IDP Portugal Joint Venture Agreement dated October 19, 2020

I.

INTRODUCTION

(A)

Vidinha is a resident of the Portuguese Portugal with 10+ years of experience in the pharmaceutical industry in areas such as engineering, validation, GMP compliance, quality assurance and manufacturing.

(B)

IDP Canada is a Canadian company incorporated under the Business Corporations Act (British Columbia) bearing registration number BC1126531. IDP Canada has specific expertise in Medicinal Plant-based EU-GMP oil extraction and processing, financial management, international banking, and the procuring of international supply agreements for the export and sale of Medicinal Plant Derivatives and Cannabinoid Oil.

(C)

Pursuant to the TMIG Agreement, IDP Canada was granted the exclusive third party right to assist TMIG in monetizing the Medicinal Plant Rights granted to TMIG by the Responsible Authorities in the DRC under both the Memorandum of Understanding and the DRC Agreement (the “IDP Canada Monetization Rights”). In doing so, the TMIG Agreement provided IDP Canada with the exclusive right to export all of the Medicinal Plants and/or Medicinal Plant Derivatives grown, processed and/or purchased by TMIG in the DRC for processing into Cannabinoid Oil at IDP Canada- contracted EU-GMP certified Medicinal Plant Derivative extraction, processing, and packaging facilities around the world for subsequent sale throughout IDP Canada’s international buying network.

(D)

IDP Canada and Vidinha have agreed to a plan of joint venture that would see the Parties utilize the IDP Canada Monetization Rights to import Medicinal Plant Derivatives from the DRC and any other country in which TMIG or IDP Canada maintains Medicinal Plant growing operations, joint ventures, supply arrangements, and/or partnerships (collectively, the “Supplying Countries”) into the Portuguese Republic to be sold, or processed into Cannabinoid Oil and sold, for monetary gain in accordance with the terms of this Agreement.

(E)

IDP Canada and Vidinha wish to enter into this Agreement for the purposes of setting forth their mutual understanding with respect to the Project.

(a)

“Agreement” means this Master Joint-Venture Agreement between IDP Canada and Vidinha including the Schedules hereto as amended, extended, replaced and varied from time to time.

(b)

“Annual Financial Forecast” means the annual conservative forecast (the form of which is attached to this Agreement as Schedule “A”) prepared by the Parties in advance of each Project Year setting forth expected Gross Revenue and Project Operating Expenses from the Project for that Project Year.

(c)

“Best Industry Practice” means the exercise of that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from time to time from a skilled and experienced contractor or professional engaged in the same type of undertaking and under the same or similar circumstances and conditions as those envisaged by this Agreement; seeking in good faith to comply with its contractual obligations and all applicable Regulatory Provisions, and upholding the integrity of the Portuguese Republic.

(d)

“Business Day” means a normal business day, excluding weekends and statutory holidays.

(e)

“Cannabinoid Oil” means crude oil, purified oil, and/or distilled oil extracted from Medicinal Plants (such as, but not limited to, CBD) which may be used as an input in the manufacture of pharmaceutical products.

(f)

“CBD” means cannabidiol and “CBD Oil” means cannabidiol oil.

(g)

“Certificate of Analysis” means the document issued by an independent third party laboratory analysing the various Specifications of Project Outputs to be sold to Purchasers under a Supply Agreement.

(h)

“Change in Control” means any change whatsoever in Control, whether effected directly or indirectly.

(i)

“Confidential information” means any information or know-how in whatever form relating to the business affairs, trade secrets, products, operating techniques, or marketing techniques, methods or processes, suppliers, customers or finances of either of the Parties.

(j)

“Constitution” means the Constitution of the Portuguese Republic.

(k)

“Control” means in relation to any entity, the ability directly or indirectly to direct or cause the direction of the votes attaching to the majority of its issued shares or interests carrying voting rights, or to appoint or remove or cause the appointment or removal of any directors (or equivalent officials) or those of its directors (or equivalent officials) holding the majority of the voting rights on its board of directors (or equivalent body).

(l)

“Corrupt Act” means offering, giving or agreeing to give to any Responsible Authority in the Portuguese Republic or the DRC or to any person employed by or on behalf of said Responsible Authority any gift or consideration of any kind as an inducement or reward: (i) for doing or not doing (or for having done or not having done) any act in relation to the obtaining or performance of the DRC Agreement, TMIG Agreement or any other contract with said Responsible Authority; (ii) for showing or not showing favour or disfavour to any person in relation to the DRC Agreement, TMIG Agreement or any other contract with the Responsible Authority; or (iii) committing any offence: (a) under any law from time to time dealing with bribery, corruption or extortion; (b) under any law creating offences in respect of fraudulent acts; or (c) at common law, in respect of fraudulent acts in relation to the DRC Agreement, TMIG Agreement or any other contract with the Responsible Authority or any other public body; or (d) defrauding or attempting to defraud or conspiring to defraud any Responsible Authority or any other public body.

(m)

“DRC” means The Democratic Republic of the Congo.

(n)

“DRC Agreement” means the joint venture agreement dated January 5, 2019 entered into between the DRC and TMIG and attached to this Agreement as Schedule “B”.

(o)

“Effective Date” means the date of signature of this Agreement by the last signing Party.

(p)

“Emergency” means a condition, situation, or occurrence whereby the security of the Project Facilities is in danger or where bodily injury or death or damage to employees, other personnel, or the Project Assets property located within the Project Facilities is likely to occur.

