LEXARIA CANPHARM ULC As Vendor - and - HILL STREET BEVERAGE COMPANY INC. As Purchaser asset PURCHASE AGREEMENT November 18, 2020

ARTICLE 1 INTERPRETATION

1

1.1

Definitions

1

1.2

Construction

5

1.3

Certain Rules of Interpretation

5

1.4

Knowledge

5

1.5

Performance on Business Days

6

1.6

Calculation of Interest

6

1.7

Currency. In this Agreement, unless specified otherwise:

6

1.8

Schedules

6

ARTICLE 2 PURCHASE AND SALE

6

2.1

Agreement to Purchase and Sell

6

2.2

Restricted Assets

7

2.3

Purchase Price and Purchase Price Allocation

7

2.4

Transfer Taxes

8

2.5

Section 85 Election

9

2.6

GST/HST Election

9

ARTICLE 3 CLOSING ARRANGEMENTS

9

3.1

Closing

9

3.2

Vendor’s Closing Deliveries

9

3.3

Purchaser’s Closing Deliveries

9

ARTICLE 4 CONDITIONS OF CLOSING

9

4.1

Conditions for the Benefit of the Purchaser

9

4.2

Conditions for the Benefit of the Vendor.

11

4.3

Termination Events

12

4.4

Effect of Termination

12

4.5

Waiver of Conditions of Closing

12

ARTICLE 5 REPRESENTATIONS AND WARRANTIES

12

5.1

Representations and Warranties of the Vendor

12

5.2

Representations and Warranties of the Purchaser

15

5.3

Qualification to Representations and Warranties of the Vendor.

17

5.4

Survival of Representations, Warranties and Covenants of the Vendor

17

5.5

Survival of the Representations, Warranties and Covenants of the Purchaser

18

ARTICLE 6 COVENANTS

18

6.1

Transfer of Documentation

18

6.2

Risk of Loss

19

6.3

Conduct Prior to Closing

19

6.4

Notification of Certain Matters

20

ARTICLE 7 INDEMNIFICATION

20

7.1

Definitions

20

7.2

Indemnification by the Vendor

21

7.3

Indemnification by the Purchaser

22

7.4

Thresholds and Limitations

22

7.5

Notice of Claim

23

7.6

Third Party Claims

23

7.7

Direct Claims

25

7.8

Waiver

25

7.9

Duty to Mitigate and Subrogation

25

7.10

Obligation to Reimburse

25

7.11

Exclusivity

26

7.12

Exceptions to Indemnification

26

7.13

Set-Off

26

7.14

Trust and Agency

26

ARTICLE 8 GENERAL

26

8.1

Confidentiality of Information

26

8.2

Expenses

27

8.3

Best Efforts

27

8.4

No Third Party Beneficiary

27

8.5

Entire Agreement

27

8.6

Estimates, Projections and Data Room Materials.

28

8.7

Non-Merger

28

8.8

Time of Essence

28

8.9

Amendment

28

8.10

Waiver of Rights

28

8.11

Jurisdiction

28

8.12

Governing Law

28

8.13

Notices

29

8.14

Assignment

30

8.15

Further Assurances

30

8.16

Severability

30

8.17

Successors

30

8.18

Counterparts

30

A.

1.1 Definitions. In this Agreement, including the Recitals to this Agreement, unless the context otherwise requires:

(1)

(a)

(b)

For purposes of this definition, a body corporate is controlled by a person or by two or more bodies corporate if (i) securities of the body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate, are held, other than by way of security only, by or for the benefit of that person or by or for the benefit of those bodies corporate; and (ii) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate. For the purposes of this definition, a body corporate is a subsidiary of another body corporate if (i) it is controlled by (A) that other body corporate, (B) that other body corporate and one or more bodies corporate each of which is controlled by that other body corporate, or (C) two or more bodies corporate each of which is controlled by that other body corporate; or (ii) it is a subsidiary of a body corporate that is a subsidiary of that other body corporate.

(2)

(3)

(4)

(5)

(6)

(7)

(a)

(b)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

(a)

(b)

(21)

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(a)

(b)

(c)

at law or in equity or before or by any Governmental Authority.

(31)

(32)

(33)

(34)

(35)

(36)

(37)

(38)

(39)

(40)

(41)

(42)

1.2 Construction. This Agreement has been negotiated by each Party with the benefit of legal representation, and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party does not apply to the construction or interpretation of this Agreement.

1.3 Certain Rules of Interpretation. In this Agreement:

(1)

(2)

(3)

(a)

(b)

(c)

(d)

(e)

(f)

1.4 Knowledge. In this Agreement, any reference to the knowledge of any Party means to the best of the knowledge, information and belief of the Party after reviewing all relevant records and making due inquiries regarding the relevant matter of all relevant Representatives of the Party, and any reference to the knowledge of the Vendor means to the best of the knowledge, information and belief of any of them after reviewing all relevant records and making due inquiries regarding the relevant matter of all their respective relevant Representatives.

(1)

(2)

(3)

(1)

Schedule 2.1(1)

Purchased Assets

Schedule 2.3(3)

Limited License Agreement

Schedule 2.3(3)

Purchase Price Allocation

Schedule 5.1(10)

Vendor Approvals

Schedule 5.2(5)

Purchaser Approvals

(2)

(3)

(1)

(2)

(3)

(1)

(2)

(a)

(b)

(c)

(d)

(e)

(f)

(3)

(1)

(2)

(a)

(b)

(i)

(ii)

(iii)

(c)

(d)

(e)

(3)

(1)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(ii)

(A)

(B)

(C)

(iii)

(iv)

(v)

(vi)

(i)

(1)

(a)

(b)

(c)

(d)

(e)

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(2)

(1)

(2)

(3)

(4)

(1)

(2)

(3)

(4)

(5)

(6)

(a)

(b)

(i)

(ii)

(iii)

(c)

(d)

the requirement of any Approval from any of its creditors.

(7)

(a)

(b)

(c)

(8)

(9)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(10)

(11)

(a)

(b)

(12)

(13)

(14)

(1)

(2)

(3)

(4)

(5)

(6)

(a)

(i)

(ii)

(iii)

(b)

(7)

(8)

(9)

(a)

(b)

(c)

(10)

(11)

(a)

(b)

(c)

(d)

(e)

(f)

(12)

(13)

(1)

(2)

(3)

5.5 Survival of the Representations, Warranties and Covenants of the Purchaser. The representations and warranties of the Purchaser and, to the extent that they have not been fully performed or waived at or prior to Closing, the covenants and other obligations of the Purchaser, contained in this Agreement and in any contract, agreement, instrument, certificate or other document executed or delivered pursuant to this Agreement survive Closing and continue for the benefit of the Vendor notwithstanding the Closing, any investigation made by or on behalf of the Vendor or any knowledge of the Vendor, as follows:

(1)

(2)

(3)

(1)

(2)

6.2 Risk of Loss. During the Interim Period, the Vendor shall maintain in force all the policies of property damage insurance under which any of the Purchased Assets are insured. If, before the Closing, any of the Purchased Assets are lost, damaged or destroyed or is appropriated, expropriated or seized by any Governmental Authority, and the loss, damage, destruction, appropriation, expropriation or seizure constitutes a Material Adverse Change, then the Purchaser at its sole discretion may either:

(1)

(2)

6.3

(1)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(2)

(a)

(b)

(c)

6.4 Notification of Certain Matters.

(1)

(a)

(b)

(c)

(2)

7.1 Definitions. In this Article 7:

(1)

(2)

(3)

(4)

(5)

(a)

(b)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

7.2 Indemnification by the Vendor.

(1)

