SPE FINANCE LLC - AND - ALEAFIA BRANDS INC. - AND - ALEAFIA HEALTH INC. MASTER JOINT VENTURE AGREEMENT

▇▇▇▇▇▇▇ is engaged in the business of owning or licensing certain brands and other intellectual property in relation to cannabis and cannabis products.

ABI or one or more of its Affiliates is a licensed medical marijuana producer with growing operations conducted from its facility in Scugog, Ontario and is a wholly-owned Affiliate of Aleafia Parent.

▇▇▇▇▇▇▇ and ABI wish to establish a joint venture for the purpose of licensing from Serruya, the Serruya Licensed Brands of branded cannabis and other cannabis products, for the legal adult-use and wellness markets in Canada and internationally (excluding the United States) (the “Business”).

The Parties wish to enter into this Agreement to formalize the intention of Serruya and ABI to create, fund and govern the operations of a joint venture, in the form of a corporation incorporated under the laws of the Province of Ontario, to carry on the Business.

Definitions

“ABI” is defined in the preamble to this Agreement.

“ABI Licenses” is defined in Section 4.02(f)(i).

“ABI Subscription Agreement” means the subscription agreement that ABI and the Joint Venture will enter into on the Implementation Date in respect with a subscription for 30 Shares for an aggregate of $1,000,000.

“Act” means the Business Corporations Act (Ontario).

“Affiliate” means an affiliate as that term is defined in the Act.

“Aleafia Parent” is defined in the preamble to this Agreement.

“Aleafia Parent Shares” means the shares in the capital of Aleafia Parent;

“Applicable Law” means each applicable provision of any constitution, treaty, statute, law, ordinance (including zoning ordinances), permits, code, rule, regulation, principle of common law or equity, policy, guideline, protocol or requirement, decision, order, decree, directive, judgment, ruling, award, injunction, verdict, subpoena, writ, release, license or other legally binding pronouncement of any Governmental Body.

“Board” means the board of directors of the Joint Venture.

“Business” has the meaning given in the recitals.

“Business Day” means any day, other than Saturday, Sunday or any statutory holiday in the Province of Ontario, Canada.

“Claim” means any claim, loss, cost, expense, liability, fine, penalty, interest, payment and/or damage, including reasonable counsel and other reasonable professional fees incurred in connection therewith (provided that such fees and expenses shall only be considered a Claim to the extent that such claim, loss, cost, expense, liability, fine, penalty, interest, payment and/or damage is indemnifiable under this Agreement), but excluding, in any event special, exemplary or punitive damages, provided that the amount of any such special, exemplary or punitive damages shall be included if paid or payable to a third party.

“Closing” is defined in Section 3.02.

“Confidential Information” means any information relating to the Joint Venture or the Business that is of a confidential or proprietary nature, including information relating to the assets, business plans, customers, employees, equipment, financial statements and financial performance, intellectual property, inventory, market strategies, operations, pricing, products, suppliers, and trade secrets of any such Persons, their Affiliates or their businesses, whether communicated in written form, orally, visually, demonstratively, technically or by any other electronic form or other media, or committed to memory, and whether or not designated, marked, labelled or identified as confidential or proprietary, including:

Personal Information; and

all analyses, compilations, records, data, reports, correspondence, memoranda, specifications, materials, applications, technical data, studies, derivative works, reproductions, copies, extracts, summaries or other documents containing or based upon, in whole or in part, any of the information listed above in this Section 1.01(14),

is generally available to or known by the public other than as a result of improper disclosure by a Party or any of its Representatives; or

is or was obtained from a source other than the Joint Venture, a Party or any of its Representatives, or any Person known to the recipient of such information at the date of inquiry to be bound by a duty of confidentiality to the disclosing Party or the Joint Venture.

“Contract” means in respect of a Person, any contract, agreement, commitment, arrangement, undertaking or understanding of any kind whatsoever (including whether oral or written), to which such Person is a party or by which such Person is contractually bound or has rights or by which the property or assets of such Person are affected, together with all related amendments, modifications, supplements, waivers and consents thereto at the relevant time.

“Control” means, with respect to any corporate entity, the ownership at the relevant time of securities carrying more than 50% of the exercisable voting rights attached to all outstanding securities of that entity, other than by way of security only, if the votes carried by those securities are sufficient to elect a majority of that entity’s board of directors or otherwise provide for effective control of that entity, and “Controlled by” and similar words have corresponding meanings.

“Director” means a director of the Joint Venture.

“Encumbrance” means any charge, claim, condition, equitable interest, lien (statutory or otherwise), option, pledge, security interest, prior assignment, mortgage, charge, hypothec, lease, sublease, right to possession, encumbrance, privilege, easement, servitude, pre-emptive right or right of refusal or restriction of any kind, ownership or title retention agreement, conditional sale agreement, imperfections of title or encroachments relating to real property, claim, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Execution Date” means the date of this Agreement.

“Governmental Body” means any governmental or quasi-governmental body, including any agency, authority, ministry, department, regulatory body, court, central bank, bureau,board or other instrumentality, court, tribunal, commission, individual, arbitrator, arbitration panel or other body or other entity, exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, having or exercising legislative, judicial, taxing, regulatory, prosecutorial or administrative powers or functions, and includes any stock or other securities exchange or professional association.

“Human Resources Plan” means the human resources plan for the Joint Venture jointly developed by Serruya and ABI prior to the Implementation Date.

