Document:

Exhibit 10.2

 

SMARTKEM, INC.

2021 EQUITY INCENTIVE PLAN

 

1.            Purposes
of the Plan. The purposes of this Plan are:

 

		·	to attract and retain the best available personnel for positions of substantial responsibility,

 

		·	to provide additional incentive to Employees, Directors, and Consultants, and

 

		·	to promote the success of the Company’s business.

 

The Plan permits the
grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted (or unrestricted) Stock, Restricted
Stock Units, Performance Units, and Performance Shares.

 

2.            Definitions.
As used herein, the following definitions will apply:

 

(a)            “Administrator”
means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

 

(b)          “Applicable
Laws” means the legal and regulatory requirements relating to the administration of equity-based awards, including without
limitation the related issuance of shares of Common Stock, including without limitation under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any non-U.S. country or jurisdiction where Awards are, or will be, granted under the Plan.

 

(c)            “Award”
means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted (or unrestricted)
Stock, Restricted Stock Units, Performance Units, or Performance Shares.

 

(d)            “Award
Agreement” means the written or electronic agreement between the Company and a Participant setting forth the terms and
provisions applicable to an Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

 

(e)            “Board”
means the Board of Directors of the Company.

 

    

     

    

 

(f)            “Change
in Control” means the occurrence of any of the following events:

 

(i)            Change
in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any Person or Persons acting
as a group (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), acquires ownership of the stock of
the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power
of the stock of the Company; provided, however, that for purposes of this subsection, the acquisition of additional stock by any
one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not
be considered a Change in Control. Further, if the stockholders of the Company immediately before such change in ownership continue
to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the
Company’s voting stock immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent
(50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event
will not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership will include,
without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business
entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business
entities; or

 

(ii)            Change
in Effective Control of the Company. A change in the effective control of the Company which occurs on the date that a majority
of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed
by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii),
if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by
the same Person will not be considered a Change in Control; or

 

(iii)            Change
in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of
the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such Person) assets from the Company that have a total gross fair market value
equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately
prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not
constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that
is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company
to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s
stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly,
by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting
power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting
power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection
(iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets.

 

For purposes of this
definition, the term “Person” shall mean any individual, partnership, firm, trust, corporation, limited liability
company or other similar entity.

 

Notwithstanding the
foregoing, a transaction will not be deemed a Change in Control with respect to any Award that is subject to Section 409A
unless the transaction qualifies as a change in control event within the meaning of Section 409A, applying for such purpose
the lowest thresholds permissible under Section 409A.

 

    	-2-

     

    

 

Further and for the
avoidance of doubt, a transaction will not constitute a Change in Control if: (x) its primary purpose is to change the jurisdiction
of the Company’s incorporation, or (y) its primary purpose is to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

(g)            “Closing”
means the closing of the transactions contemplated by the Exchange Agreement.

 

(h)            “Closing
Date” means the date the Closing occurs.

 

(i)             “Code”
means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code or regulation thereunder will include
such section or regulation, any valid regulation or other official guidance promulgated under such section, and any comparable
provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation.

 

(j)             “Committee”
means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized
committee of the Board, in accordance with Section 4 hereof.

 

(k)            “Common
Stock” means the common stock of the Company.

 

(l)             “Company”
means SmartKem, Inc., a Delaware corporation, or any successor thereto.

 

(m)            “Consultant”
means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary of the Company to render bona
fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in a capital-raising
transaction, and (ii) do not directly promote or maintain a market for the Company’s securities, in each case, within
the meaning of Form S-8 promulgated under the Securities Act, and provided, further, that a Consultant will include only those
persons to whom the issuance of Shares may be registered under Form S-8 promulgated under the Securities Act.

 

(n)      
       “Director” means a member of the
Board.

 

(o)             “Disability”
means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards
other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability
exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

 

(p)             “Employee”
means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment”
by the Company.

 

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

 

    	-3-

     

    

 

(r)           “Exchange
Agreement” means the Share Exchange Agreement by and among the Company (formerly known as Parasol Investments Corporation),
SmartKem Limited and the shareholders of SmartKem Limited, dated 23, 2021.

 

(s)             “Exchange
Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards
of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash;
(ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person
or entity selected by the Administrator; and/or (iii) the exercise price of an outstanding Award is increased or reduced.
The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.

 

(t)              “Fair
Market Value” means, as of any date, the value of Common Stock determined as follows:

 

 (i)            If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New
York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock
Market, its Fair Market Value will be the closing sales price for such stock (or, if no closing sales price was reported on that
date, as applicable, on the last Trading Day such closing sales price was reported) as quoted on such exchange or system on the
day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

 (ii)            If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value
of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if
no bids and asks were reported on that date, as applicable, on the last Trading Day such bids and asks were reported), as reported
in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

 (iii)            In
the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

 

The determination of
fair market value for purposes of tax withholding may be made in the Administrator’s discretion subject to Applicable Laws
and is not required to be consistent with the determination of Fair Market Value for other purposes.

 

(u)             “Fiscal
Year” means the fiscal year of the Company.

 

(v)             “Incentive
Stock Option” means an Option intended to qualify, and actually qualifies, as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated thereunder.

 

(w)            “Inside
Director” means a Director who is an Employee.

 

(x)              “Nonstatutory
Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock
Option.

 

    	-4-

     

    

 

(y)           “Officer”
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

 

(z)              “Option”
means a stock option granted pursuant to the Plan.

 

(aa)       “Outside
Director” means a Director who is not an Employee.

 

(bb)       “Parent”
means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(cc)       “Participant”
means the holder of an outstanding Award.

 

(dd)       “Performance
Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals
or other vesting criteria as the Administrator may determine pursuant to Section 10.

 

(ee)       “Performance
Unit” means an Award which may be earned in whole or in part upon attainment of performance goals or other vesting criteria
as the Administrator may determine and which may be settled for cash, Shares, or other securities or a combination of the foregoing
pursuant to Section 10.

