Document:

Exhibit 10.13

 

 

 

 

 

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

 

by and among

 

SIMULATIONS PLUS, INC.,

 

DILISYM SERVICES, INC.,

 

THE SHAREHOLDERS’ REPRESENTATIVE

 

and

 

THE SHAREHOLDERS OF DILISYM SERVICES, INC.

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

 

	TABLE OF CONTENTS
	 	 	Page
	ARTICLE I PURCHASE AND SALE OF THE PURCHASED SHARES	1
	Section 1.1	Transaction	1
	Section 1.2	Purchase Price	2
	Section 1.3	Payment Procedures	2
	Section 1.4	Funds Flow Memorandum	3
	Section 1.5	Stock Options	3
	Section 1.6	Holdback	3
	Section 1.7	Further Assurances	3
	Section 1.8	Shareholders’ Representative	4
	Section 1.9	Working Capital Adjustment	6
	Section 1.10	Repayment of Company Indebtedness and Transaction Expenses	8
	Section 1.11	Earn-Out	9
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS	12
	Section 2.1	Organization and Qualification; Subsidiaries	12
	Section 2.2	Certificate of Incorporation and Bylaws	12
	Section 2.3	Capitalization	12
	Section 2.4	Authority Relative to this Agreement	13
	Section 2.5	Governmental Authorization and Consents	13
	Section 2.6	Non-contravention	14
	Section 2.7	Title to Properties; Absence of Liens; Sufficiency of Assets	14
	Section 2.8	Financial Statements; Related Information	14
	Section 2.9	Absence of Certain Changes	15
	Section 2.10	Related Party Transactions	17
	Section 2.11	Material Contracts	17
	Section 2.12	No Undisclosed Liabilities	19
	Section 2.13	Litigation	20
	Section 2.14	Compliance with Laws and Court Orders	20
	Section 2.15	Licenses and Permits	20
	Section 2.16	Governmental Contracts	20
	Section 2.17	Proprietary Rights	20
	Section 2.18	Taxes	23
	Section 2.19	Real Property	24
	Section 2.20	Environmental Matters	25
	Section 2.21	Insurance Coverage	26
	Section 2.22	Employee Benefit Plans	27
	Section 2.23	Employees	28
	Section 2.24	Labor Matters	28
	Section 2.25	Books and Records	29
	Section 2.26	Customers; Suppliers	29
	Section 2.27	Customer or Third-Party Approval	29

 

 

 

    	 	i	 

     

    

 

	Section 2.28	Absence of Unlawful Payments	30
	Section 2.29	International Trade	30
	Section 2.30	Service or Product Liability	30
	Section 2.31	Finders’ Fees	30
	Section 2.32	Bank Accounts and Powers of Attorney	30
	Section 2.33	Consortium Agreement	31
	Section 2.34	Full Disclosure	31
	ARTICLE IIA. REPRESENTATIONS AND WARRANTIES OF COMPANY SHAREHOLDERS	32
	Section 2A.1.	Valid Title	32
	Section 2A.2.	Authorization; Binding Effect	32
	Section 2A.3.	Governmental Authorization and Consents	32
	Section 2A.4.	Non-contravention	32
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER	33
	Section 3.1	Corporate Existence and Power	33
	Section 3.2	Corporate Authorization; Binding Effect	33
	Section 3.3	Governmental Authorization	33
	Section 3.4	Non-contravention	33
	Section 3.5	Litigation	33
	ARTICLE IV CONDUCT OF BUSINESS	34
	Section 4.1	Conduct of Business by the Company Pending the Transaction	34
	Section 4.2	Filing of Tax Returns	36
	ARTICLE V COVENANTS 	39
	Section 5.1	Access to Information; Confidentiality	39
	Section 5.2	Consents; Approvals	39
	Section 5.3	Litigation and Investigations Support	39
	Section 5.4	No Solicitation of Competing Transaction	40
	Section 5.5	Notification of Certain Matters	40
	Section 5.6	Further Action	41
	Section 5.7	Preliminary Closing Balance Sheet; Interim Balance Sheet	41
	Section 5.8	Updating of Company Disclosure Schedule	41
	ARTICLE VI CONDITIONS TO THE CLOSING	42
	Section 6.1	Conditions to Obligation of Each Party to Effect the Transaction	42
	Section 6.2	Additional Conditions to Obligation of Purchaser to Effect the Transaction	42
	Section 6.3	Additional Conditions to Obligation of the Company and the Shareholders to Effect the Transaction	45
	ARTICLE VII TERMINATION	46
	Section 7.1	Termination	46
	Section 7.2	Effect of Termination	46
	ARTICLE VIII INDEMNIFICATION	47
	Section 8.1	Indemnification by Shareholders	47
	Section 8.2	No Contribution; Shareholders’ Representative	49
	Section 8.3	Indemnification by Purchaser	49

 

 

 

    	 	ii	 

     

    

 

	Section 8.4	Survival	49
	Section 8.5	Certain Limitations	50
	Section 8.6	Notice of Indemnification Claims; Notice of Claims	51
	Section 8.7	Determination of Losses	53
	Section 8.8	Right of Set-Off	53
	ARTICLE IX MISCELLANEOUS PROVISIONS	54
	Section 9.1	Amendment and Modifications	54
	Section 9.2	Waiver of Compliance	54
	Section 9.3	Expenses	54
	Section 9.4	Waiver	54
	Section 9.5	Dispute Resolution	55
	Section 9.6	Notices	55
	Section 9.7	Assignment	56
	Section 9.8	Publicity	56
	Section 9.9	Governing Law	57
	Section 9.10	Counterparts	57
	Section 9.11	Headings	57
	Section 9.12	Incorporation of NDA	57
	Section 9.13	Entire Agreement	57
	Section 9.14	Assignments, Successors, and No Third-Party Rights	57
	Section 9.15	Further Assurances	58
	Section 9.16	Representation by Counsel; Interpretation	58
	Section 9.17	Certain Definitions	58
	Section 9.18	Rules of Construction	64

 

 

Company Disclosure Schedule

Schedule 1.11 – Earn-Out Schedule

Exhibit A – Form of Non-Competition Agreement

Exhibit B – Form of General Release
of Claims

 

 

 

 

    	 	iii	 

     

    

 

 

 

DEFINED TERMS

 

	Acquisition Proposal,
58

Adjusted EBT,
58

Adjustment Amount,
8

Affiliate, 58

Agreement, 1

Articles, 64

Assuming Party,
52

Audited Financial
Statements, 58

Basket, 50

Board, 1

Business Day,
59

Cap, 50

Cash Consideration,
2

Claims, 47

Closing, 1

Closing Balance
Sheet, 6

Closing Date,
2

Closing Statements,
6

COBRA, 59

Code, 59

Company, 26

Company Adjustment
Amount, 8

Company Common
Stock, 59

Company Data Site,
59

Company Disclosure
Schedule, 12

Company Indemnitees,
49

Company IP Rights,
20

Company Policies,
26

Company’s
Knowledge, 61

Contemplated Transactions,
59

Control, 59

Dispute, 55

Dispute Notice,
55

Earn-Out Calculation,
9

Earn-Out Calculation
Statement, 9

Earn-Out Payment,
9

Earn-Out Years,
59

Employee Plans,
27

Environmental
Laws, 26

Environmental
Permits, 26

ERISA, 27

ERISA Affiliate,
27

	 	Extended Representations,
49

FCPA, 30

Financial Statements,
14

Flow of Funds
Memorandum, 2

Fundamental Representations,
49

GAAP, 59

Government Agency,
60

Government Contract,
60

Government Contract
Proposal, 60

Governmental Authority,
60

Governmental Authorization,
60

Holdback Amount,
2

Holdback Release
Date, 60

Indebtedness,
60

Indemnification
Notice, 51

Indemnification
Objection Notice, 52

Indemnitees, 49

Independent Accountant,
7

Independent Firm,
61

Intellectual Property
Rights, 61

Interim Balance
Sheet, 61

Interim Balance
Sheet Date, 61

Interim Financials
Certificate, 41

JAMS, 61

Knowledge, 61

Law or Laws, 61

Licensed Intellectual
Property, 61

Liens, 61

Losses, 62

Majority Shareholders,
62

Material Adverse
Effect, 62

Material Contract,
17

Materials of Environmental
Concern, 26

NDA, 62

Net Working Capital,
62

Non-Competition
Agreement, 43

Off-the-Shelf
Software, 62

Order, 62

Other Securities,
44

Owned Intellectual
Property, 21

Ownership Rights,
48

Payoff Letters, 8

 

 

 

    	 	4	 

     

    

 

	Payroll Company,
28

Permits, 20

Permitted Indemnification
Claims, 52

Person, 62

Preliminary Cash
Consideration, 2

Preliminary Closing
Balance Sheet, 6

Preliminary Working
Capital Statement, 6

Pro Rata Portion,
63

Purchase Price,
2

Purchased Shares,
1

Purchaser, 1

Purchaser Adjustment
Amount, 8

Purchaser Deficit,
8

Purchaser Indemnitee,
47

Real Property
Leases, 17

Related Parties,
17

Related Party
Agreements, 17

Sections, 64

Securities Act,
63

Shareholder Excess,
8

	 	Shareholder Release,
45

Shareholders,
1

Shareholders’
Representative, 4

Stock, 13

Stock Options,
13

Subsidiary, 63

Target Net Working
Capital, 63

Tax, 63

Tax Return, 63

Tax Sharing Agreement,
63

Taxes, 63

Terminating Breach,
46

Termination Liability,
64

Transaction, 1

Transaction Documents,
64

Transaction Expense
Schedule, 2

Transaction Expenses,
64

WARN, 64

Working Capital Statement, 6

 

 

 

 

 

 

 

 

 

 

    	 	v	 

     

    

 

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE
AGREEMENT (this “Agreement”), dated as of May 1, 2017, is entered into by and among DILISYM SERVICES, INC.,
a North Carolina corporation (the “Company”), SIMULATIONS PLUS, INC., a California corporation (“Purchaser”),
the shareholders of the Company listed on the signature pages hereto (the “Shareholders”), and Brett A. Howell
(“Shareholders’ Representative”).

 

WHEREAS, the Company,
the Shareholders and Purchaser have determined that it is advisable and in the best interest of their respective shareholders for
Purchaser to acquire all of the Company’s outstanding capital stock (the “Purchased Shares”), upon the
terms and subject to the conditions set forth in this Agreement (the “Transaction”);

 

WHEREAS, the Board
of Directors of the Company (the “Board”) has approved this Agreement and the Contemplated Transactions and
declared the advisability and resolved to recommend approval of the Transaction and adoption of this Agreement by the Shareholders;

 

WHEREAS, the Company,
Purchaser, the Shareholders and the Shareholders’ Representative desire to make certain representations, warranties, covenants
and agreements in connection with this Agreement;

 

WHEREAS, in connection
with this Agreement, it is contemplated that, subject to the terms and conditions set forth in this Agreement, on the date hereof
or at the Closing, the Shareholders, or the Shareholders’ Representative on their behalf, and the Purchaser will enter into
the Transaction Documents; and

 

NOW, THEREFORE, subject
to and in consideration of the foregoing and the mutual covenants and agreements, terms and conditions herein contained, and intending
to be legally bound hereby, the Company, Purchaser, the Shareholders and the Shareholders’ Representative hereby agree as
follows:

 

Article
I

PURCHASE AND SALE OF THE PURCHASED SHARES

 

Section
1.1Transaction.

 

(a)       Purchase
and Sale. On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Shareholders shall sell,
convey, assign, transfer and deliver to the Purchaser, and the Purchaser shall purchase, acquire and accept from the Shareholders,
all of the Shareholders’ right, title and interest in and to the Purchased Shares, free and clear of all Liens.

 

(b)       Closing.
Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set forth in Article VI, the closing of the Transaction
(“Closing”) will take place as promptly as practicable (and in any event within five (5) Business Days) after
satisfaction or waiver of the conditions set forth in Article VI, at the principal offices of Procopio, Cory, Hargreaves &
Savitch LLP, 12544 High Bluff Drive, Suite 300, San Diego, California 92130, unless another date and time or place is agreed to
in writing by the parties hereto (the “Closing Date”).

 

 

 

    	 	1	 

     

    

 

Section
1.2Purchase Price.

 

(a)       Subject
to the terms and conditions of this Agreement and to the adjustments set forth herein, the aggregate Transaction consideration
(the “Purchase Price”) shall consist of:

 

(i)       cash
in amount equal to the sum of (A) Five Million Dollars ($5,000,000), minus (x) the Transaction Expenses set forth
on the Transaction Expense Schedule, minus (y) the amount of Indebtedness of the Company, (collectively, the “Preliminary
Cash Consideration”), minus (B) the Purchaser Adjustment Amount, if any, plus (C) the Company Adjustment
Amount, if any, minus (iv) One Million Dollars ($1,000,000) (the “Holdback Amount”), subject to
adjustment as provided herein (collectively, the “Cash Consideration”); and

 

(ii)       the
Earn-Out Consideration.

 

(b)       Not
less than two (2) Business Days prior to the Closing Date, the Company shall deliver to Purchaser a schedule (the “Transaction
Expense Schedule”) of the Company signed by the President of the Company and the Shareholders’ Representative,
which schedule shall set forth the Transaction Expenses to be paid at Closing by Purchaser on behalf of the Company as provided
herein, along with wire transfer instructions for any such payments. At Closing Purchaser shall pay, on behalf of the Company,
to the parties identified in the Transaction Expense Schedule the amounts identified in the Transaction Expense Schedule (which
amounts shall reduce the Preliminary Cash Consideration payable to Shareholders at Closing).

 

Section
1.3Payment Procedures. The Purchase Price which shall be paid by Purchaser on the Closing Date as follows
in the form of wire transfers to the accounts set forth in a flow of funds memorandum to be provided by the Shareholders’
Representative to the Purchaser at the Closing, in a form satisfactory to the Purchaser (the “Flow of Funds Memorandum”):

 

(a)       the
Holdback Amount shall be withheld by the Purchaser as security for certain potential adjustments to the Purchase Price pursuant
to Section 1.9 below and for the indemnification obligations set forth in Article VIII;

 

(b)       an
amount equal to the Indebtedness, on behalf of the Company, as directed by and in accordance with the terms of payoff letters;

 

(c)       the
Transaction Expenses, on behalf of the Company, the Shareholders and their Affiliates, as applicable, as directed by and in accordance
with the Payoff Letters; and

 

 

 

    	 	2	 

     

    

 

(d)       the
balance of the Closing Consideration, after making the payments set forth in clauses (a) through (c) hereof to the Shareholders.

 

Section
1.4Funds Flow Memorandum. Notwithstanding anything to the contrary in this Agreement or elsewhere, Purchaser
shall not be in any way responsible for or liable in connection with any aspect or component of the Closing Funds Flow Memorandum
provided to Purchaser by the Shareholders’ Representative on or prior to the Closing Date, including: (i) any determination
or calculation of any amounts payable pursuant to the Funds Flow Memorandum; (ii) the inclusion of any amount payable in or
the omission of any amount payable from the Funds Flow Memorandum; or (iii) any error or omission with respect to the third
parties to whom payments are to be made pursuant to the Funds Flow Memorandum.

 

Section
1.5Stock Options. Prior to the Closing, the Shareholders shall take, or shall cause the Company to take,
all actions necessary to cancel, rescind and/or exercise all Stock Options outstanding, whether or not exercisable, whether or
not vested as of the Closing, and which are outstanding immediately prior to the Closing. As of the Closing, the Shareholders shall
have taken all actions necessary to ensure that there is no further or continuing obligation or liability of any kind with respect
to the exercise, cash out or other disposition of any Stock Options, including any payroll or other Taxes with respect thereto.

 

Section
1.6Holdback. At the Closing, the Holdback Amount shall be withheld by Purchaser from the Purchase Price otherwise
payable to the Shareholders, and Purchaser shall hold such Holdback Amount in accordance with the terms of this Agreement until
the Holdback Release Date. Notwithstanding anything in this Agreement to the contrary, if Purchaser has given written notice to
the Shareholders’ Representative of one or more Claims made prior to the Holdback Release Date pursuant to Section 8.6 of
this Agreement or any other section of this Agreement providing for payment of Losses from the remaining Holdback Amount and all
such Claims have not been finally resolved prior to the Holdback Release Date, Purchaser shall withhold from its delivery of the
portion of the remaining Holdback Amount otherwise required to be remitted on the Holdback Release Date, pending resolution of
such Claims, an amount of cash that represents Purchaser’s good faith estimate of the amount to which it would be entitled
if it prevailed with respect to such Claims. If, upon final resolution of all such Claims, the aggregate amount withheld by the
Purchaser is greater than the Shareholders’ aggregate liability with respect to all such Claims, then the Purchaser shall
deliver to the Shareholders’ Representative, for the benefit of the Shareholders, the Holdback Amount in an amount equal
to such difference. Subject to the terms and conditions herein, each Shareholder shall be entitled to receive from the Shareholders’
Representative, on behalf of Purchaser, as promptly as practicable following the Holdback Release Date and if applicable, such
later date as all Claims are finally resolved, such Shareholder’s Pro Rata Portion of the remaining Holdback Amount as set
forth in Section 8.8.

 

Section
1.7Further Assurances. If, at any time after the Effective Time, the Purchaser considers or is advised that
any deeds, bills of sale, assignments, consents, assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Purchaser its right, title or interest in, to or under any of the rights, properties,
or assets of the Company, or otherwise to carry out the intent and purposes of this Agreement, the Shareholders will execute and
deliver all such deeds, bills of sale, assignments, consents and assurances and to take and do, all such other actions and things
as Purchaser may determine to be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to
and under such rights, properties or assets in Purchaser and the Company to carry out the intent and purposes of this Agreement.

 

 

    	 	3	 

     

    

 

Section
1.8Shareholders’ Representative.

 

(a)       Through
signature on this Agreement and/or approval of this Agreement, each of the Shareholders hereby appoints Brett A. Howell as such
Shareholder’s exclusive agent and attorney-in-fact (the “Shareholders’ Representative”) to give
and receive notices and communications with respect to the provisions of this Agreement, and to agree to, negotiate, enter into
settlements or compromises of matters arising under this Agreement, and to take any and all actions necessary or appropriate in
the judgment of the Shareholders’ Representative to be taken on behalf of the Shareholders under this Agreement. Such agency
is irrevocable other than as set forth in this Agreement and coupled with an interest. Notices or communications to or from the
Shareholders’ Representative shall constitute notice to or from the Shareholders in respect of matters under this Agreement.
The Shareholders agree that a decision, act, consent or instruction of the Shareholders’ Representative shall constitute
a decision of all Shareholders, and shall be final, binding and conclusive upon each Shareholder, and Purchaser may rely upon any
decision, act, consent or instruction of the Shareholders’ Representative as being the decision, act, consent or instruction
of all Shareholders. Purchaser and its Affiliates shall not be liable in any way to the Shareholders based on any act or omission
of the Shareholders’ Representative relating to this Agreement.

 

(b)       The
Shareholders’ Representative shall be liable to the Shareholders only for his proven bad faith, willful misconduct, or gross
negligence, as determined in light of all the circumstances, including the time and facilities available to him in the ordinary
conduct of business. In determining the occurrence of any event or contingency, the Shareholders’ Representative may request
from any of the Shareholders or any other Person such reasonable additional evidence as the Shareholders’ Representative
in his sole discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and may
at any time inquire of and consult with others, including any of the Shareholders, and may obtain legal advice, and the Shareholders’
Representative shall not be liable to any Shareholder for any damages resulting from his delay in acting hereunder pending his
receipt and examination of additional evidence, counsel or advice requested by him.

 

(c)       The
Shareholders’ Representative is authorized, in his sole discretion, to comply with final, nonappealable orders issued or
process entered by any court of competent jurisdiction with respect to the Holdback Amount. If any portion of the Holdback Amount
is disbursed to the Shareholders’ Representative and is at any time attached, garnished or levied upon under any court order,
or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court
order, or in case any order, writ, judgment or decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Shareholders’ Representative is authorized, in his sole discretion, but in good
faith, to rely upon and comply with any such order, writ, judgment or decree which he is advised by legal counsel selected by him
is binding upon it without the need for appeal or other action; and if the Shareholders’ Representative complies with any
such order, writ, judgment or decree, he shall not be liable to any Shareholder or to any other Person by reason of such compliance
even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.

 

 

 

    	 	4	 

     

    

(d)       In
no event shall the Shareholders’ Representative be liable to any Shareholder for incidental, indirect, special, consequential
or punitive damages.

 

(e)       The
Shareholders’ Representative shall be entitled to reimbursement for expenses (including attorneys’ fees) that are incurred
by Shareholders’ Representative in connection with his performance hereunder. Each Shareholder shall be liable for its pro
rata share (based on their respective Pro Rata Portion of the Purchased Shares immediately prior to the Closing Date) of such excess
expenses (including attorneys’ fees).

 

(f)       In
the event that any Shareholder pays Purchaser and/or Shareholders’ Representative any amounts pursuant to this Agreement
in excess of such Shareholder’s Pro Rata Portion of such amount, such Shareholder shall be entitled to reimbursement for
the amount of any such payments in excess of such Shareholder’s Pro Rata Portion of such amount out of (and any such amounts
shall be deducted by the Shareholders’ Representative from) any future Holdback Amount that is distributed to the Shareholders’
Representative for future distribution to the Shareholders prior to Shareholders’ Representative’s distribution of
such Holdback Amount to the Shareholders.

 

(g)       If
the Shareholders’ Representative resigns (by giving at least sixty (60) days’ written notice of such resignation to
Purchaser) or dies or becomes incapable of continuing to act as the Shareholders’ Representative for any reason, a successor
Shareholders’ Representative (who shall either be a Shareholder or another Person reasonably acceptable to Purchaser) shall
be appointed in writing by a majority in interest of the Shareholders (which for purposes of this Agreement shall be based on their
respective Pro Rata Portion of the Purchased Shares immediately prior to the Closing Date), such appointment to become effective
upon the delivery of executed counterparts of such writing to Purchaser, together with an acknowledgement signed by the successor
Shareholders’ Representative named in such writing that he, she or it accepts the responsibility of successor Shareholders’
Representative and agrees to perform and be bound by all provisions of this Agreement applicable to the Shareholders’ Representative.
Pending the election of a successor Shareholders’ Representative, the Shareholder that has the largest aggregate stake in
the Purchase Price immediately following the Effective Time (excluding any former Shareholders’ Representative) shall act
as the interim Shareholders’ Representative. Failing such appointment, Purchaser or any Shareholder may apply to a court
of competent jurisdiction for the appointment of a successor Shareholders’ Representative.

 

 

 

    	 	5	 

     

    

 

(h)       A
majority in interest of the Shareholders (based on their respective Pro Rata Portion of Purchased Shares immediately prior to the
Closing Date) shall have the right at any time during the term of this Agreement to remove the then-acting Shareholders’
Representative and to appoint a successor Shareholders’ Representative (who shall either be a Shareholder or another Person
reasonably acceptable to Purchaser); provided, however, that such removal of the then-acting Shareholders’ Representative
shall not be effective until the delivery to Purchaser of executed counterparts of a writing signed by a majority in interest of
the Shareholders with respect to such removal and appointment, together with an acknowledgement signed by a successor Shareholders’
Representative appointed in such writing that he, she or it accepts the responsibility of successor Shareholders’ Representative
and agrees to perform and be bound by all of the provisions of this Agreement applicable to the Shareholders’ Representative.

 

(i)       Each
interim and successor Shareholders’ Representative shall have all the power, authority, rights and privileges conferred by
this Agreement upon the original Shareholders’ Representative, and the term Shareholders’ Representative as used herein
shall be deemed to include any interim or successor Shareholders’ Representative.

 

(j)       Any
notices given by Purchaser while there is no Shareholders’ Representative shall be sufficiently given if given to the Shareholder
with the largest stake in the Holdback Amount immediately following the Effective Time (excluding the former Shareholders’
Representative). A copy of all such notices shall be delivered to the successor Shareholders’ Representative upon his, her
or its appointment and he, she or it shall have five (5) days thereafter to take such actions as may be required under the terms
of this Agreement in connection with any such notice.

 

Section
1.9Working Capital Adjustment.

 

(a)       No
later than three (3) Business Days prior to the Closing Date, and as one of the conditions to Closing described in Section 6.2
hereof, the Shareholders’ Representative shall cause to be delivered to Purchaser a preliminary balance sheet of Company
dated as of the Closing Date (the “Preliminary Closing Balance Sheet”), together with a written statement setting
forth in reasonable detail its determination of the Company’s current assets and its current liabilities as of that date
and an estimate of the Company’s Net Working Capital (the “Preliminary Working Capital Statement”). The
Preliminary Closing Balance Sheet and the Preliminary Working Capital Statement shall be prepared in accordance with GAAP and Section
1.9.

 

(b)       Within
ninety (90) calendar days after the Closing Date, Purchaser will prepare or cause to be prepared, and will provide to the Shareholders’
Representative, a balance sheet of the Company as of the Closing Date (the “Closing Balance Sheet”), together
with a working capital statement setting forth in reasonable detail its determination of the Company’s Net Working Capital
as of the Closing Date (“Working Capital Statement”). The Closing Balance Sheet and Working Capital Statement
(collectively, the “Closing Statements”) will be prepared in accordance with GAAP. Subject to a customary confidentiality
agreement being in effect (which agreement shall allow the Shareholders’ Representative to discuss these matters with the
Shareholders), Purchaser shall provide to Shareholders’ Representative reasonable supporting documentation for the Closing
Statements concurrently with the delivery thereof and access to the appropriate books, records, employees and agents of the Company
(including by electronic means, to the extent available) and Purchaser to allow Shareholders’ Representative to properly
review the Closing Statements (upon reasonable notice); provided, that Purchaser shall not be required to provide any attorney-client
privileged documents or communications.

 

 

 

    	 	6	 

     

    

(c)       The
Closing Statements shall be final and binding on the parties unless Shareholders’ Representative, within thirty (30) calendar
days following its receipt thereof, delivers to Purchaser written notice of disagreement with any of the Closing Statements, which
notice shall describe in reasonable detail the nature of such disagreement, and shall identify the specific items involved and
the dollar amount of the disagreement. If Shareholders’ Representative shall raise any objections within the aforesaid thirty
(30) calendar day period, then the disputed matters shall be resolved by Shareholders’ Representative, on behalf of the Shareholders,
and Purchaser, in good faith. If Shareholders’ Representative and Purchaser are unable to resolve all disagreements within
thirty (30) calendar days after receipt by Purchaser of a written notice of disagreement, or such longer period as may be agreed
by Purchaser and Shareholders’ Representative, then, either Shareholders’ Representative or Purchaser may initiate
procedures to finally resolve such disputes by providing written notice of such intent to the non-initiating party. Promptly following
such written notice (but in any event within ten (10) Business Days), Shareholders’ Representative and Purchaser shall jointly
select a nationally recognized independent public accounting firm that does not have an existing business relationship with any
of Purchaser, Shareholders’ Representative, the Shareholders, or the Company (the “Independent Accountant”);
provided, however, that if Purchaser and Shareholders’ Representative are unable to select an Independent Accountant within
such time period, JAMS shall make such selection as promptly as practicable thereafter. The Independent Accountant so selected
will consider only those items and amounts set forth in the Closing Statements as to which Purchaser and Shareholders’ Representative
have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms
and provisions of this Agreement. The Independent Accountant may not assign a value greater than the greatest value for any such
item claimed by either Purchaser, on the one hand, or Shareholders’ Representative, on the other hand, or smaller than the
value assigned to the disputed item by Purchaser, on the one hand, or Shareholders’ Representative, on the other hand, in
the Closing Statements. In submitting a dispute to the Independent Accountant, each of the parties shall concurrently furnish,
at its own expense, to the Independent Accountant and the other party, such documents and information as the Independent Accountant
may reasonably request; provided, that neither party shall be required to provide any attorney-client privileged documents or communications.
Each party may also furnish to the Independent Accountant such other information and documents as it deems relevant, with copies
of such submission and all such documents and information being concurrently given to the other party. The Independent Accountant
shall issue a written report that sets forth the resolution of all items in dispute and that contains, as applicable, (i) a
final Closing Balance Sheet and/or (ii) a final Working Capital Statement, according to the dispute(s) noticed. The report
shall be final and binding upon Purchaser, the Company, Shareholders’ Representative and the Shareholders. The fees and expenses
of the Independent Accountant incurred in connection with the determination of the disputed items by the Independent Accountant
shall be allocated equally between Purchaser and Shareholders’ Representative (solely on behalf of the Shareholders). Purchaser
and Shareholders’ Representative shall, and Purchaser shall cause the Company to, cooperate fully with the Independent Accountant
and respond on a timely basis to all requests for information or access to documents or personnel made by the Independent Accountant
or by other parties hereto, all with the intent to fairly and in good faith resolve all disputes relating to the Closing Statements
as promptly as reasonably practicable; provided, that neither party shall be required to provide any attorney-client privileged
documents or communications.

