Document:

EMPLOYMENT,
LOCK-UP AND OPTIONS AGREEMENT

 

This Employment
Agreement (this “Agreement”) dated December 15, 2015 is entered into by and between AmericaTowne, Inc.,
a Delaware corporation with a mailing address for notice purposes at 4700 Homewood Court, Suite 100 Raleigh, North Carolina 27609
(the “Company”) and Juan Mendez, an individual with a mailing address of at 802 North Franklin Street, Wake
Forest, NC 27587, USA (the “Employee”).

 

WHEREAS, Company
wishes to compensate Employee for past services rendered and other consideration, and to retain the continued services of Employee,
and the Employee wishes to continue with his employment by the Company in consideration of the stock issuance remuneration agreed
to herein, including those options and lock-up periods set forth herein.

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained in this Agreement, the parties agree as follows:

 

1. Employment.
The Company hereby employs Employee to serve as its “Vice President for Marketing USA Latin America and Latino Markets”
and Employee hereby accepts such employment by the Company, upon the terms and conditions herein provided.

 

2. Duties and Responsibilities.
Employee shall report to the Board of Directors of the Company pursuant to the procedures set forth in the Company’s
Bylaws. Employee agrees to discharge such duties as may be delegated to him from time-to-time by the Company.  The Company
reserves the right to change or modify the designation of Employee or his duties at Company's discretion from time-to-time. During
the term of his employment, unless an actual conflict arises, Employee is authorized to engage in any other business or occupation
provided he has the ability to dedicate, at the very least, twenty hours a month towards the performance of his duties hereunder.
Employee is not prohibited from making passive or personal investments for which the expenditure of time is not required. 
Employee acknowledges that he shall travel, as reasonably required by the Company, in connection with his employment, subject to
the Company paying any and all reasonable expenses in advance of such travel.

 

3. Location.
The initial principal location where the Employee shall perform services for the Company shall not be limited to any particular
location; however, upon establishment by the Company of a permanent business location, the Employee agrees to report, as needed
and no less than weekly, to the permanent business location.

 

4. Term.
This Agreement shall commence on the Effective Date. There will be a three-month temporary period starting on the effective date
extending for three consecutive months. Provided that the employee successfully completes the trail period as determined by the
Company, this agreement shall continue for a period of three years (the “Initial Term”). At the expiration of
the Initial Term, this Agreement shall be extended for additional successive one (1) year terms at the option of the Company upon
providing Employee with written notice no later than thirty (30) days prior to the expiration of the Initial Term (the “Renewal
Term”). The Initial Term and Renewal Term are collectively defined herein as the “Term.”

 

5. Vacation and
Sick Leave. Employee shall be entitled to the number of paid vacation days that is consistent with existing Company policies
for its Employee officers, and as provided for in the Compensation Schedule.  Employee shall also be entitled to all paid
holidays given by the Company to its Employee officers.

 

6. Compensation.
The Company and the Employee agree that the Employee shall be compensated in the manner and form set forth in the “Compensation
Schedule” attached hereto as Schedule A.

    	-1- 

    	 

    

 

 

7. Termination.
The Company may terminate this Agreement without cause at any time upon thirty (30) days written notice to the Employee. The Employee
may terminate this Agreement without cause at any time upon thirty (30) days’ written notice to the Company. If requested
by the Company, the Employee shall continue to perform his duties and shall receive a mutually agreeable salary up to the date
of termination. In addition, the Company at its discretion may pay the Employee a severance allowance on the date of the termination.

 

The Company may terminate this Agreement
“for cause” immediately without any notice, and without compensation of any kind whether salary or severance, for any
of the following events: (i) If Employee is convicted for an offence of felony or any act involving moral turpitude; (ii) If
Employee commits any act of theft, fraud, dishonesty, or falsification of an employment record; (iii) If Employee commits any
breach of this Agreement which remains uncured for a period of 14 days following written notice of such breach; (iv) If
Employee fails to perform reasonable assigned duties, or fails to perform those duties expected of an officer of a publicly reporting
company to the United States Securities and Exchange Commission; (v) If Employee improperly discloses Company’s confidential
information; or (vi) If Employee commits any act which causes detrimental effect to Company’s reputation and business.

 

THE PARTIES AGREE
THAT ANY COMPENSATION PAID PRIOR TO ANY EVENT OF TERMINATION, INCLUDING MONEY, STOCK OR OTHER FORMS OF COMPENSATION SHALL BE CONSIDERED
FULLY EARNED AND NOT SUBJECT TO ANY CLAWBACK, UNLESS SUCH MONEY, STOCK OR OTHER FORM OF CONSIDERATION WAS OBTAINED THROUGH FRAUD,
FALSE PRETENSES OR OTHER INTENTIONAL TORT COMMITTED BY THE EMPLOYEE.

 

8. Expenses.
Pursuant to Company policy, and to the extent not set forth in the Compensation Schedule, the Company shall reimburse the Employee
for all authorized travel and other reasonable expenses incurred by him in furtherance of the Company’s business upon the
Employee’s presentation of an itemized account of expenditures.

 

9. Benefit Plans.
During the Term, the Employee shall be entitled to participate in any medical and dental plans, life and disability insurance plans,
retirement plans and any other fringe benefit plans or programs maintained by the Company for the benefit of its Employees. Nothing
in this Agreement shall preclude the Company from terminating or amending any Employee benefit plan or program from time to time.

 

10. Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

 

11. Mediation
and Arbitration. Any controversy or claim arising out of or in relation to this Agreement or the validity, construction or
performance of this Agreement, or the breach thereof, shall be resolved by private arbitration before a single arbitrator pursuant
to the procedures set forth herein. In selecting a single arbitrator, in the event the parties are unable to reach a mutual decision
on the arbitrator within a commercially reasonable time, the Employee and the Company, through their attorneys, shall submit three
names to the Chief Financial Officer/Treasurer of the Company, who in turn, shall place the names on separate sheets of paper of
equal dimension, fold and place in a container for selection. The parties may either, within a commercially reasonable period of
time, (a) meet in person to select a name out of the container, (b) agree to do the selection through a video feed of the process,
or (c) have the Chief Financial Officer/Treasurer turn over the container to an independent third-party at his choosing, who in
turn would commence the drawing and then provide the parties with the name of the arbitrator chosen. The parties agree to waive
any and all claims or defenses related to the selection of the arbitrator.

