Exhibit 10.3


 


STOCK PURCHASE AGREEMENT 


 


AMONG


 


PAUL CHARLES JOY II, TRUSTEE OF THE PAUL
C. JOY AND KATHRYN B. JOY


TRUST – FUND B


 


AND


 


KATHRYN BLAKE JOY, TRUSTEE OF THE PAUL
C. JOY AND KATHRYN B. JOY


TRUST - FUND C


 


AND


 


HOWCO DISTRIBUTING CO., A WASHINGTON
CORPORATION


 


AND 


 


DRONE USA, LLC


 




     


     


    

 


TABLE OF CONTENTS


 


	ARTICLE I	TRANSFER AND ACQUISITION; CLOSING	1
	 	 	 
	1.1	Agreement to Sell and Purchase Stock	1
	1.2	Purchase Price; Payment Terms	1
	1.3	Drone USA, Inc. Stock Warrants	2
	1.4	Earnout	2
	1.5	Closing	4
	1.6	Conditions to Closing	4
	1.7	Post Closing Covenants	6
	 	 	 
	ARTICLE II	REPRESENTATIONS AND WARRANTIES OF SELLER	7
	 	 	 
	2.1	Organization and Qualification	7
	2.2	Articles of Incorporation and Bylaws	7
	2.3	Books and Records	7
	2.4	Capitalization	7
	2.5	Authority Relative to this Agreement	8
	2.6	No Conflict; Required Filings and Consents	9
	2.7	Permits; Compliance	9
	2.8	Financial Statements	10
	2.9	Notes and Accounts Receivable	11
	2.10	Undisclosed Liabilities	11
	2.11	Taxes	11
	2.12	Title to Personal Property	13
	2.13	Condition of Tangible Fixed Assets	13
	2.14	Inventory	14
	2.15	Product Warranty	14
	2.16	Product Liability	14
	2.17	Real Property	14
	2.18	Intellectual Property	15
	2.19	Material Contracts	19
	2.20	Litigation	20
	2.21	Employee Benefit Plans	21
	2.22	Labor and Employment Matters	23
	2.23	Environmental	24
	2.24	Related Party Transactions	25
	2.25	Insurance	26
	2.26	Absence of Certain Changes or Events	26
	2.27	Solvency	27
	2.28	Brokers or Finders	27
	2.29	No Illegal Payments	27
	2.30	Information Supplied	28
	2.31	Compliance with Securities Laws	28
	2.32	Powers of Attorney	28
	2.33	Material Disclosures	28
	2.34	Change in Control	28


 


	STOCK PURCHASE AGREEMENT	TABLE OF CONTENTS


 




     


     


    

 


	ARTICLE III	REPRESENTATIONS AND WARRANTIES OF BUYER	28
	 	 	 
	3.1	Authority for Agreement	28
	3.2	Brokers or Finders	28
	3.3	Litigation	29
	 	 	 
	ARTICLE IV	OTHER AGREEMENTS AND COVENANTS	29
	 	 	 
	4.1	Seller’s Noncompete - Nonsolicitation	29
	4.2	Access	29
	4.3	Ordinary Course	29
	4.4	Material Developments	29
	4.5	Company Distributions Prior to Closing	30
	4.6	Additional Documents	30
	4.7	Publicity	30
	4.8	Expenses	30
	 	 	 
	ARTICLE V	INDEMNIFICATION	31
	 	 	 
	5.1	Survival of Representations, Warranties and Covenants; Remedies	31
	5.2	Indemnification	31
	5.3	Procedures for Third Party Claims	32
	5.4	Procedures for Inter-Party Claims	33
	5.5	Insurance Proceeds	33
	 	 	 
	ARTICLE VI	TAX MATTERS	33
	 	 	 
	6.1	Responsibility for Filing Tax Returns	33
	6.2	Interim Closing of Books	34
	6.3	Cooperation	34
	 	 	 
	ARTICLE VII	MISCELLANEOUS	34
	 	 	 
	7.1	Termination of Agreement	34
	7.2	Amendment	34
	7.3	Notices	34
	7.4	Entirety of Agreement	35
	7.5	Persons Bound by Agreement	35
	7.6	Multiple Counterparts	35
	7.7	Governing Law	35
	7.8	Jurisdiction	35
	7.9	Certain Definitions	36


 


	STOCK PURCHASE AGREEMENT	TABLE OF CONTENTS


 




     


     


    

 


SCHEDULES AND EXHIBITS


 


Seller Disclosure Schedule


 


Exhibit A - Promissory Note


Exhibit A2 - Security Agreement


Exhibit B - Buyer Stock Agreements


Exhibit C - Paul C. Joy Employment Agreement


Exhibit D - Kathy Joy Employment Agreement


Exhibit E – Unconditional Guaranty of Payment


 


	STOCK PURCHASE AGREEMENT	TABLE OF CONTENTS


 






     


     


    

 


STOCK PURCHASE AGREEMENT


 


THIS STOCK PURCHASE
AGREEMENT (the “Agreement”) is entered into by and among Paul Charles Joy II, Trustee of the Paul C. Joy and
Kathryn B. Joy Trust - Fund B, dated December 9, 2003, as amended, and Kathryn Blake Joy, Trustee of the Paul C. Joy and Kathryn
B. Joy Trust - Fund C, dated December 9, 2003, as amended (collectively, the “Seller”) as the sole shareholders
of Howco Distributing Co., a Washington corporation (the “Company”), and Drone USA, LLC (“Buyer”).


 


RECITALS:


 


WHEREAS, Seller owns
one hundred percent (100%) of the issued and outstanding common stock of the Company (the “Stock”) and there
are no other issued or outstanding securities of the Company, phantom stock rights or obligations of the Company to issue common
stock, options, warrants, notes, phantom stock, shareholder appreciation rights or other securities or their equivalents;


 


WHEREAS, Buyer desires
to purchase all of the Stock (100% of the issued and outstanding common stock) from Seller for the purchase price and pursuant
the terms and conditions hereinafter set forth; and


 


WHEREAS, Seller desires
to sell and convey their Stock to Buyer.


 


NOW, THEREFORE, in
consideration of the premises, mutual covenants and agreements herein contained, and other good and valuable consideration, the
parties hereto agree as follows:


 


ARTICLE I


TRANSFER AND ACQUISITION; CLOSING


 


1.1.          Agreement
to Sell and Purchase Stock. Buyer agrees to buy from Seller and Seller agrees to sell and deliver to the Buyer, in accordance
with Buyer’s delivery instructions at the Closing (defined in Section 1.5), all of the Stock, free and clear of all
Liabilities, security interests, claims, Liens, and encumbrances.


 


1.2.          Purchase
Price; Payment Terms. The consideration payable for Seller’s Stock (the “Purchase Price”) shall be
(a) Three Million Five Hundred Dollars ($3,500,000) which shall be paid at Closing to Seller as follows (i) $2,600,000 in cash
payable by wire transfer in immediately available good funds to an account designated by Seller; (ii) the delivery of a promissory
note attached hereto in the form substantially as set forth in Exhibit A, in the principal amount of $900,000 together with simple
interest thereon at a rate of 5.5% (the “Note”) which Note shall be secured by a UCC Security Interest granted
by Buyer and the Company in all Company assets in the form attached hereto as Exhibit A (the “Security Interest”),
and which UCC Security Interest shall be perfected by the filing of a UCC Financing Statement or as otherwise required; plus (b)
delivery of the Drone USA Stock Warrants; plus (c) the Earnout Payments. Seller’s Security Interest shall be subordinated
to the security interest of Buyer’s lender, namely TCA Global Master Fund, LP, for a loan to Buyer not exceeding the principal
amount of $6,500,000, or the security interest of any substitute lender (provided the principal amount of the loan to Buyer does
not exceed $6,500,000), it being expressly acknowledged and understood that the payment to the Seller is being funded by the Buyer’s
lender and that this lender requires, and any substituted lender will likely require, a first priority security interest in all
of the assets of Drone USA, Inc. including the assets being purchased by way of stock acquisition as set forth herein.


 




    	STOCK PURCHASE AGREEMENT – 1	 



     


    

 


1.3.          Drone
USA, Inc. Stock Warrants.


 


(a)          At
Closing, Buyer shall cause Drone USA, Inc. (“Drone USA”) to deliver to Seller warrants for 500,000 shares
of common stock of Drone USA (the “Drone USA Stock Warrants”). Upon exercise of the Drone USA Stock
Warrants, the Drone USA stock issuable thereunder shall be deemed fully-paid and non-assessable and the certificates will
bear the standard Rule 144 restrictive legend as well notice of the executed Bleed-Out Agreement between the Sellers and
Drone USA, the form of which is attached hereto as Exhibit B.


 


(b)          Securities
Matters. Seller agrees to sign any lock-up letters, bleed out agreements, standstill agreements, or other similar documentation
required of all management shareholders in Drone USA by an underwriter or investor in connection with a financing, or take other
actions reasonably related thereto as requested of all management shareholders by the Board of Directors of Drone USA. In the event
Seller’s default under this Section 1.3(b) Seller agrees that Drone USA may seek and obtain specific performance of
such covenant, including any injunction requiring execution of such documents and the taking of such actions, and Seller hereby
appoints the then current president of Drone USA to sign any such documents on Seller’s behalf so long as such documents
are prepared on the same basis as all other management shareholders of Drone USA


 


1.4.          Earnout.


 


(a)          Earnout
Payments. As additional consideration for the purchase of Stock, at such times as provided in Section 1.4, Buyer
shall pay to Seller with respect to each Calculation Period an amount, if any (each, an “Earnout
Payment”), equal to (i) $100,000 if Company Gross Profit for such Calculation Period exceeds $1,964,678 but is less
than $2,500,000, or (ii) $200,000 if Company Gross Profit for such Calculation Period is equal to or exceeds $2,500,000 but
is less than $3,000,000, or (iii) $300,000 if Company Gross Profit for such Calculation Period is equal to or exceeds
$3,000,000; provided that in no event shall Buyer be obligated to pay Seller more than the $300,000 in the aggregate for all
Calculation Periods. If the Company Gross Profit for a particular Calculation Period does not exceed $1,964,678, no Earnout
Payment shall be due for such Calculation Period.


 


(b)          Procedures
Applicable to Determination of the Earnout Payments.


 


i.            Onor
before the date which is ninety (90) days after the last day of each Calculation Period (each such date, an “Earnout
Calculation Delivery Date”), Buyer shall prepare and deliver to Seller a written statement (in each case, an “Earnout
Calculation Statement”) setting forth in reasonable detail its determination of Company Gross Profit for the applicable
Calculation Period and its calculation of the resulting Earnout Payment (in each case, an “Earnout Calculation”).


 




    	STOCK PURCHASE AGREEMENT – 2	 



     


    

 


ii.         Seller
shall have thirty (30) days after receipt of the Earnout Calculation Statement for each Calculation Period (in each case, the “Review
Period”) to review the Earnout Calculation Statement and the Earnout Calculation set forth therein. During the Review
Period and, as part of such review, (i) Seller and its accountants/representatives shall have the right to receive complete and
prompt copies of any working papers, trial balances and similar materials prepared by Buyer or its accountants or other professional
advisors in connection with its Earnout Calculation and (ii) inspect Buyer’s books and records during normal business hours
at Buyer’s offices, upon reasonable prior notices and solely for purpose reasonably related to the determinations of Company
Gross Profit and the resulting Earnout Payment. Prior to the expiration of the Review Period, Seller may object to the Earnout
Calculation set forth in the Earnout Calculation Statement for the applicable Calculation Period by delivering a written notice
of objection (an “Earnout Calculation Objection Notices”) to Buyer. Any Earnout Calculation Objection Notice
shall specify the items in the applicable Earnout Calculation disputed by Seller and shall describe in reasonable detail the basis
for such objection, as well as the amount in dispute. If Seller fails to deliver an Earnout Calculation Objection Notices to Buyer
prior to the expiration of the Review Period, then the Earnout Calculation set forth in the Earnout Calculation Statement shall
be final and binding on the parties hereto. If Seller timely delivers an Earnout Calculation Objection Notice, Buyer and Seller
shall negotiate in good faith to resolve the disputed items an agree upon the resulting amount of Company Gross Profit and the
Earnout Payment for the applicable Calculation Period. If Buyer and Seller are unable to reach agreement within thirty (30) days
after such an Earnout Calculation Objection Notice has been given, all unresolved disputed items shall be promptly referred to
the Independent Accountant. The Independent Accountant shall be directed to render a written report on the unresolved disputed
items with respect to the applicable Earnout Calculation as practicable, but in no event greater than sixty (60) days after such
submission to the Independent Accountant, and to resolve only those unresolved disputed items set forth in the Earnout Calculation
Objection Notice. If unresolved disputed items are submitted to the Independent Accountant, Buyer and Seller shall each furnish
to the Independent Accountant such work papers, schedules and other documents and information relating to the unresolved disputed
items as the Independent Accountant may reasonably request. The Independent Accountant shall resolve the disputed items based solely
on the applicable definitions and other terms in this Agreement and the presentations by Buyer and Seller, and not by independent
review. The resolution of the dispute and the calculation of Company Gross Profit that is the subject of the applicable Earnout
Calculation Objection Notice by the Independent Accountant shall be final and binding on the parties hereto. The fees and expenses
of the Independent Accountant shall be shared equally between Seller and Buyer.


 


(c)          Independence
of Earnout Payments. Buyer’s obligation to pay each of the Earnout Payments to Seller in accordance with Section
1.4 is an independent obligation of Buyer and is not otherwise conditioned to contingent upon the satisfaction of any conditions
precedent to any preceding or subsequent Earnout Payment and the Obligation to pay an Earnout Payment to Seller shall not obligate
Buyer to pay any preceding or subsequent Earnout Payment. For the avoidance of doubt and by way of example, if the conditions
precedent to the payment of the Earnout Payment for the first Calculation Period are not satisfied, but the conditions precedent
to the payment of the Earnout Payment for the second Calculation Period are satisfied, then Buyer would be obligated to pay such
Earnout Payment for the second Calculation Period for which the corresponding conditions precedent have been satisfied, and not
the Earnout Payment for the first Calculation Period.


 




    	STOCK PURCHASE AGREEMENT – 3	 



     


    

 


(d)          Timing
of Payment of Earnout Payments. Any Earnout Payment that Buyer is required to pay pursuant to Section 1.4 hereof shall
be paid in full no later than five (5) Business Days following the date upon which the determination of Company Goss Income for
the applicable Calculation Period becomes final and binding upon the parties as provided in Section 4.1(b)ii (including
any final resolution of any dispute raised by Seller in an Earnout Calculation Object Notice). Except as provided in Section
1.4(e), Buyer shall pay to Seller the applicable Earnout Payment in cash by wire transfer of immediately available funds to
the bank account designated by Seller.


 


(e)          Seller
Option to Receive Drone USA, Shares. Seller may, at its sole option, upon written notice to Buyer prior to the date of payment
of any Earnout Payment, as an alternative to receipt of a cash Earnout Payment, elect to receive shares of common stock of Drone
USA of then equal value to the Earnout Payment. In the event of such election by Seller, Buyer shall cause Drone USA, to deliver
such shares of common stock of Drone USA to seller within the time period provided in Section 1.4(d).


 


1.5.          Closing.
Except as provided by Section 7.1 of this Agreement, the closing of the sale and purchase of the Stock (the “Closing”)
shall be consummated on or before August 12, 2016 (the “Closing Date”) (to be effective as of the close of
business on the Closing Date) by Buyer and Seller executing and exchanging all the Closing documents by facsimile or pdf signatures,
with originals of all such Closing documents to be sent to Seller’s counsel, William Dudley, Landerholm P.S., 805 Broadway
Suite 1000, Vancouver, WA 98660 and Buyer’s counsel, Peder K. Davisson, Davisson & Associates, PA, 4124 Quebec Avenue
North, Suite 306, Minneapolis, Minnesota 55427. Two originals of all such Closing documents shall be executed (with the exception
of stock certificates and negotiable instruments).


 


1.6.          Conditions
to Closing.


 


(a)          Buyer’s
Obligations. The obligations of Buyer to consummate the Closing are subject to the fulfillment of the following conditions
(unless waived in writing by Buyer):


 


i.            The
representations and warranties of the Seller contained in this Agreement will be true and correct in all material respects (except
those representations and warranties that are, by their terms, limited by materiality or other qualifiers, which shall be true
and correct in all respects) at and as of the Closing with the same force and effect as if made on the Closing Date.


 


ii.         Seller
has delivered to the Buyer at Closing, stock certificates of Howco duly endorsed in blank or accompanied by duly executed stock
powers transferring the Stock to the Buyer and/or its designee(s) free and clear of all Liabilities, security interests, claims,
Liens and encumbrances.


 




    	STOCK PURCHASE AGREEMENT – 4	 



     


    

 


iii.         Seller
and the Company will have performed and complied with all agreements, obligations and covenants contained in this Agreement that
are required to be performed or complied with by Seller and/or the Company at or prior to the Closing.


 


iv.         Buyer
has received the written resignations of Seller, covering all officer and director positions they hold with the Company, to be
effective as of the Closing Date.


 


v.           Seller
shall have secured executed employment agreements between Paul C and Kathy Joy, on the one hand, and Drone USA, on the other, each
for a two year term with base salaries of $125,000 each, together with benefits consistent with past practices and containing non-compete
provisions, non-solicitation provisions and confidentiality provisions acceptable to Seller and consistent with the standard requirements
across industries in connection with the sale of a business.


 


vi.         Buyer
shall have received a good standing certificate for the Company from Washington and each other jurisdiction in which the Company
is qualified to do business where such qualification is required.


 


vii.         Prior
to the Closing, the status of the Company as validly electing S corporations within the meaning of Section 1361 and 1362 of the
Internal Revenue Code (the “Code”) shall not have been terminated or revoked.


 


viii.         Any
and all necessary advance notices and consents required to consummate the Stock purchase transaction on the Closing Date have been
timely made, received, or waived by Buyer, including any consents or approvals required under any contracts to which the Company
is a party such as supply agreements, leases, purchase agreements, employment agreements.


 


ix.         The
Company shall retain such employees as are necessary for its continued operations, (other than Paul C. and Kathy Joy, who have
agreed to continue as employees under separate agreements) following Closing.


 


x.         Buyer
shall have obtained financing from TCA Global Master Fund, LP for payment of the cash portion of the Purchase Price as set forth
in Section 1.2.


 


(b)          Seller’s
Obligations. The obligations of Seller to consummate the Closing are subject to the fulfillment of the following conditions
(unless waived in writing by Seller):


 


i.            The
representations and warranties of the Buyer contained in this Agreement will be true and correct in all material respects (except
those representations and warranties that are, by their terms, limited by materiality or other qualifiers, which shall be true
and correct in all respects) at and as of the Closing with the same force and effect as if made on the Closing Date.


 


ii.         Buyer
shall have paid the Purchase Price as provided in Section 1.2 at Closing.


 




    	STOCK PURCHASE AGREEMENT – 5	 



     


    

 


iii.         Buyer
shall have caused Drone USA, to enter into new 2 year employment agreements with Paul C. Joy and Kathy Joy, with 5 year non-competes,
confidentiality and non-solicitation agreements in the form attached hereto as Exhibit C and D.


 


iv.         Seller
shall have received certificates of good standing for Buyer and Drone USA from Delaware and each other jurisdiction in which Buyer
or Drone USA, is qualified to do business and which such qualification is required.


 


v.           Buyer
shall have caused Drone USA to issue the Drone USA Stock Warrants to Seller, on and including such terms as are acceptable to Seller
in Seller’s sole discretion (including, but not limited to, an exercise price of one cent per share of Drone USA common stock).


 


vi.         Buyer
shall have caused Drone USA to execute the Unconditional Guaranty of Payment in the form attached hereto as Exhibit E.


 


vii.         Lessor,
under the real property lease referred to in Section 2.17(a) of Seller Disclosure Schedule, shall have provided any consent
required to consummate the stock purchase transaction in a form acceptable to Seller.


 


viii.         Buyer
will have performed and complied in all material respects with all agreements, obligations and covenants contained in this Agreement
that are required to be performed or complied with by Buyer at or prior to Closing.


 


ix.         Buyer
shall deliver to Seller at Closing consents or resolutions of Buyer authorizing the purchase of the Stock.


 


x.         Seller’s
review and approval, in Seller’s sole discretion, of Buyer’s Certificate of Incorporation, Bylaws, any amendments thereto,
any and all documents of Buyer filed with the office of the Delaware Secretary of State, any related resolutions or consents of
Buyer, and any agreements of Buyer related to preferred shares and any rights or preferences associated therewith.


 


1.7.          Post
Closing Covenants.


 


(a)          Seller’s
Post Closing Obligations. Immediately following the Closing Date the Seller shall:


 


i.            Add
Buyer’s officers to all bank accounts and have its employees removed as signatories from such accounts;


 


ii.         Provide
Michael Bannon with any keys to properties occupied by the Company, user id’s and passwords for any accounts or sites used
by the Company or any other security codes used by the Company in its operations;


 


iii.         Provide
all minute books, transfer ledgers, accounting records, federal and state tax returns, sales tax, any licenses used by the Company
and all of the Company’s books and records; and


 




    	STOCK PURCHASE AGREEMENT – 6	 



     


    

 


iv.         Take
such other actions as are reasonably necessary to allow the Company to continue operations under new ownership.


 


ARTICLE II


REPRESENTATIONS AND WARRANTIES OF
SELLER


 


Except as set
forth in the Disclosure Schedule attached to this Agreement (the “Seller Disclosure Schedule”), which
shall identify exceptions by specific section references, Seller hereby represents and warrants to Buyer that the statements
contained in this Article II are correct and complete as of the date of this Agreement and, subject to any necessary updated
Seller Disclosure Schedule as of the Closing Date, will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement throughout this Article II). Seller represents
and warrants to Buyer that:


 


2.1           Organization
and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. The Company is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it
or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a Material Adverse Effect on the Company or its operations.
Except as disclosed in Section 2.1 of the Seller Disclosure Schedule, the Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest
in, any corporation, partnership, joint venture or other business association or entity.


 


2.2           Articles
of Incorporation and Bylaws. The Company has previously furnished or made available to the Buyer a complete and correct copy
of the articles of incorporation and bylaws or equivalent organizational documents, each as amended to date. The Company is not
in material violation of any provision of its articles of incorporation or bylaws.


 


2.3           Books
and Records.


 


(a)          The
books of account, minute books, stock record books, and other records of the Company are materially complete and correct and have
been maintained in accordance with the Company’s historical business and accounting practices.


 


(b)          None
of the records, systems, data or information of the Company is recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held or accessible by any means (including, but not limited to, an electronic, mechanical or photographic process
computerized or not) which are not under the direct control of the Company.


 


2.4           Capitalization.


 


(a)          The
authorized capital stock of Howco Distributing Co. consists of ten thousand (10,000) shares of the Company’s common stock,
no par value per share. As of the date of this Agreement, Nine Hundred Seventy Eight and One Half (978.5) shares are held by Paul
Charles Joy II, Trustee of the Paul C. Joy and Kathryn B. Joy Trust - Fund B, dated December 9, 2003, as amended, and One Thousand
Twenty One and One Half (1,021.5) shares are held by Kathryn Blake Joy, Trustee of the Paul C. Joy and Kathryn B. Joy Trust - Fund
C, dated December 9, 2003, as amended. All Two Thousand (2,000) shares of the Company’s common stock that are issued and
outstanding, were validly issued, fully paid and non-assessable and not subject to preemptive rights, and there were no other shares
of capital stock issued and outstanding and no shares of the Company’s common stock were reserved for future issuance pursuant
to outstanding stock options or stock incentive rights granted pursuant to any stock option plan, note or agreement.


 




    	STOCK PURCHASE AGREEMENT – 7	 



     


    

 


(b)          Except
as set forth in Section 2.4(a) or as may be specified in Section 2.4(a) of the Seller Disclosure Schedule, as of
the date of this Agreement, (i) there are no options, warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of, or other equity interests in, the Company obligating the Company
to issue or sell any shares of capital stock of, or other equity interests in, the Company, (ii) there are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares of the Company’s common stock or any other
capital stock of the Company, (iii) there are no declared or accrued unpaid dividends with respect to any of the Company’s
outstanding securities, and (iv) the Company does not have outstanding or authorized any stock appreciation, phantom stock, profit
participation, or similar rights.


 


(c)          Except
as may be specified in Section 2.4(c) of the Seller Disclosure Schedule, as of the date of this Agreement, only the Company’s
common stock provides any voting rights of any kind.


 


2.5           Authority
Relative To This Agreement.


 


(a)          The
Company has all necessary corporate power and authority to execute and deliver this Agreement and the other Operative Agreements
and, with respect to this Agreement, upon the approval of this Agreement by the Seller in accordance with this Agreement and applicable
Law, to perform its obligations hereunder and to consummate the transactions. The execution and delivery of this Agreement and
the other Operative Agreements by the Company and the consummation by the Company of the transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings on the part of the Company is necessary to authorize
this Agreement or to consummate the transactions, other than, with respect to the sale of the shares of the Company, the approval
of this Agreement by the Company’s two shareholders in accordance with applicable Law. This Agreement has been duly and validly
executed and delivered by the Seller, and constitutes a legal, valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the availability
of injunctive relief and other equitable remedies.


 




    	STOCK PURCHASE AGREEMENT – 8	 



     


    

 


(b)          At
a meeting duly called and held in compliance with the Washington Business Corporation Act (“WBCA”) and the
bylaws of the Company, or otherwise through written consent if permitted pursuant thereto, the board of directors of the Company
has duly taken action (i) approving the Agreement, based on a determination that the Agreement is fair to the holders of the Company’s
common stock and is in the best interests of such stockholders, and (ii) approving this Agreement and the transactions and recommending
approval of this Agreement and the transactions by the shareholders of the Company. As of the date hereof, such action has not
been rescinded and is in full force and effect.


 


(c)          In
accordance with the Company’s articles of incorporation, bylaws, and WBCA, the affirmative vote of a majority of the then-outstanding
shares of Company’s common stock is the only vote of the holders of any class or series of capital stock of the Company necessary
to approve the Agreement, and such vote, in accordance with the Company’s articles of incorporation, bylaws, and the WBCA,
may be duly obtained by the written consents in lieu of a meeting.


