EXHIBIT 10.1

EXECUTION VERSION

_______________________________________

INVESTMENT AGREEMENT

_______________________________________

between

ALTRIA VENTURES INC., a Virginia corporation,

LEXARIA NICOTINE LLC, a Delaware limited liability company,

POVIVA CORP., a Nevada corporation

and

LEXARIA BIOSCIENCE CORP., a Nevada corporation

Dated as of January 15, 2019

TABLE OF CONTENTS

ARTICLE I DEFINITIONS				1
Section 1.01	Certain Defined Terms			1
Section 1.02	Definitions			6
Section 1.03	Interpretation and Rules of Construction			7
ARTICLE II PURCHASE AND SALE OF EQUITY				7
Section 2.01	Sale and Issuance of Class B Units			7
Section 2.02	Purchase Price			7
Section 2.03	Closing			7
Section 2.04	Withholding			7
Section 2.05	Purchase Price Allocation			7
ARTICLE III CLOSING DELIVERABLES				8
Section 3.01	Closing Deliveries by the Company			8
Section 3.02	Closing Delivery by the Investor			8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES				9
Section 4.01	Existence and Power			9
Section 4.02	Authorization			9
Section 4.03	Capitalization and Ownership; Subsidiaries; Indebtedness			9
Section 4.04	Valid Issuance of Class B Units			10
Section 4.05	No Conflict			10
Section 4.06	Governmental Consents and Approvals			10
Section 4.07	Financial Information			10
Section 4.08	Absence of Undisclosed Material Liabilities			10
Section 4.09	Conduct in the Ordinary Course; No Material Adverse Effect			11
Section 4.10	Litigation; Orders			11
Section 4.11	Sufficiency of and Title to Assets			11
Section 4.12	Intellectual Property			11
Section 4.13	Taxes			12
Section 4.14	Compliance with Laws			14
Section 4.15	Insurance			14
Section 4.16	Environmental and Safety Laws			15
Section 4.17	Products			15
Section 4.18	Employees			15
Section 4.19	Permits			15
Section 4.20	Real Estate			15
Section 4.21	Affiliate Agreements			15
Section 4.22	Brokers			15
Section 4.23	Disclosure			15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INVESTOR				16
Section 5.01	Existence and Power			16
Section 5.02	Authorization			16
Section 5.03	Investment Purpose			16
Section 5.04	Restricted Securities			16
Section 5.05	No Public Market			17
Section 5.06	Accredited Investor			17

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SCHEDULES
Schedule 4.03(a)	Pre-Closing Capitalization
Schedule 4.03(b)	Post-Closing Capitalization
Schedule 4.03(d)	Indebtedness
Schedule 4.10	Litigation
Schedule 4.12(a)	Intellectual Property
Schedule 4.12(f)	Exceptions to Confidentiality Agreements
Schedule 4.12(g)	Royalties
Schedule 4.13(f)	Power of Attorney
Schedule 4.13(h)	Affiliated Groups, etc.
Schedule 4.18	Compensation
Schedule 4.20	Leased Real Property
Schedule 4.21	Affiliate Agreements
EXHIBITS
Exhibit A	Investor License Agreement
Exhibit B	Warrant and Option Agreement

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INVESTMENT AGREEMENT

THIS INVESTMENT AGREEMENT (this “ Agreement ”), dated as of January 15, 2019, is made by and between Lexaria Nicotine LLC, a Delaware limited liability company (the “ Company ”), Lexaria Bioscience Corp., a Nevada corporation (“ Parent ”), PoViva Corp., a Nevada corporation and a wholly-owned subsidiary of Parent (“ PoViva ,” and together with the Company and Parent, the “ Seller Parties ”) and Altria Ventures Inc., a Virginia corporation (the “ Investor ”). The Company, Parent, PoViva and the Investor are referred to individually as a “ Party ” and collectively as the “ Parties ”.

WHEREAS, Seller Parties are engaged in the business of developing and commercializing products that enhance the flavor, bouquet or delivery of certain materials, including the Molecules (as defined below), and possess certain intellectual property regarding such products, methods of production and their use;

WHEREAS, pursuant to a Technology License Agreement, made as of October 1, 2018 (the “ PoViva License Agreement ”), Parent obtained from PoViva a license, with the right to further sublicense, under Technology that is Owned (as such terms are defined below) by PoViva to create, test, manufacture and sell products containing certain materials (including the Molecules) in accordance with the terms and conditions set forth in the PoViva License Agreement;

WHEREAS, pursuant to a Technology License Agreement, made as of October 1, 2018 (the “ Parent License Agreement ”), the Company obtained from Parent a license, with the right to further sublicense, under the Technology that is Owned by Parent to create, test, manufacture and sell products containing the Molecules in accordance with the terms and conditions set forth in the Parent License Agreement;

WHEREAS, simultaneously with the execution and delivery of this Agreement, and as a condition to the Investor’s willingness to enter into this Agreement, the Company, the Investor and Parent have entered into the Limited Liability Company Agreement of the Company, dated as of the date hereof (the “ Limited Liability Company Agreement ”);

WHEREAS, simultaneously with the execution and delivery of this Agreement and as part of the Closing (as defined below), the Company will issue Class B Units to the Investor in those respective amounts as set forth in this Agreement; and

WHEREAS, the Company wishes to sell to the Investor, and the Investor wishes to purchase from the Company, at the Closing, the Class B Units, on the terms as set forth herein, whereby the Investor will become a member of the Company.

NOW, THEREFORE, in consideration of the promises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound, the Parties hereby agree as set forth in this Agreement.

ARTICLE I
DEFINITIONS

Section 1.01 Certain Defined Terms . For purposes of this Agreement:

“ Action ” means any assessment, audit, complaint, demand, examination, hearing, investigation or inquiry by a Governmental Authority or any action, claim, suit, litigation, proceeding, arbitration or mediation (whether civil, criminal or administrative and whether formal or informal).

“ Affiliate ” means any entity that controls, is controlled by, or is under common control with, a Party to this Agreement. For purposes of this definition, “control” means ownership, directly or indirectly, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors in the case of a corporation, or fifty percent (50%) or more of the equity interest or votes in the case of a limited liability company or other type of entity, or any other arrangement whereby a Person controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity.

“ Ancillary Agreements ” means, collectively, the Limited Liability Company Agreement, the Investor License Agreement, the Warrant and Option Agreement and any other documents contemplated by this Agreement.

“ Business ” means the business of the Company as currently conducted or contemplated to be conducted, including, but not limited to, the development of materials and products that enhance the beneficial characteristics (such as flavor, bouquet or bioavailability) of the Molecules, for the purposes of developing, manufacturing and selling products containing the Molecules (including the exploitation of all Intellectual Property Rights therein and thereto, wholesaling and all activities related thereto).

“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in Richmond, Virginia or Kelowna, British Columbia.

“ Confidential Information ” means all know-how, trade secrets, and confidential or proprietary information, however documented and in whatever form, whether in writing, orally, electronically, optically, magnetically, or otherwise, including product specifications, bills of material, purchase orders, data, charts, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing or distribution methods and processes, equipment, materials (including materials regarding training, controls, and quality), current and anticipated customer requirements, market studies, business plans, historical, current and projected sales, historical sales and marketing data, capital spending budgets and plans, strategic plans, marketing and advertising plans, publications, customer data, client and customer lists and files, pricing and cost information, price lists and testing data and studies (including verifications and validations, clinical and non-clinical trial data and trial reports, quality system documentation, including lot records and associated non-conformance records, rework and deviation records, service history files, corrective and preventive actions, internal audit reports and other similar information).

“ Control ” (including the terms “ controlled by ”, “ under common control with ” and “ controlled ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by Contract, credit arrangement or otherwise.

“ Disclosure Letter ” means the disclosure letter delivered by the Seller Parties to the Investor dated as at the date of this Agreement and references in this Agreement to any particular “Schedule” means to the specified Schedule of the Disclosure Letter.

“ Encumbrance ” means any security interest, pledge, hypothecation, mortgage, deed of trust, collateral security arrangement, lien, Tax lien, title imperfection, charge, easement, claim, encumbrance, encroachment or restriction, or other title or interest retention arrangement, reservation, limitation of any kind or nature.

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“ Environmental Laws ” means any Law relating to (a) releases or a threatened release of Hazardous Substance; (b) pollution or protection of employee health or safety, public health or the environment; or (c) the manufacture, handling, transport, use, treatment, storage, or disposal of Hazardous Substances.

“ Governmental Authority ” means any transnational, United States or foreign federal, state, provincial, municipal or local governmental, legislative, judicial, executive, regulatory or administrative authority, department, court (including any arbitral body or tribunal), agency, branch, board, department, instrumentality, entity, commission or official, including any political subdivision thereof, or any non-governmental self-regulatory agency, commission or authority, whether of the United States or another country.

“ Intellectual Property Rights ” means: all rights in intellectual property of any type throughout the world, including all such rights regarding Technology, including: (i) Patents; (ii) Trademarks (iii) copyrights, whether registered or common law, and registrations and applications for registration thereof; (iv) domain names and social media accounts; (v) rights of publicity and privacy, rights to personal information and moral rights; (vi) shop rights; (vii) inventions (whether patentable or unpatentable), invention disclosures, mask works, industrial design rights, discoveries, ideas, developments, data, software, confidential or proprietary technical, business and other information, including processes, techniques, methods, formulae, designs, algorithms, prospect lists, customer lists, projections, analyses, and market studies, and all rights therein and thereto; (viii) all rights to any of the foregoing provided in international treaties and convention rights; (ix) the right and power to assert, defend and recover title to any of the foregoing; (x) all rights to assert, defend and recover for any past, present and future infringement, misuse, misappropriation, impairment, unauthorized use or other violation of any of the foregoing; and (xi) all administrative rights arising from the foregoing, including the right to prosecute applications and oppose, interfere with or challenge the applications of others, the rights to obtain renewals, continuations, divisions and extensions of legal protection pertaining to any of the foregoing.

“ Knowledge of the Company ” means the actual knowledge of Chris Bunka, John Docherty, Allan Spissinger and Jamieson Bondarenko or any knowledge that any of such individuals would have had following a reasonable inquiry.

“ Law ” or “ Laws ” means any applicable federal, state, local, municipal, foreign, international, multinational or other law, treaty, rule, order, regulation, statute, ordinance, code, decree, directive, decision or other binding requirement of any Governmental Authority of any kind and the rules, regulations and orders promulgated thereunder.

“ Liabilities ” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law, Action or Order and those arising under any Contract.

“ Licensed Patents ” means all Patents in the Territory licensed to the Company pursuant to the Parent License Agreement, and all other Patents Owned by the Company claiming Technology or otherwise used in the Business, including the Patents listed in Schedule B of the Investor License Agreement.

“ Licensed Trademarks ” means the Trademarks licensed to Investor pursuant to the Investor License Agreement, including the Trademarks listed in Schedule A of the Investor License Agreement.

“ Molecules ” means nicotine and nicotine-like or related compounds such as nor-nicotine, lobeline and the like, as well as the free base substance nicotine and all pharmacologically acceptable salts of nicotine, including acid addition salts, and nicotine analogs. “Nicotine” as that term is used herein therefore includes all the foregoing tobacco alkaloids, as well as nicotine salts including but not limited to nicotine hydrogen tartrate and nicotine bitartrate dihydrate, as well as nicotine hydrochloride, nicotine dihydrochloride, nicotine sulfate, nicotine citrate, nicotine zinc chloride monohydrate, nicotine salicylate, nicotine oil, nicotine complexed with cyclodextrin, polymer resins such as nicotine polacrilex, nicotine resinate, and other nicotine-ion exchange resins, either alone or in combination, as well as nicotine analogs that include, but are not limited to (s)-Nicotine, Nornicotine, (S)-Cotinine, B-Nicotyrine, (S)-Nicotene-N’-Oxide, Anabasine, Anatabine, Myosmine, B-Nornicotyrine, 4-(Methylamino)-1-(3-pyridyl)-1-butene (Metanicotine) cis or trans, N’-Methylanabasine, N’Methylanatabine, N’Methylmyosmine, 4-(Methylamino)-1-(3-pyridyl)-1-butanone (Pseudoxynicotine), and 2,3’-Bipyridyl.

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“ Order ” means any judgment, decision, consent decree, injunction, citation, ruling, writ, order or other determination of or entered by any Governmental Authority that is binding on any Person or its property under applicable Law.

“ Organizational Document ” means, with respect to any Person that is not a natural person, such Person’s charter, certificate or articles of incorporation or formation, bylaws, memorandum and articles of association, operating agreement, limited liability company agreement, partnership agreement, limited partnership agreement, limited liability partnership agreement or other constituent or organizational documents of such Person.

“ Owned by Company ” means, with respect to Intellectual Property Rights, the ownership or other possession of a right, title or other interest in such Intellectual Property Rights by the Company, in whole or in part. It is understood that ownership or possession of such Intellectual Property Rights includes ownership of legal title in such Intellectual Property Rights by formal conveyance or operation of Law, and possession of express or implied license or other contractual rights regarding such Intellectual Property Rights that may be conveyed to the Investor by assignment or by license or sub-license without breaching the terms of any agreement with a third party.

“ Ownership Interests ” means: (a) any shares, interests, participations or other equity interests or equivalents (however designated) of capital stock of a corporation; (b) any ownership interests in a Person other than a corporation, including units, membership interests, partnership interests, joint venture interests and beneficial interests or other equity interests; and (c) any warrants, options, convertible or exchangeable debt or securities, subscriptions, rights (including any preemptive or similar rights), calls or other rights to purchase or acquire any of the foregoing.

“ Patents ” means all common law, statutory, treaty, convention rights and other proprietary rights regarding inventions (whether patentable or unpatentable), invention disclosures, mask works, industrial design rights, discoveries, ideas, developments, data, software, confidential or proprietary technical, business and other information, including processes, techniques, methods, formulae, designs, algorithms, prospect lists, customer lists, projections, analyses, and market studies, and all rights therein and thereto, including patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications, worldwide.

“ Permitted Encumbrances ” means: (a) liens for current Taxes not yet due and payable or the amount or validity of which is being contested and for which adequate reserves have been established in the financial statements of the Company and which, in all such cases, the Company shall pay when due; (b) mechanics’, carriers’, workers’, repairers’, lessors’ and similar liens arising or incurred in the ordinary course of business for amounts which are not delinquent and which the Company shall pay when due; (c) liens arising under zoning, building and other land use Laws applicable to the Company’s owned real property and leased real property that are not and have not been violated by the current use, occupancy or operation of such real property; and (d) covenants, conditions, restrictions, easements and other non-monetary liens affecting title to any of the Company’s owned real property or leased real property that do not and would not reasonably be expected to, individually or in the aggregate, materially impair the marketability of title, value, current use, occupancy or operation of such real property as currently conducted.

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“ Person ” means an individual, corporation, company, partnership, joint venture, limited liability company, Governmental Authority or other legal entity.

“ Pre-Closing Period ” means all taxable years or other taxable periods that end on or before (and including) the Closing Date and, with respect to any taxable year or other taxable period beginning on or before and ending after the Closing Date, the portion of such taxable year or period ending on and including the Closing Date.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Tax ” or “ Taxes ” means (i) any and all foreign, United States federal, state, provincial, local, and other taxes, levies, fees, imposts, duties, and similar governmental charges (including any interest, fines, assessments, penalties or additions to tax imposed in connection therewith or with respect thereto) including those imposed on, measured by, or computed with respect to income, franchise, profits or gross receipts, alternative or add-on minimum, margin, ad valorem, value added, capital gains, sales, goods and services, use, real or personal property, escheat or unclaimed property taxes (or similar), environmental, capital stock, license, branch, payroll, estimated, withholding, employment, social security (or similar), insurance, disability, workers compensation, unemployment, compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and gains taxes, registrations, net worth, and customs duties, whether disputed or not, (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of an affiliated, consolidated, combined or unitary group for any taxable period or as the result of being a transferee or successor thereof and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of any express or implied obligation to indemnify any other Person.

“ Tax Returns ” means any return, questionnaire declaration, certificate, bill, report, claim for refund or information return or statement or other document or written information (including declaration of estimated Taxes) filed with or required to supplied to or filed with any Governmental Authority relating to Taxes, including any amendment thereof or supplement, appendix, schedule or attachment thereto.

“ Technology ” means all know-how, trade secrets, data, confidential and proprietary information, technical information, ideas, inventions, discoveries, designs, drawings, specifications, recipes, formulations, flow charts, software code, plans, improvements, and related information regarding the development, composition, manufacture, use and commercialization of materials and products that enhance the beneficial characteristics (such as flavor, bouquet or bioavailability) of Molecules and products containing such materials, including design specifications and drawings, test results and data, product assessments, sales records, e-commerce records, receipts, photographs, purchase orders, bills of lading, order forms, Contracts, financial records, regulatory filings and intellectual property records.

“ Territory ” means the United States and its territories and possessions.

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“ Trademarks ” means any word, phrase, symbol, or design that identifies and distinguishes the source of the goods or services of one party from those of others, including all trademarks, service marks, trade names, brand names, logos and corporate names, trade dress, slogans and other indicia of source of origin, whether or not registered, including all common law rights thereto and all goodwill associated therewith.

“ Transfer Taxes ” means any US federal, state, county, local, non-US and other sales, use, transfer, value added, conveyance, documentary transfer, stamp, recording, registration or other similar Tax (including any notarial fee) imposed in connection with, or otherwise relating to, the transactions contemplated by this Agreement or the recording of any sale, transfer or assignment of property (or any interest therein) effected pursuant to this Agreement.

“ Treasury Regulations ” means the regulations promulgated under the Code.

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Section 1.03 Interpretation and Rules of Construction .

(a) In this Agreement, except to the extent otherwise provided or that the context otherwise requires: when a reference is made in this Agreement to an Article, Section or Exhibit, such reference is to an Article or Section of, or an Exhibit to, this Agreement; when a reference is made in this Agreement to a Schedule, such reference is to a Schedule of the Disclosure Letter; the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement; whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”; the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement; terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto; the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; and references to a Person are also to its successors and permitted assigns. References to “Law”, “Laws” or to a particular statute or Law shall be deemed also to include such Laws or statutes as such Laws or statutes are from time to time amended, modified or supplemented, including by succession of comparable successor Laws.

(b) The Parties have participated jointly in the negotiation and drafting of this Agreement, the Ancillary Agreements and the other agreements, documents and instruments executed and delivered in connection herewith with counsel sophisticated in investment transactions. In the event an ambiguity or question of intent or interpretation arises, this Agreement, the Ancillary Agreements and the agreements, documents and instruments executed and delivered in connection herewith shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement, the Ancillary Agreements and the agreements, documents and instruments executed and delivered in connection herewith.

ARTICLE II
PURCHASE AND SALE OF EQUITY

Section 2.01 Sale and Issuance of Class B Units . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to sell and issue to the Investor at Closing 20 Class B Units of the Company (the “ Class B Units ”).

Section 2.02 Purchase Price . The aggregate purchase price for the Class B Units shall be $1,000,000 (the “ Purchase Price ”), which shall be paid by the Investor to the Company at the Closing in immediately available funds in consideration of the issuance of the Class B Units to the Investor by the Company (such payment of the Purchase Price, the “ Investment ”).

Section 2.03 Closing . The closing of the grant of the Investment (the “ Closing ”) shall be held at the offices of Hunton Andrews Kurth LLP in Richmond, Virginia on the date of the execution and delivery of this Agreement (the “ Closing Date ”).

Section 2.04 Withholding . Investor and the Company will be entitled to deduct and withhold from the amounts otherwise payable by it pursuant to this Agreement to the Company or any other Person such amounts as it is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of state, local or foreign Tax law. In the event that any amount is so deducted and withheld such amount will be treated for all purposes of this Agreement as having been paid to the applicable recipient.

Section 2.05 Purchase Price Allocation . Investor and Parent agree to cooperate to allocate the Purchase Price between the Class B Units, the licenses granted pursuant to the Investor License Agreement and the Warrants and Purchase Option granted pursuant to the Warrant and Option Agreement for U.S. federal, state, local or non-U.S. Tax purposes. The Investor and Parent agree to not take any position inconsistent with such agreed allocation in any forum, including on any Tax Return, before any Governmental Authority, or in any Action relating to any Tax, in each case, except as required by applicable Law.

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ARTICLE III

CLOSING DELIVERABLES

Section 3.01 Closing Deliveries by the Company . At the Closing, the Company shall deliver to the Investor:

(a) a License Agreement in the form attached hereto as Exhibit A (“ Investor License Agreement ”), duly executed by the Company;

(b) a Warrant and Option Agreement in the form attached hereto as Exhibit B (“ Warrant and Option Agreement ”), duly executed by the Company;

(c) all authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required to be obtained by the Company in connection with the Investment;

(d) all third party approvals required to be obtained by the Company in connection with the Investment;

(e) the Limited Liability Company Agreement, duly executed by the Seller Parties;

(f) an amended and restated PoViva License Agreement dated as of the date hereof;

(g) an amended and restated Parent License Agreement dated as of the date hereof; and

(h) a certificate in accordance with the requirements of Treasury Regulation Section 1.1445-11T(d)(2).

Section 3.02 Closing Delivery by the Investor . At the Closing, the Investor shall deliver or cause to be delivered to the Company:

(a) an amount equal to the Purchase Price, by wire transfer in immediately available funds to that bank account designated by the Company to the Investor in writing prior to the execution and delivery of this Agreement;

(b) an IRS Form W-9 duly completed and signed by the Investor;

(c) the Limited Liability Company Agreement, duly executed by the Investor;

(d) the Investor License Agreement, duly executed by the Investor or one of its Affiliates; and

(e) the Warrant and Option Agreement, duly executed by the Investor or one of its Affiliates.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

In order to induce the Investor to enter into this Agreement and consummate the transactions contemplated hereby, the Seller Parties represent and warrant to the Investor the accuracy, as of the date of this Agreement, of each of the statements set forth in this Article IV . The representations and warranties set forth in this Article IV are subject to the qualifications and exceptions set forth in the Schedules to this Agreement, however, the Schedules shall not be construed as (a) indicating that any item set forth therein is required to be disclosed, (b) an admission that such information is material to the Company, or (c) an admission of liability under any applicable Law or for any other purpose.

Section 4.01 Existence and Power . The Company is duly formed and is validly existing and in good standing under the Laws of Delaware. The Company has the requisite power and authority to own, operate and lease its assets and to carry on the Business. The Company is duly qualified to do business and is in good standing in each jurisdiction where the ownership, operation or leasing of its assets or the conduct of its Business as currently conducted requires such qualification, except for such jurisdictions where the failure to be so qualified would not have a material adverse effect. The Company has made available to the Investor true and correct copies of all the Organizational Documents of the Company.

Section 4.02 Authorization . Each of the Seller Parties has all necessary power and authority to enter into this Agreement and each of the Ancillary Agreements to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each of the Seller Parties of this Agreement and the Ancillary Agreements to which it is a party, the performance by each of the Seller Parties of its obligations hereunder and thereunder and the consummation by each of the Seller Parties of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of each of the Seller Parties. This Agreement and each other Ancillary Agreement to which any Seller Party is a party constitutes a legal, valid and binding agreement of such Seller Party, as applicable, enforceable against such party in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting the enforcement of creditors’ rights generally or to general principles of equity regardless of whether such enforcement is considered at equity or at law).

