Exhibit 10.1  

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (“ Agreement ”) is entered into as of February 17, 2016, by and among KeepItSafe, Inc., a Delaware corporation (“ Buyer ”), VaultLogix, LLC, a Delaware limited liability company, Data Protection Services, L.L.C., a Delaware limited liability company, and U.S. Data Security Acquisition, LLC, a Delaware limited liability company (each a “ Seller ”, and collectively “ Sellers ”), and each individual owner of interests in Sellers as set forth on the signature page to this Agreement (each an “ Owner ,” and collectively, the “ Owners” ). In this Agreement, each of Sellers, Owners and Buyer is sometimes called a “ Party ,” and together, “ Parties .

INTRODUCTION

This Agreement contemplates a transaction in which Buyer will purchase substantially all of the Assets (as defined below) and the on-going online data backup business (the “ Business ”) of Sellers.

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:

ARTICLE I
DEFINITIONS

Capitalized terms used herein shall have the meanings set forth in Schedule I attached hereto.

ARTICLE II
PURCHASE AND SALE

2.1 Purchase and Sale of Assets .

(a) Upon and subject to the terms and conditions of this Agreement, at the Closing, Buyer shall purchase from Sellers, and Sellers shall sell, transfer, convey, assign and deliver to Buyer, free and clear of any Encumbrances, all of Sellers’ right, title and interest in and to all of Sellers’ assets, tangible and intangible, of every kind and description, wherever located, including, without limitation, the following (but excluding the Excluded Assets set forth in Section 2.1(b)) (collectively, the “ Assets ”):

i. all of the Sellers’ right, title and interest to the products, services and other assets listed on Schedule 2.1(a)(i ) of the Disclosure Schedule;

ii. all of the intangible rights and property of Sellers including Intellectual Property Assets, going concern value, goodwill (including, but not limited to, the goodwill associated with all trademarks transferred hereby), marketing materials, telephone, facsimile, websites, social media accounts, Twitter handles, Facebook pages (content and URL) and all related content, domain names set forth in Schedule 2.1(a)(ii ) of the Disclosure Schedule, trade names, help manuals, e-mail addresses and any other information developed or acquired by Sellers and used for the operation of the Business;

iii. all of Sellers’ right, title and interest in the following (collectively, the “ Assigned Contracts ”): (A) the customer and reseller accounts of Sellers listed in Schedule 2.1(a)(iii)(A) of the Disclosure Schedule (the “ Customer Contracts ”), (B) all Seller Contracts listed in Schedule 2.1(a)(iii)(B ) of the Disclosure Schedule, and (C) all outstanding offers or solicitations made by or to Sellers to enter into any Contract, excluding the Excluded Contracts;

iv. all Accounts Receivable;

v. all Governmental Authorizations or permits necessary to operate the Business; and

vi. all books, records, accounts, ledgers, files, documents, correspondence, advertising and promotional materials, studies, reports and other printed or written materials relating to the Business.

Notwithstanding the foregoing, the transfer of the Assets pursuant to this Agreement shall not include the assumption of any liability related to the Assets unless Buyer expressly assumes that liability pursuant to Section 2.2(a).

Notwithstanding anything in this Agreement to the contrary, no Assigned Contract that is not capable of being delegated, assigned or transferred to Buyer without the Consent of a third party, or under which any actual or purported delegation, assignment, transfer to Buyer would constitute a violation, breach or default under the terms of the Assigned Contract, shall be delegated, assigned or transferred to Buyer without having first obtained such required Consent. To the extent such Consents are not obtained and in full force and effect as of the Closing Date, Sellers shall cooperate with Buyer (i) to establish lawful arrangements which result in the benefits and obligations under such Assigned Contracts apportioned in a manner consistent with the purpose and intention of this Agreement and (ii) if so requested by Buyer and at Sellers’ expense, to obtain any such Consents, and enforce Sellers’ rights under such Assigned Contracts on behalf and for the benefit of, and as directed by, Buyer.

(b) Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following assets of Sellers (collectively, the “ Excluded Assets ”) are not part of the sale and purchase contemplated hereunder, are excluded from the Assets and shall remain the property of Sellers after the Closing:

i. all cash and cash equivalents, bank accounts and deposits therein;

ii. all minute books, Equity Interest records, and corporate seals;

iii. the Equity Interests;

iv. all insurance policies and rights thereunder;

v. all Seller Contracts other than the Assigned Contracts, including those listed in Schedule 2.1(b)(v ) of the Disclosure Schedule (collectively, the “ Excluded Contracts ”);

vi. all personnel records and other employee records;

vii. all claims for refund of Taxes and other governmental charges of whatever nature;

viii. all rights in connection with and assets of the Seller Benefit Plans;

ix. all rights of Sellers under this Agreement; and

x. the assets expressly identified in Schedule 2.1(b)(x) of the Disclosure Schedule.

2.2 Assumption of Liabilities .

(a) From and after the Closing, Buyer shall assume and become responsible for (i) obligations of Sellers arising after the Closing under the Assigned Contracts, but excluding any such obligations and liabilities if they relate to breaches of, or defaults under, the Assigned Contracts on or prior to the Closing or arising from facts or conditions (other than the existence of the Assigned Contracts) existing on or before the Closing, and (ii) Post-Closing Apportioned Obligations allocated to Buyer pursuant to Section 6.1(c) (collectively, the “ Assumed Liabilities ”).

(b) Buyer shall not assume or become responsible for, and the Sellers shall remain liable for, any and all liabilities or obligations of the Sellers which are not Assumed Liabilities, including but not limited to all Sellers’ employee liabilities or obligations (collectively, the “ Retained Liabilities ”).

2.3 Purchase Price. The consideration for the Assets (the “ Purchase Price ”) will be Twenty Four Million Dollars ($24,000,000) minus the Adjustment Amount, if any. The Purchase Price will be subject to adjustment as follows, and as determined as of the close of business on the Closing Date and according to the adjustment procedures set forth in Section 2.6 below:

(a) [Intentionally Omitted]

(b) downward adjustment on a dollar-for-dollar basis (the “ Receivables Adjustment ”) to the extent any Account Receivable included in the Assets has been outstanding more than ninety (90) days as of the Closing Date (such amount, the “ Aged Receivables ”); provided, however, that any Aged Receivables received by any Seller or Buyer within one hundred and eighty (180) days of the Closing Date shall be transferred immediately to Owner and become the property of Owner; and

(c) downward adjustment on a dollar-for-dollar basis for Prepaid Amounts (the “ Prepaid Adjustment ” and, together with the Receivables Adjustment, the “ Adjustment Amount ”).

The Purchase Price shall be paid to Sellers as follows: (a) Twenty Two Million Dollars ($22,000,000) less the Estimated Adjustment Amount (the “ Closing Payment ”) shall be paid on the Closing Date by wire transfer of immediately available funds to a bank account designated by Sellers in a written notice delivered to Buyer at least five (5) days prior to the Closing Date; and (b) Two Million Dollars ($2,000,000) (the “ Holdback Amount ”) will be retained by Buyer in an escrow account to provide a ready source of funds to secure the performance of Sellers’ and Owners’ obligations under this Agreement, including but not limited to indemnification obligations set forth in Section 5.2 and any obligation of Sellers to make a payment under Section 2.6(c)i. Buyer shall release the Holdback Amount, less Buyer’s good faith estimate of the amount required to cover any claims Buyer has under Sections 5.2 or 2.6(c)i, within five (5) business days of such date that is twelve (12) months after the Closing Date (the “ Holdback Disbursement Date ”). Any portion of the Holdback Amount that Buyer retains pursuant to this Section 2.3 following the Holdback Disbursement Date which is not applied to obligations under Sections 5.2 or 2.6(c)i shall be paid over to Sellers upon Buyer’s good faith determination that such funds will not be needed with respect to such claims. The Parties acknowledge and agree that any interest earned on the Holdback Amount on or prior to the Holdback Disbursement Date shall be reported for Tax purposes as income of Sellers, notwithstanding that such interest ultimately may be released to Buyer in partial satisfaction of Sellers’ and Owners’ obligations hereunder.

2.4 The Closing . The closing of the transaction contemplated by this Agreement (the “ Closing ”) shall take place at the offices of j2 Global, Inc., 6922 Hollywood Blvd., 5 ^th Floor, Los Angeles, California, on the date of this Agreement (the “ Closing Date ”) or at such other place as Sellers, Owners and Buyer agree. For purposes of calculating the Adjustment Amount, the Closing shall be deemed to occur as of the close of business on the Closing Date.

2.5 Closing Obligations . In addition to any other documents to be delivered under other provisions of this Agreement, at the Closing:

(a) Sellers and Owners, as the case may be, shall deliver or cause to be delivered to Buyer:

i. a bill of sale for all of the Assets in the form of Exhibit A , executed by Sellers (the “ Bill of Sale ”);

ii. an assignment of all the Assumed Liabilities the form of Exhibit B , which assignment shall also contain Buyer’s undertaking and assumption of the Assumed Liabilities (the “ Assignment and Assumption Agreement ”), executed by Sellers;

iii. an assignment of all Intellectual Property Assets, and separate confirmatory assignments of all registered Marks, Patents and Copyrights in the form of Exhibit C , executed by Sellers (the “ Assignment of Intellectual Property Assets ”);

iv. such other bills of sale, assignments, certificates of title, documents and other instruments of transfer and conveyance as may reasonably be requested by Buyer, each in form and substance reasonably satisfactory to Buyer and their legal counsel and executed by Sellers;

v. non-competition agreements in the form of Exhibit D (the “ Noncompetition Agreements ”), executed by each Seller and each Owner. The Noncompetition Agreements are a material part of the consideration bargained for by Buyer in order to enter into this Agreement and each Seller and each Owner is willing to enter into the Noncompetition Agreements;

vi. transition services agreement in the form of Exhibit E (the “ Transition Services Agreement ”), executed by Sellers and the individuals named on the signature page thereto;

vii. all Consents and any approvals or other authorizations of any Governmental Authority relating to the transfer of any of Sellers’ Governmental Authorizations to Buyer necessary to complete the Contemplated Transactions, and all Consents necessary for the assignment of the Assigned Contracts;

viii. a certificate of the managing member of each Seller and Owner in the Form of Exhibit F (A) certifying, as complete and accurate as of the Closing, attached copies of the Organizational Documents of such Seller or Owner, (B) certifying and attaching all requisite resolutions or actions of such Seller’s or Owner’s directors and shareholders approving the execution and delivery of this Agreement, and the consummation of the Contemplated Transactions, and (C) certifying to the incumbency and signatures of the authorized representatives of such Seller or Owner executing this Agreement and any other document relating to the Contemplated Transactions (the “ Seller’s Secretary’s Certificate ”);

ix. Customer list, reseller list, customer data and reseller data (including name, email address, address, phone, billing information) relating to the Business in Excel format with respect to all Customer Contracts;

x. the Estimated Adjustment Amount;

xi. all software used in the Business, including all documentation;

xii. copies of website and contents, all databases and their contents, all customer email accounts and their content, all applications and their source code;

xiii. the Financial Statements;

xiv. Commitment Letter executed by Tim Hannibal;

xv. Escrow Agreement;

xvi. Release documents from the holders of any Encumbrances on the Assets;

xvii. all credit card information relating to each Customer Contract, including, full name on credit card, card number, expiration date, security number and evidence that the customer agreed to pay by credit card, in Excel format; and

xviii. a certificate from Sellers in the applicable form specified in Treasury Regulations Section 1.1445-2.

(b) Buyer shall deliver to Sellers and Owners, as the case may be:

i. the Closing Payment in accordance with Section 2.3;

ii. the Assignment and Assumption Agreement executed by Buyer;

iii. the Noncompetition Agreements executed by Buyer; and

iv. the Transition Services Agreement executed by Buyer.

2.6 Adjustment Amount .

(a) At least three (3) days prior to the Closing, Sellers shall deliver to Buyer a statement setting forth in reasonable detail Sellers’ good faith estimate of the Adjustment Amount (the “ Estimated Adjustment Amount ”) as of the Closing Date, which statement shall be substantially in the form of Schedule 2.6(a) of the Disclosure Schedule attached hereto.

(b) Within sixty (60) days after the Closing Date, Buyer shall deliver to Sellers a balance sheet and income statement of the Business dated as of the Closing Date and prepared in accordance with GAAP (the “ Closing Date Financial Statements ”) and a calculation of the Adjustment Amount and each component thereof (i.e., the Receivables Adjustment and the Prepaid Adjustment), together with reasonable supporting documentation. The Adjustment Amount so delivered by Buyer shall become final for all purposes of this Agreement unless, within fourteen (14) days after the receipt of such calculation by Sellers, Buyer receives written notice of the Sellers’ disapproval of such calculation along with Sellers’ determination of the final Adjustment Amount and a detailed explanation as to the reasons for such disapproval. If Buyer and Sellers are unable to agree on the final Adjustment Amount within thirty (30) days after such notice is delivered, they shall submit the issues remaining in dispute to a certified public accounting firm of national standing in the industry in which Buyer and Sellers principally operate (the “ Independent Accountants ”) for resolution. If issues are submitted to the Independent Accountants for resolution, (a) Sellers and Buyer shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (b) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Buyer within sixty (60) days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the Parties; and (c) Buyer and Sellers will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination.

(c) No later than five (5) days following the final determination of the Adjustment Amount (the “ Final Adjustment Amount ”), the following payments will be made:

i. in the event that the Final Adjustment Amount is greater than the Estimated Adjustment Amount, Buyer will retain from the Holdback Amount an amount equal to the difference between the Final Adjustment Amount and the Estimated Adjustment Amount; and

ii. in the event that the Final Adjustment Amount is less than the Estimated Adjustment Amount, Buyer will pay to Sellers, in cash, the amount equal to the difference between the Estimated Adjustment Amount and the Final Adjustment Amount.

2.7 Further Assurances . At any time and from time to time after the Closing and without further consideration:

(a) Sellers shall, at the request of the Buyer, promptly execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take all such other action as the Buyer may reasonably request, including giving notices to and obtaining all Consents with respect to Assigned Contracts, to more effectively transfer, convey and assign to the Buyer, and to confirm the Buyer’s title to, all of the Assets, to put the Buyer in actual possession and operating control of the Business and the Assets, and to carry out the purpose and intent of this Agreement;

(b) Buyer shall, at the request of the Sellers, provide any records relating to activities of the Sellers included in the Assets to the Sellers for any financial, tax or other purpose relating to the Sellers’ discontinuance of the Business.

2.8 Allocation . Following the Closing Date, Buyer shall obtain an appraisal (the “ Appraisal ”) of the Assets for Buyer’s GAAP-based accounting purposes. Within ninety (90) days following receipt of the Appraisal, Buyer will deliver to Sellers an allocation of the Purchase Price plus the Assumed Liabilities and other applicable amounts (reduced by the amount required to be treated as unstated interest or original issue discount) among the Assets in a manner which is consistent with the Appraisal and in conformance with Section 1060 of the Internal Revenue Code (and any similar provision of state, local or foreign law, as appropriate) (the “ Purchase Price Allocation ”). Each Party agrees to file IRS Form 8594, and all federal, state, local and foreign Tax Returns, in a manner that is consistent with the Purchase Price Allocation and to take no position for Tax purposes inconsistent therewith.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND OWNERS

Each Seller and each Owner represent and warrant to Buyer as follows:

3.1 Organization and Good Standing .

(a) Each Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the assets that it purports to own or use, and to perform all its obligations under all Seller Contracts. Each Seller is duly qualified to do business as a foreign limited liability company and is in good standing under the laws of each state or other jurisdiction in which the nature of the activities conducted by it requires such qualification.

(b) Each Seller has delivered to Buyer copies of the Organizational Documents of such Seller, as currently in effect. Each Seller is not in breach of any provision of its Organizational Documents. There is no pending or threatened action (or basis therefor) for the dissolution, liquidation or insolvency of any Seller.

3.2 Authority; No Conflict .

(a) This Agreement constitutes the legal, valid and binding obligation of each Seller, enforceable against such Seller in accordance with its terms. Upon the execution and delivery by each Seller of all agreements and certificates to be executed or delivered by each Seller at the Closing (collectively, the “ Sellers’ Closing Documents ”), each of Sellers’ Closing Documents will constitute the legal, valid and binding obligation of the applicable Seller, enforceable against such Seller in accordance with its terms. Each Seller has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the applicable Sellers’ Closing Documents, and to perform its obligations under this Agreement and the Sellers’ Closing Documents, and such action has been duly authorized by all necessary action by such Seller’s directors and shareholders.

(b) Neither the execution and delivery of this Agreement, the assignment of the Assets to Buyer, nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time):

i. contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of any Seller, or (B) any resolution adopted by the members of any Seller;

ii. contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which any Seller, or any of the assets owned or used by any Seller, may be subject;

iii. contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by any Seller or that otherwise relates to the Business or any of the assets owned or used by any Seller;

iv. cause any of the Assets to be reassessed or revalued by any taxing authority or other Governmental Body;

v. contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Assigned Contract; or

vi. result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by any Seller.

(c) No Seller is or will be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement, the assignment of Assets to Buyer, or the consummation or performance of any of the Contemplated Transactions.

3.3 Ownership . Owners are, and will be on the Closing Date, the record and only owners of shares of capital stock of each Seller and the beneficial owners and holders of any and all shares of capital stock in each Seller (the “ Equity Interests ”), free and clear of all Encumbrances, except as set forth on Schedule 3.3 of the Disclosure Schedule. The Equity Interests have been duly authorized and are validly issued, fully paid, and non-assessable. The Equity Interests represent the only ownership interests in each Seller. There are no pending Contracts relating to the issuance, sale, or transfer of the Equity Interests. None of the Equity Interests or other previous ownership interests or securities of any Seller were issued in violation of the Securities Act or any other Legal Requirement.

3.4 Financial Statements . Each Seller has delivered to Buyer, as set forth in Schedule 3.4 of the Disclosure Schedule, (a) an unaudited balance sheet of such Seller as of December 31, 2015 (the “ Balance Sheet ”), and the related unaudited statements of income, changes in members’ equity and cash flows for the fiscal year ended December 31, 2015 (collectively, the “ Financial Statements ”). The Financial Statements (a) have been prepared in accordance with GAAP; (b) have been prepared in accordance with the methodology by which each Seller has historically kept and maintained its financial records; and (c) fairly present the financial condition and the results of operations, changes in members’ equity and cash flows of such Seller for the periods referred to in the Financial Statements. The Financial Statements reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes to the Financial Statements. Since the Balance Sheet, no Seller has effected any change in any method of accounting or accounting practice, except for any such change required because of a concurrent change in GAAP.

3.5 Books and Records . The books of account and all other records of each Seller, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices.

3.6 Sufficiency of Assets .

(a) The Assets constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Business in the manner presently operated by each Seller. Each tangible Asset is in good repair and good operating condition, ordinary wear and tear excepted, is suitable for immediate use in the Ordinary Course of Business and is free from latent and patent defects.

(b) The drawings and photographs set forth in Schedule 3.6(b) of the Disclosure Schedule constitute a complete and accurate schematic diagram of the System.

3.7 Title to Assets; No Encumbrances; Deferred Obligations .

(a) Each Seller owns all the good and transferable title to the assets (whether tangible or intangible), including without limitation the Assets, that it purports to own as reflected in the books and records of such Seller, including all of the assets reflected in the Financial Statements, free and clear of any Encumbrances. At the time of Closing, except as set forth on Schedule 3.7(a)(i) , all Assets shall be free and clear of any Encumbrances. Assuming the Closing shall have occurred, all Assets shall be free and clear of any Encumbrances. No Seller owns any real property, excepting only leasehold interests set forth in Schedule 3.7(a)(ii) of the Disclosure Schedule. Except as set forth on Schedule 3.7(a)(iii) of the Disclosure Schedule, all of such leases are enforceable against the applicable Seller, and, to each Seller's Knowledge, the applicable counter-parties (and their successors).

(b) Schedule 3.7(b) of the Disclosure Schedule lists all of the assets purchased or otherwise acquired by each Seller since the date of the Balance Sheet.

(c) Except as set forth in Schedule 3.7(c) of the Disclosure Schedule, no Seller has any obligation to perform services following the Closing Date that have been paid for as of, or prior to, the Closing Date.