 

(ff)         “Period
of Restriction” means the period (if any) during which the transfer of Shares of Restricted Stock are subject to restrictions
and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time,
the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

 

(gg)       “Plan”
means this SmartKem, Inc. 2021 Equity Incentive Plan.

 

(hh)       “Restricted
Stock” means Shares issued pursuant to a Restricted Stock award under Section 8 of the Plan, or issued pursuant
to the early exercise of an Option.

 

(ii)             “Restricted
Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant
to Section 9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

(jj)         “Rule 16b-3”
means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.

 

(kk)        “Section 16(b)”
means Section 16(b) of the Exchange Act.

 

(ll)          “Section 409A”
means Section 409A of the Code, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations
and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time, or any state
law equivalent.

 

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

 

(nn)       “Service
Provider” means an Employee, Director, or Consultant.

 

    	-5-

     

    

 

(oo)           “Share”
means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

 

(pp)       “Stock
Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 7 is
designated as a Stock Appreciation Right.

 

(qq)       “Subsidiary”
means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the
Code.

 

(rr)         “Trading
Day” means a day that the primary stock exchange, national market system, or other trading platform, as applicable, upon
which the Common Stock is listed is open for trading.

 

3.            Stock
Subject to the Plan.

 

(a)             Stock
Subject to the Plan. Subject to the provisions of Section 14 of the Plan and the automatic increase set forth in Section 3(b),
the maximum aggregate number of Shares that may be issued under the Plan is 2,275,000 Shares. In addition, Shares may become available
for issuance under the Plan pursuant to Sections 3(b) and 3(c). The Shares may be authorized, but unissued, or reacquired
Common Stock.

 

(b)             Automatic
Share Reserve Increase. Subject to the provisions of Section 14 of the Plan, the number of Shares available for
issuance under the Plan will be increased annually on the first day of each Fiscal Year beginning with the 2022 Fiscal Year
and ending on (and including) the 2031 Fiscal Year, in an amount equal to the least of (i) 2,275,000 Shares;
(ii) four percent (4%) of the outstanding Shares (or of the outstanding shares of common stock of any successor to the
Company) on the last day of the immediately preceding Fiscal Year; or (iii) such number of Shares determined by the
Administrator no later than the last day of the immediately preceding Fiscal Year.

 

(c)      
       Lapsed Awards. If an Award expires or becomes
unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to
Restricted Stock, Restricted Stock Units, Performance Units, or Performance Shares, is forfeited to, or repurchased by, the
Company due to failure to vest, then the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights,
the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the
Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued (i.e., the net
Shares issued) pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under
Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated).
Shares that actually have been issued under the Plan under any Award will not be returned to the Plan and will not become
available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted
Stock, Restricted Stock Units, Performance Shares, or Performance Units are repurchased by the Company or are forfeited to
the Company due to failure to vest, such Shares will become available for future grant under the Plan. Shares used to pay the
exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future
grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, the cash payment
will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and,
subject to adjustment as provided in Section 14, the maximum number of Shares that may be issued upon the exercise of
Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable
under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for
issuance under the Plan pursuant to Sections 3(b) and 3(c).

 

    	-6-

     

    

 

(d)             Share
Reserve. The Company, at all times during the term of this Plan, will reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of the Plan.

 

4.            Administration
of the Plan.

 

(a)             Procedure.

 

 (i)            Multiple
Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

 

 (ii)            Rule 16b-3.
To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
will be structured to satisfy the requirements for exemption under Rule 16b-3.

 

 (iii)            Other
Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee,
which committee will be constituted to satisfy Applicable Laws.

 

(b)             Powers
of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, the specific duties delegated
by the Board to such Committee, the Administrator will have the authority, in its discretion, to:

 

 (i)            determine
the Fair Market Value;

 

 (ii)            select
the Service Providers to whom Awards may be granted hereunder;

 

 (iii)            determine
the number of Shares to be covered by each Award granted hereunder;

 

 (iv)            approve
forms of Award Agreement for use under the Plan;

 

 (v)            determine
the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. The terms and conditions
include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award
or the Shares relating thereto, based in each case on such factor as the Administrator will determine;

 

(vi)            institute
and determine the terms and conditions of an Exchange Program;

 

    	-7-

     

    

 

 (vii)            prescribe,
amend, and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable non-U.S. laws or for qualifying for favorable tax treatment under applicable
non-U.S. laws;

 

 (viii)          construe
and interpret the terms of the Plan and Awards granted under the Plan;

 

 (ix)             modify
or amend each Award (subject to Section 19(c) of the Plan), including without limitation the discretionary authority
to extend the post-termination exercisability period of Awards; provided, however, that in no event will the term of an Option
or Stock Appreciation Right be extended beyond its original maximum term;

 

 (x)              allow
Participants to satisfy tax withholding obligations in a manner prescribed in Section 15 of the Plan;

 

 (xi)              authorize
any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the
Administrator;

 

 (xii)             temporarily
suspend the exercisability of an Award if the Administrator deems such suspension to be necessary or appropriate for administrative
purposes;

 

 (xiii)            allow
a Participant to defer the receipt of the payment of cash or the delivery of Shares that otherwise would be due to the Participant
under an Award; and

 

 (xiv)            make
all other determinations deemed necessary or advisable for administering the Plan.

 

(c)             Effect
of Administrator’s Decision. The Administrator’s decisions, determinations, and interpretations will be final and
binding on all Participants and any other holders of Awards and will be given the maximum deference permitted by Applicable Laws.

 

5.            Eligibility.
Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, and Performance
Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

 

6.            Stock
Options.

 

(a)             Grant
of Options. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant
Options to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

 

(b)             Stock
Option Agreement. Each Award of an Option will be evidenced by an Award Agreement that will specify the exercise price, the
number of Shares subject to the Option, the exercise restrictions, if any, applicable to the Option, and such other terms and conditions
as the Administrator, in its sole discretion, will determine.

