Document:

Exhibit

Exhibit 10.2
Execution Version

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

ASSIGNMENT AND ASSUMPTION AGREEMENT
(License Agreement)
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made and entered as of the Closing (defined below) (the "Effective Date"), by and among Heska Imaging US, LLC, a Delaware limited liability company formerly known as Cuattro Veterinary U.S.A., LLC ("Imaging US"), Heska Imaging Global, LLC, a Delaware limited liability company ("Imaging Global"), Cuattro, LLC, a Colorado limited liability company ("Cuattro") and Heska Imaging International, LLC, a Delaware limited liability company formerly known as Cuattro Veterinary, LLC ("Imaging International").
WHEREAS, Imaging US and Cuattro are parties to that certain Amended and Restated Master License Agreement dated as of February 22, 2013, and all amendments thereto (the "License Agreement"); 
WHEREAS, Cuattro is a party to that certain Agreement and Plan of Merger among Heska Corporation ("Heska"), its wholly-owned subsidiary Cuattro International Merger Subsidiary, Inc., a Delaware corporation ("Merger Sub"), Imaging International, Kevin S. Wilson and all members of Imaging International, including Cuattro, dated as of March 14, 2016 (the "Merger Agreement"), pursuant to which Merger Sub will merge with and into Imaging International with Imaging International surviving such merger as a wholly-owned subsidiary of Heska (the "Merger"), which following the Closing under the Merger Agreement (the "Closing") will be called Heska Imaging International, LLC; 
WHEREAS, it is a condition of the obligations of the parties to the Merger Agreement to consummate the Merger and the other transactions contemplated by the Merger Agreement that the License Agreement be assigned to Global Imaging and amended as set forth herein;
WHEREAS, to facilitate the transactions between its affiliate, Heska, and Cuattro, as contemplated by the Merger Agreement, which are of potential benefit to Imaging US, Imaging US is willing to enter into this Agreement to assign the License Agreement to Imaging Global and to amend the License Agreement on the terms and conditions of this Agreement;
WHEREAS, Section 10.8 of the License Agreement requires Cuattro's prior written consent before Imaging US may assign its rights under the License Agreement, and, to induce Heska to enter into the Merger Agreement, which Heska would not do unless Cuattro enters into this Agreement, Cuattro is willing to enter into this Agreement to consent to Imaging US's assignment of the License Agreement to Imaging Global and to amend the License Agreement on the terms and conditions of this Agreement; and 
NOW, THEREFORE, for and in consideration of the Closing, the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

1.    Assignment and Assumption.  Effective as of the Closing, Imaging US hereby assigns, sells, transfers and sets over to Imaging Global all of Imaging US's right, title, benefit, privileges and interest in and to the License Agreement, and all of Imaging US's burdens and obligations in connection with the License Agreement (collectively, the "Assignment").  Imaging Global hereby accepts the Assignment and assumes and agrees for the benefit of Imaging US and Cuattro to be bound by, observe, perform, pay and discharge all of Imaging US's duties, liabilities, obligations, terms, provisions and covenants solely to the extent they are to be observed, performed, paid or discharged on and after the Effective Date, in connection with the License Agreement (collectively, the "Assumption").  
2.    Consent and Agreement of Cuattro.  In accordance with Section 10.8 of the License Agreement, Cuattro hereby consents to the Assignment and Assumption.  Cuattro further acknowledges and agrees that all of Cuattro's burdens and obligations under the License Agreement shall survive the assignment and assumption of the License Agreement in accordance with the terms and conditions thereof. The Assignment and Assumption shall not relieve Imaging US of responsibility for the performance of any accrued obligation which it has as of the Effective Date.
3.    Amendments to License Agreement.  In accordance with Section 10.9 of the License Agreement:
3.1    Amendment to Territory.  Effective as of the Closing, the definition of "Territory" in Section 1.13 of the License Agreement is hereby amended to read as follows: ""Territory" shall be defined as the Market throughout the world."
3.2    Amendment to Per Copy Software License Payment Schedule. Effective as of the Closing, the table of prices in Section 3.3 of the License Agreement is hereby amended to read in its entirety as follows: 
		
	2013:
	[***] per Software License in each Product 

		
	2014:
	[***] per Software License in each Product 

		
	2015:
	[***] per Software License in each Product 

		
	2016:
	[***] per Software License in each Product

		
	2017:
	[***] per Software License in each Product 

		
	2018:
	[***] per Software License in each Product 

		
	2019:
	[***] per Software License in each Product 

		
	2020:
	[***] per Software License in each Product 

		
	2021:
	[***] per Software License in each Product 

		
	2022:
	[***] per Software License in each Product 

2023+:    [***] per Software License in each Product

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3.3    Amendment to Covered Affiliates.  Effective as of the Closing, Exhibit A2 to the License Agreement is hereby amended to read in its entirety as follows: 
"EXHIBIT A2
COVERED AFFILIATES

		
	•
	Heska Corporation

		
	•
	Diamond Animal Health, Inc.

		
	•
	Heska Imaging US, LLC

		
	•
	Heska Imaging International, LLC (formerly Cuattro Veterinary, LLC)

		
	•
	Heska AG"

4.    Appointment of Sublicensees.  
4.1    Appointment of Imaging US.  Effective as of the Closing, in accordance with Section 2.1 of the License Agreement and as authorized herein, Imaging Global hereby appoints Imaging US as its sublicensee under the License Agreement with respect to the portion of the Territory comprising the United States (the "US Territory") to hold and exercise all of Imaging Global's rights under the License Agreement with respect to the US Territory, and Imaging US hereby accepts such appointment and agrees, for the benefit of Cuattro, to perform all of Imaging Global's obligations under the License Agreement with respect to the US Territory.  
4.2    Appointment of Imaging International.  Effective as of the Closing, in accordance with Section 2.1 of the License Agreement and as authorized herein, Imaging Global hereby appoints Imaging International as its sublicensee under the License Agreement with respect to the portion of the Territory outside the United States (the "International Territory") to hold and exercise all of Imaging Global's rights under the License Agreement with respect to the International Territory, and Imaging International hereby accepts such appointment and agrees, for the benefit of Cuattro, to perform all of Imaging Global's obligations under the License Agreement with respect to the International Territory. 
5.    No Other Consideration.  The assignments and rights granted by Imaging US to Imaging Global in this Agreement are to facilitate, and in consideration of, the transactions contemplated by the Merger Agreement, and no other consideration shall be given by Imaging Global or received by Imaging US in connection with this Agreement or the transactions contemplated by the Merger Agreement.
6.    Remaining Terms.  All parties acknowledge that a true, correct and complete copy of the License Agreement, together with all amendments thereto, is attached hereto as Exhibit A. Except as specifically modified pursuant to this Agreement all terms and provisions of the License Agreement shall remain in full force and effect as set forth therein.  Nothing in this Agreement shall constitute or be construed to be a termination of the License Agreement.

