Document:

nxst-ex103_194.htm

Exhibit 10.3

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of July 26, 2021 by and between Lee Ann Gliha (“Executive”), and Nexstar Media Group, Inc., a Delaware corporation (the “Company”).

The Company desires to retain the services of Executive as Executive Vice President & Chief Financial Officer of the Company, and Executive desires to be employed by the Company under the terms and conditions of this Agreement.

In consideration of the mutual promises set forth herein and the mutual benefits to be derived from this Agreement, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Position and Duties.  Subject to the terms and conditions of this Agreement, during the term of this Agreement, the Company will employ Executive and Executive will serve as Executive Vice President & Chief Financial Officer of the Company.  In such position, Executive will perform such duties as shall be reasonably assigned to her from time to time by the Company’s Chief Executive Officer (the “CEO”), its President (the “President”), its Chief Operating Officer (the “COO”), and/or its Board of Directors (the “Board”), which are commensurate and consistent with the duties of an Executive Vice President & Chief Financial Officer.  Executive will devote her best efforts to her employment with the Company and will devote substantially all of her business time and attention to the performance of her duties under this Agreement; provided that the foregoing will not preclude Executive from devoting reasonable time to the supervision of her personal investments, civic and charitable affairs and serving on other boards, provided, that such activities do not materially interfere with the performance of Executive’s duties hereunder and, with respect to service on any board, the CEO has consented thereto.

2.Term of Employment.  Unless terminated earlier as provided below, the Company’s employment of Executive under this Agreement will commence on August 9, 2021 and continue until July 31, 2025 (the “Term”), provided, however, that the Term will be automatically renewed and extended for successive one-year period(s) unless, at least ninety (90) days prior to the end of the Term or any subsequent renewal term, Executive or the Company gives written notice to the other party of the notifying party’s intent not to extend the Term or any renewal term.

3.Termination.  The Company’s employment of Executive under this Agreement shall terminate prior to the end of the Term, or any subsequent renewal term, specified in Paragraph 2 hereof only under the following circumstances:

(a)Death.  Executive’s death, in which case Executive’s employment will terminate on the date of death.

(b)Disability.  If, as a result of  Executive’s illness, physical or mental disability or other incapacity, Executive is unable to substantially perform, with or without reasonable accommodation (as defined under the Americans with Disabilities Act), Executive’s material job duties under this Agreement for any period of six (6) consecutive months, and after receiving thirty (30) days written notice of termination by the Company to Executive (which may occur 

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after the end of such six-month period), Executive shall not have returned to the performance of Executive’s job duties hereunder on a full-time basis, then the Company may terminate Executive’s employment hereunder.

(c)Termination by the Company for Cause.  The Company may terminate Executive’s employment at any time for Cause, such termination to be effective as of the date stated in a written notice of termination delivered by the CEO or President to Executive.  Any termination under this Paragraph 3(c) shall not also be deemed to be a termination under Paragraph 3(d) hereof.  For the purposes of this Agreement, “Cause” is defined to mean any of the following activities by Executive: (i) the conviction of Executive for a felony or a crime involving moral turpitude or the commission of any act involving dishonesty, disloyalty or fraud with respect to the Company or any of its subsidiaries or affiliates; (ii) substantial repeated failure to perform material job duties which are reasonably directed by the CEO, the President, or the Board and which are consistent with the terms of this Agreement and the position specified in Paragraph 1, which is not cured within thirty (30) days after written notice thereof to Executive; (iii) gross negligence or willful misconduct with respect to the Company or any of its subsidiaries or affiliates, in each instance which has caused or is reasonably likely to cause material harm to the Company; or (iv) any other willful breach of a material provision of this Agreement, which is not cured within thirty (30) days after written notice thereof to Executive. 

(d)Termination by the Company Other Than for Cause.  The Company may terminate Executive’s employment for any reason or for no reason, other than for Cause and including in connection with a Change in Control (as defined in Paragraph 21(d)), upon thirty (30) days prior written notice to Executive.  Such termination will be effective as of the date stated in a written notice of termination delivered by the CEO or President to Executive.

(e)Termination by Executive for Good Reason.  Executive may terminate her employment hereunder at any time for Good Reason, such termination to be effective as of the date stated in a written notice of termination delivered by Executive to the Company (or such earlier date after the delivery of such notice as the Company may elect).  For purposes of this Agreement, “Good Reason” shall mean any of the following (i) a material reduction in the job duties, responsibilities, authority, or position of Executive, or (ii) a material breach by the Company of a material provision of this Agreement, which has not been cured by the Company within thirty (30) days after written notice of noncompliance has been given by Executive to the Company.  A termination of Executive’s employment for Good Reason in accordance with this Paragraph 3(e) is intended to be treated as an involuntary separation from service for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

(f)Voluntary Termination by Executive Without Good Reason.  Executive may voluntarily terminate her employment hereunder for any reason or for no reason upon thirty (30) days prior written notice to the Company.  Such termination shall be effective as of the date stated in a written notice of termination delivered by Executive to the Company (or such earlier date after the delivery of such notice as the Company may elect).

In no event will the termination of Executive’s employment affect the rights and obligations of the parties set forth in this Agreement, except as expressly set forth herein.  Any termination of 

			
	
 
	
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Executive’s employment pursuant to this Paragraph 3 will be deemed to include a resignation by Executive of all positions with the Company and each of its subsidiaries and affiliates.

4.Compensation.

(a)Base Salary.  During the Term, and any subsequent renewal term, Executive will be entitled to receive an annual base salary (“Base Salary”) at the rate specified below:

		
	
Period
	
Base Salary

	
From August 1, 2021 and thereafter
	
$700,000.00

 

Executive will be eligible for annual merit increases at the discretion of the CEO.  The Company shall pay to Executive her Base Salary ratably during each 12-month period under this Agreement on a basis consistent with other Company executives.

(b)Bonus Incentives. Executive will be eligible to receive annual incentive compensation (the “Bonus”) in an amount, if any, up to seventy-five percent (75%) of Executive’s annual base salary in effect at the end of that fiscal year (or in excess of such amount, up to a maximum of one hundred fifty percent (150%) of Executive’s annual base salary in effect at the end of that fiscal year, as the CEO, with the approval of the Compensation Committee of the Board (the “Compensation Committee”), may determine is appropriate), prorated for any partial fiscal year during which Executive is employed by the Company pursuant to this Agreement, to be determined by the CEO, with the approval of the Compensation Committee, based on the following criteria:

	
 
	
•
	
Fifty percent (50%) earned if Nexstar Media Inc. exceeds ninety percent (90%) of budgeted Net Revenue or EBITDA for the fiscal year.

 

	
 
	
•
	
Fifty percent (50%) earned at the discretion of the CEO and/or Compensation Committee.

 

Subject to the approval of the CEO and the Compensation Committee, the Company shall pay Executive a single sum cash amount equal to the Bonus, if any, earned in accordance with this Paragraph 4(b) within thirty (30) days after the independent certified public accountants regularly employed by the Company have made available to the Company the Company’s audited financial statements for the appropriate fiscal year.  Executive will be eligible to receive payment of her Bonus, if any, provided Executive is employed on the date of payment, except that the Executive will be eligible to receive a “Prorated Bonus” payment for the year in which the Executive terminates employment under the circumstances described in Paragraph 6.  Any Prorated Bonus shall be determined by multiplying (i) the actual Bonus the Executive would have been due for the full year based on actual results for such year had the Executive remained employed through the payment date by (i) a fraction, the numerator of which is the number of days between (and inclusive of) the first day of the applicable bonus program year and the date of the Executive’s termination of employment, and the denominator of which is the total number of days in the applicable bonus program year), such Prorated Bonus to be payable at the same time bonuses under the annual incentive plan are paid to other senior executives of the Company 

			
	
 
	
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(and in all events no later than March 31 of the calendar year following the calendar year in which the Executive incurs a termination of employment).

(c)Equity Incentives. Executive shall be eligible to participate in the Company’s equity compensation program on a basis consistent with the other Company executives.  In addition, Executive will be granted ten thousand (10,000) restricted stock units (the “Initial Equity Grant”) within fifteen (15) days of commencement of employment with the Company.  The Initial Equity Grant will be subject to a 4-year vesting period, with fifty percent (50%) based on continued employment and fifty percent (50%) based on performance measured against whether the Company exceeds the midpoint for Total Shareholder Return ranking within its Peer Group as defined in the Company’s 2021 Proxy Statement.

5.Fringe Benefits. During the Term and any subsequent renewal term,

(a)Executive shall be entitled to participate, at the Company’s expense, in any retirement plan, pension plan, life insurance plan, health insurance plan or fringe or other comparable benefit plan which the Company from time to time makes available generally to its corporate executive employees.

(b)Executive shall also be entitled to participate in the Company’s paid leave benefit programs, including holidays, sick leave and vacation leave, subject to the terms of those programs, with the exception that Executive’s accrual rate for paid vacation will be established at a rate of one hundred twenty (120) hours per year.  

(c)Executive will receive $750.00 per month for automobile allowance, subject to applicable taxes.

(d)Executive will be eligible to receive a cell phone stipend of $100.00 per month conditioned upon Executive’s acceptance of the terms and conditions of the Company’s cell phone stipend program.

(e)Executive will be reimbursed by the Company for all approved business expenses (which approval shall not be unreasonably withheld) incurred by her on behalf of the Company upon presentation of appropriate documentation.

(f)Executive will receive a relocation bonus of $30,000.00, subject to applicable taxes and per the terms of the Company’s relocation benefit program, which includes a repayment obligation on a prorated basis if Executive voluntarily terminates her employment for any reason within two years of her date of hire.  Payment of this bonus is contingent upon Executive’s execution of a repayment agreement.

6.Termination Payments.

(a)Termination Due to Death or Disability. In the event the Executive incurs a termination of employment under Paragraphs 3(a) or 3(b), the Company will make the following payments to the Executive (or Executive’s estate):

			
	
 
	
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(i)all accrued and unpaid Base Salary as of the date of termination as provided in Paragraph 4(a), which shall be paid in a lump sum within 30 days of the Executive’s termination of employment,

(ii)an amount equal to all accrued but unused vacation time (calculated at the rate of Base Salary in effect on such date), which shall be paid in a lump sum within 30 days of the Executive’s termination of employment,  

(iii)an amount equal to any earned but unpaid Bonus relating to performance periods preceding the year of the Executive’s termination of employment (amounts payable under subparagraphs (i), (ii) and (iii) shall be referred to as “Accrued Benefits”), and  

(iv)an amount equal to the Executive’s Prorated Bonus, which shall be paid in accordance with Paragraph 4(b).

(b)Termination by the Company for Cause or Voluntary Termination by Executive Without Good Reason. In the event the Executive incurs a termination of employment under Paragraphs 3(c) or 3(f), the Company will pay to the Executive (or Executive’s estate pursuant to Paragraph 6(a) hereof) and amount equal to her Accrued Benefits, in a lump sum within 30 days of the Executive’s termination of employment.