(a)

(b)

(c)

(d)

(e)

(2)

7.3 Indemnification by the Purchaser. In addition to any other indemnification provided by the Purchaser contained in this Agreement and subject to this Article 7, the Purchaser shall indemnify and save harmless the Vendor and, to the extent named or involved in any Third Party Claim, the Vendor Indemnitees from, and shall pay to the Vendor and the Vendor Indemnitees, on demand, the amount of any and all Losses as a result of or arising in connection with:

(1)

(2)

(3)

7.4 Thresholds and Limitations.

(1)

(2)

(3)

(4)

(a)

(b)

7.5 Notice of Claim.

(1)

(2)

(3)

7.6 Third Party Claims.

(1)

(a)

(b)

(c)

(2)

(a)

(b)

(c)

(d)

(3)

(a)

(b)

(c)

(4)

7.7 Direct Claims. Following receipt of an Indemnification Notice in respect of a Direct Claim, the Indemnitor has 60 days to make such investigation of the Direct Claim as is considered necessary or desirable. For the purpose of that investigation, the Indemnitee shall make available to the Indemnitor the information relied on by the Indemnitee to substantiate the Direct Claim, together with such information as the Indemnitor may reasonably request. If the Parties agree at or prior to the expiry of this 60 day period (or prior to the expiry of any extension of this period agreed to by the Parties) as to the validity and amount of that Direct Claim, the Indemnitor shall immediately pay to the Indemnitee the full amount as agreed to by the Parties of the Direct Claim. For clarity, the Purchaser is deemed to have incurred or suffered Losses as of and from the Closing Date as a consequence of any reduction in the value of the Purchased Assets resulting from an inaccuracy or breach of any representation or warranty by the Vendor or any breach or non-fulfillment by the Vendor of any of its covenants or obligations under this Agreement.

7.8 Waiver. The Indemnitor waives any right it may have to require an Indemnitee to proceed against or enforce any other right, power, remedy or security or to claim payment from any other Person before claiming under the indemnity provided for in this Article 7. It is not necessary for an Indemnitee to incur expense or make payment before enforcing that indemnity.

7.9 Duty to Mitigate and Subrogation.

(1)

(2)

7.10 Obligation to Reimburse.

(1)

(2)

(3)

(4)

7.11 Exclusivity. Unless otherwise provided in this Agreement or any contract, agreement, instrument, certificate or other document delivered pursuant to this Agreement, the provisions of this Article 7 constitute the sole remedy available to the Vendor and the Purchaser to any Claim for breach of covenants, representation, warranty or other obligation or provision of this Agreement or any contract, agreement, instrument, certificate or other document delivered pursuant to this Agreement (other than a Claim for specific performance or injunctive relief) and to any and all other indemnities provided in this Agreement or in any contract, agreement, instrument, certificate or other document delivered pursuant to this Agreement.

7.12 Exceptions to Indemnification. Neither the Purchaser nor any Purchaser Indemnitee has any claim or other recourse against the Vendor nor does the Vendor or any Vendor Indemnitee have any liability in connection with any breach of any representation, warranty or covenant of the Vendor in this Agreement or any Transaction Documents, which relate to actions or matters arising during the Interim Period and which breach was committed by the Vendor as a result of written instructions received from the Purchaser (or any of its Representatives).

7.13 Set-Off. A Party is entitled to set-off any Losses subject to indemnification under this Agreement or in any contract, agreement, instrument, certificate or other document delivered pursuant to this Agreement against any other amounts payable by the Party to the other party whether under this Agreement or otherwise.

7.14 Trust and Agency. The Purchaser accepts each indemnity in favour of any of the Purchaser Indemnitees that is not a Party as agent and trustee of that Purchaser Indemnitee and may enforce any such indemnity in favour of that Purchaser Indemnitee on behalf of that Purchaser Indemnitee. The Vendor accepts each indemnity in favour of any of the Vendor Indemnitees as agent and trustee of that Vendor Indemnitee and may enforce any such indemnity in favour of that Vendor Indemnitee on behalf of that Vendor Indemnitee.

8.1 Confidentiality of Information.

(1)

(a)

(b)

(c)

(d)

(e)

Notwithstanding the foregoing, Confidential Information does not include any information that at the time has become generally available to the public other than as a result of a disclosure by the other Party or any of its Representatives, any information that was available to the other Party or its Representatives on a non-confidential basis before the date of this Agreement or any information that becomes available to the other Party or its Representatives on a non-confidential basis from a Person (other than the Party to which the information relates or any of its Representatives) who is not, to the knowledge of the other Party or its Representatives, otherwise bound by confidentiality obligations to the Party to which the information relates in respect of the information or otherwise prohibited from transmitting the information to the other Party or its Representatives.

(2)

(3)

(4)

8.2 Expenses. Each Party shall pay all expenses (including Taxes imposed on those expenses) it incurs in the authorization, negotiation, preparation, execution and performance of this Agreement and the Transactions, including all fees and expenses of its legal counsel, bankers, investment bankers, brokers, accountants or other representatives or consultants.

8.3 Best Efforts. In this Agreement, unless specified otherwise, an obligation of any Party to use its best efforts to obtain any Approval does not require the Party to make any payment to any Person for the purpose of procuring the Approval, except for payments for amounts due and payable to that Person, payments for incidental expenses incurred by that Person and payments required by any Applicable Law.

8.4 No Third Party Beneficiary. Except as provided for in Section 7.14, this Agreement is solely for the benefit of the Parties and no third party accrues any benefit, claim or right of any kind pursuant to, under, by or through this Agreement.

8.5 Entire Agreement. This Agreement together with the other Transaction Documents delivered at Closing constitute the entire agreement between the Parties pertaining to the subject matter of this Agreement and the other Transaction Documents and supersede all prior correspondence, agreements, negotiations, discussions and understandings, written or oral. Except as specifically set out in this Agreement or the other Transaction Documents, there are no representations, warranties, conditions or other agreements or acknowledgements, whether direct or collateral, express or implied, written or oral, statutory or otherwise, that form part of or affect this Agreement or the other Transaction Documents or which induced any Party to enter into this Agreement or the other Transaction Documents. No reliance is placed on any representation, warranty, opinion, advice or assertion of fact made either prior to, concurrently with, or after entering into, this Agreement or any other Transaction Document, or any amendment or supplement hereto or thereto, by any Party to this Agreement or any other Transaction Documents or its Representatives, to any other Party or its Representatives, except to the extent the representation, warranty, opinion, advice or assertion of fact has been reduced to writing and included as a term in this Agreement or that other Transaction Document, and none of the parties to this Agreement or any other Transaction Document has been induced to enter into this Agreement or any other Transaction Documents or any amendment or supplement by reason of any such representation, warranty, opinion, advice or assertion of fact. There is no liability, either in tort or in contract, assessed in relation to the representation, warranty, opinion, advice or assertion of fact, except as contemplated in this Section.

8.6 Estimates, Projections and Data Room Materials.

(1)

(2)

8.7 Non-Merger. Except as otherwise provided in this Agreement, the covenants, representations and warranties set out in this Agreement do not merge but survive Closing and, notwithstanding such Closing or any investigation by or on behalf of a Party, continue in full force and effect. Closing does not prejudice any right of one Party against another Party in respect of any remedy in connection with anything done or omitted to be done under this Agreement.

8.8 Time of Essence. Time is of the essence of this Agreement.

8.9 Amendment. This Agreement may be supplemented, amended, restated or replaced only by written agreement signed by each Party.

