2.1

Service period shall be 36 months from Effective Date.  ITRI shall proceed with the Service according to the SOW.

2.2

Smartkem shall use its best efforts to provide all necessary support as set forth in the SOW within its competence to assist ITRI in proceeding with the Service.

2.3

Smartkem hereby warrants that the all information, samples and/or objects provided hereunder are lawfully obtained, and Smartkem has full rights to authorize ITRI to use such information, samples and/or objects to conduct the Service.  The information and materials are authorize to service Smartkem technology development, ITRI is not allow to use for other purposes without prior formal permission from Smartkem.  Smartkem shall defend and indemnify ITRI against any and all liabilities, expenses, damages, or any claim arising from any breach of such warranties.

3.1

ITRI shall deliver the items to Smartkem at ITRI’s principal office in consistent with the specification set forth in the SOW (hereinafter referred to as the “Deliverables”).

5.1

After the signature of this Agreement, Smartkem will pay the Service Fee in accordance with the applicable Statement of Work (SOW), Payment schedule followed by clause 6 from SOW which is within thirty (30) days from Smartkem receipt of an invoice from ITRI that is consistent with the terms of this Agreement and/or applicable Statement of Work.

5.2

All payments made to ITRI hereunder shall be made in US Dollars and made by wire transfer to ITRI’s appointed account as follows:

6.1

Any patents, copyrights, trade secret, trademark and other intellectual properties existing prior to the Effective Date (“Background IP”) shall belong to the party that owned such rights prior to the Effective Date.  Both Parties agree that nothing in this Agreement shall be construed to grant either party any license with respect to the other’s Background IP.

6.2

Any patents, copyrights, trade secrets, knowhow, trademark and other intellectual properties arising from the performance of the Service under this Agreement and using Smartkem’s technology including materials, process (“Smartkem Foreground IP”) shall belong to Smartkem solely and ITRI hereby assigns to Smartkem, by way of future assignment, all and any intellectual property rights in such Smartkem Foreground IP upon full payment being made by Smartkem.  ITRI hereby undertakes, upon request by Smartkem, to promptly execute such further documentation and do such things as

7.1

THE SERVICES, DELIVERABLES AND ANY INFORMATION, DOCUMENTATION, COMPONENTS, MATERIALS THEREOF PROVIDED BY ITRI HEREUNDER ARE PROVIDED ON AN “AS IS” BASIS AND ITRI DISCLAIMS ANY AND ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7.2

IN NO EVENT WILL ITRI BE LIABLE FOR ANY LOST PROFITS, LOST SAVING OR OTHER INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE DELIVERABLES EVEN IF ITRI HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM BY ANY OTHER PARTY.

7.3

NOTWITHSTANDING ANYTHING TO THE CONTRARY, ITRI’S LIABILITY HEREUNDER SHALL IN NO EVENT EXCEED 10% OF THE TOTAL AMOUNT ACTUALLY RECEIVED BY ITRI UNDER THE TERMS AND CONDITIONS OF THIS AGREEMENT.

7.4

Nothing in this clause 7 shall limit ITRI’s liability in respect of any breach of article 8.

8.1

ITRI and Smartkem agree that any and all knowledge, information and data furnished by either party (hereinafter referred to as “Disclosing Party”) to the other party (hereinafter referred to as “Receiving Party”), and claimed and designated by Disclosing Party to be “confidential” or “proprietary” (“Confidential Information”) shall be kept in confidence and shall not be disclosed to any third party, provided that such Confidential Information shall be given in writing or, if oral, be reduced to writing within thirty (30) days and shall be marked “confidential” or “proprietary” to indicate the claims of ownership and secrecy.  The Receiving Party shall not reverse engineer, reverse assemble, de-compile, use or reproduce in any way, any Confidential Information of the Disclosing Party except in performance of the Service set forth herein.  The Receiving Party shall protect the Confidential Information of the Disclosing Party with the same standard of care and procedures used by the Receiving Party to protect its own confidential information of similar importance but at all times using at least a reasonable degree of care.