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7.    Further Actions.  Each of the parties hereto covenants and agrees, at its own expense, to execute and deliver, at the request of the other parties hereto, such further instruments of transfer and assignment and to take such other action as such other parties may reasonably request to more effectively consummate the Assignment and Assumption contemplated by this Agreement.
8.    Amendment and Waiver.  No provision of this Agreement may be amended, modified, supplemented or waived except by an instrument in writing executed by all of the parties hereto or, in the case of an asserted waiver, executed by the party against which enforcement of the waiver is sought.  The rights and remedies of the parties to this Agreement are cumulative and not alternative.
9.    Assignment.  Neither this Agreement nor any right created hereby is assignable by any of the parties hereto without the prior written consent of the other parties; provided, that the License Agreement, as amended hereby, shall continue to be assignable on the terms and conditions set forth in Section 10.8 thereof.
10.    Governing Law.  This Agreement will be governed by, and construed in accordance with, the laws of the State of Colorado without reference or regard to the conflicts of law rules thereof.
11.    Counterparts.  This Agreement may be executed in any number of counterparts and by facsimile, each of which will be deemed an original, and all of which together will constitute one and the same instrument. 
12.    Integration.  This Agreement, together with the License Agreement, constitutes the sole and entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter, including without limitation (i) that certain Management Agreement, dated November 1, 2012, by and between Cuattro and Imaging International, as amended by that certain Amendment to Management Agreement, dated December 31, 2012; and (ii) that certain License Agreement, dated December 31, 2009, by and between Cuattro and Imaging International.
[Signature Page Follows]

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

	
					
	"IMAGING US"
	 
	"IMAGING GLOBAL"

	 
	 
	 
	 
	 

	Heska Imaging US, LLC
	 
	Heska Imaging Global, LLC

	 
	 
	 
	 
	 

	By:
	/s/ Jason Napolitano
	 
	By:
	/s/ Jason Napolitano

	 
	Jason Napolitano, Chief Financial Officer
	 
	 
	Jason Napolitano, Chief Operating Officer

	
					
	"CUATTRO"

	 
	"IMAGING INTERNATIONAL"

	 
	 
	 
	 
	 

	Cuattro, LLC

	 
	Heska Imaging International, LLC

	 
	 
	 
	 
	 

	By:
	/s/ Kevin S. Wilson
	 
	By:
	/s/ Jason Napolitano

	 
	Kevin S. Wilson, Manager
	 
	 
	Jason Napolitano, Chief Executive Officer

[Signature Page to Assignment and Assumption Agreement (License Agreement)]

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EXHIBIT A

Amended and Restated Master License Agreement

[Attached]

Ex. A

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

AMENDED AND RESTATED MASTER LICENSE AGREEMENT
This AMENDED AND RESTATED MASTER LICENSE AGREEMENT (the "Agreement") is made and entered into as of February 22, 2013, and amends and restates in its entirety that certain Master License Agreement dated as of the 5th day of April, 2011 at 11:59:59 PM, (the "Effective Date") by and between Heska Imaging US, LLC, a Delaware limited liability company, with offices at 3760 Rocky Mountain Ave., Loveland CO 80538, formerly known as Cuattro Veterinary USA, LLC, with offices at 1618 Valle Vista Blvd., Pekin, IL, 61554 ("Licensee"), and Cuattro, LLC, a Colorado limited liability company, with offices at 63 Avondale Lane, Villa Montane #C2, Beaver Creek, CO 81620 ("Licensor") (each a "Party" and collectively the "Parties")
RECITALS
A.    Licensor has developed and is the owner of, or otherwise has the authority to, license certain digital radiography acquisition software and PACS software as described on Exhibit A1 attached hereto and incorporated herein by reference ("Licensor Software").
B.    Licensee has entered into that certain Supply Agreement with Licensor dated as of February 22, 2013 ("Supply Agreement") whereby Licensee shall acquire certain products from Licensor (the "Licensor Products").
C.    Licensee desires to obtain from Licensor the use, reproduction and distribution rights to load and distribute Licensor Software solely in conjunction with Products which are acquired from Licensor. Licensor has agreed to grant the requisite rights to Licensee, and provide certain services in relation thereto on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties agree as follows:
		
	1.
	DEFINITIONS.

1.1    "Affiliate" shall mean, with respect to any Party, any person or entity which, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Party. A person or entity shall be deemed to control a corporation (or other entity) if such person or entity possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation (or other entity) whether through the ownership of voting securities, by contract or otherwise.  Licensor and Licensee may fulfill all or any portion of their respective obligations hereunder through their respective Affiliate(s).
1.2    "Documentation" means all documentation and information in connection with the installation, use, operation, modification, support and maintenance of Software made available by Licensor to Licensee including, without limitation, any on-line help files, written instruction manuals or written correspondence, but excludes software code.

1.3    "End Users" shall mean users who have purchased a Product for their internal use only and not for the purpose of further resale, development or modification, subject to the limitations of the End User Software License Agreement that comes with each executable copy of each Software, in the Market and the Territory.  
1.4    "Innovations" means any invention, improvements, works of authorship, innovation or other developments that may be conceived, authored, created or otherwise developed by Licensor during the term of this Agreement, whether or not forming part of Software, arising from Software, Services, Specifications, existing Intellectual Property of Licensor, performance hereunder, non-performance hereunder, or arising from Licensee's specifications, discovery, or provision of feedback, and including, but not limited to, designs, formulae, processes, methods and methodologies, ideas, algorithms, libraries, databases, software, software tools, programs and their documentation, articles, writings and compositions.
1.5    "Intellectual Property Rights" means any and all now known and hereafter existing (a) copyrights, and copyrightable works of authorship, exploitation rights, moral rights and mask work rights, (b) trademark, trade name and service mark rights, (c) trade secret rights, including, without limitation, all rights in Confidential Information and proprietary rights whether arising by law or contract, (d) patent rights, patentable inventions and processes, designs, algorithms, software, code, schema, artwork, user interface design, firmware, and other industrial property rights, and (e) other intellectual and industrial property and proprietary rights of every kind and nature throughout the world, whether arising by operation of law, by contract, by license or otherwise.
1.6    "Market" means the field of veterinary medicine, limiting use of any Products containing Software to the practice of medicine on or for non-human species, by currently licensed veterinary medical doctors in good standing with state, federal and professional authorities, and by entities in which a licensed veterinary medical doctor oversees the activities performed on or for non-human species.  
1.7    "Open Source Software" means any software that is derived in any manner (in whole or in part) from any software that is distributed under the following conditions: (i) licensees of such software are authorized to access, modify and make derivative works of the source code for the software; (ii) licensees of source code of such software are not obligated to maintain the confidentiality of such source code; and (iii) at least some licensees of such software are required, if they desire to distribute derivative works of such software, to license the source code for such derivative works to their sublicensees under the conditions of (i), (ii) or (iii) hereof.
1.8    "Product" shall mean a Licensee product containing the Software, provided that, in each case, Product must also contain (i) at least one (1) digital radiographic detector or one (1) radiographic generator purchased from Licensor or (ii) third-party hardware to the extent permitted by Section 2.3 hereof.

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1.9    "Services" means the professional services to be provided by Licensor or its authorized representatives, in relation to Licensor Software for, without limitation, customizations, enhancements and improvements of the Software, in accordance with the applicable Statement of Work.
1.10    "Software" means the object code version of Licensor Software including any changes, modifications, updates, enhancements, deletions, additions or derivatives to Licensor Software. Software also includes any materials that are provided for use in connection with Software, including, but not limited to, Documentation designed to be used in conjunction with Software.
1.11    "Specifications" means the technical and other specifications and quality standards for Software as set forth on Exhibit A1 attached hereto and those set forth in a Statement of Work having been executed by the Parties.
1.12    "Statement of Work" or "SOW" means each statement of work executed by the Parties (together with all schedules, attachments, product schedules, and other materials that are appended to, or referenced into the Statement of Work), that specifically refers to this Agreement and specifies, in detail, the Services, the Specifications, the delivery schedule, the Service Fees and payment schedule and Review Period for such Services and Software.
1.13    "Territory" means the Market solely in the United States of America.
1.14    "Third Party Materials" means proprietary information, data, technology, methods and methodologies, software, hardware, documentation, tools, software and interfaces, trade secrets, works of authorship, trademarks and other proprietary materials of a party including Open Source Software other than Licensor or Licensee.
		
