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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) October
4, 2021

 

PRECISION OPTICS CORPORATION, INC.

(Exact name of registrant as specified in its charter)

 

Massachusetts   001-10647   04-2795294
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)
         

 

22 East Broadway, Gardner, Massachusetts   01440
(Address of principal executive offices)   (Zip Code)

 

(978) 630-1800

(Registrant’s telephone number, including
area code)

 

Not applicable.

(Former name or former address, if changed since
last report)

 

Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):

 

☐           
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐           
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐           
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐           
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to
Section 12(b) of the Act: None

Securities registered pursuant to
Section 12(g) of the Act:

 

Title of each class   Trading symbol(s)   Name of each exchange on which registered
Common stock, $0.01 par value   PEYE   OTCQB

 

Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange
Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐

     

 

Item 1.01 Entry into a Material Definitive Agreement.
Item 2.01 Completion of Acquisition or Disposition of Assets.
Item 3.02 Unregistered Sale of Securities.

 

On October 4, 2021, we closed on an asset purchase
agreement with Lighthouse Imaging, LLC and Anania & Associates Investment Company, LLC for substantially all of the assets of Lighthouse
Imaging, LLC, a Maine limited liability company operating a medical optics and digital imaging business. The aggregate cash purchase price
consisted of $2,855,000 in cash at closing, which is the original cash closing amount of $3,250,000 adjusted for a working capital shortfall,
and $1,500,000 as earn-out consideration over a period of two years. In addition, we issued 2,500,000 unregistered shares of common stock
to the sellers.

 

The earn-out consideration will be paid at a rate
of $750,000 per annum from October 1, 2021 to September 30, 2023 if certain gross profit is earned by Lighthouse.

 

The asset purchase agreement contains customary
representations, warranties, and indemnification provisions. The selling shareholders of Lighthouse agreed to a non-compete, non-solicitation,
and non-hire provision for a period of five years from the closing date.

 

We financed the acquisition by taking on a $2,600,000
term loan from Main Street Bank and by closing a $1,500,000 private placement. The term loan has a term of seven years and bears interest
at the greater of the Wall Street Journal “Prime Rate” plus 1.50% or the fixed rate of 4.75% per annum. We also secured a
revolving line of credit not to exceed $250,000 for general working capital purposes. The line of credit bears interest at the same rate
as the term loan. Both the term loan and the line of credit are secured by all of the assets of our Company, including those acquired
with the Lighthouse business.

 

On October 4, 2021, we entered into agreements
with investors for the sale and purchase of 937,500 shares of our common stock, $0.01 par value, at a purchase price of $1.60 per share.
We received $1,500,000 in gross proceeds from the offering.

 

The wife of our VP of sales and marketing Jeffrey
Di Rubio participated in the private placement by purchasing 12,500 shares of common stock for $20,000.

 

In conjunction with the placement, we also entered
into a registration rights agreement with the investors, whereby we are obligated to file a registration statement with the Securities
Exchange Commission on or before 120 calendar days after October 4, 2021 to register the resale by the investors of 937,500 shares of
our common stock purchased in the placement.

 

The agreements also provide for the investors
to receive additional shares of our common stock in the event we close a subsequent offering of our common stock at a purchase price lower
than $1.60 per share before October 4, 2022. The additional shares each investor would receive would be equal to the difference between
the number of shares that would have been received at the reduced purchase price and the number of shares received at the $1.60 purchase
price.

 

The issuance of the shares of common stock was
exempt from registration pursuant to the exemption contained in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506
of Regulation D, inasmuch as it was not a public offering since no general solicitation or advertising of any kind was used in connection
with the issuance and there was only a limited number of recipients or the recipients were knowledgeable accredited investors who understand
the investment risks. Accordingly, the shares issued as part of the private placement have not been registered under the Securities Act
of 1933, as amended, and until so registered, the securities may not be offered or sold in the United States absent registration or availability
of an applicable exemption from registration.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.

 

As part of the Lighthouse acquisition, on October
4, 2021, we agreed with the seller that Mr. Peter Anania or another person named by Lighthouse will join our Board for a minimum term
of three years. The minimum term shall not apply in the event Mr. Anania violates any applicable laws, the bylaws or other corporate governance
documents of the Company, or the employee handbooks, guidelines and other documents governing employee conduct. Lighthouse may request
the removal of Mr. Anania at any time.

 

 

 

 

On October 6, 2021, our Board
appointed Mr. Peter V. Anania as a class II director for a three-year term or until his successor is duly elected or qualified.

 

Peter V. Anania is President of Anania & Associates,
and Anania & Associates Investment Company LLC, a private investment firm focused on privately-held, Maine-based businesses. He founded
both businesses in 1987. He serves as President and on the Board of Microwave Techniques LLC and Ferrite Microwave Technologies LLC. He
has served in operating and board positions of numerous private companies in which he has invested and performed management consulting
services to non-portfolio companies.

 

Mr. Anania served on the Windham Town Council,
board of the Windham Economic Development Corporation, Maine Heritage Policy Center (Chairman); is a Corporator for Bangor Savings Bank;
an Emeritus Board member of the Maine International Trade Center participating in trade missions to Korea, the United Kingdom, Brazil,
Argentina, Taiwan, Singapore, Germany, the Netherlands and Mexico; and serves as a charter member of Maine’s District Export Council helping
small businesses expand their export sales. He previously served on the board of the USM Alumni Association, the Family Crisis Center,
the United Way Allocation Committee and Raye’s Mustard Mill in Eastport.

 

Mr. Anania has a B.A. from the University of Maine
and an MBA from the University of Southern Maine.

 

There have been no related party transactions
between Mr. Anania and our Company since the beginning of the last fiscal year.

 

The description of the asset purchase agreement,
the loans and the private placement does not purport to be complete and is qualified in its entirety by reference to the complete text
of the asset purchase agreement, the loan documents, the form of the securities purchase agreement, and the form of registration rights
agreement, which are filed as Exhibits 10.1 through 10.7, respectively, to this Current Report on Form 8-K and are incorporated
herein by reference.

 

This report does not constitute an offer to sell
or the solicitation of an offer to buy, and these securities cannot be sold in any state or jurisdiction in which this offer, solicitation,
or sale would be unlawful prior to registration or qualification under the securities laws of any state or jurisdiction. Any offer will
be made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement.

 

This report contains forward-looking statements. Forward-looking
statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or
any other statements related to our future activities or future events or conditions. These statements are based on current expectations,
estimates and projections about our business based, in part, on assumptions made by our management. These statements are not guarantees
of future performances and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including
those risks discussed in our Annual Report on Form 10-K and in other documents that we file from time to time with the SEC, including
but not limited to the risks associated with realizing the opportunities of the Lighthouse acquisition and the resources required to integrate
the newly acquired assets.  Any forward-looking statements speak only as of the date on which they are made, and we do not undertake
any obligation to update any forward-looking statement to reflect events or circumstances after the date of this report, except as required
by law.

 

  Item 9.01 Financial Statements and Exhibits.

 

a) Financial Statements of
businesses or funds acquired.

 

The financial statements
required to be filed by Item 9.01(a) of Form 8-K will be filed by amendment no later than 71 calendar days after the date this Current
Report on Form 8-K is required to be filed.

 

(b) Pro forma financial information.

 

The financial statements
required to be filed by Item 9.01(b) of Form 8-K will be filed by amendment no later than 71 calendar days after the date this Current
Report on Form 8-K is required to be filed.

 

 

 

 

(d) Exhibits.

 

10.1†*   Asset Purchase Agreement, dated October 4, 2021, by and among Precision Optics Corporation, Inc. and Lighthouse Imaging, LLC and Anania & Associates Investment Company, LLC.
     
10.2   Form of Securities Purchase Agreement, by and among Precision Optics Corporation, Inc. and several Investors, dated October 4, 2021.
     
10.3   Form of Registration Rights Agreement, by and among Precision Optics Corporation, Inc. and several Investors, dated October 4, 2021.
     
10.4*   Loan Agreement dated October 4, 2021, by and among Precision Optics Corporation, Inc. and Main Street Bank.
     
10.5   $250,000 Revolving Line of Credit Note dated October 4, 2021.
     
10.6   $2,600,000 Term Loan Note dated October 4, 2021.
     
10.7   Security Agreement dated October 4, 2021, by and among Precision Optics Corporation, Inc. and Main Street Bank.
     
10.8   Director side letter agreement dated October 4, 2021.

 

Certain portions of the agreement have been omitted to preserve the confidentiality of such information. The Company will furnish copies of any such information to the SEC upon request.

 

  * The schedules to the agreement have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K.  The Company will furnish copies of any such schedules to the SEC upon request.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  Precision Optics Corporation, Inc.
  (Registrant)
   
   
Date: October 8, 2021 By:  /s/ Joseph N. Forkey
    Name: Joseph N. Forkey
Title: Chief Executive Officer

 

 

 

 

 

 

 

Exhibit 10.1

 

[Certain identified information has been excluded
from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.]

 

ASSET
PURCHASE AGREEMENT

 

This Asset Purchase Agreement
(this “Agreement”) is made and entered into as of October 4, 2021 by and among Precision Optics Corporation, Inc. a
Massachusetts corporation (the “Purchaser”), and Lighthouse Imaging, LLC a Maine limited liability company (the “Seller”),
and Anania & Associates Investment Company, LLC, the holder of a majority interest in Seller (the “Majority Member”).
The Purchaser, the Seller and the Majority Member are each referred to herein as a “Party” and collectively as the
Parties.” Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them
in the Glossary attached as Exhibit A.

 

RECITALS

 

WHEREAS, the Seller is in
the business of owning and operating a medical optics and digital imaging manufacturing business “Lighthouse Imaging” located
at 765 Roosevelt Trail, Suite 9, Windham, ME 04062 (the “Business”); and

 

WHEREAS, upon the terms and
subject to the conditions set forth in this Agreement, the Seller desires to sell to the Purchaser and the Purchaser desires to purchase
from the Seller substantially all of the assets, properties and contractual rights of the Seller as more fully set forth herein.

 

NOW, THEREFORE, in consideration
of the respective representations, warranties and covenants contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I
SALE AND PURCHASE OF THE ASSETS

 

1.1                Business
Assets
.
Subject to the terms and conditions set forth herein, effective as of the Closing Date, the Seller hereby sells, transfers,
assigns and delivers to the Purchaser, and the Purchaser hereby purchases from the Seller, all right, title, ownership and interest in
the Business Assets, free and clear of all Encumbrances. The “Business Assets” means all of the assets, properties,
rights, privileges, claims and contractual rights of the Seller of every kind and nature, real and personal, tangible and intangible,
absolute or contingent, wherever located to the extent such Business Assets are in any way associated with or related to the Business,
including without limitation the assets set forth in Exhibit B (the “Asset Schedule”), but expressly excluding
the Excluded Assets. The Business Assets shall include, without limitation, the following assets of the Seller, but expressly excluding
the Excluded Assets:

 

(a)                 all
logos, trademarks, telephone numbers, fax numbers, websites, email addresses, customer lists, customer information, business information,
and the name and trade name “Lighthouse Imaging,” and all related names and derivations thereof (the “Name and Trade
Name
”);

 

(b)               
all Intellectual Property;

 

(c)               
all Business Tangible Property;

 

(d)               
all Accounts Receivable and all deposits and advance payments for services to be performed on or
after the Effective Time;

 

(e)               
all of the Seller’s rights under the Contracts identified in Section 1.1(e) of the
Disclosure Schedule
(the “Assumed Contracts”);

 

 

 

 

 

(f)                
the Real Property Leases, including those security deposits held by landlords pursuant to the Real
Property Leases;

 

(g)               
to the extent transferable under applicable Law, all Business Permits used or held for use by the
Seller;

 

(h)               
originals or copies of all books and records;

 

(i)                
all Inventory;

 

(j)                
to the extent transferable, all claims, demands, deposits, pre-payments, refunds, rebates, causes
of action, choses in action, rights of recovery, rights of set-off and rights of recoupment, including (i) rights under or pursuant to
all warranties, representations and guarantees made by suppliers or service providers, (ii) proceeds from insurance policies, and (iii) for
the breach, infringement or misappropriation, as the case may be, of any of the Intellectual Property;

 

(k)               
all of the Seller’s rights, if any, under employment, consulting, noncompetition, non-solicitation,
assignment of Intellectual Property, and similar agreements between the Seller and its current or former owners, employees, or contractors;

 

(l)                
all service contracts, license agreements, and contracts with customers and suppliers to the extent
such contracts are assignable and the Purchaser elects to be assigned such contracts and agreements; and

 

(m)             
all of the goodwill associated with the Business.

 

1.2                Excluded
Assets
.
The Seller shall retain all right, title and interest in and to the following assets (collectively, the “Excluded
Assets
”):

 

(a)               
all cash and cash equivalents, including bank accounts, certificates of deposit and treasury bills;

 

(b)               
any assets of the Seller listed on Exhibit C (the “Excluded Asset Schedule);

 

(c)               
any equity interests in the Seller;

 

(d)               
the Seller’s corporate seal, Charter Documents, and any equity interest records;

 

(e)               
the Purchase Price to be paid by the Purchaser;

 

(f)                
all rights of the Seller under this Agreement and the Related Agreements;

 

(g)               
all claims, demands, refunds, rebates, causes of action, choses in action, rights of recovery, rights
of set-off and rights of recoupment to the extent relating to any Excluded Assets or Retained Liabilities; and

 

(h)               
all Contracts which are not identified as Assumed Contracts.

 

 

 

 

 

1.3                Purchase Price.

 

(a)               
Purchase Price. The Purchaser agrees, subject to the terms hereof:

 

(i)                    
In consideration for the purchase of the Business Assets from Seller, the Purchaser shall pay, or
cause to be paid, an amount equal to the Closing Payment, plus the Earn-Out Amount actually earned, plus the Issued Shares
(all as defined below) (collectively, the “Purchase Price”) as the same may be adjusted pursuant to this Agreement;
and

 

(ii)                   
to discharge when lawfully due the Assumed Liabilities.

 

(b)               
Payment of Purchase Price. The Purchaser shall pay to the Seller the Purchase Price as follows:

 

(i)                   
Subject to the various adjustments as of the Closing Date set forth in this Agreement, at the Closing,
three million two hundred fifty thousand Dollars ($3,250,000.00) (the “Closing Payment”);

 

(ii)                 
Subject to Section 1.3(d) and Section 5.5, to the extent earned and at the time set forth in Section
1.3(d), up to one million five hundred thousand Dollars ($1,500,000.00) (the “Earn-Out Amount”); and

 

(iii)            
     
At Closing the Purchaser shall issue (in book-entry form) to Seller, or its designees as set forth in Exhibit D, two million
five hundred thousand (2,500,000.00) unregistered shares of common stock in Purchaser (the “Issued Shares”). Seller
acknowledges and agrees that the Issued Shares shall be restricted from sale for a period of at least six (6) months following Closing
in accordance with Rule 144 promulgated under the Securities Act.

 

(c)               
Proration Adjustment. No fewer than three (3) Business Days prior to the Closing, the Parties
shall prorate and apportion, on a per diem basis, as of the close of business the day before the Effective Time, the real and personal
property taxes and assessments for the Business Assets, based upon the last available tax statement, amounts owing for utilities and similar
expenses, and amounts owed under any capital leases that are Assumed Contracts (collectively, the “Proration Amount”).
The Purchase Price and the Closing Payment shall be increased or decreased, as the case may be, by the Proration Amount, and such adjustments
shall be reflected on the Settlement Statement.

 

(d)               
Earn-Out Amount.

 

(i)                     Earn-Out.
With respect to each Earn-Out Year (as defined below), in the event that the Gross Profits Threshold (as defined below) for such Earn-Out
Year is achieved or exceeded, then the Seller shall be entitled to an earn-out payment equal to seven-hundred fifty thousand Dollars
($750,000.00) (the “Annual Earn-Out Amount”), as further illustrated in the chart below:

 

Earn-Out Year Gross Profit Threshold Earn-Out Amount
10/1/2021-9/30/2022 $[____] $750,000.00
10/1/2022-9/30/2023 $[____] $750,000.00

 

For purposes of
this Agreement, “Earn-Out Year” means that period of time commencing on October 1 of such year and concluding on September
30 of the following calendar year.

 

For purposes of
this Agreement, “Gross Profits Threshold” means the amount of Gross Profits set forth in the chart in Section 1.3(d)(i)
that must be achieved or exceeded in order for the Seller to earn the Annual Earn-Out Amount for such Earn-Out Year.

 

 

 

 

 

For purposes of
this Agreement, “Gross Profits” means gross sales to the customers of the Business (as identified on Schedule 1.3(d))
less all cost of goods sold, credits and rebates calculated in accordance with GAAP consistent with the past practices of the Seller.

 

(ii)             Partial Earn-Out. If Seller does not earn the Annual Earn-Out Amount in either Earn-Out Year
pursuant to Section 1.3(d)(i), Seller shall be entitled to a partial payment of such Annual Earn-Out Amount as follows:

 

(1)    
If Seller achieves [____] percent ([____]%) of the Gross Profit Threshold (the “First Year Gross Profit Floor”)
for the first Earn-Out Year, Seller shall be entitled to an earn out payment equal to [____] percent ([____]%) of the Annual Earn-Out
Amount. In addition, each [____] percent ([____]%) of Gross Profit Threshold greater than the First Year Gross Profit Floor, Seller shall
be entitled to an additional earn out payment equal to [____] percent ([____]%) of the Annual Earn-Out Amount for the first Earn-Out Year.
For example, if the Gross Profits for the first Earn-Out Year equals [____] Dollars ($[____]), the Earn-Out Amount for the first Earn-Out
Year shall be [____] Dollars ($[____]). No Earn-Out Amount shall be earned or paid unless the Gross Profits for the first Earn-Out Year
equals or exceeds the First Year Gross Profit Floor.

 

(2)    
If Seller achieves [____] percent ([____]%) of the Gross Profit Threshold (the “Second Year Gross Profit Floor”)
for the second Earn-Out Year, Seller shall be entitled to an earn out payment equal to [____] percent ([____]%) of the Annual Earn-Out
Amount. In addition, each [____] percent ([____]%) of Gross Profit Threshold greater than the Second Year Gross Profit Floor, Seller shall
be entitled to an additional earn out payment equal to [____] percent ([____]%) of the Annual Earn-Out Amount for the second Earn-Out
Year. For example, if the Gross Profits for the second Earn-Out Year equals [_____] Dollars ($[____]), the Earn-Out Amount for the second
Earn-Out Year shall be [____] Dollars ($[____]). No Earn-Out Amount shall be earned or paid unless the Gross Profits for the second Earn-Out
Year equals or exceeds the Second Year Gross Profit Floor.

 

(iii)           Earn-Out Statement. Within sixty (60) days after the end of each Earn-Out Year, Purchaser
shall prepare and deliver to the Seller a statement setting forth, in reasonable detail, Purchaser’s good faith calculation of the
Gross Profits for such Earn-Out Year (the “Earn-Out Statement”). Seller shall have a period of thirty (30) days to
review such Earn-Out Statement (the “Review Period”).  During such Review Period, the Purchaser shall provide
the Seller and its representatives with prompt access to such books, records, materials, information and personnel as the Seller may reasonably
request to confirm the accuracy of the Earn-Out Statement. If the Gross Profits set forth in such Earn-Out Statement equal or exceed the
Gross Profits Threshold for such Earn-Out Year, then Purchaser shall pay to Seller the Annual Earn-Out Amount for such Earn-Out Year via
wire transfer of immediately available funds within fifteen (15) days of the delivery of the Earn-Out Statement; provided, however,
such Earn-Out Amount shall not be deemed accepted by Seller until the conclusion of the Review Period, subject to any dispute per Section
1.3(d)(iv) below. If the Gross Profits set forth in such Earn-Out Statement do not equal or exceed the Gross Profits Threshold
for such Earn-Out Year, Purchaser shall not pay to Seller any Annual Earn-Out, but the Seller shall have the Review Period to evaluate
the calculation and shall have the right to proceed pursuant to Section 1.3(d)(iv) below.

 

(iv)           Earn-Out Statement Dispute. If the Seller disputes the calculation of Gross Profits in an
Earn-Out Statement, then the Seller shall provide to Purchaser, no later than the expiration of the Review Period, a written notice (the
Dispute Notice”) setting forth, in reasonable detail, each such disputed item, along with (to the extent practicable
given the information made available by the Purchaser to the Seller) the Seller’s calculation of Gross Profits. If the Seller
delivers a Dispute Notice prior to the expiration of the Review Period, Purchaser and the Seller will, for a period of thirty (30) days
thereafter, attempt in good faith to resolve any disputed items identified in such Dispute Notice.  Failing resolution pursuant
to the foregoing, either Purchaser or Seller may refer the unresolved disputed items (each, a “Disputed Item”) for
final binding resolution to a neutral accounting firm to be mutually selected by the Parties (the “Accounting Firm”)
in the event a Dispute Notice is provided to Purchaser.  The Accounting Firm shall be required to resolve the disagreements with
or relating to the calculation of Gross Profits in accordance with the terms and provisions of this Agreement.  The Accounting Firm
shall act as an expert (and not an arbitrator) to resolve each Disputed Item.  In submitting a dispute to the Accounting Firm, each
of Purchaser and the Seller shall concurrently furnish, at its own respective expense, to the Accounting Firm and the other Party such
documents and information as the Accounting Firm may reasonably request.  Each of Purchaser and the Seller may also furnish to the
Accounting Firm such other information and documents as it deems relevant, with copies of such submission and all such documents and
information being concurrently given to the other Party.  The fees and expenses of such Accounting Firm shall be borne by the losing
party in such proceeding (as finally determined by the Accounting Firm).  In the event that, after resolution of all Disputed Items
in accordance with this Section 1.3(d)(iii), the finally determined Earn-Out Amount exceeds the Earn-Out Amount paid by the Purchaser
concurrently with the delivery of the Earn-Out Statement, then the Purchaser shall pay, or cause to be paid, to the Seller such excess
amount no later than fifteen days (15) after the date of such final determination under this 1.3(d)(iv).

 

 

 

 

 

(v)            Conduct
of Business
. During the Earn-Out Period, Purchaser shall have the right and power to control all aspects of the business and operations
of the Business and shall be entitled to take such actions, or refrain from taking any actions, as Purchaser deems appropriate in its
sole discretion.

 

(e)               
Working Capital Adjustment.

 

(i)             Preliminary Statement. No fewer than three (3) Business Days prior to the Closing, the Seller
shall prepare and deliver to the Purchaser a statement, certified by an executive officer of the Seller (the “Preliminary Statement”),
containing (i) an estimated balance sheet of the Company as of the Effective Time, prepared in good faith and in accordance with GAAP
(the “Estimated Balance Sheet”), and (ii) based thereon, a good faith estimate of the Working Capital that will be
delivered to the Purchaser at the Closing (the “Estimated Working Capital”), in each case, together with work papers
or other supporting documentation showing in reasonable detail the preparation or calculation thereof. The Estimated Balance Sheet, including
the Estimated Working Capital, shall be subject to the Purchaser’s review and approval.

 

(ii)             Estimated Adjustments. The Closing Payment shall be adjusted, plus or minus, dollar
for dollar, by the amount by which the Estimated Working Capital set forth in the Preliminary Statement exceeds or is less than the Target
Working Capital. Any such adjustment shall be reflected on the Settlement Statement.

 

(iii)           Post-Closing Adjustments. Within ninety (90) calendar days after the Closing Date, the Purchaser
will prepare and deliver to the Seller a statement (the “Closing Statement”) setting forth the actual Working Capital
delivered to the Purchaser at the Closing (the “Final Working Capital”), together with work papers or other supporting
documentation showing in reasonable detail the preparation or calculation thereof.

 

(1)            If the Final Working Capital is greater than the Estimated Working Capital, then the Purchaser shall pay to the Seller an amount
equal to the amount by which the Final Working Capital exceeds the Estimated Working Capital.

 

(2)            If the Final Working Capital is less than the Estimated Working Capital, then the Seller shall pay to the Purchaser an amount equal
to the amount by which the Estimated Working Capital exceeds the Final Working Capital.

 

(3)            Any payment to be made pursuant to this Section 1.3(e)(iii) shall be paid within five (5) Business Days after the final
determination of the Final Working Capital pursuant to Section 1.3(e)(iv).

 

(iv)           Objection
to Closing Statement
. Seller shall have a period of thirty (30) days to review the Closing Statement (the “Closing Review
Period
”). During such Closing Review Period, the Purchaser shall provide the Seller and its representatives with prompt
access to such books, records, materials, information and personnel as the Seller may reasonably request to confirm the accuracy of the
Closing Statement. If the Seller disputes the calculation of Closing Statement, the parties shall handle that dispute pursuant to the
process set forth in Section 1.3(d)(iv); provided, however, that all references to “Gross Profits” and
“Earn-Out Amounts” shall instead refer to the “Final Working Capital” and all references to an “Earn-Out
Statement” shall instead refer to the “Closing Statement.”

 

1.4                Assumption of Liabilities.

 

(a)               
Assumed Liabilities. As of the Closing Date, the Purchaser will assume only the following
liabilities, commitments and other obligations of the Seller (collectively, the “Assumed Liabilities”): all Liabilities,
commitments and other obligations arising after the Effective Time pursuant to the Assumed Contracts, but only to the extent such liabilities
and obligations (i) arise after the Effective Time, (ii) do not arise from or relate to any breach by the Seller of any provision of any
of such Assumed Contracts, and (iii) do not arise from or relate to any event, circumstance or condition occurring or existing on or prior
to the Effective Time that, with notice or lapse of time, would constitute or result in a breach of any of such Assumed Contracts.

 

 

 

 

 

(b)               
Retained Liabilities. Anything to the contrary in this Section 1.4 notwithstanding,
the Parties expressly agree that, except with respect to the Assumed Liabilities, the Purchaser will not assume or otherwise become liable
for any Liabilities of the Seller of any nature whatsoever, all of which shall be retained by the Seller (collectively, the “Retained
Liabilities
”), whether or not any of the same have been disclosed to the Purchaser and whether or not any of the same relate
to the Business Assets. The Seller will discharge when lawfully due the Retained Liabilities.

 

1.5               Closing. The sale and purchase of the Business Assets shall occur (the “Closing”) on the date
of this Agreement. Closing shall take place remotely by exchange of documents and signatures (or their electronic counterparts) simultaneously
with the execution of this Agreement, or at such other time or place or in such other manner as Seller and Purchaser may mutually agree
upon in writing. The date on which Closing occurs is referred to as the “Closing Date”. The consummation of the transactions
contemplated by this Agreement shall be deemed to have occurred at 12:01 a.m. on the Closing Date; provided, however, that the consummation
of the transactions contemplated by this Agreement, solely for tax and accounting purposes, shall be deemed to have occurred at 12:01
a.m. on October 1, 2021 (the “Effective Time”).

 

1.6               Deliveries by the Seller. In addition to any other documents to be delivered under other provisions of this Agreement,
at the Closing, the Seller shall deliver or cause to be delivered to the Purchaser each of the following:

 

(a)               
a Bill of Sale, in substantially the form attached hereto as Exhibit E (the “Bill
of Sale
”) for the Business Tangible Property, executed by an authorized officer of the Seller;

 

(b)               
all consents, waivers or approvals required in order to properly effectuate the assignment of the
Assumed Contracts to the Purchaser, or the consummation of the transactions pursuant to this Agreement, all in a form or forms reasonably
acceptable to the Purchaser;

 

(c)               
an Assignment and Assumption Agreement, in substantially the form attached hereto as Exhibit F
(the “Assumption Agreement”) executed by the Seller;

 

(d)               
an Assignment and Assumption of Lease, in substantially the form attached hereto as Exhibit G
(the “Lease Assignment”) executed by the Seller and the landlord;

 

(e)               
the Restrictive Covenants Agreements, in substantially the form attached hereto as Exhibit H
(the “Restrictive Covenants Agreement”) executed by [____];

 

(f)                 a
Settlement Statement, in substantially the form attached hereto as Exhibit I (the “Settlement Statement”)
setting forth the various adjustments to the Closing Payment;

 

(g)               
an Assignment of Intellectual Property, in substantially the form attached hereto as Exhibit J
(the “IP Assignment”) executed by the Seller;

 

(h)               
the 8-K Financial Information;

 

(i)                
the Lighthouse Director Side Letter executed by the Seller and the Majority Member;

 

(j)                
a certificate, signed by an authorized [manager/officer] of the Seller, dated as of the Closing Date,
certifying (i) the accuracy, completeness and full force and effect of the Charter Documents of the Seller attached thereto as an exhibit;
(ii) (A) the resolutions duly adopted by the managers and the members of the Seller authorizing and approving the execution, delivery
and performance of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby
and (B) that such resolutions have not been rescinded or modified and remain in full force and effect as of the Closing Date; and (iii)
the incumbency of the [manager/officer(s)] of the Seller executing this Agreement and the other Related Agreements, including specimen
signatures;

 

 

 

 

 

(k)               
a good standing certificate for the Seller issued by the appropriate Governmental Authority of the
state of the Seller’s organization, dated as of a recent date;

 

(l)                
evidence reasonably satisfactory to the Purchaser of a full release of all security interests held
by third parties in any of the Business Assets;

 

(m)               evidence reasonably satisfactory to the Purchaser of full repayment and satisfaction of Closing Indebtedness;

 

(n)               
Uniform Commercial Code lien searches and such other searches as may be reasonably requested by the
Purchaser to confirm that there are no financing statements, judgments, taxes or other Liens outstanding against the Seller or any of
the Business Assets as of the Closing;

 

(o)               
tax clearance certificates from the taxing authorities in the jurisdictions that impose Taxes on
the Seller or where the Seller has a duty to file Tax returns in connection with the transactions contemplated by this Agreement and evidence
of the payment in full or other satisfaction of any Taxes owed by the Seller in those jurisdictions;

 

(p)               
An affidavit of non-foreign status of the Seller and the Majority Member, dated as of the Closing
Date, in form and substance required under Section 1445 of the Code such that the Purchaser is exempt from withholding any portion of
the Purchase Price; and

 

(q)                such
other separate documents or instruments of sale, assignment or transfer as the Purchaser shall reasonably request, including registration
transfers for Domain Names used or held for use by the Seller for the Business, to evidence the consummation of the transactions set
forth herein.

 

1.7                Deliveries by the Purchaser. In addition to any other documents to be delivered under other provisions of this Agreement,
at the Closing, the Purchaser shall deliver or cause to be delivered to the Seller each of the following:

 

(a)               
the Closing Payment;

 

(b)               
the Issued Shares delivered to the Seller or its designees;

 

(c)               
the Assumption Agreement executed by the Purchaser;

 

(d)               
the Lease Assignment executed by the Purchaser;

 

(e)               
the Restrictive Covenants Agreements executed by the Purchaser;

 

(f)                
the IP Assignment executed by the Purchaser;

 

(g)               
the Lighthouse Director Side Letter executed by the Purchaser;

 

(h)               
the Settlement Statement executed by the Purchaser; and

 

(i)                
a certificate, signed by an authorized officer of the Purchaser, dated as of the Closing Date, certifying
(i) (A) the resolutions duly adopted by the Board of Directors of the Purchaser or its parent authorizing and approving the execution,
delivery and performance of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and
thereby and (B) that such resolutions have not been rescinded or modified and remain in full force and effect as of the Closing Date;
and (ii) the incumbency of the officer(s) of the Purchaser executing this Agreement and the other Related Agreements, including specimen
signatures.

 

 

 

 

 

1.8               Allocation
of Purchase Price
. The Purchase Price shall be allocated among the Business Assets in accordance with the methodology set forth
on Section 1.8 of the Disclosure Schedule. The Parties shall make consistent use of this allocation for all purposes (including
Tax and financial accounting) and in any and all filings, declarations and reports with the Internal Revenue Service in respect thereof.

 

1.9               Withholding
Tax
. The Purchaser shall be entitled to deduct and withhold from the Purchase Price all taxes that the Purchaser may be required
to deduct and withhold under any applicable Tax law. All such withheld amounts shall be treated as delivered to the Seller hereunder.

 

1.10      
      
Transfer Restrictions; Share Certificates; Book Entry Shares.

 

(a)                Any shares comprising the Issued Shares shall not be sold, pledged, or otherwise transferred, and
the Seller and any of its designees shall not , directly or indirectly, unless otherwise provided herein, (a) offer, sell, agree to offer
or sell, solicit offers to purchase, grant any call option or purchase any put option with respect to, pledge, assign, transfer, borrow
or otherwise dispose of any Issued Shares or otherwise publicly disclose the intention to do so, except where such transfer complies with
the applicable securities laws. Seller and the designees agree that Purchaser shall instruct Purchaser’s transfer agent to issue
stop-transfer instructions with respect to the Issued Shares and any such sale, pledge, or transfer, except upon the conditions specified
in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. The Seller and any designee
will cause any proposed purchaser, pledgee, or transferee of such shares to agree to take and hold such securities subject to the provisions
and upon the conditions specified in this Agreement and all applicable federal and state laws, including the Securities Act.

 

(b)               The
holder of any shares comprising the Issued Shares, by acceptance of ownership thereof, agrees to comply in all respects with the provisions
of this Section 1.10. Before any proposed sale, pledge, or transfer of any such shares, unless there is in effect a registration statement
under the Securities Act covering the proposed transaction, the holder thereof shall give notice to the Purchaser of such holder’s
intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale,
pledge, or transfer in sufficient detail and, if reasonably requested by the Purchaser, shall be accompanied at such holder’s expense
by obtaining a written opinion of corporate counsel for Purchaser, to the effect that the proposed transaction may be effected without
registration under the Securities Act. The Purchaser agrees to use reasonable efforts to effectuate a registration statement in connection
with the Issued Shares within a reasonable period of time after the Closing Date.

 

(c)                All
certificates representing the Issued Shares or any other securities issued in respect of such shares upon stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required by applicable
state securities laws):

 

“THE SECURITIES REPRESENTED
HEREBY HAVE NOT 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 TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT AND SUCH REGISTRATION STATEMENT
REMAINS EFFECTIVE, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) COMPANY COUNSEL HAS OPINED THAT SUCH TRANSFER MAY LAWFULLY
BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT.”

 

In addition, with respect
to any Issued Shares or any other securities issued in respect of such shares that are issued in book-entry form, a notation comparable
to the foregoing legend shall be reflected on the books and records of the Purchaser’s transfer agent.

 

 

 

 

 

 

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MAJORITY MEMBERS

 

Except as specifically set
forth in the Disclosure Schedule attached hereto as Exhibit K (the “Disclosure Schedules”), the Seller and the
Majority Member, jointly and severally, hereby make the representations and warranties set forth in this ARTICLE II to the Purchaser as
of the date hereof; provided, however, the Seller shall only make the representations and warranties set forth in. Section 2.31 in the
event that the Seller is actually issued some or all of the Issued Shares in connection with the Closing.

 

2.1             
Organization and Qualification. The Seller is a limited liability company duly organized, validly existing and in
good standing under the laws of the state of its organization. The Seller’s members identified in Section 2.1 of the Disclosure
Schedules
own in the aggregate all of the issued and outstanding equity interest of the Seller. The Seller has the company power to
own the Business Assets and to carry on the Business as now being conducted, and is duly qualified to do business and is in good standing
in each jurisdiction in which the failure to be so qualified and in good standing would be material. The Seller has provided to the Purchaser
a true and correct copy of its operating agreement and articles of organization, in each case as amended to date, and as in full force
and effect on the date hereof (collectively, the “Charter Documents”).

 

2.2             
Authority. (a) The Seller has all requisite power and authority to enter into this Agreement and any Related Agreements
to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement
and any Related Agreements to which the Seller is a party and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary company action on the part of the Seller, and no further action is required on the part of the Seller
to authorize the Agreement and any Related Agreements to which the Seller is a party and the transactions contemplated hereby and thereby.
This Agreement and each of the Related Agreements to which the Seller is a party have been duly executed and delivered by the Seller and
assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations
of the Seller, enforceable against it in accordance with their respective terms, except to the extent that such enforceability may be
limited by the effect, if any, of (i) any applicable bankruptcy, reorganization, insolvency, moratorium or other Law affecting the enforcement
of creditors’ rights generally, and (ii) general principles of equity, regardless of whether such enforceability is considered in
a proceeding at law or in equity.

 

(b)               The
Majority Member has full power, authority and legal right and capacity to enter into and perform its obligations under this Agreement
and each other Related Agreement to which the Majority Member is or will be a party and to consummate the transactions contemplated hereby
and thereby. This Agreement and the other Related Agreements to which the Majority Member is a party have been duly executed and delivered
by the Majority Member and are legal, valid and binding obligations of the Majority Member, enforceable against the Majority Member in
accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights in general and general principles of equity.

 

2.3             
Consents and Approvals; No Violation. Except as set forth in Section 2.3 of the Disclosure Schedules, no filing
or registration with, and no permit, authorization, consent or approval of, any Party, including any Governmental Authority, is necessary,
and the Seller is not required to give any notice to any Person, for the consummation of the transactions contemplated by this Agreement.
Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the compliance by
the Seller with any of the provisions hereof do, (i) conflict with or result in any breach of any provision of the Charter Documents,
(ii)  result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any Business Permit,
note, Contract, commitment, bond, mortgage, indenture, license, lease, pledge agreement or other instrument or obligation to which the
Seller is a party or by which the Seller, the Business or any of its assets may be bound (including any Assumed Contract), (iii) give
rise to any lien, charge or other Encumbrance on any of the Business Assets, or (iv) violate any Law.

 

 

 

 

 

 

2.4             
Financial Statements.

 

(a)                The
Seller has provided the Purchaser true, correct and complete copies of (i) the Seller’s audited financial statements, prepared
by an independent accounting firm for the two most recent fiscal years and (ii) the Seller’s internal interim financial statements
as of July 31, 2021 (the “Balance Sheet Date”) (collectively, the “Financial Statements”). The
Financial Statements are accurate and complete, have been prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered and present fairly in all material respects the financial position of the Seller as of the date thereof and the results
of operations and cash flows of the Seller for the periods covered thereby. The Financial Statements reflect all revenues earned through
the Balance Sheet Date, regardless whether such revenues have been billed or collected. As of the respective dates of the Financial Statements,
there are no Liabilities, contingent or definite, of the Seller that are not taken into account or otherwise disclosed in the Financial
Statements.