“Implementation Agreements” means the Share Exchange Agreement, the Shareholders Agreement, the License Agreement, the Subscription Agreement, the ABI Subscription Agreement and any other agreement executed and delivered pursuant to this Agreement or any of the Implementation Agreements.

“Implementation Date” means November 20, 2018, or such earlier or later date as may be agreed upon by the Parties in writing.

“Implementation Transactions” is defined in Section 3.01.

“Indemnified Party” means a Party who has been indemnified by another Party pursuant to Article 10 of this Agreement.

“Indemnifying Party” means a Party who has agreed to indemnify another Party pursuant to Article 10 of this Agreement.

“Initial Business Plan” is defined in Section 7.01.

“Intellectual Property” means all trade-marks and trade-▇▇▇▇ applications, trade names, certification marks, patents and patent applications, copyrights, domain names, industrial designs, plant breeders rights, trade secrets, know-how, formulae, processes, inventions, developments, improvements, technical expertise, research data and other similar property, circuit layout designs, topography rights and rights in databases, including all associated registrations and applications for registration, and all associated rights, including moral rights.

“Interim Period” means the period of time commencing on the Execution Date and ending on the earlier of: (i) the Implementation Date; and (ii) the date on which this Agreement terminates in accordance with Article 9.

“Joint Venture” means the joint venture corporation to be formed under the laws of the Province of Ontario pursuant to the terms of this Agreement.

“JV Agreements” means this Agreement and the Implementation Agreements, collectively.

“License” means any license, permit, exemption, consent, approval or other authorization or evidence of authority issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Applicable Law.

“License Agreement” means the intellectual property license agreement(s) that the Joint Venture and Serruya will enter into on the Implementation Date, a copy of which is attached hereto as Appendix D.

“Material Adverse Effect” means in respect of a Person, any change, effect or circumstance that is or would reasonably be expected to be, individually or in the aggregate, (a) materially adverse to such Person, their business, operations, assets or condition (financial or otherwise), taken as a whole; but shall exclude any Material Adverse Effect arising out of: (i) any adverse change, effect or circumstance relating generally to financial markets or general economic conditions, (ii) any adverse change, effect or circumstance relating to conditions generally affecting the industry in which such Person operates, (iii) war, act of terrorism, civil unrest or similar event, or (iv) any generally applicable change in Applicable Laws or interpretation thereof, provided in the case of (ii) and (iv) such change, effect or circumstance, as applicable, does not have a disproportionate effect on such Person or their business, operations, assets or condition (financial or otherwise), taken as a whole, compared to other participants in the industry in which the such Person conducts business; or (b) materially adversely affect the ability of such Person to enter into and perform its obligations under the Implementation Agreements to which it is a party.

“OBCA” means the Business Corporations Act (Ontario), as amended.

“Organizational Documents” means: (i) the articles or certificate of incorporation or amalgamation, as applicable, and the bylaws of a corporation; (ii) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (iii) any amendment to any of the foregoing.

“Parties” means, collectively, Serruya, ABI and Aleafia Parent and any other Person who may become a party to this Agreement.

“Person” means any individual, sole proprietorship, general partnership, limited partnership unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, and a natural person in his or her capacity as trustee, executor, administrator, or other legal representative.

“Personal Information” means information relating to identifiable individuals.

“Private Placement Subscription Agreement” means the subscription agreement that Aleafia Parent and Serruya will enter into on the Implementation Date in respect with a private placement subscription for 5,000,000 Aleafia Parent Shares at $2.00 per share, a copy of which is attached hereto as Appendix C.

“Proceeding” means any dispute, litigation, application hearing, claim, action, complaint, grievance, cause of action, suit, demand, inquiry, audit, investigation or other proceeding by or before any Governmental Body, or any arbitration, mediation or similar proceeding, whether civil, criminal, administrative regulations, at law or in equity.

“Representatives” means a Person’s directors, officers, employees, and to the extent involved in the negotiations and transactions contemplated herein and in the Implementation Agreements, such Person’s agents, consultants, advisors or other representatives, including lawyers, accountants and financial advisors. In the case of a Party, “Representatives” includes the Representatives of that Party’s Affiliates.

“Reseller and Distribution Agreement” means a reseller and distribution agreement that the Joint Venture and Aleafia Parent to be entered into as soon as practicable following the Implementation Date on mutually agreed terms to cover the reselling/distribution of licensed cannabis products by Aleafia Parent or its Affiliate derived from Serruya Licensed Brands through global distribution channels (excluding the United States).

“Serruya” is defined in the preamble to this Agreement.

“Serruya Licensed Brands” means the Intellectual Property to be licensed by Serruya to the Joint Venture pursuant to the License Agreement, including the license of the brand materials for the “One Plant” brand and other key cannabis brands (including, but not limited to, North Emerald and King’s Garden) and related Intellectual Property, as will be more particularly described in the License Agreement including the brands listed on Schedule 1.01(45).

“Serruya Licenses” is defined in Section 4.01(f)(i).

“Shares” means the shares, of any class, of the Joint Venture issued and outstanding at the relevant time.

“Share Exchange Agreement” means the share exchange agreement that the Joint Venture, ABI, Aleafia Parent and Serruya will enter into on the Implementation Date, a copy of which is attached hereto as Appendix B.

“Shareholders Agreement” means the shareholders agreement for the Joint Venture to be entered into between Serruya, ABI and the Joint Venture on the Implementation Date, a copy of which is attached hereto as Appendix A.