(q)

“Environment” means the aggregate of surrounding objects, conditions, and influences that influence the life and habitats of humans or any other organism or collection of organisms, and including all or any of the following media: air (including the air within any building or the air within any other man-made or natural structure above or below ground, water (including inland waters, groundwater and water in drains and sewers), and land.

(r)

“Environmental Laws” means any Laws in respect of the Environment.

(s)

“Existing Legal Framework” means the Constitution and the Laws of the Portuguese Republic, in each case as in effect on the Effective Date.

(t)

“Expiry Date” means the twenty-fice (25) year anniversary of the Effective Date or the twenty-five (25) year anniversary of the commencement of the Extended Term, as applicable.

(u)

“Expropriation” means the condemnation, nationalization, seizure, requisition or expropriation of all or part of the Project Facilities or the IDP Portugal Licenses by any Responsible Authority of the Portuguese Republic.

(v)

“Ex Works” or “EXW” means the shipping arrangement whereby the manufacturer or seller of Project Outputs makes the Project Outputs available to the Purchaser at a specific location. With EXW, the Purchaser is required to pay all transport costs and is responsible for other risks such as loading the Project Outputs onto trucks, transferring them to a ship or plane, and meeting customs regulations.

(w)

“Force Majeure” shall mean any event beyond the reasonable control of either Party, the occurrence of which could not have been reasonably foreseen at the Effective Date, including, but not limited to, war whether declared or not, revolution, riot, insurrection, strikes (including strikes by employees or sub-contractors), civil commotion, invasion, armed conflict, hostile act of a foreign enemy, blockade, embargo, act of terrorism, sabotage, civil disturbance, radiation, biological or chemical contamination, ionizing radiation, explosion, fire, epidemic or pandemic, landslide, lightning, earthquake, volcanic eruption, other natural disaster or calamity of any kind and any other similar event.

(x)

“GACP Guidelines” means the Guideline on Good Agricultural and Collection Practice (GACP) for Starting Materials of Herbal Origin (2006) adopted by the Committee on Herbal Medicinal Products (HMPC) of the European Medicines Agency.

(y)

“GMP” is a system for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimize the risks involved in any pharmaceutical production that cannot be eliminated through testing the final product. GMP covers all aspects of production from the starting materials, premises, and equipment to the training and personal hygiene of staff. Detailed written procedures are essential for each process that could affect the quality of the finished product. There must be systems to provide documented proof that correct procedures are consistently followed at each step in the manufacturing process - every time a product is made. EU-GMP certification is an enhancement to the GMP certification above as required for the European Union countries.

(z)

“Gross Revenue” means the tax-free income or revenue received or accruing to IDP Portugal from the Project during the Project Term from the sale of Project Outputs.

(aa)

“IDP Canada Parties” means the officers, directors, staff, employees, contractors, Sub-contractors, agents, guests, visitors, invitees and patrons of the IDP Canada and those of its shareholders or, where the context requires, any one or more of them.

(bb)

“IDP Portugal” means a company to be incorporated in the Portuguese Republic for the purpose of securing the IDP Portugal Licenses and operating the Project. Legal ownership of IDP Portugal shall be held ninety percent (90%) to IDP Canada and ten percent (10%) to Vidinha.

(cc)

“IDP Portugal Facilities” means the EU-GMP certified Medicinal Plant extraction, processing, packaging, and storing facilities to be constructed or purchased in the Portuguese Republic by IDP Portugal, copies of which are to be attached as Schedule “C“ to this Agreement.

(dd)

“IDP Portugal Letter Agreement” means the letter agreement entered into between IDP Canada, AbstractIngredient, LDA and Vidinha dated July 9, 2020, a copy of which is attached as Schedule “D” to this Agreement.

(ee)  

“IDP Portugal Licenses” means those commercial licenses and permits in the Portuguese Republic required by IDP Portugal to do one or more of the following: (i) import Medicinal Plants and Medicinal Plant Derivatives into the Portuguese Republic from Supplying Countries, (ii) grow, cultivate, manufacture, process, store, and transport Project Outputs at and from the Project Facilities, and (iii) export Project Outputs from the Portuguese Republic to Purchasers. Copies of applicable IDP Portugal Licenses shall be inserted as Schedule “E” to this Agreement once obtained by IDP Portugal.

(ff)

“IDP Portugal Parties” means the officers, directors, staff, employees, contractors, sub-contractors, agents, guests, visitors, invitees and patrons of IDP Portugal and those of its shareholders or, where the context requires, any one or more of them.

(gg)

“IFRS” means the International Financial Reporting Standards as set by the International Accounting Standards Board, having its offices at 30 Cannon Street, London, EC4M 6XH, England.

(hh)

“Imported Derivatives” means Medicinal Plant Derivatives that have been imported from the Supplying Countries into the Portuguese Republic by the Parties under the Project.

(ii)

“Interim JV Partner” means Lecifarma-Laboratório Farmacêutico, LDA.

“Interim JV Partner Commission” means a two-percent (2%) cash commission on Gross Revenues generated and received under the Project utilizing the Interim JV Partner Licenses and/or the Interim JV Partner Facilities.

(kk)

“Interim JV Agreement” means the joint venture agreement entered into between IDP Canada and the Interim JV Partner, a copy of which is attached to this Agreement as Schedule “F”.

