Document:

plth_ex105

Exhibit 10.5

 

AGREEMENT REGARDING RELEASE OF LEASHOLD ESTATE

 

THIS AGREEMENT REGARDING
RELEASE OF LEASEHOLD ESTATE (this "Agreement")
is made and entered into on August 31, 2020, by an among LaBarre
Chastang, Inc. a California corporation, d.b.a. ABC Traffic
Programs ("Lessee"), and BLC Management Company, LLC, a Nevada
limited liability company ("BLC").

 

RECITALS

 

A. Grove
Investment Company, a California general partnership
("Lessor")
and Lessee entered into that certain
Standard Industrial/Commercial Multi-Tenant Gross Lease dated
January 1, 2019 (the "Lease")
for certain property commonly known as
3400 W. Warner Ave. (the "Building"),
Units C and D, Santa Ana, California
(the "Premises").

 

B. BLC
currently occupies a portion of the Building pursuant to the
Standard Industrial Commercial Multi-Tenant Lease — Net,
dated November 8, 2019 between Warner Management Group, LLC a New
York Limited liability company as Lessee and Lessor, including all
amendments and exhibits thereto and Agreements thereto (the
"Master
Lease").

 

C. BLC
desires to acquire the right to lease the Premises starting on
October 1, 2020 (the "Turnover
Date"), and Lessee has agreed
to relocate its business from the Premises and release its interest
in the Premises (but not the Lease) to Lessor, so that BLC can
occupy the Premises, in consideration for the payment by BLC to
Lessee of the sum of Three Hundred Fifty Thousand Dollars
($350,000.00) (the "BLC
Payment").

 

D. Lessor
is willing to consent to the release of the Premises and to add the
Premises to the Master Lease, such addition starting on the
Turnover Date.

 

E. Lessor
is willing to execute an amendment of the Lease to relocate Lessee
within Lessor's property, and Lessee is willing to enter into an
amendment of the Lease to relocate Lessee within Lessor's
property.

 

F. Lessor
is willing to consent to a sublease of the Premises from BLC to
Lessee for the period beginning on Oct. 1, 2020 and ending on
December 31, 2020.

 

NOW, THEREFORE,
in consideration of the mutual
benefits and covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby mutually agreed as
follows:

 

1.            Release
of Premises. In consideration
for the BLC Payment, receipt of which is hereby acknowledged,
effective as of the Turnover Date, Lessee hereby releases its
right, title and interest in and to the
Premises.

 

2.            BLC's
Representations. BLC represents to both Lessee and
Lessor, that BLC is familiar with the Premises and with the
improvements previously placed thereon by Lessor, Lessee and/or
others; and BLC, shall accept the Premises in its "As-Is, Where-Is"
condition as of the
Turnover Date.

 

 

1

 

 

 

3.            Waiver
and Release. BLC represents,
warrants and agrees that neither Lessee nor any of Lessee's
shareholders, employees, representatives or agents have made any
representations, warranties or covenants with respect to the
condition of the Premises nor shall Lessee or any shareholders,
employees, representatives or agents have any liability or
responsibility to BLC or any other person or entity with respect to
the condition of the Premises, other than Lessee's agreement to
vacate the Premises on or before the Turnover Date. Other than for
claims arising against Lessee from non-BLC parties prior to the
final day that Lessee has use of the Premises through December 31,
2020, BLC hereby waives and releases Lessee and Lessee's
shareholders, employees, representatives and agents from any
rights, claims and causes of action it may otherwise have against
Lessee or Lessee's shareholders, employees, representatives or
agents.

 

4.            Limited
Consent to Agreement. Lessor
has provided its limited consent to the release of the Premises
described herein as set forth in the Limited Joinder executed by
Lessor and attached hereto.

 

5.            Amendment
of Master Lease. Lessor and BLC
hereby agree that the Master Lease shall be amended by the Third
Amendment to Standard Industrial Commercial Multi-Tenant Lease
— Net, dated November 8, 2019 between Lessor and BLC a true
and correct copy of which is attached hereto as Exhibit A
and by this reference incorporated
herein, effective upon execution by the Lessor as described in the
Limited Consent.

 

6.            Amendment
of Lease. Lessor and Lessee
hereby agree that the Lease shall be amended by Lessor and Lessee
by that First Amendment between Lessor and Lessee a true and
correct copy of which is attached hereto as Exhibit B
and by this reference incorporated
herein, effective upon execution by the Lessor as described in the
Limited Consent.

 

7.            Sublease
Agreement. Lessee and BLC
hereby agree that Lessee shall enter into a Sublease Agreement for
the Premises from BLC, a true and correct copy of which is attached
hereto as Exhibit C
and by this reference incorporated
herein, effective upon execution by the Lessor as described in the
Limited Consent.

 

8.            Successors
and Assigns. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and
assigns.

 

9.            Amendment.
This Agreement may not be modified,
altered or amended nor may any provision hereof or rights hereunder
be waived, except by an instrument in writing signed by the Person
or entity against which such modification, alteration, amendment or
waiver is sought to be enforced.

 

10.             
Further
Assurances. Each party hereto,
at its own expense, shall execute and deliver all such instruments
and take all such action as from time to time may be reasonably
necessary or reasonably requested in order for each party to obtain
the full benefits of this Agreement and of the rights and powers
herein created.

 

11.             
Authority.
Each Person executing this Agreement
represents and warrants to the

 

parties hereto that such individual has the full right power and
authority to execute this Agreement and to bind the entity on whose
behalf such individual is executing this Agreement

 

12.             
Legal Costs/Attorneys'
Fees. In the event any legal
proceeding is instituted by a party to enforce, this Agreement, the
prevailing party in such action (as determined by the arbitrator,
judge, agency or other authority before which such proceeding is
commenced), shall be entitled to such reasonable attorneys' fees
(including, without limitation, reasonable outside counsel fees and
in-house paralegals' and attorneys' time computed at similar
rates), costs and expenses as may be fixed by the decision maker.
This Agreement shall be construed and enforced in accordance with
the internal laws of the State of California (without regard to
conflicts of law). The parties hereby irrevocably waive their
respective rights to a jury trial of any claim or cause of action
based upon or arising out of this Agreement.

 

13.             
Counterpart
Originals. This Agreement may
be executed in counterpart originals, confirmed by email, each of
which shall constitute the same agreement. Electronic signatures
shall have the same effect as original
signatures.

 

[Signatures on Next Pages]

 

 

2

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written by their proper officers and
pursuant to due and requisite company action.

 

LESSEE:

LaBarre
Chastang, Inc. a California corporation,
d.b.a. ABC Traffic Programs

 

 

By: /s/ Cherine
Child

Name: Cherine
Child

Its: CEO

 

 

BLC:

BLC
Management Company, LLC, a Nevada
limited liability company

 

 

By: /s/ Leighton
Koehler

Name: Leighton
Koehler

Its: Manager

 

3

 

	

 

LIMITED JOINDER 

 

 

The undersigned GROVE INVESTMENT COMPANY, a
California general partnership ("Grove"), is joining this LEASEHOLD
ESTATE TRANSFER AGREEMENT (the "Transfer Agreement"), solely to indicate that, as described in Section
5, 6, and 7 of the Transfer Agreement, when the lease amendments,
attached hereto as Exhibit
"A" and Exhibit "B", and the sublease agreement, attached hereto
as Exhibit "C"
are all delivered to Grove, signed by
the counter-parties thereto, Grove will counter-sign each of those
and deliver a copy to the respective lessees named therein. Grove
is not otherwise approving of or joining in the Transfer
Agreement.

