Document:

Exhibit 10.9

 

 

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

among

 

APPLIANCE
RECYCLING CENTERS OF AMERICA, INC., as the PARENT

 

APPLIANCE RECYCLING ACQUISITION CORP.,
as the MERGER SUB,

 

GEOTRAQ INC., as the COMPANY,

 

the
STOCKHOLDERS of GEOTRAQ INC.,

 

and

 

the
STOCKHOLDERS’ REPRESENTATIVE

 

 

 

 

 

 

August 18, 2017

 

 

 

    	 	 	 

     

    

 

TABLE OF CONTENTS

 

	ARTICLE I DEFINITIONS	7
	ARTICLE II THE MERGER	16
	Section 2.01 The Merger.	16
	Section 2.02 Closing.	16
	Section 2.03 Closing Deliverables.	16
	Section 2.04 Effective Time.	18
	Section 2.05 Effects of the Merger.	18
	Section 2.06 Articles of Incorporation; Bylaws.	18
	Section 2.07 Directors and Officers.	19
	Section 2.08 Effect of the Merger on Capital Stock of the Company and the Merger Sub; Earnest Money Deposit.	19
	Section 2.09 Surrender and Payment.	19
	Section 2.10 No Further Ownership Rights in Company Shares.	20
	Section 2.11 Adjustments.	20
	Section 2.12 Withholding Rights.	20
	Section 2.13 Tax-Free Merger.	20
	Section 2.14 Waiver of Dissenters’ Rights.	20
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS	20
	Section 3.01 Authority of the Stockholders; No Conflicts or Consents in Respect of the Stockholders.	21
	Section 3.02 Organization and Qualification of the Company; Authority of the Company.	21
	Section 3.03 Capitalization.	22
	Section 3.04 No Subsidiaries.	23

 

 

 

    	 	2	 

     

    

 

	Section 3.05 No Conflicts or Consents in Respect of the Company.	23
	Section 3.06 Financial Statements.	23
	Section 3.07 Undisclosed Liabilities.	24
	Section 3.08 Absence of Certain Changes, Events, and Conditions.	24
	Section 3.09 Material Contracts.	26
	Section 3.10 Title to Assets; No Real Property.	28
	Section 3.11 Condition and Sufficiency of Assets.	28
	Section 3.12 Intellectual Property.	28
	Section 3.13 Insurance.	30
	Section 3.14 Legal Proceedings; Governmental Orders.	30
	Section 3.15 Compliance With Laws; Permits.	30
	Section 3.16 Employee Matters.	30
	Section 3.17 Taxes.	31
	Section 3.18 Books and Records.	34
	Section 3.19 Brokers.	34
	Section 3.20 Affiliate Agreements.	34
	Section 3.21 Indebtedness.	34
	Section 3.22 Investment Representations.	34
	Section 3.23 Full Disclosure.	35
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB	36
	Section 4.01 Organization and Authority.	36
	Section 4.02 No Conflicts; Consents.	36
	Section 4.03 No Prior Merger Sub Operations.	37
	Section 4.04 Brokers.	37

 

 

 

    	 	3	 

     

    

 

	Section 4.05 Sufficiency of Funds.	37
	Section 4.06 Legal Proceedings.	37
	Section 4.07 SEC Reports.	37
	Section 4.08 Capitalization.	38
	Section 4.09 Financial Statements.	38
	Section 4.10 Permits; Compliance with Applicable Laws.	39
	Section 4.11 Absence of Material Adverse Effect.	39
	ARTICLE V COVENANTS	39
	Section 5.01 Conduct of Business Prior to the Closing.	39
	Section 5.02 Access to Information.	40
	Section 5.03 No Solicitation of Other Bids.	40
	Section 5.04 Notice of Certain Events.	41
	Section 5.05 [Intentionally Omitted].	42
	Section 5.06 Confidentiality.	42
	Section 5.07 Non-competition; Non-solicitation.	42
	Section 5.08 Governmental Approvals and Consents.	43
	Section 5.09 Directors’ and Officers’ Indemnification and Insurance.	44
	Section 5.10 Closing Conditions.	46
	Section 5.11 Public Announcements.	46
	Section 5.12 Affiliate Agreements.	46
	Section 5.13 Audited Financial Statements.	46
	Section 5.14 Funding Obligations.	47
	Section 5.15 Further Assurances.	47
	Section 5.16 Reservation of Parent Shares.	47
	Section 5.17 Required Parent Shareholder Approval.	47

 

 

 

    	 	4	 

     

    

 

	ARTICLE VI TAX MATTERS	48
	Section 6.01 Taxes.	49
	Section 6.02 Certain Tax Covenants.	49
	Section 6.03 Termination of Existing Tax Indemnity, Tax Sharing, and Tax Allocation Agreements.	49
	Section 6.04 Tax Returns.	49
	Section 6.05 Straddle Period.	50
	Section 6.06 Cooperation and Exchange of Information.	50
	Section 6.07 Tax Indemnities.	51
	Section 6.08 Control of Audit or Tax Litigation.	51
	Section 6.09 Survival.	52
	Section 6.10 Overlap.	52
	ARTICLE VII CONDITIONS TO CLOSING	52
	Section 7.01 Conditions to Obligations of the Parent and the Merger Sub.	52
	Section 7.02 Conditions to Obligations of the Company and the Stockholders.	53
	ARTICLE VIII INDEMNIFICATION	54
	Section 8.01 Survival.	54
	Section 8.02 Indemnification By the Stockholders.	54
	Section 8.03 Indemnification By the Parent.	55
	Section 8.04 Certain Limitations.	55
	Section 8.05 Indemnification Procedures.	56
	Section 8.06 Payments.	58
	Section 8.07 Tax Treatment of Indemnification Payments.	59
	Section 8.08 Effect of Investigation.	59
	Section 8.09 Exclusive Remedies.	59

 

 

 

    	 	5	 

     

    

 

	Section 8.10 No Circular Recovery.	59
	ARTICLE IX TERMINATION	59
	Section 9.01 Termination.	59
	Section 9.02 Effect of Termination.	60
	ARTICLE X MISCELLANEOUS	61
	Section 10.01 Expenses.	61
	Section 10.02 Notices.	61
	Section 10.03 Interpretation.	62
	Section 10.04 Headings.	62
	Section 10.05 Severability.	62
	Section 10.06 Entire Agreement.	63
	Section 10.07 Successors and Assigns.	63
	Section 10.08 No Third-party Beneficiaries.	63
	Section 10.09 Amendment and Modification; Waiver.	63
	Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.	63
	Section 10.11 Specific Performance.	64
	Section 10.12 Counterparts.	64
	Section 10.13 Stockholders’ Representative.	64

 

 

Index of Exhibits

 

Exhibit A – Form of
Certificate of Designation

 

Exhibit
B – Form of Closing Payment Certificate

 

Exhibit
C – Form of Employment Agreement

 

Exhibit
D – Form of Promissory Note

 

Exhibit
E – Directors and Officers of the Surviving Corporation

 

 

 

    	 	6	 

     

    

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND
PLAN OF MERGER (this “Agreement”), dated as of August 18, 2017, is entered into by and among Appliance Recycling
Centers of America, Inc., a Minnesota corporation (the “Parent”), Appliance Recycling Acquisition Corp., a Nevada
corporation and a wholly-owned subsidiary of the Parent (the “Merger Sub”), GeoTraq Inc., a Nevada corporation
(the “Company”), the undersigned stockholders of the Company (each, a “Stockholder,” and,
collectively, the “Stockholders”), and the Stockholders’ Representative (as defined below).

 

RECITALS

 

WHEREAS,
(i) the respective Boards of Directors of the Parent (including a special committee of its Board of Directors that was formed specifically
to review and evaluate the Merger (as defined below)), the Merger Sub, and the Company have deemed it advisable and in the best
interests of their respective stockholders that the Company be acquired by the Parent, which acquisition is to be effected by the
merger of the Merger Sub with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of the Parent
(the “Merger”), on the terms and subject to the conditions set forth
herein, (ii) such Boards of Directors have approved this Agreement and the Merger, (iii) the Board of Directors of the Company
(the “Company Board”) has recommended the approval of this Agreement and the Merger by the Stockholders, and
(iv) the Board of Directors of the Parent (the “Parent Board”) will recommend the approval of the Series A Preferred
Convertible Terms (as defined below) by the shareholders of the Parent;

 

WHEREAS, the Stockholders
own all of the issued and outstanding Company Shares (as defined below) and, by their execution of this Agreement, hereby approve
this Agreement, the Merger, and the transactions contemplated hereby by written consent in accordance with the applicable provisions
of the NRS (as defined below);

 

WHEREAS, the parties
hereto intend that the Merger shall qualify as a reorganization under the provisions of Section 368(a)(1)(A) of the Code (as defined
below) and for this Agreement to constitute a “plan of reorganization” within the meaning of Treasury Regulations Section
1.368-2(g).

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE
I

Definitions

 

The following terms
have the meanings specified or referred to in this ARTICLE I:

 

“Acquisition
Proposal” has the meaning set forth in Section 5.03(a).

 

“Action”
means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation,
citation, summons, subpoena, or investigation of any nature, civil, criminal, administrative, regulatory, or otherwise, whether
at law or in equity.

 

 

 

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“Affiliate”
of a Person means any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person. The term “control” (including the terms “controlled by” and
“under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

 

“Affiliate
Agreement” has the meaning set forth in Section 3.20.

 

“Aggregate
Note Amount” means $800,000, constituting the sum of the initial principal amounts of the Promissory Notes.

 

“Agreement”
has the meaning set forth in the preamble to this Agreement.

 

“Annual Financial
Statements” has the meaning set forth in Section 3.06.

 

“Articles of Merger”
has the meaning set forth in Section 2.04.

 

“Audited Financials”
has the meaning set forth in Section 5.13.

 

“Balance Sheet”
has the meaning set forth in Section 3.06.

 

“Balance Sheet
Date” has the meaning set forth in Section 3.06.

 

“Basket”
has the meaning set forth in Section 8.04(a).

 

“Benefit Plan”
means any pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive,
bonus, performance award, phantom equity or other equity, change in control, retention, severance, vacation, paid time off, welfare,
fringe-benefit, or other similar agreement, plan, policy, program, or arrangement, in each case whether or not reduced to writing
and whether funded or unfunded, including any “employee benefit plan” within the meaning of Section 3(3) of ERISA,
whether or not tax-qualified and whether or not subject to ERISA.

 

“Business
Day” means any day except Saturday, Sunday, or any other day on which commercial banks located in the State of Minnesota
or the State of Nevada are authorized or required by Law to be closed for business.

 

“Cap”
has the meaning set forth in Section 8.04(a).

 

“Cash Consideration”
means an amount in cash equal to $1,000,000.

 

“Certificate of Designation”
means the Certificate of Designation for Series A Preferred Stock in the form attached hereto as Exhibit A.

 

“Closing”
has the meaning set forth in Section 2.02.

 

“Closing Date”
has the meaning set forth in Section 2.02.

 

 

 

    	 	8	 

     

    

 

“Closing Indebtedness
Amount” means, as of immediately prior to the Effective Time, the aggregate amount of Indebtedness of the Company, including
all accrued and unpaid interest, prepayment penalties or fees, and other unpaid fees and expenses payable in respect of such Indebtedness
through the Effective Time.

 

“Closing Payment
Certificate” means a certificate, in the form attached hereto as Exhibit B, signed by the Company and the Stockholders,
dated the Closing Date, that sets forth (a) an itemized list of the Closing Indebtedness Amount or, if none, a statement to that
effect, (b) the amount of Company Transaction Expenses remaining unpaid as of immediately prior to the Effective Time or, if none,
a statement to that effect, and (c) the number of issued and outstanding Company Shares held by each Stockholder, together with
each Stockholder’s Pro Rata Share of the Merger Consideration (as a percentage interest) and the Parent Preferred Shares,
the respective amounts of the Earnest Money Deposit Amount paid the Stockholders prior to the date hereof, and the respective initial
principal amounts payable to the Stockholders under the Promissory Notes, which initial principal amounts in the aggregate will
not exceed the Aggregate Note Amount. The Parent will be entitled to rely conclusively on the amounts and other information set
forth in the Closing Payment Certificate.

 

“Code”
means the Internal Revenue Code of 1986, as amended, or any successor law, and regulations issued by the Internal Revenue Service
pursuant thereto.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Company”
has the meaning set forth in the preamble to this Agreement.

 

“Company Board”
has the meaning set forth in the recitals to this Agreement.

 

“Company Business
Plan” has the meaning set forth in Section 5.14.

 

“Company Common
Stock” means the common stock, par value $0.0001 per share, of the Company.

 

“Company Intellectual
Property” means all Intellectual Property that is owned or held for use by the Company.

 

“Company IP
Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants
not to sue, permissions, and other Contracts (including any right to receive or obligation to pay royalties or any other consideration),
whether written or oral, relating to Intellectual Property to which the Company is a party, beneficiary, or otherwise bound.

 

“Company IP
Registrations” means all Company Intellectual Property that is subject to any issuance registration, application, or
other filing by, to, or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered
trademarks, domain names, and copyrights, issued and reissued patents, and pending applications for any of the foregoing.

 

 

 

    	 	9	 

     

    

 

“Company Material
Adverse Effect” means any event, occurrence, fact, condition, or change that is, or could reasonably be expected to become,
individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise),
or assets of the Company or (b) the ability of the Company or any Stockholder to consummate the transactions contemplated hereby
on a timely basis; provided, however, that “Company Material Adverse Effect” shall not include any event, occurrence,
fact, condition, or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions;
(ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial or securities
markets in general; (iv) acts of war (whether or not declared), armed hostilities, or terrorism, or the escalation or worsening
thereof; (v) any action required or permitted by this Agreement, except pursuant to Section 3.05 and Section 5.08;
(vi) any changes in applicable Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency, or completion
of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition,
or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Company
Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact,
condition, or change has a disproportionate effect on the Company compared to other participants in the industries in which the
Company conducts its businesses.

 

“Company Shares”
means shares of Company Common Stock.

 

“Company Transaction
Expenses” means all (a) costs, fees, and expenses incurred (whether or not invoiced or accrued) by the Company in connection
with this Agreement and the transactions contemplated hereby, including fees and expenses of advisors and consultants (including
investment bankers, brokers, lawyers, and accountants) arising out of, relating to, or incidental to the discussion, evaluation,
negotiation, and documentation of the transactions contemplated hereby; (b) transactional bonuses that become due as a result
of the Merger and are actually paid or accrued by virtue of obligations created by the Company prior to the Closing Date; and (c)
severance payments that become due as a result of the Merger and are actually paid or accrued by virtue of obligations created
by the Company prior to the Closing Date.

 

“Contracts”
means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures,
and all other agreements, commitments, and legally binding arrangements, whether written or oral.

 

“D&O Indemnified
Party” has the meaning set forth in Section 5.09(a).

 

“D&O Indemnifying
Parties” has the meaning set forth in Section 5.09(b).

 

“D&O Tail
Policy” has the meaning set forth in Section 5.09(c).

 

“Direct Claim”
has the meaning set forth in Section 8.05(c).

 

“Disclosure
Schedules” means the Disclosure Schedules delivered by the Company concurrently with the execution and delivery of this
Agreement.

 

“Dollars”
or “$” means the lawful currency of the United States of America.

 

“Earnest Money
Deposit Amount” has the meaning set forth in Section 2.08(d).

 

 

 

    	 	10	 

     

    

 

“Effective
Time” has the meaning set forth in Section 2.04.

 

“Employment
Agreement” means the Employment Agreement between the Company and Gregg Sullivan, in the form attached hereto as Exhibit
C.

 

“Encumbrance”
means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option,
security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission
promulgated thereunder.

 

“Financial
Statements” has the meaning set forth in Section 3.06.

 

“GAAP”
means United States generally accepted accounting principles in effect from time to time, consistently applied.

 

“Government
Contracts” has the meaning set forth in Section 3.09(a)(viii).

 

“Governmental
Authority” means any federal, state, local, or foreign government or political subdivision thereof, any agency or instrumentality
of such government or political subdivision, any self-regulated organization or other non-governmental regulatory authority or
quasi-governmental authority (to the extent that the rules, regulations, or orders of such organization or authority have the force
of Law), or any arbitrator, court, or tribunal of competent jurisdiction.

 

“Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation, determination, or award entered by or with any
Governmental Authority.

 

“Indebtedness”
means, without duplication and with respect to the Company, (a) all indebtedness for borrowed money, (b) all obligations for the
deferred purchase price of property or services, (c) all obligations evidenced by notes, bonds, debentures, or other similar instruments,
(d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property
acquired (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all obligations as lessee under leases that have been or should be, in accordance with GAAP, recorded
as capital leases, (f) all obligations, contingent or otherwise, under acceptance, letter of credit, or similar facilities, (g)
all obligations under any interest rate, currency swap, or other hedging agreement or arrangement, (h) all obligations in the nature
of guarantees made by the Company on behalf of any third party in respect of the obligations described in clauses (a) through (g),
above, and (i) any unpaid interest or prepayment, exit, or rescheduling or other penalties, premiums, costs, and/or fees that would
arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (h).

 

“Indemnified
Party” has the meaning set forth in Section 8.05.

 

 

 

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“Indemnifying
Party” has the meaning set forth in Section 8.05.

 

“Independent
Accountant” has the meaning set forth in Section 6.04(b).

 

“Insurance
Policies” has the meaning set forth in Section 3.13.

 

“Intellectual
Property” means all intellectual property and industrial property rights and assets, and all rights, interests, and protections
that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws
of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, service marks,
trade names, brand names, logos, trade dress, design rights, and other similar designations of source, sponsorship, association,
or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications, and renewals
for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized
private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook
and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions,
designs, and design registrations, whether or not copyrightable, including copyrights, author, performer, moral, and neighboring
rights, and all registrations, applications for registration, and renewals of such copyrights; (d) inventions, discoveries, trade
secrets, business and technical information and know-how, databases, data collections, and other confidential and proprietary information
and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part,
re-examinations, renewals, substitutions, and extensions thereof), patent applications, and other patent rights and any other Governmental
Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents, and patent utility models);
(f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files,
records, schematics, computerized databases, and other related specifications and documentation; and (g) semiconductor chips and
mask works.

 

“Interim Balance
Sheet” has the meaning set forth in Section 3.06.

 

“Interim Balance
Sheet Date” has the meaning set forth in Section 3.06.

 

“Interim Financial
Statements” has the meaning set forth in Section 3.06.

 

“Knowledge”
means, when used with respect to the Company, the actual or constructive knowledge of any Stockholder or any director, officer,
or manager of any Stockholder or the Company, after due inquiry.

 

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

 

“Liabilities”
has the meaning set forth in Section 3.07.

 

“Losses”
means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs, or expenses of
whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and
the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive damages,
except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.

 

 

 

    	 	12	 

     

    

 

“Material
Contracts” has the meaning set forth in Section 3.09(a).

 

“Merger”
has the meaning set forth in the recitals to this Agreement.

 

“Merger Consideration”
has the meaning set forth in Section 2.08(a).

 

“Merger Sub”
has the meaning set forth in the preamble to this Agreement.

 

“NRS”
shall mean the Nevada Revised Statutes, as amended.

 

“Organizational
Documents” means (a) in the case of a Person that is a corporation, its articles or certificate of incorporation and
its by-laws, regulations, or similar governing instruments required by the laws of its jurisdiction of formation or organization;
(b) in the case of a Person that is a partnership, its articles or certificate of partnership, formation, or association and its
partnership agreement (in each case, limited, limited liability, general, or otherwise); (c) in the case of a Person that is a
limited liability company, its articles or certificate of formation or organization and its limited liability company agreement
or operating agreement; and (d) in the case of a Person that is none of a corporation, partnership (limited, limited liability,
general, or otherwise), limited liability company, or natural person, its governing instruments as required or contemplated by
the laws of its jurisdiction of organization.

 

“Parent”
has the meaning set forth in the preamble to this Agreement.

 

“Parent Adverse
Recommendation Change” has the meaning set forth in Section 5.17(a).

 

“Parent Board”
has the meaning set forth in the recitals to this Agreement.

 

“Parent Board
Recommendation” has the meaning set forth in Section 5.17(a).

 

“Parent Common
Stock” means the common stock, no par value, of the Parent.

 

“Parent Material
Adverse Effect” means any event, occurrence, fact, condition, or change that is, or could reasonably be expected to become,
individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise),
or assets of the Parent or (b) the ability of the Parent to consummate the transactions contemplated hereby on a timely basis;
provided, however, that “Parent Material Adverse Effect” shall not include any event, occurrence, fact, condition,
or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions
generally affecting the industries in which the Parent operates; (iii) any changes in financial or securities markets in general;
(iv) acts of war (whether or not declared), armed hostilities, or terrorism, or the escalation or worsening thereof; (v) any action
required or permitted by this Agreement, except pursuant to Section 4.02 and Section 5.08; (vi) any changes in applicable
Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency, or completion of the transactions contemplated
by this Agreement; provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses
(i) through (iv) immediately above shall be taken into account in determining whether a Parent Material Adverse Effect has occurred
or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate
effect on the Parent compared to other participants in the industries in which the Parent conducts its businesses.

 

 

 

    	 	13	 

     

    

 

“Parent Indemnitees”
has the meaning set forth in Section 8.02.

 

“Parent Preferred Shares”
has the meaning set forth in Section 2.08(a).

 

“Parent Preferred
Stock” means the preferred stock of the Parent.

 

“Parent Proxy
Statement” means, collectively, the letter to the shareholders, notice of meeting, proxy statement, and forms of proxy,
to be filed with the SEC and transmitted to the shareholders of the Parent in connection with the Parent Shareholders Meeting.

 

“Parent SEC
Reports” has the meaning set forth in Section 4.07(b).

 

“Parent Shareholders
Meeting” means an annual meeting of the shareholders of the Parent, one of which items thereat will be to consider the
approval of the Series A Preferred Convertible Terms.

 

“Permits”
means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances, and similar rights
obtained, or required to be obtained, from Governmental Authorities.

 

“Permitted
Encumbrances” has the meaning set forth in Section 3.10(a).

 

“Person”
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated
organization, trust, association, or other entity.

 

“Post-Closing
Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning
before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

 

“Post-Closing
Taxes” means Taxes of the Company for any Post-Closing Tax Period.

 

“Pre-Closing
Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning
before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

 

“Pre-Closing
Taxes” means Taxes of the Company for any Pre-Closing Tax Period.

 

“Promissory
Notes” means, collectively, the Promissory Notes, substantially in the form of the Promissory Note attached hereto as
Exhibit D, each to be executed by the Parent at Closing and delivered to the Stockholders.

 

“Pro Rata
Share” means, with respect to any Stockholder, such Stockholder’s ownership interest in the Company as of immediately
prior to the Effective Time, determined by dividing (a) the number of Company Shares owned of record by such Stockholder as
of immediately prior to the Effective time, by (b) the aggregate number of Company Shares issued and outstanding immediately prior
to the Effective Time.

 

 

 

    	 	14	 

     

    

 

“Release”
means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, abandonment, disposing, or allowing to escape or migrate into or through the environment (including ambient
air, surface water, groundwater, land surface, or subsurface strata or within any building, structure, facility, or fixture).

 

“Representative”
means, with respect to any Person, any and all directors, managing members, managers, officers, employees, consultants, financial
advisors, counsel, accountants, and other agents of such Person.

 

“Required
Parent Shareholder Approval” means the approval of the shareholders of the Parent required by applicable Law or stock
exchange requirements of the Series A Preferred Convertible Terms.

 

“Restricted
Business” means any business that would be directly or indirectly competitive with the Company as of the Closing Date.

 

“Restricted
Period” has the meaning set forth in Section 5.07(a).

 

“Securities
Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission
promulgated thereunder.

 

“Series A
Preferred Convertible Terms” means the terms set forth in the Certificate of Designation, pursuant to which, subject
to the approval by the shareholders of the Parent of the Series A Preferred Convertible Terms, the shares of Series A Preferred
Stock are convertible into shares of Parent Common Stock.

 

“Series A
Preferred Stock” means the Parent Preferred Stock designated as “Series A Convertible Preferred Stock” and
having the rights, preferences, and privileges set forth in the Certificate of Designation.

 

“Stockholder”
and “Stockholders” have the respective meanings set forth in the preamble to this Agreement.

 

“Stockholder
Indemnitees” has the meaning set forth in Section 8.03.

 

“Stockholders’
Representative” means Gregg Sullivan.

 

“Straddle
Period” has the meaning set forth in Section 6.05.

 

“Surviving
Corporation” has the meaning set forth in Section 2.01.

 

“Taxes”
means all national or multinational, federal, state, local, foreign, and other income, corporation, capital gains, excise, gross
receipts, ad valorem, sales and use, goods and services, harmonized sales, use, employment, franchise, profits, gains, property
(real or personal), transfer, payroll, social security contributions, Medicare, Medicaid, license, severance, occupation, premium,
windfall profits, environmental, capital stock, withholding, unemployment, disability, registration, value added, estimated, alternative
or add on minimum, intangibles, and other taxes, fees, tariffs, stamp taxes, duties (including any customs duties, tariffs, fees
and processing charges), charges, levies, or assessments of any kind whatsoever (whether payable directly or by withholding), whether
disputed or not, together with any interest and any penalties, fines, additions to tax, or additional amounts imposed by any Governmental
Authority with respect thereto, whether disputed or not, and any liability for the payment of any amounts of the type described
above as a result of being a member of an affiliated, consolidated, combined, or unitary group for any period, as a result of a
tax sharing, tax allocation, or tax indemnification contract, or as a result of being liable for another Person’s taxes,
as a transferee or successor, by contract or otherwise.

 

 

 

    	 	15	 

     

    

 

“Taxing Authority”
means the United States Internal Revenue Service and any other Governmental Authority responsible for the administration of any
Tax.

 

“Tax Return”
means any return, declaration, report, claim for refund, declaration of estimated Tax, information return or statement, or other
document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, and including, where
permitted or required, combined, consolidated, or unitary returns for any group of entities that includes the Company or any of
its Affiliates.

 

“Territory”
means each state and territory of the United States of America.

 

“Third-party
Claim” has the meaning set forth in Section 8.05(a).

 

ARTICLE
II

the merger

 

Section 2.01     
The Merger.
On the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the
NRS, at the Effective Time, (a) the Merger Sub shall merge with and into the Company and (b) the separate corporate existence of
the Merger Sub shall cease and the Company shall continue its corporate existence under Nevada law as the surviving corporation
in the Merger (sometimes referred to herein as the “Surviving Corporation”) and as a wholly-owned subsidiary
of the Parent. The Merger shall have the effects set forth in the applicable provisions of the NRS.

 

Section 2.02     
Closing.
Subject to the conditions of this Agreement, the closing of the Merger (the “Closing”) shall occur by electronic
exchange of documents on the date hereof (the “Closing Date”) and shall be effective after the last of the conditions
to Closing set forth in ARTICLE VII have been satisfied or waived.

 

Section
2.03      Closing Deliverables. 

 

(a)            
At or prior to the Closing, the Company shall deliver to the Parent the following:

 

(i)             
the Employment Agreement duly executed by the Company and Gregg Sullivan;

 

 

 

    	 	16	 

     

    

 

(ii)           
[intentionally omitted];

 

(iii)         
a certificate, dated the Closing Date and signed by a duly authorized officer of the Company, that each of the conditions
set forth in Section 7.01(a) and Section 7.01(b) has been satisfied;

 

(iv)          
a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of the Company certifying that (A) attached
thereto are true and complete copies of all resolutions adopted by the Company Board authorizing the execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby and (B) all such resolutions are in full force and
effect and are all the resolutions adopted in connection with the transactions contemplated hereby;

 

(v)            
a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of the Company certifying the names and
signatures of the officers of the Company authorized to sign this Agreement and the other documents to be delivered hereunder;

 

(vi)          
a good standing certificate (or its equivalent) for the Company from the Secretary of State of the State of Nevada;

 

(vii)        
at least one Business Day prior to the Closing Date, the Closing Payment Certificate;

 

(viii)      
a certificate from the Company, dated as of the Closing Date, certifying to the effect that no interest in the Company is
a U.S. real property interest (such certificate in the form required by Treasury Regulation Section 1.897-2(h) and 1.1445-3(c));
and

 

(ix)          
such other documents or instruments as the Parent reasonably requests and are reasonably necessary to consummate the transactions
contemplated by this Agreement.

 

(b)            
At the Closing, the Parent shall deliver:

 

(i)             
to each Stockholder (and subject to Section 2.09(b)):

 

(A)          
his or it respective Promissory Note; and

 

(B)          
stock certificates representing such Stockholder’s Pro Rata Share of Parent Preferred Shares issuable pursuant Section
2.08(a) and in accordance with the Closing Payment Certificate.

 

(ii)           
[intentionally omitted].