8.10 Waiver of Rights. Any waiver of, or consent to depart from, the requirements of any provision of this Agreement is effective only if it is in writing and signed by the Party giving it, and only in the specific instance and for the specific purpose for which it has been given. No failure on the part of any Party to exercise, and no delay in exercising, any right under this Agreement operates as a waiver of that right. No single or partial exercise of any such right precludes any other or further exercise of that right or the exercise of any other right.

8.11 Jurisdiction. The Parties irrevocably and unconditionally attorn to the exclusive jurisdiction of the courts of the Province of British Columbia sitting in Vancouver in respect of all disputes arising out of, or in connection with, this Agreement, or in respect of any legal relationship associated with it or derived from it.

8.12 Governing Law. This Agreement is governed by, and interpreted and enforced in accordance with, the laws of the Province of British Columbia and the laws of Canada applicable therein.

8.13 Notices.

(1)

(2)

8.14 Assignment. No Party may assign or transfer, whether absolutely, by way of security or otherwise, all or any part of its rights or obligations under this Agreement to any Person.

8.15 Further Assurances. Each Party shall promptly do, execute, deliver or cause to be done, executed or delivered all further acts, documents and matters in connection with this Agreement that any other Party may reasonably require, for the purposes of giving effect to this Agreement.

8.16 Severability. If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, that provision will, as to that jurisdiction, be ineffective only to the extent of that restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement, without affecting the validity or enforceability of that provision in any other jurisdiction and, if applicable, without affecting its application to the other Parties or circumstances. The Parties shall engage in good faith negotiations to replace any provision which is so restricted, prohibited or unenforceable with an unrestricted and enforceable provision, the economic effect of which comes as close as possible to that of the restricted, prohibited or unenforceable provision which it replaces.

8.17 Successors. This Agreement is binding on, and enures to the benefit of, the Parties and their respective successors.

8.18 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together constitute one agreement. Delivery of an executed counterpart of this Agreement by facsimile or transmitted electronically in legible form, including in a tagged image format file (TIFF) or portable document format (PDF), shall be equally effective as delivery of a manually executed counterpart of this Agreement.

LEXARIA CANPHARM ULC

By:

▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Chief Executive Officer

By:

▇▇▇▇ ▇▇▇▇▇▇▇▇

President

HILL STREET BEVERAGE COMPANY INC.

By:

▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Chairman & Chief Executive Officer

·

·

·

o

o

o

o

·

·

·

·

o

o

o

1)

License of Technology: Subject to the terms and conditions of this Agreement, LICENSOR hereby grants to LICENSEE a limited license (as defined in Section 2 below), to use the Technology to develop, test, make, sell, offer for sale and distribute the End Products during the Term of this Agreement.

a)

Limited Ability to Sub-license: LICENSEE is expressly permitted to sub-license its license to use the Technology to Related Entities (all as defined in Exhibit D), without LICENSOR’s consent; provided, however, that LICENSEE may sub-license its license to one Person per country of the Territory per End Product Line as defined in Schedule B, to perform contract manufacturing for LICENSEE (a “Contract Manufacturer”) so long as LICENSEE notifies LICENSOR of the name and address of such manufacturer prior to any sub-license. At the request of LICENSEE, LICENSOR shall have the option of acting as the LICENSEE’s Contract Manufacturer for the production of End Products in Canada for the sole purpose of exportation outside of Canada and the US, at terms to be negotiated by the Parties at the time of the request. Any Contract Manufacturer must agree in writing to all obligations of LICENSEE hereunder, including those relating to confidentiality and non-use regarding both Parties’ Confidential Information. The LICENSEE shall have the right, in its sole and absolute discretion to terminate a Contract Manufacturer at any time and replace such Contract Manufacturer. In the event that LICENSEE performs one or more of its obligations under this Agreement through a Related Entity or Contract Manufacturer, then LICENSEE shall at all times be responsible for the performance by such Related Entity or Contract Manufacturer of LICENSEE’s obligations hereunder. The LICENSEE shall not have any additional rights to sub-license the license to use the Technology unless the LICENSOR provides its prior written approval to such sub-license.

b)

Active Substances: Nothing in this Agreement, with respect to the specific license being granted by the LICENSOR to the LICENSEE therein, infers applicability of the Technology by LICENSEE for enabling active substance incorporation and potentiation in LICENSEE’s End Products, other than those End Products derived from cannabis or hemp and containing 0.3% or greater THC. LICENSEE is prohibited from developing, manufacturing or selling in its Territory, any End Product that is marketed as the following types of products: (i) a fat soluble vitamin product for vitamins A, D, E, and/or K, whether in their natural or synthetic forms, (ii) a Non-Steroidal Anti Inflammatory (NSAID) product which contains acetaminophen, ibuprofen, acetylsalicylic acid, diclofenac, indomethacin, and piroxicam, or substances similar thereto; or (iii) a nicotine or nicotine analog product and any other active substance not specifically named and allowed within this Agreement. Certain cannabinoids are thought to deliver anti-inflammatory benefits which benefits ARE permitted under this Agreement if delivered through the cannabinoids described as the End Products; and are only prohibited if delivered through NSAIDs’ as described in this section.

2)

Non-Exclusivity. LICENSEE will have the following rights to research, develop, produce and sell the End Products for the Term in the Territory using the Technology licensed pursuant to this Agreement.

a)

In the Territory: Non-Exclusive rights from the Effective Date until the expiry of the Term, allowing LICENSEE the non-exclusive ability to continue to manufacture the End Products directly or through its Related Entity or Contract Manufacturer in the Territory for the balance of the term of this Agreement as per Section 4.

b)

LICENSOR’s Products: LICENSOR shall not be prohibited from licensing or similar arrangements with respect to the Technology. LICENSOR is expressly permitted to utilize the Technology on any basis it chooses, at any time, for producing and commercializing its own products under the terms of the Asset Purchase Agreement it effected with LICENSEE dated November 18, 2020.

3)

Rights and Obligations Related to the Technology. Except as expressly provided in this section or elsewhere in this Agreement, neither Party will be deemed by this Agreement to have been granted any license or other rights to the other Party’s products, information or other intellectual property rights, either expressly or by implication, estoppel or otherwise.

a)

LICENSOR Intellectual Property: LICENSOR, via its license from Lexaria Bioscience Corp., retains its full, absolute, and complete rights to all processes covered or described in all of the issued patents and patent applications filed prior to the date of this Agreement as listed in the attached Exhibit A in connection with the enhancement of 0.3% or greater THC End Products, and any future continuations, continuations in part or divisional applications filed thereto, including but not limited to the US Provisional patent applications, US Utility patent application, and the International patent application, that comprise the Technology (collectively “Licensor IP”), unless LICENSOR or Lexaria Bioscience Corp. allows these applications to abandon or lapse, or otherwise fails to protect the Technology. Except as expressly provided for in Section 2, nothing in this Agreement or in the conduct of the Parties shall be interpreted as preventing LICENSOR from granting to any other person a license for use of the Licensor IP or from using the Licensor IP in any manner whatsoever outside of the use for drug, pharmaceutical, or biopharmaceutical purposes which is not permitted.

b)

LICENSEE Intellectual Property: Any intellectual property resulting solely from LICENSEE’s work, know-how, or development that does not include nor rely upon the Licensor IP or jointly owned intellectual property, as described in this Agreement, shall be owned by LICENSEE (“Licensee IP”).

c)

i)