 

GROVE
INVESTMENT COMPANY, a

California
general partnership

 

By: /s/ Ernie
Gallardo

Ernie Gallardo, Asset Manager

 

 

4

 

 

EXHIBIT
A

 

THIRD
AMENDMENT TO MASTER LEASE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

THIRD AMENDMENT TO STANDARD INDUSTRIAL / COMMERCIAL

 

MULTI-TENANT LEASE — NET

 

Dated: September 8, 2020

 

LESSOR:

 

GROVE INVESTMENT
COMPANY, a California general
partnership

 

LESSEE:

 

BLC MANAGEMENT COMPANY,
LLC, a Nevada limited liability
company

 

LEASED PREMISES:

 

3400 W. WARNER AVENUE, UNITS A, B, C, D, E, F, F-1, G, H, K, L, and
M

 

SANTA ANA, CALIFORNIA 92704

 

 

This
THIRD AMENDMENT TO STANDARD INDUSTRIAL / COMMERCIAL MULTI-TENANT
LEASE — NET (the "Amendment") is entered into between the
Lessor and Lessee, as identified above, and relates to the leased
premises identified above (the "Premises"). This Amendment is
entered into based on the facts contained in the Recitals, below,
and on the Terms and Conditions which are also set forth
below.

 

RECITALS

 

The
Lessor and Lessee's predecessor, WARNER MANAGEMENT GROUP, LLC, a
New York limited liability company (hereinafter "WARNER" or
"Assignor"), entered into a Standard Industrial/Commercial
Multi-Tenant Lease - Net (the "Original Lease") dated May 1, 2018,
which included Exhibits A through H, inclusive.

 

A
Guaranty of Lease (the "Guaranty"), relating to the Original Lease
was executed by NEWTONIAN PRINCIPLES, INC., a Delaware corporation
(the "Original Guarantor") in favor of the Lessor.

 

The
Original Lease has since been amended by: (1) The terms of the
FIRST AMENDMENT TO STANDARD INDUSTRIAL / COMMERCIAL MULTI-TENANT
LEASE

6

 

— NET, dated November 8, 2019 (the "First Amendment"),
entered into between Lessor and WARNER, which included a
reaffirmation of the Guaranty by the Original Guarantor, and (2)
The terms of the SECOND AMENDMENT TO STANDARD INDUSTRIAL /
COMMERCIAL MULTI-TENANT LEASE — NET, dated April 17, 2020
(the "Second Amendment"), entered into between Lessor and WARNER,
which included a reaffirmation of the Guaranty by the Original
Guarantor.

 

The
Original Lease, as amended by the First Amendment and Second
Amendment (the "Previously Amended Lease") has been assigned by
WARNER to BLC MANAGEMENT COMPANY, LLC, a Nevada limited liability
company (hereinafter referred to as "Lessee") in accordance with
the terms of the Assignment, Assumption and Consent to Assignment
of Lease dated May 20, 2020, entered into by WARNER, Lessee and
Lessor (the "Assignment"). WARNER was not released from liability
under the Previously Amended Lease by the terms of the
Assignment.

 

The
Original Guarantor was not a party to the Assignment, but PLANET 13
HOLDINGS, INC., a corporation organized under the Business
Corporations Act of British Columbia, Canada (the "New Guarantor")
guarantied the performance of the lessee under the terms of the
Previously Amended Lease, pursuant to the terms of a Guaranty of
Lease dated May 20, 2020 (the "New Guaranty"), which was delivered
to Lessor along with the Assignment.

 

Lessee
has entered into an agreement with La Barre Chastang, Inc. to
vacate Suite C and Suite D, which are defined above as a part of
the Premises (the "New Suites"), effective as of October 1, 2020,
and Lessee has agreed to take the risk that the New Suites will be
delivered to Lessee as of October 1, 2020, and Lessee has agreed to
start paying Lessor for such space, effective as of October 1,
2020, regardless of whether or not Lessee has gained possession of
the New Suites.

 

Initially
capitalized terms which are not otherwise identified in this
Amendment shall have the meaning ascribed to them in the Previously
Amended Lease.

 

TERMS AND CONDITIONS

 

NOW,
THEREFORE, Lessor and Lessee agree to modify the terms of the
Original Lease as follows:

 

1. Premises.
Effective as of October 1, 2020, the
Premises as defined in the Previously Amended Lease shall be
changed to also include the New Suites. The New Suites, when added
to the space leased under the terms of the Premises, results in the
total square footage being leased by Lessee being 33,001 square
feet. Lessee shall

7

 

 

begin
paying rents on the pre-existing Premises, plus the New Suites,
from and after October 1, 2020.

 

2. Base Rent.
Base Rent due under the Lease was most
recently revised in Paragraph 1 of the Second Amendment; that Base
Rent shall continue in effect through September 30, 2020. Effective
from and after October 1, 2020, Base Rent shall be revised and
shall be payable as follows:

 

A. Base
Rent for the period from October 1, 2020, until the
earlier of:
(i) March 31, 2021, or (H) the date
when Lessee opens for business at the Premises (hereinafter the
"Rent Abatement Period"), shall be revised to to
$49,254.00
per month;

 

B. If
the Rent Abatement Period does not end on or before December 31,
2020, the Base Rent shall be revised to $50,731.60 per month for the period from January 1, 2021
through the end of the Rent Abatement Period;

 

C. From
and after the later of the end of the Rent Abatement Period or
January 1, 2021, through December 31, 2021, Base Rent shall be
revised to $67,642.00 per month;

 

D. From
and after January 1, 2022, Base Rent shall be revised as set forth
in Paragraph 60, which is revised in this Amendment.

 

3. Lessee's Share.
Lessee's Share, as defined in Section
1.6 of the Previously Amended Lease shall be increased to
33.74%
from and after October 1,
2020.

 

4. Security Deposit.
The Security Deposit, referenced in
Section 1.7c, shall be increased from the current amount of
$180,000.00 to $203,000.00 and Lessee shall pay the difference of
$23,000.00 to Lessor upon the exchange of signed copies of this
Amendment.

 

5. Waiver. Lessee waives any right to any notice from Lessor
of the availability of the New Suites under the terms of the
Previously Amended Lease.

 

6. Revised Paragraph 60.
The Base Rent shall be increased at a
rate of three percent (3%) per annum on a compounding basis, during
the remainder of the Original Term. Accordingly, Paragraph 60 as
set forth in the First Amendment shall be replaced with the
following:

8

 

"60. Base Rent
Adjustments. The Base Rent
shall be increased at a rate of three percent (3%) per annum on a
compounding basis, during the remainder of the Original
Term.

 

	

Months

	
 

Monthly Base Rent:

 

	
January
1, 2022 - December 31, 2022

	
 $69,671.00 

	
January
1, 2023 - December 31, 2023

	
 $71,762.00 

	
January
1, 2024 - December 31, 2024

	
 $73,914.00 

	
January
1, 2025 - December 31, 2025

	
 $76,132.00 

	
January
1, 2026 - December 31, 2026

	
 $78,416.00 

	
January
1, 2027 - December 31, 2027

	
 $80,768.00 

	
January
1, 2028 - December 31, 2028

	
 $83,191.00 

	
January
1, 2029 - December 31, 2029

	
 $85,687.00 

	
January
1, 2030 - May 31, 2030

	
 $88,258.00''

 

 

7. Exhibit "C" in the form attached to the First Amendment, shall
now be deemed to include the New Suites, which are identified
thereon.

 

8. Reaffirmation.
Except as expressly amended or
modified by the terms of this Amendment, the terms of the
Previously Amended Lease are ratified and reaffirmed by Lessor and
Lessee.

 

 

 

	
  GROVE INVESTMENT
COMPANY,  a California
general partnership

	

 

	

 

	

BLC MANAGEMENT COMPANY, LLC,   a
Nevada limited liability company

	

 

	
/s/ Ernest
Gallardo

	

 

	

 

	
/s/ Robert
Groesbeck

	

 

	
Ernest
Gallardo

	

 

	

 

	
Robert
Groesbeck

	

 

	
Asset
Manager

	

 

	

 

	
Manager

	

 

 

 

 

REAFFIRMATION OF GUARANTY

 

The
undersigned provided the New Guaranty, referenced above in this
Amendment. The undersigned has reviewed this Amendment and agrees
that, as an inducement for Lessor to execute this Amendment, the
New Guaranty shall remain in full force and effect and, from and
after the date hereof, and that the New Guaranty shall operate as a
guaranty obligations arising out of the Previously Amended Lease,
as

9

 

 

amended
by the foregoing Amendment. The obligations of the undersigned
Guarantor and the rights of the Lessor, as provided in the New
Guaranty, shall be fully applicable to the Previously Amended
Lease, as amended by this Amendment.