“Supply Agreement” means a supply agreement that the Joint Venture and Aleafia Parent to be entered into as soon as practicable following the Implementation Date on mutually agreed terms to cover the supply of cannabis products (dry flower in processed and packaged forms) by Aleafia Parent or its Affiliate on an industry standard wholesale pricing basis for use with the Serruya Licensed Brands.

“Tax Act” means the Income Tax Act (Canada), as amended

“Tax Benefit” means, in the case of an indemnified Claim, the savings or potential savings in Tax realized or realizable from payment in cash of the Claim.

“Tax” means all taxes, duties, fees, premiums, assessments, imposts, levies, rates, withholdings, dues, government contributions and other charges of any kind, whether direct or indirect, together with all interest, penalties, fines, additions to tax or other additional amounts, imposed by any Governmental Body.

“Territory” means all countries of the world (except for the United States).

“Third Party” means any person other than any Party or any Affiliate thereof, and any Person dealing at arm’s length to such Persons within the meaning of the Tax Act.

“Third Party Claim” means a Claim arising as a result of a Proceeding by a Third Party against an Indemnified Party.

“TSXV” means the TSX Venture Exchange.

“TSXV Approval Letter” means the written approval of the TSXV to be dated on or before the Execution Date in respect of the issuance and delivery by Aleafia Parent of Aleafia Parent Shares to Serruya, in connection with the subscription evidenced by the Subscription Agreement and the acquisition by ABI of its Shares.

Appendices and Schedules

Headings and Table of Contents

Business Day

Gender and Number

Currency

Knowledge

Invalidity of Provisions

Entire Agreement

Waiver, Amendment

Governing Law

Attornment

Priority of Agreements

first, this Agreement;

next, the terms and conditions of Shareholders Agreement;

next, the Organizational Documents; and

finally, the terms and conditions of the other Implementation Agreements,

Formation Generally

Prior to the Implementation Date, Serruya shall have incorporated and organized the Joint Venture pursuant to the laws of the Province of Ontario by having approved, executed and filed the articles contained in the Organizational Documents with, and paid the prescribed fee to, the Ontario Ministry of Government Services;

During the Interim Period, Serruya shall be the sole shareholder of the Joint Venture, holding 970 Shares issued for $1.00, and will elect one or more initial directors to the Board;

From and after the Implementation Date, the governance and other rights and obligations of the Parties, as shareholders of the Joint Venture (in the proportions set out in Section 3.04), including rights to nominate directors to the Board, terms and conditions relating to the transferability of the Shares, customary “piggy back”, “drag along” and buy-out provisions, and provisions related to the distribution of dividends, will be as set out in and governed by the Shareholders Agreement and the Organizational Documents.

Purpose of the Joint Venture

Names

Location of Principal Office

Governance of the Joint Venture

The Board will have the full and exclusive right, power and authority to manage, control, administer and operate the Joint Venture and its Business and to do any act, take any proceeding, make any decision and execute and deliver any instrument, deed, agreement or document, for and on behalf of and in the name of the Joint Venture.

Provisions relating to the governance of the Joint Venture are described in the Shareholders Agreement.

Distributions of the Joint Venture

Aleafia as to 51%; and

Serruya as to 49%.

Applicability of the OBCA

No Personal Liability of Parties

Description of Implementation Transactions

Place and Time of Closing

Contributions to the Joint Venture

ABI and/or Aleafia Parent hereby agree to make the following contributions to the Joint Venture:

$1,000,000 in exchange for the issuance of 30 Shares to ABI pursuant to the ABI Subscription Agreement to fund the working capital for the Joint Venture on the Implementation Date;

Supply of cannabis product (dry flower in processed and packaged forms) for use with the Serruya Licensed Brands, on an industry standard wholesale pricing basis, pursuant to the Supply Agreement;

Reselling and distribution of licensed cannabis product derived from the Serruya Licensed Brands pursuant to the Reseller and Distribution Agreement; and

Provision of expertise to the Joint Venture on a consumer’s “in-person” cannabis client experience on an as-needed basis.

Serruya hereby agree to make the following contributions to the Joint Venture:

Provision of brand materials, including the One Plant brand; and

License of Serruya Licensed Brands to the Joint Venture with rights to sub- license to ABI pursuant to the License Agreement.

Shareholdings

Election of Directors

Appointment of Legal Officers

Closing Deliveries

At the Closing, Serruya will deliver or cause to be delivered to ABI the following:

a certificate executed by an officer of Serruya certifying that, except as otherwise stated in such certificate (provided that acceptance of such certificate shall not constitute or be deemed to constitute a waiver of any condition): (A) each of Serruya’s representations and warranties made in Section 4.01 is accurate in all material respects as of the date of this Agreement and as of the Implementation Date as if made on the Implementation Date; and (B) Serruya has fulfilled, performed or complied with, in all material respects, all covenants contained in this Agreement to be fulfilled, performed or complied with by it at or prior to Closing;

the Share Exchange Agreement;

the Shareholders Agreement;

the Private Placement Subscription Agreement;

the ABI Subscription Agreement;

the License Agreement;

share certificates representing: (i) 480 Shares pursuant to the Share Exchange Agreement free and clear of all Liens, duly endorsed in blank for transfer, and (ii) 30 Shares registered in the name of ABI pursuant to the ABI Subscription Agreement, in each case, together with evidence satisfactory to ABI that ABI or its nominee(s) have been entered upon the books of the Joint Venture as the holder of such shares; and

such other documents as ABI may reasonably request for the purpose of (A) evidencing the accuracy of any of Serruya’s representations and warranties made in Section 4.01, (B) evidencing the performance by Serruya of, or the compliance by Serruya with, any covenant or obligation required to be performed or complied with by Serruya under this Agreement; (C) evidencing the satisfaction of any condition for the benefit of Serruya referred to in this Agreement; or (D) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.