 

 

 

    	 	7	 

     

    

(d)       After
the Closing Statements have been finally determined in accordance with Section 1.09 (c), if the finally determined Net Working
Capital of the Company as of the Closing is less than the Target Net Working Capital (the difference between such Net Working Capital
of the Company as of the Closing minus the Target Net Working Capital is referred to herein as the “Purchaser Deficit”),
then the Purchase Price shall be reduced by the amount of Purchaser Deficit (“Purchaser Adjustment Amount”).
Purchaser shall be entitled to receive cash in an amount equal to the Purchaser Adjustment Amount, from the Shareholders and, may
either (i) elect to offset the Purchaser Adjustment Amount against the Holdback Amount (without regards to the limitations
of Article VIII), or (ii) recover such amount directly from the Shareholders (in which case, the Shareholders shall deliver
such amount to Purchaser within five (5) Business Days following such determination). If the finally determined Net Working Capital
of the Company as of the Closing is greater than the Target Net Working Capital (the difference between such Net Working Capital
of the Company as of the Closing minus the Target Net Working Capital is referred to herein as the “Shareholder Excess”),
then the Purchase Price shall be increased by the amount of the Shareholder Excess (“Company Adjustment Amount”,
and together with the Purchaser Adjustment Amount, as applicable, the “Adjustment Amount”). The Shareholders
shall be entitled to receive cash in the amount of the Company Adjustment Amount, if any, from Purchaser. In the event of a Company
Adjustment Amount, Purchaser shall deliver such amount to the Shareholders within five (5) Business Days following such determination.

 

Section
1.10Repayment of Company Indebtedness and Transaction Expenses. At or prior to the Closing, the Company shall
repay and discharge, or cause to be repaid and discharged, any and all Transaction Expenses not being paid directly by the Shareholders
and Indebtedness of the Company outstanding as of the Closing Date, together with accrued and unpaid interest thereon. Prior to
the Closing Date, the Company shall submit reasonably satisfactory documentation (“Payoff Letters”) setting
forth (a) the amount of all Indebtedness outstanding as of the Closing Date, including the identity of each lender thereof,
dollar amounts, wire instructions and any other information necessary to effect payment therefore, and (b) an estimate of
the Transaction Expenses, including in each case the identity of each service provider, dollar amounts and any other information
necessary to effect payment therefore. The Company and the Shareholders understand that all amounts of Indebtedness and Transaction
Expenses are the sole responsibility of the Company and the Shareholders, and the amounts paid pursuant to this Section 1.10 are
being made on the Company and the Shareholders’ behalf and shall reduce the Preliminary Cash Consideration and Purchase Price
payable to the Shareholders under this Agreement. In no event shall Purchaser or the Company have any liability or obligation regarding
the Indebtedness or Transaction Expenses. In connection with the repayment of Indebtedness hereunder, the Company shall obtain
releases of all Liens on the assets, properties or capital stock of the Company securing any such Indebtedness of the Company.
At the Closing, the Company shall provide evidence in writing reasonably satisfactory to Purchaser of such repayment of Indebtedness
of the Company and release of any and all Liens contemplated by this Section 1.10, including, without limitation, Payoff Letters
that are reasonably acceptable to Purchaser and its lenders and UCC-3 termination statements.

 

 

 

    	 	8	 

     

    

Section
1.11Earn-Out.

 

(a)       Earn-Out
Payment. Following the Closing, the Shareholders shall be entitled to a payment (each, an “Earn-Out Payment”)
equal to the Adjusted EBT for each of the Earn-Out Years, as more fully set forth in this Section 1.11. For avoidance of doubt,
all items with respect to the Earn-Out Payment shall be calculated in accordance with GAAP and Schedule 1.11.

 

(b)       Limitation.
No Earn-Out Payment shall be due or payable for any Earn-Out Year in which Adjusted EBT is a negative number. In no event will
the aggregate amount of all of the Earn-out Payments exceed Five Million Dollars ($5,000,000). The Earn-out Payments, if any, shall
be considered part of the Purchase Price to the extent permitted by Law.

 

(c)       Procedures
Applicable to Determination of the Earn-Out Payments.

 

(i)       Purchaser
shall consult with Shareholders’ Representative from time to time during the period of the Earn-Out Years with regards to
Adjusted EBT and, no later than the date that is ninety (90) days after the last day of each Earn-Out Year, Purchaser shall
prepare and deliver to the Shareholders’ Representative a written statement (the “Earn-Out Calculation Statement”)
setting forth in reasonable detail its determination the Adjusted EBT, and its calculation of the resulting Earn-Out Payment, if
any (the “Earn-Out Calculation”).

 

(ii)       The
Earn-Out Calculation Statement shall be final and binding on the parties unless Shareholders’ Representative, within thirty
(30) calendar days following its receipt thereof, delivers to Purchaser written notice of disagreement with any of the Earn-Out
Calculation Statement, which notice shall describe in reasonable detail the nature of such disagreement, and shall identify the
specific items involved and the dollar amount of the disagreement. If Shareholders’ Representative shall raise any objections
within the aforesaid thirty (30) calendar day period, then the disputed matters shall be resolved by Shareholders’ Representative,
on behalf of the Shareholders, and Purchaser, in good faith. If Shareholders’ Representative and Purchaser are unable to
resolve all disagreements within thirty (30) calendar days after receipt by Purchaser of a written notice of disagreement, or such
longer period as may be agreed by Purchaser and Shareholders’ Representative, then, either Shareholders’ Representative
or Purchaser may initiate procedures to finally resolve such disputes by providing written notice of such intent to the non-initiating
party. Promptly following such written notice (but in any event within ten (10) Business Days), Shareholders’ Representative
and Purchaser shall jointly select an Independent Accountant; provided, however, that if Purchaser and Shareholders’ Representative
are unable to select an Independent Accountant within such time period, JAMS shall make such selection as promptly as practicable
thereafter. The Independent Accountant so selected will consider only those items and amounts set forth in the Earn-Out Calculation
Statement as to which Purchaser and Shareholders’ Representative have disagreed within the time periods and on the terms
specified above and must resolve the matter in accordance with the terms and provisions of this Agreement. The Independent Accountant
may not assign a value greater than the greatest value for any such item claimed by either Purchaser, on the one hand, or Shareholders’
Representative, on the other hand, or smaller than the value assigned to the disputed item by Purchaser, on the one hand, or Shareholders’
Representative, on the other hand, in the Earn-Out Calculation Statement. In submitting a dispute to the Independent Accountant,
each of the parties shall concurrently furnish, at its own expense, to the Independent Accountant and the other party, such documents
and information as the Independent Accountant may reasonably request; provided, that neither party shall be required to provide
any attorney-client privileged documents or communications. Each party may also furnish to the Independent Accountant such other
information and documents as it deems relevant, with copies of such submission and all such documents and information being concurrently
given to the other party. The Independent Accountant shall issue a written report that sets forth the resolution of all items in
dispute and that contains, as applicable, (i) a final Earn-Out Calculation Statement and/or (ii) a final Earn-Out Calculation,
according to the dispute(s) noticed. The report shall be final and binding upon Purchaser, the Company, Shareholders’ Representative
and the Shareholders. The fees and expenses of the Independent Accountant incurred in connection with the determination of the
disputed items by the Independent Accountant shall be allocated equally between Purchaser and Shareholders’ Representative
(solely on behalf of the Shareholders). Purchaser and Shareholders’ Representative shall, and Purchaser shall cause the Company
to, cooperate fully with the Independent Accountant and respond on a timely basis to all requests for information or access to
documents or personnel made by the Independent Accountant or by other parties hereto, all with the intent to fairly and in good
faith resolve all disputes relating to the Earn-Out Calculation Statement as promptly as reasonably practicable; provided, that
neither party shall be required to provide any attorney-client privileged documents or communications.

 

 

 

    	 	9	 

     

    

(d)       Timing
and Tax Treatment of Earn-Out Payments. Subject to Section 1.11(f) and Section 1.11(g) below, any Earn-Out Payment that Purchaser
is required to pay pursuant to Section 1.11(a) hereof shall be paid in full no later than five (5) Business Days following the
date upon which the determination of the amount of any Earn-Out Payment becomes final and binding upon the parties as provided
in Section 1.11(c) (including any final resolution of any dispute raised by the Shareholders’ Representative). Purchaser
shall pay to the Shareholders the applicable Earn-Out Payment in cash by wire transfer of immediately available funds to the bank
account(s) designated by the Shareholders’ Representative. Any Earn-Out Payment shall be treated as an adjustment to the
Purchase Price by the parties for all applicable income tax purposes, unless otherwise required by Law.

 

(e)       Post-Closing
Operation of the Company. Subsequent to the Closing, Purchaser shall have sole discretion with regard to all matters relating
to the operation of the Company and any Subsidiary and shall operate the Company in any way it deems appropriate; provided, however,
that from the Closing through the Earn-Out Years: (i) Purchaser shall not intentionally take any action the purpose of which is
to decrease the Earnout Payment; provided that any action taken to comply with GAAP or upon the advice of Purchaser’s auditors
shall not be deemed to be an action intentionally taken to decrease the Earnout Payment; (ii) Purchaser shall not sell, liquidate
or otherwise dispose of the operations or equity interest in the Company unless the party acquiring such operations or ownership
interest expressly agrees in writing to be bound by the post-Closing terms of this Agreement (including this Section 1.11) and
to assume, and does in fact assume, all of Purchaser’s obligations under this Agreement (including this Section 1.11).
For avoidance of doubt, Purchaser has no obligation to operate the Company or any Subsidiary in order to achieve any Earn-Out Payment
or to maximize the amount of any Earn-Out Payment.

 

 

 

    	 	10	 

     

    

 

(f)       Audit
Correction. Notwithstanding the foregoing, including Sections 1.11(c) and (d), if the Company’s final audit
for any Earn-Out Year indicates the Earn-Out Calculation for such Earn-Out Year was incorrect, Purchaser shall provide notice of
such error, together with a duly corrected Earn-Out Calculation to the Shareholders’ Representative setting forth any overpayment
or underpayment to the Shareholders for such Earn-Out Year, and such corrected Earn-Out Calculation shall be final and binding
on the parties hereto.  The Shareholders shall pay to Purchaser any such overpayment, and the Purchaser shall pay to the Shareholders
any such underpayment, within five Business Days of such notice under this Section 1.11(f) by wire transfer of immediately
available funds to the bank account(s) designated by Purchaser.

 

(g)       Right
of Set-Off. Purchaser shall have the right to withhold and set off any amount otherwise due to be paid to the Shareholders
pursuant to this Section 1.11 against the amount of (i) any Adjustment Amount owed to it pursuant to Section 1.9 of this Agreement,
and (ii) any Losses that any Purchaser Indemnitee may be finally entitled to under Article VIII of this Agreement.

 

(h)       No
Security. The Parties understand and agree that (i) the contingent rights to receive any Earn-Out Payment shall not be
represented by any form of certificate or other instrument, are not transferable, except by operation of Laws relating to descent
and distribution, divorce and community property, and do not constitute an equity or ownership interest in Purchaser or the Company
or any Subsidiary, (ii) the Shareholders shall not have any rights as a securityholder of Purchaser or the Company or any
Subsidiary as a result of any Shareholder’s contingent right to receive any Earn-Out Payment hereunder, and (iii) no
interest is payable with respect to any Earn-Out Payment.

 

(i)       Condition
of Non-Competition Agreement. Notwithstanding anything contained in this Section 1.11 or otherwise in this Agreement, no Shareholder
shall be entitled to receive any Earn-out Payment otherwise payable to such Shareholder pursuant to this Section 1.11 to the extent
of Losses caused by such Shareholder from the breach or other violation of the Non-Competition Agreement.

 

 

 

    	 	11	 

     

    

 

Article
II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

AND THE SHAREHOLDERS

 

The Company and each
of the Shareholders hereby, jointly and severally, represent and warrant to Purchaser that on the date hereof and as of the Closing
Date that the following statements are true, correct and complete, except as specifically set forth in the section of the written
disclosure schedule delivered on or prior to the date hereof by the Shareholders to Purchaser (the “Company Disclosure
Schedule”) which shall identify by section number the provision of this Article II to which each exception relates, as
follows:

 

Section
2.1Organization and Qualification; Subsidiaries. The Company is a corporation duly incorporated, validly
existing and in good standing under the law of its jurisdiction of incorporation, and the Company has the requisite power and authority
and is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals
and orders necessary to own, lease and operate the properties it purports to own, lease or operate and to carry on its business
as it is now being conducted. The Company is duly qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary. The Company does not own or lease property in any jurisdiction other than its
jurisdiction of incorporation and the jurisdictions referred to in the previous sentence. Except as set forth on Section 2.1 of
the Company Disclosure Schedule, no jurisdiction has claimed, in writing or otherwise, that the Company is required to qualify
as a foreign corporation or other entity therein, and (except as aforesaid) the Company does not file any franchise, income or
other tax returns in any other jurisdiction based upon the ownership or use of property therein or the derivation of income therefrom.
The Company has no subsidiaries and does not own, directly or indirectly, (a) any capital stock (including ordinary share
or preference share capital), partnership or membership interest, unit of participation or other similar interest (however designated)
in any other Person and (b) any option, warrant, purchase right, conversion right, exchange right or other contractual obligation
which would entitle the Company to acquire any such interest in any Person or otherwise entitle the Company to share in the equity,
profits, earnings, losses or gains of such Person (including stock appreciation, phantom stock, profit participation, change of
Control bonus or other similar rights), in any other corporation, partnership or other Person.

 

Section
2.2Certificate of Incorporation and Bylaws. The Company has heretofore furnished to Purchaser a true, complete
and correct copy of its Certificate of Incorporation and Bylaws, each as amended to date. Such Certificate of Incorporation and
Bylaws are in full force and effect. The Company is not in violation of any material provisions of its Certificate of Incorporation
or Bylaws.

 

Section
2.3Capitalization. The authorized capital stock of the Company consists of One Million (1,000,000) shares
of Common Stock. As of the date of this Agreement, Seven Hundred Sixty-Six Thousand Twenty-Seven (766,027) shares of Common Stock
are issued and outstanding, all of which are validly issued, fully paid and nonassessable, and none of which are held in treasury.
There are no shares of capital stock of the Company outstanding other than the Purchased Shares. Except as set forth on Section
2.3 of the Company Disclosure Schedule, no shares of Common Stock are issued, granted, outstanding or reserved for future issuance
for outstanding option to purchase shares of Company Common Stock (each a “Stock Option” and, collectively,
the “Stock Options”) and the Company has no Company stock option or other equity or incentive plan. Section
2.3 of the Company Disclosure Schedule sets forth a true and complete list of all shareholders of the Company, and the number of
shares held by each. There are no options, warrants or other similar rights, agreements, arrangements, commitments or understanding,
whether or not in writing, of any character relating to the issued or unissued capital stock or other securities of the Company
or obligating the Company to issue (whether upon conversion, exchange or otherwise) or sell any share of capital stock of, or other
equity interests in or other securities of, the Company. There are no obligations, contingent or otherwise, of the Company to repurchase,
redeem or otherwise acquire any shares of Common Stock or capital stock or any other securities of the Company or to provide funds
to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity. Except as set forth on
Section 2.3 of the Company Disclosure Schedule, there are no voting trusts or agreements, stockholder agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies relating to any securities of the Company.

 

 

 

    	 	12	 

     

    

 

Section
2.4Authority Relative to this Agreement. The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and to consummate the Contemplated Transactions. The execution
and delivery of this Agreement by the Company, the Transaction Documents and the consummation by the Company of the Contemplated
Transactions have been duly and validly authorized by all necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement, the Transaction Documents or to consummate the
Contemplated Transactions, including, if necessary, the approval of this Agreement by all Shareholders in accordance with the Governing
Corporate Law and the Company’s Certificate of Incorporation and Bylaws, as amended to date. The Board has unanimously approved
this Agreement and the Contemplated Transactions and declared their advisability. This Agreement has been duly and validly executed
and delivered by the Company and, when duly authorized, executed and delivered to all other parties hereto, will constitute a legal,
valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability
against the Company may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium
or similar laws affecting the enforcement of creditors' rights and by general principles of equity relating to enforceability (regardless
of whether considered in a proceeding at law or in equity).

 

Section
2.5Governmental Authorization and Consents. Except for obtaining those consents, approvals, authorizations,
filings or notices set forth in Section 2.5 of the Company Disclosure Schedule, no Governmental Authorization of, filing with,
or notice to, any Governmental Authority or any lenders, lessors, creditors, shareholders or any other Person, is required by the
Company in connection with the execution, delivery and performance by the Company of this Agreement or any document, agreement,
instrument or certificate contemplated hereby and the consummation by the Company of the Contemplated Transactions. Additionally,
no Governmental Authorization of, filing with, or notice to, any Governmental Authority was required by the Company or, to the
Company’s Knowledge, the Hamner Institute in connection with (i) the Hamner Institute’s contribution or assignment
of Intellectual Property to the Company, or (ii) the issuance of any equity securities of the Company to or from the Hamner Institute.

 

 

    	 	13	 

     

    

 

Section
2.6Non-contravention. The execution and delivery of this Agreement and all of the Transaction Documents and,
the performance by the Company of the obligations hereunder and thereunder, and the consummation of the Transaction and all related
transactions, do not and will not (a) breach, contravene or conflict with the Certificate of Incorporation, Bylaws or other
charter documents of the Company, (b) assuming compliance with the matters referred to in Section 2.5, contravene or conflict
with any applicable provision of any Law, regulation, rule, judgment, injunction, Order or decree binding upon or applicable to
the Company, (c) except as set forth in Section 2.5 or Section 2.6 of the Company Disclosure Schedule, require notice, consent
or approval or constitute a default under, or impair or alter the rights of the Company or, to the Company’s Knowledge, any
third party, (d) give rise to a right of termination, cancellation, amendment or acceleration of any right or obligation of
the Company or to a loss of any benefit to which the Company is entitled under, any provision of any contract (including any Material
Contract) or other instrument binding upon the Company or by which any of the Company’s assets or properties may be bound
or subject, or any license, franchise, Permit or other similar authorization held by the Company or (e) result in the creation
or imposition of any Lien on any assets or properties of the Company.

 

Section
2.7Title to Properties; Absence of Liens; Sufficiency of Assets. The Company has good, valid, and marketable
title to or, in the case of leased property and assets, valid and subsisting leasehold interests in, all of its assets and property,
whether real, personal, mixed, tangible, including, without limitation, all of the assets and properties reflected in the Interim
Balance Sheet, free and clear of all Liens, except for such Liens as are set forth in Section 2.7 of the Company Disclosure Schedule.
The Company does not own or lease any vehicles. As of the Closing, the assets and property owned or leased by the Company (i) will
constitute all of the property and assets used or held for use in connection with the Company’s business, (ii) will
constitute all of the property and assets necessary to conduct the Company’s business, (iii) will be in good operating
condition and repair (normal wear and tear excepted), (iv) will be adequate for the uses to which they are being put and (v) will
be free and clear of all Liens.

 

Section
2.8Financial Statements; Related Information.

 

(a)       A
correct and complete copy of the Audited Financial Statements, together with the related auditor’s reports thereon, and Interim
Balance Sheet (collectively, the “Financial Statements”) are, or will be at the time of Closing (with respect
to the Audited Financial Statements) attached to Section 2.8(a) of the Company Disclosure Schedule. The Financial Statements were
prepared in accordance with GAAP applied on a consistent basis throughout all periods involved, are accurate and complete and present
fairly, the financial position and the results of operations and cash flows of the Company, in each case as of the dates and for
the periods referred to therein, subject, in the case of the Interim Balance Sheet, to (i) normally recurring year-end adjustments
in accordance with the Company’s ordinary course of business consistent with past practices which are not material either
individually or in the aggregate and (ii) the absence of footnote disclosures.

 

    	 	14	 

     

    

 

(b)       The
Company has not entered into any off balance sheet financial arrangement, including any transaction involving a hedge or derivative
financial instrument.

 

(c)       The
net property and equipment balance reflected in the Audited Financial Statements and Interim Balance Sheet represents the sum of
all personal property and assets that are owned by the Company and not fully depreciated, and any depreciation with respect to
such assets has been made in accordance with GAAP as historically applied by the Company on a consistent basis.

 

(d)       The
Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations; (ii) revenue is recognized in accordance
with GAAP; and (iii) access to assets is permitted only in accordance with management’s general or specific authorization.

 

Section
2.9Absence of Certain Changes. Except as disclosed in Section 2.9 of the Company Disclosure Schedule, since
December 31, 2015, the Company has conducted its business in the ordinary course consistent with past practice, including making
all payments and discharging all commitments and, except as disclosed in Section 2.9 of the Company Disclosure Schedule, there
has not been:

 

(a)       any
event, occurrence, development of a state of circumstances or facts, or change in the business, properties, assets, prospects,
operations or condition (financial or otherwise) of the Company which, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect and no such event, occurrence, development or change is threatened;

 

(b)       (i) any
declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the
Company, or (ii) any sale of issuance of, or any repurchase, redemption or other acquisition by the Company of, any outstanding
shares of capital stock or other securities of, or other ownership interests in, the Company;

 

(c)       (i) any
acquisition by the Company of stock or other equity interests, from any Person, (ii) any acquisition of assets of another
Person incident to the acquisition of a business, (iii) any sale, lease, license or other disposition of assets or property
of the Company or (iv) any other acquisition by the Company of assets of another Person;

 

(d)       any
amendment of any term of any outstanding security of the Company;

 

(e)       any
incurrence, assumption or guarantee by the Company of any Indebtedness or any creation or assumption by the Company of any Lien
on any asset;

 

 

 

 

    	 	15	 

     

    

(f)       any
extension of a loan, advance or capital contribution to or investment in any Person by the Company;

 

(g)       any
condemnation, seizure, damage, destruction or other casualty loss (whether or not covered by insurance) affecting the assets, properties,
business, prospects, operations or condition (financial or otherwise) of the Company and, to the Company’s Knowledge, no
such loss is threatened;

 

(h)       any
material transaction or commitment made, or any material contract or agreement entered into, amended or terminated by the Company
or any waiver or relinquishment by the Company of any contract or other right, other than in the ordinary course of business consistent
with past practices;

 

(i)       any
change in any method of accounting or accounting practice by the Company;

 

(j)       any
capital expenditure, or commitment for a capital expenditure, for additions or improvements to property, plant and equipment by
the Company that, individually or in the aggregate, involve payments in excess of $15,000;

 

(k)       except
for capital expenditures and commitments referred to in paragraph (j) above, any acquisition or disposition by the Company of any
assets or property (real, personal or mixed, tangible or intangible) in one or more transactions, or any commitment by the Company
in respect thereof, that, individually or in the aggregate, involved or involve payments of $15,000 or more;

 

(l)       any
write-down or write-off of accounts receivable of the Company or any cancellation of any debts or waiver of any Claims or rights,
in each case, other than in the ordinary course of business consistent with past practices;

 

(m)       any
incurrence by the Company of any material liability or obligation of any nature (whether accrued, absolute, contingent or otherwise);

 

(n)       any
disposal by the Company or lapse of any rights to the use of any Intellectual Property Rights, or disposal of or disclosure to
any Person by the Company other than representatives of Purchaser of any trade secret, formula, process, know-how or other Intellectual
Property Rights not theretofore a matter of public knowledge;

 

(o)       any
write-down by the Company of the value of any inventory (including write-downs by reason of shrinkage or mark-down) or write-off
by the Company as uncollectible of any notes or accounts receivable, except for immaterial write-downs and write-offs in the ordinary
course of business and consistent with past practice all of which are reflected in the Interim Balance Sheet;

 

(p)       any
payment, discharge or satisfaction of any claim, liability or obligation by the Company (whether absolute, accrued, contingent
or otherwise) other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice
of liabilities and obligations reflected or reserved against in the Balance Sheet or incurred in the ordinary course of business
and consistent with past practice since the Interim Balance Sheet Date; or

 

 

 

    	 	16	 

     

    

 

(q)       any
agreement by the Company, whether in writing or otherwise, to take any action described in this Section 2.9.

 

Section
2.10Related Party Transactions. Except as set forth in Section 2.10 of the Company Disclosure Schedule, (a) no
Shareholder, (b) no officer, director or Affiliate of the Company, and (c) no immediate family member of any Person identified
in (a) or (b) above (collectively, the “Related Parties”) and no former director or current employee: (i) owns,
directly or indirectly, any interest in (excepting not more than 5% stock holdings for investment purposes in securities of publicly
held and traded companies), or is an officer, director, employee or consultant of, any Person which is, or is engaged in business
as, a competitor, lessor, lessee, customer, distributor, sales agent, or supplier of the Company; (ii) owns, directly or indirectly,
in whole or in part, any tangible or intangible property that the Company uses or the use of which is reasonably necessary or desirable
for the conduct of the business of the Company; (iii) owes any amount to the Company; or (iv) on behalf of the Company,
has made any payment or commitment to pay any commission, fee or other amount to, or purchase or obtain or otherwise contract to
purchase or obtain any goods or services from, any Person of which any officer or director of the Company, or an immediate family
member of the foregoing, is a partner or shareholder (excepting stock holdings solely for investment purposes in securities of
publicly held and traded companies). Section 2.10 of the Company Disclosure Schedule contains a correct and complete description
of all transactions, contracts, agreements and understandings (oral or written) between the Company and any Related Party (collectively,
the “Related Party Agreements”).

 

Section
2.11Material Contracts.

 

(a)       Except
as disclosed in the corresponding subsection of Section 2.11(a) of the Company Disclosure Schedule, the Company is not a party
to or bound by any of the following (whether oral or written) (each a “Material Contract”):

 

(i)       any
(A) lease, sublease, license or other agreement under which the Company uses or has the right or obligation to use or pay
rent or other fees for use thereof, now or in the future, any real property (“Real Property Leases”) or (B) lease
for personal property;

 

(ii)       any
partnership, joint venture or limited liability company agreement;

 

(iii)       other
than the Transaction Documents, any agreement relating to the (A) acquisition or disposition of any business (whether by sale
of stock, sale of assets or otherwise) or (B) acquisition or disposition of assets outside the ordinary course of business;

 

(iv)       any
agreement relating to Indebtedness of the Company or Indebtedness of any other Person to the Company;

 

(v)       any
agreement that restricts the freedom of the Company to compete in any line of business, in any market or customer segment or with
any Person;

 

(vi)       any
contract or other agreement with any current or former officer, director, employee, consultant, agent or other representative or
any agreement or understanding pursuant to which the Company may be liable for any severance or termination pay or obligations;

 

 

 

 

    	 	17	 

     

    

(vii)       any
contracts or other agreements for the sale of any of its assets or properties other than in the ordinary course of business or
the grant to any Person of any preferential rights to purchase any of the assets or properties of the Company;

 

(viii)       any
outstanding contracts or agreements with any Government Agency;

 

(ix)       any
agreement for the purchase of more than $10,000 of materials, software, supplies, goods, services,
equipment or other assets, whether individually or in the aggregate;

 

(x)       any
agreement (A) providing for the sale by the Company of materials, supplies, goods, services, equipment and involving more than
$10,000, or (B) which will result in any loss to the Company upon completion of performance thereof, or any outstanding bids or
proposals that will not result in a normal profit;

 

(xi)       any
option to license, license (including software licenses, other than licenses for Off-the-Shelf Software with aggregate license
fees of under $5,000) or franchise agreement;

 

(xii)       any
commission, agency, dealer, sales representative or marketing agreement;

 

(xiii)       any
agreement containing any right of first refusal or right of first negotiation;

 

(xiv)       any
agreement pursuant to which the Company is subject to confidentiality or non-disclosure obligations;

 

(xv)       any
agreement under which the Company agrees to indemnify any party other than in the ordinary course of business, or in which the
Company agrees to indemnify any Person for consequential or incidental damages or lost profits;

 

(xvi)       any
contract or agreement to provide goods or services to any Person on a preferential or most-favored basis;

 

(xvii)       any
agreement which encumbers any Company Intellectual Property Rights other than agreements listed in (xi) above;

 

(xviii)       any
outstanding proposal related to the Company’s business;

 

 

 

    	 	18	 

     

    

 

(xix)       any
other agreement or series of related agreements, which, individually or in the aggregate, is material to the Company; and

 

(xx)       the
Consortium Agreements.