(ll)

“Interim JV Partner Facilities” means the Interim JV Partner’s EU-GMP certified Medicinal Plant extraction, processing, and packaging facilities located in the Portuguese Republic, the architectural/engineering drawings of which are to be inserted as Schedule “G” to this Agreement.

(mm)

“Interim JV Partner Licenses” means those commercial licenses and permits in the Portuguese Republic required by the Interim JV Partner to do any or all of the following: (i) import Medicinal Plants and Medicinal Plant Derivatives into the Portuguese Republic from Supplying Countries, (ii) grow, cultivate, manufacture, process, store, and transport Project Outputs at and from the Interim JV Partner Facilities, and (iii) export Project Outputs from the Portuguese Republic to Purchasers. Copies of the Third Party Licenses are attached as Schedule “H” to this Agreement.

(nn)

“Laws” means the common law, Legislation, and all judicial decisions and any notifications or other similar directives made pursuant thereto that have the force of law, issued by any executive, legislative, judicial or administrative entity in the Portuguese Republic where the Project and Project Facilities are located.

(oo)

“Legislation” means all applicable statutes, statutory instruments, by- laws, regulations, orders, rules, executive orders, treaties, directives, and codes of practice having the force of law in the Portuguese Republic.

(pp)

“Loss” or “Losses” means losses, damages, liabilities, claims, actions, proceedings, demands, costs, charges, or expenses of any nature.

(qq)

“Medicinal Plant Derivatives” means predominantly dried cannabis and hemp flower, cannabis and hemp biomass, and other related pharmaceutical derivatives all of which are produced from Medicinal Plants.

(rr)

“Medicinal Plant Origination Fee” means:

(i)

with respect to the sale of Imported Derivatives as a Project Output, ten percent (10%) of the purchase price paid by the Purchaser per kilogram of Imported Derivatives under the Project.

(ii)

with respect to the sale of Cannabinoid Oil as a Project Output produced utilizing Imported Derivatives, ten percent (10%) of the purchase price paid by the Purchaser per litre of Cannabinoid Oil under the Project.

(iii)

payment of the Medicinal Plant Origination Fee shall be paid by Instadose Pharma to the Supplying Country Rights Holder out of those Gross Revenues generated from the sale of said Imported Derivatives or Cannabinoid Oil produced utilizing Imported Derivatives.

(ss)

“Medicinal Plant Rights” means the right and license to grow, transport, store, process, package, and purchase Medicinal Plants and Medicinal Plant Derivatives for international export and sale, copies of which are attached as Schedule “I” to this Agreement.

(tt)

“Medicinal Plants” means plants, including, but not limited to, medicinal cannabis, whose oils and other derivatives when extracted from them, can serve as inputs to pharmaceutical production.

(uu)

“Memorandum of Understanding” means the memorandum of understanding dated October 26, 2018 entered into between the Responsible Authorities in the DRC and TMIG providing TMIG with the Medicinal Plant Rights, a copy of which is attached in Schedule “J”.

(vv)

“Vidinha Parties” the officers, directors, staff, employees, contractors (including Vidinha), Sub-contractors, agents, guests, visitors, invitees and patrons of Vidinha (including, but not limited to, Vidinha) and those of its shareholders or, where the context requires, any one or more of them.

(ww)

“Minimum Import Quota” means the minimum number of kilograms of Medicinal Plant Derivatives to be imported from the Supplying Countries to the Project Facilities on a per quarter basis by the Parties throughout each Project Year.

(xx)

“Minimum Sale Price” means the minimum sale price for Project Outputs to be sold by the Parties to Purchasers under any new Supply Agreement.

(yy)

“Net Profit” represents the sales dollars remaining after all Project Operating Expenses have been deducted from Gross Revenue.

(zz)

“Party” means any one of Vidinha or IDP Canada, as the case may be, “Parties” means both Vidinha and IDP Canada.

(aaa)

“Person” means any individual, partnership, corporation, company, business organization trust, governmental agency or other entity.

(bbb)

“Political Event” means (i) any change (whether by the introduction, modification or application of any Laws) in the Existing Legal Framework other than in accordance with this Agreement or with the prior written consent of the IDP Canada, which change uniquely and materially affects the cannabis and cannabinoid oil sector in the Portuguese Republic, (ii) any Expropriation, (iii) any revocation or other withdrawal of any Relevant Consent other than in accordance with the terms of this Agreement or in accordance with the Existing Legal Framework, (iv) any failure of any Responsible Authority to grant, maintain, renew, or accept, any Relevant Consent other than in accordance with the Existing Legal Framework or in a manner consistent with any Relevant Consent or agreement relating thereto, in each case which materially and adversely changes the legal, economic, or commercial position of IDP Canada or the Project from what it was on the Effective Date or from what it is or what it would have been but for such action or failure to act.

(ccc)

“Portugal-Grown Medicinal Plant Derivatives” means Medicinal Plant Derivatives derived from Medicinal Plants grown and harvested at any of the Project Facilities;

(ddd)

“Portuguese Republic” means the country of Portugal.

(eee)

“Project” means the project referred to in Article 5.2 of this Agreement.

(fff)

“Project Assets” means collectively, the Project Equipment and the Project Facilities.