 

The parties shall
have the right to engage in pre-hearing discovery in connection with such arbitration proceedings. The parties agree hereto that
they will abide by and perform any award rendered in any arbitration conducted pursuant hereto, that any court having jurisdiction
thereof may issue a judgment based upon such award and that the prevailing party in such arbitration and/or confirmation proceeding
shall be entitled to recover its reasonable attorneys' fees and expenses. The arbitration award shall be final, binding and non-appealable.
The Parties agree to utilize the arbitration rules of the American Arbitration Association for all aspects of the private arbitration.

    	-2- 

    	 

    

 

 

12. Notices.
Any notice to be given hereunder by any party to the other, may be effected either by personal delivery in writing, or by mail,
registered or certified, postage pre-paid with return receipt requested. Mailed notices shall be addressed to the parties at the
addresses appearing in the introductory paragraphs of this Agreement, but each party may change their address by written notice
in accordance with this paragraph. Notices delivered personally shall be deemed communicated as of actual receipt; mailed notices
shall be deemed communicated as of five (5) days after mailing. The Employee agrees to keep the Company current as to his or her
business and mailing addresses, as well as telephone, email and mobile numbers.

 

13. Waiver.
The waiver by either party hereto of any breach of any provision of this Agreement shall not operate or be construed as a waiver
or any subsequent breach by either party hereto.

 

14. Proprietary
Information. The Employee agrees that all processes, procedures, programs, discoveries, ideas, conceptions, formulae, improvements,
developments, technologies, designs, inventions, processes, designs, software, firmware, hardware, diagrams, copyrights, trade
secrets, and any other proprietary information (collectively, the “Proprietary Information”), whether or not patentable
or copyrightable, conceived, developed, invented, or made solely by the Employee, or jointly with others, during the Term of the
Agreement shall be the property of, and belongs to, the Company.

 

The Employee agrees
to promptly and freely disclose to the Company all such Proprietary Information which Employee conceives as a result of his employment
by the Company, and Employee agrees to assign and hereby does assign all of his interest therein to the Company. Whenever requested
to do so by the Company, Employee shall execute any and all applications, assignments, or other instruments, which the Company
shall deem necessary to apply for and obtain Letters Patent or Copyrights of the United States, or any foreign country, to otherwise
protect the Company's interest in the Proprietary Information or to vest title to the Proprietary Information in the Company. These
obligations shall survive the termination of Employee's employment and shall be binding upon Employee's assigns, executors, administrators,
and other legal representatives.

 

15. Binding Effect
and Assignment. This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns and
the Employee and his heirs and legal representatives.  This Agreement is personal as to Employee and may not be assigned by
Employee without first obtaining the written consent of the Company. This Agreement may be assigned by the Company without the
prior consent of Employee.

 

16. Severability.
The unenforceability of any provision or provisions of this Agreement shall not affect the enforceability of any other provision
of this Agreement. If, for any reason, any provision of this agreement is held invalid, all other provisions of this agreement
shall remain in effect. If this agreement is held invalid or cannot be enforced, then to the full extent permitted by law any prior
agreement between the Company (or any predecessor thereof) and the Employee shall be deemed reinstated as if this agreement had
not been executed.

 

17. Entire Understanding.
This Agreement, along with Schedule A, contains the entire understanding of the parties relating to the employment of the Employee
by the Company.  It may be changed only by an agreement in writing signed by the party or parties against whom enforcement
of any waiver, change, modification, extension or discharge is sought.

 

18. Amendment
and Default. This Agreement may be amended in whole or part at any time and from time to time but only in writing in a form
substantially similar to the form hereof.  In the event of default or breach of any of the terms and conditions hereof the
defaulting party agrees to pay the reasonable attorneys’ fees incurred by the other party in enforcing the provisions hereof.

 

19. Counterparts
and Electronic Signatures. This Agreement may be executed in counterpart, and may be executed by way of facsimile or electronic
signature, and if so, shall be considered an original.

 

    	-3- 

    	 

    

 

 

 

IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first above written.

AGREED:

 

EMPLOYEE                                   AMERICATOWNE, INC.

 

By /s/Juan Mendez     12/15/2015     By
/s/Alton Perkins     12/15/2015

Juan Mendez                                    Alton Perkins

                                                       Chairman of the Board

                                           Chief Executive Officer

    	-4- 

    	 

    

 

 

 

SCHEDULE A

 

COMPENSATION SCHEDULE

 

This Compensation
Schedule (this “Schedule”) dated December 15, 2015 is entered into by and between AmericaTowne, Inc., a
Delaware corporation with a mailing address for notice purposes at 4700 Homewood Court, Suite 100 Raleigh, North Carolina 27609
(the “Company”) and Juan Mendez, an individual with a mailing address of at 802 North Franklin Street, Wake
Forest, NC 27587, USA (Employee), and is incorporated and merged with the Employment Agreement executed by the Company and
the Employee (the “Agreement”).

 

1. Effective
Date. This Schedule is effective upon approval by the Company’s Board of Directors, and shall continue until such time
the Agreement is terminated under the applicable provisions therein.

 

2. Compensation/Salary
& Benefits. Based upon the company’s cash flow and capital raised, the Company at its discretion will pay salaries,
and benefits to key management staff, other employees and persons. Salaries and benefits may include commissions, health plans,
transportation compensation and other benefits. The Board will determine the type, amount, timing and distribution of these salaries
and benefits. For this consideration, key employees agree to be bound by this agreement.

