Document:

Exhibit

CHANGE OF CONTROL AGREEMENT        Exhibit 10.3

This Change of Control Agreement (the “Agreement”) between Gulf Island Fabrication, Inc., a Louisiana corporation (the “Company”), and Todd F. Ladd (the “Executive”) is dated effective March 1, 2018 (the “Agreement Date”).  
Article I 
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary.  The singular pronoun shall include the plural where the context so indicates.  
1.1    “Accrued Salary” has the meaning provided in Section 2.3(a)(i).  
1.2    “Affiliate” of any Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person.  For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities or otherwise; and the terms “controlling” and “controlled” shall have correlative meanings.
1.3    “Base Salary” has the meaning provided in Section 2.2(a).  
1.4    “Beneficial Owner” (and variants thereof) with respect to a security, means a Person who, directly or indirectly (through any contract, understanding, relationship, or otherwise) has or shares (a) the power to vote, or direct of the voting of, the security, and (b) the power to dispose of, or to direct the disposition of, the security.  
1.5    “Board” means the Board of Directors of the Company.
1.6    “Business Combination” means the consummation of a reorganization, merger or consolidation (including a merger or consolidation of the Company or any direct or indirect subsidiary of the Company), or sale or other disposition of all or substantially all of the assets of the Company.
1.7    “Cause.”
(a)    “Cause” means:
(i)    the Executive’s willful and continued failure to perform substantially the Executive’s duties with the Company or its Affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board, which specifically identifies the 

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manner in which the Board believes that the Executive has not substantially performed the Executive’s duties;
(ii)    the willful engaging in conduct that is demonstrably and materially injurious to the Company or any of its Affiliates, monetarily or otherwise;
(iii)    unauthorized acts or omissions by the Executive that could reasonably be expected to cause material financial harm to the Company or materially disrupt Company operations;
(iv)    commission by the Executive of an act of dishonesty (even if not a crime) resulting in the enrichment of the Executive at the expense of the Company;
(v)    the Executive’s knowing falsification or knowing attempted falsification of financial records of the Company in violation of SEC Rule 13b2-1; or
(vi)    the final conviction of the Executive or an entering of a guilty plea or a plea of no contest by the Executive to a felony.  
(b)    For purposes of subparagraphs (a)(i) and (a)(ii) above, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interest of the Company or its Affiliates.  
(c)    Any act, or failure to act, based on authority given pursuant to a resolution duly adopted by the Board, upon the instructions of a senior officer of the company, or based upon the advice of counsel for the Company or its Affiliates shall be conclusively determined to be done, or omitted to be done, by the Executive in good faith and in the best interest of the Company or its Affiliates.  
(d)    The termination of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive, together with counsel, is given an opportunity to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of conduct described in subparagraph (a) above, and specifying the particulars of such conduct.  
1.8    “Change of Control” means 
(a)    The acquisition by any Person of Beneficial Ownership of 30% or more of the outstanding shares of the Common Stock or 30% or more of the combined voting power of the Company’s then-outstanding securities entitled to vote generally in the election of directors; provide, however, that for purposes of this Section 1.8(a), the following acquisitions shall not constitute a Change of Control:  

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(i)    any acquisition (other than a Business Combination which constitutes a Change of Control under Section 1.8(c)) of Common Stock directly from the Company,
(ii)    any acquisition of Common Stock by the Company,
(iii)    any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or its Affiliates, or
(b)    individuals who, as of the Agreement Date, constituted the Incumbent Board, cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to such date whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board, unless such individual’s initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Incumbent Board; or
(c)    a Business Combination, provided, however, that in no such case shall any such transaction constitute a Change of Control if immediately following such Business Combination:
(i)    the individuals and entities who were the Beneficial Owners of the Company’s outstanding Common Stock and the Company’s voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect Beneficial Ownership, respectively, of more than 50% of the then outstanding shares of Common Stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Post-Transaction Corporation; 
(ii)    except to the extent that such ownership existed prior to the Business Combination, no Person (excluding the Post-Transaction Corporation and any employee benefit plan or related trust of either the Company, the Post-Transaction Corporation, or any Affiliates of either) beneficially owns, directly or indirectly, 25% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 25% or more of the combined voting power of the then outstanding voting securities of such corporation; and
(iii)    at least a majority of the members of the board of directors of the Post-Transaction Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or
(d)    approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.  
1.9    “Code” means the Internal Revenue Code of 1986, as amended.

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1.10    “Common Stock” means the common stock, no par value per share, of the Company.  
1.11    “Company” means the Company as defined above and any successor to or assignee of (whether direct or indirect, by purchase, merger, consolidation, or otherwise) all or substantially all of the assets of the Company.  
1.12    “Confidential Information” means any information, knowledge, or data of any nature and in any form (including information that is electronically transmitted or stored on any form of magnetic or electronic storage media) relating to the past, current, or prospective business or operations of the Company and its Affiliates, that at the time or times concerned is not generally known to persons engaged in businesses similar to those conducted or contemplated by the Company and its Affiliates (other than information known by such persons through a violation of an obligation of confidentiality to the Company), whether produced by the Company and its Affiliates or any of their consultants, agents, or independent contractors or by Executive, and whether or not marked confidential, including without limitation information relating to the Company’s or its Affiliates’ products and services, business plans, business acquisitions, processes, product or service research and development ideas, methods or techniques, training methods and materials, and other operational methods or techniques, quality assurance procedures or standards, operating procedures, files, plans, specifications, proposals, drawings, charts, graphs, support data, trade secrets, supplier lists, supplier information, purchasing methods or practices, distribution and selling activities, consultants’ reports, marketing and engineering or other technical studies, maintenance records, employment or personnel data, marketing data, strategies or techniques, financial reports, budgets, projections, cost analyses, price lists, formulae and analyses, employee lists, customer records, customer lists, customer source lists, proprietary computer software, and internal notes and memoranda relating to any of the foregoing.
1.13    “Continuation Period” has the meaning provided in Section 2.3(c)(iii).  
1.14    “Disability” means a condition that would entitle the Executive to receive benefits under the Company’s long-term disability insurance policy in effect at the time either because he is Totally Disabled or Partially Disabled, as such terms are defined in the Company’s policy in effect as of the Agreement Date or as similar terms are defined in any successor policy.  If the Company has no long-term disability plan in effect, “Disability” shall occur if (a) the Executive is rendered incapable because of physical or mental illness of satisfactorily discharging his duties and responsibilities to the Company for a period of 90 consecutive days, (b) a duly qualified physician chosen by the Company and acceptable to the Executive or his legal representatives so certifies in writing, and (c) the Board determines that the Executive has become disabled.  
1.15    “Employment Term” has the meaning provided in Section 2.1(a).
1.16    “Expiration Date” has the meaning provided in Section 2.1(a).
1.17    “Good Reason” shall mean:
(a)    Any material breach by the Company or the Post-Transaction Corporation of any of the provisions of this Agreement;

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(b)    Any failure of the Post-Transaction Corporation to provide the Executive with the position, authority, duties and responsibilities at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Change of Control.  The Executive’s position, authority, duties and responsibilities after a Change of Control shall not be considered commensurate in all material respects with the Executive’s position, authority, duties and responsibilities prior to a Change of Control unless after the Change of Control the Executive holds an equivalent position in the Post-Transaction Corporation;
(c)    The Post-Transaction Corporation requiring the Executive to be based at any office or location more than 50 miles from the office or location where the Executive was employed immediately preceding the Change of Control, or requiring the Executive to travel on business to a substantially greater extent than required immediately prior to a Change of Control; or
(d)    Any failure by the Company to comply with and satisfy Sections 4.1(c) and (d) of this Agreement.
Notwithstanding the foregoing, the Executive shall not have the right to terminate the Executive’s employment hereunder for Good Reason unless (1) within 90 days of the initial existence of the condition or conditions giving rise to such right the Executive provides written notice to the Company of the existence of such condition or conditions, and (2) the Company fails to remedy such condition or conditions within 30 days following the receipt of such written notice (the “Cure Period”). If any such condition is not remedied within the Cure Period, the Executive must terminate the Executive’s employment with the Company within a reasonable period of time, not to exceed 30 days, following the end of the Cure Period.