 

(b)       True
and complete copies of all Material Contracts, in each case as amended to date, have been made available to Purchaser on the Company
Data Site. Each Material Contract constitutes a valid and binding obligation of the Company and is in full force and effect in
all material respects. Each Material Contract is enforceable against the Company, as applicable, and, to the Company’s Knowledge,
the other parties thereto in accordance with its terms, subject to general equitable principles (regardless of whether such enforceability
is considered in a proceeding at equity or at Law), and except as enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general application relating to creditors’ rights. The Company
is not in default under or breach of any Material Contract, and no event or circumstance has occurred that, with notice or lapse
of time or both, would (i) constitute any default or breach thereunder by the Company or,
to the Company’s Knowledge, any other party to such Material Contract, (ii) impair or alter the rights of the
Company or, to the Company’s Knowledge, any third party, (iii) give rise to a right of termination, cancellation, amendment
or acceleration against the Company or (iv) result in the creation or imposition of any Lien on any assets or properties of
the Company.

 

(c)       Neither
the Company, nor, to the Company’s Knowledge, any other Person intends to terminate (whether for cause or convenience) or
default under any Material Contract before the expiration of its stated term, if any, and, to the Company’s Knowledge, no
Person intends not to renew such contract, if renewable by its terms. Except as set forth in Section 2.11(c) of the Company Disclosure
Schedule, no Claim for non-performance of any Material Contract is pending or, to the Company’s Knowledge, threatened. There
are no pending renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any material amounts paid or payable
under any Material Contract, and no Person has requested any such renegotiation. Except as separately identified in Section 2.5
of the Company Disclosure Schedule, no approval or consent of any Person is needed in order that the Material Contracts continue
in full force and effect following the consummation of the Transactions.

 

Section
2.12No Undisclosed Liabilities. There are no liabilities of the Company of the kind required to be disclosed
on the face of a balance sheet in accordance with GAAP (whether accrued or unaccrued, actual or contingent, matured or unmatured,
conditional or absolute, determined, determinable, unliquidated or otherwise), and there are no existing conditions, situations
or circumstances which, individually or in the aggregate, reasonably could be expected to result in such a liability or obligation,
other than: (a) liabilities or obligations to the extent disclosed or provided for in the Interim Balance Sheet; (b) liabilities
(other than an Indebtedness) that have arisen after the Interim Balance Sheet Date in the ordinary course of business; and (c) liabilities
disclosed in Section 2.12 of the Company Disclosure Schedule.

 

 

 

    	 	19	 

     

    

 

Section
2.13Litigation. There is no action, suit, investigation or proceeding pending against or, to the Company’s
Knowledge, threatened against or affecting the Company or any of its officers or directors in such capacity before any court or
arbitrator or any governmental body, agency or official nor is there any valid basis for any such action, suit, investigation or
proceeding. The Company is not subject to any judgment, order or decree. The Company has not instituted or had instituted on its
behalf any legal proceeding against any other Person.

 

Section
2.14Compliance with Laws and Court Orders. The Company is in material compliance with all applicable Laws,
Orders or other requirements of each Governmental Authority applicable to its business, properties, assets and operations (including
those Laws relating to wages and hours, classification of employees, record keeping, customs, export and sanctions compliance,
possession of classified information or zoning). The Company has not been given written notice of any alleged violation or non-compliance
of any such Law, Order or requirement. The Company is not and has not been under investigation with respect to, and has not been
given notice of any violation of any applicable Law, order or requirement or, to the Company’s Knowledge, threatened to be
charged with any such violation of any applicable Law, order or requirement.

 

Section
2.15Licenses and Permits. The Company has all Governmental Authorizations, license, franchise, permit, Order,
registration, certificate, approval or other similar authorization issued to the Company affecting, or relating in any way to,
the assets or business of the Company (collectively, the “Permits”) necessary to carry on its business as now
conducted. Section 2.15 of the Company Disclosure Schedule correctly sets forth a list of each Permit, and each pending application
for any Permit, together with the name of the Government Agency or entity issuing such Permit or with which such application is
pending. Except as set forth in Section 2.15 of the Company Disclosure Schedule, (a) the Permits are valid and in full force
and effect, (b) the Company has not been in violation of or default under, and no condition exists that with notice or lapse
of time or both would constitute a violation of or default under, the Permits, (c) no proceeding is pending or, to the Shareholders’
Knowledge, threatened, to revoke or limit any Permit and (d) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the Contemplated Transactions. The Company is in compliance in all material respects
with the terms of such Permits.

 

Section
2.16Governmental Contracts. The Company (i) is not a party to, nor is the Company or any of its assets
bound or affected by, any Government Contract, and (ii) has not submitted any Government Contract Proposal.

 

Section
2.17Proprietary Rights.

 

(a)       Company
IP Rights. Section 2.17(a) of the Company Disclosure Schedule sets forth a list of the all Intellectual Property Rights that
are used in or necessary to the operation of the Company or its business (the “Company IP Rights”), including
without limitation all: (i) patents and patent applications, along with, for any and all of the foregoing, any and all inventions
described in the patents or patent applications, in the United States, its territorial possessions and all foreign countries, and
in any and all continuations-in-part, continuations, divisions, substitutes, reissues, extensions thereof, together with all Claims
for damages or injunctive relief by reason of infringements of any patents issuing from such patent applications, with the right
to sue for past infringement and collect for same; (ii) trademarks and applications therefor; (iii) copyrights and applications
therefor; (iv) Internet domain names, (v) Licensed Intellectual Property, excluding Off-the-Shelf Software having aggregate
perpetual license fees of under $5,000; (vi) trade secrets and know-how; and (vii) software (in both object code and
source code form), specifications, drawings, and other technical documentation related to the Company business.

 

 

 

    	 	20	 

     

    

 

(b)       Ownership.
Subject to Section 2.17(b) of the Company Disclosure Schedule, the Company is the sole and exclusive owner of the right, title
and interest in and to all Company IP Rights (with the exception of the Licensed Intellectual Property) (the “Owned Intellectual
Property”). All patents, registrations and applications for Owned Intellectual Property (i) are valid, subsisting
and in proper form, and have been duly maintained, including the timely submission of all necessary filings, fees and Taxes in
accordance with the legal and administrative requirements of the appropriate jurisdictions and (ii) have not lapsed, expired
or been abandoned, and no patent, registration or application therefor is the subject of any opposition, interference, cancellation
proceeding or other legal or governmental proceeding before any Governmental Authority in any jurisdiction.

 

(c)       Licenses
to Company. The Licensed Intellectual Property is licensed pursuant to valid and binding agreements that are enforceable by
the Company in accordance with their terms and, other than as set forth in Section 2.17(c) of the Company Disclosure Schedule,
in connection with the Contemplated Transactions, are not deemed to be assigned or otherwise are freely assignable under such agreements
without consent or approval of any third party. The Company, and, to the Company’s Knowledge, any other party to any such
agreement is not in default or breach in any material respect under the terms of any such agreements and no event or circumstance
has occurred that, with notice or lapse of time or both, would constitute a material breach or default thereunder. The computer
software used by the Company in the conduct of its business was either (i) developed by employees of the Company within the
scope of their employment, (ii) developed on behalf of the Company by a third party, and in each case all ownership rights
therein have been assigned or otherwise transferred to or vested in the Company pursuant to written agreements, (iii) licensed
or acquired from a third party pursuant to a written license, assignment, or other contract that is in full force and effect and
of which the Company is not in material breach or (iv) open source software.

 

(d)       Licenses
from Company to Third Parties. Except as set forth in Section 2.17(d) of the Company Disclosure Schedule, the Company has not
has granted any licenses to another Person with respect to the Owned Intellectual Property. The Company has not granted any Person
an exclusive license under any Owned Intellectual Property. Except as set forth in Section 2.17(d) of the Company Disclosure Schedule,
the Company has not entered into any consent, indemnification, forbearance to sue, settlement agreement or cross-licensing arrangement
with any Person relating to any Intellectual Property Rights.

 

(e)       Government
Rights. Except as disclosed in Section 2.17(e) of the Company Disclosure Schedule, the Company has not provided to the U.S.
Government any ownership rights in the Owned Intellectual Property. Except as disclosed in Section 2.17(e) of the Company Disclosure
Schedule, the Company has not provided to the U.S. Government greater intellectual property rights to use third-party materials
than have been granted to the Company.

 

 

 

    	 	21	 

     

    

 

(f)       Adverse
Effect. The Contemplated Transactions will not result in any termination, loss or impairment of any Company IP Right nor require
payment by the Company of any fee to owners of any Licensed Intellectual Property.

 

(g)       Encumbrances.
The Company has not assigned, hypothecated or otherwise encumbered title in and to any of the Owned Intellectual Property and other
than as disclosed on Section 2.17(g) of the Company Disclosure Schedule, is not obligated to pay any further sums to another Person
for the use of the Licensed Intellectual Property or Owned Intellectual Property equal to or greater than $10,000 in the aggregate.
The Company has no agreement or obligation to pay any employee or consultant any sums for the use by the Company of any Intellectual
Property Rights. The Owned Intellectual Property was written and created solely by either (i) current and former employees
of the Company acting within the scope of their employment who have validly and irrevocably assigned all of their rights, including
all Intellectual Property Rights therein, to the Company pursuant to the agreements set forth in Section 2.17(g) of the Company
Disclosure Schedule or (ii) by third parties who have validly and irrevocably assigned all of their rights in and to the Owned
Intellectual Property, including all Intellectual Property rights therein, to the Company.

 

(h)       Infringement.
Except as disclosed in Section 2.17(h)(1) of the Company Disclosure Schedule, (i) to the Company’s Knowledge, there
are no infringements by any other party of any of the Owned Intellectual Property, (ii) there are no pending or, to the Company’s
Knowledge, threatened Claims against any Person, who would be entitled to indemnification by the Company for such Claims, that
the Owned Intellectual Property infringes any other Person’s Intellectual Property, (iii) making, using or selling the
Company’s products and/or services, as currently designed, does not infringe any third party’s Intellectual Property
Rights in existence as of the Closing and (iv) except as disclosed in Section 2.17(h) of the Company Disclosure Schedule,
there are no facts, conditions, situations or set of circumstances that would reasonably be expected to result in or be the basis
for any such liability in the future. Except as disclosed in Section 2.17(h)(2) of the Company Disclosure Schedule, the Company
has not entered into any agreement to indemnify any Person against any charge of infringement of any of the Company’s Intellectual
Property, and neither the Company nor to the Company’s Knowledge, such other Person has received any written communication
alleging that the Company or such Other Person, by making, using or selling the Company’s Intellectual Property, has violated
or infringed the Intellectual Property of any other Person. The Company has not been sued at any time for infringing any Intellectual
Property of another Person.

 

(i)       Know-How.
Except as disclosed in Section 2.17(i) of the Company Disclosure Schedule, there have been no disclosures by the Company or any
of their Affiliates, to any other Person, other than disclosures to Government Agencies or Persons who are bound to hold such information
in confidence pursuant to confidentiality agreements or otherwise by operation of Law, of any algorithm, process, technique, formula,
research and development results, financial results, price or cost data or other know-how relating to the business of the Company,
the unauthorized public disclosure or use of which could have individually or, in the aggregate, a Material Adverse Effect on the
Company. Except as disclosed in Section 2.17(i) of the Company Disclosure Schedule, to the Company’s Knowledge, no employee
or former employee has used any algorithm, process, technique, formula, research and development results, financial results, price
or cost data or other know-how constituting Intellectual Property of the Company for any purpose other than for the benefit of
the Company.

 

 

 

    	 	22	 

     

    

 

(j)       Open
Source Software. The Intellectual Property Rights used by the Company do not include any open source software.

 

Section
2.18Taxes.

 

(a)       Except
as otherwise set forth on Section 2.18(a) of the Company Disclosure Schedule: (i) the Company has timely filed (taking into
account any properly granted extensions of time to file) all Tax Returns with the appropriate taxing authorities required to have
been filed, and each such Tax Return is correct and complete in all material respects; (ii) all material Taxes due and owed
by the Company, whether or not shown on any Tax Return, have been timely paid; (iii)  the Company and its officers, directors
or employees responsible for Tax matters have complied with all rules and regulations relating to the withholding of Taxes and
the remittance of withheld Taxes in connection with any amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party; (iv) the Company has not waived any statute of limitations in respect of its Taxes or agreed
to any extension of time with respect to a Tax assessment of deficiency, which waiver or extension is currently in effect; (v) no
withholding is required under Section 1445 of the Code, in connection with the consummation of the Contemplated Transactions; (vi) the
Company has not engaged in any transaction that would constitute a “reportable transaction,” a transaction substantially
similar to a “reportable transaction,” or a “tax shelter” within the meaning of Sections 6011, 6111, 6662
or 6707A of the Code and the Treasury Regulations thereunder, and that has not been disclosed on an applicable Tax Return; (vii) the
Company has no outstanding ruling requests to the Internal Revenue Service or a state tax authority; (viii) the Company has
at no time made, changed or rescinded any express or deemed material election relating to Taxes that is not reflected in any Tax
Return; (ix) the Company will not be required to include any item of income in, or exclude any item of deduction from any
Tax period ending after the Closing Date as a result of any (a) change in method of accounting for a taxable period (or portion
thereof) ending on or prior to the Closing Date (including installment sale or open transaction), (b) ”closing agreement”
as described in Section 7121 of the Code or similar state or local Tax Law, or (c) material prepaid amount received on or
prior to the Closing Date; (x) the Company has not been a member of an Affiliate group of corporations within the meaning
of Section 1504(a) of the Code that has filed or at any time was required to file a consolidated federal income tax return for
any taxable period, and the Company has not been a member of an Affiliate group of corporations that has filed or at any time was
required to file a consolidated, combined or unitary income tax return under provisions of state, local or foreign tax Law comparable
to Section 1504(a) of the Code for any taxable period; (xi) the Company has no obligation under any agreement or arrangement
with any other Person with respect to which it has agreed to accept liability for Taxes of such other Person (including pursuant
to Treasury Regulations Section 1.1502-6 or comparable provision of state, local or foreign tax Law), including any liability for
Taxes as a transferee or successor, by contract or otherwise; (xii) the unpaid Taxes of the Company do not exceed the reserve
for Tax liability (excluding any reserve for deferred Taxes established to reflect temporary difference between book and Tax income)
set forth or included in the Interim Balance Sheet; (xiii) no payments by the Company to employees required under or contemplated
by this Agreement will be non-deductible under Sections 162(a), 162(m) or 280(G) or other similar provisions of the Code concerning
non-deductibility of expenses; (xiv) the Company is not the beneficiary of any extension of time within which to file any
Tax Returns; (xv) there are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company;
(xvi) the Company has not received any written notice from any Tax authority that such Tax authority currently plans to assess
any additional Taxes for any period for which Tax Returns have been filed; (xvii) no Tax audits or administrative or judicial
Tax proceedings are pending or being conducted with respect to the Company; (xviii) the Company has not received from any
taxing authority (including jurisdictions in which the Company has not filed Tax Returns) any currently unresolved (A) written
notice indicating an intent to open an audit or other review, (B) written request for information related to Tax matters or
(C) written notice of deficiency or proposed adjustment for any amount of Tax, proposed, asserted or assessed by any taxing
authority against the Company; (xix) the Company has not distributed stock of another Person or had its stock distributed
by another Person in a transaction that was purported or intended to be governed in whole or in party by Sections 354, 355 or 361
of the Code; (xx) at no time has a nonresident alien (as defined in Section 7701(b)(1)(B) of the Code) been a shareholder
of the Company; (xxi) no liability can be imposed on the Company under Section 4979A of the Code; and (xxii) the Company
has not been requested to or participated in an “International Boycott” within the meaning of Section 999 of the Code.

 

 

 

    	 	23	 

     

    

 

(b)       Tax
Returns. The Company has made available to Purchaser on the Company Data Site (i) complete copies of all Tax Returns of
the Company requested by Purchaser, and of all examination reports and statements of deficiencies assessed against or agreed to
by the Company for all taxable periods for which the applicable statute of limitations has not yet expired, and (ii) complete
copies of all private letter rulings, revenue agent reports, information documents requests, notices of proposed deficiencies,
deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests, and any similar documents,
submitted by, received by, agreed to by or on behalf of or otherwise relating to the Company with respect to a taxable period for
which the statute of limitations has not yet expired. Section 2.18(b) of the Company Disclosure Schedule lists each state, local,
county, municipal or foreign jurisdiction in which the Company files or is or has been determined by any Governmental Agency to
be required to file a Tax Return or is or has been determined by any Governmental Agency to be liable for any Tax on a “nexus”
basis at any time for a taxable period for which the statute of limitations has not expired.

 

(c)       Partnerships.
The Company does not own and has not owned an interest in any Person treated as a partnership for Tax purposes.

 

Section
2.19Real Property. The Company has never owned any real property or interest therein. Section 2.11(a)(i)
of the Company Disclosure Schedule sets forth a true and complete list of all Real Property Leases and other than the property
under the Real Property Leases, the Company has never leased any other real property or interest therein. No third-party claim
has been made against the Company or against the landlord under any Real Property Lease based on an event or circumstance occurring
on the leased real property or relating to use and occupancy by the Company of the leased real property.

 

 

 

 

    	 	24	 

     

    

Section
2.20Environmental Matters.

 

(a)       Except
as identified in Section 2.20(a) of the Company Disclosure Schedule:

 

(i)       no
notice, notification, demand, request for information, citation, summons or order has been received, no penalty has been assessed,
and no investigation, action, Claim or review (or any basis therefor) is pending or, to the Company’s Knowledge, is threatened
by any Governmental Authority or other Person with respect to any matters relating to the Company or any Person for which the Company
has retained or assumed liability either contractually or by operation of Law, and relating to or arising out of any Environmental
Law;

 

(ii)       no
complaint has been filed with respect to any matters relating to the Company and relating to or arising out of any Environmental
Law;

 

(iii)       there
are no liabilities of or relating to the Company, of any kind whatsoever whether accrued, contingent, absolute, determined or otherwise,
arising under or relating to any Environmental Law, and to the Company’s Knowledge there are no facts, conditions, situations
or set of circumstances that would reasonably be expected to result in or be the basis for any such liability;

 

(iv)       the
Company is and has been in compliance with all Environmental Laws in all material respects, and has obtained and is in compliance
with all Environmental Permits in all material respects; and

 

(v)       the
Company has never performed or subcontracted for the performance of, at its own facilities or otherwise, any activity involving
the disturbance, abatement, repair or removal of any Material of Environmental Concern.

 

(b)       The
Company has not used or disposed of any Materials of Environmental Concern.

 

(c)       The
Company is not subject to any Environmental Laws requiring (i) the performance of site assessment by the Company for Materials
of Environmental Concern, (ii) the removal or remediation by the Company of Materials of Environmental Concern, (iii) the
giving of notice to, or receiving the approval of, any Governmental Authority by the Company, or (iv) the recording or delivery
by the Company to any other Person of any disclosure document or statement pertaining to matters of environmental concern by virtue
of the Transactions or as a condition to the effectiveness of any of the Transactions.

 

(d)       There
has been no environmental investigation, study, audit, test, review or other analysis conducted in relation to the current or prior
business of the Company or any property or facility now or previously owned, leased or operated by the Company which has not been
made available to Purchaser on the Company Data Site at least fifteen (15) days prior to the date of this Agreement.

 

 

 

 

    	 	25	 

     

    

For purposes of this
Section 2.20, the following terms shall have the meanings set forth below:

 

“Company”
shall include the Company and any entity which is, in whole or in part, a predecessor of the Company.

 

“Environmental
Laws” means any Law (including common law), treaty, judicial decision, regulation, rule, judgment, order, decree, injunction,
permit or governmental restriction or requirement or any agreement or contract with any Governmental Authority or other third party,
whether now or hereinafter in effect, relating to human health and safety, the environment or to pollutants, contaminants, wastes
or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substances, wastes or materials.

 

“Environmental
Permits” means all permits, licenses, franchises, certificates, approvals and other similar authorizations of Governmental
Authorities relating to or required by Environmental Laws and affecting the business of the Company as currently conducted.

 

“Materials
of Environmental Concern” shall mean chemicals, pollutants, contaminants, toxic or hazardous substances, petroleum and
petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead and lead-based paints and materials,
and radon.

 

Section
2.21Insurance Coverage. Section 2.21 of the Company Disclosure Schedule sets forth (a) a true and complete
list and description of all insurance policies, fidelity bonds and other insurance arrangements and other contracts or arrangements
for the transfer or sharing of insurance risks by the Company with respect to the business, assets, properties, operations, employees,
officers or directors of the Company (the “Company Policies”), together with a statement of the aggregate amount
of Claims paid out, and Claims pending, under each such insurance policy or other arrangement through the date hereof, (b) the
dates from which such policies or other arrangements have been in effect, and (c) a description of such risks that the Company
has designated as being self-insured. True and complete copies of all such Company Policies have been made available to Purchaser
on the Company Data Site. The Company has policies of insurance of the type and, to the Company’s Knowledge, in amounts customarily
carried by Persons conducting businesses or owning assets similar to those of the Company. All such Company Policies are in full
force and effect, all premiums due thereon have been timely paid, and the Company is otherwise in compliance in all material respects
with the terms and provisions of such policies and arrangements. Furthermore, (i) the Company has not received any notice
of cancellation or non-renewal of any such policy or arrangement, nor is the termination of any Company Policy or arrangements
threatened, (ii) there is no claim pending under any of such policies or arrangements as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or arrangements or in respect of which the underwriters have reserved their
rights, (iii) the Company has not received any notice or indication from any of its insurance carriers that any insurance
premiums will be increased in the future or that any insurance coverage presently provided for will not be available to the Company
in the future on substantially the same terms as now in effect and (iv) none of such Company Policies provide for any retrospective
premium adjustment, experienced-based liability or loss sharing arrangement affecting the Company.

 

 

 

 

    	 	26	 

     

    

Section
2.22Employee Benefit Plans.

 

(a)       Section
2.22(a) of the Company Disclosure Schedule contains a correct and complete list identifying (i) each “employee benefit
plan”, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), and
(ii) each employment, severance or similar contract, plan, arrangement or policy and each other plan, agreement or arrangement
(written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock-related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements), health
or medical benefits, disability benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) which is maintained,
administered, contributed to or required to be contributed to by the Company or any ERISA Affiliate and covers any employee or
former employee of the Company, or with respect to which the Company or any ERISA Affiliate has any liability, whether direct or
indirect, actual or contingent, and whether formal or informal (collectively, the “Employee Plans”). Copies
of each such plan (and, if applicable, any related trust agreement and all amendments to such requested plans), together with the
most recent annual report (Form 5500 including, if applicable, Schedule B thereto) prepared in connection with any such plan, have
been furnished to Purchaser. For purposes of this Section 2.22, “ERISA Affiliate” of any Person means any other
Person that, together with such Person, would be treated as a single employer under Section 414 of the Code or Section 4001 of
ERISA.

 

(b)       Neither
the Company nor any ERISA Affiliate maintains, or has ever maintained, any Employee Plan that (i) constitutes or constituted
a “multiemployer plan,” as defined in Section 3(37) of ERISA, (ii) is or was subject to Title IV of ERISA, (iii) is
or was intended to be qualified under Section 401(a) of the Code or any trust forming a part thereof; (iv) is or was a “nonqualified
deferred compensation plan” (within the meaning of Section 409A of the Code). Neither the Company nor any ERISA Affiliate
is a party to, or otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of interest
and/or taxes imposed by Section 409A(a)(1)(B) of the Code.

 

(c)       Each
Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations, including ERISA and the Code, which are applicable to such Employee Plan, including timely adoption of all
amendments required to maintain each such Employee Plan’s compliance with applicable Law. All contributions and payments
accrued under each Employee Plan have been discharged and paid on or prior to the Closing Date, other than with respect to any
accrued during the payroll period which includes the Closing Date.

 

 

 

 

    	 	27	 

     

    

(d)       Except
as set forth in Section 2.22(d) of the Company Disclosure Schedule, neither the execution of this Agreement or any other Transaction
Documents, nor the consummation of the Contemplated Transactions will (i) entitle any employee or independent contractor of
the Company to severance pay or any increase in severance pay upon any termination of employment after the date of this Agreement
or (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise)
of compensation or benefits under, increase the amount payable, or result in any other material obligation pursuant to, any Employee
Plan. The Company does not have any liability with respect to post employment or retiree health, medical or life insurance benefits
for retired, former or current employees of the Company.

 

(e)       There
is no pending or, to the Company’s Knowledge, threatened or contingent Claim against the Company relating to any Employee
Plans. No Employee Plan or fiduciary thereof is under review or investigation by any Government Agency or Governmental Authority.
No fiduciary of any Employee Plan has breached any fiduciary duty it owes to such Employee Plan or any of its participants.

 

Section
2.23Employees.

 

(a)       Set
forth in Section 2.23 of the Company Disclosure Schedule is a true and complete list as of the date of this Agreement of (i) the
names and titles of all employees, directors and officers of the Company and (ii) the names of all independent contractors
or consultants. Except as set forth in Section 2.23 of the Company Disclosure Schedule, the Company has not entered into an employment
agreement, oral or written, with any Person and all employees are “at will” and will not be owed any severance, termination
or other special payments or benefits upon termination of employment. Set forth in Section 2.23 of the Company Disclosure Schedule
is a list of the names of Persons with whom the Company has entered into a separation agreement and general release or similar
agreements within the last seven (7) years.

 

(b)       The
Company has engaged CBIZ- Flex-Pay (“Payroll Company”) to facilitate employment tax administration and payroll
processing. Notwithstanding the foregoing, all personnel of the Company processed through Payroll Company are employees of the
Company, and all references in this Agreement to Company employees, and/or Persons employed by the Company, shall include personnel
processed by Payroll Company on behalf of the Company.

 

Section
2.24Labor Matters. The Company is in material compliance with all Laws respecting terms and conditions of
employment and employment practices, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational safety and health and plant closing. Each Person employed
by the Company who was or is classified by the Company as exempt from overtime requirements under applicable Law was and is properly
classified as exempt, and no such Person has any Claim against the Company for wages or benefits relating to being classified as
exempt under applicable Law. There exists no basis for the assessment of any unpaid wages with respect to any employees of the
Company. All Persons treated as independent contractors or consultants by the Company are not employees under applicable Law, and
no such Person has any Claim against the Company for wages or benefits relating to being classified as an independent contractor
under applicable Law. There is no unfair labor practice complaint pending or, to the Company’s Knowledge, threatened against
the Company before the National Labor Relations Board or any state or local authority or agency. The Company is not and has not
been bound by or party to any collective bargaining agreement. There is no labor strike, slowdown, lockout or stoppage or union
organization campaign, election or similar action pending or, to the Company’s Knowledge, threatened against or affecting
the Company. The Company has not incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act,
as it may be amended from time to time, or similar applicable state Law. The Company has never employed any illegal aliens and
has complied with all immigration laws. To the Company’s Knowledge, no employee of the Company has (a) breached any
agreement to keep in confidence information acquired by that employee in confidence or in trust prior to that employee’s
employment with the Company by disclosing such information to the Company, or (b) through his or her employment by the Company,
breached any noncompetition, nonsolicitation or noninterference agreement or used trade secrets of any other Person. During the
past three (3) years, no significant accidents or injuries have occurred in the workplace or in work-related activities involving
the Company or any of its employees, officers, consultants, directors or contractors.