 

3. Compensation/Stock
Issuance. Ninety days after successful employment, the Company agrees to issue 25,000 shares of the Company’s
common stock (the “Shares”) to the Executive in consideration of his services. Upon issuance of the common stock, the
shares shall be considered outstanding and fully paid. The Shares shall be subject to the following terms and conditions:

 

			3.1. Employee’s Representations. In connection with the issuance and acquisition of
the Shares, the Employee hereby represents and warrants to the Company as follows:

 

			3.1.1. The Employee is acquiring and will hold the Shares for investment for his account only and
not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities
Act of 1933 (the “Securities Act”).

 

			3.1.2. The Employee understands that the Shares have not been registered under the Securities Act
by reason of a specific exemption therefrom and that the Shares must be held indefinitely, unless they are subsequently registered
under the Securities Act, or the Employee obtains an opinion of counsel, in form and substance satisfactory to the Company and
its counsel, that such registration is not required. The Employee further acknowledges and understands that the Company is under
no obligation to register the Shares.

 

			3.1.3. The Employee is aware of the adoption of Rule 144 of the Securities and Exchange Commission
under the Securities Act, which permits limited public resales of the securities acquired in a non-public offering, subject to
the satisfaction of certain conditions. The Employee acknowledges and understands that the conditions for resale set forth in Rule
144 have not been satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future.

 

			3.1.4. The Employee has been furnished with, and has had access to, such information as he considers
necessary or appropriate for deciding whether to invest in the Shares, and has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the issuance of the Shares.

    	-5- 

    	 

    

 

 

			3.1.5. The Employee is aware that his investment in the Company is a speculative investment that
has limited liquidity and is subject to the risk of complete loss. The Employee is able, without impairing his financial condition
to hold the Purchased Shares for an indefinite period and to suffer a complete loss of his investment in the Purchased Shares.

 

			3.2. Limitations on Transfer of The Shares. The Employee shall not sell, assign, transfer,
pledge, hypothecate, mortgage, encumber or otherwise dispose of all or any of the Shares except as expressly provided in this Agreement.
Notwithstanding, the Employee may transfer all or any of his Shares: (a) by way of gift to any member of his family or to any trust
for the benefit of any such family member or the Employee; provided, however that any such transferee shall agree
in writing with the Company, as a condition to such transfer, to be bound by all of the provisions of this Agreement to the same
extent as if such transferee were the Employee, or by will or the laws of descent and distribution, in which event each transferee
shall be bound by all of the provisions of this Agreement to the same extent as if such transferee were the Employee. As used herein,
the word “family” shall include any spouse, lineal ancestor or descendant, brother or sister.

 

			3.3. Right of First Refusal on Disposition of The Shares.

 

			3.3.1. If at any time the Employee desires to sell for cash any of the Shares pursuant to a bona
fide offer from a third party (the “Proposed Transferee”), the Employee shall submit a written offer (the “Offer”)
to sell such Shares (the “Offered Shares”) to the Company on terms and conditions, including price, not less
favorable to the Company than those on which the Employee proposes to sell such Offered Shares to the Proposed Transferee. The
Offer shall disclose the identity of the Proposed Transferee, the number of Offered Shares proposed to be sold and the price thereof,
the total number of Shares owned by the Employee, and the terms and conditions of, and any other material facts relating to, the
proposed sale.

 

			3.3.2. The Company shall have an option for a period of 21 days (the “Company Option Period”)
following in receipt of the Offer to purchase some or all of the Offered Shares in place of the Proposed Transferee. If the Company
desires to purchase any of the Offered Shares, it shall notify the Employee of such election during the Company Option Period,
stating the number of Offered Shares it desires to purchase. Such notice shall, when taken in conjunction with the Offer, be deemed
to constitute a valid, legally binding and enforceable agreement for the sale and purchase of such Offered Shares.

 

			3.3.3. If the Company does not purchase all of the Offered Shares, the Offered Shares not so purchased
may be sold by the Employee at any time within 42 days after the date the Offer was made (i.e. 21 days after the expiration of
the option period in Section 3.3.2, above), subject to the provisions of Section 3.4 and Section 3.5 of this Schedule. Any such
sale shall be to the Proposed Transferee at not less than the price and upon other terms and conditions, if any, not more favorable
to the Proposed Transferee than those specified in the Offer. Any Offered Shares not sold within such 42 day period shall continue
to be subject to the requirements of a prior offer pursuant to this Section 3.3. Offered Shares that are sold pursuant to this
Section 3.3 to any person who is not a party hereto shall no longer be subject to this Schedule.

 

			3.4. Additional Restrictions on Resale.

 

			3.4.1. Securities Law Restrictions. Regardless of whether the offering and sale of the Shares
under this Schedule have been registered under the Securities Act or have been registered or qualified under the securities laws
of any state, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of the Shares (including
the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment
of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities
laws of any state or any other law.

    	-6- 

    	 

    

 

 

			3.4.2. Market Stand-Off. In connection with any underwritten public offering by the Company
of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s
initial/primary public offering, the Employee shall not directly or indirectly sell, make any short sale of, loan, hypothecate,
pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale
of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Purchased
Shares without the prior written consent of the Company or its underwriters. Such restriction (the “Market Stand-Off”)
shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the
Company or such underwriters. In no event, however, shall such period exceed 180 days. In the event of the declaration of a stock
dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the
Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are
by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares
thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the
Company may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period.
The Company’s underwriters shall be beneficiaries of the agreement set forth in this Section 3.4.2. This Section 3.4.2 shall
not apply to Shares registered in the public/primary public offering under the Securities Act, and the Employee shall be subject
to this Section 3.4.2 only if all directors, officers, holders of at least 25% of the outstanding stock of the Company are subject
to similar arrangements. This Section 3.4.2 shall expressly survive a termination of this Schedule.

 

			3.4.3 Lock-Up Provisions. In addition to the other restrictions provided in this Schedule,
the Employee agrees to the following limitations and lock-up provisions:

 

			3.4.3.1 The Employee shall not dispose or convey greater than ten-percent (10%) of the Shares between
the first day after the first year after issuance and the conclusion of the second year after issuance.

 

			3.4.3.1 The Employee shall not dispose or convey greater than twenty percent (20%) of the Shares
between the conclusion of the first year up to and after the first day of the third year after issuance.

