Document:

Document

Exhibit 10.6
NOVAN, INC.

INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of _________, 20__ between Novan, Inc., a Delaware corporation (the “Company”), and [Name] (“Indemnitee”).
WITNESSETH THAT:
WHEREAS, highly competent persons have become more reluctant to serve corporations as [directors] [officers] or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions.  At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.  The By-laws of the Company require indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).  The By-laws and  the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;
WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; 
WHEREAS, this Agreement is a supplement to and in furtherance of the By-laws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; [and]

WHEREAS, Indemnitee does not regard the protection available under the Company's By-laws and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity.  Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified[.][; and]
[WHEREAS, Indemnitee has certain rights to indemnification and/or insurance provided by [NAME] which Indemnitee and [NAME] intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board.]
NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as [an officer] [a director] from and after the date hereof, the parties hereto agree as follows:
1.Indemnity of Indemnitee.  The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:
(a)Proceedings Other Than Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of his Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful. 
(b)Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.
(c)Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Section and 
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without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
(d)Indemnification of Appointing Stockholder.    If (i) Indemnitee is or was affiliated with one or more venture capital funds that has invested in the Company (an “Appointing Stockholder”), and (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a participant in any Proceeding relating to or arising by reason of Appointing Stockholder's position as a stockholder of, or lender to, the Company, or Appointing Stockholder's appointment of or affiliation with Indemnitee or any other director, including without limitation any alleged misappropriation of a Company asset or corporate opportunity, any claim of misappropriation or infringement of intellectual property relating to the Company, any alleged false or misleading statement or omission made by the Company (or on its behalf) or its employees or agents, or any allegation of inappropriate control or influence over the Company or its Board members, officers, equity holders or debt holders, then the Appointing Stockholder will be entitled to indemnification hereunder for Expenses to the same extent as Indemnitee, and the terms of this Agreement as they relate to procedures for indemnification of Indemnitee and advancement of Expenses shall apply to any such indemnification of Appointing Stockholder. 
The rights provided to the Appointing Stockholder under this Section 1 shall (i) be suspended during any period during which the Appointing Stockholder does not have a representative on the Company’s Board and (ii) terminate on an initial public offering of the Company’s Common Stock; provided, however, that in the event of any such suspension or termination, the Appointing Stockholder’s rights to indemnification will not be suspended or terminated with respect to any Proceeding based in whole or in part on facts and circumstances occurring at any time prior to such suspension or termination regardless of whether the Proceeding arises before or after such suspension or termination. The Company and Indemnitee agree that the Appointing Stockholder is an express third party beneficiary of the terms of this Section 1(d).
2.Additional Indemnity.  In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.  The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.
3.Contribution.
(a)Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee.  The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
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(b)Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered.  The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.
(c)The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
(d)To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
4.Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
5.Advancement of Expenses.  Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or 
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accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. 
6.Procedures and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:
(a)To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.  Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company. 
(b)Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board:  (1) by a majority vote of the Disinterested Directors, even though less than a quorum, (2) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum, (3) if there are no disinterested directors or if the disinterested directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board, by the stockholders of the Company.  For purposes hereof, disinterested directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee. 
(c)If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c).  The Independent Counsel shall be selected by the Board.  Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof.  The 
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Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.
(d)In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(e)Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise  in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(f)If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such sixty (60)-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.
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(g)Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(h)The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(i)The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.
7.Remedies of Indemnitee.
(a)In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification.  Indemnitee shall commence such proceeding seeking an adjudication within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a).  The Company shall not oppose Indemnitee’s right to seek any such adjudication.
(b)In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).
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(c)If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d)In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.
(e)The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.  The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.
(f)Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
8.Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.
(a)The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-laws, any agreement, a vote of stockholders, a resolution of directors of the Company, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under  the Certificate of Incorporation, By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
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(b)To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors' and officers' liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(c)[The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by [ • ] and certain of its affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Certificate of Incorporation or Bylaws of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and, (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 8(c).]
(d)[Except as provided in paragraph (c) above,] the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (other than against the Fund Indemnitors), who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(e)[Except as provided in paragraph (c) above,] the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(f)[Except as provided in paragraph (c) above,] the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.
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9.Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:
(a)for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision[, provided, that the foregoing shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in Section 8(c) above]; or
(b)for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or
(c)in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.
10.Duration of Agreement.  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.
11.Security.  To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.
12.Enforcement.
(a)The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.
(b)This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
10