 

PLANET 13 HOLDINGS,
INC., a corporation organized
under the
Business Corporations Act of British Columbia, Canada

 

 

	
/s/ Larry
Scheffler

	

 

	

 

	
/s/ Robert
Groesbeck

	

 

	
Larry
Scheffler

	

 

	

 

	
Robert
Groesbeck

	

 

	
President  

	

 

	

 

	Co-President	

 

 

 

 

REAFFIRMATION OF BY WARNER

 

The
undersigned, WARNER, was not released from liability under the
Previously Amended Lease by the terms of the Assignment. The
undersigned has reviewed this Amendment and agrees that, as an
inducement for Lessor to execute this Amendment WARNER shall remain
liable as an assignor of the Previously Amended Lease (which
included rights to capture additional space under its terms), as
the same has been amended by the foregoing Amendment. The
obligations of the undersigned WARNER and the rights of the Lessor,
as provided in the Previously Amended Lease, and the Assignment
shall be fully applicable to the Previously Amended Lease, as
amended by this Amendment.

 

WARNER MANAGEMENT GROUP,
LLC, a New York limited
liability company

 

 

	

 

	

	

 

	

 

	

 

	

 

	

 

	

	
By:  

	
/s/ 
Sarah
Sibia

	

 

	

 

	

 

	
Sarah
Sibia

	

 

	

 

	

 

	

Manager

	

 

 

 

10

 

 

EXHIBIT
B

 

FIRST
AMENDMENT TO LEASE

 

EXHIBIT
B

 

11

 

 

FIRST AMENDMENT TO LEASE

 

This
FIRST AMENDMENT TO LEASE (this "Amendment") is entered into as
of

 

 

August,
2020 by and between GROVE INVESTMENT COMPANY, a California general
partnership ("Lessor"), and La Barre Chastang, Inc. a California
corporation, d.b.a. ABC Traffic Programs ("Lessee"), based on the
factual matters recited below and on the terms and condition
contained herein.

 

RECITALS

 

A. Lessor
and Lessee entered into that certain Standard IndustriaUCommercial
Multi- Tenant Lease 

                      

Gross,
dated January I, 2019 (the "Lease") for certain property commonly
known as 3400 W. Warner Ave. Units C and D, Santa Ana, California
(the "Old Premises").

 

B. The
parties hereto now wish to amend the Lease as of October I, 2020
(the "Effective Date"), to redefine the Premises, as referenced in the
Lease from the Old Premises to two industrial units containing
approximately 3,600 square feet of space, commonly known as 3440 W.
Warner Ave. Units I and J, Santa Ana, California (the "New
Premises"), to modify the Base Rent due under the terms of the
Lease and to address the other matters set forth
herein.

 

C. The
Lease was guaranteed by MICHELE HUNDLEY in accordance with the
terms of a Guaranty of Lease, which references the Old Premises and
which was delivered concurrently with the Lease (the "Guaranty");
MICHELE HUNDLEY has agreed to reaffirm her obligations under the
Guaranty as applicable to the Lease as amended by this
Amendment.

 

NOW,
THEREFORE, in consideration for the foregoing and the mutual
covenants hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1.          Recitals.
The foregoing recitals arc true and
correct and incorporated herein by reference.

 

2.          Defined
Terms. All capitalized terms
used in the Amendment that are not defined herein shall have the
meanings as defined in the Lease.

 

3.          Change
in the Premises. As of the
Effective Date, Section 1.2 (a) of the Lease, which defines the
Premises, is amended such that the Premises will include only the
New Premises and Lessee's right to occupy the Old Premises, under
the terms of the Lease, shall terminate as of Noon on October I,
2020. A Site Plan showing the New Premises is depicted on
Exhibit
A attached hereto, which as of
the Effective Date, shall replace Exhibit C
as attached to the Lease. From and
after October 1, 2020, the term "Premises" under the Lease shall
mean the New Premises. Lessee shall have the right to remove its
personal property, trade fixtures and the existing satellite
equipment and security cameras and related equipment from the Old
Premises.

 

4.          Condition
of New Premises. Lessor agrees
that, notwithstanding any contrary provision of the Lease or any
interpretation of any provision thereof, the representations,
warranties and covenants of Lessor in the Lease, including without
limitation the representations, warranties and covenants of Lessor
in Sections 2.2 and 2.3 thereof, shall be applicable to the New
Premises and the "Start Date" with respect to the New Premises
shall be the date on which Lessor delivers exclusive possession of
the New Premises to Lessee.

 

5.          Access
to
the New Premises. Upon
execution by Lessor and Lessee of this Amendment and mutual
delivery, Lessee shall have access to the New Premises for purposes
of building it out, at Lessee's sole cost and to Lessee's
specifications; provided that, such build out is completed in
accordance with plans submitted to and approved by the City of
Santa Ana (the "Approved Plans") and permits issued by the City of Santa Ana based
on the Approved Plans. Lessor shall reasonably cooperate in good
faith and in a timely manner with Lessee in Lessee's pu9uit and
obtaining of the approval of such plans and
permits.

 

12

 

 

6.          Acknowledgment
of Re-Leasing. Lessee
acknowledges that Lessor is leasing the Old Premises to BLC
Management Company, LLC ("BLC") as of the Effective Date and that
Lessee and BLC are coordinating any holdover tenancy in the Old
Premises and that Lessee's obligation to pay rent on the New
Premises shall commence on October 1, 2020, regardless of whether
Lessee's build out of the New Premises is completed and regardless
of whether or not a certificate of occupancy has been issued for
the New Premises.

 

7.          Base
Rent. Commencing on the on the
Effective Date, Section 1.5 of the Lease, relating to Base Rent, is
amended such that the new Base Rent is $5,191.50 per month plus
$216 per month as a trash fee. The new Base Rent shall then
increase by three percent (3%) effective as of March 1, 2021 and
annually thereafter, effective as of each successive March 1, on a
compounding basis.

 

8.          Lessee's
Share of Common Area Operating Expenses. Commencing on the on the Effective Date, Lessee's
Share, as set forth in Section 1.6 of the Lease shall be reduced
from 3.82% to 3.68%.

 

9.          No
Third Party Rights. Except as
otherwise expressly set forth herein, nothing contained in this
Amendment is intended to confer upon any person or entity other
than the parties and their successors.

 

10.          Counterparts
and Fax or Electronic Transmission. This Amendment may be executed in two or more
counterparts, each counterpart being executed by fewer than both of
the parties hereto and shall be equally effective as if a single
original had been signed by all parties; but all such counterparts
shall be deemed to constitute a single
agreement.

 

11.          Authority.
Each Person executing this Amendment
represents and warrants to the parties hereto that such individual
has the full right power and authority to execute this Amendment
and to bind the entity on whose behalf such individual is executing
this Amendment.

 

12.          No
Change. Except as set forth
herein, all of the terms and conditions of the Lease remain
unchanged and in full force and effect.

 

13.          Conflict.
In case of any conflict between the
terms and provisions of this Amendment and the Lease, the terms and
provisions of this Amendment shall govern.

 

[ Continue to Signature Page ]

 

13

 

 

IN
WITNESS WHEREOF, this Amendment has been executed as of the date
first set forth above.

 

LESSEE:
La Barre Chastang, Inc. a
California corporation, d.b.a. ABC Traffic Programs

 

 

By: /s/ Cherine
Child

Cherine Child, CEO

 

By: /s/ Michele
Hundley

Michele Hundley, CFO

 

LESSOR:
Grove Investment Company, a
California general partnership

 

By: /s/ Ernie
Gallardo

Ernie Gallardo

 

 

 

REAFFIRMATION OF GUARANTY

 

The undersigned provided the Guaranty which is
referenced above in this Amendment The undersigned has reviewed
this Amendment and agrees That, as an inducement for Lessor
to execute this Amendment, the Guaranty shall remain in full
force and effect from and after the date here4 and that the
Guaranty shall operate as a guaranty of the obligations arising out
of the Lees; as amended by the foregoing Amendment The obligations
of the undersigned Guarantor and the rights of the Lessor, as
provided in the Guaranty, shall be fully applicable to the Lease,
as amended by this Amendment

 

By: /s/ Michele
Hundley

Michele Hundley, an individual

14

 

EXHIBIT "A"

FLOOR PLAN

 

South Coast Business Center

3440 W. Warner Ave. Units I and J, Santa Ana, CA 92704

 

 

 

 

 

 

EXHIBIT "A"

SITE PLAN

 

South Coast Business Center

 

 

 

3400, 3440, and 3480 W. Warner Ave. Santa Ana, CA
92704

 

15

 

 

EXHIBIT
C

 

SUBLEASE
AGREEMENT

 

 

16

 

 

EXHIBIT
C

Sublease Between BLC Management Company, LLC and LaBarre Chastang,
Inc.