 

(iii)         
to the Company:

 

 

 

    	 	17	 

     

    

 

(A)          
a certificate, dated the Closing Date and signed by a duly authorized officer of the Parent, that each of the conditions
set forth in Section 7.02(a) and Section 7.02(b) has been satisfied;

 

(B)          
a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of the Parent and the Merger Sub certifying
that attached thereto are true and complete copies of all resolutions adopted by the Parent Board and the Board of Directors of
the Merger Sub authorizing the execution, delivery, and performance of this Agreement and the consummation of the transactions
contemplated hereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection
with the transactions contemplated hereby;

 

(C)          
a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of the Parent and the Merger Sub certifying
the names and signatures of the officers of the Parent and the Merger Sub authorized to sign this Agreement and the other documents
to be delivered hereunder; and

 

(D)          
such other documents or instruments as the Company reasonably requests and are reasonably necessary to consummate the transactions
contemplated by this Agreement.

 

Section
2.04      Effective Time. Subject to the provisions of
this Agreement, on the Closing Date, the Company, the Parent, and the Merger Sub shall cause Articles of Merger (the “Articles
of Merger”) to be executed and filed with the Secretary of State of the State of Nevada in accordance with Section 92A.200
of the NRS and
shall make all other filings or recordings required by the NRS in connection with the Merger. The
Merger shall become effective at such time as the Articles of Merger have been duly filed with the Secretary of State of the State
of Nevada in accordance with the NRS or
at such later date or time as may be agreed by the Company and the Parent in writing and specified in the Articles of Merger in
accordance with the NRS (the effective time of the Merger being hereinafter referred to as the “Effective
Time”).

 

Section 2.05     
Effects of the Merger.
The Merger shall have the effects set forth herein and in the applicable provisions of the NRS. Without limiting the
generality of the foregoing, from and after the Effective Time, all property, rights, privileges, immunities, powers, franchises,
licenses, and authority of the Company and the Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, and duties of each of the Company and the Merger Sub shall become the debts, liabilities, obligations,
restrictions, and duties of the Surviving Corporation.

 

Section 2.06     
 Articles of Incorporation;
Bylaws. At the Effective
Time, (a) the Articles of Incorporation of the Merger Sub as in effect immediately prior to the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation until thereafter amended in accordance with the terms thereof or as provided by applicable
Law and (b) the Bylaws of the Merger Sub as in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until thereafter amended in accordance with the terms thereof, the Articles of Incorporation of the Surviving Corporation,
or as provided by applicable Law; provided, however, in each case, that the name of the corporation set forth therein shall
be changed to the name of the Company.

 

 

 

    	 	18	 

     

    

 

Section 2.07     
Directors and Officers.
From and after the Effective Time, the directors and officers of the Surviving Corporation shall be as set forth on Exhibit
E hereto until their respective successors have been duly elected or appointed and qualified or until their respective earlier
death, resignation, or removal in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation.

 

Section 2.08     
 Effect of the Merger
on Capital Stock of the Company and the Merger Sub; Earnest Money Deposit. At the Effective Time, as a result of the
Merger and without any action on the part of the Parent, the Merger Sub, the Company, or any Stockholder:

 

(a)            
Conversion of Company Shares. Each Company Share issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive a proportionate share of the Merger Consideration. For purposes of this Agreement, “Merger
Consideration” means the sum of the following: (i) the Earnest Money Deposit Amount, plus (ii) the Aggregate Note
Amount, plus (iii) 288,588 shares of the Series A Preferred Stock (the “Parent Preferred Shares”). No
fractional Series A Preferred Stock shall be issued as a result of the Merger. If any fractional Series A Preferred Stock would
otherwise result from the Merger, the number of securities required to be issued to the applicable Stockholder shall be rounded
to the nearest whole number of Parent Preferred Shares.

 

(b)            
Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.001 per share, of the Merger Sub
issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid,
and non-assessable share of common stock of the Surviving Corporation.

 

(c)            
Treasury Stock. Any Company Shares held by the Company as treasury shares or by the Parent immediately prior to the
Effective Time shall automatically be canceled and cease to exist as of the Effective Time and no consideration shall be delivered
or deliverable therefor.

 

(d)            
Earnest Money Deposit. The parties hereto acknowledge and agree that, prior to the execution of this Agreement, the
Parent delivered to the Stockholders the aggregate amount of $200,000 in cash (the “Earnest Money Deposit Amount”)
by wire transfer of immediately available funds or by certified check. At the Closing, the Earnest Money Deposit Amount shall be
retained by the Stockholders as a portion of their Merger Consideration.

 

Section 2.09     
 Surrender and Payment.

 

(a)            
At the Effective Time, all Company Shares outstanding immediately prior to the Effective Time shall automatically be cancelled
and retired and shall cease to exist and each Stockholder (and any other holder of a certificate formerly representing any Company
Shares) shall cease to have any rights as a stockholder of the Company.

 

(b)            
The Parent shall, no later than the later of (i) the Closing Date or (ii) three Business Days after receipt from a Stockholder
of a stock certificate or certificates representing such Stockholder’s Company Shares, together with any other customary
documents that the Parent may reasonably require in connection therewith, pay to such Stockholder such Stockholder’s Pro
Rata Share of the Merger Consideration not previously paid to such stockholder and such stock certificate(s) shall forthwith be
cancelled. No interest shall be paid or shall accrue on any Merger Consideration payable upon surrender of any stock certificate
representing Company Shares. Until so surrendered, each outstanding stock certificate that prior to the Effective Time represented
Company Shares shall be deemed from and after the Effective Time, for all purposes, to evidence the right to receive the portion
of the Merger Consideration as provided in Section 2.08(a).

 

 

 

    	 	19	 

     

    

 

Section 2.10     
 No Further Ownership
Rights in Company Shares. All
Merger Consideration paid or payable upon the surrender of stock certificates formerly representing Company Shares in accordance
with the terms hereof shall be deemed to have been paid or payable in full satisfaction of all rights pertaining to the Company
Shares formerly represented by such stock certificates, and from and after the Effective Time, there shall be no further registration
of transfers of Company Shares on the stock transfer books of the Surviving Corporation. 

 

Section 2.11     
Adjustments.
Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and
the Effective Time, any change in the outstanding shares of capital stock of the Company shall occur, including by reason of any
reclassification, recapitalization, stock split (including reverse stock split), or combination, exchange, or readjustment of shares,
or any stock dividend or distribution paid in stock, the Merger Consideration and any other amounts payable pursuant to this Agreement
shall be appropriately adjusted to reflect such change.

 

Section 2.12     
Withholding Rights.
The Parent shall be entitled to deduct and withhold from the consideration otherwise payable
to any Person pursuant to this Article II
such amounts as may be required to be deducted and withheld with respect to the making of such payment under any provision of Tax
Law. To the extent that amounts are so deducted and withheld by the Parent, such amounts shall be treated for all purposes of this
Agreement as having been paid to the Person in respect of whom the Parent made such deduction and withholding.

 

Section 2.13     
Tax-Free Merger.
The parties hereto intend that the Merger will be treated as a tax-free reorganization under Section 368 of the Code.

 

Section 2.14     
 Waiver of Dissenters’
Rights. Each
Stockholder hereby waives any rights of dissent or other similar rights that such Stockholder may have as a result
of, or otherwise in connection with, the Merger or any of the other transactions contemplated by this Agreement.

 

ARTICLE
III

Representations and warranties of THE company and the stockholders

 

Except as set forth
in the correspondingly numbered Section of the Disclosure Schedules that relates to such Section or in another Section of the
Disclosure Schedules to the extent that it is reasonably apparent on the face of such disclosure that such disclosure is applicable
to such Section, the Company and the Stockholders, jointly and severally (except in respect of Section 3.01 and Section
3.22, which representations and warranties are made by each of the Stockholders, severally and not jointly, as to itself or
himself and not by the Company), represent and warrant to the Parent and the Merger Sub that the statements contained in this
ARTICLE III are true and correct as of the date hereof.

 

 

 

    	 	20	 

     

    

 

Section 3.01     
 Authority of the
Stockholders; No Conflicts or Consents in Respect of the Stockholders.

 

(a)            
Each Stockholder has full capacity, power, and authority to enter into this Agreement and to carry out his or its obligations
hereunder. This Agreement has been duly executed and delivered by each Stockholder and (assuming due authorization, execution,
and delivery by each other party hereto) this Agreement constitutes a legal, valid, and binding obligation of each Stockholder
enforceable against such Stockholder in accordance with its terms.

 

(b)            
The execution, delivery, and performance by each Stockholder of this Agreement and the consummation of the transactions
contemplated hereby, do not and will not: (i) conflict with or result in a violation or breach of, or default under, any provision
of the Organizational Documents of any Seller; (ii) conflict with or result in a violation or breach of any provision of any Law
or Governmental Order applicable to any Stockholder; or (iii) require the consent of, notice to, or other action by, any Person
under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse
of time or both, would constitute a default under, result in the acceleration of, or create in any party the right to accelerate,
terminate, modify, or cancel, any Contract to which any Stockholder is a party or by which any Stockholder is bound or to which
any of its or his properties and assets are subject. No consent, approval, Permit, Governmental Order, declaration, or filing with,
or notice to, any Governmental Authority is required by or with respect to any Stockholder in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

Section 3.02     
Organization and
Qualification of the Company; Authority of the Stockholders.

 

(a)            
The Company is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Nevada
and has full corporate power and authority to own, operate, or lease the properties and assets now owned, operated, or leased by
it and to carry on its business as it has been and is currently conducted. Section 3.02(a) of the Disclosure Schedules sets
forth each jurisdiction in which the Company is licensed or qualified to do business, and the Company is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its
business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed, qualified,
or in good standing would not have a Company Material Adverse Effect.

 

(b)            
The Company has full corporate power and authority to enter into and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite corporate action
on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize the execution,
delivery, and performance of this Agreement or to consummate the Merger and the other transactions contemplated hereby. The affirmative
vote or consent of the Stockholders representing a majority of the outstanding Company Shares is the only vote or consent of the
holders of any class or series of the Company’s capital stock required to approve this Agreement and the Merger. This Agreement
has been duly executed and delivered by the Company and (assuming due authorization, execution, and delivery by each other party
hereto) this Agreement constitutes a legal, valid, and binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, and other similar laws affecting
creditors’ rights generally and by general principles of equity.

 

 

 

    	 	21	 

     

    

 

(c)            
The Company Board, by resolutions duly adopted by unanimous written consent, has (i) determined that this Agreement
and the transactions contemplated hereby, including the Merger, are fair to, and in the best interests of, the Stockholders, (ii) approved
and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, in accordance with the applicable
provisions of the NRS, (iii) directed that this Agreement and the Merger be submitted to the Stockholders for their approval, and
(iv) recommended that the Stockholders approve this Agreement and the Merger.

 

Section
3.03      Capitalization. 

 

(a)            
The authorized capital stock of the Company consists of 75,000 Company Shares, of which 100 Company Shares are issued and
outstanding. All of the issued and outstanding Company Shares are (i) duly authorized, are validly issued, fully paid, and non-assessable;
(ii) not subject to any preemptive rights created by statute, the Organizational Documents of the Company, or any agreement to
which the Company or any Stockholder is a party; (iii) free and clear of any Encumbrances; and (iv) owned of record and beneficially
by the Stockholders in the respective amounts set forth in Section 3.03(a) of the Disclosure Schedules.

 

(b)            
All of the issued and outstanding Company Shares were issued in compliance with applicable Laws. The issued and outstanding
Company Shares were not issued in violation of the Organizational Documents of the Company or any other agreement, arrangement,
or commitment to which any Stockholder or the Company is a party.

 

(c)            
No subscription, warrant, option, convertible or exchangeable security, or other right (contingent or otherwise) to purchase
or otherwise acquire equity securities of the Company is authorized or outstanding. There is no commitment by the Company to issue
shares, subscriptions, warrants, options, convertible or exchangeable securities, or other such rights or to distribute to holders
of any of its equity securities any evidence of indebtedness or asset, to repurchase or redeem any securities of the Company, or
to grant, any warrant, option, convertible or exchangeable security, or other such right. There are no declared or accrued unpaid
dividends with respect to any Company Shares. There are no voting trusts, stockholder agreements, proxies, or other agreements
or understandings in effect with respect to the voting or transfer of any of the Company Shares. No outstanding Company Shares
are subject to vesting or forfeiture rights or repurchase by the Company. There are no outstanding or authorized stock appreciation,
dividend equivalent, phantom stock, profit participation, or other similar rights with respect to the Company or any of its securities.

 

 

 

    	 	22	 

     

    

 

(d)            
All distributions, dividends, repurchases, and redemptions of the capital stock (or other equity interests) of the Company
were undertaken in compliance with the Organizational Documents of the Company then in effect, any agreement to which the Company
then was a party, and in compliance with applicable Law.

 

(e)            
There are no shares of treasury stock held by the Company.

 

Section
3.04      No Subsidiaries. The Company does not own, have
any interest in any shares of, or have an ownership interest in, any other Person.

 

Section
3.05      No Conflicts or Consents in Respect of the Company.
The execution, delivery, and performance by the Company of this Agreement and the consummation of the transactions contemplated
hereby, including the Merger, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any
provision of the Organizational Documents of the Company; (b) conflict with or result in a violation or breach of any provision
of any Law or Governmental Order applicable to the Company; (c) require the consent of, notice to, or other action by, any Person
under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse
of time or both, would constitute a default under, result in the acceleration of, or create in any party the right to accelerate,
terminate, modify, or cancel, any Contract to which the Company is a party or by which the Company is bound or to which any its
properties and assets are subject (including any Material Contract) or any Permit affecting the properties, assets or business
of the Company; or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties
or assets of the Company. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental
Authority is required by or with respect to the Company in connection with the execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby, except for the filing of the Articles of Merger with the Secretary
of State of the State of Nevada.

 

Section 3.06     
Financial Statements.

 

(a)            
Complete copies of the Company’s unaudited financial statements consisting of the balance sheet of the Company as
at December 31, 2016 and the related statements of income and retained earnings, stockholders’ equity, and cash flow for
the year then ended (the “Annual Financial Statements”), and unaudited financial statements consisting of the
balance sheet of the Company as at June 30, 2017 and the related statements of income and retained earnings, stockholders’
equity and cash flow for the three- and six-month periods then ended (the “Interim Financial Statements,” and,
together with the Annual Financial Statements, the “Financial Statements”) have been delivered to the Parent.
The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved,
subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will
not be materially adverse) and, in the case of all of the Financial Statements, the absence of notes. The Financial Statements
are based on the books and records of the Company, and fairly present in all material respects the financial condition of the Company
as of the respective dates they were prepared and the results of the operations of the Company for the periods indicated. The balance
sheet of the Company as of December 31, 2016 is referred to herein as the “Balance Sheet” and the date thereof
as the “Balance Sheet Date” and the balance sheet of the Company as of June 30, 2017 is referred to herein as
the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date.” The
Company maintains a standard system of accounting established and administered in accordance with GAAP. There are no off balance
sheet transactions, arrangements, or obligations of or involving the Company.

 

 

 

    	 	23	 

     

    

 

(b)            
The Company makes and keeps accurate financial books and records reflecting its assets and maintains commercially reasonable
internal accounting controls that provide reasonable assurance that (a) transactions are executed with management’s authorization;
(b) transactions are recorded as necessary to permit preparation of the financial statements of the Company and to maintain
accountability for the Company’s assets; (c) access to the assets of the Company is permitted only in accordance with management’s
authorization; (d) the reported accountability of the assets of the Company is compared with existing assets at reasonable intervals;
and (e) accounts are recorded accurately in all material respects and commercially reasonable procedures are implemented to effect
the collection thereof on a current and timely basis. There are no significant deficiencies or material weaknesses in either the
design or operation of internal controls of the Company that are reasonably likely to adversely affect the ability of the Company
to record, process, summarize, and report financial information in a materially accurate manner.

 

(c)            
The financial books and records of the Company are sufficient such that the Financial Statements can be audited without
a scope limitation, by an independent certified public accounting firm that is registered under the Public Company Accounting Oversight
Board, which audited Financial Statements can be included in the Current Report on Form 8-K of the Parent to be filed after the
Closing that describes the transactions herein and thereafter can be consolidated into the Parent’s periodic reports to be
filed under the Exchange Act.

 

Section
3.07      Undisclosed Liabilities. The Company has no
liabilities, obligations, or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent,
accrued or unaccrued, matured or unmatured, or otherwise (“Liabilities”), except (a) those that are adequately
reflected or reserved against in the Interim Balance Sheet as of the Interim Balance Sheet Date and (b) those that have been incurred
in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date and that are not, individually
or in the aggregate, material in amount.

 

Section
3.08      Absence of Certain Changes, Events, and Conditions.
Since the Interim Balance Sheet Date, and other than in the ordinary course of business consistent with past practice, there has
not been, with respect to the Company, any:

 

(a)            
event, occurrence, or development that has had, or could reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect;

 

 

    	 	24	 

     

    

 

(b)            
amendment of the Organizational Documents of the Company;

 

(c)            
split, combination, or reclassification of any shares of its capital stock;

 

(d)            
issuance, sale, or other disposition of, or creation of any Encumbrance on, any shares of its capital stock, or grant of
any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any shares of its
capital stock;

 

(e)            
declaration or payment of any dividends or distributions on or in respect of any shares of its capital stock or redemption,
purchase, or acquisition of any shares of its capital stock;

 

(f)             
material change in any method of accounting or accounting practice of the Company, except as required by GAAP or as disclosed
in the notes to the Financial Statements;

 

(g)            
entry into any Contract that would constitute a Material Contract;

 

(h)            
incurrence, assumption, or guarantee of any Indebtedness except unsecured current obligations and Liabilities incurred in
the ordinary course of business consistent with past practice;

 

(i)             
transfer, assignment, sale, or other disposition of any of the assets shown or reflected in the Interim Balance Sheet or
cancellation of any debts or entitlements;

 

(j)             
transfer, assignment, or grant of any license or sublicense of any material rights under or with respect to any Company
Intellectual Property or Company IP Agreements;

 

(k)            
material damage, destruction, or loss (whether or not covered by insurance) to its property;

 

(l)             
any capital investment in, or any loan to, any other Person;

 

(m)          
acceleration, termination, or cancellation of, or material modification to, any material Contract (including any Material
Contract) to which the Company is a party or by which it is bound;

 

(n)            
any material capital expenditures;

 

(o)            
imposition of any Encumbrance upon any of the Company’s properties, capital stock, or assets, tangible or intangible;

 

(p)            
(i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension, or other
compensation or benefits in respect of its current or former employees, officers, directors, independent contractors, or consultants,
other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment
for any employee or any termination of any employees for which the aggregate costs and expenses exceed $10,000, or (iii) action
to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent
contractor, or consultant;

 

 

 

    	 	25	 

     

    

 

(q)            
hiring or promoting any person as or to an officer or any key employee below officer except to fill a vacancy in the ordinary
course of business;

 

(r)             
adoption, modification, or termination of any: (i) employment, severance, retention, or other agreement with any current
or former employee, officer, director, independent contractor, or consultant, (ii) Benefit Plan, or (iii) collective bargaining
agreement, in each case whether written or oral;

 

(s)            
any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its stockholders or current
or former directors, officers, and employees;

 

(t)             
entry into a new line of business or abandonment or discontinuance of existing lines of business;

 

(u)            
except for the Merger, adoption of any plan of merger, consolidation, reorganization, liquidation, or dissolution or filing
of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy
petition against it under any similar Law;

 

(v)            
purchase, lease, or other acquisition of the right to own, use or lease any property or assets for an amount in excess of
$10,000, individually (in the case of a lease, per annum) or $25,000 in the aggregate (in the case of a lease, for the entire term
of the lease, not including any option term);

 

(w)          
acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets, stock, or other equity
of, or by any other manner, any business or any Person or any division thereof;

 

(x)            
action by the Company to make, change, or rescind any Tax election, amend any Tax Return, or take any position on any Tax
Return, take any action, omit to take any action, or enter into any other transaction that would have the effect of increasing
the Tax liability or reducing any Tax asset of the Parent in respect of any Post-Closing Tax Period; or

 

(y)            
any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

 

Section
3.09      Material Contracts. 

 

(a)            
Section 3.09(a) of the Disclosure Schedules lists each of the following Contracts of the Company (such Contracts,
together with all Company IP Agreements required to be set forth in Section 3.12(b) of the Disclosure Schedules, being “Material
Contracts”):

 

 

 

    	 	26	 

     

    

 

(i)             
each Contract of the Company involving aggregate consideration in excess of $10,000 and which, in each case, cannot be cancelled
by the Company without penalty or without more than 90 days’ notice;

 

(ii)           
all Contracts that require the Company to purchase its total requirements of any product or service from a third party or
that contain “take or pay” provisions;

 

(iii)         
all Contracts that provide for the indemnification by the Company of any Person or the assumption of any Tax, environmental,
or other Liability of any Person;

 

(iv)          
all Contracts that relate to the acquisition or disposition of any business, equity, or assets of any other Person (whether
by merger, sale of stock, or other equity interests, sale of assets, or otherwise);

 

(v)            
all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research,
marketing, consulting, and advertising Contracts to which the Company is a party;

 

(vi)          
all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) to which the
Company is a party and that are not cancellable without material penalty or without more than 90 days’ notice;

 

(vii)        
all Contracts relating to Indebtedness of the Company;

 

(viii)      
all Contracts with any Governmental Authority to which the Company is a party (“Government Contracts”);

 

(ix)          
all Contracts that limit or purport to limit the ability of the Company to compete in any line of business or with any Person
or in any geographic area or during any period of time;

 

(x)            
any Contract to which the Company is a party that provides for any joint venture, partnership, or similar arrangement by
the Company;

 

(xi)          
all Contracts between or among the Company, on the one hand, and any Stockholder or any Affiliate of any Stockholder, on
the other hand;

 

(xii)        
all collective bargaining agreements to which the Company is a party; and

 

(xiii)      
any other Contract that is material to the Company and not previously required to be disclosed pursuant to this Section
3.09(a).

 

 

 

 

    	 	27	 

     

    

(b)            
Each Material Contract is valid and binding on the Company in accordance with its terms and is in full force and effect.
None of the Company or, to the Company’s Knowledge, any other party thereto is in breach of or default under (or is alleged
to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate,
any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event
of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes
of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including
all modifications, amendments, and supplements thereto and waivers thereunder) have been made available to the Parent.

 

Section
3.10      Title to Assets; No Real Property. 

 

(a)            
The Company has good and valid title to all personal property and other assets reflected in the Interim Financial Statements
or acquired after the Interim Balance Sheet Date. All such properties and assets are free and clear of Encumbrances except for
liens for Taxes not yet due and payable and for which adequate reserves have been set aside by the Company (“Permitted
Encumbrances”):

 

(b)            
The Company does not own or lease any real property.

 

Section
3.11      Condition and Sufficiency of Assets. The items
of tangible personal property of the Company are structurally sound, are in good operating condition and repair, and are adequate
for the uses to which they are being put, and none of such items of tangible personal property is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in nature or cost. The items of tangible personal property
currently owned or leased by the Company, together with all other properties and assets of the Company, are sufficient for the
continued conduct of the Company’s business after the Closing in substantially the same manner as conducted prior to the
Closing and constitute all of the rights, properties, and assets necessary to conduct the business of the Company as currently
conducted.

 

Section
3.12      Intellectual Property. 

 

(a)            
Section 3.12(a) of the Disclosure Schedules lists all (i) Company IP Registrations and (ii) Company Intellectual
Property (including software) that is not registered but that is material to the Company’s business or operations. All required
filings and fees related to the Company IP Registrations have been timely filed with and paid to the relevant Governmental Authorities
and authorized registrars, and all Company IP Registrations are otherwise in good standing. The Company has provided the Parent
with true and complete copies of file histories, documents, certificates, office actions, correspondence, and other materials related
to all Company IP Registrations.

 

(b)            
Section 3.12(b) of the Disclosure Schedules lists all Company IP Agreements. The Company has provided the Parent
with true and complete copies of all such Company IP Agreements, including all modifications, amendments, and supplements thereto
and waivers thereunder. Each Company IP Agreement is valid and binding on the Company in accordance with its terms and is in full
force and effect. Neither the Company nor any other party thereto is in breach of or default under (or is alleged to be in breach
of or default under), or has provided or received any notice of breach or default of or any intention to terminate, any Company
IP Agreement.

 

 

 

    	 	28	 

     

    

 

(c)            
The Company is the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations, record, owner
of all right, title, and interest in and to the Company Intellectual Property, and has the valid right to use all other Intellectual
Property used in or necessary for the conduct of the Company’s current business or operations, in each case, free and clear
of Encumbrances other than Permitted Encumbrances. Without limiting the generality of the foregoing, the Company has entered into
binding, written agreements with every current and former employee of the Company, and with every current and former independent
contractor, whereby such employees and independent contractors (i) assign to the Company any ownership interest and right they
may have in the Company Intellectual Property and (ii) acknowledge the Company’s exclusive ownership of all Company Intellectual
Property. The Company has provided the Parent with true and complete copies of all such agreements.

 

(d)            
The consummation of the transactions contemplated hereunder will not result in the loss or impairment of, or payment of
any additional amounts with respect to, nor require the consent of any other Person in respect of, the Company’s right to
own, use, or hold for use any Intellectual Property as owned, used, or held for use in the conduct of the Company’s business
or operations as currently conducted.

 

(e)            
The Company’s rights in the Company Intellectual Property are valid, subsisting, and enforceable. The Company has
taken all reasonable steps to maintain the Company Intellectual Property and to protect and preserve the confidentiality of all
trade secrets included in the Company Intellectual Property, including requiring all Persons having access thereto to execute written
non-disclosure agreements.

 

(f)             
The conduct of the Company’s business as currently and formerly conducted, and the products, processes, and services
of the Company, have not infringed, misappropriated, diluted, or otherwise violated, and do not and will not infringe, dilute,
misappropriate, or otherwise violate, the Intellectual Property or other rights of any Person. To the Company’s Knowledge,
no Person has infringed, misappropriated, diluted, or otherwise violated, or is currently infringing, misappropriating, diluting,
or otherwise violating, any Company Intellectual Property.

 

(g)            
There are no Actions (including any oppositions, interferences, or re-examinations) settled, pending, or, to the
Company’s Knowledge, threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation,
dilution, or violation of the Intellectual Property of any Person by the Company; (ii) challenging the validity, enforceability,
registrability, or ownership of any Company Intellectual Property or the Company’s rights with respect to any Company Intellectual
Property; or (iii) by the Company or any other Person alleging any infringement, misappropriation, dilution, or violation by any
Person of the Company Intellectual Property. The Company is not subject to any outstanding or prospective Governmental Order (including
any motion or petition therefor) that does or would restrict or impair the use of any Company Intellectual Property.

 

 

 

    	 	29	 

     

    

 

Section
3.13      Insurance. Section 3.13 of the Disclosure
Schedules sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella
liability, real and personal property, workers’ compensation, vehicular, directors’ and officers’ liability,
fiduciary liability, and other casualty and property insurance maintained by the Company (collectively, the “Insurance
Policies”) and true and complete copies of such Insurance Policies have been made available to the Parent. Such Insurance
Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions
contemplated by this Agreement. The Company has not received any written notice of cancellation of, premium increase with respect
to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been
paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance
Policy. There are no claims related to the business of the Company pending under any such Insurance Policies as to which coverage
has been questioned, denied, or disputed or in respect of which there is an outstanding reservation of rights. The Company is not
in default under, and has not otherwise failed to comply with, in any material respect, any provision contained in any such Insurance
Policy. The Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar
to the Company and are sufficient for compliance with all applicable Laws and Contracts to which the Company is a party or by which
it is bound.

 

Section
3.14      Legal Proceedings; Governmental Orders. 

 

(a)            
There are no Actions pending or, to the Company’s Knowledge, threatened (a) against or by the Company affecting any
of its properties or assets or (b) against or by the Company that challenge or seek to prevent, enjoin, or otherwise delay
the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as
a basis for, any such Action.

 

(b)            
There are no outstanding Governmental Orders and no unsatisfied judgments, penalties, or awards against or affecting the
Company or any of its properties or assets.

 

Section
3.15      Compliance With Laws; Permits. 

 

(a)            
The Company has complied, and is now complying, with all Laws applicable to it or its business, properties, or assets.

 

(b)            
All Permits required for the Company to conduct its business have been obtained by it and are valid and in full force and
effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 3.15(b) of the
Disclosure Schedules lists all current Permits issued to the Company, including the names of the Permits and their respective
dates of issuance and expiration. No event has occurred that, with or without notice or lapse of time or both, would reasonably
be expected to result in the revocation, suspension, lapse, or limitation of any Permit set forth in Section 3.15(b) of the
Disclosure Schedules.

 

Section
3.16      Employee Matters. 

 

(a)            
All compensation, including wages, commissions, and bonuses, payable to all employees, independent contractors, or consultants
of the Company for services performed have been paid in full and there are no outstanding agreements, understandings, or commitments
of the Company with respect to any compensation, commissions, or bonuses. The employment of each employee of the Company is terminable
at the will of the Company. Upon termination of the employment of any such employees, no severance or other payments will become
due. All individuals characterized and treated by the Company as independent contractors or consultants are properly treated as
independent contractors under all applicable Laws. The Company is not, and has not been, a party to, bound by, or negotiating,
any collective bargaining agreement or other Contract with a union, works council, or labor organization.