	2.
	GRANT.

2.1    Acquisition Software License. Subject to the terms and conditions of this Agreement, strictly limited to the Territory, in consideration of payments per Article 3 of this Agreement, Licensor hereby grants to Licensee, and Licensee hereby accepts, for the term of this Agreement, an exclusive right and license, and sub-licensable only to its Affiliates set forth in Exhibit A2 ("Covered Affiliates"), to (i) reproduce and install Software, in the object code form, on Products in the Territory, (ii) market, distribute and sell the Software loaded on Products either itself or through authorized third party or affiliated distributors, representatives and resellers ("Distributors") in the Territory, provided that Distributors are bound to and observe the limitations, terms, scope, and conditions set forth herein, and (iii) reproduce, use and distribute the Documentation in connection with aforesaid use of Software.  Licensee shall be fully responsible and liable towards Licensor for the use of Software by the Covered Affiliates and any of its Distributors.  For the avoidance of doubt, once a copy of the Software is distributed to an End User as part of a Product in 

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compliance with this Agreement, the foregoing license extends to any repaired or replaced Product for that End User.
2.2    Trademark License. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee, and Licensee hereby accepts, for the term of this Agreement, limited to the Territory, a non-exclusive right and license, sub-licensable only to its Covered Affiliates, to use trademarks CloudDR, Cloudbank, ViewCloud, Uno and any other trademarks owned and used by Licensor in connection with Licensor Software in the Territory (collectively, the "Marks") solely in connection with Licensee's (and its Affiliates' and Distributors') marketing and distribution of the Products. Use of the Marks shall be in accordance with Licensor's reasonable policies in effect from time to time and subject to reasonable review and approval by Licensor. Licensee has paid no consideration for the use of the Marks and nothing herein shall give Licensee any right, title or interest in the Marks except the limited license granted in this Section 2.2. Licensee agrees that it will not, at any time during or after the Agreement, assert or claim any interest in, or do anything which may adversely affect the validity, enforceability or value of, the Marks.  Except as specifically provided in Section 4.3 of this Agreement, upon termination or cancellation of this Agreement, Licensee shall cease all display, advertising or other use of the Marks and shall not thereafter use, advertise or display any name, mark, logo or other designation which is, or any part of which is, similar to or confusing with the Marks. Any and all uses by Licensee of Marks shall inure solely to the benefit of Licensor.
2.3    Restrictions. Licensee agrees that, except as expressly permitted under this Agreement, it will not itself, or through any Affiliate, Distributor, agent or other third party, entity or other business structure (i) decompile, disassemble, re-program, reverse engineer or otherwise attempt to derive or modify Software (including the Documentation) in whole or in part, (ii) write or develop any derivative software or any other software program based on Software, Documentation, or related information provided by Licensor, (iii) remove, alter, cover or obfuscate any copyright notices or other proprietary rights notices of Licensor, or (iv) sell or cause to be sold or marketed any product containing the Software or derivatives thereof that in the reasonable determination of Licensor is competitive to the Software or the hardware offered for sale by Licensor in any other Territory, without the prior written consent of Licensor. For the avoidance of doubt, Licensee agrees to not use or install the Software on any product that does not contain at least one (1) digital radiographic detector or one (1) radiographic generator purchased from Licensor, and, agrees to not use or install the Software for use with any product that is competitive with Licensor's digital radiographic detector(s) or radiographic generator(s), without prior written permission from Licensor. Notwithstanding the foregoing, in the event that, during the Initial Term or any renewal term of this Agreement, if Licensor is unable to timely supply under the Supply Agreement for a period of more than sixty (60) days, and for so long as such inability continues, upon request from Licensee, Licensor shall sell licenses of the Software for use with Competitive Products (as defined in the Supply Agreement), provided however that Licensor shall provide licenses for use with Competitive Products without warranty or representation as to performance or fitness for use with Competitive Products.   
2.4    End User Software License Agreement. Licensee shall electronically include the End User Software License Agreement ("EUSLA") that is delivered by Licensor

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

with each copy of Software, separately, or as distributed in Products.  Licensor may modify or alter the EUSLA for subsequent use, provided that Licensor shall provide a written copy, in Microsoft® format, of each modification.  Within ten (10) days of receipt of the modified EUSLA, Licensee will (i) accept the modifications (acceptance not unreasonably withheld) or (ii) only if the modifications adversely affect the use thereof by End Users, object in writing with written proposed edits and the parties will, time of the essence, endeavor to quickly reach agreement and acceptance.  Upon acceptance, Licensee shall cease using former versions, and all transactions thereafter shall be by and under the latest version(s).
2.5    Licensor Obligations. In connection with the delivery of the Software (and any future releases or future versions of the Software), Licensor will provide, at no charge to Licensee, a fully functional, executable and compiled (non human readable) version of the Software in electronically downloadable form for use by Licensee or its permitted sub-licensees in installing the Software pursuant to this Agreement.
2.6    Third Party Materials. To the extent that Software contains Third Party Materials, it is Licensor's sole responsibility to obtain any licenses required for Licensee to use such Third Party Materials. Licensor shall pay any additional consideration for actual costs of such licenses for Third Party Materials contained in the Software.
		
	3.
	SUPPORT, MAINTENANCE, PAYMENTS.

3.1    Reports. Licensee shall, upon request, no more often than once per calendar quarter, provide to Licensor reports in connection with the sales of the Products (or any product) containing Software, not later than thirty (30) days following the end of the calendar quarter just ended ("Quarterly Reports"). The Quarterly Reports shall state the quantity of such Products sold by Licensee from the Effective Date through the end of the calendar quarter just ended, the location, end user customer contact information, and date of first clinical use of the Software and of the Product delivered to each End User and Distributor. The Quarterly Reports shall be treated as Licensee's Confidential Information.
3.2    License Payment Schedule. Intentionally Omitted.
3.3    Per Copy Software License Payment Schedule. For each Product containing Licensor Software, Licensee shall pay Licensor under the following calendar year schedule; provided, that, taking into account scope of work, schedule, volume, features, exclusivity, liability, indemnification, market access, regulatory assistance, bundling with hardware, and other commercial and service terms, the prices, terms and conditions of such payments shall be no less favorable than the most favorable prices, terms and conditions extended to other Licensor customers in the Market ("MFN Pricing").
		