LICENSOR Improvements: The entire right and title to the Technology, whether or not patentable, and any patent applications or patents based thereon, which directly relate to and are not severable from Licensor IP and which are improvements thereto by LICENSOR or any Related Entity of the LICENSOR, and such associated employees or others acting for LICENSOR’s or LICENSOR’s Related Entity’s behalf shall be owned solely by LICENSOR or such Related Entity of LICENSOR as designated by LICENSOR (in any such case the “Licensor Improvements”) and all costs associated with creation, filing and prosecution of any patent applications related thereto shall be borne by LICENSOR. If LICENSOR develops any Licensor Improvements, LICENSOR will promptly provide LICENSEE with written notice of such Licensor Improvements. Following receipt of notice of such Licensor Improvements, LICENSEE or any LICENSEE Related Entities shall have the right to utilize said Licensor Improvements during the Term of this Agreement (and any renewal terms).

ii)

LICENSEE Improvements: Rights and title to improvements whether or not patentable, and any patent applications or patents based thereon, which directly relate to and are not severable from Licensor IP and which are improvements thereto by LICENSEE, its employees or a Related Entity, as defined by this Agreement, shall be owned by the LICENSEE (“Licensee Improvements”) and all costs associated with creation, filing and prosecution of any patent applications related thereto shall be borne by LICENSEE. In respect to such Licensee Improvements, LICENSOR grants LICENSEE a license to use the underlying intellectual property supporting any such improvement for so long as this Agreement remains in effect (including any renewal terms) and LICENSOR agrees to negotiate in good faith, terms of a license renewal after the end of the Term of this Agreement and any renewal terms per Section 4. a). If LICENSEE develops any Licensee Improvements, LICENSEE will promptly provide LICENSOR with written notice of such Licensee Improvements to validate LICENSEE’S claim to Licensee Improvements. Following receipt of notice of such Licensee Improvements, LICENSOR shall have the exclusive option during the Term of this Agreement (and any renewal terms) to purchase or license from LICENSEE the Licensee Improvements for LICENSOR’s use, or for the use by LICENSOR’s Related Entities, upon mutually agreeable terms and conditions that the parties shall negotiate in good faith.

iii)

Joint Improvements: Rights and title to the Technology, whether or not patentable, and any patent applications or patents based thereon, which directly relate to and are not severable from Licensor IP and which are improvements thereto by both LICENSOR and LICENSEE shall be jointly owned intellectual property by LICENSOR and LICENSEE and all costs associated with creation, filing and prosecution of any patent applications related thereto shall be shared equally by LICENSOR and LICENSEE subject to 3) e) below.

iv)

Improvements; Assignment. LICENSEE and LICENSOR hereby represent that all of their employees and other persons acting on their behalf in performing their respective obligations under this Agreement shall be obligated under a binding written agreement to assign, or as it shall direct, all Joint Improvements that include or rely on the Technology conceived or reduced to practice by such employees or other persons acting on their behalf in accordance with this Agreement to the benefit of LICENSOR or LICENSEE, as applicable.

v)

Improvements; Confidential Information. All Improvements shall constitute Confidential Information and shall be subject to the confidentiality provisions set forth in this Agreement.

d)

i)

Upon making any invention that does not include or rely upon the Technology neither the LICENSOR nor the LICENSEE (in either such case the “Inventor”) will have any obligation to share such information of the invention with the other Party or inform the other Party of said invention, and the Inventor retains unrestricted rights and ability to use, assign, license, seek patent and other forms of intellectual property protection related to said invention. For the avoidance of doubt, any such new invention, development, technology, and/or intellectual property belongs solely to the Inventor.

e)

i)

Prosecution and Maintenance of Jointly Owned Patents. The Parties shall cooperate to cause the filing of one or more patent applications covering any such Jointly Owned IP. The Parties will mutually agree upon which of them shall be responsible for filing, prosecution and maintenance of Jointly Owned IP. The expenses of such filing, prosecution and maintenance shall be equally shared by the Parties unless one of the Parties assigns all of its rights to the other Party. Both Parties agree to assist the other Party in enforcing its rights in the Jointly Owned IP. The costs of any such assistance or cooperation will be borne by the requesting party.

ii)

Jointly Owned IP Rights. LICENSOR grants to LICENSEE or Related Entity of LICENSEE an exclusive, non-sub-licensable, fully-paid, royalty-free, perpetual license to any Jointly Owned IP. Further, LICENSEE grants to LICENSOR or Related Entity of LICENSOR an exclusive, non-sub-licensable, fully-paid, royalty-free, perpetual license to any Jointly Owned IP.

f)

No Challenge. LICENSEE expressly acknowledges and agrees that all rights in and to the Licensor IP shall remain vested in LICENSOR, and LICENSEE shall not assert any rights to the Licensor IP except as otherwise provided in this Section 3.

g)

Notice Requirements. To the extent required by applicable rules and regulations LICENSEE agrees that it will include such patent notices and other proprietary notices on all End Products or related materials that contain any Technology as may be reasonably required by regulators in order to give appropriate notice of all intellectual property rights therein or pertaining thereto.

h)

i)

LICENSEE agrees to maintain and preserve the quality of the Technology and to use the Technology in good faith and in a manner consistent with the uses approved herein.

ii)

LICENSEE shall (a) ensure that all End Products created under the Technology are developed, tested, promoted, manufactured and distributed in a professional manner in compliance with all generally accepted industry standards, and (b) comply in all material respects with any and all laws, rules and regulations that are applicable to the development, testing, promotion, manufacture and distribution of the End Products and such related materials.

i)

Prosecution and Maintenance. LICENSOR, directly or indirectly, shall be solely responsible for, and have control of, preparing, filing, prosecuting, obtaining, and maintaining the Technology (including Provisional Patent Applications and, if any, issued Patents). LICENSOR shall take such actions as it shall deem to be appropriate in its discretion in connection therewith and shall pay all costs and expenses incurred by it in connection with the foregoing activities.

j)

Infringement. If LICENSEE learns of any activity by a third party that might constitute an infringement of LICENSOR’s rights in any of the Technology, or if any third party asserts that LICENSEE’s use of the Technology constitutes unauthorized use or infringement, LICENSEE shall so notify LICENSOR.

k)

i)

LICENSOR has the right, directly or indirectly, but not the obligation, to enforce its rights against any third-party infringement and to defend LICENSEE’s right to use the Licensor IP. If LICENSOR prosecutes any alleged infringement of the Licensor IP, or defends LICENSEE’s right to use the Licensor IP, LICENSOR shall control such litigation and shall bear the expense of such actions. LICENSEE shall make all reasonable efforts to assist LICENSOR therewith, including joining such action as a party plaintiff or providing such evidence and expert assistance as LICENSEE may have within its control, with all costs for such cooperation to be borne by LICENSOR. LICENSOR shall retain the award of any damages in this case. If LICENSOR chooses to not enforce against an alleged infringement, LICENSEE may itself enforce LICENSOR’s rights (and its own rights as a licensee) in the Technology, with all costs to be borne by LICENSEE. LICENSEE shall retain the award of any damages in this case.

ii)

LICENSOR has the right of examination of LICENSEE financial statements, production records, shipping and warehouse slips and statements if and as required to substantiate reported production and sales levels used to determine royalty levels. Any information provided to LICENSOR under this section is provided under strictest confidentiality and is subject to the confidentiality clauses of this Agreement.

