Document:

Exhibit 10.3

 

LEASE AGREEMENT

 

PJM BLDG. II LLC, an Oregon
limited liability company

 

(Landlord)

 

and

 

Eastside Distilling, LLC, an
Oregon limited liability company

 

(Tenant)

 

Dated: July 17,
2014

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

	ARTICLE I: DEFINITIONS	1
	1.1	Defined Terms	1
	 	 
	ARTICLE II: PREMISES LEASED	2
	2.1	Premises	2
	 	 
	ARTICLE III: IMPROVEMENTS	3
	3.1	Premises As-Is	3
	 	 
	ARTICLE IV: TERM; Early access; contingency	3
	4.1	Term	3
	4.2	Early Access	3
	4.3	OLCC Contingency	3
	4.4	Option to Extend	3
	 	 
	ARTICLE V: RENT	4
	5.1	Base Rent	4
	5.2	Abated Rent	5
	5.3	Additional Rent	5
	5.4	Late Payment	5
	5.5	Security Deposit	5
	5.6	Net Lease	6
	 	 
	ARTICLE VI: operating expenses AND PERSONAL PROPERTY TAXES	6
	6.1	Operating Expenses	6
	6.2	Real Property Taxes	6
	6.3	Tenant’s Personal Property Taxes	7
	 	 
	ARTICLE VII: INSURANCE	7
	7.1	Landlord's Insurance	7
	7.2	Tenant’s Public Liability	7
	7.3	Tenant’s Property and Other Insurance	7
	7.4	Form of Insurance/Certificates	7
	7.5	Tenant’s Failure	8
	7.6	Waiver of Subrogation	8
	7.7	Tenant’s Properties and Fixtures	8
	7.8	Indemnification	8
	7.9	Damage to Tenant’s Property	9
	 	 
	ARTICLE VIII: REPAIRS AND MAINTENANCE	9
	8.1	Repairs and Maintenance	9
	8.2	Utilities and Services	9
	8.3	Non-liability of Landlord	9
	8.4	Inspection of Premises	9
	 	 
	ARTICLE IX: FIXTURES, PERSONAL PROPERTY AND ALTERATIONS	10
	9.1	Fixtures and Personal Property	10
	9.2	Tenant’s Work	10
	9.3	Alterations	10
	9.4	Liens	11
	 	 
	ARTICLE X: USE AND COMPLIANCE WITH LAWS	11
	10.1	General Use and Compliance with Laws	11
	10.2	Liquor Service	11
	10.3	Hazardous Materials	12
	10.4	Signs	13

 

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	ARTICLE XI: DAMAGE AND DESTRUCTION	13
	11.1	Reconstruction	13
	11.2	Excessive Damage or Destruction	13
	11.3	Uninsured Casualty	13
	11.4	Mortgagee’s Right	14
	11.5	Damage Near End of Term	14
	 	 
	ARTICLE XII: EMINENT DOMAIN	14
	 	 
	ARTICLE XIII: DEFAULT	14
	13.1	Events of Default	14
	13.2	Remedies	15
	13.3	Landlord’s Default	16
	 	 
	ARTICLE XIV: ASSIGNMENT AND SUBLETTING	16
	14.1	Prohibition	16
	14.2	Scope	16
	14.3	Waiver	17
	14.4	Change in Control	17
	 	 
	ARTICLE XV: ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION	17
	15.1	Estoppel Certificates	17
	15.2	Attornment	17
	15.3	Subordination	17
	15.4	Recording	17
	 	 
	ARTICLE XVI: MISCELLANEOUS	18
	16.1	Notices	18
	16.2	Successors Bound	18
	16.3	Waiver	18
	16.4	Subdivision and Easements	18
	16.5	Accord and Satisfaction	18
	16.6	Limitation of Landlord’s Liability	18
	16.7	Survival	18
	16.8	Attorneys’ Fees	19
	16.9	Captions; Article Numbers; Construction	19
	16.10	Severability	19
	16.11	Applicable Law	19
	16.12	Submission of Lease	19
	16.13	Holding Over	19
	16.14	No Nuisance	19
	16.15	Broker; Agency Disclosure	19
	16.16	Landlord’s Right to Perform	20
	16.17	Assignment by Landlord	20
	16.18	Entire Agreement	20
	16.19	Financial Covenants	20
	16.20	Consents	20
	16.21	Exhibits	20
	16.22	Time	20
	16.23	Authority to Bind Landlord	21
	16.24	Authority to Bind Tenant	21
	16.25	Interpretation	21
	16.26	Excused Delays	21
	16.27	USA Patriot Act and Anti-Terrorism Laws	21
	16.28	Amendment	22
	16.29	Guaranty	22
	16.30	Execution; Counterpart; Signature Transmitted	22
	16.31	Effective Date	22

 

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LEASE AGREEMENT

 

THIS LEASE
AGREEMENT (“Lease”) dated as of the Effective Date (defined in Section 16.31 below), is made by and between PJM
Bldg. II LLC, an Oregon limited liability company (“Landlord”), and Eastside Distilling, LLC, an Oregon limited
liability company (“Tenant”).

 

ARTICLE I: DEFINITIONS

 

1.1           Defined
Terms. The following terms shall have the meanings specified in this Section, unless

otherwise specifically provided. Other terms may be defined
in other parts of the Lease.

 

	(a)	Landlord:	 	PJM Bldg. II LLC
	 	 	 	 
	(b)	Landlord’s Address:	 	
        c/o Wyse Investment Services Co.

        1501 SW Taylor Street,
        Suite 100

        Portland, OR 97205

         

        Telephone: (503) 294-0400

        Facsimile: (503) 227-2507

	 	 	 	 
	 	With a Copy to:	 	
        Ball Janik LLP

        101 SW Main Street, Suite 1100

        Portland, OR 97204

        Attn: Bradley S. Miller

        Telephone: (503) 228-2525

        Facsimile: (503) 295-1058

	 	 	 	 
	(c)	Landlord’s Address for payment of Rent	 	
        1501 SW Taylor Street, Suite 100

        Portland, OR 97205

	 	 	 	 
	(d)	Tenant:	 	Eastside Distilling, LLC
	 	 	 	 
	(e)	Tenant’s Address:	 	
        1805 SE Martin Luther King

        Portland, OR 97214

        Telephone: 503-926-7060

        Email: steven@eastsidedistilling.com

	 	 	 	 
	(f)	Tenant’s Use:	 	Distillery and tasting room and related purposes and for no other purpose
	 	 	 	 
	(g)	Building:	 	That certain building located at 1805 SE Martin Luther King Blvd., Portland, OR 97214
	 	 	 	 
	(h)	Premises:	 	The
    entire Building, which contains approximately 27,958 square feet of first floor space, including approximately 2,500 square
    feet of office and tasting room space as well as 13,213 square feet of mezzanine space for a total of 41,171 square feet,
    along with the parking lot located north of the Building and surrounding landscaped, trash and loading areas, all as more
    particularly shown on Exhibit A and legally described on Exhibit A-l attached hereto.

 

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	(i)	Term:	 	Commencing on November 1,2014 and expiring on October 31,2020, subject to Tenant’s Option to Extend the Term as provided in Section 4.4 below.
	 	 	 	 
	(j)	Base Rent:	 	 

 

	Months	 	Monthly Installments	 
	 	 	 	 
	November 1, 2014 - January 31, 2015	 	$	0.00	 
	February 1, 2015 - April 30, 2015	 	$	6,000.00	 
	May 1, 2015 - October 31, 2015	 	$	12,000.00	 
	November 1, 2015 - October 31, 2016	 	$	20,000.00	 
	November 1, 2016 - October 31, 2017	 	$	21,000.00	 
	November 1, 2017 - October 31, 2018	 	$	22,000.00	 
	November 1, 2018 - October 31, 2019	 	$	23,000.00	 
	November 1, 2019 - October 31, 2020	 	$	24,000.00	 

 

	(k)	Security Deposit:	 	$48,000.00
	 	 	 	 
	(l)	Pre-Paid Rent:	 	$90,000.00 which shall be due and payable November 1, 2014, as set forth in Section 5.3 below
	 	 	 	 
	(m)	Guarantors:	 	
        Lenny Gotter, an individual

        Steven Earles, an individual

	 	 	 	 
	(n)	Address of Guarantors:	 	
        Lenny Gotter

        5812 SE Bush Street

        Portland, OR 97206

         

        Steven Earles

        74068 College View Circle West

        Palm Desert, CA 92211

	 	 	 	 
	(o)	Broker(s):	 	
        NAI Norris, Beggs & Simpson, representing Landlord

        (“Landlord’s Broker”)

         

        CBRE, Inc., representing Tenant (“Tenant’s Broker”)

	 	 	 	 
	(p)	Exhibits:	 	Exhibit A:	Site Plan of Premises
	 	 	 	Exhibit A-1:	Legal Description
	 	 	 	Exhibit B:	Guaranty
	 	 	 	Exhibit C:	Tenant’s Work

 

ARTICLE II: PREMISES LEASED

 

2.1           Premises.

 

(a)          Landlord
hereby leases to Tenant, and Tenant hereby leases from Landlord, subject to the provisions of this Lease, the Premises.

 

(b)          The
area of the Premises specified in Section 1.1 is approximate. Tenant is satisfied with such approximations and with Landlord’s
measurement of the areas of the Premises. Tenant acknowledges that, except as otherwise expressly set forth in this Lease, neither
Landlord nor any agent, property manager or broker of Landlord has made any representation or warranty with respect to the Premises
and that the Premises is leased in its “As-Is” condition existing at the time of execution of this Lease.

 

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ARTICLE III: IMPROVEMENTS

 

3.1           Premises
As-ls. Tenant is familiar with the condition of the Premises and is leasing the Premises in its “As-ls” condition
and Landlord shall have no obligations to make any improvements to the Premises.

 

ARTICLE IV: TERM; EARLY ACCESS; CONTINGENCY

 

4.1           Term.
The Term shall commence on the Commencement Date, as set forth in Section 1.1 (i). The Term shall expire upon the date set forth
in Section 1.1 (i), unless sooner terminated as hereinafter provided.

 

4.2           Early
Access. Tenant shall have the right to occupy the Premises as of the mutual execution and delivery of this Lease by Landlord
and Tenant and the payment of the Security Deposit as required herein. Such early access to the Premises by Tenant shall be solely
for the purpose of performing Tenant’s Work (defined below) in accordance with the terms of this Lease, provided however,
no construction may begin in the Premises until the OLCC Contingency (defined below) has been satisfied, deemed waived or waived
in writing by Tenant in the Premises and such early access shall be subject to the following conditions: (i) prior to Tenant’s
entry into the Premises, Tenant provides Landlord with proof that Tenant has the insurance that Tenant is required to maintain
under this Lease, (ii) prior to Tenant’s entry into the Premises, Tenant provides Landlord with such evidence as reasonably
required that Tenant has received all required governmental approvals to enter the Premises, (iii) prior to Tenant’s entry
into the Premises, Tenant provides Landlord with contractor’s licenses, insurance and bonds for all contractors entering
the Premises in connection with any work to be performed on by Tenant in the Premises, (iv) Tenant shall be responsible for paying
all utilities and operating costs during such early access period and (v) all terms and conditions of this Lease shall be in full
force and effect, except for Tenant’s obligation to pay Base Rent.

 

4.3           OLCC
Contingency. Tenant’s obligations under this Lease are subject to Tenant securing a liquor license from the Oregon Liquor
Control Commission (the “OLCC”) pertaining to the Premises (the “OLCC Contingency”). Tenant shall apply
for a the necessary liquor license required by OLCC for Tenant’s Permitted Use immediately following the mutual execution
of this Lease and thereafter use Tenant’s best efforts to obtain such liquor license as soon as practicable. If Tenant fails
to obtain such liquor license by the date which is sixty (60) days after the Effective Date (the “Contingency Expiration
Date”), Tenant may terminate this Lease by written notice to Landlord; provided if Tenant fails to so terminate this
Lease on or before 5:00 pm on the Contingency Expiration Date, Tenant shall automatically be deemed to have waived the OLCC Contingency
and this Lease shall remain in full force and effect. If Tenant terminates this Lease because it is unable to obtain the OLCC license,
Landlord shall be entitled to retain Twenty-Four Thousand and No/100 Dollars ($24,000.00) of the Security Deposit, as the reasonable
costs and fees incurred by Landlord hereunder, but will return the balance of the Security Deposit and any Pre-Paid Rent promptly
within seven (7) days of Tenant’s written notice.

 

4.4           Option
to Extend. Landlord hereby grants Tenant the right to extend the Term of the Lease for one (1) additional period of five (5)
years (such extended period is hereinafter referred to as the “Extended Term”) on the same terms and conditions contained
in the Lease, except that (i) Base Rent for the Extended Term shall be as set forth herein below, (ii) no additional options to
extend shall apply following the expiration of the Extended Term, and (iii) Landlord shall have no obligation to make any improvements
to the Premises or contribute any amounts therefor. Written notice of Tenant’s exercise of its option to extend (“Option
to Extend”) the Term of this Lease for the Extended Term must be given to Landlord no more than twelve (12) months and no
less than nine (9) months prior to the date the Term of the Lease would otherwise expire. If Tenant is in default under this Lease,
Tenant shall have no Option to Extend the Term of this Lease until such default is cured within the cure period set forth in this
Lease for such default, if any; provided, that the period of time within which said Option to Extend may be exercised shall not
be extended or enlarged by reason of Tenant’s inability to exercise said Option to Extend because of a default. In the event
Tenant validly exercises its Option to Extend the Term of this Lease as herein provided, Base Rent shall be adjusted as of the
commencement date of the Extended Term as follows (but in no event shall it be less than the Base Rent for the month immediately
prior to the commencement of the Extended Term):

 

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(a)          Not
later than six (6) months prior to the commencement of an Extended Term, Landlord shall provide Tenant with Landlord’s
determination of the fair market Base Rent for such Extended Term, including periodic increases as dictated by the current
market (“Landlord’s Determination of Base Rent for Extended Term”). Tenant shall provide notice to Landlord
within ten (10) days after receipt of such notice from Landlord as to whether Tenant accepts Landlord’s Determination
of Base Rent for Extended Term. In the event Tenant does not agree to Landlord’s Determination of Base Rent for the
Extended Term, Landlord and Tenant shall attempt to agree upon Base Rent for the Premises for the Extended Term, such rent to
be the fair market Base Rent, as defined in Subsection (c) below. If the parties are unable to agree upon the Base Rent for
the Extended Term by the date three (3) months prior to the commencement of the Extended Term, then within ten (10) days
thereafter each party, at its own cost and by giving notice to the other party, shall appoint a real estate appraiser with at
least five (5) years full- time commercial real estate appraisal experience in the area in which the Premises are located to
appraise and set Base Rent for the Extended Term. If a party does not appoint an appraiser within ten (10) days after the
other party has given notice of the name of its appraiser, the single appraiser appointed shall be the sole appraiser and
shall set Base Rent for the Extended Term. If each party shall have so appointed an appraiser, the two (2) appraisers shall
meet promptly and attempt to set the Base Rent for the Extended Term. If the two (2) appraisers are unable to agree within
thirty (30) days after the second appraiser has been appointed, they shall attempt to select a third appraiser meeting the
qualifications herein stated within ten (10) days after the last day the two (2) appraisers are given to set Base Rent. If
the two (2) appraisers are unable to agree on the third appraiser within such ten (10) day period, either of the parties to
this Lease, by giving five (5) days’ notice to the other party, may apply to the Arbitration Service of Portland
for the selection of a third appraiser meeting the qualifications stated in this Section. Each of the parties shall bear
one-half (1/2) of the cost of appointing the third appraiser and of paying the third appraiser’s fee. The third
appraiser, however selected, shall be a person who has not previously acted in any capacity for either party.

 

(b)          The
fair market Base Rent shall be fixed by the appraisers) in accordance with the following procedure. Each party-appointed appraiser
shall state, in writing, such appraiser’s determination of the fair market Base Rent supported by the reasons therefor and
shall make counterpart copies for the other party-appointed appraiser and any neutral appraiser. The party-appointed appraisers
shall arrange for a simultaneous exchange of their proposed fair market Base Rent determinations. The role of any neutral appraiser
shall be to select whichever of the two (2) proposed determinations of fair market Base Rent most closely approximate the neutral
appraiser’s own determination of fair market Base Rent. The neutral appraiser shall have no right to propose a middle ground
or any modification of either of the two (2) proposed determinations of fair market Base Rent. The determination of fair market
Base Rent the neutral appraiser chooses as that most closely approximating the neutral appraiser’s determination of the fair
market Base Rent shall constitute the decision of the appraisers and shall be final and binding upon the parties. The appraisers
shall have no power to modify the provisions of this Lease.

 

(c)          For
purposes of the appraisal, the term “fair market Base Rent” shall mean the price that a ready and willing tenant would
pay, as of the Extended Term commencement date, as a base rent to a ready and willing landlord of industrial premises comparable
to the Premises, in terms of size, quality and comparable term, in their then-improved state (excluding the value of Tenant’s
Work, other than any base building improvements), in the Portland, Oregon market, if such premises were exposed for lease on the
open market for a reasonable period of time; including any rent increases over the Extended Term. In no event shall there be deducted
from such fair market rental the value of any concessions, including without limitation, commission and/or “down time.”

 

(d)          Any
neutral appraiser’s decision shall be made not later than thirty (30) days after the submission by the appraisers of their
proposals with respect to the fair market Base Rent. The parties have included these time limits in order to expedite the proceeding,
but they are not jurisdictional, and the neutral appraiser may for good cause allow reasonable extensions or delays, which shall
not affect the validity of the award. Absent fraud, collusion or willful misconduct by the neutral appraiser, the award shall be
final, and judgment may be entered in any court having jurisdiction thereof. The Option to Extend the Lease hereby granted is personal
to the entity executing this Lease as tenant and is not transferable; in the event of any assignment or subletting under this Lease,
the Option to Extend the Lease shall automatically terminate and shall thereafter be null and void.