Section 4.03 Capitalization and Ownership; Subsidiaries; Indebtedness .

(a) As of the date of this Agreement, the ownership of the Company is as set forth on Schedule 4.03(a) .

(b) Other than the Ownership Interests as set forth on Schedule 4.03(a) , there are no outstanding Ownership Interests of the Company. Except as set forth in the Limited Liability Company Agreement, there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Ownership Interests nor shall any such obligation be created by virtue of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements. Immediately following the Closing, the fully-diluted ownership of the Company will be set forth on Schedule 4.03(b) .

(c) The Company does not own beneficially, directly or indirectly, any Ownership Interests of any Person, or any interest in a partnership or joint venture of any kind.

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(d) Schedule 4.03(d) sets forth and describes (i) all indebtedness of the Company for borrowed money, including but not limited to any indebtedness owed by the Company to an Affiliate of the Company, which indebtedness constitutes all of the obligations of the Company for borrowed money, (ii) all indebtedness for borrowed money guaranteed in any manner by the Company, and (iii) all outstanding payment obligations of the Company for goods or services that are outstanding for more than one-hundred and twenty (120) days.

(e) Parent owns 100% of the issued and outstanding capital stock of PoViva and there are no other outstanding Ownership Interests of PoViva held by any Person other than Parent.

Section 4.04 Valid Issuance of Class B Units . The Class B Units, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Limited Liability Company Agreement and applicable state and federal securities Laws.

Section 4.05 No Conflict . The execution, delivery and performance by the Seller Parties of this Agreement and the Ancillary Agreements to which such Seller Party, as applicable, is a party does not (i) violate, conflict with or result in the breach of the Organizational Documents of such party, (ii) conflict with or violate any Law or Order applicable to such party, (iii) conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent, approval, authorization or other action by, or notification to, any third party under, or give to others any rights of termination, amendment, withdrawal, first refusal, first offer, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, deed of trust, concession, commitment, undertaking, contract, agreement, lease, sublease, license (including the Company Licenses), permit, franchise or other instrument or arrangement, whether oral or written (collectively, “ Contracts ”), to which any Seller Party is a party, other than any violation, conflict, breach or default with respect to subclause (iii) that would not have a material adverse effect on the Company.

Section 4.06 Governmental Consents and Approvals . Assuming the accuracy of the representations made by the Investor in Article V , the execution, delivery and performance of this Agreement and each Ancillary Agreement by the Seller Parties does not require any material consent, approval, authorization or other order of, action by, filing with or notification to, any Governmental Authority, other than filings pursuant to Regulation D of the Securities Act, and applicable state securities Laws.

Section 4.07 Financial Information . The financial information provided to the Investor, consisting of the unaudited balance sheet of the Company as of September 30, 2018, the unaudited monthly balance sheet of the Company as of November 30, 2018, and the unaudited statements of profits and loss of the Company for the period from June 1 to November 30, 2018, fairly presents in all material respects the financial condition and results of operations of the Company as of the dates thereof and for the periods covered thereby.

Section 4.08 Absence of Undisclosed Material Liabilities . There are no Liabilities of the Company or its Affiliates of any nature, other than Liabilities reflected or reserved against on the financial statements of the Company and its Affiliates described in Section 4.07 that would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company.

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Section 4.09 Conduct in the Ordinary Course; No Material Adverse Effect .

(a) Since formation, the Company has conducted the Business in the ordinary course, consistent with past practice.

(b) Since formation, there has not existed or occurred any change, effect, event, circumstance, occurrence, state of facts or development that, individually or in the aggregate with any other such change, effect, event, circumstance, occurrence, state of facts or development, has had or could reasonably be expected to have, a material adverse effect on the condition or prospects of the Business or the Company.

Section 4.10 Litigation; Orders .

(a) Except as set forth on Schedule 4.10 , there are no Actions pending against, or to the Knowledge of the Company, threatened against the Company.

(b) The Company is not a party to or subject to any Order.

Section 4.11 Sufficiency of and Title to Assets .

(a) The Company holds and owns valid title to, has valid leasehold interests in or has valid licenses to use all of the material assets of the Business free and clear of all Encumbrances, other than Permitted Encumbrances.

(b) The Company has maintained the assets of the Business in accordance with sound business practices. The assets of the Business are in good operating condition and repair, subject to ordinary wear and tear.

(c) The assets of the Business include all tangible and intangible assets, contracts and rights necessary for the operation of the Business.

Section 4.12 Intellectual Property .

(a) Schedule 4.12(a) contains a true, complete and accurate list of (i) all Intellectual Property Rights used or held for use in the operation of the Business (the “ Company Intellectual Property ”), (ii) all licenses or other agreements with third parties pursuant to which a Seller Party has acquired Company Intellectual Property from a third party (the “ Inbound Licenses ”), (iii) all licenses or other agreements with third parties pursuant to which a Seller Party has sold or otherwise divested Company Intellectual Property to a third party (the “ Outbound Licenses ,”) and (iv) all agreements regarding Intellectual Property between a Seller Party and an Affiliate of a Seller Party (the “ Intracompany Licenses ,” and collectively with the Inbound Licenses and the Outbound Licenses, the “ Company Licenses ”). Schedule 4.12(a) contains a true, complete and accurate list of all Company Intellectual Property that is subject to any issuance, registration, application or other filing by, to or with any Authority or authorized private registrar in any jurisdiction, including pending applications (the “ Intellectual Property Registrations ”). All Intellectual Property Registrations are in full force and effect and in good standing in all material respects, and all required filings and fees have been timely filed with and paid to the relevant Authorities. The Seller Parties have taken reasonable measures to protect the Company Intellectual Property, including maintaining the confidentiality of the Confidential Information that forms part of the Company Intellectual Property.

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(b) PoViva is the exclusive owner of the Technology and associated Intellectual Property Rights that are licensed to Parent under the PoViva License Agreement and that are further Sub-Licensed to Company under the Parent License Agreement and to Investor under the License Agreement, free and clear of all Encumbrances other than Permitted Encumbrances; (ii) Parent is the exclusive owner of the Trademarks that are licensed to Investor under the License Agreement, free and clear of all Encumbrances other than Permitted Encumbrances, and (iii) all other Technology and associated Intellectual Property Rights used in the Business is Owned by Company free and clear of all Encumbrances other than Permitted Encumbrances. None of the Technology, Trademarks or other Intellectual Property Rights relating to the Molecules licensed to Investor under the Investor License Agreement have been licensed to any third party.

(c) All Company Licenses are in full force in effect as of the date hereof, no party to an Intracompany License is in breach of such Intracompany License, and to the Knowledge of the Company, no party to an Inbound License or an Outbound License is in breach of such Inbound Licenses or Outbound License.

(d) The Company has all necessary right, title and interest to grant the licenses and other rights set forth in the Investor License Agreement.

(e) The conduct of the Business, including without limitation the manufacture, use and sale of the products and services in the Business, does not infringe, misappropriate, or otherwise violate any Intellectual Property Rights of any other Person, and there is no Action pending or, to the Knowledge of the Company, threatened alleging any such infringement, misappropriation, or violation or challenging any of the Company’s rights or ownership in or to any Company Intellectual Property and, to the Knowledge of the Company, there is no existing fact or circumstance that would be reasonably expected to give rise to any such Action. The Seller Parties have not received any notice alleging that the conduct of the Business infringes, misappropriates, or otherwise violates any Intellectual Property Rights of any third party. To the Knowledge of the Company, no Person is infringing, misappropriating, or otherwise violating any Company Intellectual Property.

(f) Except as set forth in Schedule 4.12(f) , each former or present stockholder, member, employee, officer, director, consultant and independent contractor of the Seller Parties has executed an agreement with Parent agreeing to protect the confidential and proprietary information of the Business and actually assigning to the Company all Intellectual Property Rights created or developed by such Person relating to the Business and the Company has made available to the Investor true and complete copies of the forms of all such agreements.

(g) Other than as set forth in Schedule 4.12(g) , there are no royalties, fees or other payments that are due and payable by the Company to any Person in connection with Company Intellectual Property, including to any Person by reason of ownership, use, licensure, sale or disposition of any of the same.

(h) None of the Company Intellectual Property is the product of any joint development activity or agreement with any third party, or has been developed or made in whole or in part using government funding or under a government Contract.

Section 4.13 Taxes .

(a) All Tax Returns that were required to be filed by or with respect to the Company under all applicable Laws have been filed, and all such Tax Returns were true, correct and complete in all material respects. All Taxes due and owing by or with respect to the Company (whether or not shown on any Tax Return) have been fully and timely paid. There are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of any of the Company.

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(b) No claim has ever been made or threatened (formally or informally, orally or in writing) by a Governmental Authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be required to file a Tax Return that was not filed or subject to Tax in that jurisdiction.

(c) The Company has collected, withheld and timely paid to the appropriate Governmental Authority all Taxes required to have been collected, withheld and paid in connection with any amounts paid by or with respect to the Company to any employee, independent contractor, creditor, stockholder, customer or other third party. The Seller Parties have complied with all information reporting requirements related to such withholding.

(d) The Company is not currently nor has ever been the subject of any Tax audit, investigation or Action. The Company has not received any notice of any audit, assessment or proposed assessment or adjustment in connection with any Tax Return nor is any such audit or Action pending or threatened (formally or informally, orally or in writing). The Company has not received a private letter ruling, technical advice memorandum, revenue agent report, information document request, notice of proposed deficiency, or deficiency notice from the Internal Revenue Service (or any comparable ruling from any other Governmental Authority), and the Company has not submitted or agreed to any protest, petition, closing agreement, settlement agreement, ruling request or any similar document with respect to the operation of the Business.

(e) There are no currently effective extensions or waivers regarding the application of any statute of limitations of any jurisdiction regarding the assessment or collection of any Taxes from the Company.

(f) Except as set forth in Schedule 4.13(f) , no power of attorney has been granted by or with respect to the Company related to Taxes. The Company is not bound by, nor has any obligation under, any Tax allocation, Tax indemnity, Tax sharing or similar contract or arrangement.

(g) The Company has not engaged in any transaction that would give rise to (i) a reporting obligation under Section 6111 of the Code or the regulations thereunder, or (ii) a list maintenance obligation under Section 6112 of the Code or the regulations thereunder. The Company has not engaged in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2) or any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(1).

(h) Except as set forth in Schedule 4.13(h) , the Company has never been a member of an affiliated group filing a consolidated, combined, or unitary income Tax return for federal, state, local, or non-U.S. income tax purposes. The Company does not have any Liability for the Taxes of any Person (other than the Company) under any section of the Code or Treasury Regulations (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, pursuant to any contractual obligation, or otherwise.

(i) The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date (including any such change as a result of the transactions contemplated by this Agreement); (ii) use of an improper method of accounting for a taxable period ending on or prior to the Closing Date; (iii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local, or non-U.S. income Tax law) executed on or prior to the Closing Date; (iv) installment sale or open transaction disposition made on or prior to the Closing Date; (v) prepaid amount received on or prior to the Closing Date; or (vi) election under Section 108(i) of the Code.

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(j) No asset of the Company at or prior to the Closing (i) is subject to any Encumbrance in respect of Taxes, or (ii) is or will be as a result of the transaction contemplated by this Agreement “tax-exempt use property” within the meaning of Section 168(h)(1) of the Code, “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, “limited use property” within the meaning of US Internal Revenue Service Revenue Procedure 76-30 or 2001-28, subject to Section 168(g)(1)(A) or 197(f)(9) of the Code or subject to any provision of Law comparable to any of the provisions listed above.

(k) The Company has never held a beneficial interest in any partnership or other pass-through entity.

(l) The consummation of the transactions contemplated by this Agreement will not have any adverse effect on the continued validity and effectiveness of any Tax exemption, Tax holiday or other Tax reduction agreement or order to which the Company is a party or subject.

(m) The Company does not have a permanent establishment in any country other than the country under the Laws of which it is organized.

(n) No interest in the Company or any of its assets constitutes a “United States real property interest” within the meaning of Section 897 of the Code.

Section 4.14 Compliance with Laws .

(a) The Seller Parties are and have been in compliance in all material respects with all Laws and Orders that are or were applicable to them in connection with the operation of the Business and use of the Technology and other assets of the Business. The Company has not sold and has no present plans to sell any product or service prohibited by Law or Order. None of the Company or its Affiliates has received any written notice from any Governmental Authority or any other Person regarding any violation of or failure to comply with any applicable Law or Order with respect to the operation of the Business and use of the assets of the Business.

(b) Without limiting the foregoing, at no time has the Company, any of its Affiliates, or any partner, officer, director, manager, member, employee, consultant or agent thereof acting on any of their respective behalves made (as it relates to the Business), directly or indirectly, any payment or promise to pay, or gift or promise to give or authorized such a promise or gift, of any money or anything of value, directly or indirectly, to any Person that could subject the business of the Company to liability under the Foreign Corrupt Practices Act of 1977, as amended, or any corresponding foreign Laws. To the Knowledge of the Company, no consultant, officer or director of the Company is a “foreign official” with the meaning of the Foreign Corrupt Practices Act of 1977, as amended.

(c) The Company has not violated in any material respect any import or export restrictions. The Company has not made sales or transacted business with Persons located, organized or resident in a country or territory that is subject to, the economic sanctions or trade embargoes administered by the U.S. Treasury Office of Foreign Assets Control or any other Governmental Authority.

Section 4.15 Insurance . The Company has in full force and effect fire and casualty insurance policies with extended coverage, sufficient in amount (subject to reasonable deductions) to allow it to replace any of its material assets that might be damaged or destroyed.

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Section 4.16 Environmental and Safety Laws . Except as could not reasonably be expected to have a material adverse effect (a) the Company is and has been in compliance with all Environmental Laws; (b) there has been no release of any pollutant, contaminant or toxic or hazardous material, substance or waste or petroleum or any fraction thereof (each, a “ Hazardous Substance ”), on, upon, into or from any site currently or heretofore owned, leased or otherwise used by the Company; (c) there have been no Hazardous Substances generated by the Company that have been disposed of or come to rest at any site that has been included in any published U.S. federal, state or local “superfund” site list or any other similar list of hazardous or toxic waste sites published by any Governmental Authority in the United States; and (d) there are no underground storage tanks located on, no polychlorinated biphenyls (“ PCBs ”) or PCB-containing equipment used or stored on, and no hazardous waste as defined by the Resource Conservation and Recovery Act, as amended, stored on, any site owned or operated by the Company, except for the storage of hazardous waste in compliance with Environmental Laws. The Company has made available to the Investor true and complete copies of all material environmental records, reports, notifications, certificates of need, permits, pending permit applications, correspondence, engineering studies and environmental studies or assessments.

Section 4.17 Products . The Company has not marketed, sold or distributed any products.

Section 4.18 Employees . The Company does not employ any employees. The Company engages three consultants. Schedule 4.18 sets forth all compensation, including bonus, paid or payable for each officer, director, independent contractor or consultant of the Company for the year ended December 31, 2018.

Section 4.19 Permits . The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of the Business. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority.

Section 4.20 Real Estate . The Company does not own any real property. Schedule 4.20 contains a true, complete and accurate list of (i) all real property leased by the Company (the “ Leased Real Property ”), and (ii) all leases of the Company in respect of the Leased Real Property (the “ Leases ”). All Leases are in full force and effect as of the date hereof and, to the Knowledge of the Company, no party to a Lease is in breach of such Lease.

Section 4.21 Affiliate Agreements . Schedule 4.21 contains a true, complete and accurate list of contracts and agreements (whether written or oral) between the Company or any of its Affiliates, on the one hand, and the Company’s Affiliates, stockholders, members, officers, directors or members of their immediate families (or any entity in which any of them has a material financial interest, directly or indirectly), on the other hand (the “ Affiliate Agreements ”).

Section 4.22 Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or the Ancillary Agreements based upon arrangements made by or on behalf of any of the Seller Parties.

Section 4.23 Disclosure . The Seller Parties have made available to the Investor all the information reasonably available to the Company that the Investor has requested for deciding whether to acquire the Class B Units. No representation or warranty of any Seller Party contained in this Agreement, as qualified by the Schedules thereto, no representation or warranty of Parent contained in this Agreement related to Parent, as qualified by disclosures made by Parent in its filings with the United States Securities and Exchange Commission, and no certificate furnished or to be furnished to the Investor at the Closing contains any untrue statement of a material fact or, to the Knowledge of the Company, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. Each of the representations and warranties of the Seller Parties set forth in Sections 4.01 to 4.23 , inclusive, is qualified by and made subject to the disclosures made in the corresponding Schedules of the Disclosure Letter and with respect to representations or warranties of Parent related to Parent, by the disclosures made by Parent in its filings with the United States Securities and Exchange Commission.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

In order to induce the Seller Parties to enter into this Agreement and consummate the transactions contemplated hereby, the Investor hereby represents and warrants to the Seller Parties the accuracy as of the date of this Agreement of each of the statements set forth in this Article V .

Section 5.01 Existence and Power . The Investor is duly formed, validly existing and in good standing under the Laws of the Commonwealth of Virginia and has all necessary power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.

Section 5.02 Authorization . The Investor has all necessary power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Investor of this Agreement and the Ancillary Agreements to which it is a party, the performance by the Investor of its obligations hereunder and thereunder and the consummation by the Investor of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Investor. This Agreement and each other Ancillary Agreement to which the Investor is a party constitutes a legal, valid and binding agreement of the Investor enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting the enforcement of creditors’ rights generally or to general principles of equity regardless of whether such enforcement is considered at equity or at law).

Section 5.03 Investment Purpose . The Investor is acquiring the Class B Units solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof. The Investor (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Class B Units and is capable of bearing the economic risks of such investment. The Investor is not acquiring the Class B Units as a result of any “general solicitation” or “advertising”, as those terms are defined in Regulation D promulgated under the Securities Act.

Section 5.04 Restricted Securities . The Investor understands that the Class B Units have not been, and will not be, registered under the Securities Act or any applicable state securities Laws, by reason of a specific exemption from the registration provisions of the Securities Act and applicable state securities Laws which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Investor’s representations as expressed herein. The Investor understands that the Class B Units are “restricted securities” under applicable U.S. federal and state securities Laws and that, pursuant to these Laws, the Investor must hold the Class B Units indefinitely unless they are registered with the United States Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Investor acknowledges that the Company has no obligation to register or qualify the Class B Units for resale except as set forth in the Limited Liability Company Agreement. The Investor further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Class B Units, and on requirements relating to the Company that are outside of the Investor’s control, and that the Company is under no obligation and may not be able to satisfy.

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Section 5.05 No Public Market . The Investor understands that no public market now exists for the Class B Units, and that the Company has made no assurances that a public market will ever exist for the Class B Units.

Section 5.06 Accredited Investor . The Investor is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

ARTICLE VI

TAX MATTERS

Section 6.01 Certain Taxes . Parent shall bear any and all Transfer Taxes, if any, arising out of or in connection with the transactions set forth in this Agreement.

Section 6.02 Tax Returns .

(a) The Company shall deliver to the Investor for its review and approval a draft copy of each Tax Return with respect to taxable periods (or portions thereof) ending after the Closing Date at least thirty (30) calendar days prior to the due date thereof (taking into account any extensions), and the Company shall amend or revise each such Tax Return to reflect any comments requested by the Investor.

(b) Within five (5) calendar days of receipt by the Seller Parties of any notice (formally or informally, orally or in writing) of any Action or claim in respect of Taxes of or with respect to the Company, the Seller Parties shall provide written notice to the Investor, together with copies of any communication or information received with respect thereto. The Investor shall have the option, exercisable at any time and in its sole discretion, to control any Action or claim in respect of Taxes of or with respect to the Company; provided that the Seller Parties may, upon delivery to the Investor of written acknowledgment satisfactory to the Investor that the Seller Parties will indemnify and hold harmless the Company and the Investor for any Losses resulting therefrom, assume control any such Action or claim relating solely to a Pre-Closing Period.

ARTICLE VII

INDEMNIFICATION

Section 7.01 Indemnification by the Seller Parties . The Investor, its Affiliates, and its and their respective officers, directors, employees, agents, successors and assigns (each, an “ Investor Indemnified Party ”) shall be indemnified and held harmless by the Parent for any damage, loss or expense (including attorney fees) (“ Losses ”) suffered or incurred by the Investor Indemnified Parties, arising out of or resulting from: (a) the breach of any representation, warranty, covenant or agreement by a Seller Party contained in this Agreement; (b) a Seller Party’s commission of intentional misconduct, common law fraud or intentional misrepresentation; and (c) (A) all Taxes imposed on, asserted against or attributable to the properties, income or operations of the Company for all Pre-Closing Periods; (B) any Transfer Taxes payable by Parent pursuant to Section 6.01 ; and (C) all Taxes imposed on the Company as a result of the provisions of Treasury Regulations Section 1.1502-6 or the analogous provisions of any state, local or foreign law attributable to being a member of a consolidated, combined, unitary or similar group during a Pre-Closing Period.

Section 7.02 Rights Unaffected by Waiver of Conditions . The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or agreement, will not affect the right to indemnification, payment of Losses, or other remedy based on such representations, warranties, covenants or agreements.

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Section 7.03 Treatment of Indemnity Payments . The Parties agree that, for Tax purposes, unless otherwise required by applicable Law, any indemnification payments made pursuant to this Article VII shall be treated as an adjustment to the Purchase Price paid by the Investor and such agreed treatment shall govern for purposes of this Agreement.

ARTICLE VIII

INTELLECTUAL PROPERTY

Section 8.01 Maintenance of Patents . The Seller Parties shall, at their expense, use commercially reasonable efforts to continue prosecution of the Licensed Patents in the Territory that are applications pending as of the Closing Date and to maintain issued Licensed Patents in the Territory. It is understood that such commercially reasonable efforts shall be determined considering the likelihood of obtaining commercially meaningful coverage and the expenditures and resources required, including such factors as the state of the art, the nature of rejections issued by patent examiners, and the existence of factually and legally grounded arguments supporting patentability.

Section 8.02 Trademark Maintenance . The Seller Parties shall, at their expense, use commercially reasonable efforts to maintain and preserve the Licensed Trademarks in the Territory, and to obtain such additional protection of the Licensed Trademarks as the Company may deem appropriate, consistent with the use and intended use of the Licensed Trademarks by Investor in the Territory.

Section 8.03 Rights in Intracompany Agreement . Unless agreed in writing by Investor, (a) Parent shall not assign, terminate, amend, revise or waive any material right or obligation under the PoViva License Agreement or the Parent License Agreement; and (b) Company shall not assign, terminate, amend, revise or waive any material right or obligation under the Parent License Agreement.

Section 8.04 No Encumbrance . Seller Parties shall not mortgage, pledge, or create a security interest in the Technology or the Licensed Patents, Licensed Trademarks or other Intellectual Property used in the Business.

Section 8.05 Certain Limited Liability Company Provisions . For the purposes of ensuring the enforceability of the approval rights set forth in Sections 5.13.24 through 5.13.28 of the Limited Liability Company Agreement (the “ Key Provisions ”), PoViva hereby agrees that it shall not, either directly or indirectly by amendment merger, consolidation or otherwise, take (or permit to be taken) any of the actions described in the Key Provisions without obtaining the approvals required by the Limited Liability Company Agreement.

