Document:

Exhibit 10.1

 

PATENT
CONTRIBUTION AGREEMENT

 

This
PATENT COntribution agreement (this “Agreement”)
is made and entered as of this 28th day of September, 2020 (the “Effective Date”) and is between KAIVAL BRANDS
INNOVATIONS GROUP, INC., a Delaware corporation (“KAVL”), KAIVAL LABS, Inc., a Delaware corporation (“Kaival
Labs”), and NEXT GENERATION LABS, LLC, a California limited liability company (“NGL”).

 

RECITALS

 

WHEREAS,
KAVL desires to acquire all right, title, and interest in and to the Patents and Patent Data (as hereinafter defined) on the terms
and conditions set forth in this Agreement and subsequently transfer the Patents and Patent Data to its wholly owned subsidiary,
Kaival Labs, for development as set forth in this Agreement; and

 

WHEREAS,
NGL desires to transfer all right, title, and interest in and to the Patents and Patent Data (as hereinafter defined) on the terms
and conditions set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:

article
I

DEFINED TERMS

 

1.1                      
Definitions. The following symbols or capitalized terms have the following meanings:

 

“Accounting
Referee” means a national or regional accounting firm that is mutually acceptable to KAVL and NGL negotiating in
good faith, or if they are unable to agree then a national or regional accounting firm that is mutually agreeable to counsel selected
by KAVL and counsel selected by NGL.

 

“Additional
Payment” means the difference between Three Million Dollars ($3,000,000.00) and the Form 1-A Payment. For the avoidance
of doubt, if the Form 1-A Payment is One Million Dollars ($1,000,000.00), then the Additional Payment will equal Two Million Dollars
($2,000,000.00) and if the Form 1-A Payment is Eight Hundred Thousand Dollars ($800,000.00), then the Additional Payment shall
equal Two Million Two Hundred Thousand Dollars ($2,200,000.00).

 

“Additional
Payment Triggering Event” means the first date on which a Covered Product is sold to consumers in the Region.

 

“Affiliate”
of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person. The term “control” (including the terms “controlled
by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract
or otherwise.

 

    	 	1	 

     

    

 

“Agreement”
has the meaning set forth in the preamble.

 

“Ancillary
Documents” means, collectively, the agreements, documents, instruments and certificates contemplated by this Agreement
or any other ancillary document to be entered into or delivered in connection with the transactions contemplated hereunder, including
without limitation, documents assigning any of the Patents from NGL to KAVL.

 

“Bona
Fide Offer” has the meaning set forth in Section 6.5(a) of this Agreement.

 

“Business
Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Orlando, Florida
are authorized or required by Law to be closed for business.

 

“Change
of Control” shall mean any of the following: (i) any Person or “group” (within the meaning of Rules
13(d) and 14(d) under the Exchange Act) become the beneficial owner (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
Act), directly or indirectly, of more than 50% of any class of Equity Interests of NGL; (ii) the Existing NGL Members, their Affiliates
and/or any trust established by the Existing NGL Members solely for their own benefit and the benefit of their respective spouses
and/or issue cease to own in the aggregate more than 50% of any class of outstanding Equity Interests in NGL; (iii) a sale, lease,
or other disposition of all or substantially all the NGL assets; or (iv) any consolidation or merger of NGL with or into any other
Person, or any other corporate reorganization, in which the Existing NGL Members own less than 50% of any class of Equity Interests
of the surviving Person.

 

“Change
of Control For Bankruptcy” shall mean any NGL declares bankruptcy or makes an assignment for the benefit of its
creditors.

 

“Claim”
means any claim, counterclaim, judgment, action, cause of action, complaint, charge, notice, suit, proceeding, audit, infringement,
notice of infringement, investigation, arbitration, mediation, hearing, or demand of any kind.

 

“Computer
Software” means all computer software, including source code, operating systems and specifications, data, data bases,
files, documentation and other materials related thereto, including any of the foregoing provided or accessible on a software-as-a-services,
cloud-based or similar model.

 

“Confidential
Information” means: (a) any confidential or proprietary information disclosed or made accessible by a Discloser
to a Recipient about the operations, financials, business, corporate structure, contracts, processes, or affairs in whatever form
or medium such information or knowledge exists or is disseminated and whether furnished before or after the Effective Date of
this Agreement; and (b) all notes, memorandum, summaries, statements, financial statements, data, reports, budgets, vendor identities,
projections, suppliers, servicing methods, programs, strategies, analyses, power-point presentations, compilations, or other writings
prepared by the Discloser and regardless of whether such Confidential Information may be deemed confidential or material to any
third-party. Confidential Information shall not, however, include any Patent Data until a Reversion Event occurs or any information
which (i) was publicly known and made generally available in the public domain prior to the time of disclosure by the Discloser
to the Recipient; (ii) becomes publicly known and made generally available after disclosure hereunder through no action or inaction
of the Recipient in violation of this Agreement; (iii) is at the time of disclosure hereunder already lawfully in the possession
of the Recipient, (iv) is obtained by the Recipient from a third party; (v) is independently developed by the Recipient without
use of or reference to the Discloser’s Confidential Information; or (vi) any press release issued by KAVL, Kaival Labs,
or their Affiliates announcing the Agreement and its intended use of the Patents.

    	 	2	 

     

    

 

“Contract”
or “Contracts” means, with respect to any Person, all understandings, agreements, commitments, obligations,
arrangements, indentures, undertakings, deeds, mortgages, options, loans, leases or licenses, written or oral, to which such Person
is a party or otherwise subject, or by which such Person or any of such Person’s assets or properties are legally bound.

 

“Cost
of Goods Sold” means those costs directly incurred by Kaival Labs for the acquisition of materials and services
from vendors, third party manufacturers and suppliers and the conversion of such materials, services, and supplies into a final,
packaged Covered Product. Costs of Good Sold shall include: (a) the landed cost of purchased materials and conversion costs associated
with the manufacture and production line testing of a Covered Product: (b) direct labor; (c) overhead costs, such as depreciation,
factory maintenance, cost of factory maintenance, utilities, and various other production costs, including third-party production
costs or licensing fees; and (d) indirect costs, which shall be limited to distribution costs, sales force costs, advertising
costs, marketing costs, and packaging costs. Costs of Good Sold does not include allocation of capital costs.

 

“Covered
Product” means any commercial R-isomer cessation product developed and sold by Kaival Labs: (a) utilizing any portion
of the Patents listed on Exhibit A; or (b) based on the Patents listed on Exhibit A. For the avoidance of doubt, a Covered Product
could be an: (y) FDA approved smoking cessation product or aid developed by Kaival Labs based on the Patents as set forth in Section
2.3(v) of this Agreement; or (z) any commercial product developed by Kaival Labs based on the Patents or utilizing the Patents
as set forth in Section 2.3(vi) of this Agreement.

 

“Derivative”
means any Intellectual Property developed by KAVL, Kaival Labs, or one of its Affiliates based on the Patents or Patent Data.

 

“Discloser”
means a Party disclosing Confidential Information to another Party or a Party’s Affiliate.

 

“Dollars”
or “$” means the lawful currency of the United States.

 

“Encumbrances”
means any lien, encumbrance, judgment, pledge, obligation, cloud, option, contract right, infringement, notice of infringement,
demand, mortgage, unpaid Taxes, deed of trust, security interest, charge, claim, easement, encroachment, matrimonial or community
interest, tenancy by the entirety claim or other title defect or restriction of any kind.

 

    	 	3	 

     

    

“Equity
Interest” means the interest of (a) any shareholder/stockholder in a corporation (whether common, preferred or other
designation); (b) a partner in a partnership (whether general, limited, limited liability or joint venture); (c) a member (whether
voting units, non-voting units, voting interest, non-voting interest) in a limited liability company; or (d) any other Person
having any other form of equity security or ownership interest in any other Person, or any interest or right exercisable, convertible
or exchangeable for any such equity interest.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and all rules and regulations issued thereunder.

 

“Existing
NGL Member” or “Existing NGL Members” means: (a) VVJ For Life with beneficial ownership
in the name of Vincent Schuman; (b) Arnold Laboratory, Inc., with beneficial ownership in the name of Michael Arnold; (c) LSR
Liquids, LLC, with beneficial ownership in the name of Daniel S. Sinclair, Lisa Harper, and David Clement; (d) Nicotine Enterprises,
LLC, with beneficial ownership in the name of Ronald Tully; (e) Charn Premoyhdin; (f) Michael Mente; and (g) Mike Karanikolas.
For purposes of the foregoing, the beneficial owners of an entity shall be considered an Existing NGL Member.

 

“Favorable
Raw Materials Terms” has the meaning set forth in Section 6.1(a).

 

“FDA”
means the United States Food and Drug Administration.

 

“FDA
Approval Costs” has the meaning set forth in Section 2.3(iv).

 

“FD&C
Act” means the Federal Food Drug, and Cosmetic Act.

 

“Form
1-A Completion Date” means the date on which the Securities Offering shall end in accordance with 17 CFR §230.251
and the Securities Exchange Act. It is expected, but not guaranteed that the Securities Offering will end within ninety (90) days
after the Securities Offering is qualified by the U.S. Securities and Exchange Commission.

 

“Form
1-A Filing Date” means no later than January 31, 2021, unless extended in writing by KAVL in good faith to no later
than March 15, 2021.

 

“Form
1-A Payment” means the lesser of: (a) two percent (2%) of the total amount of securities KAVL sells through its
Securities Offering; or (b) One Million Dollars ($1,000,000.00). For the avoidance of doubt: (y) if KAVL raises Fifty Million
Dollars ($50,000,000.00) through its Securities Offering, then it will pay NGL One Million Dollars ($1,000,000.00); and (z) if
KAVL raises Forty Million Dollars ($40,000,000.00) through its Securities Offering, then it will pay NGL Eight Hundred Thousand
Dollars ($800,000.00).

 

“Fundamental
Representations” means the representations and warranties set forth in Sections 4.1(a), 4.1(b), 4.1(c), 4.1(d),
4.1(e), 4.1(f), 4.1(g), 4.1(h), 4.1(i), 4.1(j), 4.1(k), 4.1(n), 4.1(o), and 4.1(p) of this Agreement.

 

    	 	4	 

     

    

“Governmental
Authority” means any federal, administrative, state, provincial, county, municipal, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any arbitrator,
court or tribunal of competent jurisdiction.

 

“Governmental
Orders” means any order, assessment, writ, judgment, demand, injunction, decree, ruling, stipulation, determination
or award entered by or with any Governmental Authority.

 

“Intellectual
Property” means any and all intellectual property rights and assets and all rights, interests and protections that
are associated with, similar to or required for the exercise of, such rights and assets, however arising, pursuant to the Laws
of any jurisdiction, whether registered or unregistered, including any and all of the following: United States, international,
and foreign (i) patents, patent applications, continuations, continuations-in-part, divisions, reissues, national phase filings,
direct national filings claiming the benefit of any of the foregoing, patent disclosures, inventions (whether or not patentable
or reduced to practice), methods, processes, designs and improvements thereto, (ii) trademarks, service marks, trade dress, corporate
names, logos, slogans, trade styles, trade names, fictitious names, social media or platform accounts and associated credentials
for use, or other source-identifying designations or devices (and all translations adaptations, derivations and combinations of
the foregoing), together with all goodwill, and all applications, registrations, renewals, and extensions, associated with each
of the foregoing, (iii) internet domain names and registrations thereof, (iv) copyrights, design rights and copyrightable works,
whether registered or unregistered, together with all goodwill associated with each of the foregoing, (v) trade secrets, confidential
information, know-how, inventions, proprietary processes and methods, customer lists, mailing lists, business plans and other
proprietary information, and (vi) Computer Software and systems (including source code, executable code, data, databases, and
documentation).

 

“Kaival
Labs” has the meaning set forth in the Preamble.

 

“KAVL”
has the meaning set forth in the Preamble.

 

“NGL”
has the meaning set forth in the Preamble.