 

 

 

 

    	 	28	 

     

    

Section
2.25Books and Records. The Company has maintained business records, including books of account, minute books
and stock record books, with respect to the assets and its business and operations which are true, accurate and complete in all
material respects, and there are no material deficiencies in such business records. True and complete copies of all minute books
and all stock record books of the Company have heretofore been made available to Purchaser on the Company Data Site. None of the
records, systems, controls, data or information which are material to the operation of the Company’s business are recorded,
stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical
or photographic process, whether or not computerized) which (including all means of access thereto and therefrom) are not under
the exclusive ownership and direct Control of the Company.

 

Section
2.26Customers; Suppliers. Since January 1, 2016, there has not been (a) any adverse change in the business
relationship of the Company with any customer or supplier of the Company’s business or (b) any adverse change in any
material term (including payment terms) of the customer or supplier agreements or related agreements with any such customer or
supplier. To the Company’s Knowledge, no customer or supplier of the Company’s business intends to cease doing business
with the Company or materially decrease the amount of business it does with the Company.

 

Section
2.27Customer or Third-Party Approval. All work substantially completed by the Company prior to the Closing
Date which will require either customer or third-party approval or acceptance but which has not yet received the required customer
or third-party approval or acceptance will meet all material requirements and specifications of the applicable contract as modified
through the Closing Date in all material respects.

 

 

 

 

    	 	29	 

     

    

Section
2.28Absence of Unlawful Payments. The Company (including any of its officers, directors, agents, distributors,
employees or other Person associated with or acting on its behalf) has not, directly or indirectly, taken any action which would
cause it to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations thereunder or
any similar anti-corruption or anti-bribery Laws applicable to the Company in any jurisdiction other than the United States (in
each case, as in effect at the time of such action) (collectively, the “FCPA”) or used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made, offered or authorized
any unlawful payment to foreign or domestic government officials or employees, whether directly or indirectly, or made, offered
or authorized any unlawful bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment, whether directly
or indirectly, except for any of the foregoing which is no longer subject to potential claims of violation as a result of the expiration
of the applicable statute of limitations. The Company has established reasonable internal controls and procedures intended to ensure
compliance with the FCPA.

 

Section
2.29International Trade. The Company has not unlawfully exported, disclosed, released or otherwise provided
access to information, software, technical data or technical assistance that is Controlled for export under, and has at all times
been in compliance with, the International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR) and/or other
applicable export or sanction Law.

 

Section
2.30Service or Product Liability. There is no action or suit, proceeding, or to the Company’s Knowledge,
inquiry or investigation, by or before any court or Governmental Authority pending or, to the Company’s Knowledge, threatened
against or involving the Company relating to any services performed by the Company that are alleged to have been defective or improperly
rendered or not in compliance with contractual requirements or relating to any products or software manufactured, sold, leased,
licensed or delivered by the Company which are alleged to be defective or not in compliance with contractual requirements; nor,
to the Company’s Knowledge, is there any basis for or any event or circumstances that might give rise to any such action,
suit or proceeding, inquiry or investigation, Claim or notice. The Company has no liability (and to the Company’s Knowledge,
there is no basis for any present or future action, suit, proceeding, inquiry, investigation, charge, complaint, Claim, notice
or demand against it giving rise to any liability) arising out of injury to individuals or property as a result of the ownership,
possession, or use of any services, products or software designed, manufactured, sold, leased, licensed or delivered by the Company.

 

Section
2.31Finders’ Fees. No broker, finder, agent or similar intermediary has acted on behalf of the Company
or the Shareholders in connection with this Agreement or the Contemplated Transactions, and there are no brokerage commissions,
finders’ fees or similar fees or commissions payable by the Company in connection therewith based on any agreement, arrangement
or understanding with the Company or the Shareholders.

 

Section
2.32Bank Accounts and Powers of Attorney. Set forth in Section 2.32 of the Company Disclosure Schedule is
an accurate and complete list showing (a) the name and address of each bank or other depository with which the Company has
an account and/or safe deposit box, the number of any such account or any such box and the names of all Persons authorized to draw
thereon or to have access thereto, and (b) the names of all Persons, if any, holding powers of attorney from the Company and
a summary statement of the terms thereto.

 

 

 

 

    	 	30	 

     

    

Section
2.33Consortium Agreement. True and complete copies of all Consortium Agreements, in each case as amended
to date, have been made available to Purchaser on the Company Data Site. Each Consortium Agreement constitutes a valid and binding
obligation of the Company and is in full force and effect in all material respects. Each Consortium Agreement is enforceable against
the Company, as applicable, and, to the Company’s Knowledge, the other parties thereto in accordance with its terms, subject
to general equitable principles (regardless of whether such enforceability is considered in a proceeding at equity or at Law),
and except as enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application relating to creditors’ rights. The Company is not in default under or breach of any Consortium
Agreement, and no event or circumstance has occurred that, with notice or lapse of time or both, would (i) constitute any default
or breach thereunder, (ii) impair or alter the rights of the Company or any third party, (iii) give rise to a right of termination,
cancellation, amendment or acceleration, or (iv) result in the creation or imposition of any Lien on any assets or properties of
the Company. Neither the Company, nor, to the Company’s Knowledge, any other Person intends to terminate (whether for cause
or convenience) or default under any Consortium Agreement before the expiration of its stated term, if any, and, no Person intends
not to renew such contract, if renewable by its terms. Except as set forth in Section 2.33 of the Company Disclosure Schedule,
no Claim for non-performance of any Consortium Agreement is pending or, to the Company’s Knowledge, threatened. There are
no pending renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any material amounts paid or payable
under any Consortium Agreement, and no Person has requested any such renegotiation. Except as separately identified in Section
2.5 of the Company Disclosure Schedule, no approval or consent of any Person is needed in order that the Consortium Agreements
continue in full force and effect following the consummation of the Transactions.

 

Section
2.34Full Disclosure. No representation, warranty or other statement of the Company or the Shareholders contained
in this Agreement contains an untrue statement of material fact or omits to state a material fact necessary in order to make such
representation, warranty or other statement, in light of the circumstances under which it was made, not misleading. Neither the
Company nor any of the Shareholders has withheld from Purchaser any documents or other information in its possession that, taken
as a whole with all other documents and information in the Company’s or the Shareholders’ possession, (i) would
lead a reasonable Person in Purchaser’s position to conclude that any such representation, warranty or other statement is
untrue in any material respect, or (ii) would be material to the decision of a reasonable Person in Purchaser’s position
to execute this Agreement and consummate the Transaction. The Company or the Shareholders have made available on the Company Data
Site true, correct and complete copies of the Certificate of Incorporation, Bylaws, and all other material organizational and constituent
documents and minute books of the Company (including stock ledger) and all Material Contracts, Financial Statements, Tax Returns
and insurance policies referred to in this Agreement.

 

 

 

    	 	31	 

     

    

 

ARTICLE
IIA.

REPRESENTATIONS AND WARRANTIES OF

COMPANY SHAREHOLDERS

 

Each Shareholder, severally
and not jointly, represents and warrants to Purchaser as of the date of this Agreement and as of the Closing Date as follows:

 

Section 2A.1  Valid
Title. Such Shareholder is the sole, true, and lawful owner of the type and number of shares of Company Common Stock in the
amount set forth in Section 2.3 of the Company Disclosure Schedule, free and clear of any and all Claims, Liens, and any other
limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such shares). Except as
set forth on Section 2.3 of the Company Disclosure Schedule, such Shareholder owns no securities of the Company or options to purchase
or rights to subscribe for or otherwise acquire any securities of the Company and has no other interest in or voting rights with
respect to any securities of the Company. Except as set forth on Section 2.3 of the Company Disclosure Schedule, none of such Shareholder's
shares of Company Common Stock is subject to any voting trust or other agreement or arrangement with respect to the voting of such
stock.

 

Sectioin 2A.2  Authorization;
Binding Effect. Such Shareholder has the legal capacity to enter into this Agreement and the Transaction Documents
contemplated hereby to which such Shareholder is a party and to consummate the Contemplated Transactions and thereby. This
Agreement, the Transaction Documents and each such document to which such Shareholder is or will be a party have been (and as
to those yet to be executed, will be) duly executed and delivered by such Shareholder and, when duly authorized, executed and
delivered all other parties thereto, will constitute a valid and binding agreement of such Shareholder enforceable against
such Shareholder in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at
Law).

 

Section 2A.3  Governmental
Authorization and Consents. No Governmental Authorization of, filing with, or notice to, any Governmental Authority or
any lenders, lessors, creditors, stockholders or any other Person, is required by such Shareholder in connection with the
execution, delivery and performance by such Shareholder of this Agreement and each of the documents, agreements, instruments
and certificates to which such Shareholder is a party in connection with the Contemplated Transactions, and the consummation
by such Shareholder of the transactions contemplated hereunder and thereunder.

 

Section 2A.4  Non-contravention.
The execution and delivery of this Agreement, and each of the documents, agreements, instruments and certificates to which
such Shareholder is a party, by such Shareholder, the performance by such Shareholder of his or her respective obligations
hereunder and thereunder, and the consummation of the Contemplated Transactions, do not and will not (a) contravene or
conflict with any applicable provision of any Law, regulation, rule, judgment, injunction, Order or decree binding upon or
applicable to the Shareholder, or (b) contravene or constitute a default under any written agreement or obligation to
which such Shareholder is a party by which any of his or her properties or assets are bound.

 

 

 

    	 	32	 

     

    

 

Article
III

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents
and warrants to the Company and the Shareholders as of the date of this Agreement as follows:

 

Section
3.1Corporate Existence and Power. Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its business as now conducted and to own the properties and
assets it now owns.

 

Section
3.2Corporate Authorization; Binding Effect. Purchaser has all requisite corporate power and corporate authority
required to enter into this Agreement and all documents, agreements, instruments and certificates contemplated hereby to which
it is or will be a party and to consummate the Contemplated Transactions to be consummated by it. The execution and delivery of
such documents to which each of Purchaser is or will be a party by Purchaser, and the consummation of the transactions to be consummated
by Purchaser hereunder, have been duly authorized by all necessary corporate action on the part of Purchaser. This Agreement and
the Transaction Documents to which each is a party have and/or will be duly executed and delivered by Purchaser, and, when duly
authorized, executed and delivered all other parties thereto, such agreements will constitute a valid and binding agreement of
such Purchaser enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors’ rights generally and
by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

 

Section
3.3Governmental Authorization. No Governmental Authorization of, filing with, or notice to, any Governmental
Authority or any other Person is required by Purchaser in connection with the execution, delivery and performance by Purchaser
of this Agreement or any document to which it is a party in connection herewith and the consummation by Purchaser of the transactions
contemplated hereunder to be consummated by it.

 

Section
3.4Non-contravention. Except for the approval of the Board of Directors of Purchaser, which has not yet been
obtained and which is not required to be obtained in order to make this Agreement a legally binding Agreement of Purchaser, the
execution and delivery by Purchaser of this Agreement and the documents, instruments, agreements and certificates contemplated
hereby to which it is or will be a party, the performance by Purchaser of its obligations hereunder and thereunder and the consummation
of the Contemplated Transactions do not and will not (a) contravene or conflict with the Certificate (or Articles) of Incorporation
or Bylaws of Purchaser, or (b) contravene or conflict with any applicable provision of any Law, regulation, rule, judgment,
injunction, Order or decree binding upon or applicable to Purchaser in any material respect.

 

Section
3.5Litigation. There is no action, suit, investigation or proceeding pending against or, to Purchaser’s
Knowledge, threatened against or affecting Purchaser before any court or arbitrator or any governmental body, agency or official,
which in any manner challenges or seeks to prevent, enjoin, alter or materially delay any of the Contemplated Transactions.

 

 

 

    	 	33	 

     

    

 

Article
IV

CONDUCT OF BUSINESS

 

Section
4.1Conduct of Business by the Company Pending the Transaction. The Company and the Shareholders covenant
and agree that, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement
or the Closing Date, unless Purchaser shall otherwise agree in writing, the Company shall in all material respects conduct its
business only in the ordinary course of business, and the Company shall use reasonable efforts to preserve substantially intact
the business organization of the Company, to keep available the services of the present officers, employees and consultants of
the Company and to preserve the present relationships of the Company with customers, suppliers and other Persons with which the
Company has significant business relations, with the intent that such goodwill and ongoing business relationships shall be unimpaired
at the Closing Date, provided, however that prior to Closing the Company shall, notwithstanding anything herein to
the contrary, be permitted to distribute to the Shareholders any cash or cash equivalents of the Company, subject to the effects
of Section 1.9 hereof. By way of amplification and not limitation, except as contemplated by this Agreement, the Company shall
not, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or
the Closing Date, directly or indirectly, undertake any of the following actions without the prior written consent of Purchaser,
unless otherwise expressly provided for in this Agreement:

 

(a)       amend
or otherwise change the Certificate of Incorporation or Bylaws of the Company;

 

(b)       issue,
sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class other than pursuant to the exercise of Stock Options outstanding on the date of this Agreement, or any options,
warrants, convertible securities, exchangeable securities or other rights of any kind to acquire any shares of capital stock of
any class, or any other ownership interest (including, without limitation, any phantom interest) in the Company, any of its Affiliates;

 

(c)       sell,
pledge, dispose or encumber any assets of the Company (other than sales and dispositions in the ordinary course of business);

 

(d)       (i) split,
combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (ii) amend the terms or change the period of exercisability
of, purchase, repurchase, redeem or otherwise acquire any of its securities, including, without limitation, shares of Common Stock
or any option, warrant, convertible or exchangeable securities or other right, directly or indirectly, to acquire shares of Common
Stock, or propose to do any of the foregoing, except for the termination of any arrangement providing for the issuance of shares
thereunder;

 

 

 

    	 	34	 

     

    

 

(e)       (i) acquire
(by consolidation, or acquisition of stock or assets) any material property or assets, make any investment in, or make any capital
contributions to, any corporation, partnership or other business organization or division thereof, (ii) incur any Indebtedness,
make any loans or advances, (iii) enter into, terminate or amend any Material Contract or agreement other than in the ordinary
course, (iv) authorize any capital expenditures or purchases of fixed assets which are, in the aggregate, in excess of $15,000;
or (v) enter into or amend any contract, agreement, commitment or arrangement to effect any of the matters prohibited by this
Section 4.1(e);

 

(f)       (i) increase
the compensation or fringe benefits payable or to become payable to its directors, officers or employees, other than increases
consistent with past practices; provided such increases in the aggregate, shall not exceed four percent (4%), (ii) grant any
severance or termination pay to, or enter into any severance agreement or other agreement providing for severance payments with,
any director, officer or other employee of the Company, (iii) establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any current or former directors,
officers or employees, (iv) enter into any employment or consulting agreement, (v) except as otherwise expressly contemplated
by this Agreement, accelerate the payment, right to payment or vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits, or (vi) enter into, amend, waive or terminate any
agreement or arrangement with any director, officer, employee or consultant, which limits or restricts the director, officer, employee
or consultant from engaging or competing in any business or in any geographic area;

 

(g)       take
any action to change material accounting policies or procedures (including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts receivable);

 

(h)       make
any material Tax election inconsistent with past practice, or settle or compromise any material federal, state, local or foreign
Tax liability, or agree to an extension of a statute of limitations;

 

(i)       pay,
discharge or satisfy any Claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the Financial Statements or incurred in the ordinary course of business and consistent with past
practice;

 

(j)       enter
into any compromise or settlement of, or take any material action with respect to, any litigation, action, suit, claim, proceeding
or investigation;

 

 

 

    	 	35	 

     

    

 

(k)       adopt
or enter into a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other material
reorganization (other than the Transaction);

 

(l)       enter
into any agreement, understanding or commitment that restrains, limits or impedes the Company’s ability to compete with or
conduct any business or line of business;

 

(m)       plan,
announce, implement or effect any reduction in force, lay-off, early retirement program, severance program or other program or
effort concerning the termination of employment of employees of Company;

 

(n)       enter
into any new agreement in an amount in excess of $15,000 (other than contracts with customers entered into in the ordinary course
of business consistent with past practice) or which will remain in effect for longer than one year from the date hereof or with
terms other than ordinary course of business terms consistent with past practice;

 

(o)       assign,
license, transfer or impair in any way the Owned Intellectual Property of the Company, such prohibited activities to include, without
limitation, licensing of the Company’s software, technology or Owned Intellectual Property to any third party, disclosure
of any trade secrets to any third party with or without a non-disclosure agreement or pledging the Company’s software, technology
or Owned Intellectual Property as collateral in any manner (except for non-exclusive licenses of Owned Intellectual Property of
the Company to customers of the Company in the ordinary course of customer contracts consistent with Company’s past practice);
or

 

(p)       take,
or agree in writing or otherwise to take, any of the actions described in Section 4.1(a) through (o) above, or any action which
would make any of the representations or warranties of the Company and/or Shareholders contained in this Agreement untrue or incorrect
in any material respect, prevent the Company from performing, or cause the Company not to perform, its covenants hereunder or that
would or could reasonably be expected to, result in any of the conditions of the Transaction set forth in Article VI not being
satisfied.

 

Section
4.2Filing of Tax Returns.

 

(a)       The
Company shall prepare or cause to be prepared and file or cause to be filed all Tax Returns of the Company that are required to
be filed on or prior to the Closing Date (taking into account, for these purposes, any extension of the time to file any such Tax
Return), including any amended Tax Returns required for such periods. Unless otherwise required by applicable Law, every material
position taken on such Tax Returns shall be reasonably consistent with the methodology and elections employed by the Company in
prior years. The Company shall provide Purchaser with copies of any Tax Returns described in the preceding sentence that have not
been provided to Purchaser prior to the date hereof.

 

 

 

    	 	36	 

     

    

 

(b)       Purchaser
shall prepare or cause to be prepared and file or cause to be filed any Tax Returns of the Company for taxable periods ending on
or prior to the Closing Date that are required to be filed after the Closing Date. For the avoidance of doubt, the foregoing Tax
Returns shall include, without limitation, all applicable federal, state, and local payroll filings of the Company, as well as
any Forms W-2 and Forms 1099 or other documents provided to any current or former employee or consultant of the Company with respect
to any payments made to such Persons through and including the Closing Date. Unless otherwise required by applicable Law, every
material position taken on such Tax Returns shall be reasonably consistent with the methodology and elections employed by the Company
in prior years. Purchaser shall permit the Shareholders’ Representative to review and comment on each such Tax Return prior
to filing as provided herein. Not less than thirty (30) days before the earlier of the due date of any such Tax Return or the date
on which such Tax Returns are to be filed, Purchaser shall furnish a draft of such Tax Return (as proposed to be filed) to Shareholders’
Representative for his review. Not less than fifteen (15) days before the earlier of the due date of any such Tax Return or the
date on which any such Tax Return is to be filed, the Shareholders’ Representative shall forward to Purchaser any comments
he may have relating to such Tax Return, and Purchaser and the Shareholders’ Representative agree to resolve in good faith
any disputes regarding such Tax Return. Not less than five (5) days before the earlier of the due date of such Tax Return or the
date on which such Tax Return is to be filed, Purchaser shall forward to the Shareholders’ Representative the Tax Return
to be filed. Any dispute regarding such Tax Returns that cannot be resolved by negotiation between Purchaser and the Shareholders’
Representative shall be resolved by the Independent Firm; provided, that, in resolving a dispute with respect to
a Tax Return, the Independent Firm shall be bound by the requirement that the Tax Return be prepared in a manner consistent with
past reporting practices of the Company unless otherwise required by applicable law only (it being understood that a position is
in accordance with applicable law only if there is substantial authority for such position). The fees and expenses of the Independent
Firm (a) shall be borne one-half (1/2) severally by the Shareholders in accordance with each Shareholder’s Pro Rata
Portion, and (b) shall be borne one-half (1/2) by Purchaser. Purchaser and the Shareholders’ Representative shall make
available to the Independent Firm and to each other all relevant books and records and working papers relating to the Tax Return
under dispute and all other items reasonably requested by the Independent Firm; provided, that neither party shall not be required
to provide any attorney-client privileged documents or communications. If any dispute with respect to a Tax Return is not resolved
prior to the due date of such Tax Return, such Tax Return shall be filed in the manner Purchaser deems correct and the Tax shown
as due on such Tax Return shall be paid in accordance with this Section 4.2(b), and if the dispute is subsequently resolved by
the Independent Firm in a manner that differs from the manner in which the Tax Return was filed, Purchaser shall file an amended
Tax Return in a manner consistent with the resolution of the dispute. Any Tax refund or Tax credit that relates to the portion
of a Tax period covered by the Tax Return ending on or before the Closing Date shall be paid to the Shareholders; provided,
that to the extent such refund or credit is attributable to a carryback of Tax losses from Tax periods following the Closing Date,
it shall belong to Purchaser (it being agreed that Purchaser shall have no obligation to carryback any such losses). All other
Tax refunds or credits shall belong solely to Purchaser. Likewise, to the extent not reflected in the Closing Balance Sheet and
paid by way of adjustment to the Purchase Price as provided in Section 1.8, such portion of any Taxes paid by Purchaser which relates
to the portion of any such taxable period ending on the Closing Date shall be reimbursable to Purchaser by the Shareholders, jointly
and severally. For purposes of this Section 4.2(b), in the case of any Taxes that are imposed on a periodic basis and are payable
for a taxable period that includes (but does not end on) the Closing Date, the portion of such Tax which relates to the portion
of such taxable period ending on the Closing Date shall (x) in the case of any Taxes other than Taxes based upon or related
to income or receipts, be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator
of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days
in the entire taxable period, and (y) in the case of any Tax based upon or related to income or receipts be deemed equal to
the amount which would be payable if the relevant taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Company.

 

 

 

    	 	37	 

     

    

 

(c)       Purchaser
and the Shareholders’ Representative shall cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section 4.2 and any audit, litigation or other proceeding with respect
to Taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of any material provided hereunder. Purchaser and Shareholders’
Representative agree to (i) retain all books and records with respect to Tax matters pertinent to the Company relating to
any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified
by Purchaser or Shareholders’ Representative, any extensions thereof) of the respective taxable periods, and to abide by
all record retention agreements entered into with any taxing authority, and (ii) give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or
Shareholders’ Representative, as the case may be, shall allow the other party to take possession of such books and records.
In addition, Purchaser and the Shareholders’ Representative will, to the maximum extent allowed by applicable Law, elect
with the relevant taxing authorities to treat the portion any Tax periods described in Section 4.2(b) that begins before the Closing
Date as a short taxable period that ends on the Closing Date.

 

(d)       All
transfer, documentary, sales, use, stamp, registration and other similar such Taxes and fees (including any penalties and interest)
incurred in connection with this Agreement shall be promptly paid by Shareholders in accordance with their respective Pro Rata
Portion. Any such Taxes of the Company not paid by the Shareholders shall be reimbursed to Purchaser out of the Holdback Amount.
Purchaser shall file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, and, if required by applicable Law, the other parties shall, and shall cause their
Affiliates to, join in the execution of any such Tax Returns and other documentation. The expense of such filings shall be paid
by the Shareholders by way of prompt offset/reimbursement out of the Holdback Amount.

 

 

 

 

    	 	38	 

     

    

(e)       Purchaser
shall have full responsibility for and discretion in handling any Tax controversy relating to a Tax period ending on or prior to
or subsequent to the Closing Date. The Shareholders’ Representative shall furnish to Purchaser or give Purchaser access to
all material relevant information in its possession concerning the Tax controversy that is the subject of such proceeding. The
Shareholders’ Representative shall have the right to participate in the defense or settlement of such straddle proceeding,
at its sole cost and expense, through its own legal counsel. Purchaser shall not settle or compromise a claim or consent to the
entry of any judgment that would adversely affect the Shareholders (or the Company for any period or portion thereof ending on
or before the Closing Date) without the prior written consent of the Shareholders’ Representative, which consent shall not
be unreasonably withheld, conditioned or delayed.

 

Article
V

COVENANTS

 

Section
5.1Access to Information; Confidentiality. Upon reasonable notice the Company and the Shareholders shall
afford, to the officers, employees, accountants, counsel, financial advisors and other representatives of Purchaser reasonable
access during normal business hours, during the period prior to the Effective Time, to all its properties, books, contracts, commitments
and records and, during such period, the Company shall furnish promptly to Purchaser all information concerning its business, properties
and personnel as Purchaser may reasonably request, and the Company and the Shareholders shall make available to Purchaser the appropriate
individuals (including attorneys, accountants and other professionals) for discussion of its business, properties and personnel
as Purchaser may reasonably request.

 

Section
5.2Consents; Approvals. The Company and the Shareholders shall each use their best efforts to take all appropriate
action to do or cause to be done all things necessary, proper or advisable under applicable Laws to consummate the Transaction
and the other Contemplated Transactions, including, without limitation, using their best efforts to obtain all consents, waivers,
approvals, authorizations or orders of Governmental Authorities and parties to contracts (including Material Contracts) with the
Company, and the Company shall make all filings including, without limitation, all filings with Governmental Authorities required
in connection with the authorization, execution and delivery of this Agreement by the Company and the Shareholders, and the consummation
by the Company and the Shareholders of the Contemplated Transactions and to fulfill the conditions to the Transaction.

 

Section
5.3Litigation and Investigations Support. If and for so long as any party hereto is actively contesting or
defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand involving a third party
in connection with (a) the Contemplated Transactions, or (b) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the
Company, or its business or properties, including audits or reviews of pricing data, product quality, product failure or government
property instituted by any Governmental Authority or current or former customer of the Company or Purchaser, the Shareholders’
Representative will cooperate with the contesting or defending party and its counsel in the contest or defense, and provide such
testimony and access to its books and records as shall be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending party (unless the contesting or defending party is entitled to indemnification
therefor as provided in this Agreement).

 

 

 

    	 	39	 

     

    

 

Section
5.4No Solicitation of Competing Transaction. Until the earlier of the Closing Date or the termination of
this Agreement in accordance with Article VII, the Company and the Shareholders shall not (and the Company and the Shareholders
shall cause their Affiliates, officers, directors, employees, representatives and agents, including investment bankers, attorneys
and accountants, not to), directly or indirectly, encourage, solicit, initiate or participate in discussions or negotiations with,
or provide any information to, any Person or group (other than Purchaser, any of their Affiliates or representatives) concerning
any Acquisition Proposal. The Company and the Shareholders shall not enter into any agreement with respect to any Acquisition Proposal.
Upon execution of this Agreement, the Company and the Shareholders shall immediately cease any existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any of the foregoing, and the Company and the Shareholders
shall request (or if it has the contractual right to do so, demand) the return of all documents, analyses, financial statements,
projections, descriptions and other data previously furnished to others in connection with efforts to sell the Company. The Company
and the Shareholders shall promptly notify Purchaser of the existence of any proposal or inquiry received by the Company or the
Shareholders, and the Company and the Shareholders shall promptly communicate to Purchaser the terms of any proposal or inquiry
which any of them may receive (and shall immediately provide to Purchaser copies of any written materials received by the Company
or the Shareholders (or a summary of all material terms if oral) in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry.

 

Section
5.5Notification of Certain Matters. Until the earlier of the Closing Date or the termination of this Agreement
in accordance with Article VII, the Company and the Shareholders shall give prompt notice to Purchaser if any of the following
occurs after the date of this Agreement: (a) any notice of, or other communication relating to, a breach, default, or event
which with notice or lapse of time or both could become a breach or default, under any Material Contract; (b) receipt of any
notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with
the Contemplated Transactions, other than a consent disclosed pursuant to Section 2.5 or Section 2.6 of the Company Disclosure
Schedules; (c) receipt of any notice or other communication from any Governmental Authority in connection with the Contemplated
Transactions; (d) the occurrence or non-occurrence of any fact or event which could reasonably be expected to cause any covenant,
condition or agreement hereunder not to be complied with (including those in Article VI) or satisfied in any material respect or
any representation or warranty to be breached in any material respect; (e) the commencement or threat of any litigation or
government investigation involving or affecting the Company or any of its properties or assets; (f) notice of any cancellation
or material change in any insurance maintained by the Company, and (g) the occurrence of any event that, had it occurred prior
to the date of this Agreement would have constituted a Material Adverse Effect. The delivery of any notice pursuant to this Section
5.5 or otherwise after execution of this Agreement shall not be deemed to cure any breach of any representation, warranty, or covenant
or limit or affect the remedies of the party receiving the notice.

