plan maintained by the Company will be governed solely by the terms of such other plan. 

 

(i)Limitation for Awards Denominated in Shares. No Eligible Person may be granted any Awards, for more than 100,000 Shares (subject to adjustment as provided for in Section 4(c) of the Plan), in the aggregate, in any calendar year. 

 

(ii)Limitation for Awards Granted to Non-Employee Directors. No Director who is not also an employee of the Company or an Affiliate may be granted any Award or Awards denominated in Shares that exceed in the aggregate $100,000 (such value computed as of the date of grant in accordance with applicable financial accounting rules) in any calendar year. The foregoing limit shall not apply to any Award made pursuant to any election by the Director to receive an Award in lieu of all or a portion of annual and committee retainers and annual meeting fees. 

4

 

 

Section 5. Eligibility 

 

Any Eligible Person shall be eligible to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes, without limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision. 

 

Section 6. Awards 

 

(a)Options. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan, as the Committee shall determine: 

 

(i)Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; provided, however, that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate. 

 

(ii)Option Term. The term of each Option shall be fixed by the Committee at the date of grant but shall not be longer than 10 years from the date of grant. Notwithstanding the foregoing, the Committee may provide in the terms of an Option (either at grant or by subsequent modification) that, to the extent consistent with Section 409A, in the event that on the last business day of the term of an Option (other than an Incentive Stock Option) (i) the exercise of the Option is prohibited by applicable law or (ii) Shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Option shall be extended for a period of not more than thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement. 

 

(iii)Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms, including, but not limited to, cash, Shares (actually or by attestation), other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price, in which payment of the exercise price with respect thereto may be made or deemed to have been made.  

 

(A)Promissory Notes. Notwithstanding the foregoing, the Committee may not permit payment of the exercise price, either in or whole or in part, with a promissory note. 

 

(B)Net Exercises. The Committee may, in its discretion, permit an Option to be exercised by delivering to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Option being exercised on the date of exercise, over the exercise price of the Option for such Shares. 

 

(iv)Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options: 

 

(A)The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000. 

 

(B)All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by the Board or the date this Plan was approved by the shareholders of the Company. 

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(C)Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant; provided, however, that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, such Incentive Stock Option shall expire and no longer be exercisable no later than five years from the date of grant. 

 

(D)The purchase price per Share for an Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option; provided, however, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, the purchase price per Share purchasable under an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option. 

 

(E)Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option. 

 

(b)Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right; provided, however, that the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee (except that the term of each Stock Appreciation Right shall be subject to the same limitations in Section 6(a)(ii) applicable to Options). The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. 

 

(c)Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: 

 

(i)Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(e). Restrictions may be time, service, or performance based or any combination thereof. 

 

(ii)Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name by the stock transfer agent or brokerage service selected by the Company to provide such services for the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book-entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units. 

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(iii)Forfeiture. Except as otherwise determined by the Committee or as provided in an Award Agreement, upon a Participant’s termination of employment or service or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units held by such Participant at such time shall be forfeited and reacquired by the Company; provided, however, that the Committee may waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock Units. 

 

(d)Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing: (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options, Stock Appreciation Rights, or other Awards the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award; and (ii) no dividend or Dividend Equivalent payment shall be made to a Participant with respect to any Award subject to performance-based vesting conditions prior to the date on which all conditions or restrictions relating to such Award (or portion thereof to which the dividend or Dividend Equivalent relates) have been satisfied, waived, or lapsed. 

 

(e)Other Stock-Based Awards. The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. The Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. No Award issued under this Section 6(f) shall contain a purchase right or an option-like exercise feature. 

 

(f)General. 

 

(i)Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law. 

 

(ii)Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. 

 

(iii)Forms of Payment under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, other securities (but excluding promissory notes), other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents with respect to installment or deferred payments. 

 

(iv)Limits on Transfer of Awards. Except as otherwise provided by the Committee in its discretion and subject to such additional terms and conditions as it determines, no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution, and no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. Where the Committee does permit the transfer of an Award other than a fully vested and unrestricted Share, such permitted transfer shall be for no value and in accordance with the rules of Form S-8. The Committee may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death.  

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(v)Restrictions; Securities Exchange Listing. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied. 

 

(vi)Prohibition on Option and Stock Appreciation Right Repricing. Except as provided in Section 4(c) hereof, the Committee may not, without prior approval of the Company’s shareholders, seek to effect any re-pricing of any previously granted, “underwater” Option or Stock Appreciation Right by: (i) amending or modifying the terms of the Option or Stock Appreciation Right to lower the exercise price; (ii) canceling the underwater Option or Stock Appreciation Right and granting either (A) replacement Options or Stock Appreciation Rights having a lower exercise price; or (B) Restricted Stock, Restricted Stock Units, or Other Stock-Based Award in exchange; or (iii) cancelling or repurchasing the underwater Option or Stock Appreciation Right for cash or other securities. An Option or Stock Appreciation Right will be deemed to be “underwater” at any time when the Fair Market Value of the Shares covered by such Award is less than the exercise price of the Award. 