ARTICLE IX

GENERAL PROVISIONS

Section 9.01 Survival . Unless otherwise set forth in this Agreement, the representations and warranties of the Seller Parties and the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Investor or any Seller Party.

Section 9.02 Expenses . Except as otherwise specified in this Agreement, all costs and expenses, including, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be borne by the Party incurring such costs and expenses, whether or not the Closing shall have occurred.

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Section 9.03 Notices . All notices and other communications must be in writing, addressed to the representatives described below and delivered by hand, recognized overnight courier service, registered mail or electronic mail in .pdf format. Notices will be deemed received as follows: (a) if delivered by hand or overnight service, then on the date of delivery, (b) if by registered mail, then on the fifth (5 ^th ) calendar day following posting or (c) if by electronic mail, then upon receipt with telephone confirmation thereof by the receiving Party to the sending Party. Any Party may change its designated representatives at any time by notifying the other Parties in writing.

(a) if to the Seller Parties:

Lexaria Bioscience Corp.

100-740 McCurdy Road

Kelowna, BC V1X 2P7

Attention: Chief Executive Officer

Email: info@lexariabioscience.com

with a copy to:

Borden Ladner Gervais LLP

Bay Adelaide Centre, East Tower

22 Adelaide Street West

Toronto, ON M5H 4E3

Attention: Andrew Powers

Email: APowers@blg.com

(b) if to the Investor:

Altria Ventures Inc.

6601 West Broad Street

Richmond, Virginia 23230

Attention: President  

and

Altria Ventures Inc.

6601 West Broad Street

Richmond, Virginia 23230

Attention: Secretary

with an additional copy to:

Hunton Andrews Kurth LLP

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, Virginia 23219-4074

Attention: Brian L. Hager

E-mail: bhager@huntonAK.com

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Section 9.04 Announcements . Unless the Seller Parties have complied with this Section 9.04, the Seller Parties will not, and will cause their respective officers, directors, employees and consultants to not, issue or cause the publication or filing of any press release, announcement or other regulatory filing (an “ Announcement ”) with respect to this Agreement or the Ancillary Agreements unless the Investor has provided its prior written consent as to the form, content and timing of such Announcement, such consent not to be unreasonably withheld or delayed. To the extent an Announcement is required by any securities Laws or stock exchange rules or policies applicable to a Seller Party (a “ Required Disclosure ”), as determined by the Seller Party, acting reasonably, the Seller Party must first give prompt written notice to the Investor (and in no event less than two (2) Business Days prior to the date such Required Disclosure is required to be made) which notice will include a draft of the proposed Announcement and confirmation that the Required Disclosure is required to be disclosed on advice of counsel (such notice, draft Announcement and memorandum or other written analysis, the “ Required Disclosure Notice ”). The Investor will promptly provide any comments it has to such Announcement and the Seller Parties shall give such comments due consideration. In addition, the Seller Parties will not, and will cause their respective officers, directors, employees and consultants to not, issue or cause the publication or filing of such Announcement that includes disclosures identifying or relating to the Investor or its Affiliates (an “ Investor-Related Announcement ”) unless the Investor has provided its prior written consent as to the form, content and timing of such Announcement, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, except with respect to an Investor-Related Announcement described in the foregoing sentence, nothing in this Section 9.04 shall limit or otherwise restrict the Seller Parties from making an Announcement or responding to inquiries or otherwise communicating with securities commissions or the stock exchange upon which the shares a Seller Party are listed any of these matters in circumstances where, pursuant to legal requirements or by the rules or policies of the stock exchange upon which the shares of a Seller Party are listed, the Seller Parties consider it necessary to make such Announcement, response or communication.

Section 9.05 Severability . If any provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement. On such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 9.06 Entire Agreement . This Agreement and the Ancillary Agreements constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior contemporaneous oral or written understandings or agreements (including, without limitation, the Preliminary Non-Binding Term Sheet, dated November 13, 2018, between Altria Client Services LLC and Parent) between the Parties which relate to the subject matter hereof.

Section 9.07 Assignment . This Agreement and the rights, licenses and obligations hereunder may not be assigned, by operation of Law or otherwise, by any Party without the express prior written consent of the other Parties, except as provided in Section 9.08 . Any assignment or transfer in violation of this Section 9.07 shall be null and void. This Agreement is binding on and inures to the benefit of the Parties hereto and their respective permitted successors and assigns.

Section 9.08 Investor’s Right to Assign . Investor shall have the right, without consent from Licensor, to assign or otherwise transfer this Agreement in whole or in part to: (a) an Affiliate of Investor; (b) a third party in connection with a merger, consolidation or reorganization involving Investor, regardless whether Investor is a surviving entity, or (c) a Third Party in connection with a sale of all or substantially all of Investor’s business or assets relating to this Agreement.

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Section 9.09 Amendment . No modification or amendment of the Agreement or any of its provisions shall be binding upon any Party unless made in writing and duly executed by authorized representatives of all Parties.

Section 9.10 Waiver . The Investor, on the one hand, and the Seller Parties, on the other hand, may (a) extend the time for the performance of any of the obligations or other acts of the other Party, (b) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any document delivered by the other Party pursuant hereto, or (c) waive compliance with any of the agreements of the other Party or conditions to such Party’s obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of a Party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.

Section 9.11 Dispute Resolution . Subject to the provisions of Section 9.15 , all disputes arising with respect to the construction of this Agreement and the rights and obligations arising hereunder shall be escalated to senior management of the Parties for resolution prior to the commencement of any Action.

Section 9.12 Governing Law; Jurisdiction . This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York, without regard to conflict of law principles that would result in the application of any Law other than the Law of the State of New York. Any unresolved controversy or claim arising out of or relating to this Agreement, except as (i) otherwise provided in this Agreement, or (ii) any such controversies or claims arising out of any Party’s Intellectual Property Rights for which a provisional remedy or equitable relief is sought, shall be submitted to arbitration by one arbitrator mutually agreed upon by the parties, and if no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the American Arbitration Association (the “ AAA ”), then by one arbitrator having reasonable experience in corporate finance transactions of the type provided for in this Agreement and who is chosen by the AAA. The arbitration shall take place in Richmond, Virginia, in accordance with the AAA rules then in effect, and judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof. There shall be limited discovery prior to the arbitration hearing as follows: (a) exchange of witness lists and copies of documentary evidence and documents relating to or arising out of the issues to be arbitrated, (b) depositions of all party witnesses, and (c) such other depositions as may be allowed by the arbitrator upon a showing of good cause. Depositions shall be conducted in accordance with the New York Code of Civil Procedure, the arbitrator shall be required to provide in writing to the parties the basis for the award or order of such arbitrator, and a court reporter shall record all hearings, with such record constituting the official transcript of such proceedings. Each Party will bear its own costs in respect of any disputes arising under this Agreement. Each of the Parties to this Agreement hereby irrevocably submits to the exclusive jurisdiction of the United States District Court for the Eastern District of Virginia and appellate courts thereof or any Virginia State Court sitting in Henrico County, Virginia for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby.

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Section 9.13 Waiver of Jury Trial . ANY CONTROVERSY THAT MIGHT ARISE RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES. CONSEQUENTLY, EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY OF ANY Proceeding a Party brings under or relating to this Agreement or any OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IN THE EVENT OF LITIGATION THE OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER, (B) THE PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE WAIVER, (C) THE PARTY MAKES THE WAIVER KNOWINGLY AND VOLUNTARILY, AND (D) THE PARTY AND EACH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.13 . Any Party may file an original counterpart or a copy of this Agreement with any court as written and conclusive evidence of the consent of each party to the waiver of its right to trial by jury.

Section 9.14 Counterparts . This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail (pdf copies) or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

Section 9.15 Remedies and Relief . Each Party hereto acknowledges and agrees that any breach of this Agreement would result in substantial harm to the other Parties hereto for which monetary damages alone could not adequately compensate. Therefore, the Parties hereto unconditionally and irrevocably agree that any non-breaching Party hereto shall be entitled to seek protective orders, injunctive relief and other remedies available at law or in equity (including seeking specific performance or the rescission of issuances, grants, purchases, sales and other transfers not made in strict compliance with this Agreement). The breaching Party must pay all costs reasonably incurred by the non-breaching Party in pursuing enforcement, including reasonable attorneys’ fees and court costs, but only if the non-breaching Party is successful in the enforcement action.

Section 9.16 Regulatory and R&D Assistance .

(a) Upon Investor’s reasonable request, the Seller Parties shall provide information to and cooperate, support and assist the Investor in the coordination of on-going regulatory activities, compliance activities and product applications with the U.S. Food and Drug Administration and other U.S. and non-U.S. regulatory agencies (including, but not limited to, the filing of Premarket Tobacco Product Applications (“ PMTAs ”)) and provide the Investor with production facility and ingredient information and related registration documentation, product descriptions, nicotine level, packaging and other specifications for any assets of the Business, any other products otherwise related to the Business, and any other products as the Investor may reasonably request.

(b) Upon the Seller Parties reasonable request, the Investor will consult on mutually agreeable terms with the Company regarding the development and progress of the Phase 1 Research Objectives, the Phase 2 Research Objectives and the Phase 3 Research Objective during the term of the Warrant and Option Agreement (each such term defined in the Warrant and Option Agreement).

[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above.

LEXARIA NICOTINE LLC
By:	/s/ Chris Bunka
Name:	Chris Bunka
Title:	Chief Executive Officer

Signature Page to Investment Agreement

LEXARIA BIOSCIENCE CORP.
By:	/s/ Chris Bunka
Name:	Chris Bunka
Title:	Chief Executive Officer

Signature Page to Investment Agreement

POVIVA CORP.
By:	/s/ Chris Bunka
Name:	Chris Bunka
Title:	Chief Executive Officer

Signature Page to Investment Agreement

ALTRIA VENTURES INC.
By:	/s/ David Wise
Name:	David Wise
Title:	President

Signature Page to Investment Agreement

Exhibit A

Investor License Agreement

See attached.

Exhibit B

Warrant and Option Agreement

See attached.

EXHIBIT 10.2

LICENSE AGREEMENT

This License Agreement (the “ Agreement ”), effective as of January 15, 2019 (the “ Effective Date ”), is entered into by and among Altria Client Services LLC, a Virginia limited liability company with offices located at 6601 West Broad Street, Richmond, Virginia 23220 (“ Licensee ”), Lexaria Nicotine LLC, a Delaware limited liability company with a principal office and place of business at 100-740 McCurdy Road, Kelowna, BC V1X 2P7, Canada (“ Licensor ”), and Lexaria Bioscience Corp., a Nevada corporation with a principal office and place of business at 100-740 McCurdy Road, Kelowna, BC V1X 2P7, Canada (“ Trademark Licensor ”). Licensor and Trademark Licensor may be referred to herein collectively as the “ Licensor Parties ,” and Licensee, Licensor, and Trademark Licensor may be referred to herein individually as a “ Party ” or collectively as the “ Parties .”

RECITALS

WHEREAS, Licensor is a wholly-owned subsidiary of Trademark Licensor and is engaged in the business of developing materials and products that enhance the beneficial characteristics (such as flavor, bouquet or bioavailability) of Nicotine Molecules (defined below), for the purposes of developing, manufacturing and selling products containing the Nicotine Molecules (the “ Business ”), and possesses certain intellectual property regarding such products, methods of production and their use.

WHEREAS, Licensee and its Affiliates are leading providers of nicotine containing products.

WHEREAS, pursuant to a Technology License Agreement, made as of October 1, 2018 (the “ Parent License Agreement ”), Licensor obtained from Trademark Licensor a license, with the right to further sublicense, under the Licensed Technology Owned or Controlled by Trademark Licensor to create, test, manufacture and sell Licensed Products in accordance with the terms and conditions set forth in the Parent License Agreement.

WHEREAS, Trademark Licensor holds certain trademarks relating to the Business.

WHEREAS, a condition to AVI (as defined below) making an investment in Licensor pursuant to an Investment Agreement, dated as of the Effective Date, among AVI, the Licensor Parties and an Affiliate of the Licensor Parties (the “ Investment Agreement ”) and to the Parties and their Affiliates, as applicable, entering into additional agreements on the Effective Date related to the Investment Agreement, including that certain Warrant and Option Agreement (as defined below), Licensor and Trademark Licensor desire to grant to Licensee, and Licensee desires to obtain from Licensor and Trademark Licensor, a sublicense under the Licensed Technology as is permitted by Section 2.2 of the Parent License Agreement and a license to the Licensed Trademarks, respectively, subject to the terms and conditions of this Agreement and the applicable terms and conditions of the Parent License Agreement.

NOW, THEREFORE, in consideration of the mutual promises and undertakings set forth in this Agreement, the Investment Agreement and the other agreements contemplated by the Investment Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS

Capitalized terms in this Agreement shall have the meanings ascribed to them in the body of this Agreement or as set forth below in this Section 1 .

1.1	“ Action ” means any assessment, audit, complaint, demand, examination, hearing, investigation or inquiry by an Governmental Authority or any action, Claim, suit, litigation, proceeding, arbitration or mediation (whether civil, criminal or administrative and whether formal or informal).
1.2	“ Affiliate ” means any entity that controls, is controlled by, or is under common control with, a Party to this Agreement. For purposes of this definition, “control” means ownership, directly or indirectly, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors in the case of a corporation, or fifty percent (50%) or more of the equity interest or votes in the case of a limited liability company or other type of entity, or any other arrangement whereby a Person controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity.
1.3	“ Ancillary Product ” means an Unlicensed Product that contains a cannabinoid or other bioactive material derived from Cannabis as the Other Active.
1.4	“ AVI ” means Altria Ventures Inc., a Virginia corporation with offices located at 6601 West Broad Street, Richmond, Virginia 23220 and an Affiliate of Licensee.
1.5	“ Claim ” means any formal or informal claim, charge, allegation, demand, cause of action, chose in action, right of recovery or right of set-off of whatever kind or description against any Person.
1.6	“ Confidential Information ” means all know-how, trade secrets, and confidential or proprietary information, however documented and in whatever form, whether in writing, orally, electronically, optically, magnetically, or otherwise, including product specifications, bills of material, purchase orders, data, charts, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing or distribution methods and processes, equipment, materials (including materials regarding training, controls, and quality), current and anticipated customer requirements, market studies, business plans, historical, current and projected sales, historical sales and marketing data, capital spending budgets and plans, strategic plans, marketing and advertising plans, publications, customer data, client and customer lists and files, pricing and cost information, price lists and testing data and studies (including verifications and validations, clinical and non-clinical trial data and trial reports, quality system documentation, including lot records and associated non-conformance records, rework and deviation records, service history files, corrective and preventive actions, internal audit reports and other similar information).
1.7	“ Governmental Authority ” means any transnational, United States or foreign federal, state, municipal or local governmental, legislative, judicial, executive, regulatory or administrative authority, department, court (including any arbitral body or tribunal), agency, branch, board, department, instrumentality, entity, commission or official, including any political subdivision thereof, or any non-governmental self-regulatory agency, commission or authority, whether of the United States or another country.
1.8	“ Improvements ” means Technology which is an improvement, derivative, or other modification of, or otherwise uses or is made using, Technology Owned or Controlled by Licensor as of the Effective Date.

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1.9	“ Intellectual Property Rights ” means: all rights in intellectual property of any type throughout the world, including all such rights regarding Technology, including: (i) Patents; (ii) Trademarks (iii) copyrights, whether registered or common law, and registrations and applications for registration thereof; (iv) domain names and social media accounts; (v) rights of publicity and privacy, rights to personal information and moral rights; (vi) shop rights; (vii) inventions (whether patentable or unpatentable), invention disclosures, mask works, industrial design rights, discoveries, ideas, developments, data, software, confidential or proprietary technical, business and other information, including processes, techniques, methods, formulae, designs, algorithms, prospect lists, customer lists, projections, analyses, and market studies, and all rights therein and thereto; (viii) all rights to any of the foregoing provided in international treaties and convention rights; (ix) the right and power to assert, defend and recover title to any of the foregoing; (x) all rights to assert, defend and recover for any past, present and future infringement, misuse, misappropriation, impairment, unauthorized use or other violation of any of the foregoing; and (xi) all administrative rights arising from the foregoing, including the right to prosecute applications and oppose, interfere with or challenge the applications of others, the rights to obtain renewals, continuations, divisions and extensions of legal protection pertaining to any of the foregoing.
1.10	“ Law ” or “ Laws ” means any applicable federal, state, local, municipal, foreign, international, multinational or other law, treaty, rule, order, regulation, statute, ordinance, code, decree, directive, decision or other binding requirement of any Governmental Authority of any kind and the rules, regulations and orders promulgated thereunder.
1.11	“ Licensed Improvements ” means all Improvements conceived, reduced to practice or otherwise acquired by the Licensor after the Effective Date that are either (a) Owned or Controlled by Licensor under the terms of the Parent License Agreement or (b) Owned or Controlled solely or jointly by Licensor pursuant to Section 6.2(b) .
1.12	“ Licensed Intellectual Property Rights ” means all Intellectual Property Rights Owned or Controlled by Licensor regarding Licensed Technology, including the Licensed Patents and the Licensed Trademarks.
1.13	“ Licensed Patents ” means all Patents in the Territory licensed to Licensor pursuant to the Parent License Agreement, and all other Patents Owned or Controlled by Licensor claiming Technology or otherwise used in the Business, including the Patents listed in Schedule B .
1.14	“ Licensed Product ” means a product that contains a Nicotine Molecule processed or enhanced with the Licensed Technology, which is not an Unlicensed Product. Licensed Products including products designed to be ingested by humans including lozenges, beverages, foods, candies, syrups, gums, oral sprays and foodstuffs of any kind; as well as topically-administered products including creams, lotions, gels, topical sprays, patches and products designed to be administered through the skin. For the avoidance of doubt, Licensed Products may comprise bioactives and other materials in addition to Nicotine Molecules, provided that such products are not Unlicensed Products.
1.15	“ Licensed Technology ” means (a) all Technology regarding Nicotine Molecules that is Owned or Controlled by Licensor as of the Effective Date, including such Technology regarding the composition, manufacturing and use of products comprising Nicotine Molecules; and (b) the Licensed Improvements.

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1.16	“ Licensed Trademarks ” means the Trademarks listed in Schedule A .
1.17	“ LLC Agreement ” means the Amended and Restated Limited Liability Company Agreement of the Licensor dated January 15, 2019.
1.18	“ Net Sales ” means with respect to Licensed Products that Licensee or its Affiliates sell pursuant to the license granted in Section 2.1 , the invoiced ex-works gross sales value of such Licensed Products to third parties (other than Affiliates of Licensee) in arms’ length transactions by Licensee or its Affiliates, as applicable, after deduction of excise Taxes or sales and use Taxes assessed on such Licensed Products or their sale, normal commissions paid to third parties, volume rebates and allowances paid or accrued during the period, including wholesale and retail allowances and incentives, “off invoice,” cash and other discounts and credits, returns and other credit memos for returned and/or damaged goods and pricing errors, all as calculated in accordance with generally accepted accounting principles in the United States or other applicable jurisdiction.
1.19	“ Nicotine Molecule ” means nicotine and nicotine-like or related compounds such as nornicotine, lobeline and the like, as well as the free base substance nicotine and all pharmacologically acceptable salts of nicotine, including acid addition salts, and nicotine analogs. “Nicotine” as that term is used herein therefore includes all the foregoing tobacco alkaloids, as well as nicotine salts including nicotine hydrogen tartrate and nicotine bitartrate dihydrate, as well as nicotine hydrochloride, nicotine dihydrochloride, nicotine sulfate, nicotine citrate, nicotine zinc chloride monohydrate, nicotine salicylate, nicotine oil, nicotine complexed with cyclodextrin, polymer resins such as nicotine polacrilex, nicotine resinate, and other nicotine-ion exchange resins, either alone or in combination, as well as nicotine analogs that include (s)-Nicotine, Nornicotine, (S)-Cotinine, B-Nicotyrine, (S)-Nicotene-N’-Oxide, Anabasine, Anatabine, Myosmine, B-Nornicotyrine, 4-(Methylamino)-1-(3-pyridyl)-1-butene (Metanicotine) cis or trans, N’-Methylanabasine, N’Methylanatabine, N’Methylmyosmine, 4-(Methylamino)-1-(3-pyridyl)-1-butanone (Pseudoxynicotine), and 2,3’-Bipyridyl.
1.20	“ Order ” means any judgment, decision, consent decree, injunction, citation, ruling, writ, order or other determination of or entered by any Governmental Authority that is binding on any Person or its property under applicable Law.
1.21	“ Owned or Controlled ” (along with the terms “ Own or Control ” and “ Owns or Controls ”) means, with respect to Technology or Intellectual Property Rights, the ownership or other possession of a right, title or other interest in such Technology or Intellectual Property Rights by a Person, in whole or in part. It is understood that ownership or possession of such Technology or Intellectual Property Rights includes ownership of legal title in such Technology or Intellectual Property Rights by formal conveyance or operation of Law, and possession of express or implied license or other contractual rights regarding such Intellectual Property Rights that may be conveyed to such Person by assignment or by license or sub-license without breaching the terms of any agreement with any other Person.
1.22	“ Patents ” means all common law, statutory, treaty, convention rights and other proprietary rights regarding inventions (whether patentable or unpatentable), invention disclosures, mask works, industrial design rights, discoveries, ideas, developments, data, software, confidential or proprietary technical, business and other information, including processes, techniques, methods, formulae, designs, algorithms, prospect lists, customer lists, projections, analyses, and market studies, and all rights therein and thereto, including patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications, worldwide.

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1.23	“ Person ” means an individual, corporation, company, partnership, joint venture, limited liability company, Governmental Authority or other legal entity.
1.24	“ Purchase Option ” has the meaning given to it in the Warrant and Option Agreement.
1.25	“ Rest of World ” means everywhere in the world other than the Territory.
1.26	“ Royalty Period ” means the period during which a Royalty is payable pursuant to Section 4.2 .
1.27	“ Sub-License ” means a licensee issued by Licensee to a Third Party.
1.28	“ Tax ” or “ Taxes ” means (i) any and all foreign, United States federal, state, provincial, local, and other taxes, levies, fees, imposts, duties, and similar governmental charges (including any interest, fines, assessments, penalties or additions to tax imposed in connection therewith or with respect thereto) including those imposed on, measured by, or computed with respect to income, franchise, profits or gross receipts, alternative or add-on minimum, margin, ad valorem, value added, capital gains, sales, goods and services, use, real or personal property, escheat or unclaimed property taxes (or similar), environmental, capital stock, license, branch, payroll, estimated, withholding, employment, social security (or similar), insurance, disability, workers compensation, unemployment, compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and gains taxes, registrations, net worth, and customs duties, whether disputed or not, (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of an affiliated, consolidated, combined or unitary group for any taxable period or as the result of being a transferee or successor thereof and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of any express or implied obligation to indemnify any other Person.
1.29	“ Technology ” means (i) the compositions and methods of the Licensed Patents, and (ii) all other know-how, trade secrets, data, confidential and proprietary information, technical information, ideas, inventions, discoveries, designs, drawings, specifications, recipes, formulations, flow charts, software code, plans, improvements, and related information regarding the development, composition, manufacture, use and commercialization of materials, products containing such materials, and methods of making such materials and products, that enhance the characteristics (such as flavor, bouquet or bioavailability) of bioactive materials, including design specifications and drawings, test results and data, product assessments, sales records, e-commerce records, receipts, photographs, purchase orders, bills of lading, order forms, contracts, financial records, regulatory filings and intellectual property records.
1.30	“ Territory ” means the United States and its territories and possessions.
1.31	“ Third Party ” means a Person other than Licensee, Licensee’s Affiliates, Licensor and Licensor’s Affiliates.
1.32	“ Trademarks ” means any word, phrase, symbol, or design that identifies and distinguishes the source of the goods or services of one party from those of others, including all trademarks, service marks, trade names, brand names, logos and corporate names, trade dress, slogans and other indicia of source of origin, whether or not registered, including all common law rights thereto and all goodwill associated therewith.