 

Effective Date of this
Agreement:                                                                

August 31, 2020
(the "Effective
Date")

 

This
Agreement is by and between

 

BLC Management Company,
LLC, a Nevada LLC,
("Sublessor") with a principal address of 2548 West Desert Inn
Road, Suite 100, Las Vegas, NV 89109,

 

And

 

LaBarre Cbastang, Inc. dba ABC
Traffic Programs ("Sublessee"),
a California corporation with an address of 3440 Warner Ave.,
Suites C and D Santa Ana California.

 

Background

 

A. 

This
is an agreement (this "Agreement" or this "Sublease") to sublet
furnished real property, being commonly known as 3400 Warner Ave.,
Suites C & D, (the "Premises") according to the terms specified
below.

 

13. 

Sublessee
and Sublessor are herein referred to individually as a "Party" and
collectively as the "Parties."

 

IN CONSIDERATION OF
Sublessor subletting, and Sublessee
renting, the Premises, both Parties agree to keep, perform and
fulfill the promises, conditions and agreements
below:

 

1. Sublease Premises and
Term

 

Sublessor
hereby subleases to Sublessee the Premises from October 1, 2020
through December 31, 2020 (the "Term"), with no option to renew
this Sublease beyond December 31, 2020, and no right to remain
within the Premises beyond December 31, 2020, regardless of any
circumstances, whatsoever. Sublessor represents and warrants to
Sublessee that Sublessor has the right to enter into this Sublease
and to permit the occupancy by Sublessee of the Premises as
described herein.

 

2. Payable Rent and
Triple Net

 

Subject
to the provisions of this Agreement, the monthly rent (the "Payable
Rent") to be paid by Sublessee to Sublessor pursuant to the terms
herein for the Premises is at a rate of $1.00 per month, being a
total of $3.00 for the entirety o£ the Term, and for which
amount Sublessor hereby acknowledges has been paid by Sublessee and
received by Sublessor as of the Effective Date.

 

Sublessor
shall receive all Payable Rent as provided in this Section 2 free
and clear of any and all impositions, encumbrances, charges,
obligations or expenses of any nature whatsoever in connection with
Sublessee's operations at the Premises and Sublessee's subsequent
relocation actions taken during the Term. In addition to the
Payable Rent to be paid pursuant to this Section

 

17

 

2,
except as expressly provided herein to the contrary, Sublessee
shall pay to the parties entitled thereto all impositions,
insurance premiums, operating expenses, liability claims,
maintenance charges and expenses which arise prior to or during the
Term and up to the extent such were payable by Sublessee pursuant
to the terms of its prior lease of the Premises.

 

3. Representations
and Warranties

 

Sublessee
represents and warrants that it shall vacate the Premises no later
than December 31, 2020.

 

Sublessee
represents and warrants that it shall comply with all statutes,
ordinances and requirements of all municipal, state and federal
authorities now in force, or that may hereafter be in force,
pertaining to the its business operations and its specific use of
the Premises.

 

Sublessee
represents and warrants that it shall continue insurance coverage
for its activities at the Premises prior to and continuing through
the Term in the amount of at least $2,000,000.

 

4. Condition
of Premises

 

Sublessee
acknowledges that (a) it is in possession of and is fully familiar
with the condition of the Premises and, notwithstanding anything
contained in this Sublease to the contrary, agrees to take the same
in its condition "as is" as of the first day of the Term, and (b)
Sublessor shall have no obligation to alter, repair or otherwise
prepare the Premises for Tenant's continued occupancy during the
Term. Furthermore, Sublessor makes no warranty or representation
regarding the suitability of the Premises for the use listed in
Section 7 below or for any other purpose, and hereby expressly
disclaims any liability, implied or otherwise, for the suitability
of the Premises for any purposes.

 

5. Notices
and Records

 

Any notice that either party may or is required to
give, shall be given by email [REDACTED] for BLC Management Company, LLC or to [REDACTED] for
LaBarre Chastang, Inc. dba ABC Traffic
Programs.

 

6. Termination

 

Sublessee
may terminate this Agreement by vacating the Premises and sending
written notice to Sublessor at any time during the
Term.

 

7. Uses
Permitted

 

Sublessee
may occupy and use the Premises only for the operation and business
of ABC Traffic Programs during the Term, as such business has
historically been run out of the, Premises, and in such
businesslike manner as previously operated.

18

 

 

8. Alterations

 

This
Sublessee shall not, without first obtaining the written consent of
Sublessor, make any alterations, additions, or improvements, in, to
or about the Premises.

 

9. Assignment
&
Subletting

 

Sublessee
shall not assign this Sublease or sublet any portion of the
Premises.

 

10. Indemnification
of Sublessor

 

Sublessee
agrees to indemnify Sublessor for any claims which arise from
Sublessee's use of the Premises during the Term, to include but not
limited to indemnification of Sublessor for any claims involving
any damage to or loss, for any reason, of property entrusted to the
employees of sublessee's business or held within the Premises, any
injury to or damage to persons or property resulting from any cause
whatsoever, unless caused by or due to the negligence or willful
misconduct of Sublessor, its agents or employees. For purposes of
this indemnification provision, Sublessor shall not be liable for
any latent defect in the Premises or in the building of which they
are a part.

 

11. Default
and Sublessor's Remedies

 

Upon
Sublessee's default of Sections 2, 3, 7, 8, 9, and which default
remains uncured for a period of three business days after written
notice of default by Sublessor, Sublessee agrees it shall cease its
use of the Premises, but not possession thereof, until the default
is cured. In the event Sublessee does not cease Its use of the
Premises, or within five business days of ceasing its use of the
Premises Sublessee has not cured the default, then all Sublessee
rights under this agreement shall terminate, but its obligations,
indemnification, representations, and warranties to Sublessor shall
survive.

 

In
no event shall the three day or five day periods discussed in this
Section 11 extend the Term of this Sublease beyond December 31,
2020.

 

12. Security
Deposit

 

No
security deposit shall be required of Sublessee for the
Premises.

 

13. Waiver

 

No
failure of Sublessor or Sublessee to enforce any term of this
Agreement shall be deemed to be a waiver,

 

14. Heirs,
Assigns & Successors

 

This
Agreement is binding upon and inures to the benefit of the heirs,
assigns and successors in interest to the parties.

19

 

 

15. Authority
of Parties/Signatories

 

Each
person signing this Agreement represents and warrants that he or
she is duly authorized and has legal capacity to execute and
deliver this Agreement on behalf of their respective corporation,
sole proprietorship, partnership or other entity. Each Party
represents and warrants to the other that the execution and
delivery of the Agreement and the performance of such Party's
obligations hereunder have been duly authorized and that the
Agreement is a valid and legal agreement binding on such Party and
enforceable in accordance with its terms.

 

16. Severability

 

If
any provision of this Agreement is found invalid or unenforceable
under judicial decree or decision, the remainder shall remain valid
and enforceable according to its terms. Without limiting the
previous, it is expressly understood and agreed that each and every
provision of this Agreement that provides for a limitation of
liability, disclaimer of warranties, or exclusion of damages is
intended by the Parties to be severable and independent of any
other provision and to be enforced as such. Further, it is
expressly understood and agreed that if any remedy under this
Agreement is determined to have failed of its essential purpose,
all other limitations of liability and exclusion of damages set
forth in this Agreement shall remain in full force and
effect.

 

17. Governing
Law

 

This
Agreement shall be governed by the laws of the State of
California,

 

18. Entire
Agreement

 

The
Parties acknowledge that this Agreement expresses their entire
understanding and agreement as to the three month sublease of the
Premises, and that there have been no warranties, representations,
covenants or understandings made by either party to the other,
regarding this Sublease, except such as are expressly set forth in
this agreement.