(c)Termination by the Company Other than for Cause or Termination by the Executive for Good Reason. In the event the Executive incurs a termination of employment under Paragraphs 3(d) or 3(e) then the Company shall pay the Executive an amount equal to the Executive’s Accrued Benefits.  In addition, subject to the Executive signing a separation agreement containing, among other provisions, a general release of claims in favor of the Company and related persons and entities, confidentiality, return of property, non-disparagement, non-compensation, non-solicitation and other restrictive covenants in a form and manner satisfactory to the Company (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming fully effective and irrevocable, all within sixty (60) days of the Executive’s termination of employment under Paragraphs 3(d) or 3(e) (“Release Period”) the Company will pay to the Executive the following benefits: 

(i)an amount equal to twelve (12) months Executive’s then current Base Salary, in a lump sum within sixty (60) days of the Executive’s termination of employment, 

(ii)in the event the Executive’s termination of employment is described under Paragraph 3(d), an amount equal to the Executive’s Prorated Bonus, which shall be paid in a lump sum in accordance with Paragraph 4(b), 

(iii)in the event the Executive’s termination of employment is described under Paragraphs 3(e), an amount equal to the Executive’s Prorated Bonus, except that the Prorated Bonus shall be determined based on the Executive’s target Bonus in effect on the date of the Executive’s termination of employment and shall be payable within sixty (60) days of the Executive’s termination of employment, and

(iv)an additional $29,000.00.  

			
	
 
	
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(d)The receipt of any severance payments or benefits pursuant to Paragraph 6(c) shall be subject to (i) the Executive’s submission to the Company of an executed Separation Agreement and Release that becomes fully effective within the Release Period and (ii) the Executive’s compliance with Paragraph 7 and the Separation Agreement and Release.  In the event an executed Separation and Release Agreement does not become fully effective within the Release Period or the Executive has failed to comply with Paragraph 7 and the Separation Agreement and Release, the Executive shall forfeit her right to receive any severance payments or benefits under Paragraph 6(c) and the Company shall have the right to recoup from the Executive any previously made severance payments or benefits under Paragraph 6(c).  

7.Covenant Not to Compete and Non-Disclosure.

(a)During the term of Executive’s employment pursuant to this Agreement and for a period of one (1) year thereafter, Executive covenants and agrees that Executive will not within any DMA (as determined from time to time by the A.C. Nielsen Company or its successor) in which the Company operates a television broadcast facility on the date that Executive’s employment by the Company terminates (or in which the Company has agreed to acquire, or the Board has approved pursuing (and the Company has not abandoned) the acquisition of, a television broadcast facility on or prior to such date) whether directly or indirectly, with or without compensation, (x) enter into or engage in the business of television broadcasting, (y) be employed by, act as a consultant to, act as a director of or own beneficially five percent (5%) or more of any class of equity or debt securities of any corporation or other commercial enterprise in the business of television broadcasting, or (z) solicit or do any business with respect to television broadcasting with any then-existing customers of the Company, provided, however, that this clause (a) shall not apply to (i) any investment banking or related services and (ii) any employment with a company with diversified media assets which includes television broadcast properties would require Company consent.  During the one (1) year after Executive’s employment with the Company terminates, neither Executive nor any of Executive’s affiliates will hire, solicit, employ or contract with respect to employment any officer or employee of the Company.  For purposes of this Paragraph 7, the term “Company” will include the Company and each of its subsidiaries or other affiliates, and each such entity is an express third-party beneficiary of this Agreement.

(b)Executive agrees to disclose promptly to the Company and does assign and agree to assign to the Company, free from any obligation to Executive, all Executive’s right, title and interest in and to any and all ideas, concepts, processes, improvements and inventions made, conceived, written, acquired, disclosed or developed by Executive, solely or in concert with others, during the term of Executive’s employment by the Company, which relate to the business, activities or facilities of the Company, or resulting from or suggested by any work Executive may do for the Company or at its request.  Executive further agrees to deliver to the Company any and all drawings, notes, photographs, copies, outlines, specifications, memoranda and data relating to such ideas, concepts, processes, improvements and inventions, to cooperate fully during Executive’s employment and thereafter in the securing of copyright, trademark or patent protection or other similar rights in the United States and foreign countries, and to give evidence and testimony and to execute and deliver to the Company all documents requested by it in connection therewith.

			
	
 
	
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(c)Except as expressly set forth below, Executive agrees, whether during Executive’s employment pursuant to this Agreement or thereafter, except as authorized or directed by the Company in writing or pursuant to the normal exercise of Executive’s responsibilities hereunder, not to disclose to others, use for Executive’s or any other Person’s (as defined herein) benefit, copy or make notes of any confidential information or trade secrets or relating to the business, activities or facilities of the Company which may come to Executive’s knowledge prior to or during Executive’s employment pursuant to this Agreement or thereafter.  Executive will not be bound to this obligation of confidentiality and nondisclosure if:

(i)the information in question has become part of the public domain by publication or otherwise through no fault of Executive;

(ii)the information in question is disclosed to the recipient by a third party and Executive reasonably believes such third party is in lawful possession of the information and has the lawful right to make disclosure thereof; or

(iii)Executive is required to disclose the information in question pursuant to applicable law or by a court of competent jurisdiction.

Pursuant to 18 U.S.C. §1833(b), Executive understands that she will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret of the Company that (i) is made (A) in confidence to a Federal, State, or local government official, either directly or indirectly, or to her attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. Executive understands that if she files a lawsuit for retaliation by the Company for reporting a suspected violation of law, she may disclose the trade secret to her attorney and use the trade secret information in the court proceeding if she (I) files any document containing the trade secret under seal, and (II) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement, or any other agreement that Executive has with the Company, is intended to conflict with 18 U.S.C. §1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such section. Further, nothing in this Agreement or any other agreement that Executive has with the Company shall prohibit or restrict her from making any voluntary disclosure of information or documents concerning possible violations of law to any governmental agency or legislative body, or any self-regulatory organization, in each case, without advance notice to the Company.

(d)Upon termination of employment pursuant to this Agreement, Executive will deliver to the Company all records, notes, data, memoranda, photographs, models and equipment of any nature which are in Executive’s possession or control and which are the property of the Company.

(e)The parties understand and agree that the remedies at law for breach of the covenants in this Paragraph 7 would be inadequate and that the Company will be entitled to seek injunctive or such other equitable relief as a court may deem appropriate for any breach of these covenants.  If any of these covenants will at any time be adjudged invalid to any extent by any court of competent jurisdiction, such covenant will be deemed modified to the extent necessary to render it enforceable.

			
	
 
	
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8.Entire Agreement.  This Agreement, together with any Company long-term incentive plans and/or restricted stock award or option agreements between Executive and the Company, embodies the entire agreement between the parties hereto with respect to Executive’s employment with the Company, and there have been and are no agreements, representations or warranties between the parties other than those set forth or provided for therein.  If any of the terms of this Agreement conflict with terms of any Company long-term incentive plans or restricted stock award or option agreements between Executive and the Company, then the terms of this Agreement shall control, govern and be given full force and effect.

9.No Assignment.  This Agreement shall not be assigned by Executive without the prior written consent of the Company and any attempted assignment without such prior written consent shall be null and void and without legal effect; provided, however, that in the case of Executive’s death or disability this Agreement may be enforced by Executive’s executors, personal representatives or guardians, to the extent applicable.  This Agreement shall not be assigned by the Company without the prior written consent of Executive except to any successor to the business of the Company.

10.Notices.  All notices, requests, demands and other communications hereunder will be deemed to have been duly given when (i) delivered by hand or if mailed, by certified or registered mail, with postage prepaid; (ii) hand delivered; or (iii) sent overnight mail or overnight courier:

(a)If to Executive, then to her address on file with the Company’s Payroll Department, or as Executive may otherwise specify by prior written notice to the Company; and

(b)If to the Company, then to Nexstar Media Group, Inc., 545 E. John Carpenter Freeway, Suite 700, Irving, TX 75062, Attention: Perry A. Sook or as the Company may otherwise specify by prior written notice to Executive.

11.Amendment; Modification.  This Agreement may not be amended, modified or supplemented other than in a writing signed by both parties hereto.

12.Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.

13.Headings.  The headings in the sections of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement.

14.Severability.  The parties agree that if any provision of this Agreement shall under any circumstances be deemed invalid or inoperative, the Agreement shall be construed with the invalid or inoperative provision deleted, and the rights and obligations of the parties shall be construed and enforced accordingly.

15.Governing Law.  This Agreement shall be governed by and construed in accordance with the internal law of the State of Delaware without giving effect to any choice of law or conflict provision or rule that would cause the laws of any jurisdiction other than the State of Delaware to be applied.

			
	
 
	
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16.Legal Fees.  In the event of any litigated dispute between or among any of the parties to this Agreement, the reasonable legal fees and expenses of the party successful in such dispute (whether by way of a decision by a court or other tribunal) shall be paid promptly by the unsuccessful party upon presentation by the successful party of an invoice therefor.

17.Representations.  Executive represents and warrants to the Company that Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity except a confidentiality agreement with Jefferies LLC.

18.Strict Construction.  The parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

19.Withholding of Taxes.  All payments made to Executive under this Agreement will be subject to withholding or deduction by reason of the Federal Insurance Contribution Act, as amended, federal income tax, state income tax, and all other applicable laws and regulations.

20.Binding Arbitration.

(a)Generally.  The arbitration procedures described in this Paragraph 20 will be the sole and exclusive method of resolving and remedying any claim under this Agreement (each such claim, a “Dispute”); provided that nothing in this Paragraph 20 will prohibit a Person from instituting litigation to enforce any Final Arbitration Award (as defined herein).  Except as otherwise provided in the Employment Arbitration Rules of the American Arbitration Association as in effect from time to time (the “AAA Rules”), the arbitration procedures described in this Paragraph 20 and any Final Arbitration Award (as defined herein) will be governed by, and will be enforceable pursuant to, the Uniform Arbitration Act as in effect in the State of Texas from time to time.  “Person” for the purposes of this Agreement means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or any governmental entity.

(b)Notice of Arbitration.  If a Person asserts that there exists a Dispute, then such Person (the “Disputing Person”) will give each other Person involved in such Dispute a written notice setting forth the nature of the asserted Dispute.  If all such Persons do not resolve any such asserted Dispute prior to the 10th business day after such notice is given, then any of them may commence arbitration pursuant to this Paragraph 20 by giving each other Person involved in such Dispute a written notice to that effect (an “Arbitration Notice”), setting forth any matters which are required to be set forth therein in accordance with the AAA Rules.

(c)Selection of Arbitrator.  An arbitrator will be selected in accordance with the AAA Rules.

(d)Conduct of Arbitration.  The arbitration will be conducted in the Dallas, Texas, metropolitan area under the AAA Rules, as modified by any written agreement among the Persons involved in the Dispute in question.  The arbitrator will conduct the arbitration in a manner so that the final result, determination, finding, judgment or award determined by the 

			
	
 
	
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arbitrator (the “Final Arbitration Award”) is made or rendered as soon as practicable, and the Persons involved will use all reasonable efforts to cause a Final Arbitration Award to occur within ninety (90) days after the arbitrator is selected.  Any Final Arbitration Award will be final and binding upon all Persons and there will be no appeal from or reexamination of any Final Arbitration Award, except in the case of fraud, perjury or evident partiality or misconduct by the arbitrator prejudicing the rights of such Persons or to correct manifest clerical errors.