1.18    “Immediate Family Members” means the spouse and the natural or adopted children or grandchildren of a specified individual.  
1.19    “Incumbent Board” means individuals who, as of a specified date, constituted the Board of Directors of the Company.  
1.20    “Person” means a natural person, company, limited partnership, general partnership, limited liability company or partnership, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and a government or agency or political subdivision thereof.  
1.21    “Post-Transaction Corporation.”  
(a)    Unless a Change of Control includes a Business Combination, Post-Transaction Corporation means the Company after the Change of Control.  
(b)    If a Change of Control includes a Business Combination, Post-Transaction Corporation means the corporation resulting from the Business Combination unless, as a result of such Business Combination, an ultimate parent corporation controls the Company or all or 

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substantially all of the Company’s assets either directly or indirectly, in which case, Post-Transaction Corporation shall mean such ultimate parent corporation.
1.22    “Pro Rata Bonus” has the meaning provided in Section 2.3(a)(ii).  
1.23    “Section 409A” means Section 409A of the Code, as amended, and the regulations and guidance issued thereunder.  
1.24    “Termination Date” means, if Executive’s status as an officer and employee is terminated (a) by reason of Executive’s death, the date of Executive’s death; (b) by reason of Disability, the date on which termination of Executive’s status as an officer and employee becomes effective due to Disability; (c) by the Company other than by reason of death or Disability, the date of delivery of the notice of termination or any later date specified in the notice of termination, which date will not be more than 30 days after the giving of the notice; or (d) by the Executive other than by reason of death, the date of delivery of the notice of termination or any later date specified in the notice of termination, which date will not be more than 30 days after the giving of the notice.
Article II     
CHANGE OF CONTROL BENEFIT
2.1    Employment Term and Capacity after Change of Control.  
(a)    This Agreement shall commence on the Agreement Date and continue in effect through February 28, 2021 (the “Expiration Date”).  If the Executive continues to serve as an officer of the Company and a Change of Control occurs on or before the Expiration Date, then the Executive’s employment term (the “Employment Term”) shall continue for a period of eighteen months following the Change of Control, subject to any earlier termination of the Executive’s employment pursuant to this Agreement.  
(b)    After a Change of Control and during the Employment Term, (i) the Executive’s position (including status, offices, titles, and reporting requirements), authority, duties, and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised, and assigned at any time during the 120-day period immediately preceding the Change of Control; and (ii) the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Change of Control or any office or location less than 50 miles from such location.  Executive’s position, authority, duties, and responsibilities after a Change of Control shall not be considered commensurate in all material respects with Executive’s position, authority, duties, and responsibilities prior to a Change of Control unless after the Change of Control the Executive holds an equivalent position in the Post-Transaction Corporation.
2.2    Compensation and Benefits. During the Employment Term, the Executive shall be entitled to the following compensation and benefits:
(a)    Salary.  An annual salary (“Base Salary”) at the highest rate in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control, 

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payable to the Executive at such intervals no less frequent than the most frequent intervals in effect at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, the intervals in effect at any time after the Change of Control for other most senior executives of the Post-Transaction Corporation and its Affiliates.
(b)    Bonus.  Executive shall be entitled to participate in an annual incentive bonus program applicable to other most senior executives of the Post-Transaction Corporation and its Affiliates but in no event shall such program provide the Executive with incentive opportunities less favorable than the most favorable of those provided by the Company and its Affiliates for the Executive under the Company’s annual cash plan as in effect for Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, those provided generally at any time after the Change of Control to other most senior executives of the Post-Transaction Corporation and its Affiliates.  Any such bonus shall be paid in cash no later than two and a half months following the close of the fiscal year for which it is earned.
(c)    Fringe Benefits. The Executive shall be entitled to fringe benefits (including, but not limited to, automobile allowance, air travel, and reimbursement for club membership dues) in accordance with the most favorable agreements, plans, practices, programs, and policies of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.
(d)    Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses (including food and lodging) incurred by the Executive in accordance with the most favorable agreements, policies, practices, and procedures of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.
(e)    Incentive, Savings and Retirement Plans. The Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies, and programs applicable generally to other most senior executives of the Post-Transaction Corporation and its Affiliates, but in no event shall such plans, practices, policies, and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable than the most favorable of those provided by the Company and its Affiliates for the Executive under any agreements, plans, practices, policies, and programs as in effect at any time during the 120-day period immediately preceding the Change of Control.
(f)    Welfare Benefit Plans. The Executive and the Executive’s family shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies, and programs provided by the Post-Transaction Corporation and its Affiliates (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death, and travel accident insurance plans and programs) to the extent applicable generally to other 

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most senior executives of the Post-Transaction Corporation and its Affiliates, but in no event shall such plans, practices, policies, and programs provide the Executive with benefits, in each case, less favorable than the most favorable of any agreements, plans, practices, policies and programs of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control.
(g)    Indemnification and Insurance. The Post-Transaction Corporation shall indemnify the Executive, to the fullest extent permitted by applicable law, for any and all claims brought against him arising out of his services during or prior to the Employment Term.  In addition, the Post-Transaction Corporation shall maintain a directors’ and officers’ insurance policy covering the Executive substantially in the form of the policy maintained by the Company and its Affiliates at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.
(h)    Office and Support Staff.  The Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its Affiliates at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.
(i)    Vacation. The Executive shall be entitled to paid vacation in accordance with the most favorable agreements, plans, policies, programs, and practices of the Company and its Affiliates as in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.
2.3    Obligations upon Termination After a Change of Control.
(a)    Termination as a Result of Death, Disability, or Retirement. If, after a Change of Control and during the Employment Term, (1) the Executive’s employment is terminated by reason of the Executive’s death, (2) the Post-Transaction Corporation terminates the Executive’s employment by reason of Executive’s Disability, or (3) the Executive retires and terminates his employment, then, subject to Section 2.3(f) and, if applicable, the six-month delay set forth in Section 2.7:
(i)    the Post-Transaction Corporation or an Affiliate will pay to the Executive or his legal representatives the Executive’s Base Salary earned through the Termination Date to the extent not previously paid (the “Accrued Salary”);
(ii)    the Post-Transaction Corporation or an Affiliate will pay to the Executive or his legal representatives a pro rata bonus in an amount determined by (1) calculating the average of the annual bonus received by the Executive in the three most recently completed fiscal years prior to the Termination Date, then (2) multiplying such 

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bonus amount by the fraction obtained by dividing the number of days in the year through the Termination Date by 365 (the “Pro Rata Bonus”); and
(iii)    the Post-Transaction Corporation or an Affiliate will pay or deliver, as appropriate, all other benefits earned by the Executive or accrued for his benefit pursuant to any employee benefit plans maintained by the Post-Transaction Corporation or its Affiliates with respect to services rendered by the Executive prior to the Termination Date.
(b)    Termination by Company for Cause; by Executive for other than Good Reason.  If, after a Change of Control and during the Employment Term, the Executive’s employment is terminated by the Post-Transaction Corporation or an Affiliate for Cause, or by the Executive for other than Good Reason or retirement, the Post-Transaction Corporation or Affiliate will pay to the Executive the Accrued Salary without further obligation to the Executive other than for obligations by law and obligations for any benefits earned by the Executive or accrued for his benefit pursuant to any employee benefit plans maintained by the Post-Transaction Corporation or Affiliate with respect to services rendered by the Executive prior to the Termination Date.
(c)    Termination by Company for Reasons Other than Death, Disability, or Retirement; Termination by Executive for Good Reason.  If, after a Change of Control and during the Employment Term, (1) the Post-Transaction Corporation or an Affiliate terminates the Executive’s employment other than for Cause, death, or Disability, or (2) the Executive terminates his employment for Good Reason, then, subject to Section 2.3(f):
(i)    The Post-Transaction Corporation or an Affiliate will pay to the Executive the Accrued Salary;
(ii)    The Post-Transaction Corporation or an Affiliate will pay to the Executive in a lump sum in cash on the first business day that is more than six months after the Termination Date (A) the Pro Rata Bonus, and (B) an amount equal to one and one-half (1.5) times the sum of (x) the Executive’s Base Salary in effect at the Termination Date and (y) the highest annual bonus awarded to the Executive during the three fiscal years immediately preceding the Termination Date;
(iii)    For the period commencing on the Termination Date and ending on the earlier of (A) December 31st of the first calendar year following the calendar year in which the Termination Date occurs, or (B) the date that the Executive accepts new employment (the “Continuation Period”), the Post-Transaction Corporation or an Affiliate will at its expense provide, either as part of a group policy or as such policy may be converted to an individual policy, health, dental, vision and life insurance (the “benefit plans”) in which the Executive was entitled to participate as an employee as of the Termination Date; provided that the Executive’s continued participation is possible under the general terms and provisions of each such plan and all applicable laws.  If the Executive is a “specified employee” governed by Section 2.7 hereof, to the extent that any benefits provided to the Executive under this Section 2.3(c)(iii) are taxable to the Executive, then, with the exception of nontaxable medical insurance benefits, the value of the aggregate amount of such taxable benefits provided to the Executive pursuant to this Section 2.3(c)(iii) during the six-month 