3.8 Accounts Receivable . All accounts receivable of each Seller that are reflected on the Financial Statements or on the accounting records of such Seller as of the Closing Date (collectively, the “ Accounts Receivable ”) represent or will represent valid obligations arising from sales actually made or services actually performed in Sellers’ Ordinary Course of Business. Unless paid prior to the Closing Date, the Accounts Receivable are, or will be as of the Closing Date, Current and collectible. Each of the Accounts Receivable either has been, or will be, collected in full, without any setoff, within 90 days after the day on which it first becomes due and payable (such Account Receivable, “ Current ”). There is no contest, claim, or right of setoff, other than returns in the Ordinary Course of Business, under any Contract with any obligor of an Account Receivable relating to the amount or validity of such Account Receivable. Schedule 3.8 of the Disclosure Schedule contains a complete and accurate list of all Accounts Receivable as of the date of the Balance Sheet, which list sets forth the aging of such Accounts Receivable. In the event Buyer or any Seller receives payment for an Aged Receivable within one hundred and eighty (180) days of the Closing Date, Buyer or such Seller shall promptly, but in no event later than ten (10) business days following the receipt thereof, remit such amount to Owner and such amount will be the property of Owner.

3.9 No Undisclosed Liabilities . No Seller has any liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise), except for liabilities or obligations reflected or reserved against in the Financial Statements and current liabilities incurred in the Ordinary Course of Business since the respective dates thereof.

3.10 Compliance with Legal Requirements; Governmental Authorizations . Each Seller is, and at all times since its formation has been, in material compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of the Business or the ownership or use of the Assets and no action is pending or, to the Knowledge of the Seller, threatened against Sellers or Owners alleging any failure to so comply.

3.11 Legal Proceedings; Orders .

(a) There is no pending Proceeding: (i) that has been commenced by or against any Seller or that otherwise relates to or may affect the Business, or any of the Assets, or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.

(b) (i) no such Proceeding has been Threatened, and (ii) no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such Proceeding.

(c) No Seller is subject to any Order.

3.12 Absence of Certain Changes and Events . Since the date of the Balance Sheet, each Seller has conducted business only in the Ordinary Course of Business, and there has not been any:

(a) change in such Seller’s issued Equity Interests; grant of options or right to purchase Equity Interests of Seller; issuance of any security convertible stock interest; grant of any registration rights; purchase, redemption, retirement, or other acquisition by such Seller of any Equity Interest; or declaration or payment of any dividend distribution or payment in respect of such Equity Interest;

(b) amendment to the Organizational Documents of such Seller;

(c) payment or increase by such Seller of any bonuses, salaries, or other compensation to any Owner, director, officer, or employee or entry into any employment, severance, or similar Contract with any Owner, director, officer, employee, consultant or contractor, each of which is not within the Ordinary Course of Business;

(d) material damage to or material destruction of or loss of any of the Assets, whether or not covered by insurance;

(e) sale (other than sales of inventory in the Ordinary Course of Business), lease, or other disposition of any Asset or mortgage, pledge, or imposition of any Encumbrance on any material asset or property of such Seller, including the sale, lease, or other disposition of any of the Intellectual Property Assets;

(f) event, occurrence or development that has had, or could reasonably be expected to have , individually or in the aggregate, a material adverse effect;

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

(h) loan to (or forgiveness of any loan to), or entry into any other transaction with, any directors, Owners, officers or employees of the Business, other than as set forth on Schedule 3.12(h) of the Disclosure Schedule;

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

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

3.13 Contracts; No Defaults .

(a) Schedule 3.13(a) of the Disclosure Schedule contains a complete and accurate list, and each Seller has delivered to Buyer true and complete copies of (each, a “ Material Contrac t”):

(i) each Seller Contract that involves performance of services or delivery of goods or materials by Seller of an amount or value in excess of $10,000;

(ii) each Seller Contract that involves performance of services or delivery of goods or materials to Seller of an amount or value in excess of $10,000;

(iii) each Seller Contract that was not entered into in the ordinary course of business consistent with past practices and that involves expenditures or receipts of the Seller in excess of $10,000;

(iv) each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Seller Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property;

(v) each licensing agreement or other Seller Contract with respect to patents, trademarks, copyrights, domain names or other intellectual property, including agreements with current or former employees, consultants, or contractors regarding the appropriation or the non-disclosure of any of the Intellectual Property Assets;

(vi) each collective bargaining agreement and other Seller Contract to or with any labor union or other employee representative of a group of employees;

(vii) each joint venture, partnership, and other Seller Contract involving a sharing of profits, losses, costs, or liabilities by Seller with any other Person;

(viii) each Seller Contract containing covenants that in any way purport to restrict the business activity of Seller or limit the freedom of Seller to engage in any line of business or to compete with any Person;

(ix) each Seller Contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods;

(x) each power of attorney that is currently effective and outstanding;

(xi) each confidentiality agreement;

(xii) each Seller Contract entered into other than in the ordinary course of business consistent with past practices that contains or provides for an express undertaking by Seller to be responsible for consequential damages;

(xiii) each Seller Contract for capital expenditures in excess of $10,000;

(xiv) each written warranty, guaranty, and or other similar undertaking with respect to contractual performance extended by the Company other than in the ordinary course of business consistent with past practices; and each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

Schedule 3.13(a ) of the Disclosure Schedule sets forth reasonably complete details concerning such Seller Contracts, including the parties to the Seller Contracts and the amount of the remaining commitment of the Company under the Seller Contracts.

(b) Each Seller Contract identified or required to be identified in Schedule 3.13(a ) of the Disclosure Schedule is in full force and effect and is valid and enforceable in accordance with its terms.

(c) Each Customer Contract:

i. conforms to Seller’s standard form customer or reseller agreement, as applicable, true and complete copies of which are set forth in Schedule 3.13(c)(i ) of the Disclosure Schedule;

ii. is in full force and effect and is valid and enforceable in accordance with its terms;

iii. will not be breached as a result of the execution and delivery of this Agreement, the assignment of the Assets to Buyer, or consummation of the Contemplated Transactions.

(d) Except as set forth in Schedule 3.13(d) of the Disclosure Schedule:

i. no Owners nor any Related Person of the Owners has, or may acquire, any rights under any Contract that relates to the Business, or any of the Assets; and

ii. no officer, director, Owner, agent, employee, consultant, or contractor of any Seller is bound by any Contract that purports to limit the ability of such officer, director, Owner, agent, employee, consultant, or contractor to (A) engage in or continue any conduct, activity, or practice relating to the business of such Seller, or (B) assign to such Seller or to any other Person any rights to any invention, improvement, or discovery.

(e) Except as set forth in Schedule 3.13(e) of the Disclosure Schedule:

i. Each Seller is, and at all times has been, in compliance with all applicable terms and requirements of each Seller Contract; and

ii. No Seller nor any Owner has given to or received from any other Person, at any time, any written notice or other written communication regarding any actual, alleged, possible, or potential violation or breach of, or default under, any Seller Contract and no event has occurred that, with notice or lapse of time, would constitute a breach or default under any Seller Contract.

(f) The Seller Contracts relating to the sale, design, manufacture, or provision of products or services by each Seller have been entered into in the Ordinary Course of Business and have been entered into without the commission of any act alone or in concert with any other Person, or any consideration having been paid or promised, that is or would be in violation of any Legal Requirement.

3.14 Insurance . Each Seller has delivered to Buyer: (a) true and complete copies of all policies of insurance to which such Seller is a party or under which such Seller, or any manager or member of such Seller, is or has been covered at any time which relate to such Seller; and (b) a statement describing the loss experience for all claims made under any insurance policies, including the number and aggregate cost of such claims for the past three (3) years.

3.15 Intellectual Property .

(a) The term “Intellectual Property Assets” means, collectively:

i. All business names, domain names, trade names, registered and unregistered trademarks, service marks, and applications and common law rights and goodwill in the foregoing (collectively, “ Marks ”), owned, licensed or otherwise used by any Seller in the Business;

ii. all patents, patent applications, and inventions and discoveries that may be patentable (collectively, “ Patents ”), in each case owned, licensed or otherwise used by any Seller;

iii. all original works of authorship (whether or not copyrightable or published); all software of any type developed by or for any Seller, including computer programs, applications, mobile apps, middleware, libraries, tools, firmware, software implementations of algorithms, models and methodologies, whether in source code, object code, executable code or other form, databases and compilations, including any and all data and collections of data, descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing and all documentation, including user manuals and training materials related to any of the foregoing (collectively, “ Software ”); and, all rights in mask works owned, licensed or otherwise used by any Seller (collectively, “ Copyrights ”), owned, licensed or otherwise used by any Seller;

iv. all social media and social networking assets, including, but not limited to, accounts, handles, profiles, channels, pages, websites, content and associated followers, friends and other connections and links of Facebook, Twitter, YouTube, Pinterest, LinkedIn and all other social media and social networking websites, services and accounts; wikis and other collaborative content websites (e.g., Wikipedia), online messaging and bulletin boards, blogs, microblogs, Google+ accounts, photo, video and other content-sharing websites, virtual game or social worlds; and email addresses and domain names used as part of email addresses, all of the foregoing as used in connection with the Business (collectively, “ Social Media Accounts ”);

v. all account names, user names, nicknames, display names, handles and other identifiers registered, used or held for use by or for any Seller, as well as all login passwords and other credentials for the Social Media Accounts (collectively, “ Social Media Account Names ”), and

vi. all scientific, financial, technical or nontechnical data, designs, drawings, blueprints, system architecture, patterns, processes, formulas, devices, know-how, negative know-how, methods, techniques, compilations, Software, drawings, financial and product plans, or lists of actual or potential customers or suppliers, relating to the Business, which (i) derives economic value, actual or potential, from not being generally known to, and not readily ascertainable by proper means by, other persons and (ii) is the subject of efforts by any Seller that are reasonable under the circumstances to maintain its secrecy (collectively, “ Trade Secrets ”), in each case which is owned, used, or licensed by any Seller as licensee or licensor.

(b) Each Seller has delivered to Buyer correct and complete copies of all available written documentation evidencing ownership of each item of Intellectual Property Assets used by each Seller in operation of the Business. Schedule 3.15(b) of the Disclosure Schedule contains a complete and accurate list and summary description, including any royalties paid or received by each Seller, of all Contracts of each Seller relating to the Intellectual Property Assets to which Seller is a party or by which Seller is bound, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $1,000 under which Seller is the licensee. There are no outstanding and no Threatened disputes or disagreements with respect to any such Contract.

(c) Except as set forth in Schedule 3.15(c) of the Disclosure Schedule:

i. The Intellectual Property Assets are all those necessary for the professional, orderly operation of the Business as they are currently conducted;

ii. Sellers are the owners of all rights, title, and interest in and to each of the Intellectual Property Assets, free and clear of all Encumbrances, and has the right to use all of the Intellectual Property Assets without payment to a third party;

iii. All former and current employees of Sellers have executed written Contracts with Sellers that assign to Sellers all rights to any inventions, improvements, discoveries, or information relating to the business of Sellers; and

iv. To the Knowledge of the Sellers, no employee of Sellers has entered into any Contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than Sellers.

(d) Sellers do not own or license any Patents. None of the products manufactured or sold, nor any process or know-how used, by Sellers is alleged to infringe any patent or other proprietary right of any other Person, or to the Knowledge of the Sellers, infringes any patent or other proprietary right of any other Person.

(e) Sellers have not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any other Person's intellectual property, and Sellers have not ever received any written notice alleging any interference, infringement, misappropriation, violation or conflict with any other Person's intellectual property (including any claim that Sellers must license or refrain from using any other Person's intellectual property). To the Knowledge of the Sellers, no third Person has any intellectual property that interferes or would be likely to interfere with Buyer's use of any of the Intellectual Property Assets transferred under this Agreement. To the Knowledge of the Sellers, Buyer will not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any intellectual property rights of any other Person as a result of the continued operation of the Business as currently conducted and as currently proposed to be conducted . No other Person has interfered with, infringed upon, misappropriated, or otherwise come into conflict with the Intellectual Property Assets.

(f) Schedule 3.15(f) of the Disclosure Schedule lists all Software developed by or for Sellers in the operation of the Business. Schedule 3.15(f) of the Disclosure Schedule lists all originators, developers, programmers (other than employees), who have written any portion of or contributed to any development of such Software (collectively, the “ Developers” ). Schedule 3.15(f) of the Disclosure Schedule contains a complete and accurate list of all code incorporated into such Software that was not specifically written or developed for use in such Software (the " Preexisting Code "). This list includes code from toolkits, from preexisting code written by the Developers and/or from third-party software used to write or otherwise contribute to the development of any such Software. After Closing, Buyer will have at least a non-exclusive right to use any such Preexisting Code and, to the Knowledge of the Sellers, there are no third-party rights to such Preexisting Code that will materially interfere with Buyer's ownership and use of such Software.

(g) To the Knowledge of Sellers, none of the Software includes any Publicly Available Software and Sellers have never used Publicly Available Software in whole or in part in the development of any part of the Software in a manner that may subject the Software, in whole or in part, to all or part of the license obligations of any Publicly Available Software. “ Publicly Available Software ” means each of (i) any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software (e.g., Linux), or similar licensing and distribution models; and (ii) any software that requires as a condition of use, modification, and/or distribution of such software that such software or other software incorporated into, derived from, or distributed with such software (1) be disclosed or distributed in source code form; (2) be licensed for the purpose of making derivative works; or (3) be redistributable at no or minimal charge. Publicly Available Software includes, without limitation, software licensed or distributed under any of the following licenses or distribution models similar to any of the following: (t) GNU General Public License (GPL) or Lesser/Library GPL (LGPL), (u) the Artistic License (e.g., PERL), (v) the Mozilla Public License, (w) the Netscape Public License, (x) the Sun Community Source License (SCSL), (y) the Sun Industry Source License (SISL), and (z) the Apache Server License.

(h) Schedule 3.15(h) of Disclosure Schedule contains a complete and accurate list and summary description of all Social Media Accounts and all Social Media Account Names.

i. None of the Social Media Account Names infringes or otherwise violates any trademark rights or other intellectual property rights of any third Person.

ii. All use of the Social Media Accounts complies with and has complied with (1) all terms and conditions, terms of use, terms of service and other agreements and contracts applicable to such Social Media Accounts, and (2) applicable law and regulation.

iii. Sellers have implemented and enforces an employee social media policy that:

iv. Each of each Seller’s employees and contractors has agreed in his or her company agreement to comply with such social media policy.

v. To the Knowledge of the Sellers, the Contemplated transactions will not result in the loss or impairment of the Buyer’s ability to use, operate or maintain any Social Media Account or Social Media Account Name, or in the breach of any terms of use, terms of service or other agreements or contracts applicable to such Social Media Accounts.

(i) Schedule 3.15(i) of Disclosure Schedule contains a complete and accurate list and summary description of all Marks.

i. Sellers are the owners of all right, title, and interest in and to each of the Marks, free and clear of all Encumbrances and other adverse claims;

ii. All Marks that have been registered with any Governmental Body are currently in compliance with all Legal Requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or renewals, responses, required filings or other actions falling due within 90 days after the Closing Date, and all assignments, transfers, security interests, name changes and other recordable events regarding the Marks have been recorded with all applicable patent, trademark and copyright offices;

iii. No Mark has been or is now opposed to or challenged by any third party and no such action is Threatened with the respect to any of the Marks;

iv. To the Knowledge of the Sellers, there is no potentially interfering trademark or trademark application of any third party domestically or internationally;

v. No Mark has been challenged or threatened in any way, and to the Knowledge of the Sellers, no Mark is infringed. None of the Marks used by Seller infringes, or is alleged to infringe, any trade name, trademark, or service mark of any third party domestically or internationally; and

vi. All products and materials containing a registered Mark bear the proper federal registration notice where permitted by law.

(j) Schedule 3.15(j) of the Disclosure Schedule contains a complete and accurate list and summary description of all Copyrights.

i. Sellers are the owners of all right, title, and interest in and to each of its Copyrights, free and clear of all Encumbrances;

ii. No Copyright has been challenged or threatened in any way, nor, to the Knowledge of the Seller, infringed upon. None of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party; and

iii. All works protected by the Copyrights that are disseminated to third parties have been marked with the proper copyright notice.

(k) Except as set forth in Schedule 3.15(k) of the Disclosure Schedule:

i. The documentation relating to each Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual;

ii. All current, and to the Knowledge of Sellers, former employees, consultants, or contractors of Sellers or its Affiliates who have participated in the creation or development of any Intellectual Property Asset which is necessary or material to the operation of the Business in the ordinary course created or developed by, for or under the direction or supervision of Seller (including the Intellectual Property Assets set forth in Schedule 3.15(a) of the Disclosure Schedule) have executed and delivered to Seller, a valid and enforceable agreement providing for the non-disclosure by such current or former employee, consultant, or contractor of all Trade Secrets.

iii. Sellers have taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets; and

iv. Sellers have good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature, and have not been used, divulged, or appropriated either for the benefit of any Person (other than Sellers) or to the detriment of Seller. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way.

(l) Except at set forth in Schedule 3.15(l) of the Disclosure Schedule, Sellers have not entered into any Assigned Contract which could result in liability to Buyer or its Affiliates of in excess of $100,000 to indemnify, defend or hold harmless any person or entity against any claim of infringement, misappropriation or violation or unlawful use of any Intellectual Property Asset in respect of the Business.

(m) There are no written consents, settlements, judgments, injunctions, decrees, awards, stipulations, orders or similar obligations to which Sellers or its Affiliates is a party, or to which Sellers or its Affiliates is otherwise bound, in each case that relate to the Intellectual Property Asset or the intellectual property rights of another Person or entity, that will materially restrict the rights of Buyer to use, transfer, license, enforce or otherwise exploit any Intellectual Property Asset or that will materially restrict the conduct of the Business.

(n) None of the Intellectual Property Assets has been developed by or for Sellers with the assistance or use of any funding from third parties, including, funding from any local, state or federal government or governmental authority of the United States, or any foreign government or governmental authority.

3.16 Information Technology.

(a) Section 3.16(a) of the Disclosure Schedule sets out a true, correct and complete list of all material Information Technology owned, licensed, used or held for use in connection with the Business (other than with respect to personal computers and printers) and all Material Contracts in effect as of the date hereof relating in any material respect to the maintenance and support, security, disaster recovery management and utilization of such Information Technology.

(b) Sellers own, lease, licenses or has other contractual rights to use (pursuant to valid and enforceable lease, license or other contractual agreements) all Information Technology, networking systems, telecommunication systems, and documentation (including, but not limited to, a written disaster recovery and business continuity plan and procedures) relating to any of the foregoing, that are used in or necessary for the operations of the Business as currently conducted (the “ Business IT ”). Seller will be, at Closing, in compliance in all material respects with its material license agreements for all Business IT licensed or leased by Seller and Seller has not received written notice from a vendor or licensor that Seller is in violation of any such license or lease. Seller maintains comprehensive and clear documentation regarding Information Technology, their methods of operation, and their support and maintenance. The Information Technology is adequate for the operation of the Business as currently conducted. Each system comprising the Information Technology is adequate for its intended functions, operations and purposes in all material respects, and there has been no material malfunction of any Information Technology that has not been resolved and corrected. Seller has taken reasonable precautions in accordance with industry practice to preserve the availability, security and integrity of the Information Technology and the data and information stored on the Information Technology, and, to the Knowledge of Seller, the Information Technology has not been compromised or breached. Seller has disaster recovery facilities in place for its primary operations Software applications and either disaster recovery or failover facilities in place for the applications needed to process customer orders that are appropriate, in accordance with industry practice, to minimize the disruption of the Business in the event of any failure of all or part of the Information Technology. Seller has regularly tested such plans and facilities, and has written disaster recovery procedures in place.

(c) Since the Balance Sheet Date, no notice of a material defect or default has been sent or received by Sellers, in respect of any license or lease under which the Sellers received material Information Technology, that remains unresolved. The use of any Information Technology by Sellers does not, in any material respect, exceed the scope of the rights granted to the Sellers with respect thereto, including any applicable limitation upon usage, type or number of licenses, users, hardware, time, service or systems.

