Document:

Exhibit 4.2

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT, OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

ELEPHANT TALK COMMUNICATIONS CORP.

 

WARRANT TO PURCHASE COMMON STOCK

 

	 	 	 
	Warrant No. Z2	 	Original Issue Date: August 28, 2013

 

 

Elephant Talk Communications Corp., a Delaware
corporation (the “Company”), hereby certifies that, for value received, Saffelberg Investments NV or his permitted
registered assigns (the “Holder”), is entitled to purchase from the Company up to a total of 2,000,000 shares
of common stock, $0.00001 par value per share (the “Common Stock”), of the Company (each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”) at an exercise price per share equal to $0.887 per
share (as adjusted from time to time as provided in Section 9 herein, the “Exercise Price”), at any time
and from time to time on or after the date that is six months from the date hereof (the “Trigger Date”) and
through and including 5:30 P.M., New York City time, on August 28, 2018 (the “Expiration Date”), and subject
to the following terms and conditions:

 

This Warrant (this “Warrant”)
is issued pursuant to that certain Convertible Note, dated August 28, 2013 by and among the Company and the Holder (the “Convertible
Note”).”

 

1. Definitions. In addition
to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Convertible Note.

  

2.Registration of Warrant. The
Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder (which shall include the initial Holder or, as the case may be, any registered assignee to which
this Warrant is permissibly assigned hereunder) from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.

 

3. Registration of Transfers.
Subject to compliance with all applicable securities laws, the Company shall register the transfer of all or any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached as Schedule 2 hereto
duly completed and signed, to the Company’s transfer agent or to the Company at its address specified in the Convertible
Note and (x) delivery, at the request of the Company, of an opinion of counsel reasonably satisfactory to the Company to the effect
that the transfer of such portion of this Warrant may be made pursuant to an available exemption from the registration requirements
of the Securities Act and all applicable state securities or blue sky laws and (y) delivery by the transferee of a written statement
to the Company certifying that the transferee is an “accredited investor” as defined in Rule 501(a) under the Securities
Act and making such representations and warranties set forth in Section 6 of the Convertible Note, to the Company at its
address specified in the Convertible Note. Upon any such registration or transfer, a new warrant to purchase Common Stock in substantially
the form of this Warrant (any such new warrant, a “New Warrant”) evidencing the portion of this Warrant so transferred
shall be issued to the transferee, and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance
by such transferee of all of the rights and obligations in respect of the New Warrant that the Holder has in respect of this Warrant.
The Company shall prepare, issue and deliver at its own expense any New Warrant under this Section 3.

 

    	 

    	 

    

 

4. Exercise and Duration of Warrant.

 

(a) All or any part of this Warrant
shall be exercisable by the registered Holder in any manner permitted by Section 10 of this Warrant at any time and from
time to time on or after the Trigger Date and through and including 5:30 P.M. New York City time, on the Expiration Date. At 5:30
P.M., New York City time, on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void
and of no value and this Warrant shall be terminated and no longer outstanding.

 

(b)The Holder may exercise this
Warrant by delivering to the Company (i) an exercise notice, in the form attached as Schedule 1 hereto (the “Exercise
Notice”), completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which
this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice
and if a “cashless exercise” may occur at such time pursuant to Section 10 below), and the date such items are
delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.”
The delivery by (or on behalf of) the Holder of the Exercise Notice and the applicable Exercise Price as provided above shall constitute
the Holder’s certification to the Company that its representations and warranties set forth in Section 6 of the Convertible
Note are true and correct as of the Exercise Date as if remade in their entirety (or, in the case of any transferee Holder that
is not a party to the Convertible Notes, such transferee Holder’s certification to the Company that such representations
are true and correct as to such assignee Holder as of the Exercise Date). The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation
of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

5. Delivery of Warrant Shares.
Upon exercise of this Warrant, the Company shall promptly (but in no event later than three Trading Days after the Exercise Date)
issue or cause to be issued and cause to be delivered to or upon the written order of the Holder, (i) a certificate for the Warrant
Shares issuable upon such exercise, free of restrictive legends, or (ii) an electronic delivery of the Warrant Shares to the Holder’s
account at the Depository Trust Company (“DTC”) or a similar organization, unless in the case of clause (i)
and (ii) a registration statement covering the resale of the Warrant Shares and naming the Holder as a selling stockholder thereunder
is not then effective or the Warrant Shares are not freely transferable without volume restrictions pursuant to Rule 144 under
the Securities Act, in which case such Holder shall receive a certificate for the Warrant Shares issuable upon such exercise with
appropriate restrictive legends. The Holder, or any Person permissibly so designated by the Holder to receive Warrant Shares, shall
be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date. If the Warrant Shares are to be issued
free of all restrictive legends, the Company shall, upon the written request of the Holder, use its reasonable best efforts to
deliver, or cause to be delivered, Warrant Shares hereunder electronically through The Depository Trust Company or another established
clearing corporation performing similar functions, if available; provided, that, the Company may, but will not be required to,
change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through such a clearing corporation.

 

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6. Charges, Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to
the Holder for any issue or transfer tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not
be required to pay any tax that may be payable in respect of any transfer involved in the registration of any certificates for
Warrant Shares or the Warrant in a name other than that of the Holder or an Affiliate thereof. The Holder shall be responsible
for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.

 

7. Replacement of Warrant. If
this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution
for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction (in such case) and, in each case, a customary and reasonable
indemnity and surety bond, if requested by the Company. Applicants for a New Warrant under such circumstances shall also comply
with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.
If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant
to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

 

8. Reservation of Warrant Shares.
The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued
and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant
as herein provided, the number of Warrant Shares that are initially issuable and deliverable upon the exercise of this entire Warrant,
free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments
and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and
fully paid and nonassessable. The Company will take all such action as may be reasonably necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of
any securities exchange or automated quotation system upon which the Common Stock may be listed.

 

9. Certain Adjustments. The
Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time
as set forth in this Section 9.

 

(a)Stock Dividends and Splits.
If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes
a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides its outstanding shares
of Common Stock into a larger number of shares, or (iii) combines its outstanding shares of Common Stock into a smaller number
of shares, then in each such case the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately before such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date
of such subdivision or combination.

 

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(b) Pro Rata Distributions.
If the Company, at any time while this Warrant is outstanding, distributes to all holders of Common Stock for no consideration
(i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph)
or (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, “Distributed
Property”), then, upon any exercise of this Warrant that occurs after the record date fixed for determination of stockholders
entitled to receive such distribution, the Holder shall be entitled to receive, in addition to the Warrant Shares otherwise issuable
upon such exercise (if applicable), the Distributed Property that such Holder would have been entitled to receive in respect of
such number of Warrant Shares had the Holder been the record holder of such Warrant Shares immediately prior to such record date
without regard to any limitation on exercise contained therein.