 

			3.4.4 Rights of the Company. The Company shall not be required to transfer on its books
any Shares that have been sold or transferred in contravention of this Agreement or treat as the owner of Purchased Shares, or
otherwise to accord voting, dividend or liquidation rights to, any transferee to whom Purchased Shares have been transferred in
contravention of this Agreement.

 

			3.5. Termination of Restrictions. This Section 3.4.3 shall terminate (a) immediately prior
to the consummation of the first firm commitment underwritten public offering to an effective registration statement on Form S-1
(or its then equivalent) under the Securities Act, pursuant to which the aggregate price paid for the public to purchase of Stock
is at least $10.00, or (b) on the third anniversary of the date of this Schedule, whichever occurs first. It is the intent of the
Employee to agree to this holding period as an agreed upon “lock-up” period in consideration of his services to the
Corporation.

    	-7- 

    	 

    

 

 

			3.6. Enforcement of Agreement. The Employee expressly agrees that the Company will be irreparably
damaged if this Agreement is not specifically enforced. Upon a breach or threatened breach of the terms, covenants or conditions
of this Agreement by the Employee, the Company shall, in addition to all other remedies, be entitled to a temporary or permanent
injunction, without showing any actual damage, or a decree for specific performance, in accordance with the provisions hereof.
If the Employee fails to fulfill any obligation to sell Shares to the Company under the Agreement, the Company may, at its option,
in addition to all other remedies it may have, send to the Employee the purchase price for such Shares as specified in this Agreement.
Thereupon the Company, upon written notice to the Employee, (a) shall cancel on its books the certificate or certificates representing
the Shares to be sold and (b) shall issue, in lieu thereof, in the name of the Company as treasury shares, a new certificate or
certificates representing such Shares, and all of the Employee’s rights in and to such Shares shall terminate.

 

			3.7. Tax Election. The issuance of the Shares may result in adverse tax consequences that
may be avoided or mitigated by filing an election under Section 83(b) of the Internal Revenue Code of 1986 (the “Section
83(b) Election”) within 30 days after the date of purchase. The Employee acknowledges that he has consulted with his
tax advisor to determine the tax consequences of acquiring the Purchased Shares and the advantages and disadvantages of filing
the Section 83(b) Election and that it is his sole responsibility, and not the Company’s, to file the Section 83(b) Election
in a timely manner, even if the Employee request the Company to make such filing on his behalf.

 

			3.8 Legend. Each certificate evidencing any of the Shares shall bear a legend substantially
as follows:

 

THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHCATED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH ANY AND ALL APPLICABLE STATE AND FEDERAL SECURITIES LAWS, AND IN COMPLIANCE WITH THE EMPLOYMENT
AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER.

 

4. Compensation
and Other Consideration. Unless subsequently modified by the Company and Executive in writing, the issuance of the Shares constitutes
the Executive’s compensation.

 

5. Stock Option.
Upon successful completion of the temporary period, the Company agrees to issue the Employee an option to purchase up to 80,000
shares of common stock of the Company in increments of one forth (80,000/4) per year over a four-year period. Annually for four
years starting in the year 2016, during the period December 1 to December 31 of each year, the employee may purchase up to 20,000
shares at a price of $0.50 per share. Prior to issuing the shares the funds owed through a third party arrangement must
be paid. The Chairman of the Board must certify that these funds have been paid. The shares purchased under this option shall be
considered subject to all rights and restrictions set forth in this Schedule.

 

6. Employee Stock
Option Plan. Employee shall be entitled to participate in the Employee Stock Option Plan of the Company once approved by the
Board of Directors.

 

7. Modification
of Schedule. The Company and Employee acknowledge and agree that modification of this Schedule requires a written document
signed by both parties.

 

8. Vacation and
Paid Time Off. Employee agrees to be bound by the policies and procedures set forth by Company related to vacation and paid
time off, which at the time of execution of the Agreement and this Schedule is three (3) weeks.

 

9. Other Benefits.
The Company agrees to extend other employment benefits provided to other similarly situated key employees consistent with the policies
and procedures of Company, and upon approval by the Board of Directors.

 

    	-8- 

    	 

    

 

 

IN WITNESS WHEREOF,
the parties have executed this Schedule as of the date first above written.

 

AGREED:

 

 

EMPLOYEE                                   AMERICATOWNE, INC.

 

By /s/Juan Mendez     12/15/2015     By
/s/Alton Perkins     12/15/2015

Juan Mendez                                    Alton Perkins

                                                       Chairman of the Board

                                           Chief Executive Officer

    	-9-Exhibit

EXHIBIT 10.1
MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding (“MOU”) is entered into as of December 16, 2015, by and among the undersigned parties to (i) one action pending in the Supreme Court of the State of New York, County of Westchester (the “Court”), captioned Jack Isaacs v. Allen S. Greene, et al., Index No. 69123-15 (the “Action”); and (ii) one action pending in the Court of Chancery of the State of Delaware, captioned Robert Brieske v. SmartPros Ltd., et. al. C.A. No. 11743-CB (the “Delaware Action,” and together with the Action, the “Actions”).  The plaintiffs in the Actions (collectively, “Plaintiffs”) are shareholders of SmartPros Ltd. (“SmartPros” or the “Company”).  The Actions relate to the proposed acquisition of SmartPros by Kaplan, Inc. (“Kaplan”) through Kaplan’s affiliates, DF Institute, LLC (“DF Institute”) and SPL Merger Corp (“Merger Sub”).  The defendants in the Actions are Allen S. Greene, Jack Fingerhut, John J. Gorman, Martin H. Lager, Leonard J. Stanley (collectively, the “Director Defendants”), SmartPros, Kaplan,  DF Institute, Merger Sub, and Graham Holdings Company (“Graham”) (collectively, the “Corporate Defendants,” and together with the Director Defendants, the “Defendants”).
WHEREAS, on October 22, 2015, SmartPros and DF Institute issued a joint press release announcing that they had entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among DF Institute, Merger Sub and the Company, under which DF Institute will acquire SmartPros for $3.57 per share in a cash transaction valued at approximately $16.9 million (the “Proposed Acquisition”); 
WHEREAS, on November 6, 2015, plaintiff Jack Isaacs (“Isaacs”) filed a putative shareholder class action complaint in the Action challenging the Proposed Acquisition; 