(e)Enforcement.  A Final Arbitration Award may be enforced in any state or federal court having jurisdiction over the subject matter of the related Dispute.

(f)Attorneys’ Fees and Expenses.  Each prevailing Person in any arbitration proceeding described in this Paragraph 20 will be entitled to recover from any non-prevailing Person(s) its reasonable costs and attorneys’ fees in addition to any damages or other remedies awarded to such prevailing Person.  As part of any Final Arbitration Award, the arbitrator may designate the prevailing Person(s) for purposes of this Paragraph 20.

21.280G Net-Better Cut Back. 

(a)Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that (i) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of Executive (whether pursuant to the terms of this Agreement or otherwise) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), and (ii) the reduction of the amounts payable to Executive under this Agreement to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide the Executive with a greater after tax amount than if such amounts were not reduced, then the amounts payable to Executive under this Agreement shall be reduced (but not below zero) to the Safe Harbor Cap. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a greater after tax result to Executive, no amounts payable under this Agreement shall be reduced pursuant to this provision. 

(b)All determinations required to be made under this Paragraph 21 shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from the Company or the Executive that there has been a Payment, or such earlier time as is requested by the Company. Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting Firm shall provide a reasonable 

			
	
 
	
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opinion to Executive that she or she is not required to report any Excise Tax on her or her federal income tax return. All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by the Company. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on Executive’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish Executive with a written opinion to such effect. The determination by the Accounting Firm shall be binding upon the Company and Executive (except as provided in Paragraph 21(c). 

(c)In the event the Internal Revenue Service adjusts the computation of the Company under Paragraph 21(b) so that the Executive did not receive the greatest net benefit, the Company shall reimburse the Executive for the full amount necessary to make the Executive whole, plus a market rate of interest, as determined by the Committee, within 30 days after such adjustment.

(d)For purposes of this Agreement, “Change in Control” means the occurrence of one of the following events:

(i)if any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successors thereto, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act or any successor thereto), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; or

(ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election was previously so approved, cease for any reason to constitute a majority thereof; or

(iii) the stockholders of the Company approve and subsequently consummate a merger or consolidation of the Company or a Subsidiary with any other corporation, other than a merger or consolidation (A) which would result in all or a portion of the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company (or the entity surviving any merger with the Company) or a direct or indirect parent corporation of the Company (or the entity surviving any merger with the Company)) outstanding immediately after such merger or consolidation or (B) by which the corporate existence of the Company is not affected and following which the Company’s chief executive officer and directors retain their positions with the Company (and constitute at least a majority of the Board); or

(iv) the stockholders of the Company approve and effectuate a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

			
	
 
	
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22.Code Section 409A. The benefits provided to Executive under Paragraphs 4, 5 and 6 of this Agreement (“Benefits”) are intended to comply with Section 409A of the Code or to otherwise be exempt therefrom. 

(a)Notwithstanding anything herein to the contrary, if (a) Executive is a “specified employee” as determined pursuant to Section 409A of the Code as of the date of Executive’s “separation from service” (within the meaning of Treas. Reg. 1.409A-1(h)) and if any Benefits or other payment or benefit provided for in this Agreement or otherwise both (i) constitutes a “deferral of compensation” within the meaning of Section 409A of the Code and (ii) cannot be paid or provided in the manner otherwise provided without subjecting Executive to “additional tax”, interest or penalties under Section 409A of the Code, then any such Benefits or other payment or benefit that is payable during the first six months following Executive’s “separation from service” shall be paid or provided to Executive in a cash lump-sum on the first business day of the seventh calendar month following the month in which Executive’s “separation from service” occurs. Any Benefit or other payment or benefit due upon a termination of Executive’s employment that represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or provided to Executive upon a “separation from service”.  

(b)Notwithstanding anything to the contrary in this Agreement, any Benefits or other payments or benefits provided under this Agreement that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1 (b)(9)(v)(A) or (C) shall be paid or provided to Executive only to the extent that the Benefits or other payments or benefits are not provided, beyond the last day of the second taxable year of Executive following the taxable year of Executive in which the “separation from service” occurs.

(c)To the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit. For the purposes of this Agreement, each payment made pursuant to Paragraph 6 shall be deemed to be separate payments, amounts payable under Paragraph 6 of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A of the Code to the extent provided in the exceptions in Treas. Reg. Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. Section 1.409A-1 through A-6. 

(d)In no event may an Executive, directly or indirectly, designate the calendar year of any payment under this Agreement, and to the extent required by Section 409A of the Code, any payment that may be paid in more than one taxable year shall be paid in the later taxable year.

23.Termination of Previous Agreements.  This Agreement replaces and terminates any previous employment agreements (including, without limitation, any supplements, addendums or 

			
	
 
	
12
	
 

 

 

amendments thereto) entered into between Executive and the Company and/or any of its affiliates and predecessors.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and made effective as of the day and year first above written.

 

 

/s/ Lee Ann Gliha

Lee Ann Gliha

Executive

 

ACCEPTED AND AGREED:

 

NEXSTAR MEDIA GROUP, INC.

 

/s/ Perry A. Sook

Perry A. Sook
Chairman & Chief Executive Officer

 

 

			
	
 
	
13Exhibit 10.1
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EXECUTION VERSION
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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED BECAUSE IT IS BOTH (1) NOT MATERIAL TO INVESTORS AND (2)
LIKELY TO CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
FRAMEWORK COLLABORATIVE RESEARCH AGREEMENT
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by
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KEYGENE N.V.
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and
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22nd Century Group, Inc.
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Page 1 of 27

EXECUTION VERSION
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FIRST AMENDED AND RESTATED FRAMEWORK
COLLABORATIVE RESEARCH AGREEMENT
This First Amended and Restated Framework Collaborative Research Agreement (the “Agreement”),  is executed this 16th day of April (the “Execution Date”), 2021, but is effective as of the 14th day of April 2019 (“Effective Date”) by and between  Keygene N.V., a company organized and existing under the laws of The Netherlands, having its registered office at Agro Business Park 90, 6708 PW Wageningen, The Netherlands, duly represented by its co-CEO’s, Dr. Arjen van Tunen and Henny Wilpshaar, (hereinafter further referred to as “KeyGene”), and 22nd Century Group, Inc., a corporation organized and existing under the laws of State of Nevada in the United States of America, having its principal offices at 500 Seneca Street, Suite 507, Buffalo, New York  14204, United States of America, duly represented by its President and Chief Executive Officer, James A. Mish (hereinafter further referred to as “XXII”), and amends and restates in its entirety the Original Agreement (defined below) with reference to the following facts.
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RECITALS
WHEREAS, XXII is a company active in, amongst others, the field of cannabis and hemp, and has proprietary expertise, knowledge and germplasm relating to cannabis and hemp;
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WHEREAS, KeyGene is a company active in the field of agricultural biotechnology, genomics and phenomics, and has proprietary expertise, knowledge and technologies for generating and analyzing molecular genetic and phenotypic data, molecular mutagenesis, lead discovery and lead validation, breeding tool and/or trait development;
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WHEREAS, On the Effective Date, XXII entered into a Framework Collaborative Research Agreement (the “Original Agreement”) under which KeyGene was to provide certain research, consulting and advisory services for XXII; and
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WHEREAS, the Parties wish to enter into this Agreement in order to replace in its entirety the Original Agreement.
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NOW, THEREFORE, in consideration of the mutual premises and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto intending to be legally bound do hereby agree as follows:
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Article 1 - Definitions
In this Agreement the following terms, either in plural or in single form, have the following meanings:
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	1.1
	Affiliate: means any entity directly or indirectly controlled by a Party, where, for the purposes of this definition “control” means the actual power, either directly or indirectly through one or more intermediaries, to determine the management and policy of an entity in a decisive way, whether through the direct or indirect ownership of more than fifty percent (50%) of the voting shares, or by contract or otherwise.

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	1.2
	Biological Material: means any and all XXII proprietary germplasm and other biological material supplied by XXII to KeyGene for the execution of a Project.

	1.3
	Change of Control: means with regard to a Party any of the following: (i) such Party sells, leases or exchanges all or substantially all of its assets to any other person or entity; or (ii) at least fifty percent (50%) of the outstanding voting shares in such Party are sold to a third party; or (iii) any other event pursuant to which the persons or entities that Control such Party immediately prior to such event do no longer Control such Party immediately after such event. “Control” for this purpose means: owner or holder of fifty percent (50%) or more of the voting stock or other equity interest of the Party with the power to vote, or the power in fact to control the management decisions of such Party through the ownership of securities, or by contract, or otherwise.

	1.4
	Consultancy Services: means the expert assistance and general advice requested by XXII to be supplied by KeyGene to XXII in accordance with a PAS.

	1.5
	Contract Year: means each consecutive twelve (12) month period from the Effective Date or its applicable calendar year anniversary.

	1.6
	Exclusivity Period: means the period that XXII pays at least the Minimum Research Funding Amount during each Contract Year as Research Funding, not exceeding a period of ten (10) Contract Years; provided, however, that (i) the Exclusivity Period shall end immediately upon any termination of this Agreement upon any termination of this Agreement (A) in accordance with Section 12.2 or (B) by KeyGene in accordance with Section 12.3 and (ii) upon any termination of this Agreement by XXII in accordance with Section 12.3, the Exclusivity Period shall continue through the end of the ninety-sixth (96th) month after the Effective Date.

	1.7
	Field: means any and all use of, research regarding, and/or commercialization of hemp and/or cannabis (all versions and types of the genus Cannabis Sativa L plant), and/or any parts thereof, for any and all purposes, including but not limited to human, medical, agricultural, veterinary, therapeutic and other such purposes.

	1.8
	KeyGene Background: means all protocols, methods, procedures, know-how, trade secrets, information, data (e.g. sequences), biological materials, software, technologies and/or combinations thereof, whether in electronic form or not and whether or not laid down in protocols, and all intellectual property rights related thereto, owned by, licensed in or otherwise in the possession of KeyGene (i) as of the Effective Date or (ii) after the Effective Date if discovered independently by KeyGene and not in furtherance of this Agreement, in each case which are required or may otherwise be useful for the performance of a specific Project.

	1.9
	KeyGene Identified Targets: means Results that constitute or are based on genes, alleles and other regulatory elements that are identified by KeyGene in the course of a Project (i.e. KeySeeQ output), other than publicly known regulatory elements.

	1.10
	Non-KeyGene Identified Targets: means Results that constitute or are based on genes, alleles and other regulators that are publicly known regulatory elements.