 

 

 

    	 	30	 

     

    

 

(b)            
No Benefit Plan is or has been maintained or sponsored by, contributed to, or required to be contributed to, by the Company
for the benefit of any current or former employee, officer, director, retiree, independent contractor, or consultant of the Company
or any spouse or dependent of such individual, or under which the Company has or may have any Liability, or with respect to which
the Parent or any of its Affiliates would reasonably be expected to have any Liability, contingent or otherwise.

 

(c)            
Neither the execution of this Agreement nor the consummation of any of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, officer,
employee, independent contractor, or consultant of the Company to severance pay or any other payment or (ii) accelerate the time
of payment, funding, or vesting, or increase the amount of compensation due to any such individual.

 

Section
3.17      Taxes.

 

(a)            
All Tax Returns required to be filed on or before the Closing Date by the Company have been, or will be, timely filed. Such
Tax Returns are, or will be, true, complete, and correct in all material respects. All Taxes due and owing by the Company (whether
or not shown on any Tax Return) have been, or will be, timely paid or, in the case of Taxes that are not yet due and payable as
of the Closing Date, accrued.

 

(b)            
The Company has withheld and paid each Tax required to have been withheld and paid (or, in circumstances where such Taxes
have not yet become due and payable, have been set aside in segregated accounts to be paid to the proper Taxing Authority) in connection
with amounts paid or owing to any employee, independent contractor, creditor, customer, stockholder, or other party, and complied
with all information reporting and backup withholding provisions of applicable Law.

 

(c)            
No claim has been made by any Taxing Authority in any jurisdiction where the Company does not file Tax Returns that it is,
or may be, subject to Tax by that jurisdiction.

 

(d)            
No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of the Company.

 

(e)            
The amount of the Company’s Liability for unpaid Taxes for all periods ending on or before the Interim Balance Sheet
Date does not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) reflected on the
Financial Statements. The amount of the Company’s Liability for unpaid Taxes for all periods following the end of the recent
period covered by the Financial Statements shall not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves
for deferred Taxes) as adjusted for the passage of time in accordance with the past custom and practice of the Company (and which
accruals shall not exceed comparable amounts incurred in similar periods in prior years).

 

 

 

    	 	31	 

     

    

 

(f)             
Section 3.17(f) of the Disclosure Schedules sets forth:

 

(i)             
the taxable years of the Company as to which the applicable statutes of limitations on the assessment and collection of
Taxes have not expired;

 

(ii)           
those years for which examinations by the Taxing Authorities have been completed; and

 

(iii)         
those taxable years for which examinations by Taxing Authorities are presently being conducted.

 

(g)            
All deficiencies asserted, or assessments made, against the Company as a result of any examinations by any Taxing Authority
have been fully paid.

 

(h)            
The Company is not a party to any Action by any Taxing Authority. There are no pending or threatened Actions by any Taxing
Authority.

 

(i)             
The Company has delivered to the Parent copies of all federal, state, local, and foreign income, franchise, and similar
Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by, the Company for all Tax periods
ending after December 31, 2014.

 

(j)             
There are no Encumbrances for Taxes upon the assets of the Company (other than for current Taxes not yet due and payable
and for which adequate reserves have been set aside by the Company).

 

(k)            
The Company is not a party to, or bound by, any Tax indemnity, Tax-sharing, or Tax allocation agreement or any similar agreement.

 

(l)             
No private letter rulings, technical advice memoranda, or similar agreements or rulings have been requested, entered into,
or issued by any Taxing Authority with respect to the Company.

 

(m)          
The Company has not been a member of an affiliated, combined, consolidated, or unitary Tax group for Tax purposes. The Company
has no Liability for Taxes of any Person (other than the Company) under Treasury Regulations Section 1.1502-6 (or any corresponding
provision of state, local, or foreign Law), as transferee or successor, by contract or otherwise.

 

 

 

    	 	32	 

     

    

 

(n)            
The Company will not be required to include any item of income in, or exclude any item or deduction from, taxable income
for any taxable period or portion thereof ending after the Closing Date as a result of:

 

(i)             
any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign
Tax Laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date;

 

(ii)           
an installment sale or open transaction occurring on or prior to the Closing Date;

 

(iii)         
a prepaid amount received on or before the Closing Date;

 

(iv)          
any closing agreement under Section 7121 of the Code, or similar provision of state, local, or foreign Law; or

 

(v)            
any election under Section 108(i) of the Code.

 

(o)            
No Stockholder is a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2. The Company
is not, nor has it been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(a) of the Code.

 

(p)            
The Company has not been a “distributing corporation” or a “controlled corporation” in connection
with a distribution described in Section 355 of the Code.

 

(q)            
The Company is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning
of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).

 

(r)             
There is currently no limitation on the utilization of net operating losses, capital losses, built-in losses, tax credits,
or similar items of the Company under Sections 269, 382, 383, 384, or 1502 of the Code and the Treasury Regulations thereunder
(and comparable provisions of state, local, or foreign Law).

 

(s)            
All individuals classified by the Company as independent contractors are properly classified as such for applicable Tax
purposes.

 

(t)             
The Company is not subject to, or required to register for, any value added Taxes.

 

(u)            
The Company does not have and has not had a permanent establishment in any foreign country, as defined in any applicable
Tax treaty or convention between the United States and such foreign country.

 

(v)            
All FinCEN Forms 114, Report of Foreign Bank Accounts, and IRS Forms TD F 90-22.1, Report of Foreign Bank and Financial
Accounts, required to be filed by, or on behalf of, the Company have been timely filed and all such forms were true, correct, and
complete when filed.

 

 

 

    	 	33	 

     

    

 

(w)          
The Company has (i) filed or caused to be filed with the appropriate Governmental Authority all reports required to be filed
with respect to any material unclaimed property and has remitted to the appropriate Governmental Authority all material unclaimed
property required to be remitted or (ii) delivered or paid all material unclaimed property to its original or proper recipient.
No material asset or property, or material amount of assets or properties, of the Company is escheatable to any Governmental Authority
under any applicable Law, including uncashed checks to vendors or employees, nonrefunded over payments, credits, unused gift certificates,
or unused prepaid accounts.

 

(x)            
The Company has not participated in or cooperated with an international boycott within the meaning of Section 999 of the
Code and has not been requested to do so.

 

Section
3.18      Books and Records. The minute books and stock
record books of the Company have been made available to the Parent, are complete and correct, and have been maintained in accordance
with sound business practices. The minute books of the Company contain accurate and complete records of all meetings, and actions
taken by written consent of, the stockholders, the Company Board, and any committees of the Company Board, and no meeting, or action
taken by written consent, of any such stockholders, Company Board, or committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Company.

 

Section 3.19     
Brokers.
No broker, finder, or investment banker is entitled to any brokerage, finder’s, or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any Stockholder.

 

Section 3.20     
Affiliate Agreements.
None of the Stockholders or any of their respective Affiliates or any officer, director, or equivalent of the Company or any of
his or her Affiliates or any individual in such officer’s, director’s, or equivalent person’s immediate family:
(a) owns any interest in any property or assets owned, leased, or used by the Company, (b) has a material interest in any customer
or supplier of the Company or any provider of products or services to the Company, or (c) is a party to any Contract or other arrangement
with the Company (each, an “Affiliate Agreement”), other than salaries, expense reimbursement, and employee
benefits in respect of employment in the ordinary course of business.

 

Section 3.21     
Indebtedness.
Section 3.21 of the Disclosure Schedules sets forth a true and complete list of all Indebtedness of the Company and provides
(a) the name(s) of the current lender(s) and (b) the outstanding principal balance(s) and all accrued and unpaid interest as of
the date hereof. As of the Closing, there will be no outstanding Indebtedness (including any pre-payment fees, exit fees, rescheduling
fees, or penalties) of the Company arising from obligations created by or on behalf of the Company or any Seller prior to the Closing.

 

Section
3.22      Investment Representations.

 

(a)            
Each Stockholder is acquiring the Parent Preferred Shares for his or its own account for the purpose of investment only,
without any view toward sale or distribution.

 

 

 

    	 	34	 

     

    

 

(b)            
Each Stockholder is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under
the Securities Act.

 

(c)            
Each Stockholder has such knowledge and experience in financial and business matters so as to be able to evaluate the risks
and merits of its investment in the Parent and it is able financially to bear the risks thereof.

 

(d)            
Each Stockholder understands that (i) the Parent Preferred Shares have not been registered under the Securities Act or qualified
under any state securities or blue sky laws by reason of their issuance in a transaction exempt from the registration requirements
of the Securities Act and the qualification requirements of the various state securities or blue sky laws and, therefore, cannot
be resold unless they are registered under the Securities Act and qualified under applicable state securities laws or unless exemptions
from such registration and qualification requirements are available, (ii) even if the Parent Preferred Shares are subsequently
registered under the Securities Act and qualified under state securities or blue sky laws, or exemptions from such registration
and qualification requirements are available, the amount or percentage of the Parent Preferred Shares that may be sold or transferred
may be limited by applicable federal and state laws, rules, and regulations, and (iii) no public agency has reviewed the accuracy
or adequacy of any information furnished to the Stockholders and their respective Representatives in connection with the Stockholders’
respective acquisitions of the Parent Preferred Shares. The Stockholders agree that all stock certificates representing the Parent
Preferred Shares shall bear the following legend (or substantially equivalent language):

 

“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION
THEREUNDER IS AVAILABLE.”

 

(e)            
Each Stockholder acknowledges that such Stockholder has had access to such financial and other information relating
to the Parent, including the Parent SEC Reports and the Parent’s other annual, quarterly, and current reports, registration
statements, prospectuses, proxy statements, information statements, and other documents (including exhibits and amendments ) filed
by the Parent with the Commission and other publicly available information regarding the Parent, required for such Stockholder
to make an informed decision with respect to such Stockholder’s acquisition of the Parent Preferred Shares hereby and that
such Stockholder has had an opportunity to discuss the Parent’s business, management, and financial affairs with the Parent’s
management, and has had all of such Stockholder’s questions regarding the Parent or the Parent Preferred Shares answered
to such Stockholder’s satisfaction. Each Stockholder acknowledges that he or it should carefully review the risk factors
set forth in the Parent SEC Reports.

 

Section
3.23      Full Disclosure. No representation or warranty
by the Company and/or the Stockholders in this Agreement and no statement contained in the Disclosure Schedules to this Agreement
or any certificate or other document furnished or to be furnished to the Parent pursuant to this Agreement contains any untrue
statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of
the circumstances in which they are made, not misleading.

 

 

 

    	 	35	 

     

    

 

ARTICLE
IV

Representations and warranties of THE Parent and merger sub

 

Except as disclosed
in the Parent SEC Reports, the Parent and the Merger Sub represent and warrant to the Company and the Stockholders that the statements
contained in this ARTICLE IV are true and correct as of the date hereof.

 

Section 4.01     
Organization and
Authority. Each of the Parent and the Merger Sub is a corporation duly organized, validly existing, and in good standing
under the Laws of the jurisdiction of its incorporation. Each of the Parent and the Merger Sub has full corporate power and authority
to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance by the Parent and the Merger Sub of this Agreement and the consummation by the Parent and the Merger
Sub of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Parent
and the Merger Sub and no other corporate proceedings on the part of the Parent and the Merger Sub are necessary to authorize the
execution, delivery, and performance of this Agreement or to consummate the Merger and the other transactions contemplated hereby
except for the Required Parent Shareholder Approval. This Agreement has been duly executed and delivered by the Parent and the
Merger Sub, and (assuming due authorization, execution, and delivery by each other party hereto) this Agreement constitutes a legal,
valid, and binding obligation of the Parent and the Merger Sub enforceable against the Parent and the Merger Sub in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, and other similar laws affecting
creditors’ rights generally and by general principles of equity.

 

Section
4.02      No Conflicts; Consents. The execution, delivery,
and performance by the Parent and the Merger Sub of this Agreement and the consummation of the transactions contemplated hereby,
do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Organizational
Documents of the Parent or the Merger Sub; (b) conflict with or result in a violation or breach of any provision of any Law or
Governmental Order applicable to the Parent or the Merger Sub; or (c) except for the consent of the Parent’s lender, require
the consent, notice, or other action by any Person under any Contract to which the Parent or the Merger Sub is a party. No consent,
approval, Permit, Governmental Order, or declaration of, filing with, or notice to, any Governmental Authority is required by or
with respect to the Parent or the Merger Sub in connection with the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby, except for (i) the filing of the Articles of Merger with the Secretary
of State of the State of Nevada, (ii) the filing of the Certificate of Designation with the Secretary of State of the State of
Minnesota, and (iii) such other consents, approvals, authorizations, orders, registrations, filings, or qualifications that shall
have been obtained or made on or prior to the Closing Date as may be required by the securities or blue sky laws of the various
states and the Securities Act in connection with the issuance of the Parent Preferred Shares.

 

 

 

    	 	36	 

     

    

 

Section
4.03       No Prior Merger Sub Operations.
The Merger Sub was formed solely for the purpose of effecting the Merger and has not engaged in any business activities or conducted
any operations other than in connection with the transactions contemplated hereby.

 

Section
4.04      Brokers. No broker, finder, or investment banker
is entitled to any brokerage, finder’s, or other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Parent or the Merger Sub.

 

Section
4.05      Sufficiency of Funds. At the Closing, the Parent
will have sufficient cash on hand or other sources of immediately available funds to enable it to consummate the transactions contemplated
by this Agreement.

 

Section 4.06     
Legal Proceedings.
There are no Actions pending or, to the Parent’s knowledge, threatened against or by the Parent or any Affiliate of the Parent
that (a) has had or would reasonably be expected to have a Parent Material Adverse Effect or (b) challenge or seek to prevent,
enjoin, or otherwise delay the transactions contemplated by this Agreement. To the Parent’s knowledge, no event has occurred
or circumstances exist that may give rise or serve as a basis for any such Action.

 

Section
4.07      SEC Reports.

 

(a)            
The Parent (i) has timely filed or furnished all reports, registration statements, proxy statements, prospectuses, and other
materials, together with any amendments required to be made with respect thereto, that it was required to file with or furnish
to the Commission pursuant to the Securities Act or the Exchange Act since
January 3, 2015, and all such reports, registration statements, proxy statements, prospectuses, other materials, and amendments
have complied in all material respects with all legal requirements relating thereto, and (ii) has paid all fees and assessments
due and payable in connection therewith, except where the failure to make such timely filing, be in such compliance, or make such
payment would not reasonably be expected, individually or in the aggregate, to have a Parent Material Adverse Effect.

 

(b)            
An accurate and complete copy of each final registration statement, prospectus, report, schedule, and definitive proxy statement
filed with or furnished to the SEC by the Parent pursuant to the Securities Act or the Exchange Act since January 3, 2015 and prior
to the date of this Agreement (the “Parent SEC Reports”) is publicly available. No Parent SEC Report, at the
time filed, furnished, or communicated (and, in the case of registration statements and proxy statements, on the dates of effectiveness
and the dates of the relevant meetings, respectively), and considering all amendments to any Parent SEC Report filed prior to the
date hereof, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the circumstances in which they were made, not misleading,
except that information filed as of a later date (but before the date of this Agreement) shall be deemed to modify information
as of an earlier date. As of their respective dates, all of the Parent SEC Reports complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto. No executive officer of the Parent has failed in any
respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act.

 

 

 

    	 	37	 

     

    

 

Section 4.08     
Capitalization.
The Parent has the authorized capitalization as set forth in the Parent SEC Reports, and all of the issued and outstanding
shares of capital stock of the Parent have been duly authorized and validly issued and are fully paid and non-assessable. Upon
issuance pursuant to the terms hereof, the Parent Preferred Shares shall be validly issued, fully paid, non-assessable, and outstanding
and will not have been issued in violation of or subject to any preemptive or similar rights. Upon conversion of the Parent Preferred
Shares in accordance with the Certificate of Designation into Parent Common Stock and subject to obtaining the Required Parent
Shareholder Approval, the shares of Parent Common Stock issued upon such conversion will be duly authorized and validly issued,
fully paid, non-assessable, and outstanding and will not have been issued in violation of or subject to any preemptive or similar
rights. No approval from the holders of outstanding shares of Parent Common Stock is required in connection with the Parent’s
issuance of the Parent Preferred Shares to the Sellers or the consummation of the transactions contemplated pursuant to this Agreement
except for the Required Parent Shareholder Approval.

 

Section
4.09      Financial Statements.

 

(a)            
The financial statements of the Parent and its subsidiaries included (or incorporated by reference) in the Parent SEC Reports
(including the related notes, where applicable) (i) have been prepared from, and are in accordance with, the books and records
of the Parent and its subsidiaries; (ii) fairly present in all material respects the consolidated results of operations, cash flows,
changes in shareholders’ equity, and consolidated financial position of the Parent and its subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth (subject, in the case of unaudited statements, to recurring year-end
audit adjustments normal in nature and amount); (iii) complied as to form, as of their respective dates of filing with the Commission,
in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission
with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except,
in each case, as indicated in such statements or in the notes thereto. As of the date hereof, the books and records of the Parent
and its subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions. As of the date hereof, Anton & Chia, LLP has not resigned (or informed the
Parent that indicated it intends to resign) or been dismissed as independent public accountants of the Parent as a result of or
in connection with any disagreements with the Parent on a matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure.

 

(b)            
Neither the Parent nor any of its subsidiaries has incurred any material liability or obligation of any nature whatsoever
(whether absolute, accrued, contingent, determined, determinable, or otherwise and whether due or to become due) that would be
required to be reflected on, or reserved against in, a consolidated balance sheet of the Parent and its subsidiaries or in the
notes thereto prepared in accordance with GAAP consistently applied, except for (i) those liabilities that are reflected or reserved
against on the consolidated balance sheet of the Parent and its subsidiaries included in its Quarterly Report on Form 10-Q for
the fiscal quarter ended April 1, 2017 (including any notes thereto), (ii) liabilities incurred in the ordinary course of
business consistent with past practice since April 1, 2017, or otherwise disclosed in any Parent SEC Report filed since such Quarterly
Report on Form 10-Q, or (iii) in connection with this Agreement and the transactions contemplated hereby.

 

 

 

    	 	38	 

     

    

 

Section 4.10     
Permits; Compliance
with Applicable Laws. The
Parent and each of its subsidiaries hold all Permits that are necessary for the lawful
conduct of their respective businesses and ownership of their respective properties, rights, and assets under and pursuant to applicable
Law (and have paid all fees and assessments due and payable in connection therewith), except where the failure to hold such Permit
or to pay such fees or assessments has not had and would not reasonably be expected, individually or in the aggregate, a Parent
Material Adverse Effect and, to the knowledge of the Parent, no suspension or cancellation of any such necessary Permit has, prior
to the date hereof, been threatened in writing. The Parent and each of its subsidiaries are in compliance in all material respects
with all applicable Laws relating to the Parent or any of its subsidiaries, except where the failure to be in such compliance would
not reasonably be expected, individually or in the aggregate, to have a Parent Material Adverse Effect.

 

Section
4.11      Absence of Material Adverse Effect. Since January
1, 2017, no event or events have occurred that have had or would reasonably be expected to have, either individually or in the
aggregate, a Parent Material Adverse Effect.

 

ARTICLE
V

Covenants

 

Section 5.01     
Conduct of Business
Prior to the Closing.

 

(a)            
Conduct of Business of the Company. From the date hereof until the Closing, except as otherwise provided in
this Agreement or consented to in writing by the Parent (which consent shall not be unreasonably withheld, delayed, denied, or
conditioned), the Company shall (x) conduct the business of the Company in the ordinary course of business consistent with past
practice and (y) use reasonable best efforts to maintain and preserve intact the current organization, business, and franchise
of the Company and to preserve the rights, franchises, goodwill, and relationships of its employees, customers, lenders, suppliers,
regulators, and others having business relationships with the Company. Without limiting the foregoing, from the date hereof until
the Closing Date, the Company shall:

 

(i)             
preserve and maintain all of its Permits;

 

(ii)           
pay all of its debts, Taxes, and other obligations when due;

 

(iii)         
maintain the properties and assets owned, operated, or used by it in the same condition as they were on the date of this
Agreement, subject to reasonable wear and tear;

 

(iv)          
continue in full force and effect without modification all Insurance Policies, except as required by applicable Law;

 

 

 

    	 	39	 

     

    

 

(v)            
defend and protect its properties and assets from infringement or usurpation;

 

(vi)          
perform all of its obligations under all Contracts relating to or affecting its properties, assets, or business;

 

(vii)        
maintain its books and records in accordance with past practice;

 

(viii)      
comply in all material respects with all applicable Laws; and

 

(ix)          
not take or permit any action that would cause any of the changes, events, or conditions described in Section 3.08
to occur.

 

(b)            
Conduct of Business of the Parent. From the date hereof until the Closing, except as otherwise provided in this Agreement
or consented to in writing by the Stockholders’ Representative (which consent shall not be unreasonably withheld, delayed,
denied, or conditioned), the Parent shall not amend the Parent’s articles of incorporation or bylaws in a manner that would
materially and adversely affect the holders of the Parent Preferred Shares relative to the holders of Parent Common Stock.

 

Section
5.02      Access to Information. From the date hereof
until the Closing, the Company shall (a) afford the Parent and its Representatives full and free access to and the right to inspect
all of the properties, assets, premises, books and records, business plans, Contracts, and other documents and data related to
the Company; (b) furnish the Parent and its Representatives with such financial, operating, intellectual property, and other data
and information related to the Company as the Parent or any of its Representatives may reasonably request; and (c) instruct the
Representatives of the Company to cooperate with the Parent in its investigation of the Company. Any investigation pursuant to
this Section 5.02 shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of
the Company. No investigation by the Parent or other information received by the Parent shall operate as a waiver or otherwise
affect any representation, warranty, or agreement given or made by the Seller in this Agreement.

 

Section
5.03      No Solicitation of Other Bids.

 

(a)            
The Company and the Stockholders shall not, and shall not authorize or permit any of their respective Affiliates or Representatives,
directly or indirectly, to (i) encourage, solicit, initiate, facilitate, or continue inquiries regarding an Acquisition Proposal;
(ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal;
or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. The Company
and the Stockholders shall immediately cease and cause to be terminated, and shall cause their respective Affiliates and Representatives
to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore
with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal”
shall mean any inquiry, proposal, or offer from any Person (other than the Parent or any of its Affiliates) concerning (A) a merger,
consolidation, liquidation, recapitalization, share exchange, or other business combination transaction involving the Company;
(B) the issuance or acquisition of shares of capital stock or other equity securities of the Company; or (B) the sale, lease, exchange,
or other disposition of any portion of the Company’s properties or assets.

 

 

 

 

    	 	40	 

     

    

(b)            
In addition to the other obligations under this Section 5.03, the Company
and the Stockholders shall promptly (and in any event within three Business Days after receipt thereof by the Company, any Seller,
or any of their respective Representatives) advise the Parent orally and in writing of any Acquisition Proposal, any request for
information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result
in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity
of the Person making the same.

 

(c)            
The Company and the Stockholders agree that the rights and remedies for noncompliance with this Section
5.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged
and agreed that any such breach or threatened breach shall cause irreparable injury to the Parent and that money damages would
not provide an adequate remedy to Parent.

 

Section
5.04      Notice of Certain Events. 

 

(a)            
From the date hereof until the Closing, the Company shall promptly notify the Parent in writing of:

 

(i)             
any fact, circumstance, event, or action the existence, occurrence, or taking of which (A) has had, or could reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (B) has resulted in, or could reasonably
be expected to result in, any representation or warranty made by the Company and/or the Stockholders hereunder not being true and
correct, or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in
Section 7.01 to be satisfied;

 

(ii)           
any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;

 

(iii)         
any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this
Agreement; and

 

(iv)          
any Actions commenced or, to the Company’s Knowledge, threatened against, relating to or involving or otherwise affecting
the Company that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section
3.14 or that relates to the consummation of the transactions contemplated by this Agreement.

 

(b)            
The Parent’s receipt of information pursuant to this Section 5.04
shall not operate as a waiver or otherwise affect any representation, warranty, or agreement given or made by the Company and/or
the Stockholders in this Agreement (including Section 8.02 and Section
9.01(b)) and shall not be deemed to amend or supplement the Disclosure Schedules.

 

 

 

    	 	41	 

     

    

 

Section 5.05     
[Intentionally Omitted].

 

Section
5.06      Confidentiality. From and after the Closing,
the Stockholders shall, and shall cause their respective Affiliates to, hold, and shall use their respective reasonable best efforts
to cause their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the
Company, except to the extent that the Stockholders can show that such information (a) is generally available to and known by the
public through no fault of any Stockholder, any of his or its Affiliates, or their respective Representatives or (b) is lawfully
acquired by any Stockholder, any of his or its Affiliates, or their respective Representatives from and after the Closing from
sources that are not prohibited from disclosing such information by a legal, contractual, or fiduciary obligation. If any Stockholder
or any of his or its Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative
process or by other requirements of Law, the applicable Stockholder shall promptly notify the Parent in writing and shall disclose
only that portion of such information that the applicable Stockholder is advised by his or its counsel in writing is legally required
to be disclosed; provided, that such Stockholder shall use reasonable best efforts to obtain an appropriate protective order
or other reasonable assurance that confidential treatment will be accorded such information.

 

Section
5.07      Non-competition; Non-solicitation. 

 

(a)            
For a period of five years commencing on the Closing Date (the “Restricted Period”), the Stockholders
shall not, and shall not permit any of their respective Affiliates, directly or indirectly, to (i) engage in or assist others in
engaging in the Restricted Business in the Territory; (ii) have an interest in any Person (other than the Company) that engages
directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member,
employee, principal, agent, trustee, or consultant; or (iii) intentionally interfere in any material respect with the business
relationships (whether formed prior to or after the date of this Agreement) between the Company and customers or suppliers of the
Company. Notwithstanding the foregoing, any Stockholder may own, directly or indirectly, solely as an investment, securities of
any Person traded on any national securities exchange if such Stockholder is not a controlling Person of, or a member of a group
which controls, such Person and does not, directly or indirectly, own five percent or more of any class of securities of such Person.

 

(b)            
During the Restricted Period, the Stockholders shall not, and shall not permit any of their respective Affiliates, directly
or indirectly, to hire or solicit any employee of the Company or encourage any such employee to leave such employment or hire any
such employee who has left such employment, except pursuant to a general solicitation that is not directed specifically to any
such employees; provided, that nothing in this Section 5.07(b)
shall prevent any Stockholder or any of his or its Affiliates from hiring (i) any employee whose employment has been terminated
by the Company or the Parent or (ii) after 180 days from the date of termination of employment, any employee whose employment has
been terminated by the employee.

 

(c)            
During the Restricted Period, the Stockholders shall not, and shall not permit any of their respective Affiliates, directly
or indirectly, to solicit or entice, or attempt to solicit or entice, any clients or customers of the Company or potential clients
or customers of the Company for purposes of diverting their business or services from the Company.

 

 

 

    	 	42	 

     

    

 

(d)            
The Stockholders acknowledge that a breach or threatened breach of this Section
5.07 would give rise to irreparable harm to the Parent, for which monetary damages would not be an adequate remedy,
and hereby agree that in the event of a breach or a threatened breach by any Stockholder of any such obligations, the Parent shall,
in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable
relief, including a temporary restraining order, an injunction, specific performance, and any other relief that may be available
from a court of competent jurisdiction (without any requirement to post bond).

 

(e)            
The Stockholders acknowledge that the restrictions contained in this Section 5.07
are reasonable and necessary to protect the legitimate interests of the Parent and constitute a material inducement to the Parent
to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained
in this Section 5.07 should ever be adjudicated to exceed the time, geographic,
product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered
to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product
or service, or other limitations permitted by applicable Law. The covenants contained in this Section
5.07 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability
of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant
or provision in any other jurisdiction.

 

Section
5.08      Governmental Approvals and Consents. 

 

(a)            
Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under
any Law applicable to such party or any of its or his Affiliates and (ii) use reasonable best efforts to obtain, or cause to be
obtained, all consents, authorizations, orders, and approvals from all Governmental Authorities that may be or become necessary
for its execution and delivery of this Agreement and the performance of its or his obligations pursuant to this Agreement. Each
party shall cooperate fully with the other party and its or his Affiliates in promptly seeking to obtain all such consents, authorizations,
orders, and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing,
or impeding the receipt of any required consents, authorizations, orders, and approvals.

 

(b)            
The Company, the Stockholders, and the Parent shall use reasonable best efforts to give all notices to, and obtain all consents
from, all third parties that are described in Section 3.05 of the Disclosure
Schedules.

 

(c)            
Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the
parties hereto shall use all reasonable best efforts to:

 

 

 

    	 	43	 

     

    

 

(i)             
respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions
contemplated by this Agreement;

 

(ii)           
avoid the imposition of any order or the taking of any action that would restrain, alter, or enjoin the transactions contemplated
by this Agreement; and

 

(iii)         
in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated
by this Agreement has been issued, to have such Governmental Order vacated or lifted.