8.2

The Receiving Party shall only permit access to Confidential Information to those of its officers, agents, and employees, or those officers, agents and employees of any entity which controls, is controlled by or is under common control of the Receiving Party, who have a need to know and who have signed confidentiality agreements or are otherwise bound by confidentiality obligations at least as restrictive as those contained in this Agreement.  The Receiving Party shall also require its officers, agents, and employees involved in the Service to strictly comply with this article.  If any officer, agent, or employee of the Receiving Party or an entity which controls, is controlled by or is under common control of the Receiving Party with whom the Confidential Information has been shared violates this article, such violation shall be deemed as a violation of this article by the Receiving Party.

8.3

Article 8.1 shall not be applicable and shall impose no obligation on the Receiving Party with respect to any portion of Confidential Information which:

(a)

was or becomes generally available to the public other than as a result of disclosure by the Receiving Party; or

(b)

was or becomes available to the Receiving Party on a non-confidential and non-restricted basis from third parties, provided that such third parties are, to the Receiving Party’s best knowledge, not bound by an obligation of confidentiality with the Disclosing Party; or

(c)

was the Receiving Party’s possession on a non-confidential and non- restricted basis as can be proved by documentary evidence prior to disclosure thereof by the Disclosing Party; or

(d)

is developed by the Receiving Party independently without use any Confidential Information of the Disclosing Party; or

(e)

is required by government regulation, by law or by a court of competent jurisdiction to be disclosed, provided that the Disclosing Party is given adequate notice so that it may protect such disclosure.

8.4

The obligation of confidentiality set forth herein shall continue for a period of 5 years after termination of agreement, notwithstanding expiration or termination of this Agreement.

8.5

All Deliverables and any results obtained hereunder shall in any event be deemed Confidential Information of ITRI and subject to the terms and conditions herein.

9.1

Without the consent of ITRI, Smartkem shall not use ITRI or ITRI’s employees’ names,

13.1

In the event that any payment owing by Smartkem to ITRI is delayed upon its due date, in addition to the overdue amount, Smartkem shall also pay ITRI the interest accruable on that delinquent amount at annual interest rate of ten (10) percent for each day of delay.

13.2

In the event that Smartkem delays in performing its obligations hereof, including, without limitation, paying any of the Service Fee hereunder to ITRI, ITRI has the right, and without prejudice to its other rights under this Agreement, to postpone performing this Service until such defaults are cured by Smartkem.

13.3

In the event that either party defaults or breaches any article under this Agreement, the non-defaulting party shall give the defaulting party a written notice requesting rectification of such defaults or breaches within thirty (30) days.  The non- defaulting party may terminate this Agreement by another written notice if the defaults or breaches are not cured upon the expiration of the said period.

13.4

Either party may terminate this Agreement by written notice immediately upon the occurrence of any of the following events to the other party:

(a)

the other party is in the process of liquidation or dissolution or is requesting, requested or ordered to have liquidation or dissolution;

(b)

the other party is in the process of reorganization or is requesting or requested to have reorganization;

(c)

the other party is in the process of merger or is requesting a merger;

(d)

the other party files bankruptcy or is requesting or requested to file an application for bankruptcy;

(e)

the other party’s main assets are assigned or transferred;

(f)

the other party is unable to pay off its debt; or

(g)

there is adequate evidence to prove that any aforementioned events may occur.

14.1

In the event this Agreement is terminated for reasons attributable to Smartkem, the Service Fee payable by Smartkem in Article 5 will remain due and payable on the date of such termination, and if already paid, will be non-refundable.

14.2

In the event this Agreement is terminated for reasons attributable to ITRI, Smartkem shall pay ITRI the costs and expenses incurred by ITRI for the Services already completed by ITRI, and ITRI shall return to Smartkem any excess portion of the Service Fee, without interest added, that was furnished by Smartkem for the purpose of the Services under this Agreement.

21.1

The text of this Agreement and its attachments constitute the entire agreement between the parties.  Any other matters which were agreed upon by the parties before the Effective Date of this Agreement but are not set out in the text of this Agreement or its attachments shall not be binding upon the parties.

21.2

The attachments hereto shall have the same effect as the text of this Agreement has, provided, however, that if any conflict exists between the text of this Agreement and its attachments, the text of this Agreement shall prevail.