At the Closing, ABI and/or Aleafia Parent will deliver or cause to be delivered to the Joint Venture $1,000,000 by wire transfer of immediately available funds in exchange for the issuance of 30 Shares pursuant to the ABI Subscription Agreement.

At the Closing, ABI and/or Aleafia Parent will deliver or cause to be delivered to Serruya the following:

a certificate executed by an officer of ABI certifying that, except as otherwise stated in such certificate (provided that acceptance of such certificate shall not constitute or be deemed to constitute a waiver of any condition): (A) each of the representations and warranties made by ABI and/or Aleafia Parent, as applicable, in Section 4.02 is accurate in all material respects as of the date of this Agreement and as of the Implementation Date as if made on the Implementation Date; and (B) ABI and/or Aleafia Parent, as applicable, has fulfilled, performed or complied with, in all material respects, all covenants contained in this Agreement to be fulfilled, performed or complied with by it at or prior to Closing;

share certificates representing: (i) 6,000,000 Aleafia Parent Shares to be issued to Serruya in consideration for ABI’s acquisition of 480 Shares pursuant to the Share Exchange Agreement and (ii) 3,225,000 Aleafia Parent Shares to be issued to Serruya pursuant to the Private Placement Subscription Agreement, together with evidence satisfactory to Serruya that Serruya or its nominee(s) have been entered upon the books of the Aleafia Parent as the holder of such shares;

the Share Exchange Agreement;

the Shareholders Agreement;

the License Agreement;

the Private Placement Subscription Agreement;

the ABI Subscription Agreement; and

such other documents as Serruya may reasonably request for the purpose of: (A) evidencing the accuracy of any of ABI’s representations and warranties made in Section 4.02; (B) evidencing the performance by ABI of, or the compliance by ABI with, any covenant or obligation required to be performed or complied with by ABI under this Agreement; (C) evidencing the satisfaction of any condition for the benefit of Serruya referred to in this Agreement; or (D) otherwise facilitating the consummation or performance of any of the transactions

Representations and Warranties of Serruya

Organization and Power.

Serruya is a corporation duly formed under its jurisdiction of organization and is duly organized, validly existing and in good standing under such laws.

As of the Closing, the Joint Venture will be a corporation duly incorporated under the laws of the Province of Ontario and duly organized, validly existing and in good standing under such laws.

Authority.

Serruya has all necessary corporate power, authority and capacity to enter into, for and on behalf of Serruya, the JV Agreements to which it is a party, and to carry out the obligations of Serruya hereunder and thereunder, and the execution and delivery of this Agreement, and, when delivered the JV Agreements and the consummation of the transactions contemplated hereby and thereby have been or, when delivered, will be, duly authorized by all necessary action on the part of Serruya and the Joint Venture, as applicable;

As of the Closing, the Joint Venture has all necessary corporate power, authority and capacity to enter into, the JV Agreements to which the Joint Venture is a party, and to carry out its obligations, hereunder and thereunder, and the execution and delivery of such JV Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Joint Venture.

Enforceability. Each of the JV Agreements, when entered into by such Person, constitutes a valid and binding obligation of the Joint Venture in accordance with its terms, subject however, to limitations with respect to enforcement imposed by law in connection with bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally and to the extent that equitable remedies such as specific performance and injunctions are only available in the discretion of the court from which they are sought.

No Conflict,     Neither the execution and delivery of the JV Agreements nor the consummation or performance of any of the transactions contemplated by the JV Agreements will, directly or indirectly (with or without notice or lapse of time):

contravene, conflict with, or result in a violation of (1) any provision of the Organizational Documents (2) any resolution adopted by the board of directors of Serruya or the Joint Venture, as applicable; or (3) any Contract to which Serruya is a party or by which its assets are affected;

contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the transactions contemplated by the JV Agreements or to exercise any remedy or obtain any relief under any Applicable Law; or

contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any License that is held by Serruya or the Joint Venture, as applicable.

Joint Venture Contracts and Assets. As of Closing, the Joint Venture will not be or have been a party to any Contracts other than the JV Agreements to which they are a party and will not hold or have held, own or have owned or use or have used any assets.

Serruya Licenses.

A complete and accurate list and description of all Licenses held by Serruya or any of its Affiliates necessary or desirable to perform the obligations of Serruya or any of their Affiliates under the JV Agreements to which it is or they are a party, is set out in Schedule 4.02(f)(i) (the “Serruya Licenses”).

Other than the Serruya Licenses, Serruya is not required under Applicable Law to hold or maintain any License in order for it or any of its Affiliates to perform its obligations under any of the Implementation Agreements.

Consents and Notices.      Serruya is not required to give any notice to or obtain any approval, consent, ratification, waiver or other authorization of any Person (including any Governmental Body) in connection with the execution and delivery of the JV Agreements to which it is a party or the consummation or performance of any of the transactions contemplated hereunder or thereunder.

Restrictive Covenants.      Serruya is not a party to any Contract or subject to any Encumbrance including any covenant not to compete or granting exclusivity or any material confidentiality agreement, whether or not legally binding, which could in any material way affect the performance of it or the Joint Venture of any of their respective obligations under any of the JV Agreements.