 

 

 

 

    	 	40	 

     

    

Section
5.6Further Action. Upon the terms and subject to the conditions hereof, each of the parties shall use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable the Contemplated Transactions, to obtain in a timely manner
all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this Agreement.

 

Section
5.7Preliminary Closing Balance Sheet; Interim Balance Sheet.

 

(a)       Concurrently
with the Shareholders’ Representative’s delivery of the Preliminary Closing Balance Sheet and Preliminary Working Capital
Statement pursuant to Section 1.9(a), the Shareholders’ Representative will deliver a certificate certifying that the Preliminary
Closing Balance Sheet and Preliminary Working Capital Statement was prepared in good faith and presents fairly in all material
respects the financial position, assets and liabilities of the Company as of the Closing, based on assumptions believed to be true
at the time of preparation, and prepared in accordance with GAAP.

 

(b)       The
Company shall provide to Purchaser as soon as practicable (but no more than fifteen (15) days) after the end of each calendar month
prior to the Closing Date (i) financial statements of the Company, consisting of a balance sheet as of the end of such month
and an income statement for that month and for the portion of the year then ended, (ii) a schedule of one-time and personal
add-backs, including a brief description of each such add-back, to the income statement included in such interim financial statements
that includes the same add-back items that were included in the pro forma financial statements, and (iii) a certificate (each,
an “Interim Financials Certificate”) certifying that each set of interim financial statements and other financial
information to be delivered to Purchaser pursuant to this Section 5.7: (A) presents fairly in all material respects the financial
position, assets and liabilities of the Company as of the dates thereof and the revenues, expenses, results of operations and cash
flows of the Company for the period covered thereby as of the dates and for the period covered thereby, in each case in conformity
with GAAP and, to the extent consistent with GAAP, the Company’s past accounting practices applied consistently during such
periods in accordance with the past accounting practices of the Company, subject to the lack of footnote disclosures; (B) is
in accordance with the books and records of the Company, does not reflect any transactions which are not bona fide transactions;
(C) makes full and adequate disclosure of, and provision for, all material obligations and liabilities of the Company as of
the date thereof; and (D) does not include any assets or liabilities of any other Person.

 

Section
5.8Updating of Company Disclosure Schedule. The Company and the Shareholders shall notify Purchaser of any
changes, additions, or events which may cause any change in or addition to the Company Disclosure Schedule delivered by the Company
and the Shareholders under Article II promptly after the occurrence of the same and again at the Closing by delivery of appropriate
updates to all such Company Disclosure Schedule. No such notification shall cure any misrepresentation or breach of any representation,
warranty or covenant of the Company and the Shareholders, nor shall any such notification be considered to constitute or give rise
to a waiver by Purchaser of any condition set forth in this Agreement except to the extent Purchaser specifically agrees thereto
in writing.

 

 

 

    	 	41	 

     

    

 

Article
VI

CONDITIONS TO THE CLOSING

 

Section
6.1Conditions to Obligation of Each Party to Effect the Transaction. The respective obligations of each party
to effect the Transaction shall be subject to the satisfaction or waiver to the extent permissible under Law at or prior to the
Closing Date of all the following conditions:

 

(a)       Orders,
Injunctions. No foreign or domestic Law, Order, injunction, judgment or decree that prohibits, restrains, enjoins or otherwise
prohibits (whether temporarily, preliminarily or permanently) consummation of the Transaction shall have been enacted, issued,
promulgated, enforced or entered by any court or Governmental Authority of competent jurisdiction and there shall not be pending
any suit, action or proceeding by any Governmental Authority which seeks to restrain, enjoin or otherwise prohibit (whether temporarily,
preliminarily or permanently) consummation of the Transaction; provided, that each of the parties hereto shall have used its reasonable
best efforts to prevent any such enactment, issuance, promulgation, enforcement or entry and to appeal as promptly as practicable
any such Law.

 

Section
6.2Additional Conditions to Obligation of Purchaser to Effect the Transaction. The obligations of Purchaser
to effect the Transaction and consummate the other Contemplated Transactions are also subject to the satisfaction or waiver by
Purchaser at or prior to the Closing of the following conditions:

 

(a)       Representations
and Warranties. Without giving effect to any supplement to the Company Disclosure Schedule, the representations and warranties
of the Company and the Shareholders set forth in this Agreement that are qualified as to materiality shall be true and correct,
and the representations and warranties of the Company and the Shareholders set forth in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date, as
though made on and as of the Closing Date, except to the extent the representation or warranty is expressly limited by its terms
to another date, and Purchaser shall have received a certificate signed on behalf of the Company by an executive officer of the
Company and by each of the Shareholders to such effect.

 

(b)       Performance
of Obligations of the Company. The Company and, as applicable, the Shareholders shall have performed or complied in all material
respects with all obligations, covenants and agreements required to be performed by it or them under this Agreement at or prior
to the Closing Date, and Purchaser shall have received a certificate signed on behalf of the Company by an executive officer of
the Company to such effect.

 

 

 

 

    	 	42	 

     

    

(c)       Consents
and Approvals. All consents and approvals necessary to the consummation of the Contemplated Transactions, including, without
limitation, consents from parties to loans, leases and other agreements and consents from any Governmental Authority shall have
been duly obtained, each in form and substance reasonably satisfactory to Purchaser.

 

(d)       Board
of Directors Approval. The Board of Directors of Purchaser shall have approved this Agreement, the Contemplated Transactions
and the Closing.

 

(e)       No
Material Adverse Effect. There will not have been any Material Adverse Effect to the Company, and Purchaser will have received
a certificate to such effect signed by an executive officer of the Company.

 

(f)       Non-Competition
Agreement. Purchaser shall have received a non-competition agreement substantially in the form of Exhibit A hereto (the
“Non-Competition Agreement”), duly executed by each of the Shareholders.

 

(g)       Employee
Retention. Purchaser shall be satisfied in its reasonable judgment that sufficient Company employees shall remain employed
by the Company immediately following the Closing Date to continue the business of the Company following the Closing Date.

 

(h)       Delivery
of Books and Records. At the Closing, the Company shall deliver to Purchaser physical possession of all of the tangible assets
and properties of the Company, including without limitation, its original Certificates of Incorporation, minute books, stock records
and other corporate records, Material Contract files and records, and documentation of all Company IP Rights owned or licensed
by the Company.

 

(i)       Audited
Financial Statements. Purchaser shall have received the Audited Financial Statements, along with a certificate certifying that
the Audited Financial Statements: (A) presents fairly in all material respects the financial position, assets and liabilities
of the Company as of the dates thereof and the revenues, expenses, results of operations and cash flows of the Company for the
period covered thereby as of the dates and for the period covered thereby, in each case in conformity with GAAP and, to the extent
consistent with GAAP, the Company’s past accounting practices applied consistently during such periods in accordance with
the past accounting practices of the Company, subject to the lack of footnote disclosures; (B) is in accordance with the books
and records of the Company, does not reflect any transactions which are not bona fide transactions; (C) makes full and adequate
disclosure of, and provision for, all material obligations and liabilities of the Company as of the date thereof; and (D) does
not include any assets or liabilities of any other Person.

 

(j)       Resignation
of Officers and Directors. The officers and directors of the Company in office immediately prior to the Effective Time will
have resigned in writing effective as of the Effective Time.

 

 

 

    	 	43	 

     

    

 

(k)       No
Other Securities. All (i) options (including, without limitation, the Stock Options), rights, or other securities that
entitle the holders thereof to purchase or otherwise acquire any shares of the capital stock of the Company, and (ii) notes,
evidence of indebtedness, stock of other securities issued by the Company that are convertible into or exchangeable for any shares
of the capital stock of the Company or any securities set forth in clause (i) above (collectively, “Other Securities”),
will have been validly terminated or exercised in full and thereby converted into shares of Common Company Stock, in accordance
with their current terms and conditions, so that no Other Securities will be outstanding immediately prior to the Effective Time.

 

(l)       Certificates.
The original Certificates in respect of all issued and outstanding shares of Company Common Stock shall have been delivered to
Purchaser

 

(m)       
(or purchaser shall have received an affidavit of lost certificate in form reasonably acceptable to Purchaser).No Claim Regarding
Stock Ownership or Sale Proceeds. There must not have been made or threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any stock
of, or any other voting, equity, or ownership interest in, the Company, or (b) is entitled to all or any portion of the consideration
payable for the Company Common Stock hereunder.

 

(n)       Consortium
Agreements. Purchaser shall have received assurances, satisfactory to Purchaser in its sole discretion, that (i) all payments
due under the Consortium Payments have been made in full and there are no outstanding balances due under any Consortium Agreement
as of the Closing; and (ii) all parties to the Consortium Agreements intend to continue under the Consortium Agreements consistent
with past practices following the Closing.

 

(o)       Closing
Documents. Purchaser shall have received the following agreements and documents, each of which shall be in full force and effect:

 

(i)       certificates
executed by an executive officer on behalf of the Company, and the Shareholders, each dated the date of Closing (the “Bring-Down
Certificate”), certifying (A) that all representations and warranties set forth in Article II and Article IIA are
true, accurate and complete as of the Closing Date as if such representations and warranties were made on the Closing Date (except
to the extent that such representations and warranties expressly relate solely to an earlier date in which case such representations
and warranties shall have been true, accurate and correct on and as of such earlier date (other than the date of this Agreement,
it being understood that any representation or warranty that by its terms speaks as of the date of this Agreement (and words of
similar import) shall be made as of the Closing Date under the Bring-Down Certificate)), and (B) the satisfaction of the conditions
precedent contained in Sections 6.2(a) and 6.2(b);

 

(ii)       a
certificate of the Secretary of the Company attaching a true and complete copy of (A) the Company’s Certificate of Incorporation,
as amended to date and certified by the Secretary of State of the State of North Carolina, (B) the Bylaws of the Company,
as amended to date, (C) resolutions adopted by the Board and all Shareholders of the Company approving the Agreement, the
Transaction and the Contemplated Transactions;

 

 

 

    	 	44	 

     

    

 

(iii)       certificates
from appropriate authorities as to the good standing of, and payment of all required fees by the Company in its jurisdiction of
organization and each jurisdiction in which it is qualified to do business as a foreign entity, as of a recent date prior to Closing;

 

(iv)       the
FIRPTA Certificates;

 

(v)       a
General Release of Claims substantially in the form of Exhibit B, (the “Shareholder Release”), duly executed
by each of the Shareholders;

 

(vi)       a
Payoff Letter in form and substance satisfactory to Purchaser from each of the Persons referenced in Section 1.10, confirming amounts
due from the Company;

 

(vii)       a
copy of the Company Data Site, in a format acceptable to Purchaser in its sole discretion, including any secured folders located
therein;

 

(viii)       an
IRS Form W-9 or the appropriate version of IRS Form W-8, as applicable, duly executed by each Shareholder; and 

 

(ix)       such
other documents as Purchaser may reasonably request for the purpose of (A) evidencing the accuracy of any of the Shareholder’s
representations and warranties, (B) evidencing the performance by the Shareholder or the Company of, or the compliance by
the Shareholder or the Company with, any covenant or obligation required to be performed or complied with by such Shareholder or
the Company, (C) evidencing the satisfaction of any condition referred to in Section 6.2, or (D) otherwise facilitating
the consummation or performance of any of the Contemplated Transactions.

 

Section
6.3Additional Conditions to Obligation of the Company and the Shareholders to Effect the Transaction. The
obligation of the Company and the Shareholders to effect the Transaction and consummate the other transactions contemplated hereby
is also subject to the satisfaction by Purchaser or waiver by the Company and the Shareholders the following conditions:

 

(a)       Representations
and Warranties. The representations and warranties of Purchaser set forth in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and warranties of Purchaser set forth in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date, as
though made on and as of the Closing Date, except to the extent the representation or warranty is expressly limited by its terms
to another date, and the Company shall have received a certificate signed on behalf of Purchaser by an executive officer of Purchaser
to such effect.

 

(b)       Performance
of Obligations of Purchaser. Purchaser shall have performed or complied in all material respects with all obligations required
to be performed by it under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed
on behalf of Purchaser by an executive officer of Purchaser to such effect.

 

 

 

    	 	45	 

     

    

 

Article
VII

TERMINATION

 

Section
7.1Termination. This Agreement may be terminated at any time prior to the Closing, notwithstanding approval
thereof by the shareholders of the Company:

 

(a)       by
mutual written consent of Purchaser and the Shareholders’ Representative;

 

(b)       by
either Purchaser or the Shareholders’ Representative, if a court of competent jurisdiction or Governmental Authority shall
have issued a nonappealable final order, decree or ruling or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Transaction (provided that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party who has not complied with its obligations under Section 5.2 and Section 5.6 and such noncompliance
materially contributed to the issuance of any such order, decree or ruling or the taking of such action);

 

(c)       by
either Purchaser or the Shareholders’ Representative, if the Effective Time shall not have occurred on or before June 30,
2017; provided, however, that the right to terminate this Agreement under this Section 7.1(c) shall not be available to any party
whose breach or failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, such failure of the
Closing to occur; and

 

(d)       by
Purchaser or the Shareholders’ Representative, (i) if any representation or warranty of the other set forth in this
Agreement that are qualified by reference to materiality shall not be true and correct or any representation or warranty of the
other set forth in this Agreement that is not qualified by reference to materiality shall not be true and correct in all material
respects in each case as of the date of this Agreement and as of the Closing Date, as though made on and as of the Closing Date,
except to the extent the representation or warranty is expressly limited by its terms to another date, or (ii) upon a breach
of or failure to perform in any material respect any covenant or agreement on the part of the other set forth in this Agreement,
except in each of (i) and (ii) above, where the failure to perform such covenants or agreements or the failure of such representations
and warranties to be so true and correct would not have a Material Adverse Effect (either (i) or (ii) above being a “Terminating
Breach”).

 

Section
7.2Effect of Termination. In the event of the termination of this Agreement pursuant to Section 7.1, (a) this
Agreement shall forthwith become void and have no further force or effect, and (b) the parties shall have no further liability
under this Agreement; provided, that if this Agreement is terminated by (x) a party because of a Terminating Breach
of this Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under
this Agreement is not satisfied as a result of the other party’s failure to comply with its obligations hereunder, the terminating
party’s right to pursue all legal remedies and the other party’s liability in respect thereof shall survive such termination
unimpaired, or (y) Purchaser, if the Company or any Shareholder has breached the terms of Section 5.1 or Section 5.4, in which
case, the Company shall immediately pay for or reimburse Purchaser for its reasonable out-of-pocket expenses incurred by it or
on its behalf in connection with the proposed Transaction, including but not limited to attorney’s fees and accountant’s
fees. Notwithstanding the foregoing, the obligations of the parties contained in this Section 7.2, and in the NDA shall survive
any such termination.

 

 

 

    	 	46	 

     

    

 

Article
VIII

INDEMNIFICATION

 

Section
8.1Indemnification by Shareholders. Each of the Majority Shareholders shall, jointly and severally, and all
other Shareholders, severally and not jointly, shall indemnify, defend and hold harmless in the manner and subject to the limitations
and qualifications set forth in this Article VIII, Purchaser and its Affiliates (which shall include the Company following the
Effective Time) and their respective officers, directors, agents, employees, subsidiaries, partners, members, controlling persons,
agents, accountants, attorneys, successors and assigns (each, an “Purchaser Indemnitee”) from and against any
and all, actions, suits, proceedings, claims, complaints, disputes, arbitrations or investigations or written threats thereof,
including, without limitation, any claim by a third party (collectively, “Claims”), and/or Losses resulting
from or arising out of:

 

(a)       any
breach of any representation or warranty by (i) the Company or any of the Shareholders in this Agreement and/or the Bring-Down
Certificate, and (ii) the Company or any of the Shareholders in any Transaction Documents, in each case of clauses (i) and
(ii), (which breach shall be determined for purposes of this Article VIII without regard to any qualification based on materiality
or Material Adverse Effect contained in such representations and warranties), including any certificate delivered in connection
therewith;

 

(b)       (i) any
breach by any Shareholder or (ii), prior to the Closing, the Company, in each case of clauses (i) and (ii), of any covenant or
obligation of any such Person in this Agreement or any Transaction Document or any certificate delivered therewith;

 

(c)       notwithstanding
any matter listed in the Company Disclosure Schedule, (i) any Taxes imposed on the Company or any Shareholder for any period
ending on or before the Closing Date (or for the portion of any period up through the Closing Date to the extent a period does
not close on such date), including without limitation any Taxes, fees and expenses for which Purchaser is entitled to be reimbursed
pursuant to Section 4.2(b); and (ii) Taxes otherwise imposed on the Company or any Shareholder by virtue of the Transaction
and any Contemplated Transactions, including without limitation any Taxes, fees and expenses for which Purchaser is entitled to
be reimbursed pursuant to Section 4.2(d);

 

 

 

 

    	 	47	 

     

    

(d)       notwithstanding
any matter listed in the Company Disclosure Schedule, any claim by a current Company equity holder, former Company equity holder
or any other Person following the Effective Time seeking to assert, or based upon the following: (i) ownership or rights to
ownership of any stock, options, warrants or other rights to acquire stock of the Company; (ii) any rights of an equity holder
of the Company in the capacity of an equity holder, including any option or preemptive rights or rights to notice or to vote (together
with the rights described under (i), the “Ownership Rights”); (iii) any Ownership Rights under any of the
Company charter documents or any other agreement with the Company; (iv) any claim regarding any issuance, reissuance, cash-out,
termination or cancellation of any stock, options or other securities by the Company; (v) any Claim that his, her or its securities
of the Company were wrongfully repurchased or transferred by the Company; or (vi) the Funds Flow Memorandum and any information
contained therein;

 

(e)       any
Indebtedness of the Company existing prior to the Closing;

 

(f)       any
litigation, arbitration or suit against the Company or any of its directors, officers or employees in their capacity as such that
relates to events occurring or circumstances existing prior to the Closing, by any Person other than Purchaser or any of its Affiliates
or any of their successors;

 

(g)       any
Transaction Expenses;

 

(h)       any
amounts payable to the Company’s employees (whether under the Company’s Employee Plans or otherwise) by reason of the
Transaction being deemed a termination of the employment of the Company’s employees or contractors, including, without limitation,
the following (for clarity, but only to the extent the obligation arises by reason of the Transaction being deemed a termination
of employment of the Company’s employees or contractors): severance, salary, commission, bonus, incentives, vacation pay
or other benefit accruals or any Termination Liability with respect to such employees or contractors of the Company and their eligible
dependents in respect of health insurance under COBRA and any other similar state Laws; and

 

(i)       any
Losses with respect to the termination of any Employee Plan in connection with the Contemplated Transactions (but not including
any ordinary administrative costs resulting from Purchaser or the Company’s voluntary termination of an Employee Plan following
Closing), any unfunded liability under any such Employee Plan, and/or any accrued but unpaid claim under such Employee Plan.

 

The parties acknowledge
and agree that, if the Company suffers, incurs or otherwise becomes subject to any Losses as a result of or in connection with
any inaccuracy in or breach of any representation, warranty, covenant or obligation, then (without limiting any of the rights of
the Company as a Purchaser Indemnitee) Purchaser shall also be deemed, by virtue of its ownership of the stock of the Company,
to have incurred Losses as a result of and in connection with such inaccuracy or breach. The parties further acknowledge and agree
that the Company’s obligations hereunder shall expire at the Effective Time.

 

 

 

 

    	 	48	 

     

    

Section
8.2No Contribution; Shareholders’ Representative. The Shareholders shall have no right to seek contribution
from the Company with respect to all or any part of any matter, including the indemnification obligations under this Article VIII.
In connection with any exercise by Purchaser of its rights hereunder, Purchaser shall be entitled to make all claims through and
deal exclusively with the Shareholders’ Representative.

 

Section
8.3Indemnification by Purchaser. Purchaser agrees to indemnify, defend and hold harmless in the manner and
subject to the limitations and qualifications set forth in this Article VIII, the Shareholders, and their respective agents, representatives,
Affiliates, successors and assigns (collectively, the “Company Indemnitees,” and, together with Purchaser Indemnitees,
the “Indemnitees”) against, from and in respect of any and all Claims and/or Losses based upon, arising out
of, or otherwise in respect of or which may be incurred by virtue of or result from (a) the inaccuracy in or breach of any
representation or warranty made by Purchaser in this Agreement, and/or (b) any covenant or agreement made by Purchaser in
this Agreement or any Transaction Documents or any certificate delivered therewith, except to the extent that any such Losses arise
out of or result from a breach by the Company, or the Shareholders of any representations, warranties or covenants in this Agreement
and/or any documents, agreements, instruments or certificates contemplated by this Agreement, or any matters for which a Purchaser
Indemnitee has a right of indemnification pursuant to Section 8.1.

 

Section
8.4Survival. All representations and warranties of the parties contained in this Agreement shall, subject
to the limitations set forth in this Section 8.4, survive the Closing. The representations and warranties contained in or made
pursuant to this Agreement and/or any documents, agreements, instruments or certificates contemplated by this Agreement, and the
indemnity obligations based on a breach of such representations and warranties under Section 8.1(a) and 8.3(a) shall terminate
on, and no Claim or action based solely thereon may be initiated after the Holdback Release Date; provided, that (i) the
representations and warranties under Section 2.16 (Government Contracts), Section 2.17 (Proprietary Rights), Section 2.22 (Employee
Benefit Plans) (the “Extended Representations”) and the related indemnity obligations under Section 8.1(a) shall
survive until the date that is the third (3rd) anniversary of the Closing Date, and (ii) the representations and
warranties under Section 2.1 (Organization and Qualification), Section 2.2 (Certificate of Incorporation and Bylaws), Section 2.3
(Capitalization), Section 2.4 (Authority Relative to this Agreement),
Section 2.18 (Taxes), Section 2.20 (Environmental Matters), Section 2A.1 (Valid Title), Section 2A.2 (Authorization; Binding
Effect) (the “Fundamental Representations”) and the related indemnity obligations under Section 8.1(a) shall
survive until the date that is the tenth (10th) anniversary of the Closing Date. Except as otherwise expressly provided
herein, the covenants and agreements contained in this Agreement shall survive the execution and delivery hereof and the consummation
of the Contemplated Transactions until the expiration of the applicable statute of limitations (including any extensions or waivers
thereto). Notwithstanding any other provision of this Agreement, if any Claim for Losses is asserted by any Indemnitee prior to
the termination of the representation, warranty or indemnification obligation, the rights of such Indemnitee shall continue with
respect to such Claim until the resolution and satisfaction thereof even if not finally resolved until after such termination.
It is the express intent of the parties that, if the applicable survival period for an item as contemplated by this Section 8.4
is shorter or longer than the statute of limitations that would otherwise have been applicable to such item, then, by contract,
the applicable statute of limitations with respect to such item shall be reduced or extended to the survival period contemplated
hereby. The parties further acknowledge that the time periods set forth in this Section 8.4 for the assertion of claims under this
Agreement are the result of arms-length negotiation among the parties and that they intend for the time periods to be enforced
as agreed by the parties.

 

 

 

 

    	 	49	 

     

    

Section
8.5Certain Limitations.

 

(a)       No
Claim by a Purchaser Indemnitee or Company Indemnitee for indemnification for claims for breaches of representations and warranties
pursuant to Section 8.1(a) or Section 8.3(a), respectively, may be made until the amount of all Losses related to such Claims exceeds
$75,000 (the “Basket”) whereupon the Indemnifying Party shall be obligated to pay in full up to the Cap all
amounts for indemnification, including the entire amount of the Basket. The indemnification obligations for claims for breaches
of representations and warranties pursuant to Section 8.1(a) or Section 8.3(a), respectively, apply, and the Purchaser Indemnitee
or Company Indemnitee shall be entitled to exercise indemnification rights under Section 8.1(a) or Section 8.3(a), respectively,
only for any individual claim or series of similar or related claims with respect to which the aggregate Losses resulting therefrom
exceed $5,000 (and all Losses, if they so exceed $5,000, arising from any such claim or series of similar or related claims shall
be fully indemnified and counted toward the Basket).

 

(b)       The
maximum amount of indemnifiable Losses in the aggregate which may be recovered from the Shareholders or Purchaser, respectively,
for indemnification for breaches of representations and warranties pursuant to Section 8.1(a) or Section 8.3(a), respectively,
and pursuant to Section 7.2(b)(y) with respect to the Shareholders, shall not exceed an amount equal to twenty percent (20%) of
the Purchase Price payable to the Shareholders (the “Cap”).

 

(c)       Notwithstanding
the limitations set forth in Section 8.5(a) and Section 8.5(b), neither the Cap nor the Basket shall apply to (i) Claims based
on a breach of the Fundamental Representations or the indemnification obligations under Section 8.1(a) with respect to such matters,
and (ii) indemnification obligations under Section 8.1(b) through Section 8.1(i) and
Section 8.3(b), for which for both clauses (i) and (ii) the maximum amount of indemnifiable Losses in the aggregate which may be
recovered from the Shareholders, or the Purchaser, respectively, shall be the Purchase Price payable to the Shareholders, plus
(x) if there is a Shareholder Excess, the Company Adjustment Amount, and minus (y) if there is a Purchaser Deficit,
the Purchaser Adjustment Amount; provided, however, that the maximum amount of indemnifiable Losses which may be recovered from
each Shareholder (other than the Majority Shareholders) with respect to indemnification claims under Section 8.1 of this Agreement,
shall not exceed such Shareholder’s Pro Rata Portion of the Purchase Price, plus (x) if there is a Shareholder Excess, the
Company Adjustment Amount, and minus (y) if there is a Purchaser Deficit, the Purchaser Adjustment Amount..

 

(d)       Notwithstanding
anything contained in this Agreement to the contrary, (i) no Indemnitee shall be entitled to duplicative recoveries arising out
of the same facts or circumstances, or (ii) no Purchaser Indemnitee shall be entitled to indemnification for Losses for which Purchaser
has otherwise been compensated pursuant to the adjustments pursuant to Section 1.9.

 

 

 

 

    	 	50	 

     

    

(e)       Losses
payable under Article VIII shall be calculated after giving effect to proceeds actually received by an Indemnitee or their Affiliates
from insurance policies maintained by the Indemnitee or their Affiliates covering the Losses that are the subject of the claim
for indemnification); provided that the amount deemed to be recovered under insurance policies will also be net of the deductible
for such policies and any increase in the premium (and retro-premium adjustments) for such policies to the extent arising out of
or in connection with such Losses.

 

(f)       The
limitations set forth in this Section 8.5 shall not apply to Claims based on fraud or intentional misrepresentation, and any such
Claims shall be excluded in calculating the limitations on indemnification obligations of Shareholders set forth in this Section
8.5.

 

(g)       Following
the Closing, indemnification pursuant to the provisions of this Article VIII shall be the exclusive remedy of the parties
for any misrepresentation or breach of any warranty or covenant contained in this Agreement (without limiting, and without any
prejudice to, any right or remedy set forth in any other Transaction Document); provided, however, nothing in this Agreement shall
limit any party’s equitable remedies or any remedy any party hereto may have with respect to fraud or intentional breach.

 

Section
8.6Notice of Indemnification Claims; Notice of Claims.

 

(a)       Promptly
after an Indemnitee becomes aware of (i) any facts or events that could give rise to indemnification hereunder, (ii) a
Claim made by a third party against such Indemnitee, or (iii) facts or circumstances establishing that an Indemnitee has experienced
or incurred Losses subject to indemnification under this Article VIII, then, if the Indemnitee is a Purchaser Indemnitee, such
Purchaser Indemnitee shall give to the Shareholders’ Representative, or, if the Indemnitee is a Company Indemnitee, then
the Shareholders’ Representative shall give to Purchaser, prompt written notice thereof (in each case, an “Indemnification
Notice”). The failure to give notice pursuant to Section 8.6(a) or any other similar notice provision of this Agreement
shall not affect or limit the Indemnitee’s rights hereunder except, and then only to the extent that, (A) the delay
in giving, or failure to give, the notice is determined by final judgment of a court of competent jurisdiction or an arbitrator
of competent authority to have actually and materially prejudiced the recipient’s ability to defend against the Claim or
(B) notice is given after the expiration of any applicable survival period set forth in Section 8.4. To the extent practicable
under the circumstances taking into account the information readily available to the Indemnitee at such time, the Indemnification
Notice will describe with reasonable specificity (x) the nature of and the basis for the set-off or indemnification Claim,
including any relevant supporting documentation, and (y) if possible, a reasonable estimate of all Losses associated therewith.