 


2.6           No
Conflict; Required Filings and Consents. The execution and delivery of this Agreement and the other Operative Agreements by
the Company and the Seller does not, and the performance of this Agreement and the other Operative Agreements by the Company
and the Seller will not (in each case, with or without the giving of notice or lapse of time, or both), subject to (x)
with respect to the Agreement, obtaining the requisite approval of this Agreement by the Company’s shareholders in accordance
with this Agreement and applicable Law, and (y) obtaining the consent, approval, authorization and permit and making the necessary
filings described in Section 2.6 of the Seller Disclosure Schedule (the “Required Company Consent”),
(i) conflict with or violate the articles of incorporation, bylaws or equivalent organizational documents of the Company, (ii)
to Seller’s Knowledge, conflict with or materially violate any Law applicable to the Company or by which any property or
asset of the Company is bound or affected, or (iii) to Seller’s Knowledge, except as to Government Contracts, and except
as may be specified in Section 2.6(iii) of the Seller Disclosure Schedule, result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination,
unilateral amendment, acceleration or cancellation of, or result in the creation of a Lien or other encumbrance on any property
or asset of the Seller or the Company or require the consent of any third party pursuant to, any note, bond, mortgage, indenture,
Contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Seller or the Company is
a party or by which the Seller or the Company or any property or asset of the Seller or the Company is bound or affected, except
for such conflicts, violations, breaches, defaults or other occurrences, which individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect on the Company.


 


2.7           Permits;
Compliance.


 


(a)          Except
as provided in Section 2.7(b), and except as may be specified in Section 2.7(a) of the Seller Disclosure Schedule,
to Seller’s Knowledge each of the Seller and the Company is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals and orders of any governmental authority necessary
for the Seller and the Company to own, lease and operate its properties or to carry on its business as it is now being conducted,
except for those which the failure to possess would not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on the Seller or the Company (the “Company Permits”) and, as of the date hereof, no suspension
or cancellation of any of the Company Permits is pending or, to Seller’s Knowledge, threatened, except such suspension or
termination as would not reasonably be expected to have a Material Adverse Effect on the Seller or the Company. Except as disclosed
in Section 2.7(a) of the Seller Disclosure Schedule or as would not reasonably be expected to have a Material Adverse Effect
on the Seller or the Company, to Seller’s Knowledge the Company is not in material conflict with, or in default or material
violation of, or, with the giving of notice or the passage of time, would be in material conflict with, or in default or material
violation of, (i) any Law applicable to the Seller or the Company or by which any property or asset of the Seller or the Company
is bound or affected, or (ii) any of the Company Permits.


 




    	STOCK PURCHASE AGREEMENT – 9	 



     


    

 


(b) Company is certified
by a Governmental Authority as a Woman Owned Small Business as defined in Title 13, Chapter 1 of the Code of Federal Regulations,
as may be amended from time to time (“WOSB”). However, to the best of Seller’s Knowledge, none of the
Government Contracts includes a set-aside designation for WOSBs. Buyer acknowledges that, following the Closing, Company will
no longer be qualified as a certified WOSB. Company has, through registration with the federal System for Award Management, self-certified
that it qualifies as a Small Business Concern (“SBC”), as defined in Title 13, Chapter 1 of the Code of Federal
Regulations, as may be amended from time to time. A substantial portion of Company’s business and sales revenue (i.e., in
excess of fifty percent (50%)) results from Company’s SBC status. SBC status is based upon either revenue or number of employees,
and varies by classification of products sold by the Company in accordance with the North American Industry Classification System
(“NAICS”), which may be updated from time to time, and is located at: https://www.sba.gov/sites/default/files/files/Size
Standards_Table.pdf. To the best of Seller’s Knowledge, currently, the largest number of employees Company may have
in order to retain SBC status for purposes of selling Company’s products under a Government Contract varies between 100
and 1,500 employees, depending on the specific product to be sold by Company. To the best of Seller’s Knowledge, Company
is in compliance with the SBC size or revenue limitations required for products sold prior to Closing under the Government Contracts.
Seller makes no representation or warranty regarding Company’s continuing qualification or certification as an SBC after
Closing for purposes of federal government contracting or otherwise, or the impact of any such continuing qualification or certification
on revenues of Company or Buyer after Closing.


 


2.8           Financial
Statements. Section 2.8 of the Seller Disclosure Schedule contains true and complete copies of the following internally
prepared financial statements: (i) unaudited income statement for the fiscal year ended December 31, 2015, for fiscal year ended
December 31, 2014 and unaudited income statement for the period ended January 31, 2016 (the “Most Recent Company Income
Statements”), (ii) unaudited balance sheet at December 31, 2015, December 31, 2014 and unaudited balance sheet for the
period ended January 31, 2016 (the “Most Recent Company Balance Sheets”), (iii) unaudited statement of stockholders’
equity for the fiscal year ended December 31, 2015, December 31, 2014 and unaudited statement of stockholders’ equity for
the period ended January 31, 2016 (the “Most Recent Company Statements of Stockholders’ Equity”), and
(iv) unaudited cash flow statement for the fiscal year ended December 31, 2015 and unaudited cash flow statement for the period
ended January 31, 2016 (the “Most Recent Company Cash Flow Statements”), (the Most Recent Company Income Statements,
the Most Recent Company Balance Sheets, the Most Recent Company Statements of Stockholders’ Equity, and the Most Recent
Company Cash Flow Statements shall be referred to collectively for the Company as the “Most Recent Company Financial
Statements”). To Seller’s Knowledge, each of the Most Recent Company Financial Statements (including, in each
case, all notes thereto) (a) are true, complete and correct, and fairly presented in all material respects the financial position,
results of operations and changes in shareholders’ equity and cash flows of the Company as at the respective dates thereof
and for the respective periods indicated therein (subject to normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to have a Material Adverse Effect on the Company), and (b) were prepared internally
consistent with past practices of the Company.


 




    	STOCK PURCHASE AGREEMENT – 10	 



     


    

 


2.9           Notes
and Accounts Receivable. All notes and accounts receivables of the Company appearing on the Most Recent Company Balance Sheet
and all of the receivables which have arisen or been acquired by the Company since the date thereof (collectively, the “Company
Receivables”), are, to Seller’s Knowledge, bona fide trade receivables and have arisen or were acquired in the
Ordinary Course of Business of the Company and in a manner consistent with normal past credit practices. Since the date of the
Most Recent Company Balance Sheet, the Seller has not cancelled or agreed to cancel, in whole or in part, any Company Receivables
except in the Ordinary Course of Business consistent with demonstrated past practices. All of the Company Receivables are reflected
properly on the books and records of the Company, and to Seller’s Knowledge and except as set forth on the Seller Disclosure
Schedule Section 2.9, are current and collectible in accordance with their terms at their recorded amounts, subject only
to reserve for bad debts or doubtful accounts set forth on the Most Recent Company Balance Sheet (including the notes thereto)
in accordance with the past custom and practice of the Company. For purposes of the foregoing, Company Receivables shall be deemed
to be “collected in accordance with their terms at their recorded amounts” if they are collected in full within 360
days of the date such receivables are billed.


 


2.10         Undisclosed
Liabilities. To Seller’s Knowledge the Company does not have any material Liability, except for (i) Liabilities set forth
on the face of the Most Recent Company Balance Sheet (including any notes thereto), (ii) Liabilities which have arisen since the
date of the Most Recent Company Balance Sheet in the Ordinary Course of Business, and (iii) Liabilities set forth on Seller Disclosure
Schedule Section 2.10.


 


2.11         Taxes.


 


(a)          Except
as may be specified in Section 2.11(a) of the Seller Disclosure Schedule, (i) the Company has duly and timely filed all
Tax Returns required to have been filed by or with respect to the Company, (ii) each such Tax Return correctly and completely reflects
all liability for Taxes and all other information required to be reported thereon, (iii) all Taxes owed by the Company (whether
or not shown on any Tax Return) have been timely paid, and (iv) the Company has adequately provided for, in its books of account
and related records, all Liability for unpaid Taxes, being current Taxes not yet due and payable.


 




    	STOCK PURCHASE AGREEMENT – 11	 



     


    

 


(b)          Except
as may be specified in Section 2.11(b) of the Seller Disclosure Schedule, the Company has withheld and timely paid all Taxes
required to have been withheld and paid by it and has complied with all information reporting and backup withholding requirements,
including maintenance of required records with respect thereto.


 


(c)          Except
as may be specified in Section 2.11(c) of the Seller Disclosure Schedule, the Company (i) is not the beneficiary of any
extension of time within which to file any Tax Return, nor has the Company made (or had made on its behalf) any requests for such
extensions, or (ii) has waived (or is subject to a waiver of) any statute of limitations in respect of Taxes or has agreed to (or
is subject to) any extension of time with respect to a Tax assessment or deficiency.


 


(d)          Section
2.11(d) of the Seller Disclosure Schedule indicates those Tax Returns that have been audited and those Tax Returns that currently
are the subject of audit. Except as set forth in Section 2.11(d) of the Seller Disclosure Schedule (i) there is no Proceeding
now pending or to Seller’s Knowledge threatened against or with respect to the Company in respect of any Tax or any assessment
or deficiency, and (ii) there are no liens for Taxes (other than current Taxes not yet due and payable) upon the assets of the
Company.


 


(e)          Section
2.11(e) of the Seller Disclosure Schedule lists, as of the date of this Agreement, all jurisdictions in which the Company currently
files Tax Returns. No claim has been made by any Taxing Authority in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction or that it must file Tax Returns.


 


(f)          None
of the assets or properties of the Company constitutes tax-exempt bond financed property or tax-exempt use property within the
meaning of Section 168 of the Code. The Company is not a party to any “safe harbor lease” within the meaning of Section
168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982, or to any “long-term
contract” within the meaning of Section 460 of the Code. The Company has not ever been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code. The Company is not a “foreign person” within the meaning
of Section 1445 of the Code.


 


(g)          The
Company has not agreed to and is not required to make by reason of a change in accounting method or otherwise, and could not be
required to make by reason of a proposed or threatened change in accounting method or otherwise, any adjustment under Section 481(a)
of the Code. The Company has not been the “distributing corporation” (within the meaning of Section 355(c)(2) of the
Code) with respect to a transaction described in Section 355 of the Code within the 5 year period ending as of the date of this
Agreement.


 


(h)          The
Company (i) has not ever been a party to any Tax allocation or sharing agreement or Tax indemnification agreement, (ii) has not
ever been a member of an affiliated, consolidated, condensed or unitary group, or (iii) has not incurred any Liability for or obligation
to pay Taxes of any other Person under Treas. Reg. 1.1502-6 (or any similar provision of Tax Law), or as transferee or successor,
by Contract or otherwise. The Company is not a party to any joint venture, partnership, or other arrangement that is treated as
a partnership for federal income tax purposes.


 




    	STOCK PURCHASE AGREEMENT – 12	 



     


    

 


(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) intercompany transactions or excess loss accounts
described in Treasury regulations under Section 1502 of the Code (or any similar provision of state, local, or foreign Tax Law),
(ii) installment sale or open transaction disposition made on or prior to the Closing Date, or (iii) prepaid amount received on
or prior to the Closing Date.


 


(j)          The Company has not
entered into any transaction that constitutes a “reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b).


 


(k)          Section 2.11(k)
of the Seller Disclosure Schedule lists each person who the Seller or the Company reasonably believes is, with respect to the Company
or any Affiliate of the Company, a “disqualified individual” within the meaning of Section 280G of the Code and the
Regulations thereunder.


 


(1) Except as may be
specified in Scction 2.11(1) of the Seller Disclosure Schedule, the unpaid Taxes of the Company (i) did not, as of the date
of the Most Recent Company Balance Sheet, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Company Balance Sheet (rather
than in any notes thereto), and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Company in filing its Tax Returns. Since the date of the Most Recent Company
Balance Sheet, the Company has not incurred any liability for Taxes arising from extraordinary gains or losses, as that term is
used in GAAP, outside the Ordinary Course of Business consistent with past custom and practice.


 


2.12         Title
to Personal Property.


 


(a)          With
respect to personal properties and assets that are purported to be owned by the Company, including all properties and assets reflected
as owned on the Most Recent Company Balance Sheet (other than inventory sold and items of obsolete equipment disposed of in the
Ordinary Course of Business since the date thereof), to Seller’s Knowledge the Company has good and valid title to all of
such properties and assets, free and clear of all Liens other than Permitted Liens and Liabilities.


 


(b)          With
respect to personal properties and assets that are leased, to Seller’s Knowledge the Company has a valid leasehold interest
in such properties and assets and all such leases are in full force and effect and constitute valid and binding obligations of
the other party(ies) thereto. To Seller’s Knowledge, the Company is not in violation of any of the terms of any such lease.


 


2.13         Condition
of Tangible Fixed Assets. All buildings, plants, leasehold improvements, structures, facilities, equipment and other items
of tangible property and assets which are owned, leased or used by the Company are to Seller’s Knowledge free from material
defects (patent and latent), have been maintained in accordance with normal industry practice, are in good operating condition
and repair (subject to normal wear and tear given the use and age of such assets), are usable in the regular and Ordinary Course
of Business and conform in all material respects to all Laws and authorizations relating to their construction, use and operation.


 




    	STOCK PURCHASE AGREEMENT – 13	 



     


    

 


2.14         Inventory.
Except as may be specified in Section 2.14 of the Seller Disclosure Schedule, to Seller’s Knowledge the inventory
of the Company consists of raw materials and supplies, manufactured and processed parts, work-in-process, and finished goods, all
of which is merchantable and fit for the purpose for which it was procured or manufactured, and none of which is out of date, contaminated,
obsolete, damaged, or defective, subject only to the reserve for inventory write-down set forth on the face of the Most Recent
Company Balance Sheet (rather than in any notes thereto) as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Company.


 


2.15         Product
Warranty. Except as may be specified in Section 2.15 of the Seller Disclosure Schedule, to Seller’s Knowledge
substantially all of the products produced, distributed, sold, leased, and delivered by the Company have conformed in all material
respects with all applicable contractual commitments and all express and implied warranties, and the Company does not have any
material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due) for replacement thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims set forth on the face of the Most Recent Company Balance Sheet
(rather than in any notes thereto) as adjusted for operations and transactions through the Closing Date in accordance with the
past custom and practice of the Company. Seller does not have standard terms and conditions which apply to products sold by Company.


 


2.16         Product
Liability. To Seller’s Knowledge, the Company does not have any material liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due) arising out of any injury to individuals or property as a result of the ownership, possession, or use of
any product produced, distributed, sold, leased, or delivered by the Company.


 


2.17         Real
Property.


 


(a)          Section
2.17(a) of the Seller Disclosure Schedule contains (i) a list of all real property and interests in real property owned in
fee by the Company (the “Company-Owned Real Property”), and (ii) a list of all real property and interests
in real property leased or used by the Company with respect to each of which the annual rental payments exceed $5,000 (the “Company-Leased
Real Property”).


 


(b)          With
respect to each parcel of Company-Owned Real Property, to Seller’s Knowledge the Company have good and marketable title to
each such parcel of Company-Owned Real Property free and clear of all Liens, except (i) Permitted Liens and Liabilities and (ii)
zoning and building restrictions, easements, covenants, rights-of-way and other similar restrictions of record, none of which materially
impairs the current or proposed use of such Company-Owned Real Property. There are no outstanding options or rights of first refusal
to purchase such parcel of Company-Owned Real Property, or any portion thereof or interest therein.


 




    	STOCK PURCHASE AGREEMENT – 14	 



     


    

 


(c)           To Seller’s
Knowledge, each lease with respect to Company-Leased Real Property (each, a “Company Lease”) is in full force
and effect. To Seller’s Knowledge, neither the Company nor any other party thereto is in default under any such Company Lease.


 


2.18         Intellectual
Property. Except to the extent as would not have a Material Adverse Effect, individually or in the aggregate, on the Company:


 


(a)          To
Seller’s Knowledge, Section 2.18(a) of the Seller Disclosure Schedule lists (by name, owner and, where applicable,
registration number and jurisdiction of registration, application, certification or filing) all Intellectual Property that is
owned by the Seller or the Company (whether exclusively, jointly with another Person or otherwise) (“Company-Owned Intellectual
Property”); provided, however, that Seller Disclosure Schedule does not include items of Seller-Owned Intellectual Property
which are both (i) immaterial to the Company and (ii) not registered or the subject of an application for registration. Except
as described in Seller Disclosure Schedule, to Seller’s Knowledge the Company owns the entire right, title and interest
to all Company-Owned Intellectual Property free and clear of all Liens.


 


(b)          To
Seller’s Knowledge, Section 2.18(b) of the Seller Disclosure Schedule lists all licenses, sublicenses and other Contracts
(“Company In-Bound Licenses”) pursuant to which a third party authorizes Seller or the Company to use, practice
any rights under, or grant sublicenses with respect to, any Intellectual Property owned by such third party, including the incorporation
of any such Intellectual Property into the Company’s products and, with respect to each Company In-Bound License, whether
Company In-Bound License is exclusive or nonexclusive; provided, however, that Seller Disclosure Schedule is not required to list
Company In-Bound Licenses that consist solely of “shrink-wrap” and similar commercially available end-user licenses.


 


(c)          To
Seller’s Knowledge, Section 2.18(c) of the Seller Disclosure Schedule lists all licenses, sublicenses and other Contracts
(“Company Out-Bound Licenses”) pursuant to which the Company authorizes a third party to use, practice any
rights under, or grant sublicenses with respect to, any Company Owned Intellectual Property or pursuant to which the Company or
any of its Subsidiaries grants rights to use or practice any rights under any intellectual Property owned by a third party and,
with respect to each Company Out-Bound License, whether Company Out-Bound License is exclusive or non-exclusive.


 


(d)          Except
as may be specified in Section 2.18(d) of the Seller Disclosure Schedule, to Seller’s Knowledge each Company In-Bound
License and each Company Out-Bound License is in full force and effect and valid and enforceable in accordance with its terms,
and neither Seller nor the Company has violated any provision of, or committed or failed to perform any act which, with or without
the giving of notice or lapse of time, or both, would constitute a default in the performance, observance or fulfillment of any
obligation, covenant, condition or other term contained in any Company In-Bound License or Company Out-Bound License, and the Company
has not given or received notice to or from any Person relating to any such alleged or potential default that has not been cured.


 




    	STOCK PURCHASE AGREEMENT – 15	 



     


    

 


(e)          Except
as may be specified in Section 2.18(e) of the Seller Disclosure Schedule, to Seller’s Knowledge the Company (i) exclusively
owns the entire right, interest and title to all Intellectual Property that is used in or necessary for the businesses of the Company
as they are currently conducted free and clear of Liens (including the design, manufacture, license and sale of all products currently
under development or in production), or (ii) otherwise rightfully use or otherwise enjoy such Intellectual Property pursuant to
the terms of a valid and enforceable Company In-Bound License that is listed in Seller Disclosure Schedule or that is a “shrink-wrap”
or similar commercially available end-user license. To Seller’s Knowledge, Company-Owned Intellectual Property, together
with the Company’s rights under Company In-Bound Licenses listed in Section 2.18(b) of the Seller Disclosure Schedule
or that are “shrink-wrap” and similar commercially available end-user licenses (collectively, the “Company
Intellectual Property”), constitutes all the Intellectual Property used in or necessary for the operation of the Company’s
businesses as they are currently conducted.


 


(f)          Except
as may be specified in Section 2.18(f) of the Seller Disclosure Schedule, to Seller’s Knowledge (i) all registration,
maintenance and renewal fees related to Patents, Marks, Copyrights and any other certifications, filings or registrations that
are owned by the Company (collectively, “Company Registered Intellectual Property”) that are currently due have
been paid and all documents and certificates related to such Company Registered Intellectual Property have been filed with the
relevant Governmental Authority or other authorities in the United States or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Company Registered Intellectual Property, (ii) all Company Registered Intellectual Property is in
good standing, held in compliance with all applicable legal requirements and enforceable by the Company, and (iii) all Patents
that have been issued to the Company are valid.


 


(g)          Except
as may be specified in Section 2.18(g) of the Seller Disclosure Schedule, neither the Seller nor the Company are aware of
any challenges (or any basis therefor) with respect to the validity or enforceability of any Company Intellectual Property. Neither
the Seller nor the Company have taken any action or, to Seller’s Knowledge, failed to take any action that would reasonably
be expected to result in the abandonment, cancellation, forfeiture, relinquishment, invalidation, waiver or unenforceability of
any Company Intellectual Property. Section 2.18(g) of the Seller Disclosure Schedule lists all previously held Company Registered
Intellectual Property that the Company has abandoned, cancelled, forfeited or relinquished during the 12 months preceding the date
of this Agreement.


 


(h)          Except
as may be specified in Section 2.18(h) of the Seller Disclosure Schedule, to Seller’s Knowledge (i) none of the products
or services currently or formerly developed manufactured, sold, distributed, provided, shipped or licensed, by the Company, or
which are currently under development, has infringed or infringes upon, or otherwise unlawfully used or uses, the Intellectual
Property Rights of any third party, (ii) the Company, by conducting its business as currently conducted, has not infringed or
infringes upon, or otherwise unlawfully used or uses, any Intellectual Property Rights of a third party, (iii) the Company has
not received any communication alleging that the Seller or the Company or any of their respective products, services, activities
or operations infringe upon or otherwise unlawfully use any Intellectual Property Rights of a third party nor is there any basis
therefor, (iv) no Proceeding has been instituted or threatened, relating to any Intellectual Property formerly or currently used
by the Company and none of the Company Intellectual Property is subject to any outstanding Order, and (v) no Person has infringed
or is infringing any Intellectual Property Rights of the Company or has otherwise misappropriated or is otherwise misappropriating
any Company Intellectual Property.


 




    	STOCK PURCHASE AGREEMENT – 16	 



     


    

 


(i)          With
respect to the Company’s Proprietary Information, to Seller’s Knowledge the documentation relating thereto is current,
accurate and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance
on the special knowledge or memory of persons other than Seller. Without limiting the generality of the foregoing, any material
Proprietary Information of the Company (other than Proprietary Information that is covered by an issued Patent) is to the Seller’s
Knowledge, not part of the public knowledge and has not been used or divulged for the benefit of any Person other than the Company.


 


(j)          To
Seller’s Knowledge, except as set forth in Seller Disclosure Schedule 2.18(j), all current and former employees, consultants
or contractors, who have (i) performed services for or (ii) provided products to the Company, who have received confidential or
proprietary information from the Company, have executed appropriate confidentiality, noncompete, non-solicitation agreements in
favor of the Company and/or its Subsidiaries. To Seller’s Knowledge, no employee, consultant or contractor of the Company
or any of its Subsidiaries has been or is performing services for the Company or Subsidiary, in violation of any term of any employment,
invention disclosure or assignment, confidentiality, noncompetition agreement or other restrictive covenant or any Order as a result
of such employee’s, consultant’s or independent contractor’s employment by the Company or any services rendered
by such employee, consultant or independent contractor.


 


(k)          To
Seller’s Knowledge, the execution and delivery of this Agreement and the other Operative Agreements by the Company does not,
and the consummation of the transactions contemplated by this Agreement (in each case, with or without the giving of notice or
lapse of time, or both) will not, directly or indirectly, result in the loss or impairment of, or give rise to any right of any
third party to terminate or reprice or otherwise renegotiate any of the Company’s rights to own any of its Intellectual Property
or its respective rights under any Company Out-Bound License or Company In-Bound License, nor require the consent of any Governmental
Authority or other third party in respect of any such Intellectual Property.


 


(l)          Software.


 


i.            To
Seller’s Knowledge, the Software owned, or purported to be owned by the Company (collectively, the “Company-Owned
Software”), has been either (A) developed by employees of the Company within the scope of their employment by the Company,
(B) developed by independent contractors who have assigned all of their right, title and interest therein to the Company pursuant
to written Contracts, or (C) otherwise acquired by the Company from a third party pursuant to a written Contract in which such
third party assigns all of its right, title and interest therein. To Seller’s Knowledge, no Company-Owned Software contains
any programming code, documentation or other materials or development environments that embody Intellectual Property Rights of
any Person other than the Company, other than such materials obtained by the Company from other Persons who make such materials
generally available to all interested Persons or end-users on standard commercial terms.


 




    	STOCK PURCHASE AGREEMENT – 17	 



     


    

 


ii.         To
Seller’s Knowledge, each of the Company’s existing and currently supported and marketed Software (including Software-embedded)
products performs, in all material respects, the functions described in any agreed specifications or end-user documentation or
other information provided to customers of the Company on which such customers relied when licensing or otherwise acquiring such
products, subject only to routine bugs and errors that can be corrected promptly by the Company in the course of providing customer
support without further liability to the Company, and all of the code of such products has been developed in a manner that meets
common industry practice, including the use of regression test and release procedures. To the Seller’s Knowledge, each of
the Company’s existing and currently supported and marketed Software (including Software-embedded) products is free of all
viruses, worms, Trojan horses and material known Contaminants and does not contain any bugs, errors, or problems in each case that
would substantially disrupt its operation or have a substantial adverse impact on the operation of the Software.


 


iii.         To
Seller’s Knowledge, the Company has taken all actions customary in the Software industry to document the Company-Owned Software
and its operation, such that the materials comprising the Company-Owned Software, including the source code and documentation,
have been written in a clear and professional manner so that they may be understood, modified and maintained in an efficient manner
by reasonably competent programmers.


 


iv.         To
Seller’s Knowledge, the Company has not exported or transmitted Software or other material in connection with the Company’s
or such Subsidiaries’ business to any country to which such export or transmission is restricted by any applicable Law, without
first having obtained all necessary and appropriate authorizations.


 


v.           To
Seller’s Knowledge, all Company-Owned Software is free of any Disabling Code or Contaminants that may, or may be used to,
access, modify, delete, damage or disable any systems or that may result in damage thereto. To Seller’s Knowledge, the Company
has taken reasonable steps and implemented reasonable procedures to ensure that its and their internal computer systems used in
connection with the Companies’ business are free from Disabling Codes and Contaminants. To Seller’s Knowledge, the
Software licensed by the Company is free of any Disabling Codes or Contaminants that may, or may be used to, access, modify, delete,
damage or disable the systems of the Company or that might result in damage thereto. To Seller’s Knowledge, the Company has
taken all reasonable steps to safeguard its systems and restrict unauthorized access thereto.


 


vi.         To
Seller’s Knowledge, no Public Software: (A) forms part of any Company Intellectual Property; (B) was, or is, used in connection
with the development of any Company-Owned Intellectual Property or any products or services developed or provided by the Company;
or (C) was, or is, incorporated or distributed, in whole or in part, in conjunction with Company Intellectual Property.


 




    	STOCK PURCHASE AGREEMENT – 18	 



     


    

 


2.19         Material
Contracts.


 


(a)          Seller
has provided Buyer with the opportunity to review all of Seller’s Contracts, including Contracts not listed under Section
2.19(b); which Contracts may exceed 1500 in total number.


 


(b)          To
the best of Seller’s knowledge, Section 2.19 of the Seller Disclosure Schedule contains a list of the following Contracts
to which the Company is a party or is subject, or by which any of its assets are bound:


 


i.            for
the purchase of products supplied by Company to Company customers, where (A) delivery to the customers will occur after a one (1)
year period from the date of the Contract or (B) the Contract extends over a period of five (5) or more years.