 

“Law”
or “Laws” means any federal, state, regional, provincial, local or foreign statute, law, ordinance,
regulation, rule, code, order, published guideline, constitution, treaty, common law, judgment, decree, other requirement or rule
of law of any Governmental Authority.

 

“Liability”
or “Liabilities” means any Encumbrance, liability, Claim, Losses, or obligation, whether absolute, accrued,
liquidated or unliquidated, known or unknown, secured or unsecured, contingent, or otherwise.

 

“Loss”
or “Losses” means any and all damages, losses, Claims, Liabilities, Encumbrances, penalties, deficiencies,
liens, awards, fines, demands, assessments, settlements, judgments, Taxes, costs and expenses, including court costs, accountants’
and attorneys’ fees and other direct out-of-pocket costs of conducting litigation, and any interest arising out of or levied
as a result of any of the foregoing, in each case to the extent actually paid or suffered.

 

    	 	5	 

     

    

“Material
Adverse Effect” means any event, occurrence, fact, condition or change that is materially adverse to the Patents
in any manner.

 

“Patents”
means: (a) the patent and patent applications identified on Exhibit “A”; (b) all patents and patents application
to which any of the patent listed in clause (a) of this definition directly or indirectly claims, or forms the basis for, priority
or filing benefit anywhere in the world; (c) all reissues, reexaminations, extensions, continuations, continuations-in-part, continuing
prosecution applications and divisions of any of the items listed in clause (a) or (b) of this paragraph; (d) all international
or foreign counterparts to any of the items listed in clause (a), (b), or (c) of this paragraph, including utility models, inventors’
certificates, industrial design protection and any other form of government grants or issuances; (e) all patents that issue from
any of the items listed in (a), (b), (c) or (d) of this paragraph; (f) rights to apply in any or all countries or territories
in the Region, for patents, certificates of invention and utility models, claiming any inventions, invention, invention disclosures
or discoveries that could be claimed in any of the Patents; and (g) all causes of action (whether known or unknown or whether
currently pending, filed, or otherwise) and other enforcement rights under, or on account of, any of the Patents and/or the rights
described in (a), (b), (c), (d), (e), or (f) of this Paragraph. For the avoidance of doubt, the items identified in clauses (b)
through (g) of this definition shall be included in the definition of Patents whether or not specifically identified on Exhibit
“A”.

 

“Patent
Data” means all engineering specifications, chemical specifications, scientific test data, technical specifications,
trade secrets, studies, know-how, drawings, trials, specifications, surveys, reports, evaluations tools, plans, charts, recordings
(video and/or sound), pictures, curricula, analyses, computer programs, notes, memoranda, and all other documentation, whether
finished or unfinished, regardless of form or media on which it may be recorded or stored that arises out of or relates to the
Patents or the development of the Patents. The term shall also include all patent prosecution history and information arising
out of or relating to any patent infringement.

 

“Parties”
means KAVL, Kaival Labs, and NGL.

 

“Permits”
means all permits, licenses, certificates, franchises, approvals, authorizations, and consents required under applicable Laws
to be obtained from Governmental Authorities.

 

“Person”
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated
organization, trust, association or other entity or organization.

 

“Profit”
means the difference between the amount Kaival Labs receives from: (a) a sale of a Covered Product through a distribution agreement,
wholesale agreement, or end-user sale; and (b) its Cost of Goods Sold.

 

“Protective
Measures” has the meaning set forth in Section 6.2.

 

    	 	6	 

     

    

 

“Raw
Materials” has the meaning set forth in Section 6.1.

 

“Recipient”
means a Party receiving Confidential Information from the Discloser or the Discloser’s Affiliate.

 

“Region”
means anywhere in the world.

 

“Representative”
means, with respect to any Person, any and all managers, directors, officers, employees, scientists, agents, inventors, chemists,
consultants, financial advisors, counsel, accountants and other agents of such Person.

 

“Reversion
Event” means any of the following: (a) KAVL or Kaival Labs declaring bankruptcy or making an assignment for the
benefit of its creditors; (b) Kaival Labs fails to develop a Covered Product by October 31, 2023, unless Kaival Labs is actively
engaged in obtaining FDA approval of a Covered Product as set forth in Section 2.3(iv); (c) Kaival Labs is denied FDA approval
as set forth in Section 2.3(iv) of this Agreement unless Kaival Labs develops a Covered Product unrelated to FDA approval as set
forth in Section 2.3(v) of this Agreement; or (d) KAVL or Kaival Labs materially breaches this Agreement after NGL provides written
notice of such material breach to KAVL by signature delivery and the material breach is not cured within fifteen (15) Business
Days after delivery of the material breach written notice. For the avoidance of doubt, a Reversion Event cannot occur if: (y)
Kaival Labs is actively seeking FDA approval; or (z) Kaival Labs has produced, or is producing, any Covered Product.

 

“Royalty”
means fifteen percent (15%) of the Profit.

 

“R-isomer
Nicotine Intellectual Property” means any Intellectual Property arising out of or relating to the manipulation of
the (R)-isomer of nicotine.

 

“Securities
Act” means the Securities Act of 1933, as amended, and all rules and regulations issued thereunder.

 

“Securities
Offering” means the Form 1-A offering that KAVL will undertake subsequent to this Agreement on or before the Form
1-A Filing Date with the expectation, but not guarantee to raise Fifty Million Dollars ($50,000,000.00) of cash from the sale
of KAVL common stock. For the avoidance of doubt, the Securities Offering may generate less than Fifty Million Dollars ($50,000,000.00),
which will not be a breach of this Agreement.

 

“Taxes”
means (i) all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise,
registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise,
severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or penalties, (ii) any liability for the payment of any amounts
of the type described in clause (i) hereof as a result of being or having been a member of an affiliated, consolidated, combined,
unitary or similar group (including any arrangement for group or consortium relief or similar arrangement) for any period, and
(iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) hereof as a result
of any express or implied obligation to indemnify any other Person or as a result of any obligation under any agreement or arrangement
with any other Person with respect to such amounts and including any liability for taxes of a predecessor or transferor or otherwise
by operation of law.

 

    	 	7	 

     

    

 

“Transaction
Expenses” means all costs, compensation payable, fees, expenses, costs arising out of or relating to this Agreement
and the Transactions.

 

“Transactions”
means the transactions contemplated by this Agreement and the Ancillary Documents.

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II

Contribution; payment; development

 

2.1             
Contribution of Patents. Contemporaneous with the execution of this Agreement, NGL shall contribute the Patents to KAVL
by executing the Recordable Assignment of Patents in the form attached as Exhibit “B.” NGL shall thereafter
execute any further Ancillary Documents required by foreign counsel to effect NGL’s contribution of the Patents to KAVL
in any jurisdiction requiring additional Ancillary Documents for assignments or transfers of patent rights.

 

2.2             
Transfer of Patent Data. Within ten (10) Business Days following execution of this Agreement, NGL shall transfer all Patent
Data to KAVL in a form mutually agreeable to the Parties determined in good faith.

 

2.3             
KAVL’s Executory Obligations. Following the execution of this Agreement, KAVL shall:

 

(i)                
Form 1 A Filing. KAVL shall undertake the Securities Offering by filing a Form 1-A by the Form 1-A Filing Date.

 

(ii)             
Form 1-A Payment. KAVL shall pay NGL the Form 1-A Payment within fifteen (15) Business Days after the Form 1-A Completion
Date.

 

(iii)           
Payment of Additional Payment. KAVL shall pay NGL the Additional Payment within fifteen (15) Business Days after the Additional
Payment Triggering Event.

 

(iv)            
Transfer of Patents. KAVL shall file the Ancillary Documents necessary to transfer the Patents from KAVL to Kaival Labs
within fifteen (15) Business Days after receiving Ancillary Documents executed by NGL transferring the Patents from NGL to KAVL.

 

(v)              
Development of FDA Approved Smoking Cessation Product. The Parties hereby acknowledge and agree: (a) smoking cessation
products and aids are subject to extensive regulation by the FDA, FD&C Act, and other federal and state statutes and regulations
that govern, among other items, the cost and expense related to research, development, testing, manufacture, preclinical studies,
laboratory evaluation of product chemistry, formulation and toxicity, safety assessments, safety controls, clinical studies, clinical
trials, all phases of clinical trials, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval
monitoring, sampling, and import/export (collectively, the “FDA Approval Costs”); (b) the FDA Approval Costs are substantial;
(c) FDA approval of an approved smoking cessation product and aid based on the Patents is not guaranteed and the review and approval
process is an expensive and uncertain process that may take several years to accomplish; and (d) there is no assurance that Kaival
Labs will be able to obtain FDA approval of an approved smoking cessation product and aid based on the Patents. Notwithstanding
the foregoing KAVL agrees to use (or cause Kaival Labs to use) commercially reasonable efforts to develop commercial products
utilizing the Patents as an FDA approved smoking cessation product and aid by paying all the FDA Approved Costs.

 

    	 	8	 

     

    

 

(vi)            
Development of Other Commercial Products Using the Patents. Notwithstanding KAVL’s agreement to undertake (or cause
Kaival Labs to undertake) the FDA approval process and pay the FDA Approval Costs as set forth in Section 2.3(iv) above, the Parties
agree that Kaival Labs may, at its own discretion and on a timeline unilaterally determined by Kaival Labs or, develop one or
more commercial products based on the Patents unrelated to the FDA approval process.

 

(vii)         
Payment of Royalty. Kaival Labs shall commence paying NGL the Royalty on a quarterly basis following the Additional Payment
Triggering Event. The Royalty shall be paid on an accrued basis with each quarterly payment being the amount accrued in the previous
quarter. The quarterly payment dates shall be as follows:

 

(A)            
Quarter 1 shall be payable on April 1 and shall be for accrued sales in January, February, and March.

 

(B)             
Quarter 2 shall be payable on July 1 and shall be for accrued sales in April, May, and June.

 

(C)             
Quarter 3 shall be payable on October 1 and shall be for accrued sales in July, August, and September.

 

(D)            
Quarter 4 shall be payable on February 1 and shall be for accrued sales in October, November, and December.

 

The
Parties further agree that the first quarterly payment will likely be a smaller quarterly payment than normal because the Additional
Payment Triggering Event may occur between the start and end date of a quarter. The Parties agree that any disputes arising out
of or relating to the calculation of the Royalty shall be submitted to the Accounting Referee with each Party submitting a memorandum
with exhibits in support of their position within ten (10) Business days after the selection of the Accounting Referee. Within
thirty (30) Business Days following the submission of the Parties’ memorandums, the Accounting Referee shall render a decision
in writing that fully and finally resolves the dispute. The Parties agree to each pay one-half (1/2) of the Accounting Referee’s
fees and expenses and that any decision rendered by the Accounting Referee can be enforced by a court of competent jurisdiction
subject to the choice of law and venue provisions in this Agreement.

    	 	9	 

     

    

 

article
III 

patent
prosecution, maintenance, and enforcement

 

3.1             
Prosecution and Maintenance. Subsequent to the execution of this Agreement, KAVL, Kaival Labs, or their Affiliates shall
be responsible for the continued prosecution of pending patent applications included in the Patents, the issuance of such applications
after allowance, and the payment of any fees in any given country required to maintain the Patents at KAVL’s expense.

 

3.2             
Cooperation Regarding Prosecution and Maintenance. NGL must use commercially reasonable efforts to cooperate in the prosecution
and maintenance of any patent application or patent included in the Patents, including, but not limited to allowing KAVL, Kaival
Labs, or their Affiliates access to NGL’s Representatives and allowing NGL’s Representatives to testify or be deposed
in any litigation arising out of or relating to KAVL’s prosecution or maintenance.

 

3.3             
Enforcement and Defense.

 

(a)              
If NGL believes a third party is infringing on any claim of the Patents, then NGL shall provide KAVL with written notice of such
infringement. At KAVL’s sole discretion and at its sole expense, KAVL shall decide whether and/or when to enforce the Patents
against any unlicensed third party, and the right to settle such infringement action. KAVL shall control all aspects of such litigation
and may at its sole discretion decide not to commence or pursue litigation. KAVL shall retain all proceeds from any recovery,
by way of judgment, award, decree, settlement or otherwise, resulting from such suit.