 

ARTICLE V: RENT

 

5.1           Base
Rent. The Base Rent (“Base Rent”) shall be as set forth in Section 1.1 (j). The Base Rent shall be paid in advance
on the first day of each and every month during the Term to Landlord at the address set forth in Section 1.1(c) hereof or at such
other place as Landlord may direct in writing, without any prior notice or demand therefor and without any abatement, deduction,
offset, or setoff whatsoever. If the Term commences on any day other than the first day of a calendar month and/or ends on any
day other than the last day of a calendar month, Base Rent for the fraction(s) of a month at the commencement and/or upon the expiration
of the Term shall be prorated based upon the actual number of days in such fractional month(s).

 

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5.2           Abated
Rent. As reflected in Section 1.1 (j), (a) Tenant shall have no obligation to pay monthly Base Rent for the first three (3)
full months of the Term, commencing with the Commencement Date resulting in an abatement of monthly Base Rent in the amount of
Twenty Thousand and No/100 Dollars ($20,000.00) per month and (b) Base Rent during the next three (3) full months of the Term shall
be partially abated resulting in an abatement of monthly Base Rent in the amount of Fourteen Thousand and No/100 Dollars ($14,000.00)
per month and (c) Base Rent during the next six (6) full months of the Term shall be partially abated resulting in an abatement
of monthly Base Rent in the amount of Eight Thousand and No/100 Dollars ($8,000.00) per month (the “Abated Rent Period”)
resulting in an aggregate abatement of monthly Base Rent in the amount of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00).
If this Lease is terminated during such Abated Rent Period, Tenant shall not be entitled to any such rent abatement after the date
of termination nor shall Tenant be entitled to assert any right to rent abatement after such termination against any sums due Landlord.
The rent abatement granted under this Section is solely for the benefit of the entity executing this Lease as tenant and is not
transferable to any assignee or subtenant. In the event of a default by Tenant under the terms of this Lease which results in early
termination pursuant to the provisions hereof, then as a part of the recovery to which Landlord shall be entitled shall be included
a portion of such rent which was abated under the provisions of this Section, which portion shall be determined by multiplying
the total amount of rent which was abated under this Section by a fraction, the numerator of which is the number of months remaining
in the Term of the Lease at the time of such default and the denominator of which is the number of months during the Term of the
Lease that Tenant is obligated to pay monthly Base Rent. Notwithstanding the foregoing, during the Abated Rent Period, Tenant shall
pay all utilities and operating costs.

 

5.3           Additional
Rent. In addition to Base Rent, Tenant shall pay to Landlord all sums of money or other charges required to be paid by the
Tenant under this Lease other than Base Rent (all such sums being herein deemed “Additional Rent”), and whether or
not the same are designated “Additional Rent” the same shall be payable in lawful money of the United States of America
without deduction, set-off or abatement whatsoever. Any Additional Rent provided for in this Lease shall become due with the next
monthly installment of Base Rent unless otherwise provided. The term “Rent”, as used in this Lease, shall refer collectively
to “Base Rent” and “Additional Rent.” Prior to the Commencement Date, Tenant shall pay to Landlord the
sum set forth in Section 1.1(1) for the Base Rent due under the Lease for the first twelve (12) after the Commencement Date.

 

5.4           Late
Payment. If any payment of Rent is not received by Landlord within five (5) days after the same is due, Tenant shall pay to
Landlord a late payment charge equal to five percent (5%) of the amount of such delinquent payment of Rent in addition to the installment
of Rent then owing, regardless of whether or not a notice of default has been given by Landlord. In addition, Tenant shall pay
interest on such late payment and late charge from the due date of the late payment at an interest rate equal to twelve percent
(12%), but in no event higher than the maximum rate permitted by applicable law (hereafter the “Default Rate”), until
such amounts are paid. Landlord and Tenant recognize that the damages which Landlord will suffer as a result of Tenant’s
failure to timely pay Rent are difficult or impracticable to ascertain, and agree that said interest and late charge are a reasonable
approximation of the damages which Landlord will suffer in the event of Tenant’s late payment. This provision shall not relieve
Tenant from payment of Rent at the time and in the manner herein specified. Acceptance by Landlord of any such interest and late
charge shall not constitute a waiver of Tenant’s default with respect to said overdue amount, nor shall it prevent Landlord
from exercising any other rights or remedies available to Landlord.

 

5.5           Security
Deposit. Tenant will simultaneously with execution of this Lease, deposit with Landlord the sum specified in Section 1. l(k)
of this Lease. This sum shall belong to Landlord and shall constitute partial consideration for the execution of this Lease. Landlord
shall pay Tenant the remaining balance thereof, without any liability for interest thereon, within thirty (30) days after the expiration
or prior termination of the Lease Term, or any extension thereof, if and only if Tenant has fully performed all of its obligations
under the terms of this Lease. Landlord shall be entitled to withdraw from the deposit the amount of any unpaid Base Rent, Additional
Rent or other charges not paid to Landlord when due, and Tenant shall immediately re-deposit an amount equal to that so withdrawn
within three (3) days of demand.

 

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5.6           Net
Lease. It is the intention of the parties that the Rent herein specified shall be completely net to Landlord in each month
during the term of this Lease so that this Lease shall yield to Landlord the net rent specified herein during the term of this
Lease. Any amount and any obligation which is not expressly declared herein to be that of Landlord pertaining to the Premises shall
be deemed to be the obligation of Tenant to be performed by, and at the expense of, Tenant. Except as otherwise specifically provided
in this Lease, all costs, expenses, and obligations of every kind and nature whatsoever relating to the maintenance, repair, restoration,
replacement and operation of the Premises during the term shall be paid or performed by Tenant. Tenant shall reimburse, indemnify,
protect, defend and hold Landlord harmless from and against any and all claims, liabilities, costs, expenses and obligations which
are to be paid or performed by Tenant hereunder.

 

ARTICLE VI: OPERATING EXPENSES AND PERSONAL
PROPERTY TAXES

 

6.1           Operating
Expenses. In addition to Base Rent and other sums payable by Tenant under this Lease, Tenant shall pay to Landlord, as Additional
Rent, amounts for the Operating Expenses (defined below) for the Premises. Upon the Commencement Date, and thereafter prior to
the commencement of each calendar year occurring wholly or partially within the Term or as soon as practical thereafter, Landlord
shall estimate the annual amount of Operating Expenses payable by Tenant pursuant to this provision, and Tenant shall pay to Landlord
on the first day of each month in advance, one twelfth (l/12th) of such estimated amount. In the event that during any calendar
year of the Term, Landlord determines that the actual amount of Operating Expenses for such year will exceed the estimate, Landlord
may revise such estimate by written notice to Tenant, and Tenant shall pay to Landlord, concurrently with the regular monthly
rent payment next due following the receipt of the revised estimate, an amount equal to the difference between the initial monthly
estimate and the revised monthly estimate multiplied by the number of months expired during such calendar year and shall also
pay an amount equal to the revised monthly estimate for the month of such payment. Subsequent installments shall be payable concurrently
with the regular monthly Base Rent due for the balance of the calendar year and shall continue until the next calendar year’s
estimate is rendered or Landlord next revises such estimate, whichever occurs sooner. Within one hundred twenty (120) days following
the end of each year or a reasonable time thereafter, Landlord shall provide Tenant with a written statement of the actual total
Operating Expenses for such year and there shall be an adjustment made to account for any difference between the amounts paid
by Tenant and the actual amount of such Operating Expenses. If Tenant has overpaid, Landlord shall, provided Tenant is not in
default hereunder, credit such overpayment to Tenant’s account. If Tenant has underpaid, Tenant shall pay the total amount
of such deficiency to Landlord as Additional Rent with the next payment of Base Rent due under this Lease following delivery of
written notice of said deficiency from Landlord to Tenant. Unless Tenant objects in writing regarding specific discrepancies in
the Operating Expenses calculations for any calendar year within ninety (90) days after receipt of Landlord’s final calculations
for such calendar year, Tenant shall be deemed to have approved the same and to have waived the right to object to such calculations.
“Operating Expenses” means Real Property Taxes (defined below), Landlord’s insurance premiums set forth in Section
7.1 and Landlord’s total costs for roof replacement as set forth in Section 8.1 to
the extent the cost of such roof replacement is amortized over the useful life of such capital item, in each case with interest
on the unamortized balance at a rate of ten percent (10%) per annum. As part of Operating Expenses Tenant shall also pay a monthly
property management fee equal to four percent (4%) of monthly Operating Expenses and Base Rent (during the Abated Rent Period,
such fee shall be equal to four percent (4%) of monthly Base Rent as though Base Rent was Twenty Thousand and No/100 Dollars ($20,000.00)
per month).

 

6.2           Real
Property Taxes. For purposes of this Lease, “Real Property Taxes” shall consist of all real estate taxes and all
other taxes relating to the Premises, all other taxes which may be levied in lieu of real estate taxes, all assessments, local
improvement districts, assessment bonds, levies, fees and other governmental charges, including, but not limited to, charges for
traffic facilities and improvements, water service studies, and improvements or amounts necessary to be expended because of governmental
orders, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public
improvements, services, benefits, or any other purpose, which are assessed, levied, confirmed, imposed or become a lien upon the
Premises or become payable during the Term (or which become payable after the expiration or earlier termination hereof and are
attributable in whole or in part to any period during the Term hereof), together with all costs and expenses incurred by Landlord
in successfully contesting, resisting or appealing any such taxes, rates, duties, levies or assessments. “Real Property Taxes”
shall exclude any franchise, estate, inheritance or succession transfer tax of Landlord, or any federal or state income, profits
or revenue tax or charge upon the net income of Landlord from all sources; provided, however, that if at any time during the Term
there is levied or assessed against Landlord a federal, state or local tax or excise tax on rent, or any other tax however described
on account of rent or gross receipts or any portion thereof, Tenant shall pay one hundred percent (100%) of the such tax or excise
applicable to Tenant’s Rent as Additional Rent.

 

    	6

    	 

    

 

6.3           Tenant's
Personal Property Taxes. Tenant shall pay or cause to be paid, prior to delinquency,

any and all taxes and assessments levied upon all trade
fixtures, inventories and other real or personal property placed or installed in and upon the Premises by Tenant. If any such taxes
on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property or if the assessed
value of the Building is increased by the inclusion therein of a value placed upon such real or personal property or trade fixtures
of Tenant, and if Landlord pays the taxes based upon such increased assessment, Tenant shall, upon demand, repay to Landlord the
taxes so levied or the portion of such taxes resulting from such increase in the assessment.

 

ARTICLE VII: INSURANCE

 

7.1           Landlord's
Insurance. During the Term, Landlord shall procure and maintain in full force and effect with respect to the Building a policy
or policies of property insurance (including, to the extent required, sprinkler leakage, vandalism and malicious mischief coverage),
and any other endorsements required by the holder of any fee or leasehold mortgage and earthquake, and terrorism insurance to the
extent Landlord reasonably deems prudent and/or to the extent required by any mortgagee. Landlord shall have the right, at its
option, to keep and maintain in full force and effect during the Term such other insurance in such amounts and on such terms as
Landlord and/or any mortgagees or the beneficiary of any first trust deed against the Building may reasonably require from time
to time in form, in amounts and for insurance risks against which a prudent Landlord would protect itself, including but not limited
to rental abatement, rental interruption, earthquake, and terrorism insurance.

 

7.2           Tenant’s
Public Liability. Tenant shall, at its own cost and expense, keep and maintain in full force during the Term and any other
period of occupancy of the Premises by Tenant, on an “occurrence” basis, a policy or policies of commercial liability
insurance, written by a reputable insurance company authorized to do business in the State of Oregon in form and content acceptable
to Landlord insuring Tenant’s activities with respect to the Premises and the Building for loss, damage or liability for
personal injury or death of any person or loss or damage to property occurring in, upon or about the Premises in an amount of not
less than Three Million Dollars and No/100 Dollars ($3,000,000.00) combined single limit or such larger amounts as may hereafter
be reasonably requested by Landlord. The policy shall insure the hazards of the Premises and Tenant’s operations therein,
shall include independent contractor and contractual liability coverage (covering the indemnity contained in Section 7.8 hereof)
and shall (a) name Landlord and the Landlord’s mortgagee under a mortgage or beneficiary under a deed of trust either having
a lien against the Building (the “Lender”) as an additional insured; (b) contain a cross-liability provision and; (c)
contain a provision that the insurance provided hereunder shall be primary and non-contributing with any other insurance available
to Landlord.

 

7.3           Tenant’s
Property and Other Insurance. Tenant shall, at its own cost and expense, keep and maintain in full force during the Term and
any other period of occupancy of the Premises, a policy or policies of standard form property insurance insuring against the perils
of fire, extended coverage, vandalism, malicious mischief, special extended coverage and sprinkler leakage. This insurance policy
shall be upon all property owned by Tenant, for which Tenant is legally liable or that was installed at Tenant’s expense,
and which is located in the Premises, including without limitation, furniture, fittings, installations, cabling, fixtures (other
than the improvements installed by Landlord), and any other personal property, in the amount of not less than one hundred percent
(100%) of the full replacement costs thereof. This insurance policy shall also insure direct or indirect loss of Tenant’s
earning attributable to Tenant’s inability to use fully or obtain access to the Premises.

 

7.4           Form
of Insurance/Certificates. All policies shall be written in a form satisfactory to Landlord and shall be taken out with insurance
companies licensed in the state in which the Building is located and holding a General Policy Holder’s Rating of “A”
and a financial rating of “X” or better, as set forth in the most current issues of Best’s Insurance Guide and
shall have deductibles of not more than Two Thousand Five Hundred and No/100 Dollars ($2,500.00). Tenant shall furnish to Landlord,
prior to Tenant’s entry into the Premises and thereafter within ten (10) days prior to the expiration of each such policy,
a certificate of insurance (or renewal thereof) issued by the insurance carrier of each policy of insurance carried by Tenant pursuant
hereto and, upon request by Landlord, a copy of each such policy of insurance. Said certificates shall expressly provide that such
policies shall not be cancelable or subject to reduction of coverage below the minimum amounts required by this Lease or required
by any lender having an interest in the Building or otherwise be subject to modification except after thirty (30) days prior written
notice to the parties named as insured in Section 7.2. No policy of insurance shall be written such that the proceeds thereof will
produce less than the minimum coverage required hereunder by reason of co-insurance provisions or otherwise.

 

    	7

    	 

    

 

 

7.5           Tenant’s
Failure. If Tenant fails to maintain any insurance required in the Lease, Tenant shall be liable for any loss or cost resulting
from said failure, and Landlord shall have the right to obtain such insurance on Tenant’s behalf and at Tenant’s sole
expense. This Section 7.5 shall not be deemed to be a waiver of any of Landlord’s rights and remedies under any other section
of this Lease. If Landlord obtains any insurance which is the responsibility of Tenant to obtain under this Article VII, Landlord
shall deliver to Tenant a written statement setting forth the cost of any such insurance and showing in reasonable detail the manner
in which it has been computed and Tenant shall promptly remit said amount as Additional Rent to Landlord.

 

7.6           Waiver
of Subrogation. Any all risk policy or policies of fire, extended coverage or similar casualty insurance which either party
obtains in connection with the Building, the Premises or Tenant’s personal property therein shall include a clause or endorsement
denying the insurer any rights of subrogation against the other party to the extent rights have been waived by the insured prior
to the occurrence of injury or loss. Landlord and Tenant waive any rights of recovery against the other for liability, injury or
loss due to hazards covered by insurance containing such a waiver of subrogation clause or endorsement to the extent of the liability,
injury or loss covered thereby.

 

7.7           Tenant’s
Properties and Fixtures. Tenant assumes the risk of damage to any furniture, equipment, machinery, goods, supplies or fixtures
which are or remain the property of Tenant or as to which Tenant retains the right of removal from the Premises, except to the
extent due to the gross negligence or willful misconduct of Landlord. Tenant shall not do or keep anything in or about the Premises
which will in any way tend to increase insurance rates paid by Landlord and maintained with respect to the Premises unless Tenant
pays directly to Landlord the increase cost of the premiums. In no event shall Tenant carry on any activities which would invalidate
any insurance coverage maintained by Landlord. Tenant shall promptly comply with all reasonable requirements of the insurance underwriters
and/or any governmental authority having jurisdiction thereover, necessary for the maintenance of reasonable fire and extended
insurance for the Building.

 

7.8           Indemnification.

 

(a)          Tenant,
as a material part of the consideration to be rendered to Landlord, hereby indemnifies and agrees to defend and hold Landlord,
Landlord’s managing agent and Lender, and the Building harmless for, from and against (i) any and all liability, penalties,
losses, damages, costs and expenses, demands, causes of action, claims, judgments or appeals arising from any injury to any person
or persons or any damage to any property to the extent as a result of Tenant’s or Tenants’ officers, employees, agents,
assignees, subtenants, concessionaires, licensees, contractors or invitees’ use, maintenance, occupation, operation or control
of the Premises during the Term, or resulting from any breach or default in the performance of any obligation to be performed by
Tenant hereunder or for which Tenant is responsible under the terms of the Lease or pursuant to any governmental or insurance requirement,
or to the extent arising from any act, neglect, fault or omission of Tenant or any of Tenant’s officers, employees, agents,
servants, subtenants, concessionaires, licensees, contractors or invitees, and (ii) from and against all reasonable legal costs
and charges, including reasonable attorneys’ and other reasonable professional fees, incurred in and about any of such matters
and the defense of any action arising out of the same or in discharging the Building or any part thereof from any and all liens,
charges or judgments which may accrue or be placed thereon by reason of any act or omission of the Tenant, except and to the extent
as may arise out of the gross negligence or willful misconduct of Landlord and/or its agents, employees or contractors.