4)

a)

Term and Renewal. This Agreement shall take effect upon the Effective Date and shall remain in effect until completion of the Term as defined in Exhibit D with any such renewals of the Term being subject to mutual agreement and upon terms and conditions to be negotiated based on the fair market value at that time.

b)

Termination. This Agreement and the licenses granted hereunder may be terminated prior to the expiration of the Term of this Agreement as follows:

i)

This Agreement may be terminated by LICENSOR by written notice to LICENSEE upon the occurrence of any of the following: (i) failure to pay any license fees for more than thirty (30) days after they become due; (ii) LICENSEE’s violation of the provisions of Sections 7 and 9 or LICENSEE’s material breach of any other term of this Agreement, which breach is not cured within thirty (30) days after written notice of such breach from LICENSOR; (iii) failure of LICENSEE, or a Related Entity of LICENSEE, to maintain all required licenses and governmental authorizations required for the conduct of its business or to comply in all material respects with applicable laws; or (iv) LICENSEE ceases operations, makes a general assignment for the benefit of creditors, or is the subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding.

ii)

This Agreement may be terminated by LICENSEE by written notice to LICENSOR (i) in the event of material breach by LICENSOR of its obligations or representations and warranties under this Agreement, which breach is not cured within thirty (30) days after written notice of such breach from LICENSEE; or (ii) without cause and upon payment of the Severance Fee noted in Section 2 (c) and as set out in Exhibit C.

c)

End Product Termination Right. After the fourth anniversary of the Effective Date of this Agreement AND the payment in full of the Purchase Price for the Purchased Assets of the LICENSEE, all as defined and described in that certain Asset Purchase Agreement dated November 18, 2020 between the LICENSOR AND LICENSEE, the LICENSOR shall have the right, but not the obligation, to terminate the LICENSEE’s use of the Technology in connection with End Products designated as “Other Products” and “Capsules, Pills, Tablets and Melts” in Exhibit B, upon six (6) months’ written notice to LICENSEE.

d)

Effect of Termination. Except as provided for in Section 5, LICENSEE’s payment obligations shall extinguish if this Agreement is terminated. If the Agreement expires without any renewal thereof, then LICENSEE must immediately cease and desist all utilization of the Technology for any purpose whatsoever including to manufacture, distribute or sell End Products, except that LICENSEE may continue to distribute and sell End Products until all finished goods and raw materials inventory that pertain to the Technology have been sold and LICENSEE shall be obligated to pay LICENSOR any related License Fees (as defined in Section 5 for such sales. In any event, upon the natural future expiration of all pending and issued patents, as applicable, related to the Technology described herein the License Agreement shall expire and LICENSEE shall have no further payment obligations to LICENSOR.

e)

Survivability. This agreement in its entirety survives and remains in force if either Party is acquired by any unknown third party. In the event that either Party negotiates any such sale or acquisition, then it shall form a part of any such sale or acquisition agreement, that this Agreement remains binding upon the third party that is the purchaser or acquirer.

5)

a)

Until such time as the LICENSOR satisfies all of its obligations to pay the Purchase Price, the LICENSEE shall be granted a royalty free license to the use of the Technology within the Territory for the enhancement of the End Products.

b)

Subsequent to the LICENSOR’s complete payment of the Purchase Price, LICENSEE shall pay LICENSOR certain license fees as set forth in Exhibit C (collectively, the “License Fee”). The License Fee for a period shall be paid by LICENSEE to LICENSOR, in U.S. funds, by cheque or wire transfer of immediately available funds pursuant to the bank account identified by LICENSOR in advance of such payment. If LICENSEE materially breaches this Agreement, LICENSEE shall remain responsible for any License Fee payments due through the end of the calendar quarter during which such breach occurs. LICENSEE’s failure to pay any portion of the applicable License Fee or any reimbursable expenses when due will be a material breach of this Agreement by LICENSEE. If any payment due to LICENSOR under this Agreement is not paid within thirty (30) days following such Party’s written demand therefore, then such payment shall bear interest at the rate of one and one-half percent (1.5%) per month from the date such payment was originally due.

6)

a)

i)

LICENSEE shall be solely responsible for all costs of researching, producing and selling the End Products, including raw materials and labor. LICENSEE acknowledges and agrees that it is solely responsible as applicable for (i) procurement of cannabis extraction machinery, cannabis, cannabis oils, and other raw materials as required; (ii) compliance with all applicable laws relating to production and sale of cannabis products; and (iii) procurement and maintenance of all required licensing and permits and/or operating authorities, including proper zoning of production and distribution facilities.

b)

i)

Upon execution of this Agreement, LICENSOR shall make the Technology and any additional documents or materials not yet provided as described in Section 1 otherwise necessary to effectuate the license of the Technology contemplated herein available for LICENSEE.

ii)

Upon request by LICENSEE, LICENSOR shall provide LICENSEE with onsite or remote consultation, management services or support in connection with LICENSEE’s implementation and use of the Technology (including Licensor Improvements) during the term of this Agreement, with reasonable costs and travel expenses paid for by LICENSEE.

7)

a)

i)

LICENSEE is a corporation duly organized and in good standing under the laws of British Columbia, Canada;

ii)

the execution, delivery and performance of this Agreement by LICENSEE has been duly authorized by all necessary action on the part of LICENSEE’s directors, managers and/or members and does not violate, conflict with, or require the consent or approval of any third party pursuant to any contract or legally binding obligation to which LICENSEE is subject;

iii)

this Agreement constitutes the valid and binding obligation of LICENSEE enforceable against LICENSEE in accordance with its terms;

iv)

LICENSEE is knowledgeable of the applicable laws and regulations of the Territory pertaining to the research, manufacture and distribution of the End Products, the use of cannabis and THC in the End Products and the use of the Technology and confirms that the LICENSEE is in compliance with such laws and regulations; and

v)

before LICENSEE begins to distribute and sell the End Products which use the Technology, LICENSEE will possess all required licenses, permits or operating authorities necessary for its operations and the manufacture and sale of the End Products as cannabis products and will be in compliance with all applicable laws and regulations.

b)

i)

ii)

iii)

iv)

8)

Reliance. The LICENSEE acknowledges that the LICENSOR is relying on the representations and warranties of the LICENSEE in the provision of this license to the Technology.

9)

Confidentiality. At all times during the term of this Agreement (including any renewal term) and thereafter, each Party undertakes not to use or disclose and to otherwise keep confidential, any trade secrets or proprietary information, including, but not limited to the Technology and other intellectual property of the other Party (in each instance, the “Confidential Information”) except to the extent required to perform each Party’s respective obligations under this Agreement. Without limitation of the foregoing, each Party will hold the other Party’s Confidential Information in confidence and will (a) exercise the same degree of care, but no less than a reasonable degree of care, to prevent its disclosure as such Party would take to safeguard its own confidential or proprietary information, and (b) limit disclosure of the Confidential Information, including any notes, extracts, analyses or materials that would disclose the Confidential Information, solely to those of its employees who need to know the information for purposes of performing the respective Party’s obligations under this Agreement and who agree to keep such information confidential. Upon termination of this Agreement, each Party shall immediately return all Confidential Information to the other Party and further the LICENSOR shall have the right to conduct an on-site audit of the LICENSEE within three (3) business days of termination to ensure compliance with the terms of this Agreement, at LICENSOR’s expense.

a)

Limitations. This section does not apply to any information that: (a) is already lawfully in the receiving Party’s possession (unless received pursuant to a nondisclosure agreement); (b) is or becomes generally available to the public through no fault of the receiving Party; (c) is disclosed to the receiving Party by a third party who may transfer or disclose such information without restriction; (d) is required to be disclosed by the receiving Party as a matter of law (provided that the receiving Party will use all reasonable efforts to provide the disclosing Party with prior notice of such disclosure and to obtain a protective order therefor, with all costs to be borne by the disclosing Party); (e) is disclosed by the receiving Party with the disclosing Party’s approval; or (f) is independently developed by the receiving Party without any use of Confidential Information. In all cases, the receiving Party will use all reasonable efforts to give the disclosing Party ten (10) days’ prior written notice of any disclosure of information under this Agreement. The Parties will maintain the confidentiality of all confidential and proprietary information learned pursuant to this Agreement for a period of ten (10) years from the date of termination of this Agreement.

b)

Saving Provision. The Parties agree and stipulate that the agreements contained in this section are fair and reasonable in light of all of the facts and circumstances of their relationship; however, the Parties are aware that in certain circumstances courts have refused to enforce certain agreements. Therefore, in furtherance of and not in derogation of the provisions of the preceding paragraph the parties agree that in the event a court should decline to enforce the provisions of the preceding paragraph, that paragraph shall be deemed to be modified to restrict non-enforcing Party’s rights under this Agreement to the maximum extent, in both time and geography, which the court shall find enforceable.