 

(b)                The Seller 
has established and maintains a system of “internal controls over financial reporting” (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act) that is sufficient to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with GAAP including policies and procedures that: (i) require
the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of
the Seller ; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and that receipts and expenditures of the Seller are being made only in accordance with
appropriate authorizations of the Seller’s management and the Seller’s board of directors; and (iii) provide assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the assets of the Seller.

 

2.5             
Undisclosed Liabilities. The Seller does not have any Liabilities of any nature with respect to the Business (whether
accrued, absolute, matured or unmatured, fixed or contingent, known or unknown, or otherwise) other than (i) those set forth or adequately
provided for in the Financial Statements (and the related notes thereto) as of the Balance Sheet Date, and (ii) those incurred in
the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not individually or in the aggregate,
material in amount.

 

2.6             
Absence of Changes. Since the Balance Sheet Date, (i) the Seller has in all material respects conducted its Business
in the ordinary course consistent with past practice; (ii) there has not occurred any change, event or condition that is a Material
Adverse Effect or could reasonably be expected to result in a Material Adverse Effect; (iii) there has not been any material destruction,
damage or loss suffered by the Seller (whether or not covered by insurance) adversely affecting the Seller; and (iv) there has not been
any material change in cash management practices and policies, practices and procedures with respect to collection of Accounts Receivable,
establishment of reserves for uncollectible Accounts Receivable, accrual of Accounts Receivable, inventory control, prepayment of expenses,
payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits.

 

2.7             
Customers and Vendors.

 

(a)   
          The Seller has not received any notice indicating that, nor to the Knowledge of the Seller is there
a material likelihood that, any customer may cease dealing with the Seller or may otherwise materially reduce the volume of business transacted
by such Person with the Seller below historical levels. Section 2.7(a) of the Disclosure Schedules sets forth a true, correct and
complete list of the Seller’s top ten (10) customers (based upon the dollar amount of payments to Seller) for calendar years 2019,
2020 and the month period ending June 30, 2021.

 

(b)              
The Seller has not received any notice indicating that, nor to the Knowledge of the Seller is there
a material likelihood that, any vendor may cease dealing with the Seller or may otherwise materially reduce the volume of business transacted
by such Person with the Seller below historical levels. Section 2.7(b) of the Disclosure Schedules sets forth a true, correct and
complete list of the Seller’s top ten (10) vendors (based upon the dollar amount of payments by Seller) for calendar years 2019,
2020 and the month period ending June 30, 2021.

 

 

 

 

 

 

2.8               Title
to Business Assets; Encumbrances
.
The Seller has good and marketable title to all of the Business Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances. No Affiliate of the Seller or any other Person holds any interest in any of the Business
Assets. The Business Assets collectively constitute all of the properties, rights, interests and other tangible and intangible assets
necessary to enable the Purchaser to conduct the Business following the Closing Date in the manner in which the Business is currently
being conducted and planned to be conducted. All of the items of Business Tangible Property owned or leased by the Seller: (a) have been
maintained in accordance with normal industry practice; (b) in good operating condition and repair, subject only to ordinary wear and
tear; and (c) are useable and fit for their purpose in which they are presently used. The Seller has sole and exclusive ownership, free
and clear of any Liens, of all Customer Information, and no person other than the Seller possesses any claims or rights with respect
to use of the Customer Information.

 

2.9             
Material Contracts. Section 2.9 of the Disclosure Schedules sets forth a true, complete and correct list of
each of the following material written or oral Contracts (the “Material Contracts”):

 

(a) any employment agreement,
independent contractor agreement, consulting agreement, severance agreement, change in control agreement, bonus agreement, offer letter
or other Contract relating to the employment or engagement of any employee, independent contractor, consultant or agent;

 

(b) any Contract relating
to the purchase, license or lease of supplies, equipment, assets, property or products from, or the performance of services by, a third-party
involving payment in excess of $35,000;

 

(c) any Contract relating
to the sale, license or lease of supplies, products, assets or property to any third party, or the performance of services by Seller,
involving payment in excess of $35,000; (d) any Contract relating to any license, franchise, software or Intellectual Property, or any
ideas, technical assistance or other know-how (other than “off the shelf” shrink-wrap software licenses);

 

(e) any Contracts relating
to capital expenditures involving payment in excess of $25,000 individually or in the aggregate;

 

(f) any Contracts relating
to the grant to any third party of a Lien and Encumbrance on any assets;

 

(g) any Contracts relating
to any joint venture or partnership or other Contract providing for the sharing of profits;

 

(h) any Contract restricting
or limiting the freedom of Seller to compete or participate in any manner, business or territory;

 

(i) any collective
bargaining agreement;

 

(j) any management, management
services, services, administrative services or other Contracts relating to the provision or receipt of any management, business, marketing,
payroll, human resources, administrative or other support services;

 

(k) any other Contract that
requires performance for a period of more than ninety (90) days or that involves payments in excess of $25,000;

 

(l) any supplier agreements,
master services agreements, or developer agreements;

 

(m) any other Contract
material to Seller.

 

 

 

 

 

 

Seller has delivered or made
available to Purchaser true, correct and complete copies of each of the written Material Contracts and a description of the material terms
of any material oral Material Contract. Except as set forth in Section 2.9 of the Disclosure Schedules each of the Material Contracts
is with an unrelated third party, was entered into on an arm’s length basis in the ordinary course of business, and is in full force
and effect in accordance with the terms thereof. There is no pending or, to the Knowledge of Seller, threatened cancellation or termination
of any of the Material Contracts, and there are no outstanding disputes under any of the Material Contracts. The Material Contracts are
enforceable by or against the Seller thereto and, against each other party thereto. There is no existing or claimed default or breach
under any of the Assumed Contracts, or any existing event that to the Knowledge of Seller, with notice or lapse of time or both, would
constitute a default or breach by the Seller or any other party to such Material Contracts, including the transactions contemplated hereunder.
Following the Closing Date, the Purchaser will be permitted to exercise all of its rights under the Assumed Contracts without the payment
of any additional amounts or consideration other than ongoing fees, royalties or payments which the Seller would otherwise be required
to pay pursuant to the terms of such Assumed Contracts had the transactions contemplated by this Agreement not occurred.

 

2.10         
   
Litigation.

 

(a)               
There are no pending Proceedings, nor has the Seller received any threats by any Person to commence
any Proceeding:

 

(i)                    
that involves the Seller or that otherwise relates to or might affect the Seller, the Business or
any of the Business Assets (whether or not the Seller is named as a party thereto); or

 

(ii)                  
that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the transactions contemplated by this Agreement or the Related Agreements.

 

(b)               
To the Knowledge of the Seller, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any such Proceeding.

 

(c)               
There is no Order to which any of the Business Assets is subject. There is no Order to which the
Seller is subject.

 

(d)               
There is no proposed Order that, if issued or otherwise put into effect, (i) may have a Material
Adverse Effect on the ability of the Seller to comply with or perform any covenant or obligation under this Agreement or any of the Related
Agreements, or (ii) may have the effect of preventing, delaying, making illegal or otherwise materially interfering with any of the
transactions contemplated by this Agreement or the Related Agreements.

 

2.11             Taxes.

 

(a)               
All Tax Returns required to be filed by the Seller for any period prior to the Effective Time have
been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all respects. All Taxes due and owing
by the Seller (whether or not shown on any Tax Return) have been, or will be, timely paid.

 

(b)               
The Seller has withheld and paid each Tax required to have been withheld and paid in connection with
amounts paid or owing to any Business Employee, independent contractor, creditor, customer, shareholder or other party, and complied with
all information reporting and backup withholding provisions of applicable Law.

 

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

 

(d)               
All deficiencies asserted, or assessments made, against the Seller as a result of any examinations
by any taxing authority have been fully paid.

 

 

 

 

 

 

(e)               
The Seller is not a party to any Proceeding by any taxing authority. There are no pending or threatened
Proceedings by any taxing authority.

 

(f)                
There are no Encumbrances for Taxes upon any of the Business Assets nor is any taxing authority in
the process of imposing any Encumbrances for Taxes on any of the Business Assets (other than for current Taxes not yet due and payable).

 

(g)               
The Seller is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

 

2.12             Employees.

 

(a)                Section
2.12(a) of the Disclosure Schedules
contains a true, correct and complete list of (i) the employees currently employed by the Seller
(the “Business Employees”), including any agreement with any such Employee, job title (if any), full or part-time status,
date of hire, citizenship status, and a description of the rate and nature of all current salary or wages payable by the Seller to each
Employee, including all accrued sick, personal and vacation days as of the date of this Agreement, all fringe benefits and all other items
owed to such Employees, (ii) each consultant or independent contractor who currently provides services to the Seller, and (iii) all personnel
policies, manuals, employee handbooks, summary plan descriptions and similar materials pertaining to the Business. Except as specifically
described in Section 2.12(a) of the Disclosure Schedules, there are no other forms of compensation paid to any Employee. Except
as specifically described in Section 2.12(a) of the Disclosure Schedules, all Employees currently employed by the Seller are actively
at work (or on vacation) and no Employee is currently on a leave of absence, layoff, suspension, sick leave, workers’ compensation,
short or long-term disability, family leave, military leave, or otherwise not actively performing his or her work during all normally
scheduled business hours (other than vacation). The Seller is not subject to any collective bargaining agreement. There is no labor strike,
dispute, slowdown or work stoppage or lockout pending or, to the Knowledge of the Seller, threatened against or affecting the Business
and during the three (3) years preceding the Closing Date there has been no such action. No union organization campaign is in progress
with respect to any of the Employees, and no question concerning representation exists respecting such Employees. Each person classified
by the Seller as an independent contractor satisfies and has satisfied the requirements of any applicable Law to be so classified, and
the Seller has fully and accurately reported such independent contractors’ compensation on IRS Forms 1099 when required to do so.

 

(b)               The
Seller has been and is in compliance with all Laws respecting employment and employment practices, terms and conditions of employment
and wages and hours, including without limitation any such Laws respecting employment discrimination, workers’ compensation, family
and medical leave, the Immigration Reform and Control Act, the Americans with Disabilities Act, human rights, employment standards, safety
and health, tax reporting and withholding with respect to wages and other compensation, and labor relations. There is not now, nor within
the three (3) years preceding the Closing Date has there been, any unfair labor practice complaint against the Seller pending or, to the
Knowledge of the Seller, threatened before any labor relations board or any other comparable authority. The Seller has not incurred and
does not reasonably expect to incur any Liability under the WARN Act and the regulations promulgated thereunder or any similar state or
local law.

 

2.13             Employee
Benefits
.

 

(a)               Except
as disclosed on Section 2.13(a) of the Disclosure Schedules, neither the Seller, nor any of its ERISA Affiliates, maintains or
sponsors, or has any Liability, contingent or otherwise, with respect to, any Benefit Arrangement. The Seller has delivered to the Purchaser
true and complete copies of: (i) each written Benefit Arrangement document and a description of each unwritten Benefit Arrangement, (ii)
each summary plan description relating to any Benefit Arrangement, (iii) each trust, insurance or other funding contract or agreement
relating to any Benefit Arrangement, (iv) each administrative services contract or agreement relating to any Benefit Arrangement, (v)
the three (3) most recent annual reports for each Benefit Arrangement (including all related schedules), if applicable, (vi) all correspondence
with or from the IRS, the U.S. Department of Labor or any other Governmental Authority relating to any Benefit Arrangement relating to
any controversy or audit, (vii) the most recent IRS determination letter, opinion, notification or advisory letter (as the case may be)
for each Benefit Arrangement which is intended to constitute a qualified plan under Section 401 of the Code and (viii) any others documents
in respect of any Benefit Arrangement reasonably requested by Purchaser. Neither the Seller nor any ERISA Affiliate has any obligation
or commitment to establish, maintain, operate or administer any new Benefit Arrangement or to amend any Benefit Arrangement so as to
increase benefits thereunder or otherwise. The Seller may amend or terminate any Benefit Arrangement (other than an employment agreement
or similar agreement that cannot be terminated without the consent of the other party) at any time without incurring any Liability thereunder,
other than in respect of accrued and vested obligations and medical or welfare claims incurred prior to such amendment or termination.
No Benefit Arrangement has terms requiring assumption by the Purchaser.

 

 

 

 

 

(b)                Neither the Seller,
nor any ERISA Affiliate, has or has ever had any Liability with respect to any Benefit Arrangement that is subject to Title IV of ERISA,
including a “multiemployer plan”, as defined in Section 3(37) of ERISA or a “single employer plan” within the
meaning of Section 4001(a)(15) of ERISA. Neither the Seller nor any ERISA Affiliate has terminated a Benefit Arrangement with respect
to which any Liability remains outstanding.

 

(c)               No
Benefit Arrangement provides or has ever provided post-retirement medical, health or other welfare benefits, except to the extent required
by Part 6 of Title I of ERISA. No Benefit Arrangement is or has ever been a “welfare benefit fund,” as defined in Section
419(e) of the Code, or an organization described in Sections 501(c)(9) or 501(c)(20) of the Code.

 

(d)               Each
Benefit Arrangement conforms to, and has been operated and administered in compliance with, its terms and all applicable Laws. Each Benefit
Arrangement intended to be qualified under Section 401(a) of the Code is so qualified and is the subject of a currently effective favorable
determination, opinion, notification or advisory letter issued by the IRS to the effect that such Benefit Arrangement is so qualified
and that the trust thereunder is exempt from federal income Tax under Section 501(a) of the Code. No event has occurred, and no condition
exists, which could adversely affect the Tax-qualified status of any such Benefit Arrangement. Neither the Seller nor any ERISA Affiliate
has incurred or is subject to a Tax under Section 4979 of the Code.

 

(e)               There
are no pending or, to the Knowledge of the Seller, threatened liens, actions, suits, claims, trials, arbitrations, investigations or other
proceedings by any Person, including any present or former participant or beneficiary under any Benefit Arrangement (or any beneficiary
of any such participant or beneficiary) or any Governmental Authority involving any Benefit Arrangement or any rights or benefits under
any Benefit Arrangement other than ordinary and usual claims for benefits by participants or beneficiaries thereunder. No event has occurred
and no condition exists that could subject the Seller or the fund of any Benefit Arrangement to the imposition of any Tax or penalty with
respect to any Benefit Arrangement, whether by way of indemnity or otherwise. All contributions required to have been made or remitted
and all expenses required to have been paid by the Seller and/or any ERISA Affiliate to or under any Benefit Arrangement under the terms
of any such plan, any agreement or any applicable Law have been paid within the time prescribed by any such plan, agreement or Law. All
contributions to or under any Benefit Arrangement have been and are currently deductible under the Code when made. No “prohibited
transaction” (as defined in ERISA Section 406) or breach of fiduciary responsibility has occurred with respect to any Benefit Arrangement
for which a Tax, penalty or other Liability of whatever nature could be incurred by the Seller or any ERISA Affiliate, directly or indirectly.

 

2.14              Real
Property
.

 

(a)                Section
2.14(a) of the Disclosure Schedules
contains a complete and accurate list of all real property, structures and buildings used by or
in connection with the Business (the “Real Property”). Except as set forth in Section 2.14(a) of the Disclosure
Schedules
, all presently existing improvements included in the Real Property are in reasonably good operating condition and repair
(subject to normal wear and tear) and sufficient for the operation of the Business as presently conducted by the Seller. To the Knowledge
of Seller, there are no structural deficiencies or latent defects affecting any of the improvements and there are no facts or conditions
affecting any of the improvements that would interfere with the use or occupancy of the improvements or any portion thereof in the operation
of the Business as presently conducted by the Seller.

 

(b)               To
the Knowledge of the Seller, (i) there is no pending or threatened condemnation, expropriation or other Proceeding in eminent domain
affecting any parcel of the Real Property or any portion thereof or interest therein, and (ii) there is no pending or threatened
injunction, decree, order, writ or judgment outstanding, nor any claim, litigation, administrative action or similar proceeding relating
to the ownership, lease, use or occupancy of the Real Property or any portion thereof.

 

(c)               To
the Knowledge of the Seller, the Real Property is in compliance in all material respects with all applicable building, zoning, subdivision,
health and safety and other land use Laws, including the Americans with Disabilities Act of1990, as amended (collectively, the “Real
Property Laws
”), and all insurance requirements affecting the Real Property, and the current use and occupancy of the Real Property
and operation of the Business do not violate any Real Property Laws in any material respect. The Seller has not received any notice of
violation of any Real Property Laws and to the Knowledge of the Seller, there is no basis for the issuance of any such notice or the taking
of any action for such violation. To the Knowledge of the Seller, there is no pending or anticipated change in any Real Property Law that
will materially impair the ownership, lease, use or occupancy of the Real Property or any portion thereof in the operation of the Business
as presently conducted by the Seller.

 

 

 

 

 

(d)          To
the Knowledge of the Seller, the classification of each parcel of the Real Property under applicable zoning laws permits the use and occupancy
of such parcel and the operation of the Business as presently conducted and as proposed to be conducted, and permits the improvements
located thereon as currently constructed, used and occupied. To the Knowledge of the Seller, there are sufficient parking spaces and other
facilities at the Real Property to comply with such zoning Laws and to permit the operation of the Business as presently conducted by
the Seller. To the Knowledge of the Seller, none of the improvements encroach on any land that is not included in the Real Property or
on any easement affecting such Real Property, or violate any building lines or set back lines, and there are not encroachments onto any
of the Real Property, or any portion thereof, which encroachment would interfere with the use or occupancy of such Real Property or the
continued operation of the Business as presently conducted and as proposed to be conducted.

 

(e)          Section
2.14(e) of the Disclosure Schedules
lists all leases, subleases, licenses, concession agreements or other use or occupancy agreements
that relate to the Business and pursuant to which the Seller leases to or from any other party any Real Property (the “Real Property
Leases
”). All of the Real Property Leases, including all renewals, extensions, modifications or supplements to any of the foregoing
or substitutions for any of the foregoing, (i) are valid and in full force and effect, without default (or event which with notice
or passage of time or both would constitute a default) on the part of any party to such Real Property Leases and (ii) have not been assigned,
modified, supplemented or amended. The Real Property Leases and the Seller’s interests thereunder are and will be free of all Encumbrances
in favor of any creditors of the Seller. Except as set forth on Section 2.14(e) of the Disclosure Schedules, the Seller is not
required to obtain any approvals in order to transfer the Real Property Leases to the Purchaser.

 

2.15       Condition
and Sufficiency of Assets
.
The buildings, plants, structures, furniture, fixtures,
machinery, equipment, vehicles and other items of tangible personal property included in the Business Assets are in good operating condition
and repair, and are adequate for the uses to which they are being put, and, to the Knowledge of Seller, none of such buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance
or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The Business Assets are sufficient
for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitute
all of the rights, property and assets necessary to conduct the Business as currently conducted. None of the Excluded Assets are material
to the Business.

 

2.16       Inventory.
All Inventory, is (a) free of any material defect or other deficiency; (b) of a quality, quantity, and condition useable and saleable
in the ordinary course of the Business (subject to obsolescence reserves); and (c) properly stated on the Financial Statements and books
and records of the Seller at the lesser of cost or fair market value on a moving average price (MAP) basis, with adequate obsolescence
reserves reflected in the Financial Statements in accordance with GAAP. None of the Inventory is obsolete (except for the obsolescence
reserve) and no write-down of such Inventory has been made or should have been made in the period since [July 1, 2021]. All Inventory
is owned by Seller free and clear of all Encumbrances, and no Inventory is held on a consignment basis. The quantities of each item of
Inventory (whether raw materials, work-in-process or finished goods) are not excessive but are reasonable in the present circumstances
of Seller. All Inventory is located at the Business, except for such Inventory that may be located at a customer’s location pursuant
to an Assumed Contract.

 

2.17       Product
Warranty
.
The Seller does not have any Liability for replacement or repair of products sold or delivered by the Seller, or other
damages in connection therewith, except as required by Applicable Laws or pursuant to contractual commitments. No product sold, leased,
distributed, delivered, or packaged by the Seller, in connection with the Assumed Contracts, is subject to any guaranty, warranty, or
other indemnity other than the applicable guaranty, warranty or other indemnity set forth in the applicable Assumed Contract. Each product
manufactured, sold, leased, distributed or delivered by Seller is and has been at all times (a) in conformity with all applicable contractual
commitments (including applicable specifications) and all express and implied warranties, (b) merchantable, (c) free from defects in workmanship,
materials, packaging, construction and design, (d) fit and sufficient for the purpose for which it is intended and/or which is stated
on any packaging, labeling or advertising, and (e) produced, packaged, labeled, packed, shipped, and invoiced in compliance with Applicable
Laws. The Inventory is guaranteed under all Applicable Laws not to be (x) adulterated or misbranded, or (y) articles which may not be
introduced into interstate commerce. Seller has no Liability (and there is no basis for any present or future Proceeding against Seller
giving rise to any Liability) for replacement or repair or any products or other damages in connection with the Business, subject only
to reserves for product warranty claims set forth on the face of the Balance Sheet and explicitly designated as a Liability of the Business,
as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Seller. No product manufactured,
sold, leased, distributed, delivered or packaged by Seller is subject to any guaranty, warranty or other indemnity beyond the applicable
standard terms and conditions of sale or lease as set forth on Section 2.17 of the Disclosure Schedules.

 

 

 

 

 

2.18       Insurance.
The Seller has maintained insurance with respect to the Business Assets, Assumed Liabilities and the operation of the Business under such
coverage policies and in such amounts that would be in accordance with good industry practice (collectively, the “Insurance Policies”)
.. There are no claims related to the Business, the Business Assets or the Assumed Liabilities pending under any such Insurance Policies
as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. Neither
Seller nor any of its Affiliates has received any written notice of cancellation of, premium increase with respect to, or alteration of
coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if not yet due,
accrued. All such Insurance Policies (a) are in full force and effect and enforceable in accordance with their terms; (b) are provided
by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. None of Seller or any of its Affiliates
is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy.

 

2.19        Environmental
Matters
.
Seller is currently and has been in compliance with all Environmental Laws and has not received from any Person any:
(i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each
case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date, and there
are no facts or circumstances that would reasonably be expected to give rise to any such violation of or Liability under Environmental
Law. To the Knowledge of the Seller, no real property or facility now or formerly leased or used by the Seller is contaminated with any
substance or material that requires investigation, remediation or clean-up under any law, regulation, order, directive or other requirement,
contains asbestos or has located on, at or under it any fuel, oil or gasoline storage tanks. To the Knowledge of the Seller, the Real
Property has not been used for hazardous waste disposal and the Real Property is not in violation of any Federal, state or local law,
ordinance or regulation relating to environmental conditions on, under or about the Real Property, including, but not limited to soil,
ground water, toxic waste or biological conditions. The Seller has not used, generated, manufactured, stored or disposed of on, under
or about the Real Property or transported to or from the Real Property any Hazardous Materials in violation of any Federal, state or local
law, ordinance or regulation relating to environmental conditions. For the purposes of this paragraph, the term “Hazardous Materials
shall include but not be limited to flammable explosives, radioactive materials, hazardous wastes, toxic substances, biological materials,
and any other materials encompassed in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, and all applicable state and local laws, regulations and publications.

 

2.20       Governmental
Authorizations; Licenses; Etc
.
The Seller has at all times operated in compliance with all applicable Laws, rules,
regulations, codes, ordinances, orders, policies and guidelines of all Governmental Authorities and no written claims have been
filed against, and no notices have been received by, the Seller alleging a violation of any such Laws, rules, regulations, codes,
ordinances, orders, policies or guidelines. The Seller has all Business Permits relating to the Business and Business Assets,
necessary or advisable for the operation of the Business and/or use of the Business Assets as currently conducted by the Seller.
There is no action, case or proceeding pending or, to the Knowledge of the Seller, threatened by any Governmental Authority with
respect to (i) any alleged violation by the Seller (or an employee or agent of the Seller) or their Affiliates of any Law or
(ii) any alleged failure by the Seller (or an employee or agent of the Seller) or their Affiliates to have any required in
connection with the operation of the Business or use of the Business Assets. No notice of any violation of such laws has been
received by the Seller or any Affiliate of the Seller and neither the Seller, any such Affiliate nor has any member of Seller
received any notice that the services furnished by the Business are not in compliance with, or do not meet the standards of, all
applicable Laws. Section 2.20 of the Disclosure Schedules sets forth a true and complete list of all Business Permits.
Such Business Permits are in full force and effect and the Seller has not received any notification of the suspension or
cancellation of any thereof. All reports and returns required by Law to be filed by the Seller in connection with the Business or
Assets with any Governmental Authority on or before the date hereof have been timely filed and were, when filed, and currently are
true, accurate and complete. Section 2.20 of the Disclosure Schedules lists all of the Business Permits possessed by the
Seller which, in accordance with applicable Law, the Purchaser is required to notify, obtain the consent of or otherwise amend the
Seller’s filings, application or other paperwork with the issuing Governmental Authority prior to the consummation of the
transactions contemplated hereby.

 

 

 

 

 

 

2.21       Intellectual
Property
.
Section 2.21 of the Disclosure Schedules contains a complete and accurate list of all Intellectual Property.
No Intellectual Property is subject to any claim, proceeding or outstanding decree, order, judgment, or stipulation or Contract restricting,
in any material manner, the use, transfer, or licensing thereof, or which may materially affect the validity, use or enforceability of
such Intellectual Property. The Seller owns, and has good and exclusive title to, each item of Intellectual Property free and clear of
any lien or encumbrance. To the Knowledge of the Seller, no person has infringed or misappropriated, or is infringing or misappropriating,
any Intellectual Property. There are and have been no claims or Actions pending or, to the Knowledge of the Sellers, threatened against
Seller contesting the validity, use, ownership or enforceability of any of the Intellectual Property owned by Seller or used in the operations
of the Business, and no notices have been received by Seller that the operations of the Business are infringing, misappropriating or otherwise
violating the Intellectual Property of any other Person. Section 2.21 of the Disclosure Schedules sets forth a true, correct and
complete list, all Intellectual Property: (A) owned or developed by Seller; or (B) licensed to Seller or otherwise owned by any third
party Person and used in the Business (other than “off the shelf” shrink-wrap software licenses). With respect to the registered
Intellectual Property listed on Section 2.21 of the Disclosure Schedules as owned or developed by Seller, all such Intellectual
Property is valid, subsisting and in full force and effect and Seller has paid all maintenance fees and made all filings required to maintain
its ownership thereof. For all such registered Intellectual Property owned or developed Seller, Section 2.21 of the Disclosure Schedules
also includes a true, correct and complete list of (A) the jurisdiction where the application or registration is located, (B) the application
or registration number, and (C) the application or registration date.

 

2.22       Customary
Business Practices
.
The Seller has not, directly or indirectly:

 

(a)       
 made or authorized the making of any offer, payment or promise to give anything of value to (i) any official or employee of a
Governmental Authority, (ii) any political party or official thereof or any candidate for political office or (iii) except
for de minimis business entertainment, any customer, supplier or competitor of the Seller (or any employee, officer or
director of any such customer, supplier or competitor); or

 

(b)       engaged
in any practice in violation of Law which would subject the Seller to any harm, or which could be used as the basis for the termination
or modification of any Assumed Contract or Business Permit.

 

2.23       Brokers/Finders.
The Seller has not agreed or become obligated to pay, or taken any action that might result in any Person claiming to be entitled
to receive, any brokerage commission, finder’s fee or any other commission or similar fee in connection with this Agreement or any
of the transactions contemplated hereby for which the Purchaser will become liable.

 

2.24       Seller’s
Information
.
The representations and warranties made by the Seller and the Majority Member herein and in any schedule hereto,
and in any certificate furnished by the Seller and the Majority Member pursuant to this Agreement, and the information furnished by the
Seller and the Majority Member in connection with this Agreement and the transactions contemplated hereunder, do not contain any untrue
statement of a material fact, or omit to state any material fact necessary in order to make the statements contained herein or therein,
in the light of the circumstances under which made, not misleading.

 

2.25       Solvency.
Immediately prior to the Closing and, after giving effect to the transactions described in and contemplated by this Agreement and
the Related Agreements and the incurrence of all obligations incurred in connection herewith and therewith, subsequent to the Closing,
the Seller shall be Solvent. “Solvent” means that (a) the fair value of the assets and properties of such Person exceeds
its total liabilities (including probable liability in respect of contingent liabilities), (b) the present fair saleable value of the
assets and properties of such Person will not be less than the amount that will be required to pay its probable liability on its debts
and other liabilities, including contingent liabilities, as they become absolute and matured, (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged, and is not about to engage, in businesses or transactions for which its assets and properties would constitute
an unreasonably small capital.

 

 

 

 

 

 

2.26       Related
Party Transactions
.
Except as set forth in Section 2.26 of the Disclosure Schedules, no current or former partner, director,
officer, employee, shareholder or other equity holder of the Seller or any associate or Affiliate thereof, or any relative with a relationship
of not more remote than first cousin of any of the foregoing, is presently, or during the twelve (12)-month period ending on the date
hereof has been, (i) a party to any transaction with the Seller, including any contract, agreement or other arrangement providing for
the furnishing of services by, or the sale, purchase or rental of real or personal property from, or otherwise requiring payments to,
any such partner, director, officer, employee, shareholder or other equity holder, or (ii) to the Knowledge of the Seller, the direct
or indirect owner of an interest in any Person which is a present or potential competitor, supplier or customer of the Seller or the Business,
nor does any such partner, director, officer, employee, shareholder or other equity holder of the Seller receive income from any source
other than the Seller which relates to the Business or should properly accrue to the Seller.

 

2.27       COVID
Related Matters
.
Section 2.27 of the Disclosure Schedules sets forth a true, correct and complete list of all COVID Relief
Programs in which Seller is participating or has participated, including the amount of funds requested, applied for and/or received under
each such program.

 

(a) With respect to each such
COVID Relief Program, (i) Seller has made all attestations, certifications or other submissions or filings required to be made in connection
therewith, (ii) all attestations, certifications or other submissions or filings made by or on behalf of Seller in connection therewith
(whether required or otherwise) are and have been true, complete and accurate and in compliance with applicable Law, and Seller was eligible
to participate in such COVID Relief Program, (iii) Seller is and has been in compliance with all Laws, covenants and other requirements
in connection therewith, including the use of related funds, (iv) Seller has not been made the subject of or received any notice of any
audit or review by any Governmental Authority in connection therewith, and (v) Seller has maintained books and records (including with
respect to use of funds or proceeds) sufficient to qualify or satisfy the terms and conditions for relief (including forgiveness under
the Paycheck Protection Program) thereunder. Seller has used or applied all proceeds from any PPP Loan only as permitted under the Paycheck
Protection Program, the CARES Act and Small Business Act. Seller has submitted true, accurate and complete forgiveness applications for
each PPP Loan received to the applicable PPP Lender, in its capacity as lender in connection therewith.

 

(b) Seller is not currently
experiencing any material business interruptions or incurring any material Liabilities arising out of, resulting from or related to COVID
or any related quarantine, “shelter in place”, “stay at home”, “safer at home”, social distancing,
shut down or similar Law, Order, directive, guideline, pronouncement or recommendation issued by any industry group or Governmental Authority,
whether directly or indirectly, including shutdowns or closures, layoffs, furloughs or workforce reductions, disruptions to supply chains,
failure of service providers to timely perform services, personal protective equipment shortages or labor shortages.

 

2.28       Issued
Shares
.
The Seller and the Seller’s Members have been advised that the Issued Shares
are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities
laws, but are being offered and sold pursuant to exemptions from such laws. The Seller and the Seller’s Members acknowledge that
the Purchaser is relying upon the representations and warranties contained herein for the purpose of qualifying the offer and sale of
the Issued Shares for applicable exemptions from registration or qualification pursuant to federal or state securities laws, rules and
regulations.
The Seller and the Seller’s Members each individually, are acquiring the Issued Shares for their own account
and not with a view towards their distribution within the meaning of Section 2.5(a)(11) of the Securities Act of 1933, as amended.

 

2.29       Accounts
Receivable
.
The Accounts Receivable (a) have arisen from bona fide transactions entered into by the Seller involving the sale
of goods or the rendering of services in the ordinary course of business consistent with past practice; (b) constitute only valid, undisputed
claims of the Seller not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the
ordinary course of business consistent with past practice; and are collectible in full within 90 days after billing. The reserve for bad
debts shown on the Balance Sheet or, with respect to Accounts Receivable arising after the Balance Sheet Date, on the accounting records
of the Business have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments and the absence
of disclosures normally made in footnotes.

 

 

 

 

 

 

2.30       Accounts Payable.
All accounts payable of Seller (i) are reflected properly on the books and records of Seller in accordance with GAAP; (ii) arose from
bona fide, arms-length transactions in the ordinary course of business for services performed for, or goods sold to, Seller, for which
Seller obtained substantially equivalent value; and (iii) have been incurred in accordance with applicable payment or credit terms imposed
by the vendors of such services or goods. None of the accounts payable of Seller has been due and payable by Seller for a period in excess
of thirty (30) days from the due date of any invoice giving rise thereto.

 

2.31       Securities
Laws Matters
.

 

(a) Seller or the respective
designee understands that (i) the Issued Shares are speculative investments, (ii) the Issued Shares are “restricted securities”
inasmuch as they are being acquired from Purchaser in a transaction not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under Rule 144 promulgated under the Securities Act only in certain limited
circumstances, (iii) there are restrictions on the transferability of the Issued Shares under the Securities Act and similar state securities
laws, (iv) it may not be possible to liquidate an investment in the Issued Shares immediately, (v) Seller or the respective designee is
responsible for the costs of removing any such transfer restrictions, including expenses for legal opinions, (vi) Seller or the respective
designee is able to bear the economic risk of this investment, to hold the Issued Shares indefinitely, and presently to afford a complete
loss of this investment, and (vii) Seller or the respective designee has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of an investment in the Issued Shares and of making an informed investment decision.

 

(b) Seller or the respective
designee consents to the placement of a legend as outlined in Section 1.10(c) on any stock certificate evidencing the Issued Shares being
delivered to Seller or the respective designee, or on the books of the Purchaser’s transfer agent evidencing the Issued Shares.
If required by the authorities of any state in connection with the issuance or sale of the Issued Shares, the legend required by such
state authority.

 

(c) Seller or the respective
designee acknowledges and agrees that, as of the date of issuance thereof, the Issued Shares will not be registered under the Securities
Act or the securities Laws of any state and that such shares may be sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such Laws, or as to which an exemption from the registration requirements of the Securities
Act and, where applicable, such Laws, is available.

 

(d) Seller or the respective
designee is acquiring the shares of Purchaser solely for the purpose of investment and not with a view to, or for resale in connection
with, any distribution thereof in violation of the Securities Act. The Issued Shares to be received by Seller or the respective designee
hereunder will be acquired for Seller’s or the respective designee’s own account, not as nominee or agent, and not with a
view to the resale or distribution of any part thereof in violation of the Securities Act, and Seller or the respective designee has no
present intention of selling, granting any participation in, or otherwise distributing the same, and has no arrangement or understanding
with any other persons regarding the distribution of such Issued Shares in violation of the Securities Act or any applicable state securities
law without prejudice, however, to Seller’s or the respective designee’s right at all times to sell or otherwise dispose of
all or any part of such Issued Shares in compliance with applicable federal and state securities Laws. Nothing contained herein shall
be deemed a representation or warranty by Seller or the respective designee to hold the Issued Shares for any period of time. Seller or
the respective designee is not a broker-dealer registered with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange
Act
”), or an entity engaged in a business that would require him to be so registered.

 

(e) Seller or the respective
designee is an accredited investor (as defined in Rule 501(a) of Regulation D promulgated under the Securities Act), and has such knowledge
and experience in business and financial matters so as to enable it to understand and evaluate the risks of and form an investment decision
with respect to its investment in the Issued Shares and to protect its own interest in connection with such investment.

 

 

 

 

 

(f) Purchaser has made available
the annual report on Form 10-K for the year ended June 30, 2021, and Seller has had the opportunity to review such report. Seller or the
respective designee has had an opportunity to receive all information related to Purchaser requested by him and to ask questions of and
receive answers from Purchaser regarding the Purchaser, its business and the terms and conditions of the offering of the Issued Shares.
Seller or the respective designee acknowledges receipt of copies of the all other reports filed by Purchaser with the Commission pursuant
to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act since the filing of the Form 10-K and during the twelve (12) months preceding
the date hereof. Neither such inquiries nor any other due diligence investigation conducted by Seller or the respective designee shall
modify, limit or otherwise affect Seller’s or the respective designee’s right to rely on Purchaser’s representations
and warranties contained in this Agreement or to exercise any remedy available to Seller or the respective designee under applicable Law
or in equity. Investor is aware that COVID-19 and/or the economic disruptions resulting from COVID-19 may impact the Purchaser’s
operations, financial results and condition to an extent currently unforeseeable by the Purchaser.

 

(g) Seller or the respective
designee did not learn of the investment in the Issued Shares as a result of any general solicitation or general advertising.

 

(h)
Since such time as Seller was first contacted by Purchaser or any other person acting on behalf of Purchaser
regarding the transactions contemplated hereby, neither Seller nor the respective designee nor any Affiliate of Seller which (a) had knowledge
of the transactions contemplated hereby, (b) has or shares discretion relating to Seller’s investments or trading or information
concerning Seller’s or the respective designee’s investments, including in respect of the Issued Shares, or (c) is subject
to Seller’s or the respective designee’s review or input concerning such Affiliate’s investments or trading has, directly
or indirectly, effected or agreed to effect, or will directly or indirectly effect, any short sale, whether or not against the box, established
any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act with respect to the Issued Shares, granted
any other right (including, without limitation, any put or call option) with respect to the Issued Shares or with respect to any security
that includes, relates to or derived any significant part of its value from the Issued Shares or otherwise sought to hedge its position
in the Issued Shares (each, a “Prohibited Transaction”). Seller or the respective designee acknowledges that the representations,
warranties and covenants contained in this Section 2.31(h) are being made for the benefit of the Seller or the respective designee as
well as the Purchaser.