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period following the Termination Date shall be limited to the amount specified by Section 402(g)(1)(B) of Code for the year in which the termination occurred.  The Executive shall pay the cost of any benefits that exceed the amount specified in the previous sentence during the six month period following the date of termination, and shall be reimbursed in full by the Company during the seventh month after the Termination Date.  The coverage and benefits (including deductibles and costs) provided under any such benefit plan in accordance with this paragraph during the Continuation Period will be no less favorable to the Executive than the most favorable of such coverages and benefits provided to active employees of the Post-Transaction Corporation during the Continuation Period.  If the Executive’s participation in any such benefit plan is barred or any such benefit plan is terminated, the Post-Transaction Corporation or its Affiliate will provide Executive with benefits substantially similar or comparable in value to those the Executive would otherwise have been entitled to receive under such plans.  At the end of the Continuation Period, the Executive will have the option to have assigned to him, at no cost and with no apportionment of prepaid premiums, any assignable insurance owned by the Post-Transaction Corporation or its Affiliates that relates specifically to the Executive.  To the maximum extent permitted by law, the Executive will be eligible for coverage under COBRA. Notwithstanding the above, if the payment of health insurance premiums for the Executive is not permitted by the Patient Protection and Affordable Care Act, then in lieu of the health benefits provided for herein, the lump sum cash payment described in Section 2.3(c)(ii) will by increased by an amount equal to the first monthly COBRA premium multiplied by the maximum number of months in the Continuation Period;  
(iv)    All benefits that the Executive is entitled to receive pursuant to benefit plans maintained by the Post-Transaction Corporation or an Affiliate under which benefits are calculated based upon years of service or age will be calculated by treating the Executive as having attained one and one-half (1.5) additional years of age and as having provided one and one-half (1.5) additional years of service as of the Termination Date; and
(v)    The Post-Transaction Corporation or an Affiliate will pay or deliver, as appropriate, all other benefits earned by the Executive or accrued for his benefit pursuant to any employee benefit plans maintained by the Post-Transaction Corporation or Affiliate with respect to services rendered by the Executive prior to the Termination Date.
(d)    Resignation from Board of Directors. If the Executive is a director of the Post-Transaction Corporation or any of its Affiliates and his employment is terminated for any reason other than death, the Executive will, if requested by the Post-Transaction Corporation, immediately resign as a director of the Post-Transaction Corporation and its Affiliates.  If such resignation is not received within 20 business days after the Executive actually receives written notice from the Post-Transaction Corporation requesting the resignation, the Executive will forfeit any right to receive any payments pursuant to this Agreement.
(e)    Nondisclosure and Proprietary Rights. The rights and obligations of the Company and the Executive contained in Article III hereof will continue to apply notwithstanding a termination following a Change of Control.

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(f)    Most Favorable Benefits.  It is the intention of the parties that the terms of this Agreement provide payments and benefits to the Executive that are equivalent or more beneficial to the Executive than are otherwise available to the Executive under the terms of any applicable benefit plan or related compensation agreement.  To that end, the terms of the Agreement shall govern the payments and benefits to which the Executive shall be entitled upon the termination of the Executive’s status as an officer and employee as provided herein, except that if the terms of any applicable benefit plan or related compensation agreement provide more favorable benefits to the Executive than are provided hereunder, the terms of such plan or agreement shall control.
2.4    Excise Tax Provision.
(a)    Notwithstanding any other provisions of this Agreement, if a Change of Control occurs during the original or extended term of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with the Change of Control of the Company or the termination of the Executive’s employment under this Agreement or any other agreement between the Company and the Executive (all such payments and benefits, including the payments and benefits under Section 2.3(c) hereof, being hereinafter called “Total Payments”) would be subject (in whole or in part), to an excise tax imposed by section 4999 of the Code (the “Excise Tax”), then the cash payments under Section 2.3(c) hereof shall first be reduced, and the noncash payments and benefits under the other sections hereof shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments); provided, however, that the Executive may elect to have the noncash payments and benefits hereof reduced (or eliminated) prior to any reduction of the cash payments under Section 2.3(c) hereof.
(b)    For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the “Auditor”) which was, immediately prior to a Change of Control or other event giving rise to a potential Excise Tax, the Company’s independent auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the “Base Amount” (within the meaning set forth in section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non cash benefit or any 

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deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.
(c)    At the time that payments are made under this Agreement, the Post-Transaction Corporation shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Post-Transaction Corporation has received from Tax Counsel, the Auditor, or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
2.5    Incentive Awards.  The foregoing benefits are intended to be in addition to the value of any options to acquire Common Stock of the Company, the exercisability of which is accelerated pursuant to the terms of any stock option agreement, any restricted stock or restricted stock units, the vesting of which is accelerated pursuant to the terms of the restricted stock or restricted stock unit agreement, and any other incentive or similar plan heretofore or hereafter adopted by the Company.
2.6    Legal Fees.  The Company agrees to pay as incurred all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by the Executive about the amount or timing of any payment pursuant to this Agreement).
2.7    Section 409A.
(a)    It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A, and the provisions of this Agreement shall be construed and administered in accordance with such intent.  To the extent any potential payments or benefits could become subject to Section 409A, the parties shall cooperate to amend this Agreement with the goal of giving the Executive the economic benefits described herein in a manner that does not result in such tax being imposed.  If the parties are unable to agree on a mutually acceptable amendment, the Company may, without the Executive’s consent and in such manner as it deems appropriate, amend or modify this Agreement or delay the payment of any amounts hereunder to the minimum extent necessary to meet the requirements of Section 409A.
(b)    No payments or benefits provided herein that are paid because of a termination of employment under circumstances described herein shall be paid, unless such termination of employment also constitutes a “separation from service” within the meaning of Section 409A.
(c)    If Executive is a “specified employee,” any payments payable as a result of Executive’s termination of employment (other than as a result of death) shall not be payable before the earlier of (i) the first business day that is more than six months after Executive’s Termination Date, (ii) the date of Executive’s death, or (iii) the date that otherwise complies with the requirements of Section 409A.  “Specified employee” shall mean the Executive if the Executive is a key employee 

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under Treasury Regulations Section 1.409A-1(i) because of final and binding action taken by the Board or its compensation committee, or by operation of law or such regulation.
(d)    No acceleration of payments and benefits provided for in this Agreement shall be permitted, except that the Company may accelerate payment, if permitted by Section 409A, as necessary to allow the Executive to pay FICA taxes on amounts payable hereunder and additional taxes resulting from the payment of such FICA amount, or as necessary to pay taxes and penalties arising as a result of the payments provided for in this Agreement failing to meet the requirements of Section 409A.  In no event shall the Executive, directly or indirectly, designate the calendar year of payment.
(e)    To the extent that the amounts payable under this Article II are reimbursements and other separation payments described under Treasury Regulations Section 1.409A-1(b)(9)(v), such payments do not provide for the deferral of compensation.  If they do constitute deferral of compensation governed by Section 409A, they shall be deemed to be reimbursements or in-kind benefits governed by Treasury Regulations Section 1.409A-3(i)(1)(iv).  If the previous sentence applies, (i) the amount of expenses eligible for reimbursement or in-kind benefits provided during the Executive’s taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year, (ii) the reimbursement of an eligible expense must be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred, and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
Article III     
NONDISCLOSURE AND PROPRIETARY RIGHTS
3.1    Non-disclosure of Confidential Information.  Executive will hold in a fiduciary capacity for the benefit of the Company all Confidential Information obtained by Executive during Executive’s employment (whether prior to or after the Agreement Date) and will use such Confidential Information solely within the scope of his employment with and for the exclusive benefit of the Company.  For a period of two years after the Termination Date, Executive agrees (a) not to communicate, divulge or make available to any person or entity (other than the Company) any such Confidential Information, except upon the prior written authorization of the Company or as may be required by law or legal process; and (b) to deliver promptly to the Company any Confidential Information in his possession, including any duplicates thereof and any notes or other records Executive has prepared with respect thereto.  In the event that the provisions of any applicable law or the order of any court would require Executive to disclose or otherwise make available any Confidential Information, Executive will give the Company prompt prior written notice of such required disclosure and an opportunity to contest the requirement of such disclosure or apply for a protective order with respect to such Confidential Information by appropriate proceedings.
3.2    Injunctive Relief; Other Remedies.  Executive acknowledges that a breach by Executive of Section 3.1 would cause immediate and irreparable harm to the Company for which an adequate monetary remedy does not exist; hence, Executive agrees that, in the event of a breach or threatened breach by Executive of the provisions of Section 3.1, the Company will be entitled to injunctive relief restraining Executive from such violation without the necessity of proof of actual 