10)

11)

a)

LICENSEE agrees to indemnify LICENSOR and hold LICENSOR harmless from and against any and all liabilities, losses and expenses arising from (i) LICENSEE’s unauthorized use of the Technology; (ii) LICENSEE’s failure to comply with applicable laws or to maintain all required licenses and governmental authorizations; (iii) any breach of LICENSEE’s representations and warranties set forth herein; and (iv) any liability to third parties as a result of LICENSEE’s production, distribution and/or sale of End Products, except as to any liability arising out of the proper use of the Technology.

b)

LICENSOR agrees to indemnify LICENSEE and hold LICENSEE harmless from and against any and all liabilities, losses and expenses arising from (i) any breach of LICENSOR’s representations and warranties set forth herein; and (ii) any claims of infringement raised by third parties as to the Technology or Licensed Patents.

c)

If a Party seeks indemnification (the “Indemnitee”), it shall give written notice to the other Party (the “Indemnitor”) promptly after the Indemnitee becomes aware of the facts giving rise to such claim for indemnification (an “Indemnified Claim”), and in any event within 30 days, specifying in reasonable detail the factual basis of the Indemnified Claim and stating the amount of the damages (or if not known, a good faith estimate of the amount of damages).

d)

In the event of receipt of notice of an Indemnified Claim arising out of the use of the LICENSOR’s Technology, the Indemnitor shall have the right to control and defend such Indemnified Claim, in such manner as it may reasonably deem appropriate. Should the Indemnitor decline to control and defend the Indemnified Claim, the Indemnitee shall have the right to control and defend the Indemnified Claim in such manner as it may deem appropriate. The controlling party shall select counsel, contractors, experts and consultants of recognized standing and competence reasonably acceptable to the other party, shall take reasonable steps necessary in the investigation, defense or settlement thereof, and shall diligently and promptly pursue the resolution thereof. All parties shall cooperate fully with the party conducting the defense of any Indemnified Claim.

e)

The Party controlling the defense of any Indemnified Claim shall be authorized to consent to a settlement of, or the entry of any judgment arising from, any Indemnified Claims subject to the following provisions. If the Indemnitor is controlling the litigation, Indemnitee must consent to any such settlement, such consent not to be unreasonably withheld. Indemnitee’s consent will be deemed unreasonably withheld unless the settlement would encumber any of its assets or contains any restriction or condition that would apply to the Indemnitee or to the conduct of its business. If the Indemnitee is controlling the litigation, it may not enter into a settlement or consent to an entry of judgment with respect to any Indemnified Claim without the express written consent of the Indemnitor, not to be unreasonably withheld.

f)

Indemnitor shall be responsible for paying any damages or settlement arising out of an Indemnified Claim. However, in the event Indemnitee pays such damages or settlement, Indemnitor shall reimburse Indemnitee within thirty (30) days of Indemnitee making such a payment.

12)

Limitation of Liability. EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY AGREED TO IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR LOST PROFITS OR FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY. THE FOREGOING SHALL NOT LIMIT LICENSEE’S LIABILITY FOR UNAUTHORIZED USE BY LICENSEE OF LICENSOR’S TECHNOLOGY.

13)

No Warranties. OTHER THAN THE EXPRESS WARRANTIES PROVIDED HEREIN, LICENSOR MAKES NO EXPRESS WARRANTIES OF MERCHANTABILITY OR FITNESS OR EFFICACY FOR A PARTICULAR PURPOSE OF THE TECHNOLOGY AND/OR ANY END PRODUCTS PRODUCED FROM SAID TECHNOLOGY AND SHALL NOT BE HELD LIABLE FOR PROFITABILITY OF TECHNOLOGY AND/OR END PRODUCTS OR HELD LIABLE UNDER ANY OTHER THEORY OF LIABILITY.

14)

Insurance. For the period of time required to cover its obligations hereunder, each Party will maintain third party provided insurance in types and amounts customary for the type of business it conducts, and in any event reasonably adequate to cover any liabilities arising out of its obligations hereunder. Further, LICENSEE will maintain product liability insurance reasonably adequate to cover any liabilities arising out of the sale and distribution of End Products. Upon a Party’s request, the other Party will provide to the requesting Party a certificate of insurance showing that such insurance is in place, which certificate shall demonstrate the amounts, exclusions and deductibles of such insurance coverage. Each Party shall notify the other Party in writing no less than thirty (30) days prior to the cancellation, termination or modification of the insurance coverage(s) described in the notifying Party’s insurance certificate(s). Nothing in this section shall in any way be construed to limit the liability of a Party under this Agreement.

15)

Compliance with Laws. In connection with this Agreement, LICENSEE agrees to comply with all applicable laws, statutes and ordinances of any state, city, province, county or local governmental authority and each regulatory body with jurisdiction in which the LICENSEE sells End Products, that may be applicable to LICENSEE, its activities under this Agreement or the End Products.

16)

Conformance with Regulations. The Parties acknowledge and agree that this Agreement, and the licensing of the Technology, is neither intended to convey any ownership interest in LICENSEE to LICENSOR nor grant LICENSOR any control over LICENSEE. In the event that any government body indicates otherwise with regards to this Agreement or any portion thereof, then the Parties shall promptly negotiate in good faith for a period of forty-five (45) days to modify this Agreement in order to conform to any guidance proffered by that authority. In the event the Parties cannot reach an agreement within forty-five (45) days’ notice by any authorized government body that this Agreement must be reformed, this Agreement shall terminate pursuant to Section 4 above, and the Parties shall thereafter have no further obligation to each other hereunder.

17)

Employees; Agents; Representatives. Employees, agents and/or representatives, if any, of either Party, who perform services for either Party pursuant to this Agreement shall also be bound by the provisions of this Agreement.

18)

Relationship of Parties. The legal relationship of the Parties is exclusively that of licensor and licensee and no employer-employee, principal-agent, partnership, franchise, agency, joint venture or other legal relationship is created by this Agreement. Neither Party shall have the authority to enter into any contracts on behalf of the other Party.

19)

Successors; Assignment; Binding Agreement. Except as otherwise provided in this Agreement, LICENSEE may not assign or transfer its rights or delegate its obligations under this Agreement without LICENSOR’s prior written consent, provided that in the event that a person acquires all of the issued and outstanding shares of LICENSEE, or all or substantially all of the assets of the LICENSEE, the LICENSEE shall be entitled to transfer all of its rights and obligations relating to this Agreement to such person, and such person is entitled to all of the rights and benefits of the LICENSEE under this Agreement solely with respect to LICENSEE branded End Products then being sold or produced by the LICENSEE. LICENSOR may freely assign this Agreement or any rights under this Agreement or delegate any duties under this Agreement without LICENSEE’s consent provided that the assignee agrees to assume all of LICENSOR’s obligations and liabilities hereunder. This Agreement inures to the benefit of, and shall be binding upon, the successors and assigns of the parties to this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns.