 

 (c) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant to paragraph (a) of this Section 9, the number
of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares shall
be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

 

10. Payment of Exercise Price.
The Holder shall pay the Exercise Price in immediately available funds; provided, however, the Holder may, in its sole discretion,
satisfy its obligation to pay the Exercise Price through a “cashless exercise”, in which event the Company shall issue
to the Holder the number of Warrant Shares determined as follows:

 

X = Y [(A-B)/A]

 

where:

 

X = the number of Warrant Shares to be issued to
the Holder.

 

Y = the total number of Warrant Shares with respect
to which this Warrant is being exercised.

 

A = the average of the Closing Sale Prices of the shares
of Common Stock (as reported by Bloomberg Financial Markets) for the five (5) Trading Days ending on the date immediately preceding
the Exercise Date.

 

B = the Exercise Price then in effect for the applicable
Warrant Shares at the time of such exercise.

 

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For purposes of this Warrant, “Closing
Sale Price” means, for any security as of any date, the last trade price for such security on the principal securities
exchange or trading market for such security, as reported by Bloomberg Financial Markets, or, if such exchange or trading market
begins to operate on an extended hours basis and does not designate the last trade price, then the last trade price of such security
prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or if the foregoing do not apply, the last
trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg
Financial Markets, or, if no last trade price is reported for such security by Bloomberg Financial Markets, the average of the
bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets”
by Pink Sheets LLC. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then the Board of
Directors of the Company shall use its good faith judgment to determine the fair market value. The Board of Directors’ determination
shall be binding upon all parties absent demonstrable error. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

For purposes of Rule 144 promulgated under
the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced,
on the date this Warrant was originally issued pursuant to the Convertible Note (provided that the Commission continues to take
the position that such treatment is proper at the time of such exercise).

 

11. No Fractional Shares. No
fractional Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that
would, otherwise be issuable, the number of Warrant Shares to be issued shall be rounded down to the next whole number and the
Company shall pay the Holder in cash the fair market value (based on the Closing Sale Price) for any such fractional shares.

 

12. Notices. Any and all notices
or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall
be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in the Convertible Note prior to 5:30 P.M., New York City time, on a Trading Day,
(ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile
number specified in the Convertible Note on a day that is not a Trading Day or later than 5:30 P.M., New York City time, on any
Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service specifying
next business day delivery, or (iv) upon actual receipt by the party to whom such notice is required to be given, if by hand
delivery. The address and facsimile number of a party for such notices or communications shall be as set forth in the Convertible
Note unless changed by such party by two (2) Trading Days’ prior notice to the other party in accordance with this Section
12.

 

13. Warrant Agent. The Company
shall serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from
any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession
as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown
on the Warrant Register.

 

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14. Miscellaneous.

 

(a)No
Rights as a Stockholder. The Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled
to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained
in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any
of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, amalgamation, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant
Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant
or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

(b)Successors
and Assigns. Subject to compliance with applicable securities laws, this Warrant may be assigned by the Holder. This Warrant
may not be assigned by the Company without the written consent of the Holder. This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of
action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder, or their successors
and assigns.

 

(c)Amendment
and Waiver. Except as otherwise provided herein, the provisions of the Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the
written consent of the Holder of this Warrant.

 

(d)Acceptance.
Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained
herein.

 

(e)Governing
Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL
OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THE CONVERTIBLE
NOTE AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH PARTY HEREBY WAIVES
ALL RIGHTS TO A TRIAL BY JURY. 

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(d) Headings. The headings
herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

 

(e) Severability. In case
any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby, and the parties will
attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF,
the Company has caused this Warrant No. Z2 to be duly executed by its authorized officer as of the date first indicated above.

 

	ELEPHANT TALK COMMUNICATIONS CORP.	 
	 	 	 
	By:	 	 
	 	Name: Alex Vermeulen	 
	 	Title: General Counsel	 

 

    	 

    	 

    

 

SCHEDULE 1

FORM OF EXERCISE NOTICE

 

(To be executed by the Holder to purchase
shares of

Common Stock under the foregoing Warrant)

 

Ladies and Gentlemen:

 

(1)The undersigned is the Holder of
Warrant No. __________ (the “Warrant”) issued by Elephant Talk Communications Corp., a Delaware corporation (the “Company”).
Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.

 

(2)The undersigned hereby exercises
its right to purchase __________ Warrant Shares pursuant to the Warrant.

  

(3)The Holder intends that payment
of the Exercise Price shall be made as (check one):

 

	 	  ̈	Cash Exercise 	 
	 	  ̈	 	 
	 	 	“Cashless Exercise” under Section 10	 
	 	 	 	 

  

(4)If the Holder has elected a Cash
Exercise, the Holder shall pay the sum of $_______ in immediately available funds to the Company in accordance with the terms of
the Warrant.

 

(5)Pursuant to this Exercise Notice,
the Company shall deliver to the Holder Warrant Shares determined in accordance with the terms of the Warrant.

 

 

Dated:_______________, _____

Name of Holder: ___________________________

By:__________________________________

Name: _______________________________

Title: _______________________________

(Signature must conform in all respects
to name of Holder as specified on the face of the Warrant)

 

    	 

    	 

    

 

SCHEDULE 2

Elephant Talk Communications Corp.

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer
of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto                             
(the “Transferee”) the right represented by the within Warrant to purchase                 
shares of Common Stock of Elephant Talk Communications Corp. (the “Company”) to which the within Warrant relates and
appoints                             
attorney to transfer said right on the books of the Company with full power of substitution in the premises. In connection therewith,
the undersigned represents, warrants, covenants and agrees to and with the Company that:

 

		(a)	the offer and sale of the Warrant contemplated hereby is being made in compliance with Section
4(1) of the United States Securities Act of 1933, as amended (the “Securities Act”) or another valid exemption from
the registration requirements of Section 5 of the Securities Act and in compliance with all applicable securities laws of the states
of the United States;

 

		(b)	the undersigned has not offered to sell the Warrant by any form of general solicitation or general
advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, and any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising;

 

		(c)	the undersigned has read the Transferee’s investment letter included herewith, and to its
actual knowledge, the statements made therein are true and correct; and

 

		(d)	the undersigned understands that the Company may condition the transfer of the Warrant contemplated
hereby upon the delivery to the Company by the undersigned or the Transferee, as the case may be, of a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect
that such transfer may be made without registration under the Securities Act and under applicable securities laws of the states
of the United States.

