Exhibit 10.39


 





SECURITY
AGREEMENT


 


THIS
SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”)
dated as of March 1, 2019, between Helix TCS, Inc., a Delaware corporation (“Company”), Helix TCS, LLC, (“LLC”),
Security Consultants Group, LLC (“SCG”), Boss Security Solutions, Inc. (“Boss”), Security Grade Protective
Services, Ltd. (“SG”), Bio-Tech Medical Software, Inc. (“THC”), and Engeni LLC (“Engeni”,
and together with LLC, SCG, Boss, SG and THC, each a “Subsidiary” and collectively the “Subsidiaries”)
(the Company, the Subsidiaries, and each other Person who becomes a party to this Agreement by execution of a joinder in the form
of Exhibit A attached hereto, which shall include all wholly-owned or majority-owned subsidiaries of the Company acquired
after the date hereof for so long as this Agreement remains in effect, are hereinafter sometimes referred to individually as a
“Debtor” and, collectively, as the “Debtors”), Rose Capital Fund I, LP, a Delaware limited partnership,
in its capacity as Collateral Agent for the benefit of itself and each of the Rose Purchasers (as hereinafter defined) and DiamondRock
LLC (“Rock”, and together with the Collateral Agent, each Rose Purchaser and the respective successors and assigns
of Rock, the Collateral Agent and each Rose Purchaser, each a “Secured Party” and collectively, the “Secured
Parties”).


 


W
I T N E S S E T H:


 


WHEREAS,
the purchasers as from time to time parties to the Rose Purchase Agreement (as hereafter defined), together with their successors
and assigns, and each other purchaser of a Note (as defined) together with their respective successors and assigns, (the “Rose
Purchasers”), will purchase from the Company certain senior secured notes each made by the Company and dated as of the date
hereof in an initial aggregate principal amount of $1,500,000 (all such notes, together with any promissory notes or other securities
issued in exchange or substitution therefor or replacement thereof, and as any of the same may be amended, supplemented, restated
or modified and in effect from time to time, the “Rose Notes”), and receive certain Common Stock Purchase Warrants
(all such Warrants, together with any promissory notes or other securities issued in exchange or substitution therefor or replacement
thereof, and as any of the same may be amended, supplemented, restated or modified and in effect from time to time, the “Rose
Warrants”);


 


WHEREAS,
the Company delivered a convertible promissory note (the “Existing RedDiamond Note”) in the aggregate principal amount
of $208,333.33 to RedDiamond Partners, LLC (“RD”) and Common Stock Purchase Warrants (the “Existing RedDiamond
Warrants”), in each case pursuant to that certain Securities Purchase Agreement by and between the Company and RD, dated
as of February 13, 2017 (the “Existing RedDiamond Purchase Agreement”);


 


WHEREAS,
as of the date hereof the principal amount outstanding on the Existing RedDiamond Note is $116,780;











 


WHEREAS,
RD transferred the Existing RedDiamond Note to Rock;


 






     


     


    




 


WHEREAS,
the Existing RedDiamond Note is secured pursuant to that certain security agreement by and among the Company, all the subsidiaries
of the Company and RD, dated as of February 14, 2017 (the “RedDiamond Security Agreement”);


 


WHEREAS,
Rock desires to terminate the RedDiamond Security Agreement and to become a party to this Agreement, and the Company desires to
permit Rock to terminate the RedDiamond Security Agreement and become a party to this Agreement;


 


WHEREAS,
Rock will purchase a secured convertible promissory note (the “New Rock Note” and, with the Existing RedDiamond Note
and the Rose Notes, collectively, the “Notes”) in the aggregate principal amount of $450,000.00, and Common Stock
Purchase Warrants (the “New Rock Warrants” and, with the Existing RedDiamond Warrants and the Rose Warrants, collectively,
the “Warrants”), in each case pursuant to that certain Securities Purchase Agreement by and between the Company and
Rock, dated as of the date hereof (the “New Rock Purchase Agreement”);


 


WHEREAS,
the Rose Notes are being acquired by the Secured Parties other than Rock, and the Secured Parties other than Rock have made certain
financial accommodations to the Company pursuant to a Securities Purchase Agreement, dated as of the date hereof, by and among
the Company and the Secured Parties other than Rock (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Rose Purchase Agreement”, and together with the Existing RedDiamond Purchase Agreement and
the New Rock Purchase Agreement, the “Purchase Agreements”). Capitalized terms used herein but not otherwise defined
shall have the meanings set forth in the Rose Purchase Agreement;


 


WHEREAS,
each Debtor will derive substantial benefit and advantage from the financial accommodations to the Company set forth in the Purchase
Agreements and the Notes, and it will be to each such Debtor’s direct interest and economic benefit to assist the Company
in procuring said financial accommodations from the Secured Parties;


 


WHEREAS,
to induce the Secured Parties to enter into the Rose Purchase Agreement and New Rock Purchase Agreement, and to purchase the Rose
Notes and the New Rock Note, and in order to obtain additional investment in the Company in the form of the Rose Notes and the
New Rock Note and thereby make the investment in the Company made by Rock pursuant to the RedDiamond Note more secure, (i) each
Debtor (other than the Company) will guaranty the Obligations (as hereinafter defined) of the Company pursuant to the terms of
one or more guaranties by each such Debtor in favor of the Secured Parties (such guaranties, as amended, restated, modified or
supplemented and in effect from time to time, individually, a “Subsidiary Guaranty”, and collectively, the “Subsidiary
Guaranties”) and (ii) each Debtor will pledge and grant a security interest in all of its right, title and interest in and
to the Collateral (as hereinafter defined) as security for its Obligations for the benefit of the Secured Parties.


 






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


 


Section
1.Definitions. Capitalized terms used herein without definition and defined in the Purchase Agreement are used herein
as defined therein. In addition, as used herein:


 


“Accounts”
means any “account,” as such term is defined in the UCC, and, in any event, shall include, without limitation, “supporting
obligations” as defined in the UCC.


 


“Chattel
Paper” means any “chattel paper,” as such term is defined in the UCC.


 


“Collateral”
shall have the meaning ascribed thereto in Section 3 hereof.


 


“Collateral
Agent” shall mean Rose Capital Fund I, LP.


 


“Commercial
Tort Claims” means “commercial tort claims”, as such term is defined in the UCC.


 


“Contracts”
means all contracts, undertakings, or other agreements (other than rights evidenced by Chattel Paper, Documents or Instruments)
in or under which a Debtor may now or hereafter have any right, title or interest, including, without limitation, with respect
to an Account, any agreement relating to the terms of payment or the terms of performance thereof.


 


“Copyrights”
means any copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright
applications, including, without limitation, the copyright registrations and applications listed on Schedule III attached
hereto (if any), and all renewals of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or
payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and
future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.


 


“Deposit
Accounts” means all “deposit accounts” as such term is defined in the UCC, now or hereafter held in the name
of a Debtor.


 


“Documents”
means any “documents,” as such term is defined in the UCC, and shall include, without limitation, all documents of
title (as defined in the UCC), bills of lading or other receipts evidencing or representing Inventory or Equipment.


 


“Equipment”
means any “equipment,” as such term is defined in the UCC and, in any event, shall include, Motor Vehicles.


 


“Event
of Default” shall have the meaning set forth in the Rose Notes.


 


“Excluded
Assets” means any lease, license or other agreement or any property subject to a capital lease, purchase money security
interest or similar arrangement, to the extent that a grant of a Lien thereon in favor of an applicable Secured Party would violate
or invalidate such lease, license, agreement or capital lease, purchase money security interest or similar arrangement, violate
applicable law or create a right of termination in favor of any other party thereto (other than the Debtors), so long as such
provision exists and so long as such lease, license or agreement was not entered into in contemplation of circumventing the obligation
to provide Collateral hereunder or in violation of the Purchase Agreement or applicable law, other than to the extent that any
such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision
or provisions) of any relevant jurisdiction or any other applicable law including the bankruptcy code, or principles of equity.


 






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“General
Intangibles” means any “general intangibles,” as such term is defined in the UCC, and, in any event, shall include,
without limitation, all right, title and interest in or under any Contract, models, drawings, materials and records, claims, literary
rights, goodwill, rights of performance, Copyrights, Trademarks, Patents, warranties, rights under insurance policies and rights
of indemnification.


 


“Goods”
means any “goods”, as such term is defined in the UCC, including, without limitation, fixtures and embedded Software
to the extent included in “goods” as defined in the UCC.


 


“Governmental
Authority” means the government of the United States of America or any other nation, or any political subdivision thereof,
whether state or local, or any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administration powers or functions of or pertaining to government over
any Debtor or any of its subsidiaries, or any of their respective properties, assets or undertakings.


 


“Instruments”
means any “instrument,” as such term is defined in the UCC, and shall include, without limitation, promissory notes,
drafts, bills of exchange, trade acceptances, letters of credit, letter of credit rights (as defined in the UCC), and Chattel
Paper.


 


“Inventory”
means any “inventory,” as such term is defined in the UCC.


 


“Investment
Property” means any “investment property”, as such term is defined in the UCC.


 


“Obligations”
means all obligations, liabilities and indebtedness of every nature of Debtors from time to time owed or owing under or in respect
of the Transaction Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable whether before or after the filing of a bankruptcy, insolvency or
similar proceeding under applicable federal, state, foreign or other law and whether or not an allowed claim in any such proceeding.


 


“Lien”
has the meaning set forth in the Rose Purchase Agreement.


 


“Motor
Vehicles” shall mean motor vehicles, tractors, trailers and other like property, whether or not the title thereto is governed
by a certificate of title or ownership.


 


“Patents”
means any patents and patent applications, including, without limitation, the inventions and improvements described and claimed
therein, all patentable inventions and those patents and patent applications listed on Schedule IV attached hereto
(if any), and the reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing,
and all income, royalties, damages and payments now or hereafter due and/or payable under or with respect to any of the foregoing,
including, without limitation, damages and payments for past, present and future infringements of any of the foregoing and the
right to sue for past, present and future infringements of any of the foregoing.


 






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“Permitted
Indebtedness” has the meaning set forth in the Rose Notes.


 


“Permitted
Lien” has the meaning set forth in the Rose Notes.


 


“Proceeds”
means “proceeds,” as such term is defined in the UCC and, in any event, includes, without limitation, (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable with respect to any of the Collateral, (b) any and all
payments (in any form whatsoever) made or due and payable from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any person acting under
color of Governmental Authority), and (c) any and all other amounts from time to time paid or payable under, in respect of or
in connection with any of the Collateral.


 


“Representative”
means any Person acting as agent, representative or trustee on behalf of the Collateral Agent from time to time.


 


“Security
Documents” means this Agreement, the Subsidiary Guaranty, the Pledge Agreement, and any other documents securing the Lien
of the Collateral Agent hereunder.


 


“Software”
means all “software” as such term is defined in the UCC, now owned or hereafter acquired by a Debtor, other than software
embedded in any category of Goods, including, without limitation, all computer programs and all supporting information provided
in connection with a transaction related to any program.


 


“Trademarks”
means any trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service
marks, logos, other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations
and recordings thereof, and all applications in connection therewith, including, without limitation, the trademarks and applications
listed in Schedule V attached hereto (if any) and renewals thereof, and all income, royalties, damages and payments now
or hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments
for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements
of any of the foregoing.


 


“Transaction
Documents” means the Purchase Agreements, the Notes, the Security Documents, the Warrants, and any other related agreements.


 


“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, that to the extent that
the Uniform Commercial Code is used to define any term herein and such term is defined differently in different Articles or Divisions
of the Uniform Commercial Code, the definition of such term contained in Article or Division 9 shall govern.


 






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Section
2.Representations, Warranties and Covenants of Debtors. Each Debtor represents and warrants to, and covenants with,
the Collateral Agent and each Secured Party as follows:


 


(a) Subject
to the Permitted Liens, such Debtor has or will have rights in and the power to transfer the Collateral in which it purports to
grant a security interest pursuant to Section 3 hereof (subject, with respect to after acquired Collateral, to such Debtor acquiring
the same) and no Lien other than a Permitted Lien exists or will exist upon such Collateral at any time.


 


(b) Subject
to the Permitted Liens, this Agreement is effective to create in favor of the Collateral Agent a valid security interest in and
Lien upon all of such Debtor’s right, title and interest in and to the Collateral, and upon (i) the filing of appropriate
UCC financing statements in the jurisdictions of formation listed on Schedule I attached hereto, (ii) creation of each
Deposit Account, (iii) filings in the United States Patent and Trademark Office, or United States Copyright Office with respect
to Collateral that constitutes Patents and Trademarks, or Copyrights, as the case may be, (iv) the filing of the Mortgages in
the jurisdictions listed on Schedule I hereto, (v) the delivery to the Collateral Agent of the Pledged Collateral together
with assignments in blank, (vi) the security interest created hereby being noted on each certificate of title evidencing the ownership
of any Motor Vehicle in accordance with Section 4.1(d) hereof and (v) delivery to the Collateral Agent or its Representative of
Instruments duly endorsed by such Debtor or accompanied by appropriate instruments of transfer duly executed by such Debtor with
respect to Instruments not constituting Chattel Paper, such security interest will be a duly perfected first priority perfected
security interest (subject to Permitted Indebtedness) in all of the Collateral.


 


(c) All
of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I attached
hereto. Except as disclosed on Schedule I, none of the Collateral is in the possession of any bailee, warehousemen, processor
or consignee. Schedule I discloses such Debtor’s name as of the date hereof as it appears in official filings in
the state or province, as applicable, of its incorporation, formation or organization, the type of entity of such Debtor (including
corporation, partnership, limited partnership or limited liability company), organizational identification number issued by such
Debtor’s state of incorporation, formation or organization (or a statement that no such number has been issued), such Debtor’s
state or province, as applicable, of incorporation, formation or organization and the chief place of business, chief executive
office and the office where such Debtor keeps its books and records and the states in which such Debtor conducts its business.
Such Debtor has only one state or province, as applicable, of incorporation, formation or organization. Such Debtor does not do
business and has not done business during the past five (5) years under any trade name or fictitious business name except as disclosed
on Schedule II attached hereto.


 


(d) No
Copyrights, Patents or Trademarks listed on Schedules III, IV and V, respectively, if any, have been adjudged invalid or
unenforceable or have been canceled, in whole or in part, or are not presently subsisting. Each of such Copyrights, Patents and
Trademarks (if any) is valid and enforceable. Subject to the Permitted Lien, such Debtor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each of such Copyrights, Patents and Trademarks, identified on Schedules
III, IV and V, as applicable, as being owned by such Debtor, free and clear of any liens (subject to the Permitted Lien),
charges and encumbrances, including without limitation licenses, shop rights and covenants by such Debtor not to sue third persons.
Such Debtor has adopted, used and is currently using, or has a current bona fide intention to use, all of such Trademarks and
Copyrights. Such Debtor has no notice of any suits or actions commenced or threatened with reference to the Copyrights, Patents
or Trademarks owned by it.


 






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(e) Each
Debtor agrees to deliver to the Collateral Agent an updated Schedule I, II, III, IV and/or V within five Business Days
after any change thereto.


 


(f) All
depositary and other accounts including, without limitation, Deposit Accounts, securities accounts, brokerage accounts and other
similar accounts, maintained by each Debtor are described on Schedule VI hereto, which description includes for each such
account the name of the Debtor maintaining such account, the name, address and telephone and telecopy numbers of the financial
institution at which such account is maintained, the account number and the account officer, if any, of such account. No Debtor
shall open any new Deposit Accounts, securities accounts, brokerage accounts or other accounts unless such Debtor shall have given
the Collateral Agent 10 Business Days’ prior written notice of its intention to open any such new accounts. Each Debtor
shall deliver to the Collateral Agent a revised version of Schedule VI showing any changes thereto within five Business
Days of any such change. Each Debtor hereby authorizes the financial institutions at which such Debtor maintains an account to
provide the Collateral Agent with such information with respect to such account as the Collateral Agent from time to time reasonably
may request, and each Debtor hereby consents to such information being provided to the Collateral Agent. In addition, all of such
Debtor’s depositary, security, brokerage and other accounts including, without limitation, Deposit Accounts shall be subject
to the provisions of Section 2 hereof.


 


(g) Such
Debtor does not own any Commercial Tort Claim except for those disclosed on Schedule VII hereto (if any).


 


(h) Such
Debtor does not have any interest in real property with respect to real property except as disclosed on Schedule VIII (if
any). Each Debtor shall deliver to the Collateral Agent a revised version of Schedule VIII showing any changes thereto
within 10 Business Days of any such change. Except as otherwise agreed to by the Collateral Agent, all such interests in real
property with respect to such real property are subject to a mortgage and deed of trust (in form and substance satisfactory to
the Collateral Agent) in favor of the Collateral Agent (hereinafter, a “Mortgage”).


 


(i) Each
Debtor shall duly and properly record each interest in real property held by such Debtor, except with respect to easements,
rights of way, access agreements, surface damage agreements, surface use agreements or similar agreements that such
Debtor, using prudent customs and practices in the industry in which it operates, does not believe are of material value or material
to the operation of such Debtor’s business or, with respect to state and federal rights of way, are not capable of
being recorded as a matter of state and federal law.


 


(j) All
Equipment (including, without limitation, Motor Vehicles) owned by a Debtor and subject to a certificate of title or ownership
statute is described on Schedule IX hereto.


 






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Section
3.Collateral. As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the Obligations, each Debtor hereby pledges and grants to the Collateral Agent, for the benefit of itself and
each Secured Party, a Lien on and security interest in and to all of such Debtor’s right, title and interest in the following
properties and assets of such Debtor, whether now owned by such Debtor or hereafter acquired and whether now existing or hereafter
coming into existence and wherever located (all being collectively referred to herein as “Collateral”):


 


(a) all
Instruments, together with all payments thereon or thereunder:


 


(b) all
Accounts;


 


(c) all
Inventory;


 


(d) all
General Intangibles (including payment intangibles (as defined in the UCC) and Software);


 


(e) all
Equipment;


 


(f) all
Documents;


 


(g) all
Contracts;


 


(h) all
Goods;


 


(i) all
Investment Property, including without limitation all equity interests now owned or hereafter acquired by such Debtor;


 


(j) all
Deposit Accounts, including, without limitation, the balance from time to time in all bank accounts maintained by such Debtor;


 


(k) all
Commercial Tort Claims specified on Schedule VII;


 


(l) all
Trademarks, Patents and Copyrights; and


 


(m) all
other tangible and intangible property of such Debtor, including, without limitation, all interests in real property, Proceeds,
tort claims, products, accessions, rents, profits, income, benefits, substitutions, additions and replacements of and to any of
the property of such Debtor described in the preceding clauses of this Section 3 (including, without limitation, any proceeds
of insurance thereon, insurance claims and all rights, claims and benefits against any Person relating thereto), other rights
to payments not otherwise included in the foregoing, and all books, correspondence, files, records, invoices and other papers,
including without limitation all tapes, cards, computer runs, computer programs, computer files and other papers, documents and
records in the possession or under the control of such Debtor, or any computer bureau or service company from time to time acting
for such Debtor.


 


Notwithstanding
anything to the contrary contained herein or in any Transaction Document, the Excluded Assets are expressly excluded from the
Collateral, and in no event shall either the security interest granted herein or therein attach to any Excluded Assets.


 






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Section
4.Covenants; Remedies. In furtherance of the grant of the pledge and security interest pursuant to Section 3 hereof,
each Debtor hereby agrees as follows:


 


4.1 Delivery
and Other Perfection; Maintenance, etc.


 


(a) Delivery
of Instruments, Documents, Etc. Each Debtor shall deliver and pledge to the Collateral Agent or its Representative any and
all Instruments, negotiable Documents, Chattel Paper and certificated securities (accompanied by stock powers executed in blank,
which stock powers may be filled in and completed at any time upon the occurrence of any Event of Default) duly endorsed and/or
accompanied by such instruments of assignment and transfer executed by such Debtor in such form and substance as the Collateral
Agent or its Representative may request; provided, that so long as no Event of Default shall have occurred and be continuing,
each Debtor may retain for collection in the ordinary course of business any Instruments, negotiable Documents and Chattel Paper
received by such Debtor in the ordinary course of business, and the Collateral Agent or its Representative shall, promptly upon
request of a Debtor, make appropriate arrangements for making any other Instruments, negotiable Documents and Chattel Paper pledged
by such Debtor available to such Debtor for purposes of presentation, collection or renewal (any such arrangement to be effected,
to the extent deemed appropriate by the Collateral Agent or its Representative, against a trust receipt or like document). If
a Debtor retains possession of any Chattel Paper, negotiable Documents or Instruments pursuant to the terms hereof, such Chattel
Paper, negotiable Documents and Instruments shall be marked with the following legend: “This writing and the obligations
evidenced or secured hereby are subject to the security interest of Rose Capital Fund I, LP, in its capacity as Collateral Agent
for the benefit of the Purchasers, as Secured Parties.”


 


(b) Other
Documents and Actions. Each Debtor shall give, execute, deliver, file and/or record any financing statement, registration,
notice, instrument, document, agreement, Mortgage or other papers that may be necessary or desirable (in the reasonable judgment
of the Collateral Agent or its Representative) to create, preserve, perfect or validate the security interest granted pursuant
hereto (or any security interest or mortgage contemplated or required hereunder, including with respect to Section 2(h) of this
Agreement) or to enable the Collateral Agent or its Representative to exercise and enforce the rights of the Secured Parties hereunder
with respect to such pledge and security interest, provided that notices to account debtors in respect of any Accounts
or Instruments shall be subject to the provisions of clause (e) below. Notwithstanding the foregoing each Debtor hereby irrevocably
authorizes the Collateral Agent at any time and from time to time to file in any filing office in any jurisdiction any initial
financing statements (and other similar filings or registrations under other applicable laws and regulations pertaining to the
creation, attachment, or perfection of security interests) and amendments thereto that (a) indicate the Collateral (i) as all
assets of such Debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain
any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether such Debtor is an organization, the type of organization and any organization identification
number issued to such Debtor, and (ii) in the case of a financing statement filed as a fixture filing, a sufficient description
of real property to which the Collateral relates. Each Debtor agrees to furnish any such information to the Collateral Agent promptly
upon request. Each Debtor also ratifies its authorization for the Collateral Agent to have filed in any jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date hereof.


 






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(c) Books
and Records. Each Debtor shall maintain at its own cost and expense complete and accurate books and records of the Collateral,
including, without limitation, a record of all payments received and all credits granted with respect to the Collateral and all
other dealings with the Collateral. Upon the occurrence and during the continuation of any Event of Default, each Debtor shall
deliver and turn over any such books and records (or true and correct copies thereof) to the Collateral Agent or its Representative
at any time on demand. Each Debtor shall permit the Collateral Agent or any Representative of the Collateral Agent to inspect
such books and records at any time during reasonable business hours and will provide photocopies thereof at such Debtor’s
expense to the Collateral Agent or its Representative upon request of the Collateral Agent or its Representative.


 


(d) Motor
Vehicles. Each Debtor shall, promptly upon acquiring same, cause the Collateral Agent to be listed as the lienholder on each
certificate of title or ownership covering any items of Equipment, including Motor Vehicles, having a value in excess of $50,000
individually or in the aggregate for all such items of Equipment of the Debtor, or otherwise comply with the certificate of title
or ownership laws of the relevant jurisdiction issuing such certificate of title or ownership in order to properly evidence and
perfect the Collateral Agent’s security interest in the assets represented by such certificate of title or ownership.


 


(e) Notice
to Account Debtors; Verification. (i) Upon the occurrence and during the continuance of any Event of Default (or if any rights
of set-off (other than set-offs against an Account arising under the Contract giving rise to the same Account) or contra-accounts
may be asserted, upon request of the Collateral Agent or its Representative, each Debtor shall promptly notify (and each Debtor
hereby authorizes the Collateral Agent and its Representative so to notify) each account debtor in respect of any Accounts or
Instruments or other Persons obligated on the Collateral that such Collateral has been assigned to the Collateral Agent hereunder,
and that any payments due or to become due in respect of such Collateral are to be made directly to the Collateral Agent, and
(ii) the Collateral Agent and its Representative shall have the right at any time or times to make direct verification with the
account debtors or other Persons obligated on the Collateral of any and all of the Accounts or other such Collateral.


 


(f) Intellectual
Property. Each Debtor represents and warrants that the Copyrights, Patents and Trademarks listed on Schedules III, IV and
V, respectively (if any), constitute all of the registered Copyrights and all of the Patents and Trademarks now owned by such
Debtor. If such Debtor shall (i) obtain rights to any new patentable inventions, any registered Copyrights or any Patents or Trademarks,
or (ii) become entitled to the benefit of any registered Copyrights or any Patents or Trademarks or any improvement on any Patent,
the provisions of this Agreement above shall automatically apply thereto and such Debtor shall give to the Collateral Agent prompt
written notice thereof. Each Debtor hereby authorizes the Collateral Agent to modify this Agreement by amending Schedules III,
IV and V, as applicable, to include any such registered Copyrights or any such Patents and Trademarks. Each Debtor shall have
the duty (i) to prosecute diligently any patent, trademark, or service mark applications pending as of the date hereof or hereafter,
(ii) to preserve and maintain all rights in the Copyrights, Patents and Trademarks, to the extent material to the operations of
the business of such Debtor and (iii) to ensure that the Copyrights, Patents and Trademarks are and remain enforceable, to the
extent material to the operations of the business of such Debtor. Any expenses incurred in connection with such Debtor’s
obligations under this Section 4.1(f) shall be borne by such Debtor. Except for any such items that a Debtor reasonably believes
(using prudent industry customs and practices) are no longer necessary for the on-going operations of its business, no Debtor
shall abandon any material right to file a patent, trademark or service mark application, or abandon any pending patent, trademark
or service mark application or any other Copyright, Patent or Trademark without the prior written consent of the Collateral Agent.


 






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(g) Further
Identification of Collateral. Each Debtor will, when and as often as requested by the Collateral Agent or its Representative,
furnish to the Collateral Agent or such Representative, statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral Agent or its Representative may reasonably request,
all in reasonable detail.


 


(h) Investment
Property. Each Debtor will take any and all actions required or requested by the Collateral Agent or its Representative, from
time to time, to (i) cause the Collateral Agent to obtain exclusive control of any Investment Property owned by such Debtor in
a manner acceptable to the Collateral Agent and (ii) obtain from any issuers of Investment Property and such other Persons written
confirmation of the Collateral Agent’s control over such Investment Property. For purposes of this Section 4.1(h), the Collateral
Agent shall have exclusive control of Investment Property if (i) such Investment Property consists of certificated securities
and a Debtor delivers such certificated securities to the Collateral Agent (with appropriate endorsements if such certificated
securities are in registered form); (ii) such Investment Property consists of uncertificated securities and either (x) a Debtor
delivers such uncertificated securities to the Collateral Agent or (y) the issuer thereof agrees, pursuant to documentation in
form and substance satisfactory to the Collateral Agent, that it will comply with instructions originated by the Collateral Agent
without further consent by such Debtor, and (iii) such Investment Property consists of security entitlements and either (x) the
Collateral Agent becomes the entitlement holder thereof or (y) the appropriate securities intermediary agrees, pursuant to the
documentation in form and substance satisfactory to the Collateral Agent, that it will comply with entitlement orders originated
by the Collateral Agent without further consent by any Debtor.


 


(i) Commercial
Tort Claims. Each Debtor shall promptly notify the Collateral Agent of any Commercial Tort Claim acquired by it that concerns
a claim in excess of $50,000 and unless otherwise consented to by the Collateral Agent, such Debtor shall enter into a supplement
to this Agreement granting to the Secured Parties a Lien on and security interest in such Commercial Tort Claim.


 


4.2 Other
Liens. Other than Permitted Liens as defined in the Notes, Debtors will not create, permit or suffer to exist, and will defend
the Collateral against and take such other action as is necessary to remove, any Lien on the Collateral except Permitted Indebtedness,
and will defend the right, title and interest of the Secured Parties in and to the Collateral and in and to all Proceeds thereof
against the claims and demands of all Persons whatsoever.


 


4.3 Preservation
of Rights. Whether or not any Event of Default has occurred or is continuing, the Collateral Agent and its Representative
may, but shall not be required to, take any steps the Collateral Agent or its Representative deems necessary or appropriate to
preserve any Collateral or any rights against third parties to any of the Collateral, including obtaining insurance for the Collateral
at any time when such Debtor has failed to do so, and Debtors shall promptly pay, or reimburse the Collateral Agent for, all expenses
incurred in connection therewith.


 






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4.4 Formation
of Subsidiaries; Name Change; Location; Bailees.


 


(a) No
Debtor shall form or acquire any subsidiary unless (i) such Debtor pledges all of the stock or equity interests of such subsidiary
to the Secured Parties pursuant to an agreement in a form agreed to by the Collateral Agent, (ii) such subsidiary becomes a party
to this Agreement and all other applicable Transaction Documents and (iii) the formation or acquisition of such subsidiary is
not prohibited by the terms of the Transaction Documents.


 


(b) No
Debtor shall (i) reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction in which it
is incorporated or organized as of the date hereof, or (ii) otherwise change its name, identity or corporate structure, in each
case, without the prior written consent of the Collateral Agent, which consent shall not be unreasonably withheld. Each Debtor
will notify the Collateral Agent promptly in writing prior to any such change in the proposed use by such Debtor of any tradename
or fictitious business name other than any such name set forth on Schedule II attached hereto.


 


(c) Except
for the sale of Inventory in the ordinary course of business and other sales of assets expressly permitted by the terms of the
Purchase Agreement, each Debtor will keep the Collateral at the locations specified in Schedule I. Each Debtor will give
the Collateral Agent thirty (30) day’s prior written notice of any change in such Debtor’s chief place of business
or of any new location for any of the Collateral.


 


(d) If
any Collateral is at any time in the possession or control of any warehousemen, bailee, consignee or processor, such Debtor shall,
upon the request of the Collateral Agent or its Representative, notify such warehousemen, bailee, consignee or processor of the
Lien and security interest created hereby and shall instruct such Person to hold all such Collateral for Secured Parties account(s)
subject to the Collateral Agent’s instructions.


 


(e) Each
Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect
to any financing statement without the prior written consent of the Collateral Agent and agrees that it will not do so without
the prior written consent of the Collateral Agent, subject to such Debtor’s rights under Section 9-509(d)(2) to the UCC.


 


(f) No
Debtor shall enter into any Contract that restricts or prohibits the grant to any Secured Party of a security interest in Accounts,
Chattel Paper, Instruments or payment intangibles or the proceeds of the foregoing.


 






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4.5 Reserved.


 


4.6 Events
of Default, Etc. During the period during which an Event of Default shall have occurred and be continuing subject to the Permitted
Lien:


 


(a) each
Debtor shall, at the request of the Collateral Agent or its Representative, assemble the Collateral and make it available to the
Collateral Agent or its Representative at a place or places designated by the Collateral Agent or its Representative which are
reasonably convenient to the Collateral Agent or its Representative, as applicable, and such Debtor;


 


(b) the
Collateral Agent or its Representative may make any reasonable compromise or settlement deemed desirable with respect to any of
the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any
of the Collateral;


 


(c) the
Collateral Agent shall have all of the rights and remedies with respect to the Collateral of a secured party under the UCC (whether
or not said UCC is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies
to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including, without limitation, the right, to the maximum extent permitted by law, to: (i) exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if the Collateral Agent were the sole and absolute owner thereof
(and each Debtor agrees to take all such action as may be appropriate to give effect to such right) and (ii) the appointment of
a receiver or receivers for all or any part of the Collateral or business of a Debtor, whether such receivership be incident to
a proposed sale or sales of such Collateral or otherwise and without regard to the value of the Collateral or the solvency of
any person or persons liable for the payment of the Obligations secured by such Collateral. Each Debtor hereby consents to the
appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees that such appointment shall
in no manner impair, prejudice or otherwise affect the rights of the Collateral Agent or any Secured Party under this Agreement.
Each Debtor hereby expressly waives notice of a hearing for appointment of a receiver and the necessity for bond or an accounting
by the receiver;


 


(d) the
Collateral Agent or its Representative in its discretion may, in the name of the Collateral Agent or in the name of a Debtor or
otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so;


 


(e) the
Collateral Agent or its Representative may take immediate possession and occupancy of any premises owned, used or leased by a
Debtor and exercise all other rights and remedies which may be available to the Collateral Agent or a Secured Party;


 


(f) the
Collateral Agent may, upon reasonable notice (such reasonable notice to be determined by the Collateral Agent in its sole and
absolute discretion, which shall not be less than 10 days), with respect to the Collateral or any part thereof which shall then
be or shall thereafter come into the possession, custody or control of the Collateral Agent or its Representative, sell, lease,
license, assign or otherwise dispose of all or any part of such Collateral, at such place or places as the Collateral Agent deems
best, and for cash or for credit or for future delivery (without thereby assuming any credit risk), at public or private sale,
without demand of performance or notice of intention to effect any such disposition or of the time or place thereof (except such
notice as is required above or by applicable statute and cannot be waived), and the Collateral Agent or anyone else may be the
purchaser, lessee, licensee, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the same absolutely, free from any claim or right of whatsoever
kind, including any right or equity of redemption (statutory or otherwise), of Debtors, any such demand, notice and right or equity
being hereby expressly waived and released. The Collateral Agent may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned; and


 






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(g) the
rights, remedies and powers conferred by this Section 4.6 are in addition to, and not in substitution for, any other rights, remedies
or powers that the Collateral Agent or any Secured Party may have under any Transaction Document, at law, in equity or by or under
the UCC or any other statute or agreement. The Collateral Agent may proceed by way of any action, suit or other proceeding at
law or in equity and no right, remedy or power of the Collateral Agent will be exclusive of or dependent on any other. The Collateral
Agent may exercise any of its rights, remedies or powers separately or in combination and at any time.


 


The
proceeds of each collection, sale or other disposition under this Section 4.6 shall be applied in accordance with Section 4.9
hereof.


 


4.7 Deficiency.
If the proceeds of sale, collection or other realization of or upon the Collateral are insufficient to cover the costs and expenses
of such realization and the payment in full of the Obligations, Debtors shall remain jointly and severally liable for any deficiency.


 


4.8 Private
Sale. Each Debtor recognizes that the Collateral Agent may be unable to effect a public sale of any or all of the Collateral
consisting of securities by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Act”),
and applicable state securities laws, but may be compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account for investment
and not with a view to the distribution or resale thereof. Each Debtor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable to the seller than if such sale were a public sale and each Debtor agrees that
it is not commercially unreasonable for the Collateral Agent to engage in any such private sales or dispositions under such circumstances.
The Collateral Agent shall be under no obligation to delay a sale of any of the Collateral to permit a Debtor to register such
Collateral for public sale under the Act, or under applicable state securities laws, even if Debtors would agree to do so. The
Collateral Agent shall not incur any liability as a result of the sale of any such Collateral, or any part thereof, at any private
sale provided for in this Agreement conducted in a commercially reasonable manner, and so long as the Collateral Agent conducts
such sale in a commercially reasonable manner each Debtor hereby waives any claims against the Collateral Agent or any Secured
Party arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even
if the Collateral Agent accepts the first offer received and does not offer the Collateral to more than one offeree.


 






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Each
Debtor further agrees to do or cause to be done all such other acts and things as may be necessary to make such sale or sales
of any portion or all of any such Collateral valid and binding and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at such Debtor’s expense. Each Debtor further agrees that
a breach of any of the covenants contained in this Section 4.8 will cause irreparable injury to the Secured Parties, that the
Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant
contained in this Section 4.8 shall be specifically enforceable against Debtors by Collateral Agent of behalf of each Secured
Party, and each Debtor hereby waives and agrees not to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred and is continuing.


 


4.9 Application
of Proceeds. The proceeds of any collection, sale or other realization of all or any part of the Collateral, and any other
cash at the time held by the Collateral Agent under this Agreement, shall be applied to the Obligations in accordance with the
Pro Rata Portion of each Purchaser. “Pro Rata Portion” shall mean the ratio of (x) the subscription amount of the
Notes purchased by a Purchaser participating under this Section 4.9 and (y) the sum of the aggregate subscription amounts of the
Notes purchased by all Purchasers participating under this Section 4.9.


 


4.10 Attorney-in-Fact.
Each Debtor hereby irrevocably constitutes and appoints the Collateral Agent, 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 such Debtor and in the name of such
Debtor or in its own name, from time to time in the discretion of the Collateral Agent, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which
may be necessary or desirable to perfect or protect any security interest granted hereunder, to maintain the perfection or priority
of any security interest granted hereunder, or to otherwise accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, hereby gives the Collateral Agent the power and right, on behalf of such Debtor, without notice to
or assent by such Debtor (to the extent permitted by applicable law), to do the following:


 


(a) to
take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement;


 


(b) upon
the occurrence and during the continuation of an Event of Default, to ask, demand, collect, receive and give acquittance and receipts
for any and all moneys due and to become due under any Collateral and, in the name of such Debtor or its own name or otherwise,
to take possession of and endorse and collect any checks, drafts, notes, acceptances or other Instruments for the payment of moneys
due under any Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys due under any Collateral whenever
payable and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate
by the Collateral Agent for the purpose of collecting any and all such moneys due under any Collateral whenever payable;


 






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(c) to
pay or discharge charges or liens levied or placed on or threatened against the Collateral, to effect any insurance called for
by the terms of this Agreement and to pay all or any part of the premiums therefor;


 


(d) to
direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due, and to become due
thereunder, directly to the Collateral Agent or as the Collateral Agent shall direct, and to receive payment of and receipt for
any and all moneys, claims and other amounts due, and to become due at any time, in respect of or arising out of any Collateral;


 


(e) upon
the occurrence and during the continuation of an Event of Default, to sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with
accounts and other Documents constituting or relating to the Collateral;


 


(f) upon
the occurrence and during the continuation of an Event of Default, to commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral;


 


(g) upon
the occurrence and during the continuation of an Event of Default, to defend any suit, action or proceeding brought against a
Debtor with respect to any Collateral;


 


(h) upon
the occurrence and during the continuation of an Event of Default, to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges or releases as the Collateral Agent may deem appropriate;


 


(i) to
the extent that a Debtor’s authorization given in Section 4.1(b) of this Agreement is not sufficient to file such financing
statements with respect to this Agreement, with or without such Debtor’s signature, or to file a photocopy of this Agreement
in substitution for a financing statement, as the Collateral Agent may deem appropriate and to execute in such Debtor’s
name such financing statements and amendments thereto and continuation statements which may require such Debtor’s signature;


 


(j) upon
the occurrence and during the continuation of an Event of Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute
owners thereof for all purposes; and


 


(k) to
do, at the Collateral Agent’s option and at such Debtor’s expense, at any time, or from time to time, all acts and
things which the Collateral Agent reasonably deems necessary to protect or preserve or, upon the occurrence and during the continuation
of an Event of Default, realize upon the Collateral and the Secured Parties’ Liens therein, in order to effect the intent
of this Agreement, all as fully and effectively as such Debtor might do.


 






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Each
Debtor hereby ratifies, to the extent permitted by law, all that such attorneys lawfully do or cause to be done by virtue hereof
provided the same is performed in a commercially reasonable manner. The power of attorney granted hereunder is a power coupled
with an interest and shall be irrevocable until the Obligations are indefeasibly paid in full in cash and this Agreement is terminated
in accordance with Section 4.12 hereof.


 


Each
Debtor also authorizes the Collateral Agent, at any time from and after the occurrence and during the continuation of any Event
of Default, (x) to communicate in its own name with any party to any Contract with regard to the assignment of the right, title
and interest of such Debtor in and under the Contracts hereunder and other matters relating thereto and (y) to execute, in connection
with any sale of Collateral provided for in Section 4.6 hereof, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Collateral.


 


4.11 Perfection.
Prior to or concurrently with the execution and delivery of this Agreement, each Debtor shall:


 


(a) file
such financing statements, assignments for security and other documents in such offices as may be necessary or as the Collateral
Agent or the Representative may request to perfect the security interests granted by Section 3 of this Agreement;


 


(b) at
the Collateral Agent’s request, deliver to the Collateral Agent or its Representative the originals of all Instruments together
with, in the case of Instruments constituting promissory notes, allonges attached thereto showing such promissory notes to be
payable to the order of a blank payee;


 


(c) deliver
to the Collateral Agent or its Representative the originals of all Motor Vehicle titles, duly endorsed indicating the Secured
Parties’ interests therein as lienholders, together with such other documents as may be required consistent with Section
4.1(d) hereof to perfect the security interest granted by Section 3 in all such Motor Vehicles (if any).


 


(d) If
the Debtor has not done so, the Collateral Agent may do so at any later time at the sole cost of the Debtors.


 


4.12 Termination;
Partial Release of Collateral. This Agreement and the Liens and security interests granted hereunder shall not terminate until
the full and complete performance and indefeasible satisfaction of all of the Obligations (including, without limitation, the
indefeasible payment in full in cash of all such Obligations) (i) in respect of the Transaction Documents, and (ii) with respect
to which claims have been asserted by Collateral Agent and/or a Secured Party, whereupon the Collateral Agent shall forthwith
cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever,
any remaining Collateral to or on the order of Debtors. The Collateral Agent shall also execute and deliver to Debtors upon such
termination and at Debtors’ expense such UCC termination statements, certificates for terminating the liens on the Motor
Vehicles (if any) and such other documentation as shall be reasonably requested by Debtors to effect the termination and release
of the Liens and security interests in favor of the Collateral Agent affecting the Collateral. Notwithstanding anything to the
contrary in this Agreement, upon full and complete satisfaction of the Notes Debtors obligations under this Agreement shall terminate
and any Liens shall thereupon be void.


 






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4.13 Further
Assurances. At any time and from time to time, upon the written request of the Collateral Agent or its Representative, and
at the sole expense of Debtors, Debtors will promptly and duly execute and deliver any and all such further instruments, documents
and agreements and take such further actions as the Collateral Agent or its Representative may reasonably require in order for
the Collateral Agent to obtain the full benefits of this Agreement and of the rights and powers herein granted in favor of the
Collateral Agent, including, without limitation, using Debtors’ best efforts to secure all consents and approvals necessary
or appropriate for the assignment to the Collateral Agent of any Collateral held by Debtors or in which a Debtor has any rights
not heretofore assigned, the filing of any financing or continuation statements under the UCC with respect to the liens and security
interests granted hereby, transferring Collateral to the Collateral Agent’s possession (if a security interest in such Collateral
can be perfected by possession), placing the interest of the Collateral Agent as lienholder on the certificate of title of any
Motor Vehicle, and obtaining waivers of liens from landlords and mortgagees. Each Debtor also hereby authorizes the Collateral
Agent and its Representative to file any such financing or continuation statement without the signature of such Debtor to the
extent permitted by applicable law.


 


4.14 Limitation
on Duty of Secured Party. The powers conferred on the Collateral Agent under this Agreement are solely to protect the Collateral
Agent’s interest on behalf of itself and the other Secured Parties in the Collateral and shall not impose any duty upon
it to exercise any such powers. The Collateral Agent shall be accountable only for amounts that it actually receives as a result
of the exercise of such powers and neither the Collateral Agent nor its Representative nor any of their respective officers, directors,
employees or agents shall be responsible to Debtors for any act or failure to act, except for gross negligence or willful misconduct.
Without limiting the foregoing, the Collateral Agent and any Representative shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in their possession if such Collateral is accorded treatment substantially equivalent
to that which the Collateral Agent or any Representative, in its individual capacity, accords its own property consisting of the
type of Collateral involved, it being understood and agreed that neither the Collateral Agent nor any Representative shall have
any responsibility for taking any necessary steps (other than steps taken in accordance with the standard of care set forth above)
to preserve rights against any Person with respect to any Collateral.


 


Also
without limiting the generality of the foregoing, neither the Collateral Agent nor any Representative shall have any obligation
or liability under any Contract or license by reason of or arising out of this Agreement or the granting to the Collateral Agent
of a security interest therein or assignment thereof or the receipt by the Collateral Agent or any Representative of any payment
relating to any Contract or license pursuant hereto, nor shall the Collateral Agent or any Representative be required or obligated
in any manner to perform or fulfill any of the obligations of Debtors under or pursuant to any Contract or license, or to make
any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any Contract or license, or to present or file any claim, or to take any action to collect or enforce
any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or
times.


 






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Section
5.Miscellaneous.


 


5.1 No
Waiver. No failure on the part of the Collateral Agent or any of its Representatives to exercise, and no course of dealing
with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Collateral Agent or any of its Representatives of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power or remedy. The rights and remedies hereunder provided
are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law.


 


5.2 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed
by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.


 


5.3 Notices.
All notices, approvals, requests, demands and other communications hereunder shall be delivered or made in the manner set forth
in, and shall be effective in accordance with the terms of, the Purchase Agreement. Debtors and Collateral Agent may change their
respective notice addresses by written notice given to each other party five days prior to the effectiveness of such change.


 


5.4 Amendments,
Etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by the Debtor
sought to be charged or benefited thereby and the Secured Parties holding a majority of the outstanding principal of the Notes.
Any such amendment or waiver shall be binding upon all the Secured Parties (including the Collateral Agent in its capacity as
a Secured Party) and the Debtor(s) sought to be charged or benefited thereby and their respective successors and assigns.


 


5.5 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of each
of the parties hereto, provided, that no Debtor shall assign or transfer its rights hereunder without the prior written consent
of each Secured Party. Any Secured Party, including the Collateral Agent in its capacity as a 

Secured Party, may assign its rights hereunder without the consent of Debtors, in which event such assignee shall be deemed to
be a Secured Party and/or Collateral Agent, as applicable, hereunder with respect to such assigned rights.


 


5.6 Counterparts;
Headings. This Agreement may be authenticated in any number of counterparts, all of which taken together shall constitute
one and the same instrument and any of the parties hereto may authenticate this Agreement by signing any such counterpart. This
Agreement may be authenticated by manual signature or facsimile, .pdf or similar electronic signature, all of which shall be equally
valid. The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning
hereof.


 


5.7 Severability.
If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (a) the
other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of
the Collateral Agent, its Representative and each other Secured Party (and all of their respective successors and assigns) in
order to carry out the intentions of the parties hereto as nearly as may be possible and (b) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.


 






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5.8 SUBMISSION
TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS. EACH DEBTOR HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND EACH DEBTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF A SECURED PARTY TO BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY A DEBTOR AGAINST A SECURED PARTY ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK COUNTY, NEW YORK (AND
EACH SECURED PARTY HEREBY SUBMITS TO THE JURISDICTION OF SUCH COURT). EACH DEBTOR HERETO HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE
OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH ACTION OR PROCEEDING BY MAILING BY REGISTERED OR CERTIFIED MAIL A
COPY THEREOF TO SUCH DEBTOR AT THE ADDRESS FOR NOTICES TO IT IN ACCORDANCE WITH SECTION 5.3 OF THIS AGREEMENT AND AGREES THAT
SUCH NOTICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED
TO LIMIT IN ANY WAY ANY RIGHT OF A SECURED PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.


 


5.9 WAIVER
OF RIGHT TO TRIAL BY JURY. EACH DEBTOR AND EACH SECURED PARTY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH DEBTOR AND EACH SECURED PARTY AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 5.9 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.


 






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5.10 Joint
and Several. The obligations, covenants and agreements of Debtors hereunder shall be the joint and several obligations, covenants
and agreements of each Debtor, whether or not specifically stated herein without preferences or distinction among them.


 


5.11 Collateral
Agent and Secured Parties Indemnification.


 


(a) Each
Rose Purchaser has, pursuant to the Securities Purchase Agreement, designated and appointed the Collateral Agent as the administrative
agent of such Secured Party under this Agreement and the related agreements. Rock hereby appoints the Collateral Agent as collateral
agent hereunder and under the Pledge Agreement and Subsidiary Guaranty.


 


(b) Nothing
in this Section 5.11 shall be deemed to limit or otherwise affect the rights of the Collateral Agent to exercise any remedy provided
in this Agreement or any other Transaction Document.


 


(c) If
pursuant to any Transaction Document a Secured Party (including the Collateral Agent) is given the discretion to allocate proceeds
received by such Secured Party (including the Collateral Agent) pursuant to the exercise of remedies under the Transaction Documents
or at law or in equity (including without limitation with respect to any secured creditor remedies exercised against the Collateral
and any other collateral security provided for under any Transaction Document), the Collateral Agent shall apply such proceeds
to the then outstanding Obligations in the following order of priority (with amounts received being applied in the numerical order
set forth below until exhausted prior to the application to the next succeeding category and each Secured Party entitled to payment
shall receive an amount equal to its Pro Rata Portion of amounts available to be applied pursuant to clauses second, third and
fourth below):


 


first,
to payment of fees, costs and expenses (including reasonable attorney’s fees) owing to the Collateral Agent;


 


second,
to payment of all accrued unpaid interest and fees (other than fees owing to Collateral Agent) on the Obligations;


 


third,
to payment of principal of the Obligations;


 


fourth,
to payment of any other amounts owing constituting Obligations; and


 


fifth,
any remainder shall be for the account of and paid to whoever may be lawfully entitled thereto.


 






    21


     


    




 


(d) Each
Debtor agrees, jointly and severally, to indemnify, defend and hold harmless the Collateral Agent (both in its capacity as collateral
agent hereunder and as a Secured Party), every other Secured Party, their respective successors and assigns and all of their respective
officers, directors, shareholders, members, managers, partners, employees, attorneys and agents, and any Person in control of
any thereof, from and against any claims, debts, liabilities, losses, demands, obligations, actions, causes of action, fines,
penalties, costs and expenses (including attorneys’ fees and consultants’ fees), of every nature, character and description
(each, an “Indemnified Liability” and collectively the “Indemnified Liabilities”), under federal and state
securities laws or otherwise insofar as such Indemnified Liability arises out of or is based upon any of the transactions contemplated
by this Agreement, any other Transaction Document, any of the Obligations, or any other cause or thing whatsoever occurred, done,
omitted or suffered to be done by a Debtor relating to any Secured Party or the Obligations (except any such amounts sustained
or incurred solely as the result of the gross negligence or willful misconduct of such Secured Party(ies), as finally determined
by a court of competent jurisdiction). If and to the extent that the foregoing undertakings in this paragraph may be unenforceable
for any reason, each Debtor agrees to jointly and severally make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The obligations of each Debtor under this Section 5.11(d)
shall survive any termination of this Agreement or any other Transaction Document.


 


5.12 No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.


 


5.13 ENTIRE
AGREEMENT; AMENDMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN
AGREEMENTS BETWEEN THE SECURED PARTIES, THE COLLATERAL AGENT, THE DEBTORS, THEIR AFFILIATES AND PERSONS ACTING ON THEIR BEHALF
WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS AND THE OTHER
INSTRUMENTS REFERENCED HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE MATTERS COVERED
HEREIN AND THEREIN AND, EXCEPT AS SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE SECURED PARTY NOR ANY DEBTOR MAKES ANY
REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT TO SUCH MATTERS. AS OF THE DATE OF THIS AGREEMENT, THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS DISCUSSED HEREIN. NO PROVISION OF THIS AGREEMENT MAY BE AMENDED,
MODIFIED OR SUPPLEMENTED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY THE DEBTORS AND THE SECURED PARTY.


 


5.14 Termination
of RedDiamond Security Agreement. The Company and Rock hereby agree to terminate the RedDiamond Security Agreement,
effective as of the date hereof. Notwithstanding the foregoing, the termination of the RedDiamond Security Agreement shall
not terminate, amend or have any effect upon the RedDiamond Purchase Agreement, the RedDiamond Note, the RedDiamond
Warrant or any other agreement, documents or understandings between the parties arising out of or related thereto, and the
defined term “Security Agreement” as set forth in the RedDiamond Purchase Agreement and all other agreements
and documents related thereto shall hereinafter mean this Agreement.


 


-
Remainder of Page Intentionally Left Blank; Signature Page Follows -





 




    22


     


    

 


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


 





	DEBTORS:	 
	 	 
	Helix TCS, Inc.	 
	 	 
	By:	                	 
	Name: 	 	 
	Title:	 	 
	 	 
	Helix TCS, LLC	 
	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 
	Security Consultants Group, LLC	 
	 	 	 
	By	 	 
	Name:	 	 
	Title:	 	 
	 	 
	Boss Security Solutions, Inc.	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	Security Grade Protective Services, Ltd.	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	Bio-Tech Medical Software, Inc.	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	Engeni LLC	 
	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 







 






    23


     


    




 





	 	COLLATERAL AGENT:
	 	 
	 	ROSE CAPITAL FUND I, LP
	 	 
	 	By: Rose Capital Fund I GP, LLC
	 	 
	 	Its: General Partner
	 	 
	 	By: Rose Management Group LLC
	 	 
	 	Its: Manager
	 	 
	 	By:	 
	 	Name:	Jonathan Rosenthal
	 	Title:	Member
	 	 	 
	 	By:	 
	 	Name:	Andrew Schweibold
	 	Title:	Member
	 	 
	 	ROSE PURCHASER:
	 	 
	 	ROSE CAPITAL FUND I, LP
	 	 
	 	By: Rose Capital Fund I GP, LLC
	 	 
	 	Its: General Partner
	 	 
	 	By: Rose Management Group LLC
	 	 
	 	Its: Manager
	 	 
	 	By:	 
	 	Name:	Jonathan Rosenthal
	 	Title:	Member
	 	 	 
	 	By:	 
	 	Name:	Andrew Schweibold
	 	Title:	Member







 






    24


     


    

 





	 	DIAMONDROCK LLC
	 	 	 
	 	By:	                     
	 	Name:	 
	 	Title:	 







 







    25


     


    

 


EXHIBIT
A


 


Form
of Joinder


 


Joinder
to Security Agreement


 


The
undersigned, ______________________________, hereby joins in the execution of that certain Security Agreement dated as of March
1, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”) by
Helix TCS, Inc., a Delaware corporation, the Debtors (as defined therein), the Secured Parties (as defined therein), and each
other Person that becomes a Debtor or a Secured Party thereunder after the date thereof and hereof and pursuant to the terms thereof,
to and in favor Rose Capital Fund I, LP, a Delaware limited partnership, in its capacity as Collateral Agent for the Secured Parties.
By executing this Joinder, the undersigned hereby agrees that it is a Debtor thereunder and agrees to be bound by all of the terms
and provisions of the Security Agreement. The undersigned represents and warrants that the representations and warranties set
forth in the Security Agreement are, with respect to the undersigned, true and correct as of the date hereof.


 


The
undersigned represents and warrants to Secured Party that:


 


(a) all
of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I and such
Debtor conducts business in the jurisdiction set forth on Schedule I;


 


(b) except
as disclosed on Schedule I, none of such Collateral is in the possession of any bailee, warehousemen, processor or consignee;


 


(c) the
chief place of business, chief executive office and the office where such Debtor keeps its books and records are located at the
place specified on Schedule I;


 


(d) such
Debtor (including any Person acquired by such Debtor) does not do business or has not done business during the past five years
under any tradename or fictitious business name, except as disclosed on Schedule II;


 


(e) all
Copyrights, Patents and Trademarks owned or licensed by the undersigned are listed in Schedules III, IV and V,
respectively;


 


(f) all
Deposit Accounts, securities accounts, brokerage accounts and other similar accounts maintained by such Debtor, and the financial
institutions at which such accounts are maintained, are listed on Schedule VI;


 


(g) all
Commercial Tort Claims of such Debtor are listed on Schedule VII;


 


(h) all
interests in real property and mining rights held by such Debtor are listed on Schedule VIII;


 


(i) all
Equipment (including Motor Vehicles) owned by such debtor are listed on Schedule IX.





 


	 	________________,
                                         a ________
	 	 
		By:	                      
	 	Title:	 
	 	FEIN:
                                         ______________









 




     


     


    

 


SCHEDULE
I


 


Jurisdictions
and Debtor’s Information


 


Corporate
Information:


  


	Debtor’s
    Legal Name	 	Jurisdiction
    of Formation	 	Other
    Jurisdictions	 	FEIN	 	State
    Org. ID
	Helix
    TCS, Inc.  	 	Delaware	 	Colorado	 	81-4046024	 	5498129
	Helix
    TCS, LLC	 	Delaware	 	Pennsylvania	 	47-3748821	 	5718659
	Security
    Consultants Group, LLC	 	Colorado	 	Colorado	 	38-3972837	 	20151383420
	Security
    Grade Protective Services, Ltd.	 	Colorado	 	Colorado	 	46-1899749	 	20131068349
	Boss
    Security Solutions, Inc.  	 	Colorado	 	Colorado	 	46-3610250	 	 
	BioTech
    Medical Software Inc.  	 	Florida	 	Colorado	 	20-8551162	 	 
	Engeni
    LLC  	 	Delaware	 	Colorado	 	81-0687467	 	 
	Engeni
    S.A.  	 	Republic
    of Argentina	 	N/A	 	N/A	 	N/A





 


Locations:





 


	Debtor	 	Locations
    of 

Equipment, 

Inventory and

 Goods	 	Owned,
    Leased,

 or Bailment?	 	Lessor/Bailee
    

Name	 	Mortgaged
    

(Y/N)
	Helix
    TCS Inc.  	 	None	 	N/A	 	N/A	 	N
	Helix
    TCS LLC	 	None	 	N/A	 	N/A	 	N
	Security
    Consultants Group LLC	 	10200
    E. Girard Avenue, Suite B420, Denver, CO	 	Owned
    and Leased	 	Automated
    Business Products	 	N
	Security
    Grade Protective Services Ltd  	 	10200
    E. Girard Avenue, Suite B420, Denver, CO	 	Owned	 	N/A	 	N
	Boss
    Security Solutions Inc.  	 	None	 	N/A	 	N/A	 	N
	BioTech
    Medical Software Inc.  	 	6750
    N. Andrews Avenue, Suite 325, Ft. Lauderdale, FL	 	 	 	 	 	N
	Engeni
    LLC  	 	None	 	N/A	 	N/A	 	N
	Engeni
    S.A.  	 	Av.
Del Libertador 88, 4th Floor, B1638 Vicente Lopez, Buenos Aires, Argentina	 	Owned	 	N/A	 	N





 






     


     


    




 


SCHEDULE
II


 


Trade
Names


 


Cannabase


 


BioTrackTHC


 


Helix
Security


 


Security
Grade Protective Services


 


Engeni


 




     


     


    

SCHEDULE
III


 


Copyrights


 




     


     


    

 


SCHEDULE
IV


 


Patents


 


U.S.
Patent #8,086,470 B2 dated 12/27/11


 


U.S.
Patent #8,335,697 B2 dated 12/18/12


 


Canadian
Patent 2715969


 




     


     


    

 


SCHEDULE
V


 


Trademarks


 


US
Trademark 4754616. BioTrackTHC Logo Trademark


 


Cannalytics
86617890


 


TAP
Reg. No. 5,099,248


 


Cannabase
86617897


 




     


     


    

 


SCHEDULE
VI


 


Depository
and Other Accounts


 


Bank
name, account name, and account number


 


Bank
of America, Bio-Tech Medical Software Inc., Checking Account, Account Number: 898015394450


 


Wells
Fargo, Bio-Tech Medical Software Inc., Checking Account, Account Number: 9178117942


 


Wells
Fargo, Bio-Tech Medical Software Inc., Savings Account, Account Number: 3315176390


 


Chase
Bank, Bio-Tech Medical Software Inc., Checking Account, Account Number: 229906398


 


Chase
Bank, Security Consultants Group, LLC, Checking Account, Account Number: 000000831301788


 


Wells
Fargo, Boss Security Solutions Inc., Checking Account, Account Number: 8413359566


 


Wells
Fargo, Boss Security Solutions Inc., Savings Account, Account Number: 7321091188


 


Citizens
Bank, Helix TCS LLC, Checking Account, Account Number 630070-076-7


 


FirstBank,
Helix TCS Inc, Checking Account, Account Number 3665751160


 




     


     


    

 


SCHEDULE
VII


 


Commercial
Tort Claim


 


None.


 




     


     


    

 


SCHEDULE
VIII


 


Real
Property Interests


 


The
Debtors lease real property at the following locations:


 


		●	10200
                                         E. Girard Avenue, Suite B420, Denver, CO



 


		●	10200
                                         E. Girard Avenue, Suite B420, Denver, CO



 


		●	6750
                                         N. Andrews Avenue, Suite 325, Ft. Lauderdale, FL



 


		●	Av.
                                         Del Libertador 88, 4th Floor, B1638 Vicente Lopez, Buenos Aires, Argentina



 




     


     


    

 


SCHEDULE
IX


 


Debtor’s
Equipment





 


	Date	 	Supplier	 	Description	 	Cost (US)	 
	11/4/14	 	Ricoh	 	MP C4503 and MP4002SP copiers (leased)	 	Approx. $20,000	 
	3/29/16	 	Automated Business Products	 	1- Okidata 4242 all in one (leased)	 	Approx. $5,000	 
	2/23/17	 	Ford	 	Cargo Van Vin NM0LE7E72G1258079	 	$	24,452	 
	1/31/18	 	Ford	 	Van Vin NM0LS7E73H1334404	 	$	28,175	 
	1/31/18	 	Ford	 	Van Vin NM0LS6E75J1347140	 	$	26,748	 
	6/15/17	 	Ford	 	Van Vin NM0LS7E73H1315254	 	$	26,271	 
	1/17/17	 	Nissan	 	NV Van Vin 3N6CM0KN1GK701639	 	$	23,815	 
	1/17/17	 	Nissan	 	NV Van Vin 3N6CM0KN7GK701371	 	$	26,070