20)

Modifications and Waivers. This Agreement may be amended only by a written agreement signed by both Parties. With regard to any power, remedy or right provided in this Agreement, no waiver or extension of time shall be effective unless expressly contained in a writing signed by the waiving Party, no alteration, modification or impairment shall be implied by reason of any previous waiver, extension of time, delay or omission in exercise or other indulgence, and waiver by any Party of the time for performance of any act or condition hereunder does not constitute a waiver of the act or condition itself.

21)

Notice. Except as otherwise provided in this Agreement, notices required to be given pursuant to this Agreement shall be effective when received, and shall be sufficient if given in writing, hand-delivered, sent by facsimile with confirmation of receipt, sent by First Class Mail, return receipt requested (for all types of correspondence), postage prepaid, or sent by email, or sent by overnight courier service and addressed as set forth below, or as amended by either Party, respectively, from time to time:

If to LICENSOR:

Hill Street Beverage Company Inc.

▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇

Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Email: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

22)

Entire Agreement. This Agreement, including the attached exhibits, constitutes the entire agreement of the Parties hereto relating to the subject matter hereof and there are no written or oral terms or representations made by either Party other than those contained herein.

23)

Publicity. Without the prior written consent of the other Party, neither Party shall disclose the terms and conditions of this Agreement, except disclosure may be made as is reasonably necessary to the disclosing Party’s bankers, attorneys, or accountants or except as may be required by law. The LICENSOR agrees not to use the LICENSEE’s corporate name or product names, in any form, in any press release or other publication, without permission from the LICENSEE, except as provided below. The Parties understand and agree that LICENSOR may be compelled by stock exchanges, securities commission regulators or other government authorities to publicly disclose the signing of said License Agreement naming both Parties. If LICENSOR is compelled by stock exchanges, securities commission regulators or other government authorities to publicly disclose the signing of said License Agreement, LICENSOR will share its planned announcement with LICENSEE beforehand for LICENSEE’s review and approval, not to be unreasonably withheld or delayed, and it will also ensure that no compromise of the LICENSEE’s existing secret processes or intellectual property, nor of LICENSEE`S personal or private information occurs through this announcement.

24)

Expenses. Each Party to this Agreement shall bear all of its own expenses in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby, including without limitation all fees and expenses of its agents, representatives, counsel and accountants.

25)

Governing Law; Jurisdiction. This Agreement will be governed by, and construed in accordance with the substantive laws of the Province of Ontario without giving effect to any choice or conflict of law provision, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted, the parties irrevocably attorn to the jurisdiction of the courts of the Province of Ontario to resolve any disputes arising hereunder.

26)

Dispute Resolution.

a)

Mandatory Procedures. The Parties agree that any dispute arising out of or relating to this Agreement shall be resolved solely by means of the procedures set forth in this section and that such procedures constitute legally binding obligations that are an essential provision of this Agreement. If either Party fails to observe the procedures of this section, as may be modified by their written agreement, the other Party may bring an action for specific performance of these procedures in any court in the Province of Ontario.

b)

c)

i)

Mediation. In the event any dispute arising out of or relating to this Agreement remains unresolved within sixty (60) days from the date the affected Party informed the other Party of such dispute, either Party may initiate mediation upon written notice to the other Party (“Notice Date”), the Parties shall be obligated to engage in a mediation proceeding under the then current Center for Public Resources (“CPR”) Model Procedure for Mediation of Business Disputes (▇▇▇.▇▇▇▇▇▇.▇▇▇), except that specific provisions of this Article shall override inconsistent provisions of the CPR Model Procedure. The mediator will be selected from the CPR Panels of Neutrals. If the Parties cannot agree upon the selection of a mediator within fifteen (15) business days after the Notice Date, then upon the request of either Party, the CPR shall appoint the mediator. The Parties shall attempt to resolve the dispute through mediation until the first of the following occurs: (i) the Parties reach a written settlement, (ii) the mediator notifies the Parties in writing that they have reached an impasse, (iii) the Parties agree in writing that they have reached an impasse, or (iv) the Parties have not reached a settlement within sixty (60) days after the Notice Date.

ii)

Failure to Mediate. If the Parties fail to resolve the dispute through mediation, each Party shall have the right to pursue any other remedies legally available to resolve the dispute, including by way of arbitration or a suit.

d)

27)

Attorneys’ Fees. In the event of any dispute between the parties arising out of this Agreement, the prevailing Party shall be entitled, in addition to any other rights and remedies it may have, to recover its reasonable attorneys’ fees and costs.

28)

No Interpretation Against Drafter. Each Party participated in the negotiation and drafting of this Agreement, assisted by such legal and tax counsel as it desired, and contributed to its revisions. Any ambiguities with respect to any provision of this Agreement will be construed fairly as to all Parties and not in favor of or against any Party. All pronouns and any variation thereof will be construed to refer to such gender and number as the identity of the subject may require. The terms “include” and “including” indicate examples of a predicate word or clause and not a limitation on that word or clause.

29)

Headings. The headings of sections are provided for convenience only and will not affect the construction or interpretation of this Agreement.

30)

Force Majeure. Neither Party shall be liable for any delay or failure to perform its obligations in this Agreement if such delay or failure to perform is due to any cause or condition reasonably beyond that Party’s control, including, but not limited to, acts of God, war, government intervention, riot, embargoes, acts of civil or military authorities, earthquakes, fire, flood, accident, strikes, inability to secure transportation, facilities, fuel, energy, labor or materials.

31)

Survival. In addition to LICENSEE’s obligation to pay LICENSOR all amounts due hereunder, the Parties obligations under this Agreement shall survive expiration or termination of the Agreement only as expressly provided herein.

32)

Invalidity. The invalidity or unenforceability of any term or terms of this Agreement shall not invalidate, make unenforceable or otherwise affect any other term of this Agreement which shall remain in full force and effect.

33)

Severability. If any terms or provisions of this Agreement shall be found to be illegal or unenforceable, notwithstanding, this Agreement shall remain in full force and effect and such terms or provisions shall be deemed stricken.

34)

Further Assurances. Upon a Party’s reasonable request, the other Party shall, at requester’s sole cost and expense, execute and deliver all further documents and instruments, and take all further acts, as are reasonably necessary to give full effect to this Agreement.

35)

Counterparts. The Parties may execute this Agreement in multiple counterparts, each of which will constitute an original and all of which, when taken together, will constitute one and the same agreement.

“LICENSEE”

“LICENSOR”

LEXARIA CANPHARM ULC

HILL STREET BEVERAGE COMPANY INC.

By:

 ▇▇▇▇ ▇▇▇▇▇▇▇▇, President

▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO

By:

 ▇▇▇▇▇ ▇▇▇▇▇, CEO

(1)

all technical know-how and trade secrets in regard to the Licensor’s business and the use, manufacture or formulation of the listed patented technology in connection with THC enhanced End Products;

(2)

the following patent applications, patents granted, and PCT International Patent Applications that are licensed by LICENSOR as of the Effective Date of this Agreement, as well as any future continuations, continuations in part or divisional applications filed pursuant to the patent applications (the “Licensed Patents”):

US Patent No.

Australia Patent No.