(d) Each of the domain names set forth in Schedule 2.1(a)(ii) of the Disclosure Schedule is validly registered to one of the Sellers and there are no other domain names which are or have been used in connection with the Business. Each such domain name is free and clear of all Encumbrances and the registration of each such domain name is in full force and effect and in material compliance with all applicable domain name registration requirements. None of the registrations or uses of the domain names have been materially disturbed or placed “on hold” and the Sellers have not received notice of any claim asserted against Sellers adverse to its rights to such domain names.

3.17 Certain Payments. None of any Seller, any Owner, director or officer of any Seller, or any, agent, employee or any other Person associated with or acting for or on behalf of, any Seller, has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of any Seller or any Affiliate of Seller, or (iv) in violation of any Legal Requirement; or (b) established or maintained any fund or asset that has not been recorded in the books and records of any Seller.

3.18 Solvency .

(a) No Seller is now insolvent and no Seller will be rendered insolvent by any of the Contemplated Transactions. As used in this Section, “insolvent” means that the sum of the debts and other probable liabilities of Sellers exceeds the present fair saleable value of Sellers’ assets.

(b) Immediately after giving effect to the consummation of the Contemplated Transactions: (i) Sellers will be able to pay its liabilities as they become due in the usual course of its business; (ii) Sellers will not have unreasonably small capital with which to conduct its present business; (iii) Sellers will have assets (calculated at fair market value) that exceed its liabilities; and (iv) taking into account all pending and threatened litigation, final judgments against Sellers in actions for money damages are not reasonably anticipated to be rendered at a time when, or in amounts such that, Sellers will be unable to satisfy any such judgments promptly in accordance with their terms (taking into account the maximum probable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered) as well as all other obligations of Sellers. The cash available to Sellers, after taking into account all other anticipated uses of the cash, will be sufficient to pay all such debts and judgments promptly in accordance with their terms.

3.19 Environmental Matters .

(a) Any property or facility now or previously owned or leased by Sellers: (i) is in full compliance with all requirements of all environmental laws; (ii) is not the subject of any investigation or administrative proceeding evaluating whether any remedial action is necessary to respond to a release or contamination; (iii) has not received nor are subject to any notice advising as to potential responsibility for response costs to a release of contaminants; and (iv) does not have any underground storage tanks of any type.

(b) Sellers have obtained all Governmental Authorization which are required under any environmental laws and is in full compliance therewith.

3.20 Disclosure .

(a) No representation or warranty of any Seller or Owners in this Agreement and no statement in the Disclosure Schedule omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading.

(b) There is no fact known to any Seller or Owners that has specific application to any Seller that materially adversely affects the Assets, the Business, prospects, financial condition, or results of operations of any Seller that has not been set forth in this Agreement or the Disclosure Schedule.

3.21 Brokers or Finders . Neither Sellers nor Owners have any obligation or liability, contingent or otherwise, for brokerage or finders’ fees, agents’ commissions, or any other similar payment in connection with this Agreement.

3.22 Employment Matters .

(a) Schedule ‎3.22(a) contains a complete and accurate list of the following information for each employee, director, independent contractor, consultant and agent of each Seller, including each employee on leave of absence or layoff status: employer; name; job title; date of hiring or engagement; date of commencement of employment or engagement; current compensation paid or payable; sick and vacation leave that is accrued but unused; active or inactive status (including type of leave, if any); employment status (i.e., full-time, part-time or temporary); any bonuses or other commissions reasonably likely to be paid for the current calendar year; and service credited for purposes of vesting and eligibility to participate under any Employee Benefit Plan, or any other employee or director benefit plan.

(b) Schedule ‎3.22(b) contains a complete and accurate list of the following information for each retired employee or director of each Seller, or their dependents, receiving benefits or scheduled to receive benefits in the future: name; pension benefits; pension option election; retiree medical insurance coverage; retiree life insurance coverage; and other benefits.

(c) Schedule ‎3.22(c) states the number of employees terminated by each Seller since January 1, 2015, and contains a complete and accurate list of the following information for each employee of each Seller who has been terminated or laid off, or whose hours of work have been reduced by more than fifty percent (50%) by any Seller, in the six (6) months prior to the Execution Date: (i) the date of such termination, layoff or reduction in hours; (ii) the reason for such termination, layoff or reduction in hours; and (iii) the location to which the employee was assigned.

(d) Each Seller has not violated the Worker Adjustment and Retraining Notification Act (the “ WARN Act ”) or any similar state or local Law.

(e) To each Seller’s Knowledge, no officer, director, agent, employee, consultant, or contractor of such Seller is bound by any Contract that purports to limit the ability of such officer, director, agent, employee, consultant, or contractor (i) to engage in or continue or perform any conduct, activity, duties or practice relating to the Business or (ii) to assign to such Seller or to any other Person any rights to any invention, improvement, or discovery. No former or current employee of Party is a party to, or is otherwise bound by, any Contract that in any way adversely affected, affects, or will affect the ability of Sellers or Buyer to conduct the Business as heretofore carried on by Sellers.

(f) There are no collective bargaining Contracts that cover any of the employees of any Seller or any of their Affiliates or to which any Seller or any of their Affiliates is a party. There has not been, there is not pending or existing, and, to the Knowledge of each Seller, there is not threatened, any strike, slowdown, picketing, work stoppage, employee grievance process, organizational activity, or other labor dispute involving any of the employees of any Seller or any of their Affiliates. There has not been, and there is not pending or, to the Knowledge of any Seller, threatened against or affecting any Seller or any of their Affiliates any action relating to the alleged violation of any law pertaining to labor relations or employment matters, including any charge or complaint filed with the National Labor Relations Board or any comparable Governmental Body, in any case with respect to any of the employees of any Seller or any of their Affiliates.

(g) Each Seller has no Knowledge of any organizational effort currently being made or Threatened by or on behalf of any labor union with respect to any employee of any Seller.

(h) With respect to the employees of each Seller, each Seller is (i) in compliance in all material respects with all laws respecting employment, employment practices, equal employment opportunity, nondiscrimination, sexual harassment, terms, conditions and classifications of employment, employee safety and health, immigration status and wages and hours, (ii) not liable for any arrears of wages, severance pay or any Taxes or any penalty for failure to comply with any of the foregoing (other than any arrearages in wages for the current payment cycle for employees), and (iii) not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Body, with respect to unemployment compensation benefits, social security or other benefits or obligations for employees. There are no actions, grievances, investigations, suits, claims, charges or administrative matters pending, or, to the Knowledge of any Seller, threatened against any Seller relating to any employee of any Seller.

(i) Except as set forth on Schedule 3.22(i), to the Knowledge of each Seller, no employee of any Seller (i) intends to terminate his or her employment or engagement with the Seller or any of its Affiliates (other than as required pursuant to this Agreement), (ii) has received an offer to join a business that may be competitive with the Business or (iii) is a party to or bound by any confidentiality agreement, noncompetition agreement or other Contract (with any other Person) that may have an adverse effect on: (A) the performance by such individual of any of his or her duties or responsibilities as an employee of the Seller or (B) the Business.

(j) Schedule 3.22(j) contains a complete and accurate list of (i) all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance, pension, profit-sharing, performance, vacation, retention, disability, hospitalization, medical, life insurance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements, to which any Seller is a party, with respect to which any Seller has any obligation which are maintained, contributed to or sponsored by such Seller for the benefit of any current or former employee of such Seller, (ii) each employee benefit plan for which any Seller could incur liability under Section 4069 of ERISA in the event such plan has been or were to be terminated, (iii) any plan in respect of which any Seller could incur liability under Section 4212(c) of ERISA and (iv) any contracts, arrangements or understandings between any Seller or any Affiliate of Seller and any employee of any Seller (collectively, the “Plans”); provided, however, that “Plan” does not include any Contract or plan of any Seller to pay any retention or stay bonus which will be satisfied before the Closing or retained by any Seller on and after the Closing. Each Plan is in writing, and the Seller has made available to Buyer a true and complete copy of each Plan.

(k) Each Plan that is intended to be qualified under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service (the “IRS”) with respect to the most recent Cycle E determination letter filing period or has timely applied to the IRS for such a letter, and, to Sellers’ Knowledge, no fact or event has occurred since the date of such determination letter or letters from the IRS that is reasonably expected to adversely affect the qualified status of any such Plan.

3.23 Taxes .

(a) Each Seller has filed all Tax Returns that it was required to file under applicable Legal Requirements. All such Tax Returns were accurate, correct, and complete in all material respects and accurately reflect the facts regarding the income, business, assets, operations, activities, status, or other matters of each of the respective entities or any other information required to be shown thereon. All Taxes each Seller owes (whether or not shown on any Tax Return) have been paid. Each Seller is not currently the beneficiary of any extension of time within which to file any Tax Return. No Governmental Body has Threatened or made a claim in writing or as to which any Seller or any Owner has Knowledge in a jurisdiction where any Seller does not file Tax Returns that it is or may be subject to Taxation by that jurisdiction. There are no Encumbrances on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Tax.

(b) Each Seller has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owed to any employee, independent contractor, creditor, holder of its Equity Interests, or other third party.

(c) There is no Threatened assessment of any additional Taxes for any period for which Tax Returns have been filed. There is no claim or Proceeding concerning any Tax Liability of any Seller either (i) claimed or raised in writing, or (ii) as to which any Seller or any Owner has Knowledge. Schedule ‎3.23 lists all Tax Returns filed with respect to each Seller for taxable periods ended on or after October 9, 2014, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Each Seller has delivered to Buyer correct and complete copies of all Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by each Seller since October 9, 2014.

(d) Each Seller has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(e) Each Seller has not been a member of an affiliated group filing a consolidated federal income Tax Return, other than a group of which Owner is the common parent.

3.24 Customers and Suppliers . Schedule 3.24 of the Disclosure Schedule lists each Seller’s (a) 20 largest customers in terms of sales during the year ended December 31, 2015 and states the approximate total sales by Seller to each such customer during such period, and (b) 10 largest suppliers during the year ended December 31, 2015 . Except as set forth in Schedule 3.24 , no Seller nor any Owner has received notice of termination or an intention to terminate the relationship with Seller from any customer or supplier.

3.25 Permits . Each Seller possesses all Permits required to be obtained for operation of the Business, other than those Permits which the lack of possession thereof would not result in a material adverse effect on the Business. Schedule 3.25 of the Disclosure Schedule sets forth a list of all such Permits. Except as set forth in Schedule 3.25 of the Disclosure Schedule, with respect to each such Permit: (i) it is valid, subsisting and in full force and effect; (ii) there are no violations of such Permit that would result in a termination of such Permit; (iii) Seller has not received notice that such Permit will not be renewed; and (iv) the Transactions will not adversely affect the validity of such Permit or cause a cancellation of or otherwise adversely affect such Permit.

3.26 Privacy; Security .

(a) Except as set forth in Schedule 3.26 of the Seller Disclosure Schedule, each Seller has complied with any publicly posted privacy policy posted on any websites used in connection with the Business. No material claims or controversies have arisen regarding such privacy policies. During the two (2) year period immediately preceding the Closing, each Seller (i) has complied in all material respects with Legal Requirements in the United States applicable to privacy and security commitments for personally identifiable information relating to users and subscribers of the products and services used in connection with the Business and (ii) has not received any inquiries from the Federal Trade Commission or any other Governmental Authority regarding an actual or alleged failure to comply with such Legal Requirements.

(b) Each Seller has taken all commercially reasonable steps and implemented reasonable security measures to protect the Assets used in the conduct of the Business prior to Closing from unauthorized access or use. To the Knowledge of each Seller, there have been no security breaches of, or other instances of unauthorized access to, the Assets in the two (2) years immediately preceding the Closing. Each Seller has implemented reasonable backup and disaster recovery technology for the Assets consistent with industry practices.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Sellers and Owners as follows:

4.1 Organization and Good Standing . Buyer is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation.

4.2 Authority; No Conflict .

(a) This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Upon the execution and delivery by Buyer of each other agreement to be executed or delivered by Buyer at the Closing (collectively, the “ Buyer’s Closing Documents ”), each of Buyer’s Closing Documents will constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and by general principles of equity. Buyer has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Buyer’s Closing Documents to which it is a party and to perform its obligations under this Agreement and the Buyer’s Closing Documents, and such action has been duly authorized by all necessary action by Buyer’s shareholders and board of directors.

(b) Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer will give any Person the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions by Buyer, nor will give any Person the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions pursuant to: (i) any provision of Buyer’s Organizational Documents; (ii) any resolution adopted by the board of directors or the stockholders of Buyer; (iii) any Contract to which Buyer is a party or by which Buyer may be bound.

Buyer is not and will not be required to obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

4.3 Certain Proceedings . There is no pending Proceeding that has been commenced against Buyer and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To Buyer’s Knowledge, no such Proceeding has been Threatened.

4.4 Brokers or Finders . Buyer has incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees, agents’ commissions, or any other similar payment in connection with this Agreement.

4.5 No Other Representations or Warranties . The Parties each acknowledge that the representations and warranties of each Party contained in this Agreement (including the Disclosure Schedule) constitute the sole and exclusive representations and warranties to of such Party in connection with this Agreement and the Contemplated Transactions.

ARTICLE V
INDEMNIFICATION; REMEDIES

5.1 Survival . All representations and warranties in this Agreement, the Disclosure Schedule, any supplements to the Disclosure Schedule and any certificate or document delivered pursuant to this Agreement shall survive the Closing and the consummation of the Contemplated Transactions and continue in full force and effect for one (1) year thereafter; provided, however, that the representations and warranties in Sections 3.1, 3.2, 3.7, 3.19, 3.22, and 3.23 (each, a “ Fundamental Representation ”) shall continue in full force and effect until thirty (30) days after the applicable statute of limitations relating to such representations and warranties has expired. The covenants and other obligations in this Agreement, the Disclosure Schedule, any supplements to the Disclosure Schedule and any certificate or document delivered pursuant to this Agreement shall survive the Closing and the consummation of the Contemplated Transactions. The waiver of any condition based upon the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and obligations.

5.2 Indemnification and Reimbursement by Sellers and Owners . Each Seller and each Owner, jointly and severally, will indemnify and hold harmless Buyer and its Representatives, shareholders, subsidiaries and Related Persons (collectively, the “ Indemnified Persons ”), and will reimburse the Indemnified Persons for any loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees and expenses and other incidental or consequential damages) or diminution of value, whether or not involving a Third-Party Claim (collectively, “ Damages ”), arising from or in connection with:

(a) any Breach of any representation or warranty made by any Seller or any Owner in (i) this Agreement, (ii) the Disclosure Schedule, (iii) each Seller’s Secretary Certificate and each Seller’s Closing Documents, (iv) any transfer instrument, or (v) any other certificate, document, writing or instrument delivered by any Seller or any Owner pursuant to this Agreement;

(b) any Breach of any covenant or obligation of any Seller or any Owner in this Agreement, including, without limitation, the Transition Services Agreement, or in any other certificate, document, writing or instrument delivered by any Seller or any Owner pursuant to this Agreement;

(c) any Pre-Closing Tax or other liability arising out of the ownership of the Assets or operation of the Business prior to the Closing Date other than the Assumed Liabilities;

(d) any product sold or any services provided by, any Seller, in whole or in part, prior to the Closing Date;

(e) any Seller Benefit Plan established or maintained by any Seller; or

(f) any Retained Liabilities.

Each Seller’s and each Owner’s liability with respect to claims under Section 5.2 is limited to an amount which shall not exceed, in the aggregate, the Purchase Price.

5.3 Indemnification and Reimbursement by Buyer . Buyer will indemnify and hold harmless Sellers, Owners and their respective Indemnified Persons, and will reimburse the Indemnified Persons for Damages, to the extent arising from or in connection with:

(a) any Breach of Buyer’s representations and warranties in (i) this Agreement, (ii) any transfer instrument, or (iii) any other certificate, document, writing or instrument delivered by Buyer pursuant to this Agreement;

(b) any Breach of any covenant or obligation of Buyer in this Agreement or in any other certificate, document, writing or instrument delivered by Buyer pursuant to this Agreement; or

(c) any liability arising out of the ownership of, or conditions first occurring with respect to, the Assets following the Closing Date or from the Assumed Liabilities except to the extent caused by any Seller in the performance of such Seller’s obligations under the Transition Services Agreement.

Buyer’s liability with respect to claims under Section 5.3 is limited to an amount which shall not exceed the Purchase Price.

5.4 Indemnification Claim Procedures .

(a) If any Proceeding is commenced in which any Indemnified Person is a party that may give rise to a claim for indemnification against any Indemnitor (an “ Indemnification Claim ”) then such Indemnified Person will promptly give written notice to the Indemnitor together with a copy of the document asserting such claim, if then available to the Indemnified Person. Failure to notify the Indemnitor will not relieve the Indemnitor of any Liability that it may have to the Indemnified Person, except to the extent the defense of such Proceeding is materially and irrevocably prejudiced by the Indemnified Person’s failure to give such notice.

(b) An Indemnitor will have the right to defend against an Indemnification Claim, with counsel of its choice reasonably satisfactory to the Indemnified Person if (i) within 15 days following the receipt of notice of the Indemnification Claim the Indemnitor notifies the Indemnified Person in writing that the Indemnitor will indemnify the Indemnified Person from and against the entirety of any Damages the Indemnified Person may suffer resulting from, relating to, arising out of, or attributable to the Indemnification Claim, (ii) the Indemnitor provides the Indemnified Person with evidence reasonably acceptable to the Indemnified Person that the Indemnitor will have the financial resources to defend against the Indemnification Claim and pay, in cash, all Damages the Indemnified Person may suffer resulting from, relating to, arising out of, or attributable to the Indemnification Claim, (iii)  the Indemnification Claim involves only money Damages and does not seek an injunction or other equitable relief, (iv)  settlement of, or an adverse judgment with respect to, the Indemnification Claim is not in the good faith judgment of the Indemnified Person likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Person, and (v)  the Indemnitor continuously conducts the defense of the Indemnification Claim actively and diligently.

(c) So long as the Indemnitor is conducting the defense of the Indemnification Claim in accordance with Section 5.4(b) , (i) the Indemnified Person may retain separate co-counsel at its sole cost and expense and participate in the defense of the Indemnification Claim, (ii) the Indemnified Person will not consent to the entry of any Order with respect to the Indemnification Claim without the prior written Consent of the Indemnitor (not to be withheld unreasonably), and (iii)  the Indemnitor will not Consent to the entry of any Order with respect to the Indemnification Claim without the prior written Consent of the Indemnified Person (not to be withheld unreasonably, provided that it will not be deemed to be unreasonable for an Indemnified Person to withhold its Consent (A) with respect to any finding of or admission (1) of any Breach of any Law, Order or Permit, (2) of any violation of the rights of any Person, or (3) which Indemnified Person reasonably believes could have a Material Adverse Effect on any other Proceedings to which the Indemnified Person or its Affiliates are party or to which Indemnified Person has a good faith belief it may become party, or (B) if any portion of such Order would not remain sealed if the failure to seal such Order would have a Material Adverse Effect Upon the Indemnified Person.

(d) If any condition in Section 5.4(b) is or becomes unsatisfied, (i) the Indemnified Person may defend against, and consent to the entry of any Order with respect to an Indemnification Claim in any manner it may deem appropriate (and the Indemnified Person need not consult with, or obtain any Consent from, any Indemnitor in connection therewith), (ii) each Indemnitor will jointly and severally be obligated to reimburse the Indemnified Person promptly and periodically for the Damages relating to defending against the Indemnification Claim, and (iii)  each Indemnitor will remain jointly and severally Liable for any Damages the Indemnified Person may suffer relating to the Indemnification Claim to the fullest extent provided in this ARTICLE 5 .

5.5 Indemnification in Case of Strict Liability or Indemnitee Negligence . THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE 5 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.