(ggg)

“Project Equipment” means that EU-GMP certified extraction, processing, and packaging equipment set forth in Schedule “K” to this Agreement to be delivered to and used at any of the Project Facilities for the purpose of producing and packaging Project Outputs.

(hhh)

“Project Facilities” means the IDP Portugal Facilities, the Interim JV Partner Facilities, and any Third Party Storage Facilities, the approximate locations of which are provided for in Schedule “L”.

(iii)

“Project Import Taxes” means all Taxes, duties, value-added, consumption, sales, use, excise, transfer, registration sharges, gross receipt, turnover or stamp, customs duties, countervail, anti-dumping special import measures, and all import and export taxes to be imposed, collected or established by any Responsible Authority of the Portuguese Republic.

(jjj)

“Project Insurance Policies” means any of:

(kkk)

“Project Operating Expenses” include, but are not limited to, the following Project operating expenses (payable by IDP Canada on behalf of the Project out of Gross Revenue deposited into the IDP Portugal Project Bank Account):

(v)

all Project Wages;

(vi)

if applicable, the Interim JV Partner Commission;

(vii)

if applicable, Project Import Taxes;

(viii)

if applicable, the Medicinal Plant Origination Fee;

(ix)

all applicable Tax (excluding IDP Portugal corporate income tax for the purposes of calculating Project Operating Expenses);

(x)

all costs associated with establishing and operating the Industry Collaboration Opportunity;

(xi)

all costs associated with the employment of that number of security guards, police officers, and/or medical personnel at the Project Facilities as agreed upon between the Parties; and

(xii)

those other costs and expenses agreed upon between the Parties.

(i)

all costs associated with applying for and securing the IDP Portugal Licenses;

(ii)

all costs associated with purchasing the IDP Portugal Facilities or, if applicable, all construction costs attributable to the IDP Portugal Facilities in accordance with an agreed upon budget and timeline for the advancement of funds; and

(iii)

all costs associated with the purchase, delivery, and installation of all Project Equipment to the Project Facilities.

(nnn)

“Project Term” means the period from the Effective Date to the Expiry Date or the Termination Date, whichever comes first.

(ooo)

“Project Year” means each twelve (12) consecutive months, commencing on the Effective Date and thereafter commencing on every twelve-month anniversary of the Effective Date.

(ppp)

“Purchase Orders” means those requests for Project Outputs from Purchasers under a Supply Agreement.

(zzz)

“Sub-contractors” means any sub-contractor of IDP Canada or Vidinha and a third party, who has contracted directly with IDP Canada or Vidinha in respect of the Project.

(aaaa)

“Supply Agreement” means a purchase agreement from local and/or international purchasers for Project Outputs, a model template of which is attached as Schedule “M” to this Agreement.

(bbbb)

“Supplying Countries” means the DRC and any other country in which TMIG or IDP Canada maintains Medicinal Plant growing operations, joint ventures, supply arrangements, and/or partnerships.

(cccc)

“Supplying Country Rights Holder” means the party or parties holding Medicinal Plant Rights in the Supplying Countries.

(dddd)

“Tax” means any national, local and/or other net income, gross income, gross receipts, sales, transfer franchise, profits, license, lease, service, service use, value added, withholding, payroll, employment, social benefit contribution, pension and health contribution, excise, severance, stamp, documentary, occupation, premium, property or windfall profits tax, or any other taxes, levies, fees (including documentation, license, and registry fees), assessments, or charges of any kind whatsoever, together with any interest and penalties, additions to tax or additional amounts with respect thereto, as imposed, collected or established by any Responsible Authority of the Portuguese Republic.

(eeee)

“Termination Date” means any date of early termination of this Agreement, in accordance with its terms.

(ffff)

“Third Party Storage Facilities” means any third party warehousing and storage facilities located in the Portuguese Republic utilized for the purpose of receiving and storing Project Outputs.

(gggg)

“TMIG” means The Maye International Group S.A.R.L., a company incorporated under Congolese law and registered with the RCCM under No. CD/KNG/RCCM/18-B-01367, NAT. ID. 01-000-N37020C C, with

headquarters located at No. 4760, avenue de la Gombe, Commune de la Gombe, City of Kinshasa in the DRC.

(hhhh)

“TMIG Agreement” means the joint venture agreement dated February 11, 2019 entered into between IDP Canada and TMIG pursuant to which TMIG appointed IDP Canada as TMIG’s exclusive international joint venture partner for monetizing the Medicinal Plants Rights granted to TMIG by the Responsible Authorities in the DRC. A copy of the TMIG Agreement is attached as Schedule “N” to this Agreement.

(a)

“Gross Revenue” means the income or revenue generated from the sale of Project Outputs under the Project albeit utilizing the Interim JV Partner Licenses and/or the Interim JV Partner Facilities; and

(b)

“Interim JV Partner Commission” means two percent (2.0%) of Gross Revenue as defined above in Article 2.1(a).