 

(d)            
If any consent, approval, or authorization necessary to preserve any right or benefit under any Contract to which the Company
is a party is not obtained prior to the Closing, the Stockholders shall, subsequent to the Closing, cooperate with the Parent and
the Company in attempting to obtain such consent, approval, or authorization as promptly thereafter as practicable. If such consent,
approval, or authorization cannot be obtained, the Stockholders shall use their reasonable best efforts to provide the Company
with the rights and benefits of the affected Contract for the term thereof, and, if the Stockholders provide such rights and benefits,
the Company shall assume all obligations and burdens thereunder.

 

(e)            
All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made
by or on behalf of any party hereto before any Governmental Authority or the staff or regulators of any Governmental Authority
in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between
the Company with Governmental Authorities in the ordinary course of business consistent with past practice, any disclosure which
is not permitted by Law, or any disclosure containing confidential information) shall be disclosed to the other party hereunder
in advance of any filing, submission, or attendance, it being the intent that the parties will consult and cooperate with one another
and consider in good faith the views of one another in connection with any such analyses, appearances, meetings, discussions, presentations,
memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other party with respect to any meeting,
discussion, appearance, or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with
such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion,
appearance, or contact.

 

(f)             
Notwithstanding the foregoing, nothing in this Section 5.08 shall require,
or be construed to require, the Parent or any of its Affiliates to agree to (i) sell, hold, divest, discontinue, or limit, before
or after the Closing Date, any assets, businesses, or interests of the Parent, the Company, or any of their respective Affiliates;
(ii) pay any amounts (other than the payment of filing fees and expenses and fees of counsel); (iii) commence or defend any
litigation; (iv) any limitation on, or changes or restrictions in, the operations of any assets, businesses, or interests of the
Parent’s or any of its Affiliate’s businesses; or (v) any material modification or waiver of the terms and conditions
of this Agreement, including any waiver any of the conditions set forth in Article VII.

 

Section
5.09       Directors’ and Officers’ Indemnification
and Insurance.

 

 

 

    	 	44	 

     

    

 

(a)            
The
Parent and the Merger Sub agree that all rights to indemnification, advancement of expenses, and exculpation by the Company
now existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective
Time an officer or director of the Company (each a “D&O Indemnified Party”) as provided in the Organizational
Documents of the Company, in each case as in effect on the date of this Agreement, or pursuant to any other Contracts in effect
on the date hereof and disclosed in Section 5.09 of the Disclosure Schedules, shall be assumed by the Surviving Corporation
in the Merger, without further action, at the Effective Time and shall survive the Merger and shall remain in full force and effect
in accordance with their terms and, in the event that any proceeding is pending or asserted or any claim made during such period,
until the final disposition of such proceeding or claim.

 

(b)            
For six years after the Effective Time, to the fullest extent permitted under applicable Law, Parent and the Surviving Corporation
(the “D&O Indemnifying Parties”) shall indemnify, defend, and hold harmless each D&O Indemnified Party
against all losses, claims, damages, liabilities, fees, expenses, judgments, and fines arising in whole or in part out of actions
or omissions in their capacity as such occurring at or prior to the Effective Time (including in connection with the transactions
contemplated by this Agreement), and shall reimburse each D&O Indemnified Party for any legal or other expenses reasonably
incurred by such D&O Indemnified Party in connection with investigating or defending any such losses, claims, damages, liabilities,
fees, expenses, judgments, and fines as such expenses are incurred, subject to the Surviving Corporation’s receipt of an
undertaking by such D&O Indemnified Party to repay such legal and other fees and expenses paid in advance if it is ultimately
determined in a final and non-appealable judgment of a court of competent jurisdiction that such D&O Indemnified Party is not
entitled to be indemnified under applicable Law; provided, however, that the Surviving Corporation will not be liable for
any settlement effected without the Surviving Corporation’s prior written consent (which consent shall not be unreasonably
withheld, delayed, denied, or conditioned).

 

(c)            
As promptly as practicable following the Closing, the Stockholders shall obtain and fully pay for “tail” insurance
policies with a claims period of at least six (6) years from the Effective Time with coverage, amount, terms, and conditions that
are reasonably satisfactory to the Parent (including in connection with the transactions contemplated by this Agreement) (the “D&O
Tail Policy”). The Stockholders shall bear the cost of the D&O Tail Policy. During the term of the D&O Tail Policy,
the Parent shall not (and shall cause the Surviving Corporation not to) take any action following the Closing to cause the D&O
Tail Policy to be cancelled or any provision therein to be amended or waived; provided, that none of the Parent, the Surviving
Corporation, or any Affiliate thereof shall be obligated to pay any premiums or other amounts in respect of such D&O Tail Policy.

 

(d)            
The obligations of the Parent and the Surviving Corporation under this Section 5.09 shall survive the consummation
of the Merger and shall not be terminated or modified in such a manner as to affect adversely any D&O Indemnified Party to
whom this Section 5.09 applies without the consent of such affected D&O Indemnified Party (it being expressly agreed
that the D&O Indemnified Parties to whom this Section 5.09 applies shall be third-party beneficiaries of this Section
5.09, each of whom may enforce the provisions of this Section 5.09).

 

 

 

    	 	45	 

     

    

 

(e)            
In the event the Parent, the Surviving Corporation, or any of their respective successors or assigns (i) consolidates with
or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, proper
provision shall be made so that the successors and assigns of the Parent or the Surviving Corporation, as the case may be, shall
assume all of the obligations set forth in this Section 5.09. The agreements and covenants contained herein shall not be
deemed to be exclusive of any other rights to which any D&O Indemnified Party is entitled, whether pursuant to Law, Contract,
or otherwise. Nothing in this Agreement is intended to, shall be construed to, or shall release, waive, or impair any rights to
directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company
or its officers, directors, and employees, it being understood and agreed that the indemnification provided for in this Section
5.09 is not prior to, or in substitution for, any such claims under any such policies.

 

Section
5.10      Closing Conditions. From the date hereof until
the Closing, each party hereto shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy
the closing conditions set forth in ARTICLE VII.

 

Section
5.11      Public Announcements. Unless otherwise required
by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall
make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld, delayed,
denied, or conditioned), and the parties shall cooperate as to the timing and contents of any such announcement.

 

Section 5.12     
Affiliate Agreements.
Prior to the Closing, the Company shall terminate all Affiliate Agreements with respect to which there could be further or continuing
liability or obligation on the part of the Parent or any of its Affiliates (including, after the Closing, the Company) without
any further or continuing liability on the part of the Parent or any of its Affiliates (including, after the Closing, the Company).

 

Section
5.13      Audited Financial Statements. The
Stockholders acknowledge that the Parent, within 71 days of Closing, may be required under applicable Law to provide
certain audited financial statements covering the Company and any predecessor business thereof, as the Parent may determine to
be required under the Commission’s rules and regulations, in accordance with its periodic reporting obligations under the
Exchange Act (collectively the “Audited Financials”). With respect to the foregoing, the Stockholders agree
that they shall afford to the Parent, its Affiliates, and their respective Representatives, at the Parent’s expense, during
normal business hours, reasonable access to the books, records, and other data of the Stockholders, and use reasonable best efforts
to cause the Company’s accountants to make available all of their work papers, that in each case include or relate to the
Company or any predecessor business thereof, and, to the extent permitted by such accountants, the Parent and its independent registered
public accounting firm shall have the right to make copies and extracts therefrom, to the extent that such access may be reasonably
required by the Parent or any of its Affiliates to prepare, complete, and file such Audited Financials at the expense of the Parent.

 

 

 

    	 	46	 

     

    

 

Section
5.14      Funding Obligations. The
Parent agrees as follows: (a) subject to having obtained the consent of the Parent’s lender, as of the Effective Time or
as promptly as commercially practicable thereafter, the Parent shall provide funding to the Company in an amount not less than
$1,500,000, which shall be used by the Company in accordance with the Company’s business plan approved in writing by the
Parent (as it may be amended by the Chief Executive Officer of the Company from time to time in his business judgment and subject
to his fiduciary duties to the Company and the Parent and the direction and approval of the Company Board and the Parent Board,
the “Company
Business Plan”) and (b) the Parent shall provide additional funding to the Company in an amount not less than
$1,500,000, which shall be used by the Company in accordance with the Company Business Plan, as promptly as commercially practicable
after, and subject
to, the Company achieving (i) $100,000 in subscription revenues in any one-month period during the 12-month period from and after
the Closing Date or (ii) $1,000,000 in total revenues during the 12-month period from and after the Closing Date, in each case
with such revenues, if accrued and not collected, (A) having arisen from bona fide transactions entered into by the Company
in the ordinary course of business, (B) constituting only valid, undisputed claims of the Company not subject to claims of set-off
or other defenses or counterclaims, (C) net of allowance for doubtful accounts, and (D) collectible in full within 90 days after
billing.

 

Section 5.15     
Further Assurances.
At and after the Effective Time, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver,
in the name and behalf of the Company or the Merger Sub, any deeds, bills of sale, assignments, or assurances and to take and do,
in the name and on behalf of the Company or the Merger Sub, any other actions and things to vest, perfect, or confirm of record
or otherwise in the Surviving Corporation any and all right, title, and interest in, to, and under any of the rights, properties,
or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

 

Section 5.16     
Reservation of Parent
Shares. The Parent shall reserve a sufficient number of shares of Series A Preferred Stock to fulfill its obligations
under this Agreement. Parent shall reserve a sufficient number of shares of Parent Common Stock to fulfill its obligations under
the Certificate of Designation upon the conversion of the Parent Preferred Shares into Parent Common Stock in accordance with the
Certificate of Designation.

 

Section 5.17     
Required Parent
Shareholder Approval.

 

(a)            
The Parent Board has adopted resolutions unanimously recommending that the holders of Parent Common Stock vote in favor
of approval of the Series A Preferred Convertible Terms (the “Parent Board Recommendation”). The Parent Board
may at any time prior to obtaining the Required Parent Shareholder Approval withdraw, modify, or change the Parent Board Recommendation
(a “Parent Adverse Recommendation Change”) in the event that the Parent Board determines in good faith, based
upon advice of legal counsel, that withdrawing, modifying, or changing the Parent Board Recommendation is necessary to comply with
its fiduciary duties under applicable Law (which withdrawal, modification, or change shall not constitute a breach by the Parent
of this Agreement). The Parent shall provide written notice to the Company promptly upon the Parent taking any action referenced
in the foregoing proviso.

 

 

 

    	 	47	 

     

    

 

(b)            
The Parent shall take all action necessary to duly call, give notice of, convene, and hold the Parent Shareholders Meeting
as soon as reasonably practicable after the Closing, and, in connection therewith, the Parent shall transmit the Parent Proxy Statement
to the holders of Parent Common Stock in advance of such meeting. Except to the extent that the Parent Board shall have effected
a Parent Adverse Recommendation Change as permitted by Section 5.17(a), the Parent Proxy Statement shall include the Parent
Board Recommendation. Subject to Section 5.17(a), the Parent shall use reasonable best efforts to: (i) solicit from the
holders of Parent Common Stock proxies in favor of the approval of the Series A Preferred Convertible Terms and (ii) take all other
actions necessary or advisable to secure the vote or consent of the holders of Parent Common Stock required by applicable Law to
obtain such approval. The Parent shall not submit, or solicit, initiate, or knowingly take any action to facilitate or encourage
any Person to submit, any other proposals for approval prior to the Parent Shareholders Meeting without the prior written consent
of the Company. Once the Parent Shareholders Meeting has been called and noticed, the Parent shall not postpone or adjourn the
Parent Shareholders Meeting without the consent of the Company (other than: (A) in order to obtain a quorum of its shareholders
or (B) to allow reasonable additional time after the filing and mailing of any supplemental or amended disclosures to the Parent
Proxy Statement for compliance with applicable Law or stock exchange requirements). If the Parent Board makes a Parent Adverse
Recommendation Change, it will not alter the obligation of the Parent to submit the approval of the Series A Preferred Convertible
Terms to the holders of Parent Common Stock at the Parent Shareholders Meeting to consider and vote upon, unless this Agreement
shall have been terminated in accordance with its terms prior to the Parent Shareholders Meeting.

 

(c)            
Notwithstanding anything to the contrary elsewhere in this Agreement or in the Certificate of Designation, each Stockholder
acknowledges and understands that the shares of Series A Preferred Stock (including the Parent Preferred Shares) shall not be convertible
into shares of Parent Common Stock pursuant to the Series A Preferred Convertible Terms unless and until the Required Parent Shareholder
Approval has been obtained. Each Stockholder covenants and agrees that, (i) at the Parent Shareholders Meeting (or any adjournment,
postponement, or continuation thereof) or in any other circumstances other than a duly called meeting of the shareholders of Parent
upon which a vote, consent, or other approval (including by written consent) with respect to the Series A Preferred Convertible
Terms is sought, such Stockholder shall abstain from being present for purposes of a quorum and from voting, in person or by proxy,
any Parent Preferred Shares owned of record or beneficially by such Stockholder on the proposal to approve the Series A Preferred
Convertible Terms and (ii) such Stockholder, until such time as the Parent Shareholder Approval has been obtained, if ever, shall
abstain from voting, in person or by proxy, any Parent Preferred Shares held by such Stockholder on any proposal submitted to the
holders of Parent Common Stock for their approval. Each Stockholder agrees not to enter into any agreement or commitment with any
Person, the effect of which would be inconsistent with or otherwise violate such Stockholder’s covenants set forth in this
Section 5.17(c).

 

ARTICLE
VI

Tax matters

 

 

 

    	 	48	 

     

    

 

Section
6.01      Taxes. All Taxes on or with respect to the Company
that are attributable to any Pre-Closing Tax Period shall be for the sole account, jointly and severally, of the Stockholders.
All Taxes on or with respect to the Company that are attributable to any Post-Closing Tax Period shall be for the sole account
of the Parent.

 

Section
6.02      Certain Tax Covenants. 

 

(a)            
Without the prior written consent of the Parent, prior to the Closing, the Company, its Representatives, and the Stockholders
shall not make, change, or rescind any Tax election, amend any Tax Return, or take any position on any Tax Return, take any action,
omit to take any action, or enter into any other transaction that would have the effect of increasing the Tax liability or reducing
any Tax asset of the Parent or the Surviving Corporation in respect of any Post-Closing Tax Period. The Company agrees that the
Parent is to have no liability for any Tax resulting from any action of the Company, any of its Representatives, or the Stockholders.
The Stockholders shall, severally and jointly, indemnify and hold harmless the Parent against any such Tax or reduction of any
Tax asset.

 

(b)            
All transfer, documentary, sales, use, stamp, registration, value added, and other such Taxes and fees (including any penalties
and interest) incurred in connection with this Agreement shall be borne and paid by the Stockholders when due. The Stockholders
shall timely file any Tax Return or other document with respect to such Taxes or fees (and the Parent shall cooperate with respect
thereto as necessary).

 

Section 6.03     
Termination of Existing
Tax Indemnity, Tax Sharing, and Tax Allocation Agreements.
Any and all existing, whether written or not, Tax indemnity agreements, Tax sharing agreements, Tax allocation agreements, and
any similar agreement binding upon the Company shall be terminated as of the Closing Date and all payments thereunder settled immediately
prior to the Closing Date with no payments permitted to be made thereunder on and after the Closing Date. After the Closing Date,
neither the Company nor the Parent, nor any of the Parent’s Affiliates and their respective Representatives (other than the
Stockholders), shall have any further rights or liabilities thereunder.

 

Section 6.04     
Tax Returns.

 

(a)            
The Company shall prepare and timely file, or cause to be prepared and timely filed, all Tax Returns required to be filed
by it that are due on or before the Closing Date (taking into account any extensions), and shall timely pay all Taxes that are
due and payable on or before the Closing Date (taking into account any extensions), and shall timely pay all Taxes that are due
and payable on or before the Closing Date. Any such Tax Return shall be prepared in a manner consistent with past practice (unless
otherwise required by Law).

 

 

 

    	 	49	 

     

    

 

(b)            
The Stockholders’ Representative shall prepare and timely file, or cause to be prepared and timely filed, all
Tax Returns required to be filed by the Company after the Closing Date with respect to a Pre-Closing Tax Period (other than the
Straddle Period). Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise required by
Law) and without a change of any election or any accounting method (unless required by Law) and shall be submitted by the Stockholders’
Representative to the Parent (together with schedules, statements, and, to the extent requested by the Parent, supporting documentation)
at least 45 days prior to the due date (including extensions) of such Tax Return. If the Parent objects to any item on any such
Tax Return, it shall, within 10 days after delivery of such Tax Return, notify the Stockholders’ Representative in writing
that it so objects, specifying with particularity any such item and stating the specific factual or legal basis for any such objection.
If a notice of objection shall be duly delivered, the Parent and the Stockholders’ Representative shall negotiate in good
faith and use their reasonable best efforts to resolve such items. If the Parent and the Stockholders’ Representative are
unable to reach such agreement within 10 days after receipt by the Stockholders’ Representative of such notice, the disputed
items shall be resolved by an independent public accountant mutually agreed upon by the Parent and the Stockholders’ Representative
(the “Independent Accountant”) and any determination by the Independent Accountant shall be binding, final,
and non-appealable. The Independent Accountant shall resolve any disputed items within 20 days of having the item referred to it
pursuant to such procedures as it may require. If the Independent Accountant is unable to resolve any disputed items before the
due date for such Tax Return, the Tax Return shall be filed as prepared by the Stockholders’ Representative and then amended
to reflect the Independent Accountant’s resolution. The costs, fees, and expenses of the Independent Accountant shall be
borne equally by the Parent and the Stockholders. The preparation and filing of any Tax Return of the Company, other than the Tax
Returns specifically identified in the first sentence of this Section 6.04(b), shall be exclusively within the control of
the Parent.

 

Section
6.05      Straddle Period. In the case of Taxes that are
payable with respect to a taxable period that begins before and ends after the Closing Date (each such period, a “Straddle
Period”), the portion of any such Taxes that are treated as Pre-Closing Taxes for purposes of this Agreement shall be:

 

(a)            
in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital, or net worth, (ii) imposed
in connection with the sale, transfer, or assignment of property, or (iii) required to be withheld, deemed equal to the amount
that would be payable if the taxable year ended with the Closing Date; and

 

(b)            
in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction, the numerator
of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the
entire period.

 

Section
6.06      Cooperation and Exchange of Information. The
Stockholders’ Representative and the Parent shall provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax Return pursuant to this ARTICLE VI or in connection with any audit
or other proceeding in respect of Taxes of the Company. Such cooperation and information shall include providing copies of relevant
Tax Returns or portions thereof, together with accompanying schedules, related work papers, and documents relating to rulings or
other determinations by Tax Authorities. Each of the Stockholders and the Parent shall retain all Tax Returns, schedules and work
papers, records, and other documents in his or its possession relating to Tax matters of the Company or Taxes of the Stockholders
related to the Company for any taxable period beginning before the Closing Date until the expiration of the statute of limitations
of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the respective Tax periods. Prior to transferring, destroying, or
discarding any Tax Returns, schedules and work papers, records, and other documents in its or his possession relating to Tax matters
of the Company for any taxable period beginning before the Closing Date, the Stockholders or the Parent (as the case may be) shall
provide the other party with reasonable written notice and offer the other party the opportunity to take custody of such materials.

 

 

 

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Section
6.07      Tax Indemnities.

 

(a)            
The Stockholders shall, jointly and severally, be responsible for and shall indemnify and hold the Company, the Parent,
the Surviving Corporation, and each other Parent Indemnitee harmless against (i) any and all Taxes imposed on or payable by the
Company for any Pre-Closing Tax Period; (ii) any and all Taxes attributable to the Pre-Closing Tax Period for which the Company
is held liable under Treasury Regulation Section 1.1502-6; (iii) any and all Taxes of any Person other than the Company imposed
on the Company as a transferee, indemnitor, or successor, by contract, pursuant to any Tax law, or otherwise which Taxes relate
solely to an event or transaction occurring or relating to the Pre-Closing Tax Period or the agreements referenced in Section
6.03; (iv) any and all Losses incurred or sustained by, or imposed upon, any Parent Indemnitee based upon, arising out of,
with respect to, or by reason of any breach or inaccuracy of any of the representations set forth in Section 3.17; and (v)
any and all costs and expenses incurred by any Parent Indemnitee in connection with any and all Actions regarding any Taxes for
which any Stockholder is required to reimburse the Parent Indemnitees pursuant to this Section 6.07.

 

(b)            
Payment of any amount due under this Section 6.07 shall be made within 10 days following the Stockholders’
Representative receipt of written notice from the Company or the Parent regarding the same.

 

(c)            
Except for Section 8.06, Section 8.07, Section 8.08, Section 8.09, and Section 8.10,
this Section 6.07 shall be the sole provision governing indemnities for Taxes and the breach or inaccuracy of any of the
representations set forth in Section 3.17.

 

Section
6.08       Control of Audit or Tax Litigation.
The Parent will control any and all Actions regarding any Taxes for which any Stockholder
is required to indemnify the Parent, the Company, or any other Parent Indemnitee pursuant to Section 6.07. The Parent will
(and will cause its Affiliates to) permit the Stockholders’ Representative to review and comment on any documents in connection
with such Action and will take any reasonable comments into consideration before filing any document. If the Stockholders’
Representative or any Stockholder is subject to or receives notice of an audit of any Stockholder or other Action against any Stockholder
relating to Taxes and such audit or other Action would reasonably be expected to (a) have an adverse effect on the Parent, the
Surviving Corporation, or the Surviving Corporation’s assets or (b) subject the Parent or the Surviving Corporation to any
liability, in each case as a result of such audit or other Action, then the Stockholders’ Representative will promptly notify
the Parent of the same in writing upon receipt of such notice or upon becoming aware of such audit or other Action and will keep
the Parent timely apprised of any developments in any such audit or litigation.

 

 

 

    	 	51	 

     

    

 

Section
6.09      Survival. Notwithstanding anything in this Agreement
to the contrary, the provisions of Section 3.17 and this ARTICLE
VI shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation,
or extension thereof) plus 60 days.

 

Section
6.10      Overlap. To the extent that any obligation or
responsibility pursuant to ARTICLE VIII may overlap with an obligation or
responsibility pursuant to this ARTICLE VI, the provisions of this ARTICLE
VI shall govern.

 

ARTICLE
VII

Conditions to closing

 

Section
7.01      Conditions to Obligations of the Parent and the Merger
Sub. The obligations of the Parent and the Merger Sub to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or the Parent’s waiver, at or prior to the Closing, of each of the following conditions:

 

(a)            
Other than the representations and warranties of the Company and/or the Stockholders contained in Section
3.01, Section 3.02, Section
3.03, Section 3.06, and Section
3.19, the representations and warranties of the Company and/or the Stockholders contained in this Agreement and any
certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation
or warranty qualified by materiality or Company Material Adverse Effect) or in all material respects (in the case of any representation
or warranty not qualified by materiality or Company Material Adverse Effect) on and as of the date hereof and on and as of the
Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The
representations and warranties of the Company and/or the Stockholders contained in Section
3.01, Section 3.02, Section
3.03, Section 3.06, and Section
3.19 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the
same effect as though made at and as of such date (except those representations and warranties that address matters only as of
a specified date, the accuracy of which shall be determined as of that specified date in all respects).

 

(b)            
The Company and the Stockholders shall have duly performed and complied in all material respects with all agreements, covenants,
and conditions required by this Agreement to be performed or complied with by them prior to or on the Closing Date; provided,
that, with respect to agreements, covenants, and conditions that are qualified by materiality, the Company and the Stockholders
shall have performed such agreements, covenants, and conditions, as so qualified, in all respects.

 

(c)            
No Action shall have been commenced against the Parent, the Merger Sub, the Company, or any Stockholder that would prevent
the Closing. No Governmental Authority shall have enacted, issued, promulgated, enforced, or entered any Governmental Order that
is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting
consummation of such transactions, or causing any of the transactions contemplated hereunder to be rescinded following completion
thereof.

 

 

 

    	 	52	 

     

    

 

(d)            
All approvals, consents, and waivers that are required to be listed on Section
3.05 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered
to the Parent at or prior to the Closing.

 

(e)            
From the date of this Agreement, there shall not have occurred any Company Material Adverse Effect, nor shall any event
or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected
to result in a Company Material Adverse Effect.

 

(f)             
The Company shall have delivered each of the closing deliverables set forth in Section 2.03(a).

 

(g)            
The Employment Agreement shall have been executed by Gregg Sullivan and a true and complete copy thereof shall have been
delivered to the Parent.

 

Section
7.02      Conditions to Obligations of the Company and the Stockholders.
The obligations of the Company and the Stockholders to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment or the Company’s waiver, at or prior to the Closing, of each of the following conditions:

 

(a)            
Other than the representations and warranties of the Parent and the Merger Sub contained in Section
4.01 and Section 4.04, the representations and warranties of the
Parent and Merger Sub contained in this Agreement and any certificate or other writing delivered pursuant hereto shall be true
and correct in all respects (in the case of any representation or warranty qualified by materiality or Parent Material Adverse
Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Parent Material
Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of
such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which
shall be determined as of that specified date in all respects). The representations and warranties of the Parent and the Merger
Sub contained in Section 4.01 and Section
4.04 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the
same effect as though made at and as of such date.

 

(b)            
The Parent and the Merger Sub shall have duly performed and complied in all material respects with all agreements, covenants,
and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date; provided,
that, with respect to agreements, covenants and conditions that are qualified by materiality, the Parent and the Merger Sub shall
have performed such agreements, covenants and conditions, as so qualified, in all respects.

 

 

 

    	 	53	 

     

    

 

(c)            
No Governmental Authority shall have enacted, issued, promulgated, enforced, or entered any Governmental Order that is in
effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting
consummation of such transactions, or causing any of the transactions contemplated hereunder to be rescinded following completion
thereof.

 

(d)            
From the date of this Agreement, there shall not have occurred any Parent Material Adverse Effect, nor shall any event or
events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to
result in a Parent Material Adverse Effect.

 

(e)            
The Parent Board shall have authorized and approved (i) the issuance of the Parent Preferred Shares to the Stockholders
and (ii) the issuance of the shares of Parent Common Stock issuable upon conversion of the Parent Preferred Shares pursuant to
the Series A Preferred Convertible Terms.

 

(f)             
The Certificate of Designation shall have been filed and accepted for filing with the Secretary of State of the State of
Minnesota and evidence thereof shall have been delivered to the Company.

 

(g)            
The Parent shall have delivered each of the closing deliverables set forth in Section 2.03(b).

 

(h)            
The Parent Board shall have taken such action to duly appoint Gregg Sullivan to the Board of Directors of the Surviving
Corporation, effective as of the Closing or as promptly as practicable thereafter.

 

ARTICLE
VIII

Indemnification

 

Section
8.01      Survival. Subject to the limitations and other
provisions of this Agreement, the representations and warranties contained herein (other than any representations or warranties
contained in Section 3.17 which are subject to ARTICLE
VI) shall survive the Closing and shall remain in full force and effect until the date that is 18 months from the Closing
Date; provided, that the representations and warranties in Section 3.01,
Section 3.02, Section 3.03, Section 3.12, Section
3.19, Section 4.01, and Section
4.04 shall survive indefinitely. All covenants and agreements of the parties contained herein (other than any covenants
or agreements contained in ARTICLE VI, which are subject to ARTICLE
VI) shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing,
any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from
the Indemnified Party to the Indemnifying Party prior to the expiration date of the applicable survival period shall not thereafter
be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

 

Section
8.02      Indemnification By the Stockholders. Subject
to the other terms and conditions of this ARTICLE VIII, the Stockholders,
jointly and severally, shall indemnify and defend each of the Parent and its Affiliates (including the Company and the Surviving
Corporation) and their respective Representatives (collectively, the “Parent Indemnitees”) against, and shall
hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained
by, or imposed upon, the Parent Indemnitees based upon, arising out of, with respect to, or by reason of:

 

 

 

    	 	54	 

     

    

 

(a)            
any inaccuracy in or breach of any of the representations or warranties of the Company and/or the Stockholders contained
in this Agreement or in any certificate or instrument delivered by or on behalf of the Company pursuant to this Agreement (other
than in respect of Section 3.17, it being understood that the sole remedy
for any such inaccuracy in or breach thereof shall be pursuant to ARTICLE VI),
as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing
Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date);

 

(b)            
any breach or non-fulfillment of any covenant, agreement, undertaking, or obligation to be performed by the Company or any
Stockholder pursuant to this Agreement (other than any breach or violation of, or failure to fully perform, any covenant, agreement,
undertaking, or obligation in ARTICLE VI, it being understood that the sole
remedy for any such breach, violation, or failure shall be pursuant to ARTICLE VI);
or

 

(c)            
any claim made by any Person relating to such Person’s rights with respect to the calculations and determinations
set forth on the Closing Payment Certificate, including any Company Transaction Expenses or Closing Indebtedness Amount to the
extent not paid or satisfied by the Company at or prior to the Closing.