WHEREAS, the Actions were brought on behalf of a proposed class of shareholders of SmartPros against SmartPros, DF Institute, and Merger Sub, the Director Defendants (collectively, the “NY Defendants”), and the Corporate Defendants (together with Plaintiffs, each a “Party” and collectively the “Parties”), alleging, inter alia, that the Director Defendants breached fiduciary duties in connection with the Proposed Acquisition and that other Defendants aided and abetted the purported breaches of fiduciary duty;
WHEREAS, the Actions further alleged, inter alia, that, by reason of Defendants’ actions, Plaintiffs and the Class members had suffered and would suffer irreparable harm for which they had no adequate remedy at law and requested that the Court grant appropriate relief for such alleged harm; 
WHEREAS, on November 6, 2015, SmartPros filed a Preliminary Proxy Statement on form PRE 14A with the United States Securities and Exchange Commission (the “Preliminary Proxy Statement”);
WHEREAS, on November 17, 2015, SmartPros filed a Definitive Proxy Statement on form DEF 14A with the United States Securities and Exchange Commission (the “Definitive Proxy Statement”);
WHEREAS, the Board of Directors of SmartPros recommended in the Proxy Statement that the shareholders of SmartPros vote "FOR" the approval of the Merger Agreement; 
WHEREAS, the Board of Directors of SmartPros set a special meeting for December 22, 2015, at which time the shareholders of SmartPros would vote for or against the Proposed Acquisition;     
WHEREAS, on November 23, 2015, the Delaware Action was filed in the Court of Chancery of the State of Delaware against the Defendants alleging, inter alia, that the Director Defendants 

2

breached fiduciary duties in connection with the Proposed Acquisition and that other Defendants aided and abetted the purported breaches of fiduciary duty;
WHEREAS, on November 25, 2015, Isaacs filed an Amended Class Action Complaint in the Action, alleging that the Director Defendants breached fiduciary duties in connection with the Proposed Acquisition, that the Definitive Proxy Statement filed in connection with the Proposed Acquisition contains material omissions and misleading statements, and that other NY Defendants aided and abetted the purported breaches of fiduciary duty; 
WHEREAS, the Parties have engaged in discussions with respect to Plaintiffs’ intentions to move for a preliminary injunction to prevent completion of the Proposed Acquisition based on alleged deficiencies in the Definitive Proxy Statement and Plaintiffs’ demands that further information be disclosed to SmartPros shareholders;
WHEREAS, on December 3, 2015, Isaacs filed an Order to Show Cause in the Action scheduling a hearing on Plaintiff’s Motion for (1) a Preliminary Injunction Pending Expedited Discovery, (2) Expedited Discovery, and (3) a Hearing Date for a Post-Expedited Discovery Motion to Continue the Preliminary Injunction Pending Trial;
WHEREAS, on December 5, 2015, Plaintiffs' counsel sent Defendants an email outlining numerous purported deficiencies in the Defintive Proxy Statement and requesting additional disclosures on a number of topics; 
WHEREAS, counsel to the Parties have engaged in arm’s-length negotiations concerning disclosure of further information to SmartPros shareholders and the terms and conditions of a potential resolution of the Actions;
WHEREAS, on December 8, 2015, counsel for SmartPros produced to Plaintiffs’ counsel certain non-public, confidential Board level documents concerning the Proposed Acquisition;

3

WHEREAS, SmartPros, after consultation and negotiation with counsel for Plaintiffs, agreed to cause supplemental disclosures, substantially in the form attached hereto as Schedule A (the “Additional Disclosures”), to be filed with the SEC in a current report on Form 8-K; 
WHEREAS, on December 16, 2015, the Parties reached an agreement-in-principle on the structure of a settlement of the Actions; 
WHEREAS, Defendants, solely to avoid the costs, disruption and distraction of further litigation, and without admitting the validity of any allegations made in the Actions or of any of the additional purported concerns expressed by Plaintiffs about the Proposed Acquisition and Merger Agreement, or any liability with respect thereto, have concluded that it is desirable that the claims against them be settled on the terms reflected in this MOU; and
WHEREAS, Defendants specifically deny the allegations made in the Actions and all other purported concerns with respect to the Proposed Acquisition and the Merger Agreement, and Defendants maintain that they have committed no breach of fiduciary duty or other wrongdoing whatsoever, have committed no securities law, disclosure or other violations in connection with the Proposed Acquisition, the Merger Agreement, filings with the SEC or other public disclosures made or to be made in connection with or regarding the Proposed Acquisition, including, but not limited to, the Preliminary Proxy/Prospectus, the Definitive Proxy, the Additional Disclosures (as defined in paragraph 1), and any amendments, supplements or modifications to any of the foregoing, and have not aided or abetted any breach of fiduciary duty or other alleged wrongdoing.
NOW THEREFORE, on December 16, 2015, the Parties to the Actions reached the following agreement in principle, which, when reduced to a stipulation of settlement following negotiations by the Parties in good faith, is intended to be a full and final resolution of the Released Claims (as defined in paragraph 9) and the Actions (the “Settlement”).  The Parties and their respective counsel believe the Settlement is fair, reasonable and adequate as to the Parties and the 