 

(i) Seller or the respective
designee acknowledges that as a result of the transaction contemplated by this Agreement, Seller or the respective designee may be obligated
to comply with Section 16 of the Exchange Act, including making filings with the Commission, such as Schedule 13 or Form 3, 4 or 5.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser hereby makes
the representations and warranties set forth in this ARTICLE III to the Seller as of the date hereof and as of the Closing Date.

 

3.1         Organization and Qualification. The Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation and has the corporate power to own its properties and carry on its business as it is
now being conducted, and to perform all its obligations under the agreements and instruments to which it is a party or by which it is
bound.

 

3.2         Authority. The Purchaser has full power and authority to execute and deliver this Agreement and any Related Agreements
and to consummate the transactions contemplated hereby. The execution and delivery by the Purchaser of this Agreement and any Related
Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Purchaser. This Agreement and any Related Agreements to which the Purchaser is a party
have been duly executed and delivered by the Purchaser and constitute the valid and binding obligations of the Purchaser, enforceable
against the Purchaser in accordance with their terms, except to the extent that such enforceability may be limited by the effect, if any,
of (i) any applicable bankruptcy, reorganization, insolvency, moratorium or other Law affecting the enforcement of creditors’ rights
generally, and (ii) general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in
equity.

 

 

 

 

 

3.3         Consents
and Approvals; No Violation
.
Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated
hereby, nor the compliance by the Purchaser with any of the provisions hereof do, as of the date hereof, or will, as of the Closing Date,
(i) conflict with or result in any breach of any provision of the organizational documents of the Purchaser, (ii) result in
a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, contract, agreement, commitment,
bond, mortgage, indenture, license, lease, pledge agreement or other instrument or obligation to which the Purchaser is a party or by
which the Purchaser or any of its properties or assets may be bound, or (iii) violate any Law applicable to the Purchaser; except
in the case of clauses (ii) or (iii), for breaches, violations or defaults as do not and could not reasonably be expected to result in
a Material Adverse Effect on the ability of Purchaser to consummate the transactions contemplated herein.

 

3.4          Brokers/Finders.
The Purchaser has not agreed or become obligated to pay, or taken any action that might result in any Person claiming to be entitled
to receive, any brokerage commission, finder’s fee or any other commission or similar fee in connection with this Agreement or
any of the transactions contemplated hereby for which the Seller will become liable.

 

3.5          Sufficiency
of Funds
.
Purchaser has sufficient cash on hand or other sources of immediately available funds to enable it to make payment
of the Purchase Price and consummate the transactions contemplated by this Agreement.

 

3.6         Solvency. Immediately after giving effect to the transactions contemplated hereby, Purchaser shall be solvent and
shall: (a) be able to pay its debts as they become due; (b) own property that has a fair saleable value greater than the amounts required
to pay its debts (including a reasonable estimate of the amount of all contingent liabilities); and (c) have adequate capital to carry
on its business. No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated
hereby with the intent to hinder, delay or defraud either present or future creditors of Purchaser or Seller. In connection with the transactions
contemplated hereby, Purchaser has not incurred, nor plans to incur, debts beyond its ability to pay as they become absolute and matured.

 

3.7          Legal
Proceedings
.
There are no actions, suits, claims, investigations or other legal proceedings pending or, to Purchaser’s
knowledge, threatened against or by Purchaser or any Affiliate of Purchaser that challenge or seek to prevent, enjoin or otherwise delay
the transactions contemplated by this Agreement.

 

3.8          Independent
Investigation
.
Purchaser has conducted its own independent investigation, review and analysis of the Business and the Business
Assets, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records,
and other documents and data of Seller for such purpose. Purchaser acknowledges and agrees that: (a) in making its decision to enter
into this Agreement and to consummate the transactions contemplated hereby, Purchaser has relied solely upon its own investigation and
the express representations and warranties of Seller set forth in Article II of this Agreement (including related portions of the Disclosure
Schedules); and (b) neither Seller nor any other Person has made any representation or warranty as to Seller, the Business, the Business
Assets or this Agreement, except as expressly set forth in Article II of this Agreement (including the related portions of the Disclosure
Schedules).

 

ARTICLE IV
ADDITIONAL AGREEMENTS

 

4.1         Confidentiality.
From and after the Closing, the Seller and the Majority Member shall, and shall cause their respective Affiliates to, keep confidential
and not use in any manner any information, whether written or oral, concerning the Business, the Business Assets, the Assumed Liabilities,
this Agreement and the Related Agreements, and the transactions contemplated hereby or thereby. If the Seller or the Majority Member
are compelled to disclose any information by judicial or administrative process or by other requirements of Law, the Seller and the Majority
Member shall promptly notify Purchaser in writing and shall disclose only that portion of such information which the Seller or the Majority
Member are advised by its counsel in writing is legally required to be disclosed.

 

 

 

 

 

4.2         Public
Disclosure
.
The initial press release with respect to this Agreement and
the transactions contemplated hereby shall be a release mutually agreed to by the 
Purchaser and the Seller.
Thereafter, each of the 
of the Seller and Purchaser agrees that no
public release, statement, announcement, or other disclosure concerning
the
Agreement and the other transactions contemplated hereby shall
be issued by any party without the prior written consent of the other party (which consent shall not be unreasonably withheld, conditioned,
or delayed), except as may be required by: (a) applicable Law, (b) court process, (c) the rules or regulations of any applicable United
States securities exchange, or (d) any Governmental Authority to which the relevant party is subject or submits, provided, in each such
case, the party making the release, statement, announcement, or other disclosure shall use its reasonable best efforts to allow the other
party reasonable time to comment on such release or announcement in advance of such issuance.

 

4.3         Expenses
and Fees
. All fees and expenses incurred in connection with the transactions contemplated hereby, including all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties incurred by a Party in connection with the negotiation
and effectuation of the terms and conditions of this Agreement, shall be the obligation of the respective Party incurring such fees and
expenses. Notwithstanding the foregoing, Purchaser, in connection with Seller’s 2019 and 2020 audits (the “Recent Audits”),
agrees to (a) reimburse Seller for one hundred percent (100%) of all fees incurred in relation to the Recent Audits in the event
the Parties do not close on the transaction described herein, and (b) to reimburse Seller for fifty percent (50%) of all fees incurred
in relation to the Recent Audit upon Closing.

 

4.4         Further
Assurances
. The Seller and the Majority Member, on the one hand, and the Purchaser, on the other, shall execute and deliver to
the other any instrument not otherwise inconsistent with this Agreement that may be requested by the other and that is reasonably appropriate
to perfect or evidence any of the sales, assignments, transfers or conveyances contemplated by this Agreement or to transfer any Business
Assets or to obtain any consents or licenses necessary for the Purchaser to operate the Business and the Business Assets in the manner
operated prior to the Closing Date. The Seller and the Majority Member agree to cooperate with the Purchaser in furnishing to the Purchaser
information, evidence, testimony, and other assistance in connection with obtaining all necessary licenses, permits and approvals and
in connection with any actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods
after the Closing Date, including but not limited to audited and pro forma financial statements as may be required by a Governmental
Authority with respect to the Issued Shares. The Parties shall cooperate in good faith with each other following the Closing Date with
respect to all official Tax inquiries, the preparation of Tax returns and all other legitimate Tax matters relating to the Business Assets
or Business. Such cooperation shall include making available, as reasonably requested and at the requesting Party’s expense, knowledgeable
tax personnel and books, records and files relating to the Business Assets or the Business.

 

4.5          Tax
Matters and Indemnification
. The following provisions shall govern the allocation of responsibility as between the Seller and
the Purchaser for certain tax matters following the Closing Date:

 

(a)          Notwithstanding
anything in this Agreement to the contrary, including any limitation on indemnification otherwise provided for in ARTICLE V, the Seller
and the Majority Member shall, jointly and severally, indemnify the Purchaser Indemnified Parties and hold them harmless from and against
any loss, claim, liability, expense, or other damage attributable to (i) any and all Taxes (or the non-payment thereof) of the Seller
and its Affiliates, (ii) any and all Taxes of any member of an affiliated, consolidated, combined, or unitary group of which the Seller
or its Affiliates (or any predecessor of any of the foregoing) is or was a member, including pursuant to Treasury Regulation §1.1502-6
or any analogous or similar state, local, or foreign law or regulation, (iii) any and all Taxes of any person (other than the Seller)
imposed on the Seller or its Affiliates as a transferee or successor, by Contract or pursuant to any law, rule or regulation, or (iv)
any breach of any tax representation made by the Seller in Section 2.11. The Seller and the Majority Member shall reimburse the
Purchaser for any Taxes of the Seller or its Affiliates that are the responsibility of the Seller pursuant to this Section 4.5
within fourteen (14) days after Purchaser’s written notice to Seller of payment of such Taxes by the Purchaser.

 

 

 

 

 

(b)         Notwithstanding
anything in this Agreement to the contrary, including any limitation on indemnification otherwise provided for in ARTICLE V, the Purchaser
shall indemnify the Seller Indemnified Parties and hold them harmless from and against any loss, claim, liability, expense, or other
damage attributable to (i) any and all Taxes (or the non-payment thereof) of the Purchaser and its Affiliates, (ii) any and all Taxes
of any member of an affiliated, consolidated, combined, or unitary group of which the Purchaser, its Affiliates or any of their Subsidiaries
(or any predecessor of any of the foregoing) is or was a member, including pursuant to Treasury Regulation §1.1502-6 or any analogous
or similar state, local, or foreign law or regulation, or (iii) any and all Taxes of any person (other than the Seller) imposed on the
Purchaser or its Affiliates or any of their Subsidiaries as a transferee or successor, by Contract or pursuant to any law, rule or regulation.
The Purchaser shall reimburse the Seller for any Taxes of the Purchaser or its Affiliates or any of their Subsidiaries that are the responsibility
of the Purchaser pursuant to this Section 4.5 within fourteen (14) days after Seller’s written notice to Purchaser of payment
of such Taxes by the Seller.

 

(c)          Bulk
Sales Tax
. To the extent compliance with any bulk sales, bulk transfer or similar laws of any jurisdiction that may otherwise be
applicable with respect to the sale of any or all of the Business Assets to the Purchaser (“Bulk Sales Laws”), the
parties do hereby waive compliance therewith on the condition that (i) the Seller shall be responsible for payment of any taxes, fees
or amounts pursuant to such Bulk Sales Laws, and that such amounts shall be reflected on the Settlement Statement; and (ii) any
Liabilities or Damages arising out of the failure of the Seller to comply with the requirements and provisions of any Bulk Sales Laws
shall be treated as Retained Liabilities.

 

(d)          Transfer
Taxes
. In addition to the Seller’s obligations in Section 4.5(c), the Seller shall also pay any stamp, sales, purchase,
use or similar Tax under the laws of any Governmental Authority arising out of or resulting from the sale of the Assets. The Seller shall
prepare and file the required Tax Returns and other required documents with respect to Taxes required to be paid by it pursuant to the
preceding sentence and shall promptly provide the Purchaser with the payment of such Taxes.

 

4.6         Third-Party
Consents
. To the extent that the Seller’s rights under any Contract or Business Permit constituting a Business Asset, or
any other Business Asset, may not be assigned to the Purchaser without the consent of another Person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful,
and the Seller, at its sole costs and expense, shall use its best efforts to obtain any such required consent(s) as promptly as possible.
If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair the Purchaser’s rights
under the Business Asset in question so that the Purchaser would not in effect acquire the benefit of all such rights, the Seller shall
act after the Closing at the Purchaser’s direction in order to obtain for the Purchaser the benefits thereunder and shall cooperate
with the Purchaser in any other reasonable arrangement designed to provide such benefits to the Purchaser.

 

4.7         Business
Employees
. On the Closing Date, the Seller shall terminate all the Business Employees and the Purchaser shall offer
employment, on an “at will” basis, to all of such Business Employees. The Seller shall be solely responsible, and the
Purchaser shall have no Liability whatsoever, for any compensation or other amounts payable to any Business Employee, including
hourly pay, commission, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period
relating to the service with the Seller at any time on or prior to the Effective Time, and the Seller shall pay all such amounts to
all entitled Persons on or prior to the Effective Time. The Seller shall remain solely responsible for the satisfaction of all
Liabilities for medical, dental, life insurance, health accident or disability benefits brought by or in respect of the Business
Employees or the spouses, dependents or beneficiaries thereof, which Liabilities relate to events occurring on or prior to the
Effective Time. The Seller also shall remain solely responsible for all workers’ compensation Liabilities of the Business
Employees that relate to events occurring on or prior to the Effective Time. The Seller shall pay, or cause to be paid, all such
amounts contemplated by this Section 4.7 to the appropriate Persons as and when due.

 

 

 

 

 

 

4.8           Restrictive
Covenants
.

 

(a)          Non-Solicitation of Customers. For a period of five (5) years after the Closing Date (which period shall be computed
by excluding from such computation any time during which the Seller or the Majority Member are in violation of any provision of this Section
4.8
, the “Restricted Period”), neither the Seller nor the Majority Member shall cause their respective Affiliates
not to, directly or indirectly, whether independently or in association with any other Person, (a) solicit, encourage or induce, or attempt
to solicit, encourage or induce, or otherwise take any action that could reasonably be expected to cause, any Covered Customer to terminate
or diminish its relationship with the Purchaser; (b) seek to persuade any such Covered Customer to conduct with anyone else any business
or activity that such Covered Customer conducts or could conduct with the Purchaser; or (c) interfere with or disrupt, or attempt to interfere
with or disrupt, the contractual relationship between any such Covered Customer and the Purchaser. As used in this Agreement, “Covered
Customer
” means any Person who is or was an actual or prospective customer of the Seller or the Purchaser.

 

(b)         Non-Solicitation
of Employees
. During the Restricted Period, neither the Seller nor the Majority Member shall, and shall cause their respective Affiliates
not to, directly or indirectly, whether independently or in association with any other Person, (a) hire or engage as an employee,
independent contractor, consultant or otherwise any Covered Employee; (b) solicit, encourage, induce or persuade, or attempt to solicit,
encourage, induce or persuade, any Covered Employee to discontinue or leave the service (whether as an employee, independent contractor,
consultant or otherwise) of the Purchaser or otherwise terminate or diminish its relationship with the Purchaser; (c) in any way interfere
with the relationship between any Covered Employee and the Purchaser; or (d) disclose names or other information about any Covered Employee
to any Person under circumstances which could reasonably be expected to lead to the use of that information for purposes of recruiting
or hiring. As used in this Agreement, “Covered Employee” means any Person who is or was an employee, consultant or
independent contractor of the Purchaser at any time during the six (6) month period immediately prior to the engagement or solicitation
at issue.

 

(c)          Non-Competition.
During the Restricted Period, neither the Seller nor the Majority Member shall, and shall cause their respective Affiliates not to, directly
or indirectly, whether independently or in association with any other Person, (i) own any equity interests in, or provide any capital
or financing to, a Competitive Business or (ii) engage in, own, manage, operate, control, provide services to or participate in
the ownership, management, operation, financing or control of any such Competitive Business. As used in this Agreement, “Competitive
Business
” means any Person or business that provides products or services that are similar to or competitive with the products
or services of the Purchaser or the Business anywhere within the United States of America.

 

(d)         Non-Disparagement.
The Seller and the Majority Member shall not, directly or indirectly, engage in any conduct that involves the making or publishing of
written or oral statements or remarks (including the repetition or distribution of derogatory rumors, allegations, negative reports or
comments) that are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Business or the Purchaser or
its management, directors, officers, agents, representatives, consultants, independent contractors, equity holders or Affiliates. The
Purchaser shall not, directly or indirectly, engage in any conduct that involves the making or publishing of written or oral statements
or remarks (including the repetition or distribution of derogatory rumors, allegations, negative reports or comments) that are disparaging,
deleterious or damaging to the integrity, reputation or goodwill of the Seller or the Majority Member.

 

4.9         Remedies
and Severability of Restrictive Covenants
.

 

(a)          Remedies.
It is recognized and acknowledged by the Seller and the Majority Member that (a) the Purchase Price is adequate consideration for
the covenants contained in Section 4.8 and (b) a breach of the covenants contained in Section 4.8 will cause irreparable
damage to the Purchaser, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any
such breach will be inadequate. Accordingly, the Seller and the Majority Member agree that, notwithstanding any other provision of this
Agreement to the contrary, in the event of a breach or threatened breach of any of the covenants contained in Section 4.8, in addition
to any other remedy which may be available at law or in equity, the Purchaser will be entitled to specific performance, injunctive relief
and other equitable relief to restrain any breach or threatened breach of Section 4.8 (without the need to post bond or other security).
If a final judgment of a court of competent jurisdiction determines that any term or provision contained in Section 4.8 is invalid
or unenforceable, then the Parties agree that the court shall have the power to reduce the scope, duration or geographic area of the term
or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. The
Parties acknowledge and agree that Section 4.8 is reasonable and necessary to protect and preserve the Purchaser’s legitimate
business interests and to prevent any unfair advantage from being conferred on the Seller or the Majority Member.

 

 

 

 

 

 

(b)         Severability.
Each of the covenants in Section 4.8 is to be construed as independent of any other covenants or other provisions of this Agreement.
If any court of competent jurisdiction at any time deems any of the covenants set forth in Section 4.8 not fully enforceable, the
other provisions of Section 4.8 will nevertheless stand and to the full extent consistent with applicable Law continue in full
force and effect, and it is the intention and desire of the Parties that the court treat any provisions of Section 4.8 which are
not fully enforceable as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable and
that the court enforce them to such extent.

 

4.10       Name
Change
. Within sixty (60) days immediately following the Closing, the Seller shall (i) cease using the Name and Trade Name in
any way, (ii) change its name to a name wholly dissimilar from the Name and Trade Name, and(iii) execute any consents or authorizations
that may be required for the Purchaser to change its name to, or register itself to do business under, any name involving all or any portion
of the Name and Trade Name if the Purchaser so desires and register such names(s) in any jurisdiction.

 

4.11       Accounts
Receivables
. From and after the Closing, if the Seller or any of its Affiliates receives or collects any Accounts Receivable,
the Seller or its Affiliates shall remit such funds to the Purchaser within fifteen (15) Business Days after its receipt thereof.

 

ARTICLE V
SURVIVAL; SURVIVAL; INDEMNIFICATION

 

5.1         Survival; Indemnity Period.

 

(a)          The
representations and warranties of the Parties set forth in this Agreement, or in any certificate or other instrument required to be delivered
pursuant to this Agreement, and the representations and warranties of the Purchaser shall survive the Closing Date until the date that
is eighteen (18) months after the Closing Date; provided, however, (i) that the representations and warranties of the Seller and the
Majority Member contained in Sections 2.1 (Organization and Qualifications), 2.2 (Authority), 2.8 (Title to Business Assets; Encumbrances),
Section 2.19 (Environmental Matters) and Section 2.23 (Brokers/Finders), and the representations and warranties of the Purchaser in 3.1
(Organization and Qualifications), 3.2 (Authority) shall survive the Closing Date indefinitely and (ii) the representations and
warranties of the Seller and the Majority Member contained in Sections 2.11 (Tax Matters), 2.12 (Employees), 2.13 (Employee Benefits)
and 2.27 (COVID Related Matters) (the representations and warranties listed in clauses (i) and (ii) above are collectively referred to
herein as the “Specified Representations”) shall survive until the date that is the expiration of the applicable statute
of limitations; provided, however, that the foregoing limitation on survival of representations and warranties shall not apply with respect
to breaches of representations and warranties arising, directly or indirectly, from or in connection with any fraud or willful or intentional
misrepresentation.

 

(b)          The
agreements, covenants and other obligations of the Parties hereto (other than the representations and warranties discussed in Section
5.1(a) above) shall survive the Closing Date until they have been performed or in accordance with their respective terms.

 

5.2         
Indemnification by the Seller the Majority Member.

 

(a)          The
Seller agrees that it will defend, indemnify, and hold harmless the Purchaser and its Affiliates (the “Purchaser Indemnified
Parties
”) from and against all Proceedings brought by, or claims or threats made by, a Third Party after the Closing Date,
and all Damages arising out of, incurred as a result of or in any way related to:

 

(i)    
a breach of the representations and warranties of the Seller or the Majority Member set forth in
ARTICLE II or in any Related Agreement;

 

(ii)   
a breach or non-fulfillment of any agreement or covenant on the part of the Seller or the Majority
Member made in this Agreement or in any Related Agreement;

 

(iii)    the
Excluded Assets;

 

 

 

 

 

(iv)  
the Retained Liabilities;

 

(v)   
any act of fraud or willful or intentional misrepresentation by the Seller or the Majority Member
or any of their Affiliates related to this Agreement or any Related Agreement; or

 

(vi)  
the non-compliance by the Seller with any Bulk Sales Laws; or

 

(vii)  the business, operations, properties, assets or obligations of the Seller or the Majority Member
conducted, existing or arising on or prior to the Closing Date.

 

(b)         The
Majority Member agrees that it will defend, indemnify, and hold harmless the Purchaser Indemnified Parties from and against all Proceedings
brought by, or claims or threats made by, a Third Party after the Closing Date, and all Damages arising out of, incurred as a result
of or in any way related to:

 

(i)    
a breach of the representations and warranties of the Seller or the Majority Member set forth Sections
2.1 (Organization and Qualifications), 2.2 (Authority), 2.8 (Title to Business Assets; Encumbrances); 2.11 (Taxes Matters); and 2.19 (Environmental
Matters);

 

(ii)  
a breach or non-fulfillment of any agreement or covenant on the part of the Majority Member made
in this Agreement or in any Related Agreement;

 

(iii)   the
Retained Liabilities; or

 

(iv) 
any act of fraud or willful or intentional misrepresentation by the Seller or the Majority Member
or any of their Affiliates related to this Agreement or any Related Agreement.

 

(c)          Except with respect to (i) Seller’s or the Majority Member’s fraud or willful misconduct,
or (ii) Damages arising out of any breach of a Specified Representation, for which the following limitation shall not apply, neither Seller
nor the Majority Member shall have any liability for any indemnification under Section 5.2(a)(i) or Section 5.2(b)(i) unless
and until the aggregate Third Party Claims or Damages exceed [____]Dollars ($[____]) (the “Deductible”), and then only
to the extent such Third Party Claims or Damages exceed the Deductible. Except with respect to (i) Seller’s or the Majority Member’s
fraud or willful misconduct, or (ii) Damages arising out of any breach of a Specified Representation, for which the following limitation
shall not apply, neither Seller nor the Majority Member shall be required to indemnify Purchaser Indemnified Parties under Section
5.2(a)(i)
or Section 5.2(b)(i) for aggregate Third Party Claims or Damages in excess of [____] Dollars ($[____]).

 

5.3          Indemnification by the Purchaser. The Purchaser (an “Indemnifying Party” with respect to matters
covered by this Section 5.3) agrees that it will defend, indemnify, and hold harmless the Seller and its Affiliates (the “Seller
Indemnified Parties
”) from and against all Proceedings brought by, or claims or threats made by, a Third Party after the Closing
Date, and all Damages arising out of, incurred as a result of or in any way related to:

 

(a)          a breach of the representations and warranties of the Purchaser set forth in ARTICLE III or in any
Related Agreement;

 

(b)         a breach or non-fulfillment of any agreement or covenant on the part of the Purchaser made in this
Agreement or any Related Agreement;

 

(c)          any Assumed Liability; or

 

 

 

 

 

(d)          any act of fraud or willful or intentional misrepresentation by the Purchaser or any of its Affiliates
related to this Agreement or any Related Agreement.

 

5.4          Procedure for Indemnification with Respect to Third Party Claims.

 

(a)          If any Third Party shall notify an Indemnified Party with respect to any matter (a “Third
Party Claim
”) that may give rise to a claim for indemnification against an Indemnifying Party or if any Party who may make a
claim for indemnification under this Agreement otherwise becomes aware of any matter that may give rise to such a claim or wishes to make
such a claim (whether or not related to a Third Party Claim), then the Indemnified Party shall promptly notify the Seller and/or the Majority
Member, as applicable (collectively, the “Indemnifying Party”) thereof in writing; provided, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party is thereby materially prejudiced. Such notice shall describe in reasonable detail
the circumstances giving rise to the claim and specify the amount of the claim (or an estimate thereof).

 

(b)         The Indemnifying Party will assume the defense of the relevant Proceeding, provided that (i) the
counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified
Party and (ii) the Indemnified Party may participate in such defense at such Indemnified Party’s expense; provided, further,
that, if the named persons to a lawsuit or other legal action include both the Indemnifying Party and the Indemnified Party and the Indemnified
Party has been advised by counsel that there may be one or more legal defenses available to such Indemnified Party that are different
from or additional to those available to the Indemnifying Party, the Indemnified Party shall be entitled, at the Indemnifying Party’s
cost, risk and expense, to retain one firm of separate counsel of its own choosing. Except with the prior written consent of the Indemnified
Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or Order, interim
or otherwise, or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or
that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release
from all liability with respect to such claim or litigation. In the event that the Indemnifying Party does not accept the defense of any
matter as above provided within thirty (30) days of notice thereof or fails to diligently prosecute the defense of such matter, the Indemnified
Party shall have the full right to defend against any such claim or demand, at the Indemnifying Party’s cost, risk and expense,
and shall be entitled to settle such claim or demand with the prior written consent of the Indemnifying Party, not to be unreasonably
withheld. In any event, the Indemnifying Party and the Indemnified Party shall cooperate in the defense of any Proceeding subject to this
ARTICLE V and the records of each shall be available to the other with respect to such defense (subject to their preservation of attorney-client
privilege).

 

5.5         Right
of Offset
. Notwithstanding anything to the contrary contained in this Agreement or otherwise, in the event that the Seller or
the Majority Member are obligated to indemnify any Purchaser Indemnified Party in accordance with this Agreement, the Purchaser shall
have the right, exercisable in the Purchaser’s sole and absolute discretion, subject to the limitations set forth in Section
5.2(c)
above, to offset the amount of any Damages on account thereof against any portion of the Purchase Price owed to the Seller
or any other amount owed by the Purchaser to the Seller or the Majority Member. This Section 5.5 shall survive through June 30,
2024.

 

ARTICLE VI 

MISCELLANEOUS

 

6.1         
Notices. All notices and other communications required or permitted hereunder shall be in writing and delivered in
person, by facsimile, by an overnight express delivery service of recognized standing (e.g., Federal Express) or by registered or certified
mail (postage prepaid, return receipt requested) to the Party at the address or facsimile number listed below (or at such other address
or facsimile number for the Party as shall be specified by like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). All such notices and communications will be deemed effectively given the earliest of (i) when actually received,
(ii) when delivered personally, (iii) on the first Business Day after transmission if by facsimile or electronic mail, (iv) one (1) Business
Day after being deposited with an overnight express delivery service of recognized standing, or (v) two (2) days after having been sent
by registered or certified mail, return receipt requested, with postage prepaid.

 

 

 

 

 

(a)          if to the Seller, to:

 

Lighthouse Imaging, LLC

c/o Anania & Associates Investment Company, LLC

2 Portland Fish Pier, Suite 214

Portland, Maine 04101

Attn: Peter Anania

 

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

 

PretiFlaherty LLP

One City Center

Portland, Maine 04010

Attn: John M. Sullivan, Esquire

 

(b)         
if to the Purchaser, to:

 

Precision Optics Corporation

22 East Broadway

Gardner, MA 01440

Attention: General Counsel

 

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

 

Miles & Stockbridge P.C.

100 Light Street

Baltimore, Maryland 21202

Attn: Christopher R. Johnson, Esquire

 

6.2          Amendment.
Except as provided otherwise in this Agreement or in this specific Section, this Agreement may be amended, modified or supplemented
only by written agreement of each of the Parties hereto.

 

6.3          Assignment.
This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned
by the Seller nor the Majority Member on the one hand or the Buyer on the other hand without the prior written consent of the counterparty.

 

6.4          Governing
Law; Venue
.
This Agreement shall be construed and enforced in accordance with, and shall be governed by the laws of, the Commonwealth
of Massachusetts, without regard to conflicts of law principles that would apply the laws of another jurisdiction. The Parties agree
that the exclusive venue for any dispute related to this Agreement shall be the federal or state courts in the Commonwealth of Massachusetts.
Without in any way affecting the indemnification obligations or rights set forth in this Agreement, if a Party initiates a proceeding
to enforce its rights under this Agreement, the Party substantially prevailing in such proceeding (as determined by the court) shall
be entitled to recover from the other Party its reasonable attorneys’ fees and costs incurred in carrying out such proceeding.

 

 

 

 

 

6.5          Waiver of Jury Trial. All of the Parties do hereby agree to waive a jury trial in connection with any proceedings
arising out of or reasonably related to this Agreement or to any Related Agreement. Each of the Parties understands and acknowledges that
they are waiving a valuable right.

 

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

 

6.7          Counterparts. This Agreement and any of the Related Agreements may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement and
any of the Related Agreements may be delivered by facsimile transmission or by e-mail delivery of a “.pdf” data file.

 

6.8          Entire Agreement. This Agreement, the Related Agreements, the exhibits and schedules hereto, and the instruments
and schedules referred to herein and therein, embody the entire agreement and understanding of the Parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings with respect to
such subject matter, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements, letters
of intent and understandings between the Parties with respect to such subject matter.

 

6.9         No Third Party Beneficiaries. This Agreement, the exhibits and schedules hereto, the Related Agreements, and the
documents and instruments and other agreements among the Parties hereto referenced herein are not intended to, and shall not, confer upon
any other Person not a Party hereto any rights or remedies hereunder, other than the Indemnified Parties.

 

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

 

6.11       Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable Law. If any provision of this Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable Law, the validity, legality and enforceability of the remaining provisions hereof shall not be affected or impaired thereby.

 

6.12        Interpretation. The article and section headings contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement.

 

6.13        Construction. The word “including” means including, without limitation. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require.

 

[Signatures appear on the following page]

 

 

 

 

SIGNTURE PAGE TO

ASSET PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, each of
the Parties hereto has caused this Agreement to be executed on its behalf as of the date first above written.

 

 

THE PURCHASER: PRECISION OPTICS CORPORATION, INC.
   
  By: /s/ Joseph N. Forkey                 
  Name: Joseph N. Forkey
  Title: CEO
   
   
THE SELLER: LIGHTHOUSE IMAGING, LLC
   
  By: /s/ Peter V. Anania                  
  Name: Peter V. Anania
  Title: President
   
   
THE MAJORITY MEMBER: ANANIA & ASSOCIATES INVESTMENT COMPANY LLC
   
  By: /s/ Peter V. Anania                  
  Name: Peter V. Anania
  Title: President
   
   
   
   
   
   
   
   

 

 

 

 

 

 

 

EXHIBIT A

 

GLOSSARY

 

(a) For the purposes of this
Agreement, the following terms shall have the meanings specified or referred to below when capitalized (or if not capitalized, unless
the context clearly requires otherwise) when used in this Agreement.

 

8-K
Financial Information
” means historical consolidated financial statements for the Seller for the fiscal years ended December
31, 2019 and 2020, and for the relevant quarterly periods of 2020 and 2021 ended or ending, as the case may be, in a form that complies
with the requirements of Item 9.01 of Form 8-K and Rule 3-05 of Regulation S-X of the SEC for
a business acquisition required to be described in answer to Item 2.01 of Form 8-K, including information required for
the Seller to prepare the pro forma financial information required by Item 9.01 of Form 8-K, and (b) an
unqualified report from the Seller’s independent accounting firm stating that such historical consolidated financial statements
for the Seller for the fiscal years ended December 31, 2019 and 2020 present fairly, in all material respects, the consolidated financial
position, as well as the consolidated results of operations and cash flows, of the Seller for the periods covered by the such financial
statements, in conformity with GAAP (collectively, the “8-K Financial Information”)

 

Accounts Receivable
means all accounts receivable and other rights to payment from customers of the Seller, and the full benefit of all security for such
accounts or rights to payment, and all Claims, remedies or other rights related to any of the foregoing.

 

Affiliate
means, with respect to a specified Person, (a) any other Person directly or indirectly controlling, controlled by or under common control
with such Person; or (b) if such specified Person is an Entity, any director, executive officer, partner, trustee or other fiduciary of
such Entity. For purposes of this definition, “control” (including “controlling”, “controlled
by
” and “under common control with”) means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
When used without reference to a particular Person, “Affiliate” means an Affiliate of the Seller.

 

Benefit
Arrangement
” means each (i) employee benefit plan, as defined in Section 3(3) of ERISA; (ii) employment contract and (iii)
bonus, deferred compensation, incentive compensation, performance compensation, stock purchase, stock option, stock appreciation,
restricted stock, phantom stock, saving and profit sharing, severance or termination pay (other than statutory or the common law
requirements for reasonable notice), health or other medical, salary continuation, cafeteria, dependent care, vacation, sick leave,
holiday pay, fringe benefit, reimbursement program, life insurance, disability or other (whether insured or self-insured) insurance,
a supplementary unemployment benefit, pension retirement, supplementary retirement, welfare or other employee plan, program, policy
or arrangement, whether written or unwritten, formal or informal, which any current or former employee, officer or manager of the
Seller or any ERISA Affiliate participated or participates in or was or is covered under, or was or is otherwise a party, and with
respect to which the Seller or any ERISA Affiliate is or ever was a sponsor or participating employer, or had or has an obligation
to make contributions, or was or is otherwise a party.

 

Business Day
means each day that is not a Saturday, Sunday or other day on which the Purchaser is closed for business or banking institutions located
in Boston, Massachusetts are authorized or obligated by law or executive order to close.

 

Business Employee
means any current or former employee, consultant, independent contractor, advisor or director of the Seller.

 

 

 

 

 

 

Business Permits
means all permits, licenses, franchises, approvals, consents, authorizations, registrations, certificates, variances and similar rights
obtained, or required to be obtained, from any Governmental Authority.

 

Business Tangible
Property
” means all inventory, equipment, computers, computer hardware (including computer servers), computer software, tools,
machinery and other tangible property of every kind (wherever located, whether or not reflected in the books of account of the Seller
and whether or not leased), together with any express or implied warranty by the manufacturers, sellers or lessors of any item or component
part thereof and all maintenance records and other documents relating thereto, in each case that relate to the Seller, the Business, the
Business Assets, the Assumed Contracts or the Assumed Liabilities or that, prior to the Closing Date, were used by Business Employees
in the ordinary course of business of the Seller, and that are not otherwise listed as Excluded Assets.

 

CARES Act
means the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748), the Paycheck Protection Program and Health Care Enhancement Act,
the Paycheck Protection Program Flexibility Act of 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, applicable
rules and regulations, any similar or successor legislation, any presidential memoranda, executive orders or funding bills or appropriation
act provisions relating to COVID, as well as any applicable guidance issued thereunder or relating thereto, in each case, as amended.

 

Claim
means any claim, action, cause of action, arbitration, audit, notice of violation, litigation, citation, summons, inquiry, proceeding
(arbitral, administrative, legal or otherwise), suit, settlement, stipulation, hearing, charge, complaint, demand or similar matter, or
subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or at equity.

 

Closing Indebtedness
means all Indebtedness of or guaranteed by Seller as of immediately prior to the Closing.

 

Code
means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations (the “Treasury Regulations”) promulgated
thereunder.

 

Contract
means any mortgage, indenture, lease, contract, covenant, plan, insurance policy or other agreement, instrument, arrangement, understanding
or commitment, permit, concession, franchise or license, whether written, oral or otherwise.

 

COVID
means the severe acute respiratory syndrome coronavirus (SARS-CoV-2 and all related strains and sequences), the novel coronavirus or any
mutation (or antigenic shift or drift) or evolution thereof, the disease caused thereby, and associated disease outbreaks, epidemics or
pandemics.

 

COVID Relief Programs
means the Paycheck Protection Program, the Main Street Loan Program, Economic Injury Disaster Loans, or other federal, state and local
Governmental Authority relief or funding programs established in response to COVID.

 

Current Assets
means the inventory, accounts receivable and prepaid expenses, as determined in accordance with GAAP, of the Seller, but only to the extent
acquired pursuant to the terms of this Agreement.

 

Current Liabilities
means the trade accounts payable and accrued payroll expenses, as determined in accordance with GAAP, of the Seller, but only to the extent
assumed pursuant to the terms of this Agreement.

 

Customer Information
means all customer lists, customer contact information, customer correspondence and customer licensing and purchasing histories relating
to current and former customers of the Seller.

 

 

 

 

 

Damages
means damages, losses, Liabilities, fines, penalties and expenses (including reasonable fees, disbursements and expenses of attorneys,
accountants and other professional advisors and of expert witnesses and reasonable costs of investigation, testing and preparation), including,
without limitation, direct, indirect and consequential damages.

 

Employee Retention
Tax Credit
” means the employee retention credit under the CARES Act, as amended by the Taxpayer Certainty and Disaster Relief
Act of 2020.

 

Encumbrance
means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, option, right of first refusal or imperfection
of title with respect to any Business Asset.

 

Entity
means any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability company, joint
venture, joint stock association, estate, trust, cooperative, foundation, union, syndicate, league, consortium, coalition, committee,
society, firm, company or other enterprise, association, organization or entity of any nature, other than a Governmental Authority.

 

Environmental Claim
means any Claim, Order by Governmental Authority, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by
or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings,
investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries,
medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the
presence, Environmental Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental
Law.

 

Environmental Law
means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or
the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment
(including ambient air (indoor or outdoor), soil, sediment, surface water or groundwater, or subsurface strata); or (b) concerning the
presence of, exposure to, or the management, manufacture, use, control, containment, storage, handling, recycling, reclamation, reuse,
treatment, generation, discharge, release, transportation, processing, production, disposal, removal or remediation of any Hazardous Materials.
The term “Environmental Law” includes, without limitation, the following (including their implementing regulations adopted
thereunder and any state, provincial and local analogs, including Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq., the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977,
33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean
Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
§§ 651 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101 et seq.; the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. §§ 136 et seq.); and the Canadian Environmental Protection Act, 1999, as amended.