 

Understood, Agreed & Approved

 

The
Parties have carefully reviewed this contract and agree to and
accept all of its terms and conditions. The Parties hereto execute
this Agreement as of the Effective Date above.

 

Signatures on following page.

 

20

 

Commercial
Sublease Planet 13 & Sublessee Signature Page

 

 

	
Sublessee  

	

 

	

 

	
Sublessor
 

	

 

	
LaBarre Chastang, Inc. dba ABC
Traffic
Programs  

	

 

	

 

	
BLC
Management Company, LLC  

	

 

	
/s/ Cherine
Child

	

 

	

 

	
/s/ Leighton
Koehler

	

 

	
Cherine
Child

	

 

	

 

	
Leighton
Koehler

	

 

	
CEO

	

 

	

 

	
Manager

	

 

	
August 31,
2021 

	

 

	

 

	
August 31,
2021 

	

 

 

 

 

21plth_ex106

 

Exhibit
10.6

 

 

 

 

 

PLANET 13 HOLDINGS INC.

 

 

 

 

 

2018 Stock Option Plan

 

 

 

 

 

 

 

Approved by the Shareholders on May 22, 2018

 

 

 

 

 

 

ARTICLE 1

GENERAL PROVISIONS

 

1.1            

Interpretation

 

(a) 

For the purposes of
the Plan, the following terms have the following
meanings:

 

“Affiliate” means an affiliate of
the Company within the meaning of Section 1.3 of NI 45-
106;

 

“Associate” has the meaning set out
in Section 2.22 of NI 45-106;

 

“Board” means the board of
directors of the Company or if established and duly authorized to
act, a committee appointed for such purpose by the board of
directors of the Company to administer the Plan;

 

“CSE” means the Canadian Securities
Exchange; and

 

“Change of Control” means the
occurrence of any one or more of the following events:

 

(i) 

the Company is not
the surviving entity in a merger, amalgamation or other
reorganization (or survives only as a subsidiary of an entity other
than a previously wholly-owned subsidiary of the
Company);

 

(ii) 

the Company sells,
leases or exchanges assets representing more than 50% of the fair
market value of its assets to any other person or entity (other
than an Affiliate of the Company);

 

(iii) 

a resolution is
adopted to wind-up, dissolve or liquidate the Company;

 

(iv) 

any person, entity
or group of persons or entities acting jointly or in concert (the
“Acquiror”) acquires, or acquires control (including,
without limitation, the power to vote or direct the voting) of, for
the first time, voting securities of the Company which, when added
to the voting securities owned of record or beneficially by the
Acquiror or which the Acquiror has the right to vote or in respect
of which the Acquiror has the right to direct the voting, would
entitle the Acquiror and/or Associates and/or affiliates of the
Acquiror to cast or direct the casting of 40% or more of the votes
attached to all of the Company’s outstanding voting
securities which may be cast to elect directors of the Company or
the successor company (regardless of whether a meeting has been
called to elect directors) and as a result of such acquisition of
control, directors of the Company holding such office immediately
before such acquisition of control shall not constitute a majority
of the Board;

 

(v) 

as a result of or
in connection with: (A) the contested election of directors or (B)
a transaction referred to in paragraph (i) above, the nominees
named in the most recent management information circular of the
Company for election to the board of directors of the Company shall
not constitute a majority of the Board; or

 

(vi) 

the Board adopts a
resolution to the effect that a Change of Control has occurred or
is imminent.

 

For the
purposes of the text above, “voting securities” means
common shares of the Company and any other shares entitled to vote
for the election of directors, and shall include any securities,
whether or not issued by the Company, which are not shares entitled
to vote for the election of directors but which are convertible
into or exchangeable for shares which are entitled to vote for the
election of directors, including any options or rights to purchase
such shares or securities;

 

“Company” means Planet 13 Holdings
Inc., and includes any successor to Planet 13 Holdings
Inc.;

 

 

 

 

“Eligible Contractor” means a
person who is not an employee, officer or director of the Company
that:

 

(i) 

is engaged to
provide on a bona fide
basis consulting, technical, management or other services to the
Company or any Affiliate under a written contract with the Company
or the Affiliate;

 

(ii) 

in the reasonable
opinion of the Board, spends or will spend a significant amount of
time and attention on the affairs and business of the Company or an
Affiliate; and

 

(iii) 

who otherwise
qualifies as a “consultant” under section 2.22 of NI
45-106;

 

“Eligible Person” means, subject to
all applicable laws, (A) in respect of any grant of Options by the
Company, any director, employee, officer or Eligible Contractor of
(i) the Company or (ii) any Affiliate (and includes any such person
(other than an Eligible Contractor) who is on a leave of absence
authorized by the Board or the board of directors of any
Affiliate), and (B) in respect of any assignment of Options by a
person in (A) above pursuant to Section 2.5, means any Permitted
Assign of such person as the context requires;

“Exchange” means the CSE or such
other stock exchange or quotation system on which the Shares are
listed or quoted from time to time;

 

“Exchange Rate” means the noon spot
rate published by the Bank of Canada on the date the Option is
granted;

 

“Holding Entity” has the meaning
set out in Section 2.22 of NI 45-106;

 

“ISO” means an Option granted to a
US Participant that is intended to qualify as an “incentive
stock option” within the meaning of section 422 of the IRS
Code;

 

“Insider” means any officer,
director or other “insider” as defined by the Toronto
Stock Exchange Company Manual, from time to time;

 

“IRS Code” means the United States
Internal Revenue Code of 1986, as amended and the regulations and
other guidance issued under the code;

 

“Market Price” means the greater of
the closing Market Price of the Shares on the CSE on: (a) the
trading day prior to the date of grant of the Options; and (b) the
date of grant of the Options. In the event that the Shares are not
then listed and posted for trading on an Exchange, the Market Price
shall be the fair market value of such Shares as determined by the
Board in its sole discretion;

 

“NI 45-106” means National
Instrument 45-106 –
Prospectus Exemptions, as may be amended or replaced from
time to time;

 

“NQSO” means any Option granted to
a US Participant that is not an ISO;

 

“Option” means an option to
purchase Shares granted to an Eligible Person pursuant to the terms
of the Plan;

 

“Participant” means an Eligible
Person to whom an Option has been granted;

 

 

 

 

“Permitted Assign”
means:

 

(i) 

a Holding Entity of
a Participant; or

 

(ii) 

a RRSP, RRIF or
TFSA of a Participant;

 

“Plan” means this 2018 stock option
plan of the Company, as it may be amended from time to
time;

 

“Resignation” means the cessation
of board membership by a director, or employment (as an officer or
employee) of the Participant with the Company or an Affiliate as a
result of resignation;

 

“Retirement” means the Participant
ceasing to be an employee, officer or director of the Company or an
Affiliate after attaining a stipulated age in accordance with the
Company’s normal retirement policy or earlier with the
Company’s consent;

 

“Retirement Date” means the date on
which a Participant satisfies the conditions for Retirement, as
agreed between the Participant and the Company;

 

“RRIF” means a trust governed by a
“registered retirement income fund” as defined in the
Income Tax Act
(Canada);

 

“RRSP” means a trust governed by a
“registered retirement savings plan” as defined in the
Income Tax Act
(Canada);

 

“Share Unit Plan” means the
Company’s Share Unit Plan; “Shares” means the common shares in
the capital of the Company; “Shareholder” means a holder of
Shares;

 

“Subsidiary” means a
“subsidiary corporation”, whether now or hereafter
existing, as defined in section 424(f) of the IRS
Code;

 

“10% Shareholder” means a US
Participant who, at the time an ISO is granted, owns securities
representing more than 10% of the voting power of all classes of
shares of the Company or any Subsidiary, taking into account the
attribution rules under section 424(d) of the IRS
Code;

 

“Termination Date” means the date
on which the Participant ceases to be an Eligible Person subject to
section 2.6(b): (i) in the case of a director, the Termination Date
occurs on the termination of board membership of the director by
the Company or any Affiliate, the failure to re-elect or re-appoint
the individual as a director of the Company or an Affiliate or the
date of his Resignation, other than through Retirement; (ii) in the
case of an employee, the Termination Date occurs on the date of
termination of the employment of the employee, indicated in the
Company’s notice of termination, with or without cause, as
the context requires by the Company or an Affiliate, or the
effective date of his Resignation, other than through Retirement,
or in the case of an officer, upon removal of or failure to
re-elect or re-appoint the individual as an officer of the Company
or an

 

Affiliate, or the
effective date of his Resignation, other than through Retirement,
(iii) in the case of an Eligible Contractor, the date of
termination of the services of the Eligible
Contractor;

 

“TFSA” means a trust governed by a
“tax-free savings account” as described in the
Income Tax Act (Canada);
and

 

“US Participant” means a
Participant that is subject to federal income tax in the United
States of America pursuant to the IRS Code and any relevant tax
convention.