 

    	-8-

     

    

 

(c)             Limitations.
Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and
any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options.
For purposes of this Section 6(c), Incentive Stock Options will be taken into account in the order in which they were
granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

 

(d)             Term
of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term
will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in
the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as
may be provided in the Award Agreement.

 

(e)             Option
Exercise Price and Consideration.

 

 (i)            Exercise
Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the
Administrator, subject to the following:

 

		(1)	In the case of an Incentive Stock Option

 

		(A)	granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.

 

		(B)	granted to any Employee other than an Employee described in paragraph (A) immediately above,
the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of
grant.

 

		(2)	In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

    	-9-

     

    

 

		(3)	Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than
one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and
in a manner consistent with, Section 424(a) of the Code or if the grant would not violate Section 409A or Applicable
Laws.

 

 (ii)            Waiting
Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option
may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

 

 (iii)            Form of
Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration
at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the
extent permitted by Applicable Laws; (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such
Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion;
(5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a
broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration
and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the
foregoing methods of payment.

 

(f)            Exercise
of Option.

 

 (i)            Procedure
for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option
may not be exercised for a fraction of a Share.

 

An Option will be deemed
exercised when the Company receives: (1) a notice of exercise (in accordance with the procedures that the Administrator may
specify from time to time) from the person entitled to exercise the Option, and (2) full payment for the Shares with respect
to which the Option is exercised (together with any applicable tax withholdings). Full payment may consist of any consideration
and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise
of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant
and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist
with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.

 

    	-10-

     

    

 

Exercising an Option
in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised.

 

 (ii)            Termination
of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the cessation of the
Participant’s Service Provider status as the result of the Participant’s death or Disability, the Participant may exercise
his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on
the date of cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term
of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will
remain exercisable for three (3) months following cessation of the Participant’s Service Provider status. Unless otherwise
provided by the Administrator, if on the date of cessation of the Participant’s Service Provider status the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If,
after cessation of the Participant’s Service Provider status, the Participant does not exercise his or her Option within
the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

 (iii)            Disability
of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant
may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested
on the date of cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term
of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will
remain exercisable for twelve (12) months following cessation of the Participant’s Service Provider status. Unless otherwise
provided by the Administrator, if on the date of cessation of the Participant’s Service Provider status the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If,
after cessation of the Participant’s Service Provider status, the Participant does not exercise his or her Option within
the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

 (iv)            Death
of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s
death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of
death (but in no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award
Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s
death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option
may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is
transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence
of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s
death. Unless otherwise provided by the Administrator, if at the time of death, the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not
so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to
the Plan.

 

    	-11-

     

    

 

(v)            Tolling
Expiration. A Participant’s Award Agreement may also provide that:

 

		(1)	if the exercise of the Option following the cessation of the Participant’s status as a Service
Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16(b), then
the Option will terminate on the earlier of (A) the expiration of the term of the Option set forth in the Award Agreement,
or (B) the tenth (10th) day after the last date on which such exercise would result in liability under Section 16(b);
or

 

		(2)	if the exercise of the Option following the cessation of the Participant’s status as a Service
Provider (other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance
of Shares would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of
(A) the expiration of the term of the Option or (B) the expiration of a period of thirty (30) days after the cessation
of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such
registration requirements.

 

7.            Stock
Appreciation Rights.

 

(a)            Grant
of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to
Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

 

(b)            Number
of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to
any Service Provider.

 

(c)            Exercise
Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation
Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant, unless the grant would not violate Section 409A or Applicable Laws. Otherwise, the Administrator,
subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation
Rights granted under the Plan.

 

(d)            Stock
Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify
the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as
the Administrator, in its sole discretion, will determine.

 

(e)            Expiration
of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date as determined by
the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of
Section 6(d) relating to the term and Section 6(f) relating to exercise also will apply to Stock Appreciation
Rights.

 

    	-12-

     

    

 

(f)            Payment
of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive
payment from the Company in an amount determined as the product of:

 

(i)            The
difference between the Fair Market Value of a Share on the date of exercise over the exercise price; and

 

(ii)            The
number of Shares with respect to which the Stock Appreciation Right is exercised.

 

At the discretion of
the Administrator, the payment upon exercise of a Stock Appreciation Right may be in cash, in Shares of equivalent value, or in
some combination of both.

 

8.            Restricted
and Unrestricted Stock.

 

(a)            Grant
of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time,
may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

 

(b)            Restricted
Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify any Period of Restriction,
the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions
on such Shares have lapsed.

 

(c)            Transferability.
Except as provided in this Section 8 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of any applicable Period of Restriction.

 

(d)            Other
Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as
it may deem advisable or appropriate.

 

(e)            Removal
of Restrictions. Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of any applicable Period
of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the
time at which any restrictions will lapse or be removed.

 

(f)            Voting
Rights. During any applicable Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.

 

(g)            Dividends
and Other Distributions. During any applicable Period of Restriction, Service Providers holding Shares of Restricted Stock
will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides
otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability
and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

 

    	-13-

     

    

 

(h)            Return
of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have
not lapsed will revert to the Company and again will become available for grant under the Plan.

 

(i)            The
Administrator, in its sole discretion, may grant Shares to Service Providers without any Period of Restriction. Prior to the delivery
of any unrestricted Shares, the Company shall be entitled to require as a condition of delivery that the recipient pay or make
adequate provision acceptable to the Company for the satisfaction of the statutory minimum prescribed amount of applicable income
tax and other withholding obligations of the Company, including, if permitted by the Administrator in its sole discretion, by having
the Company withhold from the number of unrestricted Shares otherwise deliverable, a number of Shares having a Fair Market Value
equal to an amount sufficient to satisfy such tax withholding obligations.

 

9.            Restricted
Stock Units.

 

(a)            Grant.
Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator
determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the
terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.

 

(b)            Vesting
Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to
which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator
may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including,
but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined
by the Administrator in its discretion.