(a)

IDP Canada and the Interim JV Partner either are or will soon be party to the Interim JV Agreement;

(b)

The purpose of the Interim JV Agreement is to enable IDP Canada to immediately commence the Project albeit utilizing the Interim JV Partner Licenses and/or the Interim JV Partner Facilities until such time as the IDP Portugal Licenses are in place and the IDP Portugal Facilities have been completed and become operational;

(c)

IDP Canada shall be responsible for paying the Interim JV Partner Commission to the Interim JV Partner so long as IDP Canada continues to utilize the Interim JV Partner Licenses and/or the Interim JV Partner Facilities in connection with the Project;

(d)

In addition to completing payment of the Interim JV Partner Commission set forth in Article 2.2(c) above, IDP Canada shall also be responsible under the Project for paying Vidinha’s Net Profit Share to Vidinha; and

(a)

incorporate IDP Portugal to operate the Project;

(b)

apply for, obtain, and maintain the IDP Portugal Licenses;

(c)

construct or purchase and operate the IDP Portugal Facilities;

(d)

import Imported Derivatives to any of the Project Facilities;

(e)

if required, or upon the Parties agreeing to do so, grow and harvest Medicinal Plants at the Project Facilities;

(f)

process Imported Derivatives and Portugal-Grown Medicinal Plant Derivatives into Cannabinoid Oil at the Project Facilities;

(g)

package and store Project Outputs at any of the Project Facilities;

(h)

sell and export Project Outputs to Purchasers; and

(i)

execute upon the Industry Collaboration Opportunity.

((a)

through (i) shall collectively hereinafter be referred to as the “Project”)

(a)

establish a storage bank for Medicinal Plant Derivatives to be sold to Industry Participants at discounted market rates;

(b)

supply Project Equipment (and requisite training) to Industry Participants who wish to generate revenues by producing Cannabinoid Oil on behalf of the Project; and

(c)

work with Responsible Authorities to establish the Portuguese Republic as the industry leader in the European Union.

(a)

IDP Canada shall have the exclusive right to provide Medicinal Plant Derivatives and Project Equipment to the Project;

(b)

all Cannabinoid Oil sold under the Project shall be produced utilizing the Project Equipment;

(c)

IDP Portugal shall not sell, assign, or otherwise transfer (whether for consideration or not) any of IDP Canada’s or IDP Portugal’s rights under this Agreement to any other Person, except in accordance with the provisions of this Agreement;

(d)

other than IDP Canada’s existing operations in The Republic of North Macedonia, this Project shall be the only other Project undertaken by IDP Canada in the European Union throughout the Project Term; and

(e)

notwithstanding Article 5.4(d) above, nothing in this Agreement shall prevent IDP Canada from establishing other projects like the Project outside of the European Union for the purpose of manufacturing or selling Project Outputs.

(a)

Vidinha shall work with IDP Canada to co-ordinate the import of Medicinal Plant Derivatives into the Portuguese Republic utilizing the IDP Portugal Licenses.

(b)

With each importation of Medicinal Plant Derivatives into the Portuguese Republic:

(1)

a Certificate of Analysis for the Medicinal Plant Derivatives;

(2)

information pertaining to the Supplying Country Rights Holder in the Supplying Country from where the Medicinal Plant Derivatives are exported (name, address, license number, etc.);

(3)

information pertaining to any applicable customs broker in the Supplying Country from where the Medicinal Plant Derivatives are being exported (name, address, license number, etc.);

(4)

GACP Guidelines compliance license or declaration by the Responsible Authority in the Supplying Country as to Supplying Country Rights Holder compliance with the GACP Guidelines;

(5)

A description of the Medicinal Plant Derivatives to be imported; and

(6)

The active ingredient content of cannabinoids in the Medicinal Plant Derivatives as to percentages and number of grams.

(ii)

utilizing the Certificate of Analysis, IDP Portugal shall submit an application to the appropriate Regulatory Authorities to obtain a permit to import the Medicinal Plant Derivatives (the “Import Permit”);

(iii)

upon receipt of the Import Permit, IDP Portugal shall deliver the Import Permit to IDP Canada. IDP Canada shall utilize the Import Permit to secure an export permit for the Medicinal Plant Derivatives (the “Export Permit”) from the applicable Supplying Country; and

(iv)

upon receipt of the Import Permit and Export Permit, IDP Portugal and IDP Canada shall work together to co-ordinate the transport and receipt of Medicinal Plant Derivatives.

(a)

Following payment of the Project Import Taxes, IDP Portugal shall co- ordinate the release of the Imported Derivatives from customs to be received by them in “quarantine” at the Project Facilities in accordance with IDP Portugal’s applicable procedures for materials reception.

(b)

Once received at the Project Facilities, the Imported Derivatives shall be sampled and analyzed by IDP Portugal (or by a third party independent laboratory (the “Third Party Inspector”) pre-approved by the Parties) for the purpose of confirming compliance with the Imported Derivatives’ already accompanying Certificate of Analysis (the “Initial Import Inspection”).

(c)

Results from the Initial Import Inspection shall be documented or received by IDP Portugal in the form of an analytical testing report (the “Analytical Testing Report”).

(a)

Commencing thirty (30) days following occupancy by the Parties of the IDP Portugal Facilities, the Parties collectively commit to utilizing their best commercial efforts to secure Supply Agreements requiring in the aggregate the import of Imported Derivatives (for subsequent sale as Project Outputs) equal to no less than the following Minimum Import Quota on a per financial quarter basis each Project Year throughout the Project Term:

(b)

Until such time as the Minimum Import Quota is satisfied each Quarter, the Parties agree that absent the written consent of IDP Canada, only Imported Derivatives shall be used in fulfilling all Supply Agreements.

(a)

All Imported Derivatives from the Supplying Countries to any of the Project Facilities under the Project shall be subjected to the Medicinal Plant Origination Fee.