 

(b) 

In the Plan, words
imparting the singular number only shall include the plural and
vice versa and words imparting the masculine shall include the
feminine.

 

(c) 

The Plan and all
matters to which reference is made in the Plan shall be governed by
and interpreted in accordance with the laws of the Province of
British Columbia and the applicable laws of Canada.

 

 

 

 

1.2            

Purpose

 

The
purpose of the Plan is to advance the interests of the Company
by:

 

(a) 

providing Eligible
Persons with additional incentive;

 

(b) 

encouraging equity
ownership in the Company by such Eligible Persons;

 

(c) 

increasing the
proprietary interest of Eligible Persons in the success of the
Company;

 

(d) 

encouraging
Eligible Persons to remain with the Company or its Affiliates;
and

 

(e) 

attracting new
directors, employees, officers and service providers.

 

1.3            

Administration

 

(a) 

The Plan shall be
administered by the Board and the Board shall have full authority
to administer this Plan, including the authority to interpret and
construe any provision of the Plan and to adopt, amend and rescind
such rules and regulations for administering the Plan as the Board
may deem necessary in order to comply with the requirements of the
Plan.

 

(b) 

Subject to the
limitations of the Plan, the Board shall have the authority
to:

 

(i) 

grant
Options;

 

(ii) 

determine the
terms, limitations, restrictions, vesting requirements and
conditions respecting Option granted;

 

(iii) 

interpret the Plan
and adopt, amend and rescind such administrative guidelines and
other rules and regulations relating to the Plan as it shall from
time to time deem advisable subject to required prior approval by
any applicable regulatory authority or Shareholders;

 

(iv) 

add a cashless
exercise feature to the Plan; and

 

(v) 

make all other
determinations and take all other actions in connection with the
implementation and administration of the Plan.

 

(c) 

The Board’s
guidelines, rules, regulations, interpretations and determinations
pursuant to or relating to the Plan shall be conclusive and binding
upon the Company and all other persons, including without
limitation all Participants. No member of the Board or any person
acting pursuant to the authority delegated by it under the Plan
shall be personally liable for any action or determination in
connection with the Plan made or taken in good faith.

 

 

 

 

1.4            

Shares
Reserved

 

(a) 

The aggregate
number of Shares which may be reserved for issuance under the Plan
and all other security based compensation arrangements of the
Company (including the Share Unit Plan) shall not exceed 10% of the
Shares (on a non-diluted basis) issued and outstanding from time to
time. No fractional Shares shall be issued and the Board may
determine the manner in which fractional share values shall be
treated. If any Options granted under the Plan are cancelled or
terminated in accordance with the Plan without being exercised then
the Shares subject to those Options will again be available to be
granted under the Plan.

 

(b) 

For greater
certainty, any increase in the issued and outstanding Shares will
result in an increase in the available number of the Shares
issuable under the Plan, and exercises of Options will make new
grants available under the Plan.

 

(c) 

The maximum number
of Shares which may be reserved for issuance to any one person
under the Plan shall be 5% of the Shares issued and outstanding at
the time of the grant (on a non-diluted basis) less the aggregate
number of Shares reserved for issuance to such person under any
other security based compensation arrangements of the
Company.

 

(d) 

If there is a
change in or substitution or exchange of the outstanding Shares by
reason of any stock dividend or split, recapitalization, merger,
amalgamation, arrangement, consolidation, reorganization,
combination or exchange of shares, or other corporate change, the
Board shall make, subject to the prior approval (if required) of
the relevant Exchange(s), appropriate substitution or adjustment
in:

 

(i) 

the number or kind
of securities reserved for issuance pursuant to the Plan;
and

 

(ii) 

the number or kind
of securities subject to unexercised Options granted and the option
exercise price of such securities; provided however that no
substitution or adjustment shall obligate the Company to issue or
sell fractional securities.

 

(e) 

The Company shall
at all times during the term of the Plan reserve and keep available
such number of Shares as will be sufficient to satisfy the
requirements of the Plan.

 

1.5            

Limits
with respect to Insiders

 

(a) 

The maximum number
of Shares issuable to Insiders under the Plan and any other
security based compensation arrangements of the Company shall be
10% of the Shares issued and outstanding at the time of the grant
(on a non-diluted basis).

 

(b) 

The maximum number
of Shares which may be issued to Insiders under the Plan and any
other security based compensation arrangements of the Company
within a 12 month period shall be 10% of the Shares, issued and
outstanding at the time of the issuance (on a non- diluted
basis).

 

1.6            

Non-Exclusivity

 

Nothing
contained in the Plan shall prevent the Board from maintaining or
adopting other or additional compensation arrangements, subject to
any required approvals.

 

1.7            

Amendment
or Termination

 

(a) 

Subject to Section
1.7(b) below, the Board may at any time, and from time to time, and
without Shareholder approval amend any provision of the Plan, or
the terms of any Options granted, or terminate the Plan, subject to
any applicable regulatory or Exchange requirements or approvals at
the time of such amendment or termination, including, without
limitation, making amendments:

 

(i) 

to Section 2.3
relating to the exercise of Options, including by the inclusion of
a cashless exercise feature;

 

(ii) 

deemed by the Board
to be necessary or advisable because of any change in applicable
securities laws or other laws;

 

 

 

 

(iii) 

to the definitions
set out in Section 1.1;

 

(iv) 

to the Change of
Control provisions provided for in Section 3.1;

 

(v) 

to Section 1.3
relating to the administration of the Plan;

 

(vi) 

to the vesting
provisions of any outstanding Options;

 

(vii) 

to postpone or
adjust any exercise of any Option or the issuance of any Shares
pursuant to the Plan as the Board in its discretion may deem
necessary in order to permit the Company to effect or maintain
registration of the Plan or the Shares issuable pursuant to the
Plan under the securities laws of any applicable jurisdiction, or
to determine that the Shares and the Plan are exempt from such
registration; and

 

(viii) 

fundamental or
otherwise, not requiring Shareholder approval under applicable laws
or the rules of an Exchange, including amendments of a
“clerical” or “housekeeping” nature and
amendments to ensure that the Options granted under the Plan will
comply with any provisions respecting income tax and other laws in
force in any country or jurisdiction of which an Eligible Person
may from time to time be resident or a citizen.

 

(b) 

Notwithstanding
Section 1.7(a), the Board shall not be permitted to amend the
following without first having obtained the approval of a majority
of the holders of the Shares voting at a duly called and held
meeting of Shareholders and, in the case of an amendment to Section
1.5 so as to increase the Insider participation limits, approval of
a majority of the Shareholders voting at a duly called and held
meeting of Shareholders excluding shares voted by Insiders who are
Eligible Persons:

 

(i) 

Section 1.4(a) in
order to increase the maximum number of Shares which may be issued
under the Plan or Section 1.5 so as to increase the Insider
participation limits;

 

(ii) 

Section 2.2 or this
Section 1.7 so as to increase the ability of the Board to amend the
Plan without Shareholder approval;

 

(iii) 

the definitions of
“Eligible Person” and “Permitted
Assigns”;

 

(iv) 

subject to Section
1.4(d), the exercise price of any Option issued under the Plan
where such amendment reduces the exercise price of such Option (for
this purpose, a cancellation or termination of an Option of a
Participant prior to its expiry for the purpose of re-issuing
Options to the same Participant with a lower exercise price shall
be treated as an amendment to reduce the exercise price of an
Option);

 

(v) 

to Section 2.5
relating to the transferability of Options; or

 

(vi) 

the term of any
Option issued under the Plan.