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1.33	“ Unlicensed Product ” means a product that contains a bioactive molecule that is not a Nicotine Molecule (an “Other Active”), wherein the Other Active is processed or enhanced with the Technology.
1.34	“ Valid Claim ” means any claim in a published and unexpired patent application or issued and unexpired patent which is a Licensed Patent (including, for the avoidance of doubt, claims regarding Licensed Improvements) which claim has not been held unenforceable, unpatentable or invalid by a final decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been finally abandoned or admitted to be invalid or unenforceable through disclaimer.
1.35	“ Warrant and Option Agreement ” means that certain Warrant and Option Agreement executed by Licensor and Trademark Licensor in favor of Licensee as of the Effective Date.

2. TECHNOLOGY LICENSE GRANT

2.1	License Grant . Licensor hereby grants to Licensee and its Affiliates a perpetual license to the Licensed Technology under the Licensed Intellectual Property Rights to make, have made, modify, use, commercialize, offer to sell, sell, import, export and distribute Licensed Products in the Territory, including the right to Sub-License pursuant to Section 2.3 . Subject to Section 2.2 , this license grant is exclusive, including with respect to Licensor, in the Territory and non-exclusive in the Rest of World.
2.2	Obligation to Exercise Warrants and Options . If Licensee does not exercise its (a) First Warrant Tranche following the occurrence of the First Warrant Tranche Trigger prior to the Expiration Time of the First Warrant Tranche or (b) Second Warrant Tranche following the occurrence of the Second Warrant Tranche Trigger prior to the Expiration Time of the Second Warrant Tranche Trigger (such capitalized terms in each of clause (a) and clause (b) having the meanings given to them in the Warrant and Option Agreement, then the license grant for the Territory pursuant to Section 2.1 shall automatically become non-exclusive in the Territory.
2.3	Sublicensing . Licensee and its Affiliates shall have the right to grant Sub-Licenses to Third Parties, including Affiliates of Licensee with respect to the rights licensed to Licensee under Section 2.1 , provided that such Sub-License shall refer to this Agreement and shall contain terms and conditions no less restrictive than those in this Agreement with respect to the sublicensed obligations, and be subject to the requirements set forth in Section 4 and the payment of royalties to Licensee, or an Affiliate of Licensee, for the benefit of Licensor, at a rate no less favorable than as set forth in Section 4. Licensee shall notify Licensor of the grant of Sub-Licenses to Third Parties that are not Affiliates of Licensee.
2.4	License Runs with Title . All rights and licenses granted by Licensor herein shall burden and run with title to the Licensed Technology and Licensed Intellectual Property Rights and shall be binding on any successors-in-interest or permitted assigns thereof or any other Person that obtains any interest in any of the Licensed Technology or Licensed Intellectual Property Rights. Licensor shall not assign, sell or otherwise transfer or grant any ownership right in any of the Licensed Technology to any other Person unless such assignee or transferee first agrees to observe all rights and licenses provided by Licensor in this Agreement, and such other Person executes an agreement to be bound by all of the terms and conditions of this Agreement.

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2.5

Use Restrictions . Unless otherwise agreed by the Parties, Licensor and Trademark Licensor shall not use any Licensed Technology or Licensed Intellectual Property Rights to develop or otherwise commercially exploit (including by assignment or licensing of Improvements) any products or services utilizing a Nicotine Molecule (whether or not paired with other bioactives), either alone or with any Third Party in the Territory, so long as the rights granted in Section 2.1 remain exclusive in the Territory.

3. TRADEMARK LICENSE GRANT

3.1	License Grant . Subject to the terms and conditions of this Agreement, Trademark Licensor hereby grants to Licensee and its Affiliates, a perpetual, fully paid-up right and license to use the Licensed Trademarks on and in connection with the commercializing (including developing, marketing, promoting, advertising, offering for sale, selling, importing, exporting and distributing) of Licensed Products. This license grant is exclusive even with respect to Trademark Licensor in the Territory so long as the rights granted in Section 2.1 remain exclusive, and non-exclusive in the Rest of World.
3.2	Quality and Goodwill . Licensee covenants to Trademark Licensor that Licensee’s commercialization (including developing, marketing, promoting, advertising, offering for sale, selling, importing, exporting and distributing) of any Licensed Products sold under and in connection with the Licensed Trademarks shall be of a consistent quality and shall reflect well upon Trademark Licensor and the Licensed Trademarks consistent with the provisions of Section 3.3. The Licensee agrees that the use of Licensed Trademarks shall be in accordance with all applicable laws. Licensee acknowledges the importance to Trademark Licensor and its Affiliates of its reputation and goodwill in the Licensed Products sold under the Licensed Trademarks, and all goodwill generated by use of the Licensed Trademarks by Licensee in the Territory or the Rest of the World shall inure to the benefit of Trademark Licensor during the Term.
3.3	Quality Control. Licensee agrees to use commercially reasonable efforts to comply with reasonable quality control measures provided by Trademark Licensor to Licensee in writing as of the Effective Date and that such quality control measures are necessary to protect the Licensed Trademarks. In particular, the use of the Licensed Trademarks shall be in accordance with the standards of quality, form and nature of the Trademark Guidelines set forth in Schedule A to this Agreement. Upon the written request of the Trademark Licensor, the Licensee shall forward to the Trademark Licensor samples of any instances of the use of the Licensed Trademarks by the Licensee. The Licensee shall permit, on reasonable advance notice, an authorized representative of the Trademark Licensor to inspect the offices and facilities in or from which the use of the Licensed Trademarks takes place in order to permit the Trademark Licensor to verify the use.

4. ROYALTIES

4.1

Royalty Documentation . In consideration of the license grant under Section 2.1 and the other obligations of Licensor under this Agreement, Licensee shall pay Licensor a royalty on a quarterly basis based on an August 31 year end (“ Royalty ”) equal to [**] 1 of Net Sales of Licensed Products that are covered by a Valid Claim of an issued or pending Licensed Patent, which Licensee or its Affiliates sell to Third Parties in the Territory and in the Rest of the World during the Royalty Period set forth in Section 4.2 The Royalty shall be payable quarterly pursuant to Section 4.3 .

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¹ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

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4.2	Royalty Period . The Royalty shall be due and payable (a) for Net Sales of Licensed Products during the period beginning on the Effective Date and ending on the [**] 2 , and (b) thereafter only with respect to Net Sales of a Licensed Products that are covered by a Valid Claim of an issued Licensed Patent. For the avoidance of doubt, no Royalty shall be due for the sale of any Licensed Products after the expiration of the last Licensed Patent.
4.3	Royalty Reports and Royalty Payments . Within forty-five (45) days after the end of each quarter (ending November 31, February 28, May 31 and August 31) during the Royalty Period, Licensee shall submit to Licensor a written report with respect to the preceding calendar quarter (“ Royalty Report ”) stating: (a) the Net Sales of Licensed Products that were made using the Licensed Technology and were sold to consumers by Licensee and its Affiliates during such calendar quarter and for which a Royalty is due under Section 4.1 ; and (b) a calculation of the amounts due to Licensor. Concurrently with providing such Royalty Report, Licensee shall make payments to Licensor in the amounts due in accordance with the Royalty Report.
4.4	Records . As required by Section 4.1 of the Parent License Agreement, Licensee agrees to maintain at its principal place of business, or another place as may be most convenient, separate books of account and records of all Sub-Licenses and Net Sales and all business done in connection with the Licensed Technology and Licensed Products in the Territory. The books of account and records shall be in sufficient detail to enable accurate calculation of the Royalty contained in Royalty Reports and any other payments due to Licensor under this Agreement. Licensee shall preserve the books of account and records for at least six (6) years after the end of the period covered by such books of account and records, which obligation will survive expiration or earlier termination of this Agreement.
4.5	Audit Rights . As provided in by Section 4.2 of the Parent License Agreement upon at least thirty (30) days advance written notice to Licensee, during the Royalty Period, Licensor shall have the right, through an independent, certified accounting firm reasonably acceptable to Licensee, to examine such records and books of account of Licensee as are necessary to verify the accuracy of Royalty 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 Royalties. 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.

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² [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

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4.6	Wire Transfer . Each Royalty shall be paid by wire transfer or electronic funds transfer (EFT) to a Licensor account to be designated in writing by Licensor within five (5) business days after the date hereof.
4.7	Payment in U.S. Dollars . Unless otherwise specified, all amounts in this Agreement are specified in, and shall be paid in, United States Dollars (US$).
4.8	Withholding Taxes . Notwithstanding any other provision of this Agreement to the contrary, Licensee will be entitled to deduct and withhold from the amounts otherwise payable by it pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment, and shall remit such amounts to the Internal Revenue Service or other applicable Governmental Authority Tax as it is required to remit, in each case under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of state, local or foreign Tax law. In the event that any amount is so deducted, withheld and remitted, such amount will be treated for all purposes of this Agreement as having been paid to the applicable recipient.

5. DOCUMENTATION AND TECHNICAL SUPPORT

5.1	Documentation . In connection with the execution of this Agreement, Licensor shall fully disclose the Licensed Technology to Licensee, including copies of all documentation that is necessary or useful for Licensee to exploit the licenses granted pursuant to Sections 2.1 and 3.1 (collectively, “ Documentation ”). Licensor shall provide such Documentation in the same format (electronic or hard copy) as Licensor keeps such Documentation in the ordinary course of business. Disclosure or provision of such Documentation does not imply nor deliver ownership to the Licensee of any Intellectual Property Rights contained within the Documentation. Licensee shall return or destroy all copies of any Documentation upon termination or expiration of this Agreement, provided that Licensee may retain any copies that Licensee is required to retain (a) by any Law (including stock exchange rule) for the sole purposes of compliance with any such Law and may use such Documentation only as required by any such Law (b) pursuant to Licensee’s bona fide record retention and disaster recovery policies.
5.2	Technical Support . During the Term of this Agreement, upon request by Licensee and for no additional compensation, Licensor will:

	(a)	assist Licensee in resolving regulatory issues and problems related to Licensed Technology; and
	(b)	provide Licensee with so much technical support as is reasonably necessary in order to exploit the licenses granted pursuant to Sections 2.1 and 3.1 , which may include: (i) meetings at which Licensor shall present and explain detailed aspects of Licensed Technology and answer any questions related thereto; (ii) visits by Licensee’s employees and representatives to Licensor’s facilities; (iii) “hands on” manufacturing support by Licensor’s engineers; and (iv) follow-up consultation and troubleshooting by Licensor’s engineers in Licensee’s manufacturing facility.

6. INTELLECTUAL PROPERTY

6.1

Trademark Usage . Licensee may use Licensed Trademarks alone or in conjunction with Licensee’s trademarks so long as such use is in accordance with the Trademark Guidelines set forth in Schedule A . Nothing in this Agreement shall constitute any grant of rights to Licensor with respect to Licensee’s Trademarks or other Intellectual Property Rights. Licensee shall use the Licensed Trademarks only for the purposes of the license granted under Section 3.1 .

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6.2	Intellectual Property Ownership .

	(a)	For the avoidance of doubt, each Party will continue to Own or Control all Intellectual Property Rights it Owns or Controls as of the Effective Date, or that it creates or acquires after the Effective Date but is outside the scope of this Agreement. In particular, Trademark Licensor shall own Improvements and associated Intellectual Property Rights created or acquired by the Trademark Licensor after the Effective Date, subject to the rights of Licensor in such Improvements and Intellectual Property Rights under the Parent License Agreement and the rights of Licensee in such Improvements (as Licensed Technology) and associated Intellectual Property Rights under this Agreement.
	(b)	It is the intention of the Parties to collaborate on research and development as set forth in the Warrant and Option Agreement. The Parties acknowledge and agree that all Improvements conceived, reduced to practice or otherwise acquired by Parties during the Term, including pursuant to work conducted under the Warrant and Option Agreement, and all associated Intellectual Property Rights, will be owned as follows:

	(i)	by Licensee, if conceived, reduced to practice or otherwise acquired solely by Licensee;
	(ii)	by Licensor, if conceived, reduced to practice or otherwise acquired solely by Licensor; or
	(iii)	jointly owned by Licensee and Licensor, if conceived, reduced to practice or otherwise acquired jointly by Licensee and Licensor.

	(c)	Licensor shall notify Licensee, in writing, of any Licensed Improvement within sixty (60) days after Licensor develops or otherwise acquires the Licensed Improvement. For the avoidance of doubt, all such Improvements, including Improvements which Licensor owns solely or jointly pursuant to Section 6.2(b), constitute Licensed Improvements that are subject to the terms and conditions of the license granted under Section 2.1. Subject to Section 6.2(f)(i), Licensor may assign or license such Improvements to a Third Party or an Affiliate regarding Unlicensed Products, consistent with the restrictions set forth in Section 2.5.
	(d)	Except as pursuant to Sub-Licenses granted to Third Parties or Affiliates under Section 2.3, Licensee shall not assign or license any Improvement or associated Intellectual Property Right which it owns, solely or jointly pursuant to Section 6.2(b) (a “ Licensee Improvement ”) to any Third Party or an Affiliate without written consent of Licensor, which will not be unreasonably withheld. Licensee shall notify Licensor, in writing, of any Licensee Improvement within sixty (60) days after Licensee develops the Licensee Improvement.
	(e)	Subject to Section 6.2(f)(ii), Licensor shall have a limited option (the “ Improvement Option ”), which may be exercised within six (6) months after receiving notice of the Licensee Improvement pursuant to Section 6.2(d), to purchase or license from Licensee the right to use Licensee Improvements and associated Intellectual Property Rights to develop and commercialize Unlicensed Products, worldwide, under mutually agreeable terms and conditions that the Parties shall negotiate in good faith, consistent with the restrictions set forth in Section 2.5.

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(f)

Licensor understands and acknowledges that the Licensee’s participation in the development of Improvements, by funding or otherwise, including pursuant to work conducted under the Warrant and Option Agreement, is subject to certain obligations of Licensee regarding the research, development, marketing or other commercialization of cannabinoid-containing products and materials, pursuant to an agreement between Licensee or its Affiliates with a Third Party (the “ Third Party Partner ”) as of the Effective Date, insofar as such Improvements relate to Ancillary Products. Accordingly, the rights and obligations of the Parties pursuant to Sections 6.2(c) and 6.2(e) regarding Improvements and associated Intellectual Property Rights, insofar as such Improvements and associated Intellectual Property Rights relate to the development or commercialization of Ancillary Products (“ Ancillary Improvements ”), are subject to Licensee’s obligations to the Third Party Partner, which shall be addressed as set forth in clauses (i) and (ii) below. The Parties agree that the Third Party Partner shall be a third party beneficiary for purposes of this Section 6.2(f), is entitled to the rights and benefits thereof and shall have the right to enforce the provisions thereof as if it were a party to this Agreement.

	(i)	If Licensor desires to transfer, assign, license or sell to a Third Party all or any portion of an Ancillary Improvement that Licensor owns solely or jointly pursuant to Section 6.2(b) (a “ Licensor Ancillary Improvement ”), or if Licensor receives an unsolicited bona fide offer from a Third Party to acquire or license a Licensor Ancillary Improvement, which offer the Licensor would like to accept, the Licensor shall first present to the Third Party Partner a written bona fide offer for the Licensor Ancillary Improvement, which shall contain a complete description of the terms of the proposed transfer, assignment, license or sale (a “Notice of Intended Transfer or License”). Licensor shall also concurrently provide Licensee with a copy of such Notice of Intended Transfer or License. The Third Party Partner may, but shall not be obligated to, purchase or license, as applicable, the Licensor Ancillary Improvement subject to the Notice of Intended Transfer or License on the offered terms and conditions or those terms and conditions negotiated by the Licensor and the Licensee. If the Third Party Partner desires to exercise such option, the Third Party Partner must exercise such option in writing within ninety (90) days after receiving the Notice of Intended Transfer or License. If the Third Party Partner’s option expires unexercised, then the Third Party Partner shall be deemed to have rejected such offer. Thereafter, the Licensor may sell or license the Licensor Ancillary Improvement to such Third Party strictly in accordance with the terms of the Notice of Intended Transfer or License and in no event on terms and conditions superior to those offered the Licensee; provided such sale or license is consummated within ninety (90) days after expiration of the unexercised option.
	(ii)	The Third Party Partner shall have a right of first negotiation to purchase or license all or any portion of an Ancillary Improvement that Licensee owns solely or jointly pursuant to Section 6.2(b) (a “ Licensee Ancillary Improvement ”). Accordingly, in the event Licensor exercises an Improvement Option pursuant to Section 6.2(e) to purchase or license rights regarding a Licensee Improvement that is or includes a Licensee Ancillary Improvement, Licensee shall notify Licensor, within three (3) months after the Improvement Option is exercised, whether the Third Party Partner has acquired rights to the Licensee Ancillary Improvement. If rights in the Licensee Ancillary Improvement have been acquired by the Third Party Partner, then such rights shall not be available for purchase or license by Licensor pursuant to Section 6.2(e). If rights in the Licensee Ancillary Improvement have not been acquired by the Third Party Partner, then the Parties shall proceed with negotiations under Section 6.2(e) regarding the purchase or licensing of such rights by Licensor.

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6.3

Patent Markings . Licensee, pursuant to the direction of the Licensor, shall ensure proper patent marking for all uses of the Licensed Technology as may be permitted or required under 35 U.S.C. § 287(a) or other applicable law or regulation, such as by actual or virtual marking of appropriate patent, publication or serial numbers, or other identifying information, on any Licensed Products.

7. INFRINGEMENT

7.1	Notice . Each Party will promptly notify the other in writing if it becomes aware of: (a) any infringement or misappropriation, or suspected or threatened infringement or misappropriation, of the Licensed Technology or Licensed Intellectual Property Rights by any Third Party, or (b) any Claim by any Third Party that commercialization of the Licensed Products or other use of any of the Licensed Technology or Licensed Intellectual Property Rights in accordance with this Agreement, misappropriates or infringes any intellectual property rights of a Third Party.
7.2	Enforcement of Licensed Intellectual Property Rights . If any Party becomes aware of any infringement or threatened infringement of any Licensed Intellectual Property Rights by a Third Party in the Territory, the following provisions shall apply:

	(a)	Licensor shall have the option to assume exclusive control of any Claim regarding the infringement or threatened infringement, including the settlement or compromise of any Claim, at Licensor’s cost. All decisions related to the Claim, including whether to bring, defend, maintain or settle the Claim shall be at the exclusive option and expense of Licensor. However, Licensor shall have no right to make any settlement with any Third Party which allows the Third Party to manufacture, use or sell a product in competition with a Licensed Product without the prior written consent of Licensee, which shall not be unreasonably withheld. Licensee will not initiate any such Claim in its own name subject to Section 7.2(b) of this Agreement. Licensee agrees, at Licensor’s request and at Licensor’s expense, to be joined as a Person in any Claim by Licensor to enforce any Licensed Intellectual Property Rights. Licensee shall be responsible for all costs related to legal or other advice provided at Licensee’s direction and for the benefit of Licensee relating to any such Claim. Licensor shall be responsible for travel, accommodation or other expenses related to examination, deposition, expert input or other participation by Licensee, or any assignee or inventor named on a Licensed Patent, in any such Claim, where such participation is at Licensor’s direction and for the benefit of Licensor.
	(b)	If Licensor decides not to proceed with a Claim regarding the infringement or threatened infringement pursuant to Section 7.2(a), Licensee, may at its sole expense, advance a Claim to enforce the Licensed Intellectual Property Rights against any Third Party. However, Licensee shall have no right to make any settlement with any Third Party without the prior written consent of Licensor, which shall not be unreasonably withheld. Licensor will provide Licensee with all reasonable assistance that Licensee may reasonably request in connection with such Claim, and agrees, at Licensee’s request and at Licensee’s expense, to be joined as a Person in any Claim by Licensee to enforce any Licensed Intellectual Property Rights. Licensor shall be responsible for all costs related to legal or other advice provided at Licensor’s direction and for the benefit of Licensor, relating to any such Claim. Licensee shall be responsible for travel, accommodation or other expenses related to examination, deposition, expert input or other participation by Licensor, or any inventor or assignee named on a Licensed Patent, in any such Claim, where such participation is at Licensee’s direction and for the benefit of Licensee.

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	(c)	All damages or other recoveries obtained from a Third Party pursuant to settlement, judgment or other resolution of a Claim pursuant to Section 7.2 (a) or 7.2(b) shall, after reimbursement of each Parties’ expenses, be divided in a manner reasonably proportionate to each Party’s economic loss due to the infringement.
	(d)	Nothing in this Agreement shall require or be deemed to require Licensor to enforce the Licensed Intellectual Property Rights against any Third Party. In no event shall Licensee advance any Claim against Licensor for any losses allegedly resulting from or otherwise connected with any decision by Licensor, including failure to initiate or advance a Claim, and including any settlement of any Claim, or as a result of any action brought by or against Licensee, or as a result of any Licensed Intellectual Property Rights being held invalid or unenforceable.

7.3

Third Party Claims . If any Party becomes aware of any Claim or threatened Claim asserting that the manufacture, use, offering for sale, sale or importation of a Licensed Product by Licensee infringes any intellectual property rights held by a Third Party in the Territory or Rest of World (an “Infringement Claim”), the following provisions shall apply to the defense of any such Claim, including any Claim for invalidity of any intellectual property rights held by the Third Party advanced in response to the Claim (the “ Defense ”):

	(a)	Licensee shall have exclusive control of the Defense, including the settlement or compromise of the Infringement Claim, at Licensee cost. All decisions related to the Defense, including whether to bring, defend, maintain or settle the Infringement Claim shall be at the exclusive option and expense of Licensee. However, Licensee will not make any assertion regarding the invalidity of the intellectual property rights of the Third Party that is the subject of the Infringement Claim which is inherently inconsistent with the validity of a Licensed Patent relevant to the Licensed Product without consulting with Licensor. Licensor shall be responsible for all costs related to legal or other advice provided at Licensor’s direction and for the benefit of Licensor relating to the Defense or the Infringement Claim.
	(b)	Nothing in this Agreement shall require or be deemed to require Licensee to defend any Third Party Claim. In no event shall Licensor advance any Claim against Licensee for any losses allegedly resulting from or otherwise connected with any decision by Licensee, including failure to defend or advance the defense of any Claim, and including any settlement of any Claim, or as a result of any action brought by or against Licensor, or as a result of any Licensed Product being held to infringe intellectual property rights of any Third Party.