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	1.11
	Net Sales: means (i) the gross revenue received by XXII and its Affiliates from the sale of Project Technology Results, KeyGene Identified Targets, Non-KeyGene Identified Targets and/or products or services that incorporate, are based on or use Project Technology Results, KeyGene Identified Targets or Non-KeyGene Identified Targets, less (ii) returns, allowances or credits, rebates, excise, sales, use or value-added taxes or other fees imposed by government entities, tariffs, costs of packing, transportation and insurance, delivery charges, cash and trade discounts allowed, and import or export duties.

	1.12
	KeyGene Net Sales: means (i) the gross revenue received by KeyGene and its Affiliates from the sale of Results and/or products or services that incorporate, are based on or use Results, less (ii) returns, allowances or credits, rebates, excise, sales, use or value-added taxes or other fees imposed by government entities, tariffs, costs of packing, transportation and insurance, delivery charges, cash and trade discounts allowed, and import or export duties.

	1.13
	License Income: means any and all gross revenue actually received by XXII and its Affiliates in consideration of the grant of a license in respect of the Project Technology Results, KeyGene Identified Targets and/or Non-KeyGene Identified Targets. License Income includes running royalties, upfront fees, annual fees and milestone fees actually paid by such licensee to XXII. It does not include any consideration paid to XXII or its Affiliates for research and development work or other non-commercial work with such licensee in connection with the grant of such license.

	1.14
	KeyGene License Income: means any and all gross revenue actually received by KeyGene and its Affiliates in consideration of the grant of a sublicense in respect of the Results. KeyGene License Income includes running royalties, upfront fees, annual fees and milestone fees actually paid by such licensee to KeyGene. It does not include any consideration paid to KeyGene or its Affiliates for research and development work or other non-commercial work with such licensee in connection with the grant of such license.

	1.15
	Other Income: means amounts payable in respect of a Contract Year pursuant to Section 7.2, 7.8 and 7.9.

	1.16
	Party or Parties means KeyGene and/or XXII, as the context may require.

	1.17
	PAS or Project Approval Sheet or Statement of Work: means a written document a template of which is attached as Annex 1 to this Agreement, agreed to in writing by both Parties and to be attached to and incorporated in this Agreement, containing the following elements, if applicable:

		(i)
	the objective of the Project;

		(ii)
	the type of Project;

		(iii)
	a description of XXII Background and Biological Material and KeyGene Background to be contributed by the Parties to the extent needed to conduct the Project;

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		(iv)
	the Project proposal or work plan, including milestones if applicable, and the intended deliverables as to expected Results;

		(v)
	a description of the consultancy to be rendered by KeyGene (if applicable);

		(vi)
	the R&D amounts and consultancy fee for the Project pursuant to Article 7; and

		(vii)
	the duration of the Project.

	1.18
	Project: means the research, development and/or consultancy activities to be performed by KeyGene, as further detailed in a PAS.

	1.19
	Project Technology Results: means (i) any and all protocols, methods, procedures, know-how, software, inventions, technologies and/or combinations thereof, whether in electronic form or not and whether or not laid down in protocols that (A) is developed, created and/or generated by KeyGene from the execution of a Project, (B) is applicable to the Field, and (C) is expressly a deliverable of a Project as further detailed in a PAS and/or is otherwise expressly agreed by the Parties prior to the commencement of a respective Project as being a Project Technology Result, unless otherwise agreed to in writing by the Parties after the commencement of a Project and (ii) any other protocols, methods, procedures or technologies that may be separately approved by the Steering Committee as Project Technology Results.

	1.20
	Research Funding: means the aggregate amounts payable by XXII to KeyGene under the Projects pursuant to Sections 7.1 (R&D amounts) and 7.2 (consultancy fees).

	1.21
	Residual Expertise: means protocols, methods, procedures, know-how, software, inventions, technologies and/or combinations thereof, whether in electronic form or not and whether or not laid down in protocols that (i) is developed, created and/or generated by KeyGene from the execution of a Project, (ii) is not specific to the Field, and (iii) is a generic crop technology that has general applicability outside the Field. Without limiting the foregoing and for the avoidance of doubt, Residual Expertise does not include Project Technology Results, KeyGene Identified Targets or Non-KeyGene Identified Targets.

	1.22
	Results: means any and all data (e.g., genotype data, expression data, transcriptomatics data, metabolomic data, and sequences), plant materials, information, biological materials, genes, plant varieties, maps, analysis, improvements, results, deliverables, discoveries, inventions, work product, know-how and/or combinations thereof, whether in electronic form or not and whether or not laid down in protocols, and all intellectual property rights related thereto, (i) developed, created, resulting and/or generated from the execution of a Project, (ii) delivered by KeyGene to XXII under this Agreement (including any PAS), (iii) otherwise invented, reduced to practice, created, developed or made by KeyGene in the performance of the Consultancy Services and/or (iv) derived, generated, developed or propagated from any Biological Material, in each case excluding Residual Expertise and KeyGene Background. Results includes Project Technology Results.

	1.23
	Steering Committee: has the meaning as defined in Article 5.

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED BECAUSE IT IS BOTH (1) NOT MATERIAL TO INVESTORS AND (2)
LIKELY TO CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
	1.24
	XXII Background: means all protocols, methods, procedures, know-how, trade secrets, information, data (e.g. sequences), Biological Material, software, technologies and/or combinations thereof, whether in electronic form or not and whether or not laid down in protocols, and all intellectual property rights related thereto, owned by, licensed in or otherwise in the possession of XXII (i) as of the Effective Date or (ii) after the Effective Date if discovered independently by XXII and not in furtherance of this Agreement, in each case which are required or may otherwise be useful for the performance of a specific Project.

Article 2 - Scope of the Agreement and Exclusivity
	2.1
	This Agreement describes the terms and conditions under which KeyGene will conduct mutually agreed research, services and/or consultancy in the Field.

	2.2
	During the Exclusivity Period, KeyGene and its Affiliates will not work with, provide any services to, provide any assistance or advise to, be engaged by, or provide any scientific information or deliverable to any third party in the Field. During the Exclusivity Period, KeyGene and its Affiliates will provide consulting services solely to XXII in the Field. For sake of clarity, KeyGene is entitled to conduct internal research in the Field during the Exclusivity Period for KeyGene’s internal knowledge, but not with or for any third party.

2.3Master Development Agreement [*]. The Parties have expressed their wish to further expand their collaboration to other crops and therefore have agreed to enter into negotiations regarding a Master Development Agreement in the field of [*] (hereinafter referred to as “MDA”).  Among other things, the MDA will: (A) incorporate a Steering Committee; (B) establish an Executive Committee to  review the programs in the field of cannabis, [*], under terms to be negotiated; (C) include as initial statements of work projects for [*]; and (D) provide for R&D amounts and other compensation in 2021 of at least US $200,000. The Parties agree, acting in good faith, to use reasonable efforts to agree and enter into the MDA at or before the end of the Negotiation Period (as defined below). KeyGene is open to discussing exclusivity for results or fields. It is expressly understood by the Parties that this Section 2.3 is not intended to, and does not, constitute an agreement to consummate or to enter into the MDA, and neither Party will have any rights or obligations of any kind whatsoever with respect to the MDA by virtue of this agreement or any other written or oral expression by any Party hereto unless and until a definitive agreement relating thereto between the Parties is executed and delivered, other than for the matters specifically agreed to herein. During 180 (one hundred and eighty) days following the Execution Date the Parties will enter into good faith negotiations of the MDA (hereinafter referred to as the “Negotiation Period”). The Parties may agree, at any time during the Negotiation Period, to extend such period past the 180 days for up to two (2) additional 90 day periods. During the Negotiation Period KeyGene hereby agrees that it considers XXII as preferred partner for collaboration in [*], and KeyGene shall therefore during the Negotiation Period not enter into discussions in nor perform any project and/or consultancy services to any third party in the field of [*]. XXII may terminate negotiations of the MDA at any time in its sole discretion. In the event XXII terminates
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the negotiations or the Negotiation Period ends and there is no new agreement between the parties on the subject matter detailed in this Section 2.3, the Minimum Research Funding for Contract Year 4 (CY 2022) will increase by two hundred thousand US dollars ($200,000) to one million four hundred thousand US dollars ($1,400,000).
Article 3 - Initiation and execution of Projects
Initiation of the activities
	3.1
	Upon written request from XXII to initiate a new Project, and provided KeyGene has no obligations towards third parties preventing it from entering into such new Project, the Parties will promptly commence and diligently pursue good faith discussions with a view to executing a PAS covering such new Project. The Parties will aim to execute such PAS within three (3) months following such written request. During the Exclusivity Period, KeyGene agrees that KeyGene and its Affiliates will not enter into any agreements with or obligations towards any third party that would prevent KeyGene from entering into a new Project in the Field with XXII.

	3.2
	All terms and conditions of this Agreement will start to apply to such new Project as of the latest signature date of the PAS which incorporates such PAS into this Agreement.

	3.3
	The first Projects to be conducted by KeyGene pursuant to and governed by this Agreement are attached hereto as Annex 2. Annex 2 will be updated from time to time with additional mutually agreed upon Projects.

	3.4
	In case of a conflict between the terms of this Agreement and any more specific terms included in any PAS attached hereto and incorporated in this Agreement, the more specific terms of the PAS shall prevail; provided, however, that notwithstanding anything contain in this Agreement of any PAS to the contrary, nothing in any PAS shall adversely affect XXII’s exclusive rights in the Field during the Exclusivity Period. In case of conflict between the terms of this Agreement and any PAS that is due to conflict of law, the terms of this Agreement shall prevail.

Performance of the activities
	3.5
	KeyGene shall use commercially reasonable efforts, including but not limited to the assignment of all necessary qualified personnel and all of its technology resources, and including where applicable and agreed, the KeyGene Background, to execute the activities assigned to it under each agreed Project substantially in accordance with the planning and objectives as described in the applicable PAS. KeyGene shall, furthermore, execute its activities under this Agreement in accordance with generally accepted scientific and ethical standards.

	3.6
	XXII shall supply to KeyGene the XXII Background and Biological Material required to execute each agreed Project in a timely and suitable manner as mutually agreed in writing by the Parties, all as described in the applicable PAS and as may be further expressly agreed in writing between the Parties.