(b)              
If any third party, separate from enforcement at KAVL’s discretion, brings any litigation or proceeding to challenge the
validity of any claim of the Patents, KAVL may defend or settle the matter in any manner at its sole discretion and expense. KAVL
shall control all aspects of such matter and may at its sole discretion decide not to defend or settle the matter. KAVL shall
retain all proceeds from any recovery, by way of judgment, award, decree, settlement or otherwise, resulting from such matter.

(c)              
If any third party brings any litigation seeking a declaratory judgment that it does not infringe any claim of the Patents, KAVL
may defend or settle the suit in any manner at its sole discretion and expense. KAVL shall control all aspects of such litigation
and may at its sole discretion decide not to defend or settle the suit. KAVL shall retain all proceeds from any recovery, by way
of judgment, award, decree, settlement or otherwise, resulting from such suit.

3.4             
Cooperation Regarding Enforcement or Defense. NGL will use commercially reasonable efforts to cooperate in the enforcement
or defense of any patent issued from a patent application included in the Patents or any patent included in the Patents, or any
lawsuit or proceeding related thereto, if requested in writing by KAVL, including, but not limited to allowing KAVL access to
NGL’s Representatives and allowing NGL’s Representatives to testify or be deposed in any litigation or proceeding
arising out of or relating to the Patents and/or KAVL’s prosecution or maintenance.

 

    	 	10	 

     

    

article
IV

REPRESENTATIONS AND WARRANTIES OF NGL

 

4.1       Representations
and Warranties. NGL hereby represents and warrants to KAVL each of the following:

 

(a)              
Power and Authority; Binding Agreement. NGL has all requisite power, legal capacity and authority to execute and deliver
this Agreement, to consummate the Transactions, and to perform its obligations hereunder. The execution and delivery by NGL of
this Agreement and the consummation by NGL of the Transactions, have been duly authorized by all necessary action on the part
of NGL, and no other proceedings on the part of NGL is necessary to authorize this Agreement or to consummate the Transactions.
This Agreement has been duly executed and delivered by NGL and, assuming due execution and delivery by KAVL, constitutes a valid
and binding obligation of NGL, enforceable against NGL in accordance with its terms.

(b)              
Ownership. NGL is the sole and exclusive legal, beneficial, and equitable owner of, and has good and marketable title to,
each patent and patent application in the Patents, including, without limitation, all right, title and interest to sue for infringement
of all claims for each patent or application of the Patents. Every patent or application of the Patents is free and clear of any
Claims, Liabilities, and/or Encumbrances. None of NGL, any of its Affiliates, or any other Person holds any interest in any patent
or application in the Patents. No other Person has an option to purchase, right of first refusal, right of first offer, license
to, or other similar right with respect to any of the Patents. The practice of any claim as issued or pending in any patent or
patent application of the Patents does not infringe on any of the Intellectual Property rights of any other Person.

(c)              
Non-contravention.

(i)                
The execution and delivery by NGL of this Agreement, the consummation of the Transactions and the compliance by NGL with the provisions
of this Agreement do not, and will not conflict with, or result in any violation or breach of, or default (with or without notice
or lapse of time or both) under, or result in, termination, cancellation or acceleration of any obligation or to a loss of a material
benefit under, or result in the creation of any Lien in or upon any of the Patents under, or give rise to any increased, additional,
accelerated or guaranteed rights or entitlements under, any provision of: (1) any Encumbrances; (2) any Claims; (3) any Liabilities;
(4) any Law; or any (5) Governmental Order.

(ii)             
No Permits or Governmental Orders are required by or with respect to NGL in connection with: (1) the execution and delivery by
NGL of this Agreement; (2) the Transactions; (3) NGL’s compliance with the terms, conditions, and provisions of this Agreement;
or (4) KAVL’s and/or Kaival Labs full enjoyment and utilization of the Patents.

(d)              
Compliance with Laws. NGL is and has been in material compliance with all Laws and Governmental Orders applicable to the
Patents. NGL has not received a written notice or other written communication (or, to the knowledge of NGL, any oral notice or
other communication) alleging a possible violation by NGL of any Laws or Governmental Orders applicable to the Patents.

    	 	11	 

     

    

 

(e)              
Litigation and Other Proceedings. There is no legal proceeding, including, but not limited to, any lawsuit before any court
or tribunal, or any reexamination (whether inter partes, ex parte, or otherwise), reissue, interference proceeding,
opposition, review (including, but not limited to, inter partes review, post grant review, and covered business method
review) or similar proceeding before the U.S. Patent and Trademark Office “USPTO” or other foreign patent and trademark
office, pending or, to the knowledge of NGL, threatened (i) relating to or affecting the Patents, including, but not limited to,
any proceeding challenging the legality, enforceability, scope, use or ownership of the Patents; (ii) that seeks to enjoin or
obtain damages in respect of the Transactions; or (iii) that questions or would reasonably be interpreted to question the validity
of this Agreement, or any action taken or to be taken by NGL in connection with the Transactions. Except as set forth on Schedule
4.6, NGL has not threatened litigation against any Persons related to the Patents, or alleged that any Persons infringe on
any claim of the Patents. For the avoidance of confusion, internal infringement analyses do not rise to alleging that such Persons
who are the subject of the analyses, but are disclosed on Schedule 4.6.

(f)               
Infringement. Except as set forth on Schedule 4.6, NGL is not aware of any Persons infringing any claim of the Patents.
NGL has not, through any act or omission, given rise to any defense or estoppel that may be raised by any Person infringing or
who may later infringe any claim of the Patents.

(g)              
Validity and Enforceability. All of the patents and applications among the Patents are valid, subsisting, in full effect,
and enforceable. NGL and its representatives have in all instances observed and performed all duties impacting the validity and/or
enforceability of each patent or patent application in the Patents, including but not limited to compliance with all applicable
regulations and/or duty of candor. NGL is not aware of any ground of invalidity or unenforceability for any claim of the Patents.

(h)              
No Challenge. NGL shall not challenge, cause challenge of, or assist with challenge of or to the validity or enforceability
of any claim of any patent or application of the Patents.

(i)                
Prosecution Status. No patent or patent application in the Patents has any outstanding deadline, including but not limited
to any maintenance fee, renewal, annuity, office action, rejection, refusal, appeal, proceeding, process, procedure, et cetera,
within sixty (60) days of the date of this Agreement.

(j)                
Scope of the Patents. The Patents and the Patent Data include all Intellectual Property necessary and sufficient to enable
Kaival Labs to develop and market a Covered Product.

(k)              
No Government Funding. NGL has not used any government funding in the development of any of the material disclosed in the
Patents, the Patent Data, or related Intellectual Property.

(l)                
Brokers. NGL has not employed or entered into any contract or other arrangement with any investment banker, broker, finder,
consultant or intermediary that would be entitled to any investment banking, brokerage, finder’s or similar fee in connection
with the transactions contemplated by this Agreement.

    	 	12	 

     

    

(m)            
Material Adverse Change. The Patents have not experienced a Material Adverse Change since August 20, 2020, which is the
date of the signed Letter of Intent through the date of this Agreement and the filing of any Ancillary Documents.

(n)              
FDA Approval. NGL has no reason to believe that the (R)-isomer of nicotine would be denied approval by the FDA for either:
(a) treating nicotine addiction in accordance with one or more of the claims of US Patent No. 10,610,526; or (b) used in a Covered
Product as an approved smoking cessation product and aid.

(o)              
Safety or Efficacy. Except as provided in Schedule 4.2(o), NGL is not aware of any material nonpublic information relating to
the safety or efficacy of the (R)-isomer of nicotine for use in a method as claimed in US Patent No. 10,610,526.

(p)              
Patent Statements. All statements made in US Patent No.10,610,526 are true.

4.2             
Survival of Fundamental Representations. The Parties agree the Fundamental Representations shall survive the execution
of this Agreement and shall continue to survive until the earlier of a Reversion Event.

article
V

REPRESENTATIONS AND WARRANTIES OF KAVL

 

 

5.1             
Representations and Warranties. KAVL hereby represents and warrants to NGL each of the following:

 

(a)              
Organization and Standing. KAVL is a corporation duly organized, validly existing and in good standing under the laws of
the state of Delaware. KAVL has all requisite corporate power and authority to own its properties and carry on its business as
now being conducted and as contemplated by this Agreement.

(b)              
Power and Authority; Binding Agreement. KAVL has all requisite corporate power and authority to execute and deliver this
Agreement, to consummate the Transactions and to perform its obligations hereunder. The execution and delivery by KAVL of this
Agreement and the consummation by KAVL of the Transactions, have been duly authorized by all necessary corporate action on the
part of KAVL, and no other proceedings on the part of KAVL are necessary to authorize this Agreement or to consummate the Transactions.
This Agreement has been duly executed and delivered by KAVL and, assuming due execution and delivery by NGL, constitutes a valid
and binding obligation of KAVL, enforceable against KAVL in accordance with its terms.

(c)              
Brokers. KAVL has not employed or entered into any contract or other arrangement with any investment banker, broker, finder,
consultant or intermediary that would be entitled to any investment banking, brokerage, finder’s or similar fee in connection
with the transactions contemplated by this Agreement.

    	 	13	 

     

    

article
VI

CERTAIN COVENANTS

 

6.1             
Business Transition and Transactions. NGL and Kaival Labs hereby acknowledge and agree that Kaival Labs will be purchasing
raw materials and supplies from NGL to develop Covered Products (“Raw Materials”). NGL agrees to assist Kaival Labs
in commercializing the Patents into a Covered Product by: (a) making itself and their Representatives reasonably available for
both general and technical consultation with respect to the Products; (b) introducing Kaival Labs to NGL’s existing supplier
base (wherever located); (c) helping to secure acceptable purchase terms from the identifiable suppliers; and (d) agreeing to
negotiate in good faith the sale of Raw Materials to Kaival Labs on terms no less favorable than those offered to other third
parties by NGL and as customary in NGL’s past practice.

 

(a)              
 Price Match. If Kaival Labs locates Raw Materials for the Covered Products from a third party of an equal or greater quality
at a cheaper price and/or on commercial terms more favorable than the Raw Materials offered to Kaival Labs by NGL (the “Favorable
Raw Materials Terms”), then, NGL must match the Favorable Raw Materials Terms and deliver and sell the Raw Materials to
Kaival Labs at the Favorable Raw Materials Terms.

6.2             
Confidentiality. Each Recipient agrees to hold a Discloser’s Confidential Information in strict confidence and not
to disclose such Confidential Information to any other Person without the prior written consent of the Discloser. If a Recipient
is required to disclose Confidential Information of the Discloser by any Law or Governmental Order, it may do so only to the extent
required thereby; provided, however, that the receiving Party will (i) to the extent practicable, provide advance notice to the
Discloser of the required disclosure to allow the Discloser an opportunity to take steps to object to, prevent or limit its disclosure
or obtain a protective or other similar order with respect to the required disclosure (collectively, “Protective Measures”),
(ii) if requested by the Discloser, cooperate with the Discloser in seeking Protective Measures, and (iii) restrict disclosure
to only that portion of the Confidential Information that is required to be disclosed.

 

6.3             
Non-Competition.

 

(a)              
NGL acknowledges and agrees that Kaival Lab’s ability to exploit and use of the Patents would be irreparably damaged if
NGL were to directly or indirectly provide services to any Person competing with a Covered Product or the Patents within the Region,
or engage in a similar business and that such direct or indirect activities or competition by NGL would result in a significant
loss of value to the Patents.