4

SmartPros public shareholders and agree to cooperate fully and to use their reasonable best efforts to effectuate the Settlement, which, among other terms, shall provide for and encompass the following:
1.Additional Disclosures.  The Parties agree that SmartPros will cause supplemental disclosures, substantially in the form attached hereto as Schedule A (the “Additional Disclosures”), to be filed with the SEC in a current report on Form 8-K within one (1) business day of the execution of this MOU.  Without admitting any wrongdoing, Defendants acknowledge that the prosecution of the Actions and negotiations with Plaintiffs’ Counsel were the sole cause of SmartPros’ decision to make the Additional Disclosures.
2.Confirmatory Discovery.  Defendants agree to provide Plaintiffs with reasonable, mutually agreeable discovery solely for the purpose of Plaintiffs confirming that the Settlement is fair, reasonable, and adequate to the Class (as defined in paragraph 5).  If Plaintiffs are unable to confirm and determine in good faith that the Settlement is fair, reasonable, and adequate to the Class (as defined in paragraph 5), Plaintiffs’ counsel shall notify Defendants in writing as promptly as reasonably possible after the completion of the confirmatory discovery (the “Termination Notice”), and the Settlement and this MOU shall be terminated and rendered null and void.
3.Modifications and Amendments to Merger.  Plaintiffs acknowledge that the parties to the Merger Agreement may (but shall not be obligated to) negotiate or agree to amendments or modifications to the Merger Agreement, the Preliminary Proxy/Prospectus, or the Definitive Proxy, and that the parties to the Merger Agreement may make further disclosures, in addition to and separate from the Additional Disclosures, as may be necessary or required prior to the Effective Time of the Proposed Acquisition (as that term is defined in the Merger Agreement) to facilitate the consummation of the Proposed Acquisition.  Plaintiffs agree that they will not challenge or object to or bring any action related to any such amendments or modifications so long as such 

5

amendments or modifications are not inconsistent with the material terms of the Settlement as reflected in this MOU.
4.Stipulation of Settlement.  Contingent upon the completion of confirmatory discovery, and unless Plaintiffs provide Defendants with a Termination Notice, the Parties shall attempt in good faith and use their best efforts to:
		
	(a)
	negotiate and execute an appropriate Stipulation of Settlement (the “Stipulation”) and such other documentation (the “Settlement Documents”) as may be required to obtain the approval of the Settlement by the Court; 

		
	(b)
	present the Settlement Documents to the Court as soon as practicable following execution of the Stipulation; and

		
	(c)
	obtain final approval of the Settlement, including entry of a final order and judgment (a “Final Order and Judgment”) in the Court, (i) approving the Settlement, (ii) dismissing the Action on the merits with prejudice as to all claims asserted or which could have been asserted in any of the Actions and without costs to any Party (other than as expressly provided herein), and (iii) providing for the releases set forth in paragraph 9 of this MOU.

If the Parties are unable to reach agreement with respect to the Stipulation, then any of the Parties to this MOU have the right to enforce the terms of this MOU.
5.Certification of Class.  The Stipulation shall provide for the conditional certification, pursuant to New York Practice Law and Rules § 902, for settlement purposes only, of the Action as a non-opt out class action on behalf of a class that consists of all record and beneficial owners of common stock of SmartPros who owned shares of SmartPros common stock at any time during the period beginning on October 21, 2015 through the date of the consummation of the Proposed Acquisition (the “Class Period“), including any and all of their respective successors in interest, predecessors, representatives, trustees, executors, administrators, heirs, assigns or transferees, immediate and remote, and any person or entity acting for or on behalf of, or claiming under, any of them, and each of them (collectively, the “Class”).  Excluded from the Class are Defendants, members of the immediate family of any Director Defendant, any entity in which a 

6

Defendant has or had a controlling interest, and the legal representatives, heirs, successors, or assigns of any such excluded person.
6.Stay Pending Court Approval.  Pending negotiation, execution and final approval by the Court of the Stipulation and Settlement, Plaintiffs agree to stay the proceedings in the Actions and to stay and not to initiate any proceedings other than those incident to the Settlement itself.  
7.Dismissal of the Delaware Action.  Plaintiffs agree to dismiss the Delaware Action voluntarily within  five (5) business days of the execution of this MOU.  The Parties also agree to use their best efforts to prevent, stay, seek dismissal of or oppose entry of any interim or final relief in favor of any member of the Class in any other litigation against any of the Parties to this MOU that challenges the Settlement or the Proposed Acquisition (including the Merger Agreement and any public disclosures, statements, or filings made in connection therewith, including but not limited to the Preliminary Proxy/Prospectus, the Definitive Proxy and the Additional Disclosures), or otherwise involves a Released Claim (as defined in paragraph 9).  If any Released Claims brought against any Released Party (as defined in paragraph 9) are not dismissed with prejudice or stayed in contemplation of the dismissal of the Action, the Defendants may (but are not obligated to) terminate this MOU on five (5) business days’ written notice to the Plaintiffs.
8.Injunction Against Further Proceedings.  The Stipulation shall provide for an injunction against any further proceedings in the Action other than proceedings to implement the Settlement.  The Stipulation shall provide for the entry of an injunction against Plaintiffs and the members of the Class commencing, prosecuting, or participating in the commencement or prosecution of any claims covered by the Settlement in any other action, suit, or proceeding.  The Parties shall cooperate in obtaining the dismissal or withdrawal of any and all actions related to the subject matter of the Actions or otherwise involving a Released Claim (as defined in paragraph 9), 

7

including where appropriate, joining in any motion to enjoin, motion to dismiss or demurrer to such litigation.  
9.Dismissal with Prejudice, Waiver and General Releases.  The Stipulation shall provide for the entry of judgment by the Court in appropriate form dismissing the Action with prejudice on the merits and for a general release barring, settling, permanently enjoining, discharging, and releasing any and all Released Claims.  As used herein, the term “Released Claims” shall refer to all claims, demands, actions or causes of action, rights, liabilities, damages, losses, obligations, judgments, suits, fees, expenses, costs, matters and issues of any kind or nature whatsoever, contingent or absolute, disclosed or undisclosed, matured or unmatured, accrued or unaccrued, that were or could have been asserted in the Actions or in any court, tribunal, or proceeding (including, but not limited to, any claims arising under federal, state, or foreign statutory or common law relating to alleged fraud, breach of any duty, negligence, violations of the federal securities laws or state disclosure laws or otherwise), by or on behalf of Plaintiffs or any member of the Class (whether individual, class, direct, derivative, representative, legal, equitable, or any other type in their capacity as shareholders during the Class Period), against any or all of the Released Parties (as defined below)—whether or not any such Released Parties were named, served with process, appeared in the Actions, or are a party to this MOU—which have arisen, could have arisen, or arise now, or relate in any manner to the allegations, facts, events, acquisitions, matters, acts, occurrences, statements, representations, omissions, or any other matter, thing or cause whatsoever, or any series thereof, embraced, involved or set forth in, or referred to or otherwise related, directly or indirectly, in any way to: 
		