Litigation. There are no suits, arbitration proceedings, injunctions, judgments, orders, legal actions, expropriation proceedings or other proceedings either pending, outstanding or, to the knowledge of Serruya, threatened against or relating to Serruya or the Joint Venture which could in any way affect the completion of or interfere with the performance of such Person’s obligations under the JV Agreements to which it is a party.

Joint Venture. During the Interim Period, the Joint Venture shall not have carried on any business or entered into any Contract other than the JV Agreements without the prior written consent of ABI, which such consent shall not be unreasonably withheld.

Representations and Warranties of ABI and Aleafia Parent

Organization and Power. ABI is a corporation duly incorporated under the laws of the Province of Ontario and is duly organized, validly existing and in good standing under such laws.

Authority. ABI has all necessary corporate power, authority and capacity to enter into the JV Agreements to which it is a party and to carry out its obligations hereunder and thereunder, and the execution and delivery of this Agreement and, when delivered, the JV Agreements and the consummation of the transactions contemplated hereby and thereby have been, or when delivered will be, duly authorized by all necessary action on the part of ABI.

Enforceability. Each of the JV Agreements, when entered into by such Person, constitutes a valid and binding obligation of ABI enforceable against ABI in accordance with its terms, subject however, to limitations with respect to enforcement imposed by law in connection with bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally and to the extent that equitable remedies such as specific performance and injunctions are only available in the discretion of the court from which they are sought.

No Conflict, Neither the execution and delivery of the JV Agreements nor the consummation or performance of any of the transactions contemplated by the JV Agreements will, directly or indirectly (with or without notice or lapse of time):

contravene, conflict with, or result in a violation of (1) any provision of the Organizational Documents of ABI, (2) any resolution adopted by the board of directors of ABI, (3) any Contract to which ABI is a party or by which its or its Affiliates’ assets are affected;

contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the transactions contemplated by the JV Agreements or to exercise any remedy or obtain any relief under any Applicable Law; or

contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any License that is held by ABI or any of its Affiliates.

Consents and Notices. Except for the TSXV Approval Letter, neither ABI nor any of its Affiliates is required to give any notice to or obtain any approval, consent, ratification, waiver or other authorization of any Person (including any Governmental Body) in connection with the execution and delivery of the JV Agreements or the consummation or performance of any of the transactions contemplated hereunder or thereunder

ABI Licenses.

A complete and accurate list and description of all Licenses held by ABI or any of its Affiliates necessary or desirable to perform the obligations of ABI or any of their Affiliates under the JV Agreements to which it is or they are a party, is set out in Schedule 4.02(f) (the “ABI Licenses”).

Other than the ABI Licenses, ABI is not required under Applicable Law to hold or maintain any License in order for it or any of its Affiliates to perform their obligations under any of the Implementation Agreements.

Compliance with Laws. ABI and its Affiliates have complied in all material respects with all Applicable Laws in the conduct of its business. Neither ABI nor any of its Affiliates has received any written notice from any Governmental Body alleging any material violation under any Applicable Laws in connection with the conduct of its business or arising out of the operation of its business. Without limiting the generality of the foregoing, as of the date of this Agreement, neither ABI nor any of its Affiliates markets or sells any cannabis-related products outside of the Territory and as of the Implementation Date, neither ABI nor any of its Affiliates markets or sells any cannabis- related products outside of the Territory except in compliance with Applicable Laws.

Health and Safety. There is no litigation, claim, correction notice or other proceeding or investigation, pending or, to ABI’s knowledge, threatened against or relating to ABI, any of its Affiliates or any of their respective products or services that pertain to compliance with any Applicable Laws concerning health and safety.

Residency. ABI is not a non-resident of Canada for purposes of the Tax Act.

Reporting Issuer. Aleafia Parent is a “reporting issuer” (or the equivalent thereof) in the provinces of British Columbia and Alberta and is in compliance in all material respects with applicable securities laws in those jurisdictions.

TSXV. The issued and outstanding common shares of Aleafia Parent are listed and posted for trading on the TSXV and Aleafia Parent is in compliance in all material respects with the rules and regulations of the TSX.

No Cease Trade Orders. No securities commission or comparable authority has issued any order preventing or suspending the distribution of the common shares of Aleafia Parent or the trading of securities of Aleafia Parent generally and, to ABI’s knowledge,there is no investigation, inquiry or proceeding for this purpose that has been commenced or which is pending, contemplated or threatened.

Public Record. Aleafia Parent has filed on SEDAR all documents required to be filed by it under applicable securities laws in the provinces where it is a “reporting issuer”.

No Material Change. Other than as disclosed on SEDAR, since March 26, 2018 and, except for the entering into of this Agreement, there has been no material change in the business, operations or capital of Aleafia Parent or its Affiliates taken as a whole.

Restrictive Covenants. None of ABI or any of its Affiliates is a party to any Contract or subject to any Encumbrance including any covenant not to compete or granting exclusivity or any material confidentiality agreement, whether or not legally binding, which could in any material way affect the performance of it or the Joint Venture of any of their obligations under the JV Agreements.

Litigation. There are no suits, arbitration proceedings, injunctions, judgments, orders, legal actions, expropriation proceedings or other proceedings either pending, outstanding or, to the knowledge of ABI or Aleafia Parent, threatened against or relating to ABI or any of its Affiliates which could in any way affect the completion of or interfere with the performance of ABI or its Affiliates obligations under the JV Agreements to which it is a party.

TSXV Conditional Approval. Aleafia Parent has obtained the TSX Approval Letter, a true and complete copy of which has been provided to Serruya.