(b)

For purposes of clarity, it is hereby understood that the requirement under the Project to pay Medicinal Plant Origination Fees shall only exist when Imported Derivatives have been used in creating the Project Outputs.

(a)

Following the execution of a Supply Agreement, a Purchaser shall be permitted to request a Project Output sample (the “Output Sample”) in the quantities specified by the Purchaser in the Output Sample request that meets the applicable Specifications. IDP Portugal shall be required to provide the said Purchaser with a Certificate of Analysis for each Output Sample.

(b)

Upon receipt of the Output Sample, a Purchaser shall undertake an assessment to determine whether the Output Sample complies with the applicable Specifications, including any tests that the Purchaser requires.

(c)

If an Output Sample does not meet the Specifications in any way, IDP Portugal shall provide another Output Sample which meets the Specifications for the Purchaser to re-assess. The process of resubmitting Output Samples shall repeat until all non-conformance to the Specifications have been remedied by IDP Portugal or approved by a Purchaser in writing, or a Purchaser, in its sole discretion, ends the process.

(d)

Once a Purchaser is satisfied that the Output Sample meets the Specifications, it will provide written notice to IDP Portugal (a “Output Approval Notice”). If a Purchaser subsequently issues a Purchase Order to IDP Portugal for Project Outputs in respect of which it has not provided an Output Approval Notice, it shall be deemed to have issued the Output Approval Notice.

9.4

Delivery of Volume Forecasts

(a)

Upon completion of the process set out in Article 9.3 above, a Purchaser shall provide IDP Portugal with a twelve (12) month rolling forecast of the volume of any Project Outputs it is projected to need and to purchase, in each month of such twelve (12) month period, which forecast shall be updated by the Purchaser every month and delivered to IDP Portugal no later than the fifth (5th) Business Day of each month (each, a “Volume Forecast”).

(b)

IDP Portugal will notify a Purchaser in writing within five (5) Business Days of receipt of a Volume Forecast if it is unable to supply any of the Project Outputs to a Purchaser as set out in a Volume Forecast, which notice (an “Unfulfilled Product Volume Notice”) shall specify which volume of Project Outputs it shall not be able to supply (“Unfulfilled Product Volume”) and the Volume Forecast shall be deemed amended accordingly to deduct the Unfulfilled Product Volume from the Volume Forecast.

(c)

A Purchaser shall be permitted to source Project Outputs required by a Purchaser from a third party, including to satisfy Unfulfilled Product Volume.

(a)

Payment in full for all Project Outputs must be made in Euros immediately prior to any Project Outputs being made available to a Purchaser at the Pick- up Location. The aggregate Purchase Price of Project Outputs under an approved Purchase Order shall be specified in each Purchase Order, as adjusted on the relevant final invoice, and will be paid by a Purchaser as follows:

(i)

10% - 30% of the Purchase Price (the “Deposit”) set out on the Purchase Order shall be paid at the time the Purchase Order is confirmed accepted by IDP Portugal (an “Approved Purchase Order”); and

(ii)

the full amount of the relevant invoice (tied to the Approved Purchase Order) less the amount paid under (i) above (the “Purchase Price Balance”) shall be paid immediately prior to the Project Outputs being made available to a Purchaser at the Pick-up Location.

(b)

Invoicing for Project Outputs to be supplied to Purchasers in connection with an Approved Purchase Order shall be completed by IDP Portugal (each, an “IDP Portugal Invoice”) and shall contain the following:

(i)

the amount of any Deposit or Purchase Price Balance (as the case may be) due and owing by the Purchaser for the Project Outputs;

(ii)

the applicable method and relevant terms of payment for all Project Outputs; and

(iii)

wire instructions for IDP Portugal’s bank account in the Portuguese Republic where the Deposit and/or Purchase Price Balance is to be deposited by the Purchaser (the “IDP Portugal Project Bank Account”).

(c)

For each IDP Portugal Invoice delivered to a Purchaser for Project Outputs not containing Portugal-Grown Medicinal Plant Derivatives, IDP Canada shall provide IDP Portugal with an invoice for the full amount of the Medicinal Plant Importation Fee (the “Medicinal Plant Importation Invoice”).

9.7

Project Output Manufacturing

IDP Portugal shall manufacture the Project Outputs at the applicable Project Facilities. No Project Outputs under any Approved Purchase Order shall be made until such time as the Deposit has been paid by the Purchaser.

9.8

Project Output Testing

(a)

IDP Portugal shall engage the services of a third party independent laboratory for the purpose of obtaining a Certificate of Analysis for all Project Outputs.

(b)

Prior to the Project Output Completion Date, IDP Portugal shall inspect the Project Outputs and conduct such tests described in the Specifications (and any other tests that IDP Portugal determines, in in its discretion, are prudent) for compliance with the applicable Specifications, and to the extent not inconsistent with the requirements set out in the Specifications, consistent with the same practices and procedures used by IDP Portugal in its own operations. All Project Outputs shall be approved by IDP Portugal’s Qualified Person prior to the Project Output Completion Date and IDP Portugal shall provide the Certificate of Analysis the Purchaser.

(c)

IDP Portugal shall provide to the Purchaser, prior to the Project Output Completion Date, certificates of manufacture and batch records, certificates of compliance showing the lot or batch in question of the Project Outputs meets the Specifications.