{N3549980.1}    13    

damage or the posting of any bond, except as required by non waivable, applicable law.  Nothing herein, however, will be construed as prohibiting the Company from pursuing any other remedy at law or in equity to which the Company may be entitled under applicable law in the event of a breach or threatened breach of this Agreement by Executive, including without limitation the recovery of damages and/or costs and expenses, such as reasonable attorneys’ fees, incurred by the Company as a result of any such breach or threatened breach.  In addition to the exercise of the foregoing remedies, the Company will have the right upon the occurrence of any such breach to offset the damages of such breach as determined by the Company, against any unpaid salary, bonus, commissions, or reimbursements otherwise owed to Executive.  In particular, Executive acknowledges that the payments provided under Article II are conditioned upon Executive fulfilling the nondisclosure agreements contained in this Article III.  If Executive at any time materially breaches nondisclosure agreements contained in this Article III, then the Company may offset the damages of such breach, as determined solely by the Company, against payments otherwise due to Executive under Article II or, at the Company’s option, suspend payments otherwise due to Executive under Article II during the period of such breach.  Executive acknowledges that any such offset or suspension of payments would be an exercise of the Company’s right to offset or suspend its performance hereunder upon Executive’s breach of this Agreement; such offset or suspension of payments would not constitute, and shall not be characterized as, the imposition of liquidated damages.
3.3    Governing Law of this Article III; Consent to Jurisdiction.  Any dispute regarding the reasonableness of the covenants and agreements set forth in this Article III or duration thereof, or the remedies available to the Company upon any breach of such covenants and agreements, will be governed by and interpreted in accordance with the laws of the State of the United States or other jurisdiction in which the alleged prohibited disclosure occurs, and, with respect to each such dispute, the Company and Executive each hereby consent to the jurisdiction of the state and federal courts sitting in the relevant State (or, in the case of any jurisdiction outside the United States, the relevant courts of such jurisdiction) for resolution of such dispute, and agree that service of process may be made upon him or it in any legal proceeding relating to this Article III by any means allowed under the laws of such jurisdiction.
3.4    Executive’s Understanding of this Article.  Executive hereby represents to the Company that he has read and understands, and agrees to be bound by, the terms of this Article III.  Executive acknowledges that the duration of the covenants contained in Article III are the result of arm’s length bargaining and are fair and reasonable in light of (a) the importance of the functions performed by Executive and the length of time it would take the Company to find and train a suitable replacement, and (b) Executive’s level of control over and contact with the business and operations of the Company and its Affiliates in various jurisdictions where same are conducted.  It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and, therefore, to the extent permitted by applicable law, the parties hereto waive any provision of applicable law that would render any provision of this Article III invalid or unenforceable.
Article IV     
MISCELLANEOUS

{N3549980.1}    14    

4.1    Binding Effect; Successors.  
(a)    This Agreement shall be binding upon and inure to the benefit of the Company and any of its successors or assigns.
(b)    This Agreement is personal to the Executive and shall not be assignable by the Executive without the consent of the Company (there being no obligation to give such consent) other than such rights or benefits as are transferred by will or the laws of descent and distribution.
(c)    The Company shall require any successor to or assignee of (whether direct or indirect, by purchase, merger, consolidation, or otherwise) all or substantially all of the assets or businesses of the Company (i) to assume unconditionally and expressly this Agreement and (ii) to agree to perform or to cause to be performed all of the obligations under this Agreement in the same manner and to the same extent as would have been required of the Company had no assignment or succession occurred, such assumption to be set forth in a writing reasonably satisfactory to the Executive.  
(d)    The Company shall also require all entities that control or that after the transaction will control (directly or indirectly) the Company or any such successor or assignee to agree to cause to be performed all of the obligations under this Agreement, such agreement to be set forth in a writing reasonably satisfactory to the Executive.
4.2    Notices.  All notices hereunder must be in writing and, unless otherwise specifically provided herein, will be deemed to have been given upon receipt of delivery by: (a) hand (against a receipt therefor), (b) certified or registered mail, postage prepaid, return receipt requested, (c) a nationally recognized overnight courier service (against a receipt therefor) or (d) telecopy transmission with confirmation of receipt.  All such notices must be addressed as follows:
If to the Company:

Gulf Island Fabrication, Inc.
Attn:  Chairman, Compensation Committee
16225 Park Ten Place, Suite 280
Houston, Texas 77084

If to the Executive:

Todd F. Ladd
    
    

or such other address as to which any party hereto may have notified the other in writing.
4.3    Governing Law.  Except as provided in Article III hereof, this Agreement shall be construed and enforced in accordance with and governed by the internal laws of the State of Louisiana without regard to principles of conflict of laws.

{N3549980.1}    15    

4.4    Withholding.  The Executive agrees that the Company has the right to withhold, from the amounts payable pursuant to this Agreement, all amounts required to be withheld under applicable income and/or employment tax laws, or as otherwise stated in documents granting rights that are affected by this Agreement.
4.5    Amendment; Waiver.  No provision of this Agreement may be modified, amended, or waived except by an instrument in writing signed by both parties, unless permitted by Section 2.7(a).  
4.6    Severability.  If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall at any time or to any extent be invalid, illegal or unenforceable in any respect as written, Executive and the Company intend for any court construing this Agreement to modify or limit such provision so as to render it valid and enforceable to the fullest extent allowed by law.  Any such provision that is not susceptible of such reformation shall be ignored so as to not affect any other term or provision hereof, and the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.
4.7    Waiver of Breach.  The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach thereof.
4.8    Remedies Not Exclusive.  No remedy specified herein shall be deemed to be such party’s exclusive remedy, and accordingly, in addition to all of the rights and remedies provided for in this Agreement, the parties shall have all other rights and remedies provided to them by applicable law, rule or regulation.
4.9    Company’s Reservation of Rights.  Executive acknowledges and understands that the Executive serves at the pleasure of the Board and that the Company has the right at any time to terminate Executive’s status as an employee of the Company or any of its Affiliates, or to change or diminish his status during the Employment Term, subject to the rights of the Executive to claim the benefits conferred by this Agreement.
4.10    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

{N3549980.1}    16    

IN WITNESS WHEREOF, the Company and the Executive have caused this Agreement to be executed as of the Agreement Date.
GULF ISLAND FABRICATION, INC.

/s/ John P. Laborde      
John P. Laborde 
Chairman of the Board

EXECUTIVE

/s/ Todd F. Ladd           
Todd F. Ladd

{N3549980.1}    17SUBSCRIPTION
AGREEMENT

 

This
Subscription Agreement (this “Agreement”) is being delivered to the purchaser identified on the signature page
to this Agreement (the “Subscriber”) in connection with its investment in Green Spirit Industries Inc., a Nevada
corporation (the “Company”). The Company is conducting a private placement (the “Offering”)
of up to Fifteen Million Dollars ($15,000,000) (the “Maximum Offering”) of the Company’s Units, (each
a “Unit” and collectively, the “Units”). Each Unit has a purchase price of $3.00 per Unit
and consists of (i) one (1) share of the Company’s common stock (the “Shares”), and (ii) one (1) warrant
to purchase shares of common stock (each, a “Warrant” and together with the Units, the Shares and the common
stock issuable upon exercise of the Warrants (the “Warrant Shares”), collectively, the “Securities”).
Each Warrant shall be exercisable at any time on or after the date of issuance for a period of three (3) years at an exercise
price per share equal to $6.00 per share, subject to adjustment as provided in the Warrant in the form attached hereto as Exhibit
A.

 

The
subscription amount for the Units will be held in escrow for the benefit of Subscribers by Sichenzia Ross Ference Kesner LLP (the
“Escrow Agent”) until satisfaction of all the conditions to the closing have been met. The Initial Closing
(as defined herein) of this Offering shall be subject to subscriptions being received from qualified Subscribers and accepted
by the Company. Upon acceptance by the Company after the date hereof of subscriptions deemed sufficient by the Company, it shall
have the right at any time thereafter, but prior to the Termination Date (as defined below), to effect an initial closing with
respect to this Offering (the “Initial Closing”). Thereafter, the Company shall continue to accept, and continue
to have closings (together with the Initial Closing, each a “Closing”) for, additional subscriptions for Units
from investors from time to time until the earlier of (i) the date upon which subscriptions for the Maximum Offering offered hereunder
have been accepted, (ii) February 28, 2018, or (iii) the date upon which the Company elects to terminate the Offering (the “Termination
Date”). The Offering will be made on a “reasonable efforts” basis for up to the Maximum Offering.

 

The
Units, the Shares, the Warrants and the Warrant Shares will not be listed on any securities exchange. The Company’s Shares
is currently traded on the OTCPink under the symbol “GSRX.”

 

1.
SUBSCRIPTION AND PURCHASE PRICE

 

(a)
Subscription. Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees
to purchase the number of Units indicated on the signature page hereof on the terms and conditions described herein.

 

(b)
Purchase of Units. The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in
exchange for the Units shall be as set forth in the preamble to this Agreement, for an aggregate purchase price as set forth on
the signature pages hereof (the “Aggregate Purchase Price”). The Subscriber’s delivery of this Agreement
to the Company shall be accompanied by payment for the Units subscribed for hereunder, payable in United States Dollars, by wire
transfer of immediately available funds delivered contemporaneously with the Subscriber’s delivery of this Agreement to
the Company in accordance with the Escrow Agreement and wire instructions attached hereto as Exhibit B. The Subscriber
understands and agrees that, subject to Section 2 and applicable laws, by executing this Agreement, it is entering into a binding
agreement.

 

    	 	- 1 -	 

     

    

 

2.
Acceptance, Offering Term and Closing Procedures

 

(a)
Acceptance or Rejection. The obligation of the Subscriber to purchase the Units shall be irrevocable, and the Subscriber
shall be legally bound to purchase the Units subject to the terms set forth in this Agreement. The Subscriber understands and
agrees that the Company reserves the right to reject this subscription for Units in whole or part in any order at any time prior
to the Closing for any reason, notwithstanding the Subscriber’s prior receipt of notice of acceptance of the Subscriber’s
subscription. In the event of rejection of this subscription by the Company in accordance with this Section 2, or if the sale
of the Units is not consummated by the Company for any reason or no reason, this Agreement and any other agreement entered into
between the Subscriber and the Company relating to this subscription shall thereafter have no force or effect, and the Company
shall promptly return or cause to be returned to the Subscriber the purchase price remitted to the Company, without interest thereon
or deduction therefrom.