 

(b)              
In further consideration for payment of the Royalty, Form 1-A Payment, and the Additional Payment, and in order to protect the
value of the Patents acquired by KAVL hereunder, NGL hereby agrees that NGL shall not, directly or indirectly, acquire or hold
any economic or financial interest in, act as a partner, member, shareholder, or representative of, render any services to, or
otherwise operate or hold an interest in any Person, enterprise or other Person that primarily engages in, or engages in the management
or operation of any Person that primarily engages in any business that competes with KAVL, Kaival Labs, or their Affiliates within
the Region; provided, however, that nothing contained herein shall be construed to prohibit NGL from purchasing
up to an aggregate of two percent (2%) of any class of the outstanding voting securities of any other Person whose securities
are listed on a national securities exchange (but only if such investment is held on a purely passive basis).

 

    	 	14	 

     

    

 

(c)              
Notwithstanding anything to the contrary in this Agreement, if at any time, in any judicial or arbitration proceeding, any of
the restrictions stated in this Section 6.3 are found by a final order of a court of competent jurisdiction or arbitrator to be
unreasonable or otherwise unenforceable under circumstances then existing, the Parties each agree that the period, scope or geographical
area, as the case may be, shall be reduced to the extent necessary to enable the court to enforce the restrictions to the extent
such provisions are allowable under applicable law, giving effect to the agreement and intent of the Parties that the restrictions
contained herein shall be effective to the fullest extent permissible. In the event of a breach or violation by NGL of any of
the provisions of this Section 6.3, the Royalty and/or Additional Payment will be tolled for so long as NGL was in violation of
such provision. NGL agrees that the restrictions contained in this Agreement are reasonable in all respects and necessary to protect
KAVL and Kaival Lab’s interest in, and the value of, the Patents.

 

6.4             
Further Assurances and Cooperation. From time to time following the Effective Date, as and when requested by any Party,
the other Party will execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take,
or cause to be taken, all such further or other actions as such other Party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the Transactions. To the extent any attorney-client privilege or the attorney
work-product doctrine applies to any portion of the Patent Data, NGL will ensure that, if any such portion of the Patent Data
remains under NGL’s possession or control after the Effective Date, it is not disclosed to any third party unless (a) disclosure
is ordered by a court of competent jurisdiction, after all appropriate appeals to prevent disclosure have been exhausted, and
(b) NGL gives KAVL prompt notice upon learning that any third party sought or intended to seek a court order requiring the disclosure
of any such portion of the Patent dates. To the extent that any conception and reduction to practice information is necessary
for filing with the USPTO or U.S. tribunal to demonstrate evidence of first-to-invent, NGL will provide all available conception
and reduction to practice materials. If such material is subsequently deemed by the USPTO or a court to be insufficient or such
other information is requested by KAVL or NGL, NGL will use commercially reasonable efforts to respond to KAVL’s requests
for any such additional information that may exist, if needed by KAVL in connection with the prosecution and enforcement of the
Patents, and KAVL will reimburse NGL for NGL’s reasonable out-of-pocket expenses and for time spent responding to such requests
to the extent such reimbursement is permissible under applicable law. KAVL will also be obligated to reimburse NGL for any factual
testimony provided to the USPTO or any court.

 

6.5             
Matching Offer Rights. Before NGL, directly or indirectly, sells, transfers, assigns or licenses any R-isomer Nicotine
Intellectual Property to any Person, NGL will first provide KAVL, for a period of 30-days, the right to match the same definitive
offer made by that Person (a “Matching Offer”), subject to these other terms and conditions set forth below:

(a)              
The 30-day period will commence when KAVL receives (i) written notice from NGL that KAVL can exercise a Matching Offer right and
(ii) a copy of a definitive, binding, written offer or agreement that covers a proposed sale, assignment, transfer, or a grant
of a license of R-isomer Nicotine Intellectual Property, subject only to the Matching Offer right (a “Bona Fide Offer”).

    	 	15	 

     

    

 

(b)              
If KAVL exercises its Matching Offer right, KAVL must close on its Matching Offer on the same material terms and conditions contained
in the Bona Fide Offer; before the expiry of 30 days after it has elected in writing to exercise its Matching Offer right and
may pay its consideration in a US dollar equivalent.

(c)              
If KAVL does not exercise its Matching Offer right within the 30-day period, then, subject to Section 6.5(e), NGL may consummate
the Bona Fide Offer with the other Person only under the strict terms of the Bona Fide Offer, with no amendments, modifications
or concessions to the Bona Fide Offer in favor of the other Person being permitted without first subjecting the revised Bona Fide
Offer to a new Matching Offer right covering the revised Bona Fide Offer.

(d)              
NGL may contribute any R-isomer Nicotine Intellectual Property, cash and other property of NGL into any entity newly formed by
NGL in exchange for the Equity Interests of such newly formed entity, if such entity agrees to be bound by the terms of this Section
6.5 and the transaction does not result in a Change of Control. If these conditions are satisfied, then the contribution of the
R-isomer Nicotine Intellectual Property will not be subject to the Matching Offer right, but such Affiliate will be subject to
this Section 6.5, and the sale or issuances of any equity interests by such Affiliate to any Person other than NGL will also be
subject to the terms of this Section 6.5 as an indirect sale of a R-isomer Nicotine Intellectual Property.

(e)              
Notwithstanding anything in this Section 6.5 to the contrary, if the Bona Fide Offer is made by an Affiliate of NGL, NGL and the
Affiliate may not consummate the Bona Fide Offer unless (i) KAVL does not exercise its Matching Offer right, and (ii) the
subject Affiliate agrees to be bound by this Section 6.5 with respect its future ability to sell, transfer, assign or grant a
license in or to any R-isomer Nicotine Intellectual Property to any Person. This provision will apply to successive sales, transfers,
assignments or grants of a license in or to any R-isomer Nicotine Intellectual Property to any Affiliates of any Affiliate that
becomes bound by this Section 6.5. If any Person that is an entity becomes bound by this Section 6.5, then any sales of equity
interest in that Person will be subject to a Matching Offer right.

(f)               
KAVL agrees that only officers of KAVL that need to know the terms of the Bona Fide Offer for purposes of evaluating the Bona
Fide Offer will be provided access such terms of the Bona Fide Offer, and it is agreed that the identity of the offeree is not
required to be disclosed to the KAVL if not permitted under the terms of a non-disclosure agreement; provided, however, NGL does
agree to seek the agreement of the offeree to disclose their identity to the KAVL.

6.6             
Reversion of Patent. The Parties agree that the Patents shall revert from Kaival Labs to NGL upon a Reversion Event and
KAVL and/or Kaival Labs shall execute all Ancillary Documents necessary to transfer the Patents from Kavial Labs to NGL after
a Reversion Event.

6.7       NGL
Change of Control for Bankruptcy. Upon NGL undergoing a Change of Control for Bankruptcy, KAVL shall have the unilateral right
to: (a) ensure Kaival Labs owns the Patents and Patent Data outright in exchange; and (b) terminate all its (and its Affiliates’)
obligations set forth in this Agreement, including, but not limited to paying the Royalty or transferring the Patents to NGL after
a Reversion Event, in exchange for paying NGL (or its successor) Five Hundred Thousand Dollars ($500,000.00) within ten (10) Business
Days following the Change of Control for Bankruptcy. NGL shall deliver written notice to KAVL upon a Change of Control for Bankruptcy,
who shall then have ten (10) Business Days after receipt to purchase the Patents and Patent Data as set forth herein and extinguish
all of KAVL’s (and its Affiliates’) obligations set forth in this Agreement.

 

    	 	16	 

     

    

 

6.8       NGL
Change of Control. NGL shall not undergo a Change of Control without the prior written consent of KAVL, which shall not be
unreasonably withheld.

 

6.8       Transaction
Expenses. Each Party shall pay its own Transaction Expenses.

 

6.9       Nicotine
Composition. Neither NGL nor any of its Affiliates will assert any patents relating to nicotine compositions for vaping devices,
e.g., US20170112182A1 and related applications against KAVL or Kaival Labs, or against suppliers or customers in relation to KAVL
products or Kaival Labs Products. 

 

article
VII

TERMINATION; INDEMNIFICATON

 

7.1Termination.
This Agreement shall terminate upon a Reversion Event.

 

7.2       NGL
Indemnification of KAVL and Kaival Labs. NGL agrees to indemnify and hold KAVL, Kaival Labs, their Affiliates, and their Representatives
harmless from all Claims and Losses arising out of or relating to: (a) a breach of this Agreement; or (b) a breach of the Fundamental
Representations.

 

7.3       KAVL
Indemnification of NGL. KAVL agrees to indemnify and hold NGL, its Affiliates, and its Representatives from all Claims and
Losses arising out of or relating to a breach of this Agreement.

 

article
VIII 

MISCELLANEOUS

 

8.1             
Entire Agreement. This Agreement, and the exhibits hereto, contain the entire agreement between the Parties with respect
to the transactions contemplated herein and will not be modified or amended except by an instrument in writing signed by or on
behalf of the Parties.

 

8.2             
Section Headings; Interpretation. Reference in this Agreement to a Section, Article, or exhibit, unless otherwise indicated,
will constitute references to a Section, Article or exhibit of this Agreement. The section headings and article titles contained
in this Agreement are for convenience of reference only and do not form a part thereof and will not affect in any way the meaning
or the interpretation of this Agreement. Wherever the words “include,” “includes” or “including”
are used in this Agreement, they will be deemed to be followed by the words “without limitation.” The words “herein,”
“hereinafter,” “hereby,” and “hereunder,” and words of similar import used in this Agreement
will refer to this Agreement as a whole and not to any particular provision of this Agreement. The singular of a term will also
include the plural of that term and the plural will also include the singular and the masculine will include the feminine, unless
the context clearly indicates otherwise.

 

    	 	17	 

     

    

 

8.3             
Notices. Any notice hereunder will be in writing and will be deemed given if given to the other Party via overnight courier
or email, with delivery deemed to occur on the next business day after sending thereof, addressed to each Party:

 

To
KAVL:                                                    Kaival Brands Innovations Group, Inc.

Attn:
Eric Mosser

4460
Old Dixie Highway

Grant,
Florida 32949

 

With
a copy to:                                             Baker & Hostetler LLP

Attn:
Keith C. Durkin

200
South Orange Avenue

Suite
2300

Orlando,
Florida 32801

kdurkin@bakerlaw.com

 

To
Kaival Labs:                                            Kaival Labs, Inc.

Attn:
Nirajkumar K. Patel

401
North Wickham Road

Melbourne,
Florida 32935

 

With
a copy to:                                             Baker & Hostetler LLP

Attn:
Keith C. Durkin

200
South Orange Avenue

Suite
2300

Orlando,
Florida 32801

kdurkin@bakerlaw.com

 

To
NGL:                                                       Next
Generation Labs LLC 

Attn:
Vincent Schuman

8505
Commerce Av

San
Diego

CA
92121

 

With
a copy to:                                              Mr.
John Carson

Lewis
Roca Rotherber Christie LLC

655
N. Central Av

Suite
300

Glendale,
CA 91203

 

To
NGL:                                                         Next Generation Labs LLC 

Attn:
Vincent Schuman

8505
Commerce Av

San
Diego

CA
92121

 

With
a copy to:                                              Mr. John Carson

Lewis
Roca Rotherber Christie LLC

655
N. Central Av

Suite
300

Glendale,
CA 91203

 

or
to such other address as any Party notifies the other Party of in accordance herewith.

 

    	 	18	 

     

    

 

8.4             
No Presumption against Drafter. Each of the Parties has jointly participated in the negotiation and drafting of this Agreement.
In the event there arises any ambiguity or question of intent or interpretation with respect to this Agreement, this Agreement
will be construed as if drafted jointly by the Parties and neither presumptions nor burdens of proof will arise favoring any Party
by virtue of the authorship of any of the provisions of this Agreement. Each Party has been duly represented by legal counsel.

 

8.5             
Assignability. NGL may not assign this Agreement without the express written consent of KAVL. This Agreement will be binding
upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns.