 

(b)          In
no event shall Landlord, its agents, employees and/or contractors be liable for any personal injury or death or property damage
caused by other lessees or persons in or about the Building, as the case may be, or caused by public or quasi-public work, or for
consequential damages arising out of any loss of the use of the Premises or any equipment or facilities therein by Tenant or any
person claiming through or under Tenant.

 

    	8

    	 

    

 

(c)          Landlord
hereby indemnifies and agrees to defend and hold Tenant and its agents and employees harmless for, from and against any and all
liability, penalties, losses, damages, costs and expenses, demands, causes of action, claims, judgments or appeals in connection
with loss of life, bodily injury, personal injury and/or damage to property of whatever kind or character occasioned wholly or
in part by negligence or willful misconduct of Landlord, its agents, employees or contractors; provided, however, that Landlord
shall not indemnify Tenant or its agents or employees from or in respect of any claim or matter to the extent resulting from the
(y) negligence or willful misconduct of Tenant or any of its shareholders, directors, officers, agents, employees, clients, customers
or invitees, or (z) breach or default by Tenant in the performance of its obligations under this Lease.

 

7.9           Damage
to Tenant's Property. Except to the extent due to the gross negligence or willful misconduct of Landlord, Landlord, its agents,
employees and/or contractors shall not be liable for (i) any damage to property entrusted to employees or security officers of
the Building, (ii) loss or damage to any property by theft or otherwise, or (iii) any injury or damage to persons or property resulting
from fire, explosion, falling substances or materials, steam, gas, electricity, water or rain which may leak from any part of the
Building or from the pipes, appliances or plumbing work therein or from the roof, street, or subsurface or from any other place
or resulting from dampness or any other cause, except to the extent Landlord receives consideration for such damage or injury from
a third party. Neither Landlord nor its agents, employees or contractors shall be liable for interference with light or incorporeal
hereditaments. Tenant shall give prompt notice to Landlord and appropriate emergency response officials if Tenant is or becomes
aware of fire or accidents in the Building or of defects therein in the fixtures or equipment.

 

ARTICLE VIII: REPAIRS AND MAINTENANCE

 

8.1           Repairs
and Maintenance. Landlord shall, at its sole cost and expense, maintain the structure of the Building and foundation of the
Building in good condition and repair. Landlord shall also be responsible for any necessary replacement of the roof, as determined
by Landlord in its reasonable discretion. Tenant shall, at its sole cost and expense, maintain in good condition and repair all
portions of the Building (other than the structural portions of the Building and the foundation of the Building) and the Premises,
including but not by way of limitation, the roof and roof membrane (excluding roof replacement), all interior walls, doors, ceiling,
fixtures, furnishings, drapes, specialty lamps, light bulbs, starters and ballasts, subfloors, carpets and floor coverings, elevators
and heating, ventilation, air-conditioning and other utility and mechanical systems within the Premises to the extent serving the
Premises exclusively, in good repair and in a clean and safe condition, including replacement as necessary. Upon expiration or
earlier termination of the Term, Tenant shall surrender the Premises to Landlord in the same condition as when leased, reasonable
wear and tear and damage by fire or other casualty not required to be repaired by Tenant pursuant to this Lease excepted.

 

8.2           Utilities
and Services. Tenant shall pay before delinquency, at its sole cost and expense, all charges for water, heat, electricity,
power, telephone service, sewer service charges and other utilities or services charged or attributable to the Premises during
the Term and during the early access period set forth in Section 4.2 above.

 

8.3           Non-liability
of Landlord. Landlord shall not be in default hereunder or be liable for any damages directly or indirectly resulting from,
nor shall the Rent herein reserved be abated or rebated by reason of (a) the interruption or curtailment of the use of the Premises
as a result of the installation of any equipment in connection with the Building; or (b) the limitation, curtailment, rationing
or restriction of the use of water or electricity, gas or any other form of energy or any other service or utility whatsoever serving
the Premises.

 

8.4           Inspection
of Premises. Upon twenty-four (24) hours verbal notice (except in the case of an emergency, in such case, no prior notice is
required) Landlord may enter the Premises to inspect the performance by Tenant of the terms and conditions hereof, show the Premises
to prospective purchasers, tenants and lenders and for all other purposes as Landlord shall reasonably deem necessary or appropriate;
provided, that Landlord shall use reasonable efforts not to interfere with Tenant’s business in exercise of Landlord’s
rights hereunder. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s
business, any loss of occupancy or quiet enjoyment of the Premises and any other loss in, upon or about the Premises, arising from
exercise by Landlord of its rights hereunder except as otherwise provided in Article XI hereof.

 

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ARTICLE IX: FIXTURES, PERSONAL PROPERTY
AND ALTERATIONS

 

9.1           Fixtures
and Personal Property. Tenant, at Tenant’s expense, may install any necessary trade fixtures, equipment and furniture
in the Premises, provided that such items are installed and are removable without damage to the structure of the Premises, including,
but not limited to, damage to drywall, doors, door frames and floors. Such improvements must be submitted for Landlord’s
written approval prior to installation, or Landlord may remove or replace such items at Tenant’s sole expense. Said trade
fixtures, equipment, personal property and furniture shall remain Tenant’s property and shall be maintained in good condition
while on the Premises and removed by Tenant upon the expiration or earlier termination of the Lease. As a covenant which shall
survive the expiration or earlier termination of the Lease, Tenant shall repair, at Tenant’s sole expense, or at Landlord's
election, reimburse Landlord for the cost to repair all damage caused by the installation or removal of said trade fixtures, equipment,
furniture, personal property or temporary improvements. If Tenant fails to remove the foregoing items prior to or upon the expiration
or earlier termination of this Lease, Landlord, at its option and without liability to Tenant for loss thereof, may keep and use
them or remove any or all of them and cause them to be stored or sold in accordance with applicable law, and Tenant shall, upon
demand of Landlord, pay to Landlord as Additional Rent hereunder all costs and expenses incurred by Landlord in so storing and/or
selling said items. In the event any such fixtures, equipment, and/or furniture of Tenant are sold by Landlord, the proceeds of
such sale shall be applied, first, to all expenses of Landlord incurred in connection with storage and sale; second, to any amounts
owed by Tenant to Landlord under this Lease or otherwise, and, third, the remainder, if any, shall be paid to Tenant.

 

9.2           Tenant’s
Work. Subject to the provisions of Section 9.3 below, Tenant may make the improvements to the Premises set forth on Exhibit
C attached hereto (“Tenant’s Work”). Tenant shall be responsible for the finish and interior design of the
Premises, at Tenant’s sole cost and expense. Tenant shall be responsible for all permitting fees and systems development
charges in connection with Tenant’s use of the Premises and the performance of Tenant’s Work. Tenant shall perform
all Tenant’s Work in the Premises in accordance with Section 9.3 below and all of Tenant’s Work shall be performed
by licensed and bonded contractors.

 

9.3           Alterations.
Tenant shall not make or allow to be made any material alterations, additions or improvements to the Premises (defined as alterations,
additions or improvements costing in excess of One Thousand and No/100 Dollars ($1,000.00) individually or in the aggregate with
respect to separate items relating to the same improvement or alteration or any alterations, additions or improvements that affect
the structure or exterior of the Building or any building, mechanical, electrical or life safety system), either at the inception
of the Lease (including Tenant’s Work) or subsequently during the Term, without obtaining the prior written consent of Landlord
which consent may be withheld in Landlord’s sole discretion with respect to any alteration, addition or improvement that
affects the structure or exterior of the Building or any building, mechanical, electrical or life safety systems. Tenant shall
deliver to Landlord the contractor’s name, references and state license number, a certificate of liability insurance naming
Landlord and Landlord’s manager and lenders) as an additional insured, as well as full and complete plans and specifications
of all such alterations, additions or improvements, and any subsequent modifications or additions to such plans and specifications,
and no proposed work shall be commenced or continued by Tenant until Landlord has received and given its written approval of each
of the foregoing. Landlord shall either approve or disapprove any proposed alteration, addition or improvement on or before thirty
(30) days following receipt of all of the foregoing items. Landlord does not expressly or implicitly covenant or warrant that any
plans or specifications submitted by Tenant are accurate, safe or sufficient or that the same comply with any applicable laws,
ordinances, building codes, or the like. Further, Tenant shall indemnify, protect, defend and hold Landlord and Landlord’s
agents, employees and contractors and the Building harmless for, from and against any loss, damage, liability, claims, cost or
expense, including attorneys’ fees and costs, incurred as a result of any defects in design, materials or workmanship resulting
from Tenant’s alterations, additions or improvements to the Premises. All alterations, telephone or telecommunications lines,
cables, conduits and equipment and all other additions or improvements to the Premises made by Tenant shall remain the property
of Tenant until termination of the Lease, at which time they shall, unless otherwise elected by Landlord by written notice to Tenant
accompanying Landlord’s approval of such alterations, additions or improvement, be and become the property of Landlord. Landlord
may, as a condition to approval of any such alterations, additions or improvements, require Tenant to remove any partitions, counters,
railings, telephone and telecommunications lines, cables, conduits and equipment and/or other improvements installed by Tenant
during the Term, and Tenant shall repair all damage resulting from such removal or, at Landlord’s option, shall pay to Landlord
all costs arising from such removal. All repairs, alterations, additions and restorations by Tenant hereinafter required or permitted
shall be done in a good and workmanlike manner and in compliance with the plans and specifications approved by Landlord and in
compliance with all applicable laws and ordinances, building codes, bylaws, regulations and orders of any federal, state, county,
municipal or other public authority and of the insurers of the Premises and as-built plans and specifications shall be provided
to Landlord by Tenant upon completion of the work. If required by Landlord, Tenant shall secure at Tenant’s own cost and
expense a completion and lien indemnity bond or other adequate security, including without limitation an indemnity agreement from
Tenant’s parent in form and substance reasonably satisfactory to Landlord. Tenant shall reimburse Landlord for Landlord’s
reasonable charges (including any professional fees incurred by Landlord and a reasonable administrative fee as established by
Landlord from time to time) for reviewing and approving or disapproving plans and specifications for any proposed alterations,
except Landlord shall not be reimbursed for reviewing and approving Tenant’s Work.

 

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9.4           Liens.
Tenant shall promptly file and/or record, as applicable, all notices of completion provided for by law, and shall pay and discharge
all claims for work or labor done, supplies furnished or services rendered at the request of Tenant or at the request of Landlord
on behalf of Tenant, and shall keep the Premises free and clear of all mechanics’ and materialmen’s liens in connection
therewith. Landlord shall have the right, and shall be given ten (10) business days written notice by Tenant prior to commencement
of the work, to post or keep posted on the Premises, or in the immediate vicinity thereof, any notices of non-responsibility for
any construction, alteration, or repair of the Premises by Tenant. If any such lien is filed, Tenant shall cause same to be discharged
of record within ten (10) days following written notice thereof, or if Tenant disputes the correctness or validity of any claim
of lien, Landlord may, in its reasonable discretion, permit Tenant to post or provide security in a form and amount acceptable
to Landlord to insure that title to the Building remains free from the lien claimed. If said lien is not timely discharged Landlord
may, but shall not be required to, take such action or pay such amount as may be necessary to remove such lien and Tenant shall
pay to Landlord as Additional Rent any such amounts expended by Landlord, together with interest thereon at the Default Rate (as
defined in Section 5.3 hereof), within five (5) days after notice is received from Landlord of the amount expended by Landlord.

 

ARTICLE X: USE AND COMPLIANCE WITH
LAWS

 

10.1         General
Use and Compliance with Laws. Tenant shall only use the Premises for Tenant’s business described in Section 1.1(f) above,
and uses customarily incidental thereto and for no other use without the prior written consent of Landlord. Tenant shall, at Tenant’s
sole cost and expense, comply with applicable requirements of municipal, county, state, federal and other applicable governmental
authorities now or hereafter in force pertaining to Tenant’s business operations, alterations and/or specific use of the
Premises, and shall secure any necessary permits therefore and shall faithfully observe in the use of the Premises, applicable
municipal, county, state, federal and other applicable governmental entities’ requirements which are now or which may hereafter
be in force. Tenant, in Tenant’s use and occupancy of the Premises, shall not subject or permit the Premises to be used in
any manner which would tend to damage any portion thereof, or which would increase the cost of any insurance paid by Landlord with
respect thereto. Tenant shall not allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor
shall Tenant cause, maintain or permit a nuisance in, on or about the Premises.

 

10.2         Liquor
Service. Tenant agrees to provide Landlord with a copy of the liquor license issued by the State of Oregon prior to the sale
of any alcoholic beverages in the Premises, and to keep such license in full force and effect and to comply with all rules and
regulations issued by the State of Oregon and any local authority regarding the sale of liquor on the Premises. Tenant shall carry
at its own expense throughout the term of this Lease or any renewal thereof, and in addition to any other insurance policy or policies
which Tenant shall be required to maintain by the terms of this Lease, liquor liability insurance in the amount of Three Million
and No/100 Dollars ($3,000,000.00) covering the Premises and Tenant's use thereof, in companies and in a form satisfactory to Landlord,
and to deposit a certificate of such policy or policies with Landlord prior to the date Tenant commences the sale of alcoholic
beverages in the Premises. Such policy or policies shall name Landlord as an additional insured and shall bear endorsements to
the effect that the insurer agrees to notify Landlord not less than thirty (30) days in advance of any modification or cancellation
thereof. Should Tenant fail to obtain and/or maintain such liquor liability insurance, Landlord shall have the right, but not obligation,
to: (i) terminate Tenant's right to sell alcohol from the Premises until such time as Tenant shall provide proof of the insurance
required hereunder, or (ii) obtain such insurance on behalf of Tenant and Tenant shall reimburse Landlord for the cost of such
policy or policies immediately upon Landlord's demand, plus an additional fifteen percent (15%) of such cost as a reimbursement
for Landlord's administrative expense.

 

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10.3         Hazardous
Materials.

 

(a)          Defined
Terms.

 

(i)          “Hazardous
Materials” means, among other things, any of the following, in any amount: (a) any petroleum or petroleum derived or
derivative product, asbestos in any form, urea formaldehyde and polychlorinated biphenyls and medical wastes; (b) any radioactive
substance; (c) any toxic, infectious, reactive, corrosive, ignitable or flammable chemical or chemical compound; and (d) any chemicals,
materials or substances, whether solid, liquid or gas, defined as or included in the definitions of “hazardous substances,”
“hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted
hazardous wastes,” “toxic substances,” “toxic pollutants,” “solid waste,” or words of
similar import in any federal, state or local statute, law, ordinance or regulation or court decisions now existing or hereafter
existing as the same may be interpreted by government offices and agencies.

 

(ii)         “Hazardous
Materials Laws” means any federal, state or local statutes, laws, ordinances or regulations or court decisions now existing
or hereafter existing that control, classify, regulate, list or define Hazardous Materials or require remediation of Hazardous
Materials contamination.

 

(b)          Compliance
with Hazardous Materials Laws. Tenant will not cause any Hazardous Material to be brought upon, kept, generated or used on
the Premises in a manner or for a purpose prohibited by or that could result in liability under any Hazardous Materials Law; provided,
however, in no event shall Tenant allow any Hazardous Material to be brought upon, kept, generated or used on the Premises other
than those Hazardous Materials for which Tenant has received Landlord’s prior written consent (other than small quantities
of cleaning or other/industrial supplies as are customarily used by a tenant in the ordinary course in a general office facility).
Tenant, at its sole cost and expense, will comply with (and obtain all permits required under) all Hazardous Materials Laws, groundwater
wellhead protection laws, storm water management laws, fire protection provisions, and prudent industry practice relating to the
presence, storage, transportation, disposal, release or management of Hazardous Materials in, on, under or about the Premises that
Tenant brings upon, keeps, generates or uses on the Premises (including, without limitation, but subject to this Section 10.3,
immediate remediation of any Hazardous Materials in, on, under or about the Premises that Tenant brings upon, keeps, generates
or uses on the Premises in compliance with Hazardous Materials Laws) and in no event shall Tenant allow any liens or encumbrances
pertaining to Tenant’s use of Hazardous Materials to attach to any portion of the Premises. On or before the expiration or
earlier termination of this Lease, Tenant, at its sole cost and expense, will completely remove from the Premises (regardless whether
any Hazardous Materials Law requires removal), in compliance with all Hazardous Materials Laws, all Hazardous Materials Tenant
causes to be present in, on, under or about the Premises. Tenant will not take any remedial action in response to the presence
of any Hazardous Materials in on, under or about the Premises, nor enter into (or commence negotiations with respect to) any settlement
agreement, consent decree or other compromise with respect to any claims relating to or in any way connected with Hazardous Materials
in, on, under or about the Premises, without first notifying Landlord of Tenant’s intention to do so and affording Landlord
reasonable opportunity to investigate, appear, intervene and otherwise assert and protect Landlord’s interest in the Premises.
Landlord shall have the right from time to time to inspect the Premises to determine if Tenant is in compliance with this Section
10.3.

 

(c)          Notice
of Actions. Tenant will notify Landlord of any of the following actions affecting Landlord, Tenant or the Premises that result
from or in any way relate to Tenant’s use of the Premises immediately after receiving notice of the same: (a) any enforcement,
clean-up, removal or other governmental or regulatory action instituted, completed or threatened under any Hazardous Materials
Law; (b) any claim made or threatened by any person relating to damage, contribution, liability, cost recovery, compensation, loss
or injury resulting from or claimed to result from any Hazardous Material; and (c) any reports made by any person, including Tenant,
to any environmental agency relating to any Hazardous Material, including any complaints, notices, warnings or asserted violations.
Tenant will also deliver to Landlord, as promptly as possible and in any event within five (5) business days after Tenant first
receives or sends the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any
way to the Premises or Tenant’s use of the Premises. Upon Landlord’s written request, Tenant will promptly deliver
to Landlord documentation acceptable to Landlord reflecting the legal and proper disposal of all Hazardous Materials removed or
to be removed from the Premises. All such documentation will list Tenant or its agent as a responsible party and the generator
of such Hazardous Materials and will not attribute responsibility for any such Hazardous Materials to Landlord or Landlord’s
property manager.