Access and Investigation

subject to consent by such Party, grant to the other Party and its Representatives, upon reasonable prior notice and during such reasonable times as agreed upon, access to each other’s personnel, properties, contracts, books and records, and other documents and data pertaining to the assets to be licensed to the Joint Venture;

furnish each other with such additional financial, operating, and other data and information relating to the Party and the Joint Venture, as may reasonably be requested.

Commercially Reasonable Efforts to Satisfy Conditions.

Conduct of Business.

Required Approvals, Consents and Filings

Notification

Exclusive Dealing

Post-Closing Covenants

Serruya and ABI will work together to jointly develop the Human Resources Plan which will describe, among other things, the steps to be taken by the Parties prior to:

transfer certain employees of Serruya and/or ABI or their respective Affiliates to the Joint Venture;

cause the Joint Venture to hire additional employees and/or retain consultants; and

cause the Joint Venture to establish appropriate compensation plans, benefit plans and incentive plans, for the employees of the Joint Venture.

each Party will take all necessary steps to support the Joint Venture in filing applications for any approvals of Governmental Bodies that may be necessary: (A) in connection with any of the transactions contemplated by this Agreement and/or the Implementation Agreements; and (B) for the Joint Venture to carry on the Business following the Implementation Date;

Serruya and ABI will work together to jointly develop the Initial Business Plan referred to in Article 7 hereof; and

Aleafia Parent agrees to use commercially reasonable efforts to enter into the Supply Agreement and the Reseller and Distribution Agreement with the Joint Venture within fourteen (14) days following the Implementation Date.

Conditions Precedent to Serruya’s Obligations to Close

Accuracy of Representations. All of the representations and warranties made by ABI in this Agreement shall have been accurate as of the date of this Agreement, and shall be accurate in all material respects as of the time of the Closing as if then made.

ABI’s and/or Aleafia Parent’s Performance. All of the covenants and obligations that ABI and/or Aleafia Parent is required to perform or to comply with pursuant to this Agreement at or before the Closing, must have been duly performed and complied with in all material respects. 

Additional Documents. ABI and/or Aleafia Parent shall have caused the deliveries required by Section 3.07 be delivered (or tendered subject only to Closing) to Serruya and/or the Joint Venture, as applicable.

No Proceedings. Since the date of this Agreement, there has not been commenced or threatened against ABI, or against any Affiliate of ABI, by any Third Party any Proceeding (A) involving any challenge to, or seeking damages or other relief in connection with, any of the Implementation Transactions or (B) that creates a reasonable likelihood of preventing, substantially delaying or making illegal any of the Implementation Transactions or either Party’s participation therein.

TSXV Approval. Aleafia Parent shall have received the TSXV Approval Letter from the TSXV and delivered a copy to Serruya.

Material Adverse Effect. There shall not have occurred any event, development or condition that has, or could reasonably be expected to have, a Material Adverse Effect on ABI, the Aleafia Parent or the Joint Venture.

Conditions Precedent to ABI’s Obligations to Close

Accuracy of Representations. All of the representations and warranties of Serruya in this Agreement shall have been accurate as of the date of this Agreement, and shall be accurate in all material respects as of the time of the Closing as if then made.

Serruya’s Performance. All of the covenants and obligations that Serruya is required to perform or to comply with pursuant to this Agreement at or before the Closing, must have been duly performed and complied with in all material respects.

Additional Documents. Serruya shall have caused the deliveries required by Section 3.07 to be delivered (or tendered subject only to Closing) to ABI and/or the Joint Venture, as applicable.

No Proceedings. Since the date of this Agreement, there has not been commenced or threatened against Serruya, or against any Affiliate of Serruya, any Proceeding by any Third Party (A) involving any challenge to, or seeking damages or other relief in connection with, any of the Implementation Agreements or (B) that creates a reasonable likelihood of preventing, substantially delaying or making illegal any of the Implementation Transactions or either Party’s participation therein.

Material Adverse Effect. There shall not have occurred any event, development or condition that has, or could reasonably be expected to have, a Material Adverse Effect on Serruya or the Joint Venture.

Initial Business Plan.

As soon as practicable and in any event within 60 days following the Implementation Date, the Parties will, and will cause the Joint Venture to, develop and approve an initial business plan for the Joint Venture (“Initial Business Plan”) which covers:

the commercial objectives for first three years of the Joint Venture’s proposed operations;

capital commitments of the Parties with respect to the Joint Venture;

the responsibilities of the Parties over the three year period of the Initial Business Plan;

key metrics and milestones that the Parties intend the Joint Venture to achieve over the three year period of the Initial Business Plan; and

ancillary commercial matters that the Parties have identified as dependencies in order for the Joint Venture to meets its objectives.

The Parties will provide a copy of the Initial Business Plan to the Board within 60 days after the Implementation Date and the election of the Board in accordance with Section 3.05. Subject to the terms of the Shareholders Agreement, the Board may, in its discretion, make any changes to the Initial Business Plan prior to approving the Initial Business Plan upon approval or written consent resolution of shareholders of the Joint Venture holding no less than 66 2/3% of the voting rights attached to all of the Shares.

Confidentiality

Each Party acknowledges and agrees to the other and to the Joint Venture that:

in the course of its association with the Joint Venture, it will acquire Confidential Information;

the Joint Venture has possession of, title to, and ownership of and all rights to use the Confidential Information; and

any disclosure of the Confidential Information to the general public would be highly detrimental to the interests of the Joint Venture,

Despite Section 8.01(a), Confidential Information may be disclosed to a prospective buyer of a Party’s interest in the Joint Venture if that prospective buyer signs a confidentiality or non-disclosure agreement containing provisions equivalent to those in this Section 8.01.