 

(c)            Earning
Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout
as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator,
in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

 

(d)            Form and
Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined
by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may settle earned Restricted
Stock Units only in cash, Shares, or a combination of both.

 

(e)            Dividend
Equivalent Rights. The Administrator, in its sole discretion, may grant Restricted Stock Units with dividend equivalent rights.
At the sole discretion of the Administrator, dividend equivalents may (i) be converted into additional Restricted Stock Units
which shall be subject to the same terms and conditions as the Restricted Stock Units to which they relate, and/or (ii) paid
during, or accumulated and paid at the end of, the applicable vesting period of the Restricted Stock Units to which they relate.

 

    	-14-

     

    

 

(f)            Cancellation.
On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.

 

10.            Performance
Units and Performance Shares.

 

(a)            Grant
of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from
time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion
in determining the number of Performance Units and Performance Shares granted to each Participant.

 

(b)            Value
of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or
before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date
of grant.

 

(c)            Performance
Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without
limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will
determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during
which the performance objectives or other vesting provisions must be met will be called the “Performance Period.”
Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such
other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited
to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator
in its discretion.

 

(d)            Earning
of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will
be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period,
to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have
been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any
performance objectives or other vesting provisions for such Performance Unit/Share.

 

(e)            Form and
Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable
after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period), or in a combination thereof.

 

    	-15-

     

    

 

(f)            Dividend
Equivalent Rights. The Administrator, in its sole discretion, may grant Performance Units with dividend equivalent rights.
At the sole discretion of the Administrator, dividend equivalents may (i) be converted into additional Performance Units which
shall be subject to the same terms and conditions as the Performance Units to which they relate, and/or (ii) paid during,
or accumulated and paid at the end of, the applicable Performance Period of the Performance Units to which they relate.

 

(g)            Cancellation
of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares
will be forfeited to the Company, and again will be available for grant under the Plan.

 

11.            Outside
Director Award Limitations. No Outside Director may be paid, issued, or granted, in any Fiscal Year, equity awards (including
any Awards issued under this Plan) with an aggregate value (the value of which will be based on their grant date fair value determined
in accordance with U.S. generally accepted accounting principles) and any other compensation (including without limitation any
cash retainers or fees) that, in the aggregate, exceed $500,000. Any Awards or other compensation paid or provided to an individual
for his or her services as an Employee, or for his or her services as a Consultant (other than as an Outside Director), will not
count for purposes of the limitation under this Section 11.

 

12.            Leaves
of Absence/Transfer Between Locations. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will
be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave
of absence approved by the Company, or (ii) transfers between locations of the Company or between the Company, its Parent,
or any of its Subsidiaries. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment
upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved
by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Stock Option
held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory
Stock Option.

 

13.            Transferability
of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent and distribution, and may be exercised, during the lifetime
of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional
terms and conditions as the Administrator deems appropriate.

 

14.            Adjustments;
Dissolution or Liquidation; Merger or Change in Control.

 

(a)            Adjustments.
In the event 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, reclassification,
repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company
affecting the Shares occurs (other than any ordinary dividends or other ordinary distributions), the Administrator, in order to
prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust
the number and class of shares of stock that may be delivered under the Plan and/or the number, class, and price of shares of stock
covered by each outstanding Award, and the numerical Share limits in Section 3 of the Plan.

 

    	-16-

     

    

 

(b)            Dissolution
or Liquidation. In the event of a proposed dissolution or liquidation of the Company, the Administrator will notify each Participant
as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised,
an Award will terminate immediately prior to the consummation of such proposed action.

 

(c)            Merger
or Change in Control. In the event of a merger of the Company with or into another corporation or other entity or a Change
in Control, each outstanding Award will be treated as the Administrator determines (subject to the provisions of the following
paragraph) without a Participant’s consent, including, without limitation, that (i) Awards will be assumed, or substantially
equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments
as to the number and kind of shares and prices; (ii) upon written notice to a Participant, that the Participant’s Awards
will terminate upon or immediately prior to the consummation of such merger or Change in Control; (iii) outstanding Awards
will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part,
prior to or upon consummation of such merger or Change in Control, and, to the extent the Administrator determines, terminate upon
or immediately prior to the effectiveness of such merger or Change in Control; (iv) (A) the termination of an Award in
exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of
such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance
of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would
have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated
by the Company without payment), or (B) the replacement of such Award with other rights or property selected by the Administrator
in its sole discretion; or (v) any combination of the foregoing. In taking any of the actions permitted under this Section 14(c),
the Administrator will not be obligated to treat all Awards, all Awards held by a Participant, all Awards of the same type, or
all portions of Awards, similarly.

 

In the event that the
successor corporation does not assume or substitute for the Award (or portions thereof), the Participant will fully vest in and
have the right to exercise the Participant’s outstanding Option and Stock Appreciation Right (or portions thereof) that is
not assumed or substituted for, including Shares as to which such Award would not otherwise be vested or exercisable, all restrictions
on Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units (or portions thereof) not assumed or substituted
for will lapse, and, with respect to such Awards with performance-based vesting (or portions thereof) not assumed or substituted
for, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and
all other terms and conditions met, in each case, unless specifically provided otherwise under the applicable Award Agreement or
other written agreement between the Participant and the Company or any of its Subsidiaries or Parents, as applicable. In addition,
if an Option or Stock Appreciation Right (or portions thereof) is not assumed or substituted for in the event of a merger or Change
in Control, the Administrator will notify the Participant in writing or electronically that such Option or Stock Appreciation Right
(or its applicable portion) will be exercisable for a period of time determined by the Administrator in its sole discretion, and
the Option or Stock Appreciation Right (or its applicable portion) will terminate upon the expiration of such period.

 

    	-17-

     

    

 

For the purposes of
this subsection (c), an Award will be considered assumed if, following the merger or Change in Control, the Award confers the right
to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration
(whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for
each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger
or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent
of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation
Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award,
to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the merger or Change in Control.