 

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(d)          Disclosure
and Warning Obligations. Tenant acknowledges and agrees that all reporting and warning obligations required under Hazardous
Materials Laws resulting from or in any way relating to Tenant’s use of the Premises are Tenant’s sole responsibility,
regardless whether the Hazardous Materials Laws permit or require Landlord to report or warn.

 

(e)          Indemnification.
Tenant releases and will indemnify, defend (with counsel reasonably acceptable to Landlord), protect and hold harmless the Landlord
and Landlord’s agents, employees and contractors for, from and against any and all claims, liabilities, damages, losses,
costs and expenses whatsoever arising or resulting, in whole or in part, directly or indirectly, from the presence, treatment,
storage, transportation, disposal, release or management of Hazardous Materials in, on, under, upon or from the Premises (including
water tables and atmosphere) that Tenant brings upon, keeps, generates or uses on the Premises. Tenant’s obligations under
this Section include, without limitation and whether foreseeable or unforeseeable, (a) the costs of any required or necessary repair,
clean-up, detoxification or decontamination of the Premises; (b) the costs of implementing any closure, remediation or other required
action in connection therewith as stated above; (c) the value of any loss of use and any diminution in value of the Premises, and
(d) consultants’ fees, experts’ fees and response costs. The Tenant’s obligations under this section survive
the expiration or earlier termination of this Lease.

 

(f)          Hazardous
Materials Representation by Landlord. Landlord represents to Tenant that, to its actual knowledge and except as Landlord has
previously disclosed to Tenant, Landlord has not caused the generation, storage or release of Hazardous Materials upon the Premises,
except in accordance with Hazardous Materials Laws and prudent industry practices regarding construction of the Premises.

 

10.4         Signs.
The Tenant shall not paint, display, inscribe, place or affix any sign, picture, advertisement, notice, lettering, or direction
on any part of the outside of the Building, except as first approved by Landlord.

 

ARTICLE XI: DAMAGE AND DESTRUCTION

 

11.1         Reconstruction.
If the Building is damaged or destroyed during the Term, Landlord shall, except as hereinafter provided, diligently repair or rebuild
it to substantially the condition in which it existed immediately prior to such damage or destruction. If Landlord is obligated
or elects to repair or restore as herein provided, Landlord shall be obligated to make repair or restoration of only those portions
of the Building which were initially provided at Landlord’s expense or as part of the original installation by Landlord for
Tenant and the repair and/or restoration of other items within the Building shall be the obligation of the Tenant.

 

11.2         Excessive
Damage or Destruction. If the Building is damaged or destroyed to the extent that it cannot within Landlord’s reasonable
discretion, with reasonable diligence, be fully repaired or restored by Landlord within the earlier of (i) one hundred twenty (120)
days after the date of the damage or destruction, or (ii) the expiration of the Term hereof, Landlord may terminate this Lease
by written notice to Tenant within thirty (30) days of the date of the damage or destruction. If Landlord does not terminate the
Lease, this Lease shall remain in full force and effect and Landlord shall diligently repair and restore the damage as soon as
reasonably possible.

 

11.3         Uninsured
Casualty. Notwithstanding anything contained herein to the contrary, in the event of damage to or destruction of all or any
portion of the Building, which damage or destruction is not fully covered by the insurance proceeds received by Landlord under
the insurance policies required under Section 7.1 hereinabove, Landlord may terminate this Lease by written notice to Tenant given
within sixty (60) days after the date of notice to Landlord that said damage or destruction is not so covered. If Landlord does
not elect to terminate this Lease, the Lease shall remain in full force and effect and the Building shall be repaired and rebuilt
in accordance with the provisions for repair set forth in Section 11.1 hereinabove.

 

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11.4         Mortgagee’s
Right. Notwithstanding anything herein to the contrary, if the holder of any indebtedness secured by a mortgage or deed of
trust covering the Building requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the
right to terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days after such requirement
is made. Upon any termination of this Lease under the provisions hereof, the parties shall be released without further obligation
to the other from date possession of the Premises is surrendered to Landlord, except for items which are theretofore accrued and
are then unpaid.

 

11.5         Damage
Near End of Term. Notwithstanding anything to the contrary contained in this Article

XI, in the event the Building is
subject to excessive damage (as defined in Section 11.2) during the last twenty-four (24) months of the Term or any applicable
extension periods, Landlord may elect to terminate this Lease by written notice to Tenant within thirty (30) days after the date
of such damage.

 

ARTICLE XII: EMINENT DOMAIN

 

In the event the whole of the Premises
and/or such part thereof as shall substantially interfere with Tenant’s use and occupation thereof, shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent
domain, or is sold in lieu of or to prevent such taking, then Tenant shall have the right to terminate this Lease effective as
of the date possession is required to be surrendered to said authority. In the event the whole of the Premises or such part thereof
as shall substantially interfere with Landlord’s use and occupation thereof, or if any access points to adjoining streets,
shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or is sold in lieu of or to prevent such taking, then Landlord shall have the right to terminate
this Lease effective as of the date possession is required to be surrendered to said authority. Except as provided below, Tenant
shall not assert any claim against Landlord or the taking authority for any compensation because of such taking, and Landlord shall
be entitled to receive the entire amount of any award without deduction for any estate or interest of Tenant in the Premises. Nothing
contained in this Article XII shall be deemed to give Landlord any interest in any separate award made to Tenant for the taking
of personal property and fixtures belonging to Tenant or for Tenant’s moving expenses. In the event the amount of property
or the type of estate taken shall not substantially interfere with the conduct of Tenant’s business, Landlord shall be entitled
to the entire amount of the award without deduction for any estate or interest of Tenant, Landlord shall promptly proceed to restore
the Building to substantially their same condition prior to such partial taking less the portion thereof lost in such condemnation,
and the Base Rent shall be proportionately reduced by the time during which, and the portion of the Premises which, Tenant shall
have been deprived of possession on account of said taking and restoration.

 

ARTICLE XIII: DEFAULT

 

13.1         Events
of Default. The occurrence of any of the following events shall constitute an “Event of Default” on the part of
the Tenant with or without notice from Landlord:

 

(a)          Tenant
shall fail to pay on or before the due date any installment of Rent or other payment required pursuant to this Lease;

 

(b)          Tenant
shall abandon the Premises, whether or not Tenant is in default of the Rent payments due under this Lease;

 

(c)          Tenant
shall fail to comply with any term, provision, or covenant of this Lease, other than the payment of Rent or other sums of money
due hereunder, and such failure is not cured within ten (10) days after written notice thereof to Tenant (said notice being in
lieu of, and not in addition to, any notice required as a prerequisite to a forcible entry and detainer or similar action for possession
of the Premises); provided that if the nature of such cure is such that a longer cure period is necessary, Tenant shall only be
in default if Tenant shall have failed to commence such cure within said ten (10) day period and thereafter to have diligently
prosecuted such cure to completion;

 

(d)          Tenant
shall file a petition or be adjudged a debtor or bankrupt or insolvent under the United States Bankruptcy Code, as amended, or
any similar law or statute of the United States or any State; or a receiver or trustee shall be appointed for all or substantially
all of the assets of Tenant and such appointment or petition, if involuntary, is not dismissed within sixty (60) days of filing;
or

 

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(e)          Tenant
shall make an assignment for the benefit of creditors.

 

13.2        Remedies.

 

(a)          Upon
the occurrence of any Event of Default set forth in this Lease, in addition to any other remedies available to Landlord at law
or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder. In the event
that Landlord shall elect to so terminate this Lease, then Landlord may recover from Tenant: (i) any unpaid rent which as been
earned at the time of such termination plus interest at the rates contemplated by this Lease; plus (ii) the amount by which the
unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided plus interest at the rates contemplated by this Lease; plus (iii) the worth at
the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount
of such rental loss that Tenant proves could be reasonably avoided; plus (iv) the unamortized balance of the value of any free
Rent, tenant improvement costs, commissions and any other monetary concessions provided to Tenant pursuant to this Lease, as amortized
over the initial Term of this Lease; plus (v) any other amount necessary to compensate Landlord for all the damage proximately
caused by Tenant’s failure to perform Tenant’s obligation under this Lease or which in the ordinary course of things
would be likely to result therefrom, including, but not limited to, costs to restore the Premises to good condition, to remodel,
renovate or otherwise prepare the Premises, or portions thereof for a new tenant, leasing commissions, marketing expenses, attorneys’
fees, and free rent, moving allowances and other types of leasing concessions. As used in Subsections 13.2(a) (iii) above, the
“worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus one percent (1%).

 

(b)          In
the event of any such default by Tenant, Landlord shall also have the right with or without terminating this Lease, to re-enter
the Premises and remove all persons and property from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of the Tenant. No re-entry or taking possession of the Premises by Landlord pursuant
to this Section 13.2(b) shall be construed as an acceptance of a surrender of the Premises or an election to terminate this Lease
unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction.

 

(c)          In
the event of the vacation or abandonment of the Premises by Tenant or in the event that Landlord shall elect to re-enter as provided
above or shall take possession of the Premises pursuant to legal proceedings or pursuant to any notice provided by law, then if
Landlord does not elect to terminate this Lease as provided above, Landlord may from time to time, without terminating this Lease,
either recover all Rent as it becomes due or relet the Premises or any part thereof for the Term of this Lease on terms and conditions
as Landlord at its sole discretion may deem advisable with the right to make alterations and repairs to the Premises.

 

(d)          In
the event that Landlord shall elect to so relet, the rents received by Landlord from such reletting shall be applied: first to
the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; second to the payment of any costs of such
reletting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of Rent due
and unpaid hereunder; and the residual, if any, shall be held by Landlord and applied to payment of future Rent as the same shall
become due and payable hereunder. Should that portion of such rents received from such reletting during the month which is applied
to the payment of Rent be less than the Rent payable during that month by Tenant hereunder, then Tenant shall pay any such deficiency
to Landlord immediately upon demand therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also
pay to Landlord, as soon as is certain, any of the costs and expenses incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rents received from such reletting.

 

(e)          All
rights, options and remedies of Landlord contained in this Lease shall be construed and held to be cumulative, and no one of them
shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy
or relief which may be provided by law, whether or not stated in this Lease. No waiver of any default of Tenant hereunder shall
be implied from any acceptance by Landlord of any Rent or other payments due hereunder or any omission by Landlord to take any
action on account of such default if such default persists or is repeated, and no express waiver shall affect defaults other than
as specified in said waiver. The consent or approval of Landlord to or of any act by Tenant requiring Landlord’s consent
or approval shall not be deemed to waive or render unnecessary Landlord’s consent or approval to or of any subsequent similar
acts by Tenant.

 

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(f)          In
the event that during the term of this Lease, Tenant commits more than two (2) acts or omissions of default for which default notices
are given by Landlord pursuant to this Article XIII (whether or not such defaults are cured by Tenant), Landlord may, at its option,
elect to terminate this Lease. Landlord’s election to exercise its early termination rights shall be effective only upon
written notice delivered to Tenant specifying Landlord’s election to cause an early termination of this Lease. Such early
termination shall be in effect when such written notice is provided to Tenant. Landlord’s right of early termination shall
be in addition to all other rights and remedies available to Landlord at law or in equity.

 

13.3         Landlord’s
Default. Landlord shall not be in default unless Landlord fails to perform its obligations under this Lease within thirty (30)
days after written notice by Tenant, or if such failure is not reasonably capable of being cured within such thirty (30) day period,
Landlord shall not be in default unless Landlord has failed to commence the cure and diligently pursue the cure to completion.
In no event shall Tenant have the remedy to terminate this Lease except upon final adjudication of competent jurisdiction authorizing
such default. In no event shall Landlord be liable to Tenant or any person claiming through or under Tenant for consequential,
exemplary or punitive damages.

 

ARTICLE XIV: ASSIGNMENT AND SUBLETTING

 

14.1         Prohibition.
Tenant shall not assign, mortgage, pledge or otherwise transfer or encumber this Lease, in whole or in part, nor sublet, assign,
or permit occupancy by any party other than Tenant of all or any part of the Premises, without the prior written consent of Landlord
in each instance which consent shall not be unreasonably withheld or delayed. Tenant shall at the time the Tenant requests the
consent of Landlord, deliver to Landlord such information in writing as Landlord may reasonably require respecting the proposed
assignee or subtenant including, without limitation, the name, address, nature of business, ownership, financial responsibility
and standing of such proposed assignee or subtenant and Landlord shall have not less than twenty (20) business days after receipt
of all required information to elect one of the following: (a) consent to such proposed assignment, encumbrance or sublease, or
(b) refuse such consent, or (c) elect to terminate this Lease, in the case of a proposed assignment, or elect to terminate the
Lease with respect to the portion of the Premises proposed to be subleased, as applicable. In addition, as a condition to Landlord’s
consent to any assignment, sublease or encumbrance of this Lease shall be the delivery to Landlord of a true copy of the fully
executed instrument of assignment, transfer or encumbrance and an agreement executed by the assignee, sublessee or other transferee
in form and substance satisfactory to Landlord and expressly enforceable by Landlord, whereby the assignee assumes and agrees to
be bound by the terms and provisions of this Lease and perform all the obligations of Tenant hereunder with respect to the assigned
or subleased portion of the Premises. No assignment or subletting by Tenant shall relieve Tenant of any obligation under this Lease,
including Tenant’s obligation to pay Base Rent and Additional Rent hereunder. Any purported assignment or subletting contrary
to the provisions hereof without consent shall be void. The consent by Landlord to any assignment or subletting shall not constitute
a waiver of the necessity for such consent to any subsequent assignment of subletting. Tenant’s sole remedy for Landlord’s
refusal to consent to a proposed assignee or sublessee of Tenant will be an action or proceeding for specific performance, injunction
or declaratory relief. Tenant shall pay Landlord’s reasonable processing costs and attorneys’ fees incurred in reviewing
any proposed assignment or sublease.

 

14.2         Scope.
The prohibition against assigning or subletting contained in this Article XIV shall be construed to include a prohibition against
any assignment or subletting by operation of law. If this Lease be assigned, or if the underlying beneficial interest of Tenant
is transferred, or if the Premises or any part thereof be sublet or occupied by anybody other than Tenant, Landlord may collect
rent from the assignee, subtenant or occupant and apply the net amount collected to the Rent herein reserved and apportion any
excess rent so collected in accordance with the terms of the immediately preceding paragraph, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. No assignment
or subletting shall affect the continuing primary liability of Tenant (which, following assignment, shall be joint and several
with the assignee), and Tenant shall not be released from performing any of the terms, covenants and conditions of this Lease.

 

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14.3         Waiver.
Notwithstanding any assignment or sublease, or any indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee or failure of Landlord to take action against any assignee or sublease, Tenant hereby agrees that Landlord may, at
its option, and upon not less than ten (10) days’ notice to Tenant, proceed against Tenant without having taken action against
or joined such assignee or sublessee, except that Tenant shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee.

 

14.4         Change
in Control. If Tenant is a partnership or limited liability company, a withdrawal of or

change in general partners or members,
in one or more transfers, owning more than a fifty percent (50%) interest in the partnership, shall constitute a voluntary assignment
and shall be subject to the provisions of this Article XIV. If the Tenant is a corporation, a transfer of fifty percent (50%) or
more of the corporation’s stock or assets in one or more transfers to a single party and/or its affiliates, or a change in
the control of such company pursuant to a merger, consolidation, sale of assets or otherwise, shall be deemed for the purposes
hereof to be an assignment of this Lease, and shall be subject to the provisions of this Article XIV.

 

ARTICLE XV: ESTOPPEL CERTIFICATE,
ATTORNMENT AND SUBORDINATION

 

15.1         Estoppel
Certificates. Within ten (10) business days after request therefor by Landlord, or if on any sale, assignment or hypothecation
by Landlord of Landlord’s interest in the Premises, or any part thereof, an estoppel certificate shall be required from Tenant,
Tenant shall deliver a certificate in such other form as requested by Landlord, to any proposed mortgagee or purchaser, and to
Landlord, certifying (if such be the case) that this Lease is in full force and effect, the date of Tenant’s most recent
payment of Rent, and that Tenant has no defenses or offsets outstanding, or stating those claimed by Tenant, and any other information
reasonably requested by Landlord or such proposed mortgagee or purchaser. Tenant’s failure to deliver said statement within
said period shall, at Landlord’s option be an Event of Default hereunder and shall in any event be conclusive upon Tenant
that: (i) this Lease is in full force and effect, without modification except as may be represented by Landlord; (ii) there are
no uncured defaults in Landlord’s performance and Tenant has no right to offset, counterclaim or deduction against Rent hereunder;
and (iii) no more than one period’s Base Rent has been paid in advance.

 

15.2         Attornment.
Tenant shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale
under, any mortgage or deed of trust made by Landlord, its successors or assigns, encumbering the Building, or any part thereof
or in the event of termination of a ground lease, if any, and if so requested, attorn to the purchaser upon such foreclosure or
sale or upon any grant of a deed in lieu of foreclosure and recognize such purchaser as Landlord under this Lease; provided, that
such purchaser recognizes Tenant’s rights under this Lease and agrees not to disturb Tenant’s quiet possession of the
Premises for so long as Tenant is not in default hereunder.

 

15.3         Subordination.
The rights of Tenant hereunder are and shall be, at the election of any mortgagee or the beneficiary of a deed of trust encumbering
the Building, subject and subordinate to the lien of such mortgage or deed of trust, or the lien resulting from any other method
of financing or refinancing, now or hereafter in force against the Building, and to all advances made or hereafter to be made upon
the security thereof. If requested, Tenant agrees to execute such documentation as may be required by Landlord or its lender to
further effect the provisions of this Article.