 


ii.         for
the purchase of materials, supplies, goods, services, equipment or other assets not for resale by the Company and that involve
or would reasonably be expected to involve (A) annual payments by the Company of $5,000 or more, or (B) aggregate payments in any
one calendar year by the Company of $5,000 or more;


 


iii.         that
is an employment, consulting, termination or severance Contract that involves or would reasonably be expected to involve the payment
of $5,000 or more by the Company following the date hereof, except for any such Contract that is terminable at-will by the Company
without liability to the Companies;


 


iv.         that
is a distribution, dealer, representative or sales agency Contract, other than Contracts entered into in the Ordinary Course of
Business with distributors, representatives and sales agents that are cancelable without penalty on not more than 5 days’
notice and does not deviate in any material respect from the Company’s standard forms;


 


v.           that
is a (A) Company Lease, or (B) Contract for the lease of personal property, in each case which provides for payments to or by the
Company in any one case of $6,000 or more annually or $12,000 or more over the term of such Company Lease or lease;


 


vi.         that
include a provision in the body of the Contract which provides for the indemnification by the Company of any Person, the undertaking
by the Company to be responsible for consequential damages, or the assumption by the Company of any Tax, environmental or other
Liability;


 


vii.         that
is a note, debenture, bond, equipment trust, letter of credit, loan or other Contract for Indebtedness or lending of money (other
than to employees for travel expenses in the Ordinary Course of Business) or Contract for a line of credit or guarantee, pledge
or undertaking of the Indebtedness of any other Person;


 


viii.         for
any capital expenditure or leasehold improvement in any one case in excess of $6,000 or any such Contracts in the aggregate greater
than $12,000;


 


ix.         that
restricts or purports to restrict the right of the Company or any of its Subsidiaries to engage in any line of business, acquire
any property, develop or distribute any product or provide any service (including geographic restrictions) or to compete with any
Person or granting any exclusive distribution rights, in any market, field or territory;


 




    	STOCK PURCHASE AGREEMENT – 19	 



     


    

 


x.         that
is a partnership, joint venture, joint development or similar Contract;


 


xi.        that
relates to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise); and


 


xii.       that
is a collective bargaining Contract or other Contract with any labor organization, union or association.


 


(c)          To
Seller’s Knowledge, each Contract required to be listed in Schedule 2.19 of the Seller Disclosure Schedule is in full force
and effect and valid and enforceable in accordance with its terms, except to the extent a failure to be in full force and effect
and valid or enforceable in accordance with its terms would not have a Material Adverse Effect on the Company (collectively, the
“Company Material Contracts”).


 


(d)          To
Seller’s Knowledge, the Company is not, and no other party thereto is, in default in the performance, observance or fulfillment
of any obligation, covenant, condition or other term contained in any Company Material Contract, and the Company has not given
or received notice to or from any Person relating to any such alleged or potential default that has not been cured. To Seller’s
Knowledge, prior to the signing of this Agreement by the Parties no event has occurred which with or without the giving of notice
or lapse of time, or both, may conflict with or result in a violation or breach of, or give any Person the right to exercise any
remedy under or accelerate the maturity or performance of, or cancel, terminate or modify, any Company Material Contract.


 


(e)          The
Company has provided accurate and complete copies of each Company Material Contract to the Buyer.


 


(f)          Notwithstanding
any other term of this Agreement, including but not limited to the foregoing provisions of this Section 2.19, Seller makes
no express or implied representation or warranty as to whether or not any Government Contract of Company may require advance notice,
subsequent notice, or consent regarding the execution or performance of this Agreement be given to any Person(s) (including but
not limited to a counterparty to a Government Contract or to a public or private agency having supervisory authority over administration
of a Government Contract) or the impact associated with failure to give such notice or obtain such consent.


 


2.20         Litigation.
Except as may be specified in Section 2.20 of the Seller Disclosure Schedule, (i) there is no Proceeding pending or, to
the Knowledge of Seller or the Company, threatened against the Company, which (a) individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on the Company, or (b) seeks to and is reasonably likely to significantly delay
or prevent the consummation of this Agreement and the transactions contemplated hereunder, (ii) there is no Proceeding pending
against any current or, to Seller’s Knowledge, former director or employee of the Company with respect to which the Company
has or is reasonably likely to have an indemnification obligation, and (iii) To the knowledge of Seller, neither the Company nor
any property or asset of the Company is in violation of any Order having, individually or in the aggregate, a Material Adverse
Effect on the Company.


 




    	STOCK PURCHASE AGREEMENT – 20	 



     


    

 


2.21         Employee Benefit
Plans.


 


(a)          To
Seller’s Knowledge; Section 2.21(a) of the Seller Disclosure Schedule sets forth a complete and accurate list of
all Benefit Plans sponsored, maintained or contributed to by the Company or any Company ERISA Affiliate, or with respect to which
the Company, or any Company ERISA Affiliate otherwise has any present or future Liability (each, a “Company Benefit Plan”).
A current, accurate and complete copy of each Company Benefit Plan has been provided to the Buyer. The Company does not have any
intent or commitment to create any additional Company Benefit Plan or amend any Company Benefit Plan.


 


(b)          To
Seller’s Knowledge, each Company Benefit Plan has been and is currently administered in compliance in all material respects
with its constituent documents and with all reporting, disclosure and other requirements of ERISA and the Code applicable to such
Company Benefit Plan. Each Company Benefit Plan that is an Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA)
and which is intended to be qualified under Section 401(a) of the Code (a “Company Pension Plan”), has been
determined by the Internal Revenue Service to be so qualified and to Seller’s Knowledge no condition exists that would adversely
affect any such determination. No Company Benefit Plan is a “defined benefit plan” as defined in Section 3(35) of ERISA.


 


(c)          To
Seller’s Knowledge, neither the Company, nor any Company ERISA Affiliate nor any trustee or agent of any Company Benefit
Plan has been or is currently engaged in any prohibited transactions as defined by Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not applicable which could subject the Company, nor any Company ERISA Affiliate nor any trustee
nor agent of any Company Benefit Plan to the tax or penalty imposed by Section 4975 of the Code or Section 502 of ERISA.


 


(d)          To
Seller’s Knowledge, there is no event or condition existing which could be deemed a “reportable event” (within
the meaning of Section 4043 of ERISA) with respect to which the 30 day notice requirement has not been waived. To Seller’s
Knowledge, no condition exists which could subject the Company to a penalty under Section 4071 of ERISA.


 


(e)          Neither
of the Company, nor any Company ERISA Affiliate is, or has been, party to any “multi-employer plan,” as that term is
defined in Section 3(37) of ERISA.


 


(f)          To
Seller’s Knowledge, true and correct copies of the most recent annual report on Form 5500 and any attached schedules for
each Company Benefit Plan (if any such report was required by applicable Law) and a true and correct copy of the most recent determination
letter issued by the Internal Revenue Service for each Company Pension Plan have been provided to the Buyer.


 


(g)          With
respect to each Company Benefit Plan, there are no Proceedings (other than routine claims for benefits in the ordinary course)
pending or, to Seller’s Knowledge, threatened against any Company Benefit Plan, the Company, any Company ERISA Affiliate
or any trustee or agent of any Company Benefit Plan.


 




    	STOCK PURCHASE AGREEMENT – 21	 



     


    

 


(h)          To
Seller’s Knowledge, with respect to each Company Benefit Plan to which the Company, or any Company ERISA Affiliate is a party
which constitutes a group health plan subject to Section 4980B of the Code, each such Company Benefit Plan complies, and in each
case has complied, in all material respects with all applicable requirements of Section 4980B of the Code.


 


(i)          To
Seller’s Knowledge, full payment has been made of all amounts which the Company or any Company ERISA Affiliate was required
to have paid as a contribution to any Company Benefit Plan as of the last day of the most recent fiscal year of each of the Benefit
Plans ended prior to the date of this Agreement, and no Company Benefit Plan has incurred any “accumulated funding deficiency”
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each such Company Benefit Plan ended prior to the date of this Agreement.


 


(j)          To
Seller’s Knowledge, each Company Benefit Plan is, and its administration is and has been during the 6 year period preceding
the date of this Agreement, in all material respects in compliance with, and no Company, or any Company ERISA Affiliate has received
any claim or notice that any such Company Benefit Plan is not in material compliance with, all applicable Laws and Orders and prohibited
transaction exemptions, including to the extent applicable, the requirements of ERISA.


 


(k)          To
Seller’s Knowledge, neither the Company nor any Company ERISA Affiliate is in default in any material respect in performing
any of its contractual obligations under any Company Benefit Plans or any related trust agreement or insurance contract.


 


(l)          To
Seller’s Knowledge, there are no material outstanding Liabilities of any Company Benefit Plan other than Liabilities for
benefits to be paid to participants in any Company Benefit Plan and their beneficiaries in accordance with the terms of such Company
Benefit Plan.


 


(m)          Subject
to ERISA and the Code, to Seller’s Knowledge, each Company Benefit Plan may be amended, modified, terminated or otherwise
discontinued by the Company, or a Company ERISA Affiliate at any time without liability.


 


(n)          No
Company Benefit Plan other than a Company Pension Plan, retiree medical plan or severance plan provides benefits to any individual
after termination of employment.


 


(o)          The
consummation of this Agreement and the transactions contemplated hereunder will not (either alone or in conjunction with any other
event) to Seller’s Knowledge (i) entitle any current or former director, employee, contractor or consultant of the Company
or any of its Subsidiaries to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment
or vesting, or increase the amount of compensation due to any such director, employee, contractor or consultant, or result in the
payment of any other benefits to any Person or the forgiveness of any Indebtedness of any Person, (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code for which an exemption is not available, or (iv) result
in the payment or series of payments by the Company or any of its Affiliates to any person of an “excess parachute payment”
within the meaning of Section 280G of the Code.


 




    	STOCK PURCHASE AGREEMENT – 22	 



     


    

 


(p)          To
Seller’s Knowledge, with respect to each Company Benefit Plan that is funded wholly or partially through an insurance policy,
all premiums required to have been paid to date under the insurance policy have been paid, all premiums required to be paid under
the insurance policy through the Closing will have been paid on or before the Closing and, as of the Closing, there will be no
liability of the Company or any Company ERISA Affiliate under any insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment, loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring prior to the Closing.


 


(q)          To
Seller’s Knowledge, each Company Benefit Plan that constitutes a “welfare benefit plan,” within the meaning of
Section 3(1) of ERISA, and for which contributions are claimed by the Company or any Company ERISA Affiliate as deductions under
any provision of the Code, is in compliance in all material respects with all applicable requirements pertaining to such deduction.
With respect to any welfare benefit fund (within the meaning of Section 419 of the Code) related to a welfare benefit plan, there
is no disqualified benefit (within the meaning of Section 4976(b) of the Code) that would to Seller’s Knowledge result in
the imposition of a tax under Section 4976(a) of the Code. To Seller’s Knowledge, all welfare benefit funds intended to be
exempt from tax under Section 501(a) of the Code have been determined by the Internal Revenue Service to be so exempt and no event
or condition exists which would adversely affect any such determination.


 


(r)          The
Company does not have in place any Company Benefit Plans covering employees of the Company outside of the United States.


 


2.22         Labor
and Employment Matters.


 


(a)          The
Company is not a party or subject to any labor union or collective bargaining Contract. There have not been since the Company began
operations and there are not pending or to Seller’s Knowledge threatened any labor disputes, work stoppages, requests for
representation, pickets, work slow-downs due to labor disagreements or any actions or arbitrations which involve the labor or employment
relations of the Company. There is no unfair labor practice, charge or complaint pending, unresolved or, to the Seller’s
Knowledge, threatened before the National Labor Relations Board. No event has occurred or to Seller’s Knowledge circumstance
exist that may provide the basis of any work stoppage or other labor dispute.


 


(b)          To
Seller’s Knowledge, the Company has complied in all material respects with each, and is not in violation in any material
respect of any, Law relating to anti-discrimination and equal employment opportunities and there are, and have been, no material
violations of any other Law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination
or benefits of any employee or other Person. To Seller’s Knowledge, the Company has filed all reports, information and notices
required under any Law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination
or benefits of any employee or other Person, and will timely file prior to Closing all such reports, information and notices required
by any Law to be given prior to Closing.


 




    	STOCK PURCHASE AGREEMENT – 23	 



     


    

 


(c)          To
Seller’s Knowledge, the Company has paid or properly accrued in the Ordinary Course of Business all wages and compensation
due to employees, including all vacations or vacation pay, holidays or holiday pay, sick days or sick pay, and bonuses.


 


(d)          The
Company is not a party to any Contract which restricts the Company from relocating, closing or terminating any of its operations
or facilities or any portion thereof. The Company has not effectuated a “plant closing” (as defined in the Worker
Adjustment and Retraining Notification Act of 1988 (the “WARN Act”)) or (ii) a “mass lay-off’ (as
defined in the WARN Act), in either case affecting any site of employment or facility of the Company, except in accordance with
the WARN Act. The consummation of this Agreement and the transactions contemplated hereunder will not create Liability for any
act by the Company on or prior to the Closing Date under the WARN Act or any other Law respecting reductions in force or the impact
on employees on plant closings or sales of businesses.


 


2.23         Environmental.


 


(a)          To
Seller’s Knowledge, the Company has secured, and is in compliance in all material respects with, all Environmental Permits
required in connection with its operations and the Real Property. Each Environmental Permit, together with the name of the Governmental
Authority issuing such Environmental Permit, is set forth in Section 2.23(a) of Seller Disclosure Schedule. To Seller’s
Knowledge, all such Environmental Permits are valid and in full force and effect and none of such Environmental Permits will be
terminated or impaired or become terminable as a result of this Agreement or the transactions contemplated hereunder. To Seller’s
Knowledge, the Company has been, and is currently, in compliance in all material respects with all Environmental Laws. The Company
has not received any notice alleging that the Company is not in such compliance with Environmental Laws.


 


(b)          There
are no past, pending or, to Seller’s Knowledge, threatened Environmental Actions against or affecting the Company, and the
Company is not aware of any facts or circumstances which could be expected to form the basis for any Environmental Action against
the Company.


 


(c)          The
Company has not entered into or agreed to any Order, and the Company is not subject to any Order, relating to compliance with any
Environmental Law or to investigation or cleanup of a Hazardous Substance under any Environmental Law.


 


(d)          No
Lien has been attached to, or asserted against, the assets, property or rights of the Company pursuant to any Environmental Law,
and, to the Seller’s Knowledge, no such Lien has been threatened. To Seller’s Knowledge, there are no facts, circumstances
or other conditions that could be expected to give rise to any Liens on or affecting any Real Property.


 


(e)          To
Seller’s Knowledge, there has been no treatment, storage, disposal or Release of any Hazardous Substance at, from, into,
on or under any Real Property or any other property currently or formerly owned, operated or leased by the Company or any of its
Subsidiaries. To Seller’s Knowledge, no Hazardous Substances are present in, on, about or migrating to or from any Real Property
that could be expected to give rise to an Environmental Action against the Company.


 




    	STOCK PURCHASE AGREEMENT – 24	 



     


    

 


(f)          The
Company has not received a CERCLA 104(e) information request nor has the Company been named a potentially responsible party for
any National Priorities List site under CERCLA or any site under analogous state Law. The Company has not received an analogous
notice or request from any non-U.S. Governmental Authority.


 


(g)          To
Seller’s Knowledge, there are no above-ground tanks or underground storage tanks on, under or about the Real Property. To
Seller’s Knowledge, any aboveground or underground tanks previously situated on the Real Property or any other property currently
or formerly owned, operated or leased by the Company have been removed in accordance with all Environmental Laws and no residual
contamination, if any, remains at such sites in excess of applicable standards.


 


(h)          To
Seller’s Knowledge, there are no PCBs leaking from any article, container or equipment on, under or about the Real Property
and there are no such articles, containers or equipment containing PCBs. To Seller’s Knowledge, there is no asbestos containing
material or lead-based paint containing materials in at, on, under or within the Real Property.


 


(i)          The
Company has not transported or arranged for the treatment, storage, handling, disposal, or transportation of any Hazardous Material
to any off-site location which is an Environmental Clean-up Site.


 


(j)          None
of the Real Property is an Environmental Clean-up Site.


 


(k)          The
Company has provided to the Buyer true and complete copies of, or access to, all written environmental assessment materials and
reports that have been prepared by or on behalf of the Company.


 


2.24         Related
Party Transactions. Except for those transactions specifically set forth on Section 2.24 of Seller Disclosure Schedule,
there are no Contracts of any kind, written or oral, entered into by the Company with, or for the benefit of, any officer, director
or stockholder of the Company, except for (a) employment agreements, indemnification agreements, fringe benefits and other compensation
paid to directors, officers and employees consistent with previously established policies (including normal merit increases in
such compensation in the Ordinary Course of Business) and copies of which have been provided to the Buyer and are listed in Section
2.24 of Seller Disclosure Schedule, (b) reimbursements of ordinary and necessary expenses incurred in connection with their
employment or service, (c) amounts paid pursuant to Company Benefit Plans of which copies have been provided to the Buyer. To Seller’s
Knowledge, none of such Persons has any material direct or indirect ownership interest in any firm or corporation with which the
Company has a business relationship, or with any firm or corporation that competes with the Company (other than ownership of securities
in a publicly-traded company representing less than one percent of the outstanding stock of such company). No officer or director
of the Company or member of his or her immediate family or greater than 5% stockholder of the Company or, to Seller’s Knowledge,
any employee of the Company is directly or indirectly interested in any Company Material Contract.


 




    	STOCK PURCHASE AGREEMENT – 25	 



     


    

 


2.25         Insurance.
Section 2.25 of Seller Disclosure Schedule sets forth the following information with respect to each material insurance
policy (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety
arrangements) with respect to which the Company is a party, a named insured, or otherwise the beneficiary of coverage:


 


(a)          the
name, address, and telephone number of the agent;


 


(b)          the
name of the insurer, the name of the policyholder, and the name of each covered insured;


 


(c)          the
policy number and the period of coverage;


 


(d)          the
scope (including an indication of whether the coverage is on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of coverage; and


 


(e)          a
description of any retroactive premium adjustments or other material loss-sharing arrangements.


 


With respect to each
such insurance policy, and to Seller’s Knowledge: (A) the policy is legal, valid, binding, enforceable, and in full force
and effect in all material respects; (B) neither the Company, or any other party to the policy is in material breach or default
(including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or default, or permit termination, modification, or acceleration, under
the policy; and (C) no party to the policy has repudiated any material provision thereof. Section 2.25 of the Seller Disclosure
Schedule describes any material self-insurance arrangements affecting the Company or any of its Subsidiaries.


 


2.26         Absence
of Certain Changes or Events. Since December 31, 2015, except as may be contemplated by, or disclosed pursuant to, this Agreement,
including Section 2.26 of the Seller Disclosure Schedule:


 


(a)          to
Seller’s Knowledge there has not been any event or events (whether or not covered by insurance), individually or in the aggregate,
which have had a Material Adverse Effect on the Company, including without limitation the imposition of any security interests
on any of the assets of the Company;


 


(b)          there
have not been any amendments or other modifications to the articles of incorporation or bylaws of the Company;


 


(c)          there
has not been any entry by the Company into any commitment or transaction material to the Company, except in the Ordinary Course
of Business and consistent with past practice, including without limitation any (i) borrowings or the issuance of any guaranties,
(ii) any capital expenditures in excess of $6,000, or (iii) any grant of any increase in the base compensation payable, or any
loans, to any directors, officers or employees;


 




    	STOCK PURCHASE AGREEMENT – 26	 



     


    

 


(d)          there
has not been, other than pursuant to the Plans, any increase in or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other employee benefit plan, except in the Ordinary Course
of Business consistent with past practice.


 


(e)          there
have not been any material changes by the Company or Seller in the Company’s accounting methods, principles or practices;


 


(f)          except
as provided in Section 4.5, the Company has not declared, set aside or paid any dividend or other distribution (whether
in cash, stock or property) with respect to any of its securities;


 


(g)          the
Company has not split, combined or reclassified any of its securities, or issued, or authorized for issuance, any securities;


 


(h)          there
has not been any material damage, destruction or loss with respect to the property and assets of the Company, whether or not covered
by insurance;


 


(i)          there
has not been any revaluation of the Company or any of its assets, including writing down the value of inventory or writing off
notes or accounts receivable, other than in the Ordinary Course of Business consistent with past practice; and


 


(j)          the
Company has not agreed, whether in writing or otherwise, to do any of the foregoing.


 


2.27         Solvency.
No Order has been made, petition presented, or resolution passed for the winding up (or other process whereby the business is terminated
and the assets of the subject company are distributed among its creditors and/or shareholders) of the Company. There are no cases
or Proceedings of any kind pending under any applicable insolvency, reorganization or similar Law in any jurisdiction where the
Company is a debtors, and to Seller’s Knowledge no circumstances exist which, under applicable Law, would justify any such
cases or Proceedings. No receiver or trustee has been appointed with respect to all or any portion of the Company business or assets.


 


2.28         Brokers
or Finders. Except as set forth in Section 2.28 of Seller Disclosure Schedule, the Company has no liability of any kind
to, and is not subject to any claim of, any broker, finder or agent in connection with the purchase and sale of the Stock contemplated
by this Agreement.


 


2.29         No
Illegal Payments. To Seller’s Knowledge, neither the Company nor any Affiliate, officer, agent or employee thereof, directly
or indirectly, has, on behalf of or with respect to the Company, (a) made any unlawful domestic or foreign political contributions,
(b) made any payment or provided services which were not legal to make or provide or which the Company, or any such officer or
employee thereof should reasonably have known, were not legal for the payee or the recipient of such services to receive, (c) received
any payment or any services which were not legal for the payer or the provider of such services to make or provide, (d) had any
material transactions or payments which are not recorded in its accounting books and records, or (e) had any off-book bank or cash
accounts or “slush funds.”


 




    	STOCK PURCHASE AGREEMENT – 27	 



     


    

 


2.30         Information
Supplied. To Seller’s Knowledge, none of the information furnished or to be furnished by or on behalf of the Company
for inclusion or incorporation by reference in the disclosure that will be made to OTC Markets in providing “current information”
in connection with this Agreement will, as of the time furnished, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein not misleading.


 


2.31         Compliance
with Securities Laws. To the Seller’s Knowledge, except to the extent as would not have a Material Adverse Effect, individually
or in the aggregate, on the Company or any of its Subsidiaries, the sale and issuance by the Company and any of its Subsidiaries
of all securities to date were made and completed in substantial compliance with all applicable state, federal and, if applicable,
foreign securities Laws.


 


2.32         Powers
of Attorney. To the Knowledge of the Seller and the Company, there are no material outstanding powers of attorney executed
on behalf of or affecting the Company.


 


2.33         Material
Disclosures. To Seller’s Knowledge, no statement, representation or warranty made by the Seller or the Company in this
Agreement, or in any certificate, statement, list, schedule or other document furnished or to be furnished to the Buyer hereunder,
contains, or when so furnished will contain, any untrue statement of a material fact, or fails to state, or when so furnished will
fail to state, a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances
in which they are or will be made, not misleading.


 


2.34         Change
in Control. Except for Government Contracts, and except as may be set forth in Section 2.34 of the Seller Disclosure
Schedule, neither the Seller nor the Company is a party to any Contract that contains a “change in control” or similar
provision.


 


ARTICLE III


REPRESENTATIONS AND WARRANTIES OF
BUYER


 


Buyer represents and
warrants to Seller that as of the date hereof and as of the Closing Date:


 


3.1           Authority
for Agreement. Buyer has full power and authority to execute, deliver, and perform this Agreement. The signing, delivery, and
performance of this Agreement by Buyer is not prohibited or limited by, and will not result in the breach of or a default under,
any provision of any agreement or instrument binding on Buyer, or of any applicable Order, writ, injunction, or decree of any court
or governmental instrumentality. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid,
and binding obligation of Buyer, enforceable in accordance with its respective terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and by general
equitable principles.


 


3.2           Brokers
or Finders. Buyer has no liability of any kind to, or is not subject to any claim of, any broker, finder or agent in connection
with the purchase and sale of the Stock contemplated by this Agreement, with the exception of Leventis, LLC.


 




    	STOCK PURCHASE AGREEMENT – 28	 



     


    

 


3.3           Litigation.
There is no action, suit, inquiry, proceeding or investigation by or before any court or governmental body pending or threatened
against or involving Buyer which is likely to prevent or interfere with Buyer’s performance of this Agreement. Buyer is not
subject to any judgment, order or decree that is likely to prevent or interfere with Buyer’s performance of this Agreement.


 


ARTICLE IV


OTHER AGREEMENTS AND COVENANTS


 


4.1           Seller’s
Noncompete - Nonsolicitation. The parties hereto agree that Buyer is incurring substantial expenses and risks in purchasing
the shares of Stock and that Buyer would not execute this Agreement without Seller’s agreement to accept and agree to the
non-competition provisions contained in the Employment, Confidentiality, Non-Compete, and Intellectual Property Agreements (“Employment
Agreements”), which are attached hereto as Exhibits C and D.


 


4.2           Access.
Prior to Closing, Seller shall cause the Company to provide to the officers, employees and authorized representatives of Buyer
(including, without limitation, independent public accountants and attorneys) during normal business hours of the Company, access
to the offices, properties and business and financial records (including computer files, retrieval programs and similar documentation)
of the Company to the extent Buyer shall deem necessary or desirable and shall furnish to Buyer or its authorized representatives
such additional information concerning the Company or the Company’s operations as shall be reasonably requested. Buyer agrees
that such investigation shall be conducted in such a manner as not to interfere unreasonably with the operations of the Company.
Following the Closing, the Buyer shall, in addition to Section 6.1, provide Seller reasonable access to Company’s
books and records upon request and demonstration of need by Seller.


 


4.3           Ordinary
Course. From the date of this Agreement to the earlier of Closing or termination of the Agreement (as defined in Section
7.1), the Company shall carry on its business in the ordinary course of business in all respects as is consistent with past
practices and (a) shall use its commercially reasonable efforts to preserve intact its present business organizations and preserve
its existing relationships with suppliers, employees and others having business dealings with it; (b) shall maintain in effect
all material, federal, state and local licenses, permits and authorizations required for the Company to carry on its business;
and (c) will not increase employees’ salaries, bonuses or benefits, or unnecessarily incur other expenses or liabilities.


 


4.4           Material
Developments. Prior to Closing, Seller shall promptly notify Buyer in writing upon becoming aware of any material development
affecting the Company, its assets and business, or any event or circumstance that could reasonably be expected to result in a material
breach of, or inaccuracy in, any Seller representation or warranty in this Agreement.