 

Notwithstanding anything
in this subsection (c) to the contrary, and unless otherwise provided in an Award Agreement or other written agreement between
the Participant and the Company or any of its Subsidiaries or Parents, as applicable, an Award that vests, is earned or paid-out
upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies
any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals
only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an
otherwise valid Award assumption.

 

Notwithstanding anything
in this subsection (c) to the contrary, if a payment under an Award Agreement is subject to Section 409A and if the change
in control definition contained in the Award Agreement or other written agreement related to the Award does not comply with the
definition of “change in control” for purposes of a distribution under Section 409A, then any payment of an amount
that otherwise is accelerated under this Section will be delayed until the earliest time that such payment would be permissible
under Section 409A without triggering any penalties applicable under Section 409A.

 

(d)            Outside
Director Awards. With respect to Awards granted to an Outside Director, in the event of a Change in Control, the Participant
will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such
Award, including those Shares which would not be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock
Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will
be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met, unless specifically provided
otherwise under the applicable Award Agreement or other written agreement between the Participant and the Company or any of its
Subsidiaries or Parents, as applicable.

 

    	-18-

     

    

 

15.            Tax.

 

(a)            Withholding
Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as
any tax withholding obligations are due, the Company (or any of its Subsidiaries, Parents, or affiliates employing or retaining
the services of a Participant, as applicable) will have the power and the right to deduct or withhold, or require a Participant
to remit to the Company (or any of its Subsidiaries, Parents, or affiliates, as applicable), an amount sufficient to satisfy U.S.
federal, state, and local, non-U.S., and other taxes (including the Participant’s FICA obligation) required to be withheld
with respect to such Award (or exercise thereof).

 

(b)            Withholding
Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time,
may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying
cash, check, or other cash equivalents; (ii) electing to have the Company withhold otherwise deliverable cash or Shares having
a fair market value equal to the minimum statutory amount required to be withheld or such greater amount as the Administrator may
determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion;
(iii) delivering to the Company already owned Shares having a fair market value equal to the statutory amount required to
be withheld or such greater amount as the Administrator may determine, in each case, provided the delivery of such Shares will
not result in any adverse accounting consequences, as the Administrator determines in its sole discretion; (iv) selling a
sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its
sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld; or (v) any combination
of the foregoing methods of payment. The withholding amount will be deemed to include any amount which the Administrator agrees
may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state, or local
marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld
is to be determined or such greater amount as the Administrator may determine if such amount would not have adverse accounting
consequences, as the Administrator determines in its sole discretion. The fair market value of the Shares to be withheld or delivered
will be determined as of the date that the taxes are required to be withheld.

 

(c)            Compliance
With Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application
of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject
to the additional tax or interest applicable under Section 409A, except as otherwise determined in the sole discretion of
the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Section 409A and
will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the
Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A,
the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that
the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A.
In no event will the Company or any of its Subsidiaries or Parents have any obligation or liability under the terms of this Plan
to reimburse, indemnify, or hold harmless any Participant or any other person in respect of Awards, for any taxes, interest, or
penalties imposed, or other costs incurred, as a result of Section 409A.

 

    	-19-

     

    

 

16.            No
Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing
the Participant’s relationship as a Service Provider, nor interfere in any way with the Participant’s right or the
right of the Company and its Subsidiaries or Parents, as applicable, to terminate such relationship at any time, with or without
cause, to the extent permitted by Applicable Laws.

 

17.            Date
of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination
granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided
to each Participant within a reasonable time after the date of such grant.

 

18.            Term
of Plan. Subject to Section 22 of the Plan, the Plan will become effective upon the later to occur of (i) its adoption
by the Board or (ii) the business day immediately prior to the Closing Date. It will continue in effect for a term of ten
(10) years from the date adopted by the Board, unless terminated earlier under Section 19 of the Plan.

 

19.            Amendment
and Termination of the Plan.

 

(a)            Amendment
and Termination. The Administrator, at any time, may amend, alter, suspend, or terminate the Plan.

 

(b)            Stockholder
Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

 

(c)            Effect
of Amendment or Termination. No amendment, alteration, suspension, or termination of the Plan will materially impair the rights
of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in
writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability
to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

20.            Conditions
Upon Issuance of Shares.

 

(a)            Legal
Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance
and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company
with respect to such compliance.

 

(b)            Investment
Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent
and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

    	-20-

     

    

 

21.            Inability
to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete
or comply with the requirements of any registration or other qualification of the Shares under any U.S. state or federal law or
non-U.S. law, or under the rules and regulations of the Securities and Exchange Commission, the stock exchange on which Shares
of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification,
or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any
Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which
such requisite authority, registration, qualification or rule compliance will not have been obtained.

 

22.            Stockholder
Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date
the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable
Laws.

 

23.            Forfeiture
Events. The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and benefits with
respect to an Award will be subject to reduction, cancellation, forfeiture, recoupment, reimbursement, or reacquisition upon the
occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.
Notwithstanding any provisions to the contrary under this Plan, an Award will be subject to the Company’s clawback policy
as may be established and/or amended from time to time to comply with Applicable Laws (including without limitation pursuant to
the listing standards of any national securities exchange or association on which the Company’s securities are listed, or
as may be required by the Dodd-Frank Wall Street Reform and Consumer Protection Act) (the “Clawback Policy”).
The Administrator may require a Participant to forfeit, return, or reimburse the Company all or a portion of the Award and any
amounts paid thereunder pursuant to the terms of the Clawback Policy or as necessary or appropriate to comply with Applicable Laws.
Unless this Section 23 specifically is mentioned and waived in an Award Agreement or other document, no recovery of compensation
under a Clawback Policy or otherwise will constitute an event that triggers or contributes to any right of a Participant to resign
for “good reason” or “constructive termination” (or similar term) under any agreement with the Company
or any Parent or Subsidiary of the Company.