5.6 Limitations on Indemnification Obligation . Sellers and Owners shall not be liable for indemnification to Buyer under Section 5.2(a) of this Agreement until the aggregate amount of all Indemnification Claims of Buyer under Section 5.2(a) exceeds One Hundred Thousand Dollars ($100,000) (the “ Threshold Amount ”), at which time Buyer shall be entitled to recover the aggregate amount of all Indemnification Claims, including the Threshold Amount. Buyer shall provide the Sellers and Owners with notice of all Indemnification Claims included in the Threshold Amount. The maximum liability of the Sellers under this Agreement for indemnification obligations under Section 5.2(a) shall not exceed twenty five percent (25%) of the Purchase Price (such maximum liability amount, the “ Cap ”). Notwithstanding anything to the contrary in this Agreement, the Threshold Amount and the Cap shall not apply in the event of fraud, intentional misrepresentation or willful and knowing breach of a provision by the indemnifying party, or in the event of a breach of a Fundamental Representation. Without limiting the effect of any other limitation contained in this Article V, for purposes of computing the amount of any Damages incurred by any Indemnified Person under this Article V, there shall be deducted an amount equal to the amount of any amounts the Indemnified Person actually collects from third parties in connection with any Damages for which indemnification is sought.

5.7 Use of Holdback . Any obligation of the Sellers or the Owners under Section 5.2 shall initially be satisfied from the Holdback Amount according to the terms set forth in this Article V and the Escrow Agreement. To the extent the Holdback Amount is insufficient to satisfy an amount payable to Buyer under Section 5.2, each Seller and each Owner shall be jointly and severally responsible for paying the balance to Buyer within fourteen (14) days following written notice from Buyer of such determination. Any of the Holdback Amount remaining and not subject to pending claims as of the Holdback Disbursement Date shall be paid to Sellers as set forth in Section 2.3.

ARTICLE VI
TAX MATTERS

6.1 Tax Matters .

(a) Tax Cooperation and Exchange of Information . From and after the Closing Date, Sellers, Owners and Buyer will cooperate in good faith and render reasonable assistance to the other parties in connection with the filing of Tax Returns, any audit or Proceeding with respect to Taxes (a “ Tax Proceeding ”), or any other Proceeding, in each case relating to the Assets or the Business, as and to the extent reasonably requested by the other parties hereto. Such cooperation shall include (i) the retention and (upon a party's request) the provision of records and information which are reasonably relevant to the preparation of Tax Returns or to any such Proceeding and (ii) making relevant employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Sellers, Owners and Buyer shall (x) retain all books and records with respect to Tax matters pertinent to the Assets relating to any period beginning before the Closing Date until the expiration of all relevant statutes of limitations (and, to the extent notified by a party hereto, any extensions thereof), and abide by all record retention agreements entered into with any Governmental Body with respect to Taxes (with respect to agreements of another party, to the extent notified thereof) and (y) give the other parties to this Agreement reasonable written notice prior to transferring, destroying or discarding any such books and records. Sellers shall control and resolve any Tax Proceeding relating to Taxes for which Sellers would be required to indemnify Buyer hereunder; provided that Sellers shall obtain the consent of Buyer, not to be unreasonably withheld, conditioned or delayed, prior to settling a Tax Proceeding in a manner that could increase Buyer’s Tax liability.

(b) Transfer Taxes . Any Transfer Taxes shall be borne solely by Owners and Sellers. Buyer and Sellers agree to cooperate in the execution and delivery of all instruments and certificates reasonably necessary to minimize the amount of any such Transfer Taxes and to enable the Buyer and/or Sellers to comply with any pre-Closing filing requirements, Sellers bearing the cost and expense thereof.

(c) Tax Apportionment . Except for Transfer Taxes (which are addressed in Section 6.1(b)), all real property Taxes, personal property Taxes and similar ad valorem obligations levied with respect to the Assets for a taxable period that includes (but does not end on) the Closing Date (collectively, the “ Apportioned Obligations ”) shall be apportioned between Sellers and Buyer as of the Closing Date based on the number of days of such taxable period ending prior the Closing Date (“ Pre-Closing Apportioned Period ”) and the number of days of such taxable period beginning on the Closing Date through the end of such taxable period (the “ Post-Closing Apportioned Period ”). Notwithstanding the foregoing, all Taxes based on income, receipts and payments shall be apportioned between Sellers and Buyer based on a “closing of the books” methodology. Sellers shall be liable for the proportionate amount of the Apportioned Obligations that is attributable to the Pre-Closing Apportioned Period (the “ Pre-Closing Apportioned Obligations ”). Buyer shall be liable for the proportionate amount of the Apportioned Obligations that is attributable to the Post-Closing Apportioned Period ("Post-Closing Apportioned Obligations"). To the extent Sellers are responsible hereunder for a Pre-Closing Apportioned Obligation (other than those taken into account in determining the Adjustment Amount) that Buyer is required to pay under applicable Legal Requirements, Sellers shall promptly pay such amount to such Buyer upon such Buyer's request.

ARTICLE VII
GENERAL PROVISIONS

7.1 Expenses . Except as otherwise expressly provided in this Agreement, each Party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and accountants.

7.2 Public Announcements . This Agreement, its negotiation, and any information disclosed relating to the underlying transaction is strictly confidential and subject to the Mutual Nondisclosure Agreement between the Parties dated as of November 23, 2015 (the “ NDA ”). Notwithstanding the aforementioned, upon execution of this Agreement or the Closing, Buyer and the Owner(s) may each issue a press release announcing, or otherwise publicly announce (including by filing a Current Report on Form 8-K or an oral announcement at, for example, an earnings conference call), such execution or Closing subject to the other party being provided a meaningful prior opportunity to review and comment upon such press release or other public announcement. Sellers and Buyer will consult with each other concerning the means by which Sellers’ employees, customers, and suppliers and others having dealings with Sellers will be informed of the Contemplated Transactions, and Buyer will have the right to be present for any such communication.

7.3 Confidentiality . A Party disclosing Confidential Information (“ Disclosing Party ”) is not waiving, and will not be deemed to have waived or diminished, any of its attorney work product protections, attorney-client privileges or similar protections and privileges as a result of disclosing its Confidential Information (including Confidential Information related to pending or threatened litigation) to the other Party (“ Receiving Party ”), regardless of whether the Disclosing Party has asserted, or is or may be entitled to assert, such privileges and protections. The Parties (a) share a common legal and commercial interest in all of the Disclosing Party's Confidential Information that is subject to such privileges and protections; (b) are or may become joint defendants in Proceedings to which the Disclosing Party's Confidential Information covered by such protections and privileges relates; (c) intend that such privileges and protections remain intact should either Party become subject to any actual or threatened Proceeding to which the Disclosing Party's Confidential Information covered by such protections and privileges relates; and (d) intend that after the Closing the Receiving Party shall have the right to assert such protections and privileges. No Receiving Party shall admit, claim or contend, in Proceedings involving either party or otherwise, that any Disclosing Party waived any of its attorney work-product protections, attorney-client privileges or similar protections and privileges with respect to any information, documents or other material not disclosed to a Receiving Party due to the Disclosing Party disclosing its Confidential Information (including Confidential Information related to pending or threatened litigation) to the Receiving Party.

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

7.5 Governing Law; Jurisdiction; Service of Process . Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement and all of the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the Parties agrees that any suit, action or other proceeding it may bring arising out of or relating to this Agreement or any of the transactions contemplated hereby shall be brought in a court of competent jurisdiction in Los Angeles, California, and each Party each irrevocably and unconditionally submits and consents to the exclusive jurisdiction of such courts for the purposes of any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby, and hereby waives the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other proceeding. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.

7.6 Further Assurances . The Parties agree: (a) to furnish upon request to each other such further information; (b) to execute and deliver to each other such other documents; and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. Without limiting the foregoing, in the event Sellers receive any remittance from any account debtors with respect to the Accounts Receivables, Sellers will endorse such remittance to the order of Buyer and forward it to Buyer immediately upon receipt thereof.

7.7 Payment of Retained Liabilities . In addition to payment of Taxes pursuant to Section 6.1, the Sellers will pay, or make adequate provision for the payment, in full of all Liabilities of Sellers that are not Assumed Liabilities. If any such Liabilities are not so paid or provided for, or if Buyer reasonably determines that failure to make any payments will impair Buyer's use or enjoyment of the Assets or conduct of the Business, Buyer may, at any time after the Closing, elect to pay any or all of such Liabilities directly (but will have no obligation to do so) and treat such payment as Damages under this Agreement so that Buyer will be entitled to exercise the remedies available to it under ARTICLE 5 of this Agreement.

7.8 Waiver . The rights and remedies of the Parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law: (a) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given; and (b) no notice to or demand on one Party will be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

7.9 Entire Agreement and Modification . This Agreement, the attached Exhibits and Schedules, supersede all prior agreements between the Parties with respect to its subject matter and constitute (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter except for the NDA, which shall remain in full force and effect with respect to the “Confidential Information” described therein and shall co-exist with this Agreement. This Agreement may not be amended except by a written agreement executed by the Party to be charged with the amendment.

7.10 Disclosure Schedule .

(a) Each disclosure in the Disclosure Schedule, and in any supplement thereto, will be deemed to relate only to the representations and warranties in the Section of the Agreement having the same number as the Part of the Disclosure Schedule in which such disclosure is made and not to any other representation or warranty in this Agreement.

(b) In the event of any inconsistency between the statements in the body of this Agreement and those in the Disclosure Schedule (other than an exception expressly set forth as such in the Disclosure Schedule with respect to a specifically identified representation or warranty), the statements in the body of this Agreement will control.

7.11 Assignments; Successors; No Third-Party Rights . No Party may assign any of its rights under this Agreement without the prior consent of the other Parties, except that Buyer may assign any of its rights under this Agreement to any entity directly or indirectly wholly owned by j2 Global, Inc. This Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the Parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the Parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties to this Agreement and their successors and assigns.

7.12 Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

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

7.14 Time of Essence . With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

7.15 Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

[Signature Page Follows]

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

SCHEDULE I

Definitions

For purposes of this Agreement, the following terms have the meanings specified or referred to in this Schedule I:

“Accounts Receivable” —as defined in Section 3.8.

“Affiliate” means with respect to any Person, any Person which, directly or indirectly, owns or controls, is under common ownership or control with, or is owned or controlled by such Person. A Person shall be deemed to be “controlled by” another Person if such other Person possesses, directly or indirectly, power to direct or cause the direction of the management or policies of such Person or the disposition of its assets or property, whether by stock, equity or other ownership, contract, arrangement or understanding, or otherwise.

“ Agreement ”—as defined in first paragraph of this Agreement.

“Adjustment Amount” —as defined in Section 2.3(c).

“Apportioned Obligations”— as defined in Section 6.1(c).

“ Apportioned Period ”—as defined in Section 6.1(c).

“Appraisal ”—as defined in Section 2.8.

“Assets” —as defined in Section 2.1(a).

“Assigned Contracts” —as defined in Section 2.1(a)iii.

“Assignment and Assumption Agreement” —as defined in Section 2.5(a)ii.

“Assignment of Intellectual Property Assets” —as defined in Section 2.5(a)iii

“Assumed Liabilities” —as defined in Section 2.2(a).

“ Balance Sheet ”—as defined in Section 3.4.

“Bill of Sale” —as defined in Section 2.5(a)i.

“ Breach ”—a “Breach” of a representation, warranty, covenant, obligation, or other provision of this Agreement or any instrument delivered pursuant to this Agreement will be deemed to have occurred if there is or has been (a) any inaccuracy in or breach of, or any failure to perform or comply with, such representation, warranty, covenant, obligation, or other provision, or (b) any claim (by any Person) or other occurrence or circumstance that is or was inconsistent with such representation, warranty, covenant, obligation, or other provision, and the term “Breach” means any such inaccuracy, breach, failure, claim, occurrence, or circumstance.

“Business” —as defined in the introduction of this Agreement.

“ Business IT ” – as defined in Section 3.16(b).

“ Buyer ”—as defined in the first paragraph of this Agreement.

“Buyer’s Closing Documents” —as defined in Section 4.2(a).

“ Closing ”—as defined in Section 2.4.

“ Closing Date ”—as defined in Section 2.4.

“ Closing Date Financial Statements ”—as defined in Section 2.6(b).

“Closing Payment” —as defined in Section 2.3.

“Confidential Information” —as defined in the NDA, modified by adding the following sentence, “Confidential Information shall also include any Confidential Information that was not marked or designated as “Confidential, “Proprietary,” or some similar designation at or prior to the time of disclosure, but which by its nature and the circumstances of its disclosure it would reasonably would be considered as confidential by a reasonable person similarly situated as the receiving party.”

“ Consent ”—any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).

“ Contemplated Transactions ”—all of the transactions contemplated by this Agreement, including: (a) the purchase by Buyer from Sellers of the Business and the Assets; and (b) the performance by Buyer, Owners and Sellers of their respective covenants and obligations under this Agreement, including without limitation, the Transition Services Agreement.

“ Contract ”—any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

“ Copyrights ”—as defined in Section 3.15(a)iii.

“ Current ”—as defined in Section 3.8.

“ Customer Contracts ” —as defined in Section 2.1(a)iii.

“Damages ”—as defined in Section 5.2.

“Developers”— as defined in Section 3.15(f).

“Disclosing Party” —as defined in Section 7.3.

“ Disclosure Schedule ”—the Disclosure Schedule delivered by Sellers to Buyer concurrently with the execution and delivery of this Agreement, a copy of which is attached hereto.

“ Encumbrance ”—any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

“ Equity Interests ”—as defined in Section 3.3.

“Estimated Adjustment Amount” —as defined in Section 2.6(a).

“ Excluded Assets ”—as defined in Section 2.1(b).

“Excluded Contracts” —as defined in Section v.

“Final Adjustment Amount” —as defined in Section 2.6(c).

“Financial Statements” —as defined in Section 3.4.

“Fundamental Representation” —as defined in Section 5.1.

“GAAP” means US generally accepted accounting principles, consistently applied.

“ Governmental Authorization ”—any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

“ Governmental Body ”—any:

“Holdback Amount” —as defined in Section 2.3.

“ Holdback Disbursement Date ”—as defined in Section 2.3.

“ Independent Accountants ”—as defined in Section 2.6(b).

“ Indemnified Persons ”—as defined in Section 5.2.

“ Indemnitor ” – means any Party having any Liability to any Indemnified Person under this Agreement.

“ Intellectual Property Assets ”—as defined in Section 3.15(a).

“Information Technology” – means all computer systems, communication systems, Software and hardware, whether owned, used or licensed.

“ Knowledge ”—an individual will be deemed to have “Knowledge” of a particular fact or other matter if (a) such individual is actually aware of such fact or other matter; or (b) such individual would reasonably be deemed to have as the result of his position and duties on behalf of the representing party. A Person (other than an individual) will be deemed to have “Knowledge” of a particular fact or other matter if any individual who is serving as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter.

“ Legal Requirement ”—any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.

“Material Contract” —as defined in Section 3.13(a).

“Noncompetition Agreements” —as defined in Section 2.5(a)v.

“Marks” —as defined in Section 3.15(a)i.

“ NDA” —as defined in Section 7.2.

“ Noncompetition Agreements ”—as defined in Section 2.5(a)v.

“ Order ”—any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.

“ Ordinary Course of Business ”—an action taken by a Person will be deemed to have been taken in the “Ordinary Course of Business” only if: (a) such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person; (b) such action is not required to be authorized by the board of directors of such Person; and (c) such action is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

“ Organizational Documents ”—(a) the articles of organization and bylaws of a corporation or the equivalent thereof; and (b) any amendment to any of the foregoing.

“Owner” or “Owners”— as defined in the preamble to this Agreement .

“Party” or “Parties” —as defined in the preamble to this Agreement.

“Patents ” —as defined in Section 3.15(a)ii.

“ Permit ” —means any permit, license, certificate, approval, consent, notice, waiver, franchise, registration, filing, accreditation, or other similar authorization required by any Legal Requirement, Governmental Body, or Contract.

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

“ Pre-Closing Taxes ”—(i) all Taxes of the Seller, the Owners or any Affiliates of the foregoing, or for which the Seller, the Owners or any Affiliates of the foregoing is liable, other than Taxes attributable to the Assets or the Business for periods (or portions thereof) ending after the Closing Date (as determined under Section 6.1(c)) for any taxable period; (ii) all Taxes related to the Excluded Assets or Retained Liabilities for any taxable period; (iii) all Taxes relating to the operation of the Business or the Assets or the Assumed Liabilities for any taxable period that ends on or before the Closing Date and, with respect to any taxable period beginning on or before and ending after the Closing Date, for the portion of such taxable period ending on the Closing Date, determined pursuant to Section 6.1(c); and (iv) Conveyance Taxes.

“ Preexisting Code ”—as defined in Section 3.15(f).

“ Prepaid Adjustment ”—as defined in Section 2.3(c).

“ Prepaid Amounts ” – any payment received by Sellers prior to the Closing Date for services (a) that have not been rendered by Sellers as of the Closing Date, and (b) the performance of which will be assumed by Buyer at Closing. For the avoidance of doubt, such amount includes both deferred revenues and unearned revenues.

“Post-Closing Apportioned Period” —as defined in Section 6.1(c).

“Post-Closing Apportioned Period” —as defined in Section 6.1(c).

“Proceeding” —any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“Publicly Available Software” – as defined in Section 3.15(g).

“Purchase Price” —as defined in Section 2.3.

“Purchase Price Allocation ”—as defined in Section 2.8.

“Receivables Adjustment” —as defined in Section 2.3(a).

“Receiving Party” —as defined in Section 7.3.

“ Related Person ”—with respect to a particular individual:

With respect to a specified Person other than an individual:

For purposes of this definition, (i) the “ Family ” of an individual includes (A) the individual, (B) the individual’s spouse and (C) any other natural person who is related to the individual within the first degree, and (ii) “ Material Interest ” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or other voting interests representing at least 5% of the outstanding voting power of a Person or equity securities or other equity interests representing at least 5% of the outstanding equity securities or equity interests in a Person.

“ Representative ”—with respect to a particular Person, any director, officer, employee, agent, consultant, adviser, or other representative of such Person, including legal counsel, accountants, and financial advisers.

“Retained Liabilities” —as defined in Section 2.2(b).

“ Securities Act ” — the Securities Act of 1933, as amended from time to time.

“ Seller ”—as defined in the first paragraph of this Agreement.

“ Seller Contract ” —any Contract (a) under which any Seller has or may acquire any rights, (b) under which any Seller has or may become subject to any obligation or liability, or (c) by which any Seller or any of the assets owned or used by it is or may become bound.

“Seller Benefit Plans” — shall mean “employee pension benefit plans,” as defined in Section 3(2) of ERISA, maintained or contributed to by any Seller or in which any Seller participates or participated and which provides benefits to employees or retired employees of any Seller, including any 401(k) plan.

“Seller’s Closing Documents” —–as defined in Section 3.2(a).

“ Seller’s Secretary’s Certificate ”—as defined in Section 2.5(a)viii.

“ Social Media Accounts ” — as defined in Section 3.15(a)iv.

“ Social Media Account Names ” — as defined in Section 3.15(a)v.

“ Software ” – as defined in Section 3.15(a)(iii).

“ System ” –the infrastructure of computers, servers, routers, hubs, switches, workstations, data communications lines and all other tangible Assets designed and maintained by Seller in order to operate the Business.

“Tax” —means any tax (including any income tax, capital gains tax, value added tax, sales tax, property tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any customs duty), deficiency, or other fee, and any related charge or amount (including any fine, penalty, interest, or addition to tax), imposed, assessed, or collected by or under the authority of any Governmental Body or payable pursuant to any tax-sharing agreement or any other Contract relating to the sharing or payment or any such tax, levy, assessment, tariff, duty, deficiency, or fee.

“ Tax Proceeding ”—as defined in Section 6.1(a).

“ Tax Return ”—any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.

“ Third Party Claim ”—any claim or action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement.

“ Threatened ”—a claim, Proceeding, dispute, action, or other matter will be deemed to have been “Threatened” if any demand or statement has been made (in writing) or any notice has been given (in writing).

“Trade Secrets” —as defined in Section 3.15(a)vi.

“Transfer Taxes” - means any statutory, governmental, federal, state, local, municipal, foreign and other transfer, documentary, real estate transfer, mortgage recording, sales, use, stamp, registration, value-added and other similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred as a result of the sale of the Transferred Assets or the other transactions contemplated by this Agreement or the Ancillary Agreements (and specifically excluding any income, net income or gains Tax).