 




    	STOCK PURCHASE AGREEMENT – 29	 



     


    

 


4.5           Company
Distributions Prior to Closing.


 


(a)          At
Closing, Company shall maintain total cash in the amount of $75,000. Seller is authorized to cause the Company to distribute to
Seller all cash or cash equivalents in excess of this amount immediately prior to Closing.


 


(b)          In
the event that on or before Closing one or more customers of Company have prepaid for the purchase of products ordered from Company,
but the products have not been shipped by Company to the customer as of Closing, (i.e. customer has ordered product from Company,
Company has received payment from the customer, but Company has not shipped the product to customer) the amount Company received
as prepayment for the products shall be credited to Buyer. In the event that on or before Closing, Company has ordered products
from Company vendors for sale to Company customers, where the vendor has charged Company’s credit card for the payment and
Company has paid its credit card bill, but the product has not been invoiced or shipped by Company to the customer on or before
the date of Closing, the amount Company prepaid for the product shall be credited to Seller.


 


(c)          Within
thirty (30) days following the Closing Date, Seller will prepare a summary of the prepaid amount to be credited to Buyer under
Section 4.5(b) and the prepaid amount to be credited to Seller under Section 4.5(b). Unless Buyer reasonably objects
to the summary of prepaid amounts within forty-five (45) days following the Closing Date, the following shall take place immediately:
if the amount to be credited to Buyer is greater than the amount to be credited to Seller, the difference shall be paid by Seller
to Buyer. If the amount to be credited to Seller is greater than the amount to be credited to Buyer, the difference shall be paid
from Buyer to Seller.


 


(d)          Notwithstanding
the rights of Seller and Buyer under this Section 4.5. the Company will continue to pay its obligations in a timely manner
and in the ordinary course of business; and as to the following regularly occurring continuing obligations that are due following
closing: rent, payroll, and utilities, allowance shall be made for the payment of such obligations and either (i) additional cash
shall be retained by the Company or (ii) the cash due to the Seller at Closing shall be reduced, in either case to allow such obligations
to be pro-rated up to and including the Closing Date.


 


4.6           Additional
Documents. Upon Buyer’s reasonable request after Closing, Seller will execute and deliver such further instruments of
conveyance and transfer and take such further action as Buyer may reasonably request in order to convey and effectively transfer
the Stock to Buyer.


 


4.7           Publicity.
No public announcement of the Stock transaction shall be made prior to Closing, and no initial public announcement shall be made
after Closing without the advance written consent of the Buyer.


 


4.8           Expenses.
Buyer and Seller shall each pay their own expenses and fees, including attorneys’ fees, in connection with the Stock purchase
and sale contemplated by this Agreement, whether or not the transaction is consummated.


 




    	STOCK PURCHASE AGREEMENT – 30	 



     


    

 


ARTICLE V


INDEMNIFICATION


 


5.1           Survival
of Representations, Warranties and Covenants; Remedies.


 


(a)          Except
as set forth below or as otherwise provided in this Agreement, the representations, warranties and covenants provided for in this
Agreement shall survive the Closing for the benefit of the parties hereto and their successors and assigns until the earlier of
(i) 60 days following expiration of the applicable statute of limitations or (ii) 18 months from the Closing Date; provided, however,
that the representations and warranties contained in Sections 2.1, 2.5 and 3.1 shall survive the Closing Date indefinitely.
The survival period of each representation, warranty and covenant as provided in this Section 5.1 is hereinafter referred
to as the “Survival Period.”


 


(b)          Except
where a court of competent jurisdiction determines that specific performance or injunctive relief is in order, indemnification
as provided in Section 5.2 is the sole and exclusive remedy for any party arising out of or relating to this Agreement.


 


5.2           Indemnification.


 


(a)          Subject
to the provisions of Sections 5.2(a)(i) and (ii), Seller shall indemnify and hold harmless the Buyer, and, after Closing,
the Company, and each of their Affiliates, stockholders, officers, directors, employees, representatives, agents, attorneys and
any person claiming by or through any of them (the “Buyer Indemnified Persons”) against and in respect of any
and all claims, costs, expenses, damages, liabilities, losses or deficiencies including, reasonable attorney’s fees and other
costs and expenses (but excluding any special exemplary, speculative, consequential or incidental damages, damages for lost profits
or damages computed on a multiple of earnings, and excluding punitive damages but only to the extent that Buyer itself is not subject
to such punitive damages claims) that are incurred in connection with any suit, action, claim or proceeding (the “Losses”)
brought during the Survival Period and arising out of, resulting from or incurred in connection with (a) the breach by Seller
of any representation, warranty or covenant or agreement to be performed by Seller under this Agreement, or (b) fraud on the part
of Seller.


 


i.            With
respect to Seller’s indemnification obligations pursuant to Section 5.2(a), Seller shall not have any indemnification
obligation until the aggregate Losses by reason of all such breaches exceed $5,000 (the “Threshold”), after
which point Seller will be obligated to indemnify the Buyer from and against the aggregate amount of all Losses in excess of the
Threshold; provided, however, that the Threshold shall not apply to Losses arising out of, or related to, breaches of Sections
2.1, 2.5 or 3.1, claims or cause of action based upon fraud or any Tax liability.


 


ii.         With
respect to Seller’s indemnification obligations pursuant to Section 5.2(a), the aggregate amount of all payments
to which the Buyer Indemnified Persons shall be entitled in satisfaction of claims for indemnification shall in no event exceed
$750,000 (the “Cap”); provided, however, that the cap for Losses arising out of, or related to, any of the
following shall be $3,500,000: (i) breaches of representations and warranties contained in Sections 2.1, 2.5 or 3.1, (ii)
claims of, or causes of action based upon, fraud, or (iii) any Tax liability.


 




    	STOCK PURCHASE AGREEMENT – 31	 



     


    

 


iii.         From
and after the Closing, any indemnification to which Buyer is entitled under this Agreement shall be satisfied first from the obligations
due under the Promissory Note. In the event the Promissory Note is insufficient to satisfy the amount of indemnifiable Losses,
Seller shall be responsible for satisfying such remaining amount.


 


(b)          The
Buyer shall indemnify and hold harmless Seller and its Affiliates, officers, directors, employees, agents, attorneys and representatives,
and any person claiming by or through any of them, against and in respect of any and all Losses brought during the Survival Period
and arising out of, resulting from or incurred in connection with (A) any breach of any representation, warranty or covenant made
by the Buyer in this Agreement or to be performed by it under this Agreement, or (B) any fraud by the Buyer; and (C) any and all
Losses arising out of, resulting from, or incurred in connection with the operation of the Company after Closing (excluding reduction
in value of Drone USA stock or related, directly or indirectly to the Company’s status as a small business concern or certified
woman owned small business).


 


(c)          Any
person providing indemnification pursuant to the provisions of this Section 5.2 is hereinafter referred to as an “Indemnifying
Party” and any Person entitled to be indemnified pursuant to the provisions of this Section 5.2 is hereinafter referred
to as an “Indemnified Party.”


 


5.3 Procedures
for Third Party Claims. In the case of any claim for indemnification arising from a claim of a third party (a “Third
Party Claim”), an Indemnified Party shall give prompt written notice to the Indemnifying Party of any claim or demand
which such Indemnified Party has knowledge and as to which it may request indemnification hereunder. The Indemnifying Party shall
have the right to defend and to direct the defense against any such Third Party Claim, in its name or in the name of the Indemnified
Party, as the case may be, at the expense of the Indemnifying Party, and with counsel selected by the Indemnifying Party unless
(i) such Third Party Claim seeks an order, injunction or other equitable relief against the Indemnified Party, or (ii) the Indemnified
Party shall have reasonably concluded that (iii) there is a conflict of interest between the Indemnified Party and the Indemnifying
Party in the conduct of the defense of such Third Party Claim or (iv) the Indemnified Party has one or more defenses not available
to the Indemnifying Party. Notwithstanding anything in this Agreement to the contrary, the Indemnified Party shall, at the expense
of the Indemnifying Party, cooperate with the Indemnifying Party, and keep the Indemnifying Party fully informed, in the defense
of such Third Party Claim. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with
counsel employed at its own expense; provided, however, that, in the case of any Third Party Claim described in clause (i) or
(ii) or as to which the Indemnifying Party shall not in fact have employed counsel to assume the defense of such Third Party Claim,
the reasonable fees and disbursements of such counsel shall be at the expense of the Indemnifying Party. The Indemnifying Party
shall have no indemnification obligations with respect to any Third Party Claim which shall be settled by the Indemnified Party
without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. Promptly
following the final determination of any Third Party Claim, after exhausting all appeals if the matter was appealed, the Indemnifying
Party shall pay any Losses to the Indemnified Party by wire transfer or check made payable to the order of the Indemnified Party.


 




    	STOCK PURCHASE AGREEMENT – 32	 



     


    

 


5.4           Procedures
for Inter-Party Claims. All claims for Losses or indemnification between the parties shall be made as set forth herein within
the Survival Period. In the event that an Indemnified Party determines that it has a claim for Losses against an Indemnifying
Party hereunder (other than as a result of a Third Party Claim), the Indemnified Party shall give prompt written notice thereof
to the Indemnifying Party, specifying the amount of such claim and any relevant facts and circumstances relating thereto. The
Indemnified Party shall provide the Indemnifying Party with reasonable access to its books and records for the purpose of allowing
the Indemnifying Party a reasonable opportunity to verify any such claim for Losses. The Indemnified Party and the Indemnifying
Party shall negotiate in good faith regarding the resolution of any disputed claims for Losses. Any disputed claims that cannot
be resolved shall be resolved under the provisions of Section 7.8 of this Agreement. Promptly following the final determination,
after exhausting all appeals if the matter could be and was appealed, of the amount of any Losses claimed by the Indemnified Party,
the Indemnifying Party shall pay such Losses to the Indemnified Party by wire transfer or check made payable to the order of the
Indemnified Party, without interest.


 


5.5           Insurance
Proceeds. The amount of Losses for which any Indemnified Party is entitled to indemnification under this Agreement shall be
reduced by the amount of insurance proceeds actually received by any such Indemnified Party in respect of any such Losses (net
of any applicable deductibles or similar costs of recovery and expenses incurred by and such Indemnified Party in connection with
recovering such insurance proceeds (such insurance proceeds, after such reductions, hereinafter referred to as the “Net
Insurance Proceeds”)). In the event that any such insurance Proceeds are not received or realized, as applicable, by
an Indemnified Party until after an indemnification claim has been paid hereunder, then the amount of the Net Insurance Proceeds,
as the case may be, will be applied first, to refund any payments made by an Indemnifying Party which would not have been paid
had such recovery been made or such benefit been realized, as applicable, prior to payment and, second, any excess to the Indemnified
Party.


 


ARTICLE VI


TAX MATTERS


 


6.1           Responsibility
for Filing Tax Returns. The Company shall prepare and file all Company tax returns that are due on or prior to the Closing
Date. The Seller, on or prior to the Closing, shall pay all taxes payable with respect to such tax returns. Seller, at Seller’s
cost and expense, shall cause to be prepared on behalf of the Company the IRS Form 1120S (and any comparable state and local S
corporation income tax returns) for all taxable years ending prior to and on the Closing Date (collectively “S Corporation
Returns”). Buyer shall make the Company’s books and records available to Seller or their representatives for this
purpose at all reasonable times. Buyer shall cause the Company to prepare and file all other tax returns of the Company that are
due after the Closing Date at Buyer’s expense, and Buyer shall insure that the Company pays all taxes payable with respect
to such tax returns.


 




    	STOCK PURCHASE AGREEMENT – 33	 



     


    

 


6.2           Interim
Closing of Books. Buyer and Seller agree that an election under Section 1377(a)(2) of the Code shall be filed with the Company’s
relevant short-year S corporation return, if any, so that Seller will include in his individual income tax return, his share of
the Company’s income, gain, loss, deduction or credit items for the taxable period commencing January 1, 2016 and ending
at the close of business on the Closing Date. Buyer shall be responsible for any and all Taxes after the Closing Date and shall
be responsible for any and all Taxes related to the termination of Company’s S Election as of the Closing Date.


 


6.3           Cooperation.
Buyer and Seller shall fully cooperate, as and to the extent reasonably requested by the other party, in connection with any tax
audit, litigation or other proceeding with respect to Company’s taxes. The party requesting such cooperation shall pay the
reasonable out-of-pocket expenses of the other party.


 


ARTICLE VII

MISCELLANEOUS


 


7.1           Termination
of Agreement. This Agreement shall terminate on August 12, 2016, unless the Closing occurs pursuant to Section 1.5 on
or before that date, or the Closing is extended beyond August 12, 2016, upon the mutual written consent of all the parties.


 


7.2           Amendment.
The parties hereto may, by mutual agreement, in writing, amend this Agreement in any respect.


 


7.3           Notices.
All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving party’s
address set forth below and shall be either (i) delivered by hand, (ii) sent by recognized overnight courier, or (iii) sent by
registered or certified mail, return receipt requested, postage paid. All notices, requests, consents and other communications
hereunder shall be deemed to have been received (i) if by hand, at the time of delivery thereof to the receiving party at the
address of such party set forth below, (ii) if sent by overnight courier, on the day such notice is delivered by the courier service,
or (iii) if sent by registered or certified mail, on the 3rd Business Day following the day such mailing is made.


 


Notices shall be addressed
as follows:


 


	 	If to the Buyer, to:	
        Michael Bannon, CEO

        Drone USA, LLC

        140 Broadway, Suite 4614

        New York, NY 10005



 




    	STOCK PURCHASE AGREEMENT – 34	 



     


    

 


	 	With Copies To:	
        Peder K. Davisson, Esq.

        Davisson & Associates, PA

        4124 Quebec Avenue North, Suite 306

        Minneapolis, MN 55427

        (763) 355-5678

        pederd@davissonpa.com

	 	 	 
	 	If to Seller, to:	
        Paul C. Joy and Kathryn B. Joy

        2747 NW 32nd Avenue

        Camas, WA 98607

	 	 	 
	 	With Copies To:	
        William C. Dudley, Esq.

        Landerholm P.S.

        805 Broadway Suite 1000

        Vancouver, WA 98660

        (360) 696-3312

        William.dudley@landerholm.com



 


7.4           Entirety
of Agreement. This Agreement embodies the entire agreement between the parties and supersedes all prior agreements and understandings
between the parties, which shall hereafter be without force and effect.


 


7.5           Persons
Bound by Agreement. The conditions, terms, provisions, and covenants contained in this Agreement shall apply to, inure to the
benefit of, and be binding upon the parties hereto and their respective heirs, legal representatives, successors, and assigns.


 


7.6           Multiple
Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original for all purposes
and all of which shall be deemed, collectively, one agreement, but, in making proof hereof, it shall never be necessary to exhibit
more than one such counterpart. Facsimile signatures or signatures by PDF or comparable format shall be acceptable.


 


7.7           Governing
Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington without reference
to principles of conflicts of laws.


 


7.8           Jurisdiction.
The parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in
the State or Federal Courts located in the state of Washington. Each of the parties hereto waives to the extent permitted under
applicable law, any right each may have to assert the doctrine of forum non-conveniens or to object to venue to the extent any
proceeding is brought in accordance with this section relating to this Agreement. In any action brought by a party under this Section
7.8, the successful party shall be entitled to reimbursement from the other party for all costs involved in such action, including
reasonable attorneys’ fees.


 




    	STOCK PURCHASE AGREEMENT – 35	 



     


    

 


7.9           Certain
Definitions. For purposes of this Agreement, the following terms, in their capitalized forms, shall have the correspondingly
ascribed meanings:


 


“Affiliate”
means, with respect to any specified Person, any other Person who, directly or indirectly, through one or more intermediaries,
Controls, is Controlled By, or is Under Common Control With, such specified Person.


 


“Authorization”
means any authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Authority
or pursuant to any Law.


 


“Beneficial
Owner” with respect to any shares means a Person who shall be deemed to be the beneficial owner of such shares (i) which
such Person or any of its Affiliates or associates (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such Person or any of its Affiliates or associates has, directly or indirectly, (A) the
right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote pursuant to any agreement, arrangement or understanding, (iii) which are beneficially owned, directly
or indirectly, by any other Persons with whom such Person or any of its Affiliates or associates or any Person with whom such Person
or any of its Affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of any such shares, or (iv) pursuant to Section 13(d) of the Exchange Act and any rules or regulations promulgated
thereunder.


 


“Benefit Plan”
means any “employee benefit plan” as defined in 3(3) of ERISA, including any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan (as defined in ERISA Section 3(2)), (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined benefit retirement
plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan (as defined in ERISA Section 3(37)),
(d) Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material fringe benefit plan or program, or (e) stock purchase,
stock option, severance pay, employment, change-in-control, vacation pay, company awards, salary continuation, sick leave, excess
benefit, bonus or other incentive compensation, life insurance, or other employee benefit plan, contract, program, policy or other
arrangement, whether or not subject to ERISA.


 


“Business Day”
means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day other than Saturday, Sunday or other day on which banks located in New York
City are required or authorized by Law to close.


 


“Calculation
Period” means each of the calendar years ending December 31, 2016 and December 31, 2017 respectively.


 


“CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.


 




    	STOCK PURCHASE AGREEMENT – 36	 



     


    

 


“Company ERISA
Affiliate” means any entity which is a member of a “controlled group of corporations” with, under “common
control” with or a member of an “affiliated services group” with, the Company or any of its Subsidiaries, as
defined in Section 414(b), (c), (m) or (o) of the Code.


 


“Company Gross
Profit” means the gross profit (total income less cost of goods sold) of the Company determined consistent with historical
practices of the Company and the most recent Company Income Statements.


 


“Contaminant”
means, in relation to any Software, any virus or other intentionally created, undocumented contaminant.


 


“Contract”
means any currently existing agreement, contract, license, lease, commitment, arrangement or understanding, written or oral,
including any sales order and purchase order.


 


“Control”
(including the terms “Controlled By” and “Under Common Control With”) means the possession,
directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, as trustee or executor, by Contract or credit arrangement or
otherwise.


 


“Copyrights”
means registered and unregistered copyrights in both published and unpublished works.


 


“Disabling Codes”
means, with respect to any Software, any disabling codes or related instructions.


 


“Environment”
means all air, surface water, groundwater, land, including land surface or subsurface, including all fish, wildlife, biota
and all other natural resources.


 


“Environmental
Action” means any Proceeding brought or threatened under any Environmental Law or otherwise asserting the incurrence
of Environmental Liabilities.


 


“Environmental
Clean-Up Site” means any location which is listed on the National Priorities List, the Comprehensive Environmental Response,
Compensation and Liability Information System, or on any similar state or foreign list of sites requiring investigation or cleanup,
or which is the subject of any pending or threatened Proceeding related to or arising from any alleged violation of any Environmental
Law, or at which there has been a threatened or actual Release of a Hazardous Substance.


 


“Environmental
Laws” means any and all applicable Laws and Authorizations issued, promulgated or entered into by any Governmental Authority
relating to the Environment, worker health and safety, preservation or reclamation of natural resources, or to the management,
handling, use, generation, treatment, storage, transportation, disposal, manufacture, distribution, formulation, packaging, labeling,
Release or threatened Release of or exposure to Hazardous Substances, whether now existing or subsequently amended or enacted,
including but not limited to: CERCLA; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Clean
Air Act, 42 U.S.C. Section 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300(f) et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. Section
136 et seq.; RCRA; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Oil Pollution Act of 1990,
33 U.S.C. Section 2701 et seq.; and any similar or implementing state or local Law, and any non-U.S. Laws and regulations
of similar import, and all amendments or regulations promulgated thereunder; and any common law doctrine, including but not limited
to, negligence, nuisance, trespass, personal injury, or property damage related to or arising out of the presence, Release, or
exposure to Hazardous Substances.


 




    	STOCK PURCHASE AGREEMENT – 37	 



     


    

 


“Environmental
Liabilities” means, with respect to any party, Liabilities arising out of (A) the ownership or operation of the business
of such party or any of its Subsidiaries, or (B) the ownership, operation or condition of the Real Property or any other real property
currently or formerly owned, operated or leased by such party or any of its Subsidiaries, in each case to the extent based upon
or arising out of (i) Environmental Law, (ii) a failure to obtain, maintain or comply with any Environmental Permit, (iii) a Release
of any Hazardous Substance, or (iv) the use, generation, storage, transportation, treatment, sale or other off-site disposal of
Hazardous Substances.


 


“Environmental
Permit” means any Authorization under Environmental Law, and includes any and all Orders issued or entered into by a
Governmental Authority under Environmental Law.


 


“ERISA”
means the U.S. Employee Retirement Income Security Act of 1974, as amended.


 


“Exchange Act”
means the U.S. Securities Exchange Act of 1934, as amended.


 


“GAAP”
means U.S. Generally Accepted Accounting Principles.


 


“Governmental
Authority” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions
of or pertaining to United States federal, state, local, or municipal government, foreign, international, multinational or other
government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory,
administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations
or orders of such body have the force of Law.


 


“Government
Contracts” means any Contract or transaction (a) between the Company and a Government Authority or (b) entered into by
the Company as a subcontractor in connection with a contract between another Person and a Government Authority.


 


“Hazardous Substances”
means all explosive or regulated radioactive materials or substances, hazardous or toxic materials, wastes or chemicals, petroleum
and petroleum products (including crude oil or any fraction thereof), asbestos or asbestos containing materials, and all other
materials, chemicals or substances which are regulated by, form the basis of liability or are defined as hazardous, extremely hazardous,
toxic or words of similar import, under any Environmental Law, including materials listed in 49 C.F.R. Section 172.101 and materials
defined as hazardous pursuant to Section 101(14) of CERCLA.


 




    	STOCK PURCHASE AGREEMENT – 38	 



     


    

 


“Indebtedness”
means any of the following: (a) any indebtedness for borrowed money, (b) any obligations evidenced by bonds, debentures, notes
or other similar instruments, (c) any obligations to pay the deferred purchase price of property or services, except trade accounts
payable and other current Liabilities arising in the Ordinary Course of Business, (d) any obligations as lessee under capitalized
leases, (e) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired
property, (f) any obligations, contingent or otherwise, under acceptance credit, letters of credit or similar facilities, and (g)
any guaranty of any of the foregoing.


 


“Intellectual
Property” means: (i) Proprietary Information; (ii) trademarks and service marks (whether or not registered), trade names,
logos, trade dress and other proprietary indicia and all goodwill associated therewith; (iii) documentation, advertising copy,
marketing materials, web-sites, specifications, mask works, drawings, graphics, databases, recordings and other works of authorship,
whether or not protected by Copyright; (iv) Software; and (v) Intellectual Property Rights, including all Patents, Copyrights,
Marks, trade secret rights, mask works, moral rights or other literary property or authors rights, and all applications, registrations,
issuances, divisions, continuations, renewals, reissuances and extensions of the foregoing.


 


“Intellectual
Property Rights” means all forms of legal rights and protections that may be obtained for, or may pertain to, any Intellectual
Property in any country of the world.


 


“Knowledge”
of a given party (or any similar phrase) means, with respect to any fact or matter, the actual knowledge of such Person or
in the event such Person is other than an individual, the actual knowledge of the directors and management of such party and each
of its Subsidiaries.


 


“Law”
means any statute, law (including common law), constitution, treaty, ordinance, code, order, decree, judgment, rule, regulation
and any other binding requirement or determination of any Governmental Authority.


 


“Liability”
or “Liabilities” means any liability, Indebtedness or obligation of any kind, whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
whether secured or unsecured, whether joint or several, whether due or to become due, whether vested or unvested, including any
liability for Taxes.


 


“Liens”
means any liens, claims, charges, security interests, mortgages, pledges, easements, conditional sale or other title retention
agreements, defects in title, covenants or other restrictions of any kind, including, any restrictions on the use, voting, transfer
or other attributes of ownership.


 




    	STOCK PURCHASE AGREEMENT – 39	 



     


    

 


“Marks”
means trademarks, service marks and other proprietary indicia (whether or not registered).


 


“Material Adverse
Effect” means, with respect to any Person, any state of facts, development, event, circumstance, condition, occurrence
or effect that, individually or taken collectively with all other preceding facts, developments, events, circumstances, conditions,
occurrences or effects (a) is materially adverse to the condition (financial or otherwise), business, operations or results of
operations of such Person, (b) impairs the ability of such Person to perform its obligations under this Agreement.


 


“Operative Agreements”
means, collectively, this Agreement, the Promissory Note, the Security Agreements, the Bleed-Out Agreement, and the Employment
Agreements.


 


“Order”
means any award, injunction, judgment, decree, stay, order, ruling, subpoena or verdict, or other decision entered, issued
or rendered by any Governmental Authority.


 


“Ordinary Course
of Business” means the ordinary course of business consistent with past custom and practice (including with respect to
quantity and frequency).


 


“Patents”
means letters patent, patent applications, provisional patents, design patents, PCT filings, invention disclosures and other
rights to inventions or designs.


 


“PCAOB”
means the Public Company Accounting Oversight Board.


 


“PCBs”
means polychlorinated biphenyls.


 


“Permitted Liens
and Liabilities” means, with respect to any party, (i) Liens for current real or personal property taxes not yet due
and payable and with respect to which such party maintains adequate reserves, (ii) workers’, carriers’ and mechanics’
or other like Liens incurred in the Ordinary Course of Business with respect to which payment is not due and that do not impair
the conduct of such party’s or any of its Subsidiaries’ business in any material respect or the present or proposed
use of the affected property, (iii) Liens that are immaterial in character, amount, and extent and which do not detract from the
value or interfere with the present or proposed use of the properties they affect, and (iv) the accepted liabilities of the Company.


 


“Person”
means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, Governmental
Authority, a person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act),
or any political subdivision, agency or instrumentality of a Governmental Authority, or any other entity or body.


 


“Proceeding”
or “Proceedings” means any actions, suits, claims, hearings, arbitrations, mediations, Proceedings (public
or private) or governmental investigations that have been brought by any governmental authority or any other Person.


 




    	STOCK PURCHASE AGREEMENT – 40	 



     


    

 


“Proprietary
Information” means, collectively, inventions (whether or not patentable), trade secrets, technical data, databases, customer
lists, designs, tools, methods, processes, technology, ideas, know-how, source code, product road maps and other proprietary information
and materials.


 


“Public Software”
means any Software that contains, or is derived in any manner (in whole or in part) from, any Software that is distributed
as free Software, open source Software or similar licensing or distribution models, including Software licensed or distributed
under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following:
(i) GNU’s General Public License or Lesser/Library GPL; (ii) Mozilla Public License; (iii) Netscape Public License; (iv)
Sun Community Source/ Industry Standard License; (v) BSD License; and (vi) Apache License.


 


“RCRA”
means the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq.


 


“Release”
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of Hazardous Substances into the Environment.


 


“Securities
Act” means the U.S. Securities Act of 1933, as amended.


 


“SEC”
means the U.S. Securities and Exchange Commission.