9,474,725 issued Oct. 25, 2016

2015274698 granted June 15, 2017

9,839,612 issued Nov. 21, 2017

2017203054 granted Aug. 30, 2018

9,972,680 issued May 15, 2018

2018202562 granted Aug. 30, 2018

9,974,739 issued May 22, 2018

2018202583 granted Aug. 30, 2018

10,084,044 issued Sept. 25, 2018

2018202584 granted Jan. 10, 2019

10,103,225 issued Oct. 16, 2018

2018220067 granted July 30, 2019

10,374,036 issued Aug. 6, 2019

2016367036 granted July 30, 2019

10,381,440 issued Aug. 13, 2019

2016367037 granted Aug. 15, 2019

10,756,180 issued Aug. 25, 2020

US Provisional Patent

Application No.

US Utility Patent

Application No.

International Patent Cooperation

Treaty Application No.

Australian Patent Application No.

62/010,601

62/264,967

14/735,844

PCT/US15/35128

2018226505

62/037,706

62/642,737

15/565,680

PCT/US16/64295

▇▇▇▇▇▇▇▇▇▇

62/153,835

62/519,511

15/565,681

PCT/US16/64296

▇▇▇▇▇▇▇▇▇▇

62/161,324

62/582,700

16/667,497

PCT/US18/38232

62/264,959

62/659,059

PCT/US18/62677

62/689,096

62/658,473

PCT/US19/22278

62/748,520

62/748,514

PCT/US19/27767

62/730,645

62/850,506

PCT/US19/27769

62/850,509

Product Line Name

Product Line Description

Specifically EXCLUDED from all Product Categories is any/all right to produce, package or sell any product classified by a national regulator as a “drug, pharmaceutical, or biopharmaceutical” product.

Capsules, Pills, Tablets and Melts

Any product recognized as tablets, pills, capsules, gel-caps, lozenges or oral chews or pouches and other similar formulations that are infused with cannabis or hemp oil/isolate or equivalent containing 0.3% or greater THC that utilizes the Technology and primarily not made with sugar and/or other sweeteners, that are generally recognized as vitamins, supplements, medicines, sublingual or mouth-melts dissolving in-mouth.

Topical Skin Products

Any cream, oil, salve, gel, lotion, lip care preparation, cosmetic product, bath product, hair care product or similar consumer product designed to be delivered to and through human skin that is infused with cannabis or hemp oil/isolate or equivalent containing 0.3% or greater THC.

Other Products

Single serving or multiple serving retail packaged products that are infused with cannabis or hemp oil/isolate or equivalent containing more than 0.3% THC, including, but not limited to the following: (i) mix and serve beverages such as dried teas, coffee, hot chocolate, iced-teas and similar; (ii) powders for use in vaporized products or such other products such as liquids to be rendered in nebulized or aerosolized form designed for pulmonary delivery.

Wholesale packaged “Other Products” or DehydraTECH-infused powders of any kind are prohibited.

(a)

Usage Fee. Upon payment in full by the LICENSOR to the LICENSEE of the Purchase Price for the Purchased Assets, as those terms are defined in that certain Asset Purchase Agreement dated November 18, 2020 between the Parties, LICENSEE agrees to pay quarterly to LICENSOR a usage fee (the “Usage License Fee”) during the balance of the Agreement of 3% of the Revenue of End Products as defined in Exhibit D, in the Territory in US Dollars. LICENSEE agrees to pay the Usage License Fee for each product sold utilizing the Technology.

(b)

Audit Rights. Upon at least thirty (30) days’ written notice, LICENSOR shall have the right, through an independent, certified accounting firm, to examine such records and books of account of LICENSEE as are necessary to verify the accuracy of the Usage License Fee and other payments of LICENSEE under this Agreement. Such right may be exercised only once during any twelve (12) month period. Such examination may be performed during normal business hours at LICENSEE’S major place of business or at such other place as may be agreed upon by the LICENSOR and LICENSEE. The accounting firm may make abstracts or copies of such books of account solely for its use in performing the examination. LICENSOR will require, prior to any such examination, such accounting firm to agree in writing that such firm will maintain all information, abstracts, and copies acquired during such examination in strict confidence and will not make any use of such material other than to confirm to LICENSOR the accuracy of LICENSEE payments hereunder. If an inspection of LICENSEE’S records by the accountant of LICENSOR shows that LICENSEE has paid more than required under this Agreement, any excess amounts will, at LICENSEE’S option, be promptly refunded or credited against future Usage License Fees. If an inspection of LICENSEE’S records by the accountant of LICENSOR shows that LICENSEE shows an under-reporting or underpayment by LICENSEE of any amount to LICENSOR, by more than one percent (1%) and less than five percent (5%) for any twelve (12) month period, any excess amounts will, at LICENSOR’s option, be promptly paid or debited against future Usage License Fees. However, if an inspection of LICENSEE’S records shows an under-reporting or underpayment by LICENSEE of any amount to LICENSOR, by more than five percent (5%) for any twelve (12) month period, then LICENSEE will reimburse LICENSOR for the reasonable cost of the inspection as well as pay to LICENSOR any amount found due within thirty (30) days of receipt of the results of such inspection.

(g)

Tax Adjustments: LICENSEE and LICENSOR acknowledge that all fees payable pursuant to this Agreement, including, as applicable, the Territory License Fee, Usage Fee, Severance Fee, Minimum Fee and Trademark License Fee, may be subject to adjustment, as required, for the purposes of withholding any applicable taxes by the LICENSEE and/or repayment to the LICENSOR of any applicable taxes as required pursuant to any municipal, state, provincial or federal legislation and that such fees shall be reduced by any such withholding or other applicable taxes.

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Asset

Purchase Price

Allocation (CDN$)

1.

Second Amended and Restated Technology License Agreement dated October 31, 2020 between Lexaria Bioscience Corp. and Lexaria CanPharm ULC

1,800,000

2.

Definitive Trademark License Agreement effective February 1, 2018 between Lexaria Bioscience Corp. and Lexaria CanPharm ULC

900,000

3.

The following third party licenses:

- Intellectual Property License #2018CD01 dated January 25, 2018 granted by Lexaria CanPharm Corp. (the predecessor of Lexaria CanPharm ULC) to Cannfections Group Inc.

- Intellectual Property License Agreement dated January 16, 2020 between Lexaria CanPharm ULC and Trinidad Consulting LLC dba Cannadips.

- Intellectual Property License Agreement dated July 23, 2019 between Lexaria CanPharm ULC and Hill Street Beverage Company Inc.

- Intellectual Property License dated April 24, 2018 granted by Lexaria Bioscience Corp. to Nuka Enterprises, LLC as amended and assigned by Lexaria Bioscience Corp. to Lexaria CanPharm ULC on May 15, 2019.

421,118

4.

Joint Venture Agreement dated as of July 23, 2019 between Lexaria CanPharm ULC and Hill Street Beverage Company Inc.

200,000

5.

All batch records and formulation spreadsheets related to the Third Party Licenses, together with all research and development relating to product formulations and recipes related to the Licensed Intellectual Property whether such work was conducted in connection with the obligations of the Third Party Licenses or non-binding letters of intent, provided that the Vendor shall not be obligated to provide any such information which is not the subject of a Third Party License forming part of the Purchased Assets and which remains confidential pursuant to an active non-disclosure agreement;

400,000

6.

Sales records, marketing materials and customer databases;

106,763

7.

Technical, consulting, marketing and formulation services for up to 200 hours

22,119

TOTAL

3,850,000

·

15 days written notice of assignment under the Amended and Restated Technology License Agreement dated January 14, 2019 between PoViva Corp. and Lexaria Bioscience Corp. (the “PoViva License”).

·

30 days written notice of assignment under the Lexaria Technology License.

·

Consent of Lexaria Bioscience Corp. under the Lexaria Trademark License.

3