 

8.6             
No Third Party Beneficiaries. Except as otherwise expressly provided in this Agreement, this Agreement is for the sole
benefit of the Parties and their permitted successors and assigns and nothing herein expressed or implied will give or be construed
to give to any Person, other than the Parties and such successors and assigns, any legal or equitable rights hereunder.

 

8.7             
Governing Law. All questions of concerning the construction, validity and interpretations of this Agreement will be governed
by and construed and enforced in accordance wither the laws of the State of Delaware, without regard to the conflict of laws principles.

 

8.8             
Jurisdiction and Venue. All actions or proceedings arising out of or relating to this Agreement must be brought in Delaware
and the Parties hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any court in the State of Delaware
or any federal court of the United States of America in Delaware. Each of the Parties hereby irrevocably and unconditionally waives,
to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue in any such court
of any suit or proceeding arising out of or relating to this Agreement. Each of the Parties irrevocably and unconditionally waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in
any such court.

 

8.9             
Severability. If any term or provision of this Agreement will, to any extent, be held by a court of competent jurisdiction
to be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to Persons or circumstances
other than those as to which it has been held invalid or unenforceable, will not be affected thereby and this Agreement will be
deemed severable and will be enforced otherwise to the full extent permitted by law; provided, however, that such
enforcement does not deprive any Party of the benefit of the bargain.

 

8.10         
Specific Performance; Equitable Remedies. The Parties hereby agree that irreparable damage would occur in the event that
any provision of this Agreement was not performed in accordance with its specific terms or were otherwise breached, and that money
damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the Parties acknowledge and
hereby agree that, in the event of any breach or threatened breach by any Party of any of its covenants or obligations set forth
in this Agreement, the other Party will be entitled to seek an injunction or injunctions to prevent or restrain breaches or threatened
breaches of this Agreement by such Party, and to specifically enforce the terms and provisions of this Agreement to prevent breaches
or threatened breaches of, or to enforce compliance with, the covenants and obligations of such Party under this Agreement. The
Parties hereby agree not to raise any objections to the availability of the equitable remedy of specific performance to prevent
or restrain breaches or threatened breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement
to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the Parties under
this Agreement. The Parties hereto further agree that (a) by seeking the remedies provided for in this Section, a Party will not
in any respect waive its right to seek any other form of relief that may be available to a Party under this Agreement (including
monetary damages) in the event that the remedies provided for in this Section are not available or otherwise are not granted,
and (b) nothing set forth in this Section will restrict or limit any Party’s right to pursue any remedies under this Agreement.
KAVL shall have the right to set-off from any Royalty and/or the Additional Payment any obligation of NGL to indemnify and hold
KAVL, Kaival Labs, their Affiliates, or their Representatives harmless under Article VII.

 

    	 	19	 

     

    

 

8.11         
Counterparts. This Agreement may be executed in one or more counterparts, by original signature or electronic copy thereof,
each of which will be deemed to constitute an original and all of which together shall constitute one and the same instrument
binding on the parties as of the Effective Date.

 

[Remainder
of page intentionally left blank]

[Signatures
on next page]

 

    	 	20	 

     

    

 

IN
WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their respective duly authorized representatives as
of the date first written above.

 

KAIVAL
BRANDS INNOVATIONS GROUP, INC., a Delaware corporation:

 

 

By:
/s/ Eric Mosser

Name:
Eric Mosser

Title:
Chief Operating Officer

 

KAIVAL
LABS, INC., a Delaware corporation:

 

By:
/s/ Nirajkumar K. Patel

Name:
Nirajkumar K. Patel

Title:
Chief Executive Officer

 

 

NEXT
GENERATION LABS, LLC, a California limited liability company:

 

 

By:
/s/ Vincent Schuman

Name:
Vincent Schuman

Title:
CEO

 

    	 	21	 

     

    

 

Exhibit
“A”

Patent
(and related applications)

 

United
States Patent Number 10,610,526 B2

United States Provisional Patent Application Number 62/273,296

Patent
Cooperation Treaty Application PCT/US16/69593

Australian
Patent Application Number 2016381372

Canadian
Patent Application Number 3048820

China
Patent Application Number 201680082978.4

European
Patent Application Number 2016882784/16882784.8

India
Patent Application Number 201827028431

Japan
Patent Application Number 2018553850

Republic
of Korea Patent Application Number 1020187021876

 

    	 	22	 

     

    

 

Exhibit
B

 

Assignment of Patent Rights

 

This
Assignment of Patent Rights (the “Assignment”) is executed, acknowledged and delivered by NEXT GENERATION LABS,
LLC, a California limited liability company, with an address of 8505 Commerce Avenue, San Diego, California 92121 (“Assignor”),
in accordance with, and pursuant to the terms and conditions of the Patent Contribution Agreement dated September 28, 2020, (the
“Agreement”) between Assignor, and KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation, with an address
of 401 N. Wickham Road, Suite 130, Melbourne, Florida 32935 (“Assignee”). Capitalized terms used herein and
not expressly defined will have the meaning ascribed to such terms in the Agreement.

 

“Patents”
means the patent applications and patents listed on Exhibit A of the Agreement, attached hereto and made a part hereof, and any
reissues, reexaminations, extensions, and registrations thereof, including, without limitation, certifications of invention and
utility models.

 

NOW,
THEREFORE, TO ALL WHOM IT MAY CONCERN:

 

For
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor agrees to and does hereby
irrevocably sell, assign, transfer and convey unto said Assignee, and Assignee hereby accepts, all of Assignor’s right,
title, and interest (i) in and to the Patents, the same to be held and enjoyed by said Assignee for its own use, and for the use
of its successors, assigns, or other legal representatives to the end of the term or terms for which said Patents may be granted
as fully and entirely as the same would have been held and enjoyed by Assignor if this Assignment had not been made; (ii) in and
to causes of action and enforcement rights for the Patents, including all rights to pursue damages, injunctive relief and other
remedies for past and future infringement of the Patents; and (iii) to apply in any and all countries for patents, certificates
of invention or other governmental grants for the Patents. Assignor also hereby authorizes the respective patent office or governmental
agency in each jurisdiction to issue any and all patents or certificates of invention which may be granted upon any of the Patents
in the name of Assignee, as the assignee to the entire interest therein.

 

Notwithstanding
anything to the contrary herein, Assignor is executing and delivering this Assignment in accordance with and subject to all of
the terms and provisions of the Agreement. In the event of any conflict between the terms of this Assignment and those of the
Agreement, the terms of the Agreement will be controlling.

 

This
Assignment will be binding upon and will inure to the benefit of the parties and their respective successors and assigns.

 

This
Assignment will be governed by, and construed in accordance with, the laws of the United States in respect to patent issues and
in all other respects by the laws of the State of Ohio, without giving effect to the conflict of laws rules thereof.

 

    	 	23	 

     

    

 

IN
WITNESS WHEREOF, Assignor has caused this Assignment to be executed by their duly authorized representatives.

 

Assignor:

 

NEXT
GENERATION LABS, LLC, a 

California
limited liability company

 

By:
/s/ Vincent Schuman

Name:
Vincent Schuman

Title:
CEO

 

 

 

WITNESSED
BY:

 

 

/s/
Niraj Kumar Patel__________

Name:NIRAKUMAR PATEL

 

 

Assignee:

 

KAIVAL
BRANDS INNOVATIONS GROUP, INC., a Delaware corporation

 

 

By:
/s/ Eric Mosser___________________

Name:
Eric Mosser

Title:
Chief Operating Officer

 

 

 

    	 	24	 

     

    

 

SCHEDULE
4.6

 

 

    	 	25Exhibit 10.1

 

XpresTest, Inc.

2020 Equity Incentive Plan

 

1.  
Purpose; Eligibility.

 

1.1 
General Purpose. The name of this plan is the XpresTest, Inc. 2020 Equity Incentive
Plan. The purposes of the Plan are to (a) enable XpresTest, Inc., a Delaware corporation, and any Affiliate to attract and retain
the types of Employees, Consultants and Directors who will contribute to the Company’s long range success; (b) provide incentives
that align the interests of Employees, Consultants and Directors with those of the stockholders of the Company; and (c) promote
the success of the Company’s business.

 

1.2 
Eligible Award Recipients. The persons eligible to receive Awards are the Employees,
Consultants and Directors of the Company and its Affiliates and such other individuals designated by the Committee who are reasonably
expected to become Employees, Consultants and Directors after the receipt of Awards.

 

1.3 
Available Awards. Awards that may be granted under the Plan include: (a) Incentive
Stock Options, (b) Non-Qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Stock Awards,
(f) Cash Awards, and (g) Other Equity-Based Awards.

 

2.  
Definitions.

 

“Affiliate”
means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under
common control with, the Company.

 

“Applicable
Laws” means the requirements related to or implicated by the administration of the Plan under applicable state corporate
law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock
is listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.

 

“Award”
means any right granted under the Plan, including an Incentive Stock Option, a Non-Qualified Stock Option, a Stock Appreciation
Right, a Restricted Award, a Performance Stock Award, a Cash Award, or an Other Equity-Based Award.

 

“Award
Agreement” means a written agreement, contract, certificate or other instrument or document evidencing the terms and
conditions of an individual Award granted under the Plan which may, in the discretion of the Company, be transmitted electronically
to any Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.

 

“Beneficial
Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that
such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable
or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned”
have a corresponding meaning.

 

“Board”
means the Board of Directors of the Company, as constituted at any time.

 

“Cash
Award” means an Award denominated in cash that is granted under Section 7.4 of the Plan.

 

“Cause”
means, with respect to any Participant, unless otherwise provided in the applicable Award Agreement, (a) dishonesty with respect
to the Company or any Affiliate, (b) insubordination, substantial malfeasance or non-feasance of duty, (c) unauthorized disclosure
of confidential information, (d) breach by a Participant of any provision of any employment, consulting, advisory, nondisclosure,
non-competition or similar agreement between the Participant and the Company or any Affiliate, and (e) conduct substantially prejudicial
to the business of the Company or any Affiliate; provided, however, that any provision in an agreement between a Participant and
the Company or an Affiliate, which contains a conflicting definition of Cause for termination and which is in effect at the time
of such termination, shall supersede this definition with respect to that Participant. The determination of the Committee as to
the existence of Cause will be conclusive on the Participant and the Company.

 

    	 	1	 

     

    

 

“Change
in Control” with respect to any Participant shall have the meaning specified in the Participant’s Award Agreement.
In the absence of any such definition, a “Change in Control” shall mean the occurrence of any of the following:

 

	 	(i)	Ownership.  Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or by any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or
	 	(ii)	Merger/Sale of Assets.  (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in 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 or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or
	 	(iii)	Change in Board Composition.  A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the effective date of the Plan, which for this purpose shall be the date of its approval by the stockholders of the Company, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).

If required
for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction
is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of
a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without
regard to any alternative definition thereunder). The Board may, in its sole discretion and without a Participant’s consent,
amend the definition of “Change in Control” to conform to the definition of “Change in Control” under Section
409A of the Code, and the regulations thereunder.

 

“Code”
means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be
deemed to include a reference to any regulations promulgated thereunder.

 

“Committee”
means a committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section
3.3 and Section 3.4, or any Officers of the Company to whom it has delegated authority as permitted under Section 3.3.

 

“Common
Stock” means shares of the Company’s common stock, $0.01 par value per share, or such other securities of the Company
as may be designated by the Committee from time to time in substitution thereof.

 

“Company”
means XpresTest, Inc., and any successor thereto.

 

“Consultant”
means any individual or entity which performs bona fide services to the Company or an Affiliate, other than as an Employee or Director.

 

“Continuous
Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Consultant
or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is
no interruption or termination of the Participant’s Continuous Service; provided further that if any Award is subject
to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For
example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of
Continuous Service. The Committee or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal
or family leave of absence. The Committee or its delegate, in its sole discretion, may determine whether a Company transaction,
such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed to result in a termination of
Continuous Service for purposes of affected Awards, and such decision shall be final, conclusive and binding.