 


“Software”
means, collectively, computer programs, including any and all software implementations of algorithms, models and methodologies,
whether in source code or object code, design documents, flow-charts, user manuals and training materials relating thereto and
any translations thereof.


 


“Subsidiary”
or “Subsidiaries” means, with respect to any party, any Person, of which (a) such party or any subsidiary
of such party is a general partner (excluding partnerships, the general partnership interests of which held by such party or any
Subsidiary of such party do not have a majority of the voting interest in such partnership) or (b) at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing
similar functions with respect to such Person is directly or indirectly owned or controlled by such party and/or by any one or
more of its subsidiaries.


 


“Systems”
means, in relation to any Person, any of the hardware, software, databases or embedded control systems thereof.


 


“Tax”
or “Taxes” means any and all federal, state, local, or foreign net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add-on minimum, environmental (including taxes under Code §59A), profits, windfall profits, transaction,
license, lease, service, service use, occupation, severance, energy, unemployment, social security, workers’ compensation,
capital, premium, and other taxes, assessments, customs, duties, fees, levies, or other governmental charges of any nature whatever,
whether disputed or not, together with any interest, penalties, additions to tax, or additional amounts with respect thereto.


 




    	STOCK PURCHASE AGREEMENT – 41	 



     


    

 


“Tax Returns”
means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.


 


“Taxing Authority”
means any Governmental Authority having jurisdiction with respect to any Tax.


 


“$”
means United States dollars.


 


[signatures on following page]


 




    	STOCK PURCHASE AGREEMENT – 42	 



     


    

 


IN WITNESS WHEREOF, the parties have
executed this Agreement to be effective August 4, 2016.


 


	 	BUYER:
	 	 
	 	DRONE USA, LLC
	 	 
	 	/s/ Michael Bannon
	 	Michael Bannon, President 
	 	 
	 	SELLER:
	 	 
	 	Paul C. Joy and Kathryn B. Joy Trust – Fund B, dated December 9, 2003
	 	 
	 	/s/ Paul Charles Joy, II
	 	Paul Charles Joy, II, Trustee
	 	 
	 	Paul C. Joy and Kathryn B. Joy Trust – Fund C, dated December 9, 2003
	 	 
	 	/s/ Kathryn Blake Joy
	 	Kathryn Blake Joy, Trustee
	 	 
	 	HOWCO DISTRIBUTING CO.
	 	 
	 	/s/ Paul Charles Joy, II
	 	Paul Charles Joy,
    II, Vice President


 


	 	/s/ Kathryn Blake Joy
	 	Kathryn Blake Joy, President



 




    	STOCK PURCHASE AGREEMENT – i	 



     


    

 


SELLER DISCLOSURE SCHEDULE


 


See attached.


 




    	SELLER DISCLOSURE SCHEDULE – 1	 



     


    

 


SELLER DISCLOSURE SCHEDULE


 


Section 2.1


Equity or Similar Interests owned by
Company


 


None.


 


Section 2.4(a)


Options, Warrants, or Other Equity Interests


 


None.


 


Section 2.4(c)


Other Voting Rights


 


None.


 


Section 2.6


Required Company Consent


 


1.          Government
Contracts - to be determined by Buyer.


2.          Real
Property Lease - consent of Landlord.


 




     


     


    

 


Section 2.6(iii)


Resulting Breaches, Defaults, Liens,
or Other Encumbrances


 


1.          Government
Contracts - to be determined by Buyer.


2.          Real
Property Lease - consent of Landlord.


 


Section 2.7(a)


Law, Permits, and Other Authorizations


 


None.


 


Section 2.8


Financial Statements


 


See attached.


 


Section 2.9


Uncollectible Accounts Receivable


 


None.


 




    	SELLER DISCLOSURE SCHEDULE - 2	 



     


    

 


Section 2.10


Other Material Liabilities


 


None.


 


Section 2.11(a)


Tax Matters


 


None.


 


Section 2.11(b)


Tax Withholding and Reporting


 


None.


 


Section 2.11(c)


Tax Filing Extensions or Waivers of Statute
of Limitations


 


None.


 




    	SELLER DISCLOSURE SCHEDULE - 3	 



     


    

 


Section 2.11(d)


Tax Returns Under Audit


 


None.


 


Section 2.11 (e)


Tax Filing Jurisdictions


 


		1.	Washington and Federal.



 


Section 2.11(k)


Disqualified Individuals


 


None.


 


Section 2.11(1)


Amounts in Excess of Reserve for Tax
Liability


 


None.


 




    	SELLER DISCLOSURE SCHEDULE - 4	 



     


    

 


Section 2.14


Non-Merchantable or Unfit Inventory


 


None.


 


Section 2.15


Non-Conforming Products


 


None.


 


Section 2.17(a)


Company-Owned Real Property and Company-Leased
Real Property


 


		1.	Real Property Lease between Steve Strong dba Creekside Business
Park as Lessor, and Howco Distributing Company as Lessee, dated April 28, 2009 for space commonly known as 6025 East 18th
Street, Vancouver, Washington, 98661 (a copy of which has been provided to Buyer).



 


Section 2.18(a)


Company-Owned Intellectual Property


 


None.


 




    	SELLER DISCLOSURE SCHEDULE - 5	 



     


    

 


Section 2.18(b)


Company in-Bound Licenses


 


None.


 


Section 2.18(c)


Company Out-Bound Licenses


 


None.


 


Section 2.18(d)


Invalidity, Unenforceability or Violations
of

Company In-Bound Licenses or Company Out-Bound Licenses


 


None.


 


Section 2.18(e)


Exceptions to Intellectual Property Ownership
or Rightful Use


 


None.


 




    	SELLER DISCLOSURE SCHEDULE - 6	 



     


    

 


Section 2.18(f)


Exceptions to Company Registered Intellectual
Property

Registration, Maintenance, Renewal, Good Standing, Compliance, and Validity


 


None.


 


Section 2.18(g)


Challenges to Validity or Enforceability
of Company Intellectual Property;

Actions Impacting Enforceability of Company Intellectual Property


 


None.


 


Section 2.18(h)


Actual, Potential, or Alleged Infringement


 


None.


 


Section 2.18(j)


Exceptions to Employee/Contractor

Confidentiality, Non-Compete, and Non-Solicitation Agreements


 


None.


 




    	SELLER DISCLOSURE SCHEDULE - 7	 



     


    

 


Section 2.19(b)


Company Material Contracts


 


		1.	Real Property Lease



		2.	Plan Advice and Consulting Program Services Agreement – Cetera
Advisors, LLC



		3.	Contract No. HSCG40-13-D-51006 (USCG Surface Forces Logistics
Center)



		4.	Contract No. SPE7MC-14-D-5013 (DLA Land and Maritime)



		5.	Contract No. SPM7LX-11-D-9032 (Solicitation No. SPM7LX-09-R-0062)



		6.	Contract No. SPE7L3-15-D-5019



		7.	Contract No. SPE4A6-14-D-7025



		8.	Contract No. SPE4A6-14-D-5751



		9.	Contract No. SPE4A6-14-D-0100



		10.	Contract No. SPM7MX-11-D-0088



		11.	Contract No. SPE4A6-15-D-5260



		12.	Contract No. SPE7LX-15-D-0148



		13.	Contract No. SPE7MX-15-D-0113



		14.	Contract No. SPE7MX-51-D-0090



		15.	Contract No. SPE4A6-15-D-5943



		16.	Contract No. SPE4A6-15-D-5466



		17.	Contract No. SPE4A6-15-D-5524



		18.	Contract No. SPE4A6-16-D-5018



		19.	Contract No. SPE4A6-16-D-5112



		20.	Contract No. SPE4A6-16-D-5134



		21.	Contract No. SPE4A6-16-D-5827



		22.	Contract No. SPE4A6-16-D-5824



		23.	Contract No. SPM7LX-14-D-0025



		24.	Contract No. SPM7MX-12-D-9001



		25.	Associated Business Systems Maintenance Agreement



		26.	Contract No. SPE4A6-15-X-0228



		27.	Contract No. SPE4A6-16-D-5231



		28.	Copier Lease



		29.	Government Contracts



 


Section 2.20

Litigation


 


None.


 




    	SELLER DISCLOSURE SCHEDULE - 8	 



     


    

 


Section 2.21(a)


Benefit Plans


 


		1.	Kaiser Medical/Dental plans.



		2.	401(k) plan.



		3.	Long Term Disability plan.



 


Section 2.23(a)


Environmental Permits


 


None.


 


Section 2.24

Related Party Transactions


 


None.


 


Section 2.25


Material Insurance Policies and Material
Self-Insurance Arrangements


 


		1.	Copies of current Insurance Policies attached.



 




    	SELLER DISCLOSURE SCHEDULE - 9	 



     


    

 


Section 2.26

Absence of Certain Changes or Events


 


		1.	See Financial Statements for dividends/distributions.



		2.	See Section 4.5 of the Agreement for pre-Closing distribution
to Seller.



 


Section 2.28

Brokers or Finders


 


		1.	Fees due by Company under Broker Agreement with Piper Group
International, LLC, as amended. Will be paid by Seller, or paid by Company prior to Closing such that Company meets the requirements
of Section 4.5 of the Agreement.



 


Section 2.34

Change in Control or Similar Provisions


 


		1.	See Section 2.17(a) for Real Property Lease document. Must
obtain approval for assignment/subletting of Lease Agreement from Lessor (Section 12 of Lease).



 




    	SELLER DISCLOSURE SCHEDULE - 10	 



     


    

 


EXHIBIT A


Promissory Note


 


See attached.


 




    	EXHIBIT A – 1	 	 



     


    

 


Promissory
Note


 


	$900,000	Vancouver, Washington


 


THIS PROMISSORY
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS PROMISSORY NOTE MAY NOT BE SOLD, TRANSFERRED
OR PLEDGED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE MAKER THAT SUCH REGISTRATION IS NOT REQUIRED.


 


FOR VALUABLE CONSIDERATION
RECEIVED, the undersigned, on behalf of Drone USA, LLC., a Delaware limited liability company, its affiliates, successors and assigns,
(“Maker”), hereby promises to pay to Paul Charles Joy II, Trustee of the Paul C. Joy and Kathryn B. Joy Trust
– Fund B, dated December 9,2003, as amended and Kathryn Blake Joy, Trustee of the Paul C. Joy and Kathryn B. Joy Trust –
Fund C, dated December 9,2003, as amended (collectively, the “Lender” or “Holder”) at Lender’s
address at: 2747 NW 32nd Avenue, Camas, Washington 98607, or at any other place designed by the Lender hereof the principal
sum of Nine Hundred Thousand Dollars ($900,000), (the “Principal Sum”) together with interest thereon as set
forth below.


 


This Promissory Note
(“Note”) is issued pursuant to the terms of that certain Stock Purchase agreement between Drone USA, LLC., a
Delaware limited liability company and Lender of even date herewith (the “Stock Purchase Agreement”) pursuant
to which Maker is purchasing one hundred percent of the issued and outstanding securities of Howco Distributing Co., a Washington
corporation (the “Company”). All capitalized terms not otherwise defined herein shall have the definitions given
to them in the Stock Purchase Agreement. The terms of the Stock Purchase Agreement shall govern in the event of any inconsistencies
between this Note and the Stock Purchase Agreement.


 


1.           Maturity.
This Note shall be payable on or before September 9th, 2017.


 


2.           Payment
of Principal. The principal balance of Nine Hundred Thousand Dollars ($900,000) shall be paid on or before Maturity.


 


3.           Interest.
Simple interest shall be paid on or before Maturity at a rate of Five and One Half Percent (5 1/2%) per annum based upon a three
hundred sixty day (360) year. In the event of Maker’s default in any payment due hereunder for a period exceeding five (5)
business days from the date such payment is due, interest shall accrue on the unpaid principal and interest at a rate of eight
percent (8%) per annum.


 


4.           Prepayment.
This Note may be prepaid in whole or in part at any time without penalty, provided that any such prepayment shall be applied first
to accrued and unpaid interest with the remainder applied to reduction of principal.


 


5.           Security.
This Note is secured by the collateral described in and referred to in the Security Agreements between the Maker and Holder and
Company and Holder of even date herewith (the “Security Agreements”). The Holder is entitled to the benefits
of the Security Agreements and reference is made thereto for a description of the rights and remedies of the Holder thereunder.
Neither the reference to the Security Agreements nor any provisions thereof shall affect or impair the absolute and unconditional
obligation of the Maker to pay the principal amount hereof, together with interest accrued thereon, when due.


 




    	 	1	 



     


    

  


6.           Subordination.
By accepting this Note, the Lender agrees that all payments on account of the indebtedness, liabilities and other obligations of
the Maker to the Lender, including, without limitation, all amounts of principal, interest accrued hereon, and all other amounts
payable by the Maker to the Lender under this Note or in connection herewith, and any liens or security interests securing this
Note, shall be subordinated and subject in right of payment, to the extent and manner set forth herein, to the prior payment in
full in cash or cash equivalents of indebtedness and other obligations of the Maker and its parent, under pre-existing and future
financings not exceeding the total combined principal amount of $6,500,000 (inclusive of the debt financing made by the third party
lender in connection with the initial cash payment under the Stock Purchase Agreement and any bank credit agreements or lines of
credit) (collectively, the “Senior Debt”). Upon the incurrence by the Maker of new Senior Debt (the total of
all Senior Debt not exceeding a combined principal amount of $6,500,000), the Maker shall provide written notice to the Lender
within 30 days of the incurrence of such debt. The notice shall state the amount of such indebtedness and other obligations and
that, subject to this Section 6, such indebtedness and other obligations will be senior to the debt evidenced by this Note. Lender
agrees to timely execute and deliver any subordination agreement consistent with this Section 6 of this Note that may be required
in connection with such Senior Debt. Notwithstanding the foregoing or any other provision of this Note, Lender shall be
entitled to receive and retain all payments of principal and/or interest and/or costs or fees paid by Maker to Lender, which payments
were received by Lender prior to Lender’s receipt of written notice of default from the holder(s) of any Senior Debt.


 


7.           Waiver.
Maker waives demand, presentment, notice of nonpayment of dishonor, protest and notice of protest, and agrees that it shall continue
to remain liable to pay the unpaid balance of the indebtedness evidenced by this Note as extended, renewed, or modified. Maker
further agrees to pay all costs of collection, including attorney’s fees, in case any payment due hereunder shall not be
made when due or other default occurs.


 


8.           Definitions.
The following terms shall have the following meanings:


 


a.           an
“Act of Bankruptcy” shall mean if (i) the Maker shall (1) be or become insolvent, or (2) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of all or a substantial
part of Maker’s property, or (3) commence a voluntary case under any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding under the laws of any jurisdiction, or (4) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment
of debts, or (5) admit in writing any inability to pay such debts as they mature, or (6) make an assignment for the benefit of
creditors; or (ii) a proceeding or case shall be commenced, without the application or consent of Maker, in any court of competent
jurisdiction, seeking (1) the liquidation, reorganization, dissolution, winding up or the composition or adjustment of debts of
Maker, (2) the appointment of a trustee, receiver, custodian or liquidator or the like of Maker or of all or any substantial part
of such Maker’s property, or (3) similar relief in respect of Maker under any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts.


 




    	 	2	 



     


    

 


b.           “Affiliate”
shall mean any Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is
under common Control with, the Maker of this Note, or (ii) five percent (5%) or more of the equity interest of which is held beneficially
or of record by Maker of this Note.


 


c.           “Control”
shall mean the possession, directly or indirectly, of the power to cause the direction of management and policies of a Person,
whether through the ownership of voting securities or otherwise.


 


d.           “Person”
shall mean any natural person, corporation, partnership, joint venture, firm, association, trust, unincorporated organization,
government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other
capacity.


 


9.           Events
of Default. The occurrence of any one or more of the following events shall constitute an Event of Default:


 


a.           The
Maker shall fail to make when due, whether by acceleration or otherwise, any payment of principal of, or interest on, this Note
when due; or


 


b.           The
Maker shall fail to comply with any other material agreement, covenant, condition, provision or term contained in this Note, or
the Security Agreement (and such failure shall not constitute an Event of Default under any of the other provisions hereof); or


 


c.           An
Act of Bankruptcy shall occur; or


 


d.           A
judgment or judgments for the payment of money in excess of the sum of $250,000 in the aggregate shall be rendered against Maker
and Maker shall not pay or discharge the same or provide for its discharge in accordance with its terms, or procure a stay of execution
thereof, prior to any execution on such judgments by such judgment creditor, within 30 days from the date of entry thereof, and
within such period of 30 days, or such longer period during which execution of such judgment shall be stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal; or


 


e.           Any
property of Maker shall be garnished or attached in any proceeding and such garnishment or attachment; or


 


f.            The
maturity of any indebtedness of Maker (other than indebtedness under this Note) shall be accelerated, or Maker shall fail to pay
any such indebtedness when due or, in the case of such indebtedness payable on demand, when demanded, or any event shall occur
or condition shall exist and shall continue for more than the period of grace, if any, applicable thereto and shall have the effect
of causing or permitting (any required notice having been given and grace period having expired) the lender of any such indebtedness
or any trustee or other person acting on behalf of such lender to cause, such indebtedness to become due prior to its stated maturity
or to realize upon any collateral given as security therefore.


 




    	 	3	 



     


    

  


10.         Remedies.
If (a) any Event of Default described in paragraph 8(c) above shall occur, the outstanding unpaid principal balance of this Note,
the accrued interest thereon and all other obligations of the Maker to the Lender shall automatically become immediately due and
payable; or (b) any other Event of Default shall occur and be continuing, then the Lender may declare that the outstanding unpaid
principal balance of this Note, the accrued and unpaid interest thereon and all other obligations of the Maker to the Lender to
be forthwith due and payable, whereupon this Note, all accrued and unpaid interest thereon and all such obligations shall immediately
become due and payable, in each case without further demand or notice of any kind, all of which are hereby expressly waived, anything
in this Note to the contrary notwithstanding. In addition, upon any Event of Default, the Lender may exercise all rights and remedies
under any other instrument, document or agreement in favor of the Lender, and enforce all rights and remedies under any applicable
law.


 


11.         Representations,
Warranties and Covenants. To induce the Lender to carry the balance due under the Stock Purchase Agreement as a Lender represented
by this Note, the Maker hereby represents, warrants and covenants to the Lender:


 


a.           Organization,
Standing, Etc. The Maker is a limited liability company duly organized and validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority to carry on its businesses as now conducted, to enter
into this Note and to perform its obligations under this Note.


 


b.           Authorization
and Validity. The execution, delivery and performance by the Maker of the Note has been duly authorized by all necessary action
by the Maker, and constitutes the legal, valid and binding obligation of the Maker, enforceable against the Maker in accordance
with its terms, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other
similar laws affecting creditors’ rights generally and subject to limitations on the availability of equitable remedies.


 


c.           No
Conflict; No Default. The execution, delivery and performance by the Maker of the Note will not (i) violate any provision of any
law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental
agency or arbitrator presently in effect having applicability to the Maker, (ii) violate or contravene any provisions of the Articles
of Organization or Operating Agreement of the Maker, or (iii) result in a breach of or constitute a default under any indenture,
loan or credit agreement or any other agreement, lease or instrument to which the Maker is a party or by which it or any of its
properties may be bound or result in the creation of any lien on any asset of the Maker, other than liens in favor of the Lender.
The Maker is not in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction,
decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case
in which the consequences of such default or violation could constitute a material adverse event.


 


d.           Notice
Obligations. From the date of this Note and thereafter until the Maker’s obligations under this Note shall have been paid
in full, unless the Lender shall otherwise expressly consent in writing, the Maker agrees that the Maker will furnish to the Lender,
in writing, immediately upon becoming aware of the occurrence of an Event of Default, describing the nature thereof and what action
the Maker proposes to take with respect thereto.


 






    	 	4	 



     


    

 


12.         No
Waiver. No delay or failure on the part of the Lender in exercising any right or remedy hereunder, or at law or at equity,
shall operate as a waiver of or preclude the exercise of any such right or remedy, and no single or partial exercise by the Lender
of any such right or remedy shall preclude or estop another or further exercise thereof or exercise of any other right or remedy.
No waiver by the Lender hereof shall be effective unless in writing signed by the Lender. A waiver on any one occasion shall not
be construed as a waiver of any such right or remedy on any prior or subsequent occasion.


 


13.         Miscellaneous.


 


a.           Notices.
All notices required pursuant to the terms of this Note shall be in writing and either delivered personally or sent by United States
Mail. If sent by mail, notice shall be deemed given when deposited in the U.S. Mail, properly addressed and with postage prepaid.
Unless changed by written notice, the following addresses shall be used:


 


	To:	MAKER
	 	 
	 	Drone USA, LLC
	 	Attn: Michael Bannon, CEO
	 	One World Trade Center, 85th Floor
	 	285 Fulton Street
	 	New York, NY 10007
	 	 
	With Copies to:	Davisson & Associates, PA
	 	Attn: Peder K. Davisson
	 	4124 Quebec Avenue North, Suite 306
	 	Minneapolis, MN 55427
	 	 
	To:	LENDER


 


Paul Charles Joy
II, Trustee of the Paul C. Joy and Kathryn B. Joy Trust – Fund B, dated December 9, 2003, as amended and Kathryn Blake
Joy, Trustee of the Paul C. Joy and Kathryn B. Joy Trust – Fund C, dated December 9, 2003, as amended


 


	With Copies to:	Landerholm P. S.
	 	Attn: William C. Dudley
	 	805 Broadway, Suite 1000
	 	Vancouver, WA 98660


 


b.           Integration.
This Note, the Stock Purchase Agreement, and the Security Agreements embody the entire agreement and understanding between the
parties relating to the subject matter thereof and supersede all prior agreements and understandings relating to such subject matter.


 




    	 	5	 



     


    

 


c.           Governing
Law and Venue. This Note shall be construed and interpreted in accordance with the laws of the State of Washington without
reference to principles of conflicts of laws. The parties agree that all actions or proceedings arising in connection with this
Note shall be tried and litigated only in the State or Federal Courts located in the State of Washington. Each of the Maker and
Lender waives to the extent permitted under applicable law, any right each may have to assert the doctrine of forum non-conveniens
or to object to venue to the extent any proceeding is brought in accordance with this section.


 


d.           Binding
Effect. Except as herein otherwise provided to the contrary, this Note shall be binding upon, and inure to the benefit of,
the parties and their respective heirs, executors, administrators, successors and assigns.


 


IN
WITNESS WHEREOF, this Promissory Note has been executed as of the date set forth below.


 


	 	MAKER: DRONE USA, LLC
	 	 	 
	DATE: September 9th, 2016	By:	/s/ Michael Bannon
	 	 	Michael Bannon, CEO


 








    	 	6	 



     


    

 


EXHIBIT A2


Security Agreement


 


See attached.


 




    EXHIBIT A2 – 1


     


    

 


SECURITY AGREEMENT - HOWCO ASSETS


 


	DATE:	September
    9th     , 2016
	 	 
	DEBTOR:	
        HOWCO DISTRIBUTING CO.,

        a Washington Corporation

        Tax I.D. #93-1033165      

        Organization I.D. #___________

        Attn: Mr. Michael Bannon, CEO

        Drone USA, LLC

        140 Broadway, Suite 4614

        New York, NY 10005

	 	 
	SECURED PARTY:	Paul Charles Joy II, Trustee of the Paul C. Joy and Kathryn B. Joy Trust – Fund B, dated December 9, 2003, as amended, and Kathryn Blake Joy, Trustee of the Paul C. Joy and Kathryn B. Joy Trust – Fund C, dated December 9, 2003, as amended


 


WHEREAS Secured Party, Debtor, and Drone
USA, LLC, a Delaware limited liability company (“Drone USA”) have entered into a Stock Purchase Agreement of
even date herewith (the “Stock Purchase Agreement”) whereby Secured Party sold 100 percent of the issued and
outstanding shares of stock in the Debtor to Drone USA; and


 


WHEREAS Drone USA issued a promissory
note to the Secured Party in the amount of Nine Hundred Thousand Dollars ($900,000) of even date herewith (the “Note”);
and


 


WHEREAS the parties have agreed that the
Note should be secured by the assets of the Debtor as described herein, and the parties have agreed that due to the relationship
between the Debtor and Drone USA, that good and valuable consideration exists for the granting of the security interest stated
herein.


 


NOW, THEREFORE, the parties hereby agree
that these recitals shall be deemed incorporated into the following Security Agreement (“Agreement”), and hereby
further agree as follows:


 


1.           Security
Interest and Collateral. To secure the payment of outstanding principal and interest on that certain Nine Hundred Thousand
Dollar ($900,000) Promissory Note of even date herewith made by Drone USA to Secured Party (“Note”) in connection
with the Stock Purchase Agreement and to secure payments of principal and interest due thereunder (the “Obligations”),
Debtor hereby grants Secured Party a security interest subordinated to the security interest granted to TCA Global Master Fund,
LP, its successors, assigns and/or any substituted lender(s) as provided in the Note (the “Subordinated Security Interest”)
in all items of Debtor’s property described in each of the three UCC-l’s and Exhibit A attached hereto and made a
part hereof (collectively, the “Collateral”).


 


2.           Representations,
Warranties and Agreements. Debtor represents, warrants and agrees that:


 




    	 	1	 



     


    

 


2.1.          Debtor
is an entity duly organized, validly existing and in good standing under the laws of the state of Washington. Debtor has full power
and authority to execute this Agreement, to perform the obligations hereunder and to subject the Collateral to the Subordinated
Security Interest. Debtor’s taxpayer identification number is the number shown at the beginning of this Agreement. Debtor’s
organizational identification number is the number shown at the beginning of this Agreement.


 


2.2.          Debtor’s
chief place of business is located at the addresses shown at the beginning of this Agreement. Debtor’s records
concerning its accounts and contract rights are kept at such address. The Collateral is located at 6025-B East
18th Street, Vancouver, Washington, 98661, and there are no other locations where any of the Collateral may be
kept except as set forth on Schedule 2.2 hereto. All Collateral has been located at the address shown at the beginning of
this Agreement or at the locations set forth on Schedule 2.2. Debtor will give at least 30 days advance written notice to
Secured Party of any change in their jurisdiction of organization or chief place of business and any change in or addition of
any Collateral location. Debtor will take all such actions as Secured Party may reasonably request to permit Secured Party to
establish and perfect the Subordinated Security Interest in all jurisdictions Secured Party deems necessary, including but
not limited to the execution, delivery or endorsement of any and all instruments, documents, assignments, security agreements
and other agreements and writings that Secured Party may at any time reasonably request in order to secure, protect, perfect
or enforce the Subordinated Security Interest and Secured Party’s rights under this Agreement.