	2013:
	[***] per Software License in each Product 

		
	2014:
	[***] per Software License in each Product 

		
	2015:
	[***] per Software License in each Product 

		
	2016:
	[***] per Software License in each Product

		
	2017:
	[***] per Software License in each Product 

5

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

		
	2018:
	[***] per Software License in each Product 

		
	2019:
	[***] per Software License in each Product 

		
	2020:
	[***] per Software License in each Product 

		
	2021:
	[***] per Software License in each Product 

		
	2022:
	[***]per Software License in each Product 

		
	2023+:
	[***] per Software License in each Product

3.4    Expenses. Each Party shall be responsible for, and bear, its own costs and expenses unless otherwise agreed in writing by the Parties prior to any cost or expense being incurred by either Party.
3.5    Taxes. Each party is responsible for paying all local, state, federal or foreign taxes, levies or duties of any nature applicable to it ("Taxes"). If either party has the legal obligation to pay or collect Taxes for which the other party is responsible, the appropriate amount shall be invoiced to and paid by the responsible party, or withheld by the paying or collecting party unless the responsible party provides a valid tax exemption certificate authorized by the appropriate applicable taxing authority. 
3.6    Records. For the entire term of this Agreement, Licensee shall keep and maintain appropriate books and records of account, in accordance with Generally Accepted Accounting Principles of the United States, sufficient to enable accurate calculations of any amounts due to Licensor and to audit the Quarterly Reports.
3.7    Audit. During the entire term of this Agreement and for a period of two (2) years thereafter Licensor shall have the right to audit, not more than once in any twelve (12) month period, Licensee's relevant records and books for the previous two (2) years ("Audit Years"). For that purpose, Licensor may itself or, at its own expense, engage an independent accountant to inspect the records of Licensee on reasonable notice and during regular business hours, provided however, that such independent accountant and Licensor shall sign an appropriate confidentiality agreement.  In the event it is found as a result of such audit that a payment in excess of five percent (5%) of the original payment made by Licensee is due to Licensor, then Licensee will reimburse Licensor for one hundred percent (100%) of the reasonable auditing expenses incurred by Licensor.
3.8    Services.  Licensor shall use its best commercial efforts to perform all Services reasonably requested by Licensee during the term of this Agreement on prices, terms and conditions no less favorable than the most favorable prices, terms and conditions extended to other customers of Licensor for similar services taking into account scope of work, schedule, volume, features, exclusivity, liability and indemnification, other commercial license and service terms, and staffing. 
		
	4.
	TERM AND TERMINATION.

4.1    Term of Agreement.  The initial term of this Agreement shall commence as of February 15, 2013 and continue through December 31, 2022 ("Initial

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Term").  Commencing after January 1, 2023, this Agreement shall continue on a year-to-year basis unless on or before September 30 of any calendar year (i) Licensee notifies Licensor in writing that it wishes to terminate the Agreement, provided, that such termination shall be effective as of December 31st of the third calendar year following the year in which such notification is given (such period, a "Heska Imaging Cancellation Term"), or (ii) Licensor notifies Licensee in writing that it wishes to terminate the Agreement, provided, that such termination shall be effective as of December 31st of the fifth calendar year following the year in which such notification is given (such period, an "LLC Cancellation Term").  No such termination shall relieve either Party from any obligations or debts incurred hereunder prior to the effective date of termination.
4.2    Termination for Cause.  Notwithstanding Section 4.1, this Agreement may be terminated before the expiration of the Initial Term and/or any renewal term as follows (each of the following a termination for "Cause"):
(a)Insolvency Event. Either Party may terminate this Agreement by delivering written notice to the other Party upon the occurrence of any of the following events: (i) a receiver is appointed for the other Party or its property; (ii) if the other Party makes a general assignment for the benefit of its creditors; (iii) if the other Party commences, or has commenced against it, proceedings under any bankruptcy, insolvency or debtor's relief law, which proceedings are not dismissed within sixty (60) days; (iv) if the other Party is liquidated or dissolved, (v) if the other Party becomes unable to make payment of amounts due to creditors in a timely and dependable fashion.
(b)Default. Either Party may terminate this Agreement effective upon written notice to the other if the other Party violates any covenant, agreement, representation or warranty contained herein in any material respect or defaults or fails to perform any of its obligations or agreements hereunder in any material respect, or fails to make any payment when due, which violation, default or failure is not cured within sixty (60) days after notice thereof from the non-defaulting Party stating its intention to terminate this Agreement by reason thereof.
(c)Supply Agreement Termination. Either Party may terminate this Agreement effective upon written notice to the other if the Supply Agreement is terminated or voided, for any reason.  
4.3    Post-Termination Licenses. Upon termination of this Agreement for any reason, all rights and licenses granted to either Party hereunder shall immediately terminate and, without derogating from the generality of the foregoing, (a) Licensee shall immediately cease and shall no longer be entitled to continue selling, offering to sell, or otherwise disposing of any Products, (b) Licensee shall immediately cease licensing, distributing, showing, using, marketing, renting, or commercializing in any way the Software and Marks, and (c) all licenses to Software, Marks, Intellectual Property of Licensor, with respect to rights or benefits granted hereunder shall immediately terminate; provided, that in the event that this Agreement is terminated (i) by Licensee for Cause, or (ii) upon the expiration of a Heska Imaging Cancellation Term or LLC Cancellation Term, then at Licensee's option in its sole discretion (y) Licensee has the right to sell off or otherwise distribute any copies of Software that (i) Licensee has paid for and then holds

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inventory as of termination of this, and (ii) in conjunction with Products supplied under the in force and paid up Supply Agreement, to any existing or future End User for a reasonable sell-off period, but not more than six (6) months (the "Sell-Off Period"), and (z) Licensee's right and license to use, advertise and display the Marks hereunder, and Licensor's grant of such license to use, advertise and display the Marks, shall continue during the Sell-Off Period.  Upon termination for any reason, Licensee shall delete all copies of the Software and Documentation and provide written certification to Licensor that such deletion of all copies has been completed, within three (3) business days after the later of such termination or expiration of the Sell-Off Period.
4.4    Survival. Sections that by their nature should survive termination shall do so. Sections that by their nature are not explicitly intended to survive termination shall terminate immediately upon termination of this Agreement.
		
	5.
	OWNERSHIP.

5.1    Retained Ownership Rights. Except as explicitly set forth herein or in a Statement of Work, neither this Agreement, nor the provision of Services hereunder, will give either Party any ownership interest in or rights to the Intellectual Property Rights of the other Party. All Intellectual Property Rights that are owned or controlled by a Party at the commencement of this Agreement will remain under the ownership or control of such Party throughout the term of this Agreement and thereafter. Unless explicitly, incontrovertibly granted in this Agreement and paid for in full by Licensee to Licensor, no work, work product, Statement of Work, or Services, whether by performance or non-performance, shall cause Licensee to acquire any ownership or rights to Licensor's Software, Intellectual Property Rights, or other property, in whole or in part or any derivative of Licensor property. In case of conflict or ambiguity in interpretation of any agreement between the Parties with respect to this subject matter, this Section 5.1 shall govern and be taken as the basis for any interpretations or conflict resolutions and in the absence of incontrovertible evidence to the contrary, Licensor shall retain sole rights or, as the case may be, acquire sole rights in and to any pre-existing, existing, and arising intellectual property arising from this Agreement, including performance and non-performance hereunder, and Licensee shall cooperate in perfecting Licensor's sole and unencumbered ownership thereof.
5.2    Innovations. Except as explicitly set forth herein or in a Statement of Work, Licensor shall have all right, title and interest in and to any and all Innovations, and Intellectual Property Rights arising therefrom that are made by Licensor in providing the Services. Licensor shall solely own all derivative works of Software and Innovations. Licensor owns and shall retain all right, title and interest in and to the Software and Documentation, including, without limitation, all Intellectual Property Rights embodied therein, and Licensee shall have no rights with respect thereto other than the rights expressly granted in this Agreement. All rights not expressly granted to Licensee in this Agreement are retained by Licensor.  