 

(b)       Procedure
in Event of Indemnification Claim. Subject to the limitations in Section 8.4 and Section 8.5 hereof, if an Indemnitee desires
to assert an indemnification Claim pursuant to Section 8.1 or Section 8.3, the Indemnitee promptly shall provide an Indemnification
Notice in accordance with the procedures set forth in this Section 8.6(a). Subject to Section 8.4 and Section 8.5, if the recipient
of a duly and timely delivered Indemnification Notice does not object within thirty (30) days after receipt of the Indemnification
Notice to the propriety of the indemnification Claims described as being subject to indemnification pursuant to Section 8.1 or
Section 8.3 or the amount of Losses asserted in the Indemnification Notice, the indemnification Claims described and, if applicable,
the amount of Losses asserted in the Indemnification Notice shall be deemed final and binding (hereinafter, collectively with any
Claims either agreed to between the parties or finally determined in accordance with Section 9.5, “Permitted Indemnification
Claims”). If the recipient of a duly and timely delivered Indemnification Notice contests the propriety of an indemnification
Claim described in the Indemnification Notice or the amount of Losses associated with such Claim, then such recipient shall deliver
to the Indemnitee a written notice detailing with reasonable specificity all specific objections such recipient has with respect
to the indemnification Claims contained in the Indemnification Notice (“Indemnification Objection Notice”).
If the objecting party and the Indemnitee are unable to resolve the disputed matters described in the Indemnification Objection
Notice within fifteen (15) Business Days after the date the Indemnitee received the Indemnification Objection Notice, the disputed
matters will be subject to the dispute resolution procedures set forth in Section 9.5 hereof. Subject to Section 8.4 and Section
8.5, any undisputed indemnification Claims or Losses contained in the Indemnification Notice shall be deemed to be final and binding
and shall constitute a Permitted Indemnification Claim. In addition, subject to Section 8.4 and Section 8.5, if the procedures
in Section 9.5 result in all or any portion of an indemnification Claim properly being subject to indemnification pursuant to Section
8.1 or Section 8.3, such Claim or portion thereof shall be final and binding and shall constitute a Permitted Indemnification Claim.

 

 

 

 

    	 	51	 

     

    

(c)       Defense
of Third Party Claims. After receipt of an Indemnification Notice in respect of a Claim brought by a third party, Purchaser
or Shareholders’ Representative, as applicable, receiving such Notice (the “Assuming Party”) shall have
the right to assume the defense (at the Assuming Party’s sole cost and expense) of any such Claim through counsel of the
Assuming Party’s own choosing by so notifying the Indemnitee in writing within thirty (30) days of receipt of such Indemnification
Notice; provided, however, that any such counsel shall be reasonably satisfactory to the Indemnitee. Each Indemnitee shall have
the right to employ separate counsel in such Claim and participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnitee unless: (i) the Assuming Party has agreed in writing to pay such expenses; (ii) the
Assuming Party has failed promptly to assume the defense and employ counsel reasonably satisfactory to such Indemnitee and such
expenses would otherwise constitute Losses indemnifiable under Section 8.1 or Section 8.3 (as limited by Section 8.4 and Section
8.5); or (iii) the named parties to any such Claim (including any impleaded parties) include any Indemnitee and the Assuming
Party or an Affiliate of the Assuming Party, and such Indemnitee shall have been advised by counsel that either (x) there
may be one or more legal defenses available to it which are different from or in addition to those available to the Assuming Party
or such Affiliate or (y) a conflict of interest may exist if such counsel represents such Indemnitee and the Assuming Party
or its Affiliate; provided, that, if such Indemnitee notifies the Assuming Party in writing that it elects to employ separate
counsel in the circumstances described in clause (ii) or (iii) above, the Assuming Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Assuming Party to the extent such expenses otherwise constitute
Losses indemnifiable under Section 8.1 or Section 8.3 (as limited by Section 8.4 and Section 8.5). Without the consent of the Indemnitees
or, in the circumstances described in clause (iii) above, the Assuming Party, such consent not to be unreasonably withheld, the
Assuming Party or Indemnitee, as applicable, shall not consent to, and the Indemnitees or Assuming Party, as applicable, shall
not be required to agree to, the entry of any judgment or enter into any settlement unless such judgment or settlement (A) includes
as an unconditional term thereof the giving of a release from all liability with respect to such Claim by each claimant or plaintiff
to each Indemnitee or Assuming Party, as applicable, that is the subject of such third-party Claim, (B) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or on behalf of an Indemnitee or Assuming Party,
as applicable and (C) in the case of any Claim regarding Taxes, such judgment or settlement does not and will not, in the
reasonable determination of Purchaser, give rise or result in any increase in any Tax liability of Purchaser or any of its Affiliates.
In case of a judgment or settlement where the elements of clauses (A), (B) and (C) are satisfied, the Assuming Party or Indemnitee,
as applicable, may consent, and Indemnitees or Assuming Party, as applicable, will be required to agree to, the entry of such judgment
or settlement in respect of such Claim. If an Indemnification Notice is given to an Assuming Party and the Assuming Party does
not, within thirty (30) days after the Indemnification Notice is given, give notice to the Indemnitee of its election to assume
the defense of such Claim, the Assuming Party will be bound by any determination made in such Claim or any compromise or settlement
effected by the Indemnitee. The Indemnitee and the Assuming Party will make available to each other and each other’s attorneys
and representatives at all reasonable times, all books and records relating to such Claim and will render to each other such assistance
as may reasonably be requested to ensure proper and adequate defense of any such Claim.

 

 

 

 

    	 	52	 

     

    

Section
8.7Determination of Losses. Losses with respect to any Permitted Indemnification Claim shall be determined
without regard to any materiality or Material Adverse Effect qualification set forth in any representation, warranty or covenant.
To the maximum extent allowed by Law, all indemnification payments under this Agreement will be treated by the parties as an adjustment
to the Purchase Price.

 

Section
8.8Right of Set-Off.

 

(a)       Set-Off.
To the extent that a Purchaser Indemnitee has made a claim for indemnification, it is expressly agreed by the Parties that Purchaser
may deduct and set-off the aggregate estimated amount of all such Losses with respect to such claim for indemnification from the
Holdback Amount (for claims asserted prior to the Holdback Release Date), any Adjustment Amount, or any Earn-Out Payment and subject
to resolution of such claim pursuant to the procedures set forth in this Article VIII. The exercise of such right of set-off by
Purchaser in good faith, whether or not ultimately determined to be justified, will not constitute a breach of this Agreement.
Neither the exercise of nor the failure to exercise such right of set-off will constitute an election of remedies or limit the
Purchaser Indemnitees in any manner in the enforcement of any other remedies that may be available to them.

 

(b)       Distribution
of Indemnity Holdback Amount. Pursuant to the terms of this Agreement, the Holdback Amount shall be released to the Shareholders’
Representative (or one or more account(s) designated thereby) on the Holdback Release Date, minus any amounts released from the
Holdback Amount to satisfy resolved Claims for indemnification made by a Purchaser Indemnitee; provided, however, if any Purchaser
Indemnitee have made claims against the Shareholders prior to any such scheduled release, then the disputed amount of the Holdback
Amount (plus accrued interest) will be held by the until resolution in full of such claims.

 

 

 

 

    	 	53	 

     

    

(c)       Distribution
of Specific Claim Amounts. Amounts remaining in the Holdback Amount attributable to any claims made prior to the Holdback Release
Date shall be distributed upon the resolution of such claims in the manner determined pursuant to such resolution, in each case,
subject to reduction as a result of claims made against the Holdback Amount prior to the Holdback Release Date and for any amounts
necessary, in the reasonable judgment of Purchaser, to satisfy all unresolved claims as of such applicable distribution date, which
amounts shall continue to be held by the Purchaser until final resolutions of such unresolved claims.

 

Article
IX

MISCELLANEOUS PROVISIONS

 

Section
9.1Amendment and Modifications. This Agreement may be amended, modified and supplemented only by written
agreement between Purchaser, the Company and the Shareholders which states that it is intended to be a modification of this Agreement;
provided that following the Closing, the Agreement may only be amended by the written agreement of Purchaser and the Shareholders.

 

Section
9.2Waiver of Compliance. Any failure of the Company, or the Shareholders to comply with any obligation, representation,
warranty, covenant, agreement or condition herein may be waived in writing by Purchaser, but such waiver or failure to insist upon
strict compliance with such obligation, representation, warranty, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. Any failure of Purchaser to comply with any obligation, representation,
warranty, covenant, agreement or condition herein may be waived in writing prior to the Closing by the Company and after the Closing
by the Shareholders’ Representative, but such waiver or failure to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure and the waiver of any condition to Closing related to a breach of any party’s representation, warranty, or covenant
shall not relieve the party of any liability therefor.

 

Section
9.3Expenses. Except as set forth in Section 7.2, the parties agree that all fees and expenses incurred by
them in connection with this Agreement and the Contemplated Transactions shall be borne by the party incurring such fees and expenses,
including, without limitation, all fees of counsel, actuaries, brokers and accountants; provided however that Transaction Expenses,
to the extent not deducted from the Purchase Price in accordance with Section 1.2, shall be paid by the Shareholders on or prior
to Closing.

 

Section
9.4Waiver. To the maximum extent permitted by Law, all rights and remedies existing under this Agreement
are cumulative to, and not exclusive of, any rights or remedies otherwise available under applicable Law. No failure on the part
of any party to exercise or delay in exercising any right hereunder shall be deemed a waiver thereof, nor shall any single or partial
exercise preclude any further or other exercise of such or any other right.

 

 

 

 

    	 	54	 

     

    

Section
9.5Dispute Resolution.

 

(a)       Negotiated
Resolution. Except to the extent a different procedure is expressly provided for herein, if any dispute arises (i) out
of or relating to, this Agreement, or any alleged breach hereof, or (ii) with respect to any of the Contemplated Transactions
(“Dispute”), the party desiring to resolve such Dispute shall deliver a written notice describing such Dispute
with reasonable specificity to the other parties (“Dispute Notice”). If any party delivers a Dispute Notice
pursuant to this Section 9.5, or if Purchaser or the Shareholders’ Representative delivers to the other an Indemnification
Objection Notice pursuant to Section 8.6, the parties involved in the Dispute shall meet at least twice within the thirty (30)
day period commencing with the date of the Dispute Notice or the Indemnification Objection Notice (as the case may be) and in good
faith shall attempt to resolve such Dispute (as the case may be).

 

(b)       Arbitration.
If the Dispute or indemnification claim is not resolved pursuant to Section 9.5(a) above, the Dispute or indemnification claim
shall be settled by arbitration conducted in Los Angeles, California, or such other place as mutually agreed to by the parties,
which shall be in accordance with the then effective Comprehensive Arbitration Rules of JAMS. The arbitration of such issues, including
the determination of any amount of damages suffered by any party hereto by reason of the acts or omissions of any party, shall
be final and binding upon all parties. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.
The arbitrator shall have the authority to award any remedy or relief that a court in the State of Delaware could order or grant,
including specific performance of any obligation created under this Agreement, the issuance of an injunction or other provisional
relief, or the imposition of sanctions for abuse or frustration of the arbitration process. The arbitrator shall apply the Law
of the State of Delaware in deciding the merits of any Dispute. The arbitrator shall provide a written and reasoned explanation
for any award rendered in the arbitration. By agreeing to arbitration, the parties do not intend to deprive any court of its jurisdiction
to issue a pre-arbitral injunction, pre-arbitral attachment, or other order in aid of arbitration proceedings and the enforcement
of any award. Except as otherwise set forth in this Agreement, the cost of any arbitration hereunder, including the cost of the
record or transcripts thereof, if any, administrative fees, and all other fees involved including reasonable attorneys’ fees
incurred by the party determined by the arbitrator to be the prevailing party, shall be paid by the party determined by the arbitrator
not to be the prevailing party, or otherwise allocated in an equitable manner as determined by the arbitrator.

 

Section
9.6Notices. All notices, requests, demands and other communications required or permitted hereunder shall
be in writing and shall be delivered by hand, mailed, certified or registered mail with postage prepaid, or sent by reputable overnight
courier to the parties at the address set forth below or to such other address as may be furnished in writing to the other parties
hereto. All such notices and communications shall be deemed to have been duly given three (3) Business Days after being deposited
in the mail, postage prepaid, if mailed; one (1) Business Day after being sent by reputable overnight courier.

 

 

 

    	 	55	 

     

    

 

	Purchaser:	
        Walter S. Woltosz

        Chief Executive
Officer

        Simulations
Plus, Inc.

        42505 10th St
W

        Lancaster, CA 93534-7059

         

	 	 
	
        With a copy (which shall
        not

         

        constitute notice) to:

         
	
        Dennis J. Doucette,
Esq.

        Procopio, Cory,
Hargreaves & Savitch, LLP

        12544 High Bluff
Drive, Suite 300

        San Diego, CA 92130

         

or to such other Person or address as Purchaser
shall furnish to the Company and the Shareholders in writing.

 

	Company (pre-Closing):	
        Brett A. Howell

        6 Davis Drive, PO Box 12317

        Research Triangle Park, NC 27709

         

	 	 
	Shareholders’ Representative (on behalf of the Shareholders):	
        Brett A. Howell

        6 Davis Drive, PO Box 12317

        Research Triangle Park, NC 27709

         

	 	 
	
        With a copy (which shall
        not

         

        constitute notice) to:

         
	
        Amalie L. Tuffin

        Hutchison PLLC

        3110 Edwards Mill Road, Suite 300

        Raleigh, NC 27612

         

or to such other Person or address as the
Company or the Shareholders’ Representative shall furnish to Purchaser in writing (with any notice to the Shareholders’
Representative to be deemed adequate notice to all Shareholders).

 

Section
9.7Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior written consent of the other party; provided, that,
Purchaser may assign this Agreement to an Affiliate of Purchaser provided that such assignment shall not relieve Purchaser of liability
hereunder.

 

Section
9.8Publicity. Neither the Company nor the Shareholders nor Purchaser shall make or issue, or cause to be
made or issued, any announcement or written statement concerning this Agreement or the Contemplated Transactions for dissemination
to the general public without the prior consent of the other party, and no such announcement or written statement shall disclose
the amount or composition of the Purchase Price. This provision shall not apply, however, to any announcement or written statement
required (upon the advice of legal counsel) to be made by Law or the regulations of any Governmental Authority, or any exchange
upon which the securities of either party may be listed, except that the party required to make such announcement, whenever practicable,
shall consult with the other party concerning the timing and content of such announcement before such announcement is made.

 

 

 

 

    	 	56	 

     

    

Section
9.9Governing Law. This Agreement and the legal relationship among the parties hereto shall be governed and
construed under the internal laws of the State of Delaware without regards to its conflict of laws principles.

 

Section
9.10Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same instrument. Signature by telecopy shall
be sufficient to evidence a party’s intention to be bound hereby.

 

Section
9.11Headings. The headings of the Sections and Articles of this Agreement are inserted for convenience only
and shall not constitute a part hereof or affect in any way the meaning or interpretation of this Agreement.

 

Section
9.12Incorporation of NDA. The terms of the NDA shall continue in full force and effect in all respects. If
this Agreement is, for any reason, terminated prior to the Closing, the NDA shall nonetheless continue in full force and effect
in all respects without any modification thereto. Notwithstanding the foregoing or any other provision of this Agreement, from
and after the Closing, the provisions of the NDA restricting Purchaser shall expire and shall not apply to or restrict in any manner
Purchaser’s or Company’s use of any Confidential Information (as defined in the NDA) of the Company.

 

Section
9.13Entire Agreement. This Agreement, including the exhibits and schedules hereto, the Company Disclosure
Schedule and the other documents and certificates delivered pursuant to the terms hereof, and the NDA set forth the final, complete
and exclusive agreement and understanding of the parties hereto in respect of the subject matter contained herein, and supersede
all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written,
by any officer, employee or representative of any party hereto, including, without limitation, the Letter of Intent dated October
20, 2016 between the Company, the Shareholders and Purchaser.

 

Section
9.14Assignments, Successors, and No Third-Party Rights. No party may assign any of its rights under this
Agreement without the prior consent of the other parties hereto, except that Purchaser may assign any of its rights under this
Agreement to any Subsidiary or Affiliate of Purchaser or as collateral security for any borrowings. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns
of the parties. Except as set forth in Article VIII, nothing expressed or referred to in this Agreement will be construed to give
any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive
benefit of the parties to this Agreement and their successors and assigns.

 

 

 

 

    	 	57	 

     

    

Section
9.15Further Assurances. Each of the parties hereto agrees that from time to time, at the request of any of
the other parties hereto and without further consideration, it will execute and deliver such other documents and take such other
action as such other party may reasonably request in order to consummate more effectively the Contemplated Transactions. The parties
shall cooperate with each other in such actions and in securing requisite approvals. Each party shall execute and deliver both
before and after the Closing such further certificates, agreements and other documents and take such other actions as the other
party reasonably may request to consummate or implement the Contemplated Transactions or to evidence such events or matters.

 

Section
9.16Representation by Counsel; Interpretation. The Company, on one hand, and Purchaser, on the other hand,
each acknowledge that such parties have been represented by counsel in connection with this Agreement and the Contemplated Transactions.
Accordingly, any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement
against the party that drafted it has no application and any such right is expressly waived. The provisions of this Agreement shall
be interpreted in a reasonable manner to effect the intent of the parties hereto.

 

Section
9.17Certain Definitions. For purposes of this Agreement, the term:

 

“Acquisition
Proposal” means any proposal or offer made by any Person other than parent or an Affiliate of Purchaser to acquire all
or a substantial part of the business or properties of the Company or any capital stock of the Company, whether by Transaction,
tender offer, exchange offer, sale of assets, recapitalization or similar transactions involving the Company, division or operating
or principal business unit of the Company.

 

“Adjusted EBT”
means, with respect to any time period, the earnings before income taxes of the Company for such period, determined in accordance
with GAAP, as adjusted by (i) adding back all amortization and depreciation expenses related to the Contemplated Transaction (minus
an amount of $16,000), (ii) deducting capitalized software cost and (iii) adding back amortized software cost, all in accordance
with GAAP and as set forth and determined in a manner consistent with the methodology set forth on Schedule 1.11. Depreciation
for property, plant, equipment and computer equipment is to be included as a deduction in the Adjusted EBT only to the extent it
exceeds fifteen thousand Dollars ($15,000) per year for each of the Earn-Out Years.

 

“Affiliate”
means a Person that directly or indirectly, through one or more intermediaries, controls, is Controlled by, or is under common
Control with, the first mentioned Person.

 

“Agreement”
has the meaning set forth in the Preamble.

 

“Audited Financial
Statements” means the audited balance sheets of the Company at December 31, 2015, the audited balance sheets of the Company
at December 31, 2016, and the related statements of income, stockholders’ equity, and cash flows for the years ended December
31, 2016, together with the notes and supplemental information thereto and the report thereon of Dixon Hughes Goodman, LLP, as
delivered to Purchaser prior to the Closing Date and attached to Section 2.8(a) of the Company Disclosure Schedule

 

 

 

 

    	 	58	 

     

    

“Business Day”
means any day other than a day on which banks in Los Angeles, California are required or authorized to be closed.

 

“COBRA”
means Part 6 of Title I of ERISA and Code Section 4980B and the regulations promulgated under any of them, as amended.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Company Common
Stock” means the common stock of Company.

 

“Company Data
Site” means the electronic diligence data room website located at Box.com established by the Company to produce diligence
materials in connection with the Contemplated Transactions.

 

“Contemplated
Transactions” means all of the transactions contemplated by this Agreement and the Transaction Documents.

 

“Consortium
Agreements” means the Consortium Agreements entered into by Hamner Institute, the Company (as itself and as an assignee
of Hamner Institute’s Consortium Agreements), and the following entities: (i) Astellas Pharma Inc., (ii) AbbVie, Inc., (iii)
GlaxoSmithKline Research and Development Ltd, (iv) Bristol-Myers Squibb Company, (v) Daiichi Sankyo, Company, Limited, (vi) Mitsubishi
Tanabe Pharma Corporation, (vii) Gilead Sciences, Inc., (viii) Eli Lilly and Company, (ix) Janssen Research and Development, LLC,
(x) Merck Sharp & Dohme Corp., (xi) Pfizer Inc., and (xii) Takeda Pharmaceuticals International, Inc.

 

“Control”
(including the terms “Controlled by”, and “under common Control with”) means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise.

 

“Earn-Out Years”
means (i) the twelve (12) month period commencing June 1, 2017 and ending May 31, 2018, (ii) the twelve (12) month period
commencing June 1, 2018 and ending May 31, 2019, and (iii) the twelve (12) month period commencing June 1, 2019 and ending
May 31, 2020.

 

“Effective Time”
means 11:59 p.m. San Diego City time on the day immediately preceding the Closing Date.

 

“FIRPTA Certificates”
means the non-foreign affidavits executed by each of the Shareholders as of the Closing Date, sworn under penalty of perjury and
in form and substance required under the Treasury Regulations issued pursuant to Section 1445 of the Code stating that Company
is not a “Foreign Person” as defined in Section 1445 of the Code.

 

“GAAP”
means accounting principles generally accepted in the United States.

 

 

 

 

    	 	59	 

     

    

“Government
Agency” means (a) the United States Government, including all departments and agencies of any branch of the United
States Government, all independent agencies or instrumentalities and all non-appropriated fund activities within the United States
Government and United States Government corporations, and (b) any state, local or foreign government, including all departments,
agents, agencies, branches, independent agencies or instrumentalities, activities, and non-appropriated fund activities of or within
a state, local or foreign government and all state, local or foreign government corporations.

 

“Government
Contract” means any prime contract, grant, research or collaboration agreement, subcontract, purchase order, task order,
delivery order, teaming agreement, joint venture agreement, strategic alliance agreement, basic ordering agreement, pricing agreement,
letter contract or other similar arrangement of any kind that is currently active in performance, has been active in performance
at any time in the five (5) year period prior to the Effective Time, or has not been closed-out under the procedures of the Governmental
Agency responsible for administering the Government Contract as of the Effective Time, with (i) any Governmental Agency, (ii) any
prime contractor of a Governmental Agency in its capacity as a prime contractor, or (iii) any subcontractor at any tier with
respect to any contract of a type described in clauses (i) or (ii) above. A task, purchase or delivery order under a Government
Contract shall not constitute a separate Government Contract, for purposes of this definition, but shall be part of the Government
Contract to which it relates.

 

“Government
Contract Proposal” shall mean any proposal, bid or quotation for awards of new Government Contracts made by the Company
or any of its Subsidiaries for which no award has been made and any proposal, bid, request for equitable adjustment, contract change
proposal, proposal for modification or indirect cost submission on any existing Government Contract.

 

“Governmental
Authority” means any court, administrative or regulatory agency or commission, Government Agency or other governmental
authority of competent jurisdiction.

 

“Governmental
Authorization” means any approval, consent, license, permit, registration, certificate, waiver or other authorization
issued, granted, given, or otherwise made available by or under the authority of any Governmental Authority or pursuant to any
Law.

 

“Hamner Institute”
means The Hamner Institutes of Health Sciences.

 

“Holdback Release
Date” means the date that is eighteen (18) months following the Closing Date.

 

“Indebtedness”
means with respect to any Person at any date, without duplication: (a) all obligations of such Person for borrowed money or
in respect of loans or advances (other than customer prepayments or deposits characterized as short term liabilities under GAAP);
(b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations
of such Person that are not characterized as short term liabilities under GAAP; (d) all obligations in respect of letters
of credit, whether or not drawn, and bankers’ acceptances issued for the account of such Person; (e) all capitalized
lease liabilities of such Person; (f) all interest rate protection agreements of such Person (valued on a market quotation
basis); (g) all obligations of such Person secured by a contractual lien; (h) all guarantees of such Person in connection
with any of the foregoing; (i) any debt-like obligation or financing-type arrangement in respect of the deferred purchase
price of property or property received as of the Closing with respect to which such Person is liable, contingently or otherwise,
as obligor or otherwise; (j) all earn-out obligations of such Person; and (k) any accrued interest, prepayment premiums
or penalties or other costs or expenses related to any of the foregoing.

 

 

 

 

    	 	60	 

     

    

“Independent
Firm” means Grant Thornton LLP or, if it is unable or unwilling to serve, another nationally recognized accounting firm
mutually acceptable to Purchaser and the Shareholders’ Representative.

 

“Intellectual
Property Rights” means any and all United States and foreign (a) patents and patent applications (including without
limitation docketed patent disclosures awaiting filing, reissues, divisions, continuations, continuations-in-part and extensions),
patent disclosures awaiting filing determination, inventions and improvements thereto, (b) trademarks, service marks, certification
marks, trade name rights, trade dress, logos, business and product names, slogans, and registrations and applications for registration
thereof, (c) copyrights (statutory or otherwise) and registrations thereof, (d) inventions, processes, designs, formulae,
trade secret rights, know-how, industrial models, confidential, technical and business information, manufacturing, engineering
and technical drawings, and product specifications, (e) intellectual property rights similar to any of the foregoing, (f) computer
software, and (g) copies and tangible embodiments thereof (in whatever form or medium, including without limitation electronic
media).

 

“Interim Balance
Sheet” means the unaudited balance sheet of the Company dated as of the Interim Balance Sheet Date.

 

“Interim Balance
Sheet Date” means December 31, 2016.

 

“JAMS”
JAMS Arbitration, Mediation and ADR Services.

 

“Knowledge”
or “Company’s Knowledge” means the knowledge of any of the officers, directors or shareholders of the
Company, including the Shareholders, after making due inquiry of all officers and other employees charged with administrative or
operational responsibility of such matters, or that an ordinary and prudent business Person employed in the same capacity in the
same type and size of business as such individual would reasonably be expected to have knowledge of such fact or other matter.

 

“Law”
or “Laws” means any law, statute, code, ordinance, regulation, rule or other binding obligation or requirement
of any Governmental Agency or Governmental Authority.

 

“Licensed Intellectual
Property” means Intellectual Property Rights licensed to the Company or which the Company has the right to use, including
Off-the-Shelf Software.

 

“Liens”
means any charge, Claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, easement, deed of trust, mortgage, right-of-way, encroachment, conditional sales agreement, or any other right
or adverse claim of any third party of any nature whatsoever, whether voluntarily incurred or arising by operation of Law, or restriction
of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership,
and including, without limitation, any Contract to give any of the foregoing in the future; the term “Lien” does not
include statutory liens for Taxes not yet due and payable.

 

 

 

 

    	 	61	 

     

    

“Losses”
means (whether or not involving a third-party claim) any cost, loss, liability, obligation, damage (including incidental, special,
punitive and consequential damages), expense, loss of profit or diminution in value, interest, penalties, compliance costs, costs
of mitigation, reasonable attorney’s fees and amounts paid in investigation, defense or settlement of any of the foregoing.

 

“Material Adverse
Effect.” When used in connection with the Company, or Purchaser or any
of its subsidiaries, as the case may be, the term “Material Adverse Effect” means any change, effect or circumstance
that is materially adverse to the business, assets, condition (financial or otherwise) or results of operations of the Company,
or Purchaser and its subsidiaries, as the case may be, in each case taken as a whole.

 

“Majority Shareholders”
means the following Shareholders: (i) Brett Howell; (ii) Lisl Shoda; (iii) Scottington Siler; (iv) Paul Watkins; and (v) Jeffrey
Woodhead.

 

“NDA”
means that certain Confidentiality and Nondisclosure Agreement dated September 12, 2016 between Purchaser and the Company.