 

Section
8.03      Indemnification By the Parent. Subject to the
other terms and conditions of this ARTICLE VIII, the Parent shall indemnify
and defend each Stockholder and its or his Affiliates and their respective Representatives (collectively, the “Stockholder
Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon, the Stockholder Indemnitees based upon, arising out of, with
respect to, or by reason of:

 

(a)            
any inaccuracy in or breach of any of the representations or warranties of the Parent and the Merger Sub contained in this
Agreement or in any certificate or instrument delivered by or on behalf of the Parent or the Merger Sub pursuant to this Agreement,
as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing
Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date); or

 

(b)            
any breach or non-fulfillment of any covenant, agreement, undertaking, or obligation to be performed by the Parent or the
Merger Sub pursuant to this Agreement (other than ARTICLE VI, it being understood
that the sole remedy for any such breach thereof shall be pursuant to ARTICLE VI).

 

Section
8.04      Certain Limitations. The indemnification provided
for in Section 8.02 and Section
8.03 shall be subject to the following limitations:

 

(a)            
The Stockholders shall not be liable to the Parent Indemnitees for indemnification under Section
8.02(a) until the aggregate amount of all Losses in respect of indemnification under Section
8.02(a) exceeds $92,500 (the “Basket”), in which event the Stockholders shall be required to pay
or be liable for all such Losses from the first dollar. The aggregate amount of all Losses for which the Stockholders shall be
liable pursuant to Section 8.02(a) shall not exceed $1,850,000 (the “Cap”).

 

 

 

 

    	 	55	 

     

    

(b)            
The Parent shall not be liable to the Stockholder Indemnitees for indemnification under Section
8.03(a) until the aggregate amount of all Losses in respect of indemnification under Section
8.03(a) exceeds the Basket, in which event the Parent shall be required to pay or be liable for all such Losses from
the first dollar. The aggregate amount of all Losses for which the Parent shall be liable pursuant to Section
8.03(a) shall not exceed the Cap.

 

(c)            
Notwithstanding the foregoing, the limitations set forth in Section 8.04(a)
and Section 8.04(b) shall not apply to Losses based upon, arising out of,
with respect to, or by reason of fraud or any inaccuracy in or breach of any representation or warranty in Section
3.01, Section 3.02, Section 3.03, Section 3.12, Section
3.19, Section 4.01, and Section
4.04.

 

(d)            
For purposes of this ARTICLE VIII, any inaccuracy in or breach of any
representation or warranty and the amount of any Losses incurred or suffered in connection with such breach or inaccuracy shall
be determined without regard to any materiality, Material Adverse Effect, or other similar qualification contained in or otherwise
applicable to such representation or warranty.

 

Section
8.05      Indemnification Procedures. The party making
a claim under this ARTICLE VIII is referred to as the “Indemnified
Party,” and the party against whom such claims are asserted under this ARTICLE
VIII is referred to as the “Indemnifying Party.”

 

(a)            
Third-party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made
or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative
of the foregoing (a “Third-party Claim”) against such Indemnified Party with respect to which the Indemnifying
Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third-party
Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such
notice by the Indemnified Party shall describe the Third-party Claim in reasonable detail, shall include copies of all material
written evidence thereof, and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may
be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice
to the Indemnified Party, to assume the defense of, any Third-party Claim at the Indemnifying Party’s expense and by the
Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided,
that, if the Indemnifying Party is any Stockholder, such Indemnifying Party shall not have the right to defend or direct the defense
of any such Third-party Claim that (x) is asserted directly by or on behalf of a Person that is a supplier or customer of the Company
or (y) seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes
the defense of any Third-party Claim, subject to Section 8.05(b), it shall
have the right to take such action as it deems necessary to avoid, dispute, defend, appeal, or make counterclaims pertaining to
any such Third-party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate
in the defense of any Third-party Claim with counsel selected by it subject to the Indemnifying Party’s right to control
the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party; provided,
that, if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified
Party that are different from or additional to those available to the Indemnifying Party or (B) there exists a conflict of interest
between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines
counsel is required. If the Indemnifying Party elects not to compromise or defend such Third-party Claim, fails to promptly notify
the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the
defense of such Third-party Claim, the Indemnified Party may, subject to Section 8.05(b),
pay, compromise, and defend such Third-party Claim and seek indemnification for any and all Losses based upon, arising from, or
relating to such Third-party Claim. The Stockholders and the Parent shall cooperate with each other in all reasonable respects
in connection with the defense of any Third-party Claim, including making available records relating to such Third-party Claim
and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management
employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third-party Claim.

 

 

 

    	 	56	 

     

    

 

(b)            
Settlement of Third-party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall
not enter into settlement of any Third-party Claim without the prior written consent of the Indemnified Party, except as provided
in this Section 8.05(b). If a firm offer is made to settle a Third-party Claim
without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides,
in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with
such Third-party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give
written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within 10
days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third-party Claim and in such
event, the maximum liability of the Indemnifying Party as to such Third-party Claim shall not exceed the amount of such settlement
offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third-party Claim,
the Indemnifying Party may settle the Third-party Claim upon the terms set forth in such firm offer to settle such Third-party
Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a),
it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably
withheld, delayed, denied, or conditioned).

 

(c)            
Direct Claims. Any Action by an Indemnified Party on account of a Loss that does not result from a Third-party Claim
(a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim.
The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations,
except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by
the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence
thereof, and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct
Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance
alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim,
and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including
access to the Company’s premises and personnel and the right to examine and copy any accounts, documents, or records) as
the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond
within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party
shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of
this Agreement.

 

 

 

    	 	57	 

     

    

 

(d)            
Tax Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event, or
proceeding in respect of Taxes of the Company (including any such claim in respect of a breach of the representations and warranties
in Section 3.17 hereof or any breach or violation of or failure to fully perform
any covenant, agreement, undertaking or obligation in ARTICLE VI) shall be
governed exclusively by ARTICLE VI hereof.

 

Section 8.06     
Payments.

 

(a)            
Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this ARTICLE
VIII, the Indemnifying Party shall satisfy its obligations within 15 Business Days of such final, non-appealable adjudication
by wire transfer of immediately available funds. The parties hereto agree that should an Indemnifying Party not make full payment
of any such obligations within such 15 Business Day-period, any amount payable shall accrue interest from and including the date
of agreement of the Indemnifying Party or final, non-appealable adjudication to, but excluding, the date such payment has been
made at a rate per annum equal to the lesser of 10% or the highest rate permitted by applicable Law. Such interest shall be calculated
daily on the basis of a 365 day year and the actual number of days elapsed, without compounding.

 

(b)            
Any Losses payable by any Stockholder to a Parent Indemnitee pursuant to ARTICLE VI and/or this ARTICLE VIII
shall be satisfied in cash or other assets of the Stockholder, which, at the option of the Parent Indemnitee, may, but need not,
include such Stockholder’s Parent Preferred Shares and/or any shares of Parent Common Stock issued to such Stockholder upon
conversion of Parent Preferred Shares pursuant to the Series A Preferred Convertible Terms, with the fair market value thereof
to be determined by the Parent Board.

 

 

 

    	 	58	 

     

    

 

Section
8.07      Tax Treatment of Indemnification Payments. All
indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Merger Consideration
for Tax purposes, unless otherwise required by Law.

 

Section
8.08      Effect of Investigation. The representations,
warranties, and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto,
shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including
by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should
have known that any such representation or warranty is, was, or might be inaccurate or by reason of the Indemnified Party’s
waiver of any condition set forth in Section 7.01 or Section
7.02, as the case may be.

 

Section 8.09     
Exclusive Remedies.
Subject to Section 5.07 and Section
10.11, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other
than claims arising from fraud, criminal activity, or willful misconduct on the part of a party hereto in connection with the transactions
contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement, or obligation set forth herein
or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in
ARTICLE VI and this ARTICLE VIII.
In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims,
and causes of action for any breach of any representation, warranty, covenant, agreement, or obligation set forth herein or otherwise
relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of
their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth
in ARTICLE VI and this ARTICLE VIII.
Nothing in this Section 8.09 shall limit any Person’s right to seek
and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any party’s fraudulent,
criminal or intentional misconduct.

 

Section
8.10      No Circular Recovery. Each Stockholder hereby
agrees that he or it will not make any claim for indemnification against the Parent, the Company, or the Surviving Corporation
by reason of the fact that such Stockholder was a Representative of the Company or was serving as such for another Person at the
request of the Company (whether such claim is for Losses of any kind or otherwise and whether such claim is pursuant to any Law,
Organizational Document, Contract, or otherwise) with respect to any claim brought by a Parent Indemnitee against any Stockholder
relating to this Agreement or any of the transactions contemplated hereby. With respect to any claim brought by a Parent Indemnitee
against any Stockholder relating to this Agreement or any of the transactions contemplated hereby, each Stockholder expressly waives
any right of subrogation, contribution, advancement, indemnification, or other claim against the Company with respect to any amounts
such Stockholder is liable for pursuant to the indemnification provisions set forth in ARTICLE
VI or this ARTICLE VIII.

 

ARTICLE
IX

Termination

 

Section
9.01      Termination. This Agreement may be terminated
at any time prior to the Closing:

 

 

 

    	 	59	 

     

    

 

(a)            
by the mutual written consent of the Company and the Parent;

 

(b)            
by the Parent by written notice to the Company if:

 

(i)             
neither the Parent nor the Merger Sub is then in material breach of any provision of this Agreement and there has been a
breach, inaccuracy in, or failure to perform any representation, warranty, covenant, or agreement made by the Company and/or the
Stockholders pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE
VII and such breach, inaccuracy, or failure has not been cured by the Company or the Stockholders within 10 days of
the Company’s receipt of written notice of such breach from the Parent; or

 

(ii)           
any of the conditions set forth in Section 7.01 shall not have been,
or if it becomes apparent that any of such conditions will not be, fulfilled by August 31, 2017, unless such failure shall be due
to the failure of the Parent to perform or comply with any of the covenants, agreements, or conditions hereof to be performed or
complied with by it prior to the Closing;

 

(c)            
by the Company by written notice to the Parent if:

 

(i)             
the Company and the Stockholders are not then in material breach of any provision of this Agreement and there has been a
breach, inaccuracy in, or failure to perform any representation, warranty, covenant, or agreement made by the Parent or the Merger
Sub pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE
VII and such breach, inaccuracy, or failure has not been cured by the Parent or the Merger Sub within 10 days of the
Parent’s receipt of written notice of such breach from the Company; or

 

(ii)           
any of the conditions set forth in Section 7.02 shall not have been,
or if it becomes apparent that any of such conditions will not be, fulfilled by August 31, 2017, unless such failure shall be due
to the failure of the Company or the Stockholders to perform or comply with any of the covenants, agreements, or conditions hereof
to be performed or complied with by it or them prior to the Closing; or

 

(d)            
by the Parent or the Company in the event that (i) there shall be any Law that makes consummation of the transactions contemplated
by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining
or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable.

 

Section
9.02      Effect of Termination. In the event of the termination
of this Agreement in accordance with this ARTICLE IX, this Agreement shall
forthwith become void and there shall be no liability on the part of any party hereto except:

 

(a)            
as set forth in Section 5.06, ARTICLE
IX, and ARTICLE X; and

 

 

 

    	 	60	 

     

    

 

(b)            
that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.

 

ARTICLE
X

Miscellaneous

 

Section
10.01   Expenses. Except as otherwise expressly provided herein, all
costs and expenses, including fees and disbursements of counsel, financial advisors, and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or
not the Closing shall have occurred.

 

Section 10.02  
Notices.
All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be
deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee
if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with
confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after
normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in accordance with this Section
10.02):

 

	 	(a)	If to the Parent:
	 	 	 
	 	 	Appliance Recycling Centers
of America, Inc.

175
Jackson Avenue North

Suite
102

Minneapolis,
Minnesota 55343

Attn: Tony Isaac, Chief Executive Officer

 

E-mail: tisaac@arcainc.com

with a copy (which shall
not constitute notice) to:

Baker & Hostetler
LLP

600 Anton Boulevard

Suite 900

Costa Mesa, California
92626

Attn: Randolf W. Katz,
Esq.

E-mail: rwkatz@bakerlaw.com

 

 

	 	(b)	If to the Company: 
	 	 	 
	 	 	GeoTraq Inc.

325 E. Warm Springs Road,
Suite 102

Las
Vegas, Nevada 89119

Attn: Gregg Sullivan

E-mail: gsullivan@geotraq.com

 

 

 

 

    	 	61	 

     

    

 

 

	 	 	 with a copy (which shall not
constitute notice) to:

 

The Doney Law Firm

4955 S. Durango Drive, Suite 165

Las Vegas, Nevada 89113

Attn: Scott Doney, Esq.

E-mail: scott@doneylawfirm.com

	 	 	 
	 	(c)	If to the
Stockholders or the Stockholders’
Representative:
	 	 	 
	 	 	Gregg Sulliva 

309
Highland Mesa Court

Las
Vegas, Nevada 89144

E-mail: gsullivan@geotraq.com

 

with a copy (which shall not
constitute notice) to:

 

The Doney Law Firm

4955 S. Durango Drive, Suite 165

Las Vegas, Nevada 89113

Attn: Scott Doney, Esq.

E-mail: scott@doneylawfirm.com

 

Section
10.03   Interpretation. For purposes of this Agreement, (a) the words
“include,” “includes,” and “including” shall be deemed to be followed by the words “without
limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,”
“hereby,” “hereto,” and “hereunder” refer to this Agreement as a whole. Unless the context
otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules, and Exhibits mean the Articles and Sections
of, Disclosure Schedules hereto and delivered concurrently herewith, and the Exhibits attached to, this Agreement; (y) to an agreement,
instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time
to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time
and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing
any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral
part of, this Agreement to the same extent as if they were set forth verbatim herein.

 

Section
10.04   Headings. The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.

 

Section
10.05   Severability. If any term or provision of this Agreement is invalid,
illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term
or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as
provided in Section 5.07(e), upon such determination that any term or other
provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

 

 

    	 	62	 

     

    

 

Section
10.06   Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties to this Agreement with respect to the subject matter contained herein and supersedes all prior and contemporaneous
understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between
the statements in the body of this Agreement and those in the Exhibits or the Disclosure Schedules (other than an exception expressly
set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

 

Section
10.07   Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign
its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably
withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

 

Section
10.08   No Third-party Beneficiaries. Except as provided in Section
5.09, Section 6.07, and ARTICLE VIII, this Agreement is for the
sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied,
is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever
under or by reason of this Agreement.

 

Section
10.09   Amendment and Modification; Waiver. This Agreement may only be
amended, modified, or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any
party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such
written waiver, whether of a similar or different character and whether occurring before or after that waiver. No failure to exercise,
or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

Section
10.10   Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. 

 

(a)            
This Agreement shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving
effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction).

 

(b)            
ANY LEGAL SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF NEVADA IN EACH CASE LOCATED
IN THE CITY OF LAS VEGAS, COUNTY OF CLARK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY
SUCH SUIT, ACTION, OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE, OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS
SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION, OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION, OR ANY PROCEEDING IN SUCH
COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION, OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

 

 

    	 	63	 

     

    

 

(c)            
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(c).

 

Section
10.11   Specific Performance. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law
or in equity.

 

Section 10.12  
Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission
shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

Section
10.13   Stockholders’ Representative.
By executing this Agreement, each Stockholder hereby irrevocably authorizes and appoints the Stockholders’ Representative
as such Person’s representative and attorney-in-fact to act on behalf of such Person with respect to this Agreement and to
take any and all actions and make any decisions required or permitted to be taken by the Stockholders’ Representative pursuant
to this Agreement. Notices or communications to or from the Stockholders’ Representative shall constitute notice to or from
each of the Stockholders. Any decision or action by the Stockholders’ Representative hereunder, including any agreement between
the Stockholders’ Representative and the Parent relating to the defense, payment, or    

 

 

 

    	 	64	 

     

    

settlement of any claims for indemnification
hereunder, shall constitute a decision or action of all Stockholders and shall be final, binding, and conclusive upon each such
Stockholder. No Stockholder shall have the right to object to, dissent from, protest, or otherwise contest the same. The provisions
of this Section, including the power of attorney granted hereby, are independent and severable, are irrevocable and coupled with
an interest, and shall not be terminated by any act of any one or Stockholders, or by operation of Law, whether by death or other
event.

 

[signature page follows]

 

 

 

 

 

 

 

 

 

 

 

    	 	65	 

     

    

 

IN WITNESS WHEREOF, the parties hereto have,
as of the date first written above, (i) executed this Agreement or (ii) caused this Agreement to be executed by their respective
officers thereunto duly authorized, as applicable.

 

	 	
        THE PARENT:

         

        APPLIANCE RECYCLING CENTERS OF AMERICA, INC.

         

        By: /s/ Tony Isaac

        Tony Isaac, Chief Executive Officer

         

        THE COMPANY:

         

        GEOTRAQ INC.

         

        By: /s/ Gregg Sullivan

        Gregg Sullivan, Chief Executive Officer

         

        THE MERGER SUB:

         

        APPLIANCE RECYCLING ACQUISITION CORP.

         

        By: /s/ Tony Isaac

        Tony Isaac, Chief Executive Officer

         

	 	THE STOCKHOLDERS:
	 	 
	 	/s/ Gregg Sullivan

        Gregg Sullivan

         

        /s/ Juan Yunis 

        Juan Yunis

         

        ISAAC CAPITAL GROUP LLC

         

        By: /s/ Jon Isaac

        Jon Isaac, CEO/Manager

 

 

Signature Page 1 of 2 to Agreement and Plan
of Merger

 

    	 	 	 

     

    

 

	 	/s/ Gregg Sullivan

        Gregg Sullivan

         

        /s/ Juan Yunis 

        Juan Yunis

         

        ISAAC CAPITAL GROUP LLC

         

        By: /s/ Jon Isaac

        Jon Isaac, CEO/Manager

         

         

        THE STOCKHOLDERS’ REPRESENTATIVE:

         

         

        /s/ Gregg Sullivan

        Gregg Sullivan

         

 

Signature Page 2
of 2 to Agreement and Plan of Merger

 

    	 	 	 

     

    

 

EXHIBIT A

 

Form of Certificate of Designation

 

(attached)

 

 

 

 

    	 	 	 

     

    

 

 

______________________________________________

 

 

CERTIFICATE OF DESIGNATION

 

OF

 

APPLIANCE RECYCLING CENTERS OF AMERICA,
INC.

 

Pursuant to Section 302A.401 of the

 

Minnesota Statutes

 

______________________________________________

 

 

 

Pursuant to Minnesota
Statutes, Section 302A.401, Subd. 3(b), Appliance Recycling Centers of America, Inc., a corporation organized and existing under
the laws of the State of Minnesota (the “Company”),

 

DOES HEREBY CERTIFY
that, pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation of the Company, and pursuant
to Section 302A.401 of the Minnesota Statutes, the Board of Directors, at a meeting duly noticed and held on July 20, 2017, duly
adopted a resolution providing for the designation of a series of preferred stock, to be known as the Company’s Series A
Convertible Preferred Stock, which resolution is and reads as follows:

 

RESOLVED, that, pursuant to the
authority expressly granted to and vested in the Board of Directors of Appliance Recycling Centers of America, Inc. (the “Company”),
by the provisions of the Articles of Incorporation of the Company, as amended, a series of the preferred stock, no par value per
share, of the Company be, and it hereby is, established; and

 

FURTHER RESOLVED, that the series
of preferred stock of the Company be, and it hereby is, given the distinctive designation of “Series A Convertible
Preferred Stock”; and

 

FURTHER RESOLVED, that the Series
A Convertible Preferred Stock shall consist of Two Hundred Eighty-eight Thousand Five Hundred Eighty-eight (288,588) shares; and

 

FURTHER RESOLVED, that the Series
A Convertible Preferred Stock shall have the powers and preferences, and the relative, participating, optional and other rights,
and the qualifications, limitations, and restrictions thereon set forth below (the “Designation” or the
“Certificate of Designation”):

 

Section 1.       DESIGNATION
OF SERIES. The authorized number of shares of Series A Convertible Preferred Stock shall initially consist of Two Hundred Eighty-eight
Thousand Five Hundred Eighty-eight (288,588) shares.

 

 

EXHIBIT A
– Page 1  of 7

Appliance
Recycling Centers of America, Inc.

Certificate
of Designation of Series A Convertible Preferred Stock

    	 	 	 

     

    

 

Section 2.       DEFINITIONS.

 

For
purposes of this Designation, the following definitions shall apply:

 

(a)   
“Business Day” means a day in which a majority of the banks in the State of Minnesota in the United
States of America are open for business.

 

(b)  
“Common Stock” means the Company’s no par value common stock, or any other class of stock
resulting from successive changes or reclassifications of such common stock consisting solely of changes in par value, or as a
result of a subdivision, combination, or merger, consolidation or similar transaction in which the Company is a constituent corporation.

  

(c)   
“Conversion Date” shall mean the date on which a share or shares of the Series A Convertible Preferred
Stock is converted pursuant to this Certificate of Designation.

 

(d)  
“Distribution” shall mean the transfer of cash or other property without consideration, whether
by way of dividend or otherwise (other than dividends on Common Stock payable in Common Stock), or the purchase or redemption of
shares of the Company for cash or property other than: (i) repurchases of Common Stock issued to or held by employees, officers,
directors or consultants of the Company or its subsidiaries upon termination of their employment or services pursuant to agreements
providing for the right of said repurchase, (ii) repurchases of Common Stock issued to or held by employees, officers, directors
or consultants of the Company or its subsidiaries pursuant to rights of first refusal contained in agreements providing for such
right, (iii) repurchases of capital stock of the Company in connection with the settlement of disputes with any shareholder, (iv)
any other repurchase or redemption of capital stock of the Company approved by the holders of (a) a majority of the Common Stock
and (b) a majority of the Preferred Stock of the Company voting as separate classes.

 

(e)   
“Holder” shall mean the person or entity in which the Series A Convertible Preferred Stock is
registered on the books of the Company, which shall initially be the person or entity that subscribes for the Series A Convertible
Preferred Stock, and shall thereafter be the permitted and legal assigns of which the Company is notified by the Holder and in
respect of which the Holder has provided a valid legal opinion in connection therewith to the Company.

 

(f)   
“Holders” shall mean all Holders of the Series A Convertible Preferred Stock.

 

(g)  
“Junior Stock” shall mean the Common Stock and each other class of capital stock or series of
preferred stock of the Company established prior to or after the Original Issue Date, the terms of which do not expressly provide
that such class or series ranks senior to or on parity with the Series A Convertible Preferred Stock upon the liquidation, winding-up
or dissolution of the Company.

 

(h)  
“Original Issue Date” shall mean the date upon which the shares of Series A Convertible Preferred
Stock are first issued.

 

 

EXHIBIT A
– Page 2   of 7

Appliance
Recycling Centers of America, Inc.

Certificate
of Designation of Series A Convertible Preferred Stock

    	 	 	 

     

    

 

(i)    
“Preferred Stock Certificates” means the certificates, as replaced from time to time, evidencing
the outstanding Preferred Stock shares.

 

(j)    
“Recapitalization” shall mean any stock dividend, stock split, and combination of shares, reorganization,
recapitalization, reclassification, or other similar event.

 

Section 3.       DIVIDENDS.

 

(a)       The Company
shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company unless
(in addition to the obtaining of any consents required elsewhere in the Articles of Incorporation) the holders of the Series A
Convertible Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share
of Series A Convertible Preferred Stock pursuant to this Section 3. The holders of the Series A Convertible Preferred Stock
shall be entitled to receive, as declared by the Board of Directors and out of funds legally available for the purpose, a dividend
in the aggregate amount of one (1) dollar, regardless of the number of then-issued and outstanding shares of Series A Convertible
Preferred Stock. The remaining dividends allocated by the Board of Directors shall be distributed in an equal amount per share
to the holders of outstanding Common Stock and Series A Convertible Preferred Stock (on an as-if-converted to Common Stock basis
pursuant to the Conversion Ratio as defined below).

 

(b)       To
the fullest extent permitted by the Minnesota Statutes, the Company shall be expressly permitted, but not required, to redeem,
repurchase or make distributions on the shares of its capital stock in all circumstances other than where doing so would cause
the Company to be unable to pay its debts as they become due in the usual course of business.

 

Section
4.       NO LIQUIDATION PREFERENCE. Immediately prior to the occurrence of any liquidation, dissolution or winding up of
the Company, whether voluntary of involuntary, all shares of Series A Convertible Preferred Stock shall automatically convert into
shares of Common Stock based upon the then-applicable Conversion Ratio and shall participate in the liquidation proceeds in the
same manner as other shares of Common Stock.

 

Section
5.       CONVERSION. The Series A Convertible Preferred Stock shall not be convertible into Common Stock and have no other conversion
rights except as specifically set forth below:

 

(a)       Conversion.
The “Conversion Ratio” per share of the Series A Convertible Preferred Stock in connection with any Conversion
shall be at a ratio of 1:100, meaning every (1) one share of Series A Convertible Preferred Stock, if and when converted into Common
Stock, shall convert into 100 shares of Common Stock (the “Conversion”). Each Holder shall have the right,
exercisable at any time and from time to time (unless otherwise prohibited by law, rule or regulation, or as restricted below),
to convert any or all of such Holder’s shares of Series A Convertible Preferred Stock into shares of Common Stock at the
Conversion Ratio. Notwithstanding anything to the contrary herein, the Holders may not effectuate any Conversion and the Company
may not issue any shares of Common Stock in connection therewith that would trigger any NASDAQ requirement to obtain shareholder
approval prior to a Conversion or any issuance of shares of Common Stock in connection therewith that would be in excess of that
number of shares of Common Stock equivalent to 19.9% of the number of shares of Common Stock as of the date hereof; provided,
however, that the Holders may effectuate any Conversion and the Company shall be obligated to issue shares of Common Stock
in connection therewith that would not trigger such a requirement. This restriction shall be of no further force or effect upon
the approval of the shareholders in compliance with NASDAQ’s shareholder voting requirements. Notwithstanding anything to
the contrary contained herein, the Holders may not effectuate any Conversion and the Company shall not issue any shares of Common
Stock in connection therewith until the later of (x) February 28, 2019, or (y) sixty-one (61) days following the date on which
the shareholders of the Company shall have approved the voting, Conversion, and other potential rights of the holders of Series
A Convertible Preferred Stock otherwise set forth in this Certificate of Designation in accordance with the relevant NASDAQ requirements.

 

 

EXHIBIT A
– Page 3   of 7

Appliance
Recycling Centers of America, Inc.

Certificate
of Designation of Series A Convertible Preferred Stock

    	 	 	 

     

    

 

(b)       Taxes.
The Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue and delivery
of shares of Common Stock upon conversion in a name other than that in which the shares of the Series A Convertible Preferred Stock
so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue or
delivery has paid to the Company the amount of any such tax, or has established, to the satisfaction of the Company, that such
tax has been paid. The Company shall withhold from any payment due whatsoever in connection with the Series A Convertible Preferred
Stock any and all required withholdings and/or taxes the Company, in its sole discretion deems reasonable or necessary, absent
an opinion from Holder’s accountant or legal counsel, acceptable to the Company in its sole determination, that such withholdings
and/or taxes are not required to be withheld by the Company.

 

(c)       Stock
Dividends, Splits, and Reclassifications. If the Company shall (i) declare a dividend or other distribution payable in securities
or (ii) split its outstanding shares of Common Stock into a larger number, including any such reclassification in connection with
a merger, consolidation or other business combination in which the Company is the continuing entity (any such corporate event,
an “Event”), then in each instance the Conversion Ratio shall be adjusted such that the number of shares
issued upon conversion of one share of Series A Convertible Preferred Stock will equal the number of shares of Common Stock that
would otherwise be issued but for such Event.

 

(d)       Fractional
Shares. If any Conversion of Series A Convertible Preferred Stock would result in the issuance of a fractional share of Common
Stock (aggregating all shares of Series A Convertible Preferred Stock being converted pursuant to each Conversion), such fractional
share shall be rounded up to the nearest whole share and the Holder shall be entitled to receive, in lieu of the final fraction
of a share, one additional whole share of Common Stock.

 

(e)       Reservation
of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Series A Convertible Preferred Stock,
such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then-outstanding
shares of the Series A Convertible Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then-outstanding shares of the Series A Convertible Preferred Stock, the
Company will within a reasonable time period make a good faith effort to take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.

 

 

EXHIBIT A
– Page 4   of 7

Appliance
Recycling Centers of America, Inc.

Certificate
of Designation of Series A Convertible Preferred Stock

    	 	 	 

     

    

 

(f)       Effect
of Conversion. On any Conversion Date, all rights of any Holder with respect to the shares of the Series A Convertible Preferred
Stock so converted, including the rights, if any, to receive distributions of the Company’s assets or notices from the Company,
will terminate, except only for the rights of any such Holder to receive certificates (if applicable) for the number of shares
of Common Stock into which such shares of the Series A Convertible Preferred Stock have been converted.