	3.7
	KeyGene shall keep and maintain lab records documenting its activities and results pursuant to each agreed Project, in a manner that is appropriate for the purpose of protecting

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the intellectual property rights attaching to such results and for regulatory purposes and for the use of such information by XXII in XXII’s use of the Results in its scientific and/or commercial activities. Without limiting the foregoing, KeyGene will (i) promptly and fully inform XXII in writing of any Results setting forth in reasonable detail the nature of the Results, (ii) promptly deliver to XXII the Results, including without limitation a stand-alone software program, operating system and all data related to Results, which will be resident and fully operable on XXII’s or XXII’s designees computer server(s), together with any other software, files or tools, needed to fully access, search and use any such data (including without limitation any related genome annotations), (iii) cause all of KeyGene’s agents, owners, consultants, contractors, servants, representatives and employees to assign all right, title and interest in and to any and all Results to XXII, (iv) execute and deliver to XXII each document, instrument and other writing, and take any other action, reasonably requested by XXII to assist or facilitate XXII in protecting XXII’s interest in any Results (including, without limitation, assisting with XXII’s preparation of any patent, plant variety right, copyright or trademark application) or to vest all right, title and interest in Results in XXII, and (v) execute, acknowledge and deliver promptly to XXII such written instruments and do and cause to be done all matter of things and other acts as may be necessary, appropriate or convenient in the reasonable opinion of XXII to obtain, secure and maintain United States and/or foreign patents, United States and/or foreign plant variety rights, United States or foreign copyright registrations, or any other legal protections in any country (where reasonable out-of-pocket costs incurred by KeyGene in doing so will be reimbursed by XXII) and to vest the entire right, title and interest in the Results in XXII.
	3.8
	KeyGene shall only be allowed to subcontract any part of its activities under this Agreement to a third party if such subcontractor and such subcontracted activity has been mutually agreed to in writing by the Parties in a PAS prior to KeyGene utilizing such third-party subcontractor, all as described in the applicable PAS, and further provided that KeyGene shall ensure that KeyGene’s subcontractor is obligated to and complies with all the intellectual property and confidentiality terms and conditions of this Agreement as if such subcontractor was a party to this Agreement; provided, however, that XXII acknowledges and agrees that KeyGene may freely subcontract any part of its activities under this Agreement to KeyGene’s Affiliates, including, without limitation, KeyGene’s U.S. subsidiary, KeyGene, Inc. KeyGene shall ensure that all subcontracts that may expose any subcontractor to Confidential Information, Biological Material and/or Results incorporate the terms and conditions of this Agreement, to the extent applicable, including, without limitation (i) each subcontractor’s level of service, systems, and control which must be at least as stringent as those required of KeyGene under this Agreement, and (ii) the terms and conditions of this Agreement relating to confidentiality, security and intellectual property ownership and rights. KeyGene will be solely liable for all acts and omissions by all subcontractors and third-parties utilized by KeyGene, including all costs, expenses, charges and other obligations of and/or to any such third-party. Any act or omission of any subcontractor or third-party utilized by KeyGene shall be deemed an act or omission of KeyGene. Any breach of these terms and conditions by its subcontractor will be regarded as a default by KeyGene itself.

Reporting & Supply of Deliverables
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	3.9
	The Parties shall consult each other and discuss the progress of the Project(s) as often as necessary for reaching the objectives of the Project(s). Without prejudice to the generality of the foregoing, KeyGene shall provide a written progress report to XXII no less than every six (6) months and a final report within two (2) months upon completion of each Project (“Report”). Such consultation and reporting are hereby delegated to the Steering Committee.

	3.10
	Delivery of Results which are biological material shall be done in compliance with applicable laws and regulations.

Article 4 - Consultancy
	4.1
	If Consultancy Services are expressly desired by XXII as set forth in a PAS, then the Steering Committee shall define the content and nature of such Consultancy Services. Such Consultancy Services may include but are not limited to general advice, the establishment of new project plans, the exchange of personnel at each other’s premises, and advice on strategies for protection of intellectual property rights.

	4.2
	Unless expressly agreed otherwise in writing, the Consultancy Services will be started by KeyGene as soon as possible after the signature date of the corresponding PAS in which XXII has expressly requested such Consulting Services.

	4.3
	Where necessary, KeyGene is entitled to replace employees it has assigned to perform the Consultancy Services without obtaining XXII’s advance permission to do so, provided however that KeyGene shall inform XXII thereof as soon as possible and that such replacement involves employees with equal or greater expertise and who are able the perform the Consultancy Services effectively.

	4.4
	KeyGene, in furnishing the Consultancy Services, will be acting as an independent contractor. Nothing in this Agreement shall create any relationship of agent and principal, partnership, or employer and employee between the Parties or between one of the Parties and the other Party’s employees.

Article 5 - Steering Committee
	5.1
	The Parties hereby establish a Steering Committee to identify, coordinate and supervise the Project(s), as well as the general collaboration between the Parties.

	5.2
	The Steering Committee consists of two (2) representatives of each Party. Each Party shall be entitled to appoint and withdraw its representative at its sole discretion. In the event a member of the Steering Committee is absent for a period of more than four (4) months, the Party with such absent representative shall appoint a substitute-representative on behalf of such Party.

	5.3
	The Steering Committee shall meet at least six (6) times per year, alternating in person or by means of telephone/videoconferencing. Meetings in persons shall be at the premises of either XXII’s offices or KeyGene’s United States offices in Maryland, except that KeyGene may elect not more than one time each Contract Year to conduct an in-person

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meeting at KeyGene’s office in The Netherlands, in all cases as mutually agreed by the Steering Committee. If meetings take place at the premises of XXII more than twice per year, the travel costs and accommodation costs of the KeyGene members of the Steering Committee shall be reimbursed by XXII.
	5.4
	The Steering Committee shall be responsible for the coordination of the design and the follow up of the Project(s). The Steering Committee shall convene to discuss and recommend on any critical decision to be made in such Project(s).

	5.5
	During the meeting of the Steering Committee, the representatives of each Party shall describe the progress, milestones, planning and financial status of the Project(s), and any other aspects of all then ongoing issues related to the Project(s) or other interesting developments that are of relevance to both Parties, and potential new projects pursuant to Section 3.1.

	5.6
	The Steering Committee is not authorized to take binding decisions on behalf of the Parties, unless expressly agreed otherwise in writing by the Parties. The role of the Steering Committee shall be to advise the Parties.

Article 6 - Biological Material
	6.1
	XXII shall supply KeyGene with the Biological Material in the quantities mutually agreed upon by KeyGene and XXII as set out in the applicable PAS and on the delivery date as set out in the applicable PAS. XXII acknowledges that KeyGene can only start with the execution of its activities under the Project(s) once it has received the Biological Material and associated XXII Background that it requires to conduct its activities under the Project(s).

	6.2
	The Biological Material shall be supplied in a form mutually agreed upon by KeyGene and XXII as set out in the applicable PAS. XXII shall use commercially reasonable efforts to ensure that the Biological Material is of the condition for analysis and/or other agreed use as set out in the applicable PAS. In the event the Biological Material is not of the condition as set out in the applicable PAS as mutually determined by the Parties, then XXII shall as soon as possible supply proper Biological Material and KeyGene will postpone the execution of its activities under the affected Project(s) accordingly. In the event XXII is not able to supply the proper Biological Material as set out in the applicable PAS within a reasonable time frame and in accordance with the PAS, the Parties shall mutually agree in good faith whether to amend or to terminate the affected Project(s).

	6.3
	KeyGene shall use the Biological Material with caution and prudence, and with a degree of professional skill, sound practice and judgment normally exercised in any experimental work performed by recognized professionals in the field of research or testing of materials like the Biological Material. The Parties shall comply in all material respects with all laws and governmental rules, regulations and guidelines which are provided with and applicable to the import, export, inter-state transport, growing, use and disposition of the Biological Materials, and all of such Party’s other activities under this Agreement, including without limitation biosafety procedures. All expenses necessary and incurred in connection with

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complying with the applicable laws and regulations shall be the responsibility of the applicable Party. In no event shall either Party be liable for any use by the other Party (“Commercializing Party”) of the Biological Material or for any claim, liability, cost, expense, damage, deficiency, loss or obligation, of any kind or nature (including, without limitation, reasonable attorneys’ fees and other costs and expenses of defense) that may arise from or in connection with the Commercializing Party’s use, handling, storage, or disposition of the Biological Material.
	6.4
	The Biological Material shall be used solely by employees of KeyGene (or KeyGene’s sub­contractors approved by XXII under this Agreement) who are involved in the Project(s). KeyGene will not give access to the Biological Material, any Results which comprise biological or tangible materials, any derivatives of Biological Material, and/or any portion thereof (collectively, the “Restricted Material”) to any person or entity, except KeyGene’s sub-contractors approved by XXII under this Agreement or those persons under KeyGene’s direct supervision and control. KeyGene shall not, by action or inaction, give, cause or allow access to, make available, distribute, convey, transfer, sell or disclose by any means any Restricted Material to any third party without the prior written consent of XXII.

	6.5
	All expenses in connection with the supply of the Biological Material by XXII to KeyGene will be borne by XXII. XXII shall be responsible at XXII’s cost and expense for obtaining all necessary permits/approvals/licenses for the import/export of the Biological Material from/to KeyGene’s facilities/laboratories in the United States. KeyGene shall be responsible for any importation of the Biological Material to any KeyGene facilities outside of the United States, provided that XXII shall reimburse KeyGene for any pre-approved shipping costs for such Biological Materials that are transported by KeyGene outside of the United States.

	6.6
	XXII warrants that the Biological Material will meet the quality standards set forth in the applicable PAS, or XXII will inform KeyGene in advance of any deficiencies in the Biological Materials with respect to such standards. KeyGene will then decide if the Biological Material will be used in the Project(s) by KeyGene. Furthermore, XXII represents and warrants to KeyGene that XXII has all rights (including, if applicable, any necessary regulatory approvals and clearances) and title in the Biological Material necessary for the delivery to, and use by, KeyGene as contemplated by the PAS.

	6.7
	Unless expressly agreed otherwise in writing, KeyGene will return or, at XXII’s option, destroy all Restricted Material after completion or termination of the Project(s). All Restricted Material shall be the sole and exclusive property of XXII.

Article 7 - R&D Funding, Milestones, Minimum Commitment and Other Payments
R&D Funding and Consultancy Fees
	7.1
	As remuneration for the activities executed by KeyGene in connection with each agreed Project pursuant to this Agreement, XXII shall pay to KeyGene the R&D amounts set out in the associated PAS, in each case which shall be due as follows unless otherwise mutually agree in the associated PAS: (i) seventy percent (70%) of the total amount due under the

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PAS will be paid by XXII to KeyGene at the commencement of the Project to which such PAS relates and (ii) the remaining thirty percent (30%) of the total amount due under the PAS will be paid by XXII to KeyGene within thirty (30) days after the Parties mutually agree that KeyGene has achieved the milestones set forth in Annex 3 attached to this Agreement, which are applicable to each Project, as may be further described in greater detail in the PAS for the Project (“Milestone Fees”).
	7.2
	The remuneration for the Consultancy Services is on an hourly fee basis. The consultancy fee for the Consultancy Services will be negotiated as part of the relevant PAS. These rates are excluding travelling and other out-of-pocket expenses pre-approved in writing by XXII prior to being incurred and then actually incurred by KeyGene in the performance of the Consultancy Services, which shall be invoiced separately on a cost basis. All reimbursable expenses of KeyGene, including without limitation any travel expenses, must be preapproved in writing by XXII and no fees or expenses shall be paid by XXII unless agreed to in writing in advance of their incursion. Unless agreed otherwise in writing by the Parties, KeyGene may invoice the consultancy hours and expenses on a monthly basis. KeyGene reserves the right, once per calendar year, for the first time on the first anniversary of the Effective Date, to increase the hourly fee, which increase shall not be more than three percent (3%) per calendar year.