 


2.3.          Debtor
has (or will have at the time Debtor acquires rights in Collateral) absolute title to each item of Collateral free and clear of
all security interests, liens and encumbrances other than the security interest of TCA Global Master Fund, LP, its successors,
assigns and/or any substituted lender(s) (the “TCA Security Interest”). Debtor will keep all Collateral free and clear
of all security interests, liens and encumbrances except the Subordinated Security Interest, and will defend the Collateral against
all claims or demands of all persons other than Secured Party. Debtor will promptly pay or properly and timely contest all taxes
and other governmental charges levied or assessed upon or against any Collateral.


 


2.4.          Until
the Obligations are satisfied in full, the Debtor will not, without Secured Party’s prior written consent, sell any of the
Collateral or enter into any agreement that is inconsistent with Debtor’s obligations or Secured Party’s rights under
this Agreement, except that Debtor may sell the Collateral in the ordinary course of business so long as such agreements are not
inconsistent with Secured Party’s rights or Debtor’s obligations under this Agreement. Debtor further agrees that it
will not take any action, or permit any action to be taken by others under its control, or fail to take any action that would affect
the validity of the Collateral or enforcement of Secured Party’s rights in the Collateral.


 


2.5.          This
Agreement has been duly and validly authorized by all necessary action by Debtor.


 


2.6.          Debtor
will keep all tangible Collateral in good repair, working order and condition, normal depreciation excepted, and will, from time
to time, replace any worn, broken or defective parts thereof.


 




    	 	2	 



     


    

 


2.7.          Debtor
will at all reasonable times permit Secured Party or its representatives to examine or inspect any Collateral, wherever located,
and to examine, inspect and copy Debtor’s books and records solely pertaining to the Collateral.


 


2.8.          Debtor
will at all times keep all tangible Collateral insured against risks of fire (including so-called extended coverage), theft, and
such other risks and in such amounts as Secured Party may reasonably request, with any loss payable to Secured Party to the extent
of its interest and subject to the TCA Security Interest.


 


2.9.          Debtor
will be responsible for out of pocket expenses (including all reasonable attorneys’ fees and costs) incurred by Secured Party
in connection with the perfection, satisfaction, protection, defense or enforcement of the Security Interest or the creation, continuance,
protection, defense or enforcement of this Agreement or any or all of the Obligations, including expenses incurred in any litigation
or bankruptcy or insolvency proceedings.


 


2.10.         The
Obligations have been incurred and the Collateral will be used primarily for business purposes.


 


2.11.         Debtor
will promptly notify Secured Party of any material loss of or damage to any Collateral or of any adverse change in the prospect
of payment of any material sums due on or under any instrument, chattel paper, account or contract right constituting Collateral.


 


2.12.         Debtor
will from time to time execute such financing statements or control agreements as Secured Party may reasonably deem necessary in
order to perfect the Subordinated Security Interest and, if any Collateral is covered by a certificate of title, execute such documents
as may be required to have the Subordinated Security Interest properly noted on a certificate of title. In addition, Debtor authorizes
Secured Party to file such financing statement(s) as the Secured Party deems necessary, describing any liens held by Secured Party
and describing the relative position with respect to the TCA Security Interest.


 


2.13.         Debtor
will not use or keep any Collateral, or permit it to be used or kept, for any unlawful purpose or in violation of any federal,
state or local law, statute or ordinance.


 


3.           Events
of Default. The occurrence of any of the following shall, at the option of the Secured Party, be an Event of Default (“Event
of Default”):


 


3.1.          any
“Event of Default” (as defined in such agreement) by Drone USA or Debtor under the Note, the Stock Purchase Agreement,
or any other document evidencing the Obligations;


 


3.2.          transfer
or disposition of any of the Collateral, except as permitted by this Agreement;


 


3.3.          Debtor’s
failure to comply with any other representation, warranty or covenant hereunder if not cured within ten (10) business days after
written notice; or


 




    	 	3	 



     


    

 


3.4.          attachment,
execution or levy on any of the Collateral.


 


4.           Remedies
upon Event of Default. Upon the occurrence of an Event of Default and at any time thereafter (except in the case of an Event
of Default identified in Section 3.1 of this Agreement, in which case Debtor shall have a 10 day opportunity to cure following
notice to Drone USA), Secured Party may exercise any one or more of the following rights and remedies:


 


4.1.          declare
all Obligations to be immediately due and payable, which shall then be immediately due and payable, without presentment or other
notice or demand; or


 


4.2.          exercise
and enforce any or all rights and remedies available upon default to a secured party under the Uniform Commercial Code, including
but not limited to the right to take possession of any Collateral, proceeding without judicial process if permitted by law or by
judicial process, and the right to use, sell, lease or otherwise dispose of any or all of the Collateral, and in connection therewith,
Secured Party may require Debtor to make the Collateral available to Secured Party at a place to be designated by Secured Party
that is reasonably convenient to the parties, and if notice to Debtor of any intended disposition of Collateral or any other intended
action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner
specified herein) at least fifteen (15) business days prior to the date of intended disposition or other action.


 


All rights and remedies
of Secured Party shall be cumulative and may be exercised singularly or concurrently, at Secured Party’s option, and the
exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of
any other.


 


5.           Subordination.
Pursuant to Section 6 of the Note, Secured Party has agreed to subordinate its rights under the Note to the rights of the holders
of Senior Debt (as defined and limited by Section 6 of the Note). Therefore, consistent with the subordination provision set forth
in Section 6 of the Note, Secured Party agrees and covenants that the rights of Secured Party under this Security Agreement shall
be subordinated to the rights of the holders of the Senior Debt, but only to the maximum amount stated in the Note.


 


6.           Miscellaneous.


 


6.1.          This
Agreement can be waived, modified, amended, terminated or discharged, and the Subordinated Security Interest can be released, only
explicitly in a writing signed by Secured Party. A waiver signed by Secured Party shall be effective only in the specific instance
and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of Secured
Party’s rights or remedies.


 


6.2.          All
notices to be given to Debtor shall be deemed sufficiently given if delivered or mailed by registered or certified mail, postage
prepaid, to Debtor at its address set forth above or at such other address as Debtor may subsequently provide to Secured Party.


 




    	 	4	 



     


    

 


6.3.          Secured
Party’s duty of care with respect to Collateral in its possession (as imposed by law) shall be deemed fulfilled if Secured
Party exercises reasonable care in physically safekeeping such Collateral or, in the case of Collateral in the custody or possession
of a bailee or other third person, exercises reasonable care in the selection of the bailee or other third person, and Secured
Party need not otherwise preserve, protect, insure or care for any Collateral. Secured Party shall not be obligated to preserve
any rights Debtor may have against prior parties, to realize on the Collateral at all or in any particular manner or order, or
to apply any cash proceeds of Collateral in any particular order of application.


 


6.4.          This
Agreement shall be binding upon and inure to the benefit of Debtor, Secured Party and the beneficiary of the TCA Security Interest,
their respective successors and assigns and shall take effect when signed by Debtor and delivered to Secured Party, and Debtor
waives notice of Secured Party’s acceptance hereof.


 


6.5.          A
carbon, photographic or other reproduction of this Agreement or of any financing statement signed by Debtor shall have the same
force and effects as the original for all purposes of a financing statement.


 


6.6.          This
Agreement shall be governed by the internal laws of the State of Washington. If any provision or application of this Agreement
is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications
which can be given effect and this Agreement shall be construed as if the unlawful or unenforceable provision or application had
never been contained herein or prescribed hereby.


 


6.7.          All
representations and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement
and the creation and payment of the Obligations.


 


ACCORDINGLY, this Agreement
has been duly executed by the parties as of the date first set forth above.


 


	 	DEBTOR:
	 	HOWCO DISTRIBUTING CO., INC.


 


	 	By:	[ILLEGIBLE]


 


	 	SECURED PARTY:
	 	 
	 	/s/
    Paul Charles Joy II
	 	Paul Charles Joy II, Trustee of the Paul C. Joy and Kathryn B. Joy Trust – Fund B, dated December 9, 2003, as amended
	 	 
	 	/s/ Kathryn Blake Joy
	 	Kathryn Blake Joy, Trustee of the Paul C. Joy and Kathryn B. Joy Trust – Fund C, dated December 9, 2003, as amended


 




    	 	5	 



     


    

 


EXHIBIT A

TO SECURITY AGREEMENT

COLLATERAL


 


“Collateral” means all
now existing and hereafter arising right, title, and interest of Debtor in, under, and to all of its assets, including, without
limitation:


 


(a)          All
now owned or hereafter acquired accounts, accounts receivable, goods, inventory, supplies, equipment, leasehold improvements, furniture,
fixtures, general intangibles, phone numbers, website addresses, customer lists, goodwill, money, instruments, chattel paper, deposit
accounts, documents, agreements, contracts, contract rights, investment property, letter-of-credit rights, supporting obligations,
and work in process;


 


(b)          The
name, “Howco Distributing Co.;”


 


(c)          All
utility deposits, telephone deposits, and other security deposits;


 


(d)          All
assets, whether now owned or existing, whether subsequently acquired or arising, or in which Debtor now has or subsequently acquires
any rights;


 


(e)          All
now owned or hereafter acquired intangible property of any nature whatsoever;


 


(f)          All
of Debtor’s books and records relating to the assets; and


 


(g)          All
products, proceeds, rents and profits of the foregoing.


 




    	 	6	 



     


    

 


EXHIBIT B

Buyer Stock Agreements


 


See attached.


 




    EXHIBIT B – 1


     


    

 


EXHIBIT C


Paul C. Joy Employment Agreement


 


See attached.


 




    	EXHIBIT C – 1	 	 



     


    

 





 






 


Employment,
Confidentiality, Non-compete


and
Intellectual Property Agreement


for


Paul
Charles Joy


 


THIS EMPLOYMENT, CONFIDENTIALITY,
NON-COMPETE AND INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is entered into effective as of the 9th
day of September, 2016 by and between Drone USA, Inc., a Delaware corporation, its subsidiaries, affiliates, successors or assigns
(hereinafter “Drone USA”), and Paul Charles Joy (hereinafter “Employee”). In consideration
of Employee’s employment with Drone USA and Employee’s receipt of the compensation now and hereafter paid to Employee
by Drone USA, the parties hereby agree as follows:


 


1.           Employment.
Drone USA hereby agrees to employ Employee and Employee hereby agrees to work for Drone USA and to advance the interests of the
Drone USA and its affiliate Howco Distributing Co., a Washington corporation (“Howco”) upon the terms and conditions
set forth herein.


 


2.           Initial
Term – Subsequent At-Will Employment. The parties acknowledge and agree that Employee’s employment with Drone USA is
for an initial period of two (2) years (the “Initial Term”); provided, however, Drone USA and Employee may
Terminate Employee’s employment with Drone USA during the Initial Term as forth in Section 6. Upon expiration of
the Initial Term, Employee’s employment with Drone USA, shall be for an unspecified duration and shall constitute “at-will”
employment.


 


3.           Scope
of Duties; Representations and Warranties.


 


a.           This
Agreement is entered into in connection with that certain Stock Purchase Agreement of even date involving the sale of 100% of the
common stock of Howco Distributing, Co. to Drone USA, LLC (the “Stock Purchase Agreement”). Employee will have
such duties as are assigned or delegated to Employee by Drone USA’s Board of Directors, and will initially serve as the Howco
CEO of Drone USA and use Employee’s best efforts to assist with the transition of the ownership and the operations of Howco.
Employee shall devote his/her entire business time, attention, skills, and energy exclusively to the business of Howco and Drone
USA and will use his/her best efforts to promote the continued success, profitability and growth of Howco as well as Drone USA
and will cooperate fully with their respective Boards of Directors and management in the advancement of their best interests.


 


b.           Employee
represents and warrants that by execution and delivery of this Agreement, Employee does not, and the performance of obligations
hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ, injunction,
or order of any court, arbitrator, or governmental agency applicable to Employee, (ii) conflict with, result in the breach of any
provisions of or the termination of, or constitute a default under, any agreement to which Employee is a party or by which Employee
is or may be bound.


 






    	 	 	 



     


    

 


c.           Employee
agrees that from time to time Drone USA may engage and use professional employment organizations (“PEO’(s)”)
to address its human resources, payroll, insurance and other employment related needs. Many PEO’s use the term “co-employment,”
to describe the relationship between an employee on the one hand and the PEO and the PEO’s client on the other hand; in that
event Employee may be deemed to be an employee of the Drone USA and the PEO. In the event that Drone USA elects to use a PEO or
change from one PEO to another, Employee’s employment with Drone USA will remain unchanged with respect to Employee’s
obligations to Drone USA and Howco under this Agreement; and, in the event of any inconsistency or contradictory provision contained
in any PEO agreement to which Drone USA or Employee is a party, the terms of this Agreement shall control and supersede the terms
of any such other agreement.


 


4.           Compensation.


 


a.           Drone
USA shall initially pay Employee base compensation of One Hundred Twenty Five Thousand Dollars ($125,000) per year, subject to
adjustment as provided below, which will be payable in equal periodic installments according to Drone USA’s customary payroll
practices, but no less frequently than twice per month, subject to adjustment as provided below. Following the Initial Term, Employee
base compensation will be reviewed by the management of Drone USA no less frequently than annually, and may be adjusted upward
or downward in the sole discretion of the management of Drone USA.


 


b.           All
payments of salary and other compensation paid to Employee shall be made after deduction of any taxes and other amounts which are
required to be withheld with respect thereto under applicable federal and state laws.


 


5.           Fringe
Benefits; Expenses.


 


a.           So
long as Employee is employed by Drone USA, Employee shall be eligible to participate in all employee benefit plans sponsored by
Drone USA for its employees in accordance with Drone USA’s policies, including but not limited to sick leave and disability
leave, life insurance, health insurance, dental insurance, and stock ownership and/or profit sharing plans; provided, however,
that the nature, amount and limitations of such plans shall be determined from time to time by the Board of Directors of Drone
USA. Employee agrees that by being eligible to participate in benefits such as health insurance, dental insurance and life insurance,
participation will be subject to employee contributions which may change from time to time. Notwithstanding the forgoing, during
the Initial Term of Employee’s employment, the benefits to which Employee is entitled shall be substantially the same as
those that Employee received while employed by Howco during the two (2) year period immediately prior to the effective date of
this Agreement, and in the event that the benefit program in effect for Drone USA employees is less favorable than the benefits
provided by Howco to Employee, an adjustment shall be made to Employee’s base compensation to compensate for any deficiency
in such benefits.


 


b.           Drone
USA shall reimburse Employee for all approved reasonable business expenses incurred by Employee in the scope of employment; provided,
however, that such expenses must be pre-approved and Employee must file expense reports with respect to such expenses in accordance
with Drone USA's policies as are in effect from time to time.


 




    	 	2	 



     


    

 


c.           Employee
shall be entitled to paid vacation consistent with the paid vacation received by Employee while employed by Howco during the two
(2) year period immediately prior to the effective date of this Agreement. Employee shall also be entitled to the paid holidays
and other paid leave set forth in Drone USA's policies.


 


6.           Termination.


 


a.           Termination
During the Initial Term. Drone USA and Employee agree that during the Initial Term Employee’s employment may only be
terminated as hereinafter set forth;


 


i.            Termination
by Drone USA for Cause. During the Initial Term, Drone USA may terminate Employee’s employment for Cause, which termination
shall be effective upon delivery of written notice by Drone USA to Employee.


 


1.          Definition
of “Cause”. When used in connection with the termination of Employee’s employment with Drone USA, “Cause”
shall mean: (a) the willful and material breach of Employee’s obligations under this Agreement, which willful and material
breach continues to occur after reasonable notice and opportunity to cure; (b) Employee’s willful failure to adhere to any
written Drone USA policy after Employee has been given a reasonable opportunity to comply with such policy or cure any failure
to comply; (c) the conviction of or the entering of a guilty plea or plea of no contest with respect to, a felony, the equivalent
thereof, or any other crime which results in Employee’s imprisonment; (d) the commission by Employee of an act of fraud upon
Drone USA or Howco or any of their affiliates; (e) the misappropriation (or attempted misappropriation) of any funds or property
of Drone USA, Howco or any of their affiliates by Employee; (f) Employee’s willful failure to perform duties assigned to
Employee after reasonable notice and opportunity to cure such performance; (g) Employee’s continued engagement, after reasonable
notice and opportunity to cure, in any direct, material conflict of interest with Drone USA or Howco without compliance with the
Drone USA’s conflict of interest policies, if any, then in effect; or (h) Employee’s continued engagement, after reasonable
notice and opportunity to cure, and without the written approval of the Board of Directors of the Drone USA, in any activity which
competes with the business of Drone USA, Howco or any of their affiliates or which would result in a material injury to Drone USA,
Howco or any of their affiliates.


 


2.          Compensation
and Benefits. If Drone USA terminates Employee’s employment for Cause during the Initial Term, Drone USA shall pay any
salary or wages earned through the date of termination, but all rights to any other compensation or benefits arising hereunder
shall be canceled and terminated in all respects concurrently with such termination of employment; provided that Employee may elect
to continue to participate, at Employee’s own expense, in such health insurance and other benefits as to which the opportunity
for continuing participation is mandated by applicable law.


 


ii.           Disability;
Death. If at any time during the Initial Term, Employee is unable due to physical or mental disability to perform effectively
Employee’s duties hereunder, Drone USA shall continue payment of compensation as provided in Section 6 during the
three (3) months of such disability to the extent not covered by any disability insurance policies. Upon the expiration of such
three (3) month period, Drone USA, at its sole option, may continue payment of salary or wages for such additional periods as it
elects, or may terminate this Agreement without further obligations hereunder. If Employee should die during the term of Employee’s
employment, Drone USA's obligations hereunder shall terminate as of the day that death occurs and there will be no salary, wages
and benefit continuation period.


 




    	 	3	 



     


    

 


iii.          Termination
by Employee.


 


1.          During
the first six months of the Initial Term, Employee may not voluntarily terminate Employee’s employment with Drone USA.


 


2.          During
the period beginning on the first day of the seventh month of the Initial Term and ending on the last day of the twelve month of
the Initial Term, Employee may Terminate Employee’s employment with Drone USA effective upon thirty (30) days written notice
to Employer, provided Drone USA or Howco has in place the personnel to perform the financial, operations, and customer and supplier
relations management, human resources duties, and pricing functions provided by Employee to Howco immediately prior to the effective
date of this Agreement.


 


3.          After
the first twelve months of the Initial Term, Employee may terminate employment with Drone USA for any reason on the thirty (30)
days’ notice to Drone USA.


 


b.           Termination
After Initial Term. Following expiration of the Initial Term, either Drone USA or Employee may terminate Employee’s employment
at any time, and such termination shall be effective upon delivery of written notice by either party to the other party.


 


i.            Termination
by Drone USA. In the event that Employee’s employment is terminated by Drone USA without Cause at any time following
the expiration of the Initial Term,, Drone USA shall pay to Employee an amount equal to two (2) weeks compensation at Employee’s
then current salary or wages payable in a lump sum, and shall continue to provide benefits in the kind and amounts provided up
to the date of termination for such two (2) week period, including continuation of any Drone USA-paid benefits as described in
Section 5 for Employee and family.


 


ii.           Waiver
and Release. In the event that Employee’s employment is terminated by Drone USA without Cause following the expiration
of the Initial Term, Employee agrees to accept, in full settlement of any and all claims, losses, damages and other demands which
Employee may have arising out of such termination, as liquidated damages and not as a penalty, the applicable amounts payable to
Employee as set forth in Section 6.b.i. Employee hereby waives any and all rights Employee may have to bring any cause of
action or proceeding contesting any termination without Cause which occurs after the expiration of the Initial Term. In the event
Employee’s termination is for Cause – either during the Initial Term or at any time thereafter – Employee agrees that under
no circumstances shall Employee be entitled to any compensation or confirmation of any benefits under this Agreement for any period
of time following the date of such termination for Cause.


 




    	 	4	 



     


    

  


7.           Confidential
Information.


 


a.           Drone
USA and Howco Confidential Information. Employee agrees at all times during the term of employment and thereafter, to hold
in strictest confidence, and not to use, except for the benefit of Drone USA and Howco, or to disclose to any person, firm or corporation
without written authorization of the Board of Directors of the Drone USA, any Confidential Information of the Drone USA or Howco.
Employee understands that “Confidential Information” means any Drone USA or Howco proprietary information, technical
data, or trade secrets, including, but not limited to, research and development, product plans, products, services, information
regarding the skills and compensation of employees of Drone USA or Howco; the identity of the Drone USA’s and Howco’s
clients, potential clients, customers and potential customers, but excluding the United States Government or any agency thereof,
or any branch of the United States military (hereinafter referred to collectively as “Customers”), the particular
preferences, likes, dislikes and needs of those Customers; Customer information regarding contact persons, pricing, sales calls,
timing, sales terms, and service plans; methods, practices, strategies, forecasts, and other marketing techniques; the identities
of key accounts and potential key accounts (but excluding the United States Government or any agency thereof, or any branch of
the United States military); the identities of Drone USA’s and Howco’s suppliers, independent contractors and consultants,
and information regarding contact persons, pricing, sales calls, timing, sales terms, and service plans; methods, practices, strategies,
forecasts, and other techniques of the forgoing; markets, software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, hardware configuration information, marketing, finances or other business information, strategy
and cost data; disclosed to Employee by Drone USA either directly or indirectly in writing, orally or by drawings or observation
of parts or equipment or known by Employee with respect to Howco. Employee further understands that Confidential Information does
not include any of the foregoing items which have become publicly known and made generally available through no direct or indirect
wrongful act of Employee or others who were under confidentiality obligations as to the item or items involved. Further Confidential
Information does not include information that is required to be disclosed by order of a governmental agency or by a court of competent
jurisdiction. Further, Employee acknowledges that any and all of the forgoing information with respect to Howco is expressly covered
by the terms of this Section 7 and that no such information has been generally available or made publicly known and with
the sale of Howco to Drone USA, such Confidential Information remains confidential. For avoidance of doubt, the parties acknowledge
that general know-how concerning how to do business with the United States Government or any agency thereof or any branch of the
United States Military is not Confidential Information.


 


b.           Material
Non-Public Information. Employee acknowledges that Drone USA is publicly traded and that U.S. Securities laws prohibit any
person who is in possession of material non-public information about a public company from purchasing or selling that company’s
securities or from providing such information to third parties. Some of the information that Employee will have as an employee
will be material non-public information and is subject to trading restrictions. Employee will not disclose any such information
to third parties or others without the express approval of Drone USA’s Board of Directors and will not engage in any purchase
or sales of Drone USA’s securities except in compliance with its approved trading policies in effect, from time to time.


 




    	 	5	 



     


    

 


c.           Third
Party Information. Employee recognizes that Drone USA and Howco have received and in the future will receive, from third parties,
their confidential or proprietary information subject to a duty on Drone USA’s and Howco’s parts to maintain the confidentiality
of such information and to use it only for certain limited purposes. Employee agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary
in carrying out Employee’s work for Drone USA consistent with the their agreement(s) with such third parties.


 


d.           Continuing
Obligations. The obligations of this Section 7 shall survive the expiration or termination of this Agreement.


 


8.           Inventions.


 


a.           Inventions
Retained and Licensed. Employee has attached hereto, as Exhibit A, a list describing all inventions, original works of authorship,
developments, and improvements which were made by Employee prior to employment with Drone USA (collectively referred to as “Prior
Inventions”), which belong to Employee, relate to Howco products or research and development, and which are not assigned
to Drone USA hereunder; or, if no such list is attached, Employee represents that there are no such Prior Inventions. If in the
course of employment with Drone USA, Employee incorporates into a Drone USA product, process or technology a Prior Invention owned
by Employee or in which Employee has an interest, Drone USA is hereby granted and shall have an exclusive, royalty-free, irrevocable,
perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such
product, process or machine.


 


b.           Assignment
of Inventions and other Intellectual Property. Employee agrees that Employee will promptly make full written disclosure to
Drone USA, will hold in trust for the sole right and benefit of Drone USA, and hereby assign to Drone USA, or its designee, all
of Employee’s right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts,
improvements or trade secrets, whether or not patentable or registrable under copyright, patent or similar laws, which Employee
may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice which
relate in any way to any Drone USA Products, as defined herein, together with the zone of foreseeable expansion, during the period
of time Employee is in the employ of Drone USA (collectively referred to as “Inventions”). Employee further
acknowledges that all original works of authorship which are made by Employee (solely or jointly with others) within the scope
of and during the period of employment with Drone USA and which are protectable by copyright are “works made for hire,”
as that term is defined in the United States Copyright Act.


 


c.           Maintenance
of Records. Employee agrees to keep and maintain adequate and current written records of all Inventions made by Employee (solely
or jointly with others) during the term of employment with Drone USA. The records will be in the form of notes, sketches, drawings,
and any other format that may be specified by Drone USA. The records will be available to and remain the sole property of Drone
USA at all times.


 




    	 	6	 



     


    

 


d.           Patent
and Copyright Registrations. Employee agrees to assist Drone USA, or its designee, at the Drone USA’s expense, in every
proper way to secure Drone USA’s rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property
rights relating thereto in any and all countries, including the disclosure of Drone USA of all pertinent information and data with
respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which Drone USA
shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to Drone USA, its successors,
assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents,
mask work rights or other intellectual property rights relating thereto. Employee further agrees that Employee’s obligation
to execute or cause to be executed, when it is in Employee’s power to do so, any such instrument or papers shall continue
after the termination of this Agreement. If Drone USA is unable because of Employee’s mental or physical incapacity or for
any other reason to secure Employee’s signature to apply for or to pursue any application of any United States or foreign
patents or copyright registrations covering Inventions or original works of authorship assigned to Drone USA as above, then Employee
hereby irrevocably designates and appoints Drone USA and its duly authorized officers and agents as Employee’s agent and
attorney in fact, to act for and in Employee’s behalf and stead to execute and file any such applications and to do all other
lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrationsthereon with the
same legal force and effect as if executed by Employee.


 


9.           Covenant
Not to Compete, Non-Solicitation.


 


a.           Non
Competition and Non Solicitation. Employee agrees that beginning with the effective date of this Agreement and continuing for
a period of five (5) years after the longer of (x) the termination of Employee’s employment or (y) the first anniversary
of the date hereof, Employee will not alone, or in any capacity with another entity or individual, within any geographic location
in which Howco or Drone USA, at the date of the termination of Employee’s employment, has engaged or has plans to engage
in any business:


 


i.            directly
or indirectly participate or support in any capacity (e.g. as an advisor, principal agent, partner, member, governor, officer,
director, manager, shareholder, owner, employee or otherwise) the sale, solicitation of sale, or marketing, of a Drone USA Product.
“Drone USA Product” means any actual or projected product or product line that has been developed (or is under
active development), marketed or sold by Drone USA or Howco continuing through the termination of Employee’s employment.
Such Drone USA Products shall specifically include, but not be limited to, those products sold to customers of Howco or any products
that were being considered for sale or distribution prior to the effective date of the aforementioned Stock Purchase Agreement.