8

		
	6.
	CONFIDENTIALITY.

6.1    Confidential Information. Each Party (the "Disclosing Party") may from time to time during the term of this Agreement disclose to the other Party (the "Receiving Party") certain information regarding the Disclosing Party's business, including, without limitation, technical, marketing, financial, employee, planning and other confidential or proprietary information, which information is either marked as confidential or proprietary (or bears a similar legend) or which a reasonable person would understand to be confidential given the circumstance and nature of the disclosure ("Confidential Information"), and whether disclosed orally or in writing. Without limiting the foregoing, each Party’s Confidential Information shall include all customer lists and other materials and technology owned or otherwise controlled by it; provided, however, any customer lists of Licensor resulting from customers of Licensee during the term of this Agreement (as a result of End Users being parties to the MWSTC as defined in the Supply Agreement ) is deemed Confidential Information of Licensee and not of Licensor. Confidential Information does not include information that: (i) is in the Receiving Party's possession at the time of disclosure as shown by credible evidence; (ii) before or after it has been disclosed to the Receiving Party, enters the public domain, not as a result of any action or inaction of the Receiving Party; (iii) is approved for release by written authorization of the Disclosing Party; (iv) is disclosed to the Receiving Party by a third party not in violation of any obligation of confidentiality; or (v) is independently developed by the Receiving Party without reference to Confidential Information of the Disclosing Party, as evidenced by such Party's written records.
6.2    Protection of Confidential Information. The Receiving Party will not use any Confidential Information of the Disclosing Party for any purpose other than performing its obligations or exercising its rights under this Agreement, and will disclose the Confidential Information of the Disclosing Party only to Receiving Party's employees, agents, directors, officers, auditors, regulators and contractors on a "need to know" basis, provided such persons are under a contractual obligation with Receiving Party to maintain the confidentiality of such Confidential Information, which obligation is consistent with, and no less protective of Confidential Information, than the terms of this Section 6.2. The Receiving Party will protect the Disclosing Party's Confidential Information from unauthorized use, access, or disclosure in the same manner as the Receiving Party protects its own confidential or proprietary information of a similar nature and with no less than reasonable care. Notwithstanding the foregoing, Confidential Information may be disclosed as required by law or by order of a court of competent jurisdiction. In such event and if reasonably possible under the circumstances of disclosure, the Receiving Party will provide the Disclosing Party with prompt prior notice of such obligation in order to permit the Disclosing Party an opportunity to take legal action to prevent or limit the scope of such disclosure. Unauthorized disclosure or use of the Disclosing Party's Confidential Information may cause irreparable harm to the Disclosing Party for which recovery of money damages would be inadequate; consequently, the Disclosing Party shall be entitled to timely injunctive relief to protect its rights under this Section 6.2, in addition to any and all remedies available at law or in equity.
6.3    Confidentiality of Agreement. Other than as permitted in this Agreement, neither Party will disclose any terms of this Agreement to anyone other than its

9

attorneys, accountants, and other professional advisors under a duty of confidentiality except: (a) as required by law; or (b) pursuant to a mutually agreeable press release; or (c) in connection with a proposed merger (of any kind), any debt or equity financing, in connection with a public offering of shares or sale of such Party's business.
6.4    Return of Confidential Information. Within thirty (30) days of the termination of the Agreement, for any reason, each Receiving Party shall return to Disclosing Party all Confidential Information, including any copies thereof which were, at any time, in the possession of receiving Party, and all materials (in any medium whatsoever), which contain or embody Confidential Information, and shall cease to make any further use of Confidential Information.
		
	7.
	REPRESENTATIONS AND WARRANTIES.

7.1    Mutual Representations and Warranties. Each Party hereby represents and warrants as of the Effective Date and at all times throughout the term of this Agreement: (a) it has the full corporate right, power and authority to enter into this Agreement and to perform its obligations hereunder; (b) the execution of this Agreement by such Party and performance of its obligations thereunder comply with all applicable laws, rules, and regulations (including privacy, export control and obscenity laws); (c) when executed and delivered, this Agreement will constitute a legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms; and (d) the execution, delivery and performance of this Agreement by such Party will not violate any agreement or instrument to which such Party is a party or is otherwise bound.
7.2    Licensor Warranties.  Licensor represents and warrants that: (i) Licensor has the requisite right and authority to grant to Licensee the rights and licenses granted under this Agreement, including but not limited to the necessary Intellectual Property Rights and there are no restrictions which could or would prevent Licensee from exercising any rights granted hereunder; (ii) Licensor shall perform all Services requested by Licensee under this Agreement or a Statement of Work on a professional reasonable effort basis in accordance to the standards prevailing in the industry and in a diligent, workmanlike and expeditious manner; (iii) to Licensor's knowledge, no Software, or any part thereof, delivered to Licensee hereunder shall infringe on any third party patent, copyright, trade secret or other Intellectual Property Right; (iv) neither the Software nor any portion thereof contains or is included in, is derived from, was developed using or with reference to, or is distributed with any Open Source Software unless disclosed by Licensor in writing or in notices within the Software; and (v) the Services, in all material respects, will be performed in accordance with, and the Software, in all material respects, will conform to, all regulatory requirements and standards, if any.  In the event of a breach of any of the foregoing warranties, Licensee shall notify Licensor of such breach after the Services are rendered and/or the Software is delivered to Licensee (as the case may be) and Licensor shall re-perform the Services or re-deliver the Software, as the case may be, so that they conform to the applicable warranty. In addition to the foregoing, Licensor represents and warrants that it holds all permits, licenses and similar authority necessary for the performance of its obligations hereunder.

10

7.3    Software Support. Software is supported, not warrantied. Licensor agrees to use commercially reasonable efforts to ensure, for one (1) year, commencing upon delivery of the Software to each End User hereunder ("Support Period"), that the Software shall operate in substantial conformity to the Specifications and Documentation ("Support"). To the extent Software fails to conform to the Specifications, Licensor shall, at its sole discretion, either: (a) remedy the purported non-conformity within a reasonable time; or (b) replace the Software within a reasonable time with Software having substantially similar functionality, provided, that Licensee notifies Licensor in writing of any defect or nonconformity covered by this Support within a reasonable time of discovering the defect or non-conformity.  
7.4    Due Diligence. Licensor warrants that it has made due inquiry regarding, and performed a due diligence review with respect to, the Intellectual Property Rights and nothing has come to the attention of Licensor in the scope of its due diligence review that gave it reason to believe that such warranties are or may be untrue in any respect. Licensee warrants that it has made due inquiry regarding the Licensor Software and that this is an arms-length transaction entered into freely by Licensee based on Licensee's best interest and diligence as to the cost versus the benefits of this Agreement. Licensee further represents that Licensor, a recent  Affiliate, has not unduly influenced Licensee to enter into this Agreement, and that Licensee enters into the Agreement, with all of the benefits, conditions, and limitations therein, freely and in pursuit of Licensee's own best interests, independent of Licensor's influence or best interests.
7.5    No Implied Warranties. THE EXPRESS WARRANTIES AND SUPPORT IN THIS AGREEMENT ARE IN LIEU OF AND TO THE EXCLUSION OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SUBJECT TO THE EXPRESS WARRANTIES IN THIS AGREEMENT, LICENSOR DOES NOT WARRANT THAT THE OPERATION OF THE LICENSED PROGRAM WILL BE UNINTERRUPTED OR ERROR FREE. THE WARRANTY DOES NOT COVER ANY MEDIA OR DOCUMENTATION THAT HAS BEEN SUBJECT TO DAMAGE OR ABUSE. THE SOFTWARE WARRANTY COVERS ONLY THE UNMODIFIED PRODUCT DELIVERED BY LICENSOR AND DOES NOT COVER ANY PROBLEMS CAUSED BY ALTERATIONS OR CHANGES MADE BY ANYONE OTHER THAN LICENSOR. LICENSOR IS NOT RESPONSIBLE FOR PROBLEMS CAUSED BY CHANGES IN THE OPERATING CHARACTERISTICS OF COMPUTER HARDWARE OR COMPUTER OPERATING SYSTEMS MADE AFTER DELIVERY OF THE LICENSED PROGRAM, NOR FOR PROBLEMS IN THE INTERACTION OF THE SOFTWARE WITH NON-LICENSOR SOFTWARE EXCEPT AS SET FORTH OTHERWISE IN THE SPECIFICATIONS FOR THE SOFTWARE.
		