	7.3
	Within sixty (60) days after the end of each Contract Year, KeyGene shall send a written overview of the amounts actually due from and/or paid by XXII for Projects and/or the Consultancy Services rendered by KeyGene and its Affiliates in such preceding Contract Year (“Actual Expenditure”).

Minimum Research Funding to maintain Exclusivity
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	7.4
	If and as long as XXII pays to KeyGene in Research Funding per Contract Year an aggregate amount of (i) no less than one million two hundred thousand US dollars (US $1,200,000), except in the case of Contract Year 3 the Parties have agreed, taking into account Section 2.3, that said amount will be reduced to no less than eight hundred thousand US dollars (US $800,000), less (ii) (A) any Milestone Fees due to KeyGene upon the achievement of milestones identified for completion during such Contract Year but not yet completed through no fault of XXII under this Agreement and therefore not yet paid for such Contract Year pursuant to Section 7.1 and, (B) in the case of Contract Year 6 and each Contract Year thereafter, up to two hundred thousand US dollars ($200,000) of Other Income in respect of each such Contract Year (the “Minimum Research Funding Amount”), the Exclusivity Period and Section 2.2 shall apply (for a maximum of ten (10) Contract Years). As of Contract Year 6 the Minimum Research Funding Amount shall be increased each Contract Year by three percent (3%). If in any Contract Year the Research Funding is less than said Minimum Research Funding Amount, XXII has the right to pay the balance to KeyGene within thirty (30) days after receipt by XXII of the Actual Expenditure report from KeyGene for such Contract Year and, if such balance payment is made prior to the expiration of such thirty (30) day period, then the Exclusivity Period shall continue. In the absence of payment of such Minimum Research Funding Amount and/or payment of the balance for any Contract Year, the Exclusivity Period shall end on the day after the expiration of such thirty (30) day period. KeyGene hereby agrees that if, in any

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED BECAUSE IT IS BOTH (1) NOT MATERIAL TO INVESTORS AND (2)
LIKELY TO CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
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Contract Year, (i) Other Income is greater than or equal to two million US dollars ($2,000,000), (ii) the MDA is in full force and effect and (iii) XXII spends at least four hundred thousand US dollars ($400,000) in research projects to be performed by KeyGene outside the Field, KeyGene herewith agrees that the Minimum Research Funding Amount for the subsequent Contract Year shall be decreased by four hundred thousand US dollars ($400,000). For purposes of clarity this allocation does not increase any minimum payments required under the MDA.  (For example, with $2,000,000 or more in Other Income, Minimum Research Funding Amount could be $600,000 in cannabis research, $400,000 in [*], and $200,000 offset by Other Income as of Contract Year 6 to equal the $1,200,000 Minimum Research Funding commitment for cannabis.)
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Patent Milestones
	7.5
	XXII shall be responsible for and shall solely control all intellectual property filings regarding the Results with legal counsel selected by XXII in XXII’s sole and absolute discretion. KeyGene will cooperate fully with XXII in such filing, prosecution, and maintenance.

	7.6
	XXII will pay KeyGene twenty five thousand US dollars (US $25,000) on the filing of each first patent application in a patent family (on a patent family by patent family basis) claiming, incorporating or otherwise based in material part on a KeyGene Identified Target or a Project Technology Result.

	7.7
	XXII will pay KeyGene fifty thousand US dollars (US $50,000) on the granting of each first patent in a patent family (on a patent family by patent family basis) claiming, incorporating or otherwise based in material part on a KeyGene Identified Target or a Project Technology Result.

Royalties to KeyGene
	7.8
	XXII will pay to KeyGene a royalty on Net Sales as follows:

		i.
	Four percent (4%) of Net Sales of KeyGene Identified Targets, or products or services that incorporate, are based on, or otherwise make use of KeyGene Identified Targets;

		ii.
	Two percent (2%) of Net Sales of Non-KeyGene Identified Targets, or products or services that incorporate, are based on, or otherwise make use of Non-KeyGene Identified Targets;

		iii.
	A royalty on Net Sales of Project Technology Results, or products or services that incorporate, are based on, or otherwise make use of Project

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Technology Results, in each case in the amount (if any) as may be mutually agreed by the Parties on a Project by Project basis in the applicable PAS.
	7.9
	XXII will pay to KeyGene a royalty on License Income related to KeyGene Identified Targets and Non-KeyGene Identified Targets of twenty five percent (25%) of such License Income. A Royalty on License Income related to Project Technology Results will be agreed on a Project by Project basis in the applicable PAS.

	7.10
	If XXII would require a third party license to obtain or maintain freedom to operate to commercialize the Results, or otherwise require a license to be able to commercialize the Results without infringing third party rights, XXII may deduct such royalty from the royalty owed to KeyGene, provided that the resulting royalty payable to KeyGene by XXII shall never be less than fifty percent (50%) of the royalty otherwise owed to KeyGene. For the avoidance of doubt: this anti-stacking clause is only applicable when the commercialization of the Results as such would, in absence of a license, infringe third party intellectual property rights. If XXII would desire to commercialize the Results in a formulated form and/or in combination with a device or other product or in a special packaging, royalties payable by XXII for such formulation and/or other product and/or packaging are not deductible from royalties payable to KeyGene.

Royalties to XXII
	7.11
	KeyGene will pay to XXII a royalty on KeyGene Net Sales as follows:

		i.
	Four percent (4%) of KeyGene Net Sales of KeyGene Identified Targets, or products or services that incorporate, are based on, or otherwise make use of KeyGene Identified Targets;

		ii.
	Two percent (2%) of KeyGene Net Sales of Results other than KeyGene Identified Targets and Project Technology Results, or products or services that incorporate, are based on, or otherwise make use of such Results (other than KeyGene Identified Targets and Project Technology Results);

		iii.
	A royalty on KeyGene Net Sales of Project Technology Results, or products or services that incorporate, are based on, or otherwise make use of Project Technology Results, in each case in the amount (if any) as may be mutually agreed by the Parties on a Project by Project basis in the applicable PAS.

	7.12
	KeyGene will pay to XXII a royalty on KeyGene License Income of twenty five percent (25%) of such KeyGene License Income.

General
	7.13
	Royalties shall be payable within forty-five (45) days after the end of each calendar quarter in which royalties are earned under this Agreement and such royalty payments shall be accompanied with a specification of the Net Sales received by the paying Party and its Affiliates and License Income received by the paying Party and its Affiliates from licensees in such calendar quarter and a calculation of the royalties thus due to the other Party.

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	7.14
	If requested in writing by either Party, the other Party shall, and shall require that its Affiliates and licensees shall, at all reasonable times during normal business hours permit an independent certified public accountant to make an examination and audit of all records required to be kept pursuant to this Article 7, such examination and audit not to occur more than once each calendar year. Prompt adjustment shall be made for any errors disclosed by such examination. If said audit reveals underpayments to the Party performing the audit in excess of five percent (5%) of the payments made to it, then the under-paying Party will reimburse the auditing Party for all reasonable costs associated with such audit within ten (10) days of receipt of notice from the auditing Party setting forth such costs of the independent certified public accountant.

	7.15
	Each Party will bear its own costs and expenses in connection with its activities under the Project(s), including costs for employees and material related to the Project(s).

	7.16
	All amounts payable under this Agreement are non-refundable and non-creditable. All payments shall be net payments without deduction of any bank or transfer charges or withholding taxes.

	7.17
	All amounts payable under this Agreement are inclusive of value added tax and excise or sales taxes or levies, and shall be due within thirty (30) days of the date of the relevant invoice, effectively in the currency of the United States, without the right to set off or withholding payment, by remittance by electronic wire transfer of funds to a bank account as specified in the invoice or by payment by certified cheque.

	7.17.1
	Withholding taxes. If applicable laws, rules or regulations require the withholding of taxes with respect to any amounts payable under this Agreement, the applicable Party shall make such withholding payments and shall subtract the amount thereof from the payments due to the other Party. The withholding Party shall submit to the other Party appropriate proof of payment of the withheld taxes as well as the official receipts within a reasonable period of time. The withholding Party shall provide the other Party reasonable assistance in order to allow the other Party to obtain the benefit of any present or future treaty against double taxation which may apply to the payments due by the withholding Party to the other Party.

	7.18
	If a Party fails to make any payment due and payable under this Agreement by the due date for payment, then such Party shall pay monthly interest on the overdue amount at the rate of one percent (1%). Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount. Such Party shall pay the interest together with the overdue amount. After a year, interest due shall also bear interest at the rate of one percent (1%). Moreover, such Party will be charged with all any actual expenses of judicial and extra-judicial collection.

Article 8 - Ownership & IP Rights & Licenses
Background / Biological Material
	8.1
	XXII shall own and retain ownership of the XXII Background including all intellectual property rights related thereto. KeyGene shall not receive any rights and licenses to use the XXII Background other than for the performance of the activities under a PAS and/or as agreed explicitly in this Agreement.

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED BECAUSE IT IS BOTH (1) NOT MATERIAL TO INVESTORS AND (2)
LIKELY TO CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
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	8.2
	KeyGene shall own and retain ownership of the KeyGene Background including all intellectual property rights related thereto. XXII shall not receive any rights and licenses to use the KeyGene Background other than for the performance of the activities under a PAS and/or as agreed explicitly in this Agreement, which includes the license by KeyGene to XXII of the KeyGene Background as provided in Section 8.6 of this Agreement.

Foreground
	8.3
	XXII shall exclusively own all the Results, including all intellectual property rights related thereto, unless otherwise mutually agreed to in writing in the PAS. For the sake of clarity, such ownership right includes the full power of disposal, derivation, propagation, sublicense and enforcement unless otherwise agreed in this Agreement or a PAS.

	8.4
	KeyGene hereby assigns, transfers and conveys to XXII all right, title and interest in and to the Results. KeyGene shall execute and deliver to XXII such documents, instrument and other writings reasonably requested by XXII to vest all right, title and interest in the Results in XXII.

	8.5
	KeyGene shall exclusively own all Residual Expertise, including all intellectual property rights related thereto. For the sake of clarity, such ownership right includes the full power of disposal, derivation, propagation, sublicense and enforcement.

	8.6
	KeyGene hereby grants to XXII and its Affiliates a worldwide, non-exclusive, perpetual, royalty-free right and license, with the right to sublicense, license in the Field to the KeyGene Background and the Residual Expertise to the extent needed by XXII to protect the Results, to protect any intellectual property rights in the Results and/or to commercialize in the Field the Results, including without limitation any Project Technology Result. It is agreed that the Cannaibis Sativa L. protoplast regeneration protocol to be developed in the first Project will be a Project Technology Result.

	8.7
	During the Exclusivity Period, XXII hereby grants to KeyGene and its Affiliates a worldwide and exclusive right and license, with the right to sublicense, to use, commercialize and apply the Results (including intellectual property rights related thereto) outside the Field (i.e. in crops or plant species other than hemp and cannabis) as it deems fit; provided, however, that KeyGene and its Affiliates shall not sublicense, use, commercialize, or apply, and shall have not right to sublicense, use, commercialize, or apply, the Results in [*]. After the Exclusivity Period, XXII hereby grants to KeyGene and its Affiliates a worldwide and non-exclusive right and license, with the right to sublicense, to use, commercialize and apply the Results (including intellectual property rights related thereto) outside the Field (i.e. in crops or plant species other than hemp and cannabis) as it deems fit; provided, however, that KeyGene and its Affiliates shall not sublicense, use, commercialize, or apply, and shall have not right to sublicense, use, commercialize, or apply, the Results in [*].