 

Section 6.       VOTING.
The Holder of each share of Series A Convertible Preferred Stock shall have such number of votes as is determined by multiplying
(a) the number of shares of Series A Convertible Preferred Stock held by such holder, and (b) 100. Such voting calculation is hereby
authorized by the Company and the Company acknowledges such calculation may result in the total number of possible votes cast by
the Series A Holders and all other classes of the Company’s common stock in any given voting matter exceeding the total aggregate
number of shares that this Company shall have authority to issue. With respect to any shareholder vote, such holder shall have
full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding
any provision hereof, to notice of any shareholders’ meeting in accordance with the Bylaws of this Company, and shall be
entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the
right to vote. The holders of Series A Convertible Preferred Stock shall vote together with all other classes and series of common
and preferred stock of the Company as a single class on all actions to be taken by the Common Stock shareholders of the Company,
except to the extent that voting as a separate class or series is required by law. Notwithstanding anything to the contrary herein,
the Holders of shares of Series A Convertible Preferred Stock may not engage in any vote where the voting power would trigger any
NASDAQ requirement to obtain shareholder approval; provided, however, the Holders shall have the right to vote that
portion of their voting power that would not trigger such a requirement. This restriction shall lapse upon the requisite approval
of the shareholders in compliance with NASDAQ’s shareholder voting requirements in effect at the time of such approval.

 

Section 7.       REDEMPTION.
The Series A Convertible Preferred Stock shall have no redemption rights.

 

Section
8.       PROTECTIVE PROVISIONS. In addition to any other rights provided by law, at any time any shares of Series A Convertible
Preferred Stock are outstanding, as a legal party in interest, the Company, through action directly initiated by the Company’s
Board of Directors or indirectly initiated by the Company’s Board of Directors through judicial action or process, including
any action by the shareholders of the Company’s Common Stock, shall not, either directly or indirectly by amendment, merger,
consolidation or otherwise, take any of the following actions without first obtaining the affirmative approval of a majority of
the Holders.

 

(a)   
Increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Convertible
Preferred Stock;

 

 

EXHIBIT A
– Page 5    of 7

Appliance
Recycling Centers of America, Inc.

Certificate
of Designation of Series A Convertible Preferred Stock

    	 	 	 

     

    

 

(b)  
Effect an exchange, reclassification, or cancellation of all or a part of the Series A Convertible Preferred Stock, but
excluding a stock split or reverse stock split or combination of the Common Stock or Preferred Stock;

 

(c)   
Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of
Series A Convertible Preferred Stock; or

 

(d)  
Alter or change the rights, preferences or privileges of the shares of Series A Convertible Preferred Stock so as to affect
adversely the shares of such series, including the rights set forth in this Designation;

 

PROVIDED,
HOWEVER, that the Company may, by any means authorized by law and without any vote of the Holders of shares of the Series A
Convertible Preferred Stock, make technical, corrective, administrative or similar changes in this Certificate of Designation that
do not, individually or in the aggregate, materially adversely affect the rights or preferences of the Holders of shares of the
Series A Convertible Preferred Stock.

 

Section
9.       PREEMPTIVE RIGHTS. Holders of Series A Convertible Preferred Stock and holders of Common Stock shall not be entitled
to any preemptive, subscription or similar rights in respect to any securities of the Company, except as specifically set forth
herein or in any other document agreed to by the Company.

 

Section
10.      REPORTS. The Company shall mail to all holders of Series A Convertible Preferred Stock those reports, proxy statements
and other materials that it mails to all of its holders of Common Stock.

 

Section
11.      NOTICES. In addition to any other means of notice provided by law or in the Company’s Bylaws, any notice required
by the provisions of this Certificate of Designation to be given to the Holders shall be deemed given if deposited in the United
States mail, postage prepaid, return receipt requested and addressed to each Holder of record at such Holder’s address appearing
on the books of the Company.

 

Section
12.      MISCELLANEOUS.

 

(a)       The
headings of the various sections and subsections of this Certificate of Designation are for convenience of reference only and shall
not affect the interpretation of any of the provisions of this Certificate of Designation.

 

(b)       Whenever
possible, each provision of this Certificate of Designation shall be interpreted in a manner as to be effective and valid under
applicable law and public policy. If any provision set forth herein is held to be invalid, unlawful, or incapable of being enforced
by reason of any rule of law or public policy, such provision shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining provisions of this Certificate of Designation. No provision
herein set forth shall be deemed dependent upon any other provision unless so expressed herein. If a court of competent jurisdiction
should determine that a provision of this Certificate of Designation would be valid or enforceable if a period of time were extended
or shortened, then such court may make such change as shall be necessary to render the provision in question effective and valid
under applicable law.

 

 

EXHIBIT A
– Page 6    of 7

Appliance
Recycling Centers of America, Inc.

Certificate
of Designation of Series A Convertible Preferred Stock

    	 	1	 

     

    

 

(c)       The
Company will provide to the Holders of the Series A Convertible Preferred Stock all communications sent by the Company to the holders
of the Common Stock.

 

(d)       Except
as may otherwise be required by law, the shares of the Series A Convertible Preferred Stock shall not have any powers, designations,
preferences or other special rights, other than those specifically set forth in this Certificate of Designations.

 

(e)       Shares
of the Series A Convertible Preferred Stock converted into Common Stock shall be retired and canceled and shall have the status
of authorized but unissued shares of preferred stock of the Company undesignated as to any specific series and may with any and
all other authorized but unissued shares of preferred stock of the Company be designated or re-designated and issued or reissued,
as the case may be, as part of any series of preferred stock of the Company.

 

(f)       Notwithstanding
the above terms and conditions of this Certificate of Designation and the dollar amounts and share numbers set forth herein shall
be subject to adjustment, as appropriate, whenever there shall occur a stock split, stock dividend, combination, reclassification
or other similar event involving shares of the Series A Convertible Preferred Stock. Such adjustments shall be made in such manner
and at such time as the Board of Directors in good faith determines to be equitable in the circumstances, any such determination
to be evidenced in a resolution duly adopted by the Board of Directors. Upon any such equitable adjustment, the Company shall promptly
deliver to each Holder a notice describing in reasonable detail the event requiring the adjustment and the method of calculation
thereof and specifying the increased or decreased Liquidation Preference following such adjustment.

 

(g)       With
respect to any notice to a Holder required to be provided hereunder, such notice shall be mailed to the registered address of such
Holder, and neither failure to mail such notice, nor any defect therein or in the mailing thereof, to any particular Holder shall
affect the sufficiency of the notice or the validity of the proceedings referred to in such notice with respect to the other Holders
or affect the legality or validity of any redemption, conversion, distribution, rights, warrant, reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation, winding-up or other action, or the vote upon any action with respect to
which the Holders are entitled to vote. All notice periods referred to herein shall commence on the date of the mailing of the
applicable notice. Any notice that was mailed in the manner herein provided shall be conclusively presumed to have been duly given
whether or not the Holder receives the notice.

 

IN WITNESS WHEREOF,
the Company has caused this statement to be duly executed by its sole director this 18th day of August, 2017.

 

	 	APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
	 	 
	 	 
	 	By:                                                     
	 	  Tony Isaac – Chief Executive Officer

 

 

 

EXHIBIT A
– Page 7 of 7

Appliance
Recycling Centers of America, Inc.

Certificate
of Designation of Series A Convertible Preferred Stock

    	 	 	 

     

    

 

EXHIBIT B

 

Form of Closing Payment Certificate

 

(attached)

 

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

GEOTRAQ INC.

 

Closing Payment Certificate 

 

August 18, 2017

 

Reference is hereby made
to that certain Agreement and Plan of Merger, dated as of August 18, 2017 (the “Merger Agreement”), by and among
Appliance Recycling Centers of America, Inc., a Minnesota corporation (the “Parent”), Appliance Recycling Acquisition
Corp., a Nevada corporation and a wholly-owned subsidiary of the Parent (the “Merger Sub”), GeoTraq Inc., a
Nevada corporation (the “Company”), the Stockholders (as defined in the Merger Agreement), and the Stockholders’
Representative (as defined in the Merger Agreement). Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Merger Agreement.

 

Pursuant to Section 2.03(a)(vii)
of the Merger Agreement, the Company and the Stockholders hereby certify to the Parent and the Merger Sub as follows:

 

1.              
The Closing Indebtedness Amount is $0.00 / none.

 

2.              
The amount of Company Transaction Expenses unpaid as of immediately prior to the Effective Time is $0.00 / none.

 

3.              
The number of issued and outstanding Company Shares held by each Stockholder, each Stockholder’s Pro Rata Share of
the Merger Consideration (as a percentage interest) and the Parent Preferred Shares, the respective amounts of the Earnest Money
Deposit Amount paid the Stockholders prior to the date hereof, and the respective initial principal amounts payable to the Stockholders
under the Promissory Notes are as follows:

 

	Stockholder	Company

 Shares	Merger 

Consideration	Parent 

Preferred 

Shares	Earnest Money 

Deposit Amount	Principal Amount

 of Promissory Note
	Gregg Sullivan	20	20%	57,718	$100,000	$100,000
	Juan Yunis	65	65%	187,582	$25,000	$625,000
	Isaac Capital Group LLC	15	15%	43,288	$75,000	$75,000

 

 

[Signature page follows.]

 

 

 

 

 

 

 

B-1

    	 	 	 

     

    

IN WITNESS WHEREOF, this
Closing Payment Certificate has been executed by the undersigned as of the date first set forth above.

 

	 	THE COMPANY:
	 	 
	 	GEOTRAQ INC.
	 	 
	 	By: ___________________
	 	Gregg Sullivan, CEO
	 	 
	 	THE STOCKHOLDERS:
	 	 
	 	Gregg Sullivan
	 	 
	 	_______________________
	 	Juan Yunis
	 	 
	 	ISAAC CAPITAL GROUP LLC
	 	 
	 	By: ______________________
	 	Jon Isaac, CEO/Manager

 

 

 

 

 

[Signature Page to Closing Payment Certificate]

B-2

    	 	 	 

     

    

 

 

EXHIBIT C

 

Form of Employment Agreement

 

(attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement
(this “Agreement”) is made and entered into as of August 18, 2017 (the “Effective Date”),
by and between GeoTraq Inc., a Nevada corporation (the “Company”), and Gregg Sullivan (the “Executive”).

 

WHEREAS, the Company
and the Executive desire to enter into this Employment Agreement to ensure the Company of the services of the Executive, to provide
for compensation and other benefits to be paid and provided by the Company to the Executive in connection therewith, and to set
forth the rights and duties of the parties in connection therewith; and

 

WHEREAS, certain capitalized
terms used herein are defined in Section 9 of this Agreement.

 

NOW, THEREFORE, in
consideration of the mutual covenants, promises, and obligations set forth herein, and for such other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

 

1.                 
Employment Position, Duties, and Place.

 

(a)            
During the Term, the Executive shall serve as the “Chief Executive Officer” of the Company and shall devote
substantially all of his business time and best reasonable efforts to his employment and perform diligently such duties as are
customarily performed by comparable chief executive officers of companies that are at a similar development, operational, and/or
growth stage as the Company, together with such other duties as may be reasonably assigned from time to time by the Board of the
Directors of the Company (the “Board”), the Board of Directors of the Parent, or the Chief Executive Officer
of the Parent, which duties shall be consistent with the Executive’s position as set forth above. The Executive shall report
directly to the Board, the Board of Directors of the Parent, and the Chief Executive Officer of the Parent. The Executive shall,
if requested by the Chief Executive Officer of the Parent, also serve as a member of the Board for no additional compensation.

 

(b)            
During the Term, the Executive shall not, directly or indirectly, without the prior written consent of the Parent, other
than in the performance of duties naturally inherent to the businesses of the Company and in furtherance thereof, render services
of a business, professional, or commercial nature to any other Person, whether for compensation or otherwise; provided, however,
that, so long as it does not interfere with the Executive’s full-time employment hereunder, and so long as the Executive
provides prior written notice thereof to the Parent, the Executive may attend to passive outside investments and serve as a director,
trustee, or officer of, or otherwise participate in any similar capacity in educational, welfare, social, religious, civic, or
trade organizations.

 

(c)            
The principal place of the Executive’s employment shall be the Company’s principal executive office, currently
located at 325 E. Warm Springs Road, Suite 102, Las Vegas, Nevada 89119; provided that, from time to time, the Executive
may be required to travel on Company business during the Term.

 

2.                 
Term. The term of employment covered by this Agreement shall begin on the Effective Date and shall continue until
the third anniversary of the Effective Date, unless terminated earlier pursuant to Section 5. This Agreement may be extended, upon
the same terms and conditions, for successive periods of one year, if at least 90 days’ prior to the expiration of the then-applicable
initial or renewal Term, both parties provide written notice to the other party of his/its intention to extend the term of this
Agreement. The period during which the Executive is employed by the Company hereunder is referred to as the “Term.”

 

 

 

    	 	C-1	 

     

    

 

3.                 
Compensation.

 

(a)            
Annual Base Salary. The Company shall pay the Executive an annual rate of base salary of $240,000.00 (the “Base
Salary”), payable monthly in arrears at the rate of $20,000 per month; provided, however, that a portion of the
monthly payment of the Base Salary shall be deferred as follows (such deferred payments, collectively, the “Deferred Salary”)
and paid in accordance with Section 3(b) (subject to Section 5(a)):

 

(i)             
$10,000 (i.e., 50%) of each monthly payment of the Base Salary shall be deferred until such time, if any, as the Company
achieves either of the following (as applicable, the “Initial Milestone”) and the monthly amount of the Deferred
Salary is reduced pursuant to Section 3(a)(ii) below: (A) $100,000 in subscription revenues in any calendar month during the Term
or (B) $1,000,000 in total revenues during any 12-month period during the Term;

 

(ii)           
following such time, if any, as the Company achieves the Initial Milestone, the monthly amount of the Deferred Salary shall
be reduced as follows: (A) $8,000 (i.e., 40%) of the monthly payment of the Base Salary shall be deferred for each of the three
months of the first fiscal quarter following the achievement of the Initial Threshold, (B) $6,000 (i.e., 30%) of the monthly payment
of the Base Salary shall be deferred for each of the three months of the second fiscal quarter following the achievement of the
Initial Threshold, (C) $4,000 (i.e., 20%) of the monthly payment of the Base Salary shall be deferred for each of the three months
of the third fiscal quarter following the achievement of the Initial Threshold, and (D) $2,000 (i.e., 10%) of the monthly payment
of the Base Salary shall be deferred for each month following such third fiscal quarter until such time, if any, as the Company
achieves $5,000,000 in total revenues during any 12-month period during the Term (the “Second Milestone”);1
and

 

(iii)         
for each monthly payment of the Base Salary commencing with the first month of the first fiscal quarter following the Company
having achieved the Second Milestone, if any, no portion of the monthly salary payment of the Base Salary shall be deferred.

 

(b)            
Payment of Deferred Salary. The Deferred Salary shall become due and payable, in installments as set forth in this
Section 3(b), at such time, if any, as the Company (i) achieves $10,000,000 in total revenues during any 12-month period during
the Term or (ii) the Company has operated on a cash flow positive basis, after payment of all operating and administrative expenses
and as reasonably determined by the Parent’s Board, for a period of three consecutive calendar months (the “Payment
Milestone”). In the event that the Company achieves the Payment Milestone, the accrued amount of the Deferred Salary
shall be paid out of excess cash flow (after payment of all operating and administrative expenses) on a pro rata basis over
the twelve months following the month-end at which the Company achieved the Payment Milestone.

 

(c)            
Revenues. For purposes of determining whether the Company has achieved the Initial Milestone, the Second Milestone,
or the Payment Milestone, as applicable, all revenues referred to in Section 3(a) and/or Section 3(b), if accrued and not collected,
shall (A) have arisen from bona fide transactions entered into by the Company in the ordinary course of business, (B) constitute
only valid, undisputed claims of the Company not subject to claims of set-off or other defenses or counterclaims, (C) be net of
allowance for doubtful accounts, and (D) be collectible in full within 90 days after billing.

 

_______________

1
By way of example, if the Initial Milestone is achieved in February 2018, the monthly
amount of the Deferred Salary would be as follows: (i) $10,000 for March 2018, (ii) $8,000 for each of April, May, and June 2018,
(iii) $6,000 for each of July, August, and September 2018, (iv) $4,000 for each of October, November, and December 2018, and (v)
$2,000 for January 2019 and each month thereafter until the first month of the first fiscal quarter following the Company having
achieved the Second Milestone.

 

 

    	 	C-2	 

     

    

 

(d)            
Bonus. For each complete calendar year during the Term, the Executive may be eligible to earn an annual bonus (the
“Annual Bonus”) based upon the achievement of annual Company performance goals established by the Board and
the Chief Executive Officer of the Parent in their sole and absolute discretion. The Annual Bonus, if any, will be paid after the
end of the applicable calendar year at such time as determined by the Parent in its discretion.

 

4.                 
Benefits; Vacation; Paid Time-Off; Business Expenses.

 

(a)            
Fringe Benefits and Perquisites. During the Term, the Executive shall be entitled to fringe benefits and perquisites
consistent with the practices of the Parent and to the extent the Parent provides similar benefits or perquisites (or both) to
similarly situated executives of the Parent or its subsidiaries.

 

(b)            
Employee Benefits. During the Term, the Executive shall be entitled to participate in all employee benefit plans,
practices, and programs maintained by the Parent, as in effect from time to time (collectively, “Employee Benefit Plans”),
to the extent consistent with applicable law and the terms of the applicable Employee Benefit Plans. The Parent reserves the right
to amend or cancel any Employee Benefit Plans at any time in its sole and absolute discretion, subject to the terms of such Employee
Benefit Plan and applicable law.

 

(c)            
Vacation; Paid Time-Off. During the Term, the Executive shall be entitled to two weeks of paid vacation per calendar
year (prorated for partial years) in accordance with the Parent’s vacation policies, as in effect from time to time. The
Executive shall receive other paid time-off in accordance with the Parent’s policies for executive officers of the Parent
or its subsidiaries, as such policies may exist from time to time.

 

(d)            
Business Expenses. The Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket
business, entertainment, and travel expenses incurred by the Executive in connection with the performance of the Executive’s
duties hereunder in accordance with the Parent’s expense reimbursement policies and procedures.

 

5.                 
Termination.

 

(a)            
Termination for Cause; Termination Without Good Reason. The Executive’s employment hereunder may be terminated
by the Company for Cause or by the Executive without Good Reason. In the event of such termination, the Executive shall forfeit
any and all right, title, and interest in and to any and all accrued and unpaid Deferred Salary and, instead, shall be entitled
to receive the following (collectively, the “Accrued Amounts”):

 

(i)             
any accrued but unpaid Base Salary (excluding any and all accrued and unpaid Deferred Salary) and accrued but unused vacation,
which shall be paid on the pay date immediately following the Termination Date in accordance with the Company’s customary
payroll procedures, unless a different date shall be required by applicable law;

 

(ii)           
any earned but unpaid Annual Bonus, which shall be paid on the applicable payment date;

 

 

 

    	 	C-3	 

     

    

 

(iii)         
reimbursement for unreimbursed business expenses properly incurred by the Executive, which shall be subject to and paid
in accordance with the Parent’s expense reimbursement policy; and

 

(iv)          
such employee benefits, if any, to which the Executive may be entitled under the Parent’s employee benefit plans as
of the Termination Date; provided that, in no event shall the Executive be entitled to any payments in the nature of severance
or termination payments.

 

Termination of the Executive’s employment
shall not be deemed to be for Cause unless and until the Company or the Chief Executive Officer of the Parent delivers to the Executive
a copy of a resolution duly adopted by a majority of the Board (after reasonable written notice is provided to the Executive and
the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that the Executive has engaged
in the conduct described in the definition of “Cause” in Section 9. Except for a failure, breach, or refusal that,
by its nature, cannot reasonably be expected to be cured, the Executive shall have ten (10) business days from the delivery of
written notice by the Company or the Chief Executive Officer of the Parent within which to cure any acts constituting Cause.

 

(b)            
Termination Without Cause or for Good Reason. The Term and the Executive’s employment hereunder may be terminated
by the Executive for Good Reason or by the Company without Cause. In the event of such termination, the Executive shall be entitled
to receive (i) any and all accrued and unpaid Deferred Salary (payable (A) on a pro rata basis over the twelve months following
the month during which the Termination Date occurs if the Company has not achieved the Payment Milestone prior to such termination
or (B) in accordance with Section 3(b) if the Company has achieved the Payment Milestone prior to such termination) and (ii) the
Accrued Amounts (payable as set forth in Section 5(a)). The Executive cannot terminate his employment for Good Reason unless he
has provided written notice to the Company and the Parent of the existence of the circumstances providing grounds for termination
for Good Reason within 30 days of the initial existence of such grounds and the Company has had at least 30 days from the date
on which such notice is provided to cure such circumstances. If the Executive does not terminate his employment for Good Reason
within 65 days after the first occurrence of the applicable grounds, then the Executive will be deemed to have waived his right
to terminate for Good Reason with respect to such grounds.

 

(c)            
Death or Disability. The Executive’s employment hereunder shall terminate automatically upon the Executive’s
death during the Term, and the Company may terminate the Executive’s employment on account of the Executive’s Disability.
If the Executive’s employment is terminated during the Term on account of the Executive’s death or Disability, the
Executive (or the Executive’s estate and/or beneficiaries, as the case may be) shall be entitled to receive (i) subject to
the Company having achieved the Payment Milestone prior to such termination, any and all accrued and unpaid Deferred Salary (payable
in accordance with Section 3(b)) and (ii) the Accrued Amounts (payable as set forth in Section 5(a)). Notwithstanding any other
provision contained herein, all payments made in connection with the Executive’s Disability shall be provided in a manner
that is consistent with federal and state law.

 

(d)            
Expiration of the Term. The Executive’s employment hereunder shall terminate upon the expiration of the then-applicable
initial or renewal Term unless the term of this Agreement has been extended in accordance with the provisions of Section 2. In
the event of such termination, the Executive shall be entitled to receive (i) subject to the Company having achieved the Payment
Milestone prior to such termination, any and all accrued and unpaid Deferred Salary (payable in accordance with Section 3(b)) and
(ii) the Accrued Amounts (payable as set forth in Section 5(a)).

 

 

 

    	 	C-4	 

     

    

 

(e)            
Notice of Termination. Any termination of the Executive’s employment hereunder by the Company or by the Executive
during the Term (other than termination pursuant to Section 5(c) on account of the Executive’s death or pursuant to Section
5(d)) shall be communicated by written notice of termination (“Notice of Termination”) to the other party hereto
in accordance with Section 18. The Notice of Termination shall specify:

 

(i)             
the termination provision of this Agreement relied upon;

 

(ii)           
to the extent applicable, the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated; and

 

(iii)         
the applicable Termination Date.

 

(f)             
Resale Restrictions and Effect of Termination on the Parent Shares.

 

(i)             
Resale Restrictions. Subject to Section 5(f)(ii), the Executive agrees not to sell, contract to sell, grant any option
to purchase, transfer the economic risk of ownership in, make any short sale of, pledge, or otherwise transfer or dispose of any
Parent Shares (or any interest in any Parent Shares) (the foregoing restrictions, the “Resale Restrictions”)
before the third (3rd) anniversary of the Effective Date (the “Resale Restrictions Period”).

 

(ii)           
Effect of Termination on the Parent Shares. Notwithstanding anything to the contrary in Section 5(f)(i), in the event
the Executive’s employment hereunder is terminated during the Resale Restrictions Period:

 

(A)          
by the Executive without Good Reason or by the Company for Cause within three years after the Effective Date, then (1) one-half
of the Parent Shares shall automatically be deemed to have been returned the Parent’s treasury for cancellation effective
as of the Termination Date and (2) the remaining Parent Shares shall be subject to the Resale Restrictions for a period ending
on the one-year anniversary of the Termination Date; or

 

(B)          
by the Executive for Good Reason or by the Company without Cause, then the Parent Shares shall be subject to the Resale
Restrictions for a period ending the earlier of the one-year anniversary of the Termination Date and the date of the expiration
of the Resale Restrictions Period.

 

(iii)         
Legend. The Parent and its transfer agent are hereby authorized to decline to make any transfer of Parent Shares
if such transfer would constitute a violation or breach of this Agreement. Any attempted transfer by the Executive in breach of
this Agreement shall be null and void. The Executive acknowledges and agrees that stock certificates issued to the Executive for
the Parent Shares shall bear the following restrictive legend:

 

THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT,
OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF AN EMPLOYMENT AGREEMENT
BETWEEN THE SHAREHOLDER AND THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE CORPORATION.

 

 

 

    	 	C-5	 

     

    

 

(g)            
Resignation of All Other Positions. Upon termination of the Executive’s employment hereunder for any reason,
the Executive shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the Board
(or a committee thereof) of the Company or any of its Affiliates, as well as any other employment or consultancy relationships
with the Company or any of its Affiliates.

 

(h)            
Exit Obligations. Upon the termination of the Executive’s employment, the Executive (or, in the event of the
Executive’s death, the personal representative of his estate) shall (i) provide or return to the Company any and all
Company property and all Company documents and materials belonging to the Company and stored in any fashion, including, without
limitation, those that constitute or contain any Confidential Information or Work Product, that are in the possession or control
of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the
Executive in connection with his employment by the Company and (ii) delete or destroy all copies of any such documents and
materials not returned to the Company that remain in the Executive’s (or his estate’s) possession or control, including
those stored on any non-Company devices, networks, storage locations, and media in the Executive’s (or his estate’s)
possession or control.

 

(i)             
Cooperation. The parties agree that certain matters in which the Executive will be involved during the Term may necessitate
the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment for
any reason (except in the event of the Executive’s death), to the extent reasonably requested by the Board or the Chief Executive
Officer of the Parent, the Executive shall cooperate with the Company in connection with matters arising out of the Executive’s
service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive’s
other activities. The Company shall reimburse the Executive for reasonable expenses incurred in connection with such cooperation
and, to the extent that the Executive is required to spend substantial time on such matters, the Company shall compensate the Executive
at an hourly rate based on the Executive’s Base Salary on the Termination Date.

 

6.              
Confidential Information.

 

(a)            
Company Creation and Use of Confidential Information. The Executive understands and acknowledges that the Company
has invested, and continues to invest, substantial time, money, and specialized knowledge into developing its resources, creating
a customer/subscriber base, generating customer/subscriber and potential customer/subscriber lists, training its employees, and
improving its offerings in the industry in which it conducts its business. The Executive understands and acknowledges that, as
a result of these efforts, the Company has created, and continues to use and create, Confidential Information. This Confidential
Information provides the Company with a competitive advantage over others in the marketplace.

 

(b)            
Disclosure and Use Restrictions. The Executive agrees and covenants: (i) to treat all Confidential Information as
strictly confidential; (ii) not, directly or indirectly, to disclose, publish, communicate, or make available Confidential Information,
or allow it to be disclosed, published, communicated, or made available, in whole or part, to any Person whatsoever (including
other employees of the Company) not having a need to know and authority to know and use the Confidential Information in connection
with the business of the Company and, in any event, not to anyone outside of the direct employ of the Company except as required
in the performance of the Executive’s authorized employment duties to the Company or with the prior approval of the Board
or the Chief Executive Officer of the Parent in each instance (and, then, such disclosure shall be made only within the limits
and to the extent of such duties or approval); and (iii) not to access or use any Confidential Information, and not to copy any
documents, records, files, media, or other resources containing any Confidential Information, or remove any such documents, records,
files, media, or other resources from the premises or control of the Company, except as required in the performance of the Executive’s
authorized employment duties to the Company or with the prior approval of the Board or the Chief Executive Officer of the Parent
in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or approval).
Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation,
or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the
disclosure does not exceed the extent of disclosure required by such law, regulation, or order. The Executive shall promptly provide
written notice of any such order to the Chief Executive Officer of the Parent.

 

 

 

    	 	C-6	 

     

    

 

(c)            
Notice of Immunity Under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016.
Notwithstanding any other provision of this Agreement:

 

(i)             
The Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure
of a trade secret that:

 

(A)          
is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney
and (2) solely for the purpose of reporting or investigating a suspected violation of law; or

 

(B)          
is made in a complaint or other document filed under seal in a lawsuit or other proceeding.

 

(ii)           
If the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive
may disclose the Company’s trade secrets to the Executive’s attorney and use the trade secret information in the court
proceeding if the Executive:

 

(A)          
files any document containing trade secrets under seal; and

 

(B)          
does not disclose trade secrets, except pursuant to court order.

 

(d)            
Duration. The Executive understands and acknowledges that his obligations under this Agreement with regard to any
particular Confidential Information shall commence immediately upon the Executive first having access to such Confidential Information
(whether before or after he begins employment by the Company) and shall continue during and after his employment by the Company
until such time as such Confidential Information has become public knowledge other than as a result of the Executive’s breach
of this Agreement or breach by those acting in concert with the Executive or on the Executive’s behalf.

 

7.                 
Restrictive Covenants.

 

(a)            
Acknowledgement. The Executive acknowledges and agrees that the nature of the Executive’s position gives him
access to and knowledge of Confidential Information and places him in a position of trust and confidence with the Company. The
Executive acknowledges and agrees that the services he provides to the Company are unique, special, or extraordinary, that the
Executive will obtain knowledge and skill relevant to the Company’s industry, methods of doing business, and marketing strategies
by virtue of the Executive’s employment; and that the restrictive covenants and other terms and conditions of this Agreement
are reasonable and reasonably necessary to protect the legitimate business interest of the Company. The Executive further acknowledges
and agrees that the Company’s ability to reserve these for the exclusive knowledge and use of the Company is of great competitive
importance and commercial value to the Company, and that improper use or disclosure by the Executive is likely to result in unfair
or unlawful competitive activity. The Executive further acknowledges that (i) the amount of his compensation reflects, in part,
his obligations and the Company’s rights under Sections 6 and 7; (ii) he has no expectation of any additional compensation,
royalties, or other payment of any kind not otherwise referenced herein in connection herewith; and (iii) he will not be subject
to undue hardship by reason of his full compliance with the terms and conditions of Sections 6 and 7 or the Company’s enforcement
thereof.