 

    	 	2	 

     

    

 

“Deferred
Stock Units” has the meaning set forth in Section 7.2 hereof.

 

“Director”
means a member of the Board.

 

“Disability”
means, unless the applicable Award Agreement says otherwise, permanent and total disability as defined in Section 22(e)(3) of the
Code.

 

“Disqualifying
Disposition” has the meaning set forth in Section 14.12.

 

“Effective
Date” shall mean the date as of which this Plan is adopted by the Board.

 

“Employee”
means any person, including an Officer or Director, employed as an employee by the Company or an Affiliate; provided, that,
for purposes of determining eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company
or a parent or subsidiary corporation within the meaning of Section 424 of the Code.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair
Market Value” means, as of any date, the value of the Common Stock as determined below. In the absence of an established
market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee and such determination shall
be conclusive and binding on all persons. If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation, the New York Stock Exchange or the NASDAQ Stock Market, the Fair Market Value shall be the
closing price of a Common Stock (or if no sales were reported the closing price on the date immediately preceding such date) as
quoted on such exchange or system on the day of determination, as reported in the Wall Street Journal. Notwithstanding the
foregoing, the Committee may also determine the Fair Market Value upon the average selling price of the Common Stock during a specified
period that is within thirty (30) days before or thirty (30) days after such date, provided that, with respect to the grant of
an Option or Stock Appreciation Right, the commitment to grant such Award based on such valuation method must be irrevocable before
the beginning of the specified period and otherwise compliant with Section 409A of the Code.

 

“Fiscal
Year” means the Company’s fiscal year.

 

“Grant
Date” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting
an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution,
then such date as is set forth in such resolution.

 

“Incentive
Stock Option” means an Option that is designated by the Committee as an incentive stock option within the meaning of
Section 422 of the Code and that meets the requirements set out in the Plan.

 

“Non-Qualified
Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock
Option.

 

“Officer”
means a person who is an officer of the Company.

 

“Option”
means an Incentive Stock Option or a Non-Qualified Stock Option granted pursuant to the Plan.

 

“Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Option.

 

    	 	3	 

     

    

 

“Option
Exercise Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.

 

“Other
Equity-Based Award” means an Award that is not an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, or Performance Stock Award that is granted under Section 7.4 and is payable by delivery of Common Stock and/or which
is measured by reference to the value of Common Stock.

 

“Participant”
means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Award.

 

“Performance
Goals” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period
based upon business criteria or other performance measures determined by the Committee in its discretion.

 

“Performance
Period” means the one or more periods of time, as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance
Stock Award or a Cash Award.

 

“Performance
Stock Award” means any Award granted pursuant to Section 7.3 hereof.

 

“Performance
Stock” means the grant of a right to receive a number of actual shares of Common Stock or stock units based upon the
performance of the Company during a Performance Period, as determined by the Committee.

 

“Person”
means a person as defined in Section 13(d)(3) of the Exchange Act.

 

“Plan”
means this XpresTest, Inc. 2020 Equity Incentive Plan, as amended and/or amended and restated from time to time.

 

“Restricted
Award” means any Award granted pursuant to Section 7.2(a).

 

“Restricted
Period” has the meaning set forth in Section 7.2(a).

 

“Restricted
Stock” has the meaning set forth in Section 7.2(a).

 

“Restricted
Stock Units” has the meaning set forth in Section 7.2(a).

 

“Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to
time.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Stock
Appreciation Right” means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise,
an amount payable in cash or stock equal to the number of shares subject to the Stock Appreciation Right that is being exercised
multiplied by the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) the
exercise price specified in the Stock Appreciation Right Award Agreement.

 

“Stock
for Stock Exchange” has the meaning set forth in Section 6.4.

 

“Substitute
Award” has the meaning set forth in Section 4.7.

 

“Ten
Percent Stockholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) shares possessing
more than 10% of the total combined voting power of all classes of shares of the Company or of any of its Affiliates.

 

“Total
Share Reserve” has the meaning set forth in Section 4.1.

 

3.  
Administration.

 

3.1 
Authority of Committee. The Plan shall be administered by the Committee or,
in the Board’s sole discretion, by the Board. Subject to the terms of the Plan, the Committee’s charter and Applicable
Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee shall have the authority:

 

(a)          
to construe and interpret the Plan and apply its provisions;

 

    	 	4	 

     

    

 

(b)          
to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;

 

(c)          
to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of
the Plan;

 

(d)          
to delegate its authority to one or more Officers of the Company;

 

(e)          
to determine when Awards are to be granted under the Plan and the applicable Grant Date;

 

(f)           
from time to time to select, subject to the limitations set forth in this Plan, those eligible Award recipients to
whom Awards shall be granted;

 

(g)          
to determine the number of shares of Common Stock to be made subject to each Award;

 

(h)          
to determine whether each Option is to be an Incentive Stock Option or a Non-Qualified Stock Option;

 

(i)           
to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium
of payment and vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;

 

(j)           
to determine the target number of Performance Stock to be granted pursuant to a Performance Stock Award, the performance
measures that will be used to establish the Performance Goals, the Performance Period(s) and the number of Performance Stock earned
by a Participant;

 

(k)          
to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term
of any outstanding Award; provided, however, that if any such amendment impairs a Participant’s rights or increases
a Participant’s obligations under his or her Award or creates or increases a Participant’s federal income tax liability
with respect to an Award, such amendment shall also be subject to the Participant’s consent;

 

(l)           
to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting
termination of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable
to Employees under the Company’s employment policies;

 

(m)         
to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control
or an event that triggers anti-dilution adjustments;

 

(n)          
to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the
Plan and any instrument or agreement relating to, or Award granted under, the Plan;

 

(o)          
to exercise discretion to make any and all other determinations which it determines to be necessary or advisable
for the administration of the Plan; and

 

(p)          
to modify the purchase price or the exercise price of any outstanding Award.

 

3.2   
Committee Decisions Final. All decisions made by the Committee pursuant to the
provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions are determined by
a court having jurisdiction to be arbitrary and capricious.

 

3.3   
Delegation. The Committee or, if no Committee has been appointed, the Board
may delegate administration of the Plan to a committee or committees of one or more members of the Board, and the term “Committee”
shall apply to any person or persons to whom such authority has been delegated. The Committee shall have the power to delegate
to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the
Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan. The members of the Committee shall be appointed by and serve at the pleasure
of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional members to, remove
members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the
Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of
only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its
members and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations
prescribed by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its
business as it may determine to be advisable.

 

    	 	5	 

     

    

 

3.4   
Indemnification. In addition to such other rights of indemnification as they
may have as Directors or members of the Committee, and to the extent allowed by Applicable Laws, the Committee shall be indemnified
by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action,
suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of any action taken
or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the
Committee in settlement thereof (provided, however, that the settlement has been approved by the Company, which approval
shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee did not act
in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the case
of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that
within 60 days after the institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company
the opportunity at its own expense to handle and defend such action, suit or proceeding.

 

4.  
Shares Subject to the Plan.

 

4.1   
Subject to adjustment in accordance with Section 11, the maximum aggregate number of shares of Common Stock
available for issuance under the Plan is 200 shares of Common Stock (the “Total Share Reserve”). During the
terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such
Awards. Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any manner.

 

4.2   
Subject to adjustment in accordance with Section 11, no more than 200 shares of Common Stock may be issued
in the aggregate pursuant to the exercise of Incentive Stock Options (the “ISO Limit”).

 

4.3   
Any Common Stock subject to an Award that expires or is canceled, forfeited,
or terminated without issuance of the full number of shares of Common Stock to which the Award related will again be available
for issuance under the Plan. 

 

5.  
Eligibility.

 

5.1   
Eligibility for Specific Awards. Incentive Stock Options may be granted only
to Employees. Awards other than Incentive Stock Options may be granted to Employees, Consultants and Directors and those individuals
whom the Committee determines are reasonably expected to become Employees, Consultants and Directors following the Grant Date.

 

5.2   
Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an
Incentive Stock Option unless the Option Exercise Price is at least 110% of the Fair Market Value of the Common Stock on the Grant
Date and the Option is not exercisable after the expiration of five years from the Grant Date.

 

    	 	6	 

     

    

 

6.  
Option Provisions. Each Option granted under the Plan shall be evidenced by
an Award Agreement. Each Option so granted shall be subject to the conditions set forth in this Section ‎6, and to such
other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options shall be separately
designated Incentive Stock Options or Non-Qualified Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for Common Stock purchased on exercise of each type of Option. Notwithstanding the foregoing,
the Company shall have no liability to any Participant or any other person if an Option designated as an Incentive Stock Option
fails to qualify as such at any time or if an Option is determined to constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the requirements of Section 409A of
the Code. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the following provisions:

 

6.1   
Term. Subject to the provisions of Section 5.2 regarding Ten Percent
Stockholders, no Incentive Stock Option shall be exercisable after the expiration of 10 years from the Grant Date. The term of
a Non-Qualified Stock Option granted under the Plan shall be determined by the Committee; provided, however, no Non-Qualified
Stock Option shall be exercisable after the expiration of 10 years from the Grant Date.

 

6.2   
Exercise Price of an Incentive Stock Option. Subject to the provisions of Section
5.2 regarding Ten Percent Stockholders, the Option Exercise Price of each Incentive Stock Option shall be not less than 100%
of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive
Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of
the Code. 

 

6.3   
Exercise Price of a Non-Qualified Stock Option. The Option Exercise Price of
each Non-Qualified Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option
on the Grant Date. Notwithstanding the foregoing, a Non-Qualified Stock Option may be granted with an Option Exercise Price lower
than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 409A of the Code.

 

6.4   
Consideration. The Option Exercise Price of Common Stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in cash or by certified or
bank check at the time the Option is exercised or (b) in the discretion of the Committee, upon such terms as the Committee shall
approve, the Option Exercise Price may be paid: (i) by delivery to the Company of other Common Stock, duly endorsed for transfer
to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or portion thereof) due for
the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares
of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise Price (or portion
thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased
and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) if the
shares of Common Stock are listed on any established stock exchange or a national market system, through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to the exercise price (i.e., by means of a “cashless”
exercise procedure); (iii) with respect to Non-Qualified Stock Options, by reduction in the number of shares of Common Stock otherwise
deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise
(i.e., by means of a “net exercise”); (iv) by any combination of the foregoing methods; or (v) in any other form of
legal consideration that may be acceptable to the Committee. Unless otherwise specifically provided in the Option, the exercise
price of Common Stock acquired pursuant to an Option that is paid by delivery (or attestation) to the Company of other shares of
Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of Common Stock of the Company that
have been held for more than six months (or such longer or shorter period of time required to avoid a charge to earnings for financial
accounting purposes). Notwithstanding the foregoing, during any period for which the shares of Common Stock are publicly traded
(i.e., the Common Stock is listed on any established stock exchange or a national market system) an exercise by a Director or Officer
that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company,
directly or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any
Award under this Plan.

 

    	 	7	 

     

    

 

6.5   
Transferability of an Incentive Stock Option. An Incentive Stock Option shall
not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option. 

 

6.6   
Transferability of a Non-Qualified Stock Option. A Non-Qualified Stock Option
may, in the sole discretion of the Committee, be transferable, upon written approval by the Committee to the extent provided in
the Award Agreement. If the Non-Qualified Stock Option does not provide for transferability, then the Non-Qualified Stock Option
shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime
of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice
to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.

 

6.7   
Vesting of Options. Each Option may, but need not, vest and therefore become
exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions
on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate.
The vesting provisions of individual Options may vary. No Option may be exercised for a fraction of a share. 

 

6.8   
Termination of Continuous Service. Unless otherwise provided in an Award Agreement
or in an employment agreement the terms of which have been approved by the Committee, in the event an Optionholder’s Continuous
Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option
(to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period
of time ending on the earlier of (a) the date three months following the termination of the Optionholder’s Continuous Service
or (b) the expiration of the term of the Option as set forth in the Award Agreement; provided that, if the termination of
Continuous Service is by the Company for Cause, all outstanding Options (whether or not vested) shall immediately terminate and
cease to be exercisable. If, after termination, the Optionholder does not exercise his or her Option within the time specified
in the Award Agreement, the Option shall terminate.

