NOTE

10:

COMMITMENTS AND CONTINGENCIES

The Company currently leases office space under operating leases for most of its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The minimum future lease payments required under the Company’s operating leases at

September 30, 2018

are as follows:

Year	Payments
2018	$	226,880
2019		654,275
2020		413,574
2021		337,397
2022		337,480
Thereafter		75,052
Total	$	2,044,658

In addition to annual base rental payments, the Company pays for the operating expenses associated with its leased office space and is responsible for any escalation in operating expenses as determined in the leases. Rent expense was

$930,972

and

$841,718

for the

nine

month periods ended

September 30, 2018

and

September 30, 2017,

respectively.

The Company’s Fort Lauderdale, Florida corporate office lease expires in

February 2023.

The Company’s lease on its New Jersey field office expires in

March 2021.

The Company currently operates its wholly-owned subsidiary, OmniComm Ltd., in the United Kingdom under the terms of a lease that expires in

September 2020.

The Company currently operates its wholly-owned subsidiary, OmniComm Europe, GmbH, in Germany under the terms of a lease that expires in

July 2019.

The Company currently operates its wholly-owned subsidiary, OmniComm Systems B.V, in the Netherlands under the terms of a lease that expires in

October 2018.

Our offices in Barcelona, Spain, Tokyo, Japan and Bengaluru, India are administered under service agreements that include the use of office space and other services.

The Company currently leases computer hardware for its operations under leases classified as capital leases. The leased equipment is amortized on a straight line basis over

five

years. The minimum future lease payments required under the Company’s capital leases at

September 30, 2018

are as follows:

Year	Payments
2018	$	32,958
2019		131,832
2020		131,832
2021		52,779
Total minimum capital lease payments		349,401
Less: Amount representing interest		(28,797	)
Present value of minimum capital lease payments	$	320,604

LEGAL PROCEEDINGS

From time to time the Company

may

be involved in litigation relating to claims arising out of our operations in the normal course of business. As of

September 30, 2018,

there were

pending legal proceedings to which the Company or its subsidiaries are a party or to which any of its property is subject that could reasonably be expected to have a material effect on the results of our operations.

PATENT LITIGATION SETTLEMENT

Effective

April 9, 2009,

we entered into a Settlement and License Agreement with DataSci, LLC (“DataSci”). DataSci granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent and the right to sublicense TrialMaster on a Technology Transfer and Technology Transition basis. Under the terms of the Settlement and License Agreement, as amended, we are obligated to pay royalties quarterly for sales of Licensed Products, as defined therein, from

January 1, 2009

until the termination of the Settlement and License Agreement on

December 31, 2017

equal to

two

percent (

) of OmniComm’s annual Gross Revenues or, alternatively, the annual minimum royalty payment(s), whichever is greater. In addition to the payment of royalties, the Settlement and Licensing Agreement imposes certain obligations on us including commercialization, certain sublicensing, other payments, insurance and confidentiality. In addition and as a license fee for past use of the Licensed Patent which

may

have occurred prior to the effective date of the Settlement and Licensing Agreement, we issued a warrant to DataSci to purchase

1,000,000

shares of our common stock at an exercise price of

$.01

per share. The Settlement and Licensing Agreement provides that upon the expiration date of the warrant, at DataSci’s sole discretion, DataSci shall exercise its option under the warrant or licensee shall pay DataSci

$300,000.

The warrant was exercisable commencing on the

second

anniversary of the Settlement and Licensing Agreement,

April 2, 2011,

through the expiration date of the warrant on

December 31, 2017.

December 31, 2017,

DataSci exercised

50%

of the warrant for

500,000

common shares and requested cash payment on

50%

of the warrant. As a result of the exercise, DataSci received

500,000

restricted common shares and a net cash payment of

$145,000.

June 23, 2009,

we entered into an agreement to acquire the EDC assets of eResearch Technology. Concurrent with the consummation of that transaction we entered into the First Amendment to Settlement and Licensing Agreement with DataSci, (i) to include the eResearch Technology EDC assets acquired within the definition of Licensed Products, and as such subject to the royalty payment(s), under and in accordance with the Settlement and Licensing Agreement, and (ii) provide a release by DataSci of any and all claims of infringement of the Licensed Patent in connection with the eResearch Technology EDC assets acquired which

may

have occurred prior to the effective date of the First Amendment to Settlement and Licensing Agreement for an aggregate amount of

$300,000.

further payments are due under the Settlement and Licensing Agreement.

During the

nine

month period ended

September 30, 2017

the Company recorded a charge to earnings of (

$111,979

), which amount represented (i) the amount of additional license expense incurred above the stipulated minimum in the DataSci Settlement and License Agreement during the

nine

month period ended

September 30, 2017

and (ii) the accretion of the difference between the total stipulated annual minimum royalty payments and the recorded present value accrual of the annual minimum royalty payments.

EMPLOYMENT AGREEMENTS

We have employment agreements in place with the following members of our executive management team:

Cornelis F. Wit, Executive Chairman

Randall G. Smith, Executive Vice Chairman

Stephen E. Johnson, Chief Executive Officer and President

Thomas E. Vickers, Chief Financial Officer

The employment agreements provide, among other things, for participation in employee benefits available to employees and executives. Each of the agreements will renew for successive

one

-year terms unless the agreement is expressly terminated by either the employee or the Company prior to the end of the then current term as provided for in the employment agreement. Under the terms of the agreement, we

may

terminate the employee’s employment upon

days notice of a material breach and the employee

may

terminate the agreement under the same terms and conditions. The employment agreements contain non-disclosure provisions, as well as non-compete clauses. The agreements for Mr. Smith, Mr. Johnson and Mr. Vickers contain severance provisions which entitles the employee to severance pay equal to

one

(

) year's salary and benefits in the event of the employee's termination by the Company for any reason other than for cause, as described in the employment agreement, or termination by the employee pursuant to a material breach of the agreement by the Company.