 


ii.           call
upon, solicit, contact or serve any of the then-existing vendors or suppliers that have had a relationship with Drone USA or Howco
during the preceding twenty four (24) months, or any potential, vendors or suppliers that were solicited by Drone USA or Howco
during the preceding twenty four (24) months in connection a Drone USA Product;


 


iii.          disrupt,
damage or impair (or attempt to do the same) with the business of Drone USA or Howco whether by way of interfering with or disrupting
Drone USA’s or Howco’s relationship with their employees, customers, agents, representatives or vendors, or


 




    	 	7	 



     


    

 


iv.         employor
attempt to employ (by assisting anyone else in the solicitation of) any of Drone USA’s or Howco’s current employees
on behalf of any other entity or person, whether or not such entity or person competes with Drone USA, Howco or any Drone USA Product.


 


b.           Employee
agrees that the limitations set forth herein on Employee’s rights to compete with Drone USA, Howco and their affiliates are
reasonable and necessary for the protection of Drone USA, Howco and their affiliates. In this regard, Employee specifically agrees
that the limitations as to period of time and geographic area, as well as all other restrictions on activities specified herein,
are reasonable and necessary for the protection of Drone USA, Howco and their affiliates. The substantial sums invested by Drone
USA in Howco’s business also make these restrictions necessary in order to protect Drone USA’s investment. Employee
agrees that, in the event that the provisions of this Agreement should ever be deemed to exceed the scope of business, time or
geographic limitations permitted by applicable law, such provisions shall be and are hereby reformed to the maximum scope of business,
time or geographic limitations permitted by applicable law.


 


c.           Employee
agrees that the remedy at law for any breach of this Section 9 will be inadequate and that Drone USA and/or Howco shall
also be entitled to injunctive relief without the necessity of posting any bond or other security, due to irreparable harm that
such breach would cause.


 


d.           Notwithstanding
any other provision in this Agreement to the contrary, Employer agrees (i) nothing contained in this Agreement shall limit Employee
from doing business with the United States Federal Government so long as it does not involve the direct or indirect participation
or support of the sale, solicitation of sale, or marketing of a Drone USA Product; and (ii) in the event of a default by Employer
under this Agreement or a default by Drone USA, LLC or Howco under the Stock Purchase Agreement or any related agreement, the restrictions
set forth in Section 9 shall automatically terminate, and thereafter, Employee may disregard such non-competition and non-solicitation
provisions and do business in any manner whatsoever.


 


10.         Returning
Documents. Employee agrees that, at the time of leaving the employ of Drone USA, Employee will deliver to Drone USA (and will
not keep in possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions
of any aforementioned items developed by me pursuant to my employment with Drone USA or Howco or otherwise belonging to Drone USA
or Howco, their parent, successors or assigns.


 


11.         Notification
of New Employer. In the event that Employee leaves the employ of Drone USA, Employee hereby grants consent to notification
by Drone USA to any new employer about Employee’s rights and obligations under this Agreement.


 


12.         Representations.
Employee agrees to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. Employee
represents that performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary
information acquired by Employee in confidence or in trust prior to employment by Drone USA. Employee has not entered into, and
agrees not to enter into, any oral or written agreement in conflict herewith.


 




    	 	8	 



     


    

 


13.         General
Provisions.


 


a.           Governing
Law; and Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington without
reference to principles of conflicts of laws. The parties agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated only in the State or Federal Courts located in the State of Washington. Each of the parties
hereto waives to the extent permitted under applicable law, any right each may have to assert the doctrine of forum non-conveniens
or to object to venue to the extent any proceeding is brought in accordance with this section relating to this Agreement.


 


b.           Entire
Agreement. This Agreement sets forth the entire agreement and understanding between Drone USA and Employee relating to the
subject matter herein and merges all prior discussions between Drone USA and Employee. No modification of or amendment to this
Agreement, nor any waiver of any rights under this agreement, will be effective unless in writing signed by the party to be charged.
Any subsequent change or changes in duties, salary or compensation will not affect the validity or scope of this Agreement.


 


c.           Severability.
If one more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force
and effect. This Agreement is made and executed pursuant to the provisions of the Stock Purchase Agreement. However, no default
by Employee hereunder shall be deemed to constitute a default under the Stock Purchase Agreement, it being agreed by the parties
that each Agreement shall be separately applied, construed and enforced and that a default under one shall not constitute a default
under the other.


 


d.           Successors
and Assigns. This Agreement will be binding upon Employee’s heirs, executors, administrators and other legal representatives
and will be for the benefit of Drone USA, Howco, their successors, and assigns.


 


e.           Waiver
and Amendments; Cumulative Rights and Remedies.


 


i.            This
Agreement may be amended, modified or supplemented, and any obligation hereunder may be waived, only by a written instrument executed
by the parties hereto. The waiver by either party of a breach of any provision of this Agreement shall not operate as a waiver
of any subsequent breach.


 


ii.           No
failure on the part of any party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver
hereof, nor shall any single or partial exercise of any such right or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right or remedy. All rights and remedies hereunder are cumulative and are in addition to all
other rights and remedies provided by law, agreement or otherwise.


 




    	 	9	 



     


    

 


iii.          Employee’s
obligations to Drone USA and Drone USA’s rights and remedies hereunder are in addition to all other obligations of Employee
and rights and remedies of Drone USA created pursuant to any other agreement.


 


f.            Construction.
Each party to this Agreement has had the opportunity to review this Agreement with legal counsel. This Agreement shall not be construed
or interpreted against any party on the basis that such party drafted or authored a particular provision, parts of or the entirety
of this Agreement.


 


Employee


 


	/s/ Paul Charles Joy	 
	Paul Charles Joy	 


 


	 	DRONE USA, INC.
	 	 
	 	/s/ Michael Bannon
	 	Michael Bannon, CEO


 




    	 	10	 



     


    

 


EXHIBIT A


 


LIST OF PRIOR INVENTIONS


AND ORIGINAL WORKS OF AUTHORSHIP


 


	 	 	Identifying
	 	 	 
	Title 	Date	or Brief Description
	Number	 	 


 


	X	  No inventions or improvements


 


	 	  Additional Sheets
    Attached




 


	/s/ Paul C Joy II	 
	Signature of Employee	 
	 	 
	Paul C Joy II	 
	Print Name of Employee	 


 








    	 	11	 



     


    

 





EXHIBIT D


Kathy Joy Employment Agreement


 


See attached.


 




    	EXHIBIT D-1		 



     


    

 





	 




 


Employment,
Confidentiality, Non-compete


and
Intellectual Property Agreement


For


Kathryn
Blake Joy


 


THIS EMPLOYMENT,
CONFIDENTIALITY, NON-COMPETE AND INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is entered into effective as of
the 9th day of September, 2016 by and between Drone USA, Inc., a Delaware corporation, its subsidiaries, affiliates,
successors or assigns (hereinafter “Drone USA”), and Kathryn Blake Joy (hereinafter “Employee”).
In consideration of Employee’s employment with Drone USA and Employee’s receipt of the compensation now and hereafter
paid to Employee by Drone USA, the parties hereby agree as follows:


 


1.          Employment.
Drone USA hereby agrees to employ Employee and Employee hereby agrees to work for Drone USA and to advance the interests of
the Drone USA and its affiliate Howco Distributing Co., a Washington corporation (“Howco”) upon the terms and
conditions set forth herein.


 


2.          Initial
Term – Subsequent At-Will Employment. The parties acknowledge and agree that Employee’s employment with Drone
USA is for an initial period of two (2) years (the “Initial Term”); provided, however, Drone USA and
Employee may Terminate Employee’s employment with Drone USA during the Initial Term as forth in Section 6. Upon expiration
of the Initial Term, Employee’s employment with Drone USA, shall be for an unspecified duration and shall constitute “at-will”
employment.


 


3.          Scope
of Duties; Representations and Warranties.


 


a.           This
Agreement is entered into in connection with that certain Stock Purchase Agreement of even date involving the sale of 100% of
the common stock of Howco Distributing, Co. to Drone USA, LLC (the “Stock Purchase Agreement”). Employee will
have such duties as are assigned or delegated to Employee by Drone USA’s Board of Directors, and will initially serve as
the Howco COO of Drone USA and use Employee’s best efforts to assist with the transition of the ownership and the operations
of Howco. Employee shall devote his/her entire business time, attention, skills, and energy exclusively to the business of Howco
and Drone USA and will use his/her best efforts to promote the continued success, profitability and growth of Howco as well as
Drone USA and will cooperate fully with their respective Boards of Directors and management in the advancement of their best interests.


 


b.           Employee
represents and warrants that by execution and delivery of this Agreement, Employee does not, and the performance of obligations
hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ, injunction,
or order of any court, arbitrator, or governmental agency applicable to Employee, (ii) conflict with, result in the breach of any
provisions of or the termination of, or constitute adefault under, any agreement to which Employee is a party or by which Employee
is or may be bound.


 




     


     


    

 


c.           Employee
agrees that from time to time Drone USA may engage and use professional employment organizations (“PEO’(s)”)
to address its human resources, payroll, insurance and other employment related needs. Many PEO’s use the term “co-employment,”
to describe the relationship between an employee on the one hand and the PEO and the PEO’s client on the other hand; in
that event Employee may be deemed to be an employee of the Drone USA and the PEO. In the event that Drone USA elects to use a
PEO or change from one PEO to another, Empoyee’s employment with Drone USA will remain unchanged with respect to Employee’s
obligations to Drone USA and Howco under this Agreement; and, in the event of any inconsistency or contradictory provision contained
in any PEO agreement to which Drone USA or Employee is a party, the terms of this Agreement shall control and supersede the terms
of any such other agreement.


 


4.          Compensation.


 


a.           Drone
USA shall initially pay Employee base compensation of One Hundred Twenty Five Thousand Dollars ($125,000) per year, subject to
adjustment as provided below, which will be payable in equal periodic installments according to Drone USA’s customary payroll
practices, but no less frequently than twice per month, subject to adjustment as provided below. Following the Initial Term, Employee
base compensation will be reviewed by the management of Drone USA no less frequently than annually, and may be adjusted upward
or downward in the sole discretion of the management of Drone USA.


 


b.           All
payments of salary and other compensation paid to Employee shall be made after deduction of any taxes and other amounts which are
required to be withheld with respect thereto under applicable federal and state laws.


 


5.          Fringe
Benefits; Expenses.


 


a.           So
long as Employee is employed by Drone USA, Employee shall be eligible to participate in all employee benefit plans sponsored by
Drone USA for its employees in accordance with Drone USA’s policies, including but not limited to sick leave and disability
leave, life insurance, health insurance, dental insurance, and stock ownership and/or profit sharing plans; provided, however,
that the nature, amount and limitations of such plans shall be determined from time to time by the Board of Directors of Drone
USA. Employee agrees that by being eligible to participate in benefits such as health insurance, dental insurance and life insurance,
participation will be subject to employee contributions which may change from time to time. Notwithstanding the forgoing, during
the Initial Term of Employee’s employment, the benefits to which Employee is entitled shall be substantially the same as
those that Employee received while employed by Howco during the two (2) year period immediately prior to the effective date of
this Agreement, and in the event that the benefit program in effect for Drone USA employees is less favorable than the benefits
provided by Howco to Employee, an adjustment shall be made to Employee’s base compensation to compensate for any deficiency
in such benefits.


 




    	 	2	 



     


    

 


b.           Drone
USA shall reimburse Employee for all approved reasonable business expenses incurred by Employee in the scope of employment; provided,
however, that such expenses must be pre-approved and Employee must file expense reports with respect to such expenses in accordance
with Drone USA’s policies as are in effect from time to time.


 


c.           Employee
shall be entitled to paid vacation consistent with the paid vacation received by Employee while employed by Howco during the two
(2) year period immediately prior to the effective date of this Agreement. Employee shall also be entitled to the paid holidays
and other paid leave set forth in Drone USA’s policies.


 


6.          Termination.


 


a.           Termination
During the Initial Term. Drone USA and Employee agree that during the Initial Term Employee’s employment may only be
terminated as hereinafter set forth;


 


i.            Termination
by Drone USA for Cause. During the Initial Term, Drone USA may terminate Employee’s employment for Cause, which termination
shall be effective upon delivery of written notice by Drone USA to Employee.


 


1.          Definition
of “Cause”. When used in connection with the termination of Employee’s employment with Drone USA, “Cause”
shall mean: (a) the willful and material breach of Employee’s obligations under this Agreement, which willful and material
breach continues to occur after reasonable notice and opportunity to cure; (b) Employee’s willful failure to adhere to any
written Drone USA policy after Employee has been given a reasonable opportunity to comply with such policy or cure any failure
to comply; (c) the conviction of or the entering of a guilty plea or plea of no contest with respect to, a felony, the equivalent
thereof, or any other crime which results in Employee’s imprisonment; (d) the commission by Employee of an act of fraud
upon Drone USA or Howco or any of their affiliates; (e) the misappropriation (or attempted misappropriation) of any funds or property
of Drone USA, Howco or any of their affiliates by Employee; (f) Employee’s willful failure to perform duties assigned to
Employee after reasonable notice and opportunity to cure such performance; (g) Employee’s continued engagement, after reasonable
notice and opportunity to cure, in any direct, material conflict of interest with Drone USA or Howco without compliance with the
Drone USA’s conflict of interest policies, if any, then in effect; or (h) Employee’s continued engagement, after reasonable
notice and opportunity to cure, and without the written approval of the Board of Directors of the Drone USA, in any activity which
competes with the business of Drone USA, Howco or any of their affiliates or which would result in a material injury to Drone
USA, Howco or any of their affiliates.


 


2.          Compensation
and Benefits. If Drone USA terminates Employee’s employment for Cause during the Initial Term, Drone USA shall pay any
salary or wages earned through the date of termination, but all rights to any other compensation or benefits arising hereunder
shall be canceled and terminated in all respects concurrently with such termination of employment; provided that Employee may elect
to continue to participate, at Employee’s own expense, in such health insurance and other benefits as to which the opportunity
for continuing participation is mandated by applicable law.


 






    	 	3	 



     


    

 


ii.         Disability;
Death. If at any time during the Initial Term, Employee is unable due to physical or mental disability to perform effectively
Employee’s duties hereunder, Drone USA shall continue payment of compensation as provided in Section 6 during the
three (3) months of such disability to the extent not covered by any disability insurance policies. Upon the expiration of such
three (3) month period, Drone USA, at its sole option, may continue payment of salary or wages for such additional periods as it
elects, or may terminate this Agreement without further obligations hereunder. If Employee should die during the term of Employee’s
employment, Drone USA’s obligations hereunder shall terminate as of the day that death occurs and there will be no salary, wages
and benefit continuation period.


 


iii.         Termination
by Employee.


 


1.          During
the first six months of the Initial Term, Employee may not voluntarily terminate Employee’s employment with Drone USA.


 


2.          During
the period beginning on the first day of the seventh month of the Initial Term and ending on the last day of the twelve month of
the Initial Term, Employee may Terminate Employee’s employment with Drone USA effective upon thirty (30) days written notice
to Employer, provided Drone USA or Howco has in place the personnel to perform the financial, operations, and customer and supplier
relations management, human resources duties, and pricing functions provided by Employee to Howco immediately prior to the effective
date of this Agreement.


 


3.          After
the first twelve months of the Initial Term, Employee may terminate employment with Drone USA for any reason on the thirty (30)
days’ notice to Drone USA.


 


b.         Termination
After Initial Term. Following expiration of the Initial Term, either Drone USA or Employee may terminate Employee’s employment
at any time, and such termination shall be effective upon delivery of written notice by either party to the other party.


 


i.            Termination
by Drone USA. In the event that Employee’s employment is terminated by Drone USA without Cause at any time following
the expiration of the Initial Term,, Drone USA shall pay to Employee an amount equal to two (2) weeks compensation at Employee’s
then current salary or wages payable in a lump sum, and shall continue to provide benefits in the kind and amounts provided up
to the date of termination for such two (2) week period, including continuation of any Drone USA-paid benefits as described in
Section 5 for Employee and family.


 


ii.         Waiver
and Release. In the event that Employee’s employment is terminated by Drone USA without Cause following the expiration
of the Initial Term, Employee agrees to accept, in full settlement of any and all claims, losses, damages and other demands which
Employee may have arising out of such termination, as liquidated damages and not as a penalty, the applicable amounts payable to
Employee as set forth in Section 6.b.i. Employee hereby waives any and all rights Employee may have to bring any cause of
action or proceeding contesting any termination without Cause which occurs after the expiration of the Initial Term. In the event
Employee’s termination is for Cause – either during the Initial Term or at any time thereafter – Employee agrees that under
no circumstances shall Employee be entitled to any compensation or confirmation of any benefits under this Agreement for any period
of time following the date of such termination for Cause.


 




    	 	4	 



     


    

 


7.          Confidential
Information.


 


a.           Drone
USA and Howco Confidential Information. Employee agrees at all times during the term of employment and thereafter, to hold
in strictest confidence, and not to use, except for the benefit of Drone USA and Howco, or to disclose to any person, firm or
corporation without written authorization of the Board of Directors of the Drone USA, any Confidential Information of the Drone
USA or Howco. Employee understands that “Confidential Information” means any Drone USA or Howco proprietary
information, technical data, or trade secrets, including, but not limited to, research and development, product plans, products,
services, information regarding the skills and compensation of employees of Drone USA or Howco; the identity of the Drone USA’s
and Howco’s clients, potential clients, customers and potential customers, but excluding the United States Government or
any agency thereof, or any branch of the United States military (hereinafter referred to collectively as “Customers”),
the particular preferences, likes, dislikes and needs of those Customers; Customer information regarding contact persons, pricing,
sales calls, timing, sales terms, and service plans; methods, practices, strategies, forecasts, and other marketing techniques;
the identities of key accounts and potential key accounts (but excluding the United States Government or any agency thereof, or
any branch of the United States military); the identities of Drone USA’s and Howco’s suppliers, independent contractors
and consultants, and information regarding contact persons, pricing, sales calls, timing, sales terms, and service plans; methods,
practices, strategies, forecasts, and other techniques of the forgoing; markets, software, developments, inventions, processes,
formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business
information, strategy and cost data; disclosed to Employee by Drone USA either directly or indirectly in writing, orally or by
drawings or observation of parts or equipment or known by Employee with respect to Howco. Employee further understands that Confidential
Information does not include any of the foregoing items which have become publicly known and made generally available through
no direct or indirect wrongful act of Employee or others who were under confidentiality obligations as to the item or items involved.
Further Confidential Information does not include information that is required to be disclosed by order of a governmental agency
or by a court of competent jurisdiction. Further, Employee acknowledges that any and all of the forgoing information with respect
to Howco is expressly covered by the terms of this Section 7 and that no such information has been generally available
or made publicly known and with the sale of Howco to Drone USA, such Confidential Information remains confidential. For avoidance
of doubt, the parties acknowledge that general know-how concerning how to do business with the United States Government or any
agency thereof or any branch of the United States Military is not Confidential Information.


 


b.           Material
Non-Public Information. Employee acknowledges that Drone USA is publicly traded and that U.S. Securities laws prohibit any
person who is in possession of material non-public information about a public company from purchasing or selling that company’s
securities or from providing such information to third parties. Some of the information that Employee will have as an employee
will be material non-public information and is subject to trading restrictions. Employee will not disclose any such information
to third parties or others without the express approval of Drone USA’s Board of Directors and will not engage in any purchase
or sales of Drone USA’s securities except in compliance with its approved trading policies in effect, from time to time.


 




    	 	5	 



     


    

 


c.           Third
Party Information. Employee recognizes that Drone USA and Howco have received and in the future will receive, from third
parties, their confidential or proprietary information subject to a duty on Drone USA’s and Howco’s parts to maintain
the confidentiality of such information and to use it only for certain limited purposes. Employee agrees to hold all such confidential
or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except
as necessary in carrying out Employee’s work for Drone USA consistent with the their agreement(s) with such third parties.


 


d.           Continuing
Obligations. The obligations of this Section 7 shall survive the expiration or termination of this Agreement.


 


8.          Inventions.


 


a.           Inventions
Retained and Licensed. Employee has attached hereto, as Exhibit A, a list describing all inventions, original works of authorship,
developments, and improvements which were made by Employee prior to employment with Drone USA (collectively referred to as “Prior
Inventions”), which belong to Employee, relate to Howco products or research and development, and which are not assigned
to Drone USA hereunder; or, if no such list is attached, Employee represents that there are no such Prior Inventions. If in the
course of employment with Drone USA, Employee incorporates into a Drone USA product, process or technology a Prior Invention owned
by Employee or in which Employee has an interest, Drone USA is hereby granted and shall have an exclusive, royalty-free, irrevocable,
perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such
product, process or machine.


 


b.           Assignment
of Inventions and other Intellectual Property. Employee agrees that Employee will promptly make full written disclosure to
Drone USA, will hold in trust for the sole right and benefit of Drone USA, and hereby assign to Drone USA, or its designee, all
of Employee’s right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts,
improvements or trade secrets, whether or not patentable or registrable under copyright, patent or similar laws, which Employee
may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice
which relate in any way to any Drone USA Products, as defined herein, together with the zone of foreseeable expansion, during
the period of time Employee is in the employ of Drone USA (collectively referred to as “Inventions”). Employee
further acknowledges that all original works of authorship which are made by Employee (solely or jointly with others) within the
scope of and during the period of employment with Drone USA and which are protectable by copyright are “works made for hire,”
as that term is defined in the United States Copyright Act.


 


c.           Maintenance
of Records. Employee agrees to keep and maintain adequate and current written records of all Inventions made by Employee (solely
or jointly with others) during the term of employment with Drone USA. The records will be in the form of notes, sketches, drawings,
and any other format that may be specified by Drone USA. The records will be available to and remain the sole property of Drone
USA at all times.


 




    	 	6	 



     


    

 


d.           Patent
and Copyright Registrations. Employee agrees to assist Drone USA, or its designee, at the Drone USA’s expense, in every
proper way to secure Drone USA’s rights in the Inventions and any copyrights, patents, mask work rights or other intellectual
property rights relating thereto in any and all countries, including the disclosure of Drone USA of all pertinent information
and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments
which Drone USA shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to Drone USA,
its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights,
patents, mask work rights or other intellectual property rights relating thereto. Employee further agrees that Employee’s
obligation to execute or cause to be executed, when it is in Employee’s power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If Drone USA is unable because of Employee’s mental or physical incapacity
or for any other reason to secure Employee’s signature to apply for or to pursue any application of any United States or
foreign patents or copyright registrations covering Inventions or original works of authorship assigned to Drone USA as above,
then Employee hereby irrevocably designates and appoints Drone USA and its duly authorized officers and agents as Employee’s
agent and attorney in fact, to act for and in Employee’s behalf and stead to execute and file any such applications and
to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by Employee.


 


9.          Covenant
Not to Compete, Non-Solicitation.


 


a.           Non
Competition and Non Solicitation. Employee agrees that beginning with the effective date of this Agreement and continuing for
a period of five (5) years after the longer of (x) the termination of Employee’s employment or (y) the first anniversary
of the date hereof, Employee will not alone, or in any capacity with another entity or individual, within any geographic location
in which Howco or Drone USA, at the date of the termination of Employee’s employment, has engaged or has plans to engage
in any business:


 


i.            directly
or indirectly participate or support in any capacity (e.g. as an advisor, principal agent, partner, member, governor, officer,
director, manager, shareholder, owner, employee or otherwise) the sale, solicitation of sale, or marketing, of a Drone USA Product:
“Drone USA Product” means any actual or projected product or product line that has been developed (or is under
active development), marketed or sold by Drone USA or Howco continuing through the termination of Employee’s employment.
Such Drone USA Products shall specifically include, but not be limited to, those products sold to customers of Howco or any products
that were being considered for sale or distribution prior to the effective date of the aforementioned Stock Purchase Agreement.


 


ii.         call
upon, solicit, contact or serve any of the then-existing vendors or suppliers that have had a relationship with Drone USA or Howco
during the preceding twenty four (24) months, or any potential, vendors or suppliers that were solicited by Drone USA or Howco
during the preceding twenty four (24) months in connection a Drone USA Product;


 




    	 	7	 



     


    

 


iii.         disrupt,
damage or impair (or attempt to do the same) with the business of Drone USA or Howco whether by way of interfering with or disrupting
Drone USA’s or Howco’s relationship with their employees, customers, agents, representatives or vendors, or


 


iv.         employ
or attempt to employ (by assisting anyone else in the solicitation of) any of Drone USA’s or Howco’s current employees
on behalf of any other entity or person, whether or not such entity or person competes with Drone USA, Howco or any Drone USA Product.


 


b.           Employee
agrees that the limitations set forth herein on Employee’s rights to compete with Drone USA, Howco and their affiliates are
reasonable and necessary for the protection of Drone USA, Howco and their affiliates. In this regard, Employee specifically agrees
that the limitations as to period of time and geographic area, as well as all other restrictions on activities specified herein,
are reasonable and necessary for the protection of Drone USA, Howco and their affiliates. The substantial sums invested by Drone
USA in Howco’s business also make these restrictions necessary in order to protect Drone USA’s investment. Employee
agrees that, in the event that the provisions of this Agreement should ever be deemed to exceed the scope of business, time or
geographic limitations permitted by applicable law, such provisions shall be and are hereby reformed to the maximum scope of business,
time or geographic limitations permitted by applicable law.


 


c.           Employee
agrees that the remedy at law for any breach of this Section 9 will be inadequate and that Drone USA and/or Howco shall
also be entitled to injunctive relief without the necessity of posting any bond or other security, due to irreparable harm that
such breach would cause.


 


d.           Notwithstanding
any other provision in this Agreement to the contrary, Employer agrees (i) nothing contained in this Agreement shall limit Employee
from doing business with the United States Federal Government so long as it does not involve the direct or indirect participation
or support of the sale, solicitation of sale, or marketing of a Drone USA Product; and (ii) in the event of a default by Employer
under this Agreement or a default by Drone USA, LLC or Howco under the Stock Purchase Agreement or any related agreement, the restrictions
set forth in Section 9 shall automatically terminate, and thereafter, Employee may disregard such non-competition and non-solicitation
provisions and do business in any manner whatsoever.


 


10.         Returning
Documents. Employee agrees that, at the time of leaving the employ of Drone USA, Employee will deliver to Drone USA (and will
not keep in possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions
of any aforementioned items developed by me pursuant to my employment with Drone USA or Howco or otherwise belonging to Drone USA
or Howco, their parent, successors or assigns.




    	 	8	 



     


    

 


11.         Notification
of New Employer. In the event that Employee leaves the employ of Drone USA, Employee hereby grants consent to notification
by Drone USA to any new employer about Employee’s rights and obligations under this Agreement.