 

15.4         Recording.
Tenant covenants and agrees with Landlord that Tenant shall not record this Lease or any memorandum thereof without Landlord’s
prior written consent Notwithstanding the provisions of Section 15.3, in the event that Landlord or its lender requires this Lease
or a memorandum thereof to be recorded in priority to any mortgage, deed of trust or other encumbrance which may now or at any
time hereafter affect in whole or in part the Building and whether or not any such mortgage, deed of trust or other encumbrance
shall affect only the Building, or shall be a blanket mortgage, deed of trust or encumbrance affecting other premises as well,
the Tenant covenants and agrees with Landlord that the Tenant shall execute promptly upon request from Landlord any certificate,
priority agreement or other instrument which may from time to time be requested to give effect thereto.

 

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ARTICLE XVI: MISCELLANEOUS

 

16.1         Notices.
All notices between the parties relating to this Lease must be in writing and sent to the parties at the address set forth
above. Any such notices must be sent either by (a) overnight delivery using a nationally-recognized courier (e.g., Fedex, Airborne
Express or UPS) and delivery charges prepaid, in which case notice shall be effective one (1) business day after deposit with
such courier, (b) facsimile, email, PDF file or other generally-recognized electronic means, in which case notice shall be effective
upon transmission provided a copy of such electronic transmission is sent within one (1) day after electronic transmission
by U.S. First Class mail and postage prepaid, or (c) personal delivery or mailed by U.S. certified mail and postage or
equivalent charges prepaid, in which case notice shall be effective upon receipt provided that if any party refuses delivery,
such notices shall be deemed given when mailed or, if made by personal delivery, upon delivery. Any notice sent by facsimile,
email, PDF file or other electronic transmission after 5:00 p.m. local time where the Premises are located shall be effective
the next business day. A party’s address may be changed by written notice to the other party; provided, however, that no
notice of a change of address shall be effective until actual receipt of such notice. Notice to Tenant may always be delivered
to the Premises. Rent shall be payable to Landlord at the same address and in the same manner, but shall be considered paid only
when received by Landlord. Tenant agrees to accept service of process for all matters related to this Lease at the Premises.

 

16.2         Successors
Bound. This Lease and each of its covenants and conditions shall be binding upon and shall inure to the benefit of the parties
hereto and their respective assignees, subject to the provisions hereof. Whenever in this Lease a reference is made to Landlord,
such reference shall be deemed to refer to the person in whom the interest of Landlord shall be vested, and Landlord shall have
no obligation hereunder as to any claim arising after the transfer of its interest in the Building. Any successor or assignee of
the Tenant who accepts an assignment of the benefit of this Lease and enters into possession or enjoyment hereunder shall thereby
assume and agree to perform and be bound by the covenants and conditions thereof. Nothing herein contained shall be deemed in any
manner to give a right of assignment without the prior written consent of Landlord pursuant to, or otherwise as provided in, Article
XIV hereof.

 

16.3         Waiver.
No waiver of any default or breach of any covenant by either party hereunder shall be implied from any omission by either party
to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default
other than the default specified in the waiver and said waiver shall be operative only for the time and to the extent therein stated.
Waivers of any covenant, term or condition contained herein by either party shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or approval by either party to or of any act by either party requiring
further consent or approval shall not be deemed to waive or render unnecessary their consent or approval to or of any subsequent
similar acts.

 

16.4         Subdivision
and Easements. Landlord reserves the right to alter the boundaries of the Premises and grant easements on the Premises and
dedicate for public use portions thereof; provided, however, that no such grant or dedication shall materially interfere with Tenant’s
use of the Premises. Tenant hereby consents to such subdivision, boundary revision, and/or grant or dedication of easements and
agrees from time to time, at Landlord’s request, to execute, acknowledge and deliver to Landlord, in accordance with Landlord’s
instructions, any and all documents, instruments, maps or plats necessary to effectuate Tenant’s consent thereto.

 

16.5         Accord
and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent herein stipulated shall be deemed
to be other than on account of the Rent, nor shall any endorsement or statement on any check or any letter accompanying any check
or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s
right to recover the balance of such Rent or pursue any other remedy provided in this Lease.

 

16.6         Limitation
of Landlord’s Liability. The obligations of Landlord under this Lease do not constitute personal obligations of the individual
partners, directors, officers, members, employees or shareholders of Landlord or its partners, and Tenant shall look solely to
the Premises, and the rents and profits therefrom, for satisfaction of any liability in respect of this Lease and will not seek
recourse against the individual partners, directors, officers, members, employees or shareholders of Landlord or its partners or
any of their personal assets for such satisfaction.

 

16.7         Survival.
The obligations and liabilities of each party which are incurred or accrue prior to the expiration of this Lease or the termination
of this Lease or of Tenant’s right of possession shall survive such expiration or termination, as shall all provisions by
which a party is to provide defense and indemnity to the other party, all provisions waiving or limiting the liability of Landlord,
and all attorneys’ fees provisions.

 

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16.8         Attorneys'
Fees. In the event either party requires the services of an attorney in connection with enforcing the terms of this Lease or
in the event suit is brought for the recovery of any Rent due under this Lease or the breach of any covenant or condition of this
Lease, or for the restitution of the Premises to Landlord and/or eviction of Tenant during the Term of this Lease, or after the
expiration thereof, the substantially prevailing party will be entitled to a reasonable sum for attorneys’ fees, witness
fees and other court costs, both at trial and on appeal.

 

16.9         Captions;
Article Numbers; Construction. The captions, article, paragraph and section numbers and table of contents appearing in this
Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such
sections or articles of this Lease nor in any way affect this Lease. All references to “days” in this Lease shall be
construed to mean calendar days unless otherwise expressly provided and all references to “business days” shall be
construed to mean days on which charter banks are open for business where the Premises are located.

 

16.10         Severability.
If any term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, shall to
any extent be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants,
conditions or provisions of this Lease, or the application thereof to any person or circumstance, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

 

16.11         Applicable
Law. This Lease, and the rights and obligations of the parties hereto, shall be construed and enforced in accordance with the
laws of the state in which the Building is located.

 

16.12         Submission
of Lease. The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation
of or option for leasing the Premises. This document shall become effective and binding only upon execution and delivery hereof
by Landlord and Tenant. No act or omission of any officer, employee or agent of Landlord or Tenant shall alter, change or modify
any of the provisions hereof.

 

16.13         Holding
Over. Should Tenant, or any of its successors in interest, hold over the Premises or any part thereof after the expiration
or earlier termination of this Lease without Landlord’s prior written consent, such holding over shall constitute
and be construed as tenancy at sufferance only, at a monthly rent equal to one hundred fifty percent (150%) of the Base Rent owed
during the final month of the Term of this Lease and otherwise upon the terms and conditions in the Lease, so far as applicable.
Should Tenant, or any of its successors in interest, hold over the Premises or any part thereof after the expiration or earlier
termination of this Lease with Landlord’s prior written consent, such holding over shall constitute and be construed
as a tenancy from month to month only, at a fair market monthly rent as agreed by Landlord and Tenant and otherwise upon the terms
and conditions of this Lease, so far as applicable. The acceptance by Landlord of Rent after such expiration or early termination
shall not result in a renewal or extension of this Lease. The foregoing provisions of this Section are in addition to and do not
affect Landlord’s right of re-entry or any other rights of Landlord hereunder or as otherwise provided by law. If Tenant
fails to surrender the Premises on the expiration of this Lease and/or to remove all Tenant’s fixture and/or personal property
pursuant to Section 9.1 hereof, Tenant shall indemnify and hold Landlord harmless for, from and against all claims, damages, loss
or liability, including without limitation, any claim made by any succeeding tenant resulting from such failure to surrender by
Tenant and any attorneys’ fees and costs incurred by Landlord with respect to any such claim.

 

16.14         No
Nuisance. Tenant shall conduct its business and control its agents, employees, invitees and visitors in such a manner as not
to create any nuisance.

 

16.15         Broker;
Agency Disclosure.

 

(a)          Each
of Tenant and Landlord warrant that it has had no discussions, negotiations and/or other dealings with any real estate broker or
agent in connection with the negotiation of this Lease other than the Broker(s) identified in Section 1.l(m) (“Brokers”),
and that it knows of no other real estate broker or agent who is or may be entitled to any commission or finder’s fee in
connection with this Lease. Landlord shall pay Brokers a commission pursuant to separate agreements. Brokers shall be obligated
to pay any co-brokers a portion of the commission received by such Broker. Each Tenant and Landlord agrees to indemnify the other
and hold the other harmless from and against any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses
(including without limitation, attorneys’ fees and costs) with respect to any leasing commission or equivalent compensation
alleged to be owing on account of such party’s discussions, negotiations and/or dealings with any real estate broker or agent
This Section is not intended to benefit any third parties and shall not be deemed to give any rights to brokers or finders. No
commissions) or finders fee(s) shall be paid to Tenant, employee(s) of Tenant or any unlicensed representative of Tenant.

 

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(b)          At
the signing of this Lease the Landlord’s Broker represented (_X_) Landlord, (__) Tenant or (__) both Landlord and
Tenant. At the signing of this Lease Tenant’s Broker represented (__) Landlord, (  X  ) Tenant or (__) both Landlord and
Tenant.

 

16.16         Landlord’s
Right to Perform. Upon Tenant’s failure to perform any obligation of Tenant hereunder after notice from Landlord pursuant
to Section 13.1 above, including without limitation, payment of Tenant’s insurance premiums, charges of contractors who have
supplied materials or labor to the Premises, etc., Landlord shall have the right to perform such obligation of Tenant on behalf
of Tenant and/or to make payment on behalf of Tenant to such parties. Tenant shall reimburse Landlord the reasonable cost of Landlord’s
performing such obligation on Tenant’s behalf, including reimbursement of any amounts that may be expended by Landlord, plus
interest at the Default Rate, as Additional Rent.

 

16.17         Assignment
by Landlord. In the event of a sale, conveyance, or other transfer by Landlord of the Building, or in the event of an assignment
of this Lease by Landlord, the same shall operate to release Landlord from any further liability upon any of the covenants or conditions,
express or implied, herein contained on the part of Landlord, and from any and all further liability, obligations, costs and expenses,
demands, causes of action, claims or judgments arising out of this Lease from and after the effective date of said release. In
such event, Tenant agrees to look solely to the successor in interest of transferor. If any Security Deposit is given by Tenant
to secure performance of Tenant’s covenants hereunder, Landlord may transfer such Security Deposit to any purchaser and thereupon
Landlord shall be discharged from any further liability in reference thereto. Notwithstanding anything in this Lease to the contrary,
however, (i) in no event shall Landlord’s lender, who may have succeeded to the interest of Landlord by foreclosure, deed
in lieu of foreclosure, or any other means, have any liability for any obligation of Landlord to protect, defend, indemnify or
hold harmless Tenant or any other person or entity except for those matters arising from the lender’s breach of the terms
of this Lease after the date of such foreclosure, deed in lieu of foreclosure or any other means, and (ii) such succeeding lender
shall have no liability for any representations or warranties of the Landlord contained herein except for those matters arising
from the lender’s breach of the terms of this Lease after the date of such foreclosure, deed in lieu of foreclosure or any
other means.

 

16.18         Entire
Agreement. This Lease sets forth all covenants, promises, agreements, conditions and understandings between Landlord and Tenant
concerning the Building, and there are no covenants, promises, agreements, conditions or understandings, either oral or written,
between Landlord and Tenant other than as are herein set forth.

 

16.19         Financial
Covenants. At the request of Landlord’s lender or a potential lender or purchaser of the Building, Tenant shall provide
such lender or purchaser with such financial statements as reasonably required by such lender or purchaser. In addition, Tenant
shall provide Landlord with an annual copy of Tenant’s reviewed financial statements.

 

16.20         Consents.
Whenever the approval or consent of Landlord or Tenant is required under the terms of this Lease, such consent shall not be unreasonably
withheld or delayed unless a different standard of approval is specifically set forth in the particular Section containing that
particular consent requirement.

 

16.21         Exhibits.
Exhibits A, A-l, B and C are attached to this Lease after the signatures and by this reference incorporated herein.

 

16.22         Time.
Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.

 

    	20

    	 

    

 

16.23         Authority
to Bind Landlord. The individuals signing this Lease on behalf of Landlord hereby represent and warrant that they are empowered
and duly authorized to bind Landlord to this Lease.

 

16.24         Authority
to Bind Tenant. The individuals signing this Lease on behalf of Tenant hereby represent and warrant that they are empowered
and duly authorized to bind Tenant to this Lease. If Tenant is a corporation, limited liability company or limited or general partnership,
each individual executing this Lease on behalf of Tenant represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of Tenant, in accordance with a duly adopted resolution or consents of all appropriate persons or
entities required therefor and in accordance with the formation documents of tenant, and that this Lease is binding upon Tenant
in accordance with its terms. At Landlord’s request, tenant shall, prior to Landlord’s execution of this Lease, deliver
to Landlord a copy of the appropriate resolution or consent, certified by an appropriate officer, partner or manager of Tenant,
authorizing or ratifying the execution of this Lease.

 

16.25         Interpretation.
The parties hereto specifically acknowledge and agree that the terms of this Lease have been mutually negotiated and the parties
hereby specifically waive the rule or principle of contract construction which provides that any ambiguity in any term or provision
of a contract will be interpreted or resolved against the party which drafted such term or provision.

 

16.26         Excused
Delays. Except as otherwise set forth in this Section, neither party shall have liability to the other on account of the following
acts (each of which is an “Excused Delay” and jointly all of which are “Excused Delays”)” which shall
include: (a) the inability to fulfill, or delay in fulfilling, any obligations under this Lease by reason of strike, lockout, other
labor trouble, dispute or disturbance; (b) governmental regulation, moratorium, action, preemption or priorities or other controls;
(c) shortages of fuel, supplies or labor; (d) any failure or defect in the supply, quantity or character of electricity or water
furnished to the Premises by reason of any requirement, act or omission of the public utility or others furnishing the Building
with electricity or water; or (e) for any other reason, whether similar or dissimilar to the above, or for act of God beyond a
party’s reasonable control. If this Lease specifies a time period for performance of an obligation of a party, that time
period shall be extended by the period of any delay in the party’s performance caused by any of the events of Excused Delay
described herein; provided, that notwithstanding anything to the contrary above, no payment of money (whether as Base Rent, Tenant’s
Share of Operating Expenses, or any other payment due under this Lease) shall be postponed, delayed or forgiven by reason of any
of the foregoing events of Excused Delay.

 

16.27         USA
Patriot Act and Anti-Terrorism Laws.

 

(a)          Tenant
represents and warrants to, and covenants with, Landlord that neither Tenant nor any of its respective constituent owners or affiliates
currently are, or shall be at any time during the Term hereof, in violation of any laws relating to terrorism or money laundering
(collectively, the “Anti-Terrorism Laws”), including without limitation, Executive Order No. 13224 on Terrorist Financing,
effective September 24,2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (the “Executive Order”) and/or the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of2001 (Public Law 107-56) (the “USA Patriot Act”).

 

(b)          Tenant
covenants with Landlord that neither Tenant nor any of its respective constituent owners or affiliates is or shall be during the
Term hereof a “Prohibited Person,” which is defined as follows: (i) a person or entity that is listed in the Annex
to, or is otherwise subject to, the provisions of the Executive Order; (ii) a person or entity owned or controlled by, or acting
for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive
Order; (iii) a person or entity with whom Landlord is prohibited from dealing with or otherwise engaging in any transaction by
any Anti- Terrorism Law, including without limitation the Executive Order and the USA Patriot Act; (iv) a person or entity who
commits, threatens or conspires to commit or support “terrorism” as defined in Section 3(d) of the Executive Order,
(v) a person or entity that is named as a “specially designated national and blocked person” on the then- most current
list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/offices/eotffc/ofac/sdn/tl
1 sdn.pdf. or at any replacement website or other replacement official publication of such list; and (vi) a person or entity
who is affiliated with a person or entity listed in items (i) through (v), above.

 

    	21

    	 

    

 

(c)          At
any time and from time-to-time during the Term, Tenant shall deliver to Landlord, within ten (10) days after receipt of a written
request therefor, a written certification or such other evidence reasonably acceptable to Landlord evidencing and confirming Tenant’s
compliance with this Section.

 

16.28         Amendment.
No subsequent alteration, amendment, change or addition to the Lease shall be binding upon Landlord or Tenant unless reduced to
writing and signed by Landlord and Tenant.

 

16.29         Guaranty.
Concurrently with the execution of the Lease, Tenant shall cause the Guarantors to deliver to Landlord a guaranty ("Guaranty")
in the form attached hereto as Exhibit B.

 

16.30         Execution;
Counterpart; Signature Transmitted. This Lease may be executed simultaneously in one or more counterparts, each of which will
be considered an original, but all of which together will constitute one and the same instrument. Signatures transmitted by facsimile,
PDF file or other form of electronic transmission and received by the other party shall be sufficient evidence of the execution
hereof by the applicable signatory and such signatures shall be treated as originals. At the request of a party, the other party
will confirm an electronically transmitted signature page by delivering an original signature page to the requesting party.

 

16.31         Effective
Date. For all purposes of this Lease, the term “Effective Date” shall mean the last date upon which both Landlord
and Tenant have executed and delivered this Lease.

 

[SIGNATURE PAGE TO FOLLOW]

 

    	22

    	 

    

 

IN WITNESS WHEREOF, the parties have executed
this Lease as of the Effective Date.