 

Environmental Notice
means any written directive, notice of violation or infraction, request for information or notice respecting any Environmental Claim relating
to actual or alleged non-compliance with any Environmental Law.

 

Environmental Release
means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient
air (indoor or outdoor), soil, sediment, surface water or groundwater or subsurface strata or within any building, structure, facility
or fixture).

 

 

 

 

 

ERISA
means the Employee Retirement Income Security Act of 1974, as amended.

 

ERISA Affiliate
means any Person under common control with the Seller within the meaning of Code §§414(b), (c), (m) or (o) and the regulations
issued thereunder.

 

Exchange Act
means the Securities Exchange Act of 1934, as amended.

 

GAAP
means generally accepted accounting principles as in effect in the United States.

 

Governmental Authority
means any foreign governmental authority, the United States of America, any State of the United States, any local authority and any political
subdivision of any of the foregoing, any multi-national organization or body, any agency, department, commission, board, bureau, court
or other authority of any of the foregoing, or any quasi-governmental or private body exercising, or purporting to exercise, any executive,
legislative, judicial, administrative, police, regulatory or taxing authority or power of any nature, including but not limited any contractors
of a Governmental Authority as authorized by law and acting pursuant to the terms and conditions of any such contract.

 

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

 

Indebtedness
means any or all of the following: (i) all indebtedness of such Person for borrowed
money; (ii) all obligations of such Person evidenced by notes, bonds, debentures, or other similar instruments; (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though
the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such
Property; (iv) all obligations of such Person to purchase, redeem, retire, defease, or otherwise make any payment in respect of any equity
interest of Such Person in such Person or any other Person or any warrants, rights, or options to acquire such equity interests, valued,
in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; (v) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter
of credit or similar facilities in respect of obligations of the kind referred to in subsections (i) through (v) of this definition.

 

Intellectual Property
means any or all of the following and all worldwide common law and statutory rights in, arising out of, or associated therewith: (i) inventions
and discoveries (whether patentable or unpatentable and whether or not reduced to practice); (ii) United States and foreign patents
and utility models and applications and disclosures therefor and all reissues, divisions, revisions, reexaminations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof (“Patents”); (iii) rights in inventions (whether
patentable or not), improvements, trade secrets, formulas, recipes, proprietary information, know how, and any rights in technology, invention
disclosures, technical data and customer lists, and all documentation relating to any of the foregoing; (iv) rights in works of authorship,
including copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world
(“Copyrights”); (v) domain names, uniform resource locators (“URLs”), other names and locators
associated with the Internet, and applications or registrations therefor (“Domain Names”); (vi) industrial designs
and any registrations and applications therefor; (vii) trade names, logos, common law and registered trademarks and service marks, trademark
and service mark registrations, related goodwill and applications therefor throughout the world (“Trademarks”); (viii)
all rights in computer software, including all source code, object code, firmware, development tools, files, records and data; (ix) all
rights in databases and data collections; (x) all moral and economic rights of authors and inventors, however denominated; and (xi) any
similar or equivalent rights to any of the foregoing.

 

Inventory
means all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories

 

Knowledge
means, when applicable to the Seller, the actual knowledge after due inquiry of the Seller’s management team, including, [____],
and Anania & Associates Investment Company, LLC.

 

 

 

 

 

Law” means
any constitutional provision, statute or other law, ordinance, rule, regulation or interpretation thereof and any Order of any Governmental
Authority.

 

Liabilities
means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined
or determinable, including those arising under any Law, Proceeding or Order and those arising under any Contract, arrangement, commitment
or undertaking.

 

Lien
means any mortgage, pledge, charge, security interest, claim or encumbrance of any kind.

 

Lighthouse Director
Side Letter
” means that certain side letter to this Agreement among Purchaser, Seller, and the Majority Member.

 

Material Adverse
Effect
” means any condition, change, circumstance or event that has had or could reasonably be expected to have a material adverse
effect on (a) the assets, properties, business, prospects, results of operations or financial condition of the Seller or the Business,
or (b) on the ability of the Seller to perform in all material respects its obligations under this Agreement.

 

Order
means any order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, sentence, subpoena, writ
or award issued, made, entered or rendered by any court, administrative agency or other Governmental Authority or by any arbitrator.

 

PPP Loan
means each loan received by Seller under the Paycheck Protection Program.

 

Paycheck Protection
Program
” means the Paycheck Protection Program established under the CARES Act, as modified or extended by the Paycheck Protection
Program and Health Care Enhancement Act, the Paycheck Protection Program Flexibility Act of 2020, the Economic Aid to Hard-Hit Small Businesses,
Nonprofits, and Venues Act or other legislation or applicable rules and regulations.

 

Permitted Encumbrances
means: (a) liens for Taxes and other governmental charges and assessments which are not yet due and payable; (b) liens of landlords
and liens of carriers, warehousemen, mechanics and materialmen, construction and other like liens arising in the ordinary course of business
for sums not yet due and payable; and (c) liens relating to deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security or to secure the performance of leases, trade contracts or other
similar agreements.

 

Person
means any individual, Entity or Governmental Authority.

 

Proceeding
means any action, suit, litigation, arbitration, lawsuit, claim, proceeding (including any civil, criminal, administrative, investigative
or appellate proceeding and any informal proceeding), prosecution, contests, hearing, inquiry, inquest, audit, examination, investigation,
challenge, controversy or dispute commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority
or any arbitrator.

 

Related Agreements
means the Bill of Sale, the Assumption Agreement, the Lease Assignment, the Restrictive Covenants Agreement, the IP Assignment, the Settlement
Statement and any other exhibits or schedules to this Agreement.

 

SEC” means
the United States Securities and Exchange Commission.

 

Subsidiary
means, with respect to any Person, any and all corporations, partnerships, limited liability companies, joint ventures, associations and
other entities controlled, directly or indirectly, by such Person.

 

Target Working Capital
means [____] Dollars ($[____]).

 

 

 

 

 

 

Tax” or
Taxes” means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.

 

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

 

Third Party
means any Person or group other than the Purchaser or the Seller.

 

Working Capital
means an amount equal to (a) the Current Assets, minus (b) cash and cash equivalents and any Employee Retention Tax Credit, minus
(c) the Current Liabilities, determined as of the Effective Time.

 

(b) In addition to the terms
defined above, the following terms shall have the meanings ascribed to such terms in the Sections set forth below:

 

Term Section/ Article/ Exhibit
   
Agreement Preamble
Asset Schedule 1.1
Assumed Contracts 1.1(e)
Assumed Liabilities 1.4(a)
Assumption Agreement 1.6(c)
Balance Sheet Date 2.4
Bill of Sale 1.6(a)
Bulk Sales Laws 4.5(c)
Business Recitals
Business Assets 1.1
Charter Documents 2.1
Closing 1.5
Closing Date 1.5
Closing Payment 1.3(b)(i)
Closing Statement 1.3(d)(iii)
Competitive Business 4.8(c)
Copyrights Exhibit A (“Intellectual Property”)
Covered Customer 4.8(a)
Covered Employee 4.8(b)
Disclosure Schedule Article II
Domain Names Exhibit A (“Intellectual Property”)
Effective Time 1.5
Employees 2.12(a)
Estimated Balance Sheet 1.3(e)(i)
Estimated Shortfall 1.3(e)(ii)
Estimated Working Capital 1.3(e)(i)

 

 

 

 

 

 

Excluded Assets 1.2
Excluded Assets Schedule 1.2(b)
Final Working Capital 1.3(e)(iii)
Financial Statements 2.4
Hazardous Materials 2.19
Indemnifying Party 5.2(a) or 5.3(a)
Inventory 2.16
IP Assignment 1.6(h)
Lease Assignment 1.6(d)
Majority Member Preamble
Material Contracts 2.9
Name and Trade Name 1.1(a)
Party/Parties Preamble
Patents Exhibit A (“Intellectual Property”)
Preliminary Statement 1.3(e)(i)
Purchase Price 1.3(a)
Purchaser Preamble
Purchaser Indemnified Party 5.2
Real Property 2.14(a)
Real Property Laws 2.14(c)
Real Property Leases 2.14(e)
Restricted Period 4.8(a)
Restrictive Covenants Agreement 1.6(e)
Retained Liabilities 1.4(b)
Seller Indemnified Party 5.3
Settlement Statement 1.6(g)
Solvent 2.25
Specified Representations 5.1(a)
Seller Preamble
Trademarks Exhibit A (“Intellectual Property”)
Treasury Regulations Exhibit A (“Code”)
Third-Party Claim 5.4(a)
URLs Exhibit A (“Intellectual Property”)
Working Capital Surplus 1.3(d)(iii)(3)

 

 

 

 

Exhibit 10.2

 

SECURITIES
PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT
(“Agreement”) is made as of the 4th day of October, 2021 by and among Precision Optics Corporation, Inc., a Massachusetts
corporation (the “Company”), and the Investors set forth on the signature pages affixed hereto (each, an “Investor
and collectively, the “Investors”).

 

RECITALS

 

A.       The
Company and the Investors are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Rule 506 of Regulation D (“Regulation D”), as promulgated by the U.S. Securities and Exchange
Commission (the “SEC”) under the Securities Act of 1933, as amended;

 

B.       The
Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions
stated in this Agreement, up to an aggregate of 937,500 shares (the “Shares”) of the Company’s common stock, $0.01 par
value (“Common Stock”) at a purchase price of $1.60 per Share, or an aggregate of up to $1,500,000 (collectively, the
Transaction”); and

 

C.       Contemporaneous
with the sale of the Shares, the parties hereto will execute and deliver a Registration Rights Agreement, in the form attached hereto
as Exhibit A (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, and applicable
state securities laws.

 

In consideration of the mutual
promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1.             Definitions.
In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth below:

 

Affiliate
means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled
by, or is under common control with, such Person.

 

Business Day
means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

 

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, rights, options, warrants or other instrument that is at any time convertible into or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Stock.

 

Company’s Knowledge
means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

 

Control
(including the terms “controlling”, “controlled by” or “under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.

 

 

 

 

 

Intellectual Property
means all of the following: (a) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether
or not reduced to practice); (b) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain
names, together with all goodwill associated with each of the foregoing; (c) copyrights and copyrightable works; (d) registrations, applications
and renewals for any of the foregoing; and (e) proprietary computer software (including but not limited to data, data bases and documentation).

 

Material Adverse Effect
means a material adverse effect on (a) the assets, liabilities, results of operations, condition (financial or otherwise), business or
prospects of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to perform its obligations under the
Transaction Documents.

 

Material Contract
means any contract, instrument or other agreement to which the Company is a party or by which it is bound which has been filed as an exhibit
to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

 

Person
means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint
venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed
herein.

 

Purchase Price
means an aggregate of up to $1,500,000 at $1.60 per share.

 

Registration Statement
has the meaning set forth in the Registration Rights Agreement.

 

SEC Filings
means the Company’s most recent Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the “10-K”),
and all other reports filed by the Company pursuant to Sections 13(a), 13(e), 14 and 15(d) of the 1934 Act since the filing of the 10-K
and during the twelve (12) months preceding the date hereof.

 

Securities
means the Shares.

 

Shares
means the shares of Common Stock to be purchased by the Investors hereunder.

 

Subsidiary
means any subsidiary of the Company as set forth on Schedule 3.1, and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the date hereof.

 

Transaction Documents
means this Agreement and the Registration Rights Agreement and documents referenced herein and therein, and the exhibits, appendices,
and schedules hereto and thereto.

 

1933 Act
means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

1934 Act
means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

2.             Closing.

 

2.1       Closing
Date
. The date and time of the closing of the purchase of the Securities (the “Closing”) by the Investors shall
be 12 noon, New York City time, on such date as shall be mutually agreed to by the Company and the Investors, which in no event shall
be prior to, or more than three (3) Business Days after, the date of this Agreement (such date on which the Closing actually occurs, the
Closing Date”), at the offices of Trombly Business Law, PC, 1314 Main St., Suite 102, Louisville, CO 80027.

 

 

 

 

 

2.2       Closing
Actions
. On the Closing Date, (i) each Investor shall pay the pro rata portion of the Purchase Price as set forth on the signature
pages to this Agreement to the Company, by wire transfer of immediately available funds in accordance with the Company’s written
wire instructions, and (ii) the Company shall irrevocably instruct the Company’s transfer agent to deliver to each Investor who
has so paid the pro rata Purchase Price one or more stock certificates, evidencing the Shares duly executed on behalf of the Company and
registered in the name of the Investor, within three (3) Business Days after the Closing.

 

3.              Representations
and Warranties of the Company
. The Company hereby represents and warrants to each Investor that:

 

3.1       Organization,
Good Standing and Qualification
. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1 hereto.
Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to
own or lease its properties, in each case as described in the SEC Filings. Each of the Company and its Subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership
or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably
be expected to have a Material Adverse Effect.

 

3.2       Authorization.
The Company has the corporate power and authority to enter into this Agreement and has taken all requisite action on its part, its officers,
directors and shareholders necessary for (a) the authorization, execution and delivery of the Transaction Documents, (b) the authorization
of the performance of all obligations of the Company hereunder or thereunder, and (c) the authorization, issuance (or reservation for
issuance) and delivery of the Securities The Transaction Documents constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally and to general equitable
principles.

 

3.3       Capitalization.
The Company has duly and validly authorized capital stock as set forth in the SEC Filings and in the Articles of Incorporation of the
Company, as amended and as in effect as of the Closing Date (the “Certificate of Incorporation”). All of the issued
and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable
and free of pre-emptive rights and were issued in full compliance with applicable state and federal securities law and any rights of third
parties. Except as set forth in Schedule 3.3, no Person is entitled to pre-emptive or similar statutory or contractual rights
with respect to any securities of the Company. Except as set forth in Schedule 3.3, there are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries
is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, neither the Company nor
any of its Subsidiaries is in negotiations for the issuance of any equity securities of any kind as of the date of this Agreement, other
than to employees. There are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements
of any kind among the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except
as set forth in Schedule 3.3, no Person has the right to require the Company to register any securities of the Company under
the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for
the account of any other Person.

 

Except as set forth on Schedule
3.3
, the issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities
to any other Person (other than the Investors) and will not result in the adjustment of the exercise, conversion, exchange or reset price
of any outstanding security.

 

3.4       Valid
Issuance
. The Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions, except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities laws.

 

 

 

 

 

3.5       Consents.
The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings
that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities
laws which the Company undertakes to file within the applicable time periods. Subject to the accuracy of the representations and warranties
of each Investor set forth in Section 4 hereof, the Company has taken all action necessary to exempt (a) the issuance
and sale of the Securities, and (b) any provision of the Articles of Incorporation or the Company’s Bylaws, as in effect as of the
Closing Date (the “Bylaws”), that is or could reasonably be expected to become applicable to the Investors as a result
of the transactions contemplated hereby, including, without limitation, the issuance of the Securities and the ownership, disposition
or voting of the Securities by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other
Transaction Documents.

 

3.6       Delivery
of SEC Filings; Business
. The Company has made available to the Investors through the EDGAR system, true and complete copies of the
Company’s SEC Filings. The SEC Filings are the only filings required of the Company pursuant to the 1934 Act for such period. The
Company and its Subsidiaries are engaged in all material respects only in the business described in the SEC Filings and the SEC Filings
contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries, taken as a whole.

 

3.7       Use
of Proceeds
. The net proceeds of the sale of the Securities hereunder shall be used by the Company for general working capital needs
and corporate growth initiatives.

 

3.8       No
Material Adverse Change
. Since the date of the latest audited financial statements included within the SEC Filings, there has not
been:

 

(a)                any
change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial
statements included in the Company’s 10-K, except for changes in the ordinary course of business which have not had and could not
reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; provided that any effects as a result of the
COVID-19 pandemic and the economic slowdown, to the extent that they also affect a business of similar operations shall not constitute
a Material Adverse Change;

 

(b)                any
declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company,
or any redemption or repurchase of any securities of the Company;

 

(c)                any
material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries;

 

(d)                any
waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;

 

(e)                any
satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the
ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of
the Company and its Subsidiaries, taken as a whole (as such business is presently conducted and as it is proposed to be conducted);

 

(f)                 any
change or amendment to the Articles of Incorporation or Bylaws, or material change to any material contract or arrangement by which the
Company or any Subsidiary is bound or to which any of their respective assets or properties is subject;

 

(g)                any
material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;

 

 

 

 

 

(h)                any
material transaction entered into by the Company or any Subsidiary other than in the ordinary course of business;

 

(i)                 the
loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company or any
Subsidiary;

 

(j)                 the
loss or, to the Company’s Knowledge, threatened loss of any customer which has had or could reasonably be expected to have a Material
Adverse Effect; or

 

(k)                any
other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.

 

3.9       SEC
Filings
. At the time of filing thereof, the SEC Filings complied as to form in all material respects with the requirements of the
1934 Act and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

 

3.10     No
Conflict, Breach, Violation or Default
. The execution, delivery and performance of the Transaction Documents by the Company and the
issuance and sale of the Securities will not (a) conflict with or result in a breach or violation of (i) any of the terms and provisions
of, or constitute a default under the Certificate of Incorporation or the Bylaws (true and complete copies of which have been made available
to the Investors through the EDGAR system), or (ii) any statute, rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any of its assets or properties, or (b) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien, encumbrance
or other adverse claim upon any of the properties or assets of the Company or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any Material Contract, except in the case of clauses (a)(ii) and (b) above,
such as could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

 

3.11     Tax
Matters
. The Company has prepared and filed (or filed applicable extensions therefore) all tax returns required to have been filed
by the Company with all appropriate governmental agencies and paid all taxes shown thereon or otherwise owed by it, other than any such
taxes which the Company is contesting in good faith and for which adequate reserves have been provided and reflected in the Company’s
financial statements included in the SEC Filings. The charges, accruals and reserves on the books of the Company in respect of taxes for
all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company nor, to the
Company’s Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits
by any federal, state or local taxing authority except for any assessment which is not material to the Company. All taxes and other assessments
and levies that the Company is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due, other than any such taxes which the Company is contesting in good faith and for which adequate
reserves have been provided and reflected in the Company’s financial statements included in the SEC Filings. There are no tax liens
or claims pending or, to the Company’s Knowledge, threatened in writing against the Company or any of its assets or property. There
are no outstanding tax sharing agreements or other such arrangements between the Company and any other corporation or entity.

 

3.12     Title
to Properties
. The Company has good and marketable title to all real properties and all other properties and assets (excluding Intellectual
Property assets which are the subject of Section 3.15 hereof) owned by it, in each case, free from liens, encumbrances
and defects that would materially affect the value thereof or materially interfere with the use made or planned as of the date of this
agreement to be made thereof by them unless failure to do so has not had and could not reasonably be expected to have a Material Adverse
Effect; and the Company holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially
interfere with the use made or planned as of the date of this agreement to be made thereof by them.

 

 

 

 

 

3.13     Certificates,
Authorities and Permits
. The Company possesses adequate certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it, except to the extent failure to possess such certificates, authorities
or permits could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, and the Company has not
received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined
adversely to the Company, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

 

3.14     Labor
Matters
.

 

(a)                The
Company is not a party to or bound by any collective bargaining agreements or other agreements with labor organizations. The Company has
not violated in any material respect any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees,
labor organizations or any laws, regulations or orders affecting employment discrimination, equal opportunity employment, or employees’
health, safety, welfare, wages and hours.

 

(b)                (i)
There are no labor disputes existing, or to the Company’s Knowledge, threatened, involving strikes, slow-downs, work stoppages,
job actions, disputes, lockouts or any other disruptions of or by the Company’s employees, (ii) there are no unfair labor practices
or petitions for election pending or, to the Company’s Knowledge, threatened before the National Labor Relations Board or any other
federal, state or local labor commission relating to the Company’s employees, (iii) no demand for recognition or certification heretofore
made by any labor organization or group of employees is pending with respect to the Company and (iv) to the Company’s Knowledge,
the Company enjoys good labor and employee relations with its employees and labor organizations.

 

(c)                The
Company is, and at all times has been, in compliance with all applicable laws respecting employment (including laws relating to classification
of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration
and naturalization, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate. There are no claims pending against the Company before the Equal Employment Opportunity Commission or any other administrative
body or in any court asserting any violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C.
§§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance barring discrimination in employment.

 

3.15     Intellectual
Property
. The Company owns, or has obtained valid and enforceable licenses for, or other rights to use, the Intellectual Property
necessary for the conduct of the business of the Company as conducted as of the date of this agreement and as described in the SEC Filings
as being owned or licensed by them, except where the failure to own, license or have such rights could not reasonably be expected
to result in a Material Adverse Effect, individually or in the aggregate. Except as set forth in Schedule 3.15 (a) to the Company’s
Knowledge, there are no third parties who have or will be able to establish rights to any Intellectual Property, except for the ownership
rights of the owners of the Intellectual Property which is licensed to the Company as described in the SEC Filings or where such rights
could not reasonably be expected to result in a Material Adverse Effect, individually or in the aggregate, (b) there is no pending
or, to the Company’s Knowledge, threat of any, action, suit, proceeding or claim by others challenging the Company’s rights
in or to, or the validity, enforceability, or scope of, any Intellectual Property owned by or licensed to the Company or claiming
that the use of any Intellectual Property by the Company in its businesses as conducted as of the date of this agreement infringes, violates
or otherwise conflicts with the intellectual property rights of any third party, and (c) to the Company’s Knowledge, the use by
the Company of any Intellectual Property by the Company in its businesses as conducted as of the date of this agreement does not infringe,
violate or otherwise conflict with the intellectual property rights of any third party.

 

3.16     Environmental
Matters
. To the Company’s Knowledge, the Company is not in violation of any statute, rule, regulation, decision or order of
any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws
”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable
for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a
claim.

 

 

 

 

 

3.17     Litigation.
There are no pending actions, suits or proceedings against or affecting the Company or any of its properties; and to the Company’s
Knowledge, no such actions, suits or proceedings are threatened, except any such proceeding, which if resolved adversely to the Company,
could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. Neither the Company nor any director
or officer thereof, is or has been the subject of any action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the Company’s Knowledge, there is not pending or contemplated,
any investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued
any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the
1934 Act.

 

3.18     Financial
Statements
. The financial statements included in each SEC Filing comply in all material respects with applicable accounting requirements
and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or to the extent corrected by a subsequent
restatement) and present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and
its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity
with United States generally accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be
disclosed therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted by Form 10-Q under the 1934
Act). Except as set forth in the SEC Filings filed prior to the date hereof, the Company has not incurred any liabilities, contingent
or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since
the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have
a Material Adverse Effect.

 

3.19     Insurance
Coverage
. The Company maintains in full force and effect insurance coverage that is customary for comparably situated companies for
the business being conducted and properties owned or leased by the Company.

 

3.20     Brokers
and Finders
. No Person, including, without limitation, any Investor or any current holder of shares of Common Stock, will have, as
a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company
or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or
on behalf of the Company. Except as a result of any agreements or arrangements made by an Investor or its representatives or Affiliates,
to the Company’s knowledge, Investors shall have no obligation with respect to any such fees or commissions of a type contemplated
in this Section 3.20 that may be due in connection with the transactions contemplated by this Agreement.

 

3.21     No
Directed Selling Efforts or General Solicitation
. Neither the Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

 

3.22     No
Integrated Offering
. Assuming the accuracy of the Investors’ representations and warranties set forth in Section 4 hereof,
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 Company security or solicited any offers to buy any security, which are or will be integrated with this offering of the
Securities hereunder in a manner that would adversely affect reliance by the Company on Section 4(a)(2) for the exemption from registration
for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act.

 

3.23     Private
Placement
. Assuming the accuracy of the Investors’ representations and warranties set forth in Section 4 hereof,
the offer and sale of the Securities to the Investors as contemplated hereby is exempt from the registration requirements of the 1933
Act.

 

3.24     Bad
Actor Disqualification
.

 

 

 

 

 

(a)                No
Disqualification Events
. With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under the 1933 Act (“Regulation
D Securities
”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the
Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered
Persons
”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under
the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3).
The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company
has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Investors a copy of
any disclosures provided thereunder.

 

(b)                Other
Covered Persons
. The Company is not aware of any person that (i) has been or will be paid (directly or indirectly) remuneration for
solicitation of an Investor in connection with the sale of the Securities and (ii) who is subject to a Disqualification Event.

 

(c)                Notice
of Disqualification Events
. The Company will notify the Investors in writing of (i) any Disqualification Event relating to any Issuer
Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered
Person, prior to any Closing of this Offering.

 

3.25     Questionable
Payments
Neither the Company nor, to the Company’s Knowledge, any of its current or former shareholders, directors,
officers, employees, agents or other Persons acting on behalf of the Company, has, on behalf of the Company or in connection with its
businesses, (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to foreign
or domestic political activity, (b) made any direct or indirect unlawful payments to any foreign or domestic governmental officials or
employees from corporate funds, (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets, (d)
made any false or fictitious entries on the books and records of the Company, or (e) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment of any nature.

 

3.26     Transactions
with Affiliates
. Except as disclosed in the SEC Filings, none of the officers or directors of the Company and, to the Company’s
Knowledge, none of the employees of the Company is presently a party to any transaction with the Company (other than as holders of stock
options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

3.27     Internal
Controls
. Except as disclosed in the SEC Filings, the Company is in material compliance with the provisions of the Sarbanes-Oxley
Act of 2002 applicable to the Company as of the date of this agreement. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific
authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization,
and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in 1934 Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the
Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s
most recently filed periodic report under the 1934 Act, as the case may be, is being prepared. The Company’s certifying officers
have evaluated the effectiveness of the Company’s controls and procedures as of the end of the period covered by the most recently
filed periodic report under the 1934 Act (such date, the “Evaluation Date”). The Company presented in its most recently
filed periodic report under the 1934 Act the conclusions of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes
in the Company’s internal controls (as such term is defined in Item 308 of Regulation S-K) or, to the Company’s Knowledge,
in other factors that could significantly affect the Company’s internal controls. The Company maintains and will continue to maintain
a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the 1934 Act while
it continues to report under the 1934 Act.

 

 

 

 

 

3.28     Investment
Company
. The Company is not required to be registered as, and is not an Affiliate of, and immediately following the Closing will not
be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

3.29     Application
of Takeover Protections
. The Company and its board of directors have taken or will take prior to the Closing Date all necessary action,
if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the state of its incorporation
which is or could become applicable to the Investor as a result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and the Investors’ ownership of the Securities.

 

3.30     Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents that will be timely
publicly disclosed by the Company, the Company confirms that neither it nor any other Person acting on its behalf has provided the Investor
or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information which
is not otherwise disclosed in the Registration Statement or the SEC Documents unless the Investor has agreed verbally or in writing to
receive such information in which case this sentence does not apply. The Company understands and confirms that the Investor will rely
on the foregoing representation in effecting purchases and sales of securities of the Company. All of the disclosure furnished by or on
behalf of the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, including the disclosure
schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole 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 and when made, not misleading. The Company acknowledges and
agrees that the Investor neither makes nor has made any representations or warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section 3 hereof.

 

3.31     Shell
Company Status
. The Company is not as of the date of this agreement, and never has been, an issuer identified in Rule 144(i)(1) under
the 1933 Act.

 

3.32     Each
of the Investors acknowledges and agrees that the Company has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3. Each of the Investors further acknowledges
and agrees that neither the Company nor any other Person has made any representation or warranty, expressed or implied, as to the accuracy
or completeness of any information received by any such Investor which constitutes or may be deemed to constitute a projection, estimate
or other forecast and certain business plan information, except that such information was prepared in good faith and based upon assumptions
that the Company believes to have been reasonable at the time such information, if any, was provided to the applicable Investor.

 

4.             Representations
and Warranties of the Investors
. Each of the Investors hereby severally, and not jointly, represents and warrants to the Company that:

 

4.1       Organization
and Existence
. If such Investor is not a natural person, such investor is a corporation, limited partnership or limited liability
company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate, partnership or limited liability company power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.

 

4.2       Authorization.
The execution, delivery and performance by such Investor of the Transaction Documents to which such Investor is a party have been duly
authorized and each will constitute the legal, valid and binding obligation of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights generally.

 

 

 

 

 

4.3       Consents.
All consents, approvals, orders and authorizations required on the part of such Investor in connection with the execution, delivery or
performance of each Transaction Document and the consummation of the transactions contemplated hereby and thereby have been obtained and
are effective as of the date hereof.

 

4.4       Purchase
Entirely for Own Account
. The Securities to be received by such Investor hereunder will be acquired for such Investor’s own
account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act,
and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same and has no arrangement
or understanding with any other Persons regarding the distribution of such Securities in violation of the 1933 Act or any applicable state
securities law without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part
of such Securities in compliance with applicable federal and state securities laws. Such Investor is acquiring the Securities hereunder
in the ordinary course of its business. Nothing contained herein shall be deemed a representation or warranty by such Investor to hold
the Securities for any period of time. Such Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged
in a business that would require it to be so registered.

 

4.5       Investment
Experience
. Such Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and
has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment
contemplated hereby.

 

4.6       Disclosure
of Information
. The Company has made available the annual report on Form 10-K for the year ended June 30, 2021 and such Investor has
had the opportunity to review such report. Such Investor has had an opportunity to receive all information related to the Company requested
by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of
the offering of the Securities. Such Investor acknowledges receipt of copies of the SEC Filings. Neither such inquiries nor any other
due diligence investigation conducted by such Investor shall modify, limit or otherwise affect such Investor’s right to rely on
the Company’s representations and warranties contained in this Agreement. Investor is aware that COVID-19 and/or the economic disruptions
resulting from COVID-19 may impact the Company’s operations, financial results and condition to an extent currently unforeseeable
by the Company.

 

4.7       Restricted
Securities
. Such Investor understands that the Securities are characterized as “restricted securities” under the U.S.
federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be resold without registration under the 1933 Act only in certain limited
circumstances.

 

4.8       Legends.
It is understood that, except as provided below, certificates evidencing the Securities may bear the following or any similar legend:

 

(a)                 “THE
SECURITIES REPRESENTED HEREBY HAVE NOT 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 TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT AND SUCH
REGISTRATION STATEMENT REMAINS EFFECTIVE, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) COMPANY COUNSEL HAS OPINED THAT
SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT.”

 

(b)                If
required by the authorities of any state in connection with the issuance or sale of the Securities, the legend required by such state
authority.

 

 

 

 

 

4.9       Accredited
Investor
. Such Investor is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act. Such
Investor was not organized for the specific purpose of acquiring the Securities and is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act.

 

4.10     No
General Solicitation
. Such Investor did not learn of the investment in the Securities as a result of any general solicitation or general
advertising.

 

4.11     Brokers
and Finders
. No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest
or claim against or upon the Company or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of such Investor.

 

4.12     Prohibited
Transactions
. Since such time as such Investor was first contacted by the Company or any other Person acting on behalf of the Company
regarding the transactions contemplated hereby through the public announcement of the Transaction, neither such Investor nor any Affiliate
of such Investor which (a) had knowledge of the transactions contemplated hereby, (b) has or shares discretion relating to such Investor’s
investments or trading or information concerning such Investor’s investments, including in respect of the Securities, or (c) is
subject to such Investor’s review or input concerning such Affiliate’s investments or trading has, directly or indirectly,
effected or agreed to effect, or will directly or indirectly effect, any short sale, whether or not against the box, established any “put
equivalent position” (as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any other right
(including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes,
relates to or derived any significant part of its value from the Common Stock or otherwise sought to hedge its position in the Securities
(each, a “Prohibited Transaction”). Such Investor acknowledges that the representations, warranties and covenants contained
in this Section 4.12 are being made for the benefit of the Investors as well as the Company and that each of the other
Investors shall have an independent right to assert any claims against such Investor arising out of any breach or violation of the provisions
of this Section 4.12.

 

The Company acknowledges and
agrees that each Investor has not made any representations or warranties with respect to the transactions contemplated by the Transaction
Documents other than those specifically set forth in this Section 4.

 

5.             Conditions
to Closing
.

 

5.1       Conditions
to the Investors’ Obligations
. The obligation of each Investor to purchase the Securities at the Closing is subject to the fulfillment
to such Investor’s satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by such
Investor (as to itself only):

 

(a)                The
representations and warranties made by the Company in Section 3 hereof qualified as to materiality shall be true and
correct at all times prior to and on the Closing Date as so qualified, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date as so qualified,
and, the representations and warranties made by the Company in Section 3 hereof not qualified as to materiality shall
be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all material respects all obligations and covenants herein required
to be performed by it on or prior to the Closing Date.

 

(b)                The
Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities and the consummation of the other transactions contemplated by the Transaction Documents, all
of which shall be in full force and effect.

 

(c)                The
Company shall have executed and delivered the Registration Rights Agreement.

 

 

 

 

 

(d)                No
judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court
or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction
Documents.

 

(e)                The
Investors shall have received an opinion from Trombly Business Law, PC, dated as of the Closing Date, in form and substance reasonably
acceptable to the Investors and addressing such legal matters as the Investors may reasonably request.

 

(f)                 No
stop order or suspension of trading shall have been imposed by the SEC or any other governmental or regulatory body with respect to public
trading in the Common Stock.

 

5.2       Conditions
to Obligations of the Company
. The Company’s obligation to sell and issue the Shares at the Closing is subject to the fulfillment
to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

 

(a)                The
representations and warranties made by the Investors in Section 4 hereof, other than the representations and warranties
contained in Sections 4.44.54.64.74.84.9 and 4.10 (the
Investment Representations”), shall be true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The
Investment Representations shall be true and correct in all respects when made, and shall be true and correct in all respects on the Closing
Date with the same force and effect as if they had been made on and as of said date. The Investors shall have performed in all material
respects all obligations and covenants herein required to be performed by them on or prior to the Closing Date.

 

(b)                The
Investors shall have executed and delivered the Registration Rights Agreement.

 

(c)                The
Investors shall have delivered the Purchase Price to the Company.

 

5.3       Termination
of Obligations to Effect Closing
.

 

(a)                The
obligations of the Company, on the one hand, and the Investors, on the other hand, to effect the Closing shall terminate as follows:

 

  (i) Upon the mutual written consent of the Company and the Investors;

 

  (ii) By the Company if any of the conditions set forth in Section 5.2 shall have become incapable of fulfillment, and shall not have been waived by the Company;

 

  (iii) By an Investor (with respect to itself only) if any of the conditions set forth in Section 5.1 shall have become incapable of fulfillment, and shall not have been waived by the Investor;

 

  (iv) By either the Company or any Investor (with respect to itself only) if the Closing has not occurred on or prior to November 30, 2021; or

 

  (v) By either the Company or any Investor (with respect to itself only) if the NYSE and Nasdaq are closed for a period of more than three trading days;

 

provided, however, that, except in the case of clause
(i)
 above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the
circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.

 

 

 

 

 

(b)                In
the event of termination by the Company or any Investor of its obligations to effect the Closing pursuant to this Section 5.3,
written notice thereof shall forthwith be given to the other Investors by the Company and the other Investors shall have the right to
terminate their obligations to effect the Closing upon written notice to the Company and the other Investors. Nothing in this Section
5.3
 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of
its obligations under this Agreement or the other Transaction Documents.

 

6.             Covenants
and Agreements
.

 

6.1       No
Conflicting Agreements
. The Company will not take any action, enter into any agreement or make any commitment that would conflict
or interfere in any material respect with the Company’s obligations to the Investors under the Transaction Documents.

 

6.2       Insurance.
The Company shall maintain appropriate insurance coverage consistent with its business being conducted.

 

6.3       Compliance
with Laws
. The Company will comply in all material respects with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.

 

6.4       Listing
of Underlying Shares and Related Matters
. If the Company applies to have its Common Stock or other securities traded on any principal
stock exchange or market, it shall include in such application the Shares and will take such other action as is necessary to cause such
Common Stock to be so listed.

 

6.5       Termination
of Covenants
. The provisions of Sections 6.4 through 6.6 shall terminate and be of no further force
and effect on the date on which the Company’s obligations under the Registration Rights Agreement to register or maintain the effectiveness
of any registration covering the Registrable Securities (as such term is defined in the Registration Rights Agreement) terminates.

 

6.6       Removal
of Legends
. Consistent with federal and state securities laws, upon the earlier of (a) the sale or disposition of any Securities by
an Investor pursuant to Rule 144 or pursuant to any other exemption under the 1933 Act or (b) any Securities of the Investor becoming
eligible to be sold without restriction pursuant to all applicable requirements of Rule 144, upon the written request of such Investor,
the Company shall or, in the case of Common Stock, shall cause the transfer agent for the Common Stock (the “Transfer Agent”)
to issue replacement certificates representing such Securities.

 

6.7       Subsequent
Equity Sales
.

 

(a)            The
Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the 1933 Act) that will be integrated with the offer
or sale of the Securities in a manner that would require the registration under the 1933 Act of the sale of the Securities to the Investors,
or that will be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any trading market such
that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.

 

(b)       
    If the Company issues shares of Common Stock at a purchase price of less than $1.60 per share (the “Reduced
Purchase Price”) during the twelve (12) months following the Closing, Investor shall receive a number of shares of Common Stock
equal to the difference between the number of shares Investor would have received at the Reduced Purchase Price and the number of Shares
Investor received at the Purchase Price (the “Additional Shares”); provided that shares of Common Stock issued (i) upon the
exercise or conversion of any outstanding stock options, warrants or other equity; or (ii) under the Company’s registration statement
on Form S-8 for compensation shall be excluded from the forgoing. The Company shall promptly instruct the Transfer Agent to issue such
Additional Shares in the same manner as the Shares. The Additional Shares shall carry the same registration rights as the shares issued
at the Reduced Purchase Price.