(c)The Company shall not seek from a court, or agree to, a "bar order" which would have the effect of prohibiting or limiting the Indemnitee's rights to receive advancement of expenses under this Agreement.
13.Definitions.  For purposes of this Agreement:
(a)“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.
(b)“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(c)“Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.
(d)“Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(e)“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(f)“Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of his or her Corporate Status, by reason of any action taken by him or of any inaction on his part while acting in his or her Corporate Status; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which 
11

indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.
14.Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.  Further, the invalidity or unenforceability of any provision hereof as to either Indemnitee or Appointing Stockholder shall in no way affect the validity or enforceability of any provision hereof as to the other.  Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee and Appointing Stockholder indemnification rights to the fullest extent permitted by applicable laws.  In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.   
15.Modification and Waiver.  No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
16.Notice By Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder.  The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.
17.Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given:  (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent:  
(a)To Indemnitee at the address set forth below Indemnitee’s signature hereto.
(b)To the Company at:
Novan, Inc.
4105 Hopson Road
Morrisville, NC 27560        
Attention:  Chief Executive Officer

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
18.Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or any other 
12

transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.  
19.Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
20.Governing Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably Incorporating Services, Ltd., 3500 S. DuPont Highway, Dover, DE 19901 in the case of the Company, and [______], in the case of the Indemnitee as its agent in the State of Delaware as such party's agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
SIGNATURE PAGE TO FOLLOW
13

    IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.
NOVAN, INC.

By:____________________________________
    Name:  
    Title:    

INDEMNITEE

______________________________________
Name:  

Address:
______________________________________
______________________________________
______________________________________

14Exhibit 10.5

 

Ucommune
International Ltd

 

2020
SHARE INCENTIVE PLAN

 

Section
1 Purpose. 

 

The
purpose of the Ucommune International Ltd 2020 Share Incentive Plan (as amended from time to time, “2020 Plan”)
is to enhance the ability of Company to attract and retain exceptionally qualified individuals and to encourage them to acquire
a proprietary interest in the growth and performance of the Company.

 

This
2020 Plan is adopted by the Company in connection with the anticipated consummation of the Business Combination and the assumption
by the Company pursuant to the Business Combination of outstanding awards (“Assumed Awards”) previously granted
to the Participants under the Ucommune Group Holdings Limited 2019 Share Incentive Plan (“Prior Plan”).

 

This
2020 Plan is intended to constitute an amendment and restatement and continuation of the Prior Plan, such that from and after
the assumption of the Assumed Awards by the Company in the Business Combination, the Assumed Awards shall be deemed granted under
and governed by this 2020 Plan, it being understood that the adoption of this 2020 Plan is not intended to modify the terms and
conditions of any Assumed Awards. In connection with the Business Combination, the Assumed Awards are being adjusted as required
under the terms of the Prior Plan, as set forth in a written notice provided or to be provided to each applicable Participant,
and the terms and conditions of such Assumed Awards shall otherwise continue to be as set forth in the applicable Award Agreements
covering each of the Assumed Awards.

 

In
addition to the Assumed Awards, from and after the time of the Business Combination, the Company intends to use this 2020 Plan
to grant new Awards to eligible Participants from time to time, subject to and in accordance with the terms and conditions described
herein.

 

Section
2. Structure.

 

Each
Award (as defined below) granted by the Company pursuant to the terms of this 2020 Plan, shall be granted to each participant,
and the corresponding Shares issuable upon the exercise of such Award (the “Award Shares”) shall be issued
to the participants or an entity designated by the participants.

 

Section
3. Definitions. 

 

As
used in this 2020 Plan and any Award Agreement (as defined below), the following terms shall have the meanings set forth below:

 

(a) “2020
Plan” shall have the meaning set forth in Section 1.

 

     

     

    

 

(b) “Affiliate”
shall mean (i) any entity that, directly or indirectly, is controlled by the Company and (ii) any entity in which the Company
has a significant equity interest, in either case as determined by the Administrator.