“Transition Services Agreement” —as defined in Section 2.5(a)vi.

“ WARN Act ”—as defined in Section 3.21(d).

EXHIBIT A

Form of Bill of Sale

1. Sale and Transfer of Assets . For good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, and as contemplated by Section 2.1 of that certain Asset Purchase Agreement dated as of February 17, 2016 (the “ Purchase Agreement ”), to which KeepItSafe, Inc., a Delaware corporation (“ Buyer ”), VaultLogix, LLC, a Delaware limited liability company, Data Protection Services, L.L.C., a Delaware limited liability company, and U.S. Data Security Acquisition, LLC, a Delaware limited liability company (each a “ Seller ”, and collectively “ Sellers ”), and each individual owner of interests in Sellers as set forth on the signature page thereto (each an “ Owner ,” and collectively, the “ Owners” ) are parties, Sellers hereby sell, transfer, assign, convey, grant and deliver to Buyer, effective as of 12:01 a.m. (Pacific Standard Time) on February 17, 2016 (the “ Effective Time ”), all of Sellers’ right, title and interest in and to all of the Assets, including but not limited to the Intellectual Property Assets (as defined in the Purchase Agreement).

2. Further Actions . Each Seller and each Owner covenants and agrees to warrant and defend the sale, transfer, assignment, conveyance, grant and delivery of the Assets hereby made against all persons whomsoever, to take all steps reasonably necessary to establish the record of Buyer’s title to the Assets, including but not limited to the Intellectual Property Assets, and, at the request of Buyer, to execute and deliver further instruments of transfer and assignment and take such other action as Buyer may reasonably request to more effectively transfer and assign to and vest in Buyer each of the Assets, including but not limited to the Intellectual Property Assets, all at the sole cost and expense of Sellers.

3. Limited Power of Attorney . Without limiting Section 2 hereof, each Seller hereby constitutes and appoints Buyer the true and lawful agent and attorney-in-fact of such Seller, with full power of substitution and resubstitution, in whole or in part, in the name and stead of such Seller but on behalf and for the benefit of Buyer and Buyer’s successors and assigns, from time to time:

(a) to demand, receive and collect any and all of the Assets, including but not limited to the Intellectual Property Assets, and to give receipts and releases for and with respect to the same, or any part thereof;

(b) to institute and prosecute, in the name of such Seller or otherwise, any and all proceedings at law, in equity or otherwise, that Buyer or Buyer’s successors and assigns may deem proper in order to collect or reduce to possession any of the Assets, including but not limited to the Intellectual Property Assets, and in order to collect or enforce any claim or right of any kind hereby assigned or transferred, or intended so to be; and

(c) to do all things legally permissible, required or reasonably deemed by Buyer to be required to recover and collect the Assets, including but not limited to the Intellectual Property Assets, and to use such Seller's name in such manner as Buyer may reasonably deem necessary for the collection and recovery of same.

Each Seller hereby declaring that the foregoing powers are coupled with an interest and are and shall be irrevocable by such Seller.

4. Terms of the Purchase Agreement . The terms of the Purchase Agreement, including but not limited to each Seller's representations, warranties, covenants, agreements and indemnities relating to the Assets, including but not limited to the Intellectual Property Assets, are incorporated herein by this reference. Each Seller acknowledges and agrees that the representations, warranties, covenants, agreements and indemnities contained in the Purchase Agreement shall not be superseded hereby but shall remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms hereof, the terms of the Purchase Agreement shall govern.

[ Signature Page Follows ]

IN WITNESS WHEREOF , each Seller has executed and delivered this Bill of Sale as of February 17, 2016.

Signature Page to Bill of Sale

EXHIBIT B

Form of Assignment and Assumption Agreement

This Assignment and Assumption Agreement (this “ Agreement ”) is made and entered into as of February 17, 2016, by and among VaultLogix, LLC, a Delaware limited liability company, Data Protection Services, L.L.C., a Delaware limited liability company, and U.S. Data Security Acquisition, LLC, a Delaware limited liability company (each an “ Assignor ” and collectively, “ Assignors ”), and KeepItSafe, Inc., a Delaware corporation (“ Assignee ”).

WHEREAS, Assignors and Assignee are parties to that certain Asset Purchase Agreement dated as of February 17, 2016 (the “ Purchase Agreement ”), pursuant to which Assignee has purchased the Assets (as defined in the Purchase Agreement); and

WHEREAS, pursuant to the Purchase Agreement, Assignors have agreed to assign certain rights and agreements to Assignee, and Assignee has agreed to assume certain obligations of Assignors, as set forth herein, and this Agreement is contemplated by Section 2.1 of the Purchase Agreement;

NOW, THEREFORE, for and in consideration of 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:

1. Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings for such terms that are set forth in the Purchase Agreement.

2. Assignment and Assumption . Effective as of 12:01 a.m. (Pacific Standard Time) on February 17, 2016 (the “ Effective Time ”), each Assignor hereby assigns, sells, transfers and sets over (collectively, the “ Assignment ”) to Assignee all of such Assignor’s right, title, benefit, privileges and interest in and to, and all of such Assignor’s burdens, obligations and liabilities in connection with, each of the Assumed Liabilities. Assignee hereby accepts the Assignment and assumes and agrees to observe and perform all of the duties, obligations, terms, provisions and covenants, and to pay and discharge all of the liabilities of Assignors to be observed, performed, paid or discharged from and after the Closing, in connection with the Assumed Liabilities. Assignee assumes no Retained Liabilities, and the parties hereto agree that all such Retained Liabilities shall remain the sole responsibility of Assignors.

3. Terms of the Purchase Agreement . The terms of the Purchase Agreement, including but not limited to each Assignor's representations, warranties, covenants, agreements and indemnities relating to the Assumed Liabilities, are incorporated herein by this reference. Each Assignor acknowledges and agrees that the representations, warranties, covenants, agreements and indemnities contained in the Purchase Agreement shall not be superseded hereby but shall remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms hereof, the terms of the Purchase Agreement shall govern.

4. Further Actions . Each of the parties hereto covenants and agrees, at its own expense, to execute and deliver, at the request of the other party hereto, such further instruments of transfer and assignment and to take such other action as such other party may reasonably request to more effectively consummate the assignments and assumptions contemplated by this Agreement.

5. Jurisdiction; Service of Process . Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement and all of the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the Parties agrees that any suit, action or other proceeding it may bring arising out of or relating to this Agreement or any of the transactions contemplated shall be brought in a court of competent jurisdiction in Los Angeles, California, and each Party each irrevocably and unconditionally submits and consents to the exclusive jurisdiction of such courts for the purposes of any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby, and hereby waives the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other proceeding.

6. Assignments; Successors; No Third-Party Rights . No Party hereto may assign any of its rights under this Agreement without the prior consent of the other parties, except that Buyer may assign any of its rights under this Agreement to any Affiliate of j2 Global, Inc. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

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

8. Governing Law . This Agreement will be governed by the laws of the State of Delaware without regard to conflicts of laws principles.

9. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

[Signature Page Follows]

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

 

	ASSIGNEE
	KEEPITSAFE, INC
	By:
	Name:
	Title:
	ASSIGNORS
	VAULTLOGIX, LLC
	By:
	Name:
	Title:
	DATA PROTECTION SERVICES, L.L.C.
	By:
	Name:
	Title:
	U.S. DATA SECURITY ACQUISITION, LLC
	By:
	Name:
	Title:

 

Signature Page to Assignment and Assumption Agreement  

EXHIBIT C

Form of Assignment of Intellectual Property Assets

This ASSIGNMENT OF INTELLECTUAL PROPERTY ASSETS (“ Assignment ”) is made as of February 17, 2016, from VaultLogix, LLC, a Delaware limited liability company, Data Protection Services, L.L.C., a Delaware limited liability company, and U.S. Data Security Acquisition, LLC, a Delaware limited liability company (each an “ Assignor ”, and collectively “ Assignors ”), to KeepItSafe, Inc., a Delaware corporation (“ Assignee ”). Terms not specifically defined herein shall have the meaning ascribed to them in the Asset Purchase Agreement dated as of February 17, 2016, by and among Assignors, Assignee and the Owners (the “ Agreement ”).

RECITALS

WHEREAS, pursuant to the Agreement, each Assignor has agreed to sell to Assignee and Assignee has agreed to buy from each Assignor the Assets, including without limitation the Intellectual Property Assets. Pursuant to the Agreement, each Assignor has agreed to execute such instruments as the Assignee may reasonably request in order to more effectively assign, transfer, grant, convey, assure and confirm to Assignee and its successors and assigns, or to aid and assist in the collection of or reducing to possession by the Assignee of, all of such Intellectual Property Assets.

WHEREAS, in accordance therewith, each Assignor desires to transfer and assign to Assignee, and Assignee desires to accept the transfer and assignment of, all of each Assignor’s worldwide right, title and interest in, to and under each Assignor’s registered and unregistered domestic and foreign Intellectual Property Assets listed on Schedule A annexed hereto and incorporated herein by reference.

NOW, THEREFORE, each Assignor, for and in exchange for the payment of the purchase price set forth in the Agreement, the receipt of which is hereby acknowledged, does hereby transfer and assign to Assignee, and Assignee hereby accepts the transfer and assignment of, all of each Assignor’s worldwide right, title and interest in, to and under the Intellectual Property Assets, together with the goodwill of the business associated therewith and which is symbolized thereby, all rights to sue for infringement of any Intellectual Property Asset, whether arising prior to or subsequent to the date of this Assignment of Intellectual Property Assets, and any and all renewals and extensions thereof that may hereafter be secured under the laws now or hereafter in effect in the United States, Canada and in any other jurisdiction, the same to be held and enjoyed by the said Assignee, their successors and assigns from and after the date hereof as fully and entirely as the same would have been held and enjoyed by the said Assignors had this Assignment of Intellectual Property Assets not been made.

Except to the extent that federal law preempts state law with respect to the matters covered hereby, this Assignment of Intellectual Property Assets shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of laws thereof.

[Signature Page Follows]

IN WITNESS WHEREOF , each Assignors has caused its duly authorized officer to execute and deliver this Assignment of Intellectual Property Assets as of the date first above written.

Signature Page to Assignment of Intellectual Property Assets

Schedule A

Intellectual Property Assets

Advantage backup software Vaultlogix Information portal Vaultlogix Internal billing system

Domain Names

●    Datapreserve.com

●    Datapreservesucks.com

●    Dataprotection.com

●    Mydatapreserve.com

●    Onlineserverbackup.com

●    remotebackup.com

●    remotedata-backup.com

●    remotedata-backup.net

●    singularbackup.com

●    singularbackup.net

●    usdatatrust.com

●    utility-backup.com

●    utilitybackupsolutions.com

●    vaultlogics.com

●    vaultlogics.net

●    vaultlogix.com

●    vaultlogix.co

●    vaultlogix.net

●    vaultlogixsucks.com

●    vaultlogixsucks.net

Social Media Accounts and Social Media Account Names

Software

Business/Trade Names

All content of any website relating to any Seller

EXHIBIT D-1

Form of Noncompetition, Nondisclosure and Nonsolicitation Agreement (Seller)

This Noncompetition, Nondisclosure and Nonsolicitation Agreement (this “ Agreement ”) is made as of February 17, 2016, by and among KeepItSafe, Inc., a Delaware corporation (“ Buyer ”), and ___________ (“ Seller ”).

RECITALS

Concurrently with the execution and delivery of this Agreement, Buyer is purchasing from Seller the Assets pursuant to the terms and conditions of the Asset Purchase Agreement (defined below).

This Agreement is a material part of the consideration bargained for by Buyer in order to enter into the Asset Purchase Agreement and execution and delivery of this Agreement is a condition to Buyer entering into the Asset Purchase Agreement. Seller is willing to enter into this Agreement.

AGREEMENT

The Parties, intending to be legally bound, agree as follows:

1 DEFINITIONS

“ Confidential Information ” is defined in Section 2.

Capitalized terms not expressly defined in this Agreement shall have the meanings ascribed to them in the Asset Purchase Agreement dated as of February 17, 2016, by and among Buyer, Sellers and the Owners (the “ Asset Purchase Agreement ”).

2. ACKNOWLEDGMENTS BY SELLER

Seller has had access to and has become familiar with the following, any and all of which constitute confidential information of Seller pertaining to the Business and Assets (collectively the “ Confidential Information ”): (a) any and all trade secrets, concerning the Business, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing and distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), database technologies, systems, structures architectures processes, improvements, devices, know-how, discoveries, concepts, methods and information of Seller and any other information, however documented, of Seller that is a trade secret; (b) any and all information concerning the Business, including, historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, contractors, agents, suppliers and potential suppliers, personnel training and techniques and materials, purchasing methods and techniques, and technical information, however documented; and (c) any and all notes, analysis, compilations, studies, summaries and other material prepared by or for Seller containing or based, in whole or in part, upon any information included in the foregoing. marketed throughout the world; (c) Seller's Business prior to Closing competes with other businesses that are or could be located in any part of the world; (d) Buyer has required that Seller make the covenants set forth in Sections 3 and 4 of this Agreement as a condition to Buyer’s purchase of the Assets; (e) the provisions of Sections 3 and 4 of this Agreement are reasonable and necessary to protect and preserve Buyer’s interests in and right to the use and operation of the Assets from and after Closing; and (f) Buyer may be irreparably damaged if Seller were to breach the covenants set forth in Sections 3 and 4 of this Agreement.

3.  CONFIDENTIAL INFORMATION

Seller acknowledges and agrees that the protection of the Confidential Information is necessary to protect and preserve the value of the Assets. Therefore, Seller hereby agrees not to disclose to any unauthorized Persons or use for its own account or for the benefit of any third party any Confidential Information without Buyer’s written consent, unless and to the extent that the Confidential Information is or becomes generally known to and available for use by the public other than as a result of Seller’s fault or the fault of any other Person bound by a duty of confidentiality to Buyer or Seller or its members, or disclosure is required by legal process in which case Seller shall provide Buyer with reasonable notice prior to disclosure. Seller agrees to deliver to Buyer at the time of execution of this Agreement, and at any other time Buyer may reasonably request, all documents, memoranda, notes, plans, records, reports and other documentation, models, components, devices or computer software, whether embodied in a disk or in other form (and all copies of all of the foregoing), that contain Confidential Information and any other Confidential Information that Seller may then possess or have under its control.

4. NONCOMPETITION AND NONSOLICITATION

As an inducement for Buyer to enter into the Asset Purchase Agreement and as additional consideration for the consideration to be paid to Seller under the Asset Purchase Agreement, Seller agrees that:

(a) For a period of three (3) years after the Closing excepting such duties required under and in connection with the Transition Services Agreement:

(i) It will not, directly or indirectly, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be associated with or in any manner connected with, or render services or advice or other aid to, or guarantee any obligation of, any Person engaged in or planning to become engaged in a business that offers or is affiliated with a business that offers the following services offered by the Business on the date of this Agreement: online data backup, anywhere within the world, provided, however, that Seller may purchase or otherwise acquire up to (but not more than) one percent of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934. Seller agrees that this covenant is reasonable with respect to its duration, geographical area and scope. Despite the foregoing, Seller’s provision of services, aid, assistance or advice to an entity or a division or Affiliate of an entity that competes with the Business shall not be a violation hereof so long as Seller does not provide, directly or indirectly, any services, aid, assistance or advice to such entity or division or Affiliate of such entity with respect to such competing Business.

(ii) Seller agrees not to, directly or indirectly, induce or attempt to induce any customer, supplier, licensee or other Person to cease doing business with Buyer or in any way interfere with the relationship between any such customer, supplier, licensee or other business entity and Buyer; provided however, that the foregoing restriction shall not apply to general solicitation or posting on the internet which are not specifically directed at such employees.

(iii) Seller agrees that it will not, directly or indirectly, solicit the business of any Person known to Seller to be a customer of Buyer, whether or not Seller had personal contact with such Person, with respect to products or activities which compete in whole or in part with the Business as was conducted by Seller using the Assets; and

(b) Seller will not, at any time during or after the 3-year period, disparage Buyer, the Assets, the Business formerly conducted by Seller, the business conducted by Buyer using the Assets or any shareholder, director, officer, employee or agent of Buyer or any of its Affiliates.

5. REMEDIES

If Seller breaches the covenants set forth in Sections 3 or 4 of this Agreement, Buyer will be entitled to the following remedies:

(a) Damages from Seller.

(b) In addition to its right to damages and any other rights it may have, to obtain injunctive or other equitable relief to restrain any breach or threatened breach or otherwise to specifically enforce the provisions of Sections 3 and 4 of this Agreement, it being agreed that money damages alone may be inadequate to compensate Buyer and may be an inadequate remedy for such breach.

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

6. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES

This Agreement will be binding upon Buyer and Seller and will inure to the benefit of Buyer and Buyer’s Affiliates, successors and assigns. j2 Global, Inc. is an express third-party beneficiary of Seller’s obligations hereunder.

7. WAIVER

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

8. GOVERNING LAW

This Agreement will be governed by the laws applied by courts of the State of Delaware to contracts entered into within that state by parties residing within that state and having no connection to any other state.

9. JURISDICTION; SERVICE OF PROCESS

Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement and all of the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the Parties agrees that any suit, action or other proceeding it may bring arising out of or relating to this Agreement or any of the transactions contemplated hereby shall be brought in a court of competent jurisdiction in Los Angeles, California, and each Party each irrevocably and unconditionally submits and consents to the exclusive jurisdiction of such courts for the purposes of any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby, and hereby waives the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other proceeding. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.

10. SEVERABILITY

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

11. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

12. SECTION HEADINGS, CONSTRUCTION

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

13. NOTICES

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

14. ENTIRE AGREEMENT

This Agreement, the Asset Purchase Agreement and all Exhibits and Schedules to the Asset Purchase Agreement, constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and supersede all prior written and oral agreements and understandings between the Parties with respect to the subject matter of this Agreement. This Agreement may not be amended except by a written agreement executed by the Party to be charged with the amendment.

[Signature Page Follows]

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

Signature Page to Seller’s Noncompetition, Nondisclosure and Nonsolicitation Agreement

EXHIBIT D-2

Form of Noncompetition, Nondisclosure and Nonsolicitation Agreement (Owner)

This Noncompetition, Nondisclosure and Nonsolicitation Agreement (this “ Agreement ”) is made as of February 17, 2016, by and among KeepItSafe, Inc., a Delaware corporation (“ Buyer ”) and InterCloud Systems, Inc. (“ Owner ”).

RECITALS

Concurrently with the execution and delivery of this Agreement, Buyer is purchasing from VaultLogix, LLC, a Delaware limited liability company, Data Protection Services, L.L.C., a Delaware limited liability company, and U.S. Data Security Acquisition, LLC, a Delaware limited liability company (each a “ Seller ”, and collectively, “ Sellers ”), the Assets pursuant to the terms and conditions of the Asset Purchase Agreement (defined below).

This Agreement is a material part of the consideration bargained for by Buyer in order to enter into the Asset Purchase Agreement and execution and delivery of this Agreement is a condition to Buyer entering into the Asset Purchase Agreement. Owner is willing to enter into this Agreement.

AGREEMENT

The parties, intending to be legally bound, agree as follows:

1 DEFINITIONS

“ Confidential Information ” is defined in Section 2.

Capitalized terms not expressly defined in this Agreement shall have the meanings ascribed to them in the Asset Purchase Agreement dated as of February 17, 2016, by and among Buyer, Sellers and the Owners (the “ Asset Purchase Agreement ”).