 

“Net Working
Capital” means the difference between: (a) the sum of the Company’s tangible current assets determined under
GAAP (including, for purposes of clarity, cash, accounts receivable and prepaid items determined under GAAP); and (b) the
sum of the Company’s current liabilities determined under GAAP, including but not limited to, accounts payable, deferred
revenue (current), accrued expenses, bonus accruals, balance sheet adjustments, lease obligation (current) and accrual for tax
liability, provided that “Net Working Capital” shall (x) include at least Five Hundred Thousand Dollars ($500,000)
of cash, and (y) exclude deferred tax assets and liabilities.

 

“Off-the-Shelf
Software” means unmodified, generally available, commercial, off-the-shelf software or other non-material shrink wrap
or downloadable software or software as a service software available to Purchaser on nondiscriminatory terms and conditions used
in the operation of the business of the Company.

 

“Order”
means any order, judgment, ruling, injunction, assessment, award, decree, writ or other binding decision of any Governmental Authority
or Government Agency.

 

“Person”
means an individual, corporation, partnership, limited liability company, association, joint venture, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act);

 

 

 

 

    	 	62	 

     

    

“Pro Rata Portion”
means with respect to each Shareholder, the percentage obtained by dividing (a) the number of shares of Company Common Stock
owned by such Shareholder immediately prior to the Effective Time, by (b) the number of Purchased Shares.

 

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

 

“Subsidiary”
means, with respect to any Person, any corporation of which a majority of the total voting power of shares of stock entitled (without
regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination
thereof, or any partnership, association or other business entity of which a majority of the partnership or other similar ownership
interest is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person
or a combination thereof. For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership,
association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, association
or other business entity or is or controls the managing director or general partner of such partnership, association or other business
entity.

 

“Target Net
Working Capital” means Two Hundred Fifty Thousand Dollars ($250,000).

 

“Tax”
or “Taxes” means (a) any federal, state, local, or foreign income, gross receipts, gross margin, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar excises), unemployment,
disability, ad valorem, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed
or not, by any Governmental Authority responsible for imposition of any such tax (domestic or foreign), (b) in the case of
the Company, liability for the payment of any amount of the type described in clause (a) as a result of being or having been on
or before the Closing Date a member of an affiliated, consolidated, combined or unitary group, or a party to any agreement or arrangement,
as a result of which liability of the Company to a Governmental Authority is determined or taken into account with reference to
the liability of any other Person, and (c) liability of the Company for the payment of any amount as a result of being party
to any Tax Sharing Agreement or with respect to the payment of any amount of the type described in (a) or (b) as a result of any
existing express or implied obligation (including an indemnification obligation).

 

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

 

“Tax Sharing
Agreement” means all existing agreements or arrangements (whether or not written) binding the Company that provide for
the allocation, apportionment, sharing or assignment of any Tax liability or benefit, or the transfer or assignment of income,
revenues, receipts or gains for the principal purpose of determining any Person’s Tax liability.

 

 

 

 

    	 	63	 

     

    

“Termination
Liability” means all Losses incurred by Purchaser or the Company as a result of the assignment or termination of employees
or consultants of the Company at Closing with respect to periods on or prior to the Closing Date, including severance, outplacement,
vacation pay, salary, commissions and benefits for periods prior to the Closing Date, claims of wrongful termination, age, race
or sex discrimination or the like, liability under WARN, COBRA and state benefits continuation Laws, and any Taxes or penalties
payable with respect to any of the foregoing payments or liabilities.

 

“Transaction
Documents” means this Agreement, the Shareholder Release, the Non-Competition Agreement and other each agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by Purchaser, the Company or the Shareholders in connection
with the consummation of the Contemplated Transactions, in each case only as applicable to the relevant party or parties to such
Transaction Documents, as indicated by the context in which such term is used.

 

“Transaction
Expenses” means, solely to the extent not paid prior to Closing, (a) the aggregate amount of all fees and expenses
incurred by the Shareholders at any time, or the Company prior to the Closing, regardless of when payable (including the fees and
expenses of any legal counsel, accountant, auditor, broker, financial advisor or consultant retained by or on behalf of the Shareholder
or the Company), arising from, relating to or in connection with this Agreement, the Transaction Documents and/or the Contemplated
Transactions, it being understood and agreed that all fees and expenses of Dixon Hughes Goodman, LLP related to the Company’s
2016 audit shall be deemed Transaction Expenses for purposes of this Agreement, and (b) any other fees and expenses of the
Company and/or the Shareholders to be paid at Closing as set forth in the Transaction Expense Schedule.

 

“WARN”
means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and each similar state, local or foreign Law or
regulation.

 

Section
9.18Rules of Construction. This Agreement shall be construed in accordance with the following rules of construction:

 

(a)       the
terms defined in this Agreement include the plural as well as the singular;

 

(b)       all
references in the Agreement to designated “Articles,” “Sections” and other subdivisions are
to the designated articles, sections and other subdivisions of the body of this Agreement;

 

(c)       pronouns
of either gender or neuter shall include, as appropriate, the other pronoun forms;

 

(d)       the
words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision;

 

(e)       the
words “includes” and “including” are not limiting;

 

 

 

 

    	 	64	 

     

    

(f)       all
references to days shall be deemed to refer to calendar days unless this Agreement specifically refers to Business Days;

 

(g)       the
terms “made available,” “delivered” and “provided to” when used in reference to the Company
and/or the Shareholders’ Representative having made or making items or information available to, or to having provided information
to, Purchaser or Transaction Sub, shall mean that such items or information were (i) posted prior to the date hereof to the
Company Data Site including the secured folders located therein; and

 

(h)       reference
to any Law means as amended, modified, codified, replaced or re-enacted, in whole or in part, and in effect on the date hereof,
including rules, regulations, enforcement procedures and any interpretations promulgated thereunder.

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	65	 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Stock Purchase Agreement to be duly executed as of the day and year first above written.

 

SIMULATIONS PLUS, INC.

 

 

By:  /s/ Walter S. Woltosz

Walter S. Woltosz, Chairman
& CEO

 

 

DILISYM SERVICES, INC.

 

 

By: /s/ Brett A. Howell

Brett A. Howell, CEO

 

 

	SHAREHOLDERS:	 
	 	 
	
        /s/ Brett A.
        Howell

        Brett A. Howell
	
        /s/ Bud M. Nelson

        Bud M. Nelson

	 	 
	
        /s/ Grant Generaux

        Grant Generaux
	
        /s/ Lisl Shoda

        Lisl Shoda

	 	 
	/s/ Diane Longo

        Diane Longo
	
        /s/ Scottington
        Siler

        Scottington Siler

	 	 
	
        Paul Watkins

        Paul Watkins
	
        /s/ Jeffrey Woodhead

        Jeffrey Woodhead

	 	 
	 	 
	 	 
	
        SHAREHOLDERS REPRESENTATIVE:

         

        /s/ Brett A.
        Howell

        Brett A. Howell
	 

 

 

    	 	66	 

     

    

 

COMPANY DISCLOSURE SCHEDULE

[TO FOLLOW]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

EXHIBIT A

 

FORM OF NON-COMPETITION
AGREEMENT

 

[ATTACHED]

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

NON-COMPETITION AGREEMENT

 

This Non-Competition
Agreement (this “Agreement”) is dated June 1, 2017 (the “Closing Date”), by and among (i)
Simulations Plus, Inc., a California corporation (“Purchaser”), and (ii) the shareholders of DILIsym Services,
Inc., a North Carolina corporation (the “Company”) listed on the signature pages hereto (together the “Shareholders”,
and each a “Shareholder”). Each of the foregoing parties shall be referred to separately herein as a “Party”
and together as the “Parties”.

 

RECITALS

 

WHEREAS, pursuant to
the terms and subject to the conditions set forth in that certain Stock Purchase Agreement dated May 1, 2017 (the “Purchase
Agreement”) among the Company, Purchaser, the Shareholders, and Brett A. Howell as the Shareholders’ Representative,
Purchaser shall acquire all of the Company’s outstanding capital stock from the Shareholders (the “Transaction”);

 

WHEREAS, the Shareholders
are shareholders of the Company and are selling all of their equity interests in the Company;

 

WHEREAS, in order to
induce Purchaser to enter into the Purchase Agreement and to protect adequately its interests, it is essential that the Shareholders
have agreed to enter into this Agreement in consideration of the transactions contemplated by, and pursuant to Section 6.2(f) of
the Purchase Agreement;

 

WHEREAS, this Agreement
is integral to the transactions contemplated by the Purchase Agreement, and it is acknowledged and agreed that the Purchaser would
not consummate such transactions (or pay the consideration specified in the Purchase Agreement) absent the Shareholders’
execution and delivery of this Agreement, and this Agreement being in full force and effect and valid, binding and enforceable
against the Shareholders as of the Closing Date and thereafter, as set forth below;

 

WHEREAS, for the avoidance
of doubt, (i) the Shareholders are not entering into this Agreement in his or her capacity as an employee of the Company, and (ii)
each of the Shareholders enter into this Agreement in connection with, and ancillary to, the sale of the Company; and

 

WHEREAS, the Parties
acknowledge and agree that the restrictive covenants below shall be construed in the sale of business context, including, but not
limited to, the Prohibited Activities covenant set forth in Section 4 below.

 

NOW, THEREFORE, in
consideration of the premises set forth herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto agree as follows:

 

 

    	 	A-1	 

     

    

 

AGREEMENT

 

1.       Definitions.
Capitalized terms not expressly defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement.

 

(a)       The
term “Confidential Information” means all of the confidential and proprietary information of the Company and
its Affiliates existing as of the date hereof and/or hereafter acquired by the Purchaser pursuant to the Transaction, including
all information and compilations of information of any kind, type or nature (tangible and intangible, written or oral, and including
information contained, stored or transmitted through any electronic medium) relating to the financial conditions, results of operations,
business, properties, assets, liabilities or future prospects of the Company, special arrangements regarding the pricing and purchase
of products or services including proprietary methods, cost information, customer and potential customer lists and contact information,
pricing and volume by customer, customer preferences, supplier information, agency and contractor relationships and contact information,
sales and profit information, goodwill, any other Trade Secrets, including information concerning services and products, developments,
techniques, processes, formulae, know-how, systems, new service, product and marketing plans, inventions, discoveries, patent applications,
ideas, designs, drawings, test data, computer programs, software (including object code and source code), databases, technologies,
systems, structures and architectures, methods, research, procurement and sales activities and procedures, promotion and pricing
techniques and credit and financial data concerning customers and potential customers of the Company as well as information relating
to the management operation or planning of the business of the Company, and technical proprietary information and any other intangible
assets whether communicated orally, electronically, in writing or in any other tangible media. Notwithstanding the foregoing, Confidential
Information shall not include, and nondisclosure and nonuse obligations under this Agreement shall not apply to, information that
is generally available to the public in the ordinary course of business of the Company.

 

(b)       The
term “Trade Secrets” means all of the information of the Company existing as of the date hereof and/or hereafter
acquired by the Company or the Purchaser pursuant to the Transaction, and information of the licensors, suppliers, clients, vendors,
and customers of Company, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern,
a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans,
a list of actual customers, clients, licensors, or suppliers, or a list of potential customers, clients, licensors, or suppliers,
and which such information (i) derives independent economic value, actual or potential, from not being generally known to the public
or to other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.

 

 

 

    	 	A-2	 

     

    

 

2.       Acknowledgments
and Representations by Shareholders.

 

(a)       Acknowledgments.
Shareholders acknowledge that:

 

(i)       the
Purchaser has required that Shareholders make the covenants set forth in Sections 3 and 4 of this Agreement as a condition to the
consummation of the transactions contemplated by the Purchase Agreement;

 

(ii)       but
for the provision of the covenants set forth herein, Purchaser would not acquire all of the capital stock of the Company;

 

(iii)       the
covenants contained herein are an integral, and not severable, material component of the basis of the consideration being paid
by Purchaser which consideration would not have been agreed to by Purchaser but for the existence and enforceability of this Agreement;

 

(iv)       each
Shareholder had the opportunity to be represented by counsel of his or her choice and based upon the advice of such counsel, if
any, and other advisers, Shareholders have knowingly and willingly agreed to enter into and agree to the enforcement of this Agreement
and the covenants herein contained;

 

(v)       the
transactions contemplated by the Purchase Agreement and payment of the Purchase Price directly benefit the Shareholders and constitute
sufficient consideration for the Shareholders to enter into this Agreement;

 

(vi)       the
provisions of this Agreement are necessary to protect the goodwill and the business of the Company (all of which are being acquired
by Purchaser) and that this Agreement and the covenants herein are necessary and reasonable in duration, scope and geographic territory
to protect such business following the Transaction;

 

(vii)       prior
to the Transaction, the Shareholders occupied a position of trust and confidence with the Company and have had access to and have
become familiar with the Confidential Information and the Trade Secrets, all of which are being acquired by Purchaser; and

 

(viii)       Purchaser
and the Company would be irreparably damaged if any Shareholder were to breach the covenants set forth in Sections 3 or 4 of this
Agreement.

 

(b)       Representations.
Shareholders represent and warrant (on which representation and warranty each Shareholder expressly acknowledges Purchaser is relying
in determining the appropriate geographic area for purposes of the restrictive covenants herein set forth) that the Company currently
carries on its business, and sells and offers for sale its products and/or services, in (i) the State of North Carolina, (ii) states
bordering North Carolina, (iii) states east of the Mississippi River, and (iv) the United States of America, (the “Restricted
Territory”):

 

 

 

 

    	 	A-3	 

     

    

3.       Nondisclosure
and Nonuse of Confidential Information and Trade Secrets.

 

(a)       Each
of the Shareholders acknowledges and agrees that the Confidential Information and the Trade Secrets were the property of the Company
prior to the Closing, and shall remain the property of the Company immediately following the Closing. None of the Shareholders
shall do anything inconsistent with the ownership of the Confidential Information and the Trade Secrets by the Company and Purchaser.
From and after the date of this Agreement, each of the Shareholders agrees that he or she will not, and will not permit any party
acting on behalf of, in conjunction or association with, or at the direction of such Shareholder, at any time, disclose to any
unauthorized Persons or use for his or her own account or for the benefit of any third Person, any Confidential Information or
the Trade Secrets, whether such Shareholder has such information in his or her memory or embodied in writing or other physical
or tangible form or media, without Purchaser’s and the Company’s express written consent, which may be withheld in
the Purchaser’s and the Company’s sole discretion, unless (a) such Confidential Information and the Trade Secrets enters
the public domain subsequent to the date hereof through no fault of a Shareholder and through no breach of confidentiality to Purchaser
or the Company; or (b) the communication of such Confidential Information and the Trade Secrets is in response to a valid order
by a Governmental Authority or is otherwise required by any applicable Law; provided, however, in the event that
any Shareholder is legally compelled to disclose any of the Confidential Information and the Trade Secrets, Shareholder shall provide
the Purchaser and the Company with immediate written notice of such requirement so that the Purchaser and the Company may seek
a protective order or other appropriate remedy or waive compliance with this Section 3. If, failing the entry of a protective order,
such Shareholder is, in the opinion of his or her counsel, compelled to disclose any Confidential Information and the Trade Secrets,
he or she may disclose only that portion of the Confidential Information and the Trade Secrets that his or her counsel advises
is compelled to be disclosed by Law and such Shareholders will exercise reasonable efforts to obtain assurance that confidential
treatment will be accorded to that portion of the Confidential Information and the Trade Secrets that is being disclosed. In any
event, no Shareholder will oppose action by the Purchaser or the Company to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Confidential Information and the Trade Secrets. Each Shareholder agrees
to use commercially reasonable efforts, upon request from time to time, to locate and provide to the Purchaser and the Company
such specific items of Confidential Information and the Trade Secrets that may be reasonably requested by the Purchaser or the
Company from time to time, whether embodied in electronic, hard copy or any other form, that Shareholders may then possess or have
under a Shareholder’s control.

 

(b)       The
obligations under this Agreement shall: (i) with regard to the Trade Secrets, remain in effect as long as the information constitutes
a trade secret under applicable Law; and (ii) with regard to the Confidential Information, remain in effect for so long as such
information constitutes Confidential Information as defined in this Agreement.

 

(c)       The
confidentiality, property, and proprietary rights protections available in this Agreement are in addition to, and not exclusive
of, any and all other rights to which the Purchaser is entitled under applicable federal and state law, including, but not limited
to, rights provided under copyright laws, trade secret and confidential information laws, and laws concerning fiduciary duties.

 

 

 

 

    	 	A-4	 

     

    

4.       Prohibited
Activities. As an inducement for Purchaser to consummate the transactions contemplated in the Purchase Agreement, each of the
Shareholders, to the extent provided in this Agreement, agrees with respect to his or herself that:

 

(a)       For
a period of four (4) years after the Closing Date (the “Restricted Term”):

 

(i)       Each
of the Shareholders will not, and will not permit any party acting on behalf of, in conjunction or association with, or at the
direction of such Shareholder to, directly or indirectly, in any market area in the Restricted Territory, engage or invest in,
own, manage, operate, develop, consult, finance, control or participate in any manner in the ownership, management, operation,
financing or control of, or lend money or credit to any business whose products, services or activities compete, directly or indirectly,
with the Company as of the Closing Date, including, but not limited to, the business of Purchaser and its Subsidiaries (collectively,
the “Business”); provided, however, that any Shareholder may purchase or otherwise acquire up to (but not more
than) one percent (1%) of any class of securities of any enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934, as amended, provided, further, that no Shareholder, in any way, participates,
either directly or indirectly, in the management, operation or other activities of such enterprise, whether as a consultant, employee,
officer, director, advisor, board member or otherwise. Notwithstanding, this subsection 4(a)(i) shall not prevent any Shareholder
from having such a position with, or providing services to, a business described above if such position and services are in no
way similar to the position Shareholder previously held with, or the services previously provided to, the Company, and further
that such position and such services do not assist the business in competing with the Company.

 

(ii)       Each
of the Shareholders will not, and will not permit any party acting on behalf of, in conjunction or association with, or at the
direction of such Shareholder to, directly or indirectly, either for themselves or any other Person, (a) induce or attempt to induce
any employee, independent contractor, or other Persons providing services to the Company prior to the Closing to leave the employ
of the Company or its Affiliates or to cease providing services to the Company or its Affiliates (including Purchaser), (b) in
any way interfere with the relationship between the Company or its Affiliates (including Purchaser) and any employee or independent
contractor of the Company or its Affiliates prior to the Closing or any other Person providing services to the Company or its Affiliates
prior to the Closing, (c) employ or otherwise engage or hire (including participating in the interviewing, selecting, recruiting,
screening, hiring, training or on-boarding) as an employee, independent contractor or otherwise, any employee or independent contractor
of the Company or its Affiliates or any Person who has been such an employee or independent contractor of the Company or its Affiliates
within the six (6) months preceding the Closing Date, or (d) induce or attempt to induce any customer, supplier, licensee or business
relation of the Company or its Affiliates prior to the Closing to cease doing business with the Company or its Affiliates (including
the Purchaser) or in any way interfere with the relationship between any customer, supplier, licensee or business relation of the
Company or its Affiliates prior to the Closing and the Purchaser or its Affiliates.

 

(iii)       Each
of the Shareholders will not, and will not permit any party acting on behalf of, in conjunction or association with, or at the
direction of such Shareholder to, directly or indirectly, either for themselves or any other Person, solicit the business of, or
contact or engage in business with, any Person known to such Shareholder to be a customer of the Company within the one year period
prior to the Closing or included on any customer list of the Company or its Affiliates as of the Closing with respect to services
or products that compete in any respect with the Business of the Company or any of its Affiliates prior to the Closing.

 

 

 

 

    	 	A-5	 

     

    

(iv)       
Each Shareholder agrees that the restrictions set forth above are ancillary to or part of otherwise enforceable agreements, are
supported by independent valuable consideration, and that the limitations as to time, geographical area, and scope of activity
to be restrained by this Section 4 are reasonable and acceptable in all respects, do not impose any greater restraint than is reasonably
necessary to protect the goodwill and other business interests of the Company acquired by the Purchaser in the Transaction, and
are more than adequately paid for in the significant consideration derived by the Shareholders under the Purchase Agreement. Each
Shareholder ratifies the restrictions set forth in this Section 4, agrees not to challenge, and covenants not to sue the Company
or Purchaser regarding, the enforceability of the covenants stated herein.

 

(b)       The
Parties agree that, if for any reason a court disagrees with the agreements and the acknowledgements of the Parties in this Agreement,
the court will have jurisdiction to modify any of the covenants of this Section 4 in accordance with the respective court’s
ruling as to reasonableness or scope of application and that, consistent with Section 7 of this Agreement, this Agreement shall
remain enforceable and in force as modified or amended, including the power to reduce or delete specific words and phrases by “blue
penciling” or otherwise and the reduced or blue penciled form of such provision shall then be enforceable by law. In the
event of a breach by any Shareholder of any covenant set forth in Section 4(a) of this Agreement, the term of such covenant will
be extended by the period of the duration of such breach. Each of the Shareholder’s obligations under this Section 4 shall
survive the closing of the transactions contemplated by the Purchase Agreement for the Restricted Term.

 

(c)       The
covenants of the Shareholders contained in this Section 4 will be construed as independent of any other provision in this Agreement,
the Purchase Agreement, or any Transaction Documents, and the existence of any claim or cause of action by a Shareholder against
the Purchaser or the Company will not constitute a defense to the enforcement by the Company or Purchaser of such covenants. Each
Shareholder further agrees that notwithstanding any other alleged breach of this Agreement, the provisions of this Section 4 will
be valid and binding upon each Shareholder.

 

5.       Nondisparagement.
During the Restricted Term, each of the Shareholders agrees that such Shareholder will not disparage or make negative statements
(or induce or encourage others to disparage or make negative statements) about the Company, the Company’s products and/or
services, Purchaser or any of their past or present officers, directors, agents, employees, attorneys, successors and assigns (as
applicable), including, without limitation, criticizing such Person’s business strategy. For the purposes of this Agreement,
the term “disparage” means any comments or statements, written or verbal, that are derogatory or which would adversely
affect in any manner: (i) the conduct of the Purchaser’s or Company’s business; (ii) the business reputation or relationships
of the Purchaser or Company and/or any of either of their past or present officers, directors, agents, employees, attorneys, successors
and assigns (as applicable); or (iii) the reputation or merchantability of any of the Purchaser’s or Company’s products
and/or services.

 

 

 

    	 	A-6	 

     

    

 

6.       Remedies.
If any Shareholder breaches the covenants set forth in Sections 3 or 4 of this Agreement, Purchaser and the Company will be entitled
to seek all of the following remedies:

 

(a)       Damages
from such Shareholder;

 

(b)       Injunctive
or other equitable relief with respect to such Shareholder without posting bond to restrain any breach or threatened breach or
otherwise to specifically enforce the provisions of Sections 3 or 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate Purchaser and/or the Company and would be an inadequate remedy for such breach; and/or

 

(c)       Any
other rights Purchaser and/or the Company may have at law, in equity or under contract with respect to such Shareholder.

 

The rights and remedies of the Parties
to this Agreement are cumulative and not alternative.

 

7.       Independent
Enforcement. Each of the covenants set forth in Sections 3, 4 and 5 of this Agreement shall be construed as agreements independent
of (a) any other agreements, or (b) any other provision in this Agreement, and the existence of any claim or cause of action by
the Shareholders against the Purchaser, whether predicated on this Agreement or otherwise, regardless of who was at fault and regardless
of any claims that either the Shareholders or the Purchaser may have against the other, shall not constitute a defense to the enforcement
by the Purchaser of any of the covenants set forth in Sections 3, 4 and 5 of this Agreement. The Purchaser shall not be barred
from enforcing any of the restrictive covenants set forth in Sections 3, 4 and 5 of this Agreement by reason of any breach of (i)
any other part of this Agreement, or (ii) any other agreement with the Shareholders.

 

8.       Severability.
Whenever possible each provision and term of this Agreement will be interpreted in a manner to be effective and valid, but if any
provision or term of this Agreement is held to be prohibited or invalid, then such provision or term will be ineffective only to
the extent of such prohibition or invalidity, without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any of the covenants set forth in Section 4 of this
Agreement are held to be unreasonable, arbitrary, against public policy or otherwise unenforceable as written, such covenants will
be considered divisible with respect to time, geographic area, and scope of activity to be restrained and in such lesser time,
geographic area, and scope of activity to be restrained will be effective, binding, enforceable and in force against Shareholders.

 

9.       Successors
and Assigns. This Agreement will be binding upon Purchaser and the Shareholders and will inure to the benefit of Purchaser,
the Company and the Shareholders and their respective successors and assigns. This Agreement may be assigned by the Purchaser to
(i) its Affiliates, and (ii) its successors by merger, consolidation, business combination, conversion or sale of all or substantially
all of the Purchaser’s assets, but may not be assigned by any of the Shareholders.

 

 

 

 

    	 	A-7	 

     

    

10.       Waiver.
Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement will operate as
a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude
any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the
maximum extent permitted by applicable Laws, (a) no claim or right arising out of this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable, except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this Agreement.

 

11.       Governing
Law; Jurisdiction. This Agreement shall be construed and enforced in accordance with the internal laws of the State of North
Carolina without regard to any conflicts or choice of law principles that would require the application of the laws other than
the internal laws of the State of North Carolina. The parties (a) hereby irrevocably submit to the jurisdiction of the state courts
of North Carolina, and to the jurisdiction of the United States District Court for the Eastern District of North Carolina, for
the purpose of any suit, action or other proceeding arising out of or based upon this Agreement or any document collateral hereto
or the subject matter hereof or thereof brought by any party or their respective successors or assigns and (b) hereby waive, and
agree not to assert, by way of motion, as a defense or otherwise, in any such suit, action or proceeding, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that this Agreement or any document collateral thereto
or the subject matter hereof or thereof may not be enforced in or by such court, and (c) hereby waive and agree not to seek any
review of the decision of a North Carolina state or federal court by any court of any other jurisdiction that may be called upon
to grant enforcement of the judgment of any such North Carolina state or federal court. Notwithstanding, Purchaser and the Company
may seek injunctive relief (as described in Subsection 6(b)) in any other appropriate venue.

 

12.       Entire
Agreement. This Agreement, the Purchase Agreement and any ancillary agreements or related agreements thereto constitute the
entire agreement between the parties with respect to the subject matter of this Agreement and supersede all prior written and oral
agreements and understandings between Purchaser, the Company and Shareholders with respect to the subject matter of this Agreement.
This Agreement may not be amended, except by a written agreement executed by the party to be charged with the amendment.

 

13.       Counterparts.
This Agreement may be executed in counterparts (including by facsimile or e-mailed Adobe® portable document format file), all
of which shall constitute one document, and that by the signature(s) hereto, the undersigned further agree that facsimile or e-mailed
Adobe® portable document format file signatures shall be effective for all purposes.

 

14.       Section
Headings; Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to “Section” or “Sections” refer to the corresponding Section
or Sections of this Agreement unless otherwise specified. All words used in this Agreement will be construed to be of such gender
or number as the circumstances require. Unless otherwise expressly provided, the words “including” and “includes”
do not limit the preceding words or terms.

 

 

 

    	 	A-8	 

     

    

 

15.       Notices.
All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed to have been
duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation
of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other
parties):

 

 

 

	
        If to Purchaser (and the Company following the Closing):

         

         

         

         

         
	
        Walter S. Woltosz

        Chief Executive Officer

        Simulations Plus, Inc.

        42505 10th St W

        Lancaster, CA 93534-7059

        Facsimile No.:

         

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

         

         

         
	
        Procopio, Cory, Hargreaves & Savitch LLP

        12544 High Bluff Drive, Suite 300

        San Diego, CA 92130

        Attn: Dennis J. Doucette

        Facsimile No.: (858) 523-4305

         

	 	 
	
        If to a Shareholder:

         

         

         

         

         
	
        To his or her respective address listed on the signature page
        hereto

         

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

         

         

         
	
        Amalie L. Tuffin

        Hutchison PLLC

        3110 Edwards Mill Road, Suite 300

        Raleigh, NC 27612

        Facsimile No.: (855) 373-3417

         

 

16.       No
Third Party Beneficiaries. No person, firm or corporation other than the Purchaser and Shareholders shall have any rights under
this Agreement or the provisions contained herein.