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	8.8
	Nothing else in this Agreement shall be construed as granting to the other Party any right and/or license with respect to Biological Material, XXII Background, KeyGene Background and/or Results, other than as explicitly stated in this Agreement.

Article 9 - Confidentiality
	9.1
	XXII undertakes to hold all KeyGene Background, or any part thereof, and any information (including data, protocols and documents) related thereto, (hereinafter referred to as “KeyGene’s Confidential Information”), in strictest confidence and shall, therefore, not disclose KeyGene’s Confidential Information in whatever form, either in whole or in part, to a third party with the exception of Affiliates, which Affiliates shall be bound by the same confidentiality undertaking as XXII, nor make KeyGene’s Confidential Information publicly available, unless KeyGene has given its previous written consent thereto.

	9.2
	KeyGene undertakes to hold all XXII Background, Biological Material and Results, or any part thereof, and any information (including data, protocols and documents) related thereto, (hereinafter referred to as “XXII’s Confidential Information”), in strictest confidence and shall, therefore, not disclose XXII’s Confidential Information in whatever form, either in whole or in part, to a third party with the exception of Affiliates, which Affiliates shall be bound by the same confidentiality undertaking as KeyGene, nor make XXII’s Confidential Information publicly available, unless XXII has given its previous written consent thereto.

	9.3
	The confidentiality obligations set out in this Article 9 will remain in full force and effect (i) during the full term of this Agreement and for a period of ten (10) years after the date of termination or expiration. The confidentiality obligations will not be applicable to that part of the KeyGene’s Confidential Information or XXII’s Confidential Information where a Party is able to demonstrate by written records that:

		(a)
	it was already in the public domain at the time of supply by the disclosing Party or that it has become part of the public domain after the time of supply by the disclosing Party, otherwise than through breach or omission on the part of the receiving Party or any of its Affiliates; or

		(b)
	it was already in the possession of the receiving Party or any of its Affiliates at the time of supply by the disclosing Party as evidenced by tangible contemporaneous written records; or

		(c)
	it has been lawfully supplied to the receiving Party or any of its Affiliates by a third party, without such third party being under any confidentiality obligation; or

		(d)
	it is required to be disclosed, (i) by operation of law, statute, rule, regulation or by order of a court of competent jurisdiction or a government authority or relevant securities exchange having competent jurisdiction, or, (ii) in connection with any notification, registration or authorization requirements related to the research, development, production and/or commercialization of products resulting from the use of the Results, or, (iii) in connection with any application for intellectual

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property rights covering results generated under this Agreement, provided the Party applying for such intellectual property rights owns such results and/or has the right under this Agreement to file an application to obtain intellectual property rights covering such results, provided that, to the extent it is legally permitted to do so, the disclosing Party gives the other Party as much advance notice of disclosure as possible in order to permit the other Party the opportunity to seek and obtain legal protections against such disclosure.
	9.4
	For the sake of clarity, the confidentiality obligations set out in this Article 9 shall not impede the exercise of the rights and licenses expressly granted to the Parties under this Agreement.

	9.5
	Any proposals for Projects or Consultancy Services written by KeyGene shall also be considered KeyGene’s Confidential Information. Only after prior written approval by KeyGene may XXII share the information contained within such proposals with third parties.

	9.6
	The Parties shall hold the terms of this Agreement and any PAS in strictest confidence and shall not disclose or allow the disclosure of the terms of this Agreement, any PAS, or any part thereof, to any third party or make the terms of this Agreement or any PAS publicly available unless the Parties have agreed otherwise or unless disclosure is required by law, rule or regulation, including but not limited to the securities laws of the United States and the rules and regulations of the U.S. Securities and Exchange Commission and/or the New York Stock Exchange American market.

Article 10 - Publications and Disclosure
	10.1
	After signing of this Agreement, by mutual agreement of the Parties and on a mutually agreed date, the Parties may send out a mutually agreed press announcement about the existence of this Agreement between the Parties; provided, however that if XXII is required to disclose and/or file this Agreement sooner by applicable law, rule or regulation, then XXII shall be permitted to do so in a timely manner since XXII cannot be late in its required public filings as a public company. Any further press communication other than the agreed press announcement about the Agreement may only be done by either Party after prior written consent of the other Party.

	10.2
	XXII shall not publish the Results without the prior written consent of KeyGene if KeyGene’s name is identified in such publication. XXII may publish or publicly disclose any of the Results without the prior written consent of KeyGene so long as KeyGene’s name is not identified in or is identifiable from such publication or disclosure.

Article 11 - Disclaimers and Limitations of liability
	11.1
	The Parties cannot guarantee and extend no warranties to each other that:

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		a.
	any Results or Project Technology Results, including the desired Results or Project Technology Results as specified in the PAS(s), will be obtained by executing the Project and/or rendering the Consultancy Services; or

		b.
	the Results or Project Technology Results will not contain any immaterial errors and/or inaccuracies.

		c.
	the Results or Project Technology Results are suitable for the purpose for which the respective Parties wishes to use them or that the respective Parties will be able to use and/or apply the Results or Project Technology Results;

		d.
	the Results and Project Technology Results, the use and/or application thereof, and/or other acts in relation thereto, will not knowingly infringe any patent or any other intellectual property right or license of a third party.

	11.2
	XXII shall in all cases be entirely and solely responsible and liable for XXII’s use and/or application of, and/or XXII’s other acts in relation to the Results. XXII will use the Results and Project Technology Results only in accordance with the applicable laws including, where applicable, good clinical practices, good manufacturing practices and personal data protection laws. KeyGene represents and warrants that it will use commercially reasonable efforts to ensure that all of its work, the Results and the Project Technology Results will be free from any material errors and inaccuracies and will not knowingly (without the obligation to perform a “freedom to operate” or similar search) infringe any patent or other intellectual property right or license of a third-party.

	11.3
	Any recommendations, opinions or findings expressed by KeyGene employees during the Consultancy Services or stated in the Report are based on circumstances and facts as they existed at the time KeyGene performed such Consultancy Services or produced such Report. Any changes in such circumstances and facts upon which such Consultancy Services and/or Report are based may adversely affect any recommendations, opinions or findings contained in such Report, in which case KeyGene shall notify XXII in writing of such changes in a timely manner after KeyGene becomes aware of such changes.

	11.4
	KeyGene shall in all cases be entirely and solely responsible and liable for KeyGene’s use and/or application of, and/or KeyGene’s other acts in relation to the Results. KeyGene will use the Results and Project Technology Results only in accordance with the applicable laws including, where applicable, good clinical practices, good manufacturing practices and personal data protection laws.

	11.5
	Save for maliciously intentional or grossly negligent acts by the directors or officers of KeyGene, KeyGene, its shareholders, officers, directors, representatives and/or agents shall not be liable for any damage arising out of or in connection with the interpretation, use, inability to use and/or application of the Results and the Report by XXII, its Affiliates and licensees or arising out of or in connection with the infringement of third party intellectual property rights. In no circumstances shall KeyGene be liable for loss, damage, costs, or expenses of any nature whatsoever incurred or suffered by the other Party or its Affiliates, whether in contract, tort (including negligence), breach of statutory duty, or

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otherwise, that is (i) of an indirect, special or consequential nature or for (ii) any loss of profits, revenue, reputation, business opportunity, or goodwill. Nothing in this Agreement shall exclude any person’s liability to the extent that it may not be so excluded under applicable law, including any liability for death or personal injury caused by that person’s negligence, or liability for fraud or fraudulent representation. Save for maliciously intentional or grossly negligent acts by the directors or officers of XXII, XXII, its shareholders, officers, directors, representatives and/or agents shall not be liable for any damage arising out of or in connection with the interpretation, use, inability to use and/or application of the Biological Material, XXII Background and the Results by KeyGene, its Affiliates and licensees or arising out of or in connection with the infringement of third party intellectual property rights. In no circumstances shall XXII be liable for loss, damage, costs, or expenses of any nature whatsover incurred or suffered by the other Party or its Affiliates, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, that is (i) of an indirect, special or consequential nature or for (ii) any loss of profits, revenue, reputation, business opportunity, or goodwill. Nothing in this Agreement shall exclude any person’s liability to the extent that it may not be so excluded under applicable law, including any liability for death or personal injury caused by that person’s negligence, or liability for fraud or fraudulent representation.
	11.6
	XXII shall, subject to the limitations set forth in Section 11.5, indemnify, defend and hold harmless KeyGene and its Affiliates, and their respective directors, officers or representatives, if any, from and against all damages, losses, obligations, liabilities (including without limitation patent infringement and product liability), claims, actions or courses of action, encumbrances, costs and expenses, (including without limitation reasonable attorney’s fees), suffered, sustained, incurred or required to be paid arising out of, based upon, in connection with or as a result of:

		(i)
	XXII’s and/or its Affiliate’s use and/or application of, and/or other acts in relation to, any of the Biological Material, KeyGene Background, Results or Project Technology Results, and/or

		(ii)
	XXII’s and/or its Affiliate’s use of any data, products or materials developed or generated by making use of and/or applying the Biological Material, KeyGene Background, the Results or Project Technology Results or any part thereof, and/or

		(iii)
	Any negligent or intentional breach of this Agreement by XXII and/or its Affiliates.

	11.7
	KeyGene shall, subject to the limitations set forth in Section 11.5, indemnify, defend and hold harmless XXII and its Affiliates, and their respective directors, officers or representatives, if any, from and against all damages, losses, obligations, liabilities (including without limitation patent infringement and product liability), claims, actions or courses of action, encumbrances, costs and expenses, (including without limitation reasonable attorney’s fees), suffered, sustained, incurred or required to be paid arising out of, based upon, in connection with or as a result of:

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		(i)
	KeyGene and/or its Affiliate’s use and/or application of, and/or other acts in relation to, any of the Biological Material, XXII Background, the Results, the Project Technology Results, and/or

		(ii)
	KeyGene’s and/or its Affiliate’s use of any data, products or materials developed or generated by making use of and/or applying the Biological Material, XXII Background, the Results, or Project Technology Results or any part thereof, and/or

		(iii)
	Any negligent or intentional breach of this Agreement by KeyGene and/or its Affiliates.

Article 12 - Term and Termination
12.1This Agreement will come into force and effect on the Effective Date and, other than provided below, will have a duration of eight (8) Contract Years. Prior to the end of the seventh (7th) Contract Year, the Parties may by mutual agreement extend the Agreement for another two (2) Contract Years (the “First Extension Period”), in which event the Steering Committee shall come up with additional Projects.  If there is a First Extension Period, during the last hundred eighty 180 days of such Period (“Second Extension Negotiation Period”), KeyGene and XXII will, at XXII’s request, enter into good faith negotiations for a further extension of the Agreement for an additional two (2) Contract Years or such longer period as may be agreed by the Parties.  12.2
	12.2
	This Agreement may be terminated at any time upon mutual written consent of the Parties hereto.