 

(c) “Applicable
Laws” shall mean all laws, statutes, regulations, ordinances, rules or governmental requirements that are applicable
to this 2020 Plan or any Award granted pursuant to this 2020 Plan, including but not limited to applicable laws of the People’s
Republic of China (“PRC”), the United States and the Cayman Islands, and the rules and requirements of any
applicable securities exchange.

 

(d) “Assumed
Awards” shall have the meaning set forth in Section 1.

 

(e) “Award”
shall mean any Option, award of Restricted Share, Restricted Share Unit or Other Share-Based Award granted under this 2020 Plan.

 

(f) “Award
Agreement” shall mean any written agreement, contract or other instrument or document evidencing any Award granted under
this 2020 Plan. For the avoidance of doubt, award agreements previously entered into with respect to Assumed Awards shall constitute
Award Agreements for all purposes hereunder.

 

(g) “Board”
shall mean the board of directors of the Company.

 

(h) “Business
Combination” shall mean the transactions contemplated by that certain Merger Agreement (“Merger Agreement”)
dated as of June 29, 2020, by and among the Company, Ucommune Group Holdings Limited, and certain parties thereto, as amended
from time to time.

 

(i) “Committee”
shall mean a compensation committee of the Board or another board committee designated by the Board to administer this 2020 Plan.

 

(j) “Company”
shall mean Ucommune International Ltd, a company incorporated under the laws of the Cayman Islands, together with any successor
thereto.

 

(k) “Consultant”
means any individual, including an advisor, who is engaged by the Company or an Affiliate to render services and is compensated
for such services, and any director of the Company whether or not compensated for such services.

 

(l) “Discharge”
shall mean that the relationship between the Participant and the Company or an Affiliate, whether it is employment or consultancy,
is terminated due to economic layoffs or restructuring of the Company or an Affiliate, as the case may be.

 

    2

     

    

 

(m) “Fair
Market Value” shall mean, with respect to any property (including, without limitation, any Shares or other securities)
the fair market value of such property determined by such methods or procedures as shall be established from time to time by the
Administrator.

 

(n) “Option”
shall mean an option granted under Section 7 hereof.

 

(o) “Other
Share-Based Award” shall mean a right granted under Section 9 hereof.

 

(p) “Participant”
shall mean an individual granted an Award under this 2020 Plan.

 

(q) “Prior
Plan” shall have the meaning set forth in Section 1.

 

(r) “Restricted
Share” shall mean any Share granted under Section 8 hereof.

 

(s) “Restricted
Share Unit” shall mean a contractual right granted under Section 8 hereof that is denominated in Shares, each of which
represents a right to receive the value of a Share (or a percentage of such value, which percentage may be higher than 100%) upon
the terms and conditions set forth in this 2020 Plan and the applicable Award Agreement.

 

(t) “Shares”
shall mean Class A Ordinary Shares of the Company, par value US$0.0001 per share.

 

(u) “Substitute
Awards” shall mean Awards granted in assumption of, or in substitution for, outstanding awards previously granted by,
or held by the employees of, a company or other entity or business acquired (directly or indirectly) by the Company or with which
the Company combines, which shall not include the Assumed Awards.

 

Section
4. Eligibility. 

 

(a) Employees
(each, an “Employee”) and Consultants of the Company or an Affiliate are eligible to participate in this 2020
Plan. An Employee or Consultant who has been granted an Award may, if he or she is otherwise eligible, be granted additional Awards.

 

(b) An
individual who has agreed to accept employment by, or to provide services to, the Company or an Affiliate shall be deemed to be
eligible for Awards hereunder.

 

    3

     

    

 

Section
5. Administration. 

 

(a) This
2020 Plan shall be administered by the Administrator formed in accordance with applicable laws and stock exchange rules, unless
otherwise determined by the Board. The term “Administrator” shall refer to the Board or the Committee, as applicable.
The Administrator may delegate its duties and powers under this 2020 Plan in whole or in part to a person or a board committee
designated by it.