 

	Dated:             ,     	 	
         

         

	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
	 	 	
         

          

	 	 	Address of Transferee
	 	 	
         

         

	 	 	
         

         

	In the presence of:Exhibit 10.1

 

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made effective this 29th day of August 2013, (the “Effective Date”) by and
between SAJAN, INC., a Delaware corporation having its principal executive offices in the State of Wisconsin (the “Company”)
and THOMAS P. SKIBA, an individual resident of the State of Minnesota (the “Employee”).

 

RECITALS

 

WHEREAS, the Company
wishes to employ the Employee to render services for the Company on the terms and conditions set forth in this Agreement, including
the terms of the Restrictive Covenant Agreement attached to this Agreement; and

 

WHEREAS, the Employee
wishes to be retained and employed by the Company on such terms and conditions.

 

NOW, THEREFORE, in
consideration of the premises, the mutual covenants and agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Employee and the Company desire to enter into this Agreement,
upon the terms and conditions hereinafter set forth.

 

AGREEMENT

 

1.          Employment;
Duties.

 

1.1          The
Company hereby agrees to employ the Employee, and the Employee hereby accepts such employment. The Employee shall serve, on a full-time
basis, as the Chief Financial Officer of the Company at the Company’s River Falls, Wisconsin location. The Employee will
render such business and professional services in the performance of the Employee’s duties, consistent with the Employee’s
position within the Company, as shall reasonably be assigned to Employee by the Company’s Chief Executive Officer. 

 

1.2          During
his employment with the Company, the Employee will perform Employee’s duties faithfully and to the best of Employee’s
ability and in a manner consistent with Employee’s full-time status. During Employee’s employment with the Company,
Employee agrees not to actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration
without the prior approval of the Company’s CEO.

 

2.          Term.
This Agreement shall commence as of the Effective Date and continue until terminated pursuant to the Section 5 of this Agreement.
The Employee shall begin employment on the date of this Agreement.

 

3.          Compensation
and Related Matters.

 

3.1          Salary.
As of the Effective Date, the Company will pay to the Employee an annualized base salary of $182,000 per annum, provided that such
amount may be adjusted from time to time as determined by the Compensation Committee (“Compensation Committee”)
of the Company’s Board of Directors (the “Board”) at its discretion (the “Base Salary”).
Any Base Salary shall be earned by the Employee on a pro rata basis as the Employee performs services for the Company and shall
be paid in monthly or other installments in accordance with the general practice of the Company from time to time.

 

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3.2          Bonus.
The Employee shall be eligible to receive bonus payments from time to time, in an amount as determined in the sole discretion of
the Compensation Committee, up to 50% of the Employee’s Base Salary, based on the Company’s profitability and the Employee
meeting the mutually agreed individual objectives for specified target periods.

 

3.3          Vacation.
The Employee shall be entitled to four (4) weeks of vacation in each fiscal year, provided that such amount may be adjusted from
time to time as determined by the Compensation Committee in its sole discretion, and provided that such vacation shall be earned
and used by the Employee in accordance with the Company’s vacation policy as it may change from time to time. The Employee
shall also be earn and use all paid holidays and personal days given by the Company to its employees generally in accordance with
the Company’s policies regarding paid holidays and personal days as they may change from time to time.

 

3.4          Expenses.
The Company will reimburse the Employee for all reasonable business expenses incurred in performing services hereunder, upon the
Employee’s presentation to the Company from time to time of itemized accounts describing such expenditures, all in accordance
with the Company’s policy in effect from time to time with respect to the reimbursements of business expenses.

 

3.5          Withholding.
All payments to the Employee under this Agreement shall be subject to required withholding for federal and state income taxes,
FICA contributions and other required deductions.

 

4.          Stock Option
Grant. The Company shall grant to the Employee stock options under the Sajan Inc. Amended and Restated 2004 Long-Term Incentive
Plan to purchase up to 250,000 shares of the Company’s common stock. The option shall have a ten-year term and an exercise
price equal to the fair market value on the date of the grant, and the option will vest according to the following vesting schedule
provided that the Employee is employed with the Company on the applicable vesting date: (i) 62,500 shares on September 1, 2014;
(ii) 62,500 shares on September 1, 2015; (iii) 62,500 shares on September 1, 2016; and (iv) 62,500 shares on September 1, 2017.
The vesting of all unvested options will accelerate and all unvested options will become vested upon a Change in Control of the
Company. For purposes of this Section, a “Change in Control” has the meaning set forth in the Sajan Inc. Amended and
Restated 2004 Long-Term Incentive Plan, as that Plan may be amended from time to time. The option shall be evidenced by and conditioned
on the Employee’s signing of a stock option agreement between the Company and the Employee on terms deemed appropriate by
the Company.

 

5.          Termination.
This Agreement does not guarantee the Employee’s continued employment for a specified period of time. This Agreement and
the Employee’s employment may be terminated by either party for any or no reason on three months’ written notice to
the other party. The Employee’s employment may also terminate in accordance with this Section 5.

 

    	2

    	 

    

 

5.1          By
the Company for Death or Disability or For Cause. The Company may terminate the Employee’s employment for death, a disability
that renders the Employee unable to perform the essential functions of his job with or without reasonable accommodation, or for
Cause. For purposes of this Agreement, “Cause” is defined as (i) theft, embezzlement, or a material act of dishonesty
by the Employee, (ii) the Employee’s commission of a felony or crime of moral turpitude, (iii) the Employee’s gross
misconduct, (iv) the Employee’s continued substantial failure to satisfy the Employee’s employment duties after the
Employee has received a written demand for performance from the Company that specifically sets forth the factual basis for the
Company’s belief that the Employee has not substantially performed the Employee’s duties and the Employee has failed
to cure his substantial failure to satisfy his employment duties to the satisfaction of the Company’s Chief Executive Officer
within 30 days of his receipt of such written demand; (v) the Employee’s continued material breach of this Agreement or any
material policy of the Company after the Employee has received a written notice that specifically sets forth the factual basis
for the Company’s belief that the Employee has breached this Agreement or any material policy of the Company; or (vi) the
Employee’s breach of the Restrictive Covenant Agreement that the parties entered before the Employee commenced employment
or any subsequent confidentiality and/or proprietary information agreements between the Employee and the Company.