 

 

 

 

 

6.8       Equal
Treatment of Investors
. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction
Documents. For clarification purposes, this provision constitutes a separate right granted to each Investor by the Company and negotiated
separately by each Investor, and is intended for the Company to treat the Investors as a class and shall not in any way be construed as
the Investors acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

6.9       Prohibited
Transactions
. From the date hereof until one (1) year after the Closing Date, no Investor shall enter into any Prohibited Transaction
relating to the Common Stock.

 

7.             Survival
and Indemnification
.

 

7.1       Survival.
The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated
by this Agreement until the expiration of the applicable statute of limitations.

 

7.2       Indemnification.
The Company agrees to indemnify and hold harmless each Investor, its Affiliates and, and each of their directors, officers, shareholders,
partners, employees, agents, and any Person who controls Investor within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act (collectively, the “Investor Parties” and each an “Investor Party”), from and against any
and all losses, claims, damages, liabilities and expenses (including, without limitation, actual and reasonable attorney fees and disbursements
(subject to Section 7.3 below) and other actual expenses incurred in connection with investigating, preparing or defending
any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”)
to which such Person may become subject as a result of (a) any breach of any representation, warranty, covenant or agreement made by or
to be performed on the part of the Company under the Transaction Documents; (b) any action instituted against any Investor Party, or any
of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of an Investor Party, with respect to
any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of Investor’s representation,
warranties or covenants or agreements under the Transaction Documents or any agreements or understandings Investor may have with any such
stockholder or any violations by Investor of state or federal securities laws or any conduct by Investor which constitutes fraud, gross
negligence, willful misconduct or malfeasance), (c) any untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement (or in a Registration Statement as amended by any post-effective amendment thereof by the Company) or arising out
of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements
therein not misleading, and/or (d) any untrue statement or alleged untrue statement of a material fact included in any Prospectus ( or
any amendments or supplements to any Prospectus ), or arising out of or based upon any omission or alleged omission to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided, however, that (i) the Company shall not be obligated to indemnify any Investor Party for any Losses finally adjudicated to have
been caused solely by an untrue statement of a material fact or an omission to state a material fact made in reliance upon and conformity
with information furnished to the Company in writing by or on behalf of such Person expressly for use in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) and (ii) the foregoing indemnity shall not inure to the benefit of any Investor
Party from whom the Person asserting any Losses purchased Securities, if a copy of the Prospectus (as then supplemented) was not sent
or given by or on behalf of such Investor Party to such Person, if required by law to have been delivered, at or prior to the written
confirmation of the sale of such Securities to such person, and if delivery of the Prospectus (as then supplemented) would have cured
the defect giving rise to such Losses, and the Company will reimburse any such Person for all such amounts as they are incurred by such
Person.

 

 

 

 

 

7.3       Conduct
of Indemnification Proceedings
Any person entitled to indemnification hereunder shall (a) give prompt notice to
the indemnifying party of any claim with respect to which it seeks indemnification and (b) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled
to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such person unless (i) the indemnifying party has agreed to pay such fees
or expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory
to such person or (iii) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest
exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such claim on behalf of such person); and providedfurther, that
the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder,
except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such
claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction,
be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying
party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation. The Company will not be liable to any indemnified party under this Agreement (a) for any settlement
by such indemnified party effected without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned
or delayed, or (b) for any Losses incurred by such indemnified party which a court of competent jurisdiction determines in a final judgment
which is not subject to further appeal are solely attributable to (A) a breach of any of the representations, warranties, covenants or
agreements made by such indemnified party under this Agreement or in any other Transaction Document or (B) the fraud, gross negligence
or willful misconduct of such indemnified party.

 

8.             Miscellaneous.

 

8.1       Successors
and Assigns
. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their respective
successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Securities by such Investor to such person, provided that (a) the Investor agrees in writing with such
transferee or assignee to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee, and (ii) the securities with respect to which such registration
rights are being transferred or assigned; (c) immediately following such transfer or assignment the further disposition of such securities
by such transferee or assignee is restricted under the 1933 Act or applicable state securities laws if so required; (d) at or before the
time the Company receives the written notice contemplated by clause (b) of this sentence such transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; (e) such transfer or assignment shall have been made in accordance
with the applicable requirements of this Agreement; and (f) such transfer or assignment shall have been conducted in accordance with all
applicable federal and state securities laws. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Without limiting the generality of the foregoing, in the event that the Company is a
party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into
the equity securities of another Person, from and after the effective time of such transaction, such Person shall agree to and, by virtue
of such transaction, have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to
such Person and the term “Common Stock” shall be deemed to refer to the securities received by the Investors in connection
with such transaction. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except
as expressly provided in this Agreement.

 

 

 

 

 

8.2       Counterparts;
Faxes
. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. This Agreement may also be executed via facsimile or by e-mail in a “.pdf” format
data file, which shall be deemed an original.

 

8.3       Titles
and Subtitles
. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing
or interpreting this Agreement.

 

8.4       Notices.
Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively
given as hereinafter described (a) if given by personal delivery, then such notice shall be deemed given upon such delivery, (b) if given
by facsimile or e-mail, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (c) if given by mail,
then such notice shall be deemed given upon the earlier of (i) receipt of such notice by the recipient or (ii) three days after such notice
is deposited in first class mail, postage prepaid, and (d) if given by an internationally recognized overnight air courier, then such
notice shall be deemed given one Business Day after delivery to such carrier. All notices shall be addressed to the party to be notified
at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other
party:

 

If to the Company:

 

Precision Optics Corporation, Inc.
22 East Broadway

Gardner, Massachusetts 01440-3338
Attention: Chief Executive Officer
Fax: (978) 630-1487

E-mail: [____]

 

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

 

Amy Trombly

Trombly Business Law, PC
1314 Main St., Ste 150

Louisville, CO 80027

Fax: (617) 243-0066

E-mail: [____]

 

If to the Investors:

 

to the addresses set forth on the signature pages hereto.

 

8.5       Expenses.
The parties hereto shall pay their own costs and expenses in connection herewith, regardless of whether the transactions contemplated
hereby are consummated. In the event that legal proceedings are commenced by any party to this Agreement against another party to this
Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings
shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket
costs and expenses incurred by the prevailing party in such proceedings.

 

 

 

 

 

8.6       Amendments
and Waivers
. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors representing
at least one-half of the shares issued in this transaction. Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities,
and the Company.

 

8.7       Publicity.
The Company will file a public release or announcement concerning the transactions contemplated hereby as required by law or the applicable
rules or regulations of any securities exchange or securities market.

 

8.8       Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as
if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by
applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

 

8.9       Entire
Agreement
. This Agreement, including the Exhibits and the Disclosure Schedules, and the other Transaction Documents constitute the
entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

 

8.10     Further
Assurances
. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

8.11     Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial
. This Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York (except to the extent
the provisions of the California Corporations Code would be mandatorily applicable to the issuance of the Shares). Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under
this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding
and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES
ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY
AS TO THIS WAIVER.

 

8.12     Independent
Nature of Investors’ Obligations and Rights
. The obligations of each Investor under any Transaction Document are several and
not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document. The decision of each Investor to purchase Securities pursuant to the Transaction
Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document,
and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor
has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of
such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents.
Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out
of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional
party in any proceeding for such purpose. Each Investor has been represented by its own separate legal counsel in their review and negotiation
of the Transaction Documents. The Company acknowledges that each of the Investors has been provided with the same Transaction Documents
for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

 

[Signature Pages Follow]

 

 

 

IN WITNESS WHEREOF, the parties
have executed this Securities Purchase Agreement or caused their duly authorized officers to execute this Securities Purchase Agreement
as of the date first above written.

 

The Company: PRECISION OPTICS CORPORATION, INC.
   
  By:  /s/ Joseph N. Forkey
  Name:
Title:
Jospeh N. Forkey
President and Chief Executive Officer

 

 

 

[Signature Page for Investor Follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Securities Purchase Agreement]

 

Name of Investor:   _________________________________
     
    By: ______________________________
    Name:
    Title:
     
Address for Delivery of Certificate to Investor:   _________________________________
    _________________________________
    _________________________________
    Fax: _____________________________
    Email: ____________________________
     
Address for Notice (if different):   _________________________________
    _________________________________
    _________________________________
    Fax: _____________________________
    Email: ____________________________
     
Subscription Amount:   $ __________
     
Shares   ___________
     
EIN Number:   ___________
     

 

 

 

 

 

 

 

 

 

 

 

 

Schedule A

 

Purchase and Sale of Shares

 

 

Name

Number of Shares of
Common Stock

Aggregate

Purchase Price

[investor name]    
     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disclosure Schedules to the Securities Purchase
Agreement

 

Schedule 3.1 – Subsidiaries.

 

Name   Jurisdiction of Incorporation
     
Precise Medical, Inc.   Commonwealth of Massachusetts, USA
Wood’s Precision Optics Corporation, Limited   Hong Kong

 

 

Schedule 3.3 – Capitalization.

 

The capitalization of the Company, as of June
30, 2021 is set forth below.

 

Common stock outstanding 13,282,476
Common stock options 2,578,200
Total 15,860,676

 

 

Schedule 3.15 Intellectual Property.

 

On July 28, 2011, as reported in the Company’s
Form 8-K filed with the SEC on August 3, 2011, the Company entered into an asset purchase agreement with Intuitive Surgical Operations,
Inc., through which the Company assigned all of the issued and pending patents that the Company held as of the date of the agreement.
As part of the agreement the Company retained an exclusive license to directly and indirectly make, use, develop, modify, improve, substitute,
iterate, combine, distribute, offer for sale, and sell, import and export products outside the field of medical robotics throughout countries
worldwide and a non-exclusive license to directly and indirectly make, use, develop, modify, improve, substitute, iterate, combine, distribute,
offer for sale, and sell, import and export products and services for in vitro procedures utilizing genomic and/or proteomic lab-on-a-chip
or other similar benchtop diagnoses, both inside and outside the field of medical robotics throughout countries worldwide.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A

 

Registration Rights Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.3


REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT
(the “Agreement”) is made and entered into as of this 4th day of October, 2021, by and among Precision Optics Corporation,
Inc., a Massachusetts corporation (the “Company”), and the “Investors” named in that certain Securities
Purchase Agreement, dated as of the date hereof, by and among the Company and the Investors (the “Purchase Agreement”).
Capitalized terms used herein have the respective meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein.

 

WHEREAS, the Company and the
Investors have entered into that certain Purchase Agreement, pursuant to which the Investors purchased from the Company up to an aggregate
of 937,500 shares (the “Shares”) of the Company’s common stock, $0.01 par value (“Common Stock”)
at a price of $1.60 per share or an aggregate price of up to $1,500,000; and

 

WHEREAS, the parties hereto
are entering into this Agreement to provide certain registration rights under the 1933 Act (as defined below), and the rules and regulations
promulgated thereunder, and applicable state securities laws to the Investors with respect to Registrable Securities (as defined below)
each may hold; and

 

NOW, THEREFORE, in consideration
of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

1.   Certain Definitions.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

Business Day
means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

 

Common Stock
means the Company’s common stock, $0.01 par value, and any securities into which such shares may hereinafter be reclassified.

 

Investors
means the Investors identified in the Purchase Agreement and any Affiliate or permitted transferee of any Investor who is a subsequent
holder of any Registrable Securities.

 

Prospectus
means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

 

Register,”
registered” and “registration” refer to a registration made by preparing and filing one or more
Registration Statement (as defined below) or similar document in compliance with the 1933 Act and pursuant to Rule 415 under the 1933
Act or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering
of effectiveness of such Registration Statement(s) by the SEC.

 

Registrable Securities
means the Shares of Common Stock purchased by the Investors pursuant to the Purchase Agreement and any shares of Common Stock that may
be issued or issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions as permitted by Rule 416(a)
of the 1933 Act; provided, that a security shall cease to be a Registrable Security upon the earlier of (i) sale pursuant to the Registration
Statement or Rule 144 (or other available exemption) under the 1933 Act, or (ii) such security becoming eligible for sale without restriction
by the holder thereof pursuant to Rule 144 (or other available exemption) under the 1933 Act, or (iii) at such time as the transfer agent
agrees that the legend on certificates representing the shares of Common Stock can be removed based on Rule 144 or any other applicable
law, rule regulation or legal interpretation of such laws, rules and regulations.

 

 

 

 

 

Registration Statement
means any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant
to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such Registration Statement.

 

Required Investors
means the Investors holding a majority of the Registrable Securities.

 

SEC” means
the U.S. Securities and Exchange Commission.

 

SEC Guidance
means (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff
and (ii) the 1933 Act.

 

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

 

1934 Act
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

2. Registration

  

2.1    Registration
Statement
.

 

(a)    Each
Investor acknowledges that the Company’s Common Stock currently trades on the OTCQB and that the Company is not currently eligible
to use Form S-3 for the Registration Statement(s) required to be filed hereunder.

 

(b)    Promptly
following the closing of the purchase and sale of the securities contemplated by the Purchase Agreement (the “Closing Date”)
but no later than one hundred twenty (120) days after the Closing Date, the Company shall prepare and file with the SEC one Registration
Statement on Form S-1, covering the resale of the Registrable Securities, subject to the limitation contained in Section 2.1(c). Such
Registration Statement shall also cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule
416), but subject to the limitation contained in Section 2.1(c), such indeterminate number of additional shares of Common Stock resulting
from stock splits, stock dividends or similar transactions with respect to the Registrable Securities.

 

(c)    Registration
Limitation
. Notwithstanding any other provision of this Agreement, if the SEC or any SEC Guidance sets forth a limitation on the number
of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering, the Company shall
reduce Registrable Securities on a pro rata basis. In the event of a reduction of the number of Registrable Securities hereunder, the
Company shall give the Investor at least five (5) Business Days prior written notice along with the calculations as to such Investor’s
allotment. In the event the Company amends the initial Registration Statement in accordance with the foregoing, the Company will use its
best efforts to file with the Commission, as promptly as allowed by the SEC or SEC Guidance provided to the Company or to registrants
of securities in general, one or more registration statements on Form S-1 (unless the Company is then eligible to use Form S-3) or such
other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration
Statement, as amended.

 

2.2    Expenses.
The Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel and
accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws
and listing fees, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold.

 

 

 

 

 

2.3    Effectiveness.

 

(a)    The
Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable. The Company
shall (1) notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within two (2) Business Days, after
any Registration Statement is declared effective and (2) promptly after a written request by an Investor, provide the Investors with printed
copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

 

(b)    The
Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event that the
Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning
the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company
or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus
shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an
Allowed Delay”); provided, that the Company shall promptly (a) notify each Investor in writing of the commencement
of an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed
Delay and (c) use commercially reasonable efforts to terminate the Allowed Delay as promptly as practicable.

 

3.    Company
Obligations
. The Company will use its commercially reasonable efforts to effect the registration of the Registrable Securities in
accordance with the terms hereof, and, pursuant thereto, the Company will, as expeditiously as possible:

 

3.1     Use
commercially reasonable efforts to cause such Registration Statement to become effective within two hundred and forty (240) days after
the date the Registration Statement is first filed and to remain continuously effective until the date on which the Investors have sold
all the Registrable Securities (the “Effectiveness Period”);

 

3.2      Prepare
and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

3.3      Subject
to the paragraph at the end of this Section, furnish (which may be by email notice of a filing on EDGAR) to the Investors and their counsel
promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2)
Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and
any amendment thereto, the Prospectus and each amendment or supplement thereto, in each case relating to such Registration Statement;

 

3.4      Use
commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order
is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

3.5      Prior
to any public offering of Registrable Securities, at the written request of the Required Investors and if required by applicable law,
use commercially reasonable efforts to register or qualify such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions requested by the Investors and do any and all other commercially reasonable acts or things necessary or
advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in
any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process
in any such jurisdiction;

 

 

 

 

 

3.6      Use
commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

3.7      Otherwise
use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act,
including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement or amendment thereof,
with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at any time during the Effectiveness
Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to deliver
a prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to
facilitate the registration of the Registrable Securities hereunder; and

 

3.8      With
a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investors to sell shares of Common Stock to the public without registration, during the Effectiveness
Period, the Company covenants and agrees to: (i) use its reasonable best efforts to make and keep public information available, as those
terms are understood and defined in Rule 144; (ii) use its reasonable best efforts to file with the SEC in a timely manner all reports
and other documents required of the Company under the 1934 Act; and (iii) furnish to each Investor upon request, as long as such Investor
owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the 1934
Act, (B) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that
permits the selling of any such Registrable Securities without registration.

 

4.      Obligations
of the Investors
.

 

4.1   Each
Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended
method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration as the Company may reasonably request. Furthermore, each
Investor will promptly, and in any event within three (3) calendar days of a Company request, respond fully to any reasonable request
for information as required by the Company or the SEC or any other regulator for inclusion in the Registration Statement or in correspondence
to the SEC or such other regulator. Failure to respond to such requests will stay any obligation of the Company to register such Investor’s
securities.

 

4.2   Each
Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of a Registration Statement hereunder.

 

4.3   Each
Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section
2.3(b) or (ii) the happening of an event pursuant to Section 3.7 hereof, such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that
such dispositions may again be made.

 

4.4   Each
Investor covenants and agrees that it will comply with the prospectus delivery and other requirements of the 1933 Act as applicable to
it in connection with sales of Registrable Securities pursuant to a Registration Statement, including compliance with the “Plan
of Distribution” section of the then current prospectus relating to such Registration Statement.

 

5.      Indemnification.

 

 

 

 

 

(a)    Indemnification
by the Company
. The Company will indemnify and hold harmless each Investor who holds Registrable Securities and its officers, directors,
members, employees and agents, successors and assigns, and each other Person, if any, who controls such Investor within the meaning of
the 1933 Act, against any losses, liabilities, obligations, claims, contingencies, damages, actual costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”),
insofar as such Losses arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, any Prospectus, or any amendment or supplement thereof or arising out of or based upon any omission or
alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii)
any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished
by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities
laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or
alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements
therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable
to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any
failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or
its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on an
Investor’s behalf and will reimburse such Investor, and each such officer, director or member and each such controlling person for
any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability
or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such Losses arise out
of or are based upon (A) an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information
furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus;
(B) a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company; (C) the Investor’s
use of an incorrect prospectus despite being promptly advised in advance by the Company in writing not to use such incorrect prospectus;
(D) any claims based on the manner of sale of the Registrable Securities by the Investor; or (E) any omission of the Investor to notify
the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner
of sale.

 

(b)    Indemnification
by the Investors
. Each Investor agrees, severally and jointly, to indemnify and hold harmless, to the fullest extent permitted by
law, the Company, its directors, officers, employees, shareholders and each person who controls the Company (within the meaning of the
1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue
statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or amendment
or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue
statement or omission is contained in any information furnished in writing by such Investor to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the liability of an Investor be greater
in amount than the dollar amount of the proceeds (net of all expenses paid by such Investor in connection with any claim relating to this
Section 5 and the amount of any damages such Investor has otherwise been required to pay by reason of such untrue statement or omission)
received by such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification
obligation.

 

(c)    Conduct
of Indemnification Proceedings
. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall
be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to
employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense
of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially
adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall
not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys
at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. No indemnifying party will
be liable to any indemnified party under this Agreement for any settlement by such indemnified party effected without the indemnifying
party’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

 

 

 

 

 

(d)    Contribution.
If for any reason the indemnification provided for in the preceding paragraphs 5(a) and 5(b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.
No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable
Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any
claim relating to this Section 5 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to
such contribution obligation.

 

6.       Miscellaneous.

 

(a)    Amendments
and Waivers
. This Agreement may be amended only by a writing signed by the Company and the Required Investors.

 

(b)    Notices.
All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 8.4 of the Purchase Agreement.

 

(c)    Assignments
and Transfers by Investors
. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their
respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its
rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person, provided that (i) the Investor
agrees in writing with such transferee or assignee to assign all or any portion of such rights, and a copy of such agreement is furnished
to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which
such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition
of such securities by such transferee or assignee is restricted under the 1933 Act or applicable state securities laws if so required;
(iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence such transferee or assignee
agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment shall have been
made in accordance with the applicable requirements of the Purchase Agreement; and (vi) such transfer or assignment shall have been conducted
in accordance with all applicable federal and state securities laws. The term “Investor” in this Agreement shall also include
all such transferees and assignees.

 

(d)    Assignments
and Transfers by the Company
. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without
the prior written consent of the Required Investors, provided, however, that in the event that the Company is a party to a merger, consolidation,
share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another
Person, from and after the effective time of such transaction, such Person shall, agree to and, by virtue of such transaction, have assumed
the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable
Securities” shall be deemed to include the securities received by the Investors in connection with such transaction unless such
securities are otherwise freely tradable by the Investors after giving effect to such transaction.

 

(e)    Benefits
of the Agreement
. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.

 

(f)     Remedies.
In the event of a breach by the Company of any of its obligations under this Agreement, each Investor, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance
of its rights under this Agreement. The Company agrees that monetary damages would not provide adequate compensation for any losses incurred
by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

 

 

 

 

 

(g)    Piggy-Back
Registrations
. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the 1933 Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other
employee benefit plans, then the Company shall deliver to each Investor a written notice of such determination and, if within fifteen
days after the date of the delivery of such notice, any such Investor shall so request in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such Investor requests to be registered; provided, however, that the Company
shall not be required to register any Registrable Securities pursuant to this Section 6.7 that are eligible for resale pursuant to Rule
144 (without volume restrictions or current public information requirements) promulgated by the SEC pursuant to the 1933 Act or that are
the subject of a then effective Registration Statement.

 

(h)    No
Inconsistent Agreements
. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company
or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would
have the effect of impairing the rights granted to the Investors in this Agreement or otherwise conflicts with the provisions hereof.
Except as set forth on Schedule 3.3, neither the Company nor any of its Subsidiaries has previously entered into any agreement granting
any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

 

(i)    Cumulative
Remedies
. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

 

(j)    Independent
Nature of Investors’ Obligations and Rights
. The obligations of each Investor hereunder are several and not joint with the obligations
of any other Investor hereunder, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor
hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Investor
pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other
kind of group or entity, or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect
to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Investors
are not acting in concert or as a group, and the Company shall not asset any such claim, with respect to such obligations or transactions.
Each Investor shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of
a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or
decision of any Investor, and was done solely for the convenience of the Company and not because it was required or requested to do so
by any Investor. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and an Investor,
solely, and not between the Company and the Investors collectively and not between and among Investors.

 

(k)    Counterparts;
Faxes
. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. This Agreement may also be executed via facsimile or by emailing a “.pdf” format
data file, which shall be deemed an original.

 

(l)    Titles
and Subtitles
. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing
or interpreting this Agreement.

 

(m)   Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as
if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by
applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

 

 

 

 

 

(n)    Further
Assurances
. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

(o)    Entire
Agreement
. This Agreement and the Purchase Agreement are intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement and the Purchase Agreement supersede all prior agreements and understandings between the parties with respect to
such subject matter.

 

(p)    Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial
. This Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under
this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding
and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES
ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY
AS TO THIS WAIVER.

 

[Signature Pages Follow.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties
have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Agreement as of the date first
above written.

 

 

 

The Company:   PRECISION OPTICS CORPORATION, INC.
     
     
    By: /s/ Joseph N. Forkey_______________
    Name: Joseph N. Forkey
    Title: President and Chief Executive Officer
     
     
     
     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Registration Rights Agreement]

 

IN WITNESS WHEREOF, the parties
have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Agreement as of the date first
above written.

 

 

Name of Investor:

 

  By: ________________________
  Name:
  Title:
   
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.4

 

LOAN AGREEMENT

 

THIS AGREEMENT dated as of October 4, 2021
is by and between PRECISION OPTICS CORPORATION, INC., a Massachusetts corporation with its principal place of business at 22 East
Broadway, Gardner, Massachusetts 01440 (the “Borrower”) and MAIN STREET BANK, a Massachusetts bank with its principal
place of business at 81 Granger Boulevard, Marlborough, Massachusetts 01752 (the “Bank”).

 

WHEREAS, the Borrower has requested, and
the Bank has consented to the extension of a $250,000 revolving line of credit loan facility and a $2,600,000 term loan facility (collectively,
the “Loans”).

 

NOW THEREFORE, in consideration of the covenants,
agreements, representations and warranties contained in this Agreement and of the faithful performance of said covenants and agreements,
the Borrower and the Bank covenant, agree, represent and warrant as follows:

 

SECTION 1

 

DEFINITIONS

 

Unless the context otherwise requires, the terms
defined in this Section 1 will, for all purposes of this Agreement, have the meanings specified. The following definitions are equally
applicable to both the singular and plural forms of any of the terms defined. All terms of accounting significance used (unless otherwise
specified) will be determined by reference to the Borrower’s books of account and in conformity with GAAP as applied to the books
of account in the opinion of a certified public accountant of recognized standing selected by the Borrower and approved by the Bank in
its reasonable discretion.

 

Acquisition. The purchase by the Borrower
of substantially all of the assets of Lighthouse pursuant to the Acquisition Documents.

 

Acquisition Documents. That certain Asset
Purchase Agreement, dated as of October 4, 2021, by and between the Borrower and Lighthouse, and all agreements, instruments and documents
executed or delivered in connection therewith, including, but not limited to, a Bill of Sale, Assignment and Assumption Agreement, Assignment
and Assumption of Lease and Intellectual Property Assignment.

 

Advance. Each advance of funds made by the
Bank under the Loans.

 

Affiliate. Any Person who directly or indirectly
controls, or is controlled by, or is under common control with the Borrower.

 

Agreement. This entire Loan Agreement with
all the Exhibits and Schedules, if any, attached.

 

Assets. All assets of the Borrower, including
without limitation, all assets acquired pursuant to the Acquisition and all assets that should be classified as assets on a balance sheet
of the Borrower prepared in accordance with GAAP.

 

Bank. Main Street Bank, a Massachusetts
bank, its successors and assigns.

 

Borrower. Precision Optics Corporation,
Inc., a Massachusetts corporation.

 

Borrowing Base Certificate. A fully completed
certificate in the form of Exhibit A to this Agreement, certified by the President or Chief Financial Officer of the Borrower
to be correct and delivered to, and accepted by, the Bank pursuant to this Agreement.

 

 

 

 

 

Business Day. Any day other than Saturday,
Sunday or a day on which commercial banks in Massachusetts are required or permitted by law to close.

 

Capital Assets. Assets that are required
or permitted to be depreciated or amortized in accordance with GAAP.

 

Capital Leases. Capital leases, conditional
sales contracts and other title retention agreements relating to the purchase or acquisition of Capital Assets.

 

Collateral. All present and future right,
title and interest of the Borrower in and to the property and rights, now or in the future existing, in which a security interest is granted
to the Bank under the Security Agreement.

 

Current Maturities of Long-Term Indebtedness.
The principal amount of long-term Indebtedness paid within twelve (12) months from the date of calculation, including, but not limited
to, amounts paid during such period under Capital Leases.

 

Default. Any event or condition specified
in Section 5.1 so long as any applicable requirements for the giving of notice or lapse of time or both have not been fulfilled.

 

EBITDA. For any period, the aggregate of
Borrower’s net income plus taxes paid, plus Interest expense, plus depreciation and amortization.

 

Environmental Event. Any (i) generation,
storage, disposal, removal, transportation or treatment of Hazardous Substances on, at or from any property owned, leased, occupied or
operated by the Borrower (or on any of the real property adjoining such property, if, through soil or groundwater migration, such Hazardous
Substances could have come to be located at any of such property); (ii) receipt by the Borrower of any notice or claim of any violation
of any Environmental Law or of any action based upon nuisance, negligence or other tort theory alleging liability on the basis of improper
generation, storage, disposal, removal, transportation or treatment of Hazardous Substances on, at or from any of the property described
in clause (i) above; or (iii) presence or release of Hazardous Substances at, from or upon any of the property described in clause (i)
above that has resulted in contamination or deterioration of any portion of such property resulting in a level of contamination greater
than the levels permitted or established by any governmental Authority having jurisdiction
over the Borrower or any of such property.

 

Environmental Laws. Any and all federal,
foreign, state, local and other governmental statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, licenses,
or other governmental restrictions relating to the environment or the release of any materials into the environment.

 

Event of Default. Any event or condition
specified in Section 5.1 if all applicable requirements for the giving of notice or lapse of time or both have been fulfilled.

 

Financial Statements. (a) the consolidated
financial statements of the Borrower together with the notes thereto for the fiscal years ended June 30, 2019 and June 30, 2020 audited
by the Borrower’s independent certified public accountants to present fairly the financial position and results of operations of
the Borrower at such dates and for such periods in accordance with GAAP, and (b) the internally prepared consolidated financial statements
of the Borrower for the period ending June 30, 2021.

 

GAAP. Generally accepted accounting principles
applied consistently as was done in the preparation of the Financial Statements, with such changes or modifications thereto as may be
approved in writing by the Bank.

 

Governmental Authority. Any agency, authority,
body, board, commission, court, instrumentality, department, bureau, legislature or office of any nature whatsoever for any government
unit or political subdivision, whether foreign, federal, state, county, district, municipal or otherwise, and whether now or hereafter
in existence.

 

 

 

 

 

Hazardous Substances. Any “hazardous
material” or “hazardous substances” as defined in any of the Environmental Laws, as well as asbestos and materials containing
asbestos.

 

Indebtedness. With respect to any entity
(a) all obligations of the entity which in accordance with GAAP are classified upon the balance sheet of the entity as liabilities (except
capital stock and surplus earned or otherwise), and in any event, without limitation by reason of enumeration, all indebtedness, capitalized
lease obligations, debt and other similar monetary obligations of the entity, whether direct, indirect or guaranteed, and all premium,
if any, due at the required prepayment date of the indebtedness, but excluding endorsement of obligations of others deposited by the entity
to its account for collection; and (b) all indebtedness secured by mortgage, pledge, lien, charge or encumbrance on assets owned by the
entity, whether or not the indebtedness was actually created, assumed or incurred by the entity; and the acquisition by an entity of assets
subject to any mortgage, pledge, lien, charge or encumbrance shall be deemed to be the equivalent of the creation, assumption and incurring
of the indebtedness secured by the assets. In computing the amount of Indebtedness at any date, there shall be included an amount equal
to all reserves at the date in respect of debts and other similar monetary obligations of the entity, either direct or guaranteed.

 

Intellectual Property. Any and all intellectual
property, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and
processes, all rights therein, and all rights to sue at law or in equity for any past, present, or future infringement, violation, misuse,
misappropriation or other impairment thereof, whether arising under US, multinational or foreign laws or otherwise, including the right
to receive injunctive relief and all proceeds and damages therefrom.

 

Interest. For any fiscal period, interest
paid or accrued, including but not limited to, interest paid or accrued on Liabilities, determined in accordance with GAAP.

 

Landlord Waivers. The consent and waiver
of the landlord in its interest in the Borrower’s property subject to the Leases and substantially in the form of Exhibit B
attached.

 

Leases. The leases (including tenancy, occupancy
and license agreements) for storage space, production facilities, office facilities and any other location now or hereinafter occupied
by the Borrower and/or where any Collateral is now or hereafter stored or used including, but not limited to, those leases listed on Schedule
1
attached.

 

Legal Requirements. All statutes, codes,
ordinances (and rules and regulations thereunder), all executive orders and other administrative orders, judgments, decrees, injunctions
and other judicial orders of or by any federal, state, municipal or other government, or any department, commission, board, bureau, agency
or instrumentality of any of them, which may at any time be applicable to the Borrower.

 

Liabilities. All liabilities of the Borrower,
including without limitation, all liabilities that should be classified as liabilities on a balance sheet of the Borrower prepared in
accordance with GAAP.

 

Lighthouse. Lighthouse Imaging, LLC, a Maine
limited liability company.

 

Loan Documents. This Agreement, the Notes,
the Security Agreement and all other agreements, documents, instruments and certificates delivered by the Borrower or others to the Bank
in connection with this Agreement.

 

Material Adverse Effect. Any materially
adverse effect on the condition (financial or otherwise) with respect to the properties, assets, business, affairs, operations, or results
of operations of the Borrower or material impairment of the ability of the Borrower to perform its business as currently conducted or
as proposed to be conducted or its obligations hereunder or under any of the other Loan Documents.

 

 

 

 

 

Notes. The Revolving Line of Credit Note
and the Term Note.

 

Obligations. (i) All of the Borrower’s
covenants, agreements and obligations contained in the Loan Documents, and (ii) all debts, liabilities and obligations of the Borrower
to Bank of every description, direct or indirect, absolute or contingent, due or to become due, now existing or in the future arising.

Patents and Trademarks. All patents, patent
applications, patents pending, trademarks and trademark applications owned or held by the Borrower (including those acquired by Borrower
pursuant to the Acquisition) all as more particularly set forth on Schedule 2 attached. To the extent any such item has been filed
or registered with any state or the United States Patent and Trademark Office all such filing information shall be set forth on said Schedule
2
.

 

Permits. All licenses, approvals, qualifications,
variances, permissive uses, certificates of need, franchises, accreditations, certificates, certifications, consents, permits and other
authorizations (including, without limitation, building permits, subdivision approvals and subdivision plans) benefiting, relating to
or affecting any of the Collateral or other property or assets of the Borrower and the ownership, construction, development, maintenance,
management, repair, use, occupancy, possession or operation thereof or the operation of any programs or services by the Borrower and all
renewals, replacements and substitutions therefor, now or hereafter issued by or entered into with any Governmental Authority or maintained
or used by the Borrower or entered into by the Borrower with any other Person.

 

Permitted Liens. The liens referred to in
Section 3.19(a).

 

Person. An individual, a corporation, a
partnership, a limited liability company, a joint stock association, a business trust or a government or any agency or subdivision of
a government.

 

Qualified Account. A Qualified Account means
at any time, an account of the Borrower which met all of the following requirements at the time it first came into existence and which
continues to meet the same until collected in full:

 

a)                 
The account arose in the ordinary course of business of the Borrower from (i) a bona fide outright sale of goods and such goods
have been shipped to the appropriate account debtors or their designees and the Borrower has possession of shipping and delivery receipts
(or receipts from the public carrier to which goods have been delivered for shipment) evidencing such shipment or (ii) the performance
of services by the Borrower and the services have been performed in full for the appropriate account debtors;

 

b)                 
The account is based upon an enforceable order or contract, written or oral, for goods shipped or held or for services performed,
and the same were shipped, held, or performed in accordance with such order or contract;

 

c)                 
The Bank has a valid and perfected first priority security interest in the account and the account is not subject to any other
assignment, claim, lien, security interest or any levy, attachment, garnishment or other judicial process;

 

d)                 
The amount shown on the books of the Borrower and on any certificate, invoice or statement delivered to the Bank is owing to the
Borrower, less any partial payment that has been made thereon;

 

e)                 
The account shall be qualified only to the extent that it is not subject to any written claim of reduction, counterclaim, set-off,
recoupment, or any claim for credits, discounts, rebates, commissions, allowances, or adjustments by the account debtor because of returned,
inferior, or damaged goods or unsatisfactory services, or for any other reason;

 

f)                  
The account is not outstanding more than ninety (90) days past the invoice date;

 

 

 

 

 

g)                 
The account does not arise out of a contract with, or order from, an account debtor that, by its terms, forbids or makes void or
unenforceable the assignment of such account to the Bank;

 

h)                 
The Borrower has not received any note, trade acceptance, draft or other instrument with respect to, or in payment of, the account,
or any chattel paper with respect to the goods giving rise to the account;

 

i)                  
The Borrower has not received notice of the death of the account debtor nor of the dissolution, termination of existence, bankruptcy,
insolvency, business failure, appointment of a receiver for any part of the property of, assignment for the benefit of creditors by, or
the filing of a petition in bankruptcy or the commencement of any proceeding under any bankruptcy or insolvency laws by or against, the
account debtor. Upon the receipt of any such notice, the recipient will promptly give the Bank written advice thereof;

 

j)                  
The account has not been turned over to a collection agency or an attorney for collection, and the Borrower reasonably determines
the account to be collectible;

 

k)                 
The account does not arise out of a contract with an Affiliate or a Subsidiary;

 

l)                  
The account arises in the United States of America and the account debtor is located in the United States of America;

 

m)                
The account is not of an account debtor where fifty percent (50%) or more of the aggregate value of the accounts of such account
debtor owing to the Borrower are outstanding more than ninety (90) days past the invoice date;

 

n)                 
The account is not a bonded account;

 

o)                 
The account is not a retainage account;

 

p)                 
The account is not owing from an account debtor to whom the Borrower is indebted;

 

q)                 
The account is not associated with consigned goods;

 

r)                  
The account is not due from an officer or employee of the Borrower;

 

s)                 
The account is not due from a governmental entity;

 

t)                  
The account is not unbilled;

 

u)                 
The account is not a rebate account;

 

v)                 
The account is not a bill and hold account;

 

w)               
The account does not represent unapplied credits more than ninety (90) days past the invoice date;

 

x)                 
The account is not a percentage of completion account;

 

y)                 
The account is not a customer deposit;

 

 

 

 

 

z)                 
The account is billed in U.S. Dollars and the account debtor is required to remit payment in U.S. Dollars;

 

aa)               
The account debtor is not located in the State of New Jersey or in the State of Minnesota, unless (i) Borrower has filed and shall
file all legally required Notice of Business Activities Reports with the New Jersey Division of Taxation or the Minnesota Department of
Revenue, as the case may be; or (ii) Borrower is exempt from such filing requirement.

 

bb)               
The Bank has not reasonably deemed such account unqualified because of uncertainty about the creditworthiness of the account debtor
or because the Bank otherwise reasonably considers the collateral value thereof to be impaired or its ability to realize such value to
be insecure based upon such criterion established by the Bank from time to time.

 

The Bank in its sole discretion shall determine
eligibility requirements, cross-aging exclusions, reserves, final advance rates and other factors with respect to Qualified Accounts based
upon ongoing field examinations performed by the Bank’s examiner. If there is a dispute about whether an account is or has ceased
to be a Qualified Account, the decision of the Bank shall control.