	(a)
	the matters alleged in any pleadings in the Actions;

		
	(b)
	the Merger Agreement and the transactions contemplated thereby, including the Proposed Acquisition; 

		
	(c)
	the Preliminary Proxy/Prospectus, the Definitive Proxy, the Additional Disclosures and any amendments, supplements, or modifications to any of the foregoing, and 

8

any other public disclosures made in connection with or regarding the Proposed Acquisition; 
		
	(d)
	the fiduciary obligations (including any disclosure obligations) of any of the Defendants or Released Parties in connection with the Merger Agreement, the Proposed Acquisition, the Preliminary Proxy/Prospectus, Definitive Proxy, the Additional Disclosures, any amendments, supplements, or modifications to any of the foregoing, and any other public disclosures made in connection with or regarding the Proposed Acquisition; 

		
	(e)
	the negotiations in connection with the Merger Agreement or Proposed Acquisition; or 

		
	(f)
	any and all conduct by any of the Defendants or any of the other Released Parties arising out of or relating in any way to the negotiation or execution of this MOU and any subsequent Stipulation.  

“Released Parties” shall include, without limitation, each of the Defendants and their respective past and/or present family members, heirs, estates, executors, administrators, predecessors, successors, assigns, parent entities, subsidiaries, associates, affiliates, employees, officers, directors, stockholders, agents, representatives, attorneys, financial or investment advisors (including without limitation Berkery, Noyes & Co., LLC), advisors, consultants, accountants, investment bankers, commercial bankers, trustees, insurers, co-insurers and re-insurers, general or limited partners or partnerships, limited liability companies, members, and any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any of the Defendants, whether or not such Released Party was named, served with process, or appeared in the Actions. 
10.Release of Plaintiffs and their Counsel.  The Stipulation will provide that upon final approval of the Settlement, Defendants shall be deemed to have, and by operation of the judgment shall have, fully, finally, and forever released, relinquished, settled, extinguished, dismissed with prejudice, and discharged Plaintiffs, each and all members of the Class, and all Plaintiffs’ counsel from all claims, sanctions, liabilities, allegations, complaints or petitions arising 

9

out of, relating to, or in connection with, directly or indirectly, the investigation, institution, prosecution, litigation, assertion, settlement or resolution of the Action, the Delaware Action or the Settled Claims.  
11.Denial of Liability.  The Stipulation shall provide that Defendants have denied and continue to deny the allegations made in the Actions and any wrongdoing or liability whatsoever with respect thereto, and that they have maintained and continue to maintain that they have committed no breach of fiduciary duty or other wrongdoing whatsoever, and have committed no disclosure or other violations, in connection with the Proposed Acquisition, the Merger Agreement, the Preliminary Proxy/Prospectus, the Definitive Proxy, the Additional Disclosures, any amendments, supplements, or modifications to any of the foregoing, or any other public disclosures made in connection with or regarding the Proposed Acquisition, and have not aided or abetted any breach of fiduciary duty or other alleged wrongdoing.  Nothing in this MOU or in the Stipulation shall be interpreted so as to waive, forfeit, or otherwise estop Defendants from continuing to pursue any position Defendants have asserted formally or informally in court filings or other communications, including, but not limited to, any positions taken with respect to jurisdiction, venue, discovery, the propriety of expedited proceedings or discovery, class certification, or the availability or propriety of injunctive relief, in these Actions or any other litigation concerning the Proposed Acquisition.  
12.Class Notice.  The Stipulation shall include an agreement by the Parties as to the form, content, and manner of notice of settlement to be provided to members of the Class, subject to approval by the Court (when approved by the Court, the “Notice”).  SmartPros shall be responsible for providing the Notice to the members of the Class.  SmartPros (or its or the SmartPros’ board of directors’ insurer(s) or SmartPros’ successor-in-interest) shall pay, on behalf of and for the benefit 

10

of all Defendants, any and all reasonable costs and expenses incurred in providing Notice to the members of the Class. 
13.Fees and Expenses.  After negotiating the substantive terms of the Settlement and the MOU, the Parties negotiated an award of $175,000 for attorneys’ fees and expenses (including costs, disbursements, and expert and consulting fees) in connection with the Actions, which, subject to the terms and conditions of this Stipulation and approval by the Court, will be paid to Plaintiffs’ Counsel, and which shall be the only fee application made in the Actions.  Subject to (a) the terms and conditions of this MOU, (b) the terms and conditions of the Stipulation contemplated hereby, (c) consummation of the Proposed Acquisition, and (d) final approval of the Settlement and such fees and expenses by the Court, SmartPros (or its or the SmartPros board of directors’ insurer(s) or SmartPros’ successor-in-interest) will, on behalf of itself and for the benefit of the other Defendants, pay or cause to be paid such reasonable attorneys’ fees and expenses as may be awarded by the Court (“Fees and Expenses”).   Plaintiffs agree and confirm that any and all requests for attorneys’ fees in connection with the Actions, this MOU or the Settlement will be brought in one consolidated application to be filed in the Court, and each Plaintiff hereby agrees that it shall be barred and estopped from seeking any separate award of attorneys’ Fees and Expenses in connection with the Actions, this MOU or the Settlement other than in the single, consolidated application to be made in the Court.  Furthermore, the single application in the Court provided for in this paragraph shall be the sole application pursuant to the Settlement for fees, costs or any expense or reimbursement in connection with any shareholder litigation brought by or on behalf of any member of the Class arising from the Proposed Acquisition, the Merger Agreement, the Preliminary Proxy/Prospectus, the Definitive Proxy, the Additional Disclosures, any amendments, supplements or modifications to any of the foregoing, or any other public disclosures made or to be made in connection with or regarding the Proposed Acquisition.  Plaintiffs and their counsel shall be solely responsible for the 