	8.
	INDEMNITY.

8.1    Indemnification by Licensor. Licensor shall defend, indemnify and hold harmless Licensee, its Distributors and their officers, directors, employees, shareholders, customers, agents, successors and assigns from and against any and all loss, damages, liabilities, settlement, costs and expenses (including legal expenses and the 

11

expenses of other professionals) as incurred, resulting from or arising out of any third party claim which alleges that Software or any part thereof or the Licensee's use authorized under this Agreement infringes or misappropriates any Intellectual Property Right of a third party.
8.2    Licensor's Efforts. If the use of Software is enjoined or is found by a court of competent jurisdiction to be infringing the Intellectual Property Rights of a third party, without prejudice to the indemnification obligations set forth in Section 8.1 above, Licensor's sole liability and Licensee's sole remedy shall be to: (a) obtain a license from such third party for the benefit of Licensee; or (b) replace or modify the infringing Software, or any part thereof, so that it is no longer infringing and substantially complies with the Specifications.
8.3    Indemnification Procedures. If any Party entitled to indemnification under this article (an "Indemnified Party") makes an indemnification request to the other, the Indemnified Party shall permit the other Party (the "Indemnifying Party") to control the defense, disposition or settlement of the matter at its own expense; provided that the Indemnifying Party shall not, without the consent of the Indemnified Party, enter into any settlement or agree to any disposition that imposes any conditions or obligations on the Indemnified Party.  The Indemnified Party shall notify the Indemnifying Party promptly of any claim for which the Indemnifying Party is responsible and shall reasonably cooperate with the Indemnifying Party to facilitate defense of any such claim. An Indemnified Party shall at all times have the option to participate in any matter or litigation, including but not limited to participation through counsel of its own selection, if desired, the hiring of such separate counsel being at Indemnified Party's own expense.
8.4    Limitation. Licensor shall have no obligation to defend the Indemnified Parties or to pay any costs, damages, or attorneys' fees for any claim to the extent based upon, (i) infringement would not be alleged if Software or IP License was not attached or embedded in a Product incorporating elements not sourced from Licensor or (ii) use of other than a current, unmodified release of the Software if such infringement would have been avoided by the use of a current, unaltered release of the Software.
		
	9.
	LIMITATION OF LIABILITY.

EXCEPT FOR INDEMNIFICATION OBLIGATIONS OR BREACH OF SECTION 2.3 OR CONFIDENTIALITY OBLIGATIONS SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY'S LIABILITY ARISING OUT OF THIS AGREEMENT EXCEED FOUR MILLION DOLLARS. EXCEPT FOR INDEMNIFICATION OBLIGATIONS OR BREACH OF SECTION 2.3 OR CONFIDENTIALITY OBLIGATIONS SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY ARISING OUT OF, OR OTHERWISE RELATING TO, THIS AGREEMENT, FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, COLLATERAL, PUNITIVE, EXEMPLARY, OR INDIRECT DAMAGES  SUFFERED  BY  THE  OTHER PARTY OR ANY THIRD PARTY INCLUDING, WITHOUT LIMITATION, LOSS OF GOODWILL, LOSS OF PROFITS OR REVENUES, LOSS OF SAVINGS, LOSS OF USE, INTERRUPTION OF BUSINESS, INJURY OR DEATH TO PERSONS OR DAMAGE TO PROPERTY, WHETHER BASED

12

ON BREACH OF CONTRACT, TORT OR ARISING IN EQUITY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE PARTIES ACKNOWLEDGE THAT THE LIMITATIONS OF LIABILITY IN THIS SECTION 9 AND IN THE OTHER PROVISIONS OF THIS AGREEMENT AND THE ALLOCATION OF RISK HEREIN ARE AN ESSENTIAL ELEMENT OF THE BARGAIN BETWEEN THE PARTIES, WITHOUT WHICH LICENSEE WOULD NOT HAVE ENTERED INTO THIS AGREEMENT AND PRICING REFLECTS THIS ALLOCATION OF RISK AND THE LIMITATION OF LIABILITY SPECIFIED HEREIN. THIS LIMITATION ON LIABILITY SHALL NOT APPLY TO ANY UNDISPUTED PAYMENT AMOUNTS NOT YET PAID BUT DUE LICENSOR UNDER THIS AGREEMENT NOR TO LICENSOR'S INDEMNITY OBLIGATIONS FOR THIRD PARTY CLAIMS UNDER SECTION 8. 
		
	10.
	MISCELLANEOUS.

10.1    Force Majeure. Except as specifically provided elsewhere in this Agreement, neither Party shall be liable to the other for delays in performing or for its failure to perform any obligation under this Agreement to the extent that such delays or failures result from or arise out of causes beyond such Party's control or reasonable expectation, including, by way of illustration but not limitation, fire, flood, war, weather of exceptional severity, civil disturbance, strikes or work stoppages, acts of God or of the public enemy, acts of any government, extended power failures, large increases in Internet activity in a short period of time (commonly known as usage spikes), attacks on the Party's computer network or server, viruses which are not preventable through generally available retail products, and catastrophic hardware and telecommunications failures.
10.2    Compliance with Laws. Each Party shall comply with all federal, state and local laws and regulations, as amended from time to time, applicable to the performance of its obligations hereunder. Licensor and Licensee understand and acknowledge that the Software may be subject to the export regulations of the United States Export Administration Act of 1979, as amended, or a successor act. Licensor and Licensee represent that they will not knowingly permit the exportation or transshipment of all or any part of the Software in violation of the above-referenced law and regulations. Each Party agrees to indemnify and hold the other Party harmless from any and all costs, damages, fines, and other expenses incurred by reason of its violations of these representations.
10.3    Relationship of Parties. The parties are independent contractors under this Agreement and no other relationship is intended, including a partnership, franchise, joint venture, agency, employer/employee, fiduciary, master/servant relationship, or other special relationship. Neither Party shall act in a manner which expresses or implies a relationship other than that of independent contractor, nor bind the other Party.
10.4    Equitable Relief. Each Party acknowledges that a breach by the other Party of any confidentiality or proprietary rights provision of this Agreement may cause the non-breaching Party irreparable damage, for which the award of damages would not be adequate compensation. Consequently, the non-breaching Party may institute an action to enjoin the breaching Party from any and all acts in violation of those provisions, which 