 

Qualified Inventory. Qualified Inventory
means the Borrower’s raw materials and finished goods inventory [excluding damaged/defective items, packaging (boxes/labels), display
items, samples, consigned items, in transit and slow moving, discontinued or obsolete items (i.e. items that have not moved within one
year or such other period as determined by the Bank from time to time)] which initially and at all times until sold is new and unused,
in first-class condition, merchantable and saleable through normal trade channels; is owned by the Borrower free and clear of any lien
except in favor of the Bank, is located at any of the locations set forth on Schedule 1 provided the Bank has received a Landlord’s
Waiver in form and substance acceptable to the Bank and is subject to a perfected first-priority security interest in favor of the Bank;
and has not been designated unqualified by the Bank because the Bank reasonably considers the collateral value thereof to be impaired
or its ability to realize such value to be insecure. Qualified Inventory shall specifically exclude all work in process. The Bank in its
sole discretion shall determine eligibility requirements, slow-moving, reserves, final advance rates and other factors with respect to
Qualified Inventory based upon ongoing field examinations performed by the Bank’s examiner.

 

Revolving Line of Credit Borrowing Base.
The Revolving Line of Credit Borrowing Base means, at any time, the amount computed on the Borrowing Base Certificate most recently delivered
to, and accepted by, the Bank in accordance with this Agreement and equal to the lesser of (a) $250,000 or (b) the sum of (i) seventy
percent (70%) of Qualified Accounts, plus (ii) forty percent (40%) of Qualified Inventory.

 

Revolving Line of Credit Loan. The $250,000
revolving line of credit loan facility extended to the Borrower under this Agreement and evidenced by the Revolving Line of Credit Note.

 

Revolving Line of Credit Note. The Demand
Revolving Line of Credit Note of the Borrower in the original principal amount of $250,000 executed in connection with this Agreement,
evidencing the Revolving Line of Credit Loan and substantially in the form of Exhibit C attached.

 

Security Agreement. The Security Agreement
between the Bank and the Borrower executed in connection with this Agreement and substantially in the form of Exhibit D attached.

 

Subordinated Indebtedness. All Indebtedness
incurred by the Borrower, the repayment of which is specifically subordinated to the payment of the Obligations pursuant to the terms
of the Subordination Agreements. All existing Subordinated Indebtedness is listed on Schedule 3 and more particularly described
in the Subordination Agreements.

 

 

 

 

 

Subordination Agreements. The Subordination
Agreement between Borrower and each creditor of the Subordinated Indebtedness and substantially in the form of Exhibit E attached.

 

Subsidiary. Any Person (other than an individual)
of which a Borrower and/or one or more Subsidiaries shall (i) at the time own equity (however designated) having ordinary voting power
for the election of a majority of the members of the board of directors (or other governing body) of such Person or (ii) possess, directly
or indirectly, the power to direct or cause the direction of the management or polices of such Person, whether through the ownership of
voting securities, by contract or otherwise.

 

Term Loan. The term loan facility extended
to the Borrower under this Agreement, evidenced by the Term Note in the original principal amount of $2,600,000.

 

Term Loan Maturity Date. The Term Loan Maturity
Date means October 15, 2028.

 

Term Note. The Term Note of the Borrower
in the original principal amount of $2,600,000 executed in connection with this Agreement, evidencing the Term Loan and substantially
in the form of Exhibit F attached.

 

Total Debt Service. The aggregate amount
paid during any fiscal period with respect to Interest and Current Maturities of Long-Term Debt.

 

SECTION 2

 

THE LOANS

 

Subject to the terms of this Agreement and in reliance
on the representations, warranties and agreements of the Borrower, the Bank agrees to make the Loans described in this Section 2.

 

 

Subject to the terms hereof, the Bank will lend
the Borrower up to the principal sum of (i) $250,000 on a revolving loan basis and (ii) $2,600,000 on a term loan basis.

 

2.2 Execution of Documents.

 

At the time of making the Loans, the Borrower shall
execute and deliver the Loan Documents to the Bank.

 

2.3 Disbursement of the Loans.

 

The Bank will disburse the proceeds of the Notes
to the Borrower’s deposit account with the Bank or as otherwise directed by the Borrower.

 

2.4 Revolving Line of Credit Loan.

 

 

 

 

 

Subject to the terms and conditions hereof and
as set forth in the Revolving Line of Credit Note, the Bank will lend the Borrower, from time to time until DEMAND is made by the
Bank to the Borrower or the occurrence of a Default hereunder, whichever occurs first, such sums as the Borrower may request by reasonable
notice to the Bank, but which shall not exceed, in the aggregate principal amount at any one time outstanding, the Revolving Line of Credit
Borrowing Base. The Borrower may borrow, repay and reborrow hereunder, from the date of this Agreement until DEMAND is made by
the Bank to the Borrower or the occurrence of a Default hereunder, whichever occurs first. Advances under the Revolving Line of Credit
Loan will be used for general working capital purposes. It is the intention of the parties that the outstanding principal amount of the
Revolving Line of Credit Note shall at no time exceed the Revolving Line of Credit Borrowing Base, and if, at any time, the outstanding
principal amount of the Revolving Line of Credit Note shall exceed the Revolving Line of Credit Borrowing Base, the full amount of such
excess shall be immediately due and payable in full. The continuation of the Revolving Line of Credit Loan is subject to (a) the Bank’s
annual review which shall be satisfactory to the Bank in all respects, and (b) the Borrower’s payment of a $2,500 annual renewal
fee which shall be due and payable as of October 4th of each year in which the Revolving Line of Credit Loan is available to
the Borrower.

 

 

Subject to the terms hereof, the Bank agrees to
lend to the Borrower on a term loan basis the amount of $2,600,000 to complete the Acquisition. The Term Loan will be amortized based
on a seven (7) year amortization schedule, with payment terms to be in accordance with the provisions of the Term Note. If not sooner
paid, all remaining outstanding indebtedness evidenced by the Term Note will be due and payable on the Term Loan Maturity Date.

 

2.6 Maintenance of Loan Account; Statements of Account.

 

The Bank shall maintain an account on its books
in the name of the Borrower (the “Loan Account”) in which the Borrower will be charged with all Loans and Advances made by
the Bank to the Borrower or for the Borrower’s account, including the Revolving Line of Credit Loan and the Term Loan, interest,
fees, reasonable expenses and any other Obligations. The Loan Account will be credited with all amounts received by the Bank from the
Borrower or for the Borrower’s account. The Bank shall send the Borrower a monthly statement reflecting the activity in the Loan
Account. Each such statement shall be an account stated and shall be final, conclusive and binding on the Borrower, absent manifest error.

 

 

2.7.1 Loan Account. The Borrower hereby authorizes the Bank to charge the Loan Account with the amount of all principal, interest,
fees, expenses and other payments to be made with respect to the Loans and under the other Loan Documents. The Bank may, but shall not
be obligated to, discharge the Borrower’s payment obligations hereunder by so charging the Loan Account.

 

2.7.2 Time of Payment. Each payment by the Borrower on account of principal, interest, fees or expenses hereunder shall be made to
the Bank. All payments to be made by the Borrower hereunder and under the Notes, whether on account of principal, interest, fees or otherwise,
shall be made without setoff, deduction or counterclaim and shall be made prior to 2:00 p.m. (Boston time) on the due date thereof to
the Bank, in immediately available funds.

 

2.7.3 Next Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension of time shall be included in the computation of the amount
of interest due hereunder.

 

2.7.4 Application. The Bank shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and
all proceeds of Collateral to any portion of the Obligations. To the extent that the Borrower makes a payment or the Bank receives any
payment or proceeds of the Collateral for the Borrower’s benefit, which is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by the Bank.

 

 

 

 

 

 

The Obligations are secured by a first priority
perfected security interest in the Collateral pursuant to the Security Agreement. When the Obligations have been paid or performed, the
Bank will release the security held therefor and deliver to the Borrower all collateral held by it and such termination statements or
other instruments as will be required to release completely the respective liens and security thereof.

 

2.9 Conditions Precedent to the Loans.

 

The Bank’s obligations under this Agreement,
including funding the Loans, are subject to the accuracy of the representations and warranties made by the Borrower in the Loan Documents,
to the performance by the Borrower of its agreements in the Loan Documents, to the terms provided in this Agreement, and to the satisfaction
or waiver by the Bank in writing, in whole or in part, of each of the following additional conditions:

 

2.9.1 Authority. The Bank shall be satisfied as to the authority of the Borrower and the other parties to the Loan Documents to enter
into and deliver the Loan Documents.

 

2.9.2 Termination of Security. All security interests in any of the Collateral which would otherwise have priority over Bank’s
security referred to in Section 2.8 will have been terminated or the Bank shall have received a payoff letter providing for the termination
of such security upon such terms as are acceptable to the Bank.

 

2.9.3 Subordination of Indebtedness. The Subordinated Indebtedness and all Indebtedness of the Borrower to any shareholder, member,
officer, director, manager, Affiliate or other insider shall have been subordinated to the Obligations owing to the Bank in form and substance
acceptable to the Bank and its counsel.

 

2.9.4 Conflict with Outstanding Instruments. Consummation of the transactions contemplated by this Agreement and compliance with
the terms of the Loan Documents will not conflict with or result in a breach of any outstanding agreements or other instruments to which
a Borrower is a party or by which a Borrower or any of its property is bound.

 

2.9.5 Perfection of Security. Upon the Bank’s filing of one or more UCC financing statements,
and/or the Bank’s recordation, registration or other actions required by applicable law to perfect a lien or security interest,

the security referred to in Section 2.8 shall have been perfected in favor of the Bank and the Collateral shall be subject to no liens
or encumbrances of any kind other than Permitted Liens.

 

2.9.6 Release of Encumbrances. All liens, mortgages, security interest and encumbrances in the Assets, other than Permitted Liens,
shall have been released, and the holders of the encumbrances shall have delivered to the Bank such releases and termination statements
as the Bank requests.

 

2.9.7 Insurance. The Bank shall have received satisfactory evidence that the insurance required pursuant to the Security Agreement
and Section 3.13 hereof is in force and all premiums paid.

 

2.9.8 Opinion of Counsel. The Bank shall have received from counsel for the Borrower one or more opinions with respect to authorization,
execution and enforceability in form and substance acceptable to the Bank and its counsel.

 

2.9.9 No Material Adverse Effect. There shall be no outstanding or threatened litigation, contingent liabilities or other proceedings,
the outcome of which could be reasonably expected to have a Material Adverse Effect nor has there been any change in the financial condition
or business of the Borrower which could be reasonably expected to have a Material Adverse Effect.

 

 

 

 

 

2.9.10 Delivery of Documents. The Bank shall have received all of the documents listed on the Closing Agenda, attached as Exhibit
G
hereto, in form and content satisfactory to the Bank.

 

2.9.11 Completion of Due Diligence. The Bank shall have completed all due diligence with respect to the Borrower, the Acquisition
and the Collateral the results of which shall be satisfactory to the Bank in its sole discretion.

 

2.9.12 No Misstatement. There shall be no material misstatement or omission with respect to the Financial Statements or any of the
materials previously furnished to the Bank by the Borrower.

 

2.9.13 Satisfaction of Bank and its Counsel. All actions to be taken in connection with the transactions contemplated by the Loan
Documents will be reasonably satisfactory in form and substance to the Bank and to the Bank’s counsel. The Bank shall have received
copies of all documents which it may reasonably request in connection with the transactions, which documents shall be in form and substance
reasonably satisfactory to the Bank and to the Bank’s counsel.

 

2.9.14 Delivery of Acquisition Documents. The Borrower shall have delivered to the Bank within one (1) Business Day of closing, fully
executed Acquisition Documents and the Acquisition shall have closed with Borrower directly acquiring the assets of Lighthouse free of
all liens and encumbrances.

 

2.9.15 Commitment Fees. The Borrower shall have paid the Bank a commitment fee of (a) $26,000 with respect to the Term Loan, and (b)
$2,500 with respect to the Revolving Line of Credit Loan.

 

SECTION 3

 

PARTICULAR COVENANTS OF BORROWER

 

As long as any of the Obligations remain unsatisfied
or any commitments hereunder remain outstanding, the Borrower covenants and agrees as follows:

 

3.1 Payment of Principal and Interest.

 

The Borrower agrees to pay when due the principal
of and interest on the Loans all such payments to be in such currency as is legal tender for the payment of public and private debts at
the time of payment. The Borrower agrees to maintain funds in an account with the Bank sufficient to permit timely payments of amounts
due under the Loans. The Bank will automatically charge the Borrower’s account monthly for all amounts due under the Loans.

 

3.2 Keep Books and Set Aside Reserves.

 

The Borrower agrees (a) to keep proper books of
record and account in which full and correct entries will be made of all dealings or transactions in relation to the business and affairs
of the Borrower, (b) to set up on its books proper reserves with respect to all taxes, assessments, charges, levies and claims referred
to in Section 3.8; and (c) to set up on its books from its earnings reserves against, or appropriate write-offs of, doubtful accounts
receivable, advances and securities which are proper for businesses of the type conducted by the Borrower or required by GAAP.

 

3.3 Financial Statements, Certificates and Information.

 

The Borrower will furnish to the Bank:

 

3.3.1 As soon as available, but in any event within twenty (20) days after the end of each quarter: (1) consolidated and consolidating statements
of cash flows of the Borrower for such quarter; (2) consolidated and consolidating income statements of the Borrower for such quarter;
and (3) consolidated and consolidating balance sheets for the Borrower as of the end of such quarter -all in reasonable detail, and
certified by the president or chief financial officer of the Borrower to be true and complete;

 

 

 

 

 

3.3.2 As soon as available following the end of each fiscal quarter, a copy of the Borrower’s (a) form 10-Q as filed with the United
States Securities and Exchange Commission, and (b) completed form FAS-123 vesting schedule.

 

3.3.3 As soon as available and in any event within one hundred twenty (120) days after the last day of each fiscal year, complete unqualified
financial statements to be audited by a certified public accountant of recognized standing selected by the Borrower and reasonably satisfactory
to the Bank, covering the operations of the Borrower for such fiscal year and containing consolidated and consolidating statements of
earnings and of retained earnings and paid-in surplus for such year, consolidated and consolidating statements of cash flow, and consolidated
and consolidating balance sheets and income statements as at the close of such year, each accompanied by (a) statements in comparative
form for the preceding fiscal year, (b) all appropriate schedules and disclosures, (c) a certification of the Borrower’s president
or chief financial officer that such financial statements fairly represent the Borrower’s financial condition at the end of such
period and the results of its operations during such period; and (d) a certificate of the president or chief financial officer of the
Borrower stating that the Borrower is not in Default in the observance or performance of any of the provisions of this Agreement or, if
the Borrower will be so in default, specifying all such Defaults and events of which he may have knowledge; such certificate will include
supporting calculations for the determination of compliance with the financial covenant set forth in Section 3.16 hereof;

 

3.3.4 As soon as available, and provided any principal is outstanding or an Advance is requested under the Revolving Line of Credit Loan,
within twenty (20) days after the end of each month, a Borrowing Base Certificate. Each Borrowing Base Certificate shall be effective
only as accepted by the Bank (and with such revisions, if any, as the Bank may require as a condition to such acceptance);

 

3.3.5 As soon as available but in any event within twenty (20) days after the end of each quarter (and contemporaneous with the delivery
of any Borrowing Base Certificate in connection with a requested Advance under the Revolving Line of Credit Loan) and in such form and
detail as shall be satisfactory to the Bank, an aging, as of the end of such quarter, of (a) all Qualified Accounts and other accounts
of the Borrower including a breakout of ineligible accounts, and (b) all accounts payable in each case certified by the president
or chief financial officer of the Borrower to be complete and correct;

 

3.3.6 As soon as available, but in any event within twenty (20) days after the end of each quarter (and contemporaneous with the delivery
of any Borrowing Base Certificate in connection with a requested Advance under the Revolving Line of Credit Loan) and in such form and
detail as shall be satisfactory to the Bank, a listing, as of the end of such quarter, of all Qualified Inventory and other inventory
(raw materials and finished goods) of the Borrower certified by the president or chief financial officer of the Borrower to be complete
and correct;

 

3.3.7 Such additional information as the Bank reasonably requires concerning the Borrower in order to enable the Bank to determine whether
the provisions of this Agreement have been complied with by the Borrower;

 

3.3.8 Promptly after the commencement thereof, notice of each action, suit or proceeding by or before any governmental
Authority affecting the Borrower which could (singly or in the aggregate) be reasonably expected to have a Material Adverse Effect;

 

3.3.9 Promptly after receipt, a copy of all audits or reports submitted to the Borrower by independent public accountants in connection
with any annual, special or interim audits of the books of the Borrower and any letter of comments directed by such accountants to the
management of the Borrower;

 

 

 

 

 

3.3.10 As soon as possible and in any event within twenty (20) days after the Borrower knows or has reason to know that any event which would
constitute a reportable event under ERISA with respect to any employee pension or other benefit plan subject to ERISA has occurred, or
that the PBGC or the Borrower has instituted or will institute proceedings to terminate such plan, a certificate of the controller or
chief financial officer of the Borrower setting forth details as to such reportable event and the action which the Borrower proposes to
take with respect thereto, together with a copy of any notice of such reportable event which may be required to be filed with the PBGC,
or any notice delivered by the PBGC evidencing its intent to institute such proceedings, or any notice to the PBGC that the plan is to
be terminated, as the case may be;

 

3.3.11 Promptly after any change of the Borrower’s independent public accountants, notification thereof and such further information
as the Bank may reasonably request concerning the resignation, refusal to stand for reappointment after completion of the current audit
or dismissal of such accountants;

 

3.3.12 Promptly after the Borrower has knowledge thereof, written notice of:

 

(a) termination or revocation of any Permit necessary for the conduct of the business of the Borrower or the ownership or operation of
any of its assets or property, but only if the same could have a Material Adverse Effect;

 

(b) any material controversy with employees of the Borrower or with any labor organization which could give rise to any claim against
the Borrower and which could be reasonably expected to have a Material Adverse Effect on the Borrower’s business; and/or

 

(c) any other development which has had or could be reasonably expected to have a Material Adverse Effect; and

 

3.3.13 Such additional information and reports concerning the Borrower, including, but not limited to, reports concerning Collateral, in
the Borrower’s possession or that the Borrower has access to, as the Bank reasonably requests, all in form and detail reasonably
acceptable to the Bank. The Bank also reserves the right in its sole discretion to increase the frequency of each of the reporting requirements
set forth in this Section 3.3.

 

3.4 Right of Inspection/Appraisals/Field Examinations.

 

Upon reasonable advance notice to the Borrower,
any qualified representative or agent of the Bank designated for the purpose in writing by the Bank has the right to visit and inspect
during normal business hours any offices of the Borrower and to examine the books and records, to request and receive from the Borrower
and its accountants reports and certificates satisfying all of the requirements of Section 3.3, and to discuss the same with and be advised
as to the same by its representatives and its independent certified public accountants, all at such reasonable times during normal business
hours and as often as the Bank may reasonably request, at the Borrower’s expense. Notwithstanding the foregoing, provided that a
Default does not exist, the Borrower shall only be responsible to pay the Bank for one (1) inspection per fiscal year of the Borrower.

 

The Bank further reserves the right to conduct
a field examination in its sole discretion at any time during normal business hours and upon reasonable advance notice to the Borrower,
the results of which shall be satisfactory to the Bank in its sole discretion. Provided that a Default has not occurred and is continuing,
the Borrower shall be responsible for the Bank’s expenses with respect to one (1) field examination per fiscal year of the Borrower.
The Borrower may have representatives present for any and all site visits, inspections and field examinations.

 

Following the occurrence of an Event of Default
which is continuing, the Bank may conduct such number of field exams as determined by the Bank in its sole discretion at Borrower’s
expense.

 

 

 

 

 

3.5 Limitation on Sales, Transfers, Consolidation, Mergers, Etc.

 

The Borrower will not, without obtaining the prior
written consent of the Bank, which consent shall not be unreasonably withheld or delayed, sell, transfer, or lease all or any material
part of its assets (other than in the ordinary course of business) to, or consolidate with, or merge into, any Person whether or not the
Borrower will be the surviving corporation.

 

3.6 Maintenance of Business and Existence, Etc.

 

The Borrower agrees (a) subject to circumstances
beyond its control, to conduct continuously and operate actively its business as presently conducted, (b) to keep in effect its legal
existence and foreign qualifications and to comply with all Legal Requirements governing the conduct of its business in all material respects,
(c) to make all reports, pay all taxes and license fees and take all other action required to maintain its Permits, and (d) to prevent
any Permit from terminating or expiring without renewal if the same could have a Material Adverse Effect.

 

 

The Borrower agrees to comply with all its obligations
under the Leases. The Borrower will promptly notify the Bank in writing in the event of any default by any party with respect to any of
the Leases.

 

 

The Borrower agrees to pay promptly all taxes,
assessments and governmental charges imposed upon it or upon its income or profits or upon any property belonging to it. The Borrower
is not required to pay any tax, assessment or charge if (a) it is not at the time due or can be paid later without penalty, or (b) its
validity is currently being contested in good faith by appropriate proceedings, and (c) the Borrower has set aside on its books reserves
deemed by it adequate with respect to the tax, assessment or charge, and (d) in any case involving a contested payment due from it in
excess of $10,000, the Borrower gives notice in writing of its action to the Bank. The Borrower agrees to pay the tax, assessment or charge
immediately upon the commencement of proceedings to foreclose any liens securing it or upon institution of distraint proceedings, unless
payment previously has been secured by the posting of an appropriate bond or similar surety device.

 

3.9 Limitation on Business with Affiliates, Etc.

 

The Borrower will not enter into any transaction
with an Affiliate except on terms no less favorable to the Borrower than would be usual and customary in similar transactions between
Persons not affiliated with each other.

 

3.10 Permitted Indebtedness.

 

The Borrower will not permit to exist any Indebtedness
for borrowed money other than (a) the Loans, (b) the Subordinated Indebtedness and (c) Indebtedness from vendors incurred in the ordinary
course of business, and (d) Indebtedness with respect to Permitted Liens.

 

3.11 Limitation on Loans and Advances.

 

The Borrower will not make any loan or advance
to any Person without the prior written consent of the Bank, other than travel expenses to employees in the ordinary course.

 

 

 

 

 

3.12 Limitation on Dividends and Distributions.

 

The Borrower will not (a) declare or pay any
dividends on any class of its capital stock or make any other distributions to its stockholders, or (b) directly or indirectly purchase,
redeem or retire any of its capital stock or membership interest.

 

 

The Borrower agrees (a) to keep all its insurable
properties insured against the hazards covered by “all risk of physical loss” policies and such risks as are usually insured
against by Persons engaged in the same or a similar business in the same jurisdiction; (b) to maintain general commercial liability insurance
against claims for bodily injury, death or property damage, suffered by others upon or in or about any premises occupied by them or occurring
as a result of the maintenance or operation of any automobiles, trucks or other vehicles or other facilities; (c) to maintain all such
worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which they may be engaged
in business; and (d) to maintain such other insurance coverage as Bank may from time to time reasonably require, in coverage and amounts
reasonably satisfactory to the Bank.

 

All insurance for which provision has been made
in clauses (a), (b), (c) and (d) of this Section: (i) shall be maintained in at least such amounts reasonably satisfactory to the Bank;
(ii) shall name the Bank with “loss payable to” and “additional named insured”; (iii) shall contain a provision
that it shall not be cancelled or modified without at least thirty (30) days prior notice to the Bank, except ten (10) days for non-payment
of premium; and (iv) shall be effected under a valid and enforceable policy or policies issued by insurers of recognized responsibility,
except that the Borrower may effect worker’s compensation or similar insurance in respect of operations in any state or other jurisdiction
either through an insurance fund operated by the state or other jurisdiction or by causing to be maintained a system or systems of self-insurance
which is in accord with applicable laws. Certificates of insurance shall be delivered to the Bank upon request and in any event no less
frequently than annually which certificates shall name the Bank as loss payee and additional insured as follows: Main Street Bank, ISAOA
ATIMA, P.O. Box 19, 81 Granger Blvd., Marlborough, Massachusetts 01752. The Borrower will deliver to the Bank, at any time upon its request,
all insurance policies and will deliver to the Bank new policies thereof for any insurance about to expire at least ten (10) days prior
to such expiration.

 

 

Until the Loans are paid in full, the Bank will
be the Borrower’s principal bank of deposit and all of the Borrower’s primary depository accounts will be maintained with
the Bank. The interest rates applicable to each of the Loans is conditioned upon Borrower transferring substantially all of its depository
accounts to the Bank. In the event Borrower elects not to transfer or maintain said depository accounts with the Bank, the Bank reserves
the right to increase the interest rates applicable to the Loans.

 

 

The Borrower will notify the Bank promptly in writing
of any failure to comply with its agreements, representations and warranties contained in this Agreement. Any such written notification
will describe such failure or event in reasonable detail and be signed by the President of the Borrower. So long as no notice is given,
a continuing representation shall be in effect that no failure exists, and the Bank will be entitled to rely upon that continuing representation.

 

3.16 Minimum Debt Service Coverage Ratio.

 

During the term of this Agreement, the Borrower
will not permit the ratio of its (a) EBITDA plus non-cash stock-based compensation expenses plus/minus extraordinary
expenses/income as determined by the Bank, to (b) Total Debt Service to be less than or equal to 1.20x. Compliance with this covenant
will be tested annually upon receipt of the Borrower’s audited financial statements required by Section 3.3 above commencing with
the fiscal year ending June 30, 2023. The Borrower shall provide an annual compliance certificate given by the Borrower’s chief
financial officer stating that the covenant contained in this Section 3.16 has been met. Compliance with this covenant will not consider
Borrower’s cash contributions with respect to completing the Acquisition.

 

 

 

 

 

3.17 Continuing Security Interest.

 

The assets of the Borrower in which the Bank has
been granted a security interest will continue to constitute collateral security for all obligations of the Borrower to the Bank, direct
or indirect, absolute or contingent, now existing or hereafter arising.

 

3.18 Employee Pension Benefit Plans.

 

The Borrower will (i) fund any of its Employee
Pension Benefit Plans in accordance with no less than the minimum funding standards of 29 U.S.C.A. 1082 (Section 302 of ERISA); and (ii)
furnish the Bank, promptly after the filing of the same, with copies of any reports or other statements filed with the United States Department
of Labor or the Internal Revenue Service with respect to any such Plan.

 

 

The Borrower further covenants and agrees that,
so long as any Obligations remain outstanding, it will comply, at all times with the following negative covenants unless the Bank shall
otherwise have agreed in writing:

 

(a) The Borrower will not and will not permit any Subsidiary to mortgage, pledge, grant, or permit to exist a security interest in, or
a lien upon any of its assets of any kind, now owned or hereafter acquired except for those liens set forth on Schedule 3.19(a)
attached and liens for taxes, assessments, statutory obligations or similar charges, incurred in the ordinary course of business, that
are not yet due and payable or if overdue are being contested in good faith by appropriate and lawful proceedings, so long as levy and
execution thereon have been stayed and continue to be stayed and they do not, in the aggregate, materially detract from the value of the
property of the Borrower or materially impair the use thereof in the operation of the Borrower’s business and for which adequate
reserves have been established (the “Permitted Liens”);

 

(b) The Borrower will not become liable, directly or indirectly, as guarantor or otherwise for any obligation of any other Person, except
for the endorsement of commercial paper for deposit or collection in the ordinary course of business and guaranties in favor of the Bank
with regard to the obligations of any Affiliate of the Borrower;

 

(c) The Borrower will not form any Subsidiary or Affiliate, make any investment in or make any loan in the nature of an investment to,
any Person;

 

(d) The Borrower will not acquire or agree to acquire the capital stock in, or all or substantially all of the assets of, any Person;

 

(e) The Borrower will not change its fiscal year;

 

(f) The Borrower will not amend its organizational documents in any respect which could reasonably be expected to have a Material Adverse
Effect;

 

(g) The Borrower will not open any new offices or facilities or organize, form or acquire any Subsidiary without the Bank’s prior
written consent;

 

(h) Except as otherwise provided in the applicable Subordination Agreement, the Borrower will not pay any portion of the Subordinated
Indebtedness without the prior written consent of the Bank;

 

 

 

 

 

(i) The Borrower will not enter into any merger or consolidation; and

 

(j) The Borrower will not sell or agree to sell all or substantially all of its assets.

 

 

The Borrower agrees to pay all of the Bank’s
underwriting and due diligence costs associated with the Loans, including, but not limited to reasonable legal fees for the preparation
and examination of the Loan Documents, and other fees and/or costs incidental to the Loans including, but not limited to, appraisals and
field examinations.

 

SECTION 4

 

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

 

The Borrower represents and warrants to the Bank,
and the representations and warranties are continuing representations so long as any Obligations remain outstanding and will be deemed
repeated and confirmed at the time of each request for an Advance under the Loans, as follows:

 

4.1 Organization and Authority.

 

The Borrower is a corporation organized, existing
and in good standing under the laws of the Commonwealth of Massachusetts and is registered to do business as a foreign corporation in
each state where such entity is required to be so registered, except where the failure to so qualify would not be reasonably expected
to have a Material Adverse Effect. The Borrower has adequate authority and has all necessary material Permits to carry on its business
and is entitled to own its property and to carry on its business, all as and in the places where its property is now owned or operated
and its business is conducted. The Borrower is not a member of any partnership or joint venture. The Borrower has two wholly owned Subsidiaries
as set forth on Schedule 4.1, both of which are inactive and neither of which conducts any operations or holds title to any assets.

 

4.2 Intellectual Property Matters.

 

The Borrower owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business as currently conducted or proposed to be conducted. No material claim has been asserted
and is pending by any Person challenging the use, validity or effectiveness of any Intellectual Property, nor is the Borrower aware of
any valid basis for any such claim. The use of Intellectual Property by the Borrower does not materially infringe on the rights of any
Person.

 

4.3 Compliance with Legal Requirements/Litigation.

 

The Borrower is in compliance in all material respects
with all Legal Requirements governing the conduct of its business. The Borrower has all material Permits necessary for the conduct of
its business and the use of its properties and assets, as presently conducted, owned and used or as proposed to be conducted, owned and
used. The Borrower has not received any notice, not heretofore complied with, from any Governmental Authority or any insurance, accreditation
or inspection body that any of its properties, facilities, equipment, procedures or practices fails to comply in any material respect
with any applicable Legal Requirement, any Permit or any other requirement of any such authority or body. No authorization, consent, approval,
license, exemption of or filing or registration with any Governmental Authority is or will be necessary for the valid execution or delivery
of, or for the performance by the Borrower of its obligations under, this Agreement, any of the other Loan Documents or other instrument
provided for or contemplated by this Agreement, with the exception of consents and approvals heretofore obtained. There are no actions,
suits or proceedings pending, or to the knowledge of the Borrower, threatened against or affecting the Borrower or its property in any
court or before or by any Governmental Authority. The Borrower is not in default with respect to any order, writ, injunction, decree or
demand of any Governmental Authority.

 

 

 

 

 

 

The Borrower is authorized under all applicable
laws to make and perform the Loan Documents, and all action on its part required for the making and performance of the Loan Documents
has been taken. Each of the Loan Documents to which it is a party is the valid and enforceable obligation of the Borrower in accordance
with its respective terms, subject to laws of general application affecting creditors’ rights. Neither the execution and delivery
of the Loan Documents, nor compliance with the terms thereof, will conflict with or result in a breach of any provisions of the Borrower’s
organizational documents or of any agreement to which the Borrower is now a party or by which it is bound, or constitute a default under
any of the foregoing, or result in the creation of any encumbrance upon any property of the Borrower under the terms of any such agreement.

 

 

None of the Loan Documents and no certificate or
statement furnished to the Bank by the Borrower in connection with the transactions contemplated under the Loan Documents, contains any
untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not
misleading. To the Borrower’s knowledge, there is no fact presently in existence which now affects or in the future may (so far
as the Borrower can now foresee) affect, in a way which is both material and adverse, the business or condition (financial or otherwise)
of the Borrower or its property, which fact has not been set forth in this Agreement or in a certificate or statement furnished to the
Bank by the Borrower.

 

 

The proceeds of the Revolving Line of Credit Loan
will be used to support the working capital and general corporate needs of the Borrower. The proceeds of the Term Loan will be used to
complete the Acquisition. No part of the proceeds of the Loans will be used for the purpose of purchasing or carrying any “margin
security” as defined in Regulation U of the Board of Governors of the Federal Reserve System.

 

 

The Borrower has filed all required tax returns
and paid all applicable Federal, state, local and foreign taxes, other than (a) taxes not yet due or which may be paid in the future without
penalty and (b) taxes which are currently being contested in good faith by appropriate proceedings and for which the Borrower has established
adequate reserves. The Borrower has no knowledge of any deficiency or additional assessment in connection with any taxes not provided
for on its books.

 

 

The Borrower has good, clear and marketable title
to all of its Assets (and will have good, clear and marketable title to the Assets acquired in connection with the Acquisition), tangible
or intangible, now carried on its books, free of any mortgages, pledges, charges, liens, security interests or other encumbrances, except
for Permitted Liens. All Collateral is in good condition and working order (ordinary wear and tear excepted), and has not been damaged
without restoration to the reasonable satisfaction of the Bank.

 

4.9 Employee Benefits Plans.

 

4.9.1 No “reportable event” (as defined in Section 4043(b) of ERISA) (whether or not waived) has occurred or is continuing
with respect to any “employee pension benefit plan” (as defined in Section 3 of ERISA) maintained for employees of the
Borrower (a “Pension Benefit Plan”).

 

4.9.2 No prohibited transaction (within the meaning of Section 406 of ERISA) has occurred with respect to any Pension Benefit Plan
or any other “employee benefit plan” (as defined in Section 3 of ERISA) (together with a Pension Benefit Plan, an “Employee
Plan
”) maintained for employees of the Borrower and covered by Part 4 of the Subtitle B of Title I of ERISA.

 

 

 

 

 

4.9.3 Except as set forth on Schedule 4.9.3, with respect to each Pension Benefit Plan, the amount for which the Borrower would be
liable pursuant to the provisions of Sections 4062, 4063 or 4064 of ERISA would be zero if such plans terminated on the date of this
Agreement. The accumulated benefit obligation under all defined benefit plans of the Borrower was less than the fair value of the assets
of those plans.

 

4.9.4 The Borrower is not now, nor has been during the preceding five (5) years, a contributing employer to a “multiemployer plan”
(as defined in Section 4001(a)(3) of ERISA) (a “Multiemployer Plan”). The Borrower has not (a) ceased operations
at a facility so as to become subject to the provisions of Section 4062(f) of ERISA, (b) withdrawn as a substantial employer so as
to become subject to the provisions of Section 4063 of ERISA, (c) ceased making contributions on or before the date hereof to any
Pension Benefit Plan subject to the provisions of Section 4064(a) of ERISA to which the Borrower made contributions during any of
the five (5) years prior to the date hereof, (d) incurred or caused to occur a “complete withdrawal” (within the meaning
of Section 4203 of ERISA) or a “partial withdrawal” (within the meaning of Section 4205 of ERISA) from a Multiemployer
Plan that is a Pension Benefit Plan so as to incur withdrawal liability under Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under Sections 4207 or 4208 of ERISA), or (e) been a party to any transaction or agreement
under which the provisions of Section 4204 of ERISA were applicable.

 

4.9.5 No notice of intent to terminate a Pension Benefit Plan has been filed, nor has any Plan been terminated, pursuant to the provisions
of Section 4041(f) of ERISA.

 

4.9.6 The PBGC has not instituted proceedings to terminate (or appoint a trustee to administer) a Pension Benefit Plan and no event has
occurred, or condition exists which might constitute grounds under the provisions of Section 4042 of ERISA for the termination of
(or the appointment of a trustee to administer) any such Plan.

 

4.9.7 The Borrower does not maintain and has never maintained any Pension Benefit Plan that is subject to the provisions of Title I, Subtitle
B, Part 3 of ERISA.

 

4.9.8 There are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of the Borrower, which
could reasonably be expected to be asserted, against any Employee Plan or the assets of any such plan. No civil or criminal action brought
pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or, to the best knowledge of the Borrower, threatened against
any fiduciary of any Employee Plan. None of the Employee Plans or any fiduciary thereof has been the direct or indirect subject of an
audit, investigation or examination by any governmental or quasi-governmental agency.

 

4.9.9 All of the Employee Plans comply currently, and have complied in the past, in all material respects both as to form and operation,
with their terms and with the provisions of ERISA and the Internal Revenue Code of 1986, and all other applicable laws, rules and regulations
(including, but not limited to, the Tax Reform Act of 1986 and all subsequent federal legislation affecting qualified plans generally);
all necessary governmental approvals for the Employee Plans have been obtained and a favorable determination as to the qualification under
Section 401(a) of such Code of each of the Pension Benefit Plans and each amendment thereto has been made by the Internal Revenue
Service and a recognition of exemption from federal income taxation under Section 510(a) of the Code of each of the funded welfare
benefit plans within the meaning of Section 3(1) of ERISA has been made by the Internal Revenue Service, and nothing has occurred
since the date of each such determination or recognition letter that would adversely affect such qualification.

 

 

 

 

 

4.10 Financial Statements.

 

The Financial Statements are complete and accurate
and fairly present the financial condition of the Borrower as at the dates thereof and for the periods covered thereby and were prepared
in accordance with GAAP. The Borrower has no liability, contingent or otherwise, which is not disclosed in the Financial Statements or
in any notes thereto that could materially affect the financial condition of the Borrower. The following representations are true on the
date of this Agreement and shall be true at the date of each Advance, in each case since the date of the most recently delivered financial
statements: (a) there has been no material adverse change in the business, assets, prospects or condition, financial or otherwise, of
the Borrower; (b) neither the business, condition, or operations of the Borrower nor any of its properties or assets has been materially
adversely affected as the result of any legislative or regulatory change, any revocation or change in any Permit, or any other event or
occurrence, whether or not insured against; (c) except as disclosed in writing to Bank, the Borrower has not experienced any material
controversy with any labor organization that may be reasonably expected to have a Material Adverse Effect on the business of the Borrower;
and (d) other than the Acquisition or except as disclosed in writing to Bank, the Borrower has not entered into any material transaction
other than in the ordinary course of business.