 

5.2          By
the Employee for Good Reason. The Employee may terminate employment with the Company for Good Reason. For purposes of this
Agreement, “Good Reason” is defined as either of the following events occurring without the Employee’s
advance consent provided that the Company has not cured such event within 30 days after receiving written notice from the Employee
of such event: (a) continued failure by the Company to comply with any material provision of this Agreement; or (b) a material
diminution in the Employee’s responsibilities, authority or Base Salary. The Employee must provide written notice to the
Company of the existence of the Good Reason within 30 days of the initial existence of the condition. If The Company remedies the
condition within the 30 day period beginning on the date the written notice of the condition is received by an officer of the Company,
the Employee will not be entitled to severance under Section 6.4. Any Good Reason termination under this Section 5.2 must occur
within 90 days following the initial existence of the Good Reason Condition or the Employee shall not be entitled to severance
under Section 6.4.

 

5.3          Notice
of Termination. Any termination of the Employee’s employment by the Company or by the Employee shall be communicated
by written Notice of Termination to the other party, which shall describe whether such termination was for Cause, for Good Reason,
or otherwise. The parties acknowledge that any written notice of noncompliance delivered under Section 5.2 does not constitute
the Notice of Termination of this Agreement or the Employee’s employment required by this Section 5.3.

 

5.4          Date
of Termination. The “Date of Termination” shall mean: (a) if the Employee’s employment is terminated
by the Employee’s death, the date of Employee’s death; and (b) if the Employee’s employment is terminated for
any other reason, the date on which the Notice of Termination is given or, in the event of termination by the Employee, the date
on which the Employee stops providing services to the Company, whichever is earlier.

 

    	3

    	 

    

 

6.          Compensation
Upon Termination.

 

6.1          Disability.
Upon the Employee’s termination because the Employee cannot perform the essential functions of his job with or without reasonable
accommodation, the Employee shall be entitled to any unpaid portion of the Base Salary through the Date of Termination, and all
amounts to which the Employee is entitled pursuant to the Company’s policies, including disability plans, programs and policies
all in accordance with the terms thereof.

 

6.2          Death.
If the Employee’s employment is terminated by the Employee’s death, the Company shall, within ten (10) days following
the date of the Employee’s death, pay to the Employee’s estate or the Employee’s designated beneficiary any unpaid
portion of the Base Salary through the Date of Termination, and, thereafter, payment of any other amounts to which the Employee
is entitled pursuant to the Company’s policies, including death benefit plans, programs and policies in accordance with the
terms thereof.

 

6.3          By
the Company For Cause or By the Employee without Good Reason. If the Employee’s employment is terminated by the Company
for Cause or by the Employee for any reason other than Good Reason, the Company shall pay the Employee any unpaid portion of the
Base Salary and any accrued vacation time through the Date of Termination at the rate in effect at the time notice of termination
is given and the Company shall have no further obligations to the Employee under this Agreement.

 

6.4          By
the Company Without Cause or by the Employee For Good Reason. If (a) the Company terminates the Employee’s employment
without Cause, or (b) the Employee properly terminates employment for Good Reason pursuant to Section 5.2, the Employee will be
entitled to severance pay in a total gross amount equal to six (6) months of the Employee’s ending Base Salary with
the Company ( the “Severance Payment”), which will be paid in accordance with the Company’s regular payroll
schedule commencing on the first payroll date following the Employee’s signing of the general release agreement discussed
in Section 6.5. of this Agreement and the expiration of any rescission period set forth in such general release agreement. In addition,
any stock options that are due to be vested within six months from the Date of Termination shall become vested and exercisable.
Notwithstanding anything herein to the contrary, in no event shall any portion of the Severance Payment be paid to the Employee
later than the last day of the second taxable year of the Employee following the taxable year in which the Date of Termination
occurs.

 

6.5          Conditions
to Receive Severance Payments. Notwithstanding anything to the contrary in this Agreement, the Severance Payment will be provided
to the Employee only to the extent the Employee satisfies and complies with the following conditions: (i) the Employee complies
with all surviving provisions of this Agreement and the Restrictive Covenant Agreement referred to in Section 7 of this Agreement;
and (ii) the Employee executes and delivers to the Company, and does not revoke, a full general release, in a form reasonably acceptable
to the Company, releasing all claims, known or unknown, that the Employee may have against the Company, and any subsidiary, affiliate
or related entity, their officers, directors, employees and agents, arising out of or any way related to the Employee’s employment
or termination of employment with the Company to the fullest extent permitted by applicable law.

 

    	4

    	 

    

 

7.          Restrictive
Covenant Agreement. In partial consideration for the Company’s offer of employment to the Employee and the benefits of
that employment, the Employee has entered the Confidentiality and Noncompete Agreement (the “Restrictive Covenant Agreement”),
attached as Exhibit A, the terms of which are hereby incorporated by reference into this Agreement.

 

8.          Arbitration.
Any claim, dispute or controversy arising out of this Agreement, the interpretation, validity or enforceability of this Agreement,
the alleged breach thereof, the Employee’s employment, or the termination of the Employee’s employment, including any
claims based on a class or group of employees, shall only be determined by binding arbitration in Minneapolis, Minnesota. A demand
for arbitration may be submitted upon the request of either party; provided, however, that notwithstanding any other provision
of this Agreement to the contrary, nothing in this Agreement shall preclude the Company from seeking injunctive relief as provided
in the Restrictive Covenant Agreement or any subsequent agreement regarding the same or similar subject matter. Such arbitration
shall proceed in accordance with the then-governing rules of the American Arbitration Association (“AAA”) for
Employment Dispute Resolutions or Commercial Arbitration, at the option of the petitioner. Judgment upon the award rendered may
be entered and enforced in any court of competent jurisdiction. It is agreed that the parties shall choose a single, neutral arbitrator
from among a panel of not less than seven (7) proposed arbitrators and that the parties may have no more than two (2) panels of
arbitrators presented to them by the AAA. The parties agree that they will share equally the fees of the arbitrator, and they shall
each be responsible for their own attorneys’ fees and costs and any filing fee paid by them unless the arbitrator determines
that one party shall pay a greater portion of such costs and fees and states the justification therefor. THE EMPLOYEE HAS READ
AND UNDERSTANDS THIS SECTION WHICH DISCUSSES ARBITRATION. THE EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, THE EMPLOYEE
AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF THE EMPLOYEE’S RIGHT TO A JURY TRIAL, RIGHT TO PARTICIPATION IN CLASS OR GROUP LITIGATION, AND RELATES TO THE RESOLUTION
OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, CLAIMS OF DISCRIMINATION,
RETALIATION, WHISTLEBLOWING, AND PAYMENT OF WAGES AND BENEFITS.