 

(b)
Closing. The closing of the purchase and sale of the Units hereunder (the “Closing”) shall take place
at the offices of Sichenzia Ross Ference Kesner LLP, 1185 Avenue of the Americas, 37th Floor., New York, NY 10036 or
such other place as determined by the Company. The Closing shall take place on a Business Day promptly following the satisfaction
of the conditions set forth in Section 6 below, as determined by the Company (the “Closing Date”). “Business
Day” shall mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time) of a day other than a Saturday,
Sunday or other day on which commercial banks in New York, New York are authorized or required to be closed. The Units purchased
by the Subscriber will be delivered by the Company promptly following the Closing.

 

(c)
Following Acceptance or Rejection. The Subscriber acknowledges and agrees that this Agreement and any other documents delivered
in connection herewith will be held by the Company. In the event that this Agreement is not accepted by the Company for whatever
reason, which the Company expressly reserves the right to do, this Agreement, the Aggregate Purchase Price received (without interest
thereon) and any other documents delivered in connection herewith will be returned to the Subscriber at the address of the Subscriber
as set forth in this Agreement. If this Agreement is accepted by the Company, the Company is entitled to treat the Aggregate Purchase
Price received as an interest free loan to the Company until such time as the Subscription is accepted.

 

3.
THE SUBSCRIBER’s Representations, Warranties AND cOVENANTS

 

The
Subscriber hereby acknowledges, agrees with and represents, warrants and covenants to the Company, as follows:

 

(a)
The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized,
if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber.

 

(b)
The Subscriber acknowledges its understanding that the Offering and sale of the Units is intended to be exempt from registration
under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) of the Securities
Act and the provisions of Regulation D promulgated thereunder (“Regulation D”). In furtherance thereof, the
Subscriber represents and warrants to the Company and its affiliates as follows:

 

(i)
The Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s
representations contained herein, the Subscriber is merely acquiring the Units for a fixed or determinable period in the future,
or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intention.

 

(ii)
The Subscriber realizes that the basis for exemption would not be available if the Offering is part of a plan or scheme to evade
registration provisions of the Securities Act or any applicable state or federal securities laws.

 

(iii)
The Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes,
and not with a view towards, or resale in connection with, any distribution of the Units. If other than an individual, the Subscriber
also represents it has not been organized solely for the purpose of acquiring the Units.

 

    	 	- 2 -	 

     

    

 

(iv)
The Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for
providing for its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.

 

(v)
The Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively,
the “Advisors”) has such knowledge and experience in financial and business matters as to be capable of evaluating
the merits and risks of a prospective investment in the Units. The Subscriber has not authorized any person or entity to act as
its Purchaser Representative (as that term is defined in Regulation D of the General Rules and Regulations under the Securities
Act) in connection with the Offering.

 

(vi)
The Subscriber (together with its Advisors, if any) has received all documents requested by the Subscriber, if any, has carefully
reviewed them and understands the information contained therein, prior to the execution of this Agreement.

 

(c)
The Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal,
tax, economic and related considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted
with, only its Advisors. Each Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is annexed to this
Agreement) the specific details of any and all past, present or future relationships, actual or contemplated, between the Advisor
and the Company or any affiliate or sub-agent thereof.

 

(d)
The Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully
understands that the Securities are a speculative investment that involves a high degree of risk of loss of the Subscriber’s
entire investment. Among other things, the Subscriber has carefully considered each of the risks described under the heading “Risk
Factors” in the Company’s SEC Filings (as defined in Section 4(f) below), and those set forth in Exhibit C, which
risk factors are incorporated herein by reference.

 

(e)
The Subscriber will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption
therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of its purchase because, among other
reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore,
cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act
and under the applicable securities laws of such states, or an exemption from such registration is available. In particular, the
Subscriber is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated
under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions
of Rule 144 are met. The Subscriber also understands that the Company is under no obligation to register the Securities on behalf
of the Subscriber or to assist the Subscriber in complying with any exemption from registration under the Securities Act or applicable
state securities laws. The Subscriber understands that any sales or transfers of the Securities are further restricted by state
securities laws and the provisions of this Agreement.

 

(f)
No oral or written representations or warranties have been made, or information furnished, to the Subscriber or its Advisors,
if any, by the Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in connection
with the Offering, other than any representations of the Company contained herein, and in subscribing for the Units, the Subscriber
is not relying upon any representations other than those contained herein.

 

(g)
The Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s
net worth, and an investment in the Securities will not cause such overall commitment to become excessive.

 

    	 	- 3 -	 

     

    

 

(h)
The Subscriber understands and agrees that the certificates for the Securities shall bear substantially the following legend until
(i) such Securities shall have been registered under the Securities Act and effectively disposed of in accordance with a registration
statement that has been declared effective or (ii) in the opinion of counsel for the Company, such Securities may be sold without
registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE
OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.

 

(i)
Neither the SEC nor any state securities commission has approved the Units or passed upon or endorsed the merits of the Offering.
There is no government or other insurance covering any of the Units.

 

(j)
The Subscriber and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person
or persons acting on behalf of the Company concerning the Offering and the business, financial condition, results of operations
and prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors,
if any.

 

(k)
The Subscriber is unaware of, is in no way relying on, and did not become aware of, the Offering through or as a result of, any
form of general solicitation or general advertising, including, without limitation, any article, notice, advertisement or other
communication published in any newspaper, magazine or similar media or broadcast over television or radio, or electronic mail
over the Internet, in connection with the Offering and is not subscribing for Units and did not become aware of the Offering through
or as a result of any seminar or meeting to which the Subscriber was invited by, or any solicitation of a subscription by, a person
not previously known to the Subscriber in connection with investments in securities generally.

 

(l)
The Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees
or the like relating to this Agreement or the transactions contemplated hereby.

 

(m)
The Subscriber acknowledges that any estimates or forward-looking statements or projections furnished by the Company to the Subscriber
were prepared by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking
statements cannot be guaranteed by the Company or its management and should not be relied upon.

 

(n)
(For ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been
informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest
“plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require
diversification of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (i) is responsible
for the decision to invest in the Company; (ii) is independent of the Company and any of its affiliates; (iii) is qualified to
make such investment decision; and (iv) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on
any advice or recommendation of the Company or any of its affiliates.

 

    	 	- 4 -	 

     

    

 

(o)
This Agreement is not enforceable by the Subscriber unless it has been accepted by the Company, and the Subscriber acknowledges
and agrees that the Company reserves the right to reject any subscription for any reason.

 

(p)
The Subscriber will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents,
advisors, affiliates and shareholders, and each other person, if any, who controls any of the foregoing from and against any and
all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding
or investigation whether commenced or threatened) (a “Loss”) arising out of or based upon any representation
or warranty of the Subscriber contained herein or in any document furnished by the Subscriber to the Company in connection herewith
being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made
by the Subscriber herein or therein; provided, however, that the Subscriber shall not be liable for any Loss that
in the aggregate exceeds the Subscriber’s Aggregate Purchase Price tendered hereunder.

 

(q)
The Subscriber is, and on each date on which the Subscriber continues to own restricted securities from the Offering will be,
an “Accredited Investor” as defined in Rule 501(a) under the Securities Act. In general, an “Accredited Investor”
is deemed to be an institution with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 (excluding
the value of their primary residence) or annual income exceeding $200,000 or $300,000 jointly with his or her spouse.

 

(r)
The Subscriber has reviewed, or had an opportunity to review, all of the SEC Filings.

 

(s)
The Subscriber acknowledges receipt and careful review of all documents furnished in connection with this transaction by the Company
(collectively, the “Offering Documents”) and has been furnished by the Company during the course of this transaction
with all information regarding the Company which the Subscriber has requested or desires to know; and the Subscriber has been
afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the
Company concerning the terms and conditions of the Offering, and any additional information which the Subscriber has requested.

 

(t)
The Subscriber acknowledges that if the Subscriber is a Registered Representative of a Financial Industry Regulatory Authority,
Inc. (“FINRA”) member firm, the Subscriber must give such firm the notice required by the FINRA’s Conduct Rules,
receipt of which must be acknowledged by such firm on the signature page hereof.

 

(u)
The Subscriber hereby acknowledges that neither the Company nor any persons associated with the Company who may provide assistance
or advice in connection with the Offering (other than the placement agent, if one is engaged by the Company) are or are expected
to be members or associated persons of members of the FINRA or registered broker-dealers under any federal or state securities
laws. This Offering is made directly by the Company.

 

(v)
The Subscriber hereby represents that, except as expressly set forth in the Offering Documents, no representations or warranties
have been made to the Subscriber by the Company or any agent, employee or affiliate of the Company and, in entering into this
transaction, the Subscriber is not relying on any information other than that contained in the Offering Documents and the results
of independent investigation by the Subscriber.

 

    	 	- 5 -	 

     

    

 

(w)
All information provided by the Subscriber in the Investor Questionnaire attached hereto is true and accurate in all respects,
and the Subscriber acknowledges that the Company will be relying on such information to its possible detriment in deciding whether
the Company can sell these securities to the Subscriber without giving rise to the loss of the exemption from registration under
applicable securities laws.