Despite Section 8.01(a), Confidential Information may be disclosed to any Representative, if that Representative is already bound by a duty of confidentiality not to disclose any information provided to it, or signs a confidentiality or non-disclosure agreement containing provisions equivalent to those in this Section 8.01.

If a Party or any Representative of that Party is required, in the reasonable opinion of that Party’s legal counsel, by Applicable Law, or by any Governmental Body, to disclose any Confidential Information, that Party will not be in breach of Section 8.01(a), provided that before making any disclosure, the Party or that Representative provides the Joint Venture and the other Party with prompt written notice of that requirement or request so that the Joint Venture and the other Party may contest the disclosure of the Confidential Information and seek an appropriate protective order or other appropriate remedy.

The obligations imposed by, and the covenants contained in, this Section 8.01 are perpetual.

Each Party shall be responsible for the compliance by its Affiliates and Representatives with the terms of this Section 8.01 and the execution by such Affiliates and Representatives of confidentiality or non-disclosure agreement pursuant to Section 8.01(c).

Resolution of Disputes

Covenants Reasonable

without the covenants included in this Article 8, the other covenantors would not have entered into this Agreement;

the covenants included in this Article 8 are reasonable in the circumstances and are necessary to protect the economic position of the Joint Venture and the other covenantors; and

the breach of any of the provisions of this Article 8 would cause serious and irreparable harm to the Joint Venture and the other covenantors which could not adequately be compensated for in damages, and if there is a breach of any of the provisions of this Article 8, each covenantor consents to an injunction being issued to prevent any further breach of those provisions. This Section 8.03 will not be construed as a derogation of any other remedy to which the Joint Venture or any covenantor may be entitled if there is a breach of any of the provisions of this Article 8.

Covenants Independent

Survival

Term

The term of this Agreement shall commence on the Execution Date and it shall subsist, unless terminated in accordance with the terms of this Article 9, for an initial term ending on the tenth (10^th) anniversary of the Execution Date and will be automatically renewed for subsequent one (1) year terms.

If this Agreement is terminated pursuant to this Article 9, all further obligations of the Parties under this Agreement will terminate, except those obligations that, by their nature, should continue.

In the event this Agreement is terminated pursuant to this Article 9, the Parties shall take all reasonable steps to forthwith cause the Joint Venture to be dissolved

Termination Rights Prior to Closing

by mutual consent of the Parties;

by Serruya if:

there has been a material violation or material breach by ABI and/or Aleafia Parent of any covenant, representation and warranty or other agreement contained in this Agreement such that any condition to Closing specified in Section 6.01 would be incapable of being satisfied by the Implementation Date, and such violation or breach is not waived by Serruya or, in the case of a covenant breach, cured by ABI and/or Aleafia Parent within ten (10) days or such longer period of time as may be required provided ABI and/or Aleafia Parent is diligently pursuing such cure but in any event prior to the Implementation Date, after written notice thereof by Serruya;

any of the Closing conditions in Section 6.01 has not been satisfied as of the Implementation Date or if satisfaction of the condition is or becomes impossible (other than through the failure of Serruya to comply with its obligations under this Agreement) and Serruya has not waived that condition on or before such date;

a change of Control of ABI and/or Aleafia Parent has occurred prior to the Implementation Date; or

the Closing has not occurred on or before November 30, 2018, or such later date as the Parties may agree upon, unless Serruya is in material breach of this Agreement, which breach results in the failure of the Closing to occur on or before such date; or

by ABI if:

there has been a material violation or material breach by Serruya of any covenant, representation and warranty or other agreement contained in this Agreement such that any condition to Closing specified in Section 6.02 would be incapable of being satisfied by the Implementation Date, and such violation or breach is not waived by ABI and/or Aleafia Parent, as applicable, or, in the case of a covenant breach, cured by Serruya within ten (10) days or such longer period of time as may be required provided Serruya is diligently pursuing such cure but in any event prior to the Implementation Date, after written notice thereof by ABI;

any of the Closing conditions in Section 6.02 has not been satisfied as of the Implementation Date or if satisfaction of the condition is or becomes impossible (other than through the failure of ABI and/or Aleafia Parent to comply with its obligations under this Agreement) and ABI and/or Aleafia Parent has not waived that condition on or before such date;

a change of Control of Serruya has occurred prior to the Implementation Date; or

the Closing has not occurred on or before November 30, 2018, or such later date as the parties may agree upon, unless ABI and/or Aleafia Parent is in material breach of this Agreement, which breach results in the failure of the Closing to occur on or before such date.

Termination Rights After Closing

by mutual consent of the Parties;

by Serruya if ABI and/or Aleafia Parent or any of its Affiliates has committed a material breach of any covenant, representation and warranty or other agreement contained in a JV Agreement to which ABI or any of its Affiliates is a party, and such breach, if capable of being cured, is not remedied within sixty (60) Business Days of written notice thereof from Serruya or the Joint Venture to ABI;

by ABI if Serruya or any of its Affiliates has committed a material breach of any covenant, representation and warranty or other agreement contained in a JV Agreement to which Serruya or any of its Affiliates is a party and such breach, if capable of being cured, is not remedied within sixty (60) Business Days of written notice thereof from ABI to Serruya; or

upon one of ABI (and/or its Affiliate) or Serruya (and/or its Affiliate) holding all of the issued and outstanding Shares.

Termination in the event of Bankruptcy, etc.