 

17.       Attorneys’
Fees. In the event of litigation relating to this Agreement, the prevailing party, shall be entitled to recover reasonable
attorneys’ fees and costs of litigation in addition to all other remedies available at law or in equity, as determined by
the court or arbitrator in accordance with N.C. Gen. Stat. § 6-21.6. The parties to this Agreement hereby acknowledge this
Agreement is a contract entered into primarily for business or commercial purposes.

 

 

 

    	 	A-9	 

     

    

 

18.       Individual
Liability. The liability for breach of this Agreement by any Shareholder shall be attributable to that individual Shareholder
only and no other Shareholder shall have any responsibility therefore unless such Shareholder is independently in breach of this
Agreement.

 

19.       Shareholders’
Representative. Nothing in this Agreement shall be construed to prevent or impair a Shareholder, if serving as the Shareholders’
Representative under the Purchase Agreement, from satisfying all of such Shareholder’s duties as such Shareholder Representative
(which may require disclosing Confidential Information to counsel in such capacity).

 

(The remainder of this page intentionally left blank/Signature
page follows)

 

 

 

 

 

 

 

    	 	A-10	 

     

    

 

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

 

	
        SHAREHOLDERS:

         

        ____________________________________

        Grant Generaux

        Address:

         

        ____________________________________

        Brett Howell

        Address:

         

        ___________________________________

        Diane Longo

        Address:

         

        ____________________________________

        M. Bud Nelson

        Address:

         

        ____________________________________

        Lisl Shoda

        Address:

         

        ____________________________________

        Scottington Siler

        Address:

         

        ___________________________________

        Paul Watkins

        Address:

         

        ____________________________________

        Daniel Weiner

        Address:

         

        ___________________________________

        Jeffrey Woodhead

        Address:

         

        ____________________________________

        Kyunghee Yang

        Address:

         

         
	
        PURCHASER:

         

        SIMULATIONS PLUS, INC.

         

         

        By: ______________________________________________

        Walter S. Woltosz, CEO

         

 

 

 

[Signature page to Non-Competition Agreement]

    	 	A-11	 

     

    

 

 

EXHIBIT B

 

FORM OF GENERAL RELEASE OF CLAIMS

 

[ATTACHED]

 

 

 

 

    	 	 	 

     

    

 

 

GENERAL RELEASE

 

This General Release
is made and entered into as of June 1, 2017 (this “Release”), by and among (i) DILIsym Services, Inc., a North
Carolina corporation (the “Company”), and (ii) each of the shareholders of the Company (each, a “Shareholder”
and collectively, the “Shareholders”). Each of the foregoing parties shall be referred to separately herein
as a “Party” and together as the “Parties”.

 

RECITALS

 

WHEREAS, pursuant to
the terms and subject to the conditions set forth in that certain Stock Purchase Agreement dated May 1, 2017 (the “Purchase
Agreement”) among the Company, Simulations Plus, Inc., a California corporation (“Purchaser”), the
Shareholders and Brett A. Howell in the capacity as Shareholders’ Representative, Purchaser shall acquire all of the Company’s
outstanding ownership interests from the Shareholders (the “Transaction”);

 

WHEREAS, the Shareholders
are the sole shareholders of the Company and are selling all of the outstanding equity interests of the Company;

 

WHEREAS, in order to
induce Purchaser to enter into the Purchase Agreement and to protect adequately the interests of the Purchaser, it is essential
that the Shareholders have agreed to enter into this Agreement in consideration of the transactions contemplated by, and pursuant
to Section 6.2(s)(v) of the Purchase Agreement; and

 

WHEREAS, this Agreement
is integral to the transactions contemplated by the Purchase Agreement, and it is acknowledged and agreed that the Purchaser would
not consummate such transactions (or pay the consideration specified in the Purchase Agreement) absent the Shareholders’
execution and delivery of this Agreement, and this Agreement being in full force and effect and valid, binding and enforceable
against the Shareholders as of the Closing Date and thereafter, as set forth below.

 

NOW, THEREFORE, for
good and valuable consideration, including the covenants contained herein and for the Parties’ participation in the Transaction
and the resulting payment of the purchase price thereunder to the Shareholders, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:

 

AGREEMENT

 

1.       Definitions.
Capitalized terms used but otherwise not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

 

2.       Release.
The Shareholders on behalf of themselves (and for their successors, assigns, agents, spouse (if any), predecessors, heirs,
relatives, executors, administrators and representatives), hereby irrevocably and unconditionally release and forever
discharge the Company and the Company’s Affiliates (including Purchaser) and each of their respective past, present or
future officers, directors, employees, members, managers, stockholders, representatives, predecessors, successors, assigns
(individually, each a “Released Party” and collectively, the “Released Parties”), of
and from any and all proceedings, demands, rights, causes, causes or manners of action, suits, obligations, liabilities,
debts, sums of money, accounts, bills, dues, covenants, undertakings, promises, contracts, agreements, charges, complaints,
controversies, grievances, damages, judgments, actions, claims, losses, costs or expenses of any kind whatsoever (including
related attorneys’ fees and costs), known or unknown, suspected or unsuspected, matured, unmatured or contingent,
potential or direct, at law or in equity, whether based in statute, common law or otherwise, that Shareholders may now have
or have ever had against the Released Parties or any of them by reason of any act, omission, transaction, or event occurring
up to and including the consummation of the Transaction on the date of this Release (the “Claims”); but
excluding any rights of any Shareholders (including their successors, assigns, and representatives) under the Purchase
Agreement and the Transaction Documents.

 

 

    	 	B-1	 

     

    

 

3.       Section
1542 Release. The Shareholders acknowledge that there is a possibility that subsequent to the execution of this Release, the
Shareholders will discover facts or incur or suffer Claims that were unknown or unsuspected at the time this Release was executed,
and which if known by the Shareholders at that time may have materially affected the Shareholders’ decision to execute this
Release. The Shareholders acknowledge and agree that by reason of this Release, and the releases contained herein, the Shareholders
are assuming any risk of such unknown facts and such unknown and unsuspected Claims. The Shareholders have been advised of the
existence of Section 1542 of the California Civil Code (“Section 1542”) which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

Notwithstanding such
provisions, this Release shall constitute a full release in accordance with its terms. The Shareholders hereby knowingly and voluntarily
waive the provisions of Section 1542, as well as any other statute, law or rule of similar effect.

 

4.       No
Assignment of Claims. The Shareholders represent to the Released Parties that the Shareholders have made no assignment or transfer
of any of the Claims herein above mentioned or implied.

 

5.       Bar
To Claims. In signing this Release, the Shareholders acknowledge and intend that this Release shall be effective as a
bar to each and every one of the Claims herein above mentioned or implied. The Shareholders expressly consent that this
Release shall be given full force and effect according to each and all of its express terms and provisions, including those
relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a
general release of unknown, unsuspected or unanticipated Claims), if any, as well as those relating to any other Claims
herein above mentioned or implied. The Shareholders acknowledge and agree that this waiver is an essential and material term
of this Release and that without such waiver the Purchaser would not have agreed to consummate the transactions contemplated
by the Purchase Agreement. The Shareholders further agree that in the event any of them should assert any Claim seeking
damages against any of the Released Parties, this Release shall serve as a complete defense to any such Claim. The
Shareholders further agree that there does not exist any Claim of the type described in or implied by the first paragraph
hereof and they are not aware of any pending or threatened Claims of the type described in or implied by the first paragraph
hereof.

 

 

 

    	 	B-2	 

     

    

 

6.       Covenant
Not to Sue. The Shareholders further agree not to bring, continue or maintain any claim or legal proceeding against any Released
Party before any court, administrative agency or other forum by reason of any Claim hereby released. If any agency or court assumes
jurisdiction of any Claim released hereby against any Released Party, the Shareholders will direct that agency or court to withdraw
from or dismiss the matter with prejudice. The Shareholders also agree that if any Shareholder violates this Release by suing a
Released Party with respect to any Claim hereby released, the Shareholders will pay all costs and expenses of defending against
the suit incurred by any Released Party, including reasonable attorney’s fees.

 

7.       No
Admission. The Shareholders agree that neither this Release, nor the furnishing of the consideration for this Release, shall
be deemed or construed at any time to be an admission by any Released Party or the Shareholders of any improper or unlawful conduct.

 

8.       Certain
Acknowledgements. In connection with execution of this Release, each of the Shareholders acknowledges, understands and agrees
that such Shareholder:

 

		(a)	Has carefully read and fully understands all of the provisions of this Release and the Purchase
Agreement, and has had the opportunity to discuss the same and its consequences with his or her attorneys;

 

		(b)	Is, through this Release, releasing the Released Parties from any and all Claims the Shareholder
may have against the Released Parties;

 

		(c)	Knowingly and voluntarily agrees to all the terms set forth in this Release;

 

		(d)	Knowingly and voluntarily intends to be legally bound by this Release;

 

		(e)	Was advised and is hereby advised in writing to consult with an attorney of his or her choice prior
to executing this Release concerning its meaning and application; and

 

		(f)	Agrees that the provisions of this Release may not be amended, waived, changed or modified except
by an instrument in writing signed by the Parties.

 

9.       Governing
Law. This Release shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in
all other respects by the internal laws of the State of California applicable to contracts made in that state, without giving effect
to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other
than the State of California.

 

10.       Severability.
Whenever possible, each provision of this Release shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision

 

 

 

    	 	B-3	 

     

    

of this Release is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or any other jurisdiction, but this Release shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. The remedies provided herein
are cumulative and not exclusive of any remedies provided by applicable law.

 

11.       Entire
Agreement. This Release, the Purchase Agreement and the Transaction Documents supersede any previous agreement, negotiation
or understanding regarding the subject matter hereof, whether in writing or otherwise. No promises or agreements not contained
herein or therein have been made by the Released Parties to induce the Parties to enter into this Release.

 

12.       Additional
Documentation and Cooperation. The Parties agree to execute such additional documentation and cooperate in further proceedings
necessary to effectuate the terms of this Release without charge or other consideration.

 

13.       Headings.
Section and paragraph headings contained in this Release are for convenience and shall not be considered for any purpose in construing
this Release.

 

14.       Successors
and Third-Party Beneficiaries. This Release shall bind and inure to the benefit of the Parties and their respective successors.

 

15.       Attorneys'
Fees. Should any action or other proceeding be necessary to enforce any of the provisions of this Release the prevailing Party
will be entitled to recover its, his or her actual attorneys' fees incurred in each and every action or proceeding, including any
and all appeals or petitions therefrom.

 

16.       Waiver
of Terms. A waiver of any term or condition of this Release will not be deemed to be, and may not be construed as, a waiver
of any other term or condition hereof.

 

17.       Representation.
Each of the Parties hereto warrants and represents that in executing this Release, it has relied on legal advice from the attorney
of its, his or her choice, that the terms of this Release and its consequences have been completely read and explained to each
of the Parties by said attorney, and that each of the Parties fully understands the terms of this Release.

 

[Remainder of page intentionally left blank; Signature page
follows]

 

 

    	 	B-4	 

     

    

 

 

IN WITNESS WHEREOF, the Parties
have executed this General Release as of the date first written above.

 

 

	
        SHAREHOLDERS:

         

        ____________________________________

        Grant Generaux

        Address:

         

        ____________________________________

        Brett Howell

        Address:

         

        ___________________________________

        Diane Longo

        Address:

         

        ____________________________________

        M. Bud Nelson

        Address:

         

        ____________________________________

        Lisl Shoda

        Address:

         

        ____________________________________

        Scottington Siler

        Address:

         

        ___________________________________

        Paul Watkins

        Address:

         

        ____________________________________

        Daniel Weiner

        Address:

         

        ___________________________________

        Jeffrey Woodhead

        Address:

         

        ____________________________________

        Kyunghee Yang

        Address:

         

         
	
        COMPANY:

         

        DILIsym Services, Inc.

         

         

        By: ___________________________

        Name:

        Title:

         

 

 

[Signature Page to General Release]

 

 

    	 	B-5	 

     

    

 

SCHEDULE 1.11

EARN-OUT SCHEDULEExhibit
4.5

 

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES, UNLESS OTHERWISE PROHIBITED BY FEDERAL OR STATE SECURITIES LAWS.

 

Original
Issue Date: June 20th, 2017

 

187,000

 

10%
ORIGINAL ISSUE DISCOUNT

CONVERTIBLE
DEBENTURE

DUE
June 20th, 2018

 

FOR
VALUE RECEIVED, The Chron Organization, a Nevada corporation (the “Company”) promises to pay to Bellridge Capital,
LLC or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal
sum of $187,000 on or before June 20th, 2018 (the “Maturity Date”) or such earlier date as this
10.00% Original Issued Discount Convertible Debenture (the “Debenture”) is required or permitted to be repaid
as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of
this Debenture in accordance with the provisions hereof. This Debenture is subject to the following additional provisions:

 

Section
1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized
terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement (as defined below) and (b) the
following terms shall have the following meanings:

 

“Alternate
Consideration” shall have the meaning set forth in Section 5(e).

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof
any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary
thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered,
(d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company
or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence
in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

    	 

    	 

    

 

“Base
Conversion Price” shall have the meaning set forth in Section 5(b).

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

“Buy-In”
shall have the meaning set forth in Section 4(c)(v).

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and
the Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any
Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of
such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders
of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately
after the transaction, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through (c) above.

 

“Conversion”
shall have the meaning ascribed to such term in Section 4.

 

“Conversion
Date” shall have the meaning set forth in Section 4(a).

 

“Conversion
Price” shall have the meaning set forth in Section 4(b).

 

“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.

 

“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with
the terms hereof.

 

“Debenture
Register” shall have the meaning set forth in Section 2(b).

 

“Default
Conversion Price” means 55% of the lowest traded price during the 20 Trading Day-period immediately prior to the applicable
Conversion Date.

 

“DTC”
means the Depository Trust Company.

 

“DWAC”
means Deposit Withdrawal at Custodian as defined by the DTC.

 

“Event
of Default” shall have the meaning set forth in Section 6(a).

 

“Fundamental
Transaction” shall have the meaning set forth in Section 5(e).

 

    	 

    	 

    

 

“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Debenture and accrued and unpaid
interest hereon, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

 

“New
York Courts” shall have the meaning set forth in Section 8(e).

 

“Notice
of Conversion” shall have the meaning set forth in Section 4(a).

 

“Original
Issue Date” means the date of the first issuance of the Debentures, regardless of any transfers of the Debentures and
regardless of the number of instruments which may be issued to evidence the Debenture.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June 20, 2017 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.

 

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

 

“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

 

“Successor
Entity” shall have the meaning set forth in Section 5(e).

 

Section
2. Prepayment and Interest.

 

a)
Payment of Interest. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal
amount of this Debenture at the rate of 12% per annum, which will be due and payable on the sooner to occur of (i) Maturity Date
(ii) except as otherwise set forth in this Debenture or (iii) upon conversion of the Debenture. In addition to the interest payable
under this Section 2(a), this Debenture was issued for an original issue discount of 10% of the principal amount.

 

b)
Interest Calculations. Subject to Section 2(a), interest shall be calculated on the basis of a 365 day year, consisting
of twelve calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding
principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder,
has been made. Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of this Debenture (the “Debenture Register”).

 

c)
Reserved.

 

d)
Prepayment. At any time prior to the Maturity Date, upon ten (10) days written notice to the Holder, the Company may prepay
any portion of the principal amount of this Debenture and any accrued and unpaid interest. If the Company exercises its right
to prepay any portion of the Debenture, the Company shall make payment to the Holder of an amount in cash equal to the sum of
the then outstanding principal amount of this Debenture being prepaid, accrued interest thereon and any other amounts due under
the Debenture multiplied by 120%. The Holder may continue to convert the Debenture from the date notice of the prepayment is given
until the date of the prepayment.

 

    	 

    	 

    

 

Section
3. Registration of Transfers and Exchanges.

 

a)
Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration
of transfer or exchange.

 

b)
Investment Representations. This Debenture has been issued subject to certain investment representations of the original
Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement
and applicable federal and state securities laws and regulations.

 

c)
Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and
any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the
owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture
is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

 

Section
4. Conversion.

 

a)
Voluntary Conversion. Beginning on the date hereof and until this Debenture is no longer outstanding, subject to the limitations
set forth in Section 4(d), this Debenture (including principal and accrued but unpaid interest on any principal being converted,
if any) shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from
time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by
delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice
of Conversion”), specifying therein the principal amount (and any accrued interest) of this Debenture to be converted
and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered
hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Conversion form be required by the Company. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture, plus
all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Debenture (and accrued interest thereon, if applicable) in an amount equal to the applicable conversion.
The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s).
The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion.
In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount
of this Debenture may be less than the amount stated on the face hereof.

 

b)
Conversion Price. The conversion price in effect on any Conversion Date, subject to adjustment herein, shall be equal to
the lower of $.03 per share or 60% of the lowest closing price for the Company’s Common Stock on the Trading Market for
the 20 Trading Days prior to the conversion (the “Conversion Price”). The Conversion Price will be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases
or increases the Common Stock during such measuring period. Notwithstanding the foregoing, but subject to the limitations set
forth in Section 4 (d) at any time after the occurrence of any Event of Default the Holder may, at such Holder’s option
and otherwise in accordance with the provisions for conversion herein, convert all or any part of this Debenture into Common Stock
at the Default Conversion Price. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event
of Default pursuant to Section 6 hereof and the Holder shall have the right to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of
any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.

 

    	 

    	 

    

 

Provided
however the Conversion Price shall not be lower than $.001 per share subject to adjustment as provided in Section 5.

 

c)
Mechanics of Conversion.

 

i.
Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion
hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be
converted by (y) the Conversion Price.

 

ii.
Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without
the need for current public information and the Company has received an opinion of counsel to such effect reasonably acceptable
to the Company, shall be free of restrictive legends and trading restrictions (other than those which may then be required by
the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Debenture. All
certificate or certificates required to be delivered by the Company under this Section 4(c) shall be delivered electronically
through the Depository Trust Company or another established clearing corporation performing similar functions. If the Conversion
Date is prior to the date on which such Conversion Shares are eligible to be sold under Rule 144 without the need for current
public information, the Conversion Shares shall bear a restrictive legend in substantially the following form, as appropriate:

 

“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES, UNLESS OTHERWISE PROHIBITED BY FEDERAL OR STATE SECURITIES LAWS.”

 

    	 

    	 

    

 

Notwithstanding
the foregoing, commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public
information requirements, the Company shall obtain at its cost a legal opinion to allow for such sales under Rule 144.

 

iii.
Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not
delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in
which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall
promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

 

iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such Conversion Shares (but subject to Section 4(e)
of this Debenture); provided, however, that such delivery shall not operate as a waiver by the Company of any such
action the Company may have against the Holder. In the event the Holder of this Debenture shall elect to convert any or all of
the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated
or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason (except as otherwise
provided in the Transaction Documents), unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion
of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety bond for the benefit of the
Holder which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall
issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver
to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per
Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion.
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section
6 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall
have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce
damages pursuant to any other Section hereof or under applicable law.

 

    	 

    	 

    

 

v.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available
to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery
Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the
Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to
the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements
under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion
Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of
the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debenture as
required pursuant to the terms hereof.

 

vi.
Reservation of Shares Issuable Upon Conversion. The Company covenants that, following filing of the Authorized Shares Amendment,
it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock a number of shares of
Common Stock at least equal to 300% of the Required Minimum for the sole purpose of issuance upon conversion of this Debenture
and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall (subject
to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions
of Section 5) upon the conversion of the then outstanding principal amount of this Debenture and payment of interest hereunder.
The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable.

 

vii.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of
this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the
Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole share.

 

viii.
Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Debenture
shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of
the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable
in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than
that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Conversion.

 

    	 

    	 

    

 

d)
Holder’s Conversion Limitations.

 

i.
Reserved.

 

ii.
The Company shall not effect any conversion of this Debenture, and a Holder shall not have the right to convert any portion of
this Debenture, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the
Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the
Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted
principal amount of this Debenture beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of
the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in
this Section 4(d) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by
the Holder together with any Affiliates) and of which principal amount of this Debenture is convertible shall be in the sole discretion
of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether
this Debenture may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal
amount of this Debenture is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with
this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such
Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company,
or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally
and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Debenture, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture
held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99%
of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
upon conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall
continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered
to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to
a successor holder of this Debenture.

 

    	 

    	 

    

 

Section
5. Certain Adjustments.

 

a)
Stock Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)
Subsequent Equity Sales. If at any time while this Debenture is outstanding, other than in connection with an Exempt Issuance
the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice,
or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock
or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower
than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively,
a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive
shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed
to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be
reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance.
The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes
of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence
of any Dilutive Issuance, the Holder will be entitled to receive a number of Conversion Shares based upon the Base Conversion
Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion
Price. For avoidance of doubt in the event of an issuance of securities (including convertible promissory notes, debentures, warrants
or like securities), involving multiple tranches or other multiple closings the anti-dilution adjustment shall be calculated as
if all of the securities were issued at the first closing for such sale.

 

    	 

    	 

    

 

c)
Subsequent Rights Offerings. If at any time the Company grants, issues or sells any Common Stock Equivalents or rights
to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares
of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

d)
Reserved.

 

e)
Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in
Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents in accordance with the provisions of this Section 5(e) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange
for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Debenture which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard
to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such conversion price being for the purpose of protecting the economic value of this Debenture immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with
the same effect as if such Successor Entity had been named as the Company herein.

 

    	 

    	 

    

 

f)
Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued
and outstanding.

 

g)
Notice to the Holder.

 

i.
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5,
the Company shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.

 

ii.
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed
at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder
at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange
their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

    	 

    	 

    

 

Section
6. Events of Default.

 

a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event
and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or
order of any court, or any order, rule or regulation of any administrative or governmental body):

 

i.
any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts
owing to the Holder on the Debenture, as and when the same shall become due and payable (whether on a Conversion Date or by acceleration
or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within
3 Trading Days;

 

ii.
the Company shall fail to observe or perform any other material covenant or agreement contained in the Debenture (other than a
breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed
in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after
notice of such failure sent by the Holder or by any other Holder to the Company and (B) five Trading Days after the Company has
become or should have become aware of such failure;

 

iii.
a breach, default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which
the Company or any Subsidiary is obligated (and not covered by clause (vi) below);

 

    	 

    	 

    

 

iv.
any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect
in any material respect as of the date when made or deemed made;

 

v.
the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;

 

vi.
the Company or any Subsidiary shall default (subject to any grace or cure period provided in the applicable agreement, contract
document or instrument) on any of its obligations under any mortgage, credit agreement or other facility, promissory note, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $5,000, whether such indebtedness now exists or shall hereafter be created and (b) results in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

vii.
the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through DTC is no
longer available or “chilled”;

 

viii.
the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose
of all or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction);

 

ix.
the Company shall fail for any reason to deliver certificates to the Holder prior to the third Trading Day after a Conversion
Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement,
of the Company’s intention to not honor requests for conversions of the Debenture in accordance with the terms hereof;

 

x.
the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it
is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);

 

xi.
the Company fails to honor requests for conversions of the Debenture in accordance with the terms of the Debenture;

 

xii.
if the Company or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian
or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) be adjudicated bankrupt or insolvent or be the subject of an order for
relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of
a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;

 

    	 

    	 

    

 

xiii.
if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Significant
Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company
or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty
(60) days;

 

xiv.
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company
or any Subsidiary having an aggregate fair value or repair cost in excess of $20,000, and any such levy, seizure or attachment
shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;

 

xv.
the Company shall fail to maintain sufficient reserved shares as required by the Purchase Agreement;

 

xvi.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $10,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days;

 

xvii.
the Company fails to honor request for exercise of the Warrants issued pursuant to the Purchase Agreement as required by the Warrant
and/or fails to deliver certificate to the Holder prior to the third Trading Day after an exercise of the Warrant;

 

xviii.
If by June 25, 2017 the Company has not registered its Common Stock under Section 12(b) or 12(b) of the Exchange Act. ;.

 

ix.
the Company has not timely filed (or obtained extensions in respect thereof and filed within the applicable grace period) all
reports and other filings required to be filed by the Company pursuant to the Exchange Act;

 

x.
the Company fails to file the Registration Statement on From S-1 as required by the Purchase Agreement.

 

b)
Remedies Upon Event of Default. If any Event of Default occurs, then the outstanding principal amount of this Debenture,
plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration,
shall become, at the Holder’s election by notice in writing to Company, immediately due and payable in cash at the Mandatory
Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the
interest rate on this Debenture shall accrue at an interest rate equal to 10% in excess of the Interest Rate. Upon the payment
in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company.
In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration
may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder
of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission
or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

    	 

    	 

    

 

Section
7. Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of a majority in
principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall
not permit any of the Subsidiaries to, directly or indirectly:

 

a)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder, repay, repurchase or offer to repay, repurchase or otherwise acquire more than
a deminimis number of shares of its Common Stock or Common Stock Equivalents other than as to the Conversion Shares or
Warrant Shares as permitted or required under the Transaction Documents;

 

b)
repay, repurchase or offer to repay, repurchase other than the Notes if on a pro-rata basis, other than regularly scheduled principal
and interest payments as such terms are in effect as of the Original Issue Date, provided that such payments shall not be permitted
if, at such time, or after giving effect to such payment, any Event of Default exist or occur provided, however,
this covenant shall not apply with respect to the exercise of any Holder’s conversion under Section 4;

 

c)
other than pursuant to an Exempt Issuance, pay cash dividends or distributions on any equity securities of the Company;

 

d)
enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with
the SEC assuming that the Company is subject to the Securities Act or the Exchange Act, unless such transaction is made on an
arm’s-length basis; or

 

e)
enter into any agreement with respect to any of the foregoing.

 

Section
8. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing
and delivered as set forth in the Purchase Agreement, provided any payment due under the is Debenture which are not otherwise
addressed in this Debenture shall be made pursuant to payment instructions provided by the Holder to the Company..

 

b)
Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation
of the Company to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company.

 

c)
Assignment/Transferability. The Holder may assign or sell a portion or all of this Debenture without consent or notice
to the Company and the Company agrees to honor such assignment.

 

d)
Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute
and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution
for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen
or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof,
reasonably satisfactory to the Company.

 

    	 

    	 

    

 

e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Debenture or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any
provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorney’s fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action
or proceeding.

 

f)
Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or
be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The
failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall
not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other
term of this Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing.

 

g)
Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall
remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the
maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal
of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though
no such law has been enacted.

 

    	 

    	 

    

 

h)
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture
shall be cumulative and in addition to all other remedies available under this Debenture and any of the other Transaction Documents
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of
this Debenture. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than
as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and
the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein,
be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition
to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity
of showing economic loss and without any bond or other security being required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Debenture.

 

i)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day.

 

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

 

*********************

 

(Signature
Pages Follow)

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above
indicated.

 

	THE
    CHRON ORGANIZATION, INC. 	 
	 	 	 
	By:	/s/
    Alex Rodriguez	 
	Name:

        Title:
	Alex
        Rodriguez

        CEO

        
	 

 

[Convertible
Debenture Signature Page]

 

    	 

    	 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Original Issue Discount Convertible Debenture due June __, 2018 of The
Chron Organization, Inc., a Nevada corporation (the “Company”), into shares of common stock (the “Common
Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock
are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By
the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common
Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d)
of the Exchange Act.

 

The
undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with
any transfer of the aforesaid shares of Common Stock.

 

Conversion
calculations:

Date
to Effect Conversion:

 

Principal
Amount of Debenture to be Converted:

 

Conversion
Price:

 

Number
of shares of Common Stock to be issued:

 

Signature:

 

Name:

 

DWAC
Instructions:

 

Broker
No: ___________________

Account
No: __________________

 

    	 

    	 

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

This
Original Issue Discount Convertible Debenture due on June _, 2018 in the original principal amount of $187,000 is issued by The
Chron Organization, a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced
Debenture.

 

Dated:

 

	Date
        of Conversion

        (or
        for first entry, Original Issue Date)
	Amount
    of Conversion	Aggregate
    Principal Amount Remaining Subsequent to Conversion (or Original Principal Amount)	Company
    Attest

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}]]