 

4.
The Company’s Representations, Warranties and Covenants

 

The
Company hereby acknowledges, agrees with and represents, warrants and covenants to the Subscriber, as follows:

 

(a)
The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by the Company and is valid, binding and enforceable against the
Company in accordance with its terms.

 

(b)
The authorized and outstanding capital stock of the Company is set forth in the Company’s SEC filings, and except as set
forth therein, there are no options, warrants, or rights to subscribe to, securities, rights, understandings or obligations convertible
into or exchangeable for or giving any right to subscribe for any shares of capital stock or other equity interest of the Company
or any of the Subsidiaries.

 

(c)
The only officer, director, employee and consultant stock option or stock incentive plan or similar plan currently in effect or
contemplated by the Company is described in the Company’s SEC filings.

 

(d)
The Securities to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms
of this Agreement, will be duly and validly issued and will be fully paid and non-assessable.

 

(e)
Neither the execution and delivery nor the performance of this Agreement by the Company will conflict with the Company’s
organizational materials, as amended to date, or result in a breach of any terms or provisions of, or constitute a default under,
any material contract, agreement or instrument to which the Company is a party or by which the Company is bound.

 

(f)
The Company is subject to, and in full compliance with, the reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). The Company has made available to each Subscriber through the
EDGAR system true and complete copies of each of the Company’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K
and Current Reports on Form 8-K (collectively, the “SEC Filings”), and all such SEC Filings are incorporated
herein by reference. The SEC Filings, when they were filed with the SEC (or, if any amendment with respect to any such document
was filed, when such amendment was filed), complied in all material respects with the applicable requirements of the Exchange
Act and the rules and regulations thereunder and did not, as of such date, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. All reports and statements required to be filed by the Company under
the Securities Act and the Exchange Act have been filed, together with all exhibits required to be filed therewith. The Company
and each of its direct and indirect subsidiaries, if any (collectively, the “Subsidiaries”), are engaged in
all material respects only in the business described in the SEC Filings, and the SEC Filings contain a complete and accurate description
in all material respects of the business of the Company and the Subsidiaries.

 

    	 	- 6 -	 

     

    

 

(g)
The Company acknowledges and agrees that the Subscriber is acting solely in the capacity of an arm’s length purchaser with
respect to the Units and the transactions contemplated hereby. The Company further acknowledges that the Subscriber is not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Subscriber or any of its representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to the Subscriber’s purchase of the Units. The Company further
represents to the Subscriber that the Company’s decision to enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(h)
The Company will indemnify and hold harmless the Subscriber and, where applicable, its directors, officers, employees, agents,
advisors and shareholders, from and against any and all Loss arising out of or based upon any representation or warranty of the
Company contained herein or in any document furnished by the Company to the Subscriber in connection herewith being untrue in
any material respect or any breach or failure by the Company to comply with any covenant or agreement made by the Company to the
Subscriber in connection therewith; provided, however, that the Company’s liability shall not exceed the Subscriber’s
Aggregate Purchase Price tendered hereunder.

 

5.
Use of Proceeds

 

The
Company anticipates using the gross proceeds from the Offering for general corporate purposes including growth initiatives and
capital expenditures.

 

6.
CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION

 

The
Company’s right to accept the subscription of the Subscriber is conditioned upon satisfaction of the following conditions
precedent on or before the date the Company accepts such subscription:

 

(a)
As of the Closing, no legal action, suit or proceeding shall be pending that seeks to restrain or prohibit the transactions contemplated
by this Agreement.

 

(b)
The representations and warranties of the Subscriber contained in this Agreement shall have been true and correct in all material
respects on the date of this Agreement and shall be true and correct as of the Closing as if made on the Closing Date.

 

7.
MISCELLANEOUS PROVISIONS

 

(a)
All parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue
of the fact that such party’s counsel was or was not the principal draftsman of this Agreement.

 

(b)
Each of the parties hereto shall be responsible to pay the costs and expenses of its own legal counsel in connection with the
preparation and review of this Agreement and related documentation.

 

(c)
Neither this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument
in writing signed by the party against whom any waiver, modification, discharge or termination is sought.

 

(d)
The representations, warranties and agreement of the Subscriber and the Company made in this Agreement shall survive the execution
and delivery of this Agreement and the delivery of the Units.

 

    	 	- 7 -	 

     

    

 

(e)
Any party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth
on the signature page of this Agreement or to the Company at its primary office (including personal delivery, expedited courier,
messenger service, fax, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will
be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the
address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other
parties written notice in the manner herein set forth.

 

(f)
Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement
and their heirs, executors, administrators, successors, legal representatives and assigns. If the Subscriber is more than one
person or entity, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties
and acknowledgments contained herein shall be deemed to be made by, and be binding upon, each such person or entity and its heirs,
executors, administrators, successors, legal representatives and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.

 

(g)
This Agreement is not transferable or assignable by the Subscriber.

 

(h)
This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect
to conflicts of law principles.

 

(i)
The Company and the Subscriber hereby agree that any dispute that may arise between them arising out of or in connection with
this Agreement shall be adjudicated before a court located in the City of New York, Borough of Manhattan, and they hereby submit
to the exclusive jurisdiction of the federal and state courts of the State of New York located in the City of New York, Borough
of Manhattan with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now
or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that
such court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale
of the Units hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or
certified mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either
party shall furnish in writing to the other.

 

(j)
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.

 

[Signature
Pages Follow]

 

    	 	- 8 -	 

     

    

 

ACCEPTED
this 23rd day of February 2018, on behalf of Green Spirit Industries Inc.

 

	 	By:	 
	 	Name:
    	 
	 	Title:
    	 

 

    	 	- 9 -	 

     

    

 

ALL
SUBSCRIBERS MUST COMPLETE THIS PAGE

 

IN
WITNESS WHEREOF, the Subscriber has executed this Agreement on the ____ day of __________ 2018.

 

	 	x
    $3.00=	 
	Units
    subscribed for	 	 Aggregate
    Purchase Price

 

Manner
in which Title is to be held (Please Check One):

 

	1.	___	Individual	7.	___	Trust/Estate/Pension
        or Profit sharing Plan

         

        Date
        Opened:______________

	2.	___	Joint
    Tenants with Right of Survivorship	8.	___	As
        a Custodian for

         

        ________________________________

         

        Under
        the Uniform Gift to Minors Act of the State of

         

        ________________________________

	3.	___	Community
    Property	9.	___	Married
    with Separate Property
	4.	___	Tenants
    in Common	10.	___	Keogh
	5.	___	Corporation/Partnership/
    Limited Liability Company	11.	___	Tenants
    by the Entirety
	6.	___	IRA	 	 	 

 

ALTERNATIVE
DISTRIBUTION INFORMATION

 

To
direct distribution to a party other than the registered owner, complete the information below. YOU MUST COMPLETE THIS SECTION
IF THIS IS AN IRA INVESTMENT.

 

Name
of Firm (Bank, Brokerage, Custodian):

 

Account
Name:

 

Account
Number:

 

Representative
Name:

 

Representative
Phone Number:

 

Address:

 

City,
State, Zip:

 

    	 	- 10 -	 

     

    

 

IF
MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.

INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 10.

SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 11.

 

EXECUTION
BY NATURAL PERSONS

 

	_____________________________________________________________________________

        Exact
        Name in Which Title is to be Held

	 
	_________________________________

        

        Name
        (Please Print)
	 	_________________________________

        

        Name
        of Additional Purchaser

	 	 	 
	_________________________________

        

        Residence:
        Number and Street
	 	_________________________________

        

        Address
        of Additional Purchaser

	 	 	 
	_________________________________

        

        City,
        State and Zip Code
	 	_________________________________

        

        City,
        State and Zip Code

	 	 	 
	_________________________________

        

        Social
        Security Number
	 	_________________________________

        

        Social
        Security Number

	 	 	 
	_________________________________

        

        Telephone
        Number
	 	_________________________________

        

        Telephone
        Number

	 	 	 
	_________________________________

        

        Fax
        Number (if available)
	 	________________________________

        

        Fax
        Number (if available)

	 	 	 
	_________________________________

        

        E-Mail
        (if available)
	 	________________________________

        

        E-Mail
        (if available)

	 	 	 
	__________________________________

        

        (Signature)
	 	________________________________

        

        (Signature
        of Additional Purchaser)

 

    	 	- 11 -	 

     

    

 

EXECUTION
BY SUBSCRIBER WHICH IS AN ENTITY

(Corporation,
Partnership, LLC, Trust, Etc.)

 

	_____________________________________________________________________________

        Name
        of Entity (Please Print)

	 
	Date
    of Incorporation or Organization:
	 
	State
    of Principal Office:
	 
	Federal
        Taxpayer Identification Number:

         

        ____________________________________________

        

        Office
        Address

         

        ____________________________________________

        

        City,
        State and Zip Code

         

        ____________________________________________

        

        Telephone
        Number

         

        ____________________________________________

        

        Fax
        Number (if available)

         

        ____________________________________________

        

        E-Mail
(if available)

 

	 	By:
    	 
	 	Name:	 
	 	Title:	 

 

[seal]

 

	Attest:	 	 	    
	 	(If
    Entity is a Corporation)	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	Address

 

    	 	- 12 -	 

     

    

 

INVESTOR
QUESTIONNAIRE

 

Instructions:
Check all boxes below which correctly describe you.