(d)

IDP Portugal will also provide to the Purchaser, delivered to the location specified by the Purchaser in writing, a Project Output sample from the beginning, the middle and the end of each production run.

9.9

Storage and Legal Ownership of Project Outputs

(a)

IDP Portugal shall store the Project Outputs at the Project Facilities in accordance with the Specifications and applicable Laws, consistent with the same practices and procedures used by IDP Portugal in its own operations and in respect of its other supplier relationships.

10.1

Annual Financial Forecast

(a)

The Annual Financial Forecast will be prepared by the Parties in advance of each Project Year throughout the Project Term. A sample Annual Financial Forecast is attached as Schedule “A” to this Agreement for reference purposes only.

(b)

The sample Annual Financial Forecast provides:

(i)

an accurate, but not necessarily exhaustive, description of all Project Operating Expenses to be incurred by IDP Portugal in carrying out the Project (“Forecasted Project Operating Expenses”); and

(ii)

an example of how Gross Revenue and Net Profit Share shall be calculated when determining payment of the Net Profit Share to the Parties.

10.2

Payment of Project Operating Expenses

(a)

Within fifteen (15) Business Days following receipt by IDP Portugal of its quarterly Financial Statements, percent (75%) of each Party’s Net Profit Share for the most recent financial quarter; and

(b)

within thirty (30) Business Days following receipt by IDP Portugal of it’s year- end audited Financial Statements, the balance of each Party’s Net Profit Share for the preceding Project Year.

(a)

obtain and keep current the IDP Portugal Licenses in accordance with the Regulatory Provisions;

(b)

comply with all conditions of the IDP Portugal Licenses granted by any Regulatory Authority; and

(c)

take all other necessary action required under the relevant Regulatory Provisions governing the IDP Portugal Licenses and all related facets of the conduct of the Project.

(a)

Vidinha shall oversee IDP Portugal’s payment of all Project Operating Expenses as per Article 10.2 of this Agreement.

(b)

All Project Operating Expenses shall be paid by IDP Portugal out of those Gross Revenues collected by IDP Portugal in the IDP Portugal Project Bank Account.

(a)

working with IDP Canada to co-ordinate the import of Medicinal Plant Derivatives into the Portuguese Republic utilizing the IDP Portugal Licenses (Article 8.1(a));

(b)

submitting Import Permit applications to the appropriate Regulatory Authorities (Article 8.1(b)(ii));

(c)

delivering Export Permits to IDP Canada (Article 8.1(b)(iii);

(d)

paying applicable Project Import Taxes (Article 8.2);

(e)

co-ordinating the release of Imported Derivatives from customs in the Portuguese Republic to be received by them “quarantine” at the Project Facilities (Article 8.3(a);

(f)

completing Initial Import Inspections (Article 8.3(b); and

(g)

with IDP Canada, working to secure Supply Agreements in satisfaction of the Minimum Import Quota (Article 8.4).

(a)

assisting IDP Canada in soliciting Supply Agreements for Project Outputs at pricing to the Purchaser equal to no less than the Minimum Sale Price (Articles 9.1 and 9.2);

(b)

providing Purchasers with Output Samples for Project Output testing (Article 9.3(a);

(c)

invoicing and collecting all Deposits and Purchase Price Balances into the IDP Portugal Project Bank Account from Purchasers on all Approved Purchase Orders (Article 9.6);

(d)

manufacturing Project Outputs at the Project Facilities (Article 9.7);

(e)

conducting required Project Output testing and obtaining Certificates of Analysis for all Project Outputs (Article 9.8);

(f)

storing Project Outputs at the Project Facilities (Article 9.9); and

(g)

conditional upon compliance with all internal reception, production, and testing procedures, causing its Qualified Person to certify Project Outputs for pending release to the Purchaser (Article 9.10).

(a)

produces, packages, stores, and delivers all Project Outputs in accordance with Best Industry Practice or any Regulatory Provisions with regard to standard or quality of Project Outputs including, but not limited to EU-GMP guidelines and SOPs; and

(b)

keeps Project Outputs fresh, uncontaminated and hygienically and properly stored at the Project Facilities.

(a)

at all times maintains the Project Equipment used at any of the Project Facilities in a clean, orderly and sanitary condition;

(b)

procures, provides and maintains the Project Assets in good working order and repair the Project Assets as is necessary to carry out the Project; and

(c)

ensures that all Project Assets are of a quantity and quality necessary for the provision by the Parties of the Project, including, without limitation, all applicable laws, rules, regulations, and decrees and the terms thereof.

(a)

conducts, manages and carries out the Project at all times in an Environmentally responsible way by adopting appropriate operating methods and practices for conducting such a Project and adhere to all Regulatory Provisions and Environmental Laws in connection therewith;

(b)

promptly brings to the attention of IDP Canada any matter which may, in its view, have a detrimental impact on the Environment within the IDP Portugal Facilities;

(c)

takes all reasonable steps in the conducting of the Project to prevent and limit the occurrence of any Environmental or health hazards and to ensure the health and safety of the IDP Portugal Parties and the general public;

(d)

complies with its statutory duties in terms of the Environmental Laws to take reasonable measures to prevent pollution or degradation from occurring, continuing or recurring; and

(e)

ensures that all of its Sub-contractors comply with all applicable laws, rules, regulations and decrees concerning the Environment with respect to the activities undertaken on the IDP Portugal Facilities or in relation to the Project.