2. ACKNOWLEDGMENTS BY SELLER

Owner has had access to and has become familiar with the following, any and all of which constitute confidential information of Sellers pertaining to the Business and Assets (collectively the “ Confidential Information ”): (a) any and all trade secrets, concerning the Business, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing and distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), database technologies, systems, structures architectures processes, improvements, devices, know-how, discoveries, concepts, methods and information of each Seller and any other information, however documented, of each Seller that is a trade secret; (b) any and all information concerning the Business, including, historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, contractors, agents, suppliers and potential suppliers, personnel training and techniques and materials, purchasing methods and techniques, and technical information, however documented; and (c) any and all notes, analysis, compilations, studies, summaries and other material prepared by or for each Seller containing or based, in whole or in part, upon any information included in the foregoing. Owner acknowledges that (a) the Business of each Seller relating to the use and operation of the Assets by such Seller prior to Closing is international in scope; (b) its products and services related to such Business are marketed throughout the world; (c) each Seller's Business prior to Closing competes with other businesses that are or could be located in any part of the world; (d) Buyer has required that Owner make the covenants set forth in Sections 3 and 4 of this Agreement as a condition to Buyer’s purchase of the Assets; (e) the provisions of Sections 3 and 4 of this Agreement are reasonable and necessary to protect and preserve Buyer’s interests in and right to the use and operation of the Assets from and after Closing; and (f) Buyer may be irreparably damaged if Owner were to breach the covenants set forth in Sections 3 and 4 of this Agreement.

3. CONFIDENTIAL INFORMATION

Owner acknowledges and agrees that the protection of the Confidential Information is necessary to protect and preserve the value of the Assets. Therefore, Owner hereby agrees not to disclose to any unauthorized Persons or use for its own account or for the benefit of any third party any Confidential Information without Buyer’s written consent, unless and to the extent that the Confidential Information is or becomes generally known to and available for use by the public other than as a result of Owner’s fault or the fault of any other Person bound by a duty of confidentiality to Buyer or any Seller or its members, or disclosure is required by legal process in which case Owner shall provide Buyer with reasonable notice prior to disclosure. Owner agrees to deliver to Buyer at the time of execution of this Agreement, and at any other time Buyer may reasonably request, all documents, memoranda, notes, plans, records, reports and other documentation, models, components, devices or computer software, whether embodied in a disk or in other form (and all copies of all of the foregoing), that contain Confidential Information and any other Confidential Information that Owner may then possess or have under its control.

4. NONCOMPETITION AND NONSOLICITATION

As an inducement for Buyer to enter into the Asset Purchase Agreement and as additional consideration for the consideration to be paid to Sellers under the Asset Purchase Agreement, Owner agrees that:

(a) For a period of three (3) years after the Closing excepting such duties required under and in connection with the Transition Services Agreement:

(i) He will not, directly or indirectly, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be associated with or in any manner connected with, or render services or advice or other aid to, or guarantee any obligation of, any Person engaged in or planning to become engaged in a business that offers or is affiliated with a business that offers the following services offered by the Business on the date of this Agreement: online data backup, anywhere within the world, provided, however, that Owner may purchase or otherwise acquire up to (but not more than) one percent of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934. Owner agrees that this covenant is reasonable with respect to its duration, geographical area and scope. Despite the foregoing, Owner’s provision of services, aid, assistance or advice to an entity or a division or Affiliate of an entity that competes with the Business shall not be a violation hereof so long as Owner does not provide, directly or indirectly, any services, aid, assistance or advice to such entity or division or Affiliate of such entity with respect to such competing Business.

(ii) Owner agrees not to, directly or indirectly, induce or attempt to induce any customer, supplier, licensee or other Person to cease doing business with Buyer or in any way interfere with the relationship between any such customer, supplier, licensee or other business entity and Buyer; provided however, that the foregoing restriction shall not apply to general solicitation or posting on the internet which are not specifically directed at such employees.

(iii) Owner agrees that he will not, directly or indirectly, solicit the business of any Person known to any Seller to be a customer of Buyer, whether or not Owner had personal contact with such Person, with respect to products or activities which compete in whole or in part with the Business as was conducted by any Seller using the Assets; and

(b) Owner will not, at any time during or after the 3-year period, disparage Buyer, the Assets, the Business formerly conducted by any Seller, the business conducted by Buyer using the Assets or any shareholder, director, officer, employee or agent of Buyer or any of its Affiliates.

5. REMEDIES

If Owner breaches the covenants set forth in Sections 3 or 4 of this Agreement, Buyer will be entitled to the following remedies:

(a) Damages from Owner.

(b) In addition to its right to damages and any other rights it may have, to obtain injunctive or other equitable relief to restrain any breach or threatened breach or otherwise to specifically enforce the provisions of Sections 3 and 4 of this Agreement, it being agreed that money damages alone may be inadequate to compensate Buyer and may be an inadequate remedy for such breach.

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

6. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES

This Agreement will be binding upon Buyer and Owner and will inure to the benefit of Buyer and its Affiliates, successors and assigns. j2 Global, Inc. is an express third-party beneficiary of Owner’s obligations hereunder.

7. WAIVER

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

8. GOVERNING LAW

This Agreement will be governed by the laws applied by courts of the State of Delaware to contracts entered into within that state by parties residing within that state and having no connection to any other state.

9. JURISDICTION; SERVICE OF PROCESS

Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement and all of the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the parties agrees that any suit, action or other proceeding it may bring arising out of or relating to this Agreement or any of the transactions contemplated hereby shall be brought in a court of competent jurisdiction in Los Angeles, California, and each party each irrevocably and unconditionally submits and consents to the exclusive jurisdiction of such courts for the purposes of any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby, and hereby waives the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other proceeding. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.

10. SEVERABILITY

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

11. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

12. SECTION HEADINGS, CONSTRUCTION

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

13. NOTICES

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

14. ENTIRE AGREEMENT

This Agreement, the Asset Purchase Agreement and all Exhibits and Schedules to the Asset Purchase Agreement, constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and supersede all prior written and oral agreements and understandings between the Parties with respect to the subject matter of this Agreement. This Agreement may not be amended except by a written agreement executed by the Party to be charged with the amendment.

[Signature Page Follows]

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

Signature Page to Owner’s Noncompetition, Nondisclosure and Nonsolicitation Agreement

EXHIBIT F

Form of Seller’s Secretary’s Certificate

I certify that I am the duly qualified and acting secretary of_______ , a_________ (“ Seller ”) and that, as such, I am familiar with the facts herein certified and am duly authorized to certify the same and do hereby certify as follows:

This Secretary’s Certificate is being delivered on Seller’s behalf pursuant to Section 2.5(a)(viii) of the Asset Purchase Agreement. Capitalized terms used but not defined herein have the meanings given to them in the Asset Purchase Agreement.

IN WITNESS WHEREOF , I have executed this certificate on February 17, 2016.

 

	By:
	Name:
	Title:

Schedule A

Seller’s Organizational Documents

Schedule B

Seller’s Resolutions

Exhibit 10.2

SECURITIES EXCHANGE AGREEMENT

This SECURITIES EXCHANGE AGREEMENT (this “ Agreement ”) is made effective as of February 18, 2016, by and between VaultLogix, LLC (“ VaultLogix ”), InterCloud Systems, Inc. (the “ Company ” and together with VaultLogix, the “ Issuers ” and each an “ Issuer ”) and the lender signatory hereto (the “ Lender ”), in its capacity as the sole lender and administrative agent under the LSA (as defined below).

RECITALS

WHEREAS , pursuant to an Assignment and Assumption, dated February 18, 2016 (the “ Assignment and Assumption ”), the Lender acquired all of the Term Loans, including the promissory notes evidencing such Term Loans (the “ Notes ”), issued under that certain Loan and Security Agreement (the “ LSA ”), dated October 1, 2014, by and among VaultLogix, as borrower, the entities party thereto as Guarantors (the “ Guarantors ”) and the entities party thereto as lenders, and the administrative agent for such lenders (the “ Administrative Agent ”);

WHEREAS , all of VaultLogix’s obligations under the LSA and the Notes are unconditionally guaranteed by the Company pursuant to a Continuing Guaranty, dated October 1, 2014, made by the Company in favor of the Administrative Agent on behalf and for the benefit of the Lender (the “ Parent Guaranty ”); and

WHEREAS , the Company and the Lender have agreed to enter into this Agreement pursuant to which all rights and obligations under the LSA, the Term Loans, the Parent Guaranty and the other Loan Documents (as defined in the LSA) (the “ Original Documents ”), subject to the terms of this Agreement, are exchanged for a 8.25% Senior Secured Convertible Note made by VaultLogix and the Company as co-borrowers in substantially the form attached hereto as Exhibit A (the “ New Note ”);

NOW, THEREFORE , in consideration of the foregoing premises and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, intending to be legally bound, the parties hereto agree as follows:

AGREEMENT

ARTICLE I. EXCHANGE

1.01 New Note . On the date of this Agreement, the Issuers will execute and deliver the New Note to the Lender. In addition to the foregoing, the Issuers shall deliver, or cause to be delivered, on the date of this Agreement the following (collectively, the “ Closing Deliverables ”):

(a) a Security Agreement in substantially the form attached hereto as Exhibit B (the “ Security Agreement ”) executed and delivered by VaultLogix and the Company;

(b) a Deposit Account Control Agreement (the “ DACA ” and together with the Security Agreement, the “ Security Documents ”) in substantially the form attached hereto as Exhibit C executed and delivered by VaultLogix and PNC Bank, National Association;

(c) evidence that the deposit account identified in the DACA has at least an amount equal to the amount payable by the Lender under the Assignment and Assumption in unencumbered cash deposits;

(d) a legal opinion of counsel to the Issuers opining (1) that the exchange of the Lender’s rights and obligations under the Original Documents, including the Notes, for the New Note is exempt from registration under Section 3(a)(9) of the Securities Act of 1933, as amended (the “ Securities Act ”), (2) on the enforceability and perfection of the liens securing the New Note, and (3) other customary matters reasonably requested by Lender;

(e) Irrevocable Transfer Agent Instructions in substantially the form attached hereto as Exhibit D (the “ Irrevocable Transfer Agent Instructions ”) executed and delivered by the Company and its transfer agent; and

(f) such other documents, instruments and agreements reasonably requested by Lender.

1.02 Surrender of Original Documents . Upon receipt of the New Note and the other Closing Deliverables, the Lender conveys all rights and obligations under the Original Documents to the Company. The parties agree that the New Note is being issued in substitution for and not in satisfaction of all rights and obligations under the Original Documents.

ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Issuers represent and warrant to Lender as of the date hereof as follows:

2.01 Organization, Good Standing and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. VaultLogix is a limited liability company duly formed validly existing and in good standing under the laws of the State of Delaware and has the requisite limited liability company power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted.

2.02 Authorization; Enforcement . Each Issuer has the requisite corporate or limited liability company power and authority, as applicable, to enter into and perform this Agreement, the New Note and the Security Documents to which it is a party and such other documents, instruments and agreements executed and delivered by each such Issuer in connection with any of the foregoing (collectively, the “ Operative Documents ”) and to issue and sell the New Note in accordance with the terms hereof. The execution, delivery and performance of the Operative Documents by each Issuer and the consummation by it of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate or limited liability company action, as applicable, of such Issuer, and no further consent or authorization of such Issuer or its board of directors or equivalent governing body or stockholders or members, as applicable, is required, except for the Stockholder Approval. When executed and delivered by the Company, each of the Operative Documents shall constitute a valid and binding obligation of each such Issuer party thereto, enforceable against each such Issuer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

2.03 Issuance of Shares . When the Conversion Shares (as defined in the New Note) are issued in accordance with the terms of the New Note, the Conversion Shares shall be validly issued and outstanding, fully-paid, non-assessable and free any clear of all liens, of any pre-emptive rights and rights of refusal of any kind.

2.04 No Conflicts . The execution, delivery and performance of the Operative Documents by each Issuer, the performance by each Issuer of its obligations under the Operative Documents, and the consummation by each Issuer of the transactions contemplated by the Operative Documents, and the issuance of the Conversion Shares as contemplated by New Note, do not and will not (i) violate or conflict with any provision of each such Issuer’s Organizational Documents (as defined in the Security Agreement), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which any Issuer or any of its subsidiaries is a party or by which any Issuer or any of its subsidiaries’ respective properties or assets are bound, (iii) result in a violation of any foreign, federal, state or local statute, law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to any Issuer or any of its subsidiaries or by which any property or asset of any such Issuer or any of its subsidiaries are bound or affected, or (iv) create or impose a lien, mortgage, security interest, charge or encumbrance of any nature (each, a “ Lien ”) on any property or asset of any Issuer or its subsidiaries under any agreement or any commitment to which any such Issuer or any of its subsidiaries is a party or by which any Issuer or any of its subsidiaries is bound or by which any of their respective properties or assets are bound. No Issuer is required under foreign, federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Operative Documents or issue and sell the New Note in accordance with the terms hereof.

2.05 SEC Documents, Financial Statements . The common stock of the Company (the “ Common Stock ”) is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the U.S. Securities and Exchange Commission (the “ SEC ”) is contemplating terminating such registration. Since January 1, 2014, the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing including filings incorporated by reference therein being referred to herein as the “ SEC Documents ”). At the times of their respective filings, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder. The SEC Documents did not, and do not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with Regulation S-X and all other published rules and regulations of the SEC. Such financial statements have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company does not currently have any reason to believe that it will not timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016.

2.06 Material Changes; Undisclosed Events, Liabilities or Developments . Since the date of the latest audited financial statements included within the SEC Documents, except as specifically disclosed in a subsequent SEC Document filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in (A) a material adverse effect on the legality, validity or enforceability of any Operative Document, (B) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, or (C) a material adverse effect on any Issuer’s ability to perform in any material respect on a timely basis its obligations under any Operative Document (any of (A), (B), or (C), a “ Material Adverse Effect ”), (ii) neither the Company nor any of its subsidiaries have incurred any liabilities (contingent or otherwise) other than (X) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (Y) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the SEC, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the SEC any request for confidential treatment of information. Except for the issuance of the New Note contemplated by this Agreement and the transactions contemplated by the Asset Purchase Agreement, dated on or about the date hereof, by and among KeepItSafe, Inc., VaultLogix, Data Protection Services, L.L.C. (“ DPS ”), U.S. Data Security Acquisition, LLC (together with VaultLogix and DPS, the “ Sellers ”) and each individual owner of interests in Sellers set forth on the signature pages thereto, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day (as defined in the New Note) prior to the date that this representation is made.

2.07 Listing and Maintenance Requirements . The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market (as defined herein) on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer. For purposes hereof, “ 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 or the OTC QB Marketplace (or any successors to any of the foregoing).

2.08 No Integrated Offering . Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the issuance of the New Note and the Conversion Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act or (ii) any applicable stockholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

2.09 Disclosure . Following the issuance of the press release referred to in Section 4.07, the Company confirms that neither it nor any other person or entity acting on its behalf has provided the Lender or its agents or counsel with any information that constitutes or might constitute material, nonpublic information that has not been publicly disclosed. The Company understands and confirms that the Lender will rely on the foregoing representation in effecting transactions in the securities of the Company.

2.10 Solvency of the Company . Based on the consolidated financial condition of the Company and its subsidiaries taken as a whole, after giving effect to the transactions contemplated hereby: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the date of this Agreement.

2.11 Seniority . As of the date of this Agreement, other than that certain 10% Original Issue Discount Senior Secured Convertible Debenture in the original principal amount of $7,500,000, issued to JGB (Cayman) Waltham Ltd. pursuant to that certain Securities Purchase Agreement, dated as of December 29, 2015, no indebtedness or other claim against the Company is senior to the New Note in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise. As of the date of this Agreement, there is no indebtedness or other claims against VaultLogix.

2.12 Holding Period . Pursuant to Rule 144 promulgated under the Securities Act, the holding period of the New Note and the Conversion Shares tacks back to June 16, 2015. The Issuers agree not to take a position contrary to this paragraph. The Company agrees to take all actions, including, without limitation, the issuance by its legal counsel of any legal opinions to the Lender or the Company’s transfer agent, necessary to issue the Conversion Shares without restriction and not containing any restrictive legend without the need for any action by the Lender in connection with a sale of the Conversion Shares by the Lender. The Company represents that the exchange of Lender’s rights under the Original Documents for the New Note is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act and agrees not to take any position contrary to this paragraph.

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE HOLDER

The Lender represents and warrants to the Company as of the date hereof as follows:

3.01 Organization and Standing of the Lender . Lender is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.

3.02 Authorization and Power . The Lender has the requisite power and authority to enter into and perform the Operative Documents. The execution, delivery and performance of the Operative Documents by the Lender and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and no further consent or authorization of Lender or its managers or members is required. When executed and delivered by the Lender, the Operative Documents shall constitute valid and binding obligations of the Lender enforceable against the Lender in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

ARTICLE IV. COVENANTS AND AGREEMENTS

Unless otherwise specified in this Article, for so long as the New Note and/or the Conversion Shares are outstanding, the Issuers hereby covenant:

4.01 Compliance with Laws . The Company shall take all necessary actions and proceedings as may be required by applicable law, rule and regulation, for the legal and valid issuance of the New Note and the Conversion Shares to the Lender.

4.02 Registration and Listing . The Company shall cause its Common Stock to continue to be registered under Section 12(b) of the Exchange Act, to comply in all material respects with its reporting and filing obligations under the Exchange Act and to not take any action or file any document to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act even if the rules and regulations thereunder would permit such termination. Without limiting the foregoing, the Company shall take all necessary action to satisfy the requirements of Rule 144(c)(1) and Rule 144(i)(2). The Company currently meets the requirements of Rule 144(i)(2) and the Conversion Shares may be resold by the Lender under Rule 144.

4.03 Public Information Failure . At any time during the period commencing on the date hereof and ending at such time that the Lender has resold all of the Conversion Shares, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) or the requirements of Rule 144(i)(2) (a “ Public Information Failure ”) then, in addition to the Lender’s other available remedies, the Issuers shall pay to the Lender, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Conversion Shares, an amount in cash equal to 0.075% of the original principal amount of the New Note on the day of a Public Information Failure and such amount on each day thereafter until the date such Public Information Failure is cured. The payments to which the Lender shall be entitled pursuant to this Section 4.03 are referred to herein as “ Public Information Failure Payments ”. For purposes hereof, a “ Public Information Failure ” shall be deemed to have occurred and be continuing during any Rule 12b-25 extension period for any annual, quarterly or other report required to be filed by the Company with the SEC. Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day (as defined in the New Note) after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Issuers fail to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit the Lender’s right to pursue actual damages for the Public Information Failure, and the Lender shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

4.04 Integration; Rules of the Trading Market .

(a) The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the New Note and Conversion Shares in a manner that would require the registration under the Securities Act of the sale of the New Note and Conversion Shares or that would be integrated with the offer or sale of the New Note and the Conversion Shares for purposes of the rules and regulations of any Trading Market unless stockholder approval is obtained before the closing of such subsequent transaction.

(b) The Company shall provide each stockholder entitled to vote at either (x) the next annual meeting of stockholders of the Company or (y) a special meeting of stockholders of the Company (the “ Stockholder Meeting ”), which shall be promptly called and held not later than May 31, 2016 (the “ Stockholder Meeting Deadline ”), a proxy statement, substantially in a form which shall have been previously reviewed by the Lender’s counsel, at the expense of the Issuers, soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for approval of resolutions (“ Stockholder Resolutions ”) providing for the Company’s issuance of Conversion Shares as described in the New Note and the other Operative Documents in accordance with applicable law and the rules and regulations of the Principal Market (as defined in the New Note) and without any limitation on the number of Conversion Shares that may be issued (such affirmative approval being referred to herein as the “ Stockholder Approval ”, and the date such Stockholder Approval is obtained, the “ Stockholder Approval Date ”), and the Company shall use its reasonable best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to the stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held once in each of the eight subsequent calendar quarters thereafter until such Stockholder Approval is obtained.

4.05 Acknowledgment of Dilution . The Company acknowledges that the issuance of the New Note and the Conversion Shares may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Operative Documents, including, without limitation, its obligation to issue the Conversion Shares pursuant to the New Note, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against the Lender and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

4.06 Indemnification of Lender . The Issuers will indemnify and hold the Lender and its directors, officers, stockholders, members, partners, employees and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each person who controls the Lender (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders, agents, members, partners or employees (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “ Lender Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Lender Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Issuers in this Agreement or in the other Operative Documents or (b) any action instituted against the Lender Parties in any capacity, or any of them or their respective affiliates, by any stockholder of the Company who is not an affiliate of such Lender Party, with respect to any of the transactions contemplated by the Operative Documents (unless such action is based upon the fraud, gross negligence, willful misconduct or malfeasance of a Lender Party).