 

24.            Non-U.S.
Participants. In order to comply with any applicable provisions of local law and regulations in any foreign country in which
the Company or any of its Subsidiaries operates, the Board or the Committee may in its sole discretion (i) modify the terms
and conditions of Awards granted under the Plan to Service Providers located in such foreign country, (ii) establish subplans
with such modifications to the terms of the Plan as the Board or the Committee determines to be necessary or appropriate under
the circumstances applicable in such foreign country, or (iii) take any other action that the Board or the Committee deems
necessary or appropriate in order to comply with, or obtain any exemptions from the applicability of, the local laws and regulations
in such foreign country.

 

    	-21-Exhibit 10.3

 

SMARTKEM, INC.

2021 EQUITY INCENTIVE PLAN 

 

UNITED KINGDOM SUB-PLAN

 

The United Kingdom Sub-plan (the “UK Sub-Plan”),
as set forth herein, is intended to apply to grants of Options to which the terms and conditions of this UK Sub-Plan are expressly
incorporated. Unless the context otherwise requires, all expressions used in the UK Sub-Plan have the same meaning as set forth
in the SmartKem, Inc. 2021 Equity Incentive Plan (the “Plan”), as amended from time to time; provided that all other
words and terms not otherwise defined shall have the meaning attributed by Schedule 5 which for the purposes hereof (but for no
other purpose) shall take precedence. For the avoidance of doubt the UK Sub-Plan is not intended to provide rights with respect
to Options to which the UK Sub-Plan applies in addition to those rights granted under the Plan. Rather, the UK Sub-Plan has been
adopted for the purpose of ensuring that Options to which the UK Sub-Plan applies will satisfy the requirements of Schedule 5.

 

1.            Establishment
and purpose of the Plan

 

1.1        Subject
to the foregoing and the succeeding terms of this UK Sub-Plan, the terms and conditions of the Plan are incorporated into this
UK Sub-Plan.

 

1.2        In
the event of any conflict between this UK Sub-Plan and the Plan, this UK Sub-Plan shall prevail as regards Options awarded under
this UK Sub-Plan to Eligible Employees based in the United Kingdom (“UK”) with the intention that they qualify as tax-advantaged
options under Schedule 5.

 

2.            Definitions

 

2.1        Subject
to Section 2.2, words and expressions defined in the rules of the Plan shall have the same meaning for the purposes of this UK
Sub-Plan. The definitions in Section 2.2 shall only apply for the purposes this UK Sub-Plan and shall replace any definitions of
the same words and expressions in the Plan, but only for the purposes of this UK Sub-Plan. Unless otherwise expressly stated or
the context requires otherwise, section references in this UK Sub-Plan shall refer to sections in this UK Sub-Plan.

 

2.2        In
this UK Sub-Plan the following words and expressions shall have, where the context so admits, the following meanings:

 

“Associate”
 – has the meaning given to associate by paragraph 31, paragraph 32 and paragraph 33 of Schedule 5, with Chapter 11 of Part
7 of ITEPA 2003 being applied for the purposes of paragraph 32(2)

 

     

     

    

 

“Constituent
Company” – the Company, and any other Group Company to which this UK Sub-Plan is expressed to extend.

 

“Eligible
Employee” – any employee of a Constituent Company who:

 

		a)	must spend on average at least the Statutory Minimum Time on the business of the Group;

 

		b)	does not have a Material Interest (either alone or together with one or more Associates); and

 

		c)	has no Associates or Associates who or which has or (taken together) have a Material Interest.

 

“EMI
Option” – an option to acquire shares granted by the Company under this UK Sub-Plan or any other Schedule 5 EMI
scheme and which qualifies as an enterprise management incentive under the provisions of paragraph 1 (2) Schedule 5.

 

“Employer
NICs” - any secondary class 1 (employer) national insurance contributions (or any similar liability for social
security contribution in any jurisdiction) that the Company or any Group Company being an employer of a Participant is liable to
pay as a result of any event or circumstance that may be lawfully recovered from the Participant.

 

 

“Fair
Market Value” – the market value of a Share determined to the satisfaction of the Board in accordance with the
applicable provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 provided that if the Shares are subject to Restricted
Shares (as defined in paragraph 5(8) of Schedule 5) the Fair Market Value shall be determined as if they were not.

 

“Group”
 – the Company and its Subsidiaries and the term “Group Company” shall be construed accordingly.

 

“Material
Interest” – has the meaning given in paragraph 28 of Schedule 5.

 

“HMRC”
 – UK HM Revenue & Customs.

 

“ITEPA
2003” – the Income Tax (Earnings and Pensions) Act 2003

 

“UK
Sub-Plan Option” – an Option granted to an Eligible Employee under this UK Sub-Plan.

 

“Schedule
5” – Schedule 5 to ITEPA 2003.

 

     

     

    

 

“Statutory
Minimum Time” – committed time, (as defined in paragraph 26 of Schedule 5), equal to the statutory threshold (as defined
in that paragraph)

 

2.3        In
these Rules, reference to any enactment shall be construed as a reference to that enactment as from time to time amended, modified,
extended or reenacted and shall include any orders, regulations, instruments or other subordinate legislation made under the relevant
enactment.

 

3.            Effective
Date; Duration

 

The effective date
and expiration date of this UK Sub-Plan shall be the same as the Effective Date and expiration date of the Plan.

 

4.           Administration

 

Notwithstanding anything contained
in the Plan to the contrary:

 

(a)        Only
UK Sub-Plan Options under this UK Sub-Plan may be granted to participants of this UK Sub-Plan.

 

(b)        UK
Sub-Plan Options may be settled in Shares only (which must be fully paid up and not redeemable following exercise of the Options)
and not in cash, other securities, other property or in any other asset.

 

(c)        UK
Sub-Plan Options may be exercised only by payment of the exercise price in cash or pursuant to a cashless exercise facility in
accordance with Section 7(l).

 

(d)        UK
Sub-Plan Options may not be cancelled, forfeited or suspended other than as provided by the UK Sub-Plan.