 

(b) Subject
to the terms of this 2020 Plan and Applicable Laws, the Administrator shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards (including Substitute Awards) to be granted to each Participant under this 2020 Plan;
(iii) determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated
in connection with) Awards; (iv) determine the terms and conditions of any Award including, but not limited to, any restrictions
or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award,
and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each
case on such considerations as the Administrator in its sole discretion determines; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards, or other property,
or canceled, forfeited or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited
or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards,
other property, and other amounts payable with respect to an Award under this 2020 Plan shall be deferred either automatically
or at the election of the holder thereof or of the Administrator; (vii) interpret and administer this 2020 Plan and any instrument
or agreement relating to, or Award made under, this 2020 Plan; (viii) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the proper administration of this 2020 Plan; (ix) determine whether and
to what extent Awards should comply or continue to comply with any requirement of statute or regulation; and (x) make any other
determination and take any other action that the Administrator deems necessary or desirable for the administration of this 2020
Plan.

 

(c) All
decisions of the Administrator shall be final, conclusive and binding upon all persons, including the Company, the shareholders
of the Company and the Participants and their beneficiaries.

 

(d) The
Administrator may impose restrictions on any Award with respect to non-competition, confidentiality, lock-up and any other events
that it considers to be detrimental to the Company, and impose other restrictive covenants as it deems necessary or appropriate
in its sole discretion. In the event that these restrictions are breached, the Administrator may request the Participants to return
all benefits made available to them under this 2020 Plan and such Participants shall cease to be entitled to potential benefits
intended to be made available to them under this 2020 Plan.

 

    4

     

    

 

Section
6. Shares Available for Awards. 

 

(a) Subject
to adjustment as provided below, the maximum aggregate number of Shares that may be issued pursuant to all Awards shall initially
not exceed 7,188,661 Shares (including the Assumed Awards). For the avoidance of doubt, pursuant to the Merger Agreement the number
of Shares underlying the Assumed Awards shall be equal to the product of: (i) the number of shares of Ucommune Group Holdings
Limited subject to Prior Plan multiplied by (ii) 0.478333.

 

(b) If,
after the effective date of this 2020 Plan, any Shares covered by an Award, or to which such an Award relates, are forfeited,
cancelled or if such an Award otherwise terminates without the delivery of Shares or of other consideration, then the Shares covered
by such Award, or to which such Award relates, to the extent of any such forfeiture or termination, shall again be, or shall become,
available for issuance under this 2020 Plan.

 

(c) In
the event that any Option or other Award granted hereunder (other than a Substitute Award) is exercised through the delivery of
Shares, or in the event that withholding tax liabilities arising from such Option or Award are satisfied by the withholding of
Shares by the Company, the number of Shares available for Awards under this 2020 Plan shall be increased by the number of Shares
so surrendered or withheld.

 

(d) Any
Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury Shares or
Shares purchased on the open market.

 

(e) In
the event that the Administrator shall determine that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or
other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the
Shares such that an adjustment is determined, in its absolute discretion, by the Administrator to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be made available under this 2020 Plan, then the Administrator
shall, in such manner as it may deem appropriate, adjust any or all of (i) the number and type of Shares (or other securities
or property) which thereafter may be made the subject of Awards, including the aggregate limit specified in Section 6(a) hereof,
(ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, (iii) the grant price, purchase
price, or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder
of an outstanding Award, and (iv) the minimum number of Shares which may be acquired by the holder of an outstanding Award at
any one time; provided, however, that the number of Shares subject to any Award denominated in Shares shall always be a
whole number.

 

    5

     

    

 

(f) Shares
underlying Substitute Awards shall not reduce the number of Shares remaining available for issuance under this 2020 Plan.

 

(g) Except
as expressly provided in this 2020 Plan, no Participant shall have any rights by reason of any subdivision or consolidation of
Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in this 2020 Plan
or pursuant to action of the Administrator under this 2020 Plan, no issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number
of shares subject to an Award or the grant or exercise price of any Award.

 

Section
7. Options.

 

The
Administrator is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional
terms and conditions, in either case not inconsistent with the provisions of this 2020 Plan, as the Administrator shall determine
and set forth in the Award Agreement:

 

(a) The
purchase price per Share under an Option shall be determined by the Administrator.

 

(b) The
term of each Option shall be fixed by the Administrator.

 

(c) The
Administrator shall determine the time or times at which an Option may be exercised in whole or in part, and the method or methods
by which, and the form or forms, including, without limitation, cash, Shares, other Awards, or other property, or any combination
thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which, payment of the exercise
price with respect thereto may be made or deemed to have been made.