 

6.9   
Extension of Termination Date. An Optionholder’s Award Agreement may also
provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason
would be prohibited at any time because the issuance of Common Stock would violate the registration requirements under the Securities
Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then
the Option shall terminate on the earlier of (a) the expiration of the term of the Option in accordance with Section 6.1 or (b)
the expiration of a period after termination of the Participant’s Continuous Service that is three months after the end of
the period during which the exercise of the Option would be in violation of such registration or other securities law requirements.

 

6.10
Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event
that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder
may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination),
but only within such period of time ending on the earlier of (a) the date that is 12 months following such termination or (b) the
expiration of the term of the Option as set forth in the Award Agreement. If, after termination, the Optionholder does not exercise
his or her Option within the time specified herein or in the Award Agreement, the Option shall terminate.

 

    	 	8	 

     

    

 

6.11
Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s
death, but only within the period ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration
of the term of such Option as set forth in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised
within the time specified herein or in the Award Agreement, the Option shall terminate.

 

6.12
Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options
or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Non-Qualified
Stock Options.

 

6.13
Disqualifying Dispositions. Any Participant who shall make a “disposition” (as defined in Section 424 of the
Code) of all or any portion of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant
Date of such Incentive Stock Option or within one year after the issuance of the Common Stock acquired upon exercise of such Incentive
Stock Option (a “Disqualifying Disposition”) shall be required to immediately advise the Company in writing as to the
occurrence of the sale and the price realized upon the sale of such Common Stock.

 

7.  
Provisions of Awards Other Than Options.

 

7.1   
Stock Appreciation Rights.

 

(a)          
General. Each Stock Appreciation Right granted under the Plan shall be evidenced
by an Award Agreement. Each Stock Appreciation Right so granted shall be subject to the conditions set forth in this Section ‎7.1,
and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.

 

(b)          
Term of Stock Appreciation Rights. The term of a Stock Appreciation Right granted
under the Plan shall be determined by the Committee; provided, however, no Stock Appreciation Right shall be exercisable
later than the tenth anniversary of the Grant Date.

 

(c)          
Vesting of Stock Appreciation Rights. Each Stock Appreciation Right may, but
need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Stock Appreciation
Right may be subject to such other terms and conditions on the time or times when it may be exercised as the Committee may deem
appropriate. The vesting provisions of individual Stock Appreciation Rights may vary. No Stock Appreciation Right may be exercised
for a fraction of a share. 

 

(d)          
Exercise and Payment. Upon exercise of a Stock Appreciation Right, the holder
shall be entitled to receive from the Company an amount equal to the number of shares of Common Stock subject to the Stock Appreciation
Right that is being exercised multiplied by the excess of (i) the Fair Market Value of a share of Common Stock on the date the
Award is exercised, over (ii) the exercise price specified in the Stock Appreciation Right. Payment with respect to the exercise
of a Stock Appreciation Right shall be made on the date of exercise. Payment shall be made in the form of Common Stock (with or
without restrictions as to substantial risk of forfeiture and transferability, as determined by the Committee in its sole discretion),
cash or a combination thereof, as determined by the Committee.

 

(e)          
Exercise Price. The exercise price of a Stock Appreciation Right shall be determined
by the Committee.

 

    	 	9	 

     

    

 

7.2   
Restricted Awards.

 

(a)          
General. A Restricted Award is an Award of actual Common Stock (“Restricted
Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a value equal to the
Fair Market Value of an identical number of shares of Common Stock, which may, but need not, provide that such Restricted Award
may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security
for the performance of any obligation or for any other purpose for such period (the “Restricted Period”) as
the Committee shall determine. Each Restricted Award granted under the Plan shall be evidenced by an Award Agreement. Each Restricted
Award so granted shall be subject to the conditions set forth in this Section ‎7.2 and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award Agreement.

 

(b)          
Restricted Stock and Restricted Stock Units. 

 

(i) 
Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect
to the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the
Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant
pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver
to the Company (A) an escrow agreement satisfactory to the Committee, if applicable and (B) the appropriate blank stock power with
respect to the Restricted Stock covered by such agreement. If a Participant fails to execute an agreement evidencing an Award of
Restricted Stock and, if applicable, an escrow agreement and stock power, the Award shall be null and void. Subject to the restrictions
set forth in the Award, the Participant generally shall have the rights and privileges of a stockholder as to such Restricted Stock,
including the right to vote such Restricted Stock and the right to receive dividends; provided that, any cash dividends
and stock dividends with respect to the Restricted Stock shall be withheld by the Company for the Participant’s account,
and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by
the Committee. The cash dividends or stock dividends so withheld by the Committee and attributable to any particular share of Restricted
Stock (and earnings thereon, if applicable) shall be distributed to the Participant in cash or, at the discretion of the Committee,
in Common Stock having a Fair Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions
on such stock and, if such stock is forfeited, the Participant shall have no right to such dividends.

 

(ii)
The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No Common Stock shall be
issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside funds for the payment
of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The
Committee may also grant Restricted Stock Units with a deferral feature, whereby settlement is deferred beyond the vesting date
until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock Units”).
At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common Stock)
may be credited with an amount equal to the cash and stock dividends paid by the Company in respect of one share of Common Stock
(“Dividend Equivalents”). Dividend Equivalents shall be withheld by the Company and credited to the Participant’s
account, and interest may be credited on the amount of cash Dividend Equivalents credited to the Participant’s account at
a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participant’s account
and attributable to any particular Restricted Stock Unit or Deferred Stock Unit (and earnings thereon, if applicable) shall be
distributed in cash or, at the discretion of the Committee, in Common Stock having a Fair Market Value equal to the amount of such
Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit or Deferred
Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant shall have no right to such
Dividend Equivalents.

 

    	 	10	 

     

    

 

(c)          
Restrictions.

 

(i) 
Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of
the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an
escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be
subject to the restrictions on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture
to the extent provided in the applicable Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates
shall be returned to the Company, and all rights of the Participant to such shares and as a stockholder with respect to such shares
shall terminate without further obligation on the part of the Company.

 

(ii)
Restricted Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration
of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the
applicable Award Agreement, and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of
the Participant to such Restricted Stock Units or Deferred Stock Units shall terminate without further obligation on the part of
the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.

 

(d)          
Restricted Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date
and end at the time or times set forth on a schedule established by the Committee in the applicable Award Agreement. No Restricted
Award may be granted or settled for a fraction of a share.

 

(e)          
Delivery of Restricted Stock and Settlement of Restricted Stock Units. Upon
the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in Section
7.2(c) and the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set
forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the
Participant, or his or her beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock which have
not then been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividends
or stock dividends credited to the Participant’s account with respect to such Restricted Stock and the interest thereon,
if any. Upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, or at the expiration
of the deferral period with respect to any outstanding Deferred Stock Units, the Company shall deliver to the Participant, or his
or her beneficiary, without charge, one share of Common Stock for each such outstanding vested Restricted Stock Unit or Deferred
Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect to each such Vested
Unit in accordance with Section 7.2(b)(ii) hereof and the interest thereon or, at the discretion of the Committee, in Common
Stock having a Fair Market Value equal to such Dividend Equivalents and the interest thereon, if any; provided, however,
that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion, elect to pay cash or
part cash and part Common Stock in lieu of delivering only Common Stock for Vested Units. If a cash payment is made in lieu of
delivering Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date
on which the Restricted Period lapsed in the case of Restricted Stock Units, or the delivery date in the case of Deferred Stock
Units, with respect to each Vested Unit. 

 

(f)           
Stock Restrictions. Each certificate representing Restricted Stock awarded under
the Plan shall bear a legend in such form as the Company deems appropriate.

 

    	 	11	 

     

    

 

7.3   
Performance Stock Awards.

 

(a)          
Grant of Performance Stock Awards. Each Performance Stock Award granted under
the Plan shall be evidenced by an Award Agreement. Each Performance Stock Award so granted shall be subject to the conditions set
forth in this Section ‎7.3, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable
Award Agreement. The Committee shall have the discretion to determine: (i) the number of shares of Common Stock or share-denominated
units subject to a Performance Stock Award granted to any Participant; (ii) the Performance Period applicable to any Award; (iii)
the conditions that must be satisfied for a Participant to earn an Award; and (iv) the other terms, conditions and restrictions
of the Award.

 

(b)          
Earning Performance Stock Awards. The number of shares of Performance Stock
earned by a Participant will depend on the extent to which the performance goals established by the Committee are attained within
the applicable Performance Period, as determined by the Committee.

 

7.4   
Other Equity-Based Awards and Cash Awards. The Committee may grant Other Equity-Based
Awards, either alone or in tandem with other Awards, in such amounts and subject to such conditions as the Committee shall determine
in its sole discretion. Each Equity-Based Award shall be evidenced by an Award Agreement and shall be subject to such conditions,
not inconsistent with the Plan, as may be reflected in the applicable Award Agreement. The Committee may grant Cash Awards in such
amounts and subject to such Performance Goals, other vesting conditions, and such other terms as the Committee determines in its
discretion. Cash Awards shall be evidenced in such form as the Committee may determine.

 

8.  
Securities Law Compliance. 

 

8.1   
Each Award Agreement shall provide that no Common Stock shall be purchased or
sold thereunder unless and until (a) any then applicable requirements of state or federal laws and regulatory agencies have been
fully complied with to the satisfaction of the Company and its counsel and (b) if required to do so by the Company, the Participant
has executed and delivered to the Company a letter of investment intent in such form and containing such provisions as the Committee
may require. The Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Awards and to issue and sell Common Stock upon exercise of the Awards;
provided, however, that this undertaking shall not require the Company to register under the Securities Act, the Plan, any Award
or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common
Stock upon exercise of such Awards unless and until such authority is obtained.

 

8.2   
Unless otherwise provided in an Award Agreement, if requested by the Company
or the representative of the underwriters of the Common Stock (or other securities of the Company), the Participant shall not,
without the prior written consent of the underwriter(s) of the Common Stock (or other securities of the Company) and the Company,
sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction
with the same economic effect as a sale, any Common Stock (or other securities of the Company) held by the Participant (other than
those included in the registration) during (i) the 180-day period following the effective date of the first firm commitment underwritten
public offering of the Common Stock registered under the Securities Act (or such longer period, not to exceed 18 days after the
expiration of the 180-day period, as the underwriters or the Company or Affiliate shall request in order to facilitate compliance
with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rule or regulation), and (ii) the 90-day period following
the effective date of a registration statement of the Company filed under the Securities Act (or such longer period, not to exceed
18 days after the expiration of the 90-day period, as the underwriters or the Company shall request in order to facilitate compliance
with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rule or regulation). The obligations described in this
paragraph shall not apply to a registration relating solely to employee benefit plans on SEC Form S-1 or Form S-8 or similar forms
that may be promulgated in the future by the SEC, or a registration relating solely to a transaction on SEC Form S-4 or similar
forms that may be promulgated in the future. If requested by the Company or the representative of the underwriters of Stock (or
other securities) of the Company, the Participant will enter into an agreement regarding his, her or its compliance with this requirement
that will survive the term of the Award Agreement.

 

    	 	12	 

     

    

 

9.  
Use of Proceeds. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shall
constitute general funds of the Company.

 

10. Miscellaneous.

 

10.1
Acceleration of Exercisability and Vesting. Notwithstanding anything herein or in the Award
to the contrary, the Committee shall have the power to accelerate the time at which an Award may first be exercised or the time
during which an Award or any part thereof will vest.

 

10.2
Stockholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall
be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Common Stock subject to such Award
unless and until such Participant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other
rights for which the record date is prior to the date such Common Stock certificate is issued, except as provided in Section
11 hereof.