 

(c) 

Any amendment or
termination of an Option shall not materially and adversely alter
the terms or conditions of any Option or materially and adversely
impair any right of any Participant under any Option granted before
the date of any such amendment or termination without the consent
of such Participant, except as otherwise required by law or as
provided in the Plan.

 

(d) 

If the Plan is
terminated, the provisions of the Plan and any administrative
guidelines, and other rules adopted by the Board and in force at
such time, will continue in effect as long as any Options under the
Plan or any rights pursuant thereto remain outstanding. However,
notwithstanding the termination of the Plan, the Board may make any
amendments to the Plan or Options it would be entitled to make if
the Plan were still in effect.

 

1.8            

Compliance
with Legislation

 

The
Plan, the grant and exercise of Options under the Plan and the
Company’s obligation to sell and deliver Shares upon exercise
of Options shall be subject to all applicable federal, provincial
and foreign laws, rules and regulations, the rules and regulations
of the Exchange and to such approvals by any regulatory or
governmental agency as may, in the opinion of counsel to the
Company, be required. The Company shall not be obligated by any
provision of the Plan or the grant of any Option under the Plan to
issue Shares in violation of such laws, rules and regulations or
any condition of such approvals. In addition, the Company shall
have no obligation to issue any Shares pursuant to the Plan unless
such Shares shall have been duly listed with the Exchange. The
Company shall, to the extent necessary, take all reasonable steps
to obtain such approvals, registrations and qualifications as may
be necessary for issuances of such Shares in compliance with
applicable laws and for the admission to listing of such Shares on
the Exchange. Shares issued and sold to Participants may be subject
to limitations on sale or resale under applicable securities
laws.

 

 

 

 

ARTICLE 2

OPTIONS

 

2.1            

Grants

 

(a) 

Subject to the
provisions of the Plan, the Board shall have the authority to
determine the terms, limitations, restrictions and conditions, if
any, applicable to the vesting or to the exercise of an Option,
including without limitation, the nature and duration of the
restrictions, if any, to be imposed upon the sale or other
disposition of Shares acquired upon exercise of the Option, and the
nature of the events, if any. An Eligible Person may receive
Options on more than one occasion under the Plan and may receive
separate Options on any one occasion. In addition (and without
limitation to the preceding text), at the sole discretion of the
Board, at the time of the grant, Options may be made subject to any
recoupment, reimbursement or claw-back compensation policy as may
be adopted by the Board from time to time (e.g. to address matters
such as fraud, or other significant misconduct of a
Participant).

 

(b) 

The award of an
Option to an Eligible Person at any time shall neither entitle such
Eligible Person to receive nor preclude such Eligible Person from
receiving a subsequent Option.

 

(c) 

Options may be
granted so that they qualify as ISOs under section 422 of the IRS
Code in accordance with the requirements and limitations in Section
4.3 below.

 

(d) 

Each Option shall
be confirmed by an option agreement (electronic or otherwise) as
prescribed by the Board from time to time. Subject to specific
variations approved by the Board in respect of any Options all
terms and conditions set out in the Plan will be incorporated by
reference into and form part of any Option granted under the
Plan.

 

2.2            

Option
Exercise Price

 

(a) 

The Board will
establish the exercise price of an Option at the time each Option
is granted based on the terms set out under Section
2.2(b).

 

(b) 

Subject to Section
4.3(e), the exercise price of an Option as established by the Board
pursuant to Section 2.2(a) will not be less than the Market
Price.

 

2.3            

Exercise
of Options

 

(a) 

Options granted
must be exercised no later than five years after the date of grant
or such lesser period as the Board may approve. In the event that
any Option expires during, or within 48 hours after a
Company-imposed blackout period on the trading of securities of the
Company, such expiry will become the tenth day after the end of the
blackout period. A minimum of 100 Shares must be purchased by a
Participant upon exercise of Options at any one time (or, if less
the remainder of Shares available for purchase pursuant to all
Options granted to such Participant).

 

(b) 

The exercise price
(and any applicable withholding taxes) of each Option to purchase
Shares shall be paid in full by the Participant by certified
cheque, or in another manner deemed acceptable to the Company, at
the time of such exercise, and upon receipt of payment in full, but
subject to the terms of the Plan and the related option agreement,
the number of Shares in respect of which the Option is exercised
shall be duly issued as fully paid and non-assessable.

 

(c) 

Subject to the
provisions of the Plan and the related option agreement, an Option
may be exercised from time to time as advised by the Company from
time to time and upon payment in full of the Option exercise price
of the Shares to be purchased and any applicable withholding taxes.
Certificates for such Shares shall be issued and delivered to the
Participant within a reasonable period of time following the
receipt of such notice and payment but in any event not exceeding
five business days.

 

2.4            

Withholding
Taxes

 

For
certainty and notwithstanding any other provision of the Plan, the
Company or any Affiliate may take such steps as it considers
necessary or appropriate for the deduction or withholding of any
income taxes or other amounts which the Company or any Affiliate is
required by any law or regulation of any governmental authority
whatsoever to deduct or withhold in connection with any Share
issued pursuant to the Plan, including, without limiting the
generality of the foregoing, (a) withholding of all or any portion
of any amount otherwise owing to a Participant; (b) the suspension
of the issue of Shares to be issued under the Plan, until such time
as the Participant has paid to the Company or any Affiliate an
amount equal to any amount which the Company or Affiliate is
required to deduct or withhold by law with respect to such taxes or
other amounts together with the exercise price for the Shares;
and/or (c) withholding and causing to be sold, by it as a trustee
on behalf of a Participant, such number of Shares as it determines
to be necessary to satisfy the withholding obligation. By
participating in the Plan, the Participant consents to any such
sale and authorizes the Company or any Affiliate, as applicable, to
effect the sale of such Shares on behalf of the Participant and to
remit the appropriate amount to the applicable governmental
authorities. Neither the Company nor any applicable Affiliate shall
be responsible for obtaining any particular price for the Shares
nor shall the Company or any applicable Affiliate be required to
issue any Shares under the Plan unless the Participant has made
suitable arrangements with the Company and any applicable Affiliate
to fund any withholding obligation.

 

 

 

 

2.5            

Transfer
of Options

 

(a) 

Subject to Section
2.5(b), Options shall be non-assignable and non-transferable by the
Participants otherwise than by will or the laws of descent and
distribution, and shall be exercisable only by the Participant
during the lifetime of the Participant and only by the
Participant’s legal representative after death of the
Participant in accordance with the Plan.

 

(b) 

Notwithstanding
Section 2.5(a), Options may, with the prior approval of the Board,
be assigned by a Participant to a Permitted Assign of such
Participant, following which such Options shall be non-assignable
and non-transferable by such Permitted Assign, except, with the
prior approval of the Board, to another Permitted Assign, otherwise
than by will or the laws of descent and distribution, and shall be
exercisable only by such Permitted Assign during the lifetime of
such Permitted Assign and only by such Permitted Assign’s
legal representative after death of such Permitted Assign in
accordance with the Plan. Notwithstanding the foregoing, an ISO may
not be transferred or assigned in any manner other than (i) by will
or the laws of descent and distribution or (ii) to the extent
required by a domestic relations order. An improper transfer of any
Options will not create any rights in the purported transferee,
will cause the immediate termination of the Options, and the
Company will not issue any Shares upon the attempted exercise of
improperly transferred Options.

 

2.6            

Termination,
Retirement or Death

 

(a) 

Except as otherwise
determined by the Board and subject to the limitation that Options
may not be exercised later than five years from their date of
grant:

 

(i) 

if a Participant
ceases to be an Eligible Person for any reason whatsoever other
than death, Retirement or termination for cause, each vested Option
held by the Participant will cease to be exercisable 90 days after
the Termination Date, or in accordance with the Participant’s
employment agreement that was previously approved by the Board or
such longer period as determined by the Board; for greater
certainty, such determination may be made at any time subsequent to
the date of grant of Options, but none will be outstanding for a
period that exceeds the expiry date of the Option. If any portion
of an Option is not vested by a Participant’s Termination
Date, that portion of the Option may not be exercised by the
Participant unless the Board determines otherwise.