 

Section
8. Restricted Shares and Restricted Share Units. 

 

(a) The
Administrator is hereby authorized to grant Awards of Restricted Shares and Restricted Share Units to Participants.

 

(b) Restricted
Shares and Restricted Share Units shall be subject to such restrictions as the Administrator may impose (including, without limitation,
any limitation on the right to vote a Restricted Share or the right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Administrator
may deem appropriate.

 

    6

     

    

 

(c) Any
Restricted Share granted under this 2020 Plan may be evidenced in such manner as the Administrator may deem appropriate including,
without limitation, book-entry registration or issuance of a share certificate or certificates, creation of a new class of shares
or amendment of the Memorandum and/or Articles of Association of the Company. In the event any share certificate is issued in
respect of Restricted Shares granted under this 2020 Plan, such certificate shall be registered in the name of the Participant
and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Share.

 

Section
9. Other Share-Based Awards. 

 

The
Administrator is hereby authorized to grant to Participants such other Awards (including, without limitation, share appreciation
rights and rights to dividends and dividend equivalents) that are denominated or payable in, valued in whole or in part by reference
to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares) as are deemed
by the Administrator to be consistent with the purposes of this 2020 Plan. Subject to the terms of this 2020 Plan, the Administrator
shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted
under this Section 9 shall be purchased for such consideration, which may be paid by such method or methods and in such form or
forms, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof,
as the Administrator shall determine.

 

Section
10. General Provisions Applicable to Awards. 

 

(a) All
Awards shall be evidenced by an Award Agreement between the Company and each Participant.

 

(b) Awards
shall be granted for no cash consideration or for such minimal cash consideration as may be required by Applicable Laws.

 

(c) Awards
may, in the discretion of the Administrator, be granted either alone or in addition to or in tandem with any other Award or any
award granted under any other plan of the Company. Awards granted in addition to or in tandem with other Awards, or in addition
to or in tandem with awards granted under any other plan of the Company, may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.

 

(d) Subject
to the terms of this 2020 Plan, payments or transfers to be made by the Company upon the grant, exercise or payment of an Award
may be made in such form or forms as the Administrator shall determine including, without limitation, cash, Shares, other securities,
other Awards, or other property, or any combination thereof, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case in accordance with rules and procedures established by the Administrator. Such rules and
procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of dividend equivalents in respect of installment or deferred payments.

 

(e) Unless
the Board or the Administrator shall otherwise determine, no Award and no right under any such Award, shall be assignable, alienable,
saleable or transferable by a Participant otherwise than by will or by the laws of descent and distribution; provided, however,
that, if so determined by the Administrator or the Board, a Participant may, in the manner established by the Administrator, designate
a beneficiary or beneficiaries to exercise the rights of the Participant, and to receive any property distributable, with respect
to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable during the Participant’s
lifetime only by the Participant or, if permissible under Applicable Laws and the applicable Award Agreement, by the Participant’s
guardian or legal representative. No Award and no right under any such Award, may be pledged, charged, mortgaged, alienated, attached,
or otherwise encumbered, and any purported pledge, charge, mortgage, alienation, attachment or encumbrance thereof shall be void
and unenforceable against the Company. The provisions of this paragraph shall not apply to any Award which has been fully exercised,
earned or paid, as the case may be, and shall not preclude forfeiture of an Award in accordance with the terms hereof and of the
applicable Award Agreement.

 

    7

     

    

 

(f) All
certificates for Shares or other securities delivered under this 2020 Plan pursuant to any Award or the exercise thereof shall
be subject to such stop transfer orders and other restrictions as the Administrator may deem advisable under this 2020 Plan or
the rules, regulations, and other requirements of the United States Securities and Exchange Commission, any stock exchange upon
which such Shares or other securities are then listed, and any Applicable Laws, and the Administrator may cause a legend or legends
to be put on any such certificates to make appropriate reference to such restrictions.