11

allocation of any fee award among Plaintiffs’ counsel.  SmartPros (or its or the SmartPros board of directors’ insurer(s) or SmartPros’ successor-in-interest) shall pay or cause to be paid the Fees and Expenses within fifteen (15) business days of the entry of an order by the Court awarding them, subject to Plaintiffs’ counsel’s joint and several obligation to refund any overage within ten (10) days of any reduction or reversal of the award of Fees and Expenses if any specified condition in the Settlement is not satisfied or if, as a result of any appeal or further proceedings on remand, or successful collateral attack, any dismissal order is reversed or an award of Fees and Expenses is reduced or reversed.  Neither SmartPros (nor its or the SmartPros board of directors’ insurer(s) nor SmartPros’ successor in interest) nor any of the Defendants shall have any obligation to pay any of the Fees and Expenses pursuant to the Settlement unless the Proposed Acquisition shall have been consummated.  
14.Final Approval.  The Settlement is conditioned upon the Court’s final approval, including entry of a Final Order and Judgment approving the Settlement, dismissing the Action with prejudice as to all claims asserted or that could have been asserted in the Actions, and without costs to any Party (other than as expressly provided herein), and providing for the releases set forth in paragraph 9 of this MOU, which Final Order and Judgment is final and no longer subject to further appeal or review, provided, however, that the Court’s final approval of the Settlement is not contingent on its approval of the Fees and Expenses referred to in paragraph 13 of this MOU.
15.Governing Law and Jurisdiction.  This MOU and the Settlement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.  The Parties agree that any dispute arising out of or relating in any way to this MOU, the Stipulation, or the Settlement Documents shall not be litigated or otherwise pursued in any forum or venue other than the Court.

12

16.Binding Effect.  This MOU shall be binding upon and inure to the benefit of the Parties and their respective agents, executors, heirs, successors, and assigns.
17.Conditions.  This MOU shall be rendered null and void and of no force and effect, unless otherwise agreed by the Parties in writing, in the event that: (a) the Court fails to enter an order finally approving the Settlement, as set forth in paragraph 14 hereof; (b) SmartPros or any of the other parties to the Merger Agreement terminate the Merger Agreement or the Proposed Acquisition is not consummated for any reason; (c) the Court declines to conditionally certify the settlement Class as requested in the Stipulation; or (d) Plaintiffs’ counsel do not satisfactorily complete Confirmatory Discovery.  In such an event, or in the event any Party withdraws from the Settlement in accordance with the terms of this MOU, the Parties shall be deemed to be in the position they were in prior to the execution of this MOU and the statements made herein shall not be deemed to prejudice in any way the positions of the Parties with respect to the Actions, or to constitute an admission of fact or wrongdoing by any Party, and shall not entitle any Party to recover any costs or expenses incurred in connection with the implementation of paragraph 12 of this MOU.  In such event, and consistent with applicable evidentiary rules, neither the existence of this MOU nor its contents shall be admissible in evidence or shall be referred to for any purpose in the Actions or in any other proceeding, provided, however, that nothing herein shall preclude use of the MOU in connection with any application for an award of Fees and Expenses by Plaintiffs’ counsel.  Without limiting the foregoing, if the Settlement does not become final for any reason, Defendants reserve the right to oppose certification of any class in any future proceedings.
18.Execution.  This MOU will be executed by counsel for the Parties to the Actions, each of whom represents and warrants that they have the authority from their client(s) to enter into this MOU and bind their clients thereto.  Plaintiffs represent and warrant that they have been shareholders of SmartPros at all relevant times; that as of the date hereof, they continue to hold 

13

their stock in SmartPros and, if requested by any Defendant, shall provide written proof thereof before execution of the Stipulation; and that none of Plaintiffs’ claims or causes of action referred to in the Actions or this MOU have been assigned, encumbered, or in any manner transferred in whole or in part.  This MOU may be executed in any number of actual, telecopied, or electronically distributed counterparts (including by way of conformed or electronic signatures in accordance with applicable Court rules and procedures) and by each of the different Parties on several counterparts, each of which when so executed and delivered will be an original.  The executed signature page(s) from each actual, telecopied, or electronically distributed counterpart may be joined together and attached and will constitute one and the same instrument. 
19.Modifications.  This MOU may be modified or amended only by a writing executed by the Parties hereto (or on their behalf by counsel).
20.Court Copy.  Within one (1) business day of the execution of this MOU, Plaintiffs’ counsel shall provide a copy of this MOU to the Court.
December 16, 2015
[Signature Pages Follow]

14

	
			
	By: /s/ Paul R. Marino

	 
	By: /s/ Shane Rowley

	Paul R.  Marino
DAY PITNEY LLP
One Jefferson Road
Parsippany, New Jersey 07054
Tel.:  973.966.8122

Attorneys for
SmartPros and the Director Defendants

	 
	Shane Rowley
LEVI & KORSINSKY, LLP
733 Summer Street, Suite 304
Stamford, CT 06901
Tel.: (212) 363-7500

Attorneys for Plaintiff Jack Isaacs 

	By: /s/ Frances Floriano Goins

	 
	By: /s/ Brian D. Long

	Frances Floriano Goins
ULMER & BERNE LLP
1660 West 2nd Street, Suite 1100
Cleveland, OH 44113-1448
Tel.: (216) 583-7202

Attorneys for Defendants Graham Holdings Company, Kaplan, Inc., DF Institute, LLC, and SPL Merger Corp

	 
	Seth D. Rigrodsky
Brian D. Long
Gina M. Serra
Jeremy J. Riley
RIGRODSKY & LONG, P.A.
2 Righter Parkway, Suite 120
Wilmington, DE 19803
Tel.: (302) 295-5310

Attorneys for Plaintiff Robert Brieske

15

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