Change of Applicable Laws.

If a Governmental Body declares by way of a final and unappealable order or Applicable Law that, for any reason, it is unlawful for the Joint Venture to carry on all or part of the Business in a province or territory of Canada, the Parties shall, in good faith, negotiate an amendment of such provisions of this Agreement or the Implementation Agreements, as the case may be, or negotiate such alternate arrangements as are necessary to facilitate the continued operation of the Business in such province or territory either directly or indirectly by another Person in which the Parties have substantially similar rights and obligations so as to substantially preserve the respective rights and obligations of the Parties hereunder.

If the Parties are unable to agree in writing upon amendments or alternate arrangements within the period permitted by such Governmental Body for the Joint Venture to continue to carry on the Business in that province or territory in compliance with Applicable Laws following such declaration, or such other period agreed to by the Parties, this Agreement, and each of the Implementation Agreements shall terminate in respect of the Business in such province or territory and be of no further force or effect and if such declaration of unlawfulness includes all of Canada, this Agreement shall terminate and the Joint Venture shall be dissolved in accordance with the terms of the Shareholder Agreement.

Effect of Termination.

If this Agreement is terminated pursuant to Article 9, all further obligations of the Parties under this Agreement will terminate, except those obligations that by their nature should survive.

In the event this Agreement is terminated pursuant to Article 9, the Parties shall take all reasonable steps to forthwith cause the Joint Venture to be dissolved.

Each Party’s right of termination herein is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination will not deemed to be an election of remedies.

Indemnification by Serruya

any breach or non-performance by Serruya or any of its Affiliates of any covenant to be performed by any of them that is contained in this Agreement or any of the Implementation Agreements to which it is a party or any agreement, certificate or other document executed and delivered pursuant to this Agreement or the Implementation Agreements; and/or

any breach by Serruya or any of its Affiliates of or any material inaccuracy of any representation or warranty contained in this Agreement or any of the Implementation Agreements to which it is a party or any agreement, certificate or other document executed and delivered pursuant to this Agreement or the Implementation Agreements.

Indemnification by ABI

any breach or non-performance by ABI or any of its Affiliates of any covenant to be performed by any of them that is contained in this Agreement or any of the Implementation Agreements to which it is a party or any agreement, certificate or other document executed and delivered pursuant to this Agreement or the Implementation Agreements; and/or

any breach by ABI or any of its Affiliates of or any material inaccuracy of any representation or warranty contained in this Agreement or any of the Implementation Agreements to which it is a party or any agreement, certificate or other document executed and delivered pursuant to this Agreement or the Implementation Agreements.

Notice of Claim

the factual basis for the Claim; and

the amount of the Claim, if known.

Determination of Damages and Related Matters

Third Party Claims

Settlement of Third Party Claims

Net Tax Benefit

Third Party Indemnification

Applies Only to Legal Claims.

Dispute Resolution Procedures

Negotiation. Either Party or the Joint Venture (in this Article 11 only, collectively the “Parties” and each, a “Party”) may give notice of a Legal Claim to the other Party. For a period of 30 days from receipt of the notice, the Parties will consult with each other in a good faith effort to resolve the Legal Claim.

Mediation. If the Parties do not settle the Legal Claim within the 30 days, either Party may provide the other Party with a notice for mediation. After delivery of such notice, the Parties will attempt in good faith to settle the matter by mediation administered by the International Centre for Dispute Resolution Canada under its Canadian mediation rules.

Binding Arbitration. If within 30 days after receipt of the notice for mediation, the mediation does not result in settlement of the Legal Claim, then the Legal Claim will be finally resolved by arbitration administered by the International Centre for Dispute Resolution Canada, in accordance with its Canadian arbitration rules. A Party may initiate arbitration by notice to the other Party any time after expiration of 60 days from receipt of notice of the Legal Claim provided for in Subsection (b), whether or not mediation has been initiated or completed unless the mediation was completed by agreement of the parties as reflected in a written agreement. Unless the Parties agree otherwise, initiation of arbitration will not relieve any Party of its obligation to participate in any mediation initiated under Subsection (b).

Arbitration Terms.

Formation of Tribunal. The arbitration tribunal will consist of three arbitrators. One arbitrator will be appointed by each Party and the third will be appointed by the first two arbitrators.

Industry Experience. The arbitrators will be familiar with the commercial and industry practices of the Joint Venture.

Conduct of Arbitration. The arbitration will take place in Toronto, Ontario in the English language and will exclude any right of application or appeal to any court in connection with any question of law or fact arising in the course of the arbitration or with respect to any award made.

Awards.

Limitation on Authority of Parties

Nothing contained in this Agreement shall be deemed to constitute any Party as the partner of any other Party or, except as otherwise herein expressly provided, to constitute any Party as the agent or legal representative of any other Party, nor to create any fiduciary relationship between the Parties. The Parties do not have any intention to create, nor shall this Agreement be construed to create, any general, limited or undeclared partnership under any Applicable Laws. No Party shall have any authority to act for or to assume any obligation or responsibility on behalf of any other Party by virtue of this Agreement, except as otherwise expressly provided herein.

Save as expressly provided herein, each Party shall be responsible only for its obligations as herein set out and shall not have any liability for the debts, liabilities or obligations of any other Party.

Implied Covenant

Other Business Opportunities

No Third-Party Beneficiary Rights

Notices

Public Announcements

Costs and Expenses

Time of Essence

Further Assurances

Enurement

Assignment

No Contra Proferentem

Counterparts

Electronic Signatures