 

	“Landlord”	 	“Tenant”
	 	 	 
	PJM BLDG. II LLC, an Oregon limited liability company 

By: Wyse Investment services Co

Its: Managing Agent	 	
        EASTSIDE DISTILLNG, LCC, an Oregon limited liability
company

	 	 	 
	By:		 	By:	/s/ Steven Earles	/s/ Lenny Gotter
	 	 	 	 	 	 
	Its:	Vice President	 	Its:	CEO	COO
	 	 	 	 	 	 
	Date:	7-17-14	 	Date:	7-17-14	 

 

    	23

    	 

    

 

EXHIBIT A 

 

SITE PLAN OF PREMISES AND PARKING

 

1805 SE MARTIN LUTHER KING JR. BLVD.

 

SE MILL ST.

 

 

    	1

    	 

    

 

EXHIBIT A-l 

 

LEGAL DESCRIPTION OF PREMISES

 

Lots 1-4 inclusive, and Lots 5-8 inclusive
(except the east 20 feet in Martin Luther King Jr. Boulevard), Block 44, STEPHENS ADDITION, City of Portland, Multnomah County,
Oregon.

 

Commonly known as 1805 SE Martin Luther King Jr.
Boulevard, Portland, Oregon.

 

    	1

    	 

    

 

EXHIBIT B

 

GUARANTY

 

In consideration of the agreement of PJM
BLDG. II LLC, an Oregon limited liability company (“Landlord”), to enter into a Lease dated July 17, 2014 (the “Lease"’)
between Landlord and Eastside Distilling, LLC, an Oregon limited liability company (“Tenant”), pertaining to certain
building located at 1805 SE Martin Luther King Blvd., Portland, OR 97214, the undersigned (“Guarantor”) hereby unconditionally
and irrevocably guarantees the punctual payment of all Rent, as defined in the Lease, and all other payments required to be paid
by Tenant under the Lease, and the prompt performance of all other obligations of Tenant under the Lease. If Guarantor consists
of more than one person or entity, all liability of Guarantor hereunder shall be joint and several.

 

Guarantor shall be directly and primarily
liable to Landlord for any amount due from Tenant under the Lease, without requiring that Landlord first proceed against Tenant,
join Tenant in any proceeding brought to enforce this Guaranty, or exhaust any security held by Landlord. Guarantor agrees that
Landlord may deal with Tenant in any manner in connection with the Lease without the knowledge or consent of Guarantor and without
affecting Guarantor’s liability under this Guaranty. Without limiting the generality of the foregoing, Guarantor agrees that
any renewal, extension of time, assignment of the Lease, amendment or modification to the Lease, delay or failure by Landlord in
the enforcement of any right under the Lease, or compromise of the amount of any obligation or liability under the Lease made with
or without the knowledge or consent of Guarantor shall not affect Guarantor’s liability under this Guaranty. Guarantor’s
liability under this Guaranty is absolute and continuing and shall not be affected by (i) any bankruptcy, reorganization, insolvency
or similar proceeding affecting Tenant, nor by any termination or disaffirmance of the Lease or any of Tenant’s obligations
thereunder in connection with such proceeding, (ii) any lack of validity or enforceability of the Lease, (iii) any law, regulation
order of any jurisdiction affecting any term of the Lease or any of Landlord’s rights with respect thereto, or (iv) any other
circumstance which might otherwise constitute a defense, set-off or counterclaim applicable to the Lease. This Guaranty shall remain
in full force and effect until the performance in full to Landlord’s satisfaction of all obligations of Tenant under the
Lease.

 

Guarantor hereby waives any claim or other
right now existing or hereafter acquired against Tenant that arises from the performance of Guarantor’s obligations under
this Guaranty, including, without limitation, any rights of contribution, indemnity, subrogation, reimbursement or exoneration.
Guarantor hereby agrees to indemnify, protect, defend and hold Landlord harmless from and against all claims, liabilities, losses
and expenses, including legal fees, suffered or incurred by Landlord as a result of claims to avoid any payment received by Landlord
from Tenant with respect to the obligations of Tenant under the Lease.

 

Guarantor hereby waives presentment, protest,
notice of default, demand for payment, and all other suretyship defenses whatsoever with respect to any payment guaranteed under
this Guaranty, and agrees to pay unconditionally upon demand all amounts owed under the Lease. Guarantor further waives any setoff,
defense or counterclaim that Tenant or Guarantor may have or claim to have against Landlord and the benefit of any statute of limitations
affecting Guarantor’s liability under this Guaranty.

 

No failure or delay on the part of Landlord
in the exercise of any power, right or privilege under this Guaranty or the Lease and no course of dealing with respect thereto
shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any power, right or privilege thereunder preclude any other or further exercise thereof or the exercise
of any other power, right or privilege. All rights and remedies existing under this Guaranty and the Lease are cumulative to, and
not exclusive of, any rights and remedies provided by law or otherwise available.

 

This Guaranty, and all obligations of any
Guarantor hereunder, shall terminate upon payment in full of all guaranteed obligations. If, at any time, all or part of any payment
of the guaranteed obligations theretofore made by any Guarantor or any other person is rescinded or otherwise must be returned
by Landlord for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of any Guarantor
or any other person), this Guaranty shall continue to be effective or shall be reinstated as to the guaranteed obligations which
were satisfied by the payment to be rescinded or returned, all as though such payment had not been made.

 

    	1

    	 

    

 

If Landlord retains
an attorney to enforce this Guaranty or to bring any action or any appeal in connection with this Guaranty, the Lease, or the collection
of any payment under this Guaranty or the Lease, Landlord shall be entitled to recover its attorneys’ fees, costs, and disbursements
in connection therewith, as determined by the court before which such action or appeal is heard, in addition to any other relief
to which Landlord may be entitled. Any amount owing under this Guaranty shall bear interest from the date such amount was payable
to Landlord to the date of repayment at a rate equal to the lesser of 15% and the maximum rate permitted by law.

 

Landlord shall have the unrestricted right
to assign this Guaranty in connection with an assignment of the Lease without the consent of, or any other action required by,
Guarantor. Each reference in this Guaranty to Landlord shall be deemed to include its successors and assigns, to whose benefit
the provisions of this Guaranty shall also inure. Each reference in this Guaranty to Guarantor shall be deemed to include the successors
and assigns of Guarantor, all of whom shall be bound by the provisions of this Guaranty. Within ten (10) days after delivery of
written demand therefor from Landlord, Guarantor shall execute and deliver to Landlord a statement in writing certifying that this
Guaranty is unmodified and in full force and effect, which statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the premises or property. If any provision of this Guaranty is held to be invalid or unenforceable, the validity
and enforceability of the other provisions of this Guaranty shall not be affected.

 

GUARANTOR:

 

	/s/ Lenny Gotter	 
	Lenny Gotter, an individual	 

5812 SE Bush Street

Portland, OR 97206

Social Security No.: 387905825

Dated: 7-17-14

 

	/s/ Steven Earles	 
	Steven Earles, an individual	 

74068 College View Circle West

Palm Desert, CA 92211

Social Security No.: ###-##-####

Dated: 7-17-14

 

	STATE OF OREGON	)
	 	)ss.
	County of MULTNOMAH	)

 

The instrument was acknowledged before
me this 17th day of JULY, 2014 by Lenny Gotter.

 

		/s/ Deborah L Bradley
	Notary Public for Oregon
	My Commission Expires 6-12-2017

  

	STATE OF OREGON	)
	 	)ss.
	County of MULTNOMAH	)

 

The instrument was acknowledged before
me this 17th day of JULY, 2014 by Steven Earles.

 

		/s/ Deborah L Bradley
	Notary Public for Oregon
	My Commission Expires 6-12-2017

 

    	2

    	 

    

 

 

 

 

    	 

    	 

    

 

EXHIBIT C

 

TENANT’S WORK

 

Tenant, at Tenant’s sole
cost, election and expense shall complete the following, subject to Landlord prior approval as set forth in Section 9.3 of the
Lease:

 

		•	Separate and build out retail tasting room in the front of the building, to be approximately 1,000
- 2,000 square feet.

		•	Tasting room may, at Tenant’s election, be constructed to have exposed ceiling and duct work,
a sink, dishwasher hook up and access to restrooms.

		•	Build out or modernize office space.

		•	Build out production area and add fire rated separation walls.

		•	Improve or add restrooms, including confirming an ADA restroom is available.

		•	Saw cut a window into tasting room on northern exterior wall.

		•	Replace western unusable grade door with windows or a glass roll up door.

		•	Generally upgrade (clean, paint and repair) all of the Premises including the office and production
space.

		•	Create/construct a dock loading platform.

		•	Upgrade lighting, if necessary.

		•	Add penetrations in floor/ceiling to allow for operations.

		•	Add floor drains.

		•	Hazard room build-out.

		•	Distribution of utilities (power, water, etc.).

		•	If Tenant desires, Tenant may build out a roof top patio.

		•	Fill in non-functional dock well on western wall.

		•	Upgrade sprinklers if necessary.

		•	Tenant shall also be responsible to construct ADA restrooms as required by the City of Portland,
and it shall be the Tenant’s responsibilities to address any seismic issues based on their use and construction at the building.

		•	Tenant shall install signage (to code).

 

    	1

    	 

    

 

GUARANTY

 

In consideration of the
agreement of PJM BLDG. II LLC, an Oregon limited liability company (“Landlord”), to enter into a Lease dated July
17, 2014 (the “Lease”) between Landlord and Eastside Distilling, LLC, an Oregon limited liability company
(“Tenant”), pertaining to certain building located at 1805 SE Martin Luther King Blvd., Portland, OR 97214, the
undersigned (“Guarantor”) hereby unconditionally and irrevocably guarantees the punctual payment of all Rent, as
defined in the Lease, and all other payments required to be paid by Tenant under the Lease, and the prompt performance of all
other obligations of Tenant under the Lease. If Guarantor consists of more than one person or entity, all liability of
Guarantor hereunder shall be joint and several.

 

Guarantor shall be directly and
primarily liable to Landlord for any amount due from Tenant under the Lease, without requiring that Landlord first proceed against
Tenant, join Tenant in any proceeding brought to enforce this Guaranty, or exhaust any security held by Landlord. Guarantor agrees
that Landlord may deal with Tenant in any manner in connection with the Lease without the knowledge or consent of Guarantor and
without affecting Guarantor’s liability under this Guaranty. Without limiting the generality of the foregoing, Guarantor
agrees that any renewal, extension of time, assignment of the Lease, amendment or modification to the Lease, delay or failure by
Landlord in the enforcement of any right under the Lease, or compromise of the amount of any obligation or liability under the
Lease made with or without the knowledge or consent of Guarantor shall not affect Guarantor’s liability under this Guaranty.
Guarantor’s liability under this Guaranty is absolute and continuing and shall not be affected by (i) any bankruptcy, reorganization,
insolvency or similar proceeding affecting Tenant, nor by any termination or disaffirmance of the Lease or any of Tenant’s
obligations thereunder in connection with such proceeding, (ii) any lack of validity or enforceability of the Lease, (iii) any
law, regulation order of any jurisdiction affecting any term of the Lease or any of Landlord’s rights with respect thereto,
or (iv) any other circumstance which might otherwise constitute a defense, setoff or counterclaim applicable to the Lease. This
Guaranty shall remain in full force and effect until the performance in full to Landlord’s satisfaction of all obligations
of Tenant under the Lease.

 

Guarantor hereby waives any claim
or other right now existing or hereafter acquired against Tenant that arises from the performance of Guarantor’s obligations
under this Guaranty, including, without limitation, any rights of contribution, indemnity, subrogation, reimbursement or exoneration.
Guarantor hereby agrees to indemnify, protect, defend and hold Landlord harmless from and against all claims, liabilities, losses
and expenses, including legal fees, suffered or incurred by Landlord as a result of claims to avoid any payment received by Landlord
from Tenant with respect to the obligations of Tenant under the Lease.

 

Guarantor hereby waives presentment,
protest, notice of default, demand for payment, and all other suretyship defenses whatsoever with respect to any payment guaranteed
under this Guaranty, and agrees to pay unconditionally upon demand all amounts owed under the Lease. Guarantor further waives any
setoff, defense or counterclaim that Tenant or Guarantor may have or claim to have against Landlord and the benefit of any statute
of limitations affecting Guarantor’s liability under this Guaranty.

 

No failure or delay on the part
of Landlord in the exercise of any power, right or privilege under this Guaranty or the Lease and no course of dealing with respect
thereto shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any power, right or privilege thereunder preclude any other or further exercise thereof
or the exercise of any other power, right or privilege. All rights and remedies existing under this Guaranty and the Lease are
cumulative to, and not exclusive of, any rights and remedies provided by law or otherwise available.

 

This Guaranty, and all obligations
of any Guarantor hereunder, shall terminate upon payment in full of all guaranteed obligations. If, at any time, all or part of
any payment of the guaranteed obligations theretofore made by any Guarantor or any other person is rescinded or otherwise must
be returned by Landlord for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization
of any Guarantor or any other person), this Guaranty shall continue to be effective or shall be reinstated as to the guaranteed
obligations which were satisfied by the payment to be rescinded or returned, all as though such payment had not been made.

 

    	1

    	 

    

 

If Landlord retains
an attorney to enforce this Guaranty or to bring any action or any appeal in connection with this Guaranty, the Lease, or the collection
of any payment under this Guaranty or the Lease, Landlord shall be entitled to recover its attorneys’ fees, costs, and disbursements
in connection therewith, as determined by the court before which such action or appeal is heard, in addition to any other relief
to which Landlord may be entitled. Any amount owing under this Guaranty shall bear interest from the date such amount was payable
to Landlord to the date of repayment at a rate equal to the lesser of 15% and the maximum rate permitted by law.

 

Landlord shall have the unrestricted right
to assign this Guaranty in connection with an assignment of the Lease without the consent of, or any other action required by,
Guarantor. Each reference in this Guaranty to Landlord shall be deemed to include its successors and assigns, to whose benefit
the provisions of this Guaranty shall also inure. Each reference in this Guaranty to Guarantor shall be deemed to include the successors
and assigns of Guarantor, all of whom shall be bound by the provisions of this Guaranty. Within ten (10) days after delivery of
written demand therefor from Landlord, Guarantor shall execute and deliver to Landlord a statement in writing certifying that this
Guaranty is unmodified and in full force and effect, which statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the premises or property. If any provision of this Guaranty is held to be invalid or unenforceable, the validity
and enforceability of the other provisions of this Guaranty shall not be affected.

 

GUARANTOR:

 

	/s/ Lenny Gotter	 
	Lenny Gotter, an individual	 

5812 SE Bush Street

Portland, OR 97206

Social Security No.: 387905825

Dated: 7-17-14

 

	/s/ Steven Earles	 
	Steven Earles, an individual	 

74068 College View Circle West

Palm Desert, CA 92211

Social Security No.: ###-##-####

Dated: 7-17-14

 

	STATE OF OREGON	)
	 	)ss.
	County of MULTNOMAH	)

 

The instrument was acknowledged before
me this 17th day of JULY, 2014 by Lenny Gotter.

 

		/s/ Deborah L Bradley
	Notary Public for Oregon
	My Commission Expires 6-12-2017

  

	STATE OF OREGON	)
	 	)ss.
	County of MULTNOMAH	)

 

The instrument was acknowledged before
me this 17th day of JULY, 2014 by Steven Earles.

 

		/s/ Deborah L Bradley
	Notary Public for Oregon
	My Commission Expires 6-12-2017

 

    	2Exhibit 10.4

 

EASTSIDE DISTILLING, INC.

2015 Stock Incentive Plan

 

1.     Purpose.
   The purpose of the 2015 Stock Incentive Plan of Eastside Distilling, Inc. is to further align the interests
of employees, directors and non-employee Consultants with those of the stockholders by providing incentive compensation opportunities
tied to the performance of the Common Stock and by promoting increased ownership of the Common Stock by such individuals. The Plan
is also intended to advance the interests of the Company and its stockholders by attracting, retaining and motivating key personnel
upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent.

 

2.     Definitions.
   Wherever the following capitalized terms are used in the Plan, they shall have the meanings specified below:

 

“Affiliate”
means (i) any entity that would be treated as an “affiliate” of the Company for purposes of Rule 12b-2 under the Exchange
Act and (ii) any joint venture or other entity in which the Company has a direct or indirect beneficial ownership interest representing
at least one-third (1/3) of the aggregate voting power of the equity interests of such entity or one-third (1/3) of the aggregate
fair market value of the equity interests of such entity, as determined by the Committee.

 

“Award”
means an award of a Stock Option, Stock Award, or Restricted Stock Award granted under the Plan.

 

“Award
Agreement” means a written or electronic agreement entered into between the Company and a Participant setting forth the
terms and conditions of an Award granted to a Participant.

 

“Board”
means the Board of Directors of the Company.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Common
Stock” means the Company’s common stock, $0.0001 par value per share.

 

“Committee”
means the Compensation Committee of the Board, or such other committee of the Board appointed by the Board to administer the Plan,
or if no such committee exists, the Board.

 

“Company”
means Eastside Distilling, Inc., a Nevada corporation.

 

“Consultant”
means any person which is a consultant or advisor to the Company and
which is a natural person and who provides bona fide services to the Company which are not in connection with the offer or sale
of securities in a capital-raising transaction for the Company, and do not directly or indirectly promote or maintain a market
for the Company’s securities.

 

“Date
of Grant” means the date on which an Award under the Plan is made by the Committee, or such later date as the Committee
may specify to be the effective date of an Award.

 

“Disability”
means a Participant being considered “disabled” within the meaning of Section 409A(a)(2)(C) of the Code, unless otherwise
provided in an Award Agreement.

 

“Eligible
Person” means any person who is an employee of the Company or any Affiliate or any person to whom an offer of employment
with the Company or any Affiliate is extended, as determined by the Committee, or any person who is a Non-Employee Director, or
any person who is Consultant to the Company..