 

 

 

    	 	C-7	 

     

    

 

(b)            
Non-Competition. Because of the Company’s legitimate business interest as described herein and the good and
valuable consideration offered to the Executive and because of the transactions contemplated by the Merger Agreement, the Executive
agrees and covenants not to engage in Restricted Activity within the Restricted Area during the Restriction Period. Nothing herein
shall prohibit the Executive from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation,
provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a
member of a group that controls, such corporation.

 

(c)            
Non-Solicitation of Employees. The Executive agrees and covenants that he will not, directly or indirectly, solicit,
hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company or Affiliate
thereof during the Restriction Period.

 

(d)            
Non-Solicitation of Customers/Subscribers. The Executive understands and acknowledges that because of the Executive’s
experience and relationship with the Company, he will have access to and learn about much or all of the Company’s customer/subscriber
information. The Executive understands and acknowledges that loss of customer/subscriber relationships and/or goodwill will cause
significant and irreparable harm. The Executive agrees and covenants, during the Restriction Period, that he will not, directly
or indirectly, solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message),
attempt to contact, or meet with the Company’s current, former, or prospective customers/subscribers for purposes of offering
or accepting goods or services similar to or competitive with those offered by the Company.

 

(e)            
Non-Disparagement. The Executive agrees and covenants that he will not at any time make, publish, or communicate
to any Person or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Company, any
Affiliate thereof, or any of their respective businesses, or any of the Company’s employees, officers, and existing and prospective
customers/subscribers, suppliers, and other associated third parties. The Company agrees and covenants that it shall cause its
officers and directors to refrain from making any defamatory or disparaging remarks, comments, or statements concerning the Executive
to any third parties.

 

(f)             
Non-Waiver. This Section 7 does not, in any way, restrict or impede the Executive from exercising protected rights
to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid
order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed
that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the Parent.

 

(g)            
Remedies. In the event of a breach or threatened breach by the Executive of Section 6 or 7, the Executive hereby
consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent
injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without
the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity
of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies,
monetary damages, or other available forms of relief.

 

 

 

    	 	C-8	 

     

    

 

8.              
Proprietary Rights.

 

(a)            
Work Product. The Executive acknowledges and agrees that all right, title, and interest in and to all writings, works
of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials,
and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived,
or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company
and relate in any way to the business or contemplated business, products, activities, research, or development of the Company or
result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment
or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and
electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and
all rights in and to United States and foreign (i) patents, patent disclosures, and inventions (whether patentable or not),
(ii) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names and other similar designations
of source or origin, together with the goodwill symbolized by any of the foregoing, (iii) copyrights and copyrightable works
(including computer programs), mask works, and rights in data and databases, (iv) trade secrets, know-how, and other confidential
information, and (v) all other intellectual property rights, in each case whether registered or unregistered and including all
registrations and applications for, and renewals and extensions of, such rights, all improvements thereto, and all similar or equivalent
rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall
be the sole and exclusive property of the Company.

 

(b)            
Work Made for Hire; Assignment. The Executive acknowledges that, by reason of being employed by the Company at the
relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work
made for hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company. To the extent that
the foregoing does not apply, the Executive hereby irrevocably assigns to the Company, for no additional consideration, the Executive’s
entire right, title, and interest in and to all Work Product and Intellectual Property Rights therein, including the right to sue,
counterclaim, and recover for all past, present, and future infringement, misappropriation, or dilution thereof, and all rights
corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company’s
rights, title, or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that the Company
would have had in the absence of this Agreement.

 

(c)            
Further Assurances; Power of Attorney. During and after his employment, the Executive agrees to cooperate reasonably
with the Company to (i) apply for, obtain, perfect, and transfer to the Company the Work Product, as well as any and all Intellectual
Property Rights in the Work Product in any jurisdiction in the world and (ii) maintain, protect, and enforce the same, including,
without limitation, giving testimony and executing and delivering to the Company any and all applications, oaths, declarations,
affidavits, waivers, assignments, and other documents and instruments as shall be requested by the Company. The Executive hereby
irrevocably grants the Company a power of attorney to execute and deliver any such documents on the Executive’s behalf in
his name and to do all other lawfully permitted acts to transfer the Work Product to the Company and further the transfer, prosecution,
issuance, and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if the Executive does
not promptly cooperate with the Company’s request (without limiting the rights the Company shall have in such circumstances
by operation of law). The power of attorney is coupled with an interest and shall not be affected by the Executive’s subsequent
incapacity.

 

 

 

    	 	C-9	 

     

    

 

9.                 
Definitions. When used herein, the following terms shall have the following meanings:

 

(a)            
“Affiliate” means any Person controlling, under common control with, or controlled by the Parent.

 

(b)            
“Cause” means:

 

(i)             
the Executive’s willful failure to perform his duties (other than any such failure resulting from incapacity due to
physical or mental illness);

 

(ii)           
the Executive’s willful failure to comply with any valid and legal directive of the Board or the Chief Executive Officer
of the Parent;

 

(iii)         
the Executive’s engagement in dishonesty, illegal conduct, or gross misconduct, which is, in each case, materially
injurious to the Company or its Affiliates;

 

(iv)          
the Executive’s embezzlement, misappropriation, or fraud, whether or not related to the Executive’s employment
with the Company;

 

(v)            
the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state
law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude, if such felony or other crime is work-related,
materially impairs the Executive’s ability to perform services for the Company, or results in material reputational or financial
harm to the Company or its Affiliates;

 

(vi)          
the Executive’s willful unauthorized disclosure of Confidential Information;

 

(vii)        
the Executive’s material breach of any material obligation under this Agreement or any other written agreement between
the Executive and the Company; or

 

(viii)      
any material failure by the Executive to comply with the Company’s written policies or rules, as they may be in effect
from time to time during the Term, if such failure causes material reputational or financial harm to the Company or its Affiliates.

 

(c)            
“Confidential Information” means, without limitation, all information not generally known to the public,
in spoken, printed, electronic, or any other form or medium, relating to the Company, its Affiliates, the respective businesses
of the Company or its Affiliates, or any existing or prospective customer/subscriber, supplier, investor, or other associated third
party of the Company, and information of any other Person that has been entrusted to the Company in confidence. The Executive understands
that the foregoing definition is not exhaustive and that Confidential Information also includes other information that is marked
or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential
or proprietary in the context and circumstances in which the information is known or used. The Executive understands and agrees
that Confidential Information includes information developed by him in the course of his employment by the Company as if the Company
furnished the same Confidential Information to the Executive in the first instance. Confidential Information shall not include
information that is generally available to and known by the public at the time of disclosure to the Executive; provided that,
such disclosure is through no direct or indirect fault of the Executive or person(s) acting on the Executive’s behalf.

 

 

 

    	 	C-10	 

     

    

 

(d)            
“Disability” means the Executive’s inability, due to physical or mental incapacity, to perform
the essential functions of his job, with or without reasonable accommodation, for one hundred eighty (180) days out of any three
hundred sixty-five (365)-day period; provided, however, in the event that the Company temporarily replaces the Executive,
or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability
to perform such duties due to a mental or physical incapacity that is, or is reasonably expected to become, a Disability, then
the Executive’s employment shall not be deemed terminated by the Company and the Executive shall not be able to resign with
Good Reason as a result thereof. Any question as to the existence of the Executive’s Disability as to which the Executive
and the Board cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive
and the Company. If the Executive and the Board cannot agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability
made in writing by such physician shall be final and conclusive for all purposes of this Agreement.

 

(e)            
“Good Reason” means the occurrence of any of the following, in each case during the Term without the
Executive’s written consent:

 

(i)             
a reduction in the Executive’s Base Salary;

 

(ii)           
any material breach by the Company of any material provision of this Agreement;

 

(iii)         
the Company’s failure to obtain an agreement from any successor to the Company to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place,
except where such assumption occurs by operation of law; or

 

(iv)          
a material, adverse change in the Executive’s title, authority, duties, or responsibilities (other than temporarily
while the Executive is physically or mentally incapacitated or as required by applicable law).

 

(f)             
“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of August 17, 2017, by and
among the Parent, the Merger Sub named therein, the Company, the Executive, in his capacity as a stockholder of the Company, the
other stockholders of the Company, and the Stockholders’ Representative named therein.

 

(g)            
“Parent” means Appliance Recycling Centers of America, Inc., a Minnesota corporation and the sole stockholder
of the Company.

 

(h)            
“Parent Common Stock” has the meaning set forth in the Merger Agreement.

 

(i)             
“Parent Preferred Shares” has the meaning set forth in the Merger Agreement.

 

(j)             
“Parent Shares” means the Parent Preferred Shares issued to the Executive pursuant to the Merger Agreement
and all shares of Parent Common Stock issuable or issued upon conversion of such Parent Preferred Shares.

 

 

 

    	 	C-11	 

     

    

 

(k)            
“Person” means any individual, corporation (including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or
governmental body.

 

(l)             
“Restricted Activity” means any activity in which the Executive contributes his knowledge, directly or
indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner,
director, stockholder, officer, volunteer, intern, or any other similar capacity to an entity engaged in the same or similar business
as the Company. Restricted Activity also includes activity that may require or inevitably requires disclosure of trade secrets,
proprietary information, or Confidential Information.

 

(m)          
“Restricted Area” means each area of each state and territory of the United States of America.

 

(n)            
“Restriction Period” means the period commencing on the Effective Date of this Agreement and ending on
the date that is the first (1st) anniversary of the Termination Date.

 

(o)            
“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended.

 

(p)            
“Termination Date” means:

 

(i)             
if the Executive’s employment hereunder terminates on account of the Executive’s death, the date of the Executive’s
death;

 

(ii)           
if the Executive’s employment hereunder is terminated on account of the Executive’s Disability, the date that
it is determined that the Executive has a Disability;

 

(iii)         
if the Company terminates the Executive’s employment hereunder for Cause, the date the Notice of Termination is delivered
to the Executive;

 

(iv)          
if the Company terminates the Executive’s employment hereunder without Cause, the date specified in the Notice of
Termination, which shall be no less than 30 days following the date on which the Notice of Termination is delivered to the Executive;

 

(v)            
if the Executive terminates his employment hereunder with or without Good Reason, the date specified in the Executive’s
Notice of Termination, which shall be no less than 30 days following the date on which the Notice of Termination is delivered to
the Company; or

 

(vi)          
if the Executive’s employment hereunder terminates pursuant to Section 2, the date of expiration of the then-applicable
initial or renewal Term.

 

10.           
Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the
laws of Nevada without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this
Agreement shall be brought only in a federal court of the United States of America or a court of the State of Nevada, in each case
located in the City of Las Vegas, County of Clark. The parties hereby irrevocably submit to the exclusive jurisdiction of such
courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

 

 

 

    	 	C-12	 

     

    

 

11.           
Entire Agreement. Unless specifically provided herein and without limiting the Merger Agreement, this Agreement contains
all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and
supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with
respect to such subject matter. The parties mutually agree that this Agreement can be specifically enforced in court and can be
cited as evidence in legal proceedings alleging breach of this Agreement.

 

12.           
Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification
is agreed to in writing and signed by the Executive, the Company, and the Parent. No waiver by either of the parties of any breach
by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed
a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure
of or delay by either of the parties in exercising any right, power, or privilege hereunder operate as a waiver thereof to preclude
any other or further exercise thereof or the exercise of any other such right, power, or privilege.

 

13.           
Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable
only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not
affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties with
any such modification to become a part hereof and treated as though originally set forth in this Agreement. The parties further
agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing
such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Agreement, or by making such other modifications as it deems
warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties
expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them. In
any event, should one or more of the provisions of this Agreement be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other provisions hereof, and if such provision or provisions
are not modified as provided above, this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions
had not been set forth herein.

 

14.           
Captions. Captions and headings of the sections and subsections of this Agreement are intended solely for convenience
and no provision of this Agreement is to be construed by reference to the caption or heading of any section or subsection. When
reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement, unless otherwise indicated.

 

15.           
Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original,
but all of which taken together shall constitute one and the same instrument.

 

16.           
Section 409A.

 

(a)            
General Compliance. This Agreement is intended to comply with Section 409A or an exemption thereunder and shall be
construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided
under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption.
Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation
from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section
409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under
this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A.
Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement
comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest,
or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

 

 

    	 	C-13	 

     

    

 

(b)            
Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to
the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation”
within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section
409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month
anniversary of the Termination Date or, if earlier, on the Executive’s death (the “Specified Employee Payment Date”).
The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date and interest on such
amounts calculated based on the applicable federal rate published by the Internal Revenue Service for the month in which the Executive’s
separation from service occurs shall be paid to the Executive in a lump sum on the Specified Employee Payment Date and thereafter,
any remaining payments shall be paid without delay in accordance with their original schedule.

 

(c)            
Reimbursements. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this
Agreement shall be provided in accordance with the following:

 

(i)             
the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect
the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(ii)           
any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following
the calendar year in which the expense was incurred; and

 

(iii)         
any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for
another benefit.

 

17.           
Successors and Assigns. This Agreement is personal to the Executive and shall not be assigned by the Executive. Any
purported assignment by the Executive shall be null and void from the initial date of the purported assignment. The Company may
assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business or assets of the Company. This Agreement shall inure to the benefit of the Company
and its permitted successors and assigns.

 

18.           
Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered
personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses
set forth below (or such other addresses as specified by the parties by like notice):

 

If to the Company:

 

GeoTraq Inc.

c/o Appliance Recycling
Centers of America, Inc.

175 Jackson Avenue
North

Suite 102

Minneapolis, Minnesota
55343

Attn: Tony Isaac, Chief Executive Officer

 

 

 

    	 	C-14	 

     

    

 

If to the Executive:

 

Gregg Sullivan

309 Highland Mesa Court

Las Vegas, Nevada 89144

 

 

19.           
Withholding. The Company shall have the right to withhold from any amount payable hereunder any federal, state, and
local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.

 

20.           
Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the
parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties
under this Agreement.

 

21.           
Acknowledgement of Full Understanding. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS,
AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS
AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS AGREEMENT.

 

[Signature page follows.]

 

 

 

 

    	 	C-15	 

     

    

 

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

 

	 	GEOTRAQ INC.
	 	 
	 	By:                                            
	 	       Tony Isaac, Secretary
	 	 
	 	 
	 	EXECUTIVE:
	 	 
	 	                                                  
	 	Gregg Sullivan

 

 

Acknowledged and agreed to by the Parent:

 

APPLIANCE RECYCLING CENTERS OF AMERICA, INC.

 

By:                                          

Tony Isaac, Chief Executive Officer

 

 

[Signature Page to Employment Agreement]

 

 

 

    	 	C-16	 

     

    

 

EXHIBIT D

 

Form of Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

PROMISSORY NOTE

 

 

	$___,___.00	August 18, 2017
	 	Las Vegas, Nevada

 

This Promissory Note
(this “Note”) is being delivered pursuant to that certain Agreement and Plan of Merger, dated as of August 18,
2017 (the “Merger Agreement”), by and among Appliance Recycling Centers of America, Inc., a Minnesota corporation
(the “Parent”), Appliance Recycling Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of
the Parent (the “Merger Sub”), GeoTraq Inc., a Nevada corporation (the “Company”), the Stockholders
(as defined in the Merger Agreement), including the Holder (as defined below), and the Stockholders’ Representative (as defined
in the Merger Agreement), pursuant to which the Merger Sub will merge with and into the Company, with the Company surviving the
Merger as a wholly-owned subsidiary of the Parent, on the terms set forth in the Merger Agreement. Terms used but not defined in
this Note shall have the meanings ascribed to them in the Merger Agreement.

 

1.              
Principal and Interest; Maturity; Payments.

 

(a)            
Principal and Interest. The Parent, for value received, hereby promises to pay to the order of ______________ (the
“Holder”) (i) the aggregate principal amount of this Note and (ii) interest on the unpaid principal balance
from time to time outstanding under this Note, from the date hereof until the principal balance is paid in full, at the rate equal
to the annual Short-Term Applicable Federal Rate of 1.29%, as announced by the U.S. Internal Revenue Service in Revenue Ruling
2017-15 for the month of August 2017, compounded annually based on a 365-day year and the actual number of days elapsed.

 

(b)            
Maturity and Payments . The principal amount of this Note, together with accrued and unpaid interest thereon, shall
be due and payable on August 17, 2018. Principal and interest under this Note shall be payable in U.S. dollars to the Holder by
wire transfer in immediately available funds to an account designated by the Holder in writing. If any payment on this Note is
due on a day that is not a Business Day, such payment will be due on the next succeeding Business Day, and such extension of time
will be taken into account in calculating the amount of interest payable under this Note.

 

2.              
Default.

 

(a)            
Events of Default. The occurrence of either of the following shall constitute an “Event of Default”
under this Note: (i) the Parent fails to pay when due any payment under this Note or (ii) the Parent (A) becomes insolvent or is
unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (B) consents
to the appointment of a trustee, receiver, assignee, liquidator, or similar official; or (C) makes a general assignment for the
benefit of its creditors or institutes a proceeding, or has an involuntary proceeding instituted against it, seeking a judgment
of insolvency, bankruptcy, or any other similar relief under any bankruptcy, insolvency, or other similar Law affecting creditors’
rights that is not dismissed within 120 days thereafter.

 

(b)            
Remedies. Upon the occurrence of an Event of Default hereunder and following the expiration of any cure period set
forth in Section 2(a)(iii)(C), the Holder may (i) by written notice to the Parent, declare the entire unpaid principal balance
of this Note immediately due and payable or (ii) exercise any rights and remedies available to him under applicable Law.

 

 

 

    	 	D-1	 

     

    

 

3.              
Miscellaneous.

 

(a)            
Governing Law; Jurisdiction; Jury. This Note has been delivered in and shall be governed by and construed in accordance
with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule. Any legal
suit, action, or proceeding arising out of or based upon this Note may be instituted in the federal courts of the United States
of America or the courts of the State of Nevada in each case located in the City of Las Vegas, County of Clark. Each party hereto
irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. EACH PARTY ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS NOTE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
ARISING OUT OF OR RELATING TO THIS NOTE.

 

(b)            
Electronic Signature. Any signature delivered by electronic means (facsimile or email/pdf, etc.) shall be binding
to the same extent as an original signature page with regard to this Note or any amendments thereof, subject to the terms thereof.

 

(c)            
Time Is of the Essence. Time is of the essence regarding payments due under this Note.

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

 

    	 	D-2	 

     

    

 

IN WITNESS WHEREOF, a duly
authorized representative of the Parent has duly executed and delivered this Note as of the date first written above.

 

 

	 	APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
	 	 
	 	 
	 	By: ____________________________
	 	       Tony Isaac, Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

Signature Page to
Promissory Note (Sullivan)

 

    	 	D-3	 

     

    

 

EXHIBIT E

 

Directors and Officers of the Surviving Corporation

 

Directors:

 

Gregg Sullivan

Tony Isaac

Jon Isaac

 

Officers:

 

	Chief Executive Officer	Gregg Sullivan
	Secretary	Tony Isaac
	Treasurer	Tony IsaacExhibit 10.1

 

Execution Version

EXECUTIVE
EMPLOYMENT AGREEMENT

 

This Employment Agreement
(the “Agreement”), made and entered into this 18th day of August 2017 by and between Akari Therapeutics
PLC, a company organized under the law of England and Wales (the “Company”), and David Horn Solomon (“Executive”).

 

WHEREAS, the
Company has offered and Executive has accepted the position of Chief Executive Officer of Company (the “CEO”) and have
agreed that, subject to the terms herein, Executive’s first day of employment shall be August 28, 2017 (the “Employment
Date”);

 

NOW, THEREFORE,
in consideration of the mutual promises, terms, provisions, and conditions contained herein, the parties agree as follows:

 

		1.	Role and Duties.

 

		(a)	Subject to the terms and conditions of this Agreement, Company shall employ Executive as its CEO
reporting to the Executive Chairman of the Company’s Board of Directors (the “Board”) unless Executive is the
Executive Chairman or the Chairman in which case Executive shall report to the Board’s independent directors.

 

		(b)	Executive shall be appointed as a Class A director to serve until the next annual general meeting
of the Company at which time he shall, upon nomination, stand for election as a Class A director.

 

		(c)	Executive accepts such employment upon the terms and conditions set forth herein, and agrees to
perform to the best of Executive’s ability the duties normally associated with such position and as determined by Company
in its sole discretion.

 

		(d)	Executive’s primary place of employment shall be the Company’s office at 24 West 40th
Street, New York, New York 10018 U.S.A, or such other office in New York, New York as the Company may maintain in the future (the
“Office”). Executive shall perform his services from the Office for no less than 75% of his working time during normal
business hours Monday through Friday, other than business travel in accords with Company needs, vacation time, sick time and other
permitted time off, and except as otherwise determined by the Executive Chairman. During the Transition Period (as defined below),
Executive shall be expected to work Monday morning through Thursday morning or afternoon at the Office, and Friday morning to Friday
afternoon or evening in the Company’s London office (the “Schedule”); provided, however, that the parties acknowledge
and agree that as the result of Executive’s business travel on behalf of the Company, compliance with the Schedule may be
burdensome or unreasonable, and in such event, it will not be a breach of this Agreement for Executive to reasonably deviate from
the Schedule. It is understood that business requirements may require adjustments which will be agreed to by Executive and the
Executive Chairman.

 

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Execution Version

 

		(e)	During his employment, and excluding any periods of disability and vacation and sick leave to which
Executive is entitled, and subject to Section 1(f) below, Executive agrees to devote substantially all of his business attention
and time to the business and affairs of the Company.

 

		(f)	In addition to his normal obligations of reporting, Executive shall keep the Board updated concerning
significant matters on a periodic basis to be agreed with the Board.

 

		(g)	It shall not be a violation of this Agreement for Executive to: (i) serve on civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (iii) with the
prior written approval of the Board serve on the board of directors or other similar governing bodies of one or more companies,
all so long as such activities do not materially interfere with the performance of Executive’s responsibilities as an employee
of the Company in accordance with this Agreement, do not create a conflict of interest with respect to Executive’s position,
or cause reputational harm to the Company. Executive shall further be permitted, on his own personal time, to manage his personal
investments, so long as all such personal investment management activities comply with the Company’s personal trading policies
and, otherwise, with applicable law, and further provided that such investments are made only in securities of:

 

		(i)	any entity which Executive does not actively participate in the management of and which does not
compete with Company, or

 

		(ii)	any publicly held entity so long as Executive’s aggregate direct and indirect interest does
not exceed two percent (2%) of the issued and outstanding securities of any class of securities of such publicly held entity.

 

		(h)	Except as permitted by Section 1(g), during Executive’s employment, Executive shall not engage
in any other non- Company related business activities of any nature whatsoever (including board memberships) without the Company’s
prior written consent.

 

		(i)	Executive shall be subject to the Company’s code of ethics as well as all applicable Company
policies and procedures, and all relevant federal, state and self-regulatory laws, rules and regulations, as may be in effect from
time to time.

 

		2.	Term of Employment.

 

		(a)	Term. The initial term of this Agreement shall commence on the Employment Date and shall
continue until the second anniversary thereof unless terminated earlier pursuant to Section 2(b) (the “Initial Term”).
It is understood and agreed, that the Initial Term shall not be read to modify in any way the payments due under Section 4 in the
event of termination.

 

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Execution Version

 

		(i)	Following the Initial Term, the Agreement shall renew automatically for successive one (1) year
periods (the Initial Term and any annual renewals being referred to as the “Term”), unless either party has given written
notice to the other by the day that is 90 days prior to the expiration of the Term in progress that such party elects not to renew
the Term.

 

		(ii)	In the event of non-renewal by either party, this Agreement and the Executive’s employment
hereunder shall terminate automatically at the close of business on the last day of the then current Term. In the event Executive
continues to perform services at any time thereinafter the Executive’s employment shall strictly be “at will”
and solely subject to the terms and conditions stated in governing Company policy.

 

		(b)	Termination. Notwithstanding anything else contained in this Agreement, Executive’s
employment hereunder shall terminate prior to the end of the Term upon the earliest to occur of the following:

 

		(i)	Death. Immediately upon Executive’s death;

 

		(ii)	Termination by Company.

 

		(A)	If because of Executive’s Disability, written notice by Company to Executive that Executive’s
employment is being terminated as a result of Executive’s Disability, which termination shall be effective on the date of
such notice or such later date as specified in writing by Company;

 

		(B)	If for Cause, written notice by Company to Executive that Executive’s employment is being
terminated for Cause which termination shall be effective on the date of such notice or such later date as specified in writing
by Company; or

 

		(C)	If by Company for reasons other than under Section 2(b)(ii)(A) or Section 2(b)(ii)(B), written
notice by Company to Executive that Executive’s employment is being terminated, which termination shall be effective on the
date of such notice or such later date as specified in writing by Company.

 

		(iii)	Termination by Executive.

 

		(A)	If for Good Reason, written notice by Executive to Company that Executive is terminating Executive’s
employment for Good Reason and that sets forth the factual basis supporting the alleged Good Reason, which termination shall be
effective only as provided in the definition of Good Reason, below.

 

		(B)	If without Good Reason, written notice by Executive to Company that Executive is terminating Executive’s
employment, which termination shall be effective no less than ninety (90) days after the date of such notice.

 

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Execution Version

 

		(iv)	“Disability”.

 

		(A)	For purposes of this Agreement, “Disability” shall mean the Executive’s inability
to substantially perform the essential duties of his job on a fulltime basis for 180 calendar days during any consecutive twelve-month
period or for 90 consecutive days as a result of incapacity due to mental or physical illness.

 

		(B)	If the Company determines in good faith that the Executive’s Disability has occurred during
the Term, it will give the Executive written notice of its intention to terminate his employment. Such termination shall be effective
upon the 30th day following the Executive’s receipt of notice of the Company’s intention to terminate the Executive’s
employment due to Disability (as defined in Section 2(b)(iv)(A); provided that, the Executive has not returned to full-time performance
of his duties within 30 days after receipt of such notice.

 

Notwithstanding anything in this
Section 2(b), Company may terminate Executive’s employment for Cause prior to the effective date of any other termination
contemplated under this Agreement if the Company determines in good faith that Cause exists.

 

		(c)	“Cause”.

 

		(i)	For purposes of this Agreement, “Cause” shall mean any of Executive’s (A) failure
to follow the lawful directions of the Board that are consistent with his position (other than for any such failure resulting from
incapacity due to physical or mental illness); (B) gross negligence or willful misconduct in the performance of his duties to the
Company, in each case, which is materially injurious to the Company; (C) indictment for, conviction of, or pleading nolo contendere
or guilty to, a felony; D) material violation of any statute, rule or regulation (including being the subject of a complaint or
charge by a governmental agency or self-regulatory organization that governs the industry for such violation), which violation
has or would reasonably be expected to have a material adverse impact on the Company’s business, reputation or goodwill;
(E) violation of the Company’s written policies or procedures, including without limitation the code of conduct, code of
ethics, or compliance manual, in each case, which is materially injurious to the Company; (F) embezzlement or misappropriation
or attempt thereof of corporate funds, business opportunities or other acts of theft, fraud, material dishonesty or breach of fiduciary
duty with respect to the Company, or any material violation of any statutory or common law duty of loyalty to the Company; (G)
the issuance of any order, judgment or decree (whether entered by consent or after trial or adjudication) of any court, government
agency or regulatory authority that enjoins, bars or otherwise prevents Executive from performing Executive’s duties hereunder;
or (H) material breach of this Agreement or EXHIBIT C hereto.

 

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Execution Version

 

		(ii)	Termination of Executive’s employment hereunder by the Company for Cause will be effective
upon written notice of the Company delivered to Executive at any time, provided that prior to such termination under Section 2(c)(i)
(A),(B),(D),(E),(F), or (G) , the Company must provide Executive with written notice and an opportunity of not less than thirty
(30) days to cure the events alleged to constitute Cause (and if cured to the Company’s reasonable satisfaction, Cause to
terminate Executive’s employment shall not exist).

 

		(d)	“Good Reason”.

 

		(i)	As used herein, a “Good Reason” shall mean:

 

		(A)	relocation of Executive’s principal business location to a location more than fifty (50)
miles from the Office;

 

		(B)	a material diminution in Executive’s duties, authority or responsibilities; or

 

		(C)	a material reduction in the Executive’s Base Salary;

 

		(D)	the Company’s material breach of this Agreement; provided Executive has given at least thirty
(30) days’ notice to Company of same and Company has not cured such breach within such period;

 

		(E)	the Company’s provision of a notice of non-renewal of the Term.