 

9.          Miscellaneous.

 

9.1          Recitals.
The recitals to this Agreement are true and correct and constitute a part of this Agreement.

 

    	5

    	 

    

 

9.2          Assignment.
The rights and benefits of the Company and its permitted assigns under this Agreement shall be fully assignable and transferable
to any other entity (subject to that entity’s assumption of the obligations hereunder): (i) which is an affiliate of the
Company, as that term is defined under federal securities law; or (ii) which is not an affiliate and with which the Company has
merged or consolidated, or to which it may have sold substantially all its assets in a transaction in which it has assumed the
liabilities of the Company under this Agreement. In the event of any such assignment or transfer, all covenants and agreements
hereunder shall inure to the benefit of, and be enforceable by or against the successors and assigns of the Company. This Agreement
shall not be assignable by the Employee without the prior written consent of the Company, but all obligations and agreements of
the Employee hereunder shall be binding upon and enforceable against the Employee and the Employee’s successors.

 

9.3          Notices.
All notice, requests, and other communications from any of the parties hereto to another shall be in writing and shall be considered
to have been fully given or served if personally delivered, sent by facsimile, sent by national overnight delivery service, or
sent by first class, certified or registered mail, return receipt requested, postage prepaid, to the party at the party’s
or its address as provided below, or to such other addresses such party may hereinafter designate by written notice to the other
parties: (a) if to the Company, to Sajan, Inc., 625 Whitetail Blvd., River Falls, WI 54022, Attention: Board of Directors,
or (b) if to the Employee, to the address last shown for the Employee in the records of the Company. Such notice shall be deemed
to be received when delivered if delivered personally, upon receipt of electronic sent confirmation (or other confirmation of receipt)
if sent by facsimile, the next business day if sent by a national overnight delivery service, or three (3) business days after
the date mailed if sent by certified or registered mail. Any notice of any change in the Employee’s address shall be given
in the manner set forth above. Whenever the giving of notice is required, the giving of such notice may be waived in writing by
the party entitled to receive such notice.

 

9.4          Governing
Law; Jurisdiction. This Agreement, and the legal relations between the parties, shall be governed by, and construed in accordance
with, the laws of the State of Minnesota without regard to such state’s conflicts or choice of law provisions. The parties
consent to jurisdiction of the courts of such state and/or its Federal District Courts, and agree that venue is proper in Hennepin
County for those matters not subject to arbitration.

 

9.5          Entire
Agreement; Amendment. This Agreement constitutes the entire agreement, and supersedes all other prior and contemporaneous agreements
and undertaking, both written and oral, between the parties hereto relating to the subject matter hereof. There are no representations,
warranties, covenants, statements, conditions, terms of obligations other than those contained herein or relating to the subject
matter hereof. No amendments or modifications to or variations of this Agreement shall be deemed valid unless in writing and executed
by the Employee and the Company.

 

    	6

    	 

    

 

9.6          Meanings
of Pronouns; Singular and Plural Words. All pronouns used in this Agreement shall be deemed to refer to the masculine, feminine,
neuter, singular and plural, as the identity of the person to which or to whom reference is made may require. Unless the context
in which any word is used shall clearly indicate to the contrary, words used in the singular shall include the plural, and words
used in the plural shall include the singular.

 

9.7          Interpretation.
When a reference is made in this Agreement to Sections or Subsections such reference shall be to a Section or Subsection of this
Agreement unless otherwise indicated. Whenever the words “include,” “includes,” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

9.8          Benefit.
This Agreement shall inure to the benefit of and be enforceable by the Employee or by the Employee’s personal and legal representatives,
executors, administrators, heirs, devisees and legatees.

 

9.9          No
Waiver. No delay on the part of either party in exercising any right hereunder shall operate as a waiver of such right, nor
shall any waiver, express or implied, by either party of any right hereunder, or of any failure to perform hereunder or breach
hereof by either party, constitute or be deemed to constitute a waiver of any other failure to perform hereunder or breach hereof
by either party, whether of a similar or dissimilar nature thereto.

 

9.10          Attorneys’
Fees. If any litigation shall ensue between the parties concerning the interpretation of or performance under this Agreement,
the prevailing party shall recover from the non-prevailing party its reasonable hourly attorneys’ fees and other expenses,
if and to the extent fixed by the court.

 

9.11          Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which counterparts
shall together constitute one and the same instrument.

 

9.12          Headings.
The headings used in this Agreement are for the convenience of the parties and shall not be deemed to be a part of this Agreement.

 

9.13          ADVICE
OF COUNSEL. THE EMPLOYEE ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, THE EMPLOYEE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE
OF INDEPENDENT LEGAL COUNSEL, AND THE EMPLOYEE HAS READ AND UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS
AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

 

 

(Remainder of Page Intentionally Left
Blank)

    	7

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed and delivered this Employment Agreement on the day and year first written above.

 

 

	 	SAJAN, INC.
	 	 
	 	/s/ Shannon Zimmerman	 
	 	By: Shannon Zimmerman
	 	Its: CEO
	 	 
	 	 
	 	/s/ Thomas P. Skiba	 
	 	Thomas P. Skiba, An Individual

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Signature Page to Sajan, Inc. Employment
Agreement)

    	8

    	 

    

Exhibit A

 

See attached.

 

 

 

 

 

    	9

    	 

    

CONFIDENTIALITY AND NONCOMPETE AGREEMENT

 

 

THIS CONFIDENTIALITY
AND NONCOMPETE AGREEMENT is made and entered into as of the 29th day of August 2013, by and between SAJAN, INC., a Delaware corporation
(the “Company”), and THOMAS P. SKIBA (the “Employee”).

 

RECITALS

 

WHEREAS, the Company
desires to employ the Employee on a full-time basis; the Employee desires to be employed by the Company on a full-time basis; such
employment is conditioned upon the Employee’s execution of this Confidentiality and Noncompete Agreement (the “Restrictive
Covenants Agreement”) before the Employee begins employment on behalf of the Company, all on the terms and subject to
the conditions herein contained; and

 

WHEREAS, the Company
has devoted substantial time and expense to the marketing of its products and services; and

 

WHEREAS, both the Company
and the Employee acknowledge that the Company’s trade secrets and proprietary information are critical assets of the Company,
the confidentiality of which is to be maintained at all times and used only for furthering the conduct of the business of the Company;
and

 

WHEREAS, the Employee
acknowledges the need for, and the reasonableness of, the restrictions on competition, the disclosure of confidential information,
and all other terms contained in this Restrictive Covenants Agreement; and

 

WHEREAS, the Employee
agrees that this Restrictive Covenants Agreement is supported by adequate consideration.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the premises and the mutual agreements hereinafter set forth, the parties agree as follows:

 

		1.	Disclosure of Confidential Information.

 

		a.	Definition of Confidential Information. For purposes of this Restrictive Covenants Agreement,
“Confidential Information” means any information that is not generally known to the public that relates to the
existing or reasonably foreseeable business of the Company which has been expressly or implicitly protected by the Company or which,
from all of the circumstances, the Employee knows or has reason to know that the Company intends or expects the secrecy of such
information to be maintained. Confidential Information includes, but is not limited to, information contained in or relating to
the development plans or proposals, marketing plans or proposals, strategies, financial statements, budgets, pricing formulas,
customer and supplier information, employee information and other proprietary information of the Company, whether written, oral
or communicated in another type of medium, whether disclosed directly or indirectly, whether disclosed prior to or after the date
of this Restrictive Covenants Agreement, whether originals or copies and whether or not legal protection has been obtained or sought
under applicable law. The Employee shall treat all such information as Confidential Information regardless of its source and whether
or not marked as confidential.

 

    	 

    	 

    

 

		b.	Technology. The Employee recognizes that the Company is engaged in the business of developing
proprietary translation, packaging and other technologies (hereinafter the “Technology”), and that such Technology
is intended to be kept in strict confidence by the Company. The Employee is aware that the Technology and its confidentiality are
vital to the Company’s success. The Employee further understands that the success of the Company depends, to a great extent,
on its ability to protect its Confidential Information, including that comprising the Technology, from unauthorized disclosure,
use or publication. Inasmuch as the Employee will gain knowledge of or have access to the Confidential Information about the Technology,
in whole or in part, in the course of employment, the Employee acknowledges that the Company is and will be entrusting the Employee
with this valuable information. The Employee understands that the Company is engaged in a continuous program of research, development,
production and marketing of its present and future products, and the enhancement of its Technology. The Employee further understands
that, as an essential part of the Employee’s employment by the Company, the Employee is expected to make new contributions
to the Company.

 

		c.	The Employee Shall Not Disclose Confidential Information. The Employee will not, during
the term of the Employee’s employment, except in conjunction with his duties while employed, or following the termination
of the Employee’s employment with the Company, directly or indirectly, use, show, display, release, discuss, communicate,
divulge or otherwise disclose Confidential Information to any person, firm, corporation, association or other entity for any reason
or purpose whatsoever, without the prior written consent or authorization of a duly authorized officer of the Company. This covenant
and restriction shall continue to be binding upon the Employee after termination of employment, and is an independent covenant.

 

		d.	Title. All documents or other tangible or intangible property relating in any way to the
business of the Company which are conceived or generated by the Employee in performing his duties for the Company or come into
the Employee’s possession in performing his duties during the employment period shall be and remain the exclusive property
of the Company. At termination or whenever requested to do so by the Company, the Employee agrees to return all such documents,
and tangible and intangible property, and all copies thereof, including, but not limited to, all records, manuals, books, blank
forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, magnetic tapes, computer files or disks, calculations
or copies thereof, which are the property of the Company or which relate in any way to the business, customers, products, practices
or techniques of the Company, and all other property of the Company, including, but not limited to, all documents.

 

 

    	-2-

    	 

    

 

		e.	Compelled Disclosure. In the event a third party seeks to compel disclosure of Confidential
Information by the Employee by judicial or administrative process, the Employee shall promptly notify the President of the Company
of such occurrence and furnish to the President a copy of the demand, summons, subpoena or other process served upon the Employee
to compel such disclosure, and will permit the Company to assume, at its expense, but with the Employee’s cooperation, defense
of such disclosure demand. In the event that the Company refuses to contest such third party disclosure demand under judicial or
administrative process, or if a final judicial order is issued compelling disclosure of Confidential Information by the Employee,
the Employee shall be entitled to disclose such information in compliance with the terms of such administrative or judicial process
or order without violating his obligations under this Restrictive Covenants Agreement.

 

		2.	Employee Representations and Warranties.

 

		a.	The Employee represents and warrants that performance of his duties for the Company and his obligations
under the terms of this Restrictive Covenants Agreement and his Employment Agreement do not and will not cause the Employee to
breach any agreement, commitment or understanding the Employee has with any other party, whether formal or informal, to assign
to such other party inventions the Employee may hereafter make, or to keep in confidence proprietary information of such other
party which the Employee acquired or learned prior to the Employee’s employment by the Company.

 

		b.	The Employee represents and warrants that the Employee has not brought and will not bring to the
Company, or use for the benefit of the Company, any materials and/or documents of a former employer (which, for purposes of this
Section, shall also include persons, firms, corporations and other entities for which the Employee has acted as an independent
contractor or consultant) that are not generally available to the public or to the trade, unless the Employee has obtained written
authorization from any such former employer permitting the Employee to retain and use said materials and/or documents. With respect
to any materials and/or documents that the Employee may bring to the Company for use in the course of the Employee’s employment,
the Employee hereby further represents and warrants that the Employee’s use (or the Company’s use) of such materials
and/or documents will not violate the intellectual property rights of any former employer of the Employee, or any other party.

 

    	-3-

    	 

    

 

		3.	Company Ownership of Intellectual Property.

 

		a.	The Employee hereby agrees to disclose promptly to the Company (or any persons designated by it)
all developments, designs, creations, improvements, original works of authorship, formulas, processes, know-how, techniques and/or
inventions, hereinafter referred to collectively as “Inventions”) (i) which are made or conceived or reduced to practice
by the Employee, either alone or jointly with others, in performing his duties during the period of the Employee’s employment,
by the Company or which are reduced to practice during the period of twelve (12) months following the termination of the Employee’s
employment, that relate to or are useful in the present or future business of the Company; or (ii) which result from tasks assigned
the Employee by the Company, or from the Employee’s use of the premises or other resources owned, leased or contracted by
the Company.

 

		b.	The Employee agrees that all such Inventions which the Company in its sole discretion determines
to be related to or useful in its business or its research or development, or which result from work performed by the Employee
for the Company, shall be the sole and exclusive property of the Company and its assigns, and the Company and its assigns shall
have the right to use and/or to apply for patents, copyrights or other statutory or common law protections for such Inventions
in any and all countries. The Employee further agrees to assist the Company in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights and other statutory or common law protections for such Inventions in
any and all countries. To that end, the Employee will execute all documents for use in applying for and obtaining such patents,
copyrights and other statutory or common law protections therefor and enforcing the same, as the Company may desire, together with
any assignments thereof to the Company or to persons or entities designated by the Company. The Employee’s obligations under
this Subsection shall continue beyond the termination of the Employee’s employment with the Company, but the Company shall
compensate the Employee at a reasonable rate after such termination for time actually spent by the Employee at the Company’s
request in providing such assistance.