 

(e)        The
delivery of Shares following the exercise of a UK Sub-Plan Option may not be deferred automatically or at the election of the Participant
or the Committee other than as provided by the UK Sub-Plan.

 

(f)        The
Committee may not accelerate the vesting or exercisability of any UK Sub-Plan Option in any circumstances other than as provided
by the UK Sub-Plan.

 

(g)        The
Committee shall exercise any discretion and make any determination in respect of rights arising from UK Sub-Plan Options once granted
under this UK Sub-Plan acting fairly and reasonably.

 

5.        Eligibility

 

5.1       No
Option may be granted under this UK Sub-Plan to a person who is not an Eligible Employee on the date of grant.

 

     

     

    

 

5.2       The
Company (acting through the Board) may grant Options under this UK Sub-Plan for commercial reasons in order to recruit or retain
an Eligible Employee. The Company may not grant Options under this UK Sub-Plan as part of any scheme or arrangement for which the
main purpose (or one of its main purposes) is tax avoidance.

 

5.3       The
Company may grant Options under this UK Sub-Plan only when the Company is a qualifying company, as defined in paragraph 8 of Schedule
5.

 

6.        Options

 

Section 6
of the Plan shall apply to this UK Sub-Plan except that:

 

(a)        No
UK Sub-Plan Option may be granted under this UK Sub-Plan unless the Shares satisfy the conditions specified in paragraph35 of Schedule
5 on the date of grant.

 

(b)        A
UK Sub-Plan Option shall be limited and take effect so that:

 

		(i)	at any time, the total Fair Market Value (at the relevant dates of grant of) of the Shares that
can be acquired on the exercise of all EMI Options over the Shares must not exceed £3 million (or any other amount as may
be specified by paragraph 7 of Schedule 5 at the relevant time; and

 

		(ii)	no Participant holds subsisting EMI Options over shares with a total Fair Market Value in excess
of £249,999 or such other limit as may be prescribed by paragraph 5 of Schedule 5 from time to time.

 

For these purposes Fair Market
Value shall be measured on the date of grant of the EMI Options An EMI Option is not subsisting for this purpose to the extent
it has lapsed, been surrendered, renounced or exercised.

 

(c)        The
exercise price per Share for each UK Sub-Plan Option shall not be less than the nominal value of such Share as of the date of grant.

 

(d)        The
sterling equivalent of the exercise price for the purposes of applying clauses (b) and (c) above shall be the amount converted
into pounds sterling using the rate published in the Financial Times for the date of grant or at such other rate as may be agreed
from time to time with HMRC Shares and Assets Valuation.

 

(e)
        For UK Sub-Plan Options, the Award Agreement shall state that the UK Sub-Plan
Options have been granted under the terms of this UK Sub-Plan and shall include the date of grant, a statement that the UK
Sub-Plan Options are granted under the provisions of Schedule 5, the number and description of the Shares subject to the UK
Sub-Plan Option, the exercise price, details of when the UK Sub-Plan Option may be exercised, details of when the UK Sub-Plan
Option will lapse, details of any restrictions to which the Shares may be subject, details of any conditions to be met prior
to exercise, a declaration from the Participant that he /she is an Eligible Employee and a statement that the UK Sub-Plan
Option may not be transferred, assigned or charged except following the death of a Participant in accordance with this UK
Sub-Plan. If a proposed Participant pursuant to this UK Sub-Plan does not correctly complete, sign and date the Award
Agreement and return it within seven days after the date of grant, the relevant Options shall automatically lapse.

 

     

     

    

 

(f)        Any
vesting terms, performance conditions or other conditions attaching to a UK Sub-Plan Option granted shall be objective, set out
in full in the Award Agreement, such that rights to exercise a UK Sub-Plan Option after the attainment or fulfilment of such objective
terms or conditions shall not be dependent upon the discretion of any person, and not capable of amendment unless events happen
which cause the Committee to consider that the term or condition has ceased to be appropriate. If the Committee considers that
any such amendment is appropriate, the amended term or condition must, in the opinion of the Committee, be fair and reasonable
and no more difficult to satisfy than the original term or condition and Section 6 of the Plan and the Award Agreement shall be
construed accordingly.

 

(g)        A
UK Sub-Plan Option shall vest and may be exercised in full by the Participant within 6 months of the date when the Participant
ceases to be an employee of any Group Company by reason of:

 

(i)        injury
or Disability provided the Committee is satisfied, on production of such evidence as it may reasonably require, that the individual
has ceased to exercise and, by reason of the injury or Disability, is incapable of exercising that employment and is likely to
remain so for the foreseeable future;

 

(ii)        redundancy
within the meaning of the UK Employment Rights Act 1996 or a closely comparable overseas provision;

 

(iii)        retirement
with the consent of his employer, acting fairly and reasonably;

 

(iv)        his
employing company ceasing to be a Group Company;

 

(v)        his
employment being transferred outside the Group in circumstances where this is a relevant transfer within the meaning of the Transfer
of Undertakings (Protection of Employment) Regulations 2006 or a closely comparable overseas provision; or

 

(vi)        for
a reason other than one provided elsewhere by this Section 6(g) if the Committee, acting fairly and reasonably, determines within
60 days of his cessation of employment that the Participant may exercise his UK Sub-Plan Option.

 

     

     

    

 

If a Participant
ceases to be an employee of any Group Company for a reason other than death or one of the reasons set out in Section 6(g)(i) through
(v), his UK Sub-Plan Option shall become incapable of exercise with effect from the date of cessation of employment and remain
incapable of exercise unless and until the Committee determines that the Participant will be permitted to exercise his Option under
Section 6(g)(vi).

 

For the purposes
of applying this Section 6(g) and notwithstanding the provisions of Section 12 of the Plan, a Participant shall cease to be an
employee of any Group Company if he gives or is given notice of termination of his employment such that he will no longer be an
employee of any Group Company, provided that there are no arrangements for him to commence a new employment with any other Group
Company. If his employment terminates in other circumstances without notice, a Participant shall cease to be an employee of a Group
Company on the date of termination. A female Participant ceases to be an employee due to pregnancy only when she no longer has
any right to return to work.