 

4.11 Environmental Compliance.

 

Except as set forth on Schedule 4.11, the Borrower
has never owned, occupied or operated a site on which any Hazardous Substances were or are stored without compliance with all Environmental
Laws, or disposed of, transported, or arranged for the transport of any Hazardous Substances without compliance with all Environmental
Laws, or caused or been legally responsible for any release of any Hazardous Substances during the Borrower’s ownership, occupation
or operation of such site. The Borrower and each of its properties is now in compliance with all Environmental Laws. No Environmental
Event has occurred on any property owned, leased, occupied or operated by the Borrower in violation of any Environmental Laws which could
have a Material Adverse Effect.

 

4.12 Incorporated Representations and Warranties.

 

The representations and warranties of the Borrower
contained in the other Loan Documents are hereby incorporated herein by reference, and all of such representations and warranties are
true and correct in all material respects.

 

SECTION 5

 

DEFAULTS; EVENTS OF DEFAULT

 

 

The following will (i) if any requirement for notice
or lapse of time or both has not been met, constitute Defaults, and (ii) if there are no such requirements or if such requirements have
been met, constitute Events of Default:

 

5.1.1 The failure to pay any principal of the Loans when it becomes due and such failure continues for ten (10) days;

 

5.1.2 The failure to pay any interest on the Loans when it becomes due and such failure continues for ten (10) days;

 

5.1.3 If (a) there is a failure to pay principal or interest of any Obligations, other than the Loans, which continues beyond any applicable
period of grace, or (b) there is a failure, other than in the payment of money, to perform or observe any Obligations which continues
beyond any applicable period of grace, (c) any statement, certificate, report, financial statement, representation, covenant or warranty
made or furnished by the Borrower in this Agreement or in connection with the Loan Documents or in compliance with the provisions of the
Loan Documents proves to have been false or erroneous in any material respect;

 

 

 

 

 

5.1.4 If the Borrower (a) terminates its existence; (b) is or becomes insolvent within the meaning of the Massachusetts Uniform Commercial
Code; (c) files a petition in bankruptcy or a petition to take advantage of any insolvency act; (d) makes an assignment for the benefit
of its creditors; (e) consents to the appointment of a receiver or custodian of itself or of the whole or any substantial part of its
property; (f) is named debtor party in an involuntary bankruptcy proceeding which is not vacated or set aside within sixty (60) days;
or (g) files a petition or answer seeking reorganization or arrangement under any Federal or state law;

 

5.1.5 If a court of competent jurisdiction enters an order (a) appointing, without consent of the Borrower, a receiver or custodian of the
Borrower or of the whole or any substantial part of the Borrower’s property, or (b) approving a petition filed against the Borrower
seeking reorganization or arrangement of the Borrower under any Federal or state law, and such order is not vacated or set aside or stayed
within sixty (60) days after it is entered;

 

5.1.6 If, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction assumes custody or control
of the Borrower or of the whole or any substantial part of the Borrower’s property, and such custody or control is not terminated
or stayed within sixty (60) days after the date of assumption of such custody or control;

 

5.1.7 If final judgment for the payment of money in excess of $50,000 is entered by any court against the Borrower, and within thirty (30)
days after entry of the judgment the Borrower does not (a) discharge the judgment or provide for its discharge in accordance with its
terms, or (b) procure a stay of execution and within said period of sixty (60) days, or such longer period during which execution of the
judgment has been stayed, appeal and cause the execution to be stayed during the appeal;

 

5.1.8 Any failure by the Borrower (a) to pay when due the principal of, or interest or premium on, any Indebtedness (other than the Loans)
incurred or assumed by the Borrower for money borrowed or for the acquisition of property or (b) to perform or observe any of the obligations
which are imposed on the Borrower by any agreements securing or evidencing such Indebtedness or under which such Indebtedness is issued,
and in either case such failure is not cured within any applicable period of grace;

 

5.1.9 Any attachment, execution, trustee process or similar process shall be issued or levied against the Borrower in connection with any
claim for the payment of money in excess of $50,000; or

 

5.1.10 The termination or expiration of any of the Leases without a replacement facility of similar terms having been identified and an executed
Landlord Waiver in form acceptable to the Bank in its reasonable discretion and having been secured within a reasonable time thereafter.

 

 

If a Default or an Event of Default occurs, the
Borrower’s right to request Advances will terminate immediately and without notice.

 

 

If any Event of Default has occurred, the Bank
may, to the extent permitted by law and without notice to the Borrower, declare the principal of and all interest on the Loans to be immediately
due and payable, and the Bank may proceed to protect and enforce its rights either by suit in equity and/or by action at law, whether
for the specific performance of any covenant or agreement contained in this Agreement or any of the Loan Documents, or proceed to enforce
the payment of the Loans or to enforce other legal or equitable rights of the Bank pursuant to the Loan Documents.

 

 

 

 

 

SECTION 6

 

MISCELLANEOUS

 

6.1 Remedies Cumulative: Remedies not Waived.

 

No remedy conferred on the Bank is intended to
be exclusive of any other remedy and each remedy is cumulative and in addition to every other remedy given under this Agreement and the
Loan Documents or now or in the future existing at law or in equity or by statute. No course of dealing between the Borrower and the Bank
nor any delay on the part of the Bank in exercising any rights under this Agreement will operate as a waiver of any of the Bank’s
rights.

 

 

The Borrower hereby grants to the Bank a lien,
security interest and a right of setoff as security for the Obligations, upon and against all deposits, credits, collateral and property,
now or hereafter in the possession, custody, safekeeping or control of the Bank or any entity under the control of the Bank, or in transit
to any of them. At any time, without demand or notice, upon an Event of Default, the Bank may set off the same or any part thereof and
apply the same to any liability or obligation of the Borrower even though unmatured and regardless of the adequacy of any other collateral
securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER,
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
The Bank shall not be required to marshal any present or future security
for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular order and the Borrower waives,
to the fullest extent that it lawfully can, (a) any right it might have to require the Bank to pursue any particular remedy before proceeding
against it and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral until the Obligations are
paid in full.

 

6.3 Pledge to Federal Reserve.

 

The Bank may at any time pledge, endorse, assign,
or transfer all or any portion of its rights under the Loan Documents including any portion of the Note to any of the twelve (12) Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act. 12.U.S.C. Section 341. No such pledge or enforcement thereof shall
release Bank from its obligations under any of the Loan Documents.

 

 

The Bank shall have the unrestricted right at any
time and from time to time, and without the consent of the Borrower, to grant to one or more institutions or other persons (each a “Participant”)
participating interests in the Bank’s obligations to lend hereunder and/or any or all of the Loans. In the event of any such grant
by the Bank of a participating interest to a Participant, whether or not upon notice to the Borrower, the Bank shall remain responsible
for the performance of its obligations hereunder and the Borrower shall continue to deal solely and directly with the Bank in connection
with the Bank’s rights and obligations hereunder. The Bank may furnish any information concerning the Borrower in its possession
from time to time to any prospective assignees and Participants, provided that the Bank shall require any such prospective assignee or
Participant to maintain the confidentiality of such information.

 

6.5 Replacement of Documents.

 

Upon receipt of an affidavit of an officer of the
Bank as to the loss, theft, destruction or mutilation of any Note or any Loan Document which is not of public record and, in the case
of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Note or other Loan Document, the Borrower
will issue, in lieu thereof, a replacement note or other document in the same principal amount thereof and otherwise of like tenor.

 

 

 

 

 

6.6 Attorneys’ Fees and Expenses.

 

The Borrower shall reimburse the Bank for all reasonable
attorneys’ fees (which may include, without limitation, the allocable cost of the Bank’s internal legal counsel), costs, and
reasonable expenses incurred by the Bank in connection with the preparation of the Loan Documents, closing the transaction described in
the Loan Documents, and enforcing its rights with respect to the Loan Documents or any Collateral.

 

6.7 Right to Transfer Collateral.

 

Following the occurrence of an Event of Default,
the Bank may transfer collateral into its name or that of its nominee and may receive the income and any distributions thereon and hold
the same as collateral for the Obligations, or apply the same to any defaulted obligation.

 

 

If, after the date hereof, the Bank reasonably
determines that (i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank
holding companies, or any change in the interpretation or application thereof
by any Governmental Authority charged with the administration thereof, or (ii) compliance by the Bank or its parent bank holding company
with any guideline, request, or directive of any such entity regarding capital adequacy (whether or not having the force of law), the
effect of reducing the return on the Bank’s or such holding company’s capital as a consequence of the Bank’s commitments
hereunder to a level below that which the Bank or such holding company could have achieved but for such adoption, change, or compliance
(taking into consideration the Bank’s or such holding company’s then existing policies with respect to capital adequacy and
assuming the full utilization of such entity’s capital) by any amount deemed by the Bank to be material, then the Bank may notify
the Borrower thereof. Following receipt of such notice, the Borrower agrees to pay the Bank on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within ninety (90) days after presentation by the Bank of a statement
in the amount and setting forth in reasonable detail the Bank’s calculation thereof and the assumptions upon which such calculation
was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, the Bank may use any reasonable
averaging and attribution methods. For purposes of this Section 6.8, “Governmental Authority” means any federal, state, local,
or other governmental or administrative body, instrumentality, department, or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other
similar dispute-resolving panel or body having proper jurisdiction.

 

6.9 Third Party Purchaser.

 

The Bank shall have the unrestricted right at any
time or from time to time, and without the Borrower’s consent, to sell, assign, endorse, or transfer all or any portion of its rights
and obligations hereunder to one or more banks or other entities (each, an “Assignee”) and, the Borrower agrees upon notice
that it shall execute, or cause to be executed such documents including without limitation, amendments to this Agreement and to any other
documents, instruments and agreements executed in connection herewith as the Bank shall deem necessary to effect the foregoing. In addition,
at the request of the Bank and any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such
Assignee and, if the Bank has retained any of its rights and obligations hereunder following such assignment, to the Bank, which new promissory
notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the note held by the Bank prior to such assignment
and shall reflect the amount of the respective commitments and loans held by such Assignee and the Bank after giving effect to such assignment.
Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by the Bank in
connection with such assignment, and the payment by Assignee of the purchase price agreed to by the Bank and such Assignee, such Assignee
shall be a party to this Agreement and shall have all of the rights and obligations of the Bank hereunder (and under any and all other
guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have
been assigned by the Bank pursuant to the assignment documentation between the Bank and Assignee, and the Bank shall be released from
its obligations hereunder and thereunder to a corresponding extent.

 

 

 

 

 

6.10 Survival of Agreements, Parties in Interest, Etc.

 

All agreements, representations and warranties
made by the Borrower in the Loan Documents or in any other document delivered to the Bank in connection with the Loan Documents by or
on behalf of the Borrower, will survive the execution and delivery of the Loan Documents to the Bank. All statements contained in any
document delivered by or on behalf of the Borrower in connection with the Loan Documents or the transactions contemplated by this Agreement
constitute representations and warranties by the Borrower. All the terms, representations and warranties in this Agreement are binding
upon and inure to the benefit of and are enforceable by and against the respective successors and assigns of the parties to this Agreement
whether so expressed or not.

 

 

The Borrower shall not be obligated to pay and
the Bank shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject the Bank to
any civil or criminal penalties. If, because of the acceleration of maturity the payment of interest in advance or any other reason, the
Borrower is required, under the provisions of any Loan Document or otherwise, to pay interest at a rate in excess of such maximum rate,
the rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in
excess of such maximum rate, together with interest thereon at the rate provided herein from the date of such payment, shall be immediately
and automatically applied to the reduction of the unpaid principal balance of the Notes as of the date on which such excess payment was
made. If the amount to be so applied to reduction of the unpaid principal balance exceeds the unpaid principal balance, the amount of
such excess shall be refunded by the Bank to the Borrower.

 

6.12 Waiver of Automatic Stay.

 

In the event that a Borrower becomes a debtor or
debtor-in-possession under any provision of the Unites States Code, Title 11, whether by the Borrower’s voluntary petition or through
the grant of an order for relief on an involuntary petition against the Borrower, the Borrower hereby: (a) unconditionally consents to
the entry of an order granting the Bank relief from the so-called automatic stay provision of 11 U.S.C. Section 362, upon the Bank’s
motion, complaint, or other pleading pursuant to which the Bank seeks to exercise its rights to foreclose on and liquidate any or all
of the Collateral and apply the proceeds thereof in reduction of the Obligations; and (b) waives any right the Borrower may have to object
to and/or defend against such motion, complaint or other pleading including, without limitation, any assertion or contention that the
Borrower, as a debtor or debtor-in-possession in any case under said Title 11, is able to provide adequate protection against any diminution
in the value of the Collateral in such case. The Borrower acknowledges that the foregoing consent to the Bank’s relief from the
automatic stay and the waivers of the Borrower’s rights to object and/or defend and/or to offer adequate protection response to
any of the Bank’s motions, complaints or other pleadings seeking relief from the automatic stay, constitute a material inducement
to the Bank in granting the financial accommodations to the Borrower provided for in this Agreement.

 

 

All notices, demands and other communications under
this Agreement must be in writing and be delivered in hand or sent by courier, express mail, or first-class mail, postage prepaid, addressed
to the parties, respectively, as follows:

 

If to the Borrower:

 

Precision Optics Corporation, Inc.

22 East Broadway

Gardner, MA 01440

Attention: Joseph N. Forkey, President and Treasurer

 

With a copy to:

 

Jason Balog, Esquire

Miles & Stockbridge P.C.

10 Light Street

Baltimore, MD 21202

 

 

 

 

 

If to the Bank:

 

Main Street Bank

P.O. Box 19

81 Granger Boulevard

Marlborough, MA 01752

Attention: William J. Brassard, Senior Vice President

 

With a copy to:

 

David E. Surprenant, Esquire

Mirick, O’Connell, DeMallie & Lougee, LLP

100 Front Street

Worcester, MA 01608-1477

 

Either party may designate another address
to which communications are to be sent or another Person to receive copies of communications. Any communication will become effective
only when received by the Person to whom it is given. However, if it is mailed by first-class registered or certified mail, it will be
deemed to be received on the earlier of (i) the third business day after it is mailed, or (ii) the day it is actually received.

 

 

The Loan Documents are each contracts made under
and to be construed according to the laws of the Commonwealth of Massachusetts where they were executed by the Borrower and delivered
to the Bank. Notwithstanding anything to the contrary set forth in any other Loan Document, the Borrower and the Bank agree that all actions
or proceedings in any way arising out of or related to the Loan Documents or the transactions contemplated under the Loan Documents will
be litigated in courts located in Worcester County, Commonwealth of Massachusetts and all parties hereby submit to the jurisdiction of
said courts.

 

6.15 Consent to Jurisdiction; JURY TRIAL WAIVER.

 

The Borrower irrevocably and unconditionally submits
to the jurisdiction of any Massachusetts court or any federal court sitting within the Commonwealth of Massachusetts over any suit, action
or proceeding arising out of or relating to this Agreement or the other Loan Documents. The Borrower irrevocably waives, to the fullest
extent permitted by law, (a) any and all rights it may have to contest the appropriateness of any such action or proceeding, whether based
on lack of personal jurisdiction, lack or insufficiency of service, improper venue, forum non conveniens or any other basis and (b) the
right, if any, to claim or recover any special, exemplary, punitive or consequential damages or any damages other than actual damages.
The Borrower agrees that final judgment in any such suit, action or proceeding brought in such a court shall be enforced in any court
of proper jurisdiction by a suit upon such judgment, provided that service of process in such action, suit or proceeding shall have been
effected upon the Borrower in one of the manners specified in this Section or as otherwise permitted by law.

 

The Borrower hereby consents to process being served
in any suit, action or proceeding of the nature referred to in this Section by notice in accordance with Section 6.13 hereof. The Borrower
irrevocably waives, to the fullest extent permitted by law, all claims of error by reason of any service as contemplated herein and agrees
that such service shall be deemed in every respect effective service upon the Borrower in any such suit, action or proceeding and, to
the fullest permitted by law, shall be taken and held to be valid personal service upon and personal delivery to the Borrower.

 

 

 

 

 

THE BORROWER AND BANK MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OTHER AGREEMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. BANK AND BORROWER SHALL NOT SEEK TO CONSOLIDATE
ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR BANK TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED
BY BANK AND BORROWER AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. BANK AND BORROWER HAVE NOT AGREED OR REPRESENTED THAT THE
PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

 

6.16 Approved by the Bank.

 

Whenever the terms “approved by the Bank”
or similar terms indicating the Bank’s consent or approval are used herein they mean “approved and/or consented to by the
Bank as determined in its sole and absolute discretion”.

 

 

This Agreement may be executed in several counterparts,
and each executed copy constitutes an original instrument, but the counterparts together constitute but one and the same instrument.

 

 

The headings of the several sections, divisions
or subsections of this Agreement are not to be construed to constitute any part of this Agreement.

 

 

If any provision of this Agreement shall be held
invalid under any applicable Legal Requirements, such invalidity shall not affect any other provision of this Agreement that can be given
effect without the invalid provision, and, to this end, the provisions hereof are severable.

 

6.20 USA Patriot Act Notice.

 

The Bank hereby notifies the Borrower that, pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), the
Bank is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address
of the Borrower and other information that will allow the Bank to identify the Borrower in accordance with the Act.

 

 

Borrower agrees to indemnify and hold the Bank
and its respective shareholders, directors, agents, officers, subsidiaries and affiliates (the “Indemnified Parties”) harmless
from and against any and all damages, losses, settlement payments, obligations, liabilities, claims, actions or causes of action, costs
and expenses incurred, suffered, sustained or required to be paid by any Indemnified Party by reason of or resulting from the transactions
contemplated hereby except to the extent resulting from the gross negligence or willful misconduct of an Indemnified Party. In all such
litigation the Bank shall be entitled to select its own counsel and, in addition to the foregoing indemnity, the Borrower agrees to promptly
pay the reasonable fees and expenses of such counsel.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, the Borrower has signed
this Agreement and the Bank has caused this Agreement to be signed in its behalf, in its corporate name by its authorized officer, as
a sealed instrument all as of the day and year first above written.

 

Witness:   PRECISION OPTICS CORPORATION, INC.
         
         
    By: /s/ Joseph N. Forkey
    Name: Joseph N. Forkey
    Title: President and Treasurer
         

 

Witness:   MAIN STREET BANK
         
         
    By: /s/ William J. Brassard
    Name: William J. Brassard
    Title: Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Loan Agreement]

 

 

SCHEDULE 1

 

LEASES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 2

 

PATENTS AND TRADEMARKS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 3

 

SUBORDINATED INDEBTEDNESS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 3.19(a)

 

PERMITTED LIENS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 4.1

 

ORGANIZATION AND AUTHORITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 4.9.3

 

EMPLOYEE BENEFIT PLANS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 4.11

 

ENVIRONMENTAL COMPLIANCE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

Borrowing Base Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

 

Landlord Waivers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT C

 

Revolving Line of Credit Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT D

 

Security Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT E

 

Subordination Agreements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT F

 

Term Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT G

 

Closing Agenda

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.5

 

DEMAND REVOLVING LINE OF CREDIT NOTE

 

$250,000 October 4, 2021
  Gardner, Massachusetts

 

FOR VALUE RECEIVED, PRECISION OPTICS CORPORATION,
INC.
, a Massachusetts corporation with its principal place of business at 22 East Broadway, Gardner, Massachusetts 01440 (the “Borrower”),
promises to pay to MAIN STREET BANK, a Massachusetts bank with its principal place of business at 81 Granger Boulevard, Marlborough,
Massachusetts 01752 (its successors, assigns and any future holder or holders of this instrument collectively, the “Lender”),
or order, at the Lender’s place of business, the principal sum of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000), or such
lesser amount as is outstanding hereunder, in lawful money of the United States of America in immediately available funds, with interest
on the unpaid balance hereof at the rate and in the manner hereafter provided.

 

This Note is issued contemporaneously with that
certain Loan Agreement between the Borrower and the Lender of even date, as amended, modified and/or restated from time to time (the “Loan
Agreement”), all of the terms and conditions of which are incorporated herein by reference. Capitalized terms used herein and not
defined herein have the meanings ascribed in the Loan Agreement.

 

An Event of Default under the Loan Agreement shall
also constitute an Event of Default hereunder. The enumeration of Events of Default in the Loan Agreement shall not alter or vitiate the
demand nature of this Note. At its option, and at any time, whether or not an Event of Default has occurred, the Lender may declare all
amounts hereunder, immediately due and payable without notice, presentment, demand, protest or other notice of dishonor of any kind, all
of which are expressly waived.

 

Except as otherwise set forth in this Note, the
Borrower may borrow, repay or prepay without penalty or premium and reborrow hereunder, from the date hereof until demand
by the Lender, or the occurrence of Default, whichever occurs first. It is the intention of the parties that the outstanding principal
amount of this Note shall at no time exceed the Revolving Line of Credit Borrowing Base and if, at any time, the outstanding principal
amount of this Note shall exceed such amount, the full amount of such excess shall be immediately due and payable in full. The proceeds
of this Note will be disbursed, if at all, from time to time in accordance with Section 2.4 of the Loan Agreement. The Lender will
have no obligation to make Advances hereunder after the occurrence of a Default under the Loan Agreement.

 

The unpaid principal of this Note from time to
time outstanding shall bear interest, payable monthly in arrears, computed on the basis of the actual number of days elapsed over a year
assumed to have 360 days, at an adjustable per annum rate equal to the aggregate of (a) the “Prime Rate” as published in the
Wall Street Journal (or any successor publication selected by the Lender), plus (b) one hundred fifty (150) basis points (collectively,
the “Note Rate”); provided, however, in no event will the Note Rate be less than four and three-quarters percent (4.75%) per
annum. Each change in the Note Rate applicable hereunder shall be effective upon any change in the “Prime Rate” as published
in the Wall Street Journal.

 

The Borrower agrees to pay interest monthly in
arrears on the 15th day of each month commencing November 15, 2021. The entire indebtedness evidenced by this Note, if not
earlier paid, shall be due and payable ON DEMAND. To the extent that any payment is due on a day which is not a Business Day, the
due date will be the first following Business Day.

 

Purpose of Loan; Use of Proceeds. The Borrower
shall use the proceeds of this Loan to support its working capital needs, and shall not use the proceeds for any other purpose. No portion
of any loan is to be used for (i) the purpose of purchasing or carrying any “margin security” or “margin stock”
as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. 221 and 224 or (ii) primarily
personal, family or household purposes. The Collateral is not used or acquired primarily for personal, family or household purposes.

 

 

 

 

 

If no Event of Default has occurred, each payment
under this Note will be applied first to interest then due, then, at the discretion of the Lender, to fees, costs and expenses, and then
to principal. After DEMAND or the occurrence of an Event of Default, payments will be applied to fees, costs of collection, interest
and/or principal in which order as determined by the Lender in its discretion.

 

The Borrower hereby authorizes the Lender to automatically
deduct from any of the Borrower’s accounts the amount of any loan payment including all payments of interest, principal and other
sums due (“Automatic Payment”), from time to time, under this Note and/or the Loan Agreement and the Lender will thereafter
notify the Borrower of the amount so charged. If the funds in the account are insufficient to cover any payment due, the Lender shall
not be obligated to advance funds to cover the payment. The failure of the Lender so to charge any account or to give any such notice
shall not affect the obligation of the Borrower to pay interest, principal or other sums as provided herein or in the Loan Agreement.
At any time and for any reason, the Lender may terminate the Automatic Payment.

 

If a regularly scheduled payment is ten (10) days
or more late, the Borrower will be charged a late charge equal to the greater of (a) $15.00 or (b) five percent (5%) of the unpaid portion
of the regularly scheduled payment (the “Late Charge”). The Borrower agrees that any such Late Charge shall not be deemed
to be additional interest or penalty, but shall be deemed to be liquidated damages because of the difficulty in computing the actual amount
of damages in advance.

 

After demand
or upon the occurrence and during the continuance of an Event of Default, the unpaid principal of all indebtedness hereunder shall, at
the option of the Lender, bear interest at a per annum rate equal to the greater of (a) eighteen percent (18%), or (b) the maximum rate
permitted by law.

 

The Borrower shall not be obligated to pay and
the Lender shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject the Lender
to any civil or criminal penalties. If, because of the acceleration of maturity the payment of interest in advance or any other reason,
the Borrower is required, under the provisions of this Note or otherwise, to pay interest at a rate in excess of such maximum rate, the
rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in excess
of such maximum rate, together with interest thereon at the rate provided herein from the date of such payment, shall be immediately and
automatically applied to the reduction of the unpaid principal balance of this Note as of the date on which such excess payment was made.
If the amount to be so applied to reduction of the unpaid principal balance exceeds the unpaid principal balance, the amount of such excess
shall be refunded by the Lender to the Borrower.

 

The Borrower agrees to pay all reasonable costs,
including but not limited to reasonable attorneys’ fees, incurred by the Lender in connection with collecting or enforcing any obligation
of the Borrower to the Lender hereunder or legal representation with respect to bankruptcy or insolvency proceedings. Such costs may include
the allocable costs of the Lender’s internal legal counsel. No course of dealing by the Lender and no delay in exercising any right
under this Note will operate as a waiver by the Lender of its rights, and a waiver of a right on one occasion may not be construed as
a waiver of the right on a future occasion.

 

The Borrower hereby grants to the Lender a lien,
security interest and a right of setoff as security for all Obligations, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Lender or any entity
under the control of the Lender, or in transit to any of them. At any time, without demand or notice, the Lender may set off the same
or any part thereof and apply the same to any Obligations even though unmatured and regardless of the adequacy of any other collateral
securing this Note and the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THIS NOTE, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTORS, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
The Lender shall not be required
to marshal any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any
particular order and the Borrower waives, to the fullest extent that it lawfully can, (i) any right it might have to require the Lender
to pursue any particular remedy before proceeding against it and (ii) any right to the benefit of, or to direct the application of, the
proceeds of any Collateral until the Obligations are paid in full.

The Lender may at any time pledge, endorse, assign,
or transfer all or any portion of its rights under the Loan Documents including any portion of this Note to any of the twelve (12) Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release the Lender from its obligations under the Loan Agreement, this Note or any of the Loan Documents.

 

 

 

 

The Borrower, any guarantors, endorsers or other
persons now or hereafter liable for the payment of any of the indebtedness evidenced by this Note, severally agree, by making, guaranteeing
or endorsing this Note or by making any agreement to pay any of the indebtedness evidenced by this Note, to waive presentment for payment,
protest and demand, notice of protest, demand and of dishonor and nonpayment of this Note, and consent, on one or more occasions, without
notice or further assent (i) to the substitution, exchange or release of the collateral securing this Note or any part thereof at any
time, (ii) to the acceptance or release by the holder or holders hereof at any time of any additional collateral or security for or other
guarantors of this Note, (iii) to the modification or amendment, at any time and from time to time, of this Note, the Loan Agreement,
or any of the Loan Documents, (iv) to the granting by the holder hereof of any extension of the time for payment of this Note or for the
performance of the agreements, covenants and conditions contained in this Note, the Loan Agreement, or any of the Loan Documents, at the
request of any person liable thereon, and (v) to any and all forbearances and indulgences whatsoever. Such consent shall not alter or
diminish the liability of any person.

 

The Lender shall have the unrestricted right at
any time or from time to time, and without the Borrower’s consent, to sell, assign, endorse, or transfer all or any portion of its
rights and obligations hereunder to one or more banks or other entities (each, an “Assignee”) and, the Borrower agrees that
it shall execute, or cause to be executed such documents including without limitation, amendments to this Note and to any other document,
instrument and agreement executed in connection herewith as the Lender shall deem necessary to effect the foregoing. In addition, at the
request of the Lender and any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee
and, if the Lender has retained any of its rights and obligations hereunder following such assignment, to the Lender, which new promissory
notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the note held by the Lender prior to such
assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Lender after giving effect
to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required
by the Lender in connection with such assignment, and the payment by Assignee of the purchase price agreed to by the Lender and such Assignee,
such Assignee shall be a party to this Note and shall have all of the rights and obligations of the Lender hereunder (and under any and
all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations
have been assigned by the Lender pursuant to the assignment documentation between the Lender and Assignee, and the Lender shall be released
from its obligations hereunder and thereunder to a corresponding extent.

 

The Lender shall have the unrestricted right at
any time and from time to time, and without the consent of or notice to the Borrower, to grant to one or more institutions or other Persons
(each a “Participant”) participating interests in the Lender’s obligations to lend hereunder and/or any or all of the
loans held by the Lender hereunder. In the event of any such grant by the Lender of a participating interest to a Participant, whether
or not upon notice to the Borrower, the Lender shall remain responsible for the performance of its obligations hereunder and the Borrower
shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations hereunder. The
Lender may furnish any information concerning the Borrower in its possession from time to time to any prospective assignees and Participants,
provided that the Lender shall require any such prospective assignee or Participant to maintain the confidentiality of such information.

 

This Note shall be governed by the laws of the
Commonwealth of Massachusetts.

 

The Borrower and the Lender irrevocably and unconditionally
submit to the jurisdiction of any Massachusetts court or any federal court sitting within the Commonwealth of Massachusetts over any suit,
action or proceeding arising out of or relating to this Note or the other Loan Documents. The Borrower and the Lender irrevocably waive,
to the fullest extent permitted by law, (i) any and all rights they may have to contest the appropriateness of any such action or proceeding,
whether based on lack of personal jurisdiction, lack or insufficiency of service, improper venue, forum non conveniens or any other
basis and (ii) the right, if any, to claim or recover any special, exemplary, punitive or consequential damages or any damages other
than actual damages. The Borrower and the Lender agree that final judgment in any such suit, action or proceeding brought in such a court
shall be enforced in any court of proper jurisdiction by a suit upon such judgment, provided that service of process in such action, suit
or proceeding shall have been effected upon the Borrower in any manner permitted by applicable law. Nothing contained herein, however,
shall prevent the Lender from bringing a suit, action or proceeding or exercising any rights against any Collateral and against the Borrower
and against any property of the Borrower in any other state or jurisdiction. Initiating such suit, action or proceeding or taking such
action in any other state or jurisdiction will not constitute a waiver of the agreement that the Laws of the Commonwealth of Massachusetts
govern the rights and obligations of the Borrower and the Lender or the Borrower’s agreement to submit to personal jurisdiction
within the Commonwealth of Massachusetts.

 

 

 

 

 

Upon receipt of an affidavit of an officer of the
Lender as to the loss, theft, destruction or mutilation of this Note or any other security document which is not of public record, and,
in the case of any such loss, theft, destruction or mutilation, upon cancellation of this Note or other security document, the Borrower
will issue, in lieu thereof, a replacement note or other security document in the same principal amount thereof and otherwise of like
tenor.

 

THE BORROWER AND THE LENDER (BY ACCEPTANCE OF
THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT TO ANY CLAIM BASED ON
THIS NOTE, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR THE LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION,
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT
OF THIS NOTE AND THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. This
waiver constitutes a material inducement for Lender to accept this Note and make the LoanS.

 

The Obligations, including without limitation,
the obligations of the Borrower under this Note are secured by the Security Agreement.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executed as a sealed instrument as of the 4th
day of October, 2021.

 

    PRECISION OPTICS CORPORATION, INC.
         
         
    By: /s/ Joseph N. Forkey
Witness   Name: Joseph N. Forkey
    Title: President and Treasurer
         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Demand Revolving
Line of Credit Note]

 

Exhibit 10.6

 

TERM NOTE

(Term Loan Maturity Date: (October 15, 2028)

 

$2,600,000 October 4, 2021
  Gardner, MA

 

FOR VALUE RECEIVED, PRECISION OPTICS CORPORATION,
INC.
, a Massachusetts corporation with its principal place of business at 22 East Broadway, Gardner, Massachusetts 01440 (the “Borrower”),
promises to pay to MAIN STREET BANK, a Massachusetts bank with its principal place of business at 81 Granger Boulevard, Marlborough,
Massachusetts 01752 (its successors, assigns and any future holder or holders of this instrument collectively, the “Lender”),
or order, at the Lender’s place of business, the principal sum of TWO MILLION SIX HUNDRED THOUSAND DOLLARS ($2,600,000),
in lawful money of the United States of America in immediately available funds, with interest, payable monthly in arrears, on the unpaid
balance hereof at the rate and in the manner hereafter provided.

 

This Note is issued pursuant to that certain Loan
Agreement between the Borrower and the Lender of even date, as amended and/or restated from time to time (the “Loan Agreement”);
all of the terms and conditions of which are incorporated herein by reference. Capitalized terms used herein and not defined herein have
the meanings ascribed in the Loan Agreement. A single advance will be made under this Note in accordance with Section 2.5 of the
Loan Agreement. This is not a revolving note.

 

An Event of Default under the Loan Agreement shall
also constitute an Event of Default hereunder. If an Event of Default occurs, the Lender may declare the unpaid principal balance and
accrued interest under this Note to be due immediately, without notice, presentment, demand, protest or other notice of dishonor of any
kind, all of which are expressly waived.

 

The outstanding principal balance of this Note
will bear interest, payable monthly in arrears, computed on the basis of the actual number of days elapsed over a year assumed to have
360 days, at an adjustable per annum rate equal to the aggregate of (a) the “Prime Rate” as published in the Wall Street Journal
(or any successor publication selected by the Lender), plus (b) one hundred fifty (150) basis points (collectively, the “Note Rate”);
provided, however, in no event will the Note Rate be less than four and three-quarters percent (4.75%) per annum. Each change in the Note
Rate applicable hereunder shall be effective upon any change in the “Prime Rate” as published in the Wall Street Journal.

 

Commencing on November 15, 2021 and continuing
on the same day of each month thereafter, the Borrower agrees to pay principal in eighty-four equal monthly installments of $30,952.38
plus interest. The monthly installment payments are based on a seven (7) year amortization schedule. The entire indebtedness evidenced
by this Note, including but not limited to all accrued and unpaid interest, all principal and all late charges and fees, if not earlier
paid, shall be due and payable on October 15, 2028 (the “Term Loan Maturity Date”). To the extent that any payment is due
on a day which is not a Business Day, the due date will be the first following Business Day.

 

The Borrower may make partial or a full prepayment
of principal due hereunder without penalty at any time without penalty or premium. Any partial prepayment shall be applied against the
principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments,
unless the Lender shall otherwise agree in writing.

 

The Borrower shall use the proceeds of this Loan
to complete the Acquisition, and shall not use the proceeds for any other purpose. No portion of any loan is to be used for (i) the purpose
of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R. 221 and 224 or (ii) primarily personal, family or household purposes.
The Collateral is not used or acquired primarily for personal, family or household purposes.

 

 

 

 

 

If no Event of Default has occurred, each payment
under this Note will be applied first to interest then due, then, at the discretion of the Lender, to fees, costs and expenses, and then
to principal. After the occurrence of an Event of Default, payments will be applied to fees, costs of collection, interest and/or principal
in such order as determined by the Lender in its discretion.

 

The Borrower hereby authorizes the Lender to automatically
deduct from any of the Borrower’s accounts the amount of any loan payment including all payments of interest, principal and other
sums due (“Automatic Payment”), from time to time, under this Note and/or the Loan Agreement and the Lender will thereafter
notify the Borrower of the amount so charged. If the funds in the account are insufficient to cover any payment due, the Lender shall
not be obligated to advance funds to cover the payment. The failure of the Lender so to charge any account or to give any such notice
shall not affect the obligation of the Borrower to pay interest, principal or other sums as provided herein or in the Loan Agreement.
At any time and for any reason, the Lender may terminate the Automatic Payment.

 

If a regularly scheduled payment is ten (10) days
or more late, the Borrower will be charged a late charge equal to the greater of (a) $15.00 or (b) five percent (5%) of the unpaid portion
of the regularly scheduled payment (the “Late Charge”). The Borrower agrees that any such Late Charge shall not be deemed
to be additional interest or penalty, but shall be deemed to be liquidated damages because of the difficulty in computing the actual amount
of damages in advance.

 

Upon (i) the occurrence and during the continuance
of an Event of Default, (ii) the Term Loan Maturity Date having occurred without full satisfaction of the outstanding balance of
all indebtedness due under this Note, or (iii) judgment having been rendered on this Note, the unpaid principal of this Note shall,
at the option of the Lender, bear interest at a per annum rate equal to the greater of (a) eighteen percent (18%), or (b) the maximum
rate permitted by law.

 

The Borrower shall not be obligated to pay and
the Lender shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject the Lender
to any civil or criminal penalties. If, because of the acceleration of maturity, the payment of interest in advance or any other reason,
the Borrower is required, under the provisions of this Note or otherwise, to pay interest at a rate in excess of such maximum rate, the
rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in excess
of such maximum rate, together with interest thereon at the rate provided herein from the date of such payment, shall be immediately and
automatically applied to the reduction of the unpaid principal balance of this Note as of the date on which such excess payment was made.
If the amount to be so applied to reduction of the unpaid principal balance exceeds the unpaid principal balance, the amount of such excess
shall be refunded by the Lender to the Borrower.

 

The Borrower agrees to pay all reasonable costs,
including but not limited to reasonable attorneys’ fees, incurred by the Lender in connection with collecting or enforcing any obligation
of the Borrower to the Lender hereunder or legal representation with respect to bankruptcy or insolvency proceedings. Such costs may include
the allocable costs of the Lender’s internal legal counsel. No course of dealing by the Lender and no delay in exercising any right
under this Note will operate as a waiver by the Lender of its rights, and a waiver of a right on one occasion may not be construed as
a waiver of the right on a future occasion.

 

The Borrower hereby grants to the Lender a lien,
security interest and a right of setoff as security for all Obligations, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Lender or any entity
under the control of the Lender, or in transit to any of them. At any time, without demand or notice, the Lender may set off the same
or any part thereof and apply the same to any Obligations even though unmatured and regardless of the adequacy of any other collateral
securing this Note and the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THIS NOTE, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTORS, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
The Lender shall not be required
to marshal any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any
particular order and the Borrower waives, to the fullest extent that it lawfully can, (i) any right it might have to require the Lender
to pursue any particular remedy before proceeding against it and (ii) any right to the benefit of, or to direct the application of, the
proceeds of any Collateral until the Obligations are paid in full.