4.07 Disclosure of Transaction . The Company shall, by 5:30 p.m. eastern time on the second business day following the closing of the transaction contemplated by this Agreement, file a Current Report on Form 8-K, including the Operative Documents as exhibits thereto, with the SEC. Such Form 8-K shall be subject to the prior review and comment of the Lender. From and after the issuance of the Form 8-K, the Company represents to the Lender that it shall have publicly disclosed all material, non-public information delivered to Lender by the Company, or any of their respective officers, directors, employees or agents.

4.08 Disclosure of Material Information; No Obligation of Confidentiality .

(a) Each Issuer covenants and agrees that neither it nor any other person or entity acting on its behalf will provide the Lender or its agents or counsel with any information that the Company believes constitutes non-public information, unless prior thereto the Lender shall have executed a written agreement regarding the confidentiality and use of such information. Each Issuer understands and confirms that the Lender shall be relying on the foregoing representations in effecting transactions in securities of the Company. In the event of a breach of the foregoing covenant by an Issuer, or any of its subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Operative Documents, the Company shall publicly disclose any material, non-public information in a Current Report on Form 8-K within one business day following the date that it discloses such information to the Lender or such earlier time as may be required by Regulation FD or other applicable law.

(b) The Lender shall not be deemed to have any obligation of confidentiality with respect to (i) any non-public information of an Issuer disclosed to the Lender in breach of Section 4.08(a) (whether or not the Company files a Current Report on Form 8-K as provided above), (ii) the fact that the Lender has exercised any of its rights and/or remedies under the Operative Documents or (iii) any information obtained by the Lender as a result of exercising any of its rights and/or remedies under the Operative Documents. In further addition, the Lender shall not be deemed to be in breach of any duty to any Issuer and/or to have misappropriated any non-public information of any Issuer, if the Lender engages in transactions of securities of any issuer, including, without limitation, any hedging transactions, short sales or any derivative transactions, while in possession of such non-public information.

(c) Any Form 8-K, including all exhibits thereto, filed by the Company pursuant to this Section 4.08 shall be subject to prior review and comment by the Lender.

(d) From and after the filing of any such Form 8-K pursuant to Section 4.07 with the SEC, the Lender shall not be in possession of any material, non-public information received from the Company, any of its subsidiaries or any of their respective officers, directors, employees or agents that is not disclosed in such Form 8-K filed pursuant to Section 4.07.

4.09 Legal Opinions . The Company shall cause its legal counsel to issue any legal opinion referred to in the Irrevocable Transfer Agent Instructions or any other Operative Document at the Issuers’ expense.

ARTICLE V. MISCELLANEOUS

5.01 Fees and Expenses . The Issuers shall reimburse the Lender for all costs and expenses incurred by the Lender in connection with the negotiation, drafting and execution of the Operative Documents and the transactions contemplated thereby (including all reasonable legal fees, travel, disbursements and due diligence in connection therewith and all fees incurred in connection with any necessary regulatory filings and clearances). In addition, the Issuers shall pay all reasonable fees and expenses incurred by the Lender in connection with the enforcement of this Agreement or any of the other Operative Documents, including, without limitation, all reasonable attorneys’ fees and expenses. The Issuers shall be responsible for their own fees and expenses incurred in connection with the transactions contemplated by this Agreement or any of the other Operative Documents. The Issuers shall pay all fees of the Company’s transfer agent, stamp taxes and other taxes and duties levied in connection with the delivery of the New Note and/or the Conversion Shares to the Lender. This provision shall survive termination of this Agreement and the Operative Documents.

5.02 Specific Performance; Consent to Jurisdiction; Venue .

(a) The Issuers and the Lender acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Operative Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement or the other Operative Documents and to enforce specifically the terms and provisions hereof or thereof without the requirement of posting a bond or providing any other security, this being in addition to any other remedy to which any of them may be entitled by law or equity.

(b) The parties agree that venue for any dispute arising under this Agreement will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The parties irrevocably consent to personal jurisdiction in the state and federal courts in New York County of the state of New York. The Issuers and the Lender consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 5.02 shall affect or limit any right to serve process in any other manner permitted by law. The parties hereby waive all rights to a trial by jury.

5.03 Amendment . No provision of this Agreement may be waived or amended except in a written instrument signed by the Issuers and the Lender.

5.04 Notices . Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur or (c) upon delivery by e-mail (if delivered on a business day during normal business hours where such notice is to be received) upon recipient’s actual receipt and acknowledgement of such e-mail. The addresses for such communications shall be:

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto.

5.05 Waivers . No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

5.06 Headings . The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

5.07 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The Lender may assign the New Note and/or the Conversion Shares and its rights under this Agreement and the other Operative Documents and any other rights hereto and thereto without the consent of the Company. The Issuers may not assign or delegate any of their respective rights or obligations hereunder or under any Operative Document.

5.08 No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and, except for Section 4.06, is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.

5.09 Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles that would result in the application of the substantive law of another jurisdiction. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

5.10 Survival . The covenants, agreements and representations and warranties of the Issuers under the Operative Documents shall survive the execution and delivery hereof. All obligations of the Issuers hereunder are joint and several.

5.11 Counterparts . This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. Signature pages to this Agreement may be delivered by facsimile or other means of electronic transmission.

5.12 Severability . The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

5.13 Time Is of the Essence . Time is of the essence of this Agreement and each Operative Document.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Securities Exchange Agreement to be duly executed by their respective authorized officers as of the date first above written.

ISSUERS:

INTERCLOUD SYSTEMS, INC.

VAULTLOGIX, LLC

LENDER:

JGB (CAYMAN) CONCORD LTD.

11

Exhibit 10.3

EXHIBIT A

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: June 16, 2015

Original Fixed Conversion Price (subject to adjustment herein): $2.00

$11,601,054.62

8.25% SENIOR SECURED CONVERTIBLE NOTE

DUE February 18, 2019

THIS 8.25% SENIOR SECURED CONVERTIBLE NOTE is the duly authorized and validly issued 8.25% Senior Secured Convertible Note of InterCloud Systems, Inc., a Delaware corporation, (the “ Company ”), and VaultLogix, LLC, a Delaware limited liability company (“ VaultLogix ” and together with the Company, the “ Borrowers ”), each having its principal place of business at 1030 Broad Street, Suite 102, Shrewsbury, NJ 07702 (this “ Note ”). This Note is issued pursuant to the Securities Exchange Agreement (the “ Securities Exchange Agreement ”), dated February 18, 2016, by and among the Holder (as defined below) and the Borrowers.

FOR VALUE RECEIVED, the Borrowers, jointly and severally as co-borrowers, promise to pay to JGB (Cayman) Concord Ltd. or its registered assigns (the “ Holder ”), or shall have paid pursuant to the terms hereunder, the principal sum of $11,601,054.62 in cash on February 18, 2019 (the “ Maturity Date ”) or such earlier date as this Note is required to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is subject to the following additional provisions:

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

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

“ Applicable Interest Rate ” means an annual rate equal to eight and one quarter percent (8.25%), provided, in any event, following the occurrence and during the continuance of an Event of Default, an annual rate equal to fifteen percent (15%).

“ Bankruptcy Event ” means any of the following events: (a) a Borrower 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 such Borrower or any Significant Subsidiary thereof, (b) there is commenced against a Borrower or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within sixty (60) days after commencement, (c) a Borrower 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) a Borrower 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 sixty (60) calendar days after such appointment, (e) a Borrower or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) a Borrower 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) a Borrower 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)(i).

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

“ Bloomberg ” means Bloomberg, L.P.

“ Board of Directors ” means the board of directors or equivalent governing body of a Borrower.

“ 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 February 18, 2016 of (a) an acquisition after February 18, 2016 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 Equity Interests of a Borrower, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of a Borrower (other than by means of Conversion of this Note), (b) a Borrower merges into or consolidates with any other Person, or any Person merges into or consolidates with a Borrower and, after giving effect to such transaction, the stockholders of such Borrower immediately prior to such transaction own less than fifty percent (50%) of the aggregate voting power of such Borrower or the successor entity of such transaction, (c) a Borrower sells or transfers all or substantially all of its assets to another Person and the stockholders of such Borrower immediately prior to such transaction own less than fifty percent (50%) 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 February 18, 2016 (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 February 18, 2016), or (e) the execution by a Borrower of an agreement to which such Borrower is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

“ Commission ” means the Securities and Exchange Commission.

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

“ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

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

“ 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 pursuant to this Note upon Conversion or otherwise.

“ DACA ” means the Deposit Account Control Agreement, dated as February 17, 2016, by and between VaultLogix, PNC Bank, National Association and the Holder.

“ Deposit Account ” means the deposit account of VaultLogix maintained at PNC Bank, National Association and subject to the DACA.

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

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

“ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction or by way of a merger) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person, excluding any sales of inventory in the ordinary course of business on ordinary business terms.

“ Dollar Volume Limitation ” means fifteen percent (15%) of the aggregate dollar trading volume of the Common Stock on the Principal Market (or other applicable Trading Market) over the twenty (20) consecutive Trading Day period ending on the Trading Day immediately preceding the commencement of any Interest Notice Period. For the purposes of this definition the term “dollar trading volume” for any Trading Day shall be determined by multiplying the VWAP by the volume as reported on Bloomberg for such Trading Day.

“ DTC ” means the Depository Trust Company.

“ Equity Conditions ” means, during the period in question, (a) the Borrowers shall have duly honored all Conversions scheduled to occur or occurring by virtue of one or more Notices of Conversions of the Holder, if any, (b) the Borrowers shall have paid all liquidated damages and other amounts owing to the Holder in respect of this Note, (c) all of the Conversion Shares issuable pursuant to the Operative Documents (and shares issuable in lieu of cash payments of interest) may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions as determined by the counsel to the Company as set forth in a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the Holder, provided, however, this condition shall not be deemed satisfied (1) during any Rule 12b-25 extension period with respect to any quarterly or annual report of the Company that is not filed by the prescribed due date for such quarterly or annual report (without giving effect to any extension period) or (2) during any period that the Company is not in compliance with the current public information requirements under Rule 144, including any public information requirements of paragraph (i) of Rule 144, (d) the Common Stock is trading on a Trading Market and all of the Conversion Shares issuable pursuant to the Operative Documents are listed or quoted for trading on such Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the Conversion Shares then issuable pursuant to the Operative Documents, (f) there is no existing Event of Default and no existing event which, with the passage of time or the giving of notice, would constitute an Event of Default, (g) the issuance of the Conversion Shares in question to the Holder would not violate the limitations set forth in Section 4(d) or Section 4(e) herein, (h) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the Holder is not in possession of any information provided by a Borrower or any person acting on their behalf that constitutes, or may constitute, material non-public information, (j) on each of the ten (10) Trading Days prior to the applicable date, unless waived by the Holder, the Closing Price of the Common Stock is at least $.10 per share (appropriately adjusted for any stock split, stock dividend, stock combination, stock buy-back or other similar transaction), (k) the Common Stock is DTC eligible and the Company’s transfer agent is participating in DTC’s Fast Automated Securities Transfer Program and (l) the Stockholder Approval has been obtained.

“ Equity Conditions Failure ” shall have the meaning set forth in Section 6(a).

“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

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

“ Exchange Cap ” shall have the meaning set forth in Section 4(e).

“ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, consultants, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, or approved by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose and (b) securities upon the exchange of or Conversion of this Note and/or other Common Stock Equivalents issued and outstanding on February 18, 2016, including any amendment or modification to such securities subsequent to February 18, 2016, to decrease the exercise price, exchange price or conversion price of such securities.

“ Fixed Conversion Price ” means $2.00 subject to adjustment herein.

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

“ Indebtedness ” shall include (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, current swap agreements, interest rate hedging agreements, interest rate swaps or other financial products, (c) all capital or equipment lease obligation or purchase money security interests, (d) all obligations or liability secured by a Lien (except for Liens described in clause (a) of the definition of Permitted Liens) on any asset of a Borrower, irrespective of whether such obligation or liability is assumed), and (e) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse) any of the foregoing obligations of any other person or entity.

“ Interest Advance Shares ” shall have the meaning set forth in Section 2(a).

“ Interest Notice Period ” shall have the meaning set forth in Section 2(a).

“ Interest Payment Date ” shall have the meaning set forth in Section 2(a).

“ Interest Share Amount ” shall have the meaning set forth in Section 2(a).

“ Investments ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition (including by merger) of Equity Interests of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial part of the business of, such Person.

“ Late Fees ” shall have the meaning set forth in Section 2(d).

“ Make-Whole Amount ” means, with respect to the applicable date of determination, an amount in cash equal to all of the interest that, but for the applicable conversion, redemption, prepayment or acceleration, would have accrued pursuant to Section 2 with respect to the applicable principal amount being so converted, redeemed, prepaid or accelerated for the period commencing on the applicable redemption date, prepayment date, Conversion Date or default payment date and ending on the Make-Whole End Date in effect on the applicable date of determination.

“ Make-Whole End Date ” means the first anniversary of the date of the Securities Exchange Agreement.

“ Make-Whole Period ” means the period commencing on the date of the Securities Exchange Agreement and ending on the Make-Whole End Date.

“ Mandatory Default Amount ” means the sum of (a) 105% of the outstanding principal amount of this Note plus 100% of accrued and unpaid interest thereon, plus the Make-Whole Amount, if applicable, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.

“ New York Courts ” shall have the meaning set forth in Section 9(d).

“ Note Register ” shall have the meaning set forth in Section 2(d).

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

“ Obligations ” shall have the meaning set forth in Section 9(k).

“ Optional Redemption ” shall have the meaning set forth in Section 6(a).

“ Optional Redemption Amount ” shall have the meaning set forth in Section 6(a).

“ Optional Redemption Date ” shall have the meaning set forth in Section 6(a).

“ Optional Redemption Notice ” shall have the meaning set forth in Section 6(a).

“ Optional Redemption Notice Date ” shall have the meaning set forth in Section 6(a).

“ Original Issue Date ” means October 1, 2014, regardless of any transfers of this Note and regardless of the number of instruments which may be issued to evidence this Note.

“ Overall Cap ” shall have the meaning set forth in Section 4(g).

“ Permitted Indebtedness ” means the indebtedness evidenced by this Note.

“ 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 Borrowers) have been established in accordance with GAAP and which in do not exceed $10,000 in the aggregate and (c) Liens for the benefit of the Holder.

“ Prepayment Date ” shall have the meaning set forth in Section 2(e).

“ Prepayment Interest ” shall have the meaning set forth in Section 2(e).

“ Prepayment Notice ” shall have the meaning set forth in Section 2(e).

“ Principal Market ” means the Nasdaq Capital Market or such other Trading Market where the Common Stock is then listed or quoted.

“ 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).

“ Subsidiaries ” as to any Person, means any corporation, partnership, limited liability company, joint venture, trust or estate of or in which more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class of such corporation may have voting power upon the happening of a contingency), (b) the interest in the capital or profits of such partnership, limited liability company, or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled through one or more intermediaries, or both, by such Person.

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

“ Trading Day ” means a day on which the Principal 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 OTC QB Marketplace, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the Principal Market (or any successors to any of the foregoing).

“ 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 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 4:00 p.m. (New York City time)), (b) if the Common Stock is not then listed or quoted for trading on a Trading Market 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 (c) 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 and reasonably acceptable to the Borrowers, the fees and expenses of which shall be paid by the Borrowers.

Section 2 . Interest; Prepayment .

a) Payment of Interest in Cash or Shares . The Borrowers shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the Applicable Interest Rate, payable monthly in arrears as of the last Trading Day of each calendar month and on the Maturity Date (each such date, an “ Interest Payment Date ”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day), in cash or, at the Borrowers’ option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock at the Conversion Price (as if such Interest Payment Date was a Conversion Date) (the dollar amount to be paid in shares, the “ Interest Share Amount ”) or a combination thereof. Notwithstanding anything contained herein to the contrary, any payment of interest in shares of Common Stock may only occur if (i) all of the Equity Conditions have been met (unless waived by the Holder in writing, except for subsection (l) of the definition of Equity Condition, which may not be waived) during the five (5) Trading Days immediately prior to the applicable Interest Payment Date (the “ Interest Notice Period ”) and through and including the date such shares of Common Stock are actually issued to the Holder; (ii) the Borrowers shall have given the Holder notice in accordance with the notice requirements set forth below and (iii) as to such Interest Payment Date, prior to such Interest Notice Period (but not more than two (2) Trading Days prior to the commencement of such Interest Notice Period), the Borrowers shall have delivered to the Holder’s account with DTC a number of shares of Common Stock to be applied against such Interest Share Amount equal to the quotient of (x) the applicable Interest Share Amount divided by (y) the Conversion Price (as if the date of calculation was a Conversion Date) assuming for such purposes that the Interest Payment Date is the Trading Day immediately prior to the commencement of the Interest Notice Period (the “ Interest Advance Shares ”). In the event that the Interest Advance Shares in respect of any Interest Share Amount would exceed the Dollar Volume Limitation, then the Borrowers shall pay the portion of the Interest Advance Shares that would be in excess of the Dollar Volume Limitation in cash.

b) Borrowers’ Election to Pay Interest in Cash or Shares . Subject to the terms and conditions herein, the decision whether to pay interest hereunder in cash, shares of Common Stock or a combination thereof shall be at the sole discretion of the Borrowers. At least two (2) Trading Days prior to the commencement of any Interest Notice Period, the Borrowers shall deliver to the Holder a written notice of their election to pay interest hereunder on the applicable Interest Payment Date either in cash, shares of Common Stock or a combination thereof and the Interest Share Amount as to the applicable Interest Payment Date, provided that the Borrowers may indicate in such notice that the election contained in such notice shall apply to future Interest Payment Dates until revised by a subsequent notice. During any Interest Notice Period, the Borrowers’ election (whether specific to an Interest Payment Date or continuous) shall be irrevocable as to such Interest Payment Date. Subject to the aforementioned conditions, failure to timely deliver such written notice to the Holder shall be deemed an election by the Borrowers to pay the interest on such Interest Payment Date in cash. The aggregate number of shares of Common Stock otherwise issuable to the Holder on an Interest Payment Date shall be reduced by the number of Interest Advance Shares previously issued to the Holder in connection with such Interest Payment Date. In addition, if the number of Interest Advance Shares exceeds the aggregate number of share of Common Stock otherwise issuable to the Holder on the Interest Payment Date, then the Holders shall promptly return such excess number of shares to the Borrowers.

c) Interest Calculations . Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Payment of interest in shares of Common Stock (other than the Interest Advance Shares issued prior to an Interest Notice Period) shall otherwise occur pursuant to Section 4(c)(ii) herein and, solely for purposes of the payment of interest in shares, the Interest Payment Date shall be deemed the Conversion Date. Interest shall cease to accrue with respect to any principal amount converted, provided that, the Borrowers actually deliver the Conversion Shares within the time period required by Section 4(c)(ii) herein. Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Borrowers regarding registration and transfers of this Note (the “ Note Register ”).

d) Late Fee . All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of fifteen percent (15%) per annum or the maximum rate permitted by applicable law (the “ Late Fees ”) which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full. Notwithstanding anything to the contrary contained herein, if, on any Interest Payment Date the Borrowers have elected to pay accrued interest in the form of Common Stock but the Borrowers are not permitted to pay accrued interest in Common Stock because they fail to satisfy the conditions for payment in Common Stock set forth in Section 2(a) herein, then, at the option of the Holder, the Borrowers, in lieu of delivering either shares of Common Stock pursuant to this Section 2 or paying the regularly scheduled interest payment in cash, shall deliver, within three (3) Trading Days of each applicable Interest Payment Date, an amount in cash equal to the product of (x) the number of shares of Common Stock otherwise deliverable to the Holder in connection with the payment of interest due on such Interest Payment Date multiplied by (y) the highest VWAP during the period commencing on the Interest Payment Date and ending on the Trading Day prior to the date such payment is actually made.

e) Prepayment . Prior to the nine-month anniversary of the date of the Securities Exchange Agreement, the Borrowers may not prepay all or any portion of this Note without the prior written consent of the Holder. At any time and from time to time after the nine-month anniversary of the date of the Securities Exchange Agreement, the Borrowers may deliver a notice to the Holder (a “ Prepayment Notice ”) of its irrevocable election to prepay all or a portion of the then outstanding principal amount of this Note on the tenth (10 ^th ) Trading Day (the “ Prepayment Date ”) following the date of such notice, for cash in an amount equal to the sum of (i) 100% of the principal amount of this Note being prepaid pursuant to such Prepayment Notice, accrued but unpaid interest thereon and (ii) the Make-Whole Amount, if applicable. Notwithstanding anything to the contrary contained herein, upon a prepayment of this Note pursuant to this Section 2(e) at any time, the Holder shall be entitled to an amount of interest equal to the interest that would have accrued on such principal amount being prepaid hereto until the six month anniversary of the Prepayment Date (“ Prepayment Interest ”). The amount of Prepayment Interest owed pursuant to the prior sentence shall be decreased by any Make-Whole Amount payable in respect of such prepayment. Such amount is payable in full in cash on the applicable Prepayment Date. The Company covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the Prepayment Notice through the date all amounts owing thereon are paid in full.