 

(h)        A
UK Sub-Plan Option shall vest and may be exercised in full following the death of a Participant by his personal representatives,
in which case it must be exercised within 12 months of the date of his death and shall then lapse.

 

(i)        No
UK Sub-Plan Option may be transferred assigned or charged, and any purported transfer shall be void provided that this Section
6(i) shall not prevent the UK Sub-Plan Option of a deceased Participant from being exercised by his personal representatives.

 

(j)        Subject
to the provisions of this UK Sub-Plan, a Participant may not exercise his UK Sub-Plan Option at any time when he is not an Eligible
Employee.

 

(k)        UK
Sub-Plan Options shall be exercisable by the Participant giving a notice of exercise to the Company, and shall be satisfied by
the issue or transfer of Shares with the same rights attaching to them as issued shares of the same class as appropriate within
30 days of the date the Company receives such notice. The notice of exercise shall be accompanied by payment of the exercise price
together with a duly completed and signed section 431 election if requested by the Company. Such payment shall be made in cash,
by cheque or by a transfer of cash funds, unless the Company provides a cashless exercise facility to enable the Participant to
provide funds to pay the exercise price and/or all applicable required withholding taxes. Any such facility shall allow the Participant
to choose to pay the exercise price in cash, by cheque or by a transfer of cash funds; in the alternative, if the Participant chooses
to do so, the facility shall enable the Participant to authorize the sale on his behalf of such number of Shares as shall be required,
net of any selling costs, to cover the aggregate exercise price and/or all applicable required withholding taxes. A Participant
may not otherwise pay the exercise price in Shares or by any other method and net settlement is not permitted under this UK Sub-Plan.

 

     

     

    

 

(l)        Provided
that the Participant has met his obligations under Section 6 of the Plan and the terms of this UK Sub-Plan, the Company shall satisfy
the exercise of an Option by issuing or transferring or procuring the issue or transfer of Shares to the Participant with the same
rights attaching to them as shares of the same class as appropriate within 30 days of the date the Company receives a notice of
exercise.

 

(m)        All
Shares allotted under this Plan shall rank equally in all respects with Shares of the same class then in issue except for any rights
attaching to Shares by reference to a record date prior to the date of allotment.

 

(o)       The
Company shall comply or shall procure compliance, in respect of any EMI Option, with its obligations under paragraph 44 of Schedule
5.

 

7.             Stock
Appreciation Rights

 

Section 7 of the Plan shall not
apply to this UK Sub-Plan.

 

8.            Restricted
Stock and Restricted Stock Units

 

Sections 8 and 9 of the Plan
shall not apply to this UK Sub-Plan.

 

9.             Performance
Awards

 

Section 10 of the Plan shall
not apply to this UK Sub-Plan.

 

10.          Changes
in Capital Structure and Similar Events

 

Section 14(a) of the
Plan shall apply to this UK Sub-Plan except that:

 

(a)        The
Committee may adjust the number of Shares subject to outstanding UK Sub-Plan Options and/or the exercise price with respect to
any outstanding UK Sub-Plan Options only so far as is necessary to take account of any variation of the share capital of the Company
including, without limitation, any capitalization, rights issue, consolidation, sub-division or reduction of capital. Any such
adjustment shall be determined by the Committee at its discretion, acting fairly and reasonably. Any such adjustment shall take
effect from the record date on which the respective variation applied to the Shares. Any UK Sub-Plan Options that are exercised
within the period from the record date to the date when the Options are adjusted shall also be subject to the adjustment. The Company
shall take such steps as it considers necessary to notify the Participants of any such adjustment and may call in, cancel or reissue
any Award Agreement. For the avoidance of doubt, UK Sub-Plan Options may not be adjusted in the event of a merger, split-up, split-off,
spin-off or in any circumstance other than a variation of share capital.

 

(b)
        The Award Agreement shall set out in full any accelerated vesting terms that shall
apply in the event of a Change in Control or winding-up of the Company. Unless provided otherwise in the relevant Award
Agreement, all UK Sub-Plan Options shall lapse on the occurrence of a Change in Control or winding-up event.

 

     

     

    

 

11.           Taxes

 

Section 15 of the Plan
shall apply to this UK Sub-Plan except that:

 

(i)        The
tax withholding provisions shall apply only in respect of any liability that arises by virtue of the exercise of a UK Sub-Plan
Option which will include the whole of the liability for Employer NICs unless the Award Agreement provides otherwise.

 

(ii)        The
tax withholding provisions shall permit the Company or other relevant person to withhold Shares only after a Participant has first
been given the opportunity to meet any such liability from his own resources (either by salary deduction or payment to the Company
or other relevant person). The tax withholding provisions shall then permit the Company or other relevant person to sell only Shares
sufficient to cover the tax liability and only after the valid exercise of the Option, with the remaining Shares being issued or
transferred to the Participant.

 

12.          General

 

12.1       A
Participant of the UK Sub-Plan shall not be entitled to and waives any rights he may have to compensation or damages in consequence
of ceasing to have rights or benefits or prospective rights or benefits including without limitation any loss of relief from tax
or employee’s social security under this UK Sub-Plan following the operation, suspension, termination or amendment of the
UK Sub-Plan or failure to obtain or loss of tax advantaged status of this UK Sub-Plan or any UK Sub-Plan Option under Schedule
5.

 

12.2       A
Participant of the UK Sub-Plan shall have no rights to compensation or damages on account of any loss in respect of Options or
the UK Sub-Plan where this loss arises (or is claimed to arise), in whole or in part, from termination of office or employment
with; or notice to terminate office or employment given by or to any Group or any former Group Company. This exclusion of liability
shall apply however termination of office or employment, or the giving of notice, is caused and however compensation or damages
are claimed.

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