 

		c.	The Employee hereby acknowledges that all original works of authorship which are made by the Employee
(solely or jointly with others) within the scope of the Employee’s employment which are protectable by copyright are “works
for hire,” as that term is defined in the United States Copyright Act (17 USCA, Section 101).

 

    	-4-

    	 

    

 

		d.	Any provision in this Restrictive Covenants Agreement requiring the Employee to assign the Employee’s
rights in any Invention to the Company shall not apply to any invention that is exempt under the provisions of Section 181.78 of
the Minnesota Statutes. The statute states that such assignment agreements do not apply to an invention for which no equipment,
supplies, facility or trade secret information of the employer was used and which was developed entirely on the Employee’s
own time, and (1) which does not relate (a) directly to the business of the Company or (b) to the Company’s actual or demonstrably
anticipated research or development, or (2) which does not result from any work performed by the Employee for the Company.

 

		e.	The Company shall execute the Invention Assignment Notice attached here to as Exhibit 1 and incorporated
herein by reference and the Employee shall acknowledge receipt of such notice by executing the acknowledgment contained in the
Invention Assignment Notice.

 

		f.	In the event the Company is unable, after reasonable effort, to secure the Employee’s signature
on any document needed to apply for, obtain or enforce any intellectual property rights relating to any Invention with respect
to which the Employee has made an inventive contribution, whether because of the Employee’s unavailability, or the Employee’s
physical or mental incapacity, or for any other reason whatsoever, the Employee hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as the Employee’s agents and attorneys-in-fact to act for and in the
Employee’s behalf and stead solely for and in connection with the execution and filing of any such document with the same
legal force and effect as if such acts were performed by the Employee.

 

		4.	Covenants Not to Solicit or Compete. The Employee and the Company agree that the Company
would be substantially harmed if the Employee competes with the Company during or after termination of employment with the Company.
Therefore, in consideration of the offer of employment with the Company and the compensation and benefits offered to him, the Employee
agrees that:

 

		a.	During the Employee’s employment by the Company, the Employee agrees not to plan or otherwise
take any preliminary steps, either alone or in concert with others, to set up or engage in any business enterprise that would be
in competition with the Company.

 

		b.	For a period of one (1) year after termination of the Employee’s employment, the Employee
will not accept any employment render services for or to any person or entity which is competitive with the Company.

 

    	-5-

    	 

    

 

		c.	During the the Employee’s employment with the Company, and for one (1) year immediately following
the termination of such employment, the the Employee will not, directly or indirectly, alone or in concert with others, induce
or attempt to induce for his benefit or that of any third party, any of the Company’s employees, officers, suppliers consultants,
independent contractors or vendors who have held any such position or provided any goods or services to the Company at any time
during the twelve (12) months preceding the date of termination of the employee’s employment, to terminate, breach, refrain
from entering or otherwise alter such person or organization’s relationship with or obligations to the Company. Furthermore,
the Employee may not hire nor contract with any such employee, consultant, independent contractor or vendor during said twelve
(12) month period. The Employee understands that the above restraint is necessary in order to reduce the risk that the Company’s
Confidential Information, including its Technology, will be disclosed to and/or used by its competitors for their benefit or to
its detriment.

 

		d.	The existence of any claim or cause of action by the Employee against the Company shall not constitute
a defense to, the enforcement of the Employee’s obligations herein.

 

		e.	Nothing contained in this Restrictive Covenants Agreement shall be construed to prevent the Employee
from engaging in a lawful profession, trade or business after the termination of the Employee’s employment with the Company.
This Restrictive Covenants Agreement shall be construed only as one which prohibits the Employee from engaging in acts which are
unfair to the Company, and which are in violation of the confidence and trust reposed in the Employee by the Company with respect
to its intellectual property as described herein.

 

		5.	Remedies. The Employee acknowledges that irreparable injury will result to the Company if
the Employee violates and continues to violate any of his covenants in paragraphs 1, 2, and 4 or the terms of this Restrictive
Covenants Agreement relating to its intellectual property, and that the Company cannot adequately ascertain or quantify its damages
or be compensated therefore by money damages. The Employee hereby expressly agrees that the Company shall be entitled, in addition
to damages and any other remedies provided by law, to reimbursement from the Employee of the Company’s reasonable attorneys’
fees and costs incurred in successfully enforcing its rights under this Restrictive Covenants Agreement; and further agrees to
the entry by a court of an injunction or other equitable remedy enjoining the Employee’s breach or threatened breach without
the necessity of proof of actual damages respecting any such violation by the Employee.

 

    	-6-

    	 

    

 

		a.	Pre-existing Proprietary Inventions. The Employee has identified on Exhibit 2 attached hereto a
complete list of all inventions or improvements which have been made or conceived or first reduced to practice by the Employee
alone or jointly with others prior to the Employee’s employment by the Company and which the Employee desires to exclude
from the operation of this Restrictive Covenants Agreement. If there is no such list on Exhibit 2, the Employee represents that
the Employee has made no such inventions or improvements at the time of signing of this Restrictive Covenants Agreement.

 

		b.	Communication with Subsequent Employer. Upon the termination of the Employee’s employment,
the Employee hereby authorizes the Company to notify any other party, including without limitation, the Employee’s future
employers, future partners and customers of the Company, of the existence of this Restrictive Covenants Agreement, and the existence
of the Employee’s covenants and responsibilities with respect to the confidential and proprietary information entrusted to
the Employee hereunder.

 

		c.	Definitions. The term “Company” or “the Company” when used in this Restrictive
Covenants Agreement shall mean in addition to the Company, any affiliate of the Company. The terms “affiliate” or “affiliates”
when used in this Restrictive Covenants Agreement shall mean any person that controls the Company, or is controlled by the Company,
or is under common control with the Company.

 

		d.	Entire Agreement; Modification. This Restrictive Covenants Agreement constitutes the full and complete
understanding and agreement of the parties with respect to the terms contained herein and supersedes any prior understanding or
agreement between the parties relating to these terms. No amendment, waiver or modification of any provision of this Restrictive
Covenants Agreement shall be binding unless made in writing and signed by the parties hereto.