 

 

 

 

 

The Lender may at any time pledge, endorse, assign,
or transfer all or any portion of its rights under the loan documents, including any portion of this Note to any of the twelve (12) Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release the Lender from its obligations under the Loan Agreement, this Note or any of the Loan Documents.

 

The Borrower, endorsers or other persons now or
hereafter liable for the payment of any of the indebtedness evidenced by this Note, severally agree, by making, guaranteeing or endorsing
this Note or by making any agreement to pay any of the indebtedness evidenced by this Note, to waive presentment for payment, protest
and demand, notice of protest, demand and of dishonor and nonpayment of this Note, and consent, on one or more occasions, without notice
or further assent (i) to the substitution, exchange or release of the collateral securing this Note or any part thereof at any time, (ii)
to the acceptance or release by the holder or holders hereof at any time of any additional collateral or security for or other guarantors
of this Note, (iii) to the modification or amendment, at any time and from time to time, of this Note, the Loan Agreement, or any of the
Loan Documents, (iv) to the granting by the holder hereof of any extension of the time for payment of this Note or for the performance
of the agreements, covenants and conditions contained in this Note, the Loan Agreement, or any of the Loan Documents, at the request of
any person liable thereon, and (v) to any and all forbearances and indulgences whatsoever. Such consent shall not alter or diminish the
liability of any person.

 

The Lender shall have the unrestricted right at
any time or from time to time, and without the Borrower’s consent, to sell, assign, endorse, or transfer all or any portion of its
rights and obligations hereunder to one or more banks or other entities (each, an “Assignee”) and, the Borrower agrees that
it shall execute, or cause to be executed such documents including without limitation, amendments to this Note and to any other document,
instrument and agreement executed in connection herewith as the Lender shall deem necessary to effect the foregoing. In addition, at the
request of the Lender and any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee
and, if the Lender has retained any of its rights and obligations hereunder following such assignment, to the Lender, which new promissory
notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the note held by the Lender prior to such
assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Lender after giving effect
to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required
by the Lender in connection with such assignment, and the payment by Assignee of the purchase price agreed to by the Lender and such Assignee,
such Assignee shall be a party to this Note and shall have all of the rights and obligations of the Lender hereunder (and under any and
all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations
have been assigned by the Lender pursuant to the assignment documentation between the Lender and Assignee, and the Lender shall be released
from its obligations hereunder and thereunder to a corresponding extent.

 

The Lender shall have the unrestricted right at
any time and from time to time, and without the consent of or notice to the Borrower, to grant to one or more institutions or other Persons
(each a “Participant”) participating interests in the Lender’s obligations to lend hereunder and/or any or all of the
loans held by the Lender hereunder. In the event of any such grant by the Lender of a participating interest to a Participant, whether
or not upon notice to the Borrower, the Lender shall remain responsible for the performance of its obligations hereunder and the Borrower
shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations hereunder. The
Lender may furnish any information concerning the Borrower in its possession from time to time to any prospective assignees and Participants,
provided that the Lender shall require any such prospective assignee or Participant to maintain the confidentiality of such information.

 

This Note shall be governed by the laws of the
Commonwealth of Massachusetts.

 

The Borrower and the Lender irrevocably and unconditionally
submit to the jurisdiction of any Massachusetts court or any federal court sitting within the Commonwealth of Massachusetts over any suit,
action or proceeding arising out of or relating to this Note or the other Loan Documents. The Borrower and the Lender irrevocably waive,
to the fullest extent permitted by law, (i) any and all rights they may have to contest the appropriateness of any such action or proceeding,
whether based on lack of personal jurisdiction, lack or insufficiency of service, improper venue, forum non conveniens or any other
basis and (ii) the right, if any, to claim or recover any special, exemplary, punitive or consequential damages or any damages other
than actual damages. The Borrower and the Lender agree that final judgment in any such suit, action or proceeding brought in such a court
shall be enforced in any court of proper jurisdiction by a suit upon such judgment, provided that service of process in such action, suit
or proceeding shall have been effected upon the Borrower in any manner permitted by applicable law. Nothing contained herein, however,
shall prevent the Lender from bringing a suit, action or proceeding or exercising any rights against any Collateral and against the Borrower
and against any property of the Borrower in any other state or jurisdiction. Initiating such suit, action or proceeding or taking such
action in any other state or jurisdiction will not constitute a waiver of the agreement that the Laws of the Commonwealth of Massachusetts
govern the rights and obligations of the Borrower and the Lender or the Borrower’s agreement to submit to personal jurisdiction
within the Commonwealth of Massachusetts.

 

 

 

 

Upon receipt of an affidavit of an officer of the
Lender as to the loss, theft, destruction or mutilation of this Note or any other security document which is not of public record, and,
in the case of any such loss, theft, destruction or mutilation, upon cancellation of this Note or other security document, the Borrower
will issue, in lieu thereof, a replacement note or other security document in the same principal amount thereof and otherwise of like
tenor.

 

THE BORROWER AND THE LENDER (BY ACCEPTANCE OF
THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT TO ANY CLAIM BASED ON
THIS NOTE, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR THE LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION,
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT
OF THIS NOTE AND THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR THE LENDER TO ACCEPT THIS NOTE AND MAKE THE LOANS.

 

The Obligations, including without limitation,
the obligations of the Borrower under this Note are secured by the Security Agreement.

 

[SIGNATURE APPEARS ON FOLLOWING
PAGE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executed as a sealed instrument as of the 4th
day of October, 2021.

 

    PRECISION OPTICS CORPORATION, INC.
         
         
    By: /s/ Joseph N. Forkey
Witness   Name: Joseph N. Forkey
    Title: President and Treasurer
         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to $2,600,000
Term Note]

 

 

Exhibit 10.7

 

SECURITY AGREEMENT
(All Assets)

 

SECURITY AGREEMENT, dated as of October 4, 2021,
between PRECISION OPTICS CORPORATION, INC., a Massachusetts corporation with its principal place of business at 22 East Broadway,
Gardner, Massachusetts 01440 (the “Company”) and MAIN STREET BANK, a Massachusetts bank with its principal place of
business at 81 Granger Boulevard, Marlborough, Massachusetts 01752 (the “Lender”).

 

WHEREAS, the Company and the Lender are
parties to that certain Loan Agreement dated of even date (as amended, modified and/or restated from time to time, the “Loan Agreement”);

 

WHEREAS, it is a condition precedent to
the Lender making any loans or otherwise extending credit to the Company that the Company execute and deliver to the Lender a security
agreement in substantially the form hereof; and

 

WHEREAS, the Company wishes to grant security
interests in favor of the Lender as herein provided.

 

NOW, THEREFORE, in consideration of the
promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

1.                 
DEFINITIONS.
All capitalized terms used herein without definitions shall have the meanings provided therefore in the
Loan Agreement. The term “State”, as used herein, means the Commonwealth of Massachusetts. All terms defined in the Uniform
Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined
in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State,
the term has the meaning specified in Article 9. The term “Obligations”, as used herein, means all of the indebtedness, obligations
and liabilities of the Company to the Lender, individually or collectively, whether direct or indirect, joint or several, absolute or
contingent, due or to become due, now existing or hereafter arising under or in respect of (a) the Loan Agreement, (b) the Loan Documents,
or (c) other instruments or agreements executed and delivered pursuant to the Loan Agreement or in connection therewith or this Agreement.
The occurrence of an Event of Default under the Loan Agreement will constitute an Event of Default hereunder.

 

2.                 
GRANT OF SECURITY INTEREST.
The Company hereby grants to the Lender, to secure the payment and performance in full of
all of the Obligations, a security interest in and pledges and assigns to the Lender the following properties, assets and rights of the
Company, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (collectively the
“Collateral”): all personal and fixture property of every kind and nature including without limitation all goods (including
inventory, equipment and any accessions thereto), instruments (including promissory notes), motor vehicles, documents, accounts (including
health care insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether
or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting
obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, tort claims, and all general
intangibles (including all payment intangibles). The Lender acknowledges that the attachment of its security interest in any commercial
tort claim as original collateral is subject to the Company’s compliance with Section 4.7.

 

 

 

 

 

3.                 
AUTHORIZATION TO FILE FINANCING STATEMENTS.
The Company hereby irrevocably authorizes the Lender at any time and from
time to time to file in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate
the Collateral (i) as all assets of the Company or words of similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State or such jurisdiction, or (ii) as being
of an equal or lesser scope or with greater detail, and (b) contain any other information required by Article 9 of the Uniform Commercial
Code of the State for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Company
is an organization, the type of organization and any organization identification number issued to the Company and, (ii) in the case of
a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient
description of real property to which the Collateral relates. The Company agrees to furnish any such information to the Lender promptly
upon request. The Company also ratifies its authorization for the Lender to have filed in any Uniform Commercial Code jurisdiction any
initial financing statements or amendments thereto if filed prior to the date hereof.

 

4.                 
OTHER ACTIONS.
Further to insure the attachment, perfection and first priority of, and the ability of the Lender to
enforce, the Lender’s security interest in the Collateral, the Company agrees, in each case at the Company’s own expense, to take the
following actions with respect to the following Collateral:

 

4.1.           
PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER.
If the Company shall at any time hold or acquire any promissory notes or tangible
chattel paper, the Company shall forthwith endorse, assign and deliver the same to the Lender, accompanied by such instruments of transfer
or assignment duly executed in blank as the Lender may from time to time specify.

 

4.2.           
DEPOSIT ACCOUNTS.
For each deposit account that the Company at any time opens or maintains, the Company shall, at the Lender’s
request and option, pursuant to an agreement in form and substance satisfactory to the Lender, either (a) cause the depositary bank to
agree to comply at any time with instructions from the Lender to such depositary bank directing the disposition of funds from time to
time credited to such deposit account, without further consent of the Company, or (b) arrange for the Lender to become the customer of
the depositary bank with respect to the deposit account, with the Company, following the occurrence of an Event of Default, being permitted,
only with the consent of the Lender, to exercise rights to withdraw funds from such deposit account. The provisions of this paragraph
shall not apply to (i) any deposit account for which the Company, the depositary bank and the Lender have entered into a cash collateral
agreement specially negotiated among the Company, the depositary bank and the Lender for the specific purpose set forth therein, (ii)
deposit accounts for which the Lender is the depositary and (iii) deposit accounts specially and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of the Company’s employees.

 

4.3.           
INVESTMENT PROPERTY.
If the Company shall at any time hold or acquire any certificated securities, the Company shall forthwith
endorse, assign and deliver the same to the Lender, accompanied by such instruments of transfer or assignment duly executed in blank as
the Lender may from time to time specify. If any securities now or hereafter acquired by the Company are uncertificated and are issued
to the Company or its nominee directly by the issuer thereof, the Company shall immediately notify the Lender thereof and, at the Lender’s
request and option, pursuant to an agreement in form and substance satisfactory to the Lender, either (a) cause the issuer to agree to
comply with instructions from the Lender as to such securities, without further consent of the Company or such nominee, or (b) arrange
for the Lender to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment
property now or hereafter acquired by the Company are held by the Company or its nominee through a securities intermediary or commodity
intermediary, the Company shall immediately notify the Lender thereof and, at the Lender’s request and option, pursuant to an agreement
in form and substance satisfactory to the Lender, either (i) cause such securities intermediary or (as the case may be) commodity intermediary
to agree to comply with entitlement orders or other instructions from the Lender to such securities intermediary as to such securities
or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed
by the Lender to such commodity intermediary, in each case without further consent of the Company or such nominee, or (ii) in the case
of financial assets or other investment property held through a securities intermediary, arrange for the Lender to become the entitlement
holder with respect to such investment property, with the Company, following the occurrence of an Event of Default, being permitted, only
with the consent of the Lender, to exercise rights to withdraw or otherwise deal with such investment property. The provisions of this
paragraph shall not apply to any financial assets credited to a securities account for which the Lender is the securities intermediary.

 

 

 

 

 

4.4.           
COLLATERAL IN THE POSSESSION OF A BAILEE.
If any goods are at any time in the possession of a bailee, the Company shall promptly
notify the Lender thereof and, if requested by the Lender, shall promptly obtain an acknowledgement from the bailee, in form and substance
satisfactory to the Lender, that the bailee (i) holds such Collateral for the benefit of the Lender and (ii) shall, following the occurrence
of an Event of Default, act upon the instructions of the Lender, without the further consent of the Company.

 

4.5.           
ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS.
If the Company at any time holds or acquires an interest in any electronic
chattel paper or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in
Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
the Company shall promptly notify the Lender thereof and, at the request of the Lender, shall take such action as the Lender may reasonably
request to vest in the Lender control, under Section 9-105 of the Uniform Commercial Code, of such electronic chattel paper or control
under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of
the Uniform Electronic Transactions Act, as in effect in such jurisdiction, of such transferable record.

 

4.6.           
LETTER-OF-CREDIT RIGHTS.
If the Company is at any time a beneficiary under a letter of credit now or hereafter issued in favor
of the Company, the Company shall promptly notify the Lender thereof and, at the request and option of the Lender, the Company shall,
pursuant to an agreement in form and substance satisfactory to the Lender, either (i) arrange for the issuer and any confirmer of such
letter of credit to consent to an assignment to the Lender, following the occurrence of an Event of Default, of the proceeds of any drawing
under the letter of credit or (ii) arrange for the Lender to become, following the occurrence of an Event of Default, the transferee beneficiary
of the letter of credit, with the proceeds of any drawing under the letter of credit to be applied to the Obligations.

 

4.7.           
COMMERCIAL TORT CLAIMS.
If the Company shall at any time hold or acquire a commercial tort claim, the Company shall immediately
notify the Lender in a writing signed by the Company of the details thereof and grant to the Lender in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory
to the Lender.

 

4.8.           
OTHER ACTIONS AS TO ANY AND ALL COLLATERAL.
The Company further agrees to take any other action reasonably requested by the
Lender to ensure the attachment, perfection and first priority of, and the ability of the Lender to enforce, the Lender’s security interest
in any and all of the Collateral including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements
and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that the Company’s signature thereon is required
therefore, (b) causing the Lender’s name to be noted as secured party on any certificate of title for a titled good if such notation is
a condition to attachment, perfection or priority of, or ability of the Lender to enforce, the Lender’s security interest in such Collateral,
(c) holding its books and records relating to the Collateral segregated from all the Company’s other books and records in a manner
satisfactory to the Lender, (d) delivering to the Lender from time to time promptly at its request, all invoices, original documents of
title, contracts, chattel paper, instruments and any other writings relating thereto, and other evidence of performance of contracts,
or evidence of shipment or delivery of the merchandise or of the rendering of services, (e) delivering to the Lender promptly at the Lender’s
request from time to time additional copies of any or all of such papers or writings and such other information with respect to any of
the Collateral and such schedules of inventory, schedules of accounts and such other writings as the Lender may in its sole discretion
deem to be necessary or effectual to evidence the Lender’s security interest in the Collateral, (f) complying with any provision
of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Lender to enforce, the Lender’s security interest in such Collateral, (g) obtaining governmental
and other third party consents and approvals, including without limitation any consent of any licensor, lessor or other person obligated
on Collateral, (h) endeavoring to obtain waivers from mortgagees and landlords in form and substance satisfactory to the Lender and (i)
taking all actions required by any earlier versions of the Uniform Commercial Code or by other law, as applicable in any relevant Uniform
Commercial Code jurisdiction, or by other law as applicable in any foreign jurisdiction.

 

5.                 
RELATION TO OTHER SECURITY DOCUMENTS.
The provisions of this Agreement supplement the provisions of any existing security
agreements, pledge agreements, assignments, motor vehicle security documents, real estate mortgages or deeds of trust granted by the Company
to the Lender and securing the payment and performance of any of the Obligations. Nothing contained in any such documents shall derogate
from any of the rights or remedies of the Lender hereunder.

 

 

 

 

 

6.                 
REPRESENTATIONS AND WARRANTIES CONCERNING COMPANY’S LEGAL STATUS.
The Company has previously delivered to the Lender
a certificate signed by the Company and entitled “Perfection Certificate” (the “Perfection Certificate”). The
Company represents and warrants to the Lender as follows: (a) the Company’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof, (b) the Company is an organization of the type, and is organized in the jurisdiction, set
forth in the Perfection Certificate, (c) the Perfection Certificate accurately sets forth the Company’s organization identification
number or accurately states that the Company has none, (d) the Perfection Certificate accurately sets forth the Company’s place
of business or, if more than one, its chief executive office as well as the Company’s mailing address if different, and (e) all
other information set forth on the Perfection Certificate pertaining to the Company is accurate and complete in all material respects.

 

7.                 
COVENANTS CONCERNING COMPANY’S LEGAL STATUS.
The Company covenants with the Lender as follows: (a) without providing
at least 30 days prior written notice to the Lender, the Company will not change its name, its place of business or, if more than one,
its chief executive office, or its mailing address or organizational identification number if it has one, (b) if the Company does not
have an organizational identification number and later obtains one, the Company shall forthwith notify the Lender of such organizational
identification number, and (c) the Company will not change its type of organization, jurisdiction of organization or other legal structure.

 

8.                 
REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL, ETC.
The Company further represents and warrants to the Lender
as follows: (a) the Company is (and as to the Collateral acquired after the date hereof will be) the owner of the Collateral, free from
any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and Permitted Liens,
(b) none of the Collateral constitutes, or is the proceeds of, “farm products” as defined in the Uniform Commercial Code of
the State, (c) none of the account debtors or other persons obligated on any of the Collateral is a governmental authority subject
to the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral, (d) to its knowledge,
the Company holds no commercial tort claim except as indicated on the Perfection Certificate, (e) to its knowledge, the Company has at
all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and
with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances, and (f) all other information set forth on the Perfection Certificate pertaining to the Collateral
is accurate and complete in all material respects.

 

9.                 
COVENANTS CONCERNING COLLATERAL, ETC.
The Company further covenants with the Lender as follows: (a) the Collateral,
to the extent not delivered to the Lender pursuant to Section 4, will be kept at those locations listed on the Perfection Certificate
and the Company will not (except for inventory sold in the ordinary course of business and obsolete equipment disposed of) remove the
Collateral from such location, without providing at least 30 days prior written notice to the Lender, (b) except for the security interest
herein granted and existing liens in favor of the Lender and Permitted Liens, the Company shall be the owner of the Collateral free from
any lien, security interest or other encumbrance, and the Company shall defend the same against all claims and demands of all persons
at any time claiming the same or any interests therein adverse to the Lender, (c) the Company shall not pledge, mortgage or create, or
suffer to exist a security interest in the Collateral in favor of any person other than the Lender, (d) the Company will keep the Collateral
in good order and repair, reasonable wear and tear excepted, and will not use the same in violation of law or any policy of insurance
thereon, (e) the Company will permit the Lender, or its designee, to inspect the Collateral at any reasonable time during normal
business hours upon reasonable advance notice, wherever located, (f) the Company will pay promptly when due all taxes, assessments,
governmental charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred
in connection with this Agreement, (g) the Company will continue to operate its business in compliance with all applicable provisions
of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials or substances, and (h) the Company will not sell or otherwise
dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for (i) sales of inventory in the ordinary
course of business, and (ii) sales consented to by the Lender and where the Lender receives all of the proceeds of such sales to be applied
to the Obligations as determined by the Lender at its sole discretion.

 

 

 

 

 

10.             
INSURANCE
.

 

10.1.       
MAINTENANCE OF INSURANCE.
The Company will maintain with financially sound and reputable insurers insurance with respect to
its properties and business against such casualties and contingencies as shall be in accordance with general practices of businesses engaged
in similar activities in similar geographic areas. Such insurance shall be in such minimum amounts that the Company will not be deemed
a coinsurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in
such forms and be for such periods as may be reasonably satisfactory to the Lender. In addition, all such insurance shall be payable to
the Lender as loss payee. Without limiting the foregoing, the Company will (i) keep all of its physical property insured with casualty
or physical hazard insurance on an “all risks” basis, with broad form flood and earthquake coverages and electronic data processing
coverage, with a full replacement cost endorsement and an “agreed amount” clause in an amount equal to 100 percent of the
full replacement cost of such property, (ii) maintain all such workers’ compensation or similar insurance as may be required by law, and
(iii) maintain, in amounts equal to those generally maintained by businesses engaged in similar activities in similar geographic areas,
general public liability insurance against claims of bodily injury, death or property damage occurring, on, in or about the properties
of the Company; business interruption insurance; and product liability insurance.

 

10.2.       
INSURANCE PROCEEDS.
The proceeds of any casualty insurance in respect of any casualty loss of any of the Collateral shall,
subject to the rights, if any, of other parties with a prior interest in the property covered thereby (i) so long as no Event of Default
has occurred and to the extent that the amount of such proceeds is less than $10,000, be disbursed to the Company for direct application
by the Company solely to the repair or replacement of the Company’s property so damaged or destroyed, and (ii) in all other circumstances,
be held by the Lender as cash collateral for the Obligations and/or applied to the Obligations. The Lender may, at its sole option, disburse
from time to time all or any part of such proceeds so held as cash collateral, upon such terms and conditions as the Lender may reasonably
prescribe, for direct application by the Company solely to the repair or replacement of the Company’s property so damaged or destroyed,
or the Lender may apply all or any part of such proceeds to the Obligations.

 

10.3.       
NOTICE OF CANCELLATION, ETC.
All policies of insurance shall provide for at least thirty (30) days prior written cancellation
notice to the Lender, except ten (10) days for non-payment of premium. In the event of failure by the Company to provide and maintain
insurance as herein provided, the Lender may, at its option, provide such insurance and charge the amount thereof to the Company. The
Company shall furnish the Lender with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.

 

11.             
COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL
.

 

11.1.       
EXPENSES INCURRED BY LENDER.
In its discretion, the Lender may discharge taxes and other encumbrances at any time levied or
placed on any of the Collateral following the Company’s failure to discharge such taxes or other encumbrances, make repairs thereto,
maintain the Collateral and pay any necessary filing fees or, if the Company fails to do so, insurance premiums. The Company agrees to
reimburse the Lender on demand for any and all expenditures so made. The Lender shall have no obligation to the Company to make any such
expenditures, nor shall the making thereof relieve the Company of any default.

 

11.2.       
LENDER’S OBLIGATIONS AND DUTIES.
Anything herein to the contrary notwithstanding, the Company shall remain liable under each
contract or agreement comprised in the Collateral to be observed or performed by the Company thereunder. The Lender shall not have any
obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Lender
of any payment relating to any of the Collateral, nor shall the Lender be obligated in any manner to perform any of the obligations of
the Company under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received
by the Lender in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement,
to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been
assigned to the Lender or to which the Lender may be entitled at any time or times. The Lender’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under the Uniform Commercial Code of the State or otherwise,
shall be to deal with such Collateral in the same manner as the Lender deals with similar property for its own account.

 

 

 

 

 

12.             
SECURITIES AND DEPOSITS.
The Lender may at any time, following the occurrence of, and during the continuance of an Event
of Default, at its option, transfer to itself or any nominee any securities constituting Collateral, receive any income thereon and hold
such income as additional Collateral or apply it to the Obligations. After the occurrence of and during the continuance of an Event of
Default, the Lender may demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral.
Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time credited by
or due from the Lender to the Company may at any time be applied to or set off against any of the Obligations.

 

13.             
NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON COLLATERAL.
The Company shall, after the occurrence of
and during the continuance of an Event of Default, at the request of the Lender, notify account debtors and other persons obligated on
any of the Collateral of the security interest of the Lender in any account, chattel paper, general intangible, instrument or other Collateral
and that payment thereof is to be made directly to the Lender or to any financial institution designated by the Lender as the Lender’s
agent therefor, and the Lender may itself, without notice to or demand upon the Company, so notify account debtors and other persons obligated
on Collateral. After the making of such a request or the giving of any such notification, the Company shall hold any proceeds of collection
of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Company as trustee for the Lender without
commingling the same with other funds of the Company and shall turn the same over to the Lender in the identical form received, together
with any necessary endorsements or assignments. The Lender shall apply the proceeds of collection of accounts, chattel paper, general
intangibles, instruments and other Collateral received by the Lender to the Obligations.

 

14.             
POWER OF ATTORNEY
.

 

14.1.       
APPOINTMENT AND POWERS OF LENDER.
During the continuance of an Event of Default, the Company hereby irrevocably constitutes
and appoints the Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Company or in the Lender’s own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary
or desirable to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys
the power and right, on behalf of the Company, without notice to or assent by the Company, to do the following: (a) upon the occurrence
of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral
in such manner as is consistent with the Uniform Commercial Code of the State and as fully and completely as though the Lender were the
absolute owner thereof for all purposes, and to do at the Company’s expense, at any time, or from time to time, all acts and things which
the Lender deems necessary or advisable to protect, preserve or realize upon the Collateral and the Lender’s security interest therein,
in order to effect the intent of this Agreement, all as fully and effectively as the Company might do, including, without limitation,
(i) to receive, open and dispose of all mail addressed to the Company and to take therefrom any remittances or proceeds of Collateral
in which the Lender has a security interest, (ii) to notify Post Office authorities to change the address for delivery of mail addressed
to the Company to such address as the Lender shall designate, (iii) to file and prosecute registration and transfer applications with
the appropriate federal or local agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes,
(iv) upon written notice to the Company, to exercise voting rights with respect to voting securities, which rights may be exercised, if
the Lender so elects, with a view to causing the liquidation in a commercially reasonable manner of assets of the issuer of any such securities
and (v) to execute, deliver and record, in connection with any sale or other disposition of any Collateral, endorsements, assignments
or other instruments of conveyance or transfer with respect to such Collateral; and (b) to the extent that the Company’s authorization
given in Section 3 is not sufficient, to file such financing statements and/or motor vehicle security documents with respect hereto,
with or without the Company’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Lender may
deem appropriate and to execute in the Company’s name such financing statements, continuation statements and motor vehicle security documents
and amendments thereto which may require the Company’s signature.

 

14.2.       
RATIFICATION BY COMPANY.
To the extent permitted by law, the Company hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.

 

 

 

 

 

14.3.       
NO DUTY ON LENDER.
The powers conferred on the Lender hereunder are solely to protect its interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. The Lender shall be accountable only for the amounts that it actually receives
as a result of the exercise of such powers and neither it nor any of its officers, directors, employees or agents shall be responsible
to the Company for any act or failure to act, except for the Lender’s own gross negligence or willful misconduct.

 

15.             
REMEDIES.
Upon the occurrence of and during the continuance of an Event of Default, the Lender may, without notice to
or demand upon the Company, declare this Agreement to be in default, and the Lender shall thereafter have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform
Commercial Code of the State or of any jurisdiction in which Collateral is located, including, without limitation, the right to take possession
of the Collateral, and for that purpose the Lender may, so far as the Company can give authority therefore enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Lender may in its discretion require the Company to assemble all
or any part of the Collateral at such location or locations within the jurisdictions of the Company’s principal office(s) or at such other
locations as the Lender may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market, the Lender shall give to the Company at least 10 business days prior written notice
of the time and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is
to be made. The Company hereby acknowledges that 10 Business Days prior written notice of such sale or sales shall be reasonable notice.

 

16.             
STANDARDS FOR EXERCISING REMEDIES.
To the extent that applicable law imposes duties on the Lender to exercise remedies
in a commercially reasonable manner, the Company acknowledges and agrees that it is not commercially unreasonable for the Lender (a) to
fail to incur expenses reasonably deemed significant by the Lender to prepare Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third-party consents
for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise reasonable collection
remedies against account debtors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise reasonable collection remedies against account debtors and other persons obligated on Collateral directly
or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications
or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not
in the same business as the Company, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h)
to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or
that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather
than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Lender against
risks of loss, collection or disposition of Collateral or to provide to the Lender a guaranteed return from the collection or disposition
of Collateral, or (1) to the extent deemed appropriate by the Lender, to obtain the services of brokers, investment lenders, consultants
and other professionals to assist the Lender in the collection or disposition of any of the Collateral. The Company acknowledges that
the purpose of this Section 16 is to provide non-exhaustive indications of what actions or omissions by the Lender would not be commercially
unreasonable in the Lender’s exercise of remedies against the Collateral and that other actions or omissions by the Lender shall not be
deemed commercially unreasonable solely on account of not being indicated in this Section 16. Without limitation upon the foregoing,
nothing contained in this Section 16 shall be construed to grant any rights to the Company or to impose any duties on the Lender
that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 16.

 

17.             
NO WAIVER BY LENDER, ETC.
The Lender shall not be deemed to have waived any of its rights upon or under the Obligations
or the Collateral unless such waiver shall be in writing and signed by the Lender. No delay or omission on the part of the Lender in exercising
any right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right on any future occasion. All rights and remedies of the Lender with respect to the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively
or concurrently at such time or at such times as the Lender deems expedient.

 

 

 

 

 

18.             
SURETYSHIP WAIVERS BY COMPANY.
The Company waives demand, notice, protest, notice of acceptance of this Agreement, notice
of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices
of any description. With respect to both the Obligations and the Collateral, the Company assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any
Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Lender may deem advisable.
The Lender shall have no duty as to the collection or protection of the Collateral or any income thereon, nor as to the preservation of
rights against prior parties, nor as to the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth
in Section 11.2. The Company further waives any and all other suretyship defenses.

 

19.             
MARSHALLING.
The Lender shall not be required to marshal any present or future collateral security (including but not
limited to this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and all of its rights hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the
extent that it lawfully may, the Company hereby agrees that it will not invoke any law relating to the marshalling of collateral which
might cause delay in or impede the enforcement of the Lender’s rights under this Agreement or under any other instrument creating or evidencing
any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof
is otherwise assured, and, to the extent that it lawfully may, the Company hereby irrevocably waives the benefits of all such laws.

 

20.             
PROCEEDS OF DISPOSITIONS; EXPENSES.
The Company shall pay to the Lender on demand amounts equal to any and all expenses,
including, without limitation, reasonable attorneys’ fees and disbursements, incurred or paid by the Lender in protecting, preserving
or enforcing the Lender’s rights under or in respect of any of the Obligations or any of the Collateral. After deducting all of said expenses,
the residue of any proceeds of collection or sale of the Obligations or Collateral shall, to the extent actually received in cash, be
applied to the payment of the Obligations in such order or preference as the Lender may determine proper allowance and provision being
made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any
payments required by the Uniform Commercial Code of the State, any excess shall be returned to the Company, and the Company shall remain
liable for any deficiency in the payment of the Obligations.

 

21.             
OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Company hereunder shall be a debt secured by the Collateral
and shall bear, whether before or after judgment, interest at the rate of interest for overdue principal set forth in the Note.

 

22.             
REPLACEMENT DOCUMENTS.
Upon receipt of an affidavit of an officer of the Lender as to the loss, theft, destruction or
mutilation of any note or any other security document which is not of public record, and, in the case of any such loss, theft, destruction
or mutilation, upon cancellation of such Agreement or other security document, the Company will issue, in lieu thereof, a replacement
note or other security document in the same principal amount thereof and otherwise of like tenor.

 

23.             
RIGHT OF SET OFF.
The Company hereby grants to the Lender a lien, security interest and a right of setoff as security
for all liabilities and obligations to the Lender, whether now existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody, safekeeping or control of, or affiliated with, the Lender or any
entity under the control of the Lender, or in transit to any of them. At any time, without demand or notice, the Lender may set off the
same or any part thereof and apply the same to any liability or obligation of the Company even though unmatured and regardless of the
adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE COMPANY, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. The Lender shall not be required to marshal
any present or future security for, or guarantees of, the obligations or to resort to any such security or guarantee in any particular
order and the Company waives, to the fullest extent that it lawfully can, (a) any right it might have to require the Lender to pursue
any particular remedy before proceeding against it and (b) any right to the benefit of, or to direct the application of the proceeds of
any collateral until the Obligations are paid in full.

 

 

 

 

 

24.             
GOVERNING LAW; CONSENT TO JURISDICTION.
THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE. The Company agrees that any suit for the enforcement of this Agreement
may be brought in the courts of the State or any federal court sitting therein and consents to the nonexclusive jurisdiction of such court
and to service of process in any such suit being made upon the Company by mail at the address specified in page 1 hereof. The Company
hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought
in an inconvenient court.

 

25.             
WAIVER OF JURY TRIAL.
The Company and the Lender mutually hereby knowingly, voluntarily and intentionally waive the
right to a trial by jury in respect of any claim based on this Agreement, arising out of, under or in connection with this Agreement or
any other documents contemplated to be executed in connection herewith or any course of conduct, course of dealing, statements (whether
verbal or written) or actions of any party. This waiver constitutes a material inducement for the Lender to accept this Agreement and
make the Loan.

 

26.             
MISCELLANEOUS.
The headings of each section of this Agreement are for convenience only and shall not define or limit
the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon the Company and its respective successors
and assigns, and shall inure to the benefit of the Lender and its successors and assigns. If any term of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein. The Company acknowledges
receipt of a copy of this Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, intending to be legally bound,
the Company has caused this Agreement to be duly executed as an instrument under seal as of the date first above written.

 

    PRECISION OPTICS CORPORATION, INC.
         
         
    By: /s/ Joseph N. Forkey
    Name: Joseph N. Forkey
    Title: President and Treasurer

 

Accepted:      
         
MAIN STREET BANK      
         
         
By:        
  Its Duly Authorized Officer      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Security Agreement (All Assets)]

 

 

PERFECTION CERTIFICATE

 

(U.C.C. Financing Statements)

 

[Attached]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.8

 

October 4, 2021

 

Lighthouse Imaging, LLC

2 Portland Fish Pier, Suite 214

Portland, ME 04101

 

Ladies and Gentlemen:

 

This letter agreement (the “Letter Agreement”)
reflects certain understandings and arrangements between Precision Optics Corporation, Inc. (the “Company”), Lighthouse
Imaging, LLC
(the “Target”), and Anania & Associates Investment Company, LLC (the “Majority Member”)
in connection with the Company’s acquisition of substantially all of the assets, properties and contractual rights of the Target
(the “Business”) and the Company’s issuance of the Issued Shares at Closing. This Letter Agreement supplements the terms
and conditions of that certain Asset Purchase Agreement dated October 4, 2021 by and between the Company, the Target, and the Majority
Member (the “Purchase Agreement”). Other than as set forth in this Letter Agreement, the terms and conditions set forth in
the Purchase Agreement shall control. All capitalized terms used but not defined in this Letter Agreement will have the meanings attributed
to such terms in the Purchase Agreement.

 

In connection with the foregoing, the parties
to this Letter Agreement hereby agree as follows:

 

1.                 
Lighthouse Director. The Company shall elect one (1) individual designated by the Target (the “Lighthouse Director”)
to the board of directors of the Company (the “Board”) immediately following Closing of the Purchase Agreement. The
Company shall support the reelection of the Lighthouse Director such that the Lighthouse Director shall serve on the Board for a minimum
period of three (3) years from the Closing (the “Minimum Service Period”); provided, however, the foregoing shall not apply
in the event of any violation by the Lighthouse Director of: (i) any applicable Laws, (ii) the bylaws or other corporate governance documents
of the Company, or (iii) the employee handbooks, guidelines and other documents governing employee conduct. The Company shall remove the
Lighthouse Director if requested by the Target. During the Minimum Service Period, the Company shall elect a replacement as directed by
the Target to fill any vacancy created by the removal or resignation of the Lighthouse Director.

 

2.                 
Operations Committee. Shortly after the Closing and during the Minimum Service Period, the Company shall establish an Operations
Committee of the Board for purposes of reviewing and advising the Board regarding the post-Closing operations of the Business (the “Post-Close
Business”) regarding financial performance, operational topics and other related topics. The Operations Committee shall meet regularly
(not less than once per quarter) with the management of the Post-Close Business and shall report as requested to the Board. During the
Minimum Service Period, the Lighthouse Director shall have the option to serve on the Operations Committee.

 

3.                 
Amendment. This Letter Agreement may be amended, modified, or supplemented only by written agreement of the parties hereto.

 

4.                 
Governing Law. This Letter Agreement shall be governed, construed, administered and regulated in all respects under the
laws of the Commonwealth of Massachusetts, without regard to the provisions, policies or principles thereof relating to choice or conflict
of laws.

 

5.                 
Successors; Assignment. This Letter Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective legal representatives, heirs, successors and assigns. Notwithstanding the foregoing, neither party may assign, delegate, or
otherwise transfer any of its rights or obligations under this letter agreement without the consent of the other party hereto.

 

 

 

 

 

6.                 
Third-Party Rights. Nothing in this letter agreement shall be deemed to create any right in any Person not a party hereto
(other than the permitted successors and assigns of a party hereto), and this Letter Agreement shall not be construed in any respect to
be a contract in whole or in part for the benefit of any third party (except as aforesaid).

 

7.                 
Counterparts; Conflicts. This Letter Agreement may be executed in counterparts, each one of which shall be deemed an original
and all of which together shall constitute one and the same agreement. In the event of any conflict between the provisions of this Letter
Agreement, on the one hand, and the provisions of the Purchase Agreement, on the other hand, the provisions of this Letter Agreement shall
control.

 

If the terms of this letter agreement are acceptable to you, please
signify by signing and dating this letter agreement below.

 

Sincerely,

 

    Precision Optics Corporation, Inc.
         
    By: /s/ Joseph N. Forkey
    Name: Joseph N. Forkey
    Title: CEO

 

Acknowledged and agreed upon as of the date first above written:

 

    Lighthouse Imaging, LLC
         
    By: /s/ Peter V. Anania
    Name: Peter V. Anania
    Title: President

 

    Anania & Associates Investment Company, LLC
         
    By: /s/ Peter V. Anania
    Name: Peter V. Anania
    Title: President

 

 

 

 

 

 

 

 

 

 

 



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