 

    	 

    	 

    

 

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

 

“Fair
Market Value” means the mean between the highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Company’s
common stock is listed or on The Nasdaq Stock Market, or, if not so listed on any other national securities exchange or The Nasdaq
Stock Market, then the average of the bid price of the Company’s common stock during the last five trading days on the OTC
Bulletin Board immediately preceding the last trading day prior to the date with respect to which the Fair Market Value is to be
determined. If the Company’s common stock is not then publicly traded, then the Fair Market Value of the Common Stock shall
be the book value of the Company per share as determined on the last day of March, June, September, or December in any year closest
to the date when the determination is to be made. For the purpose of determining book value hereunder, book value shall be determined
by adding as of the applicable date called for herein the capital, surplus, and undivided profits of the Company, and after having
deducted any reserves theretofore established; the sum of these items shall be divided by the number of shares of the Company’s
common stock outstanding as of said date, and the quotient thus obtained shall represent the book value of each share of the Company’s
common stock.

 

“Incentive
Stock Option” means a Stock Option granted under Section 6 hereof that is intended to meet the requirements of Section
422 of the Code and the regulations thereunder.

 

“Non-Employee
Director” means any member of the Board who is not an employee of the Company.

 

“Nonqualified
Stock Option” means a Stock Option granted under Section 6 hereof that is not an Incentive Stock Option.

 

“Participant”
means any Eligible Person who holds an outstanding Award under the Plan.

 

“Plan”
means the 2015 Stock Incentive Plan of Eastside Distilling, Inc. as set forth herein, as amended from time to time.

 

“Restricted
Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 8 hereof that is issued subject
to such vesting and transfer restrictions as the Committee shall determine and set forth in an Award Agreement.

 

“Service”
means a Participant’s employment with the Company or any Affiliate or a Participant’s service as a Non-Employee Director
with the Company, as applicable.

 

“Stock
Award” means a grant of shares of Common Stock to an Eligible Person under Section 7 hereof that are issued free of transfer
restrictions and forfeiture conditions.

 

“Stock
Option” means a contractual right granted to an Eligible Person under Section 6 hereof to purchase shares of Common
Stock at such time and price, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement. 

 

    	Page 2 of 14

    	 

    

 

3.     Administration.

 

3.1    Committee
Members.    The Plan shall be administered by a Committee comprised of one or more members of the Board, or
if no such committee exists, the Board.

 

3.2    Committee
Authority.    The Committee shall have such powers and authority as may be necessary or appropriate for the
Committee to carry out its functions as described in the Plan. Subject to the express limitations of the Plan, the Committee shall
have authority in its discretion to determine the Eligible Persons to whom, and the time or times at which, Awards may be granted,
the number of shares, units or other rights subject to each Award, the exercise, base or purchase price of an Award (if any), the
time or times at which an Award will become vested, exercisable or payable, the performance goals and other conditions of an Award,
the duration of the Award, and all other terms of the Award. Subject to the terms of the Plan, the Committee shall have the authority
to amend the terms of an Award in any manner that is not inconsistent with the Plan, provided that no such action shall adversely
affect the rights of a Participant with respect to an outstanding Award without the Participant’s consent. The Committee
shall also have discretionary authority to interpret the Plan, to make factual determinations under the Plan, and to make all other
determinations necessary or advisable for Plan administration, including, without limitation, to correct any defect, to supply
any omission or to reconcile any inconsistency in the Plan or any Award Agreement hereunder. The Committee may prescribe, amend,
and rescind rules and regulations relating to the Plan. The Committee’s determinations under the Plan need not be uniform
and may be made by the Committee selectively among Participants and Eligible Persons, whether or not such persons are similarly
situated. The Committee shall, in its discretion, consider such factors as it deems relevant in making its interpretations, determinations
and actions under the Plan including, without limitation, the recommendations or advice of any officer or employee of the Company
or such attorneys, consultants, accountants or other advisors as it may select. All interpretations, determinations and actions
by the Committee shall be final, conclusive, and binding upon all parties.

 

3.3    Delegation
of Authority.    The Committee shall have the right, from time to time, to delegate to one or more officers
of the Company the authority of the Committee to grant and determine the terms and conditions of Awards granted under the Plan,
subject to the requirements of state law and such other limitations as the Committee shall determine. In no event shall any such
delegation of authority be permitted with respect to Awards to any members of the Board or to any Eligible Person who is subject
to Rule 16b-3 under the Exchange Act or Section 162(m) of the Code. The Committee shall also be permitted to delegate, to any appropriate
officer or employee of the Company, responsibility for performing certain ministerial functions under the Plan. In the event that
the Committee’s authority is delegated to officers or employees in accordance with the foregoing, all provisions of the Plan
relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference
to such officer or employee for such purpose. Any action undertaken in accordance with the Committee’s delegation of authority
hereunder shall have the same force and effect as if such action was undertaken directly by the Committee and shall be deemed for
all purposes of the Plan to have been taken by the Committee.

 

4.     Shares
Subject to the Plan. 

 

4.1    Maximum
Share Limitations.    Subject to Section 4.3 hereof, the maximum aggregate number of shares of Common
Stock that may be issued and sold under all Awards granted under the Plan shall be three million (3,000,000) shares. Shares
of Common Stock issued and sold under the Plan may be either authorized but unissued shares or shares held in
the Company’s treasury. To the extent that any Award involving the issuance of shares of Common Stock is
forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements or other conditions of the Award,
or otherwise terminates without an issuance of shares of Common Stock being made thereunder, the shares of Common Stock
covered thereby will no longer be counted against the foregoing maximum share limitations and may again be made subject to
Awards under the Plan pursuant to such limitations. Any Awards or portions thereof that are settled in cash and not in shares
of Common Stock shall not be counted against the foregoing maximum share limitations.

 

    	Page 3 of 14

    	 

    

 

4.2    Adjustments.
   If there shall occur any change with respect to the outstanding shares of Common Stock by reason of any recapitalization,
reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split or other distribution with respect to
the shares of Common Stock, or any merger, reorganization, consolidation, combination, spin-off or other similar corporate change,
or any other change affecting the Common Stock, the Committee may, in the manner and to the extent that it deems appropriate and
equitable to the Participants and consistent with the terms of the Plan, cause an adjustment to be made in (i) the maximum number
and kind of shares provided in Section 4.1 hereof, (ii) the number and kind of shares of Common Stock, or other rights subject
to then outstanding Awards, (iii) the exercise or base price for each share or other right subject to then outstanding Awards,
and (iv) any other terms of an Award that are affected by the event. Notwithstanding the foregoing, in the case of Incentive Stock
Options, any such adjustments shall, to the extent practicable, be made in a manner consistent with the requirements of Section
424(a) of the Code.

 

4.3 Anti-Dilution.
Notwithstanding anything contained in the Plan to cover the contrary, including any adjustments discussed in this Section 4, the
maximum aggregate number of shares of Common Stock that may be issued and sold under all Awards granted under the Plan shall be
anti-dilutive in the event of a reverse stock split by the Company and shall not result in any reduction in the number of shares
available and authorized under the Plan at the effective time of such reverse stock split(s).

 

5.     Participation
and Awards.

 

5.1    Designations
of Participants.    All Eligible Persons are eligible to be designated by the Committee to receive Awards and
become Participants under the Plan. The Committee has the authority, in its discretion, to determine and designate from time to
time those Eligible Persons who are to be granted Awards, the types of Awards to be granted and the number of shares of Common
Stock or units subject to Awards granted under the Plan. In selecting Eligible Persons to be Participants and in determining the
type and amount of Awards to be granted under the Plan, the Committee shall consider any and all factors that it deems relevant
or appropriate.

 

5.2    Determination
of Awards.    The Committee shall determine the terms and conditions of all Awards granted to Participants in
accordance with its authority under Section 3.2 hereof. An Award may consist of one type of right or benefit hereunder or of two
or more such rights or benefits granted in tandem or in the alternative. In the case of any fractional share or unit resulting
from the grant, vesting, payment or crediting of dividends or dividend equivalents under an Award, the Committee shall have the
discretionary authority to (i) disregard such fractional share or unit, (ii) round such fractional share or unit to the nearest
lower or higher whole share or unit, or (iii) convert such fractional share or unit into a right to receive a cash payment. To
the extent deemed necessary by the Committee, an Award shall be evidenced by an Award Agreement as described in Section 11.1 hereof.

 

6.     Stock
Options. 

 

6.1    Grant
of Stock Options.    A Stock Option may be granted to any Eligible Person selected by the Committee. Subject
to the provisions of Section 6.8 hereof and Section 422 of the Code, each Stock Option shall be designated, in the discretion of
the Committee, as an Incentive Stock Option or as a Nonqualified Stock Option.

 

    	Page 4 of 14

    	 

    

 

6.2     Exercise
Price.    The exercise price per share of a Stock Option shall not be less than 20  percent of the Fair
Market Value of the shares of Common Stock on the Date of Grant, provided that the Committee may in its discretion specify
for any Stock Option an exercise price per share that is higher than the Fair Market Value on the Date of Grant, except that
the price shall not be less than 110 percent of the Fair Market Value in the case of any person who owns securities
possessing more than 10 percent of the total combined voting power of all classes of securities of the Company.

 

6.3     Vesting
of Stock Options.    The Committee shall in its discretion prescribe the time or times at which, or the conditions
upon which, a Stock Option or portion thereof shall become vested and/or exercisable, and may accelerate the vesting or exercisability
of any Stock Option at any time, provided, however, that any Stock Option shall vest at the rate of at least twenty percent (20%)
per year over five (5) years from the date the Stock Option is granted, subject to reasonable conditions as may be provided for
in the Award Agreement. However, in the case of a Stock Option granted to officers, Non-employee Directors, managers or Consultants
of the Company, the Stock Option may become fully exercisable, subject to reasonable conditions, at anytime or during any period
established by the Company. The requirements for vesting and exercisability of a Stock Option may be based on the continued Service
of the Participant with the Company or its Affiliates for a specified time period (or periods) or on the attainment of specified
performance goals established by the Committee in its discretion.

 

6.4     Term
of Stock Options.    The Committee shall in its discretion prescribe in an Award Agreement the period during
which a vested Stock Option may be exercised, provided that the maximum term of a Stock Option shall be ten years from the Date
of Grant. Except as otherwise provided in this Section 6 or as otherwise may be provided by the Committee, no Stock Option issued
to an employee or a Non-Employee Director of the Company may be exercised at any time during the term thereof unless the employee
or a Non-Employee Director Participant is then in the Service of the Company or one of its Affiliates.

 

6.5     Termination
of Service.    Subject to Section 6.8 hereof with respect to Incentive Stock Options, the Stock Option of any
Participant whose Service with the Company or one of its Affiliates is terminated for any reason shall terminate on the earlier
of (A) the date that the Stock Option expires in accordance with its terms or (B) unless otherwise provided in an Award Agreement,
and except for termination for cause (as described in Section 10.2 hereof), the expiration of the applicable time period following
termination of Service, in accordance with the following: (1) twelve months if Service ceased due to Disability, (2) eighteen months
if Service ceased at a time when the Participant is eligible to elect immediate commencement of retirement benefits at a specified
retirement age under a pension plan to which the Company or any of its Affiliates had made contributions, (3) eighteen months if
the Participant died while in the Service of the Company or any of its Affiliates, or (iv) three months if Service ceased for any
other reason. During the foregoing applicable period, except as otherwise specified in the Award Agreement or in the event Service
was terminated by the death of the Participant, the Stock Option may be exercised by such Participant in respect of the same number
of shares of Common Stock, in the same manner, and to the same extent as if he or she had remained in the continued Service of
the Company or any Affiliate during the first three months of such period; provided that no additional rights shall vest after
such three months. The Committee shall have authority to determine in each case whether an authorized leave of absence shall be
deemed a termination of Service for purposes hereof, as well as the effect of a leave of absence on the vesting and exercisability
of a Stock Option. Unless otherwise provided by the Committee, if an entity ceases to be an Affiliate of the Company or otherwise
ceases to be qualified under the Plan or if all or substantially all of the assets of an Affiliate of the Company are conveyed
(other than by encumbrance), such cessation or action, as the case may be, shall be deemed for purposes hereof to be a termination
of the Service.

 

    	Page 5 of 14

    	 

    

 

6.6     Stock
Option Exercise; Tax Withholding.    Subject to such terms and conditions as shall be specified in an Award
Agreement, a Stock Option may be exercised in whole or in part at any time during the term thereof by notice in the form required
by the Company, together with payment of the aggregate exercise price therefor and applicable withholding tax. Payment of the exercise
price shall be made in the manner set forth in the Award Agreement, unless otherwise provided by the Committee: (i) in cash or
by cash equivalent acceptable to the Committee, (ii) by payment in shares of Common Stock that have been held by the Participant
for at least six months (or such period as the Committee may deem appropriate, for accounting purposes or otherwise) valued at
the Fair Market Value of such shares on the date of exercise, (iii) through an open-market, broker-assisted sales transaction pursuant
to which the Company is promptly delivered the amount of proceeds necessary to satisfy the exercise price, (iv) by a combination
of the methods described above or (v) by such other method as may be approved by the Committee and set forth in the Award Agreement.
In addition to and at the time of payment of the exercise price, the Participant shall pay to the Company the full amount of any
and all applicable income tax, employment tax and other amounts required to be withheld in connection with such exercise, payable
under such of the methods described above for the payment of the exercise price as may be approved by the Committee and set forth
in the Award Agreement.

 

6.7     Limited
Transferability of Nonqualified Stock Options.    All Stock Options shall be nontransferable except (i) upon
the Participant’s death, in accordance with Section 11.2 hereof or (ii) in the case of Nonqualified Stock Options only, for
the transfer of all or part of the Stock Option to a Participant’s “family member” (as defined for purposes of
the Form S-8 registration statement under the Securities Act of 1933), as may be approved by the Committee in its discretion at
the time of proposed transfer. The transfer of a Nonqualified Stock Option may be subject to such terms and conditions as the Committee
may in its discretion impose from time to time. Subsequent transfers of a Nonqualified Stock Option shall be prohibited other than
in accordance with Section 11.2 hereof.

 

6.8     Additional
Rules for Incentive Stock Options. 

 

(a)    Eligibility.
   An Incentive Stock Option may only be granted to an Eligible Person who is considered an employee for purposes
of Treasury Regulation §1.421-7(h) with respect to the Company or any Affiliate that qualifies as a “subsidiary corporation”
with respect to the Company for purposes of Section 424(f) of the Code.

 

(b)     Termination
of Employment.    An Award of an Incentive Stock Option may provide that such Stock Option may be exercised
not later than 3 months following termination of employment of the Participant with the Company and all Subsidiaries, or not later
than one year following a permanent and total disability within the meaning of Section 22(e)(3) of the Code, as and to the extent
determined by the Committee to comply with the requirements of Section 422 of the Code.

 

(c)    Other
Terms and Conditions; Nontransferability.    Any Incentive Stock Option granted hereunder shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as are deemed necessary or desirable by the Committee,
which terms, together with the terms of the Plan, shall be intended and interpreted to cause such Incentive Stock Option to qualify
as an “incentive stock option” under Section 422 of the Code. An Award Agreement for an Incentive Stock Option may
provide that such Stock Option shall be treated as a Nonqualified Stock Option to the extent that certain requirements applicable
to “incentive stock options” under the Code shall not be satisfied. An Incentive Stock Option shall by its terms be
nontransferable other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of
a Participant only by such Participant.

 

    	Page 6 of 14

    	 

    

 

(d)    Disqualifying
Dispositions.    If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of
within two years following the Date of Grant or one year following the transfer of such shares to the Participant upon exercise,
the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition
and provide such other information regarding the disposition as the Company may reasonably require.

 

6.9     Repricing
Prohibited.    Subject to the adjustment provisions contained in Section 4.2 hereof, without the prior approval
of the Company’s stockholders, evidenced by a majority of votes cast, neither the Committee nor the Board shall cause the
cancellation, substitution or amendment of a Stock Option that would have the effect of reducing the exercise price of such a Stock
Option previously granted under the Plan, or otherwise approve any modification to such a Stock Option that would be treated as
a “repricing” under the then applicable rules, regulations or listing requirements.

 

7.     Stock
Awards. 

 

7.1    Grant
of Stock Awards.    A Stock Award may be granted to any Eligible Person selected by the Committee. A Stock Award
may be granted for past services, in lieu of bonus or other cash compensation, as directors’ compensation or for any other
valid purpose as determined by the Committee. A Stock Award granted to an Eligible Person represents shares of Common Stock that
are issued without restrictions on transfer and other incidents of ownership and free of forfeiture conditions, except as otherwise
provided in the Plan and the Award Agreement. The deemed issuance price of shares of Common Stock subject to each Stock Award shall
not be less than 85 percent of the Fair Market Value of the Common Stock on the date of the grant. In the case of any person who
owns securities possessing more than ten percent of the combined voting power of all classes of securities of the issuer or its
parent or subsidiaries possessing voting power, the deemed issuance price of shares of Common Stock subject to each Stock Award
shall be at least 100 percent of the Fair Market Value of the Common Stock on the date of the grant. The Committee may, in connection
with any Stock Award, require the payment of a specified purchase price.

 

7.2    Rights
as Stockholder.    Subject to the foregoing provisions of this Section 7 and the applicable Award Agreement,
upon the issuance of the Common Stock under a Stock Award the Participant shall have all rights of a stockholder with respect to
the shares of Common Stock, including the right to vote the shares and receive all dividends and other distributions paid or made
with respect thereto.

 

8.     Restricted
Stock Awards.

 

8.1    Grant
of Restricted Stock Awards.    A Restricted Stock Award may be granted to any Eligible Person selected
by the Committee. The deemed issuance price of shares of Common Stock subject to each Restricted Stock Award shall not be less
than 85 percent of the Fair Market Value of the Common Stock on the date of the grant. In the case of any person who owns securities
possessing more than ten percent of the combined voting power of all classes of securities of the issuer or its parent or subsidiaries
possessing voting power, the deemed issuance price of shares of Common Stock subject to each Restricted Stock Award shall be at
least 100 percent of the Fair Market Value of the Common Stock on the date of the grant. The Committee may require the payment
by the Participant of a specified purchase price in connection with any Restricted Stock Award.