 

		e.	Assignment. The rights and benefits of the Company and its permitted assigns under this Restrictive
Covenants Agreement shall be fully assignable and transferable to any other entity (subject to that entities’ assumption
of the obligations hereunder):

 

		i.	Which is an affiliate of the Company; or

 

		ii.	which is not an affiliate and with which the Company has merged or consolidated, or to which it
may have sold substantially all its assets in a transaction in which it has assumed the liabilities of the Company under this Restrictive
Covenants Agreement;

 

    	-7-

    	 

    

 

			And in the event of any such assignment or transfer, all covenants and agreements hereunder shall
inure to the benefit of, and be enforceable by the successors and assigns of the Company. This Restrictive Covenants Agreement
shall not be assignable by the the Employee, but all obligations and Restrictive Covenants Agreements of the Employee hereunder
shall be binding upon and enforceable against the Employee and the Employee’s personal representatives, heirs, legatees and
devisees.

 

		f.	Notices. To be effective, all notices, consents or other communications required or permitted
hereunder shall be in writing. A written notice or other communication shall be deemed to have been given hereunder (i) if delivered
by hand, when the notifying party delivers such notice or other communication to all other parties to this Restrictive Covenants
Agreement, (ii) if delivered by facsimile or overnight delivery service, on the first business day following the date such notice
or other communication is transmitted by facsimile or timely delivered to the overnight courier, or (iii) if delivered by mail,
on the third business day following the date such notice or other communication is deposited in the U.S. mail by certified or registered
mail addressed to the other party. Mailed or telecopied communications shall be directed as provided in the Company’s records
unless written notice of a change of address or facsimile number has been given in writing in accordance with this Section.

 

		g.	Waiver. No waiver of any term, condition or covenant of this Restrictive Covenants Agreement
by a party shall be deemed to be a waiver of any subsequent breaches of the same or other terms, covenants or conditions hereof
by such party.

 

		h.	Counterparts. This Restrictive Covenants Agreement may be executed in counterparts, each
of which shall be deemed to be an original, and all such counterparts shall constitute one instrument.

 

		i.	Construction and Severability. Whenever possible, each provision of this Restrictive Covenants
Agreement shall be interpreted in such manner as to be effective or valid under applicable law, but if any provision of this Restrictive
Covenants Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent
of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Restrictive
Covenants Agreement.

 

		j.	Applicable Law, Jurisdiction and Venue. This Restrictive Covenants Agreement, and the legal
relations between the parties, shall be governed by, and construed in accordance with, the laws of the State of Minnesota without
regard to such state’s conflicts or choice of law provisions. The parties consent to jurisdiction of the courts of this state
and/or its Federal District Courts, and agree that venue is proper in Hennepin County, for those matters not subject to arbitration.

 

    	-8-

    	 

    

 

		k.	Arbitration. Except in the event of a breach or threatened breach by the Employee of paragraphs
1 or 4 of this Restrictive Covenants Agreement, any controversy or claim arising out of or relating to this Restrictive Covenants
Agreement or its breach shall only be settled by final and binding arbitration in Minneapolis, Minnesota upon the request of either
party. Such arbitration shall proceed in accordance with the then-governing rules of the American Arbitration Association (“AAA”)
for Employment Dispute Resolutions or Commercial Arbitration, at the option of the petitioner. Judgment upon the award rendered
may be entered and enforced in any court of competent jurisdiction. It is agreed that the parties shall choose a single, neutral
arbitration from among a panel of not less then seven (7) proposed arbitrators and that the parties may have no more than two (2)
panels of arbitrators presented to them by the AAA. The parties agree that they will share equally the fees of the arbitrator,
and they shall each be responsible for their own attorneys’ fees and costs and any filing fee paid by them unless the arbitrator
determines that one party shall pay a greater portion of such costs and fees and states the justification therefore.

 

			THE EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION WHICH DISCUSSES ARBITRATION. THE EMPLOYEE UNDERSTANDS
THAT BY SIGNING THIS AGREEMENT, THE EMPLOYEE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS
AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND
THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF THE EMPLOYEE’S RIGHT TO A JURY TRIAL, RIGHT TO PARTICIPATION IN CLASS
OR GROUP LITIGATION, AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, CLAIMS OF DISCRIMINATION, RETALIATION, WHISTLEBLOWING, AND PAYMENT OF WAGES AND BENEFITS.

 

		l.	Representation by Counsel; Interpretation. The Company and the Employee each acknowledge
that each party to this Restrictive Covenants Agreement has been, or has had the opportunity to be, represented by counsel in connection
with this Restrictive Covenants Agreement and the matters contemplated by this Restrictive Covenants Agreement. Accordingly, any
rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Restrictive Covenants Agreement
against the party that drafted it has no application and is expressly waived. The provisions of this Restrictive Covenants Agreement
shall be interpreted in a reasonable manner to affect the intent of the parties.

 

(Signature page follows)

 

    	-9-

    	 

    

 

Signature Page

 

 

IN WITNESS WHEREOF, the parties have executed
this Confidentiality and Noncompete Agreement effective as of the date set forth above.

 

 

EMPLOYEE NAME (PRINTED):   Thomas
P. Skiba

 

	/s/ Thomas P. Skiba	 

 

 

 

 

COMPANY: Sajan, Inc.

 

	By:	/s/ Shannon Zimmerman	 
	 	 	 
	Title:	Chief Executive Officer	 

 

 

    	-10-

    	 

    

 

Exhibit 1

 

INVENTION ASSIGNMENT NOTICE

 

 

Mr./Ms.                          

 

You are notified that the employment Restrictive
Covenants Agreement between you and Sajan, Inc. (the “Company”) dated ____________ does not apply to any invention
that qualifies fully under the provisions of Minnesota Statutes Section 181.78.

 

Inventions that are excluded under Minnesota
Statutes Section 181.78 are inventions for which no equipment, supplies, facility or trade secret information of the Company was
used and which was developed entirely on your own time, and (1) which does not relate (a) directly to the business of the Company
or (b) to the Company’s actual or demonstrably anticipated research or development, or (2) which does not result from any
work performed by you for the Company.

 

 

	 	COMPANY: Sajan, Inc.
	 	 
	 	By:	 
	 	 
	 	 
	 	Title	 

 

 

I acknowledge receiving a copy of this
notice

 

Date: ____________, 20_____

 

 

	 	 
	 	 	 

 

    	-11-

    	 

    

 

Exhibit 2

 

PRE-EXISTING PROPRIETARY INVENTIONS

 

 

	Name/Title of Proprietary Invention*	Description of Proprietary Invention

 

 

 

 

 

 

 

 

 

 

 

 

* Note: If no Proprietary Inventions are
listed above the Employee executing the attached Confidentiality and Noncompete Agreement represents that none exist.

  

    	-12-

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