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8. TERM AND TERMINATION

8.1	Term . This Agreement shall become effective as of the Effective Date and shall remain in effect until terminated as provided herein. The period of time in which this Agreement is effective is the “ Term ”.
8.2	Termination for Cause . Licensee may terminate this Agreement if Licensor or Trademark Licensor materially breaches any term or condition in this Agreement, and Licensor and Trademark Licensor may terminate this Agreement if Licensee materially breaches any term or condition in this Agreement; provided , however , that the non-breaching Party must give written notice of the breach to the other Parties and allow the breaching Party at least thirty (30) days from the date of the notice to cure the breach. If the breach is capable of being cured but cannot be cured within thirty (30) days, and the breaching Party is diligently pursuing the cure, then the initial thirty (30)-day cure period will be extended for up to an additional thirty (30) days. Additionally, Licensee may terminate this Agreement by providing at least ten (10) days prior written notice if Licensor or Trademark Licensor becomes insolvent, files a voluntary petition in bankruptcy court, makes an assignment for benefit of creditors, is voluntarily or involuntarily adjudicated as bankrupt, or has a receiver appointed for its business, and Licensor and Trademark Licensor may terminate this Agreement by providing at least ten (10) days prior written notice if Licensee suffers such an event.
8.3	Effect of Termination . The following provisions shall survive termination or expiration of this Agreement for the longer of two (2) years or thirty (30) days following the expiration of the statute of limitations applicable to such provision: Section 1 (Definitions), Section 6 (Intellectual Property), Section 7 (Infringement), this Section 8.3 (Effect of Termination), Section 9.2 (Compliance with Laws Covenant), Section 10 (Indemnification), Section 11 (Exclusion of Damages), Section 12 (Further Assurances), Section 13 (Confidentiality), Section 14 (Assignment of Agreement) and Section 15 (General Provisions).

9. REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1	Licensor Parties’ Representations, Warranties and Covenants . Licensor Parties make the following representations, warrantees and covenants to Licensee:

	(a)	Licensor Parties are, and have been for the past five (5) years, in compliance in all material respects with all Laws and Orders that are or were applicable to the Licensed Technology, Licensed Intellectual Property Rights, and Licensed Trademarks and the products and services that Licensor Parties market or sell. Licensor Parties have not received any written notice or other written communication from any Governmental Authority regarding any violation of or failure to comply with any such applicable Law. Licensor has not sold or marketed any product or service prohibited by Law or Order.
	(b)	Licensor Parties have all necessary right, title and interest to grant the licenses and other rights set forth in this Agreement.

9.2

Compliance with Laws Covenant . Licensee, on the one hand, and the Licensor Parties, on the other hand, covenant to and agree with the other Parties that it and they, respectively, will comply with all applicable Laws in connection with this Agreement and shall bear sole responsibility and liability for such compliance or any non-compliance in respect thereto. Licensor will advise Licensee of any health, safety or environmental risks of which it is aware or later learns in connection with the Licensed Products.

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10. INDEMNIFICATION

10.1	Indemnification by Licensor . The Licensor Parties shall jointly and severally defend, indemnify and hold harmless Licensee and its Affiliates, and their respective shareholders, directors, officers, members, mangers, employees, agents, representatives and assigns (each, a “ Licensee Indemnitee Party ”), from and against, and agree to defend promptly the Licensee Indemnitee Parties from, and reimburse Licensee Indemnitee Parties for, from and against any and all losses, damages, costs, expenses, Taxes, liabilities, obligations, Actions and Claims of any kind, including reasonable attorneys’ fees and other reasonable legal costs and expenses (each, an “ Indemnification Claim ”) arising out of or resulting from (a) a breach of any of Licensor’s representations and warranties made in this Agreement, (b) any failure of Licensor to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement; or (b) any act or omission of Licensor constituting gross negligence, willful misconduct or fraud.
10.2	Indemnification by Licensee . Licensee shall defend, indemnify and hold harmless the Licensor Parties and their shareholders, directors, officers, members, mangers, employees, agents, representatives and assigns (each, a “ Licensor Indemnitee Party ”) from and against any and all Indemnification Claims arising out of or resulting from (a) a breach of any of Licensee’s representations and warranties made in this Agreement, (b) any failure of Licensee to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement; (b) any product or regulatory liability arising solely from Licensee’s manufacture, promotion, distribution and sale of the Licensed Products; or (c) any act or omission of Licensee constituting gross negligence, willful misconduct or fraud.
10.3	Notice . As used herein, “ Indemnitee Party ” means a Licensor Indemnitee Party or a Licensee Indemnitee Party, as the context requires, and “ Indemnitor ” means the Party providing the indemnification hereunder, as the context requires. If an Indemnitee Party wishes to seek indemnification under this Agreement for an Indemnification Claim, the Indemnitee Party shall promptly provide the Indemnitor with written notice of the Indemnification Claim. The failure of an Indemnitee Party to provide such written notice promptly to the Indemnitor will not relieve the Indemnitor of any indemnification responsibility under this Section 10 , except to the extent, if any, that such failure materially prejudices the ability of the Indemnitor to defend such Indemnification Claims.
10.4	Third Party Claims . For a Third Party Indemnification Claim, the Indemnitor shall have the right to control the defense or settlement of such Indemnification Claims with counsel of its own choosing reasonably acceptable to the Indemnitee Party; provided , however , that the Indemnitee Party will be entitled, at the Indemnitee Party’s expense, to participate with its own counsel in such defense and settlement; provided , further , that Licensor shall not have the right to control, but may participate in, and Licensee shall have sole control, including the right to select defense counsel, over the defense or settlement of any claim that relates to Taxes. The Indemnitee Party shall at all times promptly deliver to the Indemnitor such information related to the basis for Third Party Indemnification Claims as the Indemnitor may reasonably request. If the Indemnitor declines to assume the defense of any Third Party Indemnification Claim, and it is later determined by an Governmental Authority of competent jurisdiction that such Third Party Indemnification Claim was eligible for indemnification under this Section 10.4 , within thirty (30) days following such determination, the Indemnitor shall reimburse the Indemnitee Party in full for all judgments, costs and expenses, including attorneys’ fees, incurred in connection with such Third Party Indemnification Claim. The Indemnitor shall not, without the prior written consent of the Indemnitee Party, effect any settlement of any pending or threatened Action related to a Third Party Indemnification Claim (a) if such settlement: (i) involves any form of relief other than the payment of money, (ii) involves any finding or admission of any violation of any Law or any of the rights of any Person, or (iii) has any adverse effect on any other Indemnification Claims that have been or may be made against the Indemnitee Party, or (b) if such settlement involves only the payment of money, unless it includes an unconditional release of such Indemnitee Party of all liability on all indemnified Third Party Indemnification Claims that are the subject of such Action.

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10.5

Direct Claims . For an Indemnification Claim by the Indemnitee Party directly against the Indemnitor, the Indemnitor shall have thirty (30) days after its receipt of written notice from the Indemnitee Party to respond in writing to such Indemnification Claim. If the Indemnitor fails to respond within such thirty (30)-day period, the Indemnitor shall be deemed to have rejected its right to dispute such Indemnification Claim. If Indemnitor responds within such thirty (30)-day period and thereafter wishes to dispute the Indemnification Claim, the Parties will resolve their dispute in accordance with Section 15.7 . If the Indemnitor does not dispute the Indemnification Claim or, in the case of a dispute, if the Indemnitee Party is determined to have suffered a loss after resolution of the dispute in accordance with Section 15.7 , the Indemnitor will promptly pay or cause to be paid to the Indemnitee Party the amount of any valid, undisputed or resolved, as applicable, Indemnification Claim.

11. EXCLUSION OF DAMAGES

EXCEPT FOR (A) A PARTY’S OBLIGATIONS UNDER ARTICLE 7 , (B) A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 10 ; AND (C) A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD; IN NO EVENT WILL SUCH PARTY BE LIABLE UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER UNDER ANY LEGAL OR EQUITABLE THEORY, INCLUDING BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY AND OTHERWISE, FOR ANY INDIRECT, EXEMPLARY, SPECIAL, ENHANCED OR PUNITIVE DAMAGES, IN EACH CASE REGARDLESS OF WHETHER THE OTHER PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES OR SUCH LOSSES OR DAMAGES WERE OTHERWISE FORESEEABLE, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE.

12. FURTHER ASSURANCES

Each Party agrees to take such actions, upon request of the other Parties in addition to the actions specified in this Agreement, as may be necessary or reasonably appropriate to implement or give effect to this Agreement.

13. CONFIDENTIALITY

13.1

Disclosure of Confidential Information . The Parties contemplate that each Party or its Affiliates (a “ Disclosing Party ”) may disclose to the other Party or its Affiliates (a “ Receiving Party ”) Confidential Information during the enforcement of intellectual property rights under Article 7 , the course of cooperation under Article 11 , and the exercise of other rights and performance of other obligations pursuant to this Agreement. Such Confidential Information shall be received by the Receiving Party subject to the obligations of Section 13.2 . The Disclosing Party will use commercially reasonably efforts to mark its Confidential Information that is disclosed to the Receiving Party in writing as “Confidential,” or words with a similar meaning. However, failure to mark information in this way will not affect whether information is Confidential Information under this Agreement. Confidential Information also includes (a) any information the Receiving Party obtains through observation while at the Disclosing Party’s or its Affiliate’s facility, (b) the fact that business discussions have and are taking place among the Parties, (c) the existence of this Agreement and the other agreements and documents contemplated to be delivered hereunder and (d) the nature of the activity under this Agreement and the agreements described in clause (c).

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13.2	Non-Disclosure and Use . Except as provided in Section 13.4 or 13.5 , the Receiving Party must hold all Confidential Information in strict confidence, shall not publish or disclose it to any Third Party, and use it only for the purposes of fulfilling its obligations under this Agreement. In particular, a Receiving Party shall not sell, utilize, implement, publish, distribute, file a patent application on, or otherwise use the Disclosing Party’s Confidential Information for any purpose or permit others to use Confidential Information for any purpose, without the Disclosing Party’s prior express written consent. Under no circumstances may the Receiving Party use Confidential Information for purposes of competing with the Disclosing Party or for purposes of interfering with the Disclosing Party’s or its Affiliates’ supply chain, customer or employee relationships. The Receiving Party will be liable to the Disclosing Party for any breach of this Article 13 by any Affiliate of the Receiving Party and by any Person under the Receiving Party’s (or its Affiliate’s) control or responsibility.
13.3	Exceptions . Confidential Information does not include, and a Receiving Party shall have no obligations regarding, information that is: (a) in or enters the public domain through no act or fault of the Receiving Party; (b) known by the Receiving Party prior to disclosure under this Agreement; (c) independently developed by the Receiving Party without use of any of the Disclosing Party’s Confidential Information; or (d) disclosed to or received by the Receiving Party (regardless of whether or not then in the public domain) from a source that was under no legal obligation to treat the information as confidential.
13.4	Disclosure . Unless the Disclosing Party has given its prior written consent, the Receiving Party may only disclose the Confidential Information to its employees, subcontractors and agents who need to know the Confidential Information for the purposes of fulfilling its obligations or obtaining its rights under this Agreement, and who are subject to nondisclosure obligations comparable in scope to this Agreement.
13.5	Forced Disclosure . The Receiving Party may disclose Confidential Information of the Disclosing Party to the extent required by any applicable Law or Order (including any applicable securities Laws or stock exchange rules or policies) or under a proper discovery request (a “Required Disclosure”). In such case, the Receiving Party may either use reasonable efforts to resist disclosing the Confidential Information by seeking to obtain a protective order or otherwise limit the disclosure, or by giving prompt notice to the Disclosing Party and, if requested by the Disclosing Party, cooperating with the Disclosing Party (at the Disclosing Party’s expense) to obtain a protective order or otherwise limit the disclosure. In addition, if Licensor is required to disclose any of Licensee’s or its Affiliate’s Confidential Information as the result of a Required Disclosure, Licensor must (except as provided below) first provide Licensee: (a) reasonable prior written notice of the disclosure; and (b) a letter from Licensor’s counsel confirming that the Confidential Information is, in fact, required to be disclosed. To the extent a Required Disclosure is required by securities Laws or stock exchange rules or policies applicable to Licensor or its Affiliates, as determined by Licensor, acting reasonably, Licensor must first give prompt written notice to Licensee (and in no event less than two (2) business days prior to the date such Required Disclosure is required to be made) which notice will include a draft of the proposed disclosure and a memorandum or other written analysis from Licensor’s counsel outlining the required scope and content of the Required Disclosure and confirmation that the Required Disclosure is required to be disclosed (such notice, draft Announcement and memorandum or other written analysis, the “ Required Disclosure Notice ”). Licensee will promptly provide any comments it has to such Announcement and Licensor shall give such comments due consideration. In addition, Licensor will not, and will cause its respective officers, directors, employees and consultants to not, issue or cause the publication or filing of such Required Disclosure that includes disclosures identifying or relating to Licensee or its Affiliates (a “ Licensee-Related Announcement ”) unless Licensee has provided its prior written consent as to the form, content and timing of such disclosure, such consent not to be unreasonably withheld or delayed.

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13.6	Ownership of Confidential Information . Except as otherwise set forth in this Agreement, as among the Parties, Confidential Information will remain the sole property of the Disclosing Party, and the Disclosing Party retains all ownership rights in its Confidential Information. Except as expressly set forth in this Agreement, nothing in this Agreement grants to the Receiving Party any right or license under any intellectual property rights Owned or Controlled by the Disclosing Party currently or in the future.
13.7	Publicity and Use of Names . Licensor may not (a) advertise or otherwise publicize the existence or terms of this Agreement or any other aspect of its relationship, without Licensee’s prior written approval or (b) use Licensee’s (including its Affiliates) name or trademarks in press releases or in any form of advertising without Licensee’s prior written approval. If a Third Party, including the media, contacts Licensor concerning Licensee or its Affiliates or this Agreement, Licensor must make no comment. Instead, Licensor must refer the Third Party to Licensee and promptly notify Licensee of the contact. Notwithstanding these restrictions it is understood by Licensee that Licensor and Trademark Licensor may be permitted to issue press releases and other materials concerning the progress of the research and development by the Parties (each, an “ R&D Release ”) to communicate progress by the Parties hereunder for leverage in other business sectors or outside the Territory, provided that such releases comply with the following obligations. If Licensor or Trademark Licensor, as applicable, wants to put out a R&D Release, Licensor or Trademark Licensor must provide Licensee prior written notice (and in no event less than two (2) business days prior to the desired date of such R&D Release), which notice will include a draft of the proposed R&D Release (such notice and draft R&D Release, the “ R&D Release Disclosure Notice ”). Licensee will promptly provide any comments it has to such R&D Release and Licensor or Trademark Licensor (as applicable) shall give such comments due consideration. In addition, Licensor and Trademark Licensor will not, and will cause their respective officers, directors, employees and consultants to not, issue or cause the publication or filing of such R&D Release that includes (x) disclosures identifying or relating to Licensee or its Affiliates, (y) Confidential Information of Licensee or its Affiliates, or (z) data or other results of the research and development work conducted by the Parties that constitutes trade secret or potentially patentable Technology, unless Licensee has provided its prior written consent as to the form, content and timing of such disclosure, such consent not to be unreasonably withheld or delayed.

14. ASSIGNMENT OF AGREEMENT

14.1

Assignment . This Agreement and the rights, licenses and obligations hereunder may not be assigned, by operation of Law or otherwise, by any Party without the express prior written consent of the other Parties, except as provided in Section 14.2 . Any assignment or transfer in violation of this Section 14 shall be null and void. This Agreement is binding on and inures to the benefit of the Parties hereto and their respective permitted successors and assigns.

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14.2

Licensee’s Right to Assign. Licensee shall have the right, without consent from Licensor or Trademark Licensor, to assign or otherwise transfer this Agreement in whole or in part to: (a) an Affiliate of Licensee; (b) unless approved by the Class B Member pursuant to the applicable provisions of the LLC Agreement, a Third Party in connection with a merger, consolidation or reorganization involving Licensee, regardless whether Licensee is a surviving entity, or (c) unless approved by the Class B Member pursuant to the applicable provisions of the LLC Agreement, a Third Party in connection with a sale of all or substantially all of Licensee’s business or assets relating to this Agreement.

15. GENERAL PROVISIONS

15.1

Notices . All notices and other communications must be in writing, addressed to the representatives described below and delivered by hand, recognized overnight courier service, registered mail or electronic mail in .pdf format. Notices will be deemed received as follows: (a) if delivered by hand or overnight service, then on the date of delivery, (b) if by registered mail, then on the fifth (5th) calendar day following posting or (c) if by electronic mail, then upon receipt with telephone confirmation thereof by the receiving Party to the sending Party. Any Party may change its designated representatives at any time by notifying the other Parties in writing.

If to either Licensor Party:

Lexaria Bioscience Corp.

100-740 McCurdy Road

Kelowna, BC V1X 2P7

Attention: Chief Executive Officer

Email: info@lexariabioscience.com

With a copy to:

Borden Ladner Gervais LLP

Bay Adelaide Centre, East Tower

22 Adelaide Street West

Toronto, ON M5H 4E3

Attention: Andrew Powers

Email: APowers@blg.com

If to Licensee:

Altria Client Services LLC

6601 West Broad Street

Richmond Virginia 23230

Attention: President

and

Sean M. Beard

Assistant General Counsel

Altria Client Services LLC

6601 West Broad Street

Richmond, Virginia 23230

E-mail: Sean.M.Beard@altria.com

Telephone: (804) 484-8695

with an additional copy to:

Hunton Andrews Kurth LLP

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, Virginia 23219-4074

Attention: Brian L. Hager

E-mail: bhager@huntonak.com

Telephone: (804) 788-7252

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15.2	Entire Agreement; Amendments . This Agreement, together with all Schedules and other attachments hereto, the Investment Agreement and the Warrant and Option Agreement constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior contemporaneous oral or written understandings or agreements among the Parties which relate to the subject matter hereof. No modification or amendment of the Agreement or any of its provisions shall be binding upon any Party unless made in writing and duly executed by authorized representatives of all Parties.
15.3	Non-Waiver; Cumulative Remedies . A Party’s failure to exercise or delay in exercising a right or remedy under this Agreement does not constitute a waiver of the right or remedy or a waiver of other rights or remedies unless the Parties expressly agree in writing. Except as otherwise provided in this Agreement, the rights and remedies provided in this Agreement are cumulative and not exclusive of any remedies provided by Law.
15.4	Severability . If any provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement. On such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
15.5	Interpretation . The headings and titles in this Agreement are for reference only and do not affect the interpretation of this Agreement. For purposes of this Agreement, the words “include,” “includes” and “including” are deemed to be followed by the words “without limitation.” The Parties intend this Agreement to be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted.
15.6	Relationship of the Parties . Nothing in this Agreement shall be construed to create any joint venture, trust, commercial partnership, or any other partnership relationship for any purpose whatsoever. Each Party agrees and represents that it is an independent contractor and its personnel are not agents or employees of the other Party for Tax purposes or any other purposes whatsoever, and are not entitled to any employee benefits from the other Party. Each Party assumes sole and full responsibility for its acts and each Party and its personnel have no authority to make commitments or enter into contracts on behalf of the other Party.

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15.7	Governing Law; Jurisdiction . This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York, without regard to conflict of law principles that would result in the application of any Law other than the Law of the State of New York. Any unresolved controversy or claim arising out of or relating to this Agreement, except as (i) otherwise provided in this Agreement, or (ii) any such controversies or claims arising out of any Party’s Intellectual Property Rights for which a provisional remedy or equitable relief is sought, shall be submitted to arbitration by one arbitrator mutually agreed upon by the parties, and if no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the American Arbitration Association (the “ AAA ”), then by one arbitrator having reasonable experience in corporate finance transactions of the type provided for in this Agreement and who is chosen by the AAA. The arbitration shall take place in Richmond, Virginia, in accordance with the AAA rules then in effect, and judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof. There shall be limited discovery prior to the arbitration hearing as follows: (a) exchange of witness lists and copies of documentary evidence and documents relating to or arising out of the issues to be arbitrated, (b) depositions of all party witnesses, and (c) such other depositions as may be allowed by the arbitrator upon a showing of good cause. Depositions shall be conducted in accordance with the New York Code of Civil Procedure, the arbitrator shall be required to provide in writing to the parties the basis for the award or order of such arbitrator, and a court reporter shall record all hearings, with such record constituting the official transcript of such proceedings. Each Party will bear its own costs in respect of any disputes arising under this Agreement. Each of the Parties to this Agreement hereby irrevocably submits to the exclusive jurisdiction of the United States District Court for the Eastern District of Virginia and appellate courts thereof or any Virginia State Court sitting in Henrico County, Virginia for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby.
15.8	Waiver of Jury Trial . ANY CONTROVERSY THAT MIGHT ARISE RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES. CONSEQUENTLY, EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY OF ANY Proceeding a Party brings under or relating to this Agreement or any OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IN THE EVENT OF LITIGATION THE OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER, (B) THE PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE WAIVER, (C) THE PARTY MAKES THE WAIVER KNOWINGLY AND VOLUNTARILY, AND (D) THE PARTY AND EACH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.8 . Any Party may file an original counterpart or a copy of this Agreement with any court as written and conclusive evidence of the consent of each party to the waiver of its right to trial by jury.
15.9	Counterparts . This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail (pdf copies) or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

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15.10

Remedies and Relief . Each Party hereto acknowledges and agrees that any breach of this Agreement would result in substantial harm to the other Parties hereto for which monetary damages alone could not adequately compensate. Therefore, the Parties hereto unconditionally and irrevocably agree that any non-breaching Party hereto shall be entitled to seek protective orders, injunctive relief and other remedies available at law or in equity (including seeking specific performance or the rescission of issuances, grants, purchases, sales and other transfers not made in strict compliance with this Agreement). The breaching Party must pay all costs reasonably incurred by the non-breaching Party in pursuing enforcement, including reasonable attorneys’ fees and court costs, but only if the non-breaching Party is successful in the enforcement action.

[ Signature Page Follows ]

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IN WITNESS WHEREOF, authorized representatives of each of the Parties have executed this Agreement effective as of the Effective Date.

[Signature Page to License Agreement]

Schedule A

Licensed Trademarks & Guidelines

DehydraTECH®

1. The Licensed Trademarks may only be used as it appears depicted above.

2. Where feasible and practicable, the symbols ® or TM or such other symbol as directed by Trademark Licensor in its discretion from time to time must appear beside the Licensed Trademarks on its right shoulder or foot to indicate to the public that the mark is a trademark owned by the Trademark Licensor.

3. Where feasible and practicable, all items bearing the Licensed Trademarks must also contain the following notice or such other similar notice as directed by Trademark Licensor in its discretion from time to time:

Trademark TM and all related marks are trademarks owned by Lexaria Bioscience Corp. and used under license.

4. All other marks, names and designs must be clearly separated and distinguished from the Licensed Trademarks.

5. The Licensed Trademarks must be used in their entirety and in the manner and form as registered or applied for and must not be altered in any way.

6. The Licensed Trademarks may not be used in any meta-tags or hidden text, or as part of an email address, except with the prior written consent of Trademark Licensor.