 

(vii)Section 409A Provisions. Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a change in control or due to the Participant’s disability or “separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such change in control event, disability or separation from service meet the definition of a change in control event, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six months after the date of the Specified Employee’s separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. 

 

(viii)Acceleration of Vesting or Exercisability. No Award Agreement shall accelerate the exercisability of any Award or the lapse of restrictions relating to any Award in connection with a change-in-control event, unless such acceleration occurs upon the consummation of (or effective immediately prior to the consummation of, provided that the consummation subsequently occurs) such change-in-control event. 

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Section 7. Amendment and Termination; Corrections 

 

(a)Amendments to the Plan and Awards. The Board may from time to time amend, suspend or terminate this Plan, and the Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may (except as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan, or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange. For greater certainty and without limiting the foregoing, the Board may amend, suspend, terminate or discontinue the Plan, and the Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of shareholders of the Company in order to: 

 

(i)amend the eligibility for, and limitations or conditions imposed upon, participation in the Plan;  

 

(ii)amend any terms relating to the granting or exercise of Awards, including but not limited to terms relating to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of Awards, or otherwise waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively;  

 

(iii)make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange (including amendments to Awards necessary or desirable to avoid any adverse tax results under Section 409A or any other applicable tax provision), and no action taken to comply shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof; or 

 

(iv)amend any terms relating to the administration of the Plan, including the terms of any administrative guidelines or other rules related to the Plan.  

 

For greater certainty, prior approval of the shareholders of the Company shall be required for any amendment to the Plan or an Award that would:

 

(i)require stockholder approval under the rules or regulations of the Securities and Exchange Commission, the New York Stock Exchange or any other securities exchange that are applicable to the Company; 

 

(ii)increase the number of shares authorized under the Plan as specified in Section 4(a) of the Plan; 

 

(iii)increase the number of shares or value subject to the limitations contained in Section 4(d) of the Plan; 

 

(iv)permit repricing of Options or Stock Appreciation Rights, which is currently prohibited by Section 6(g)(vi) of the Plan; 

 

(v)permit the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)(i) and Section 6(b) of the Plan; or 

 

(vi)increase the maximum term permitted for Options and Stock Appreciation Rights as specified in Section 6(a)(ii) and Section 6(b). 

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(b)Corporate Transactions. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Shares or other securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Committee or the Board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter the rights of any holder of an Award or beneficiary thereof: 

 

(i)either (A) termination of the Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the vested portion of the Award or realization of the Participant’s vested rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or event described in this Section 7(b)(i)(A), the Committee or the Board determines in good faith that no amount would have been attained upon the exercise of the Award or realization of the Participant’s rights, then the Award may be terminated by the Company without any payment) or (B) the replacement of the Award with other rights or property selected by the Committee or the Board, in its sole discretion;  

 

(ii)that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;  

 

(iii)that, subject to Section 6(g)(viii), the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or 

 

(iv)that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event. 

 

(c)Correction of Defects, Omissions and Inconsistencies. The Committee may, without prior approval of the shareholders of the Company, correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan. 

 

Section 8. Income Tax Withholding 

 

In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. Without limiting the foregoing, in order to assist a Participant in paying all or a portion of the applicable taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (subject to any applicable limitations under ASC Topic 718 to avoid adverse accounting treatment) or (b) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes. The election, if any, must be made on or before the date that the amount of tax to be withheld is determined.

 

Section 9. General Provisions 

 

(a)No Rights to Awards. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants. 

 

(b)Award Agreements. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee. 

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(c)Plan Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control. 

 

(d)No Rights of Shareholders. Except with respect to Shares issued under Awards (and subject to such conditions as the Committee may impose on such Awards pursuant to Section 6(c)(i) or Section 6(e)), neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued. 

 

(e)No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases. 

 

(f)No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby. 

 

(g)Governing Law. The internal law, and not the law of conflicts, of the State of Delaware shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award. 

 

(h)Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect. 

 

(i)No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. 

 

(j)Other Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan. 

 

(k)No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated. 

 

(l)Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. 

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Section 10. Clawback or Recoupment 

 

All Awards under this Plan shall be subject to recovery or other penalties pursuant to (i) any Company clawback policy, as may be adopted or amended from time to time, or (ii) any applicable law, rule or regulation or applicable stock exchange rule, including, without limitation, Section 304 of the Sarbanes-Oxley Act of 2002, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable stock exchange listing rule adopted pursuant thereto. 

 

Section 11. Effective Date of the Plan 

 

The Plan was adopted by the Board on March 26, 2019. The Plan shall be subject to approval by the shareholders of the Company at the annual meeting of shareholders of the Company to be held on July 2, 2019 and the Plan shall be effective as of the date of such shareholder approval. 

 

Section 12. Term of the Plan 

 

No Award shall be granted under the Plan, and the Plan shall terminate, on May 31, 2029 or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan.

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