 

	[  ]	You
    are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”),
    (ii) a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether
    acting in an individual or fiduciary capacity, (iii) a broker or dealer registered pursuant to Section 15 of the Securities
    Exchange Act of 1934, as amended (the “Exchange Act”), (iv) an insurance company as defined in Section
    2(13) of the Securities Act, (v) an investment company registered under the Investment Company Act of 1940, as amended
    (the “Investment Company Act”), (vi) a business development company as defined in Section 2(a)(48)
    of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S. Small Business Administration
    under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii) a plan established and
    maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions,
    for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit plan
    within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1)
    the decision that you shall subscribe for and purchase Units, is made by a plan fiduciary, as defined in Section 3(21) of
    ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (2) you
    have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Units is made solely
    by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities
    Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe for
    and purchase the Units is made solely by persons or entities that are accredited investors.
	 	 
	[  ]	You
    are a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended.
	 	 
	[  ]	You
    are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”),
    a corporation, Massachusetts or similar business trust or a partnership, in each case not formed for the specific purpose
    of making an investment in the Units and its underlying securities in excess of $5,000,000.
	 	 
	[  ]	You
    are a director or executive officer of the Company.
	 	 
	[  ]	You
    are a natural person whose individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time of your
    subscription for and purchase of the Units (excluding principal residence).
	 	 
	[  ]	You
    are a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income
    with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable expectation of reaching
    the same income level in the current year.
	 	 
	[  ]	You
    are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units and whose
    subscription for and purchase of the Units is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation
    D.
	 	 
	[  ]	You
    are an entity in which all of the equity owners are persons or entities described in one of the preceding paragraphs.

 

    	 	- 13 -	 

     

    

 

Check
all boxes below which correctly describe you.

 

With
respect to this investment in the Units, your:

 

	 	Investment
    Objectives: 	[  ]
    Aggressive Growth 	[  ]
    Speculation

 

	 	Risk
    Tolerance: 	[  ]
    Low Risk 	[  ]
    Moderate Risk 	[  ]
    High     Risk

 

Are
you associated with a FINRA Member Firm?           [  ] Yes      [  ] No

 

Your
initials (purchaser and co-purchaser, if applicable) are required for each item below:

 

	____
    ____ 	I/We
    understand that this investment is not guaranteed.
	 	 
	____
    ____ 	I/We
    are aware that this investment is not liquid.
	 	 
	____
    ____ 	I/We
    are sophisticated in financial and business affairs and are able to evaluate the risks and merits of an investment in
    this offering.
	 	 
	____
    ____ 	I/We
    confirm that this investment is considered “high risk.” (This type of investment is considered high risk due to
    the inherent risks including lack of liquidity and lack of diversification. Success or failure of private placements such
    as this is dependent on the corporate issuer of these securities and is outside the control of the investors. While potential
    loss is limited to the amount invested, such loss is possible.)

 

FINRA
Affiliation

 

Are
you affiliated directly or indirectly with a member broker-dealer firm of the Financial Industry Regulatory Authority, Inc. as
an employee, officer, director, partner or shareholder or as a relative or member of the same household of an employee, director,
partner or shareholder of a FINRA member broker-dealer firm?

 

Yes____
No_____

 

If
the answer is “yes,” then, in order to purchase securities in the offering, the Subscriber will need to provide the
Issuer with a FINRA member affiliate certification whereby the FINRA member firm acknowledges the affiliation and its receipt
of the notice required by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice with respect to an investment in Units
pursuant to the offering described herein.

 

Anti-Money
Laundering Rules

 

In
order for the Company to comply with applicable anti-money laundering/U.S. Treasury Department Office of Foreign Assets Control
(“OFAC”) rules and regulations, Subscriber is required to provide the following information:

 

    	 	- 14 -	 

     

    

 

	(a)	Payment
    Information

 

(i)
Name and address (including country) of the bank from which Subscriber’s payment to the Company is being wired (the
“Wiring Bank”):

 

		_______________________________________	

 

		_______________________________________	

 

		_______________________________________	

 

		_______________________________________	

 

(ii)
Subscriber’s wiring instructions at the Wiring Bank:

 

		_______________________________________	

 

		_______________________________________	

 

		_______________________________________	

 

(iii)
Is the Wiring Bank located in the U.S. or another “FATF Country”*?

 

_____
Yes   ______ No

 

(iv)
Is Subscriber a customer of the Wiring Bank?

 

_____
Yes   ______ No

 

	(b)	Additional
    Information 

 

Investors
wishing to subscribe must provide the following additional information or documents unless you have previously delivered such
information to the Company or to a Placement Agent for the Offering as part of the establishment of your account at the Placement
Agent.

 

For
Individual Investors:

 

	____
    	A
    government issued form of picture identification (e.g., passport or drivers license).
	 	 
	____
    	Proof
    of the individual’s current address (e.g., current utility bill), if not included in the form of picture identification.
	 	 
	____
    	One
    or more of the above documentations has previously provided to Placement Agent.
	 	 
	 	For
    Funds of Funds or Entities that Invest on Behalf of Third Parties:
	 	 
	_____
    	A
    certificate of due formation and organization and continued authorization to conduct business in the jurisdiction of its organization
    (e.g., certificate of good standing).
	 	 
	_____	An
    “incumbency certificate” attesting to the title of the individual executing these subscription materials on behalf
    of the prospective investor.
	 	 
	_____	A
    completed copy of a certification that the entity has adequate anti-money laundering policies and procedures (“AML Policies
    and Procedures”) in place that are consistent with the USA PATRIOT Act, OFAC and other relevant federal, state or non-U.S.
    anti-money laundering laws and regulations (with a copy of the entity’s current AML Policies and Procedures to which
    such certification relates).

 

 

*
As of the date hereof, countries that are members of the Financial Action Task Force on Money Laundering (“FATF
Country”) are: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong
Kong, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, Kingdom of the Netherlands, New Zealand, Norway, Portugal, Russian Federation,
Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States of America.

 

    	 	- 15 -	 

     

    

 

	_____	A
    letter of reference for any entity not located in the U.S. or other FATF country, from the entity’s local office of
    a reputable bank or brokerage firm that is incorporated, or has its principal place of business located, in the U.S. or other
    FATF Country certifying that the prospective investor maintains an account at such bank/brokerage firm for a length of time
    and containing a statement affirming the prospective investor’s integrity. 
	 	 
	____
    	One
    or more of the above documentations has previously provided to Placement Agent.
	 	 
	 	For
    all other Entity Investors:
	 	 
	_____	A
    certificate of due formation and organization and continued authorization to conduct business in the jurisdiction of its organization
    (e.g., certificate of good standing).
	 	 
	_____	An
    “incumbency certificate” attesting to the title of the individual executing these subscription materials on behalf
    of the prospective investor. 
	 	 
	_____
    	A
    letter of reference from the entity’s local office of a reputable bank or brokerage firm that is incorporated, or has
    its principal place of business located, in the U.S. or other FATF Country certifying that the prospective investor maintains
    an account at such bank/brokerage firm for a length of time and containing a statement affirming the prospective investor’s
    integrity.
	 	 
	_____	If
    the prospective investor is a privately-held entity, a certified list of the names of every person or entity who is directly
    or indirectly the beneficial owner of 25% or more of any voting or non-voting class of equity interests of the Subscriber,
    including (i) country of citizenship (for individuals) or principal place of business (for entities) and, (ii) for individuals,
    such individual’s principal employer and position.
	 	 
	 	If
    the prospective investor is a trust, a certified list of (i) the names of the current beneficiaries of the trust that have,
    directly or indirectly, 25% or more of any interest in the trust, (ii) the name of the settlor of the trust, (iii) the name(s)
    of the trustee(s) of the trust, and (iv) the country of citizenship (for individuals) or principal place of business (for
    entities).
	 	 
	_______	One
    or more of the above documentations has previously provided to Placement Agent.

 

The
Subscriber hereby represents and warrants that all of its answers to this Investor Questionnaire are true as of the date of its
execution of the Subscription Agreement pursuant to which it purchased the Units.