 


12.         Representations.
Employee agrees to execute any proper oath or verify any proper document required to carry out the terms of this Agreement.
Employee represents that performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary
information acquired by Employee in confidence or in trust prior to employment by Drone USA. Employee has not entered into, and
agrees not to enter into, any oral or written agreement in conflict herewith.


 


13.         General
Provisions.


 


a.           Governing
Law; and Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington without
reference to principles of conflicts of laws. The parties agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated only in the State or Federal Courts located in the State of Washington. Each of the parties
hereto waives to the extent permitted under applicable law, any right each may have to assert the doctrine of forum non-conveniens
or to object to venue to the extent any proceeding is brought in accordance with this section relating to this Agreement.


 


b.           Entire
Agreement. This Agreement sets forth the entire agreement and understanding between Drone USA and Employee relating to the
subject matter herein and merges all prior discussions between Drone USA and Employee. No modification of or amendment to this
Agreement, nor any waiver of any rights under this agreement, will be effective unless in writing signed by the party to be charged.
Any subsequent change or changes in duties, salary or compensation will not affect the validity or scope of this Agreement.


 


c.           Severability.
If one more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full
force and effect. This Agreement is made and executed pursuant to the provisions of the Stock Purchase Agreement. However, no
default by Employee hereunder shall be deemed to constitute a default under the Stock Purchase Agreement, it being agreed by
the parties that each Agreement shall be separately applied, construed and enfor ced and that a default under one shall not
constitute a default under the other.


 


d.           Successors
and Assigns. This Agreement will be binding upon Employee’s heirs, executors, administrators and other legal representatives
and will be for the benefit of Drone USA, Howco, their successors, and assigns.


 


e.           Waiver
and Amendments: Cumulative Rights and Remedies.


 


i.           This Agreement
may be amended, modified or supplemented, and any obligation hereunder may be waived, only by a written instrument executed by
the parties hereto. The waiver by either party of a breach of any provision of this Agreement shall not operate as a waiver of
any subsequent breach.


 




    	 	9	 



     


    

 


ii.         No
failure on the part of any party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver
hereof, nor shall any single or partial exercise of any such right or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right or remedy. All rights and remedies hereunder are cumulative and are in addition to all
other rights and remedies provided by law, agreement or otherwise.


 


iii.         Employee’s
obligations to Drone USA and Drone USA’s rights and remedies hereunder are in addition to all other obligations of Employee
and rights and remedies of Drone USA created pursuant to any other agreement.


 


f.            Construction.
Each party to this Agreement has had the opportunity to review this Agreement with legal counsel. This Agreement shall not be construed
or interpreted against any party on the basis that such party drafted or authored a particular provision, parts of or the entirety
of this Agreement.


 


	Employee	 
	 	 
	/s/ Kathryn Blake Joy	 
	Kathryn Blake Joy	 


 


	 	DRONE USA, INC.
	 	 
	 	/s/ Michael Bannon
	 	Michael Bannon, CEO


 




    	 	10	 



     


    

 


EXHIBIT A


 


LIST OF PRIOR INVENTIONS


AND ORIGINAL WORKS OF AUTHORSHIP


 


	 	Identifying
	 	 
	Title 	Date	or Brief Description
	Number	 	 


 


	  	 	No inventions or improvements 
	 	 	 
	  	 	Additional Sheets Attached


 


	 	 
	/s/ Kathryn B Joy	 
	Signature of Employee	 
	 	 
	Kathryn B Joy	 
	Print Name of Employee	 


 




    	 	11	 



     


    

 


EXHIBIT E


Unconditional Guaranty of Payment


 


See attached.


 




    EXHIBIT E – 1


     


    

 


UNCONDITIONAL GUARANTY OF PAYMENT


 


THIS
UNCONDITIONAL GUARANTY OF PAYMENT (this “Guaranty”), is made and entered effective as of September
9th, 2016 by Drone USA, Inc., a Delaware corporation (“Guarantor”), whose address is 140
Broadway, Suite 4614, New York, NY, 10005, in favor of Paul Charles Joy II, Trustee of the Paul C. Joy and Kathryn B. Joy
Trust – Fund B, dated December 9, 2003, as amended, and Kathryn Blake Joy, Trustee of the Paul C. Joy and Kathryn B.
Joy Trust –  Fund C, dated December 9, 2003, as amended (collectively, the “Lender”), whose address
is _______________________.


 


DEFINITIONS


 


The following capitalized words and terms
shall have the meaning stated in this section when used in this Guaranty. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.


 


Lender: Paul Charles Joy II, Trustee
of the Paul C. Joy and Kathryn B. Joy Trust – Fund B, dated December 9, 2003, as amended, and Kathryn Blake Joy, Trustee of the
Paul C. Joy and Kathryn B. Joy Trust – Fund C, dated December 9, 2003, as amended


 


Borrower: Drone USA, LLC, a Delaware
limited liability company


 


Guarantor: Drone USA, Inc., a Delaware
corporation


 


Indebtedness: The “Indebtedness”
shall mean every liability or obligation now or hereafter owing from Borrower to Lender as set forth under that Promissory Note
in the beginning principal balance of $900,000.00 of even date being executed by Borrower in favor of Lender (“Note”);
together with any and all Security Agreements or Pledge Agreements executed for the purpose of securing the Borrower’s obligations
under the Note without regard to whether the same may be unenforceable against Borrower due to incapacity, ultra vires, discharge
in bankruptcy, discharge through non-judicial foreclosure, waiver, equitable defense or otherwise.


 


Documents of Indebtedness: The Note
and any Security Agreement(s) or Pledge Agreement(s) executed by Borrower in favor of Lender, and all modifications or amendments
to any of the foregoing.


 


Collateral: Any property (whether
real or personal), rights, estates and interests now or hereafter securing the payment of the Indebtedness and/or the performance
of or performing other obligations of Borrower under any Documents of Indebtedness whether held by Lender or by any person or entity
on Lender’s behalf or for Lender’s account.


 


COVENANTS AND AGREEMENTS


 


For good and valuable consideration, the
receipt and adequacy of which is acknowledged by Guarantor, Guarantor covenants, warrants, and agrees:


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 1 	 



     


    

 


1.       
   Guarantees.


 


a.           Guaranty
of Payment. Guarantor does unconditionally guarantee to Lender the full and prompt payment of the Indebtedness when due, whether
by acceleration or otherwise, with such interest as may accrue thereon and such fees and other charges as may be due in connection
therewith, either before or after maturity thereof.


 


b.           Guaranty
of Obligations. Guarantor does agree that if the Indebtedness is not paid by Borrower under its terms, Guarantor will immediately
make such payments. Guarantor further agrees to pay Lender all expenses (including, without limitation, reasonable attorney fees)
paid or incurred by Lender in endeavoring to collect all or any portion of the Indebtedness, to enforce any other obligations guaranteed,
or to enforce this Guaranty.


 


c.           Amount
Unlimited. This Guaranty shall be unlimited in amount as to all Indebtedness.


 


d.           Duration.
This Guaranty shall take effect upon execution by the Guarantor, with no formal acceptance by Lender required. This Guaranty shall
be deemed to be continuing in nature with regard to Guarantor, shall not be revocable, and shall remain in full force and effect
with respect to Guarantor until all payment obligations undertaken or arising in conjunction with the Indebtedness are fully satisfied.


 


e.           Liability
of Guarantors. This is a guaranty of payment and not of collection. The liability of Guarantor under this Guaranty shall be
direct and immediate and not conditional or contingent upon the pursuit of any remedies against Borrower, any other Guarantor or
any other person, nor against any portion of the Collateral. Guarantor waives any right to require that an action be brought against
Borrower or any other Guarantor or any other person or to require that resort be had to any Collateral. In the event, on account
of the Bankruptcy Code, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction, now or hereafter in effect, which may be or become applicable, Borrower and/or any other Guarantor shall be relieved
of any obligation or liability for the Indebtedness or under any Documents of Indebtedness or this Guaranty, each other Guarantor
shall nevertheless be fully liable under this Guaranty. Lender may enforce its rights, powers and remedies (including, without
limitation, foreclosure of any Collateral) under any Documents of Indebtedness or hereunder, in any order, and all rights, powers
and remedies available to Lender shall be nonexclusive and cumulative of all other rights, powers and remedies provided thereunder
or hereunder or by law or in equity. If the Indebtedness or other obligations guaranteed are partially paid or discharged by exercising
any of the remedies available to Lender, this Guaranty shall nevertheless remain in full force and effect, and each Guarantor shall
jointly and severally remain liable for all remaining Indebtedness and obligations guaranteed hereby, even though any rights which
any Guarantor may have against Borrower or any other Guarantor may be destroyed or diminished by exercising any such remedy, and
if the Indebtedness or other obligations guaranteed are otherwise partially paid or discharged including voluntary payment or prepayment,
application of insurance proceeds or condemnation awards, additional financing or refinancing, or sale of the Collateral or a portion
thereof; with or without the consent or cooperation of Lender, this Guaranty shall remain in full force and effect, and each Guarantor
shall remain jointly and severally liable for all remaining Indebtedness and obligations guaranteed. No exculpatory or similar
provision of the Documents of Indebtedness or any other document regarding the Indebtedness which limits, or relieves Borrower
or any Guarantor or other person or entity from, any personal or direct liability of Borrower shall limit or relieve any other
Guarantor from any such liability, it being the intention of the parties hereto that each Guarantor be and remain liable for the
Indebtedness and all obligations of Borrower under any Documents of Indebtedness notwithstanding any such exculpatory or similar
provision. The obligations of each Guarantor and the rights of Lender are in addition to the obligations of each Guarantor and
the rights of Lender under any other guaranty or indemnity agreement now or hereafter given by any Guarantor to Lender for the
Indebtedness or other obligations guaranteed and payments made under one guaranty or indemnity agreement shall not reduce the liabilities
and obligations of any Guarantor under any other guaranty or indemnity agreement.


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 2 	 



     


    

 


2.     
     Reinstatement of Obligations. If all or any part of any payment made by a Guarantor
or received by Lender from a Guarantor under or regarding this Guaranty is or must be rescinded or returned for any reason
whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of any Guarantor or Borrower), then
the obligations of all Guarantors shall, to the extent of the payment rescinded or returned, be deemed to have continued in
existence, notwithstanding such previous payment made by any Guarantor, or receipt of payment by Lender, and the obligations
of each Guarantor shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such
previous payment by a Guarantor had never been made. If any payment made by Borrower is reclaimed in a bankruptcy or
receivership proceeding, each Guarantor shall be liable for assuring that Lender is paid the amount so reclaimed. Each
Guarantor assigns to Lender all rights such Guarantor may have in any proceeding involving Borrower under the United States
Bankruptcy Code or any receivership or insolvency proceedings involving Borrower, whether or not such rights related to this
Guaranty. Such assignment shall not diminish, alter or otherwise affect any Guarantor’s liability under this
Guaranty.


 


3.    
      Waivers by Guarantors. To the extent permitted by law, Guarantor waives and
agrees not to assert or take advantage of (as a defense or otherwise):


 


a.           Any
right to require Lender to proceed against Borrower or any other person or to proceed against or exhaust the Collateral or any
security held by Lender or to pursue any other remedy in Lender’s power or under any other agreement before proceeding against
any or all of the Guarantors;


 


b.           Demand,
presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind, or the lack of any
thereof including without limitation, notice of the existence, creation or incurring of any new or additional indebtedness or obligation
or of any action or non-action by Borrower, Lender, any endorser or creditor of Borrower or of any Guarantor or by any other person
whomsoever for the Indebtedness or any Documents of Indebtedness;


 


c.           The
defense of the statute of limitations in any action; any defense that may arise by the incapacity, lack of authority, death or
disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other person or persons; any failure of Lender to provide any notice to Lender or any
Guarantor; all defenses given to sureties or guarantors at law or in equity other than the actual payment of the Indebtedness and
performance of all obligations under any Documents of Indebtedness and all defenses based upon questions on the validity, legality
or enforceability of the Indebtedness and/or any Documents of Indebtedness; any defense based upon an election of remedies by Lender;
any principle or provision of law, statutory or otherwise, which is or might conflict with the terms and provisions of this Guaranty;


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 3 	 



     


    

 


d.           Any
failure by Lender to ascertain the extent or nature of any Collateral or any insurance or other rights with respect thereto, or
the liability of any party liable for the Indebtedness or any obligations secured by the Collateral; any lack of notice of disposition
or of manner of disposition of any Collateral; failure to properly record any document or any other lack of due diligence by Lender
in creating or perfecting a security interest in or collection, protection or realization upon any Collateral; any sale or assignment
by Borrower of any Collateral, or any portion thereof or interest therein, whether or not consented to by Lender; any lack of commercial
reasonableness in dealing with any Collateral; any deficiencies in the Collateral or any deficiency in the ability of Lender to
collect or to obtain performance from any persons or entities now or hereafter liable for the payment and performance of any obligation
guaranteed;


 


e.           Any
invalidity, irregularity or unenforceability, in whole or in part, of the Indebtedness or Documents of Indebtedness; the inaccuracy
of any representation or other provision in any Documents of Indebtedness; any modifications of the Indebtedness or any Documents
of Indebtedness by operation of law or by action of any court, whether under the Bankruptcy Code, or any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction, now or hereafter in effect, or otherwise; any sale
or assignment of the Indebtedness or Documents of Indebtedness, in whole or in part;


 


f.            The
release of Borrower or of any other Guarantor or of any other person or entity from payment of the Indebtedness or performance
under any Documents of Indebtedness by operation of law, Lender’s voluntary act or otherwise; any change in the composition
of Borrower, including, without limitation, the withdrawal or termination of Guarantor from its relationship or association with
Borrower;


 


g.           Any
duty by Lender to disclose to Guarantor any facts Lender may now or hereafter know about Borrower or any Collateral, regardless
of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to
assume or has reason to believe that such facts are unknown to Guarantor or has a reasonable opportunity to communicate such facts
to Guarantor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial
condition of Borrower, of the condition of any Collateral and of all circumstances bearing on the risk that liability may be incurred
by Guarantor;


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 4 	 



     


    

 


h.           An
assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or involuntary bankruptcy
proceeding of Borrower) or any other stay provided under any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction, now or hereafter in effect, which may be or become applicable, shall operate or be interpreted
to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any of its rights, whether now or hereafter acquired,
which Lender may have against Guarantor or any Collateral; each Guarantor covenants and agrees that, upon the commencement of a
voluntary or involuntary bankruptcy proceeding by or against Borrower, such Guarantor shall not seek or cause or any other person
or entity to seek a supplemental stay or other relief, whether injunctive or otherwise, under the Bankruptcy Code or the laws of
any jurisdiction, to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any rights of Lender against
any Guarantor or any Collateral by virtue of this Guaranty or otherwise;


 


i.            Any
right or claim or right to cause a marshalling of the assets of any Guarantor; any action, occurrence, event or matter consented
to by any Guarantor under any provision of this Guaranty or otherwise.


 


4.    
      Independent Obligations.  Guarantor acknowledges that, under applicable law,
Borrower may be relieved of further liability after the completion of a sale, including a non-judicial foreclosure sale of
Collateral. Notwithstanding Borrower’s discharge, each Guarantor unconditionally covenants and agrees, to the fullest
extent permitted by law, to pay: a) any deficiency balance as defined by applicable law; b) all costs of restoring, managing,
and selling Collateral acquired by sale or non-judicial foreclosure including management fees, transfer costs and sales
commissions; c) unpaid obligations for utility service obligations affecting any of the Collateral whether or not said unpaid
obligations are or become liens against the Collateral; d) Lender’s appraisal costs, inspection fees, attorney fees,
and all other costs and expenses of any kind or nature incurred because of acquiring and disposing of Collateral; and e) any
cost or expense for which Borrower would be liable but for the anti-deficiency provisions of any law.


 


5.       
   General Provisions.


 


a.           Full
Recourse. All of the terms and provisions of this Guaranty are recourse obligations of Guarantor and not restricted by any
limitation on personal ability of any Guarantor.


 


b.           Condition
of Borrower and other Guarantors. Guarantor warrants and represents that such Guarantor fully knows of the financial condition
of Borrower and any other Guarantors and is executing and delivering this Guaranty based solely upon such Guarantor’s own
independent investigation of all matters pertinent hereto, and that such Guarantor is not relying in any manner upon any representation
or statement of Lender. Guarantor warrants, represents and agrees that such Guarantor can obtain, and such Guarantor assumes full
responsibility for obtaining, any additional information concerning the financial condition of Borrower and any other Guarantor
and any other matter pertinent hereto, and that no Guarantor is relying upon Lender to furnish, and that no Guarantor shall have
any right to require Lender to obtain or disclose, any information regarding the Indebtedness or obligations guaranteed, the financial
condition or character of Borrower or any other Guarantor, or the ability of Borrower or any other Guarantor to pay the Indebtedness
or perform the obligations guaranteed, the existence of any Collateral or security for any or all of the Indebtedness or obligations
guaranteed hereby, the existence or nonexistence of any other guaranties of all or any part of the Indebtedness or obligations
guaranteed hereby, any actions or non-action by Lender, Borrower, any other Guarantor or any other person or entity, or any other
matter, fact or occurrence. By executing this Guaranty, each Guarantor acknowledges and knowingly accepts the full range of risks
encompassed within a contract of guaranty.


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 5 	 



     


    

 


c.           No
Subrogation: No Recourse Against Lender: Subordination. Notwithstanding the satisfaction by any or all Guarantors of any liability
hereunder, no Guarantor shall have any right of subrogation, contribution, reimbursement or indemnity or any right of recourse
to or regarding the assets or property of Borrower or to any Collateral. For the foregoing, each Guarantor expressly waives all
rights of subrogation to Lender against Borrower, and each Guarantor waives any rights to enforce any remedy, which Lender may
have against Borrower and any right to participate in any Collateral. Besides and without limiting the foregoing, each Guarantor
subordinates all indebtedness of Borrower now or hereafter owed to such Guarantor to all indebtedness of Borrower to Lender. Further,
no Guarantor shall have any right of recourse against Lender by any action Lender may take or omit to take under this Guaranty
or under the provisions of the Indebtedness or Documents of Indebtedness.


 


d.           Rights
Cumulative. Lender’s rights under this Guaranty shall be in addition to all rights of Lender under any Documents of Indebtedness.


 


e.           Consents.
Guarantor consents and agrees that Lender may, from time to time, without notice to or further consent from such Guarantor, either
with or without consideration: release and surrender any Collateral or any portion thereof; substitute for any Collateral held
by or on behalf of Lender other collateral of like kind, or of any kind; make additional advances or increase the Indebtedness;
agree to modify the terms of any one or more of the Documents of Indebtedness; extend or renew the terms of the Indebtedness for
any period; grant releases, compromises and indulgences regarding the Indebtedness or any one or more of the Documents of Indebtedness
and to any persons or entities now or hereafter liable thereunder or hereunder; release Borrower, any other Guarantor or endorser
of or other person or entity liable for the Indebtedness or upon any of the Documents of Indebtedness; or take or fail to take
any action of any type. No such action which Lender shall take or fail to take in connection with the Indebtedness, Documents of
Indebtedness, or any Collateral, nor any course of dealing with Borrower or any other Guarantor or any other person, shall limit,
impair or release any Guarantor’s obligation, affect this Guaranty or afford any Guarantor any recourse against Lender. Nothing
in this section shall be construed to require Lender to take or refrain from taking any action referred to herein.


 


f.            Entire
Agreement: Amendment; Severability. This Guaranty contains the entire agreement between and among the parties respecting the
matters set forth and supersedes all prior agreements, whether written or oral, between the parties respecting such matters; and
all Guarantors and Lender acknowledge there are no contemporaneous oral agreements with respect to the subject matter hereof. This
Guaranty may not be changed, modified or amended, except by a writing executed by the parties hereto; and no obligation of Guarantor
can be released or waived by Lender or any agent of Lender, except by a writing duly executed by Lender. A determination that any
provision of this Guaranty is unenforceable or invalid shall not affect the enforceability or validity of any other provision,
and any determination that applying any provision of this Guaranty to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 6 	 



     


    

 


g.           Governing
Law: Binding Effect; Assignment: Waiver of Acceptance. This Guaranty shall be governed by and construed under the laws of the
State of Washington, except to the extent that foreclosure of other state laws of Washington may apply to Collateral now or hereafter
located in the State of Washington, and except to the extent the applicability of any of such laws may now or hereafter be preempted
by Federal law, in which case Washington or Federal law, as applicable, shall so govern and be controlling. This Guaranty shall
be binding upon each Guarantor and the heirs, executors, legal representatives, successors and assigns of such Guarantor and shall
inure to the benefit of Lender and its legal representatives, successors and assigns. This Guaranty shall in no event be impaired
by any change which may arise by the termination or dissolution of Borrower or any Guarantor. Each Guarantor has executed this
Guaranty individually and not as a partner of Borrower or any other Guarantor. This Guaranty is assignable by Lender, and any full
or partial assignment by Lender shall operate to vest in the assignee all rights and powers herein conferred upon and granted to
Lender and so assigned by Lender, each Guarantor expressly waives notice of transfer or assignment of this Guaranty and acknowledges
that the failure by Lender to give any such notice shall not affect the liabilities of each Guarantor hereunder. Notwithstanding
the foregoing, no Guarantor shall assign any of its rights or obligations under this Guaranty. Each Guarantor waives any acceptance
of this Guaranty by Lender, and this Guaranty shall immediately be binding upon each Guarantor.


 


h.           Notice.
All notices, demands, requests or other communications (“Notices”) required or permitted to be sent by one
any party to another or required by law shall be in writing and shall be deemed to have been validly given or served by delivery
of the same in person to the intended addressee, or by depositing the same with Federal Express or another reputable private courier
service for next business day delivery to the intended addressee at its address on the first page of this Guaranty or at such
other address as designated by such party as herein provided, or by depositing the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed to the intended addressee at its address on the first page of
this Guaranty or at such other address as designated by such party as herein provided. All notices, demands and requests shall
be effective upon such personal delivery, or one (1) business day after being deposited with the private courier service, or two
(2) business days after being deposited in the United States mail as required above. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt
of the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days’ prior written notice
thereof in accordance with the provisions hereof, the parties hereto shall have the right from time to time to change their respective
addresses and each may specify as its address any other address within the United States of America. Each Guarantor irrevocably
appoints Borrower as such Guarantor’s representative for purposes of receiving any and all Notices; and irrevocably covenants
that Notice provided to Borrower shall constitute Notice to all Guarantors.


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 7 	 



     


    

 


i.            No
Waiver: Time of Essence; Business Day. The failure of any party hereto to enforce any right or remedy, or to promptly enforce
any such right or remedy, shall not constitute a waiver thereof nor give rise to any estoppel against such party nor excuse any
of the parties hereto from their respective obligations. Any waiver of such right or remedy must be in writing and signed by the
party to be bound. This Guaranty is subject to enforcement at law or in equity, including actions for damages or specific performance.
Time is of the essence hereof. The term “business day” as used herein shall mean a weekday, Monday through Friday,
except a legal holiday or a day on which banking institutions in New York, New York are authorized by law to be closed.


 


j.            Attorney
Fees. If it is necessary for Lender to retain the services of an attorney or any other consultants to enforce this Guaranty,
or any portion thereof, each Guarantor agrees to pay to Lender all costs and expenses, including, without limitation, attorneys’
fees, incurred by Lender as a result thereof and such costs, fees and expenses shall be payable to Lender upon demand.


 


k.          Joint
and Several. Where two or more persons or entities have executed or hereafter execute this Guaranty, all references to “Guarantor”
shall mean all of the signatories hereon as Guarantors or either or any of them, notwithstanding that they may be collectively
defined as Guarantor in singular. All of the obligations and liability of each signatory constituting collectively “Guarantor”
or “Guarantors” shall be joint and several as to the signatories hereon and as to any other guarantors of the Indebtedness
under other guaranty agreements. Suit may be brought against said all of the guarantors, jointly and severally, or against any
one or more of them, less than all, without impairing the rights of Lender against the other or others of the guarantors; and Lender
may compromise with any one or more of the guarantors for such sums or sum as it may see fit and/or release such of the guarantors
from all further liability to Lender for such indebtedness without impairing the right of Lender to demand and collect the balance
of such indebtedness from the other or others of the guarantors not so compromised with or released; but it is agreed among the
guarantors themselves, however, that such compromise and release shall in nowise impair the rights of the guarantors as among themselves.


 


1.          Successive
Actions. A separate right of action shall arise each time Lender acquires knowledge of any failure of payment or performance
of any matter guaranteed by any Guarantor under this Guaranty. Separate and successive actions may be brought to enforce any of
the provisions hereof at any time and from time to time. No action shall preclude any subsequent action, and each Guarantor waives
and covenants not to assert any defense in the nature of splitting of causes of action or merger of judgments.


 


m.           Reliance.
Lender would not extend credit to Borrower without this Guaranty. Each Guarantor intentionally and unconditionally enters into
the covenants and agreements and understands that, in reliance upon and in consideration of such covenants and agreements, credit
may be extended and, as part and parcel thereof, specific monetary and other obligations have been, are being and shall be entered
into which would not be made or entered into but for such reliance.


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 8 	 



     


    

 


n.           Submission
to Jurisdiction. Each Guarantor, to the full extent permitted by law, knowingly, intentionally and voluntarily, with and upon
the advice of competent counsel, (a) submits to personal jurisdiction in the State of Washington or in the state in which the property
is located over any suit, action or proceeding by any person arising from or relating to this guaranty, (b) agrees that any such
action, suit or proceeding may be brought in any state or federal court of competent jurisdiction sitting in the State of Washington,
(c) submits to the jurisdiction of such courts, and, (d) to the fullest extent permitted by law, agrees not to bring any action
suit or proceeding in any forum other than in the state or federal courts located within the State of Washington (but nothing herein
shall affect the right of Lender to bring any action, suit or proceeding in any other appropriate forum).


 


o.           Relationship
to Borrower; Consideration. Each Guarantor hereunder warrants to Lender that such Guarantor is affiliated with Borrower and
the obtaining of credit by Borrower is of substantial benefit to such Guarantor. Each Guarantor voluntarily and intentionally enters
into this Guaranty and acknowledges the receipt and adequacy of consideration for each and every undertaking herein.


 


IN WITNESS WHEREOF, each Guarantor has
executed this Guaranty as of the day and year first above written.


 


ORAL AGREEMENTS OR ORAL COMMITMENTS
TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.


 


GUARANTOR:


 


DRONE USA, INC.,


a Delaware corporation


 


 


	/s/ Michael
    Bannon	 
	By:	 Michael Bannon	 
	Its:	CEO	 


 




    	UNCONDITIONAL GUARANTY OF PAYMENT - 9