13

remedy shall be cumulative and not exclusive, and a Party may seek the entry of an injunction enjoining any breach or threatened breach of those provisions, in addition to any other relief to which the non-breaching Party may be entitled at law or in equity.
10.5    Governing Law; Venue. This Agreement and any action related thereto shall be governed, controlled, interpreted and defined by and under the laws of the State of Colorado and the United States, without regard to the conflicts of laws provisions thereof. The parties specifically disclaim the UN Convention on Contracts for the International Sale of Goods. Any dispute or litigation based on, related to or arising out of this Agreement must be brought and maintained in Denver County, Colorado, before a court of competent jurisdiction. Each Party consents to the personal jurisdiction of the State of Colorado, acknowledges that venue is proper in any of its state or federal courts, and waives any objection it has or may have in the future with respect to any of the above.
10.6    Attorneys' Fees. In addition to any other relief awarded, the prevailing Party in any action arising out of this Agreement shall be entitled to its reasonable attorneys' fees and costs.
10.7    Notices. All notices, demands, and other communications given or delivered under this Agreement shall be in writing and shall be deemed to have been given, (a) when received if given in person, (b) on the date of electronic confirmation of receipt if sent by facsimile, other wire transmission, or by e-mail, (c) three days after being deposited in the U.S. mail, certified or registered mail, postage prepaid, or (d) one day after being deposited with a reputable overnight courier. Notices, demands, and communications to the parties shall, unless another address is specified in writing, be sent to the address, e-mail address or facsimile number indicated on the signature page.
10.8    Assignment. Licensee shall not transfer or assign any of its rights or delegate any of its obligations, in whole or in part, whether voluntarily or by operation of law, without the prior written consent of Licensor; provided, however, that either Party may, without securing such prior consent, assign this Agreement and its rights and obligations to any successor of such first Party by way of merger, consolidation, or the acquisition of substantially all of the assets of such first Party or of the assets of the business to which this Agreement relates by delivering a written undertaking from the assignee to be legally bound by the terms and conditions of this Agreement. Notwithstanding anything to the contrary, Licensor may perform its obligations, in whole or in part, in Licensor's sole discretion, through authorized third parties or Affiliates.
EXCEPT WITH RESPECT TO EXISTING INDEBTEDNESS IN FAVOR OF INSTITUTIONAL LENDERS OF LICENSEE OR ANY OF ITS AFFILIATES, OR ANY REFINANCINGS  OR  REPLACEMENTS  THEREOF,  LICENSEE  SHALL  NOT  PLEDGE, USE, OR OFFER FOR COLLATERAL, OR IN ANY WAY  ENCUMBER  OR  TREAT AS AN ASSET OR SECURITY, FOR THE PURPOSE OF OBTAINING CREDIT OR INVESTMENT, THIS AGREEMENT, LICENSE, THE SOFTWARE, OR ANY OF THE RIGHTS GRANTED HEREIN. LICENSOR DISCLAIMS AND REFUSES ANY ASSIGNMENT BY LICENSEE, FOR THE BENEFIT OF THIRD PARTY CREDITORS, 

14

INVESTORS, OR ANY OTHER ENTITY, OF ANY RIGHT, TITLE OR CLAIM IN AND TO THE LICENSE, SOFTWARE, OR IN THIS AGREEMENT. 
10.9    Waiver and Modification. Failure by either Party to enforce any provision of this Agreement will not be deemed a waiver of future enforcement of that or any other provision. Any waiver, amendment or other modification of any provision of this Agreement will be effective only if in writing and signed by the parties.
10.10    Severability. If for any reason a court of competent jurisdiction finds any provision of this Agreement to be unenforceable, that provision of the Agreement will be enforced to the maximum extent permissible so as to affect the intent of the parties, and the remainder of this Agreement will continue in full force and effect.
10.11    Headings. Headings used in this Agreement are for ease of reference only and shall not be used to interpret any aspect of this Agreement.
10.12    Entire Agreement. This Agreement, including all Exhibits which are incorporated herein by reference, and the Supply Agreement constitute the entire agreement between the parties with respect to the subject matter hereof, and supersede and replace all prior and contemporaneous understandings or agreements, written or oral, regarding such subject matter. To the extent any terms and conditions of this Agreement conflict with the terms and conditions of any Exhibit or Statement of Work entered into by the Parties hereunder, the terms and conditions of this Agreement shall govern and control.
10.13    Counterparts/Facsimiles. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, and such counterparts together shall constitute one and the same instrument.
10.14    Purchase of Software.  All references in this Agreement to the "purchase" or "sale" of Software shall mean the acquiring or granting, respectively, of a license to use the Software, and to exercise any other rights pertaining to such Software which are expressly set forth herein. The Software is licensed, not sold, and title does not transfer.

15

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by persons duly authorized as of the date and year first above written.
	
			
	Cuattro, LLC
	 
	Heska Imaging US, LLC

	/s/ Kevin S. Wilson
	 
	/s/ Jason Napolitano

	Authorized Signature
	 
	Authorized Signature

	Kevin S. Wilson
Officer, Units Holder, and Manager
	 
	Jason Napolitano 
Manager/Chief Financial Officer

	February 22, 2013
	 
	February 22, 2013

	Date
	 
	Date

	 
	 
	 

	Address for Notice:
63 Avondale Lane
Villa Montane, #C2
Beaver Creek, CO 81620
Attn : Kevin S. Wilson
	 
	Address for Notice:
3760 Rocky Mountain Avenue
Loveland, CO 80538
Attn: Jason Napolitano

16

Execution Version
EXHIBIT A1

SOFTWARE:
Acquisition Software has the following features:
		
	•
	DICOM Database for Doctor and Patient Demographics and Exam/Image metadata

		
	•
	Acquire Digital Radiograph images and data from detector devices

		
	•
	User Interface for Veterinary specific use

		
	•
	Transfer data to DICOM image formats via DICOM network or other media

		
	•
	Enhance using ContextVision GOP and ADi licensed technologies (extra costs apply)

		
	•
	Control of UnoTM brand of hardware of Licensor

		
	•
	Control of CloudDRTM brand of hardware of Licensor

		
	•
	DICOM interface and Store to CloudBankTM brand

		
	•
	DICOM archival

		
	•
	CopilotTM support functionality and connections

	
						
	LICENSEE
	 
	 
	LICENSOR

	Heska Imaging US, LLC
	 
	 
	Cuattro, LLC

	By:
	/s/ Jason Napolitano
	 
	 
	By:
	/s/ Kevin Wilson

	Name:
	Jason Napolitano
	 
	 
	Name:
	Kevin Wilson

	Title:
	Manager/Chief Financial Officer
	 
	 
	Title:
	Member

	 
	 
	 
	 
	 
	 

EXHIBIT A2
COVERED AFFILIATES
		
	•
	Heska Corporation

		
	•
	Diamond Animal Health, Inc.Exhibit 4.3

 

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 APPLICABLE STATE SECURITIES LAWS, 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.

 

Original
Issue Date: June 30, 2016

Original
Conversion Price (subject to adjustment herein): $1.25

 

ORIGINAL
ISSUE DISCOUNT

SENIOR
SECURED CONVERTIBLE DEBENTURE 

DUE
JUNE 30, 2018

 

THIS
ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE DEBENTURE is duly authorized and validly issued Original Issue Discount Senior
Secured Convertible Debenture of SG Blocks, Inc., a Delaware corporation, (the “Company”), having its principal
place of business at 912 Bluff Road, Brentwood, TN 37027, designated as its Original Issue Discount Senior Secured Convertible
Debenture due on the Maturity Date (this debenture, the “Debenture”).

 

FOR
VALUE RECEIVED, the Company promises to pay to Hillair Capital Investments L.P. or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $2,500,000 on the Maturity Date or such earlier date
as this Debenture is required or permitted to be repaid as provided hereunder. 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 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).

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.

 

“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 33% 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 66% 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 66% of the aggregate voting power of the acquiring entity immediately
after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) 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 (d) above.

 

    	 	2	 

     

    

  

“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(c).

 

“Dilutive Issuance” shall have the meaning
set forth in Section 5(b).

 

“Dilutive
Issuance Notice” shall have the meaning set forth in Section 5(b).

 

“Event
of Default” shall have the meaning set forth in Section 8(a).

 

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

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June 30, 2016 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.

 

“Maturity
Date” means June 30, 2018.

 

“Mandatory
Default Amount” means the sum of (a) the greater of (i) the outstanding principal amount of this Debenture, divided
by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create
an Event of Default) or otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the
date the Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP, or
(ii) 130% of the outstanding principal amount of this Debenture, plus 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 9(d).