(a)

by the fifth (5th) Business Day after the end of each calendar month during the Project Term, an up-to-date inventory list of all Project Outputs stored at the Project Facilities (specifying packaging label details, including weight);

(b)

by the thirtieth (30th) Business Day after the end of each calendar quarter during the Project Term, Vidinha shall work with IDP Canada to provide a detailed report disclosing all Gross Revenues accruing to and received by IDP Portugal from the sale of Project Outputs during the preceding calendar quarter (and, in the case of the first such report, the period from the Effective Date to the end of the first calendar quarter after the Effective Date);

(c)

should IDP Portugal propose any alterations, amendments and/or refurbishments to any of the Project Facilities, all documents, drawings, data, reports, specifications and other information (whether in printed form or in electronic form) produced in respect of such work, copies of all “as- built” drawings and such other technical and design information and completion records relating to the finished work as IDP Canada may reasonably request;

(d)

written reports containing the names, identity numbers and any other relevant details of any employees of IDP Portugal or its Sub-contractors who are engaged in respect of the Project and who have resigned or been dismissed during the relevant Project Year;

(e)

as soon as practicable after such should occur (including a Political Event), a report containing any and all material events or developments that may arise in the course of the Project; and

(f)

immediate written notice of any disruption or suspension of operations at any of the Project Facilities. Vidinha shall, within twenty-four (24) hours of any disruption or suspension of operations at any of the Project Facilities, provide IDP Canada with a report detailing the circumstances of such disruption, suspension, or closure.

(a)

Subject to the provisions of this Agreement, Vidinha undertakes not to take any action, and to use its best efforts to ensure to the best of its abilities that no Responsible Authority shall take any action, which would have a material adverse effect on IDP Portugal or the Project unless required in the event of an Emergency, or to mitigate damages resulting from IDP Canada’s failure to comply with its obligations under this Agreement, in which case the interruption shall be deemed authorized; provided, however, that Vidinha undertakes to ensure that any such interruption by Vidinha or any Responsible Authority authorized pursuant to this Article 11.23 shall be limited to such period of time and to such scope of work as are necessary to deal with the Emergency or to mitigate such damages.

(b)

If any unauthorized interruption by Vidinha or any Responsible Authority or if any authorized interruption in the event of an Emergency (to the extent such Emergency is not caused by the fault or negligence of IDP Canada or any Sub-contractor) causes the closure or the suspension of the Project, then IDP Canada shall be entitled to an extension of the Project Term equal in length to the period of time the Project was suspended or closed.

(a)

Quarterly Financial Reporting – by the thirtieth (30th) Business Day after the end of each calendar quarter during the Project Term, a detailed report containing IDP Portugal’s financial results with respect to operations (namely, a balance sheet and income statement) (the “Financial Statements”) during the preceding calendar quarter (and, in the case of the first such report, the period from the Effective Date to the end of the first calendar quarter after the Effective Date); and

(b)

Annual Financial Reporting – as soon as practicable but in any event not later than three (3) calendar months after the end of each Project Year:

(i)

three (3) copies of IDP Portugal’s complete audited Financial Statements for the previous Project Year (which are consistent with the books of accounts and prepared in accordance with IFRS and presented in Euros), together with an audit report thereon;

(ii)

a copy of any management letter or other communication sent by the Auditor to IDP Portugal, or to its management in relation to IDP Portugal’s financial, accounting and other systems, management and accounts; and

(iii)

an annual report by the Auditor certifying that, based on its said financial, accounting and other systems, management and accounts, IDP Portugal was in compliance with its financial obligations in respect of the Project as at the end of the relevant Project Year or detailing any non-compliance by IDP Portugal therewith.

(a)

put in place an accounting and cost control system on behalf of IDP Portugal which shall, among other things, record all financial and commercial transactions and other activities whether or not recorded on the books and records of IDP Portugal; and

(b)

retain a firm of independent accountants of recognized international standing and expertise, acceptable to IDP Canada, as auditors of IDP Portugal. IDP Portugal shall prepare and maintain its accounts in Euros in accordance with applicable laws, rules, regulations, and decrees and IFRS. IDP Portugal’s financial year shall be a calendar year, unless otherwise agreed by the Parties.

(a)

provide reasonable assistance to IDP Canada to carry out the Project;

(b)

provide reasonable co-operation in seeking the assistance of the appropriate Relevant Authorities in carrying out the operation of the Project;

(c)

provide reasonable assistance to the IDP Canada in obtaining any Relevant Consents required to be obtained by the IDP Canada; and

(d)

if any claim is asserted against IDP Canada, or IDP Canada is made a party in any action or proceeding, in connection with the Project, provide reasonable assistance as requested by IDP Canada; provided that IDP Canada shall provide IDP Portugal with written notice of the assistance requested promptly upon receipt of any applicable complaint, summons or court order and all relevant facts and information.

(a)

working with Vidinha to co-ordinate the import of Medicinal Plant Derivatives into the Portuguese Republic utilizing the IDP Portugal Licenses (Article 8.1(a));

(b)

providing Vidinha and IDP Portugal will Required Import Documentation;

(c)

ensuring that IDP Portugal shall at all times maintain access to sufficient readily available funds to enable IDP Portugal to complete payment of all Project Import Taxes (Article 8.2);

(d)

with Vidinha, working to secure Supply Agreements in satisfaction of the Minimum Import Quota (Article 8.4); and