Schedule B

Licensed Patents

[**] ³

_______________

³ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

EXHIBIT 10.3

EXECUTION VERSION

THIS WARRANT AND OPTION AGREEMENT AND THE UNITS ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND EXCEPT AS PROVIDED IN SECTION 8 OF THIS WARRANT AND OPTION AGREEMENT, THIS WARRANT AND THE UNITS ISSUABLE HEREUNDER MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF THE COMPANY’S SECURITIES LAW COUNSEL, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

WARRANT AND OPTION AGREEMENT

This Warrant and Option Agreement (“ Agreement ”) is executed as of January 15, 2019, by Lexaria Nicotine LLC, a Delaware limited liability company (the “ Company ”) and Lexaria Bioscience Corp., a Nevada corporation (“ Company Holdings ”), in favor of Altria Ventures Inc., a Virginia corporation (the “ Initial Holder ”), in accordance with the terms and subject to the conditions set forth in this Agreement. The Company, Company Holdings and the Initial Holder are each referred to herein as a “ Party ” and collectively as the “ Parties .”

WHEREAS, the Initial Holder has undertaken to make an investment (“ Company Investment ”) in the Company pursuant to that certain Investment Agreement, dated January 15, 2019, between the Initial Holder, the Company and Company Holdings (the “ Investment Agreement ”);

WHEREAS, the Initial Holder and the Company have entered into that certain License Agreement by and between the Initial Holder and the Company, effective as of January 15, 2019 (the “ License Agreement ”);

WHEREAS, in connection with the Company Investment by the Initial Holder and the License Agreement, the Company and Company Holdings desire to grant to the Initial Holder (i) warrants (each, a “ Warrant ” and, collectively, the “ Warrants ”) to subscribe for a certain number of Class B membership units of the Company (the “ Class B Units ”), and (ii) the Purchase Option (defined below); and

WHEREAS, the execution of this Agreement and the grant of the Warrants and the Purchase Option are a condition to Initial Holder entering into the License Agreement and a condition to the closing of the transactions contemplated by the Investment Agreement.

NOW, THEREFORE, in consideration of the foregoing and the agreements hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, the Company, Company Holdings and the Initial Holder, on its behalf and on behalf of all subsequent registered holders of the Warrants (each, a “ Holder ” and, collectively, the “ Holders ”), agree as follows:

1. Definitions . All capitalized terms that are not defined in this Agreement shall have the meaning ascribed to such terms in the License Agreement.

2. Grant of Warrants . Subject to the terms, restrictions, limitations and conditions stated in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company hereby grants to the Initial Holder:

(a) the number of Warrants evidencing a right to acquire membership interests equal to 17.5% of the Company’s membership interests on a fully-diluted and as-converted basis on the date of the occurrence of the First Warrant Tranche Trigger (as defined below) (the “ First Warrant Tranche ”). Each Warrant in the First Warrant Tranche initially shall be exercisable for thirty two (32) fully-paid Class B Units (the “ First Warrant Units ”). The purchase price per First Warrant Unit to be paid by a Holder for First Warrant Units shall be [**] ¹ each, subject to adjustment in Section 14 and Section 15 of this Agreement (the “ First Warrant Tranche Exercise Price ”).

(b) the number of Warrants equal to 8.9% of the Company’s membership interests on a fully-diluted and as-converted basis on the date of the occurrence of the Second Warrant Tranche Trigger (as defined below) (the “ Second Warrant Tranche ”). Each Warrant in the Second Warrant Tranche initially shall be exercisable for twenty four (24) fully-paid Class B Units (the “ Second Warrant Units ” and together with the First Warrant Units, each a “ Warrant Unit ” and, collectively, the “ Warrant Units ”). The purchase price per Second Warrant Unit to be paid by a Holder for Second Warrant Units shall be [**] ² each, subject to adjustment in Section 14 and Section 15 of this Agreement (the “ Second Warrant Tranche Exercise Price ”, and together with the First Warrant Tranche Exercise Price, the “ Exercise Price ”).

3. Warrant Certificates . The Warrants shall be evidenced by one or more warrant certificates, which shall be substantially in the form attached to this Agreement as Exhibit A (“ Warrant Certificates ”). The Warrant Certificates shall have such marks of identification or designation and such legends or endorsements thereon as the Company deems appropriate, so long as they are not inconsistent with the provisions of this Agreement, or as are required to comply with any law, rule or regulation applicable to the Company, the Warrants or the Warrant Units. The Warrant Certificates shall be duly executed by the Company.

4. Term of Warrants .

(a) With respect to the First Warrant Tranche, the Warrants may not be exercised until the date that the Holder provides written notice to the Company that the Holder has determined in its reasonable discretion that the research objectives set forth on Exhibit B (the “ Phase 1 Research Objectives ”) have been satisfied or waived (the “ First Warrant Tranche Trigger ”). The Company and Company Holdings shall use reasonable best efforts to complete the Phase 1 Research Objectives and cause the First Warrant Tranche Trigger to occur no later than [**] ³ after the date of this Agreement. The Warrants included in the First Warrant Tranche shall expire at 11:59 p.m., New York, New York time on the date that is three (3) months after the First Warrant Tranche Trigger (the “ Expiration Time of the First Warrant Tranche ”).

(b) With respect to the Second Warrant Tranche, the Warrants may not be exercised until the date that the Holder provides written notice to the Company that the Holder has determined in its reasonable discretion that the research objectives set forth on Exhibit C (the “ Phase 2 Research Objectives ”) have been satisfied or waived (the “ Second Warrant Tranche Trigger ”). The Company and Company Holdings shall use reasonable best efforts to complete the Phase 2 Research Objectives and cause the Second Warrant Tranche Trigger to occur no later than [**] ⁴ following a Holder’s exercise of the First Warrant Tranche. The Warrants included in the Second Warrant Tranche shall expire at 11:59 p.m., New York, New York time on the date that is three (3) months after the Second Warrant Tranche Trigger (the “ Expiration Time of the Second Warrant Tranche ,” and together with the Expiration Time of the First Warrant Tranche, the “ Expiration Time ”).

________________

¹ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

² [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

³ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

⁴ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

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5. Exercise of Warrants .

(a) A Holder may exercise Warrants evidenced by a Warrant Certificate in whole, but not in part, at any time prior to the applicable Expiration Time by delivering to the President of the Company (i) the Warrant Certificate; (ii) a written notice in the form attached to this Agreement as Exhibit D (an “ Exercise Notice ”); and (iii) payment either by wire transfer of immediately available funds to an account designated by the Company or by certified or official bank check or bank cashier’s check payable to the order of the Company, in each case for the full amount of the aggregate Exercise Price of the Warrant Units being acquired.

(b) Upon the written request of Holder delivered to the Company in connection with the Exercise Notice, the Company and Company Holdings shall provide an officer’s certificate giving representations and warranties to the Initial Holder or to such duly authorized assigns in substantially the same form and content as those representations and warranties given by the Company and Company Holdings in Article IV of the Investment Agreement, which representations and warranties may be qualified in a schedule to such officer’s certificate.

(c) Upon the written request of Holder delivered to the Company in connection with the Exercise Notice, the Company and Company Holdings shall execute an amendment to the Investment Agreement that effects a bring-down of the indemnity in Article VII of the Investment Agreement to the date of the exercise of the Warrant, as adjusted to reflect Company Holdings’ proportional ownership interest in the Company.

(d) Upon the written request of the Company delivered to the Holder immediately following receipt of the Exercise Notice, the Holder shall provide an officer’s certificate giving representations and warranties to the Company in substantially the same form and content as those representations and warranties given by the Initial Holder in Article V of the Investment Agreement, which representations and warranties may be qualified in a schedule to such officer’s certificate.

6. Grant and Exercise of Purchase Option .

(a) Subject to the terms, restrictions, limitations and conditions stated in this Agreement, the receipt and sufficiency of which are hereby acknowledged, Company Holdings hereby grants to the Initial Holder the exclusive option to purchase all of the outstanding Ownership Interests (as defined in the Investment Agreement) of the Company owned by Company Holdings (the “ Purchase Option ”). For the purpose of clarity, such Ownership Interests are currently comprised of 100 Class A membership units of the Company.

(b) If the Second Warrant Tranche is exercised, the Company and Company Holdings shall use reasonable best efforts to complete research objectives set forth on Exhibit E (the “ Phase 3 Research Objectives ”) no later than [**] ⁵ following a Holder’s exercise of the Second Warrant Tranche. The Holder may exercise, in its sole discretion, the Purchase Option during the period beginning on the date that is the first anniversary of the date that the Holder provides written notice to the Company that the Holder has determined in its reasonable discretion that the Phase 3 Research Objectives have been satisfied or waived (the “ Phase 3 Completion Date ”) and ending at 11:59 p.m., New York, New York time on the fifth anniversary of such Phase 3 Completion Date (the “ Purchase Option Term ”) by providing written notice to Company Holdings at least sixty (60) days prior to the desired exercise date (the “ Purchase Option Notice ”).

_____________

⁵ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

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(c) Upon receipt of a Purchase Option Notice, the Company shall engage, upon the mutual agreement of the Holder and Company Holdings, a professional or group of professionals with significant experience valuing businesses in the sale of business context (the “ Qualified Appraiser ”) to value the Company (a “ Request for Valuation ”). The Company shall cooperate with and facilitate the Qualified Appraiser’s work, including providing all reasonable assistance, relevant documentation and due diligence information and access to its management and personnel as requested by the Qualified Appraiser. The appraisal provided by the Qualified Appraiser will be calculated on a fair market value basis as of the Purchase Option Notice and will set forth an equity value of the Company, and such equity value will be adjusted by the Company’s indebtedness (the “ Appraised Value ”). The Qualified Appraiser shall report its Appraised Value in writing simultaneously to the Company and each Member within forty-five (45) days after receiving the Request for Valuation, which report shall include supporting analysis for its Appraised Value. The parties shall express a preference for the Qualified Appraiser to arrive at a single amount for the Appraised Value, rather than a range, however, in the event the Qualified Appraiser provides a valuation range, the midpoint of the range will be used. The fees and expenses of the Qualified Appraiser shall be borne by the Company.

(d) Following the determination of the Appraised Value, Holder shall calculate the purchase price for Company Holdings’ Class A Units (the “ Option Purchase Price ”) as provided in this paragraph. The Option Purchase Price will equal [**] ⁶ The Holder shall provide the calculation of the Option Purchase Price to Company Holdings within five (5) business days following the determination of the Appraised Value (the “ Option Purchase Price Calculation ”).

Within fifteen (15) business days following the Holder’s delivery of the Option Purchase Price Calculation to Company Holdings (the “ Purchase Option Election Period ”), the Holder may elect to exercise its Purchase Option; however , the Holder will not be obliged to exercise the Purchase Option. If the Holder elects not to exercise its Purchase Option, then the Holder may deliver additional Purchase Option Notices and initiate additional Due Diligence Periods (defined below) at any time during the Purchase Option Term at its sole discretion provided, however , the Holder shall only be entitled to deliver another Purchase Option Notice and initiate another Due Diligence Process once per the Company’s fiscal year.

(e) As soon as reasonably practicable (but in no event later than thirty (30) days) following a Holder’s election to exercise its Purchase Option, the Holder and Company Holdings will enter into an Equity Purchase Agreement that will contain customary terms and conditions, including representations, warranties, covenants and indemnities, which will be mutually agreed upon, and such other documents contemplated by such Equity Purchase Agreement (the “ Definitive Documents ”). The Holder and Company Holdings will close the transaction as soon as reasonably practicable following the execution of the Definitive Documents.

______________

⁶ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

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(f) At any time and from time to time during the Purchase Option Term, subject to a limit of one Due Diligence Process (defined below) per financial quarter, the Holder may, at its sole election and upon 15 days’ advance written notice to Company Holdings (the “ Due Diligence Notice ”), initiate a full and complete due diligence investigation into the business affairs of the Company, including, without limitation, a financial, legal, commercial and compliance due diligence review of the foregoing (the “ Due Diligence Process ”). For sixty (60) days following receipt of the Due Diligence Notice (or such longer time as Company Holdings and the Holder may agree) (the “ Due Diligence Period ”), the Company and Company Holdings shall cooperate with and facilitate the Due Diligence Process, including providing all reasonable assistance, documentation and access to its management and personnel as requested by the Holder or the Holder’s advisors (including, but not limited to, such assistance, information and access as may be requested by the Holder or the Holder’s advisors to allow them to review and verify the calculation of Option Purchase Price). The Holder shall use commercially reasonable efforts to conduct the Due Diligence Process in such a manner as to minimize the disruption to the business of the Company and Company Holdings and all onsite due diligence shall be performed during normal business hours unless otherwise agreed to by the Company or Company Holdings, as applicable. All costs and expenses incurred by the Holder and its Affiliates and related to the Due Diligence Process shall be borne solely by the Holder.

(g) During the Purchase Option Term and, if applicable, through the date when the Holder and Company Holdings execute and deliver the applicable Definitive Documents, Company Holdings will not (i) solicit, initiate, or encourage the submission of any proposal or offer, or accept the same, from any person relating to the purchase of it Ownership Interests in the Company, or (ii) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any person to do or seek any of the foregoing. If Company Holdings receives an offer related to any of the foregoing, Company Holdings shall give notice to the Holder within three (3) days of such receipt and provide a summary of terms and the identity of the third party.

7. Issuance of Warrants and Purchase Option .

(a) The Initial Holder and all subsequent Holders shall have the rights and obligations set forth in this Agreement.

(b) Upon the closing of the transactions contemplated by the exercise of the Purchase Option, Parent will deliver to the Holder a non-foreign person certificate in accordance with the requirements of Treasury Regulations Section 1.1445-2(b)(2) in form and substance satisfactory to the Holder.

8. Securities Law Representations and Related Provisions .

(a) Purchase Entirely for Own Account . This Agreement is made with the Initial Holder in reliance upon the Initial Holder’s representation to the Company, which by the Initial Holder’s execution of this Agreement, the Initial Holder hereby confirms, that the Warrants to be acquired by the Initial Holder will be acquired solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof. The Holder (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Warrants or Warrant Units and is capable of bearing the economic risks of such investment. The Holder is not acquiring the Warrants as a result of any “general solicitation” or “advertising”, as those terms are defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”).

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(b) Restrictions on Transfer and Exercise of the Warrants and Warrant Units . The Initial Holder acknowledges that neither the Warrants nor the Warrant Units have not been, and will not be, registered under the Securities Act. The Holder understands that the Warrants and Warrant Units are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Holder must hold the Warrant or Warrant Units indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Holder acknowledges that the Company has no obligation to register or qualify the Warrant or the Warrant Units for resale except as set forth in the Limited Liability Company Agreement (as defined in the Investment Agreement). The Holder further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Warrant or the Warrant Units, and on requirements relating to the Company that are outside of the Holder’s control, and that the Company is under no obligation and may not be able to satisfy. The Holder understands that no public market now exists for the Warrant or the Warrant Units, and that the Company has made no assurances that a public market will ever exist for the Warrant or the Warrant Units. The Holder is an “accredited investor”, as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

(c) Legends . This Agreement has the legend set forth on page one above. Certificates evidencing the Warrant Units shall be imprinted with a legend in substantially the following form unless a prospectus or registration statement relating to the Warrant Units is in effect under applicable laws and rules of the SEC and applicable state blue sky laws:

THESE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND EXCEPT AS PROVIDED IN SECTION 8 OF THE WARRANT UNDER WHICH THESE UNITS WERE ISSUED (A COPY OF WHICH IS ON FILE WITH THE COMPANY), THESE UNITS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF THE COMPANY’S SECURITIES LAW COUNSEL, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION .

9. Delivery of Warrant Units . Upon receipt of the items set forth in Section 5(a), and subject to the terms of this Agreement, the Company shall promptly and no later than five business days after the date of the Exercise Notice (i) allot and issue the Warrant Units to which a Holder is entitled following its delivery of an Exercise Notice, (ii) enter the Holder’s name (or its nominee’s or trustee’s name as appropriate) in the register of members of the Company as the holder of the Warrant Units issued to such Holder, and (iii) deliver to the Holder a certificate or certificates representing the number of Warrant Units to which the relevant Exercise Notice relates.

10. Registration of Transfer and Exchange . Subject to Section 5 of this Agreement:

(a) The Company shall keep, or cause to be kept, at its principal place of business or at such other location designated by the Company, a register in which, subject to such reasonable regulations as the Company may prescribe, the registrar and transfer agent (the “ Securities Registrar ”) shall register the holder of the Warrants and the transfers thereof as provided herein (“ Securities Register ”). The initial Securities Registrar, with respect to the Warrants, shall be the President of the Company, and thereafter, the Securities Registrar, with respect to the Warrants, may be removed and/or appointed as authorized by the Company.

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(b) Upon surrender for registration of transfer of any Warrant Certificate, the Company shall issue and deliver to the Holder or its duly authorized assigns, one or more new Warrant Certificates of like tenor and in like aggregate amount.

(c) At the option of the Holder, Warrant Certificates may be exchanged for other Warrant Certificates of like tenor and in like aggregate amount upon surrender of the Warrant Certificates to be exchanged. Upon such surrender, the Company shall issue and deliver to the Holder or its duly authorized assigns, one or more new Warrant Certificates of like tenor and in like aggregate amount.

(d) Every Warrant Certificate presented or surrendered for registration of transfer or exchange shall be accompanied (if so required by the Company or the Securities Registrar) by a written instrument or instruments of transfer, in form satisfactory to the Company or the Securities Registrar, duly executed by the registered Holder or by such Holder’s duly authorized attorney in writing.

11. Replacement of Warrant Certificates .

(a) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of a Warrant Certificate and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, surrender and cancellation of such Warrant Certificate, the Company shall issue and deliver to the Holder or its duly authorized assigns after compliance with Section 8, one or more new Warrant Certificates of like tenor and in like aggregate amount.

(b) All Warrants shall be held and owned under the express condition that the provisions of this Section 11 are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Warrant Certificates and shall preclude (to the extent lawful) all other rights and remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

(c) Every new Warrant Certificate issued pursuant to this Section 11 shall constitute an additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly issued hereunder.

12. Persons Deemed Holders . Prior to the due presentment of a Warrant Certificate for registration of transfer or exchange, the Company, any Securities Registrar and any other agent of the Company may treat the person in whose name such Warrant Certificate is registered in the Securities Register as the sole Holder of such Warrant Certificate and of the Warrant represented by such Warrant Certificate for all purposes whatsoever, and shall not be bound to recognize any equitable or other claim to or interest in such Warrant Certificate or in the Warrant represented by such Warrant Certificate on the part of any other person and shall be unaffected by any notice to the contrary.

13. Cancellation . All Warrant Certificates surrendered for the purpose of exercise, exchange or registration of transfer shall be cancelled by the Securities Registrar, and no Warrant Certificates shall be issued in lieu thereof, except as expressly permitted by the provisions of this Agreement.

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14. Anti-Dilution Protection .

(a) If the Company shall, at any time or from time to time after the date of this Agreement, (i) pay or make any distribution upon any membership interest of the Company payable in membership interests or other convertible securities, or (ii) subdivide (by any membership interest split, recapitalization or otherwise) its outstanding membership interests into a greater number of units, the Exercise Price in effect immediately prior to any such distribution or subdivision shall be proportionately reduced and the number of Warrant Units issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse membership interest split or otherwise) its outstanding membership interests into a smaller number of units, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Units issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 14(a) shall become effective at the close of business on the date the distribution, subdivision or combination becomes effective.

(b) In the event of any (i) capital reorganization of the Company, (ii) reclassification of the membership interest of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a membership interest distribution or subdivision, split-up or combination of units), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 14(a)), in each case which entitles the holders of membership interest to receive (either directly or upon subsequent liquidation) membership interest, securities or assets with respect to or in exchange for membership interest, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Units then exercisable under this Warrant, be exercisable for the kind and number of membership interests or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Units then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 14 shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any membership interests, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per unit for the membership interest reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Units acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 14(b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions.

15. Certificate as to Adjustments; Issuance of New Warrant Certificates . Within thirty (30) days following any adjustment provided for in Section 14 of this Agreement, the Company shall give written notice of the adjustment to the Holders. The notice shall state the Exercise Price as adjusted and the increased or decreased number of Class B Units purchasable upon the exercise of the Warrants and shall set forth in reasonable detail the method of calculation for each. Notwithstanding anything to the contrary set forth herein or in the Warrant Certificates, the Company may, at its option, issue new Warrant Certificates evidencing the Warrants, in such form as may be approved by the Company, to reflect any adjustment or change in the Exercise Price and the number or kind of membership interest or other securities or property purchasable upon exercise of the Warrants.

8

16. Miscellaneous .

(a) Any notice or other communication required or permitted to be made hereunder shall be in writing, duly signed and shall be deemed delivered and effective when delivered by hand, recognized overnight courier service, registered mail or electronic mail in .pdf format to the Party at its principal place of business (or such other address as designated in writing). A notice shall not be effective until received. Notices will be deemed received as follows: (i) if delivered by hand or overnight service, then on the date of delivery, (ii) if by registered mail, then on the fifth calendar day following posting, or (iii) if by electronic mail, then upon receipt with telephone confirmation thereof by the receiving Party to the sending Party.

(b) The Company shall, at all times, reserve and keep available for issue and allot and free from any pre-emptive rights such number of Class B Units that are from time to time sufficient to permit the exercise in full of all outstanding Warrants. The Company shall take all such action as may be necessary to ensure that all Warrant Units delivered upon exercise of any Warrants shall, at the time of delivery of the Warrant Certificates for such Warrant Units, be duly authorized, validly issued and fully paid.

(c) The Company shall ensure that the board of directors of the Company has all necessary authorizations to issue and allot such number of Warrant Units as will enable the exercise of the Warrants in full at any time during the term of this Agreement.

(d) The Company shall pay when due and payable any and all federal and state transfer taxes and charges (other than any applicable income taxes) that may be payable in respect of the issuance and delivery of Warrant Certificates or of certificates for Warrant Units receivable upon the exercise of any Warrants; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of the issuance and delivery of any Warrant Certificate or membership interest certificate registered in a name other than that of the Holder of the Warrant Certificate that has been surrendered or such Holder’s duly authorized successors or assigns.

(e) No Holder, in its capacity as such, shall be entitled to vote or receive distributions or shall be deemed for any other purpose the holder of the Warrant Units or other securities which may at any time be issuable upon the exercise of such Warrant. Nothing contained herein or in any Warrant Certificate shall be construed to confer upon any Holder, in its capacity as such, any of the rights of a member of the Company, including any right to vote for the election of directors or upon any matter submitted to members of the Company at any meeting thereof, to give or withhold consent to any corporate action, or to receive notices of meeting or other actions affecting members.

(f) Each Holder, by accepting a Warrant Certificate, accepts and agrees to the terms of this Agreement. The terms of this Agreement shall be binding upon the Company, the Initial Holder and the subsequent Holders and their respective heirs, successors, representatives and permitted assigns. Nothing expressed or referred to herein is intended or will be construed to give any person other than the Company or the Holders any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provision herein contained, it being the intention of the Company and the Holders that this Agreement, the assumption of obligations and statements of responsibilities hereunder, and all other conditions and provisions hereof are for the sole benefit of the Company, Company Holdings and the Holders and for the benefit of no other person.