 

    	 	- 16 -	 

     

    

 

	 	 	 
	Name
    of Purchaser [please print]	 	Name
    of Co-Purchaser [please print]
	 	 	 
	 	 	 
	Signature
    of Purchaser (Entities please provide signature of Purchaser’s duly authorized signatory.)	 	Signature
    of Co-Purchaser
	 	 	 
	 	 	 
	Name
    of Signatory (Entities only)	 	 
	 	 	 
	 	 	 
	Title
    of Signatory (Entities only)	 	 

 

    	 	- 17 -	 

     

    

 

VERIFICATION
OF INVESTMENT ADVISOR/BROKER

 

I
state that I am familiar with the financial affairs and investment objectives of the investor named above and reasonably believe
that a purchase of the Units is a suitable investment for this investor and that the investor, either individually or together
with his or her purchaser representative, understands the terms of and is able to evaluate the merits of this offering. I acknowledge:

 

	 	(a)	that
    I have reviewed the Subscription Agreement and forms of securities presented to me, and attachments (if any) thereto;
	 	 	 
	 	(b)	that
    the Subscription Agreement and attachments thereto have been fully completed and executed by the appropriate party; and
	 	 	 
	 	(c)	that
    the subscription will be deemed received by the Company upon acceptance of the Subscription Agreement.

 

Deposit
securities from this offering directly to purchaser’s account?       [  ]
Yes  [  ] No

 

If
“Yes,” please indicate the account number: _____________________________________

 

	 	 	 
	Broker/Dealer	 	Account
    Executive
	 	 	 
	 	 	 
	(Name
    of Broker/Dealer)	 	(Signature)
	 	 	 
	 	 	 
	(Street
    Address of Broker/Dealer Office)	 	(Print
    Name)
	 	 	 
	 	 	 
	(City
    of Broker/Dealer Office) (State) (Zip)	 	(Representative
    I.D. Number)
	 	 	 
	 	 	 
	(Telephone
    Number of Broker/Dealer Office)	 	(Date)
	 	 	 
	 	 	 
	(Fax
    Number of Broker/Dealer Office)	 	(E-mail
    Address of Account Executive)

 

    	 	- 18 -	 

     

    

 

Exhibit
A

 

Form
of Warrant

 

(see
attached)

 

    	 	- 19 -	 

     

    

 

Exhibit
B

 

Form
of Escrow Agreement

 

(see
attached)

 

    	 	- 20 -	 

     

    

 

Exhibit
C

 

Risk
Factors

 

The
risk factors below are in addition to the risk factors described in the Company’s SEC filings and does not include all the
risks that may ultimately affect our Company. Some risks not yet known to us, or currently believed to be immaterial, could ultimately
have an impact on our business or financial performance.

 

AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE IN NATURE, INVOLVES A HIGH DEGREE OF RISK AND SHOULD NOT BE MADE BY
ANY INVESTOR WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT. EACH PROSPECTIVE PURCHASER SHOULD CAREFULLY CONSIDER THE FOLLOWING
RISKS AND SPECULATIVE FACTORS ASSOCIATED WITH THIS OFFERING, AS WELL AS OTHERS DESCRIBED ELSEWHERE IN THIS MEMORANDUM, BEFORE
MAKING ANY INVESTMENTS.

 

NEITHER
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (“SEC” OR “COMMISSION”) NOR ANY STATE SECURITIES
ADMINISTRATOR HAS APPROVED OR DISAPPROVED THE SECURITIES OFFERED HEREIN NOR HAS THE COMMISSION OR ANY STATE SECURITIES ADMINISTRATOR
PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES CONTAINED IN THIS SUBSCRIPTION AGREEMENT OR THE MERITS OF AN INVESTMENT
IN THE SECURITIES OFFERED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT, OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION UNDER SUCH LAWS. SUCH EXEMPTIONS IMPOSE SUBSTANTIAL RESTRICTIONS ON THE
SUBSEQUENT TRANSFER OF SECURITIES SUCH THAT AN INVESTOR HEREIN MAY NOT SUBSEQUENTLY RESELL THE SECURITIES OFFERED HEREIN UNLESS
THE SECURITIES ARE SUBSEQUENTLY REGISTERED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE.

 

Risks
Relating to our Operations

 

Our
operations have recently been affected by extreme weather conditions and the impact of natural disasters.

 

We
operate properties in a region that is subject to extreme weather patterns that may affect our operations. Extreme weather conditions
can, from time to time, have a significant adverse impact upon our properties and dispensaries. Recently, our dispensaries have
been significantly damaged by Hurricane Irma and Hurricane Maria, and we anticipate devoting the necessary funds to repair the
damages caused by such hurricanes to our dispensaries. The costs associated with such repairs will have a negative impact on our
operations and our financial operations.

 

Risks
Relating to the Securities

 

There
will be restrictions on the resale of the Securities.

 

The
Securities, following issuance may not be resold unless, at the time of such intended resale, there is a current registration
statement covering the resale of the Securities or there exists an available exemption from registration under the Securities
Act and such Securities have been registered, qualified, or deemed to be exempt under applicable securities or “blue sky”
laws in the state of residence of the seller or in the state where sales are being effected.

 

    	 	- 21 -	 

     

    

 

We
have never paid dividends on our securities.

 

We
have never paid dividends on our securities and do not presently intend to pay any dividends in the foreseeable future. We anticipate
that any funds available for payment of dividends will be re-invested into the Company to further our business strategy.

 

Risks
Related to this Offering

 

The
offering price for the Securities and other terms has been determined by the Company

 

The
price at which the Securities are being offered and the other terms of the Offering have been determined by us. There is no relationship
between the offering price and our assets, book value, net worth, or any other economic or recognized criteria of value. Rather,
the price of the Securities was based upon various factors including prevailing market conditions, our future prospects and our
capital structure.

 

An
investment in the Securities is speculative and there can be no assurance of any return on any such investment.

 

An
investment in the Securities is speculative and there is no assurance that investors will obtain any return on their investment.
Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire
investment.

 

The
Company has broad discretion over the use of the net proceeds.

 

The
gross proceeds to the Company from the sale of the Securities, assuming the sale of the Maximum Offering, will be $15,000,000.
The Company anticipates using the net proceeds from the Offering for further capital investments, as well as for general working
capital.

 

The
Units will be offered by us on a “reasonable efforts” basis and we may not raise the Maximum Offering Amount.

 

We
are offering the Unites on a “reasonable efforts” basis. In a “reasonable efforts” offering such as the
one described in this Subscription Agreement, there is no assurance that we will sell the Maximum Offering. Accordingly, we may
close upon amounts less than the Maximum Offering, which may not provide us with sufficient funds to fully implement our business
plan.

 

Investor
funds will not accrue interest while in escrow prior to the closing of the Offering.

 

All
funds delivered in connection with subscriptions for Units will be held in a non-interest bearing escrow account until the closing
of the Offering, if any. If we fail to sell and receive subscriptions that the Company deems sufficient to fund our growth initiatives
and capital expenditures prior to the Termination Date, investor subscriptions will be returned without interest or deduction.
Investors in the Units offered hereby will not have the use of escrowed funds or receive interest on such funds pending the completion
of the Offering.

 

    	 	- 22 -	 

     

    

 

There
are significant restrictions on the transferability of securities comprising the Securities. 

 

The
offer and sale of the Securities is being made without registration under state and federal securities laws in reliance upon the
“private offering” exemption of Section 4(a)(2) and/or Rule 506 of Regulation D under the Securities Act as well as
available exemptions under applicable state securities laws. The securities will be “restricted securities” under
the Securities Act and cannot be resold or otherwise transferred unless they are registered under the Securities Act and any applicable
state securities laws or are transferred in a transaction exempt from such registration. Consequently, each investor’s ability
to control the timing of the liquidation of his or her investment in the Company may be restricted. Investors should be prepared
to hold the securities comprising the Securities for an indefinite period of time.

 

The
Securities are being offered pursuant to an exemption from registration under the Securities Act. 

 

The
Offering described in this Subscription Agreement is being made in reliance upon the so-called “private placement”
exemption from registration with the SEC provided by Section 4(a)(2), Regulation D of the Securities Act and the exemptions from
registration provided by the Blue Sky laws of states in which the Units are offered. However, reliance upon these exemptions is
highly technical and should not be viewed as a guarantee that such exemptions are indeed available. If for any reason the private
placement exemption is not available for the Offering, and no other exemption from registration is found to be available, and
the Offering is not registered pursuant to applicable federal or state authorities, the sale of the Securities would be deemed
to have been made in violation of the applicable laws, thus requiring registration of the Securities. As a remedy for such a violation,
each Subscriber would have the right to rescind its purchase and to have its full investment returned. If a Subscriber requests
return of its investment, it is possible that funds would not be available to the Company. Any refunds made would reduce funds
available to the Company for its operations.

 

You
should consult your own tax and legal advisors concerning income tax risks. 

 

We
urge each prospective subscriber to consult with its own representatives, including its own tax and legal advisors, with respect
to the federal (as well as state and local) income tax consequences of this investment before purchasing any securities. Prospective
subscribers should not construe the information set forth in this Subscription Agreement as providing any tax advice and this
Subscription Agreement is not intended to be a complete or definitive summary of the tax consequences of an investment in the
Securities. Prospective subscribers are advised to consult with their own tax counsel concerning the tax aspects of the purchase
of Units.

 

There
are no independent experts representing investors. 

 

Counsel,
accountants and other experts who are available to the Company regarding the structure and terms of the Offering, did not and
do not represent the investors. The Company urges each prospective investor to consult its own legal, tax and financial advisers
regarding the desirability of purchasing the Securities and the suitability of an investment in the Company.

 

    	 	- 23 -

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