 

(g) No
Shares shall be delivered under the 2020 Plan to any Participant until such Participant has made arrangements acceptable to the
Administrator for the satisfaction of any income and employment tax withholding obligations under Applicable Laws. The Company
or any of its subsidiaries shall have the authority and the right to deduct or withhold, or require a Participant to remit to
the Company or its subsidiaries, an amount sufficient to satisfy all applicable taxes (including the Participant’s payroll
tax obligations) required or permitted by Applicable Laws to be withheld with respect to any taxable event concerning a Participant
arising as a result of the 2020 Plan. The Administrator may in its discretion and in satisfaction of the foregoing requirement
allow a Participant to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the return of Shares)
having a Fair Market Value equal to the sum required to be withheld. Notwithstanding any other provision of the 2020 Plan, the
number of Shares which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be
repurchased from the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to
satisfy any income and payroll tax liabilities applicable to the Participant with respect to the issuance, vesting, exercise or
payment of the Award shall, unless specifically approved by the Administrator, be limited to the number of Shares which have a
Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum
statutory withholding rates for the applicable income and payroll tax purposes that are applicable to such supplemental taxable
income.

 

    8

     

    

 

Section
11. Amendment and Termination. 

 

(a) Except
to the extent prohibited by Applicable Laws and unless otherwise expressly provided in an Award Agreement or in this 2020 Plan,
the Administrator may amend, alter, suspend, discontinue or terminate this 2020 Plan, or any Award Agreement hereunder or any
portion hereof or thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation
or termination shall be made without (i) shareholder approval with such legally mandated threshold for a resolution of the shareholders
of the Company, if such approval is necessary to comply with any tax or regulatory requirement for which or with which the Administrator
deems it necessary or desirable to qualify or comply, (ii) shareholder approval with such threshold for a resolution of the shareholders
of the Company in respect of such amendment, alteration, suspension, discontinuation or termination as provided in the Company’s
Memorandum and Articles of Association for any amendment to this 2020 Plan that increases the total number of Shares reserved
for the purposes of this 2020 Plan, and (iii) with respect to any Award Agreement, the consent of the affected Participant, if
such action would materially and adversely affect the rights of such Participant under any outstanding Award.

 

(b) The
Administrator may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate,
any Award theretofore granted, prospectively or retroactively, without the consent of any relevant Participant or holder or beneficiary
of an Award; provided, however, that no such action shall materially and adversely affect the rights of any affected Participant
or holder or beneficiary under any Award theretofore granted under this 2020 Plan; and provided further that, except as
provided in Section 6(e) hereof, no such action shall reduce the exercise price of any Option established at the time of grant
thereof.

 

(c) The
Administrator shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 6(e) hereof affecting
the Company, or the financial statements of the Company, or of changes in Applicable Laws or accounting principles); whenever
the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under this 2020 Plan.

 

    9

     

    

 

(d) Any
provision of this 2020 Plan or any Award Agreement to the contrary notwithstanding, with the affected Participant’s consent,
the Administrator may cause any Award granted hereunder to be canceled in consideration of a cash payment or alternative Award
made to the holder of such canceled Award equal in value to the Fair Market Value of such canceled Award as of the time of the
cancellation.

 

(e) The
Administrator may correct any defect, supply any omission, or reconcile any inconsistency in this 2020 Plan or any Award in the
manner and to the extent it shall deem desirable to carry this 2020 Plan into effect.

 

Section
12. Withholding Taxes.  The exercise of each Award granted under this 2020 Plan shall be subject to the condition
that, if at any time, the Administrator shall determine that the satisfaction of withholding tax is necessary or desirable in
respect of such exercise, such exercise shall not be effective unless such withholding has been effected to the satisfaction of
the Administrator. In such circumstances, the Administrator may require the exercising Participant to pay to the Company, in addition
to and in the same manner as the exercise price for the Award Shares, such amount as the Company or any Affiliate is obliged to
remit to the relevant taxing authority in respect of the exercise of the Awards. Alternatively, the Administrator may direct the
Company or an Affiliate thereof to withhold the appropriate amount of tax from the applicable Participant’s salary in connection
with a requested exercise.  Any such additional payment shall be due no later than the date as of which any amount with respect
to the Award exercised first becomes includable in the gross income of the exercising Participant for tax purposes.

 

Section
13. Miscellaneous. 