 

		(ii)	To terminate for “Good Reason”:

 

		(A)	Executive must provide Company with written notice that Executive intends to terminate Executive’s
employment hereunder for one of the grounds set forth in this Section 2(e) within fifteen (15) days of such ground occurring and
setting forth in such notice the factual basis for such ground;

 

		(B)	If such ground is capable of being cured in the Company’s sole discretion, the Company has
failed to cure such ground within a period of thirty (30) days from the date of such written notice of intent to terminate;

 

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Execution Version

 

		(C)	Executive must terminate Executive’s employment within sixty (60) days from the date of such
written notice of intent to terminate.

 

		(iii)	For purposes of clarification, the above-listed conditions shall apply separately to each occurrence
of Good Reason and failure to adhere to such conditions in the event of Good Reason shall not disqualify Executive from asserting
Good Reason for any subsequent occurrence of Good Reason; provided, however, that any single incident can only be used to assert
Good Reason once, the failure or cure of which shall negate its justification for any future allegation of Good Reason; and

 

		(iv)	If notice is given based on Section 2(d)(i)(E), the notice period shall be not less than 90 days
unless otherwise agreed between Executive and Company and Executive shall comply with his obligations during the notice period,
including continuing his fulltime role as CEO if requested by the Company and may resign for Good Reason only at the end of the
then current Term.

 

		(v)	For purposes of this Agreement, “Good Reason” shall be interpreted in a manner, and
limited to the extent necessary, so that it shall not cause adverse tax consequences for either party with respect to Section 409A
(“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”) and any successor statute,
regulation and guidance thereto.

 

		(e)	Notice. During any period of notice under 2(b)(iii) above, or upon notice of nonrenewal,
(either, the “Notice Period”) Executive shall remain subject to the terms of this Agreement, and all Company policies
and procedures. Subject to Section 1(f), in no event may Executive perform services of any kind for any other employer or business
during the Notice Period. During the Notice Period, the Company may, in its sole discretion, remove any duties assigned to Executive,
assign Executive other duties, require Executive to remain away from the Company’s place of business, or waive some or all
of the Notice Period and consider Executive’s resignation effective immediately, or on some date prior to the expiration
of the Notice Period. During the effective duration of the Notice Period, and provided that Executive continues to act in a manner
consistent with his obligations to the Company, Executive will continue to receive his then current base salary and remain eligible
to participate in the benefit plans in which he had participated immediately prior to giving your notice of resignation.

 

		(f)	Resignations. Termination of Executive’s employment for any reason whatsoever shall
constitute Executive’s resignation from the Board, if Executive is serving as a Board Member at the termination date, unless
otherwise agreed to in writing by the Board.

 

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Execution Version

		3.	Compensation.

 

		(a)	Base Salary. Company shall pay Executive a base salary (as in effect from time to time,
the “Base Salary”) at the annual rate of $500,000. The Base Salary shall be payable in substantially equal periodic
installments in accordance with Company’s payroll practices as in effect from time to time. The Board, or an appropriate
committee thereof, shall review the Base Salary on an annual basis.

 

		(b)	Performance Bonus. As additional consideration for the services rendered by Executive, for
each year of the Term for which Executive is employed, Executive shall be eligible to receive an annual cash bonus (the “Annual
Performance Bonus”), with the target amount of such Annual Performance Bonus equal to forty percent (40%) of Executive’s
Base Salary in the year to which the Annual Performance Bonus relates. The actual amount of the Annual Performance Bonus shall
be determined by the Board or an appropriate committee thereof in its sole discretion. Any Annual Performance Bonus for a year
in which Executive is employed for less than the full year, if payable pursuant to the terms herein, shall be prorated. Except
as otherwise provided for in this Agreement, Executive must be employed by Company on the date on which the Annual Performance
Bonus is paid in order to be eligible for, and to be deemed as having earned, such Annual Performance Bonus. Such Annual Performance
Bonus shall be paid to Executive following the end of the fiscal year to which it relates and in a manner consistent with the manner
in which performance bonuses for other senior executives of the Company are paid (and in all events, by April 1 of the calendar
year immediately following the calendar year to which such Annual Performance Bonus relates). The Annual Performance Bonus shall
be paid in cash.

 

		(c)	Signing Bonus. Company shall pay to Executive a one-time cash bonus of $50,000, which shall
be paid to Executive on the first payroll date following the Employment Date.

 

		(d)	Compensatory Equity Grant. Executive shall, as soon as reasonably practicable following
the Employment Date, be granted a stock option for the purchase of 26,000,000 ordinary shares of the Company pursuant to the Akari
Therapeutics, PLC Amended and Restated 2014 Equity Incentive Plan (the “Plan”). Such stock option grant shall have
a grant date and an exercise price determined pursuant to the Company Equity Award Policy (the “Policy”), and shall
vest over a four (4) year period, with 25% of such grant vesting annually from the date of the grant, subject to Executive’s
continued employment with the Company on the applicable vesting date, provided that such option shall vest in full earlier upon
a Change of Control as defined in the Grant Documents. Any option grant shall be evidenced in writing by, and subject to the terms
and conditions of the Plan and the Policy and shall be evidenced by the Company’s standard form of option agreement for grants
in the United States which is attached hereto as Exhibit A (collectively, the “Grant Documents’). In the event of any
dispute between the language hereof and the language of the Grant Documents, the language of the latter shall control.

 

		(e)	Perquisite Payment. As of and from the Employment Date, Company shall pay to Executive the
sum of $1,000 per month for Executive to use for car lease payments, insurance or other items as Executive shall determine in his
sole discretion.

 

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Execution Version

 

		(f)	Paid Time Off. Executive may take up to four (4) weeks of paid time off per full calendar
year of the Term, to be scheduled to minimize disruption to Company’s operations, pursuant to the terms and conditions of
Company’s policy and practices as applied to Company senior executives. Vacation days shall accrue ratably through the calendar
year. Executive’s paid vacation for the 2017 fiscal year and any year thereinafter which is less than a full calendar year
shall be prorated based on Executive’s actual period of service during that year.

 

		(g)	Fringe Benefits. Executive shall be eligible to participate in all benefit/welfare plans
and fringe benefits provided to Company senior executives. Executive understands that, except when prohibited by applicable law,
Company’s benefit plans and fringe benefits may be amended or discontinued by Company from time to time in its sole discretion.

 

		(h)	Reimbursement of Expenses. Company shall reimburse Executive for all ordinary and reasonable
out-of-pocket business expenses incurred by Executive in furtherance of Company’s business in accordance with Company’s
policies with respect thereto as in effect from time to time. Executive must submit any request for reimbursement no later than
ninety (90) days following the date that such business expense is incurred. All reimbursements provided under this Agreement shall
be made or provided in accordance with the requirements of Section 409A of the Code including, where applicable, the requirement
that (i) any reimbursement is for expenses incurred during Executive’s lifetime (or during a shorter period of time specified
in this Agreement); (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible
for reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense shall be made no later than the last
day of the calendar year immediately following the year in which the expense is incurred; and (iv) the right to reimbursement or
in kind benefits is not subject to liquidation or exchange for another benefit.

 

		(i)	Withholding. The Company may withhold from any amounts payable under this Agreement all
federal, state, city or other taxes as the Company reasonably believes it is required to withhold pursuant to any applicable law,
regulation or ruling.

 

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Execution Version

 

		(j)	Relocation.

 

		(A)	CEO will relocate his primary residence to, and shall be resident in, the New York metropolitan
area by August 1, 2018 (the “Relocation Date”). During the period commencing on the Employment Date and ending on the
date on which Executive relocates his residence to the New York metropolitan area but in any event not later than the Relocation
Date (the “Transition Period”), Executive shall submit expense reports for the business travel expenses associated
with the Schedule and shall maintain these expenses within the budget agreed between the Executive and the Executive Chairman.
Any costs associated with travel between London and Copenhagen and between Copenhagen and New York shall be, if in excess of the
cost of travel between London and New York, the sole responsibility of Executive. Company shall use commercially reasonable efforts
to purchase tickets for such travel during the Relocation Period. If any travel expenses between Copenhagen and New York (including,
without limitation, lodging, but excluding incremental travel expenses above those that would be incurred for travel between New
York and London) are deemed by the U.S. Internal Revenue Service or any U.S. state or local taxing authority to be taxable to Executive,
Company shall gross up the amount to compensate Executive for the taxes actually paid (including, without limitation, taxes paid
to another jurisdiction but for which Executive receives credit against his U.S. federal, state or local taxes) (with such reimbursements
to be made promptly and in all events no later than the last day of the taxable year immediately following the taxable year to
which such taxes relate). For the avoidance of doubt, each such gross-up payment paid to Executive shall also be grossed up, so
the result is that Executive retains a net amount of such gross-up payments equal to the taxes actually paid by Executive on such
travel expenses.

 

		(B)	Company shall pay directly the expenses of relocation of Executive from Denmark to the New York
metropolitan area up to a maximum payment of $80,000 (the “Relocation Amount”). If as of December 10, 2018, Executive
reasonably anticipates that there are relocation expenses still to be incurred between then and the end of 2019, Company shall
pay to Executive the balance of the Relocation Amount remaining and Executive shall then pay all remaining relocation expenses
directly. If the relocation expenses incurred and paid by Executive between December 10, 2018 and the end of 2019 are less than
such payment, Executive shall reimburse the difference to Company. Company shall with respect to any portion of the Relocation
Amount that is taxable to Executive, gross up that amount to offset the taxes to be paid by Executive based on the tax rates Executive
would pay in the United States (sate, local and federal) if that was the only jurisdiction in which he was subject to taxes (with
such reimbursements to be made promptly and in all events no later than the last day of the taxable year immediately following
the taxable year to which such taxes relate). For the avoidance of doubt, each such gross-up payment paid to Executive shall also
be grossed up, so the result is that Executive retains a net amount of such gross-up payments equal to the taxes actually paid
by Executive on the Relocation Amount.

 

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Execution Version

 

		(C)	Visa Assistance. Company shall provide legal assistance to Executive in securing visas for
his spouse and child prior to the Relocation Date.

 

		(D)	Company Credit/Debit Card. Company will use commercially reasonable efforts to obtain a
Company credit or debit card for Executive within ninety (90) days of the Employment Date.

 

		(k)	Indemnification. Executive shall be entitled to indemnification with respect to Executive’s
services provided hereunder to the extent provided by and pursuant to English law, the terms and conditions of Company’s
articles of incorporation and, if provided to the Executive, Company’s standard indemnification agreement for officers as
executed by Company and Executive.

 

		4.	Payments upon Termination.

 

		(a)	“Accrued Obligations” means: (i) the portion of Executive’s Base Salary
that has accrued, prior to any termination of Executive’s employment with Company and has not yet been paid; (ii) the amount
of any expenses properly incurred by Executive on behalf of Company prior to any such termination and not yet reimbursed (including,
without limitation, the tax gross-ups under Section 3(j)); (iii) all vested benefits under the Company’s and its affiliates
U.S. employee benefit plans; and (iv) if the Company provides payment for vacation days accrued and unused under its policies,
any such accrued and unused vacation days. Executive’s entitlement to any other compensation or benefit under any plan of
Company shall be governed by and determined in accordance with the terms of such plans, except as otherwise specified in this Agreement.

 

		(b)	Termination by Company for Cause, by Executive without Good Reason, Nonrenewal by the Executive,
or as a Result of Executive’s Disability or Death. If Executive’s employment hereunder is terminated by Company
for Cause, by Executive without Good Reason, as a result of Executive’s Disability or death, or if the Term is non-renewed
at Executive’s election (regardless if the Company non-renews as well) then Company shall pay the Accrued Obligations to
Executive promptly following the effective date of such termination and shall have no further obligations to Executive; provided,
however that if such termination is for death or Disability, then to the extent the Annual Performance Bonus for the fiscal year
immediately preceding the fiscal year in which such termination occurred is not paid as of the date of such termination, then the
Company shall pay Executive or his estate (as applicable) such earned but unpaid Annual Performance Bonus at the time it would
have been paid had no such termination occurred.

 

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		(c)	Termination by Company without Cause, by Executive for Good Reason. In the event that: Executive’s
employment is terminated by action of the Company other than for Cause; or Executive terminates Executive’s employment for
Good Reason, then, in addition to the Accrued Obligations, Executive shall receive the following, subject to the terms and conditions
described in Section 4(g) (including Executive’s execution of a release of claims):

 

		(i)	Severance Payments.

 

		(A)	The sum of (a) one times the Base Salary at the rate in effect as of the termination date plus
(b) the Executive’s then current bonus target (such calculation, the “Severance”). The payment of the Severance
shall be made in twelve equal monthly installments during the one year period following the termination date, with the first payment
commencing on the first payroll date following the date on which the release of claims required by Section 4(g) becomes effective
and non-revocable, but not after sixty (60) days following the effective date of termination from employment; provided, that if
the 60th day falls in the calendar year following the year during which the termination or separation from service occurred, then
if required by Code Section 409A the payments will commence in such subsequent calendar year; provided, further, that the first
such installment of any amount payable hereunder shall include an amount equal to the payments that would have been paid if the
payments had commenced on the termination date.

 

		(B)	Benefits Reimbursement. Provided Executive timely elects the continuation of medical, dental,
vision and/or health benefits for Executive and any covered dependents and timely notifies the Company of same, the Company shall
pay Executive a monthly payment for each month Executive so elects coverage in an amount equal to the employer portion of such
coverage (the “Healthcare Subsidy”) for the lesser of (a) 12 months from the date of termination and (b) Executive’s
employment by any entity which provides medical and health benefits which Executive is eligible to receive. The Healthcare Subsidy
shall be paid, less required withholdings, in the same manner and the same time as the payments under Section 4(c)(A) are paid.

 

		(C)	Payment of the above described severance payments and benefits are expressly conditioned on Executive’s
execution without revocation of the release of claims under Section 4(g) and return of Company property under Section 6 and continued
compliance with any post-employment restriction applicable to Executive, including, without limitation, the Executive’s obligations
in the Restrictive Covenant Agreement.

 

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		(D)	In the event that Executive is eligible for the severance payments and benefits under this Section
4(c), Executive shall not be eligible for and shall not receive any of the severance payments and benefits as provided in Section
4(d) or pursuant to any other severance policy, plan, or program of the Company.

 

		(d)	Termination by Nonrenewal of the Company. In the event that the Executive’s employment
ends by nonrenewal of the Term by the Company, and further provided that the Executive has not elected non-renewal, then, in addition
to the Accrued Obligations, Executive shall receive the same amounts, pursuant to same terms and conditions, as those provided
in Section 4(c) or 4(e), as applicable; provided, however, that the Annual Performance Bonus component of the Severance shall be
prorated based on the date of termination. If, however, non-renewal occurs within one year following a change in control, then
the bonus component shall not be prorated.

 

		(e)	Termination by Company without Cause or by Executive for Good Reason Following a Change of Control.
In the event that within a period of one (1) year following a Change of Control, either Executive’s employment is terminated
other than for Cause, or Executive terminates Executive’s employment for Good Reason, then, in addition to the Accrued Obligations,
Executive shall receive the following, subject to the terms and conditions described in Section 4(g) (including Executive’s
execution of a release of claims):

 

		(i)	Severance Payment. An amount equal to one and a half times the Severance. Any amount payable
hereunder shall be paid over the 18-month period immediately following the termination date in accordance with Company’s
normal payroll practices (provided such payments shall be made at least monthly), commencing on the first payroll date following
the date on which the release of claims required by Section 4(g) becomes effective and non-revocable, but not after sixty (60)
days following the effective date of termination from employment; provided, that if the 60th day falls in the calendar year following
the year during which the termination or separation from service occurred, then if required by Code Section 409A the payments will
commence in such subsequent calendar year; provided, further, that the first such installment of any amount payable hereunder shall
include an amount equal to the payments that would have been paid if the payments had commenced on the termination date.

 

		(ii)	Benefit Payments. The Company shall pay to Executive the Healthcare Subsidy for the lesser
of (a) 18 months from the date of termination and (b) Executive’s employment by any entity which provides medical and health
benefits which Executive is eligible to receive. The Healthcare Subsidy shall be paid, less required withholdings, in the same
manner and the same time as the payments under Section 4(d)(A) are paid.

 

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		(iii)	Payment of the above described severance payments and benefits are expressly conditioned on Executive’s
execution without revocation of the release of claims under Section 4(g) and return of Company property under Section 6 and continued
compliance with Executive’s obligations in the Restrictive Covenant Agreement.

 

		(iv)	In the event that Executive is eligible for the severance payments and benefits under this Section
4(e), Executive shall not be eligible for and shall not receive any of the severance payments and benefits as provided in Section
4(c) or (d) or pursuant to any other severance policy, plan, or program of the Company.

 

		(f)	“Change in Control” means: (i) the consummation of (A) any consolidation or merger
of the Company in which the Company is not the continuing or surviving corporation, provided that the consolidation or merger is
not with a corporation that was a direct or indirect wholly-owned subsidiary of the Company or the parent of the Company immediately
before the consolidation or merger, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; (ii) the approval by the shareholders of the Company
of a plan for the complete liquidation or dissolution of the Company; (iii) any person (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the beneficial owner (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or indirectly, of 51% or more of the voting control of the Company’s
then outstanding common stock, provided that such person shall not be a wholly-owned subsidiary of the Company immediately before
it becomes such 51% beneficial owner of voting control; or (iv) individuals who constitute the Incumbent Board cease for any reason
to constitute at least a majority of the Company’s Board of Directors (for this purposes “Incumbent Board” means
at any time those persons who are then members of the Board of Directors of the Company and who either (A) are members of the Company’s
Board of Directors on the date hereof, or (B) have been elected or have been nominated for election by the Company’s stockholders,
by the affirmative vote of at least two-thirds of the directors comprising the Incumbent Board at the time of such election or
nomination (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee
for director without objection to such nomination)). Provided, however, that if the Company’s valuation at the time of the
Change of Control is less than US$150,000,000, as calculated including any prior distribution of funds, dividends or sales proceeds,
then this Section 4(f) shall not apply but Executive instead shall be entitled to severance under Section 4(c), if applicable.

 

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		(g)	Execution of Release of Claims. Company shall not be obligated to pay Executive any of the
severance payments or benefits described in this Section 4 (other than the Accrued Obligations) unless and until Executive has
executed (without revocation) a timely release of claims substantially in the form attached hereto as Exhibit B which must be effective
and irrevocable prior to the 60th day following Executive’s separation from service (the “Review Period”), and
which shall include a general release of claims against Company and its affiliated entities and each of their officers, directors,
employees and others associated with Company and its affiliated entities. If Executive fails or refuses to return such agreement,
or revokes the agreement, within the Review Period, Executive’s Severance shall be forfeited.

 

		(h)	No Other Payments or Benefits Owing. Except as otherwise provided in this Agreement, the
payments and benefits set forth in this Section 4 shall be the sole amounts owing to Executive upon termination of Executive’s
employment for the reasons set forth in Section 4 and Executive shall not be eligible for any other payments or other forms of
compensation or benefits. The payments and benefits set forth in Section 4 shall be the sole remedy, if any, available to Executive
in the event that Executive brings any claim against Company relating to the termination of Executive’s employment under
this Agreement.

 

		5.	Restrictive Covenants.

 

As a condition of his employment,
Executive will execute the Company’s Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement
appended hereto as Exhibit C (the “Restrictive Covenant Agreement”). The Executive’s failure to execute the Restrictive
Covenant Agreement, which terms are incorporated herein, concurrently with this Employment Agreement shall render this Agreement
void ab initio.

 

		6.	Exceptions. Anything herein (including the
Restrictive Covenant Agreement) to the contrary notwithstanding, Executive shall not be restricted from: (i) disclosing information
that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in
the event such disclosure is required by law, Executive shall provide the Company with prompt notice of such requirement so that
the Company may seek an appropriate protective order prior to any such required disclosure by Executive; or (ii) reporting possible
violations of federal, state, or local law or regulation to any governmental agency or entity, or from making other disclosures
that are protected under the whistleblower provisions of federal, state, or local law or regulation, and Executive shall not need
the prior authorization of the Company to make any such reports or disclosures and shall not be required to notify the Company
that Executive has made such reports or disclosures. Notwithstanding anything in the foregoing to the contrary, in accordance
with the Defend Trade Secrets Act of 2016, Executive will not be criminally or civilly liable for disclosing a trade secret if
it was disclosed: (1) to any government official or attorney in confidence directly or indirectly for the sole purpose of reporting
or investigating a suspected violation of law; (2) in a complaint or other document filed in a lawsuit or other proceeding if
filed under seal; or (3) to an attorney or used in a court proceeding in a retaliation lawsuit if any document containing a trade
secret is filed under seal and is not disclosed except pursuant to court order.

 

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		7.	Code Sections 409A and 280G.

 

		(a)	409A. In the event that any payments or benefits set forth in this Agreement constitute
“non-qualified deferred compensation” subject to Section 409A of the Code, then the following conditions apply to such
payments or benefits:

 

		(i)	The intent of the parties is that payments and benefits under this Agreement comply with Section
409A of the Code and the regulations and guidance promulgated thereunder (collectively, “Code Section 409A”) and, accordingly,
to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. To the extent that any provision
hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum
extent reasonable possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable
provision without violating the provisions of Code Section 409A. In no event whatsoever shall the Company be liable for any additional
tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section
409A.

 

		(ii)	A termination of employment shall not be deemed to have occurred for purposes of any provision
of this Agreement providing for the payment of any amount or benefit upon or following a termination of employment unless such
termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such
provision of this Agreement, references to a “termination,” “termination of employment,” or like terms
shall mean “separation from service.” Notwithstanding anything to the contrary in this Agreement, if the Executive
is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section
409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered “nonqualified deferred
compensation” under Code Section 409A payable on account of a “separation from service,” such payment or benefit
shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from
the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death, to the
extent required under Code Section 409A. Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant
to this Section 7(a)(ii) (whether they would have otherwise been payable in a single sum or in installments in the absence of such
delay) shall be paid or reimbursed to the Executive in a lump sum, and all remaining payments and benefits due under this Agreement
shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

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		(iii)	To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified
deferred compensation” for purposes of Code Section 409A, (A) all expenses or other reimbursements hereunder shall be made
on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive,
(B) any right to reimbursement or in-kind benefits shall not be subject to liquidations or exchange for another benefit, and (C)
no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect
the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

		(iv)	For purposes of Code Section 409A, the Executive’s right to receive installment payments
pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment
under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified
period shall be within the sole discretion of the Company.

 

		(v)	Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment
or benefit under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section
409A be subject to offset by any other amounts unless otherwise permitted by Code Section 409A.

 

		(b)	280G. If any payment or benefit Executive would receive under this Agreement, when combined
with any other payment or benefit Executive receives pursuant to a Change of Control (for purposes of this section, a “Payment”)
would: (i) constitute a “parachute payment” within the meaning of Section 280G of the Code; and (ii) but for this sentence,
be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either:
(A) the full amount of such Payment; or (B) such lesser amount (with cash payments being reduced before stock option compensation)
as would result in no portion of the Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account
the applicable federal, state and local employment taxes, income taxes, and the Excise Tax, results in Executive’s receipt,
on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject
to the Excise Tax. In the event of a reduction in benefits hereunder, the reduction shall occur in the following order: (i) any
cash severance (forfeited from latest to earliest scheduled payments), (ii) any other cash amounts payable to the Executive (forfeited
from latest to earliest scheduled payments), (iii) non-cash benefits (forfeited from latest to earliest scheduled benefits) and
(iv) acceleration of vesting of any equity awards included at full value and then acceleration of vesting of equity awards included
at accelerated value (forfeited from the highest to lowest value under Code Section 280G).

 

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		8.	Work Authorization: To comply with the Immigration Reform and Control Act of 1986,
Executive understands and agrees to provide proof of identity and employment eligibility as required by applicable law.

 

		9.	Executive Representations. Executive warrants and agrees that: (a), Executive is
not bound by any notice or garden leave periods, or non-competition, non-solicitation or other similar agreements (collectively,
“Other Agreements”) which would prevent or restrict the performance of his duties hereunder after the Employment Date;
(b) by entering into and performing his duties and responsibilities under this Agreement, Executive will not be in breach of any
Other Agreements or cause the Company to incur any liability of any kind with respect to any Other Agreements; and that Executive
shall indemnify and hold harmless the Company with respect to any liability arising from the breach of any Other Agreements; (c)
to the best of Executive’s knowledge, Executive has not requested, solicited or encouraged, and Executive will not request,
solicit or encourage, any employees of any previous employers to join the Company if such would be in violation of any contractual
commitment or common law duties of Executive or any such employee with respect to any previous employers; (d) Executive has not
brought to or used and will not bring to or use at the Company any documents or files, whether in hard copy or electronic form,
containing confidential information which were created, collected or received by Executive in connection with any previous employment
except for (ia) documents and files relating solely to the terms and conditions of his prior employment including compensation
and benefits, (ii) materials that Executive created, collected or received prior to his previous employment, or (iii) materials
that were or are publicly available or otherwise known generally in the investment management industry through no fault of Executive’s;
(e) that he has the full, complete and entire right and authority to enter into this Agreement, that he has no agreement, duty,
commitment or responsibility of any kind or nature whatsoever with any person, corporation, partnership, firm, company, joint venture
or other entity that would conflict in any manner whatsoever with any of his duties, obligations or responsibilities to the Company
pursuant to this Agreement; (f) that as of the date hereof, to his knowledge, Executive is not under investigation for any violation
of his current employer’s policies or procedures; and (g) is not, and has not in the past five years been, the subject of
a formal complaint, or charge by a governmental agency or self-regulatory organization that governs the industry for such violation.
The Executive further understands and agrees that any violation of this paragraph or of his ability to begin his employment on
the Employment Date or of his ability to relocate to and be resident in the New York metropolitan area by the Relocation Date shall
enable the Company to declare this Agreement void ab initio and of no further force of effect, without any further compensation
payable thereunder.

 

		10.	Intentionally Omitted.

 

		11.	General.

 

		(a)	Notices. Except as otherwise specifically provided
herein, any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed
given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of
receipt; (iii) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified
or registered mail, return receipt requested, upon verification of receipt.

 

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Notices to Executive shall be sent to:

 

Executive’s last known
residential address in Company’s records or such other address as Executive may specify in writing, with a copy sent by email
to Executive at: davidhornsolomon@gmail.com (the failure of sending a copy by email will
not constitute failure to provide notice under this Agreement)

 

Notices to Company shall be sent to:

 

Akari Therapeutics, Plc

24 West 40th Street, 8th Floor

New York, NY 10018

Attention: General Counsel

 

or to such other Company representative
as Company may specify in writing.

 

		(b)	Modifications and Amendments. The terms and provisions of this Agreement may be modified
or amended only by written agreement executed by the parties hereto.

 

		(c)	Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent
for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions.
No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions
of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for
the purpose for which it was given, and shall not constitute a continuing waiver or consent.

 

		(d)	Assignment. Company may assign its rights and obligations hereunder to any entity that succeeds
to all of Company’s business. Executive may not assign Executive’s rights and obligations under this Agreement without
the prior written consent of Company.

 

		(e)	Governing Law/Dispute Resolution. Except as set forth in Section 3(k), this Agreement and
the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the law of the State
of New York, without giving effect to the conflict of law principles thereof. Any legal action or proceeding with respect to this
Agreement shall be brought in the courts of the Supreme Court of the State of New York, New York County, or of the United States
of America for the Southern District of New York. By execution and delivery of this Agreement, each of the parties hereto accepts
for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts with
respect to any legal action or proceeding with respect to this Agreement.

 

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		(f)	Jury Waiver. ANY, ACTION, DEMAND, CLAIM, OR COUNTERCLAIM ARISING UNDER OR RELATING TO THIS
AGREEMENT SHALL BE RESOLVED BY A JUDGE ALONE AND EACH OF COMPANY AND EXECUTIVE WAIVES ANY RIGHT TO A JURY TRIAL THEREOF.

 

		(g)	Headings and Captions. The headings and captions of the various subdivisions of this Agreement
are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions
hereof.

 

		(h)	Entire Agreement. This Agreement, together with the other agreements specifically referenced
herein, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.

 

		(i)	Severability. In the event that any provision or term of this Agreement is held to be invalid,
prohibited or unenforceable for any reason, such provision or term shall be deemed severed from this Agreement, without invalidating
the remaining provisions, which shall remain in full force and effect.

 

		(j)	Counterparts. This Agreement may be executed in two or more counterparts, and by different
parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. For all purposes a signature by fax shall be treated as an original.

 

		(k)	Survival. The provisions of Sections 3(i), 4, 5, 6, 7 and 11 shall survive the termination
or expiration of this Agreement and Executive’s employment with the Company in accordance with their terms.

 

		(l)	Legal Fees. As reimbursement for Executive’s legal fees incurred in connection with
the negotiation and execution of this Agreement, the Company shall pay directly to Dechert LLP up to $8,000_upon receipt of Dechert
LLP’s invoice for such services.

 

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

 

	David Horn Solomon	 	AKARI THERAPEUTICS, PLC
	 	 	 
	/s/ David Solomon	 	By:	/s/ Ray Prudo
	Signature	 	 	Name:	Ray Prudo
	 	 	 	Title:	Executive Chairman
	Address:	Hornbaekgaardsvej 2,	 	 	 	 
	 	 	 	 	 	 
	 	Hornbaek 3100, Denmark	 	 	 	 

 

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