Section 3. Registration of Transfers and Exchanges .

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

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

c) Reliance on Note Register . Prior to due presentment for transfer to the Borrowers of this Note, the Borrowers and any agent of the Borrowers may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and none of the Borrowers nor any such agent shall be affected by notice to the contrary.

Section 4. Conversion .

a) Voluntary Conversion . At any time and from time to time, commencing on the Stockholder Approval Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock (subject to the limitations set forth in Section 4(d) and Section 4(e) hereof) at the option of the Holder as provided herein. The Holder shall effect conversions (each a “ Conversion ”) by delivering to the Borrowers 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 Note 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 Note to the Borrowers unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable Conversion. The Holder and the Borrowers shall maintain records showing the principal amount(s) converted and the date of such Conversion(s). 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 Note, acknowledge and agree that, by reason of the provisions of this paragraph, following Conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

b) Conversion Price . The conversion price (the “ Conversion Price ”) in effect on any Conversion Date shall be equal to the lowest of: (a) the Fixed Conversion Price, (b) 80% of the average of the VWAPs for each of the five (5) consecutive Trading Days immediately prior to the applicable Conversion Date, and (c) 85% of the VWAP for the Trading Day immediately preceding the applicable Conversion Date.

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 Note 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 Borrowers shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing the Conversion Shares which shall be free of trading restrictions representing the number of Conversion Shares being acquired upon the Conversion of this Note (including, if the Borrowers have given continuous notice pursuant to Section 2(b) for payment of interest in shares of Common Stock at least seven (7) Trading Days prior to the date on which the Notice of Conversion is delivered to the Borrowers, shares of Common Stock equal to (x) accrued and unpaid interest on the principal amount being converted plus, if the applicable conversion is during the Make-Whole Period, the Make-Whole Amount, divided by (y) the Conversion Price assuming that the Conversion Date is an Interest Payment Date) and (B) the amount of accrued and unpaid interest and, if the applicable conversion is during the Make-Whole Period, the Make-Whole Amount, in cash by wire transfer of immediately available funds (if the Borrowers have elected or are required to pay accrued interest in cash). The Borrowers shall deliver any certificate or certificates required to be delivered by the Borrowers under this Section 4(c) electronically through DTC provided that (i) the Company is in compliance with the current public information requirements of Rule 144 and (ii) the Holder has delivered to the Borrowers a broker representation letter that the shares of Common Stock represented by such certificates have been sold pursuant to Rule 144. The Borrowers shall, at their own expense, cause their outside legal counsel to provide any required legal opinions to deliver certificates free of restrictive legends pursuant to the preceding sentence.

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 Borrowers at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Borrowers shall promptly return to the Holder any original Note delivered to the Borrowers and the Holder shall promptly return to the Borrowers the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

iv. Obligation Absolute; Partial Liquidated Damages . The Borrowers’ obligations to issue and deliver the Conversion Shares upon Conversion of this Note 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 Borrowers 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 Borrowers 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 Borrowers of any such action the Borrowers may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, the Borrowers 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 Note shall have been sought and obtained, and the Borrowers post a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of 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 Borrowers shall issue Conversion Shares or, if applicable, cash, upon a properly noticed Conversion. If the Borrowers fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the second Trading Day following the Share Delivery Date, the Borrowers shall pay to the Holder, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5 ^th ) Trading Day after such liquidated damages begin to accrue) for each Trading Day after the second Trading Day following such Share Delivery Date until such certificates are delivered or Holder rescinds such Conversion; provided, however, if the Borrowers have failed to deliver a certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date more than twice in any twelve (12) month period, then such partial liquidated damages shall begin to accrue on the Share Delivery Date. 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 Borrowers’ failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion . In addition to any other rights available to the Holder, if the Borrowers 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 Borrowers 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 Note 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 Borrowers 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 Note 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 Borrowers shall be required to pay the Holder $1,000. The Holder shall provide the Borrowers written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Borrowers, 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 Borrowers’ failure to timely deliver certificates representing shares of Common Stock upon Conversion of this Note as required pursuant to the terms hereof.

vi. Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the Conversion of this Note. 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.

vii. Transfer Taxes and Expenses . The issuance of certificates for shares of the Common Stock on Conversion of this Note 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 Borrowers 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 Note so converted and the Borrowers 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 Borrowers the amount of such tax or shall have established to the satisfaction of the Borrowers that such tax has been paid. The Borrowers shall pay all Transfer Agent fees required for processing of any Notice of Conversion and all fees to DTC (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

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

e) Principal Market Regulation . The Borrowers shall not issue any shares of Common Stock pursuant to the terms of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue without breaching the Company’s obligations under the rules or regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations, the “ Exchange Cap ”), except that such limitation shall not apply after the Company obtains the Stockholder Approval.

f) Dollar Trading Volume Matters . To the extent commercially reasonable and practicable under the circumstances, Holder shall limit Conversions of the principal amount of this Note on any given Trading Day to twenty (20%) of the average daily dollar trading volume for the Common Stock on the Principal Market (or other applicable Trading Market) for the twenty (20) consecutive Trading Days preceding such Trading Day. For the purposes of this definition the term “dollar trading volume” for any Trading Day shall be determined by multiplying the VWAP by the volume as reported on Bloomberg for such Trading Day. The Conversion of up to $20,000 of principal amount of this Note on any given Trading Day would in no event be prohibited by the foregoing.

g) Overall Cap . In no event will the aggregate number of shares of Common Stock issued in any capacity pursuant to this Note exceed 15,000,000 shares of Common Stock (the “ Overall Cap ”).

Section 5 . Certain Adjustments .

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

b) Subsequent Equity Sales .

(i) If, at any time while this Note 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 Fixed Conversion Price (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 Fixed Conversion Price, such issuance shall be deemed to have occurred for less than the Fixed Conversion Price on such date of the Dilutive Issuance), then the Fixed Conversion Price shall be reduced, and only reduced, to an amount equal to 120% of such lower price (such lower price, 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)(i) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b)(i), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”).

(ii) Intentionally Omitted .

(iii) 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 Section 5(a) above, 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 Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

d) Pro Rata Distributions . During such time as this Note 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 Note, 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 Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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 ( provided , however , to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

e) Fundamental Transaction . If, at any time while this Note 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 fifty percent (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 fifty percent (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 Note, 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), Section 4(e) or Section 4(f) on the Conversion of this Note), the number of shares of capital 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 Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d), Section 4(e) or Section 4(f) on the Conversion of this Note). 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 Note 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 Note and the other Operative Documents in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note 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 Note (without regard to any limitations on the Conversion of this Note) 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 Note 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 Note and the other Operative 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 Note and the other Operative Documents with the same effect as if such Successor Entity had been named as the Company herein.

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

g) Notice to the Holder .

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

ii. Notice to Allow Conversion by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of Conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note 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 Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 6 . Optional Redemption at the Election of the Holder .

(a) Subject to the provisions of this Section 6(a), (i) commencing on August 1, 2017, (ii) in the event that the Overall Cap has been reached or (iii) in the event that any of the Equity Conditions, at any time after July 31, 2016, are not or cease to be satisfied for any reason (an “ Equity Conditions Failure ”) for three consecutive Trading Days, the Holder may, at any time and from time to time after such date set forth in clause (i) or the occurrence of such events set forth in clauses (ii) or (iii), whichever may occur first, deliver a notice to the Borrowers (an “ Optional Redemption Notice ” and the date such notice is deemed delivered hereunder, the “ Optional Redemption Notice Date ”) of its election to require the Borrowers to redeem all or a portion of the then outstanding principal amount of this Note plus all accrued and unpaid interest thereon and other amounts payable hereunder, plus, if applicable, the Make-Whole Amount (the “ Optional Redemption Amount ”) for cash on the twentieth (20 ^th ) Trading Day following the Optional Redemption Notice Date (such date, the “ Optional Redemption Date ” and such redemption, the “ Optional Redemption ”). The Optional Redemption Amount is payable in full on the Optional Redemption Date. Notwithstanding anything to the contrary contained herein, upon an optional redemption of this Note pursuant to clause (ii) or clause (iii) of the first sentence of this Section 6(a) at any time, the Holder shall be entitled to an amount of interest equal to the interest that would have accrued on such principal amount being redeemed hereto until the six month anniversary of the Optional Redemption Date. The amount owed pursuant to the prior sentence shall be decreased by any Make-Whole Amount payable in respect of such optional redemption. Such amount is payable in full in cash on the applicable Optional Redemption Date.

(b) The Borrowers shall immediately notify the Holder of any Equity Conditions Failure.

(c) The Optional Redemption Amount plus any additional amounts owed pursuant to Section 6(a) shall be due and payable in cash on the Optional Redemption Date. For the avoidance of doubt, in no event shall the Optional Redemption Amount or any other amount due under Section 6(a) be payable in shares of Common Stock. If any portion of the Optional Redemption Amount or any other amount due under Section 6(a) shall not be paid by the Borrowers by the Optional Redemption Date interest shall accrue thereon at an interest rate equal to the lesser of fifteen percent (15%) per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount remains unpaid after the Optional Redemption Date, the Holder may elect, by written notice to the Borrowers given at any time thereafter, to revoke such Optional Redemption, ab initio . The Holder may elect to convert the outstanding principal amount of this Note pursuant to Section 4 prior to actual payment in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Borrowers.

Section 7 . Covenants .

a) As long as any portion of this Note remains outstanding, unless the Holder shall have otherwise given prior written consent, VaultLogix shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

i. other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness 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;

ii. 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;

iii. make or hold any Investments;

iv. Dispose of any of its assets other than the sale of inventory in the ordinary course of business consistent with past practices;

v. 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;

vi. merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person or otherwise suffer or permit a Change of Control Transaction; or

vii. repay, repurchase or offer to repay, repurchase or otherwise acquire any of its Equity Interests;

viii. repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness other than this Note;

ix. pay cash dividends or distributions on any of its Equity Interests

x. enter into any transaction with any Affiliate of a Borrower 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

xi. enter into any agreement with respect to any of the foregoing.

b) As long as any portion of this Note remains outstanding, unless the Holder shall have otherwise given prior written consent, the Company shall not suffer or permit a Change of Control Transaction or enter into any agreement with respect thereto.

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 this Note, or (B) interest, liquidated damages and other amounts owing to a Holder on this Note, as and when the same shall become due and payable (whether on a Conversion Date, Optional Redemption Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within three (3) Trading Days;

ii. a Borrower shall fail to observe or perform any other covenant or agreement contained in this Note (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 (viii) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5) Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) ten (10) Trading Days after a Borrower has become or should have become aware of such failure; provided, that any failure to observe or perform Section 7 shall be an immediate Event of Default without any grace period;

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 Operative Documents or (B) any other material agreement, lease, document or instrument to which a Borrower or any Subsidiary thereof is obligated (and not covered by clause (vi) below);

iv. any representation or warranty made in this Note, any other Operative 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. a Borrower or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof shall be subject to a Bankruptcy Event;

vi. a Borrower or any Subsidiary thereof 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. (a) the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within five (5) Trading Days, (b) the shares of Common Stock are not listed or quoted for trading on a Trading Market for five (5) Trading Days (which need not be consecutive) during any twelve (12) month period, or (c) the shares of Common Stock are not listed or quoted for trading on a Trading Market for three (3) consecutive Trading Days;

viii. the Borrowers shall fail for any reason to deliver certificates to a Holder prior to the second Trading Day after a Share Delivery Date or a Borrower shall provide at any time notice to the Holder, including by way of public announcement, of its intention to not honor requests for conversions of this Note in accordance with the terms hereof;

ix. an Event of Default (as defined therein) occurs and is continuing under the 10% Original Issue Discount Senior Secured Convertible Debentures of the Company originally issued on December 29, 2015;

x. a Public Information Failure occurs and continues uncured for ten (10) consecutive Trading Days;

xi. the electronic transfer by the Company of shares of Common Stock through DTC or another established clearing corporation is no longer available or is subject to a “chill”;

xii. any monetary judgment, writ or similar final process shall be entered or filed against a Borrower, any Subsidiary or any of their respective property or other assets for more than $500,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of forty five (45) calendar days;

xiii. unencumbered cash on deposit in the Deposit Account is less than the Mandatory Default Amount;

xiv. VaultLogix or PNC Bank, National Association fails to comply with its obligations under the DACA or notifies the Holder of its intention to not comply with terms of the DACA;

xv. PNC Bank, National Association closes, or notifies the Holder and/or the Borrowers of its intention to close, the Deposit Account; or

xvi. PNC Bank, National Association terminates, or notifies the Holder and/or the Borrowers of its intention to terminate, the DACA.

b) Remedies Upon Event of Default . If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount; provided, that such acceleration shall be automatic, without any notice or other action of the Holder required, in respect of an Event of Default occurring pursuant to clause (v) of Section  8(a). For the avoidance of doubt, in no event shall the Mandatory Default Amount be payable in shares of Common Stock. Upon the payment in full of the Mandatory Default Amount in cash, the Holder shall promptly surrender this Note to or as directed by the Borrowers. In connection with such acceleration described herein, the Holder need not provide, and the Borrowers hereby waive, 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 this Note 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 Borrowers, at the address set forth above, or such other facsimile number, email address, or address as the Borrowers 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 Borrowers hereunder shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile number or email address or address of the Holder appearing on the books of the Borrowers, or if no such facsimile number or email attachment or address appears on the books of the Borrowers, at the principal place of business of such Holder, as set forth in the Securities Exchange 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.

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

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

d) Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Note 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 Operative 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 Operative 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 Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any 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 Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, 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.

e) Amendments; Waivers . No provision herein may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Borrowers and the Holder, or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Note shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

f) Severability . If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note 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 Borrowers covenant (to the extent that they may lawfully do so) that they 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 Borrowers from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Borrowers (to the extent it may lawfully do so) hereby expressly waive 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) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief .  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Operative Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Borrowers to comply with the terms of this Note.  The Borrowers covenant to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Borrowers (or the performance thereof). Each Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. Each Borrower therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. Each Borrower shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm each Borrower’s compliance with the terms and conditions of this Note.

h) 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.

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

j) Secured Obligation . The obligations of the Borrowers under this Note are secured by the collateral identified in the Security Agreement, dated as of February 18, 2016, between the Debtors (as defined therein) and the Holder.

k) Reservation of Shares . 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 Note and payment of interest on this Note, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder, not less than such aggregate number of shares of the Common Stock set forth in the Irrevocable Transfer Agent Instructions. 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.

l) Co-Borrowers .

i. Borrowers are jointly and severally liable for all of the indebtedness, obligations, and liabilities of the Borrowers now or hereafter existing under this Note and the Operative Documents, whether for principal, interest, fees, expenses, indemnification or otherwise (the “ Obligations ”) and the Holder may proceed against one Borrower to enforce the Obligations without waiving its right to proceed against the other Borrower. This Note and the Operative Documents are a primary and original obligation of each Borrower and shall remain in effect notwithstanding future changes in conditions, including any change of law or any invalidity or irregularity in the creation or acquisition of any Obligations or in the execution or delivery of any agreement between the Holder and any Borrower. Each Borrower shall be liable for existing and future Obligations as fully as if all of the principal amount of this Note were advanced to such Borrower. The Holder may rely on any certificate or representation made by any Borrower as made on behalf of, and binding on, all Borrowers. Each Borrower appoints each other Borrower as its agent with all necessary power and authority to give and receive notices, certificates or demands for and on behalf of all Borrowers. This authorization cannot be revoked, and the Holder need not inquire as to one Borrower’s authority to act for or on behalf of another Borrower.

ii. Notwithstanding any other provision of this Note or any other Operative Document, each Borrower irrevocably waives, until all Obligations are paid in full, all rights that it may have at law or in equity (including, without limitation, any law subrogating a Borrower to the rights of the Holder under this Note or any other Operative Documents) to seek contribution, indemnification, or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by a Borrower with respect to the Obligations in connection with the Operative Documents or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by a Borrower with respect to the Obligations in connection with the Operative Documents or otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section shall be null and void. If any payment is made to a Borrower in contravention of this Section, such Borrower shall hold such payment in trust for the Holder and such payment shall be promptly delivered to the Holder for application to the Obligations, whether matured or unmatured.

iii. Each Borrower waives, to the extent permitted by law, notice of acceptance hereof; notice of the existence, creation or acquisition of any of the Obligations; notice of an Event of Default except as set forth herein; notice of the amount of the Obligations outstanding at any time; notice of any adverse change in the financial condition of any other Borrower or of any other fact that might increase a Borrower’s risk; presentment for payment; demand; protest and notice thereof as to any instrument; and all other notices and demands to which Borrower would otherwise be entitled by virtue of being a co-borrower or a surety. Each Borrower waives any defense arising from any defense of any other Borrower, or by reason of the cessation from any cause whatsoever of the liability of any other Borrower. The Holder’s failure at any time to require strict performance by any Borrower of any provision of this Note or the other Operative Documents shall not waive, alter or diminish any right of the Holder thereafter to demand strict compliance and performance therewith. Each Borrower also waives any defense arising from any act or omission of the Holder that changes the scope of such Borrower’s risks hereunder. Each Borrower hereby waives any right to assert against the Holder any defense (legal or equitable), setoff, counterclaim, or claims that such Borrower individually may now or hereafter have against another Borrower or any other Person liable to the Holder with respect to the Obligations in any manner or whatsoever.

iv. The liability of the Borrowers hereunder shall not be diminished by (i) any agreement, understanding or representation that any of the Obligations is or was to be guaranteed by another Person or secured by other property, or (ii) any release or unenforceability, whether partial or total, of rights, if any, which the Holder may now or hereafter have against any other Person, including another Borrower, or property with respect to any of the Obligations. Without notice to any given Borrower and without affecting the liability of any given Borrower hereunder, the Holder may (i) compromise, settle, renew, extend the time for payment, change the manner or terms of payment, discharge the performance of, decline to enforce, or release all or any of the Obligations with respect to any other Borrower by written agreement with such other Borrower, (ii) grant other indulgences to another Borrower in respect of the Obligations, (iii) modify in any manner any documents relating to the Obligations with respect to any other Borrower by written agreement with such other Borrower, (iv) release, surrender or exchange any deposits or other property securing the Obligations, whether pledged by a Borrower or any other Person, or (v) compromise, settle, renew, or extend the time for payment, discharge the performance of, decline to enforce, or release all or any obligations of any guarantor, endorser or other Person who is now or may hereafter be liable with respect to any of the Obligations.

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(Signature Pages Follow)

IN WITNESS WHEREOF, the parties below have caused this Note to be duly executed by a duly authorized officer as of this 18 ^th day of February, 2016.

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the 8.25% Senior Secured Convertible Note due February 18, 2019 of InterCloud Systems, Inc., a Delaware corporation (the “ Company ”), and VaultLogix, LLC, a Delaware limited liability company (“VaultLogix” and together with the Company, the “ Borrowers ”), 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 Borrowers 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 Borrowers that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, 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.

Schedule 1

CONVERSION SCHEDULE

The 8.25% Senior Secured Convertible Note due on February18, 2019, in the aggregate principal amount of $11,601,054.62 is issued by InterCloud Systems, Inc., a Delaware corporation, and VaultLogix, LLC, a Delaware limited liability company. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.

Dated: