Exhibit 10.4


 


SECURITY
AGREEMENT


 


This SECURITY AGREEMENT,
dated as of July 5, 2018 (this “Agreement”), is among MassRoots, Inc., a Delaware corporation (the “Company”
or the “Debtor”), and the holders of the Company’s Convertible Secured Promissory Notes due six (6) months
following their issuance, in the aggregate principal amount of $1,650,000 (which includes a 10% original issuance discount) (collectively,
the “Notes”) signatory hereto, their endorsees, transferees and assigns (each a “Secured Party”
and collectively, the “Secured Parties”).


 


W
I T N E S S E T H:


 


WHEREAS,
pursuant to the Purchase Agreement (as defined in the Notes), the Secured Parties have severally agreed to extend the loans to
the Company evidenced by the Notes; and


 


WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the Notes, the Debtor has agreed to execute and deliver
to the Secured Parties this Agreement and to grant the Secured Parties, pro rata based on the sum invested and through the Agent
(as defined in Section 18 hereof), a security interest in certain property of such Debtor to secure the prompt payment, performance
and discharge in full of all of the Company’s obligations under the Notes.


 


NOW,
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:


 


1. Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms
used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”,
“chattel paper”, “commercial tort claim”, “deposit account”, “document”,
“equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”,
“proceeds” and “supporting obligations”) shall have the respective meanings given such terms in
Article 9 of the UCC.


 


(a)
“Collateral” means the collateral in which the Secured Parties are granted a security interest by this Agreement
and which shall include the following personal property of the Debtor, whether presently owned or existing or hereafter acquired
or coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in connection therewith, and all dividends, interest, cash,
notes, securities, equity interest or other property at any time and from time to time acquired, receivable or otherwise distributed
in respect of, or in exchange for, any or all of the Pledged Securities (as defined below):


 


(i)
All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships,
appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind
and nature and wherever situated, together with all documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items
used and useful in connection with the Debtor’s businesses and all improvements thereto; and (B) all inventory;


 






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(ii) 
All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses,
distribution and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed
by the Debtor), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and
rights, goodwill, Intellectual Property and income tax refunds;


 


(iii) 
All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;


 


(iv)
All documents, letter-of-credit rights, instruments and chattel paper;


 


(v)
All commercial tort claims;


 


(vi)
All deposit accounts and all cash (whether or not deposited in such deposit accounts);


 


(vii) 
All investment property;


 


(viii) 
All supporting obligations; and


 


(ix)
All files, records, books of account, business papers, and computer programs; and


 


(x)
the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.


 


Without
limiting the generality of the foregoing, the “Collateral” shall include all investment property and general intangibles
respecting ownership and/or other equity interests in each Guarantor, including, without limitation, the shares of capital stock
and the other equity interests of any other direct or indirect subsidiary of the Debtor obtained in the future, and, in each case,
all certificates representing such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for,
any of the foregoing and all rights arising under or in connection with such securities, including, but not limited to, all dividends,
interest and cash.


 






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Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the
extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable
law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in
the proceeds of such asset.


 


(b)
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to
intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation,
(i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright
Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and
extensions thereof, and all applications for letters patent of the United States or any other country and all divisions, continuations
and continuations-in-part thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious
business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto,
(iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v)
all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii)
all causes of action for infringement of the foregoing.


 


(c)
“Majority in Interest” means, at any time of determination, holders of 67% of the then-outstanding principal
amounts of Notes. 


 


(d)
“Necessary Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment
duly executed and such other instruments or documents as the Agent (as that term is defined below) may reasonably request.


 






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(e)
“Obligations” means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint
or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Debtor to the
Secured Parties, including, without limitation, all obligations under this Agreement, the Notes, and any other instruments, agreements
or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all
or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may
be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality of the foregoing,
the term “Obligations” shall include, without limitation: (i) principal of the Notes and the loans extended pursuant
thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtor from time to time under or
in connection with this Agreement, the Notes, and any other instruments, agreements or other documents executed and/or delivered
in connection herewith or therewith; and (iii) all amounts (including, but not limited, to post-petition interest) in respect
of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding involving the Debtor.


 


(f) 
“Organizational Documents” means with respect to the Debtor, Debtor’s Second Amended and Restated Certificate
of Incorporation and any certificates of designation for preferred stock or other forms of preferred equity and the Debtor’s
Bylaws.


 


(g)
“UCC” means the Uniform Commercial Code of the State of New York and or any other applicable law of any state
or states which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time.
It is the intent of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral”
will be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that
broaden the definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions,
the existing ones shall be controlling.


 


2. 
Grant of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by
the Notes and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the
Obligations, the Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a security
interest in and to, a lien upon and a right of set-off against all of their respective right, title and interest of whatsoever
kind and nature in and to, the Collateral (a “Security Interest” and, collectively, the “Security
Interests”).


 


3. 
Intentionally Deleted.


 






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4. Representations,
Warranties, Covenants and Agreements of the Debtor. Except as set forth under the corresponding section of the disclosure
schedules delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which
Disclosure Schedules shall be deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with, the
Secured Parties as follows:


 


(a)
The Debtor has the requisite corporate power and authority to enter into this Agreement and otherwise to carry out its obligations
hereunder. The execution, delivery and performance by the Debtor of this Agreement and the filings contemplated therein have been
duly authorized by all necessary action on the part of such Debtor and no further action is required by such Debtor. This Agreement
has been duly executed by the Debtor. This Agreement constitutes the legal, valid and binding obligation of the Debtor, enforceable
against the Debtor in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors and by general
principles of equity.


 


(b) The Debtor has no place of business or offices where its respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. The Debtor owns no real property and has entered into a lease covering the location where the Collateral
is stored or located. Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee,
bailee, warehouseman, agent or processor.


 


(c) Except for Permitted Liens (as defined in the Notes) and except as set forth on Schedule B attached hereto, the Debtor
is the sole owner of the Collateral (except for non-exclusive licenses granted by the Debtor in the ordinary course of business),
free and clear of any liens, Security Interests, encumbrances, rights or claims, and are fully authorized to grant the Security
Interests. Except as set forth on Schedule C attached hereto, there is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the
foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting
any of the Collateral. Except as set forth on Schedule C attached hereto and except pursuant to this Agreement, as long
as this Agreement shall be in effect, the Debtor shall not execute and shall not knowingly permit to be on file in any such office
or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the
Agent on behalf of the Secured Parties pursuant to the terms of this Agreement).


 


(d)
No written claim has been received that any Collateral or the Debtor's use of any Collateral violates the rights of any third
party. There has been no adverse decision to the Debtor's claim of ownership rights in or exclusive rights to use the Collateral
in any jurisdiction or to the Debtor's right to keep and maintain such Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of the Debtor, threatened before any court, judicial body, administrative
or regulatory agency, arbitrator or other governmental authority.


 


(e)
The Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account
and records or tangible Collateral unless it delivers to the Secured Parties at least thirty (30) days prior to such relocation
(i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence
that appropriate financing statements under the UCC and other necessary documents have been filed and recorded and other steps
have been taken to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing
perfected lien in the Collateral.


 






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(f) 
This Agreement creates in favor of the Secured Parties a valid Security Interest in the Collateral, subject only to Permitted
Liens (as defined in the Notes), securing the payment and performance of the Obligations. Upon making the filings described in
the immediately following paragraph, all security interests created hereunder in any Collateral which may be perfected by filing
UCC financing statements shall have been duly perfected. Except for the filing of the UCC financing statements referred to in
the immediately following paragraph, the recordation of the Intellectual Property Security Agreement (as defined in Section 4(p)
hereof) with respect to copyrights and copyright applications in the United States Copyright Office, no action is necessary to
create, perfect or protect the Security Interests created hereunder. Without limiting the generality of the foregoing, except
for the filing of said financing statements, the recordation of said Intellectual Property Security Agreement, no authorization,
approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (i)
the execution, delivery and performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder
in the Collateral or (iii) the enforcement of the rights of the Agent and the Secured Parties hereunder.


 


(g)
The Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests,
with the proper filing and recording agencies in any jurisdiction deemed proper by it.


 


(h)
Intentionally Deleted.


 


(i)
Intentionally Deleted.


 


(j)
The ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the
“Pledged Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC
and are not held in a securities account or by any financial intermediary.


 


(k) Except for Permitted Liens (as defined in the Notes), the Debtor shall at all times maintain the liens and Security Interests
provided for hereunder as valid and perfected liens and Security Interests in the Collateral in favor of the Secured Parties until
this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. The Debtor hereby agrees
to defend the same against the claims of any and all persons and entities. The Debtor shall safeguard and protect all Collateral
for the account of the Secured Parties. At the request of the Agent, the Debtor will sign and deliver to the Agent on behalf of
the Secured Parties at any time or from time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory
to the Agent and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Agent to be,
necessary or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing,
the Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the Security Interests hereunder,
and the Debtor shall obtain and furnish to the Agent from time to time, upon demand, such releases and/or subordinations of claims
and liens which may be required to maintain the priority of the Security Interests hereunder. The Agent shall have the power to
file financing statements in any jurisdiction it deems appropriate at the sole cost of the Debtor.


 






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(l)
The Debtor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except
for non-exclusive licenses granted by the Debtor in its ordinary course of business and sales of inventory by the Debtor in its
ordinary course of business) without the prior written consent of a Majority in
Interest.


 


(m)
The Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order
and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.


 


(n)
Intentionally Deleted.


 


(o)
The Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail,
of any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect
on the value of the Collateral or on the Secured Parties’ security interest, through the Agent, therein.


 


(p)
The Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take such further action as the Agent may from time
to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security
interest in the Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement
with respect to the Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) in which
the Secured Parties have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent,
which Intellectual Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions
hereof.


 


(q)
The Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and
upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the
Agent from time to time.


 


(r) 
The Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the Collateral.


 






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(s) 
The Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of any other information received by such Debtor that may materially
affect the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.


 


(t)
To the best of Debtor’s knowledge, all information heretofore, herein or hereafter supplied to the Secured Parties by or
on behalf of the Debtor with respect to the Collateral is accurate and complete in all material respects as of the date furnished.


 


(u) The Debtor shall at all times preserve and keep in full force and effect its valid existence and good standing and any rights
and franchises material to its business.


 


(v)
The Debtor will not change its name, type of organization, jurisdiction of organization, organizational identification number
(if it has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least thirty
(30) days prior written notice to the Secured Parties of such change and, at the time of such written notification, the Debtor
provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests
granted and evidenced by this Agreement.


 


(w)
Except in the ordinary course of business, the Debtor shall not consign any of its inventory or sell any of its inventory on bill
and hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not
be unreasonably withheld.


 


(x)
The Debtor may not relocate its chief executive office to a new location without providing thirty (30) days prior written notification
thereof to the Secured Parties and so long as, at the time of such written notification, such Debtor provides any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.


 


(y)
The Debtor was organized and remains organized solely under the laws of the state set forth next to the Debtor’s name in
Schedule D attached hereto, which Schedule D sets forth the Debtor’s organizational identification number
or, if the Debtor does not have one, states that one does not exist.


 


(z) (i) The actual name of the Debtor is the name set forth in Schedule D attached hereto; (ii) the Debtor does not have any
trade names except as set forth on Schedule E attached hereto; (iii) the Debtor has not used any name other than that stated
in the preamble hereto or as set forth on Schedule E for the preceding five (5) years; and (iv) no entity has merged into
the Debtor or been acquired by the Debtor within the past five (5) years except as set forth on Schedule E.


 






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(aa) At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the Secured Party to perfect the Security Interest created hereby, the Debtor shall deliver such Collateral
to the Agent.


 


(bb)
The Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the
Pledged Interests consistent with the terms of this Agreement without the further consent of the Debtor as contemplated by Section
8-106 (or any successor section) of the UCC. Further, the Debtor agrees that it shall not enter into a similar agreement (or one
that would confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.


 


(cc) 
The Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is
not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest
created by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall
cause the underlying chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section
thereto).


 


(dd)
If there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, the Debtor shall cause such an account control agreement, in form and substance in each
case satisfactory to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.


 


(ee) 
To the extent that any Collateral consists of letter-of-credit rights, the Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.


 


(ff) 
To the extent that any Collateral is in the possession of any third party, the Debtor shall join with the Agent in
notifying such third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to
obtain an acknowledgement and agreement from such third party with respect to the Collateral, in form and substance reasonably
satisfactory to the Agent.


 


(gg)
If the Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties
in a writing signed by such Debtor of the particulars thereof and grant to the Secured Parties 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 Agent.


 


(hh)
The Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts
with any governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests
in such accounts and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate
with the Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar
federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts
and proceeds thereof.


 






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(ii) 
The Debtor shall cause each subsidiary of such Debtor to immediately
become a party hereto (an “Additional Debtor”), by executing and delivering an Additional Debtor Joinder in substantially
the form of Annex A attached hereto and comply with the provisions hereof applicable to the Debtor. Concurrent therewith,
the Additional Debtor shall deliver replacement schedules for, or supplements to all other Schedules to (or referred to in) this
Agreement, as applicable, which replacement schedules shall supersede, or supplements shall modify, the Schedules then in effect.
The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other information and documentation as the Agent may reasonably
request. Upon delivery of the foregoing to the Agent, the Additional Debtor shall be and become a party to this Agreement with
the same rights and obligations as the Debtor, for all purposes hereof as fully and to the same extent as if it were an original
signatory hereto and shall be deemed to have made the representations, warranties and covenants set forth herein as of the date
of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtor” shall be deemed
to include each Additional Debtor.


 


(jj) 
Intentionally Deleted.


 


(kk)
Intentionally Deleted.


 


(ll) 
Intentionally Deleted.


 


(mm) 
Intentionally Deleted.


 


(nn)
The Debtor will from time to time, at the joint and several expense of the Debtor, promptly execute and deliver all such further
instruments and documents, and take all such further action as may be necessary or desirable, or as the Agent may reasonably request,
in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties
to exercise and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes
of this Agreement.


 


(oo)
Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered
copyrights, and domain names owned by any of the Debtor as of the date hereof. Schedule F lists all material licenses in
favor of the Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof.


 






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(pp)
Except as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on
any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state
or local statute or rule in respect of such Collateral.


 





(qq) Until the Obligations shall have been paid and performed in full, the Debtor covenants that it shall promptly direct any direct
or indirect subsidiary of the Debtor formed or acquired after the date hereof to enter into a Subsidiary Guarantee in favor of
the Secured Party, in the form attached as an exhibit to the Purchase Agreement.







 


5. 
Intentionally Deleted.


 


6. 
Defaults. The following events shall be “Events of Default”:


 


(a)
The occurrence of an Event of Default (as defined in the Notes) under the Notes;


 


(b)
Any material representation or warranty of the Debtor in this Agreement shall prove to have been incorrect in any respect when
made;


 


(c)
The failure by the Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to such Debtor
of written notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured
within such time frame and such Debtor is using best efforts to cure same in a timely fashion.


 


7. 
Duty To Hold In Trust.


 


(a)
Upon the occurrence of any Event of Default and at any time thereafter, the Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Notes or otherwise, or of
any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties,
pro-rata in proportion to their respective then-currently outstanding principal amount of Notes for application to the satisfaction
of the Obligations (and if any Note is not outstanding, pro-rata in proportion to the initial purchases of the remaining Notes).


 


(b)
If the Debtor shall become entitled to receive or shall receive any securities or other property (including, without
limitation, shares of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or
any options, warrants, rights or other similar property or certificates representing a dividend, or any distribution in
connection with any recapitalization, reclassification or increase or reduction of capital, or issued in connection with any
reorganization of such Debtor or any of its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as
an addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise), the Debtor agrees to (i)
accept the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of the
Secured Parties; and (iii) to deliver any and all certificates or instruments evidencing the same to Agent on or before the
close of business on the fifth (5th) business day following the receipt thereof by such Debtor, in the exact form
received together with the Necessary Endorsements, to be held by Agent subject to the terms of this Agreement as
Collateral.


 






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8. 
Rights and Remedies Upon Default.


 


 (a)
Upon the occurrence of any Event of Default, after the applicable cure period, if any, the Agent may proceed to protect, exercise
and enforce the Secured Parties’ rights and remedies under the Notes and this Agreement against Debtor, and such other rights
and remedies as are provided by law or equity including, without limitation, the right to take possession of, hold, collect, sell,
lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral. So
long as the sale of the Collateral is made in a commercially reasonable manner, the Agent may sell such Collateral on such terms
and to such purchaser(s) as the Agent, in its absolute discretion may choose. Without precluding any other methods of sale, the
sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity
with reasonable commercial practices of creditors disposing of similar property.


 





(b)  If
any Event of Default shall have occurred and be continuing, any cash held by the Agent as Collateral and all cash proceeds received
by the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied
in whole or in part by the Agent to the payment of expenses incurred by the Agent in connection with the foregoing or incidental
to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Agent hereunder,
including reasonable attorneys’ fees, and the balance of such proceeds shall be applied or set off against all or any part
of the Obligations in such order as the Agent shall elect. Any reduction in the principal and accrued interest of the Notes shall
be on a pro rata basis in accordance with the principal of the Notes then outstanding. The Agent may rely upon the Secured Parties
in determining the outstanding sums due under the Notes. Any surplus of such cash or cash proceeds held by the Agent and remaining
after payment in full of all the Obligations shall be paid over to the Debtor or to whomsoever may be lawfully entitled to receive
such surplus. The Debtor shall remain liable for any deficiency if such cash and the cash proceeds of any sale or other realization
of the Collateral are insufficient to pay the Obligations and the fees and other charges of any attorneys employed by the Agent
to collect such deficiency.







 






    	 	12	 



     


    

 


(c)  If
the Agent shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section 8, the Debtor
agrees that, upon request of the Agent, the Debtor will, at its own expense, do or cause to be done all such acts and things as
may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.


 





(d) The Agent shall comply with any
applicable law in connection with a disposition of Collateral and such compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving any warranties and may
specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtor will only be credited with
payments actually made by the purchaser. In addition, the Debtor waives any and all rights that it may have to a judicial hearing
in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect
thereto.(e) For the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided
by agreement or applicable law, the Debtor hereby grants to the Agent, for the benefit of the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to such Debtor) to use, license or sublicense
following an Event of Default, any Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same
may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout thereof.







 






    	 	13	 



     


    

 


9. 
Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from
payments made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes,
fees and other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses
incurred by the Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and
disposing of the Collateral, and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding
principal amounts of Notes at the time of any such determination), and to the payment of any other amounts required by applicable
law, after which the Secured Parties shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally
entitled, the Debtor will be liable for the deficiency, together with interest thereon, at the rate of fourteen percent (14%)
per annum or the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable fees of
any attorneys employed by the Secured Parties to collect such deficiency. To the extent permitted by applicable law, the Debtor
waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal, retention or sale
of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final
judgment (not subject to further appeal) of a court of competent jurisdiction.


 


10. 
Securities Law Provision. The Debtor recognizes that Agent may be limited in its ability to effect a sale to the public
of all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other
federal or state securities laws (collectively, the “Securities Laws”), and may be compelled to resort to one
or more sales to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own
account, for investment and not with a view to the distribution or resale thereof. The Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold to the public, and that Agent has no obligation
to delay the sale of any Pledged Securities for the period of time necessary to register the Pledged Securities for sale to the
public under the Securities Laws. The Debtor shall cooperate with Agent in its attempt to satisfy any requirements under the Securities
Laws (including, without limitation, registration thereunder if requested by Agent) applicable to the sale of the Pledged Securities
by Agent.


 


11. 
Costs and Expenses. The Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection
with any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements,
partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent.
The Debtor shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice,
imperil or otherwise affect the Collateral or the Security Interests therein. The Debtor will also, upon demand, pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection,
satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance,
amendment or enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the
Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the
rights of the Secured Parties under the Notes. Until so paid, any fees payable hereunder shall be added to the principal amount
of the Notes and shall bear interest at the Default Rate.


 






    	 	14	 



     


    

 


12. 
Responsibility for Collateral. The Debtor assumes all liabilities and responsibility in connection with all Collateral,
and the Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the
Collateral or its unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any
Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral
or to preserve any rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral
for sale, and (b) the Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to
be observed or performed by such Debtor thereunder. Neither the Agent nor any Secured Party shall 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 Agent or any Secured
Party of any payment relating to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to
perform any of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any Secured Party 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 Agent or to which the Agent or any
Secured Party may be entitled at any time or times.


 


13. 
Security Interests Absolute. Subject to the Permitted Liens (as defined in the Notes), all rights of the Secured Parties
and all obligations of the Debtor hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of this Agreement, the Notes or any agreement entered into in connection with the foregoing, or any portion hereof
or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure from the Notes or any other agreement entered
into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release or
amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security, for all
or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests granted
hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even
if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy.
The Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance.
In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the
bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured
Parties, then, in any such event, the Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions hereof. The Debtor waives all right to require the
Secured Parties to proceed against any other person or entity or to apply
any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. The Debtor
waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.


 






    	 	15	 



     


    

 


14. 
Term of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the
Notes have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all
indemnities of the Debtor contained in this Agreement shall survive and remain operative and in full force and effect regardless
of the termination of this Agreement.


 


15. 
Power of Attorney; Further Assurances.


 


(a)
The Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or
assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the
Agent or such Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks,
drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance)
in respect of the Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant
to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, Security Interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv)
to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtor, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Notes all as fully and effectually as the Debtor might
or could do; and the Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as
any of the Obligations shall be outstanding. The designation set forth herein shall be deemed to amend and supersede any inconsistent
provision in the Organizational Documents or other documents or agreements to which the Debtor is subject or to which the Debtor
is a party. Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default,
each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment
of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.


 






    	 	16	 



     


    

 


(b)
On a continuing basis, the Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C
attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as
reasonably requested by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Agent the grant or perfection of a perfected security interest
in all the Collateral under the UCC.


 


(c)
The Debtor hereby irrevocably appoints the Agent as the Debtor’s attorney-in-fact, with full authority in the place and
instead of the Debtor and in the name of the Debtor, from time to time in the Agent’s discretion, to take any action and
to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any
of the Collateral without the signature of such Debtor where permitted by law, which financing statements may (but need not) describe
the Collateral as “all assets” or “all personal property” or words of like import, and ratifies all such
actions taken by the Agent. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.


 


16. 
Notices. All notices, requests, demands and other communications hereunder shall be subject to the notice provision of
the Purchase Agreement (as such term is defined in the Notes).


 


17. 
Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or
by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the
right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without
in any way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.


 


18. 
Appointment of Agent. The Secured Parties hereby appoint L1 Capital Global Opportunities Master Fund to act as their agent
(“Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. Such
appointment shall continue until revoked in writing by a Majority in Interest, at which time a Majority in Interest shall appoint
a new Agent. The Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.


 


19. 
Miscellaneous.


 


(a)
No course of dealing between the Debtor and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on
the part of the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.


 






    	 	17	 



     


    

 


(b)
All of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes
or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.


 


(c)
This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment,
by the Debtor and the Secured Parties holding a Majority in Interest or more of the principal amount of Notes then outstanding,
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.


 


(d)
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.


 


(e)
No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 


(f) 
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company
and the Guarantors may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each
Secured Party (other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person
(as defined in the Purchase Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee
agrees in writing to be bound, with respect to the transferred Obligations, by the provisions of this Agreement that apply to
the “Secured Parties.”


 


(g)
Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Agreement.


 






    	 	18	 



     


    

 


(h)
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning
the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor agrees that all proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Notes (whether
brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan.
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby.


 


(i)
This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.


 


(j)
Intentionally Deleted.


 


(k)
The Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions)
(collectively, “Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise
from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses
which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision
of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification
provision in the Notes, the Purchase Agreement (as such term is defined in the Notes) or any other agreement, instrument or other
document executed or delivered in connection herewith or therewith.


 






    	 	19	 



     


    

 


(l)
Nothing in this Agreement shall be construed to subject the Agent or any Secured Party to liability as a partner in
the Debtor or any if its direct or indirect subsidiaries that is a partnership or as a member in the Debtor or any of its
direct or indirect subsidiaries that is a limited liability company, nor shall the Agent or any Secured Party be deemed to
have assumed any obligations under any partnership agreement or limited liability company agreement, as applicable, of any
such Debtor or any of its direct or indirect subsidiaries or otherwise, unless and until any such Secured Party exercises its
right to be substituted for such Debtor as a partner or member, as applicable, pursuant hereto.


 


(m)
To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of the Debtor or any direct or indirect subsidiary of the Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtor hereby grants such consent and approval and
waive any such noncompliance with the terms of said documents.


 


[SIGNATURE
PAGES FOLLOW]



 






    	 	20	 



     


    

 


IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.


 


	Massroots,
    Inc.	 
	 	 	 
	By:		 
	 	Name:
    Isaac Dietrich	 
	 	Title:
    Chief Executive Officer	 



 


[SIGNATURE
PAGE OF HOLDERS FOLLOWS]


 




    	 	21	 



     


    

 


[SIGNATURE
PAGE OF HOLDERS TO SECURITY AGREEMENT]


 


 


Name
of Investing Entity: ________________________________________________________


 


Signature
of Authorized Signatory of Investing entity: ___________________________________


 


Name
of Authorized Signatory: _____________________________________________________


 


Title
of Authorized Signatory: ______________________________________________________


  




    	 	22	 



     


    

 


SCHEDULE
A


 


Principal
Place of Business of Debtor: 2420 17th Street, Office 3118, Denver, CO 80202


 


Locations
Where Collateral is Located or Stored: The Collateral which is not located at our principal place of business as set forth above
is located at a storage unit located at 2424 Delgany St, Unit 4204, Denver, CO 80216.


 


 


SCHEDULE
B


 


Not
applicable.


 


SCHEDULE
C


 


Not
applicable.


 


SCHEDULE
D


 


MassRoots,
Inc., a Delaware corporation.


Organizational
identification/file number: 5325528


 


SCHEDULE
E


 


On
January 25, 2017, we consummated a reverse triangular merger (the “Whaxy Merger”) pursuant to which we acquired all
of the outstanding common stock of DDDigtal Inc (“DDDigtal”), a Colorado corporation. Upon closing of the Whaxy Merger,
each share of DDDigtal’s common stock was exchanged for such number of shares of our common stock (or a fraction thereof)
based on an exchange ratio equal to approximately 5.273-for-1, such that 1 share of our common stock was issued for every 5.273
shares of DDDigtal’s common stock. At the closing of the Whaxy Merger, all shares of common stock of our newly-formed merger
subsidiary formed for the sole purpose of effectuating the Whaxy Merger, were converted into and exchanged for one share of common
stock of DDDigtal, and all shares of DDDigtal’s common stock that were outstanding immediately prior to the closing of the
Whaxy Merger were automatically cancelled and retired. Upon the closing of the Whaxy Merger, DDDigtal continued as our surviving
wholly-owned subsidiary, and the merger subsidiary ceased to exist.


 


On
July 13, 2017, we consummated a reverse triangular merger (the “Odava Merger”) pursuant to which we acquired all of
the outstanding common stock of Odava Inc (“Odava”), a Delaware corporation. Upon closing of the Odava Merger, each
share of Odava’s common stock was exchanged for such number of shares of our common stock (or a fraction thereof), based
on an exchange ratio equal to approximately 4.069-for-1, such that 1 share of our common stock was issued for every 4.069 shares
of Odava’s common stock. At the closing of the Odava Merger, all shares of common stock of our newly-formed merger subsidiary
formed for the sole purpose of effectuating the Odava Merger, were converted into and exchanged for one share of common stock
of Odava, and all shares of Odava’s common stock that were outstanding immediately prior to the closing of the Odava Merger
automatically cancelled and retired. Upon the closing of the Odava Merger, Odava continued as our surviving wholly-owned subsidiary,
and the merger subsidiary ceased to exist.


 


In
December 2017, we formed MassRoots Blockchain Techologies, Inc. as a wholly-owned subsidiary.


 


SCHEDULE
F


 


MASSROOTS
is a federally registered trademark owned by us, ODAVA is a state registered trademark owned by us and RETAIL is a state registered
trademark of Odava. In addition, we have applied for the trademark “TOKE”.


 


SCHEDULE
G


 


Not
applicable.


  




    	 	23	 



     


    

 


ANNEX
A


to


SECURITY


AGREEMENT


 


FORM
OF ADDITIONAL DEBTOR JOINDER


 


Security
Agreement dated as of July 5, 2018 made by


MassRoots,
Inc.


and
its subsidiaries party thereto from time to time, as Debtor


to
and in favor of


the
Secured Parties identified therein (the “Security Agreement”)


 


Reference
is made to the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have
the meanings given to such terms in, or by reference in, the Security Agreement.


 


The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned
shall (a) be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtor under the
Security Agreement as fully and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to
have made the representations and warranties set forth therein as of the date of execution and delivery of this Additional Debtor
Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY
INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY
TRIAL PROVISIONS SET FORTH THEREIN.


 


Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement, as applicable.


 


An
executed copy of this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth
herein on or after the date hereof. This Joinder shall not be modified, amended or terminated without the prior written consent
of the Secured Parties.


 




    	 	Annex A-1	 



     


    

 


IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned.


  


	 	[Name of Additional Debtor]
	 	 	 
	 	By:	       
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Address:


 


 Dated:




 




    	 	Annex A-2	 



     


    

 


ANNEX
B


to


SECURITY


AGREEMENT


 


THE
AGENT


 


1.
Appointment. The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective
meanings provided in the Security Agreement to which this Annex B is attached (the "Agreement")), by their acceptance
of the benefits of the Agreement, hereby designate L1 Capital Global Opportunities Master Fund (“Agent”) as
the Agent to act as specified herein and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent
to take such action on its behalf under the provisions of the Agreement and any other Transaction Document (as such term is defined
in the Purchase Agreement) and to exercise such powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto.
The Agent may perform any of its duties hereunder by or through its agents or employees.


 


2.
Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement.
Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for
any action taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible
for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross
negligence or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement
or any other Transaction Document a fiduciary relationship in respect of the Debtor or any Secured Party; and nothing in the Agreement
or any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of the Agreement or any other Transaction Document except as expressly set forth herein and therein.


 


3.
Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs
of the Company and its subsidiaries in connection with such Secured Party’s investment in the Debtor, the creation and continuance
of the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in
connection therewith, and (ii) its own appraisal of the creditworthiness of the Company and its subsidiaries, and of the value
of the Collateral from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Secured Party with any credit, market or other information with respect thereto, whether coming into its possession
before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible to the Debtor or any
Secured Party for any recitals, statements, information, representations or warranties herein or in any document, certificate
or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition
of the Debtor or the value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of
the Debtor, or the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under
the Agreement, the Notes or any of the other Transaction Documents.


 






    	 	Annex B-1	 



     


    

 


4.
Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf
of all of the Secured Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect
to any material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions
are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such
action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions
to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without
limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and
the Debtor shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to
the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected
to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.


 


5.
Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the
other Transaction Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining
to this Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it.
Anything to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the
Collateral exists or is owned by the Debtor or is cared for, protected or insured or that the liens granted pursuant to the Agreement
have been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.


 


6.
Indemnification. To the extent that the Agent is not reimbursed and indemnified by the Debtor, the Secured Parties
will jointly and severally reimburse and indemnify the Agent, in proportion to their initially purchased respective principal
amounts of Notes, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder or under the Agreement or any other Transaction Document, or in any way relating to or
arising out of the Agreement or any other Transaction Document except for those determined by a final judgment (not subject to
further appeal) of a court of competent jurisdiction to have resulted solely from the Agent's own gross negligence or willful
misconduct. Prior to taking any action hereunder as Agent, the Agent may require each Secured Party to deposit with it sufficient
sums as it determines in good faith is necessary to protect the Agent for costs and expenses associated with taking such action.


 






    	 	Annex B-2	 



     


    

 


7.
Resignation by the Agent.


 


(a)
The Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents
at any time by giving thirty (30) days' prior written notice (as provided in the Agreement) to the Debtor and the Secured Parties.
Such resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.


 


(b)
Upon any such notice of resignation, the Secured Parties, acting by a Majority in
Interest, shall appoint a successor Agent hereunder.


 


(c)
If a successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtor and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not
limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable
by the Debtor on demand.


 


8.
Rights with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that
it shall not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant
to any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent
or any of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from
the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than as
set forth in this Agreement and the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement. 
After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex
B shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.


 



    	 	Annex B-3