 

    	Page 7 of 14

    	 

    

 

8.2    Vesting
Requirements.    The restrictions imposed on shares granted under a Restricted Stock Award shall lapse
in accordance with the vesting requirements specified by the Committee in the Award Agreement, provided that the Committee may
accelerate the vesting of a Restricted Stock Award at any time. Such vesting requirements may be based on the continued Service
of the Participant with the Company or its Affiliates for a specified time period (or periods) or on the attainment of specified
performance goals established by the Committee in its discretion. If the vesting requirements of a Restricted Stock Award shall
not be satisfied, the Award shall be forfeited and the shares of Common Stock subject to the Award shall be returned to the Company.

 

8.3    Restrictions.    Shares
granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge, or charge until
all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. Failure to satisfy any applicable
restrictions shall result in the subject shares of the Restricted Stock Award being forfeited and returned to the Company. The
Committee may require in an Award Agreement that certificates representing the shares granted under a Restricted Stock Award bear
a legend making appropriate reference to the restrictions imposed, and that certificates representing the shares granted or sold
under a Restricted Stock Award will remain in the physical custody of an escrow holder until all restrictions are removed or have
expired.

 

8.4    Rights
as Stockholder.    Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement,
the Participant shall have all rights of a stockholder with respect to the shares granted to the Participant under a Restricted
Stock Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect
thereto. The Committee may provide in an Award Agreement for the payment of dividends and distributions to the Participant at such
times as paid to stockholders generally or at the times of vesting or other payment of the Restricted Stock Award.

 

8.5    Section
83(b) Election.    If a Participant makes an election pursuant to Section 83(b) of the Code with respect
to a Restricted Stock Award, the Participant shall file, within 30 days following the Date of Grant, a copy of such election with
the Company and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code. The Committee
may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining
from making an election with respect to the Award under Section 83(b) of the Code.

 

9.     Change
in Control. 

 

9.1    Effect
of Change in Control.    Except to the extent an Award Agreement provides for a different result (in which case
the Award Agreement will govern and this Section 9 of the Plan shall not be applicable), notwithstanding anything elsewhere in
the Plan or any rules adopted by the Committee pursuant to the Plan to the contrary, if a Triggering Event shall occur within the
12-month period beginning with a Change in Control of the Company, then, effective immediately prior to such Triggering Event,
each outstanding Stock Option, to the extent that it shall not otherwise have become vested and exercisable, shall automatically
become fully and immediately vested and exercisable, without regard to any otherwise applicable vesting requirement.

 

9.2    Definitions

 

(a)    Cause.
   For purposes of this Section 9, the term “Cause” shall mean a determination by the Committee
that a Participant (i) has been convicted of, or entered a plea of nolo contendere to, a crime that constitutes a felony under
Federal or state law, (ii) has engaged in willful gross misconduct in the performance of the Participant’s duties to the
Company or an Affiliate or (iii) has committed a material breach of any written agreement with the Company or any Affiliate with
respect to confidentiality, noncompetition, nonsolicitation or similar restrictive covenant. Subject to the first sentence of Section
9.1 hereof, in the event that a Participant is a party to an employment agreement with the Company or any Affiliate that defines
a termination on account of “Cause” (or a term having similar meaning), such definition shall apply as the definition
of a termination on account of “Cause” for purposes hereof, but only to the extent that such definition provides the
Participant with greater rights. A termination on account of Cause shall be communicated by written notice to the Participant,
and shall be deemed to occur on the date such notice is delivered to the Participant.

 

    	Page 8 of 14

    	 

    

 

(b)    Change
in Control.    For purposes of this Section 9, a “Change in Control” shall be deemed to have occurred
upon:

 

(i) the
occurrence of an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
a percentage of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Company Voting Securities”) (but excluding (1) any acquisition directly from the Company
(other than an acquisition by virtue of the exercise of a conversion privilege of a security that was not acquired directly from
the Company), (2) any acquisition by the Company or an Affiliate and (3) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliate) (an “Acquisition”) that is thirty percent (30%) or
more of the Company Voting Securities;

 

(ii) at
any time during a period of two (2) consecutive years or less, individuals who at the beginning of such period constitute the Board
(and any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was so approved) cease for any reason (except for death, Disability or voluntary
retirement) to constitute a majority thereof;

 

(iii)
an Acquisition that is fifty percent (50%) or more of the Company Voting Securities;

 

(iv) the
consummation of a merger, consolidation, reorganization or similar corporate transaction, whether or not the Company is the surviving
company in such transaction, other than a merger, consolidation, or reorganization that would result in the Persons who are beneficial
owners of the Company Voting Securities outstanding immediately prior thereto continuing to beneficially own, directly or indirectly,
in substantially the same proportions, at least fifty percent (50%) of the combined voting power of the Company Voting Securities
(or the voting securities of the surviving entity) outstanding immediately after such merger, consolidation or reorganization;

 

(v) the
sale or other disposition of all or substantially all of the assets of the Company;

 

(vi) the
approval by the stockholders of the Company of a complete liquidation or dissolution of the Company; or

 

(vii)
the occurrence of any transaction or event, or series of transactions or events, designated by the Board in a duly adopted resolution
as representing a change in the effective control of the business and affairs of the Company, effective as of the date specified
in any such resolution.

 

    	Page 9 of 14

    	 

    

 

(c)    Constructive
Termination.    For purposes of this Section 9, a “Constructive Termination” shall mean a termination
of employment by a Participant within sixty (60) days following the occurrence of any one or more of the following events without
the Participant’s written consent (i) any reduction in position, title (for Vice Presidents or above), overall responsibilities,
level of authority, level of reporting (for Vice Presidents or above), base compensation, annual incentive compensation opportunity,
aggregate employee benefits or (ii) a request that the Participant’s location of employment be relocated by more than fifty
(50) miles. Subject to the first sentence of Section 9.1 hereof, in the event that a Participant is a party to an employment agreement
with the Company or any Affiliate (or a successor entity) that defines a termination on account of “Constructive Termination,”
“Good Reason” or “Breach of Agreement” (or a term having a similar meaning), such definition shall apply
as the definition of “Constructive Termination” for purposes hereof in lieu of the foregoing, but only to the extent
that such definition provides the Participant with greater rights. A Constructive Termination shall be communicated by written
notice to the Committee, and shall be deemed to occur on the date such notice is delivered to the Committee, unless the circumstances
giving rise to the Constructive Termination are cured within five (5) days of such notice.

 

(d)    Triggering
Event.    For purposes of this Section 9, a “Triggering Event” shall mean (i) the termination of
Service of a Participant by the Company or an Affiliate (or any successor thereof) other than on account of death, Disability or
Cause, (ii) the occurrence of a Constructive Termination or (iii) any failure by the Company (or a successor entity) to assume,
replace, convert or otherwise continue any Award in connection with the Change in Control (or another corporate transaction or
other change effecting the Common Stock) on the same terms and conditions as applied immediately prior to such transaction, except
for equitable adjustments to reflect changes in the Common Stock pursuant to Section 4.2 hereof.

 

9.3    Excise
Tax Limit.    In the event that the vesting of Awards together with all other payments and the value of any
benefit received or to be received by a Participant would result in all or a portion of such payment being subject to the excise
tax under Section 4999 of the Code, then the Participant’s payment shall be either (i) the full payment or (ii) such lesser
amount that would result in no portion of the payment being subject to excise tax under Section 4999 of the Code (the “Excise
Tax”), whichever of the foregoing amounts, taking into account the applicable Federal, state, and local employment taxes,
income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the
payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code. All determinations
required to be made under this Section 9 shall be made by M&K CPAs PLLC or any other accounting firm which is the Company’s
outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax (the “Accounting
Firm”). The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to
the Company and the Participant. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Accounting
Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code). For the purposes
of all calculations under Section 280G of the Code and the application of this Section 9.3, all determinations as to present value
shall be made using 120 percent of the applicable Federal rate (determined under Section 1274(d) of the Code) compounded semiannually.

 

10.     Forfeiture
Events. 

 

10.1    General.
   The Committee may specify in an Award Agreement at the time of the Award 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 specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events
shall include, but shall not be limited to, termination of Service for cause, violation of material Company policies, breach of
noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other conduct by the Participant
that is detrimental to the business or reputation of the Company.

 

    	Page 10 of 14

    	 

    

 

10.2    Termination
for Cause.    Unless otherwise provided by the Committee and set forth in an Award Agreement, if a Participant’s
employment with the Company or any Affiliate shall be terminated for cause, the Company may, in its sole discretion, immediately
terminate such Participant’s right to any further payments, vesting or exercisability with respect to any Award in its entirety.
In the event a Participant is party to an employment (or similar) agreement with the Company or any Affiliate that defines the
term “cause,” such definition shall apply for purposes of the Plan. The Company shall have the power to determine whether
the Participant has been terminated for cause and the date upon which such termination for cause occurs. Any such determination
shall be final, conclusive and binding upon the Participant. In addition, if the Company shall reasonably determine that a Participant
has committed or may have committed any act which could constitute the basis for a termination of such Participant’s employment
for cause, the Company may suspend the Participant’s rights to exercise any option, receive any payment or vest in any right
with respect to any Award pending a determination by the Company of whether an act has been committed which could constitute the
basis for a termination for “cause” as provided in this Section 10.2.

 

11.     General
Provisions. 

 

11.1    Award
Agreement.    To the extent deemed necessary by the Committee, an Award under the Plan shall be evidenced by
an Award Agreement in a written or electronic form approved by the Committee setting forth the number of shares of Common Stock
or units subject to the Award, the exercise price, base price, or purchase price of the Award, the time or times at which an Award
will become vested, exercisable or payable and the term of the Award. The Award Agreement may also set forth the effect on an Award
of termination of Service under certain circumstances. The Award Agreement shall be subject to and incorporate, by reference or
otherwise, all of the applicable terms and conditions of the Plan, and may also set forth other terms and conditions applicable
to the Award as determined by the Committee consistent with the limitations of the Plan. Award Agreements evidencing Incentive
Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the
Code. The grant of an Award under the Plan shall not confer any rights upon the Participant holding such Award other than such
terms, and subject to such conditions, as are specified in the Plan as being applicable to such type of Award (or to all Awards)
or as are expressly set forth in the Award Agreement. The Committee need not require the execution of an Award Agreement by a Participant,
in which case, acceptance of the Award by the Participant shall constitute agreement by the Participant to the terms, conditions,
restrictions and limitations set forth in the Plan and the Award Agreement as well as the administrative guidelines of the Company
in effect from time to time.

 

11.2    No
Assignment or Transfer; Beneficiaries.    Except as provided in Section 6.7 hereof, Awards under the Plan shall
not be assignable or transferable by the Participant, except by will or by the laws of descent and distribution, and shall not
be subject in any manner to assignment, alienation, pledge, encumbrance or charge. Notwithstanding the foregoing, the Committee
may provide in the terms of an Award Agreement that the Participant shall have the right to designate a beneficiary or beneficiaries
who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s death.
During the lifetime of a Participant, an Award shall be exercised only by such Participant or such Participant’s guardian
or legal representative. In the event of a Participant’s death, an Award may to the extent permitted by the Award Agreement
be exercised by the Participant’s beneficiary as designated by the Participant in the manner prescribed by the Committee
or, in the absence of an authorized beneficiary designation, by the legatee of such Award under the Participant’s will or
by the Participant’s estate in accordance with the Participant’s will or the laws of descent and distribution, in each
case in the same manner and to the same extent that such Award was exercisable by the Participant on the date of the Participant’s
death.

 

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11.3    Deferrals
of Payment.    The Committee may in its discretion permit a Participant to defer the receipt of payment of cash
or delivery of shares of Common Stock that would otherwise be due to the Participant by virtue of the exercise of a right or the
satisfaction of vesting or other conditions with respect to an Award. If any such deferral is to be permitted by the Committee,
the Committee shall establish rules and procedures relating to such deferral in a manner intended to comply with the requirements
of Section 409A of the Code, including, without limitation, the time when an election to defer may be made, the time period of
the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to
the deferral and the method of funding, if any, attributable to the deferred amount.

 

11.4    Rights
as Stockholder.    A Participant shall have no rights as a holder of shares of Common Stock with respect to
any unissued securities covered by an Award until the date the Participant becomes the holder of record of such securities. Except
as provided in Section 4.2 hereof, no adjustment or other provision shall be made for dividends or other stockholder rights, except
to the extent that the Award Agreement provides for dividend payments or dividend equivalent rights.

 

11.5    Employment
or Service.    Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any
Eligible Person any right to continue in the Service of the Company or any of its Affiliates, or interfere in any way with the
right of the Company or any of its Affiliates to terminate the Participant’s employment or other service relationship for
any reason at any time.

 

11.6    Securities
Laws.    No shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then
applicable requirements imposed by Federal and state securities and other laws, rules and regulations and by any regulatory agencies
having jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met. As a condition
precedent to the issuance of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to take
any reasonable action to meet such requirements. The Committee may impose such conditions on any shares of Common Stock issuable
under the Plan as it may deem advisable, including, without limitation, restrictions under the Securities Act of 1933, as amended,
under the requirements of any exchange upon which such shares of the same class are then listed, and under any blue sky or other
securities laws applicable to such shares. The Committee may also require the Participant to represent and warrant at the time
of issuance or transfer that the shares of Common Stock are being acquired only for investment purposes and without any current
intention to sell or distribute such shares.

 

11.7    Tax
Withholding.    The Participant shall be responsible for payment of any taxes or similar charges required by
law to be withheld from an Award or an amount paid in satisfaction of an Award, which shall be paid by the Participant on or prior
to the payment or other event that results in taxable income in respect of an Award. The Award Agreement may specify the manner
in which the withholding obligation shall be satisfied with respect to the particular type of Award.

 

11.8    Unfunded
Plan.    The adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the Company
to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement. Except upon the issuance
of Common Stock pursuant to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor
of the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest
in any assets of the Company by virtue of the Plan. Notwithstanding the foregoing, the Company shall have the right to implement
or set aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to discharge its obligations
under the Plan.

 

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11.9    Other
Compensation and Benefit Plans.    The adoption of the Plan shall not affect any other share incentive or other
compensation plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other
forms of share incentive or other compensation or benefit program for employees of the Company or any Affiliate. The amount of
any compensation deemed to be received by a Participant pursuant to an Award shall not constitute includable compensation for purposes
of determining the amount of benefits to which a Participant is entitled under any other compensation or benefit plan or program
of the Company or an Affiliate, including, without limitation, under any pension or severance benefits plan, except to the extent
specifically provided by the terms of any such plan.

 

11.10    Plan
Binding on Transferees.    The Plan shall be binding upon the Company, its transferees and assigns, and the
Participant, the Participant’s executor, administrator and permitted transferees and beneficiaries.

 

11.11    Severability.
   If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by
any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other jurisdiction.

 

11.12    Foreign
Jurisdictions.    The Committee may adopt, amend and terminate such arrangements and grant such Awards, not
inconsistent with the intent of the Plan, as it may deem necessary or desirable to comply with any tax, securities, regulatory
or other laws of other jurisdictions with respect to Awards that may be subject to such laws. The terms and conditions of such
Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems
necessary for such purpose. Moreover, the Board may approve such supplements to or amendments, restatements or alternative versions
of the Plan, not inconsistent with the intent of the Plan, as it may consider necessary or appropriate for such purposes, without
thereby affecting the terms of the Plan as in effect for any other purpose.

 

11.13    Substitute
Awards in Corporate Transactions.    Nothing contained in the Plan shall be construed to limit the right of
the Committee to grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or
other corporate transaction, of the business or assets of any corporation or other entity. Without limiting the foregoing, the
Committee may grant Awards under the Plan to an employee or director of another corporation who becomes an Eligible Person by reason
of any such corporate transaction in substitution for awards previously granted by such corporation or entity to such person. The
terms and conditions of the substitute Awards may vary from the terms and conditions that would otherwise be required by the Plan
solely to the extent the Committee deems necessary for such purpose.

 

11.14 Governing
Law. The Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of Nevada,
without reference to the principles of conflicts of laws, and to applicable Federal securities laws.

 

11.15 Financial
Statements. All Participants shall receive the financial statements of the Company at least annually.  

 

11.16Performance
Based Awards.    For purposes of Stock Awards and Restricted Stock Awards granted under the Plan that are
intended to qualify as “performance-based” compensation under Section 162(m) of the Code, such Awards shall be granted
to the extent necessary to satisfy the requirements of Section 162(m) of the Code.

 

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11.17 Stockholder
Approval.  The Plan must be approved by the stockholders by a majority of all shares entitled to vote within twelve (12) months
after the date the Plan was adopted by the Board. Any Incentive Stock Options granted before stockholder approval is obtained shall
be converted into Nonqualified Stock Options if stockholder approval is not obtained within twelve (12) months before or after
the Plan was adopted.

 

12.     Effective
Date; Amendment and Termination. 

 

12.1    Effective
Date.    The Plan shall become effective following its adoption by the Board. The term of the Plan shall be
ten (10) years from the date of adoption by the Board, subject to Section 12.3 hereof.

 

12.2    Amendment.
    The Board may at any time and from time to time and in any respect, amend or modify the Plan. The Board
may seek the approval of any amendment or modification by the Company’s stockholders to the extent it deems necessary or
advisable in its discretion for purposes of compliance with Section 162(m) or Section 422 of the Code, or exchange or securities
market or for any other purpose. No amendment or modification of the Plan shall adversely affect any Award theretofore granted
without the consent of the Participant or the permitted transferee of the Award.

 

12.3    Termination.
   The Plan shall terminate on the tenth anniversary of the date of its adoption by the Board. The Board may,
in its discretion and at any earlier date, terminate the Plan. Notwithstanding the foregoing, no termination of the Plan shall
adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award.

  

    	Page 14 of 14

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