(g) This Agreement and other attachments hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior contemporaneous oral or written understandings or agreements between the Parties which relate to the subject matter hereof. No modification or amendment of the Agreement or any of its provisions shall be binding upon any Party unless made in writing and duly executed by authorized representatives of all Parties.

9

(h) The headings and titles in this Agreement are for reference only and do not affect the interpretation of this Agreement. For purposes of this Agreement, the words “include,” “includes” and “including” are deemed to be followed by the words “without limitation.” The Parties intend this Agreement to be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted.

(i) Each Party hereto acknowledges and agrees that any breach of this Agreement would result in substantial harm to the other Parties hereto for which monetary damages alone could not adequately compensate. Therefore, the Parties hereto unconditionally and irrevocably agree that any non-breaching Party hereto shall be entitled to seek protective orders, injunctive relief and other remedies available at law or in equity (including seeking specific performance or the rescission of issuances, grants, purchases, sales and other transfers not made in strict compliance with this Agreement). The breaching Party must pay all costs reasonably incurred by the non-breaching Party in pursuing enforcement, including reasonable attorneys’ fees and court costs, but only if the non-breaching Party is successful in the enforcement action.

(j) This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York, without regard to conflict of law principles that would result in the application of any Law other than the Law of the State of New York. Any unresolved controversy or claim arising out of or relating to this Agreement, except as (i) otherwise provided in this Agreement, or (ii) any such controversies or claims arising out of any Party’s intellectual property rights for which a provisional remedy or equitable relief is sought, shall be submitted to arbitration by one arbitrator mutually agreed upon by the parties, and if no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the American Arbitration Association (the “ AAA ”), then by one arbitrator having reasonable experience in corporate finance transactions of the type provided for in this Agreement and who is chosen by the AAA. The arbitration shall take place in Richmond, Virginia, in accordance with the AAA rules then in effect, and judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof. There shall be limited discovery prior to the arbitration hearing as follows: (a) exchange of witness lists and copies of documentary evidence and documents relating to or arising out of the issues to be arbitrated, (b) depositions of all party witnesses, and (c) such other depositions as may be allowed by the arbitrator upon a showing of good cause. Depositions shall be conducted in accordance with the New York Code of Civil Procedure, the arbitrator shall be required to provide in writing to the parties the basis for the award or order of such arbitrator, and a court reporter shall record all hearings, with such record constituting the official transcript of such proceedings. Each Party will bear its own costs in respect of any disputes arising under this Agreement. Each of the Parties to this Agreement hereby irrevocably submits to the exclusive jurisdiction of the United States District Court for the Eastern District of Virginia and appellate courts thereof or any Virginia State Court sitting in Henrico County, Virginia for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby

10

(k) ANY CONTROVERSY THAT MIGHT ARISE RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES. CONSEQUENTLY, EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY OF ANY Proceeding a Party brings under or relating to this Agreement or any OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IN THE EVENT OF LITIGATION THE OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER, (B) THE PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE WAIVER, (C) THE PARTY MAKES THE WAIVER KNOWINGLY AND VOLUNTARILY, AND (D) THE PARTY AND EACH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 16(k) . Any Party may file an original counterpart or a copy of this Agreement with any court as written and conclusive evidence of the consent of each party to the waiver of its right to trial by jury.

(l) A Holder will be entitled to deduct and withhold from the amounts otherwise payable by it pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended, or any provision of state, local or foreign Tax law. In the event that any amount is so deducted and withheld, such amount will be treated for all purposes of this Agreement as having been paid to the applicable recipient.

11

IN WITNESS WHEREOF , the Company has caused this Agreement to be executed by a duly authorized officer as of the date first above written.

	LEXARIA NICOTINE LLC
	By:	/s/ Chris Bunka
	Name:	Chris Bunka
	Title:	Chief Executive Officer
	LEXARIA BIOSCIENCE CORP.
	By:	/s/ Chris Bunka
	Name:	Chris Bunka
	Title:	Chief Executive Officer

Acknowledged and Agreed as of the date first above written:

[Signature Page to Warrant and Option Agreement Agreement]

EXHIBIT A

FORM OF WARRANT CERTIFICATE

No. [____]

THIS WARRANT CERTIFICATE AND THE UNITS ISSUABLE UNDER THAT CERTAIN WARRANT AND OPTION AGREEMENT, DATED AS OF January ___, 2019, BY Lexaria Nicotine LLC, a Delaware limited liability company (THE “COMPANY”), IN FAVOR OF THE INITIAL HOLDER, AS THE SAME MAY BE AMENDED FROM TIME TO TIME (THE “AGREEMENT”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND EXCEPT AS PROVIDED IN SECTION 8 OF THE AGREEMENT, THIS WARRANT CERTIFICATE AND THE UNITS ISSUABLE HEREUNDER MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF THE COMPANY’S SECURITIES LAW COUNSEL, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION. A COPY OF THE AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY DURING NORMAL BUSINESS HOURS. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE AGREEMENT.

______________________

WARRANT CERTIFICATE

This Warrant Certificate certifies that [_____], a [_____], (the “ Initial Holder ”) or registered assigns, is the registered holder of a warrant to purchase the number of fully-paid Class B Units (“ Warrant Units ”) of Lexaria Nicotine LLC, a Delaware limited liability company (the “ Company ”) calculated pursuant to Section 2 of the Agreement, at the Exercise Price set forth in Section 2 of the Agreement (defined below) (the “ Warrant ”).

The Warrant evidenced by this Warrant Certificate is part of a duly authorized issue of Warrants issued pursuant to that certain Warrant and Option Agreement, dated as of January 15, 2019 by the Company and Lexaria Bioscience Corp., a Nevada corporation in favor of the Initial Holder, as the same may be amended from time to time (the “ Agreement ”), which is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the Holder. All terms used, but not otherwise defined, in this Warrant Certificate shall have the meanings assigned to them in the Agreement. If any provision of this Warrant Certificate conflicts with a provision of the Agreement, the provision of the Agreement shall supersede.

With respect to the First Warrant Tranche (defined in the Agreement), this Warrant may not be exercised until the First Warrant Tranche Trigger. The Warrants included in the First Warrant Tranche shall expire at 11:59 p.m., New York, New York time on the date that is three (3) months after the First Warrant Tranche Trigger.

With respect to the Second Warrant Tranche (defined in the Agreement), this Warrant may not be exercised until the Second Warrant Tranche Trigger. The Warrants included in the Second Warrant Tranche shall expire at 11:59 p.m., New York, New York time on the date that is three (3) months after the Second Warrant Tranche Trigger.

Upon the First Warrant Tranche Trigger and the Second Warrant Tranche Trigger (each term as defined in the Agreement), Schedule I to this Warrant shall be updated to reflect the number and series of membership interests for which this Warrant may be exercised with respect to the First Warrant Tranche and the Second Warrant Tranche, respectively.

The Holder may exercise the Warrant evidenced by this Warrant Certificate in whole, but not in part, at any time prior to the applicable Expiration Time by delivering to the President of the Company (i) the Warrant Certificate; (ii) an Exercise Notice; and (iii) payment either by wire transfer of immediately available funds to an account designated by the Company or by certified or official bank check or bank cashier’s check payable to the order of the Company, in each case for the full amount of the aggregate Exercise Price of the Warrant Units being acquired.

Upon receipt of the items set forth above, and subject to the terms of the Agreement, the Company shall promptly deliver to, and register in the name of, the Holder a certificate or certificates representing the number of Warrant Units acquired by exercise of this Warrant.

The Agreement provides that upon the occurrence of certain events the Exercise Price and the type and/or number of the Company’s securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company shall issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants.

Upon surrender for registration of transfer of this Warrant Certificate, subject to the terms of the Agreement, the Company shall issue and deliver to the Holder or its duly authorized assigns, one or more new Warrant Certificates of like tenor and in like aggregate amount.

Prior to the due presentment of this Warrant Certificate for registration of transfer or exchange, the Company, any Securities Registrar and any other agent of the Company may treat the person in whose name this Warrant Certificate is registered in the Securities Register as the sole Holder of this Warrant Certificate and of the Warrant represented by this Warrant Certificate for all purposes whatsoever, and shall not be bound to recognize any equitable or other claim to or interest in this Warrant Certificate or in the Warrant represented by this Warrant Certificate on the part of any person and shall be unaffected by any notice to the contrary.

Nothing contained in this Warrant Certificate shall be construed to confer upon any Holder, in its capacity as such, any of the rights of a member of the Company, including any right to vote for the election of directors or upon any matter submitted to members of the Company at any meeting thereof, to give or withhold consent to any corporate action, to receive notices of meetings or other actions affecting members, or to receive distributions in respect of the Warrant Units or other securities which may at any time be issuable upon the exercise of the Warrants.

Any notice or other communication required or permitted to be made by the Holder to the Company shall be in writing, duly signed by the Holder and shall be deemed delivered and effective when delivered by hand, recognized overnight courier service, registered mail or electronic mail in .pdf format to the Company, at its principal place of business (or such other address as designated in writing to the Holder by the Company). A notice given to the Company by a Holder with respect to the exercise of this Warrant shall not be effective until received by the Company. Notices will be deemed received as follows: (a) if delivered by hand or overnight service, then on the date of delivery, (b) if by registered mail, then on the fifth calendar day following posting or (c) if by electronic mail, then upon receipt with telephone confirmation thereof by the receiving party to the sending party.

[ Signature page follows ]

IN WITNESS WHEREOF , the Company has caused this Warrant Certificate to be duly executed under its corporate seal.

Dated as of _________, 20__

 

	LEXARIA NICOTINE LLC
	By:
	Name:
	Title:

Acknowledged and Agreed as of the date first above written:

Schedule I

EXHIBIT B

PHASE 1 RESEARCH OBJECTIVES

[**] ⁷

______________

⁷ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

EXHIBIT C

PHASE 2 RESEARCH OBJECTIVES

[**] ⁸

______________

⁸ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion

EXHIBIT D

FORM OF EXERCISE NOTICE

[DATE]

[_____], a [_____], or a registered assign (the “ Holder ”), is the registered holder of a warrant to purchase the number of fully-paid Class B Units (“ Warrant Units ”), of Lexaria Nicotine LLC, a Delaware limited liability company (the “ Company ”), at the Exercise Price set forth in Section 2 of the Warrant and Option Agreement between the Company, Lexaria Bioscience Corp., a Nevada corporation and the Holder dated December ___, 2018 (the “ Warrant ”). Capitalized terms used but not defined in this Exercise Notice shall have the meanings given to them in the Warrant.

The Holder hereby delivers to the Company this Exercise Notice pursuant to Section 5 of the Warrant for the following number of Warrant Units: ________________.

Pursuant to Section 5, the Holder hereby delivers to the Company concurrently with this Exercise Notice the Holder’s Warrant Certificate. Holder shall make payment of the aggregate Exercise Price for the Warrant Units being exercised pursuant to this Exercise Notice in an amount of $[ ] upon the instruction of the Company by wire transfer of immediately available funds to an account designated by the Company or by certified or official bank check or bank cashier’s check payable to the order of the Company. The Holder confirms that the representations and warranties related to the Holder set forth in Section 8 of the Warrant are true and correct as of the date first written above.

IN WITNESS WHEREOF , the Holder has caused this Exercise Notice to be executed by a duly authorized officer as of the date first above written.

EXHIBIT E

PHASE 3 RESEARCH OBJECTIVES

[**] ⁹

__________________

⁹ [**] – Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portion.

  EXHIBIT 10.4

EXECUTION VERSION

____________________________________________

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT
OF
LEXARIA NICOTINE LLC

Dated January [__], 2019

____________________________________________

TABLE OF CONTENTS

				Page
ARTICLE I	GENERAL PROVISIONS			1
	1.1	Definitions		1
	1.2	Name		6
	1.3	Place of Business		6
	1.4	Existence		6
	1.5	Purposes		7
	1.6	Foreign Qualifications		7
ARTICLE II	MEMBERSHIP UNITS AND CAPITAL CONTRIBUTIONS			7
	2.1	Membership Units		7
	2.2	Nature of Membership Units; No Additional Capital Contributions; Member Loans		7
	2.3	Capital Contributions		7
	2.4	Certificates		7
	2.5	Recordation of Transfer of Membership Units		8
ARTICLE III	CAPITAL ACCOUNTS, ALLOCATIONS AND DISTRIBUTIONS			8
	3.1	Capital Accounts		8
	3.2	Allocations to Capital Accounts		9
	3.3	Tax Allocations		11
	3.4	Distributions		11
ARTICLE IV	MEMBERS			12
	4.1	Agreement to Vote and other Actions		12
	4.2	Board Size		12
	4.3	Election of the Managers		12
	4.4	Specific Enforcement		13
	4.5	No Liability for Election of Recommended Managers		13
	4.6	Grant of Proxy		13
ARTICLE V	BOARD OF MANAGERS			13
	5.1	Management by the Board		13
	5.2	Quorum; Majority Vote; Action Without Meeting		14
	5.3	Regular Meetings		14
	5.4	Special Meetings		14
	5.5	Place and Manner of Meetings		14
	5.6	Notice of Meetings		14
	5.7	Officers		15
	5.8	Interested Persons		15
	5.9	Removal		15
	5.10	Resignations		15
	5.11	Vacancies		15
	5.12	Committees		16
	5.13	Limitations on Authority of the Board		16

(Continued)

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF
LEXARIA NICOTINE LLC

This Amended and Restated Limited Liability Company Agreement (this “ Agreement ”) is adopted effective as of January [__], 2019 (the “ Effective Date ”), by the Class A Member and the Class B Member listed on the signature page hereto and any other Person who becomes a Member pursuant to the terms of this Agreement (each, a “ Member ,” and collectively, the “ Members ”) and Lexaria Nicotine LLC, a Delaware limited liability company (the “ Company ” and together with the Members, the “ Parties ” and each a “ Party ”).

WHEREAS, on December 11, 2018, Lexaria Nicotine Corp. filed a Certificate of Conversion and a Certificate of Formation with the Delaware Secretary of State whereby Lexaria Nicotine Corp. was converted to a Delaware limited liability company named “Lexaria Nicotine LLC” (the “ Conversion ”);

WHEREAS, the Class A Member, which was the sole stockholder of Lexaria Nicotine Corp. prior to the Conversion, is a party, as the sole member of the Company, to that certain Limited Liability Company Agreement of the Company, effective as of December 11, 2018 (the “ Prior Limited Liability Company Agreement ”);

WHEREAS, pursuant to its terms, the Prior Limited Liability Company Agreement may be amended by the vote or written consent of the Member holding all of the Prior Membership Units;

WHEREAS, in connection with the transactions contemplated by the Investment Agreement, the Class A Member desires to amend and restate the Prior Limited Liability Company Agreement as set forth below, including by admitting the Class B Member as a Member of the Company; and

WHEREAS, upon the execution of this Agreement by the Member holding all of the Prior Membership Units pursuant to the Prior Limited Liability Company Agreement and the other Parties hereto, this Agreement shall amend, restate and supersede the Prior Limited Liability Company Agreement in its entirety and shall become effective as of the Effective Date.

In consideration of the mutual covenants and benefits herein contained, the Members hereby agree as follows:

ARTICLE I
GENERAL PROVISIONS

1.1 Definitions . When used in this Agreement, the following terms shall have the following meanings unless the context requires otherwise:

“ 1933 Act ” has the meaning specified in Section 2.4.1 .

“ AAA ” has the meaning specified in Section 12.8 .

“ Act ” means the Delaware Limited Liability Company Act, as it may be amended from time to time, and any successor to such Act.

“ Adjusted Capital Account Deficits ” means, in respect of any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

(i) the Capital Account shall be increased by any amounts that such Member is obligated to restore pursuant to any provision of this Agreement, is treated as obligated to restore pursuant to Section 1.704-1(b)(2)(ii)(c), or is deemed to be obligated to restore pursuant to the penultimate sentence of Section 1.704-2(g)(1) of the Treasury Regulations and of Section 1.704-2(i)(5) of the Treasury Regulations; and

(ii) the Capital Account shall be decreased by the items described in Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations.

This definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted consistently therewith.

“ Affiliate ” means any entity that Controls, is Controlled by, or is under common Control with, a party to this Agreement. For purposes of this definition, “ Control ” (and its derivatives) means ownership, directly or indirectly, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors in the case of a corporation, or fifty percent (50%) or more of the equity interest or votes in the case of a limited liability company or other type of entity, or any other arrangement whereby a Person controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity.

“ Agreed Value ” means, with respect to any property contributed to the Company by a Member, the fair market value thereof at the time such property is contributed to the Company as mutually agreed by the Board and such Member.

“ Agreement ” has the meaning specified in the introductory paragraph hereof.

“ Announcement ” has the meaning specified in Section 8.4.2 .

“ Board ” has the meaning specified in Section 4.2 .

“ Book Value ” means in respect of any Company asset, the Company’s adjusted basis for federal income tax purposes, except as follows:

(i) the initial Book Value of any asset contributed by a Member to the Company shall be the Agreed Value;

(ii) the Book Values of all assets shall be adjusted to equal their respective gross fair market values, as determined by the Board, as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution to the Company (including as directed by Section 1.704-1(b)(2)(iv)(s) of the Treasury Regulations); (B) the issuance of an additional interest in the Company as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a member capacity or by a new Member acting in a member capacity or in anticipation of being a Member; (C) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; and (D) the liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; provided, however, that adjustments pursuant to clauses (A), (B) and (C) of this definition shall be made only if the Board determines that such adjustments are necessary or appropriate to reflect the relative economic rights of the Members;

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(iii) the Book Value of any asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined by the Board; and

(iv) the Book Values of assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations and clause (vi) of the definition of Net Income and Net Loss; provided, however, that Book Values shall not be adjusted pursuant to this clause (iv) to the extent the Board determines that an adjustment pursuant to clause (ii) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (iv).

“ Budget ” has the meaning specified in Section 5.13.17 .

“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in Richmond, Virginia or Kelowna, British Columbia.

“ Capital Account ” has the meaning specified in Section 3.1.1 .

“ Capital Contribution ” means, with respect to any Member, the aggregate contributions made by or on behalf of such Member to the Company pursuant to Article II as of the date in question in respect of such Member’s Membership Units, in each case net of any liabilities assumed by the Company from such Member in connection with such contribution and net of any liabilities to which assets contributed by such Member in respect thereof are subject.

“ Change of Control ” has the meaning specified in Section 5.13.10 .

“ Class A Manager ” has the meaning specified in Section 4.3.1(a) .

“ Class A Member ” means a Member holding Class A Units.

“ Class A Units ” has the meaning specified in Section 2.1 .

“ Class B Manager ” has the meaning specified in Section 4.3.1(b) .

“ Class B Member ” means a Member holding Class B Units.

“ Class B Initial Investment Amount ” means an amount equal to $1,000,000.

“ Class B-Related Disclosure and Announcement ” has the meaning specified in Section 8.4.2 .

“ Class B Units ” has the meaning specified in Section 2.1 .

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.

“ Company ” has the meaning specified in the introductory paragraph hereof.

“ Company Minimum Gain ” has the meaning set forth for “partnership minimum gain” as set forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.

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“ Company Representative ” has the meaning specified in Section 8.3.3(b) .

“ Confidential Information ” has the meaning specified in Section 8.4 .

“ Conversion ” has the meaning set forth in the recitals.

“ Effective Date ” has the meaning specified in the introductory paragraph hereof.

“ FCPA ” has the meaning specified in Section 9.1.1 .

“ First Warrant Tranche ” has the meaning specified in Section 4.3.1 .

“ Fiscal Year ” means the taxable year of the Company as required by Section 706(b)(1) of the Code and the Treasury Regulations thereunder.

“ GAAP ” means United States generally accepted accounting principles in effect from time to time.

“ Governmental Authority ” means any transnational, United States or foreign federal, state, municipal or local governmental, legislative, judicial, executive, regulatory or administrative authority, department, court (including any arbitral body or tribunal), agency, branch, board, department, instrumentality, entity, commission or official, including any political subdivision thereof, or any non-governmental self-regulatory agency, commission or authority, whether of the United States or another country.

“ Interested Person ” has the meaning specified in Section 5.8 .

“ Investment Agreement ” means that certain Investment Agreement, dated as of the Effective Date, by and between the Company, the Class A Member and the Class B Member.

“ IP Licenses ” has the meaning specified in Section 5.13.24 .

“ Liquidity Event ” means any Change of Control or any dissolution, liquidation or winding-up of the Company.

“ Majority in Interest ” means, with respect to any class or group of classes of Membership Units, the Member or Members holding a majority of the Membership Units of such class or group of classes then outstanding.

“ Manager ” has the meaning specified in Section 4.3 .

“ Member ” has the meaning specified in the introductory paragraph hereof.

“ Member Indemnitors ” has the meaning specified in Section 6.7 .

“ Member Minimum Gain ” with respect to any Member, has the meaning set forth for “partner nonrecourse debt minimum gain” in Section 1.704-2(i) of the Treasury Regulations as if, in such provision, the word “partner” was replaced with the word “member” wherever it appears.

“ Member Non-Recourse Deductions ” has the meaning set forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury Regulations for “partner nonrecourse deductions” as if, in such provision, the word “partner” was replaced with the word “member” wherever it appears.

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“ Membership Unit ” means an ownership interest in the Company, including Class A Units and Class B Units.

“ Net Income ” and “ Net Loss ” mean, for each Fiscal Year or other period, the Company’s taxable income or loss for such Fiscal Year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

(i) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B) expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition shall be subtracted from such taxable income or loss;

(ii) any income of the Company that is exempt from federal income taxation and not otherwise taken into account in computing Net Income and Net Loss shall be added to such taxable income or loss;

(iii) gain or loss resulting from any disposition of Company property in respect of which gain or loss is recognized for United States federal income tax purposes shall be computed by reference to the Book Value of the Company property disposed of, notwithstanding that the adjusted tax basis of such Company property differs from its Book Value;

(iv) if the Book Value of any Company asset is adjusted pursuant to clause (ii) or (iii) of the definition of Book Value, then the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

(v) if the Book Value of any asset differs from its adjusted tax basis for federal income tax purposes, the amount of depreciation, amortization or cost recovery deductions in respect of such asset for purposes of determining Net Income and Net Loss shall be an amount that bears the same ratio to such Book Value as the federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction is zero, then the Board may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Net Income and Net Loss); and

(vi) to the extent an adjustment to the adjusted tax basis of any Company property pursuant to Section 734(b) or 743(b) of the Code is required pursuant to Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as a result of a distribution other than in complete liquidation of a Member’s economic rights, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss.

“ Non-Compensatory Option ” means a non-compensatory option as defined in Section 1.721-1(f) of the Treasury Regulations.

“ Non-Recourse Deductions ” has the meaning set forth for “nonrecourse deductions” in Sections 1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations.

“ Party ” has the meaning specified in the introductory paragraph hereof.

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“ Percentage Interest ” means, with respect to any Member as of any date, the ratio (expressed as a percentage to the third decimal place) of the number of Membership Units held by such Member on such date to the aggregate Membership Units held by all Members on such date. The Percentage Interest of each Member immediately after the Effective Date is provided on Schedule A .

“ Person ” means an individual, corporation, company, partnership, joint venture, limited liability company, Governmental Authority or other legal entity.