 

(a) No
employee, independent contractor, Participant or other person shall have any claim to be granted any Award under this 2020 Plan,
and there is no obligation for uniformity of treatment of employees, independent contractors, Participants, or holders or beneficiaries
of Awards under this 2020 Plan. The terms and conditions of Awards need not be the same with respect to each recipient.

 

(b) Nothing
contained in this 2020 Plan shall prevent the Company from adopting or continuing in effect other or additional compensation arrangements,
and such arrangements may be either generally applicable or applicable only in specific cases.

 

(c) The
grant of an Award shall not be construed as giving a Participant the right to be retained in the employ or service of the Company
or any Affiliate. Further, the Company or the applicable Affiliate may at any time dismiss a Participant from employment or terminate
the services of an independent contractor, free from any liability, or any claim under this 2020 Plan, unless otherwise expressly
provided in this 2020 Plan or in any Award Agreement or in any other agreement binding upon the parties.

 

    10

     

    

 

(d) If
any provision of this 2020 Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction,
or as to any person or Award, or would disqualify this 2020 Plan or any Award under any Applicable Laws, such provision shall
(to the fullest extent permitted by Applicable Laws) be construed or deemed amended to conform to Applicable Laws, or if it cannot
be so construed or deemed amended without, in the determination of the Administrator, materially altering the intent of this 2020
Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of this 2020 Plan
and any such Award shall remain in full force and effect.

 

(e) Awards
payable under this 2020 Plan shall be payable in Shares or from the general assets of the Company, and no special or separate
reserve, fund or deposit shall be made to assure payment of such awards. No Participant, beneficiary or other person shall have
any right, title or interest in any fund or in any specific asset (including Shares, except as expressly otherwise provided) of
the Company or one of its subsidiaries by reason of any award hereunder.

 

(f) Neither
this 2020 Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship
between the Company and a Participant. To the extent that any person acquires a right to receive payments from the Company pursuant
to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

 

(g) No
fractional Shares shall be issued or delivered pursuant to this 2020 Plan or any Award, and the Administrator shall determine
whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

 

(h) This
2020 Plan shall be submitted to the competent foreign exchange regulatory authority and tax authority of the PRC for registration
if Applicable Laws require, and shall be implemented in accordance with the applicable rules of these authorities with respect
to Participants who are PRC residents.

 

(i) In
order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Administrator may, in its
sole discretion, provide for such special terms as it may consider necessary or appropriate to accommodate differences in local
law, tax policy, or custom applicable in the jurisdiction in which the Participant resides or is employed. Moreover, the Administrator
may approve such supplements to, amendments, restatements or alternative versions of this 2020 Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of this 2020 Plan as in effect for any other purpose; provided,
however, that no such supplements, restatements or alternative versions shall increase the share limitations contained in
Section 6 hereof. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be
granted, that would violate any Applicable Laws.

 

    11

     

    

 

(j) The
Company shall not be obligated to grant any Awards, permit the exercise of any Awards, issue any Award Shares upon the exercise
of any Awards, make any payments or take any other action pursuant to this 2020 Plan if, in the opinion of the Administrator,
such action would conflict or be inconsistent with any Applicable Law or the Company’s trading policies, and the Administrator
reserves the right to refuse to take such action for so long as such conflict or inconsistency or issue remains outstanding.

 

(k) The
Company shall maintain a register of Awards granted to the Participants and Award Shares issued to the Participants or an entity
designated by the Participants, including the dates of grant of such Awards and the exercise of such Awards and any other details
as the Administrator may deem appropriate.

 

(l) The
2020 Plan and all Award Agreements shall be governed by and construed in accordance with the laws of the Cayman Islands.

 

Section
14. Effective Date of 2020 Plan. 

 

The
2020 Plan shall be effective upon the closing the Business Combination with its approval by the Board of the Company (the “Effective
Date”).

 

Section
15. Term of 2020 Plan.

 

No
Award shall be granted under this 2020 Plan after the tenth anniversary of the Effective Date. However, unless otherwise expressly
provided in this 2020 Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and
the authority of the Administrator to amend, alter, adjust, suspend, discontinue, or terminate any such Award, or to waive any
conditions or rights under any such Award, and the authority of the Board to amend this 2020 Plan, shall extend beyond such date.

 

 

 12

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