	12.3
	Each of the Parties is entitled to forthwith terminate this Agreement in writing, in the event that:

		a.
	the other Party has breached one or more of its material obligations under this Agreement and such breach is either not capable of being remedied (such as breach of confidentiality obligations) or, if capable of being remedied, is not remedied within thirty (30) days after the breaching Party has received written notification requesting such breach to be remedied; and/or

		b.
	the other Party is declared bankrupt or a petition for the bankruptcy or suspension of debt of this Party is filed or this Party passes a resolution or a court makes an order for its winding up (otherwise by way of solvent liquidation where the emergent company assumes its obligations); and/or the other Party suspends, threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or is deemed unable to pay its debts within the meaning of applicable bankruptcy or insolvency laws to which such Party is subject, or a petition is filed, a notice is given, a resolution is passed, or an order is made, for or in connection with the winding up of that other Party, other than for the sole purpose of a scheme for a solvent amalgamation of that other Party with

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one or more other companies or the solvent reconstruction of the ther Party, or a court makes an order for its winding up.
Article 13 - Consequences of termination
	13.1
	In the event a Project is terminated, the Agreement shall not be affected and shall remain in full force and effect.

	13.2
	In the event the Agreement is terminated pursuant to Section 12.2, the Projects and/or Consultancy Services that have not yet finalized before the termination date of the Agreement shall remain in full force and effect until the delivery of the Report(s) of the Projects and payment of all sums due thereunder.

	13.3
	On termination of the Agreement, unless such things are needed by such Party to perform its obligations under a Project (and then only until such time), as soon as reasonably practical:

		(a)
	KeyGene shall return or destroy, as directed by XXII, any Biological Material; and

		(b)
	The Parties shall return all of the other Party’s equipment and materials. Until these are returned that Party shall be solely responsible for the safe-keeping.

	13.4
	In the event the Agreement is terminated for cause pursuant to Section 12.3, the following consequences shall occur:

		(a)
	the Projects and the Consultancy Services shall immediately be terminated per the termination date of the Agreement; and

		(b)
	all sums that became due from XXII to KeyGene for Projects and Consultancy Services prior to the date of termination shall remain due and outstanding from XXII to KeyGene and shall be promptly paid thereafter by XXII to KeyGene; and

		(c)
	all sums that became due from KeyGene to XXII under this Agreement prior to the date of termination shall remain due and outstanding from KeyGene to XXII and shall be promptly paid thereafter by KeyGene to XXII.

		(d)
	KeyGene shall return or destroy, as directed by XXII, any Results.

	13.5
	The rights and licenses granted under or pursuant to this Agreement shall continue notwithstanding any expiry or termination of this Agreement except that either Party is entitled to terminate such rights and licenses immediately in writing in the event that:

		(a)
	any material terms of such rights and licenses have been breached and such breach is either not capable of being remedied (such as breach of confidentiality obligations) or, if capable of being remedied, not remedied within thirty (30) days after the breaching Party has received written notification requesting such breach to be remedied; and/or

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		(b)
	the other Party suspends, threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or is deemed unable to pay its debts, or a petition is filed, a notice is given, a resolution is passed, or an order is made, for or in connection with the winding up of that other Party, other than for the sole purpose of a scheme for a solvent amalgamation of that other Party with one or more other companies or the solvent reconstruction of the other Party, or a court makes an order for its winding up.

	13.6
	The provisions of this Agreement that by their nature are intended to survive termination or expiration shall survive termination or expiration of this Agreement, which shall include in any event Section 2.2 (but only during the Exclusivity Period), Sections 6.4, 6.6 and 6.7 (Biological Material), Sections 7.5 - 7.20 (Milestones and Royalties and subject to the term provided in Section 13.7), Sections 8.1 - 8.8 (Ownership, IP Rights and, subject to Section 13.5, the licenses), Articles 9 (Confidentiality), 10 (Publication), 11 (Disclaimers and Limitations of Liability), 13 (Consequences of Termination), 14(Notices), 15 (Governing Law and Dispute Resolution), Sections 16.1 (warranty), 16.3 (force majeure), 16.4 (assignment), 16.5 (severability), 16.7 (variation), 16.9 (rights and remedies), 16.10 (equitable rights), 16.11 (rights of third parties ) and 16.12 (entire agreement), as well as Article 1 (Definitions) to the extent the definitions are used in the surviving Articles, shall survive and remain in full force effect after the termination or expiration of this Agreement or of any specific Project and/or Consultancy Services hereunder.

	13.7
	Notwithstanding any termination or expiration of this Agreement, the royalty payment, reporting and audit obligations of each Party to the other Party shall continue until the later of (i) expiration of the last to expire patents or plant variety rights included in the Results or (ii) fifteen (15) years from the Effective Date if no such patents or plant variety rights issue in the United States.

Article 14 - Notices
	14.1
	Any notice required to be given under this Agreement shall be deemed to be sufficiently given, only if sent by overnight international delivery service, or by email, with receipt confirmed, addressed to the Party to be notified at its address shown below, or at such other address and/or contact person as may later be furnished by either Party in writing to the notifying Party.

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	If to KeyGene:
	If to XXII:

	Address
	Keygene N.V.
PO Box 216
6700 AE Wageningen
The Netherlands
	22nd Century Group, Inc.
500 Seneca Street, Suite 507
Buffalo, New York  14204
United States of America

	Attn.
	Managing Director
	Chief Executive Officer

	Email
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Article 15 - Governing law and dispute resolution
	15.1
	This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York, United States.

	15.2
	These dispute resolution procedures shall be the exclusive means for resolution of disputes arising out of or relating to this Agreement, or its breach.

	15.3
	If a dispute arises out of or relates to this Agreement, or its breach, the disputing Party may give the other Party written notice of any dispute not resolved in the normal course of business. Within thirty (30) days after delivery of the written notice, executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of this Agreement shall meet at a mutually acceptable time and place and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute.

	15.4
	If the dispute has not been resolved by negotiation within forty-five (45) days after delivery of the initial notice of negotiation, or if the Parties failed to meet within thirty (30) days after delivery, the Parties agree to attempt to resolve the dispute through mediation by a sole mediator selected by the Parties or, at any time at the option of a Party, to mediation under the ICC Mediation Rules.

	15.5
	If not thus resolved, the Parties agree to submit the matter to settlement proceedings under the ICC ADR Rules. If the dispute has not been settled pursuant to the said Rules within forty-five (45) days following the filing of a Request for ADR or within such other period as the Parties may agree in writing, such dispute shall, upon the written request of either Party, be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one arbitrator appointed in accordance with the said Rules of Arbitration. The place of arbitration shall be New York, USA. The proceedings shall be conducted in the English language.

Article 16 - Miscellaneous
	16.1
	Each Party represents and warrants:

		(a)
	that any and all of its Affiliates, to which any rights and licensed are granted hereunder, will properly and timely fulfill any and all of the obligations hereunder and any default or breach of any of the provisions of this Agreement by any Affiliate will be observed and construed as a breach or default of the concerning provision by the Party concerned; and

		(b)
	that it has full power and authority to carry out the actions contemplated under this Agreement.

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	16.2
	For the purposes of this Agreement, a Force Majeure Event shall mean an event, condition, or circumstances or its effect which:

		(a)
	is beyond the reasonable control of and occurs without fault or negligence on the part of the Party claiming it as a Force Majeure Event; and

		(b)
	causes a delay or disruption in the performance of any obligation under this Agreement despite all reasonable efforts of the Party claiming it as a Force Majeure Event to prevent it or mitigate its effects.

	16.3
	Neither Party shall be in breach of this Agreement nor liable for delay in performing, or failure to perform, any of its obligations under this Agreement if such delay or failure result from any of the Force Majeure Event. In such circumstances the time for performance shall be extended by a period equivalent to the period which performance shall be delayed or failed to be performed. If the period of delay or non-performance caused by any of the Force Majeure Event continues for twelve (12) weeks the Party not affected may terminate this Agreement by giving thirty (30) days’ written notice to the affected Party. Upon termination thereof, neither party shall have any further claims against the other party in relation to any breach arising from a Force Majeure Event.

	16.4
	A Party shall not be entitled to assign or transfer the rights and obligations of this Agreement, either in whole or in part, without the prior written consent of the other Party.

	16.5
	Should any provision in this Agreement or any document related to it turn out to be invalid, illegal or unenforceable, it will not affect the validity or enforceability of this Agreement as far as the provisions other than the invalid provisions are concerned. In that event, the aim of the Parties shall be to replace the provision that is invalid by one that is valid and in line with the intention of the Parties upon entering into this Agreement.

	16.6
	Any amendments or additions made to this Agreement shall only be valid and binding between the Parties if made in writing and executed by authorized signatories of both Parties.

	16.7
	No variation of this Agreement shall be effective unless it is in writing and signed by the Parties (or their authorised representatives). Any variation of this Agreement agreed by the Parties in accordance with this Section shall be deemed to apply to all future Projects entered after the date of such variation, but shall not apply to Projects already in force at that date unless such variation specifically so provides.

	16.8
	Nothing in this Agreement shall give either Party any authority to act or make representations or commitments on behalf of the other Party or to create any contractual liability to a third party on behalf of the other Party, and nothing in this Agreement is intended to, or shall be deemed to, establish any partnership between any of the Parties.

	16.9
	The rights and remedies provided in this Agreement are in addition to, and not exclusive of, any rights and remedies provided by law.

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	16.10
	Without prejudice to any other rights or remedies that a Party (“First Party”) may have, the other Party (“Other Party”) acknowledges and agrees that damages alone would not be an adequate remedy for any breach of the terms of this Agreement by the First Party. Accordingly, the First party shall be entitled to the remedies of injunction, specific performance or other equitable relief for any threatened or actual breach of the terms of this Agreement.

	16.11
	A party which is not a party to this Agreement shall not have any rights under this Agreement to enforce any term of this Agreement.

	16.12
	This Agreement comprises the entire agreement between the Parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them whether written or oral, relating to its subject matter.  Effective upon the Execution Date, the Original Agreement shall be amended and restated in its entirety by this Agreement.

	16.13
	Headings are for convenience only.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in twofold by their duly authorized representatives.
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	Keygene N.V.
	    
	22nd Century Group, Inc.

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	/s/ Dr. Arjen J. van Tunen
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	/s/ James A. Mish

	Name:
	Dr. Arjen J. van Tunen
	​
	Name:
	James A. Mish

	Title:
	co-CEO
	​
	Title:
	President & Chief Executive Officer

	Date:
	​
	​
	Date:
	​

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	Keygene N.V.
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	/s/ Henny Wilpshaar
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	Name:
	Henny Wilpshaar
	​
	​
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	Title:
	co-CEO
	​
	​

	Date:
	​
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Page 27 of 27

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