 

10.3
No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award
granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity
in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate (a) the employment
of an Employee with or without notice and with or without Cause or (b) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate
is incorporated, as the case may be.

 

10.4
Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment
by an Employee shall be deemed to result from either (a) a transfer of employment to the Company from an Affiliate or from the
Company to an Affiliate, or from one Affiliate to another, or (b) an approved leave of absence for military service or sickness,
or for any other purpose approved by the Company, if the Employee’s right to reemployment is guaranteed either by a statute
or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides
in writing, in either case, except to the extent inconsistent with Section 409A of the Code if the applicable Award is subject
thereto.

 

10.5
Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject
to the discretion of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating
to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company’s
right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering
a cash payment; (b) authorizing the Company to withhold Common Stock from the Common Stock otherwise issuable to the Participant
as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no Common Stock is withheld
for such purpose with a value exceeding the maximum amount of tax required to be withheld by law; (c) delivering to the Company
previously owned and unencumbered Common Stock of the Company; or (d) if the Common Stock is listed on any established stock exchange
or a national market system, through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an
amount equal to the tax required to be withheld by law (i.e., by means of a “cashless” exercise procedure).

 

    	 	13	 

     

    

 

10.6
Stockholder Agreements. If the Company has one or more stockholder agreements in effect at the time of grant or exercise
of an Award under the Plan, then the Committee shall, if the Company is contractually obligated to, and may, in its discretion,
condition the grant or exercise (as applicable) of any such Award upon execution by the Participant of such stockholder agreement(s),
such that the Participant shall become a party to such stockholder agreements(s) concurrently with such grant or exercise (as applicable)
of any such Award. The Company may also require, as a condition to the grant, exercise or settlement of any Award, that the Participant
appoint the Company’s Chief Executive Officer (or other member of the Board) as having the sole and exclusive power of attorney
to vote all Shares subject to the Participant’s Award, which power shall be effective until the earlier of the consummation
of a Change in Control or the Company’s initial public offering of its securities on a national stock exchange or national
market such as Nasdaq or NYSE.

 

10.7
Right of Repurchase. An Award may include a provision whereby the Company may elect to repurchase all or any part of the
Shares acquired by the Participant. The terms of any repurchase option shall be specified in the Award Agreement. Unless otherwise
determined by the Committee and subject to compliance with applicable laws, the repurchase price for vested Shares will be the
Fair Market Value of the Shares on the date of repurchase. The Company will not exercise its repurchase option until at least six
months (or such longer or shorter period of time necessary to avoid classification of the Award as a liability for financial accounting
purposes) have elapsed following delivery of the Shares subject to the Award, unless otherwise specifically provided by the Committee.
The Committee reserves the right to assign the Company’s right of repurchase.

 

10.8
Right of First Refusal. An Award may also include a provision whereby the Company may elect to exercise a right of first
refusal following receipt of notice from the Participant of the intent to transfer all or any part of the Shares received under
the Award. Except as expressly provided in this paragraph or in the Award Agreement, such right of first refusal shall otherwise
comply with any applicable provisions of the bylaws of the Company. The Committee reserves the right to assign the Company’s
right of first refusal.

 

10.9
Dissolution or Liquidation. Except as otherwise provided in the Award Agreement, in the event of a dissolution or liquidation
of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding Shares not subject to a forfeiture
condition or the Company’s right of repurchase) shall terminate immediately prior to the completion of such dissolution or
liquidation, and the Shares subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased
or reacquired by the Company notwithstanding the fact that the holder of such Award is providing Service, provided, however, that
the Committee may, in its sole discretion, cause some or all Awards to become fully vested, exercisable and/or no longer subject
to repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before the dissolution or liquidation
is completed but contingent on its completion.

 

11. Adjustments
Upon Changes in Common Stock. In the event of changes in the outstanding Common Stock or in the capital structure of the
Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate
transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant
change in capitalization occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements,
the exercise price of Options and Stock Appreciation Rights, the Performance Goals to which Performance Stock Awards and Cash
Awards are subject, the maximum number of shares of Common Stock subject to all Awards stated in Section 4 will be
equitably adjusted or substituted, as to the number, price or kind of Common Stock or other consideration subject to such
Awards to the extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant to
this Section ‎11, unless the Committee specifically determines that such adjustment is in the best
interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that any
adjustments under this Section ‎11 will not constitute a modification, extension or renewal of the
Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Non-Qualified Stock Options,
ensure that any adjustments under this Section ‎11 will not constitute a modification of such Non-Qualified
Stock Options within the meaning of Section 409A of the Code. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

 

 

    	 	14	 

     

    

 

12. Change
in Control. The following provisions shall apply to Awards in the event of a Change in Control unless otherwise provided
in the instrument evidencing the Award or any other written agreement between the Company or any Affiliate and the holder of
the Award or unless otherwise expressly provided by the Committee at the time of grant of the Award. Except as otherwise
stated in the Award Agreement, in the event of a Change in Control, then, notwithstanding any other provision of the Plan,
the Committee shall take one or more of the following actions with respect to Awards, contingent upon the closing or
completion of the Change in Control:

 

(a)          
arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s
parent company) to assume or continue the Award or to substitute a similar stock award for the Award (including, but not limited
to, an award to acquire the same consideration paid to the stockholders of the Company pursuant to the Change in Control);

 

(b)          
arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock
issued pursuant to the Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s
parent company);

 

(c)          
accelerate the vesting, in whole or in part, of the Award (and, if applicable, the time at which the Award may be
exercised) to a date prior to the closing of such Change in Control as the Committee shall determine (or, if the Committee shall
not determine such a date, to the date that is five (5) days prior to the closing of the Change in Control), with such Award terminating
if not exercised (if applicable) at or prior to the closing of the Change in Control;

 

(d)          
arrange for the lapse of any reacquisition or repurchase rights held by the Company with respect to the Award;

 

(e)          
cancel or arrange for the cancellation of the Award, to the extent not vested or not exercised prior to the closing
of the Change in Control, in exchange for such cash consideration, if any, as the Committee, in its sole discretion, may consider
appropriate; and

 

(f)           
make a payment, in such form as may be determined by the Committee, equal to the excess, if any, of (A) the value
of the property the holder of the Award would have received upon the exercise of the Award, over (B) any exercise price payable
by such holder in connection with such exercise. For the avoidance of doubt, such payment may be zero if the fair market value
of the property is equal to or less than the exercise price.

 

The
Committee need not take the same action with respect to all Awards or with respect to all Participants. To the extent permitted
under Section 409A of the Code, the Committee may provide that payments under this provision may be delayed to the same extent
that payment of consideration to the holders of Stock in connection with the Change in Control is delayed as the result of escrows,
earnouts, holdbacks or other contingencies. In addition, the Committee may provide that such payments made over time will remain
subject to substantially the same vesting schedule as the Award, including any performance-based metrics that applied to the Award
immediately prior to the closing of the Change in Control. 

 

13. Amendment
of the Plan and Awards.

 

13.1
Amendment of Plan. The Board at any time, and from time to time, may amend or terminate the
Plan. However, except as provided in Section 11 relating to adjustments upon changes in Common Stock and Section 13.3,
no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary
to satisfy any Applicable Laws. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such
amendment will be contingent on stockholder approval.

 

13.2
Stockholder Approval. The Board may, in its sole discretion, submit any other amendment to
the Plan for stockholder approval.

 

13.3
Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock
Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards
granted under it into compliance therewith.

 

    	 	15	 

     

    

 

13.4
No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall
not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant
consents in writing.

 

13.5
Amendment of Awards. The Committee at any time, and from time to time, may amend the terms
of any one or more Awards; provided, however, that the Committee may not make any amendment which would otherwise constitute
an impairment of the rights of a Participant under any Award unless the Participant consents in writing.

 

14. General
Provisions.

 

14.1
Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s
rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon
the occurrence of certain events, in addition to applicable vesting conditions of an Award. Such events may include, without limitation,
breach of non-competition, non-solicitation, confidentiality, or other restrictive covenants that are contained in the Award Agreement
or otherwise applicable to the Participant, a termination of the Participant’s Continuous Service for Cause, or other conduct
by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.

 

14.2
Clawback. Notwithstanding any other provisions in this Plan, the Company may cancel any Award,
require reimbursement of any Award by a Participant, and effect any other right of recoupment of equity or other compensation provided
under the Plan in accordance with any Company policies that may be adopted and/or modified from time to time (“Clawback
Policy”). In addition, a Participant may be required to repay to the Company previously paid compensation, whether provided
pursuant to the Plan or an Award Agreement, in accordance with the Clawback Policy. By accepting an Award, the Participant is agreeing
to be bound by the Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion
(including, without limitation, to comply with applicable law or stock exchange listing requirements).

 

14.3
Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific cases.

 

14.4
Sub-Plans. The Committee may from time to time establish sub-plans under the Plan for purposes
of satisfying securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans
shall contain such limitations and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans
shall be deemed a part of the Plan, but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan
was designed.

 

14.5
Deferral of Awards. The Committee may establish one or more programs under the Plan to permit
selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance
criteria, or other event that absent the election would entitle the Participant to payment or receipt of Common Stock or other
consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms
for payments of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral
program.

 

    	 	16	 

     

    

 

14.6
Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee
shall be required to establish any special or separate fund or to segregate any assets to assure the performance of its obligations
under the Plan.

 

14.7
Recapitalizations. Each Award Agreement may contain provisions to reflect the provisions of
Section 11.

 

14.8
Delivery. Upon exercise of a right granted under this Plan, the Company shall issue Common
Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations
the Company may otherwise have, for purposes of this Plan, 30 days shall be considered a reasonable period of time.

 

14.9
Fractional Shares. Fractional shares of Common Stock may be issued or delivered pursuant to
the Plan. The Committee shall determine whether cash, additional Awards or other securities or property may be issued or paid in
lieu of fractional Common Stock or whether any fractional shares may be rounded, forfeited or otherwise eliminated.

 

14.10
Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions
not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of Awards, as the Committee may
deem advisable.

 

14.11
Section 409A. The Plan is intended to comply with Section 409A of the Code to the extent subject
thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section
409A of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything
to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six month
period immediately following the Participant’s termination of Continuous Service shall instead be paid on the first payroll
date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier).
Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the
assessment of any additional tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee
will have any liability to any Participant for such tax or penalty.

 

14.12
Section 16. If a Participant is an Officer or Director within the meaning of Section 16 of
the Exchange Act, Awards granted hereunder shall be subject to all conditions required under Rule 16b-3, or any successor rule
promulgated under the Exchange Act, to qualify the Award for any exception from the provisions of Section 16(b) of the Exchange
Act available under that Rule. Such conditions shall be set forth in the agreement with the Participant which describes the Award
or other document evidencing or accompanying the Award.

 

14.13
Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by
whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when
filed by the Participant in writing with the Company during the Participant’s lifetime.

 

14.14
Expenses. The costs of administering the Plan shall be paid by the Company.

 

14.15
Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid,
illegal or unenforceable, whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent,
of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby.

 

    	 	17	 

     

    

 

14.16
Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended
to define or limit the construction of the provisions hereof.

 

14.17
Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform
and may be made by it selectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the
generality of the foregoing, the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments,
and to enter into non-uniform and selective Award Agreements.

 

15. Effective
Date of Plan. The Plan shall become effective as of the Effective Date, but no Award shall be exercised (or, in the case
of a stock Award, shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.

 

16. Termination
or Suspension of the Plan. The Plan shall terminate automatically on tenth anniversary of the Effective Date. No Award
shall be granted pursuant to the Plan after such date, but Awards theretofore granted may extend beyond that date. The Board
may suspend or terminate the Plan at any earlier date pursuant to Section 13.1 hereof. No Awards may be granted under
the Plan while the Plan is suspended or after it is terminated.

 

17. Choice
of Law. The law of the State of Delaware shall govern all questions concerning the construction, validity and
interpretation of this Plan, without regard to such state’s conflict of law rules.

  

    	 	18

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