“ Prior Membership Units ” means the membership units held by Members pursuant to the Prior Limited Liability Company Agreement prior to the Effective Date.

“ Prior Limited Liability Company Agreement ” has the meaning set forth in the recitals.

“ Regulatory Allocations ” has the meaning specified in Section 3.2.2(i) .

“ Required Disclosure ” has the meaning specified in Section 8.4.2 .

“ Required Disclosure Notice ” has the meaning specified in Section 8.4.2 .

“ Second Warrant Tranche ” has the meaning specified in Section 4.3.2 .

“ Subsidiaries ” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the Board or other persons performing similar functions, or otherwise bestowing the power to direct the management of such entity are, at the time, directly or indirectly owned by such Person or any entity for which such Person serves as the managing member or general partner.

“ Treasury Regulations ” means the federal income tax regulations promulgated by the United States Treasury Department under the Code, as such regulations may be amended, modified or supplemented from time to time. All references herein to a specific section of the Treasury Regulations shall be deemed also to refer to any corresponding provisions of succeeding Treasury Regulations.

“ Unreturned Class B Initial Investment Amount ” means, with respect to the Class B Member, an amount equal to the difference of (i) the Class B Member’s Class B Initial Investment Amount minus (ii) the distributions made to the Class B Member (and such Member’s predecessor) from time to time pursuant to Section 3.4 .

“ Warrant and Option Agreement ” means that certain Warrant and Option Agreement, dated as of the Effective Date, by and between the Company, the Class A Member and the Class B Member.

“ Written Consent ” has the meaning specified in Section 4.1 .

1.2 Name . The name of the Company shall be “Lexaria Nicotine LLC” or such other name as the Board shall specify for the Company from time to time.

1.3 Place of Business . The principal place of business of the Company shall be located at such place as the Board may determine from time to time.

1.4 Existence . The existence of the Company commenced upon the filing of the Company’s Certificate of Formation with the Delaware Secretary of State as required by the Act and in connection with the Conversion, and shall continue until dissolution of the Company as permitted by applicable law or by this Agreement.

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1.5 Purposes . The Company has been organized for the conduct of any and all business for which a limited liability company may be formed under the Act.

1.6 Foreign Qualifications . Prior to conducting business in any foreign jurisdiction, the Company shall comply with all requirements of that jurisdiction necessary to permit the Company to conduct or transact business as a foreign limited liability company in that jurisdiction.

ARTICLE II
MEMBERSHIP UNITS AND CAPITAL CONTRIBUTIONS

2.1 Membership Units . Subject to the limitations set forth herein, the Company shall be authorized to issue two classes of Membership Units: (i) Class A Units and (ii) Class B Units. The Company is authorized to issue 100 Class A Units (the “ Class A Units ”) and 76 Class B Units (the “ Class B Units ”). As of the Effective Date, all Prior Membership Units under the Prior Limited Liability Company Agreement that were outstanding immediately prior to the execution of this Agreement are hereby reclassified as Class A Units. The name, address, and number of Membership Units of each Member are set forth on Schedule A , as such schedule shall be amended from time to time in accordance with the terms of this Agreement.

2.2 Nature of Membership Units; No Additional Capital Contributions; Member Loans . Membership Units shall be personal property. The assets of the Company shall be owned by the Company as an entity, and no Member, individually, shall have any ownership of such assets. No Member shall be entitled to interest on such Member’s Capital Contributions to the Company or such Member’s Capital Account balance. No Member shall have the right to withdraw any part of such Member’s Capital Contribution or Capital Account, or to receive any return of any portion of such Member’s Capital Contribution or Capital Account, except as may be specifically provided in this Agreement, and each Member shall look solely to distributions from the Company pursuant to Article III for a return of any Capital Contribution. If the Company shall have insufficient cash to pay its obligations, then the Members may, but shall have no obligation to, if, as and when requested by the Board, advance such funds to the Company on such terms and conditions as may be agreed to by the Board and such loaning Members, subject to Section 5.13 . Each such advance shall constitute a loan from the applicable Member or Members to the Company and shall not constitute a Capital Contribution for any purpose and shall not result in an increase in the amount of the Capital Account of such Member.

2.3 Capital Contributions . The amount of Capital Contributions made by the Members shall be maintained by the Company’s accountants.

2.4 Certificates .

2.4.1 At the discretion of the Board, Membership Units may be maintained in book-entry or certificated form. If Membership Units are maintained in certificated form, each certificate evidencing a Membership Unit shall be in the form approved by the Board, shall be signed by a Manager of the Company and shall be consecutively numbered by class. In either case, the issuance of Membership Units shall be entered in the Company’s Membership Unit ledger as they are issued. In addition, any such certificate shall state on its face the holder’s name, the class and the number of Membership Units evidenced thereby and such other matters as may be required by the Act or this Agreement. Any such certificate shall bear the following legends to the extent applicable:

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THE MEMBERSHIP UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ 1933 ACT ”), OR THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT.

THESE MEMBERSHIP UNITS ARE SUBJECT TO CERTAIN RESTRICTIONS AS MORE FULLY SET OUT IN THE COMPANY’S AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, WHICH AGREEMENT HAS BEEN DEPOSITED WITH THE COMPANY. A COPY OF SUCH AGREEMENT WILL BE MADE AVAILABLE UPON WRITTEN REQUEST OF A MEMBER WITHOUT CHARGE AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SECURITIES SUBJECT TO SUCH RESTRICTIONS IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY.

2.4.2 The Company may issue a new certificate or certificates in place of any certificate alleged to have been lost or destroyed. In so doing, the Company may in its discretion and as a condition precedent to the issuance of a new certificate (i) require the owner of the lost or destroyed certificate or such owner’s legal representative, to advertise the same in such manner as it shall require and/or (ii) to give the Company a bond (with a surety or sureties satisfactory to the Company) in such sum as it may direct, as indemnity against any claim, or expense resulting from any claim, that may be made against the Company with respect to the certificate alleged to have been lost or destroyed.

2.5 Recordation of Transfer of Membership Units . Subject to compliance with Article X , Membership Units shall be transferable only on the Membership Unit ledger of the Company by the holder thereof in person or by such holder’s duly authorized attorney. If Membership Units are maintained in certificated form, to transfer a Membership Unit, the holder thereof must surrender to the Company for cancellation the certificate representing such Membership Unit properly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer.

ARTICLE III
CAPITAL ACCOUNTS, ALLOCATIONS AND DISTRIBUTIONS

3.1 Capital Accounts .

3.1.1 General . The Company shall establish and maintain a capital account (“ Capital Account ”) for each Member. Each Member’s Capital Account shall be increased by (i) the amount of money contributed by that Member to the Company (including the amount treated as paid to the Company for any Non-Compensatory Option (if exercised) and any amount paid to the Company for the exercise of such Non-Compensatory Option), (ii) the Agreed Value of property contributed by that Member to the Company, (iii) such Member’s allocable share of Net Income (and items thereof) and other items in the nature of Company income and gain that are specially allocated hereunder and (iv) the amount of any liabilities of the Company assumed by such Member or that are secured by any property distributed to such Member. Each Member’s Capital Account shall be decreased by (A) the amount of money distributed to that Member by the Company, (B) the Agreed Value of property distributed to that Member by the Company, (C) such Member’s allocable share of Net Loss (and items thereof) and other items in the nature of Company expenses and losses that are specially allocated hereunder; and (D) the amount of any liabilities of such Member assumed by the Company or that are secured by any property contributed by such Member to the Company. Any reference in this Agreement to the Capital Account of a Member shall be deemed to refer to such Capital Account as the same may be increased or decreased from time to time as set forth above. A transferee of a Membership Unit shall succeed to the Capital Account of the transferor Member to the extent it relates to the transferred Membership Unit.

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3.1.2 This Article III as it relates to the maintenance of Capital Accounts is intended to comply with the requirements of Section 1.704-1(b) of the Treasury Regulations and shall be interpreted and applied in a manner consistent with such Treasury Regulations; provided , however , that nothing contained herein shall be construed as creating a capital account deficit restoration obligation or otherwise personally obligating any Member to make capital contributions in excess of the capital contributions provided for in Article II .

3.2 Allocations to Capital Accounts .

3.2.1 General Rule . Except as otherwise provided in Section 3.2.2 , Net Income and Net Loss for any allocation period shall be allocated to the Member in a manner such that, as nearly as possible, immediately after such allocation each Member has a positive balance in its Capital Account equal to the amount such Member would be entitled to receive if the Company were dissolved as of such date, all Company assets (including cash) were sold for their book values, all Company liabilities were satisfied in cash according to their terms (limited, with respect to each nonrecourse liability, to the book value of the assets securing such liability) and the net proceeds of such sale (after satisfaction of such liabilities) were distributed to the Member pursuant to a Company liquidation, taking into account a Member’s share of minimum gain and partner nonrecourse debt minimum gain before the hypothetical dissolution. In the event of a liquidation of the Company, items of Company income, gain, deduction and loss shall be allocated among the Members in the manner that causes the balance of the Capital Account of each Member to be equal to the amount which will be distributed to such Member pursuant to Section 3.4.2 .

3.2.2 Allocations in Special Circumstances . Notwithstanding the provisions of Section 3.2.1 , the following special allocations shall be made in the following order:

(a) Minimum Gain Chargeback . Except as otherwise provided in Section 1.704-2(f) of the Treasury Regulations, if there is a net decrease in Company Minimum Gain during any Fiscal Year, then each Member shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Section 1.704-2(g) of the Treasury Regulations. This paragraph is intended to comply with the minimum gain chargeback requirement in Section 1.704-2(f) of the Treasury Regulations and shall be interpreted consistently therewith.

(b) Member Minimum Gain Chargeback . Except as otherwise provided in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Minimum Gain, then each Member who has a share of the Member Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations, shall be specially allocated items of Company income and gain, including gross income, for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in Member Minimum Gain, determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph is intended to comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted consistently therewith.

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(c) Qualified Income Offset . If any Member unexpectedly receives any adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, then items of Company income and gain, including gross income, shall be specially allocated to each such Member in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit of such Member as quickly as practicable; provided, however, that an allocation pursuant to this Section 3.2.2(c) shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 3.2.2 have been tentatively made as if this Section 3.2.2(c) were not in this Agreement. This Section 3.2.2(c) is intended to comply with the qualified income offset provisions in Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted consistently therewith.

(d) Loss Allocation Limitation . Losses allocated pursuant to this Section 3.2.2 shall not exceed the maximum losses that can be so allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. If some, but not all, of the Members would have Adjusted Capital Account Deficits as a consequence of the allocation of losses pursuant to Section 3.2.2 , then the limitations set forth in this Section 3.2.2(d) shall be applied on a Member-by-Member basis so as to allocate the maximum permissible losses to each Member under the Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations.

(e) Non-Recourse Deductions . Non-Recourse Deductions for any Fiscal Year shall be allocated among the Members in the same proportions that Net Income for such Fiscal Year is allocated to the Members in accordance with the number of Membership Units held by such Member.

(f) Member Non-Recourse Deductions . Any Member Non-Recourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss in respect of the Member Non-Recourse Debt in accordance with Section 1.704-2(i)(1) of the Treasury Regulations.

(g) Section 754 Adjustments . To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or Section 743(b) of the Code is required, pursuant to 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations, to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their respective interests in the Company if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations is applicable, or to the Member to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations is applicable.

(h) Non-Compensatory Option Exercise . Any Member who has received its interest pursuant to the exercise of a Non-Compensatory Option (including a Warrant as defined the Warrants and Option Agreement) shall be allocated gain or loss, or reallocated capital from other Member’s Capital Accounts, as necessary to comply with Section 1.704-1(b)(2)(iv)(s) of the Treasury Regulations.

(i) Curative Allocations . The allocations set forth in Sections 3.2.2(a) through 3.2.2(h) (the “ Regulatory Allocations ”) are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent practicable, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss or deduction pursuant to this Section 3.2.2(i) . Therefore, notwithstanding any other provision of this Article III to the contrary (other than the Regulatory Allocations), the Board shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent practicable, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of this Agreement and all Company items were allocated pursuant to Section 3.2.1 . In exercising its discretion under this Section 3.2.2(i) , the Board shall take into account future Regulatory Allocations under Sections 3.2.2(a) and 3.2.2(b) that, although not yet made, are likely to offset other Regulatory Allocations previously made under Sections 3.2.2(e) and 3.2.2(f) .

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3.2.3 Other Allocation Rules . In each Fiscal Year, Net Income (and items thereof) and Net Losses (and items thereof) shall be allocated as of the last day of each Fiscal Year and at such other times as the Book Values of Company property are adjusted pursuant to clause (ii) of the definition of Book Value. If during any Fiscal Year there is a change in a Member’s Percentage Interest, allocations of Net Income or Net Loss for such Fiscal Year shall take into account the varying Percentage Interests of the Members in the Company in a manner selected by the Board which is consistent with the requirements of Code Section 706 and the Treasury Regulations thereunder.

3.3 Tax Allocations .

3.3.1 General Rules . Except as otherwise provided in Section 3.3.2 , for each Fiscal Year, items of Company income, gain, loss, deduction and expense shall be allocated, for federal, state and local income tax purposes, among the Members in the same manner as the Net Income (and items thereof) or Net Loss (and items thereof) of which such items are components were allocated pursuant to Section 3.2 .

3.3.2 Section 704(c) of the Code . Income, gains, losses and deductions in respect of any property (other than cash) contributed or deemed contributed to the capital of the Company shall, solely for income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Book Value at the time of the contribution or deemed contribution in accordance with Section 704(c) of the Code and the Treasury Regulations promulgated thereunder. Such allocations shall be made in accordance with the remedial method under Section 1.704-3(d) of the Treasury Regulations. If there is a revaluation of Company property pursuant to the definition of Book Value, then subsequent allocations of income, gains, losses or deductions in respect of such property shall be allocated among the Members so as to take account of any variation between the adjusted tax basis of such property to the Company for federal income tax purposes and its Book Value in accordance with Section 704(c) of the Code and the Treasury Regulations promulgated thereunder. Such allocations shall be made in accordance with the method chosen by the Board under Section 1.704-3 of the Treasury Regulations.

3.3.3 Capital Accounts Not Affected . Allocations pursuant to this Section 3.3 are solely for federal, state and local tax purposes and shall not affect any Member’s Capital Account or allocable share of Net Income (or items thereof) or Net Loss (or items thereof).

3.3.4 Tax Allocations Binding . The Members acknowledge that they are aware of the tax consequences of the allocations made by Sections 3.2 and 3.3 and that they are bound by the provisions of Sections 3.2 and 3.3 in reporting their respective shares of items of Company income, gain, loss, deduction and expense.

3.4 Distributions .

3.4.1 Distributions Generally . The Board may only declare or make distributions pursuant to Section 3.4.2 and Section 5.13 and such distributions shall be made in accordance with this Agreement. In the event that the Company at any time pays distributions to the Members other than in accordance with Section 3.4.2 and Section 5.13 , such distributions shall be made to all Members on a pro rata basis in proportion to their respective Percentage Interest. Any distributions pursuant to this Section 3.4.1 with respect to Class B Units shall reduce the Class B Member’s Unreturned Class B Initial Investment Amount on a dollar for dollar basis until the balance of the Class B Member’ Unreturned Class B Initial Investment Amount equals zero.

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3.4.2 Distributions Upon a Liquidity Event . In connection with any Liquidity Event, all distributions from the Company shall be made in the following order of priority:

(a) first, to the Class B Member, an amount equal to the Class B Member’s Unreturned Class B Initial Investment Amount until the balance of the Class B Member’s Unreturned Class B Initial Investment Amount equals zero (for the purposes of clarity, the Class B Units do not have a “coupon rate” and do not automatically accrue distributions);

(b) second, to all Members (including the Class B Member), pro rata , in accordance with the remaining positive balance in their Capital Accounts; and

(c) thereafter, to all Members (including the Class B Member), pro rata , in accordance with their Percentage Interest.

ARTICLE IV
MEMBERS

4.1 Agreement to Vote and other Actions . Each Member agrees to vote all of the Membership Units now held or hereafter acquired by it in accordance with the provisions of this Agreement at any and all regular or special meetings of the Members (or actions taken by written consent in lieu of holding an actual meeting (a “ Written Consent ”)), and to take all other actions necessary (including the removal of Managers) to achieve the composition of the Board contemplated by Section 4.3 .

4.2 Board Size . Each Member shall vote all of its Membership Units (or give its Written Consent) to ensure that the size of the Company’s Board of Managers (the “ Board ”) shall be set and remain at seven (7), unless otherwise approved unanimously by the Board and by the Class B Member.

4.3 Election of the Managers . On all matters relating to the election of the managers of the Board (a “ Manager ”), each Member shall vote at all regular or special meetings of Members (or by Written Consent) at which Managers are to be elected all of its units of the Company so as always to elect the following as Managers of the Company:

4.3.1 Prior to the exercise of the First Warrant Tranche (as defined in the Warrant and Option Agreement):

(a) Six (6) members (the “ Class A Managers ”) designated by the Class A Member. Any vacancy occurring because of the death, resignation or removal of a Class A Manager shall be filled according to this Section 4.3.1(a) .

(b) One (1) member (the “ Class B Manager ”) designated by the Class B Member. Any vacancy occurring because of the death, resignation or removal of a Class B Manager shall be filled according to this Section 4.3.1(b) .

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4.3.2 Following the exercise of the First Warrant Tranche and prior to the exercise of the Second Warrant Tranche (as defined in the Warrant and Option Agreement):

(a) Five (5) Class A Managers designated by the Class A Member. Any vacancy occurring because of the death, resignation or removal of a Class A Manager shall be filled according to this Section 4.3.2(a) .

(b) Two (2) Class B Managers designated by the Class B Member. Any vacancy occurring because of the death, resignation or removal of a Class B Manager shall be filled according to this Section 4.3.2(b) .

4.3.3 Following the exercise of the Second Warrant Tranche:

(a) Four (4) Class A Managers designated by the Class A Member. Any vacancy occurring because of the death, resignation or removal of a Class A Manager shall be filled according to this Section 4.3.3(a) .

(b) Three (3) Class B Managers designated by the Class B Member. Any vacancy occurring because of the death, resignation or removal of a Class B Manager shall be filled according to this Section 4.3.3(b) .

4.3.4 Notwithstanding anything contained in this Section 4.3 to the contrary, the Members acknowledge and agree that from time to time the Class A Member may choose, at its sole discretion, to have vacancies in the Class A Manager seats, provided that the Class A Member shall always have appointed enough Class A Managers such that the Class A Managers will represent a majority of the Board.

4.4 Specific Enforcement . It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Article IV by any party, that this Article IV shall be specifically enforceable, and that any breach or threatened breach of this Article IV shall be the proper subject of a temporary or permanent injunction or restraining order without a requirement of posting bond. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

4.5 No Liability for Election of Recommended Managers . None of the Company, the Members, nor any officer, Manager, partner, employee or agent of such party, if any, makes any representation or warranty as to the fitness or competence of the nominee of any party hereunder to serve on the Board by virtue of such party’s execution of this Agreement or by the act of such party in voting for such nominee pursuant to this Agreement.

4.6 Grant of Proxy . Upon the failure of any Member to vote its units of the Company in accordance with the terms of this Agreement, such Member hereby grants to a Member designated by the Board a proxy coupled with an interest in all units of the Company owned by such Member, which proxy shall be irrevocable until this Agreement terminates pursuant to its terms or until this Section 4.6 is amended to remove such grant of proxy.

ARTICLE V
BOARD OF MANAGERS

5.1 Management by the Board . Except where approval of the Members is required by nonwaivable provisions of the Act or approval of the Members (or any subset thereof) is required by this Agreement, the business and affairs of the Company shall be managed by and under the supervision of the Board, which may exercise all powers of the Company and do all acts that are not by the Act or this Agreement reserved to the Members. The Board shall consist of the Managers of the Company, elected as provided herein. Subject to the foregoing exception, the Board shall have full and complete authority, power and discretion to manage and control the business and affairs of the Company, to make all decisions regarding those matters and to perform any and all acts or activities incident to the management of the Company’s business. Each Manager of the Company shall be deemed a “manager” for all purposes of the Act.

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5.2 Quorum; Majority Vote; Action Without Meeting . Except as otherwise required by the Act or this Agreement, a majority of the Managers then in office shall constitute a quorum for transacting business at any meeting of the Board; provided that at least one Class B Manager must be present to constitute a quorum. The act by a majority of the Managers at any meeting at which a quorum is present shall be and constitute the act of the Board, unless a greater number is required by the Act or this Agreement. If a quorum is not present at any meeting of the Board, the Managers present at such meeting may adjourn such meeting, without notice other than announcement of such adjournment at such meeting, until a quorum is present. Any action required or permitted to be taken by the Board or any committee thereof may be taken without a meeting, if a majority of the Managers, which must include at least one Class B Manager, constituting the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings and/or electronic transmission or transmissions are filed with the minutes of the proceedings of the Board. Notwithstanding anything to the contrary contained herein, if there is the need for an approval of the Board with respect to a proposed action of the Company, whether such approval is requested by vote at a properly called and noticed meeting of the Board or by Written Consent of the Board, and no Class B Manager either responds to such request for approval via Written Consent or attends such properly called and notice meeting of the Board, after three (3) attempts, which are not given less than five (5) calendar days apart from one another, for such approval via Written Consent or at a properly called and noticed meeting, it shall be deemed that at least one (1) Class B Manager is in attendance for purposes of satisfying the quorum requirements of this Section 5.2 , although any Class B Manager that is deemed present for purposes of satisfying quorum at any such meeting or for purposes of executing a Written Consent, shall not be deemed to vote at any such meeting or in such Written Consent.

5.3 Regular Meetings . Regular meetings of the Board may be held at the times and places determined by the Board from time to time; provided that the Board shall convene an annual meeting and quarterly meetings. The Company shall reimburse the nonemployee Managers for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board.

5.4 Special Meetings . Any Manager may call a special meeting of the Board. Additionally, the Class B Member may call a special meeting of the Board. Any special meeting shall be held at the time and place specified in the notice of the meeting provided to Managers hereunder. The business to be transacted and the purpose of a special meeting shall be specified in a notice or waiver of notice

5.5 Place and Manner of Meetings . Meetings of the Board, whether regular or special, may be held either within or outside of the State of Delaware. Managers may participate in meetings by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting as provided in this Section 5.4 shall constitute presence in person at the meeting, except where a person participates in the meeting solely to object that the meeting is not lawfully called or convened.

5.6 Notice of Meetings . Notice of any special meeting of the Board shall be given to each Manager at least 24 hours in advance of the meeting. The notice must state the meeting date, place and hour, and Managers requesting electronic (telephone or other) attendance shall be provided such electronic (telephone or other) capability for such meeting such that all Managers participating in the meeting can hear one another. If all Managers execute a waiver of notice of meeting time and place, no meeting notice shall be required. The meeting shall be held at the time and place specified in the waiver of notice. Attendance of Managers at any meeting shall constitute a waiver of notice of the meeting, except where the Managers attend a meeting solely to object that the meeting is not lawfully called or convened.

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5.7 Officers . The Board shall appoint the following officers of the Company:

Chief Executive Officer and Secretary	Chris Bunka
President & Head of Research	John Docherty
Chief Financial Officer and Treasurer	Allan Spissinger