 

“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 any Debenture and
regardless of the number of instruments which may be issued to evidence such Debentures.

 

    	 	3	 

     

    

 

“Permitted Indebtedness”
means (a) the indebtedness evidenced by the Debentures and (b) lease obligations, purchase money indebtedness incurred in connection
with the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets.

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company's
business, such as carriers', warehousemen's and mechanics' Liens, statutory landlords' Liens, and other similar Liens arising
in the ordinary course of the Company's business, and which (x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and
its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens
incurred in connection with Permitted Indebtedness under clause (a) and (d) Liens incurred in connection with Permitted Indebtedness
under clause (b) thereunder, provided that such Liens are not secured by assets of the Company or its Subsidiaries other than
the assets so acquired or leased.

 

“Purchase
Agreement” means the Securities Purchase Agreement dated as of even date herewith between the Company and the Holder
as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration
Statement” means a registration statement covering the resale of the Underlying Shares by the Holder.

 

“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).

 

“Trading
Day” means a day on which the principal Trading Market is open for trading.

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, OTC Markets Inc. or the OTC Bulletin Board (or any successors to any of the foregoing).

 

    	 	4	 

     

    

  

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price
of the Common Stock for such date (or the nearest preceding date on which the Common Stock actually traded) on the Trading Market
on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is
not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest
of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

 

Section
2.             Interest.

 

a)           No Interest. This is an original issue discount obligation and accordingly there is no regularly
scheduled interest payments.

 

b)           Prepayment.
Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture
without the prior written consent of the Holder.1

 

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)           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.

 

 

1
Note to draft: discuss

 

    	 	5	 

     

    

 

Section
4.             Conversion.

 

a)           Voluntary
Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture 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 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. 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 has been so converted in which case the Holder shall surrender this Debenture
as promptly as is reasonably practicable after such conversion without delaying the Company's obligation to deliver the shares
on the Share Delivery Date. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture
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 shall be equal to $1.25, subject to adjustment herein
(the “Conversion Price”).

 

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) a certificate or certificates representing
the Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective
Date, 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. On or after the
earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, the Company shall deliver any
Conversion Shares required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust
Company or another established clearing corporation performing similar functions.

 

    	 	6	 

     

    

 

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; 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, 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 in the amount of 150% of the outstanding principal amount of this
Debenture, which is subject to the injunction, 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 $15 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 8
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.

 

    	 	7	 

     

    

 

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 it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture, each as herein
provided, free from preemptive rights or any other actual contingent purchase
rights of Persons other than the Holder (and the other holders of the Debentures), 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.
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 and, if the Registration Statement is then effective under the Securities Act, shall be registered
for public resale in accordance with such Registration Statement.

 

    	 	8	 

     

    

  

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 and all fees to the Depository Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic delivery of the Conversion Shares

 

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 the Debentures or in connection with an Exempt Issuance), (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.

 

    	 	9	 

     

    

 

b)           Subsequent
Equity Sales. If, at any time while this Debenture is outstanding, 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. If the Company enters into a Variable Rate Transaction,
despite the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised. 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 is 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 in the Notice
of Conversion.

 

c)            Subsequent
Rights Offerings. In addition to any adjustments pursuant to the other subsections of this Section 5, 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
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.

 

    	 	10	 

     

    

 

d)           Pro
Rata Distributions. During such time as this Debenture is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Debenture, then, in each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Debenture immediately before the date of which a record is taken for
such Distribution, 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 participation in such Distribution.

 

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 (as defined in the Purchase Agreement) 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.

 

    	 	11	 

     

    

 

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 each 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.

 

    	 	12	 

     

    

 

Section
6.             [RESERVED]

 

Section
7.            Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of at least
50.1% in principal amount of the then outstanding Debentures shall have otherwise given prior written consent, the Company shall
not, and shall not permit any of the Subsidiaries to, directly or indirectly:

 

a)           other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness
for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

b)           other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

c)           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;

 

d)           repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common
Stock Equivalents other than as to (i) the Conversion Shares as permitted or required under the Transaction Documents and (ii)
repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such
repurchases shall not exceed an aggregate of $150,000, or such greater amount as is approved by the Board of Directors, for all
officers and directors during the term of this Debenture;

 

e)           repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures if on a pro-rata basis;
or

 

f)            pay
cash dividends or distributions on any equity securities of the Company;

 

g)           enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm's-length basis and expressly approved by a majority of the disinterested directors of
the Company (even if less than a quorum otherwise required for board approval); or

 

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

 

Section
8.             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) liquidated damages and other amounts owing to a
Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date
or by acceleration or otherwise);

 

    	 	13	 

     

    

 

ii.          the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures (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 (x) 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) 20 Trading Days after the Company
has become or should have become aware of such failure;

 

iii.          a
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 or any other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;

 

v.          after
the effectiveness of the Plan, 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 on any of its obligations under any mortgage, credit agreement or other facility, 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 $250,000, 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 fifteen Trading Days;

 

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 33% 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.          at
any time after six months after the date hereof the Company does not meet the current public information requirements under Rule
144 in respect of the Underlying Shares;

 

    	 	14	 

     

    

 

x.          the Company shall fail for any reason to deliver certificates to a Holder prior to the fifth 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 any Debentures in accordance with the
terms hereof; or

 

xi.          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 $150,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.

 

b)          Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus, liquidated
damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder's election, immediately
due and payable in cash at the Mandatory Default Amount. Commencing 5 days 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
the lesser of 18% per annum or the maximum rate permitted under applicable law. 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 8(b). No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

 

Section
9.            Miscellaneous.

 

a)          Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally
recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number,
email address, or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this
Section 9(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing
and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier service addressed
to each Holder at the facsimile number or email address or address of the Holder appearing on the books of the Company, or if
no such facsimile number or email attachment or address appears on the books of the Company, at the principal place of business
of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt
by the party to whom such notice is required to be given.

 

    	 	15	 

     

    

 

b)          Absolute
Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, liquidated damages, 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.
This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein.

 

c)          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.

 

d)          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 attorneys fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.

 

    	 	16	 

     

    

 

e)          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.

 

f)          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 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.

 

g)          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.

 

h)          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.

 

i)          Secured
Obligation. The obligations of the Company under this Debenture are secured by all assets of the Company and each Subsidiary
pursuant to the Security Agreement, dated as of even date herewith between the Company, the Subsidiaries of the Company and the
Secured Parties (as defined therein).

 

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

 

(Signature
Pages Follow)

 

    	 	17	 

     

    

  

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.

 

	 	SG
    BLOCKS, INC.
	 	 	 
	 	By:	/s/
    Paul M. Galvin
	 	Name:	Paul M. Galvin
	 	Title:	Chief Executive Officer
	 	 	 
	 	Facsimile
    No. for delivery of Notices: 615-776-3657

 

    	 	18	 

     

    

 

ANNEX A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Original Issue Discount Senior Secured Convertible Debenture due on the
Maturity Date of SG Blocks, Inc., a Delaware 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:
	 	 
	 	Number of shares of Common Stock to be issued:
	 	 
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Address
    for Delivery of Common Stock Certificates:
	 	 
	 	Or
	 	 
	 	DWAC
    Instructions:
	 	 
	 	Broker
    No:	 
	 	Account No:	 

 

    	 	19	 

     

    

 

Schedule 1

 

CONVERSION
SCHEDULE

 

This
Original Issue Discount Senior Secured Convertible Debentures due on the Maturity Date in the original principal amount of $2,500,000
is issued by SG Blocks, Inc., a Delaware 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
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

 

 20

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