 

(ii) 

If a Participant
ceases to be an Eligible Person because his relationship with the
Company or an Affiliate is terminated by the Company or the
Affiliate, as applicable, for cause, his Options shall cease to be
exercisable immediately upon such termination on the Termination
Date.

 

(iii) 

if a Participant
retires, upon such Retirement the Participant’s unvested
Options will vest on his or her Retirement Date and the Participant
may exercise these Options within 180 days following his or her
Retirement Date or such longer period as determined by the Board,
for greater certainty such determination may be made at any time
after the date of grant of the Options, provided that no Option
shall remain outstanding for any period which exceeds the earlier
of (i) the expiry date of such Option; and (ii) 12 months following
the Retirement Date of the Participant.

 

(iv) 

If a Participant
dies, upon such death the Participant’s Options will
immediately vest and the legal representative of the Participant
may exercise the Participant’s Options within 180 days
following the death of the Participant or such longer period as
determined by the Board, for greater certainty such determination
may be made at any time after the date of grant of the Options,
provided that no Option shall remain outstanding for any period
which exceeds the earlier of (i) the expiry date of such Option;
and (ii) 12 months following the date of death of the
Participant.

 

(v) 

Notwithstanding the
foregoing, an ISO may not be exercisable by a US Participant beyond
the earlier of the date that is three months following the US
Participant’s termination of employment with the Company and
all Subsidiaries for reasons other than death or disability or the
expiry date of such ISO. In the event of the death of a US
Participant (including during the three month period after the US
Participant’s Termination Date) or in the event of a
termination of employment due to disability (as determined under
section 422(c)(6) of the IRS Code), no ISO still held by such US
Participant may be exercised beyond the earlier of the date that is
12 months after the date of such death or disability or the expiry
date of such ISO.

 

(b) 

Any Participant to
whom an Option is granted under the Plan who subsequently ceases to
hold the position in which he or she received such Option shall
continue to be eligible to hold such Option as a Participant as
long as he or she otherwise falls within the definition of
“Eligible Person” in any capacity.

 

 

 

 

ARTICLE 3

CHANGE OF CONTROL

 

3.1            

Change
of Control

 

(a) 

In the event of a
proposed Change of Control, the Board may, in its discretion, and
on such terms as it sees fit, accelerate the vesting of all of a
Participant’s unvested Options to a date determined by the
Board, such that all of a Participant’s Options will
immediately vest at such time. In such event, all Options so vested
will be exercisable from such date until their respective expiry
dates so as to permit the Participant to participate in such Change
of Control. For greater certainty, upon a Change of Control,
Participants shall not be treated any more favourably than
Shareholders with respect to the consideration that the
Participants may be entitled to receive for their
Shares.

 

(b) 

If a Participant
elects to exercise its Options following a Change of Control, the
Participant shall be entitled to receive, and shall accept, in lieu
of the number of Shares which he was entitled upon such exercise,
the kind and amount of shares and other securities, property or
cash which such holder could have been entitled to receive as a
result of such Change of Control, on the effective date thereof,
had he been the registered holder of the number of Shares to which
he was entitled to purchase upon exercise of such
Options.

 

3.2            

Right
to Terminate Options on Sale of Company

 

Notwithstanding any
other provision of the Plan, if the Board at any time by resolution
declares it advisable to do so in connection with any proposed
Change of Control (collectively, the “Proposed Transaction”), the
Company may give written notice to all Participants advising them
that, within 30-days or such greater period as the Board determines
in its sole discretion after the date of the notice and not
thereafter, each Participant must advise the Board whether the
Participant desires to exercise its Options before the closing of
the Proposed Transaction, and that upon the failure of a
Participant to provide such notice within the 30-day period or such
greater period as the Board determines in its sole discretion, all
rights of the Participant will terminate, provided that the
Proposed Transaction is completed within 180 days after the date of
the notice. If the Proposed Transaction is not completed within the
180-day period, no right under any Option will be exercised or
affected by the notice, except that the Option may not be exercised
between the date of expiration of the 30-day period or such greater
period as the Board determines in its sole discretion and the day
after the expiration of the 180-day period. If a Participant gives
notice that the Participant desires to exercise its Options before
the closing of the Proposed Transaction, then all Options which the
Participant elected by notice to exercise will be exercised
immediately before the effective date of the Proposed Transaction
or such earlier time as may be required to complete the Proposed
Transaction.

 

ARTICLE 4

MISCELLANEOUS PROVISIONS

 

4.1            

No
Rights as Shareholder

 

The
holder of an Option shall not have any rights as a Shareholder with
respect to any of the Shares underlying an Option until such holder
has exercised such Option in accordance with the terms of the Plan
(including tendering payment in full of the exercise price in
respect of which the Option is being exercised and paying
applicable withholding taxes).

 

4.2            

No
Rights to Continued Employment or Engagement

 

Nothing
in the Plan or any Option shall confer upon a Participant any right
to continue in the employment or engagement of the Company or any
Affiliate or affect in any way the right of the Company or any
Affiliate to terminate his employment or engagement at any time;
nor shall anything in the Plan or any Option be deemed or construed
to constitute an agreement, or an expression of intent, on the part
of the Company or any Affiliate to extend the employment or
engagement of any Participant beyond the date on which he would
normally be retired pursuant to the provisions of any present or
future retirement plan of the Company or any Affiliate, or beyond
the date on which his relationship with the Company or any
Affiliate would otherwise be terminated pursuant to the provisions
of any employment, consulting or other contract for services with
the Company or any Affiliate.

 

4.3            

Special
Requirements for US Participants

 

(a) 

Notwithstanding any
other provision of the Plan to the contrary, the aggregate number
of Shares available for ISOs shall not exceed 10% of the Shares (on
a non-diluted basis) issued and outstanding from time to time,
subject to adjustment pursuant to Section 1.4 of the Plan and
subject to the provisions of sections 422 and 424 of the IRS
Code.

 

(b) 

Individuals
eligible to receive ISOs are US Participants who are employees of
the Company or a Subsidiary.

 

(c) 

Each option
agreement or grant letter shall specify whether the related Option
is an ISO or a NQSO. If no such specification is made, the related
Option will be an NQSO.

 

 

 

 

(d) 

An ISO shall be
treated as a NQSO to the extent that the aggregate Market Price
(determined as of the applicable grant date) with respect to which
ISOs are exercisable by the US Participant for the first time
during any calendar year (pursuant to the Plan and all other plans
of the Company and of any Affiliate for purposes of section 422 of
the IRS Code) will exceed US$100,000 or any other limitation
subsequently set out in section 422(d) of the IRS Code. If two or
more Options designated as ISOs first become exerciseable in the
same calendar year, the $100,000 limit shall be applied to the
Options in the order in which they were granted, and any Shares
whose value exceeds the limit shall be deemed to be covered by an
NQSO.

 

(e) 

The exercise price
per Share of an ISO granted to a 10% Shareholder will be not less
than 110% of the Market Price on the applicable grant date and such
ISO shall not be exercisable later than the expiration of five
years after the date of grant.

 

(f) 

An ISO may only be
granted within the 10-year period beginning from the earlier of the
date the Plan is adopted by the Board or the date the Plan is
approved by Shareholders.

 

(g) 

If the Board
determines to extend the exercise period of an ISO pursuant to its
authority under Section 2.3 above or to make any other revision to
the terms of an ISO, such Option shall thereafter be treated as a
NQSO to the extent required under sections 422 and 424 of the IRS
Code.

 

(h) 

No NQSO shall be
granted to a US Participant unless, with respect to such US
Participant, the Shares constitute “service recipient
stock” under section 409A of the IRS Code. Notwithstanding
any provision in the Plan to the contrary, any revision to the
terms of an NQSO granted to a US Participant shall be made only if
it does not create adverse tax consequences under section 409A of
the IRS Code.

 

ARTICLE 5

ADOPTION

 

5.1            

Effectiveness

 

The
Plan shall be effective upon the approval by the
Shareholders.

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